The Pomp Podcast - Mike Dudas: Crypto's PR Crisis

Episode Date: August 31, 2018

Mike Dudas is the Founder of The Block, a crypto focused community that helps people cut through the noise. He previously Co-Founded Button and before that, worked at Venmo and PayPal.  In this conversation, Anthony and Mike discuss the role of media in the crypto industry, why CoinBase is the most important company in the space, and why CNBC is more entertainment than substance.

What's up, everyone? This is Anthony Pompliano. Most of you know me as Pomp. You're listening to Off The Chain, simply the best podcast in crypto. Let's kick this thing off. Mike Dudas is the founder of The Block, a crypto-focused community to help people cut through the noise. He previously co-founded Button and worked at Venmo and PayPal. In this conversation, Mike and I discuss the role of media in the crypto industry, why Coinbase is the most important company in the space and which media outlet he thinks is more entertainment than substance. I learned a lot about the intersection of content and crypto in this one, so I hope you find it as fascinating as I did. Anthony Pompliano is a partner at Morgan Creek

Digital. All opinions expressed by Pomp or his guests on this podcast are solely their opinions and do not reflect the opinions of Morgan Creek Digital or Morgan Creek Capital Management. You should not treat any opinions expressed by Pomp as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. This podcast is for informational purposes only. Why don't you just give us a little bit about your background and kind of what got you into crypto? Absolutely.

So Mike Dudas, a relatively recent entrant into the crypto ecosystem full time. In 2013, I started to dabble, bought Bitcoin. I was working at the time at Braintree, the payment processor. We had customers like Uber, Airbnb, and obviously all of the big crypto companies wanted to work with them. So Coinbase came to us and said, hey, do you want to accept Bitcoin in your gateway? And at the time we chose not to, but it developed, you know, an interest in my mind. You know, talking with the Andreessen folks, talking with the Coinbase folks and reading Chamath's, you know, everybody should put one to three percent of their net worth into crypto at that time. I was like, hmm, let's do this.

So I've been paying attention to crypto through ownership since 2013, but I left the ecosystem for a while, worked at Braintree Venmo, started a company called Button here in New York, and we had our second child in the fall. And it coincided with a pretty significant price rise in Bitcoin and in other cryptocurrencies. And I went down the rabbit hole for the first time. And the rabbit hole took about five months before I really felt comfortable having conversations with folks who had been in the ecosystem full time for a number of years. And my interest was piqued. And I said, hey, what do I want to do for the next 10 years? And after meeting the people I'd met in those five months, thinking the ideas I'd thought and having the conversations I'd had, I said, hey, it's time to jump in. Amazing.

And so what specific parts of the industry do you think are the most interesting in terms of somebody who's coming from a non-technical background but has had a high degree of success in terms of companies that you've worked at, started, et cetera? What pulls you in and is so interesting? Yeah. So the things that the primary thing that pulls me in relative to what I am now calling traditional tech, I've written a little bit about this, is the multidisciplinary nature of crypto and blockchain technology. You know, it's not just about technology or sales or marketing or go to market. You know, it's about governance. It's about economics. It's about network security.

It takes a team of world experts to execute on any protocol project. And the other thing that really attracted me is this is the first time, I've been in fintech for 10 years, ever since the Google Wallet days and Braintree Venmo. This is the first time that I've actually seen something that could truly create crypto assets, create a parallel financial system versus what we've historically called fintech, which are things that can kind of nibble at the edge of Wall Street and the traditional financial system. Very, very interesting. And what do you think is the biggest mistake people are making in trying to build this decentralized financial system? So the biggest thing that I'm seeing right now, the ecosystem as a whole, I think the biggest mistake that I'm seeing, and it's kind of like a game theory thing, and every rational actor is probably making the right move in terms of maximizing their own near-term wealth. But I do think that for crypto to succeed, we're going to need to coalesce around the dominant protocol in each of the verticals that are being pursued. So let's just say Bitcoin as sound money, Ethereum as the worldwide universal computer.

I'm using extreme shorthand language here. Zcash or Monero as the privacy coin. Now, I don't think it's reasonable to coalesce quite yet, but I think it's supremely problematic when you see some of the leaders of the industry who are working on five or six projects, and I think it's really problematic when you see some of the strongest voices in the industry, the Fred Wilsons of the world and many others, who are using economic incentives to get developers to work on things that probably have very little chance of success, like Kik's Kin, relative to the other platforms out there. that can do similar things better got it and so i think that part of the beauty of crypto is the fact that people uh who have independent thoughts and and you know kind of do a bunch of research learn formulate their opinions and they're able to share them and there's a little bit less of um a uh you know kind of group mindset right in traditional tech if everyone's into scooters everyone's in scooters, right? Everyone's doing this. And the tribalism and the kind of ferocious

intellectual debates that happen in crypto, I think actually allow a lot of the best ideas to rise to the top. But that also allows people and environment to present unpopular or controversial ideas, right? What would you say is your most unpopular or most controversial idea that a high degree of people would disagree with, but that you believe? So as somebody who is a Bitcoin maximalist of uh so basically i'm a bitcoin maximalist um but i would say that extreme bitcoin maximalists would disagree with me as would people who aren't bitcoin maximalists i think there are multiple definitions of bitcoin maximalism or there should be um so i fundamentally believe that you know bitcoin has the highest probability of any coin by a wide margin of

establishing sort of the store of value use case and perhaps eventually medium of exchange and unit of account and becoming you know and is sound money yep i think that if bitcoin went to zero i think it's you know a very low probability that cryptocurrency you know exists in 20 years successfully at scale at the same time that i'm a bitcoin maximalist in terms of value of uh the token i believe deeply in the other projects happening out there many of the other projects you know including ethereum uh including you know zcash um including smaller ones like poet you know and i think there are a lot of interesting projects so i'm not sure that value will accrue to the token but i wouldn't call them shit coins like i actually think that you know the token in

some respects for many of these projects is a way to sort of market and signal interest and get monetary incentives to get developers in the ecosystem. And I applaud that, even though my more extreme Bitcoin maximalist friends would probably frown upon that. Absolutely. Well, and it's also the incentive piece, right? So if you have a centralized company and you want to recruit talent, right, you basically need to have a team and a mission that is attractive, right? You need to have the ability to pay money, right? So actual cash. And you've got to usually use some other incentive mechanism to hire and retain that talent, right? And so you see everything from I'll give people equity in a company, right, to I'll provide them free lunch, right?

And so there's a whole bunch of different things that you can do, but that's in a centralized, you know, single location or multiple single location type business where everyone's coming together at the same time. No question. When you go to the crypto world, you have this distributed team, no for-profit entity type structure where a lot of those incentive mechanisms that you use in kind of traditional company building is not available to the founders or the people who start these projects. And so the argument it sounds like you're making is just that those incentive mechanisms are being replaced by these tokens, which have monetary value associated with them, but they're no different than the free lunches, the equity, etc. Yeah, I think that's close. That's close to what I'm saying. And what's interesting is, so the slight differences, I think a lot of the investors who are investing in these tokens do actually believe that many of them will have long term value for a host of reasons, which would take a multi hour podcast that we'd have to probably explore by vertical. I think most of them won't have value. But I'm more making the point, and you were making this as well, that these are the incentives that right now are encouraging folks to work on these problems that I think are real, are hard, and are worthwhile. while. But it will, you know, there will be a day of reckoning when there's kind of this, you know,

separation of Bitcoin, Ethereum and some of the other top tokens from some of the tokens that haven't made progress. And I actually hope that, you know, some of the scam coins go away and some of the smaller market cap tokens that actually have use cases and potential utility, even just to use a silly one like spank chain that only has a market cap of 15 million and a believe 15 million and a really significant industry which should be a prime use for cryptocurrency i could look at that and say hey you know maybe maybe there's some room for for this one to go up absolutely and so let's talk about uh community right in crypto because i think that there's uh both the good side and the bad side um let's talk first about the good side of the community right so so if you look on social

and you look at some of these projects and the tribalism that goes on, there's just a rabid fan base or rabid interest, right? Like, how do you see that in comparison to the traditional technology startup world where, you know, people are always trying to, I want customers that love me, right, to now this rabid, you know, interest in the crypto world? Yep. So in the traditional tech world, outside of gaming and real, like, consumer tech, eSports and things of that nature. And there's more examples, but those are a few of the examples where you see these rabid fan bases. And I actually think crypto is most analogous to those

rabid ones, to sports teams in the real world. In tech, you see developer fan bases, and they'll go to Google I.O. and F8. But those are very different, very controlled experiences. In the crypto ecosystem people come with and you've heard this before i'm not saying anything particularly novelness area but you know with with almost a religious belief and an anchoring and a strong bias and and as strong a tribal nature to associating with specific projects as i've ever seen yep uh and frankly it's because they've had access i mean it's because these folks look at themselves as angel investors. You know, true investors are the earliest stages of these projects because clearly, you know, nearly almost none of them are even close to fully developed

yet. And so I think that's a positive. At the same time, it can be a curse. So an example of where it's genuine is clearly Ethereum, right? And clearly Bitcoin, but that's been talked about a lot. But clearly Ethereum from a developer perspective and tons of developers, you know, flocking to it um you know solidity you know is a language that's not just you know ethereum specific but folks uh if folks really want to um work on the ethereum blockchain uh and with uh and so you're seeing apps and services built on top and so i i consider that a really healthy organic natural community uh at the same time i see really unhealthy communities so you know the obvious canonical example of that is Ripple. So Ripple has a centralized structure where

Ripple Corp basically says, hey, we put our tokens in escrow. But still, they're obviously under their control and they're released over a period of time. And then they have a host of real people who are Ripple extremists and who knows what their motives are and what their compensation is and you know why they're doing what they do um but they really become kind of a hive mind in public um and really come after anybody who questions the validity of xrp and of ripple uh and then you can go one level uh past that which is uh just false and fake communities right and and you know it has echoes of of what happened and you know our election and and you know bots and uh ripple is a case where there's certainly real people who are supporters but

there's no question that there are tens of thousands of bots uh associated with ripple uh and and do you think that's something where uh the company and the people in and around the company are actively trying to create this stuff or do you think it's a thing where community members who like the project who hold the coins right have a financial incentive in seeing it succeed or uh trying to push that narrative through through you know social channels etc yeah so the the ripple corp team is an exceptionally professional talented team they they truly are like i've spoken with them uh i know you know some of them personally and they're very talented um they're talented you know both at creating you know functioning

financial products yep and they're also very talented at you know increasing the value of things related you know to the corporation they're working for and the token is clearly you know part of that right so so brad garlinghouse's comments about you know pilots that might have eight transactions uh total globally ever uh that you know they issue a press release about you know those are clearly uh strategic decisions they make where they know it's not material, but will impact the price of the token. So the management at Ripple clearly does things to move the token price, separate from actually creating value at the core product. At the same time, they have an incredible team. Their product team is doing a good job

on a number of financial institution and bank products that they're working with, and increasingly you know getting more and more partners uh that being said you know if they were just a traditional equity-backed uh company you know they'd be valued nowhere near what they're valued at today um and then to the question of the community and the bots i think they could do more to police it and it's not in their interest to do so today so they don't and you know i've experienced it personally and i know many other folks who have like my friend jeff goldberg who's explored the Ripple bot problem. And they invite, you know, the Ripple team definitely invites many of the most prominent, you know, tweeters affiliated with them to all of their events and

sort of encourages them to continue with this sort of mini celebrity game that I don't think is a healthy one that they know helps to artificially support the token price. so i think that that argument is uh popular and you know relatively well accepted by a lot of people i would take the opposite side and i don't even know if i have a different opinion about ripple specifically right i don't know and i haven't spent enough time with them to have an opinion on them but the mechanisms of uh you know let's walk through so um if they announce pilots right that are early you could say hey they're doing it to manipulate price right or you could say they are being overly transparent right the uh the idea of them um working with people who

are big fans of a brand right every company in the world does that who has any sort of size you know public uh influencers true and it happens throughout the industry you know consensus this absolutely does it with so i think i think that yep one of the things that i try to wrap my head around and i don't have an answer here right but but i think is is really interesting is you know part of the ethos of crypto right in general as an industry is um decentralized you know distributed teams kind of all all of that that goes in that bucket at the same time it's experimentation it's you know trying different ideas not getting tied to the sacred cows all this stuff and so you know in the case of a ripple or other projects those are almost in direct

conflict with each other right because actually what they're doing is they're doing experimentation they're doing um you know they're really pushing the edge and trying to figure out you know do these new models work and how to can they drive value um but they aren't decentralized they aren't distributed right so how do you think through like where that line is so it's it's a great question so i think one way that they could basically eliminate all doubt is to say hey instead of compensating ourselves in this token xrp which you know the founding team has the leadership has um david schwartz as uh they could choose to you know basically renounce those tokens and you take value in more value in the equity of ripple the corporation which clearly has a

connection to XRP the token, but I think it would reduce questions as to whether there are ulterior motives when they are announcing things. That's just one simple thing. Again, that being said, structurally, it's really difficult for that management team to execute without people asking questions externally, just given the structure of corporation and how it's tied to tokens. And that's just one example. That's even a healthier community than some of the other ones out there um you know the the the tron community right i mean it's it's it's a total scam it's not even worth getting into that but you know you mentioned tron and say scam and you know you're gonna have 100 bots in your inbox uh in seven minutes quickly yeah all right so let's switch

gears let's talk about uh the media in crypto right so sign is something you care about a lot um it seems like there are three separate buckets of uh media outlets or types right so you've got the crypto media. These are people who are super well connected in the industry. They really understand what's going on. They do a fairly good job in terms of reporting that in detail, accurately, maybe a little bit smaller audiences, but very much, hey, these are people who understand this industry. Then you've got the traditional media, which depending on who you're talking about, may or may not understand what's going on. Accuracy is questionable sometimes. And the way that they are delivering the message can lead to a lot of retail investors changing their opinion

about certain tokens, acting differently, et cetera, in the market. And then the third bucket is what I call like the citizen journalist, right? Which is, you know, these Twitter accounts that explode that all of a sudden, you know, whale panda, right? Or, you know, bully ESQ, right? And these guys- Or even like a Nick Carter, you know, some of these folks who- Yeah, they have a voice, right? They've got a publishing platform and what they're doing, people want to hear. And so, um, they grow these audiences. I am, uh, I'm just having fun, but they're actually providing a legitimate value. And, uh, and so through that, like, how do you see that ecosystem and the relationship between the three playing out over the next, you know,

five, 10 years? Yeah. So I think all of them are important. Uh, so today, but I think, you know, those three are all somewhat insular okay so i think the way that all three of those types of media today are writing is in a very trade oriented uh manner and so meaning price like talking about price and and what is happening in a market where people are looking to trade so that would be one example yep uh but another is like basically writing about ethereum governance or you're writing about yeah like why has price gone up or down in the last six months If I gave that article to a friend who's an engineer working in traditional tech, but with not a lot of knowledge about the crypto ecosystem, they'd probably need to read like four precursor pieces to get to the point where they understood it. So the way I think of those three categories right now, and I'll just start there, is, you know, I look at like Coindesk being the former.

So there's a sort of trade magazine type of ecosystem. And really, Coindesk is the only one that has a brand that even in this ecosystem stands out. And this ecosystem is like a pretty de minimis small number of folks. OK, you know, compared to the global interest in cryptocurrency, of course, in technology. And then you've got Bitcoin Magazine, Cointelegraph, CCN, which copies everybody else's stuff. I mean, it's just a small, small, you know, I'm sorry, it's a big group of brands that write very similar things. Yep. Okay.

Then, to your point, you've got the Bloombergs, the Fortunes, who, you know, and then there's a host of others who are writing about this, New York Times. But I think Bloomberg and Fortune are doing the best job. And they have folks on the beat who are deeply informed. And they write, and they break news, right? And they write some really good pieces. And they write some pieces that I wouldn't write that aren't good, right? I think there's a group that's a little bit different than that. They have better editorial judgment.

You know, CNBC is a disaster. I mean, it's just terrible for the industry. It's a shit show. It's basically no holds barred, completely unethical. So basically, you've got these folks on air, Brian Kelly, you know, crypto man ran, who blocked me on Twitter for calling him out for being an absolute shill of coins that he owned. buys them and then tweets about them you know through his private vehicle cnbc literally allows people who are telling people how to buy cryptocurrencies and informing and educating them supposedly to literally run hedge funds on the side it's a fucking joke it's a it's

embarrassing makes me irate um and it hurts people hurts people's pockets they're a sham okay so cnbc is different than everybody else and it's embarrassing and comcast should be embarrassed to allow this on television. And it's probably the thing I'm most passionate right now. I care less about Ripple than about CNBC being held accountable for hurting the common investor. They're terrible for the industry and they mislead people. So sorry for going off on that tangent, but I think it's important that people understand that. I believe it deeply. And, you know, so that's sort of the mass market. If you ask people walking down the street, a thousand people, you know, what's the biggest brand and media

of Bitcoin, crypto, blockchain, name all the terms. I think they'd probably say Bloomberg, you know, a thousand people, even in New York. Maybe a couple would say Coindesk, but they'd say Bloomberg, Fortune, New York Times, a couple of others. They've got the name brand recognition. And then lastly, you know, the last category you said,

I think you sort of aggregated on Twitter and Medium, right? So personal blogs and then Medium. And it is the richest source of high signal information in the industry. I agree. And it's abundance. I mean, just absolute abundance. It's a shame that I think Medium needs to hire somebody, a cryptocurrency expert, to really curate this and highlight the best stuff.

They're not doing a good job there. Frankly, as the industry, we just need to find some rich person to give them a bunch of tokens to hire somebody to do this because it's so wonderful. And every week now, I'm curating the best on Medium. Yeah, do you think that – Because they're practitioners. It's you, it's me, it's people in the industry. Do you think it's because other types of media are basically reporting what other people are doing

and what you get on Medium specifically is- With PR talking to them and talking to experts. And look, everybody has an agenda versus, sorry to interrupt, but I think the direction you were headed is this authentic, deep, I've thought about this thing that I personally care about, like a Nick Carter. Some of these folks don't even have their real names. hasu fly who's who's very bright um a number of folks you know who have gotten me really

interested in token economics you know the kyle samanis of the world and uh ariana simpson it's original ideas yeah right it's original ideas yep your daily newsletter you know you get ryan selkis um you know those are the folks the folks day in and day out who are living and breathing this are the folks who are sharing right now the best information and i'm actually writing a blog post that will be published uh tomorrow in the block which is my new business which i haven't talked about yet but we'll be publishing on somebody asked me this morning on twitter hey why do you guys talk so much about what you're building instead of actually building and uh i listed a few reasons but you know i think it's important that we talk about it because we have

so few believers we have such so much information so much change so fast uh so much of what's being shared isn't accurate and therefore uh it's really important for the folks who are in the know who have that judgment and good curation to talk and to get it out there and evangelize. What we're seeing is this is probably one of the first industries where part of it is the nature of crypto. Part of it is the nature of just communication and tools outside of crypto is the practitioners, the operators, the engineers are able to talk directly to audiences without the middleman, right? It's incredible.

I mean, and we're seeing it, by the way, we're seeing it in our president doesn't. Elon Musk is doing it right. Kanye West. I mean, you go through there's a bunch of people who are figuring out I can talk directly to my audience. Like Jeremy Rubin wrote a piece on, hey, you know, giving sort of airdrop tokens, giving wealth to people that I read this morning. And by the way, I'm being completely honest. I read the whole thing and I didn't understand any equations, but like it made some sense to me. And I loved sharing it and putting it out there and, you know, having it be debated and discussed.

And another guy I respect greatly, Jeremy Gardner, said, hey, I don't necessarily agree with that. And it's a wonderful, you know, it's just wonderful to see all these different viewpoints coming from different backgrounds, some mathematical, you know, some practical, you know, having these discussions. It's really exciting. Absolutely. And then so what do you think is the, you know, with what you're doing with the block, right? Well, first tell us a little bit about what you're doing there and then we can talk about how this relates to the media. So there's a fourth type of media that I don't believe has existed and it's starting to exist. So it's basically media and information and community around the crypto and blockchain

ecosystem that reaches, let's just say, I'm making up numbers here, 1 million people in the world know a lot, right? Those first three categories we talked about are super serving, those 1 million people who already know a bunch of stuff. Well, hey, there's 100 million people, and I'm just, again, making up numbers, but relatively I think the ratios are probably somewhat accurate, who are getting terrible information. They're just following random Twitter feeds, you know, pump groups on Telegram. They don't have access to the best information, the insider information that we're fortunate

enough to have access to. So I looked at this ecosystem and said, hey, I really feel like this is where I want to be for the next 10 years. I've been successful in the past, so I can take a 10 to 15 year horizon. And, you know, I'd love to do this the rest of my life. Absolutely. But I want this industry or this ecosystem to succeed so badly. And I'd love to do this for the rest of my life.

So the block is crypto simplified. And the whole idea here is that we take these concepts that you and I understand and probably many of our listeners understand. And we basically start at the base layer of those and then build up from there and build this education base, create what I call a Reddit meets Slack. And I've created a Slack group. It's a thousand people strong where people are learning from one another. I think people learn best in groups.

as we see from telegram but effectively liberating this and giving it to people so that they can discuss the news the analysis the topics of the day together so anyway the block has launched a newsletter that we publish you know every other day our website's launching at the end of september and it's going to be that thing that you check in your phone for a quick take on what's happening and you know we'll aggregate all of the analysis and other information but it's approachable and we want to reduce people are fearful i was fearful when i came into this industry five six seven eight months ago uh we want to reduce the fear so people can jump in and learn well and a lot of it too is you know if i said hey go learn everything you can

about uh quantum you know mechanics right you you would uh say i don't know anything right or maybe you're an expert but i'd be like give me a link dude i have no idea yeah and so you would start googling right you'd find some okay hey these look like these are the people who understand a bunch i can search on youtube okay i'm gonna go watch these videos i'm gonna read you know some stuff off of wikipedia and i'm gonna find a book and an expert and you just go down this rabbit hole and you eventually come up with oh all right i understand that some at some degree of um of knowledge the problem in crypto is those people those videos etc don't look anything like we've ever seen before right it's pseudo anonymous accounts on twitter it's these secret telegram

groups it's these videos where i've literally seen people who are incredibly intelligent are doing videos and their faces are covered yeah right it's like medium sort of gives text credibility you know we're looking to have the block give a number of these concepts these voices credibility and then got it to basically take a lot of what they're doing with their endorsement and present it in a way that people feel comfortable and then we're actually going to ground that in a physical community as well so we're starting here in new york uh with something called the block at we work uh it's a co-working space it's going to be launching this fall and we're going to invite crypto projects you know 100 plus people to join us and uh folks

who you know are part of the block community will be able to drop in and so it's really grounding i'm sorry it's it's really you know we think right now new york is one of the top three if if not the top. I mean, I'm exceptionally biased. Crypto ecosystems in the world. So we'll start here and we'll see how it manifests itself, that physical plus digital community that's welcoming. And one other thing I want to say, there are some other fantastic teams that are doing this right now. I mean, again, huge kudos to you with your newsletter, which I think is much more approachable than a lot of what I've seen out there. The team at Masari Crypto is doing some phenomenal work. I mean, they have a team, Ryan Selkis just wrote about it this morning,

a guy i respect tremendously uh and you know 125 folks who are who are offering up uh you know analysis of tokens and other things um so they're working for transparency and wealth of information and token daily is another one these are different thing token daily who is having just amazing people contribute like they have a medium historically and then allowing conversation around it so the block isn't the only one and i think we're all going to be able to work together And I'm just like, it's just, I think this is the time and the place. And what's great is because price has gone to shit over the last six, eight months, we can all just focus on building.

And, you know, this is not a permanent thing. I think we all believe in this technology. I mean, sort of in this ecosystem and its ability to change so many industries and to change money. When we come out of this, it's going to be wonderful that we've all been working heads down. It's like the 2008, 2009 quote unquote crisis. I think you may have said it.

You said it in your newsletter. You know, birthed Uber, birthed Airbnb, birthed some of the greatest companies of the last decade. So it's really exciting. For sure. What do you think is, if you could wave a magic wand, right, and change one thing about the crypto industry, what would you change? So I would change the, I would change this mindset that I sometimes see where people judge others. And this is not universal, but I do see a significant portion of people who judge others either explicitly or just you can kind of see it in the back of their head by how long they've been 100 percent immersed in the industry as somebody who has immersed myself fully recently, but been, you know, caring about it and an owner for a long time. I think it's bullshit, you know, when somebody says, hey, you know, you weren't around when we did X, Y, Z, and therefore you don't understand.

I would and my retort would be, hey, you know, explain it to me, because by the way, my whole mission is that the person who joins in three years has a platform in the block where nobody's going to treat them like that and scare them off. That's really the biggest thing, I think. And I think you're bringing I would change the sort of lack of focus on design. And the last thing I'd change is, frankly, this, and I wrote about it this morning in a tweet, is this sort of like pre-presale, pre-pre-pre-pre-presale, like triple pre-pre-pre-pre-presale. And I know Meltem probably talked about it this morning, the shitcoin waterfall. It's disgusting. It's a terrible, terrible funding mechanism. I know we're moving away from it.

But, you know, a number of very prominent investors have benefited from it. And I just think it sends a bad signal. And I think some of those folks should stay quiet for a while and stop with their moralizing. Got it. And so out of all of this, you know, let's fast forward 10 years. You know, you've built an incredible company. A bunch of other people have continued to build what they're doing. What do you think is the outcome of all of this talent and capital that's flowing into

the space, right? Is it Bitcoin becomes a global reserve currency and nothing else? Is it Bitcoin plus everything else that's being built? like where do we end up yeah so 10 years i mean it's hard to pick the date right of course because it's going to base it you know it's it's like uh the fall of blockbuster or the fall of the beauty is when people listen to the podcast if they listen to it from a year from now 10 years is still 10 years away exactly there you go so i'll be right for you know at some point yeah so um you know i'm hopeful it's a very low probability that bitcoin becomes like just from a pure

probability like do i believe it like i ascribe a higher probability to it yep that bitcoin does become you know the global reserve currency and you know eats the u.s dollars dominance right what do you think the probability is right now not what you believe but just like the the kind of sober probability i'm gonna go you know below uh below like below five percent okay um but that's fair you know that's currency is like that's hey we're talking hundreds of trillions of dollars worth of value for for for bitcoin i may have actually is there even hundreds of trillions i may be off by an order of numbers but um but there's a lot of value to that um you know but but you know becoming a better gold like in my mind it's so obvious that it's a near

certainty yep that uh you know like if paul krugman and i saw each other we wouldn't even be able to talk because like we we literally would be from such a different grounding of ideas But do you think somebody like that actually believes what he's saying? I believe Noreal does not believe what he's saying and is a troll. I believe Paul Krugman does believe what he's saying and he's just old. Got it. And by old, I don't mean it in an ageist way. I mean it old of economic philosophy.

Got it. And what makes money and what he has seen throughout his life. Okay. So we put less than 5% chance that Bitcoin becomes a global reserve currency. Now Jack said it's going to happen in 10 years. Um, you know, Pierre Rochard will probably not allow me at any more of his Bitcoin maximalist dinners for saying less than 5%. Now the hopeful, you know, part of me says one in five chance. Yep. Um, and I think over not a 10 year horizon, but you know, a 20, 30 year horizon.

Okay. And then what outside of Bitcoin, what happens to all of this, you know, tens of billions of dollars that now have come into the space, you know, thousands of people. Yeah. The good news is it's not that much money, right? Like if you look at it, you know, outside of bitcoin i expect bitcoin dominance to actually increase through the remainder of the year literally as i was taking the subway up here i said you know chris berniski said what do you think is going to be one big thing that happens and a milestone to watch in the crypto industry this year i think bitcoin dominance going over 70 is something i'm going to keep an eye out for and i think very well might happen um because i think you're going to see people realize that

most of these uh protocols that have significant value are nowhere close to delivering anything of value yep and uh so that doesn't mean bitcoin will skyrocket i just think you're going to see i'm actually hopeful whether it happens this year or next year to see you know every coin not rise and fall you know the same percentage every day um i lost my train of thought though on your original question actually uh so what do you think happens to everything outside of bitcoin oh yeah outside of bitcoin so i think you know you're going to see a flight to quality so things like ethereum uh right now what is it 35 billion today market cap like maybe a little less you know that's not unreasonable for you know airbnb's 30 billion uh it's not unreasonable for the ambition

and the potential of that platform and the developer activity um it's certainly way over its skis i mean it you know but look when stripe was valued at nine billion dollars having been somebody who was competing with them i was like holy shit that's an overpayment and hey, I don't like Keith Rabois at all, but that guy was dead right about that company being a generational company. And I love the Collison. So the brothers who run the company are incredible entrepreneurs, great people, and geniuses. And so, you know, sometimes things surprise you to the upside that you never could see because you were thinking of the business model in a different way. And I just couldn't imagine Stripe turning a simple few lines of code into something that

had the margins that it has just based on my knowledge of braintree so when you look at ethereum you see you know hey it you know crashes when one uh specific dap you know gets a ton of usage on a given day it's easy to say hey they're not gonna you know there's nothing there right and by the way like my probability bet i would say there's more likelihood that there's not than there is but you know it's very reasonable to think that the value of ethereum you know increases significantly so my point isn't about ethereum my point is i expect a flight to quality yeah and i really uh i don't know if i expect it or i hope for it you know i hope neo i hope uh i own i hope tron you know just absolutely evaporate absolutely and then what um what do you think is the most

important company in crypto today yeah so i've long thought this and again this will rile you You know, most of my closest crypto folks of the philosophy. I think the most important company in crypto, in the history of crypto, is Coinbase. Why? Without a doubt. They are the first folks who made crypto, who attracted investors and got the backing of folks who the financial industry took seriously. So, Unisquare Ventures and Andreessen Horowitz. uh they are the first company that made it something where people like me who were

intellectually interested in it felt comfortable and safe um putting money you know into this this token that was vapor um effectively at the time 2013 you know i don't believe it's vapor i've done a lot more studying today uh you know my brother invested you know i could convince other folks to do so uh and they stuck with it and they grew and they've evolved right i don't agree necessarily with everything that their ceo says um and uh you know one of their founders has moved on but the company the entity itself folks like dan romero who have been there since the beginning and amazing people dance fantastic stay strong take criticism and have really brought this to the masses and i am so sympathetic to people who bring important technology the masses i think

engineers and and sort of like really extreme religious minded people don't believe and understand how important that is so coinbase is super easy to hate and is against much of the sort of libertarian philosophy of why some people support bitcoin for example um but we wouldn't be here without them it's a company that almost went out of business a couple years ago uh and is now a behemoth and, uh, you know, I'm very optimistic about their future. I'm hopeful for their future and rooting for them because I think they've done so much for the industry. I think they're the single most important company, uh, in the industry. That's awesome. Um, all right. Last question for you is what is, what do you do on a daily or weekly basis that you think has formed

much of your opinion in this space? So the number one thing that forms, uh, my opinions that, that helps me to learn and that directs and guides me uh to where i should be paying attention and i'm very fortunate for this uh is uh telegram and and i'm in you know three telegram groups that i value you know very very highly i can't name them it's like yeah once you name them you're out um but it's probably this is where like a real journalist will get you to name them but uh i'll I wouldn't, but because you're in, I think all of them. Um, so, you know, it, you can't pay attention to everything, uh, about them. Right. I mean, it's just, it's overload, but if you pick and choose, you're going to happen upon. And certainly when I was learning and I had more

time, paternity leave, I was fortunate enough. Um, but, but starting my day with telegram, moving some of those thoughts to Twitter and then engaging has been the most important thing my learning and then sort of broadcasting my ideas on twitter and sharing has been what's helped me build my company and our company a block so the two folks who uh are already you know have accepted dot online you know mark rodowski's my co-founder and editor-in-chief uh and i can't name the person who's joining us our head of research in a week and a half uh both quote-unquote met me on twitter right amazing uh and i'm speaking to two more people over the next couple of days

and I've had multiple conversations with them and I'm going to close them. I hope they're listening. I hope this gets published really soon. Are also folks that, you know, I met through Twitter and stuff. Twitter is the new LinkedIn. It is.

LinkedIn is just a total shit show. It's a wonderful, wonderful broadcast medium. It's a terrible, terrible business connection medium. Amazing, amazing. All right, man. Thank you so much for doing this. This is awesome. I think you've got a very unique perspective on the world

and all the best of luck to you and we'll talk soon. Yeah, I mean, literally right back at you. I appreciate the opportunity and a lot of fun, buddy. All right, sounds good. Sorry, let's, I kind of actually like what Melton did at the end

or she got to ask you one. Oh, man. I actually think that's going to be a little stupid. Let's make that a thing. Okay, I got one. After every podcast, let's have them ask you one. All right, ready?

All right, so. And then at the end, we're going to have to edit this in, so just thank him again for coming on. Yep, okay, cool. Cool. All right. So we've started allowing people to ask me one question when they come on, which scares the hell out of me. But yeah, what one question do you have for me? Okay. What is one important thing that you have strongly asserted over the past six months about the tokenization of securities that you believed at the time and that you strongly disagree with or disagree with today? so um i think that there are a number of things that

i strongly believed and i can't say that i strongly disagree with them but i am much less excited about and i think how i arrive at being less excited about or thinking that they are less important probably a mixture of the two and that makes sense like i am you know me i'm so euphoric and i say things and get excited and i tone it down yeah well i think part of it is education especially on the technical side of like you know let's go deeper into the tech and understand exactly how this is going to work uh and then two is um having more data points from a timeline perspective right so just watching some of this play out being in market trying you know exactly so i think there's two things one is um the idea that tokenization

is going to occur because of the technology i'm probably less excited about so the idea that um you know instantaneous settlement uh 24-hour trading fractional ownership like i think these are all uh features that are important and interesting but i don't think that's actually why people are going to use the tokenized securities or interact with them uh i think now i'm a much bigger believer that it's a user behavior where people's interface into the digital world it's going to be a digital wallet in order for them to have that digital wallet act like a bank and a brokerage account they can hold stocks bonds currencies commodities yep and in order for anybody with an asset to allow that person to hold those assets they have to digitize it right

so it's more of the digital aspect in the in the support of a digital wallet than it is all the transactions etc so i think that's one thing i've kind of walked back into a different um you know kind of thesis around yeah no i love that like it actually i remember some of the rebuttals to some of things you were saying four or five months ago yep and like that seems eminently reasonable as a rebuttal because we all know user experience if it's in the place where you do the other things then you know hey absolutely do it if you can make it as easy as the other things are for sure and valuable as the other thing yeah and then i think the second thing that i would argue on tokenized security specifically uh is the idea that um people are going to want to buy this for

liquidity, et cetera. I think that I'm very much in the camp of, at the end of the day, if you're going to buy tokenized equity, you're going to evaluate it as equity. If you're going to buy tokenized real estate, you're going to evaluate it as real estate, right? It's still, I think, you know, if the asset is good, people will want it and therefore it will get a premium in price. If the asset is bad and it, you know, is not going to appreciate value, et cetera, then people are not going to want it. It's going to decrease in price. And so this idea that um, if I have capital that I want to invest, I already understand the asset classes, right? Stocks, bonds, commodities, the technology in between me and that asset is probably less

important to me right now. Tokenization for a whole host of reasons, I think is actually going to be the winner, right? In terms of what, of what people are going to use. But I don't think the mass consumer mass investor is as interested in, Oh, I bought the tokenized version of the equity versus just access ease transparency yeah they just want they just want to buy the equity right and so the the the egregious example is nobody runs around and says i bought electronic shares of apple settled in dtcc yeah instead they just say i bought shares of apple same thing whether it's tokenized so the key thing uh and what's your biggest do i get two questions i'm going for it all right go ahead what's your biggest worry or do you worry that we you know

maybe end up in an analogous situation to, you know, the Blythe Masters-induced, you know, CDO situation of 2008, 2009. So I think that tokenization is not going to be the cause. I think that people will do it, right? But I also think that's going to happen with Bitcoin and it happens with a lot of assets. We can already see it, right? With, you know, every kind of future and, you know, a mixture of derivatives and you name it. Ultimately, here's...

Yeah, thought of and spun up over time. I haven't fully formulated this yet, but if you think about engineers, really good engineers that understand this kind of decentralized, distributed world, they have a superpower that Wall Street has never had available to them. So when you take those people who have a superpower and allow them to play in a financial system that they probably don't have a deep understanding or experience in, there's a lot of good that comes out of it because they don't know which rules are not supposed to break, right? The unwritten rules kind of disappear. But that also means they haven't learned the lesson from past bubbles and problems. And so I think what we're going to see is all of the elements of Wall Street are going to get exasperated, right? And so the good and the bad. And so when that happens, you bring these people with the superpower into that financial system, just buckle up, right? Because you're gonna get

both up and down. And I guess my hope would be that because we have these sort of religious people, you know, who are feeling like, hey, this is our ecosystem, that there will be, you know, a level of checks and balances and transparency. But it's gonna be fun to watch. We'll see how it off. Absolutely. That is the, uh, that is the hope. So look, man, I appreciate you coming on obviously, uh, best of luck with what you're doing. I think that, uh, that you're definitely off to the races here and, uh, we'll talk soon. Likewise. Thank you so much, buddy. Hey everyone, pop here. If you liked this episode of off the chain and want to help us take crypto to the top of the Apple, Spotify, and other podcast charts, please do us a favor and rate

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