The Wolf Of All Streets - Tokenizing A $20M Violin: Yat Siu’s Bold Move To Revolutionize Web3!

Episode Date: October 27, 2024

I sat down with Yat Sui to talk about everything from classical music to the future of Web3 and why it's vital for the world. Yat shares an incredible story about buying a Stradivarius violin, tokenizing it, and how it connects to the democratization of digital assets. Join us for this mind-blowing conversation where finance, culture, and technology intersect in surprising ways! Yat Sui: https://x.com/ysiu ►► Sponsored by Aptos Foundation: 👉https://aptosfoundation.org/ ►► WANT MORE? JOIN MY COMMUNITY AND GET EVERYTHING WOLF OF ALL STREETS! 👉https://www.thewolfofallstreets.com/ ►► JOIN THE FREE WOLF DEN NEWSLETTER, DELIVERED EVERY WEEKDAY! 👉https://thewolfden.substack.com/   ►► The Arch Public Unleash algorithmic trading. Discover how algorithms used by hedge-funds are now accessible to traders looking for unparalleled insights and opportunities!  👉https://thearchpublic.com/  ►►TRADING ALPHA READY TO TRADE LIKE THE PROS? THE BEST TRADERS IN CRYPTO ARE RELYING ON THESE INDICATORS TO MAKE TRADES. Use code '10OFF' for a 10% discount. 👉https://tradingalpha.io/?via=scottmelker  Follow Scott Melker: Twitter: https://x.com/scottmelker Web: https://www.thewolfofallstreets.io/ Spotify: https://spoti.fi/30N5FDe   Apple podcast: https://apple.co/3FASB2c   #Bitcoin #Crypto #animoca   Timecodes: 0:00 Intro 1:10 Yat's Background in Classical Music and Performing Arts 3:00 The Discipline and Challenges of Learning Music 5:17 Buying the Legendary Stradivarius Violin 9:27 Tokenizing the Stradivarius: A New Frontier 11:40 The Future of Digital Assets and Tokenization 13:50 Ownership and Democratization Through Tokenization 17:18 How Tokenized Assets Could Reshape the Arts and Culture 20:55 The Importance of Financial Literacy in Web3 23:38 Bridging the Gap Between Creativity and Capitalism 27:24 The Class Struggle Within Crypto: Maximalism vs. Innovation 30:57 The True Meaning of Freedom in Web3 34:14 The Role of Institutions in Crypto's Future 41:06 Why Bitcoin Will Be the Gold Standard for Web3 45:18 How Institutions Will Shape the Future of Crypto 50:31 Closing Thoughts and Yat Sui's Vision for the Future 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.

This episode of the Wolf of All Streets podcast was recorded in person in Singapore at Token 2049 and is proudly brought to you by the Aptos Foundation. I want to talk about violence. Every second of my life, my brother was tortured. You're trying to find the harmony effect. You're trying to find the rhythm. You know, it sounds more poetic. Fuck it. I can't afford anything anyway. Maybe it's a lottery ticket. And I think, and actually everyone in Web3 are deeply capitalists too, right? Because they like the story. That's how I learned about investing. No matter how many times I sit down and speak with Yatsu, he continues to absolutely blow

my mind. We can have a conversation about the future of crypto and Web3 and why it's important to the world, or just sit down and talk about classical music and violins for hours on end. I wish that I'd had four hours to have this incredible conversation with Yatsu. Here's what I want to talk about. I want to talk about violins. Okay, sure. No problem. Let's start right with that.

Yes, let's go for it. Okay. So this story was incredible. You're better to tell it, but I haven't had a chance to talk to you about it yet. Yeah. Are you a violinist? So I grew up actually, actually my first degree is in music. I actually studied music, classical music to be precise, because my parents were musicians,

particularly my mother, she's a professional opera singer and then became an opera director. So my whole household growing up in Austria and Vienna is all around basically classical music. And so that's kind of how it started. Although really, I had a little bit of PTSD for a while because I was basically learning music. Force-fed music as a child. Force-fed music, right? And I was doing piano, flute, and cello. So it wasn't actually the violin.

But in many ways, you know, when it comes to music theory, it's the same. And the instrumentation and the string instrument of a cello and a violin, while not exactly the same, theory is broadly the same. I have an appreciation for it, let's just say. But I didn't play music for a long time until I had kids, right, after. And what happened then, I started playing music again for

my kids right. And actually that got me back into it. And in some ways it never leaves you. You know it may be a little bit sort of you know traumatic as a kid, but it's now a part of you. And then I've just learned to embrace and love it. and I love classical music. I always love listening to it to be fair. I just didn't like sort of playing it but I would also say maybe I credit the fact that I was doing performing arts as something that helped me later on in life. Again you never know you know how these things work out but yes so I have a classical music background and interest. I have a similar story. I played classical piano starting at five years old, very seriously until my mid-teens and then had to capitulate. Wanted to do other things and gave up on it and didn't touch a piano for decades, but I was a DJ for 20 years. Amazing. See, the principles of that come back to you.

You know, harmonics, all these type of things that actually you know and remember. You don't lose that. And so I feel music, one of the things that I really didn't appreciate though was that it was very competitive. And with music, you can have fun, but there's a certain type of person that actually really loves it so passionately, like my mom, she was totally into it. And she had perfect pitch, like all this type of stuff. So you have this raw talent that comes with it. When I was studying music, I was in class with kids that were actually just geniuses, right?

And so it was in one way a very humbling experience because I had to literally work 10 times harder just to even get close to where they are, right? And there are certain things in sort of life where you recognize that maybe that's not for you, right? In some ways, you can have fun with it, but it's not really suitable for a professional career. So I think that was certainly one of those experiences where, and discipline. I would say the one thing that music did teach me, you're practicing on a piano, it's all discipline. Endless.

Endless discipline and perfection, perfection, perfection. We tortured my family because I learned initially by the Suzuki method. Okay. So by ear, which was incredible for DJing and all the later things, not incredible for my music reading versus other people. They probably have to sheet read and all that kind of stuff. But it meant every second of my life my brother was tortured with classical music that I was learning for the piano playing on repeat at breakfast, lunch, dinner, my parents. It's amazing the suffering they go

through to give you this gift that you throw away in your teen years. But specifically, and I agree with you completely about the discipline and I think the way that you think as a result of it, then the way that you approach problems is unique to people who are musicians. I think so. I mean, some people try to make a connection between music and creativity. Maybe there's some truth to that. But I actually think what music really taught me was pattern recognition. Basically, it is about rhythm. There's a harmony. And you always look for that somehow. And so in many ways, I would translate the way that I look at life, right, is those patterns, right? You're trying to create forms of pattern recognition. You're trying to find the

harmony effect. You're trying to find the rhythm and the balance of sorts. So I think that's an element that, you know, sounds more poetic in some ways, but I think that's actually something intrinsically you learn, then it becomes part of your nature, and then it just becomes part of your natural life flow. So you didn't play the violin, but you bought one. Yes, I actually bought a few, but yes, that's probably the one. You famously bought one. Yes. Can you talk about that process because it's really the perfect segue to a conversation about the potential and possibilities with this industry. So the violin that was purchased was a Stradivarius. The Stradivarius is known for being really the most valuable, precious instrument when it comes to particularly violence, but generally.

And also the background on this is that you can't recreate basically violence from that era anymore. There's only a few other ones that from that era have made violence this way. And people don't fully comprehend why, but it's a combination of the wood and the varnish and the craftsmanship that even the best sort of luthiers of today can replicate that effect. And then also there's a provenance, right? Who played it, who performed it. And what's also really interesting about these instruments is they get brighter or fuller or deeper sound as they age. So it's kind of like wine but forever. Fine wine. Right? You know, which is kind of also interesting as well, so that effect. And so violins from Stradivarius, which is about, you know, 600 around in the world today, are actually very, very priced, very, very valuable. And they also, by the way, appreciate roughly

12 to 15 percent a year, year on year. So if you bought a violin of that type, regardless of what sort of what time, you would have made money over time. It's something that we covered as a, and also it's performed, right? So that's kind of what kind of value that is and the one that i bought was known as the empress katarina because it was previously owned by catherine the great and before that also by another russian empress and for me it was kind of a great connection point uh because catherine the great actually had a germanic background right she was actually had german roots right from um and you know, German is my mother tongue. There was a little bit of that connection. Of course, the musical background on Strads as well.

So there was this providence aspect, but also she and her predecessor, both of them owners of the violin, were responsible for the sort of Russian Age of Enlightenment, which actually is why Russia became great during that era and it sort of created the foundation, which is why she was known as Catherine the Great. And what was the Enlightenment? It was about science and it was about arts and it was about basically rational thinking and common sense, you know,

things that maybe we could use a bit of. I was going to say, I think we need one. Yeah, we need one, right? But I mean, that was the whole thing about Enlightenment and philosophy and philosophers and sort of free thinking and liberalism and all these things started to really flourish during that time so to me that instrument represented all of that which is why i decided to purchase it and i purchased it on auction and i was very fortunate because i

purchased it in 23 and as we all know 23 was a pretty shitty year for generally everyone yes right and so you know um I was contacted to say, hey, you know what, this is a violin coming out. The actual price would have been much higher, but they said, hey, you want to bid on it? And, you know, I basically put in the floor bid, which was, of course, still millions and millions of dollars, but it was a floor bid and say,

because for me, it was more like, wouldn't it be cool if I got to bid on that violin? That was my mental thought. Not necessarily believing you were going to win. Yeah, because some of these violins, like the most famous one on auction, private sales go higher, but on auction, ended up going for over $20 million, right?

So I was like, okay, I'm not going to spend that. I don't have that kind of spare change. So I'm just going to let it be. And then I won the bid. And I just let it go. Next thing in the morning, I'm just gonna you know let it be and then I won the bid right and so and you know I just let it go next thing in the morning I'm like congratulations sir you have uh you know you won the violin I'm like what okay so so there's a whole process where I was like what's going on and I think it was um I think it was July or August so remember that was a really bad time in all areas

right it wasn't just crypto the whole world like, so maybe unsurprisingly so, actually, that was my opportunity because I ended up buying something at a really sort of inexpensive price relative to the value that it actually was. And then, of course, later on, I ended up tokenizing it, which is kind of interesting. And that's what I want to talk about. So how did that happen? I know that Galaxy, I believe, was involved. Yes, Galaxy was involved. I had a meeting with Mike as well in the team and those guys were great. So the genesis of this was, I actually had purchased violins earlier. And what I actually wanted to build was a kind of violin DAO, basically a decentralized autonomous organization

that could manage essentially the violins that I had. Because one of the problems that we saw, I saw, was that when you get to perform in one of those instruments, it boosts your career like this. You could be a very, very talented artist, but if you get to play with a Strat or a Del Geso or any one of those type of instruments, it boosts your career. You could argue that violins are actually in its cultural power, kind of like what NFTs are to Web3. It's kind of like if I have a Bordeaux or a CryptoPunk, I recognize you. You're someone. I should take you more seriously.

It's the credibility. Right, there's credibility. That's what these violins do, but not because of the value, only because they have a powerful sound. And if you can bring out that powerful sound as an artist, then you're a really, really good artist. That type of stuff, right?

Yeah. Anyway, so I wanted to create a way to create more mass participation. Most musicians will never be able to afford anything close to that kind of instrument. But maybe, through a token, they could actually have a stake in saying who gets to play it. Because right now, if you're someone who can afford this violin, you get to decide who gets to play with this. And I actually wanted to give the community of musicians as a way to say, actually, this kid should maybe have a chance to play this instrument, right?

Because that's actually how it normally would work, except, you know, it's not community voted, right? You don't have a violence got talent type of thing. You just have to have a very powerful friend. Right, exactly. So that's kind of how it was set up. And that's what I was thinking about. And but I never thought I would be able to get a Stradivarius so soon in the collection.

And so that sort of began that pathway around, OK, so how do I make that real? And then from that conversation, as you may recall, in 23, the whole market was obviously still very down. But one thematic that was gaining more traction in the TradFi world was RWAs. So how do I take a real world asset and translate that? So for me, it was like, OK, it wasn't that I needed to tokenize it right away, because I didn't need sort of the collateral alone, but rather this story could bring in all the kinds of people who are into arts, into culture, buying violins like this, and tell them, hey, did you know that Web3 can be used like this? Because there's so much value that's locked

in the cultural world, whether it's in museums or whether it's foundations that have actually never been made available to the public and you could now make it accessible to the organization. So that was the idea. So I ended up talking to Galaxy partially because if I did it with Animoca, maybe it would be

too much of a conflict of interest. So there was a little bit of that. Also, we don't really specialize in that type of stuff. It's more gaming and cultural different items. So, you know, I started talking to the team at Galaxy, had a wonderful meeting with Mike as well, and they're like, everyone's like, hey, this is great, let's do something. And also, how do we bring Spotlight back into crypto in a way that actually isn't just about, you know, remember 23, it was still FTX in the headlines. SPF all day. It was Terra Luna. Galaxy, Luna, Celsius. Yeah, Celsius. All these things, right? I mean, somehow

distant memory, which is great now, it's funny actually, one year ago this was all we could talk about. One year later, what's that all about? But anyway, that was the landscape, right? So what's the story we could bring out that people would say, hey, that's cool, that's interesting, and we can sort of rally around a little bit as to what's actually possible? That violent, right? And for me also, it was about bringing attention to an asset class that actually most people don't even know about, right? And I found it's not just people in the traditional world who are like, oh, I heard about a strat. I never knew you could do that.

It was also people in crypto who were like, hey, I didn't know violence could be that valuable. And that there's actually a world in arts and culture that I had no idea. Because when people talk about arts and culture and valuable things like that, they think about paintings, right? They don't really think about that type of stuff. And so again, it opened up, I think it was just good for broader education about both spaces. You know that the asset's going to appreciate 15% a year-ish, so not very difficult math to know that whatever interest you're paying is lower than the theoretical. What's the interest on the loan and how is it structured? Okay, so first of all, the interest on the loan is market rate, so it's actually quite reasonable. So it's actually not very high. It's somewhere in, I don't know, it's like, I think it's like 10% or something. Imagine that in a Zerp environment.

Exactly. And this was obviously done later. Anyway, it was a competitive rate. It wasn't anything crazy. And to be fair, you could actually go to third parties that are not Galaxy, and you could also get a loan for those types of instruments. Right. But not tokenized. Yeah, that's not tokenized. But tokenization to me is a way in which you can prove providence and eventually you can prove providence and eventually you can create different types of leverage for it. For instance, I'm thinking actually maybe with that,

eventually there could be a kind of fractionalization, which would be a security, but a fractionalization in the future that we offer in the right kind of platforms. We're not doing that yet, but that's kind of one way to look at it. The other way is also when you think about it from a DAO construct, maybe that could be a utility token or an NFT collection that would actually give you governance over the asset to decide what to do with it, right?

And also, when you think about fractionalization, maybe I would sell a portion of the violin because it is an appreciating asset class. But to me, it's not because I need to own the violin 100%. It's about how do you expand the story. Our thinking about tokenization and about value is about network effects. So in other words, the more people who get to own something or share in something, the more the value increases, actually, and the more of a story it becomes because it's your story, right?

And I think a lot of people sometimes get confused about this aspect of proliferation and scarcity. For instance, the Mona Lisa isn't valuable because it's the only painting in the world. Yes, of course, the fact that there's only one is valuable, but if it was hidden in a basement and only recently revealed, it'd still be worth very little in comparison to what the Mona Lisa's were. Why is it valuable?

Because the whole world knows it. Because every person is snapping photos and taking shots and taking selfies and putting it in secondary paintings or magazine covers or film. And now it's super iconic. And so that makes her art, the original Leonardo da Vinci art completely priceless, right? And so there is this interesting dimension between the scarcity of the asset, but actually the accessibility, availability,

and openness of it to the community as a whole, right? And so that's how I'm thinking about the violin as well. There could be a utility token or a network effect that comes from that, that can give you broad sort of management or certain aspects of it, but the ownership would still be ones that own the security side of it, the actual underlying asset that would give its value, but it would proliferate. And there would probably be a mixing of them, but my point is that actually this is what you can now do with tokenization that you couldn't do before.

So I assume you originally bought the violin and took custody of it. Yes. In some manner. When you took the loan, did you have to go to third party custody? So first of all, violins like this are always in a different custody to get the insurance. Right.

You can't have it hanging on your wall. I mean, you could, but you know, then you gotta hire security and all that kind of stuff. Right? So just to be clear, it's not hanging in my bedroom. Right. It's not there, right? You can't go steal a violin from...

Exactly, right? But I did put that violin in a very secure place. The insurance company can insure that, air-conditioned, all that kind of stuff. But eventually, we're going to want to have someone play that violin, and they could tour it around. And by the way, TwoSet Violin, which is basically a violin influencer performer, they actually performed on that instrument. You can actually see the instrument live performed at a concert.

They're pretty fun because they're, you know, appealing sort of classical music to younger people as well. So you can kind of see the providence and the quality of those instruments. But either way, you know, it's a... So you can perform them, and then there's a process around that to make sure that the violin remains in good care and custody so that the insurance company can take care of it, and also that the instrument is kept in the right shape. What an incredible story. So how does that... let me frame it this way. Most people aren't going to buy a Stradivarius and do this. These are sort of one-off situations where you went to Mike, who's a friend, and you figured it out, you knew it would be a big story. How does that translate to the possibilities we have within Web3 for every man?

Everything. So first of all, I see even if it's a spread or anything that's scarce and rare, in the future, which I think will absolutely happen when you talk about security tokens, actually, how do you fractionalize that value? And how do you share in that value? It's an asset class that we'll always appreciate. And one of the reasons why we have a problem in the world is that actually, an end user who might say, you know what, 15% a year sounds pretty good. I'd like to have access. How does he even get access? Right? I mean, the dealer is not going to talk to him because he hasn't got the money to buy one, right? And the person who ends up often very super wealthy, who can afford that, he doesn't want to share in buy one, right? And the person who ends up often very super wealthy,

who can afford that, he doesn't want to share in there, see? So to me, there's a dimension in between. Actually, I think of it as a democratization of access. If I actually end up buying this violin and I fractionalize it and I offer it to others, you can now own something that has, for basically decades and decades, appreciated over time, that's

actually a pretty good asset. Even if you don't care about violins. Even if you don't care about violins. Simply as an investor. Just an investor. But more importantly, I actually also think of something else, which is that for me, musicians were also not actually investor types most of the time. In fact, creators don't know much about money.

They can get introduced to the world of investing through that. One of the ways that I got involved in investing was through angel investing. My profile as a classically trained musician and later on as a game maker and as a programmer and developer has nothing to do with finance. The way I got into investing was I started just backing projects I found was cool as an angel investor. I ended up being fortunate that they mostly worked out, right? Because it could have gone the other way, right? But that's how I learned about investing. And you can hear so many stories of people who invest in companies because they like the story, because it appeals to them,

whether it's health or fitness or, you know, like, you know, green or, you know, maybe it's just, you know, technology, you know, how many people who play gaming ended up buying EA shares or Nvidia shares, right? As an example, right? People buy a Tesla and they got to own a Tesla. Exactly. Or I'm an Apple product user. I love Apple. I'm looking for Apple shares, right? Same thing, right? But we don't have that for the world of creativity in that sense, right? And so how do I bring on, how do we bring people who are not financially literate included, which is most of the world, but who care about something like music, into the world?

If you go to a musician and say, you know what, you could own for $10 a steak and a Strad. He'll immediately understand the value. He doesn't need to know about stocks and bonds. He doesn't need to understand about the dimensions of GPU cycles or climate or whatever. He will intrinsically understand, oh, yes, that's rare. I know it's valuable. I could have a stake in that.

That's how you introduce people into financial literacy. So to me, the expansion, the first part of expansion is people can assetize, basically sort of tokenize this asset and make it available to their particular communities. So you can bring classical musicians who don't have assets or who don't invest into the world of investing through that because it's a good thing and they understand it. So that's kind of one angle. The second angle though is that I think to me, Web3 actually opens up all forms of tokenization for everything you do creatively. So for instance, with TinyTap, which is underpinned by the EDU chain. Actually, teachers are painting their teaching content, which might make like $50 or $100 or maybe even less a year. And what they're

doing is they're actually turning them into NFTs, which then becomes the container of intellectual property right, so that whoever owns the NFT will continue to get all the royalties and intellectual property from that. That means I now have a kind of trademark copyright protection system for less than a dollar. The reason why the music industry can be what it is is because it's protected by a copyright and trademarking system, but it's only worth doing if you can afford to pay the lawyers to protect it. And so that means a whole set of asset classes

can never really begin to appreciate because the cost to get there is too high. There's a barrier to entry, which is the legal cost, trademarking, patenting, all that kind of stuff. But with an NFT, you can prove that. I have an interesting story with another portfolio of ours called Dance Fight. The story, origin story, is that one of the dancers basically realized that his dance moves that he was showing on TikTok got ripped off by Fortnite because they turned it into an emoji, right? Into some kind of move.

And he was like, then sending messages to them. Hey, it's cool you're using my dance moves, but hey, should I get something for that? Stonewall. Yeah, of course. Yeah, it's like, I don't know who you are. Prove it. All that kind of stuff, right? Yeah.

But that's why basically Dance Fight is interesting because you can now create original dance moves, turn them into an NFT, and then prove Providence that you were the first person to do it. Because in American copyright law, you don't have to necessarily copyright it, you have to just prove with actual Providence that you were the actual creator of that. So stuff like that, that opens up. And the music industry only became this multi-billion dollar industry because we had copyright protection and a way to have intellectual property rights protection. Now imagine if you could do that for assets that are worth less technically today. An asset that makes $100 a year can now have capital value and as an asset might be worth

$500 as an asset, right? You can basically see how it opens up everything. And that story has happened in all sorts of assets, Pokemon cards, baseball cards, stamps, coins, whatever collectible you want to look at, that's their story. You touched on such an interesting point that I've been having a lot of conversations and thinking about deeply, which is financial education for the everyman, I would say. Most of the world.

You talk about a musician, right? They have this core competency. They're an incredible genius. But they have no idea how to not lose value in their money versus inflation because they didn't teach it in school. Bitcoiners love to talk about this, of course, right? Your money should... You should only have to buy your money.

It should be a store of value. You should never have to be an investor. What I've been thinking about is this fact that... I disagree with that, but that's a different story. Your average person in the United States, though, you're affected, or anywhere in the world, you're effectively expected to become a professional investor just to not lose money every year. Right. It's insane. And I think, you know, I say this often, which is, we can teach our kids algebra, complex mathematics,

you know, all that kind of stuff, and we don't teach our kids algebra, complex mathematics, all that kind of stuff, and we don't teach them simple things like compound interest and basic economics. And then what happens is that they end up going into student debt, and they have no idea what they're signing off. I mean, the reason why credit card companies can still get away charging those types of rates is because the people who sign up for them have no idea what they're signing up to because they're signing up to because they're not thinking about it. And I think the problem isn't just purely the education,

it's also understanding the effects that happen. People don't understand money, period. And then they don't really understand actually the whole cycle of investing. And this is the other thing. We actually live in a capitalist society, but the people who are truly capitalist is still a small percentile because only the ones who own something are actually the capitalists or can afford to own something Whereas the majority of the world still lives in a labor economy So in some ways we have this sort of class division between labor and capital and that I think is the problem We see in the world right now because the people who don't have capital don't have assets are looking at them and saying that's not right

And so this narrative they see in America, which is a very socialist one, especially among some people, is what? It's actually about the fact that they weren't included in a capitalist narrative. They weren't included in ownership of things, right? But Web3 solves that because tokenization is the only way in which you can actually have ownership principles go to billions of people. You know, the number of people who own shares in Apple or institutions and groups is about 85,000. That's crazy, right?

How many people own an iPhone, but actually don't own shares in Apple, for example, yet they offer value, they use it, they pay them- We own the depreciating assets that they purposely break every two years so we'll buy another one instead of getting any of the value. That's right. You own the depreciating asset and gives value. In some ways, and this is the Web3 ethos, if you're going to buy Apple, you should buy Apple shares. If I use an Apple product, I should own Apple product because I'm actually then vested in the index. Your Apple product should come with a

fractionalized Apple share. It should, I agree. And that's what tokenization does, right? And that to me is this network asset that never existed before. For instance, if I'm a shareholder in Meta and Facebook, me being a shareholder in Facebook has zero impact on my influence on Instagram. And vice versa, I could have a million followers on Instagram, it has zero bearing on my value or my increase in value that I'm actually giving to Facebook through that activity. So that actually is again what tokenization solves. And you can imagine a future where everyone can hold through tokenization an asset or a network asset of some sort, which you can't do basically in the traditional world because

you can't get to a space where you have a billion shareholders, but you can get to a space where you have a billion token holders. I don't know what started the conversation, but you and I were backstage in Paris at Paris Blockchain and we got into a bit of a rant about maximalism. started the conversation, but you and I were backstage in Paris at Paris Blockchain, and we got into a bit of a rant about maximalism. Yes. Bitcoin maximalism, but I think maximalism in general. And I don't want to pick on Bitcoiners per se, but what you just described aligns in my mind with the ethos of what a Bitcoiner would

theoretically believe. So why do we have this incredible division? So we see this in history every time. And I'm a student of history in the sense that I love it. I'm not an expert historian, but I find looking at history and philosophy as a great way to understand the human mind and think about this. And we have lessons from the past. And to me, this is another form of class struggle. Basically, Bitcoiners are the first class. They've come into the land.

They own that land. And remember, it's not just about altcoins or as they describe shitcoins. It's also ordinals. And what's the issue? After all, ordinals are actually expanding the universe of Bitcoin. It's also ordinals. And what's the issue? After all, ordinals are actually expanding the universe of Bitcoin. It's great for miners. It's making it more sustainable because of other forms of revenue sources to essentially make sure that the mining system remains basically profitable. But actually, the issue why people, let's call it more psychological

human reasons why the maximists are against ordinals is because it infringes on their turf in the sense that wait a second this is my land how dare you come to my land and make money off me or more than me even right this is the issue about class struggle right where suddenly a new class of people comes in that actually is maybe a threat to you now because you were basically the kings of your dominion and that's what we have in history as well whether this is the french revolution whether this is basically you know any church in pitchfork you know whatever right it's the same same type of effect that happens when people feel like wait

a second that's mine why are you here taking that away from me when in fact actually you are arguably expanding the base but what you're also doing is you're diluting the power right so in a constitutional monarchy the the king is actually probably more wealthy than before because the wealth was more distributed and more but his concentration of power goes away so they end up losing power by the way you see this you know for instance between in america as well you've got a lot of people tech silicon valley wealth they're looking at the crypto guys and saying, oh, what's that? Like, what is this?

This is- It didn't work. Yeah, you don't deserve this, right? Like, you know, this is our turf, right? While the guys at Miami, remember, what was Miami like 20 years ago, right? And now basically the new rising class, I think a lot of people need to remember

that these rising classes are all new forms of wealth. Silicon Valley tech wealth was a new form of wealth 30, 40 years ago. And the people who rubbed their nose against them were the New York bankers, right? The people who are working at all the big institutions and saying, in their suits and ties and saying, what are these guys coming in in their shorts and the track suits, right? And now you're seeing that translate to a different audience. So it's an age-old game. And I think it comes from a sense of wanting to protect essentially your own power base, as it were. And so I think that's where you get that maximalism.

But I deeply disagree with the concept. And the reason why I disagree with this is because the whole point about digital property rights and something like Bitcoin and so on is it's based on freedom and the freedom to express your own network and your own growth. And there is something very unnatural when the whole world is, you know, the universe expands. We know this, right? So therefore, how can you make something so artificially scarce and limited to say that

that's actually the true expression of reality of the world that is fixed when actually we are growing, we are having babies, we're expanding, we're growing out there. And then we can go even deeper into areas of where quantum physics can take us in terms of how the space expands and grows, meaning we can't look at the world as something as limited as that. Anyway, my point is that we have the freedom to express ourselves in any which way we like. If you have the freedom to create one type of asset, I have the freedom

to create another type of asset as well, which is, by the way, the struggle that we have right now. Why do you get to do this? Why don't I get to do this? What is a token to us? It's a network effect. It's a representation of the networks that you're in, and it then enumerates the value of that network. If you basically say that you can only grow and it then enumerates the value of that network. And if you basically say that you can only grow your network based on mine, because I think of money as a social network too, then actually what you end up doing is you end up actually attaching value to that network,

which is fine. You can borrow that value of that network, but you can choose not to as well, because actually you end up becoming colonized by that network in itself. Let's play that out. If everyone were just to use Bitcoin as the currency, as some of the maximists would say, who gets to benefit the most? All the people who owned Bitcoin before. What have we just done? We have created new kings, new queens, new lords. But actually, that's what we are supposed to be fighting against. That's what the Bitcoin guys are saying we don't want, want. What are they doing? Are they saying... and because bitcoin and actually

everyone in web3 are deeply capitalists too. So in other words what's the capitalist ethos? Competition, better services, more appeal. If I build something that's more appealing to you, whatever service that is, then I get to win. Isn't that what we're doing? Otherwise, we're all saying in a way that we're building another type of quasi-socialist controlled state by saying, hey, we all can use only one currency because we say so, because it's better, because really it accrues power to us, right?

And all this stuff about thermodynamics and whatever, it's just another way to cover this aspect of protecting the narratives of that, right? So I personally am not in favor of that because I think it infringes on our personal liberties. What's so interesting about that is the Wall Street bankers that you described are the feudal lords. They knew that they wanted to keep power and hold it. I think Bitcoin Maximus, at least outwardly, say it's about freedom and everyone.

So it's almost like in the way you're describing it, is that it's the same phenomenon, but they're wildly unaware of it. You know, maybe intellectually, but I don't think so. I don't think so. I think, let me put it this way. Sort of, it's not bad intentions ever that people tend to do stuff. I don't think any of those guys are thinking about it in selfish bad terms. But they end up creating, remember, humans, us as humans.

I think it was a great description, I forgot who said it, we're homo neurons, as in we're narrative creatures. We live on stories. In the same way that money and even in some ways Bitcoin was a story that we love and attach ourselves to. The original meme coin. Yes, exactly, right? And so when we attach ourselves to these powerful stories, it forms part of our identity. And then these stories become who we are and they become our realities.

And then what happens is that we defend the stories as if they were basically truth and fact, right? Right. And we do this all the time. History stories as if they were basically truth and fact. Right. And we do this all the time. History is written by the winners. Well, yeah. And but also, you know, and for instance, freedom is a good example, right? We have freedom is very loose word, but you go to someone in China and they will ask you,

are you free? And he will say, absolutely. He will not tell you that he feels less free or that he's not free in the same way that a person in America will say, well, generally I feel free, or maybe he might not, depending on where he is. But the point is that both countries have completely different constructions of freedom and they both feel free in themselves. And that to me is basically what we're seeing here as well. They don't think it's wrong. They really believe that. Good for them. And they're trying to enforce it on people. But at end of the day they can't force them either, right?

But the point is is that that's what they truly believe in because they think it's better and they don't necessarily believe that it's better For just themselves to your point that we're realizing they actually think it's better for the world, right? Right, and I think you know And I think you need and I'm not against the fact that they are making the argument Because the debate and argument raises it up there. It's like the same thing, we need to talk about censorship as well in order to appreciate freedom. You need both things.

Is there a line? So you obviously have hundreds of investments, I presume at Animoca, I don't know what the number would be up to now. 540. Right, so you have 540 investments, but I think in April there were five or six thousand tokens launched on Solana, right? No, two million. Okay. Not in April, but up to this point, we have now, I think this year... Oh, it's five or six million. Did I say five or six thousand? Five or six million were launched in April. Right, I mean, an incredible

number, right? So there's still quality versus the insanity that maybe they're pushing back against. So where's the line where this is benefiting society versus potentially predatory? I just wrote an article about this, which is kind of interesting. So it's a good segue into that. So first, Pump the Fund alone is responsible

for 2 million token launches, basically, on Solana this year alone, right? So you can see that, right? And so, but the altcoin space, taking away Bitcoin and Ethereum for the time being, has actually grown by almost $300 billion from a year ago. But why does it feel like that some of the more known tokens have actually not increased the same way as Bitcoin were? And that's precisely because of that attention dilution. When you have millions of tokens released, basically the end user ends up having millions of tokens, not millions of tokens, but basically many more tokens to choose from, and the attention is fragmented and differentiated across many ways as opposed to just one.

For instance, if you look at things like Axie Infinity or Sand or Eggcoin or these things, the amount of tokens that had a certain type of narrative around them were limited. So if I was wanting to invest in the metaverse or if I wanted to invest in gaming, there were only a handful to do so. And today I have a whole range, including a whole bunch of stuff that might sound like something, but I have no idea what that is. So that's a circumstantial world. That to me is not that different from how the explosion of chat rooms and message boards that were there. Or for instance, apps. Remember in 2009, 2010, everyone was building an app for everything. The

app store was inundated with a gazillion of apps that do all sorts of funny and weird stuff and also productive stuff. So how do you stand out from that crowd? And to us, this is the era underpinned by the beginning of Bitcoin ETFs of institutions. So crypto is mostly retail, mostly consumer focused, right? But in America, for instance, the equities market is 80% institutions. What are the tokens that have actually stood out from the crowd over the last six months outside of Bitcoin and Ethereum? Solana, Ton, what's the narrative?

Institutional support. In other words, we've hit an age where in order for you to become a large token, you must have institutional backing. You must be institutional grade, as in you need to be able to go into a meeting with the Panteras or the VanEcks of the world or those type of guys and say, hey, you know what? Actually, we can explain to you what we're doing. We explain how the network is built, that type of guys and say, hey, you know what? Actually, we can explain to you what we're doing. We explain how the network is built, that type of stuff. It's like being the violinist

who gets to touch the Stradivarius. Maybe, right? And that's basically when we launched Mocha, actually that's exactly what happened. When you look at the sea of gaming tokens, it's not really gaming token, but essentially those type of cultural tokens, Mocha actually was the mega bright spot in comparison to the other ones. What of cultural tokens, Mocha actually was the mega bright spot in comparison to the other ones. What was the difference? Mocha had institutional backing, whereas the other ones didn't. And I think there's a lot of conversations about the high FTV, low float, that type of stuff. These are actually not the real reason. They are symptoms of some sort, but actually the real reason is there's a delusion of attention and in order to stand out you need to basically sort of go into different

areas of markets, in this case the institution, to basically appeal to them. And that means that certain meme coins can never really get to a certain scale and size because the institution will never go there because they can't invest in some of that. And that's okay by the way, right? There is nothing wrong to say that I've got a token infrastructure for my game or whatever that's worth $10 million. Yeah. Since when is that bad, right? Yeah.

You know, like, why do we walk away thinking that everything has to be... It's a failure if it doesn't hit a billion, right? Yeah, exactly. Like, what is that number, right? That's kind of like saying, you know, I want to open a restaurant in my neighborhood or maybe here in Singapore. But if it doesn't become a unicorn, then I failed. What? Right? You know, so I do think there's going to continue to be millions of tokens

that represent the networks you're building, but not every network is a billion dollars. And that's okay, right? If you're a small, medium business, heck, millions of dollars is great. Hundreds of thousands of dollars is great too. And you see that represented already in that space, right? Is every website in the world today worth a billion? No, right? All sorts of people open up websites, run shops and do experiences that make them good money, but doesn't turn them into unicorn status. So I think we've just gotten a little bit lost in the narratives of understanding that actually to expand the space, we actually have to look at the value chain totally different, right? There's another interesting phenomenon, which is that meme coins, whether Max Mills liked it or not, meme coins and NFTs drove the last

retail cycle. Yes. Right? I mean, Saturday Night Live making jokes about NFTs and people signing up by the millions to find a way to trade Dogecoin. And it brought people in. And it brought people in. But the difference this time is that you don't need to sign up for a centralized exchange to trade Doge or the Meancoin. You had one to ten of them that were meaningful in that cycle. You needed an account. You had to.

Now it's become decentralized and therefore open to the public and therefore everyone can launch one. So there's a positive and a negative framing of that. But to be clear, I think all this growth is net positive to Bitcoin. I agree. Yeah. And it brings more people in. Well, not only does clear, I think all this growth is net positive to Bitcoin. I agree. Yeah. It brings more people in. Well, not only does it bring more people in, Bitcoin is still, and this is its OG status,

the premium asset in the digital asset space in Web3, because it has basically the gold status value, shall we say, right? It's like the origin of that. And to me, you know, I may have spoken about this before, you before, how does Bitcoin become a million dollars worth? It's not the implied scarcity of having and all that kind of stuff. To me, it's because Bitcoin will become the desired asset of the people from Web3. In other words, 10 years down in the future, in the other direction, we're going to sit down and have a word and say, hey, you know, this guy owns one Bitcoin.

Oh, he owns a Bitcoin. Stradivarius. Stradivarius, exactly. Right? Its value isn't going to be its sort of pure function of it, actually, which it isn't anywhere. It's basically a store of value. That's what it's used for. Its value will be the status aspect of I own a Bitcoin.

And that's what we see with NFTs and other areas as well. That's why we think OG NFTs, for instance, are also going to have that essential long-term value just because they represent that time. But the buyer isn't necessarily going to be, you know, like someone from the TradFi world. It's going to be someone from the Web3 world who has made money in Web3 and basically is now looking to represent himself in the community he grew in, and that's to own Bitcoin, right? So, you know, we're not at that stage yet. But I'm sure all the people who ended up basically succeeding with their tokens or their projects, whatever, the one thing that they're going to end up buying assets for in their treasury is not going to be USD.

It's not going to be USD. It's going to be Bitcoin. So basically, in that sense, I think Bitcoin is, it will continue to rise. And it's actually a net positive for the entire ecosystem. Same destination by a completely different path. But isn't that life in general? It is. So interesting, though, discussing the division of attention that obviously we have from so many of these coins and the fact that now you need institutional backing effectively to be successful, does that mean that the tokens that succeed in the future have to be institutionally backed because there's too many things and not enough demand from retail?

People are asking if there's going to be, we have all of last cycle's tokens. This is the conversation always, right? We have unlocks, unlocks, unlocks. We're going to get millions of tokens in October and hundreds of millions of tokens in November. And who's going to buy these? It's a legitimate question. Yes, yes. We need all the supplies coming on the market. Rationally, anyone who understands economics, for any of it to go up, there needs to be massively increasing demand. Yes, but also it's a natural cycle of the demand for them comes from the utility as well, right?

You can see this was happening with Tone Telegram, that there's more utility happening, there's more users entering the space. But the number of tokens coming into the market is larger than the number of users coming in. But the institutional sort of support that you have essentially in Web3 is still mostly in single digits. Yeah, of course. So that is still sort of a big number. Which also, by the way, you know,

going back to this point about sort of the retail consumer, it's not to say that they don't want to have tokens and participate in networks. It's just that they don't want to have tokens and participate in networks. It's just that they don't have to be billions of dollars of value worth. This is what people are sort of hoping and thinking for, right? So as I see it, when you're building a business, whether it's Web3 or whether it's whatever, right?

There is a small business you're building that could be worth $100,000 or $1 million or $2 million. You don't need major institutions to back you, and that's okay. But then maybe some of these products hit an inflection point. That happens all the time. you don't need major institutions to back you, and that's okay. But then maybe some of these products hit an inflection point. That happens all the time, and it gets to a point. And then they go, you know what?

I can see something big. I need some growth capital. Well, that's when you can bring in the institution. So meaning we can see stories. In some ways, I think that's a Solana story, where the institutions came much later. Ironically, because of the whole FTX bankruptcy, they started becoming buyers of this and then they started getting involved. When they get in, when there's a story, when there's a network growth that happens, actually that becomes the impetus for an institution

to say, I can see it, I see the reason why, right? So, you know, we start businesses all the time without institutional support. Right? We want to see how it goes. And by the way, that means to me, you can have a live token as well because that's how you build your network. Whether it's an NFT collection or whether it's a fungible token,

they're kind of similar in building network effects. And then when you hit a certain point, maybe it makes sense. Remember, Yugo Labs didn't raise a round until almost nine months after the NFT collection was out there.

In some ways, the NFT collection was your first proof point that you had a network. Then you could raise money. Yeah, you became investable. Exactly. Same thing. So I don't see that as a problem.

It just means that if you're looking to back a project and you expect it to hit a certain size, the institutional capability becomes very important. And that's something that previously could be maybe ignored and forgotten. And I think that's not, it's never, you know, it's not been part of the narrative because maybe it's not fashionable, but it's a reality. At the end of the day, if Bitcoin wasn't, there was no Bitcoin ETF, you probably wouldn't have Bitcoin hit the price levels that it has today, for instance. Of course, we'd be chopping around between 35 and 40 and everyone would be like, it's

great, we're not 15. Exactly. So at the end of the day, the institution coming into the crypto world was generally hailed and everyone's like, this is great, this is wonderful. And now how do we expand it to the broader ecosystem? Same thing. It has to be institutional ready. It has to be appealing. It has to have a roadmap that people can understand everything that an institution will look for. Also, institutions can be long-term, right? Retail, much harder for all sorts of reasons. Yeah, because they need the money. Things go down and they need to pay their bills. So institutions can be long term, right? Retail, much harder for all sorts of reasons, right?

Yeah, because they need the money. Yeah, exactly. Things go down and they need to pay their bills, right? And institutions are still vesting and they've written it off for 10 years. That's right. It's an interesting question then for how your average retail person who comes into this market and is buying a meme coin that launches, it goes to zero and they lose their money. How did they, going back to the financial they lose their money. How do they, going back to the financial education question, that's a problem in the legacy system.

How do we educate people financially within crypto so that they identify the projects that are institutional ready or have a chance to survive because of those very factors? Because the average person's going to go on Twitter and buy something that some influencer talks about. Whether this is institutional ready or whether this is something built by credible teams that are being something appealing to you, I think it has to resonate with the buyer. So what we see today with meme coins is a sign of the times right now and the fact that there is a world that is also very desperate, unfortunately. You can see this with the GED coefficient. It's getting worse.

The rich are getting richer, the poor are getting poorer. Inflation is certainly not helping. The combination of QE and then inflation afterwards, actually all of that basically created this incredible division that we have in the world. I think to me, meme coins and the way they're being traded is an expression of somewhat the desperation of the times we're in right now. Occupy Wall Street. Right.

I mean, it's a different form of that, right? But if you basically, it's a little bit of a fuck you to the system. Yes. But it's also a little bit of, well, you know what? I got some money. I mean, fuck it. I can't afford anything anyway. Maybe it's a lottery ticket.

Yeah, it's a lot, right? And I think, you know, it's the same thing when you talk about gambling. There's the fun of gambling and there's the gambling of gambling, right? Where's the line between that? I think we're seeing that expression happening there as well. So I think we need to be mindful that the primary utility of a lot of those meme coins is for that reason, right? The appeal why I get into that is that hope, which is not good, but it's basically the problems we have right now. But the answer, I think, is around actually launching projects that appeal to people.

For instance, the Strad is a good example. If I actually could tokenize the Strad sometime in the future and offer it as an investment product for musicians, for them, it's understandable. They don't need financial literacy to understand that the Strad was valuable. Do you see what I'm saying?

Yes. Right? It's very easy today. And then they just need to prove, is the Strad real? And okay, I'll buy that because there's a value. And I think of this in all sorts of areas, this is art whether this is real estate whether this is maybe you following an artist or an influencer it's the same kind of direction where if I want to be a part of that then actually I understand that narrative right and so I think launching more products like this is why rwa is so exciting or deepin deepin is

another narrative that is understandable. Oh, internet access. I get that. I don't need to. I use it every day, right? Or, you know, those type of narratives or storage, right? Those are the type of things that are also more easily understandable because not just because of the utility, because you do it every day, right?

And so when you bring in someone who doesn't understand about trading and then you use the meme coin, it is gone, right? Because he's not educated. But if you tell him about something he does every day and he could participate, there's already a thread to pull from. And from there, you can begin the education. I think there was a study that showed that humans learn best when they are emotionally attached to it. Right? That's how... I hate to interrupt, but every... I came in in 2016 and I made all this money trading, strictly trading. And then when everything went down, I had to justify my interest in the space and I

started to actually do... I say that the bear market orange-pilled me because it was like, why am I here if I'm not actually making money trading anymore? It's anecdotally true, I think, for so many people. Exactly, right. And by the way, I think when someone is emotionally attached to it or has a feeling towards it, right, they learn much faster and much easier. This is, by the way, true for students as well.

When they go, if you love math, it's faster. That's why you choose a major. Exactly, why you choose a major. It's like you have an interest in it or something, right? So the thread to pull from, which is why gaming is so interesting because so many people love gaming. That's why when you attach Web3 to gaming, the thread is easier to pull from, which is why gaming is so interesting, because so many people love gaming. That's why when you attach Web3 to gaming, the thread is easier to pull from because I'm a gamer. OK, you can explain that to me because I have some level of attention already on it.

Because as humans, we don't have unlimited attention. Our attention can only be based on things we like. And so, again, it's about the feeling and emotion. So in the early days, people did this with chat rooms about dogs and cats and all sorts of funny memes. And that's what people are doing with tokens. When someone is launching a Trump token, for instance, what they're doing is appealing to the emotional connections of people who know Trump. It's not just I know the brand. Everyone knows Trump, but who are the ones who actually care about Trump are the ones who are going to have a higher reaction to it.

And so that basically is the same thing. So the assets and the products and service we have to come out are the ones that attack the kind of customers and bases of users that have an emotional attachment to this, right? Which is why brands work, for instance, as well, right? So I feel we have to... So the financial literacy piece begins with, start with things that you can build an emotional connection with, that you have already a feeling towards,

because from that, you're willing to go down that rabbit hole. That makes perfect sense. I wish we could talk for another three hours as usual, but I know that we're here at a huge conference. Thank you so much. I'm really looking forward to it. Thank you so much. My favorite. By the way, Brian Rose yesterday said that you were the next Elon Musk. No, no. Just in case you didn't know that, that came up in conversation unprompted. No, not at all, but thank you

for the compliment. Always a pleasure, thank you so much. Let's go.