The Wolf Of All Streets - The Future Of Tezos | Arthur Breitman

Episode Date: November 1, 2022

In 2017, Arthur Breitman co-founded Tezos along with his wife Kathleen Breitman. Tezos ran one of the most successful ICOs in history, raising 66,000 Bitcoin and 361,000 Ether, worth $232 million in 2017. In 2022, 5 years later, Tezos is now a thriving blockchain ecosystem with 135 projects being developed. I talked to Arthur about the origin and the history of Tezos, as well as the problems and issues of blockchains: interoperability, security, adoption, and regulation. Arthur Breitman: https://twitter.com/ArthurB Tezos: https://tezos.com/ ►► JOIN THE FREE WOLF DEN NEWSLETTER https://www.getrevue.co/profile/TheWolfDen  GET UP TO A $8,000 BONUS IN USDT AND TRADE ALL SPOT PAIRS ON BITGET FOR ZERO FEES! ►► https://thewolfofallstreets.info/bitget   Follow Scott Melker: Twitter: https://twitter.com/scottmelker  Facebook: https://www.facebook.com/wolfofallstreets   Web: https://www.thewolfofallstreets.io  Spotify: https://spoti.fi/30N5FDe  Apple podcast: https://apple.co/3FASB2c  #Tezos #Crypto #Blockchain The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. This video was created for entertainment. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this video constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sell," or "Hold" an investment.

There are a number of layer one blockchains and each has a novel approach to solving the trilemma. I spoke with Arthur Brightman, the founder of Tezos, about what they're building, how they solve this problem, and what he's looking forward to in the future. He had a lot of different takes than other founders that I've spoken to in the past, so I think you're going to find this conversation extremely interesting. Stay tuned. where did the name tezos come from in the first place well i mean there's two origins one is that you said that it's uh i mean smart contract in ancient greek uh i've said that a couple times and then you know some people either laugh some people say oh yeah sure and then some people say

that's not true they didn't have smart contracts in ancient Greece. The other origin is that there's a free domain name. Tisos.com was a free domain name. It was pronounceable and it was only five letters long. And if you can write, if you have scripts to download the list of available domains,

and if you can parse, or rather the list of taken domains, and then you take the complement of that, and you look for a domain name which is pronounceable, so maybe alternate vowels and consonants, and five letter, that's a good name. And Tezos doesn't mean anything in any language. If you find a pronounceable five letter dot com,

it probably doesn't mean anything, which means if you search for Tezos, that's the only possible Tezos. Do you ever find people mispronouncing it Tezos? Well, I don't think it's mispronunciation because sometimes the Cornell pronunciation, there's two schools of thought. Both pronunciations are fine. I say Tezos, but a lot of people say Tezos as well. So obviously you saw a gap in the market or a reason to build this in the first place. Can you give a bit of background, I guess, your history and how you got involved

and then why you decided to launch your own Layer 1? Sure. And they weren't even called Layer 1s at the time. They were called cryptocurrency or altcoins. But my coming into crypto was that because it was an intersection of a lot of things I was interested in, namely the theory of

money and finance, computer science, distributed systems, cryptography. So all of that was into Bitcoin. And looking into this, the thing that struck me was there was a lot of innovation coming in, a lot of new ideas about privacy, about smart contracts, scaling. How was all of this going to fit into Bitcoin? And the ethos of Bitcoin started out by saying, we'll adapt whatever is the best technology. Bitcoin is a ledger. It's not an algorithm.

And then that changed over time. And I saw there was a lot of reluctance in adopting some of the ideas from smart contracts or for privacy. So this got me thinking into the governance problem that was at the heart of this. How do you maintain a system decentralized while still able to upgrade technologically? Because the notion of an upgrade at the end of the day is subjective. Not everyone might agree that something is an upgrade. So how do you build that in?

And that's the idea for Tezos, which was bringing a lot of innovation in terms of smart contract, proof of stake, and other ideas, but doing so in a way where the participant in the engine would have a voice and would have a way of controlling how it evolves. That makes perfect sense. So how do you differentiate yourself in this space? Obviously, you kind of alluded to the fact that layer one wasn't a term back then. Now, obviously, when I go to the Tezos website or talk to anyone who's building in this space, we start talking about Web3, which also wasn't a term back then, right?

No, that's a saying. It's like I hear people say, oh yeah, we need some Web3 developer. And I'm like, please don't. I mean, look, it's a fine term, but don't say this is a term that has been in existence for more than a year. The first people using Web3 was the Web3 Foundation,

but now it's basically everyone's using it. So the widespread usage is probably like a year old at most. How specifically does Tezos address the trilemma? Obviously, I think that's what everyone's trying to solve when they develop in this space. Yeah. So if you look at what validators do on a blockchain, they do three different things. One is they order transaction. They say which transaction came before which. And that sounds pretty boring, but actually that's at the art of avoiding double spends.

The second thing they do is they make the data available. Again, pretty boring. You say, well, sure, the data is here. No, but actually it's technical, but it really matters that you're able to verify the chain. And for that, you need to download it. And the third thing, which sounds like the most important one, but is actually the easiest one,

is they execute transaction and validate what's going on. So the way you solve the trilemma is you unbundle all this. You move the execution to specialized nodes, and you can do that with rollups. So essentially, you say, okay, now you don't have to execute anything. Execution is going to be separate, and you'll just verify that the execution was correct, as opposed to executing yourself.

You unbundle data availability by doing techniques like data availability sampling, where every validator downloads only a small shard of the data. And then you're left with just ordering those shards of data, which is fairly lightweight. So that's how you solve the tree lemma with rollups and data availability sampling. And does that still have the same level of security as a proof-of-work blockchain, for example? Listen, I know your answer probably, but obviously it's worth discussing. Well, there's two things. One is proof-of-work versus proof-of-stake, and then there's

scaling beyond that. And I think those things are orthogonal. Everything that I described, you could do on a proof-of-work blockchain. You could do roll-ups, you could do the liability sampling, and you can do on a approved-of-stake blockchain. So setting aside the issue, do you lose security properties by doing this? Not really. If you're using optimistic roll-up as opposed to ZK roll-up, you're losing a little bit of security in a sense that censorship by validators become a little more problematic, but you can make this really, really minimal as a disruption.

And with the typeability sampling, you don't really lose anything at all. So statistically, it's almost nothing. So no, you don't really lose any property in terms of decentralization and censorship resistance in doing that. And if you were talking about proof of work versus proof of stake, I think you gain a lot of security properties by doing proof-of-stake as opposed to proof-of-work. I think it's more resilient, more decentralized. It's better on almost every aspect. Well, you have to assume that's why Ethereum decided to make the move from proof-of-work to proof-of-stake and why it's been so built into their plans for years, right? Well, yeah. I mean, they announced they were doing proof-of-stake in 2014. And that's why you see decks from Henderson Orbitz that are like, Ethereum, proof of stake 2014. No, they memed themselves into proof of stake blockchain for like eight years before actually doing it.

And why do you think it took so long? Obviously, I've spoken to people from the Ethereum Foundation in the early years, and they say the proof of stake just wasn't ready, you know, at the time, in their opinion. And I think sort of once the train gets rolling, it's really hard to stop the momentum. I think it's a convenient excuse because the rest of the entire industry moved to proof of stake before that. And we saw a lot of value being secured by proof of stake. So it was clearly there. I think they took a very convoluted pass to proof-of-stake.

And, you know, for a while, also, because everyone... Look, I heard a lot of people say that Ethereum was proof-of-stake before it was. So in some sense, you know, if you have the benefit of being considered proof-of-stake without actually doing it, why would you bother? Yes, that's a fair assessment. And one question that I love to ask founders. When you came up with the idea, you decided to actually create Tezos. Did you view it as a one chain to rule them all

sort of scenario that you would take the entire market, you would be able to do everything just on this chain? Or did you view it as complementary to the other existing chains, a multi-chain world, so to speak? So I don't think we necessarily end up with a one-chain world, in the sense that there may be multiple chains that survive, but it's not because they're complementary. It's mostly, you know, the way you can think about it is, imagine that you're cooling down

a liquid with a solution in order to form crystals, right? If you cool it very, very, very quickly, you're not going to get crystals. You're going to get a glass. You can try this at home. Take some water and sugar, cool it down. If you cool it very quickly, the sugar falls out of solution. You don't get any big crystals.

If you cool it very, very slowly, you get very few crystals because you have the time to get into the minimal energy configuration, which is just like one big crystal. And if it's in between, maybe you end up with like a few big crystals. So I see the same thing happening in blockchains.

The minimal energy configuration, the thing that's the most efficient from an economic perspective, it's probably a single blockchain to roll them all. However, we don't have a perfect cooling schedule and we may end up with different clusters, which can maintain their own network effect. So I do think we have several blockchains in the future with some sort of power law, but not because they're complementary.

At the end of the day, I did think that the whole point of having a blockchain is to be as big as possible, to have as much network effect as possible and encompass everything. Well, when you say they won't be complementary, it obviously implies that they will be competitive. So do you see it as each blockchain finds its ideal use case? One becomes the metaverse chain, one becomes the NFT chain, one becomes the DeFi chain. Or do you think that they're all competing in every single genre? I think they're all competing in every single genre in a sense that there's no technical specialization that you can do that's going to make you better suited for a use case than another.

A little bit, but not that much. And mostly because the trail of may can be solved, right? If you couldn't solve scaling, if somehow scaling had to happen at the expense of, let's say, decentralization, you might find trade-offs. You might say, okay, we'll have a chain that has more throughput but less centralization, so you could have-offs. You might say, okay, we'll have a chain that has more throughput, but less centralization. So you can have a curve, I would say, of

machine existing. But if you can solve it at the end of the day, you can't really specialize yourself on one application, which doesn't mean that you don't end up with one chain for DeFi, one chain for Metaverse or other things, because there are more than technical reasons for choosing a chain. There are ecosystem reasons. Who else is using it? What is the audience? What is the integration?

How well supported is it by middleware vendors, by wallets? So there's a lot of distribution and infrastructure which matters for application. And that, however, can be very, very specialized. Let's say you want to be big in gaming. If you have all the gaming SDKs and you're integrated in a lot of games and there's a lot of infrastructure built up around this, that makes you more suitable for game, but not because of anything the L1 does itself,

but more about what exists in the ecosystem. So it's about the community and where the focus ends up being and the market effectively decides, but it's not really something technical at an infrastructure level. That's absolutely right. And much more concise than I put it. Yeah. That leads obviously to the question of interoperability, because if we believe that the chains are somewhat competitive, then perhaps we don't need them all to speak to each other and to work together. Yeah, and many people mean different things

by interoperability. Some people will say that if you have the same programming language or the same data convention, you're interoperable. That would be the weakest version of interoperability. Like, okay, maybe you can use the same tools. The strongest being that your state is portable

so that one blockchain is aware of the state of another blockchain. This implies using bridges, and bridges are naturally brittle. So in some sense, it's hard to get this level of interconnectivity between chains and preserve security at the same time. But yeah, at the end of the day,

I think there's a lot of competition that's going to happen. And when people build interoperability, it's not because they believe in the bright, you know, multi-strand future. It's always strategic. I mean, it's become abundantly clear that the bridges are brittle, right? I mean, every single exploit and hack that we seem to hear about in 2022 is a bridge exploit of some kind. That makes you wonder, is this an inferior technology? We need to stop and find a new way?

Or is it just early and the bridges will get there? Well, there's bridge and bridge. So a simple solution to build a bridge is to have a federation. For example, a five out of eight multi-sig. And say, oh, that sounds good. And then you realize that the bridge for Axie Infinity was hacked by a group tied to North Korea. And if your threat is an actual nation state, you know, it's people who can break in secure facilities

and all of that to steal your keys, that becomes a lot harder to pull. You have other bridges based on light clients. So that's, for example, what you see in a Cosmos ecosystem where the bridge have light clients with each other. Now, that is much more secure than a multi-sig. But it depends on the chain. If you have a chain with only a few validators,

at the end of the day, it's not that different from a multi-sig, right? If you have like three out of five validators basically control your bridge, control your chain, it's the same thing as if you had multi-signature for for a bridge so a little better not necessarily much stronger um you have things like the rainbow bridge from near is interesting as well based on a light client uh but the strongest version i think is what you get with roll ups like one way to think

about roll ups is that roll ups says you have another blockchain that runs on your blockchain with a secure bridge because it settles on a chain. So in some sense, you get this interoperability by running multiple roll-ups on one settlement layer. Is that the future of scalability? I mean, obviously the term roll-ups, everybody's talking about it now. It's sort of the hot button item, which really I think everyone started talking about it last year. We're still yet to see it, I think, at its full potential, obviously. But do you think that that solves all of our scalability issues,

or is this just one more step? I think it solves them very large. I mean, there's two aspects. It solves the computation aspect. You need to solve the data availability separately. But yes, I think it solves the computation aspect, and it's the right solution. But you're right, we don't see many roll-ups out there.

They are products that build themselves as roll-ups, like for example, Arbitrum, Optimism, or ZK roll-ups in the form of Starkware. But if you look under the hood, there's a lot of centralization and multi-sig actually happening. So yes, in theory, there's roll-ups, but all of them have centralized training wheels around them. So is decentralization a myth then in blockchain? It sounds like every time we talk about decentralization, we eventually run into some fully centralized aspect. Like you said, the multi-sig or of course, I don't know, it's being built on Amazon Web Services and we're dealing with their cloud technology. Seems like it's very hard to be truly decentralized. It is. And decentralization is a cost.

You have to think about decentralization as an insurance policy. So it's painful to pay the premium, especially when you don't see any houses on fire. You're saying, well, why should I pay the fire insurance premium? My competitors aren't paying the fire insurance premium and they're fine.

And if I pay this, I'll go slower. And if there's a fire, we're all going to burn anyway. So I think that's how people think about that. and they're fine. And if I pay this, I'll go slower. And if there's a fire, we're all going to burn anyway. So I think that's how people think about that. You don't see the difference until there's an actual fire, in which case, for the longest time, people might think a multi-sig is fine until you have nation states that start hacking multi-sigs. And all of a sudden, if you're Polygon, for example,

and your security depends on a five out of eight multi-sig bridge and you have a few billions in your bridge, you start getting a little sweaty and think, well, maybe I need to be decentralized actually. Yeah, that makes perfect sense. And obviously decentralization, decentralization are a spectrum, right? But is it possible to be fully decentralized by all definitions? Or is that just...

Yeah, I think so. I mean, it's always going to be a matter of degree, right? And you have a version of decentralization, which is the de jure decentralization. Say, well, there's no privileged actor in the system. Anyone can participate. It just so happens that we only have three evaluators. So, you know, you're technically decentralized,

but not de facto decentralized. Yeah. I think the most important thing is to make decentralization not relevant. If you build a bridge and you say, well, my bridge is secure because I'm going to have a decentralized set of validators around the bridge, the best solution is if

somehow you don't rely on decentralization, if the bridge is unconditionally secure. So remove decentralization whenever you can, as much as possible, not by centralization, but by replace it with cryptography whenever you can, because cryptography is more sound than relying on people not colluding. And that's actually what you get when you build a system. You don't really depend on decentralization for the security of the execution of a roll-up.

You depend on the existence of a single honest party. Now, I much prefer the existence of a single honest party than the idea that it's hard to compromise 50% or 60%, and 50% or 60% are going to be honest. Rather, it's the assumption that only one party is honest. And yeah, reduce what depends on decentralization as much as possible. I think the irredeemable part is ordering transaction. It's a consensus. That's where you're going to have this honest majority assumption and need decentralization. But as much as possible for the rest, build optionality as opposed to decentralization. Yeah. And it's interesting

because I think we have plenty of problems with the existing infrastructure and scalability and the market. Obviously, we see blockchains going down, the bridges, the hacks and exploits that we've talked about. But on the other hand, we want to see a billion, two billion or three billion people using blockchains and adopting this technology. Is it possible at that scale? I mean, we already see the fastest and lightest and cheapest blockchains not working when an NFT is launched. I mean, partly it's because people also want to break the laws of economics and it's tough.

A lot of people wanting to launch NFT, they have this idea. They want incompatible things, right? They want to give away their NFT for cheaper than it's worth, right? And that's the first thing. And two, they don't want to have an identity system. So in some sense, they are creating a situation where there's just more demand and supply at

the clearing price. And of course, you're going to get a glut at this point. This is always going to happen. Now, your chain should still, the chain should be unaffected by this, but you're always going to happen. Now, your change should still... The change should be unaffected by this, but you're always going to be some disruption on the user end. And fundamentally, you either need to have an identity scheme and you say like, okay, well, based on who you are,

you get it or you don't, or you need to set a price where you're going to actually equalize supply and demand. So that's the fundamental problem, I would say. But yeah, it's possible. I think it's possible to handle possible to onboard billions of people. Definitely, we need better technologies than what's currently being deployed on blockchains.

But fundamentally, you have billions of people using the web and the web works. Right. So is that just a natural evolution that the space will scale to basically accommodate the amount of people that are trying to use it. I mean, it's fun to talk about a billion people right now, but you could argue there's not even 10 million people in the world actively using this technology on a day-to-day basis beyond speculation, right? And listen, I'm a huge bull, but that's just the reality in my mind.

I mean, not just that, if you look at a very successful dApp, very successful, they're going to number in like hundreds of thousands of users a day, daily active users. For any website or application, it's absolutely tiny. Yeah. So when did you guys decide to start adopting the term Web3?

Because it's all over, obviously, the website for every single chain. Yeah, yeah, yeah, yeah. Well, you know, you don't want to fight the trend here. If people are interested in this, they're going to hear about it on TV. They're going to hear about it in the media. They're going to hear about Web3.

They're going to search for Web3 on Google. And, you know, we want them to find all the Web3 projects on Tezos. So hence, you know, Web3 all over the website. There's no point in being the pedant in the room saying... Also, I think it's not a bad term for it. It's one of the best. It's naturally one of the few decent terms I think that we've come up with in this space

to be honest. I just don't like when people take it too seriously as if it's been established for the past 10 years and like of course we need Web3 engineers not Web2 engineers. Come on. Yeah they're just engineers man. Where do you get your degree in Web3 engineering by the way?

We want you to have 10 years of experience in Web3 development. But you literally see those things, right? I mean, it's kind of a meme and a joke to say it, but people really view it that way. Absolutely, yeah. And one of the biggest, I think, problems in the space right now, obviously, is that most people are not clear as to how they can operate in the United States because of regulation and the utter lack of clarity on

regulation. You guys have actually already sort of been down the unregistered security path to some degree, right? Can you talk about what happened in the past? Well, I mean, some people allege we went on that path. I don't agree with that. I'm just saying, right. That's fair to say. That's why I'm not asking you to explain it. Yeah, no, I mean, you know, five, five, five, five years ago, uh, they were a few lawsuits filed by, uh, believe it or not, the guy, the guy filing a lawsuit is currently in jail. Uh, he's serving a 10 year sentence for ripping a 12 year old. Um, so that's a person who sued us. And yeah, they dragged this for a few years. They didn't have anything. We settled it because

it was frankly costly and a distraction. But yeah, you read the press, they make it look quite different than what it actually was. I didn't mean to imply that it was actually successful. I was just saying that you've obviously were one of the first to even have to deal with that narrative in this space. And now that's becoming the prevailing narrative. And so do you operate with any fear of regulation in the United States or you're separate, you're going to keep on building

and it doesn't even matter? I mean, you know, the main thing that, so from point of view of the business foundation, the main thing that, so from the point of view of the Thesaurus Foundation, the main thing we do is we fund different entities that do software development. By and large,

software development is not something that is heavily regulated. And that is, you know, that is essentially what we do. Also, you know, I'm based in London,

and the Thesaurus Foundation is based in Switzerland. So regulation in the US matters insofar as it affects what users can do on a Tezos blockchain and what developers and builders can do on the chain. But we ourselves are not particularly bears in the US. Yeah, you talk about the fact that software generally is not affected by regulation, but we just saw the tornado cash saga come to the forefront. I have to imagine that was at least slightly eye-opening or concerning. Oh, it is definitely concerning. And I'm glad that there are lawsuits being filed

against the treasury because I think they are not acting legally when in doing this. I think it's tricky for regulators because they have yet to understand that some things are software and not entities. And they're saying like, yes, Tornado Cash will. It's not a person. It's not an entity. It's a thing. Yeah. It's the same as saying that

a criminal made a call on an iPhone. We should take away iPhones. Yeah, absolutely. It really is that absurd if you dig into it, but I don't think that the regulators are going to understand that nuance and it's going to probably take a while to play out. And I think, you know, this is a step in the dark, of course. But my guess, you might think, of course, they know it's not an entity, but they are going to pretend

it's an entity to try to apply the law or they argue that for them it's indistinguishable. But I don't even believe that's the case. I believe there are people who are genuinely confused about this because we saw some tweets from people there, and they're saying that Torino DeCache is a hacking group. They're literally clueless. I think they literally think it is an entity. I tend to agree. And you talked about how the Tezos Foundation effectively is funding development on the blockchain and companies that are building things and different platforms and projects. That means you get the first sort of view into what's being built and what the future of blockchain and crypto looks like.

Is there anything specific, maybe that hasn't gone mainstream yet or that we're not seeing, or it could be something that is, that's really exciting to you? Oh, there's a lot of things. On the core side, I'm quite excited about this because I'm an engineer at heart and all the work that's going on in terms of building roll-ups inside the protocol, building data availability sampling. So it's what we talked about, the trilemma and scaling. I like to say that Tezos had three main pillars, smart contract language security, proof of stake, and governance. And right now, we're seeing a new pillar being built, which is scaling. And I think Tezos has not been known as the scaling chain, and I think that's going to change with the next year.

I think we'll actually be known for scaling. So that's a cool thing that's really, really exciting. But of course, it's under the hood. In terms of what's more visible for users' perspective, I see a lot of games being built on Tezos and I'm quite excited about that. We had a lot of art application in 2021. I think by and large the art space is on Tezos, the best artists are minting on Tezos. It's super cool to see. And then we've seen some crossovers, like artists building games or games using art assets. And that's, I think, an extremely promising direction. It's also culturally relevant. Today, the video game industry is bigger than even movies or music.

And I think the quality of the game, especially on of gambling, but not actual compelling games being built with true Web3 tie-in. And seeing that, I think, is super exciting and fascinating. Yeah, certainly the quality of games being built on the blockchain have not been up to par with the Fortnites and Calls of Duty of the world, but I think it's early. But a lot of people sort of believe that game fi is the killer app for blockchains right that that that is if we can crack that market then that's it do you agree well it depends what we mean by fi right if what we're talking about is like there's a game and then we have a yield farm. No, I don't agree. No, no, no.

If what we're talking about is like, there's a game, there's an economy around the game, and the economy is run on a decentralized platform, then yes. But there has to be an economy. At the end of the day, the blockchain tie-in needs to bring something to the game experience.

Now, it could be different things. It could be you reward creators for creating artistic content or creative content that they put to the game experience. Now, it could be different things. It could be you reward creators for creating artistic content or creative content that they put in the game. You reward people for playing convincing characters. You reward people because you're betting on a game of skill, for example. So all of these aspects are things that can make a game more fun.

If you play poker, poker is more fun when you bet money than when you're not betting money. So there's an interesting fun component in the bet. When you play a game like Axie Infinity, the fact that there are people being paid to farm it does not make the game more fun.

It's like, well, it's more fun because I don't have to do it. Yeah, but then you've just added some arbitrary task in the game to justify a token. So as long as it adds... Second Life is a great example. Second Life had the first... I don't know if it was the first,

but it had a virtual economy and a virtual currency way before cryptocurrencies. And there was an economy. You would create 3D models, sell them in a game. You would have some form of IP ownership. You would get tokens. So that existed. And that's a model that's been proven

that we haven't really seen yet in crypto. So if it was proven in Second Life and it existed without a blockchain, is the idea that the blockchain can take it out of that game and make it real world value as opposed to just being inside the ecosystem? I mean, is that the killer app? Yes, I think so. I mean, you know, you could trade your Linden dollars back for dollars, but it was, you know, it was on eBay.

It wasn't very convenient. The fact that you can plug into a global network that can trade, that can exchange value, adds something. And some, you know, sometimes even for a lot of applications, people will say, well, you could do that with a centralized database. And sometimes, even for a lot of applications, people will say, well, you could do that with a centralized database. And the answer is like, well, maybe, but which centralized database today exists that is available worldwide and that can cover these use cases and people come up short. Yeah, I guess it gives us sort of a chicken and the egg problem because as you alluded to, gaming market is huge, bigger than movies, bigger than sports. It's one of the biggest entertainment markets in the world. Does that mean that we should be starting again from scratch and building fresh games on blockchain? Or should we be attacking the Fortnite of the world and bringing a blockchain element to that so that the existing economies there can then bring that value outside of the game. Well, yeah, you want to do a pincher, right? You want to do both.

And there's two major gaming studios that did anything with blockchains and NFT in 2021. Those were CCP Games, which had NFTs for EVE Online, and Ubisoft, and both did it on Tezos. Right. And so that begs the next question. Why Tezos? Why are they choosing that? And then to continue on to that, how do you woo the best developers and the best projects to your blockchain versus another? Or is that something that's happening organically? It's a bit of both.

I would say the reason to choose Tezos is stability. The network has been running for a long time. It's been stable for a long time. It's proof of stake. The decentralization, you're not playing in someone else's private blockchain or private database. So there's actually the idea that people will have, we don't have, there's no

entity that has control of the chain. And if you look at the other blockchains out there, there's very, very few that can have these properties. There's Ethereum, I would say it's fairly decentralized, but it didn't have proof of stake. And also the fees are extremely expensive. So that made Tezos quite appealing in this area.

Really good developer tools. The developer tooling came late, but it's now very high quality. And the engineers who work on integration really love using some of the languages that we had to develop smart contracts. The ability to do formal verification. So it's really a set of things that come together. I think we've been good at viewing, in general, larger businesses to build on Tezos. There's a push that started, I would say, a few months ago, and that's coming into the next year,

to push more grassroots developers, like really a broad base of developers through hackathons, incubators, to build more applications on Tezos so that we have the other side of the equation as well. That makes sense. And when everything is operating to scale, does the competition come down to thousands of transactions per second or fractions of a penny in expenses? Or does it really not get to that point?

I think it will get to that point in terms of the transactions. You see, today we consider that a transaction that costs a few pennies is cheap. But it depends what you're building on it. If you're trying to have millions of transactions between millions of users, even pennies are going to start adding up, especially if you don't want your user to pay for it,

if you want to be subsidizing it. All of a sudden, you launch a game and you're spending thousands or tens of thousands a day just to power this thing. That gets really expensive. So I think it will matter. But of course, below a certain floor, it stops being the relevant case,

and it's more about developer tooling infrastructure. I also think that in terms of network effect, there are some that exist, but people tend to overestimate the importance of the crypto communities, I would say, which exist around blockchains. Because at the end of the day, if you're a game, you're bringing your own users, right? You're going to build a game.

You want to attract millions of users. Your users are not necessarily going to be the people who happen to own the token on the platform that you're building. They are people who want to play your game. And with a good UX, it shouldn't matter. With a good UX, basically, you can provide easy wallet onboarding.

You can provide easy fiat onboarding. All of this is available today and abstracted with a blockchain. I think what you just described is literally the key to adoption. Right? Like, we might care and your ETH Maxi or your Tezos Maxi or Solana Maxi might be super passionate about where it's built. But your average person who just wants to play a game, if they never hear the word blockchain,

we've done our job right. Absolutely. Absolutely. So how do we get to a point with UX UI where that is the case, right? Because I would argue right now that that's the biggest barrier to entry for most people. They just find it daunting, intimidating.

They don't understand it. Yeah. There's a couple of things. I would say probably the biggest obstacle is the wallet. Because anytime you install, installing a wallet by itself is already a lot. You know, like you have to imagine, you see some websites that optimize

to not ask you for your email or to have the shortest signup form so that they don't lose anyone on signup. I don't know, have you noticed a trend now when you go to a website, you can't even find the login button. They just have a signup button and they hide the login button. So they optimize the shit out of this.

And then you're trying to build a blockchain. It's like, well, first you go out and you install a wallet. That's already bad. And then you install the wallet and then you say, well, here's some cryptographic key material. Don't even think of putting it into your pastebin. Just write it down and put it in a safety box. This is

the thing to do, but it's also a horrible user experience. So we have to be able to get past that, and hopefully we have to be able to get past that without falling into the other side, which is to say, well, we'll just have completely custodial wallets where the game is going to take care of your assets with the possibility

of offboarding. There's a good in-between that's popular in its ecosystem, which is to use social sign-on. So you basically use your Twitter account or your Gmail account, and that controls your key. So it's non-custodial, but also if you have one of these social media accounts, you have direct access. I think it's an interesting trade-off. That's the first one. And the second thing is fees. You don't want people to have to go and KYC them. Okay,

baby's a credit card. First pass this KYC test so you can get five bucks so you can pay for your transaction fees. Those are the two main things. If you get rid of that, you've smoothed out the experience a lot. So we obviously know the history and where we are at this point. In your grandest vision, if everything works out perfectly and everything you're building becomes adopted mainstream, what does the future look like five, ten years for Tezos? Well, the future looks like tens of millions of users every day on a chain,

not necessarily knowing that they're using Tizzles, but having heard of Tizzles nonetheless. And with all sorts of applications, from gaming to finance, art, and other categories, hopefully, I'm hoping that it's not, you know, there's a thing about hiding the blockchain in some sense. I'm hoping that there's some cross-pollinization in the sense that when you are on a TISOS ecosystem, you've played a game and now you want to use some other application.

You want to collect a piece of art. Maybe you want to get a loan. You know, you're already part of the ecosystem. So you have kind of this ability to do this in the same sense that, you know, if you have a Google account, then it's easy to use different types of applications in the same ecosystem. Or if you have a mobile phone and you have access to a series of applications. So you don't want to hide it completely. You want people to come in your ecosystem and cross-pollinate between applications.

Absolutely. But you still don't want to be in your face saying, you are now using a blockchain. Wait for the next block for your transaction to be included and all that. Yeah, I asked you this question before, and you obviously gave scalability as the answer, but you just kind of talked about NFTs, art, gaming, metaverse. Is there something that's coming that we're not thinking about at all? Obviously, we're seeing, you know, play to earn, walk to earn, breathe to earn, everything to earn. Is that the next iteration? Or is there something wild that's being built that has not even made it yet to the mainstream?

I don't believe in the... I think that if you want to earn something, you have to be providing something. So again, if you're earning money playing poker, you're providing players for the other side. But also it's based on the illusion that some people think that they're going to win. Or if you are creating new visual assets for a game, then you can earn something. But the idea that you're going to do something that provides value to no one and still earn money is nonsense.

And it's absolutely not sustainable. So I don't think the future is to earn, even though there may be money-making opportunities and maybe work opportunities that happen. The killer use case is not make money and it cannot be. That's funny because I saw one recently that was

a platform being built that was volunteer to earn money. And I thought, isn't that just working? Volunteer to earn. Do work to earn money, the killer app for cryptocurrencies. But really. It's really full circle. It is.

But that's actually the first time I've heard someone be somewhat dismissive of it. And your argument makes a ton of sense. It really does. Yeah. I mean, the thing is, someone has to dismissive of it and your argument makes a ton of sense. It really does. The thing is, someone has to be paying for it on the other side. So how does that economy really work? What is in it? But they're collecting your data, presumably, is what they care about,

right? I think a lot of what powers the economy today is like, the earning comes from printing tokens and what gives value to the token being printed is people buying it to speculate so that's basically like people earn from the inflation and then they earn from people who hold it because the speculate is going to go up that's that's uh that's a dynamic uh i think a few generations of this and people are

going to get a bit jaded with uh with those mechanisms and learn that they don't really work isn't that effectively what bitcoin was created to hedge against in the first place? There are different views of Bitcoin. And certainly I think it's interesting as a store of value. But when Bitcoin first came out, the thing that really excited me about it was the permissionless aspects, the idea of being able to make permissionless cross-border payments, because it opened the possibility of doing international finance.

So when I first saw Bitcoin, I was like, oh my God, this is fantastic because now you can create a stock exchange in the Seychelles or in the Bahamas and then you're not going to be dependent on the banking system for people to go in or out, which means you can really be independent because the banking system has been used in the past to basically do some form of extra-jurisdictional enforcement or use cartels between countries. So that, my thought, was a Bitcoin use case. And then you saw, for example, there was BitMEX. Basically, you know, tried to have a little bit of this model and others.

I think the model is a little flawed, and the reason being that the United States considers that if you had a Burger King once in transit in Atlanta, then your entire business is based in the United States. Or at least that's what they'll do, and most of the world will enforce a core decision even based on those flimsy premises. So unfortunately, it means that the idea of being a centralized solution that's offshore and uses Bitcoin for payments is not going to work. And I think that's what Satoshi envisioned initially. Hence the importance of smart contracts, decentralized organization, and pushing the decentralization further into the stack of what you build. So it all comes back to regulators in the United States government. Wonderful. It does. Everything seemingly comes back to that as the biggest impediment

to adoption and growth. There's two kinds of people in cryptocurrency when they look at the banks and some of them are going to say it's great because banks are evil and we don't have to depend on the banks. And the other way to look at it is that banks are not

evil but they're forced to be and Bitcoin is not forced to be evil. Well, we'll take whatever narrative we can get at this point, I would say, here in the depths of the bear market. So any final thoughts before I let you go? I know we're up against time, but where can people check it out? What would you say to developers who are looking to build something new? Absolutely.

So check out the Tezos Developer portal on tezos.com. And there's tons of information on the website, tezos.com. If you can also follow me, if you want, on Twitter, I'm at Arthur B. And of course, there's the Tezos handle at T-E-Z-O-S. Well, thank you so much for taking the time. It was a great conversation. And you definitely made me think and left me with a few surprises

that were different than what I've heard from founders of other projects. So I really appreciate the perspective and you taking the time to share. My pleasure, Scott. Thank you. Thank you. Let's go.