The Pomp Podcast - Steven Nerayoff, Chairman of ADAPtive Holdings: Crypto’s Trajectory and Stories from the Past

Episode Date: March 18, 2019

Steven Nerayoff @stevennerayoff is the Chairman of ADAPtive Holdings, parent company of CasperLabs. In this conversation, Steven and Anthony Pompliano discuss the past, present, and future of Crypto, the original founding story and architecture of Ethereum and its ICO, how Casper plans to scale, and why Steven is so bullish on tokenized securities and how they differ from the ICO mania of 2017. ----- Join the Off the Chain newsletter. Pomp's daily email analyzes the crypto market for institutional investors. Simply, it’s the best crypto newsletter delivered to your inbox every morning. No frills. No bullsh*t. Just everything you need to know in a 3-minute read. https://offthechain.substack.com/ ----- ZenLedger simplifies crypto taxes for investors and CPAs. We provide the best software for importing crypto transactions, calculating gains and income, and auto-completing tax forms like 8949, Schedule D and FinCEN. If you had losses in your crypto investments, ZenLedger can help you save up to $3,000 on your income taxes, with our tax loss harvesting tool. ZenLedger is also a TurboTax partner and has the best support for EOS owners. Finally, a simple tax tool that saves you a ton of time and headache!Visit Zenledger.io/OffTheChain to get your taxes done with ease, and as an Off the Chain listener, save 20% of your 2018 tax forms! ----- Totle is a rare blockchain investment opportunity, one that offers a live product, active customers, an established revenue model. Totle solves three significant problems with blockchain asset exchange: 1) Security 2) Complexity and 3) Pricing. Over $4 trillion of blockchain assets were exchanged in 2018 and growth is forecast for at least the next 10 years. Totle’s sophisticated platform powers the blockchain economy with safe, simple decentralized asset exchanges at the best price for traders, wallets, businesses and other financial apps. Totle’s B2C Web App and B2B API are live and serving customers today. Visit totle.com/pomp for more info. ----- BlockFi allows you to keep your crypto, put it up as collateral, and receive a USD loan funded directly to your bank account. They do loans ranging from $2,000 to $10,000,000, and they're perfect for helping you reach your financial goals of all sizes. Visit BlockFi.com/Pomp to learn more about putting your crypto to work without having to sell it. ----- If you enjoyed this conversation, share it with your colleagues & friends, rate, review, and subscribe. This podcast is presented by BlockWorks Group. For exclusive content and events that provide insights into the crypto and blockchain space, visit them at: https://www.blockworksgroup.io

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. Stephen Neriop is the chairman of Adaptive Holdings. In this conversation, we talk about the past, present, and future of crypto. He has some wild stories and great anecdotes to share with us. I really enjoyed this conversation, and I hope you do as well. All right, guys, before we continue with this episode, a quick word from our sponsor, Zenledger. For all you accountants and crypto investors out there

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opinion. This podcast is for informational purposes only. Bang, bang. All right, guys, I'm here with Steven. Thank you so much for coming on, sir. Hey, Pomp. I'm really excited about being here. Awesome. All right. You have a super interesting background pre all of your Ethereum work and up till today. Let's maybe go through some of the things you did before getting involved with Ethereum. So I've always been in tech. I was out in Silicon Valley for many years, but then I was also an attorney and a venture capitalist. So kind of mixing all those things together, I've started a lot of tech companies and then ended up in blockchain back about 2011 got it and so uh what initially drew you into crypto blockchain uh bitcoin etc back in

the in the early days when frankly most of the people thought that this was all nonsense so like i i think a bitcoin like it's it's one of those like unique items it's like um the road charts um test those ink spot tests like the that the psychiatrists have because like everybody looks at bitcoin and see something different in it and i like a lot of people in the space with libertarian background believed that at some point this financial system was going to collapse. And when somebody showed me the Bitcoin white paper and explained it to me, I was like in shock because what I saw was, for me, it was the new monetary system. And the reason I was in shock was that I expected that to be like a revolution or something like bloodshed or something like a

really bad situation, hyperinflation. I did not expect it, even though I was in tech, for a technology to be ushering the new monetary system. And now, you know, these years, seven years later, I'm ever more convinced that Bitcoin is the new monetary system. It's a digitally native currency. And I think a lot of people look at it and they compare it to kind of non-digitally native assets. But I talk all the time about the digital world needs a digitally native asset. Right. And so I think that's what we're seeing. All right. So you get into Bitcoin blockchain. Right. You kind of like, hey, look, this thing could actually change the world uh the first big thing that you did was uh with vitalik and ethereum so before we get into

the ethereum work maybe let's talk about how you met vitalik uh you guys were living together at one point you know we weren't living together but he would uh when he would come to new york um kind of like during mostly during 2014 uh he stayed with me often and it was just a real pleasure for me and a treat just to get to know him at that level. How did you guys originally meet? So I got introduced to the team in early, right around early 2014. And they were looking to do a crowd sale, a very ambitious crowd sale. And what my job was to figure out how can you do a crowd sale and it not be a security. And ultimately, we were looking to get a law firm that would be willing to stand behind that. But there needed to be a lot of innovation to make

that happen. Absolutely. And so you guys architected the first ICO in the sense of what I think a lot of people understand it today. Maybe talk us through what the goals of what you were trying to accomplish. And then we can talk through some of the trade-offs that you guys made and ultimately how you ended up on the structure you ended up on. Yeah. So what we were trying to accomplish was raise money in a crowd sale and include the United States because we had a very gallantarian view that everybody should be included. It was something important to a lot of people and for it not to be deemed a security.

And so how do you accomplish that? That just had never happened before. There were three crowd sales earlier. None of them had really structured in any particular way. And so we were looking like, can we innovate somehow legally using this technology so when it's viewed, it would not be a security? And kind of like it's one of those Eureka moments. The way it actually happened was almost by accident. It was one evening.

I was sitting. We were having drinks, and Vitalik was there. and I was we were still like you know at least me I was still trying to get my arms around like gas and how that worked and you know uh and so I said to him I said wait don't you need this stuff to send this stuff meaning you know you need it uh you know to send it through the system and he said yeah why and I said well so by definition every purchaser or contributor of ether it will be a user of the system because even if they have to send it even if they want to sell it they have to send it so by definition and we started like i started going down that train of thought and i

was it was really lucky because i had the former chairman of the sec uh as a sounding board and frankly i gotta admit i thought he was gonna like laugh at me when i said and i so i called him and i said look i have this idea i said what if we say that this is a good because this is gas like that you put in your car right and it helps go through this network and everybody that uses it will have to everybody that's purchasing will have to use it on the network so then it's more akin to a good than than a security and it's a future sale of a good uh he thought i mean his words were you know thought it was brilliant and i was kind of like a little shocked by that and then we called the law firm we gave the ideas but that was that was rough we still had a lot of refinement to do

from that point. But that's the genesis of the ICO as we know it. Absolutely. And when you guys were doing this, how did you structure it, right? So where are the legal entities set up? How did you think about who you could offer to, who you couldn't? Were you actually successful in being able to offer to everybody? Just talk through kind of the legal structure and then the actual offering process itself. Yeah. So originally, Ethereum was structured as a for-profit plus a foundation. Towards like in the 11th hour before we actually did the ICO, the for-profit was eliminated and it was just the foundation. But the foundation is a really fascinating story because a number of folks, but I would say like the leading guy there is Charles Hoskinson,

went out to Switzerland and spoke to this very old, slow-moving, historical banking society. He somehow got into some really influential folks there and explained to them about Bitcoin. He had also did the Udemy course in Bitcoin, so he's a natural educator and just, frankly, brilliant guy. And he explained to them that this is the new banking system. This could be the new monetary system. And they got it. And in about a couple of months, they were able to enact laws in the canton of Zug. And that is the genesis of Crypto Valley. So the foundation then was stationed as a Swiss foundation. And now, obviously, there's a ton of them over there. Absolutely. And so when you're doing this, how much of the dependence was on Switzerland specifically versus could you have done this in other jurisdictions?

Do you think that Switzerland was pretty key in being able to do this? Yeah. Literally, this was created. It just didn't exist anywhere. Through Charles' work and some other folks, they invented a jurisdictional framework to allow what we're calling a blockchain company today to exist as a foundation under those rules, under these new and active rules. Since then, even after that, the irony is that the opinion letter that we got based on our structure, when other jurisdictions like Singapore and a bunch of these other jurisdictions wanted to also kind of get into the game, what they were all asking for was show us another jurisdiction other than Switzerland that's done this. And they didn't have anything really, and I think it even happened for Switzerland, and they actually used our legal opinion for that. Got it. And so as you're doing this, how much of Vitalik's time and kind of the developers involved in the project are focused on the legal structure, the crowd sale, et cetera, versus you and kind of the non-developer crowd?

So it was the most brilliant group of guys I'd ever been around. I was just being a fly on that wall around those guys. And if you see, each one has gone on to some amazing second act from there. But they were very well-rounded. So the folks, like Vitalik in particular, was very extremely well-versed in the legal consequences. He was very thoughtful about how he made the decisions. And frankly, the only reason I got involved in it was because I saw this brilliant kid trying to improve the world. And I had been reading him in Bitcoin magazine.

And so when he explained to me what he was trying to do, it just captured me. I mean, it captured a lot of people. For sure. And so kind of give yourself a report card in terms of the crowd sale. How did it go? Was the team happy? Did they want to accomplish more? Where did you guys end up with that?

So we're going to take over the world, and we're going to have this amazing crowd sale. But you say that, and then when it actually happens, you're kind of in shock. So prior to this, the largest crowd sale was $3.5 million, I believe. And we raised $18 million. So we did almost a 5x, about a 5x of the largest crowd sale in history. That's shocking. We're not even talking about just crypto. This is like any kind of crowd sale previously.

The response, the groundswell of support, the dozens and dozens of meetups around the world, like this thing took off like a rocket. And nobody was really prepared for that. Why do you think that happened? You know what? It was the concept of the intelligence in the blockchain of a Turing complete system was so compelling. and you know i think vitalik threw it out there and and thought people would capture it but like the way people like embraced it was just shocking because you know if you start thinking about the way that this can be used and part of the problem is that people are still thinking you know like

web 2.0 and how do we just put that on the blockchain but the ones that had the vision could see like this was a whole new world this was web 3.0 and that that just like was inspiring Absolutely. And so one interesting thing that you guys did was you didn't allow the token to get listed until main net. So maybe talk through why you guys did that. Would you do that again, et cetera? Yeah, so we were not selling this as an investment. We were super clear about that.

We told people this is not an investment. Do not invest in this. You are contributing to this, and you're purchasing a future product that will be delivered to you at a future date. So, we were very, very, very clear about that. And in line with being that every user would be purchasing Ether, would be a user of the system, what we did was we put the Ether into an address, but we didn't allow people to have access to that address until Mainnet went live, which was, I think, about nine months later. And at that point, literally every purchaser of the good was on the network. Got it. And so what was your take, let's say, over the last two years, right? Ether went from, I don't know, $8, $10 to the first kind of big jump was to $30.

Then it jumped to almost $100. Then it ran up to like $300. And it eventually went all the way up to $1,400 and kind of has come all the way back down to let's call it $100 or so on any given day today in the beginning of 2019. like what drives that right i mean you you were there from the beginning right you were part of this uh this crowd sale and kind of structuring it and really had a good insight into uh what the intentions uh to raise the capital to go build this system were um good that this all happened bad this all happened kind of what's your take i guess on just like the price volatility really Look, I think there's a lot of damage that happens during booms, but they're kind of necessary to break in new markets.

I was in Silicon Valley in 2000, and I was there prior to the boom, as all the internet companies were booming, and then I stayed afterwards. And I saw when I called the visitors went home, and it was just like us left. And that's kind of like what's in blockchain right now. You know, somebody said to me, when's the capitulation? And I said, you're not getting it. Like anybody who's still in it after a 90% drop, they're going to zero or they're going back up. Like that's it. They're believers.

And I think that's where we're at. You know, the drop of 90%, I don't know. Like, yeah, it was also sold at, you know, it's up. It's also at this point, it's still one of the greatest investments in history. You know, at $130, $140. Like it's just mind boggling. Right. And so these people, you know, if you kind of graph it out, but it also, the other thing

that was really cool about it is, you know, there was a lot of, I was a vocal opponent of the abuses that were happening. I do believe a lot of the ICOs were securities. I don't believe they did what we intended to do. I don't think they took the care, a lot of them. Some of them did. But what it did enable is this like explosion, this interest, this worldwide, like attention on this space and what you are seeing you know crypto aside for a second just the blockchain

technology you're seeing that now seeping into all kinds of industries and we're like we run an accelerator and in there i'm shocked because like we're for the first time we're seeing domain experts like in health care you know and all these other areas that didn't know anything about blockchain a couple years ago but somebody explained to them you know here's a decentralized model. And here's, you know, the way Web 3.0 can work. And they're like, wow, I can change my model, my business that I've been in for 20 years by using, you know, blockchain technology. And so let's talk about kind of what Ethereum really empowered, right? Was this whole boom of ICOs and kind of crowd sales. And, you know, there's other things that Ethereum did that we

can get into. But that was an early, I think, interaction with blockchain technology was people participating in these as investors or users. What's your take on how this ends up? So it already happened. We have these big price drawdowns. Do you think people continue to use the ICO model on Ethereum moving forward? Do you think there's other things that come forward that people find to be more valuable kind of what is ethereum's place as a fundraising platform in the future i mean the that was almost a happenstance of history right that wasn't like anybody planned that this the killer app first one for ethereum was going to be the ico that ethereum that we created ethereum right i mean that that wasn't the intention right i mean it's you know it's

really more i like to call it to like most people it's an operating system right and so it's like It's the new windows, right, of the new world. So I think it's unfortunate that it got associated with some of the abuses, right? But I think when history is done and in the next few years, what you're going to start seeing is, yeah, I believe this market is coming back. It will continue to be a fundraising platform. I believe you're starting to see ICOs, or they may be calling them now initial exchange offerings and all other fancy names, but they're basically the same thing. And it won't be just on Ethereum. There's more players in the game now, so it'll be on these other players.

But longer term, what really was set in motion here was something, in my opinion, that's very different than Bitcoin. It was a different play on blockchain and dApp development and smart contracts. And that's a whole other world. And I'm not sure which one's the bigger pie. It's an argument. But that's what it said. And whether or not – I don't actually even think it matters whether or not Ethereum is the ultimate winner. It was the one – when history is told that it was the one and Vitalik is the person who set this in motion.

The rest of it is tech. Yeah. I think it's Nolan who runs research at Coindesk podcast. he said look the erc20 standard shook the world right that you know ethereum shook the world in the sense of it was the first time people saw whoa look at what this something like this can do um and it caught a lot of people's attention and uh and then and anything kind of moving forward from here has ethereum the crowd sale the erc20 standard etc to thank uh and it remains to be seen you know will that remain the dominant platform the dominant standard or will there be

you know 10 others etc so i think look you hit on a really important point that erc20 creation was absolutely brilliant right and it allowed for this proliferation the fact that it was fundraising i mean that's that's secondary really i mean just it allowed for a standard so that you could have you know wallets and exchanges and everybody could be on this standard it also created a lot of network effects for ethereum so it was it was very positive for that At the same time, nothing has scaled yet, right? So the game is still super early. Ethereum has plans in order to deal with a multi-year process that maybe it works, maybe it doesn't, I don't know.

There's certainly challenges, but there's certainly opportunities there for them. And it would be wonderful for the ecosystem because it has such an amazing community for them to succeed. But at the same time, now you have, I would say there's about 10 protocols that are sitting right on its heels. And whether or not they're cross-chain protocols or they're proof-of-stake protocols or what have you, they're all vying to be that main chain. I actually don't personally believe that any of them have the real chance because I believe it has to be fully decentralized to be the main chain. And there's a reason why Ethereum and Bitcoin are the two most popular. They're also the two that are fully decentralized. The scalability is the other issue.

And so there's a lot of people working. We're working on one, too. I was going to ask you, what's your take on the scalability issues with Ethereum? you so you know we're i i think um what what we were captured with was um the casper uh protocols that vlad's and fear um invented uh we were enamored in particular with cbc casper that was his preferred okay before before we get into this it's hard to cut you off but uh let's start with uh who we is right so let's talk about uh alchemist and maybe tell us a little bit about what you guys are doing there and then we can get into casper labs and kind of what's going on

Sure, sure. So, Alchemist is an investment advisory and blockchain building company. It was started a while ago. We've been involved in dozens of blockchain projects. What we do at Core is we come in, we help the team, the entrepreneur, build the business. And we look at them as, I don't even really like the word project, but it's just in our vernacular. But we look at them as businesses. So we help build those. And like the partnership we now have with Techstars opening the first really, we think gold standard and accelerators here in New York City and the inaugural class is happening right now is further of what we like to do in terms of helping blockchain either protocols or dApps and potentially other businesses as well proliferate. Got it. And as you guys have been doing this, any notable projects that you want to talk about other than Casper Labs first and then we get to Casper? So it's really interesting how my particular career took these really weird twists and turns, as I'm sure a lot of people did in blockchain. So it was in 2017, I think it was somewhere in the middle of 2017, and I got a call from Trevor Carverco, who's a good friend of mine and now is known as the founder of Polymath.

And he said, I got it. I said, what? He said, the next monster is the biggest monster of all industries. And I said, what are you talking about? And I remember the word that he used, but he was talking about security tokens. effectively. And I had been involved in a couple of projects that were genetically linked to a security token, ended up becoming. And so, I was already there. And because of my structuring at Ethereum and thinking so much about security, non-security, and token construction,

along with actually the construction of the decentralized model, I knew that this was big. And he showed me a chart that was totally out of whack in terms of what tokenized assets are going to be. And since then, we've run a number on it, and it's in the quadrillions. I literally had to go to Wikipedia and look up, make sure what was a quadrillion. It's like $1,000 trillion. And given the world's GDP is less than $100 trillion, that's a big number. So the project that I ended up being really fortunate was the seminal security token was T0. So we were the advisors.

I was there, just got fortunate again because I was working with Patrick, who's an absolute legend. Call him Bitcoin Messiah. And that allowed us, it was really the seminal security token deal for the seminal security token exchange. So it was really cool to learn not only about, you know, how does the security tokens, you know, it's not learning, like really we were creating this, right, but within some regulatory framework. And the trick here is what you're creating, you're looking out like here's like a, you know, let's say there's a cup and that cup is the current regulatory framework. And you're thinking, all right, in five years from now, you know, four feet away, they're going to put another cup down and that's going to be the regulatory framework. You've got to guess where that's going to be. I mean, where the regulators are going to be in the politics involved and, you know, how token construction is going to develop.

And so it's pretty challenging. Right. But it was also at the same time, super exciting. Like if you're not interested in that kind of stuff, you shouldn't be in this space. Well, and you have unique experience in that you were there for Ethereum, you know, at the time, the most successful crowd, non-security crowd sale. And then with TZERO's crowd sale as a security, you kind of got to see both sides of the coin, if you will. Right. No pun intended. Yeah, I mean, it was like, yeah, I mean, like, I was lucky to be, you know, and anybody says differently. In theory, I'm like, I was just lucky to be the fly on the wall over there and have my little part of it. But like, you know, there was a lot of luck and a lot of smart people involved in that. And then the T0 component is setting off.

I don't know. It's like it's crazy because like we're talking about like Bitcoin monetary system, trillions and trillions. And then we're talking about a full, touring, complete operating system kind of thing. And it's trillions and trillions and dApps or whatever in this Web 3.0. And then you get to T0 and security token and tokenization of assets and crypto assets. And then you're talking about potentially quadrillions and quadrillions. We've never had a situation where the internet boom was the closest thing. And that turned out to be trillions, but over a long period of time.

We didn't have multiple markets. And at the end of the day, people ask me, because it's confusing to people. These are all really separate things. And I say to them, look, they just have a genetic connection. I mean, there's this genetic connection to this guy, Satoshi, or group of people, and the underlying technology of Bitcoin. But they're all very different use cases, and they're all going to play out very differently. What's your take on where the tokenized securities and kind of the regulated crowd sales are going? Is this going to be kind of the go-to way for people to get capital, right, to access capital markets and also to get liquidity once they're a larger company?

Do you think that this kind of bifurcates, right? So, hey, early-stage startups will use it as a crowd sale mechanism to raise money from potential users of their network, and they'll be off to the races. But companies will still go public through the traditional IPO process, vice versa. What's kind of your take? No, I think this changes everything. As much as Web 3.0, because Ethereum changed everything, like what T0, and I say T0 because Patrick really was way ahead of the curve. He started this in like 2014, 2015 rather. That's Wall Street 2.0, right?

And that game is totally different, right? So you're going to see this flow of capital that, you know, just like Bitcoin, we still the tokenomics, you know, the token ways that it flows more evenly. You've got global systems now. I envision a world where in the not too distant future, every stock will delist from a traditional equity exchange like NASDAQ or New York Stock Exchange. And they will relist on a security token exchange. Maybe those guys and both of those players have, you know, efforts in these areas. But I don't think traditional securities will exist. They don't make sense, right, for settlement purposes, for flow of capital, for cost.

I mean, like the list just goes on and on and on. The other thing is I envision a world where the access to capital has just dropped tremendously, right? So, you know, we could see a world where what we think of the future public company could be 500,000 or a million public companies. And that could be anywhere from, you know, the coffee stand in a coffee shop and you're putting $50 in there because you go there and you know that that's a really good business. All the way to, well, you know, the Googles and Microsofts of the world, right? So that changes everything. And then the tokenization of assets is like super cool. I believe every digital asset will become a cryptographic asset and will become tokenized.

And the ability of what you can do there, you know, a lot of people focus on real estate and that's super cool and it's a big number, but there's a ton of other stuff that right now just can't even trade. I mean, like I'm looking at something in the IP area and like for patents and things, and that opens up a whole new world. I mean, the tokenized data was involved in a project called Artblocks, which is a fascinating project in the art world that's run by some really esteemed people. And you can see already that something like that will absolutely, completely disrupt the

entire art scene. So you're seeing these industry, which security tokens I think will be doing from a financial perspective, is going to actually disrupt industry after industry after industry. The same way I think a dApp system like Ethereum is also going to be disrupting industry effort, the industry. And they kind of play together that way. So the industry is getting disrupted from a financial perspective, but also from an operational perspective. The old models are not going to work in the new world. It's fascinating to me. I recently heard the term smart security, or it's a smart contract, smart security. And I jokingly said, who doesn't

like a smart anything? Everyone wants to be associated with smart whatever. And so the idea that you can program a security to do all sorts of things in the digital world that might not be possible or may just be difficult to do in the more kind of electronic world i think makes a lot of sense uh let's switch gears casper labs uh ethereum's got scaling issues um you know i'll say they're challenges right and so it doesn't mean that uh they won't be figured out there's tons of smart people and lots of brain power working to um solve them figure them out no different than bitcoin scaling challenges etc right so kind of every large chain has these um but you guys are heavily involved and big fans of casper labs and what they're doing there so maybe just talk about

what it is, why you guys are excited. Yeah, so I'm a co-founder of a company and chairman of a company called Adaptive Holdings. And we are funding an entity called Casper Labs. And Casper Labs is going to put out the first iteration of Vlad Samfir's CBC Casper. We believe that that is the single most advanced blockchain ever created. And really importantly, it's the only blockchain at this point in time that we, in our belief, that you can look at and say it will be scalable and decentralized. Every other blockchain that has created scalability has done it at the compromise of decentralization. And they may have use cases for those, right? And they may be fine for a certain – but when you're talking about the main public kind of chains that everybody's going to have government institutions going on, you're going to have enterprises, individuals, everything, people are not going to trust that.

Like if you said to somebody, the internet, somebody could like reverse your words, change your words, you probably wouldn't post your blog on the internet, right? Nobody would trust it, but it's decentralized. And this is worse because there's a value on top of that. And so let's talk through, you know, at a high level for the non-technical audience, what are the main differences between the Casper approach versus how Ethereum and Bitcoin are thinking of scaling their blockchains? So this is the Casper protocol. First of all, I should just say, like, all these communities should be working together. Like, you know, they're all going to – we all help each other grow. The Casper approach that Vlad proposed that we're implementing is native.

It's a native chain built from the ground up. It is not a fork of any other chain. And it is designed from the beginning to be decentralized and scalable. Ethereum right now, I think Ethereum really is a victim. It's like it's a victim of its own success. When it was built, you know, and it's like shocking. And Bitcoin fell in half. So people don't realize that that entire protocol was built for less than $10 million.

But nobody anticipated the growth of that thing going as fast as it was. So it wasn't built to scale. And now they're trying to get it. And it's a really hard thing that they're trying to do. So what their methodology is kind of like it's more of an incremental approach. And that makes a lot of sense because you've got people on the bridge. right and you can't just blow it up um and so you you have to so this you know now they're introducing a little bit of proof of stake but mostly proof of work and then you know so there's

a timetable and then there's some holes in the timetable that they're still trying to figure out but there's a lot of really smart people behind that um and i think bitcoin's taking a very different approach bitcoin's like we're cool with our scalability as it is we're going to do second layer stuff and i kind of agree actually with the bitcoin model for bitcoin's use case because to me that's a monetary system and so i kind of look at like the base layer layer one as more like the central banks right you know the short the bankers right that's that's long the bankers your long layer one of bitcoin if you're long bitcoin you know as being short the bankers and that's okay because like you know central banks move money really really really

slowly i mean they ship gold it's like nuts right and so that's fine but now you know i i just tweeted yesterday that the lightning network just surpassed three million dollars that doesn't seem like a lot but like when you look at the new chart it's like from zero to three million under a year that's right i mean it's exactly so it's like this thing is has every hockey stick you know written all over it this thing is going to go vertical so i believe you know i still think it's going to take a long time for bitcoin to become a monetary because people don't want to spend it because they're still expecting it to go into the hundreds of thousands of dollars. But over time, you know, in the next 10, 15 years, it'll go from a store value into a

monetary system. And all of these layer two solutions, you know, will, you know, lightning is one, you know, but there'll be other ones, you know, and we have that in the real world. Like there's Visa that sits on top of the banking system that sits on top of the central banks. And then there's PayPal and Venmo that sits on top of that. And so I think that'll still go along that way. The thing that we're so excited about is we're also touring complete.

We are a – I mean, when I say we, I'm talking about the Casper Labs efforts to launch CBC Casper. And that's Vlad Samfir's – really, I would say his invention. I just go as far, by the way, the thing that captured me is like he kind of stands on the shoulder of giants. Because my view is like you had Satoshi with that massive invention. And then you had Vitalik with, to me, an equally massive invention. And then I think, in my opinion, what Vlad Zemfier has created is as equal to those other ones. That's a pretty big statement. Yeah, it is a big statement.

But if you look at history, that's actually the way history views things. And if you look at, you know, if you ask most people who invented the car, like 9 out of 10 people are going to say Ford. It was Ben's who invented the car. Ford figured out how to scale the car by creating the assembly line, right? So you can, you know, Yahoo and all these other search engines were Yahoo's first, right? They were manually doing it. Google figured out if you use algorithms, we can scale this thing. So when you think of search, you think of Google.

Now, this is just again and again and again, you know, in every single industry, the scalability. I don't know. I think it's a tough argument for somebody to say the invention of the initial item is any more important than, and this is the important thing, it's the invention of scalability. So you saw like Walmart invented real-time inventory in order to scale its stores the way it did. And they didn't understand it was a lean, mean technology company back there. So that's its own invention. That's why I say I think it's that. And in your opinion, when you get the Vitalik's, the Vlad's, Satoshi, he, him, her, they, when you get this type of intellectual capital, to me, it feels like they will come up with things that we can't even imagine. Right. And that's probably the most exciting part to me of crypto and blockchain is there's so many complex problems that really, really smart people are working on. they're not just going to solve those problems they're actually going to solve the problems in

a way that uh empowers things like the ico boom on ethereum right it's not like vitalik and crew said hey let's go build a you know crowdfunding platform right right they said hey let's go build this uh network and it happens to be used for a whole host of things one of them being the ico boom right is is that kind of your take as well or do you think that um there's going to be more intentionality now that kind of there's you know one two three kind of big aha or breakthroughs that have happened and now it's really time for entrepreneurs to focus on uh the more intentional applications of those technologies no i think it's a former absolutely it's a former right we haven't seen anything i think it was like in the 1800s with the head of like the patent office

said every invention that's ever going to be invented invented has been invented right like i mean that's like what they i mean moment in time like what if people are nuts right like they don't have perspective of history, and they don't understand that actually our rate of invention is increasing exponentially. And when you look at a disruptive space like this, and whenever I, like we're in crypto winter right now, and whenever I get down, and I'm as a believer as much as anybody, whenever I get down, I go to exactly what you just said. I think are all these, not smart, absolutely ridiculously brilliant people, are they all wrong? Like they're all here for the wrong reason and and if you think about like you know bitcoin where you have to have so many

different disciplines to kind of understand it you know and it like this is it's shocking how many and it's drawing these people from both like inspirational and like a pure just mensa off the chart uh you know you're you're mentioning a couple people like satoshi is had to be in that caliber uh i haven't met everybody in the world but like i can't imagine there's five people smarter in this world literally than Vitalik I mean it's just

he's brilliant and then and Vlad too I mean it's like you're seeing these people all congregating in this little area and so what I think

you're going to see is you're going to see invention after invention I don't even I think we're like in the bottom of the first inning

like I think we're just an embryo it's like the game hasn't even really started much and so you're going to start seeing more inventions and so

it's not so much like finding a solution to a problem it's it's more inventing new ways of being and and and and ultimately i think where a lot of people's hearts are right in these brilliant minds is that they're trying to improve society right and that's that's their driving force yeah i love it um before i finish up i always ask rapid fire set of questions uh what do you think is the most important company outside of um alchemist uh well i'm gonna pick casper labs

outside of casper uh outside of casper so outside of casper what uh what would you say is the most important company so i think right now it's it's binance binance yeah yeah because um you here you have for the first time you've got a guy in cz who to me is just like he's brilliant and clever and all kinds of different ways. But you have somebody who finally has network effect and critical mass and is actually doing something to push the industry forward. So he has the ammunition to drive millions and millions of people in different directions that are productive for the entire industry. Prior to that, you had, you know, you had Mount Gox and then you had Poloniex and, you know, each one of the baton kept getting handed off to one after

or the other. And now he grabbed the baton and he took the game to a whole nother level. Yep. Shout out CZ. I'm a big fan of just his ability to build and execute at a rate and pace that just other people are having a hard time keeping up with. What would be the one regulation that you would change or improve if you could? Regulation? I would institute the Token Taxonomy Act. I think that is on so many levels important, but that's the act that's floating around Congress right now as a bill that they're looking to define. Here's what a utility token is, and it's legislatively defined. If you fall into the safe harbor, the SEC or anybody else can't bother you as being a security

token and why is that important because a keeps you know just for those in the u.s it keeps the u.s innovation moving forward but even for the world the u.s is like this like you know um it blocks innovation for the rest of the world too the u.s has kind of got to get with the program so i think that's like the most important one what's the most important book you've ever read a most important book i've read uh in my life yeah uh that would be wayne dyer your sacred self what is that i've never heard of that uh so he in very simple terms explains why there's more to this world than we're seeing right so like simulation type stuff no i mean it's just like that you know that there's you know there's just meaning to life like a soul you have a soul right

and so it's not just this physical world you know like what happens when you die right and it's like and so he explains it in a really interesting way and you know it's not really like hocus pocus i I mean, if anybody's part of any kind of religion, obviously has the beliefs similar to that. But to me, that was a pretty groundbreaking book for me. I read it when I was young. I've never heard that one. I'll have to read it. I usually end by letting people ask me one question.

But first, we talk aliens. Believer or non-believer in aliens? I think it was Einstein that says, or at least like a million other things were attributed to him. He said that the mathematical possibilities that are there aren't are so infinitesimal to be dismissed, just given the trillions of planets out there. Einstein said that? I said it was attributed to him. I don't know if it was actually him. If he said that, if Einstein's down with the aliens, everyone's got to be down with the aliens.

Yeah, but if I say it and I use Einstein, then it's got to be more credible, right? So, yeah, absolutely. But I don't think they necessarily look like us. And maybe they're not even physical form. And, you know, I mean, we're so close minded as like a society. We're always looking for water and oxygen. And we think like there's supposed to be like people that walk on two legs. And I mean, don't we see enough of other stuff that are people living in other things?

And I think it's a very short sighted approach. You want to know what's crazy to me? It's the ocean. What? I've been looking into the ocean lately. Yeah. There's some wild stuff going on in the ocean. They got things down there that you and I wouldn't even understand.

we've never seen before thought about you know they're just hiding out under the water those may be aliens they could be aliens look the the aliens are easier to comprehend i think than even just our own ocean because uh i saw a picture on the internet the other day of a thing that literally looked like a sea monster right like what the hell is that thing and uh they're like ah it's one of these common uh you know animals in the depths of the ocean blah blah whatever and i was like jesus i think as a society we're happy that they don't have feet and they stay in the water so we can actually have separation from them and only the people that are psychopaths that go down there to go play with them yeah i i mean when i was a kid and i was watching these

jaws movies i was like why do they keep going out i'm like why are you just like like you know like just stop going on the boat get back get on the dock would you rather go to space or go to the depths of the ocean without me oh definitely space oh definitely space i would not want to go to the depths of the ocean i think people are more scared of the ocean than they are space yeah yeah Yeah, I mean, a lot of people, I think, have, you know, threat of, you know, fear of suffocating or drowning, rather, and getting eaten alive and all this other kind of stuff. And I guess space could equally be horrible. I guess we're just not as used to it because we don't see it, you know, other than in a couple of movies. Space is, like, sexy now, right?

Yeah, I mean, besides which, Elon's sending up stuff and we're going to Mars. We're going to Mars. We're going to live on the moon. I'm like. What one question do you have for me? uh so what like like in the morning i mean there's short the bankers and long bitcoin but like ultimately like that you know that's one level right like if you go deeper into pump like really at the depth like you get into your like ultimate net like bottom line what is it

that drives you and inspires you? My whole thing with crypto is, I actually think most people are completely wrong. And not in the like, they're wrong, I'm right. It's more of a, they are thinking about things that are either too obvious or too small. And the part that gets me excited about crypto is,

we are moving to a digital world with one single nation right so the internet is one nation with one set of rules that's governed by algorithms and machines and in that world you need digitally native assets you need digitally native contracts you need digitally native accounting right for all of those transactions uh and i like to use this um you know double spin problem is a perfect example in a digital world where everything's a digital file if you can just copy it and send two of them that would be a problem, right? And so the accounting, the smart contracts, the digitally native assets.

What I feel like we're building, and I get a lot of pushback on this, is we're not building a world for humans. We're building a world for machines, right? And automation. And if you think about what does that automated efficient world look like where we're able to move value

around the single nation of the internet to 4 billion people that are connected now, that feels really important, right? And I always go to like, what's your special skill, right? I don't write code. I'm not the smartest guy in the room, but there is one very, very specific thing that I think I'm good at doing. And I've just learned over time that I can take these super complex ideas and communicate

them to non-technical people in very understandable terminology and concepts, right? And so I feel like it is my job and I have a responsibility to go take that ability, take these really complex topics, and go explain this to the entire world that has no clue. They don't even care, right? It's not that they don't understand. They just don't even care yet. How do we make them care, right? How do we make them aware, right? Once they care and they're aware, which rhymes, by the way, which makes me even smarter than I thought I was, then I think that they can really start to pay attention.

They can work on this stuff. They can participate in their own way, et cetera. And so I think that we're so early that we need 100 people like me, right? Where are the other 99 that can go and take these complex things that are being worked on by these brilliant people and go tell everyone who doesn't care yet, right? And if we can slowly chip away at that day after day after day, we're going to turn around five, ten years from now and be like, well, everyone cares, right? And so I think that there's people, you know, the, the, uh, Andreas Antonopoulos, right. Um, course, uh, or, um, uh, Wentz, right. You know, all these guys, um, and unfortunately most of them were guys, but, but we're getting

a lot more females that are coming into the industry and participating as well, doing this hard kind of unsung hero work. And it really paved the way for, you know, what I call like the Twitter brigade brigade, right now you've got all these people on Twitter who now they're pounding the pavement. it wasn't cool to talk about this stuff before right so those people were doing it when it was uncool now it's a little bit more acceptable it's a little bit cooler 10 years from now everyone's gonna be talking about this stuff and so i think that's really you know when i wake up every day i just say it's incredible i get to go do this on a daily basis and uh the fact that people listen

still shocks me but as long as they're listening and i'm having fun i'll keep doing it i relate to so much of what you're saying and and to me when i like this concept of decentralization i think it's just changed everything and i think everything eventually you know it might go worse before it gets better in some ways um and it's definitely not going to be a smooth ride and it may not even be all in our lifetime but the crack has happened and the the change is inevitable in my opinion um and so it's like it's hard to imagine like not seeing it you know for for some of us that are And, you know, people outside think we're drinking our own Kool-Aid. Maybe we are, but it's just actually really logical.

You can definitely speak things into existence, in my opinion. That's right. So, listen, man, I really appreciate you coming on. This is really cool. It's great to hear the stories from years ago, and hopefully we'll have you back on, and you can tell us some more stories in the future. I look forward to it. I appreciate you guys listening to that great episode.

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