TRASHFUTURE - Some Day a Real Use Case Will Come feat. Molly White

Episode Date: April 25, 2023

This week, Riley, Milo, and Alice speak with friend of the show Molly White (@molly0xFFF) about a recent presentation from Andreesen Horowitz in which they predict… a much rosier 2023 for crypto, Web 3.0, and the various other VC money-sumps that will magically resolve their structural problems any day now. Check out Molly’s newsletter here! https://newsletter.mollywhite.net If you want access to our Patreon bonus episodes, early releases of free episodes, and powerful Discord server, sign up here: https://www.patreon.com/trashfuture *STREAM ALERT* Check out our Twitch stream, which airs 9-11 pm UK time every Monday and Thursday, at the following link: https://www.twitch.tv/trashfuturepodcast *WEB DESIGN ALERT* Tom Allen is a friend of the show (and the designer behind our website). If you need web design help, reach out to him here:  https://www.tomallen.media/ *MILO ALERT* Check out Milo’s upcoming live shows here: https://www.miloedwards.co.uk/live-shows and check out a recording of Milo’s special PINDOS available on YouTube here! https://www.youtube.com/watch?v=oRI7uwTPJtg *ROME ALERT* Milo and Phoebe have teamed up with friend of the show Patrick Wyman to finally put their classical education to good use and discuss every episode of season 1 of Rome. You can download the 12 episode series from Bandcamp here (1st episode is free): https://romepodcast.bandcamp.com/album/rome-season-1 Trashfuture are: Riley (@raaleh), Milo (@Milo_Edwards), Hussein (@HKesvani), Nate (@inthesedeserts), and Alice (@AliceAvizandum)

Hello everyone, and welcome back to this, it's Thursday, free episode of TF. It's the free one. Milo. It's the exhausted free one. Yeah, we're gonna get it. What's completely free and great for your body, getting up at 5am. Yeah, you sound really great. I'm looking forward to seeing what your adult mind produces today.

Absolutely, the riffs are gonna get real nice. And you're doing a little bit of like an after dark voice, like you're on like a lonely hearts college. The riffs are gonna get real nice. Real nice, brother. Hey lonely podcast listeners, why don't you call in to Love Line? My girlfriend is asleep about 8 feet from me, so there's gonna be a bit of like kind of sexy baby voice here. Well, into this sort of, I'd say, unpalatable ruckus, I also would like to introduce our guest. It is returning champion, Web3 is going great creator, and the proprietor of the Molly White newsletter,

which you can find at newsletter.mollywhite.net. It's Molly White. How's it going? Hello, it's going well. Yeah, and also, we can say officially, having read the Andreessen Horowitz 2023 state of crypto newsletter, crypto seems to be better than ever. In fact, the declining valuations and plummeting sort of overall use cases, plummeting business, plummeting interest, actually is good when you just change the numbers to ones that you like.

It's remarkable. Yeah, everything is going up and to the right and always has been. Honestly, that guy's readability has really fallen off since Stormbreaker. If you start counting from the time of the Pharaohs, the combined annual growth rate for Ethereum is actually upwards of 10,000%, which is very exciting for the community. Well, that was in Business Secrets of the Pharaohs. That is absolutely right. What are the three books?

Everything they teach you in Harvard Business School, everything they don't teach you in Harvard Business School, and Business Secrets of the Pharaohs. And Stormbreaker by Andreessen Horowitz. We're going to get like an Anthony Horowitz joke into like every single time we mention that guy. We're going to do it. At a certain point, we need to venture capitalists to name something very similar to like Owen Colfer, and then we can move on.

Michael Mopargo. So, we have a couple of things to talk about up front, though. Number one, the US has engaged in some import substitution by creating a technology that has allowed them to home grow an AI version of Drake and the Weekend, which has, of course, cratered Canada's last profitable industry, which is supporting celebrities to the US, and the dollar is now in free fall. AI has finally gotten good enough to do like a guy who sometimes sings and sometimes raps, and at that point, it's over, you know?

Yeah. Skynet Real. Yeah. First, Skynet imitated some of the mumbliest, most formulaic musicians of the 2000s, and then it started the Terminators, and then it created the Great Goo. First, it was Drake and the Weekend singing. I listened to the song. It wasn't really mostly words.

It was mostly just intonations. And you know what? After the softwood lumber trade dispute, I don't think Canada has an economy left. All we had was exporting celebs to the US. Oh, sorry. This just in AI Drake is going out with an underage VTuber. It's all over. And also, the other thing that I'd like to mention before we get into the main content,

of course, is that Elon Musk has yet another brilliant success. The Starship launch today basically... Rocket fall down Mr. Bond. He actually did it, you know? And the great thing about this is that with the low expectations, what they wanted to do with this one was just get it off the pad and then crash it into the ocean. What they actually did was get it off the pad, explode,

and palve a bunch of shit with concrete shards and dirt. I think it's important to mention that it wasn't an explosion. It was a rapid, unscheduled disassembly. I think Elon Musk would like you to be very clear about that. The New York Times headline on this was that it didn't meet all of its most ambitious goals and then exploded. It didn't meet the least ambitious ones either. Not exploding was pretty low down the list.

You could say that about a lot of very impactful organizations. They didn't necessarily meet all of their goals, but we are still talking about the Heaven's Gate people. But Waco lives on in our collective imagination. How else are you going to get into Heaven? I tell you what, before that, it was eye of the needle, and that shit was very inconvenient. What I think is very funny is the overall mood of the tech press

when talking about the Starship explosion has been actually pretty similar to the way that the Andreessen Horowitz state of crypto report talks about crypto, is essentially that all these things that look like they're going wrong are actually good, and because the technology press is deeply, deeply uncritical, they've largely been repeating the press release from SpaceX that this thing is good, it's good that this happened.

Let's not look into the fact that we fired like half of the engineering staff six months ago, which by the way they do. If you look at Maslow's hierarchy of explosions, this is the kind of basic explosion that you need to get things going. Look, the Big Bang was an explosion, and without that we wouldn't have AI Drake, so think about that.

That's right, not even would we have Elon Musk. That is true. That would be a shame. All right, enough of that foolishness and frankly disgusting line of thinking. I want to turn away from the news. Childish things, yeah. We want to do serious adult podcasts.

That's right. Hit me with it. What have we got? Well, we have crypto GPT, a startup that combines the previous two things. The adults are back in the room, serious ideas only. What if we did two great tastes,

the tastes great together? Fucking AI and crypto, brilliant. That is what it is, right? Yeah, yeah. It's crypto is greased to AI's realm. The thing is right, I think about this. These are the two great houses of scam that we have in our current economy, right?

Two houses alike in dignity, and AI is not entirely a scam, it's very overhyped. Crypto is entirely a scam. They're both sitting across from each other, opposing castles, and then just in the middle of those falling into the swamp, we have the shack that was the metaverse.

Just add a dog that didn't just fail to bark, but then when trying to bark, choked on a pine cone, just the greatest thing in the entire world. The dog that didn't meet its most ambitious goals and then explode. Look, it never really cracked legs, but boy, did dozens of people have a weird meeting. Yeah, a paraplegic dog.

So this is crypto GPT, the first of the two things. Uh-huh. Yeah, it promises an AI revolution for billions of users. Molly, have you seen crypto GPT? Unfortunately, I have. Okay, all right. So for you other two, you other two jogers, have you seen crypto GPT?

No, what the fuck does it do? Does it tell you what crypto to invest in based on chat GPT, or what? Oh, no, that would be far too reasonable of a use case. Milo? Okay, wait, hang on. It's going to be doing something dumber than that. It's going to be like,

it's going to put your new AI generated version of Brian Adams on the blockchain so that you can copyright it. Weirdly, that's closer than what Alice said. That's pretty good. Yeah, that's actually closer to the reality of what it is. Oh, good. Yeah, basically, it looks at the AI requirements, right?

Where most of the, I mean, not if you listen to Sam Altman, who said that the time of the large language model is dead. Guess what comes next? I guess we need billions more dollars to work it out. Just to be like, now is the time of monsters, you know? Now is the time of the little language model. Yeah, now is the time of AI, Avril Lavigne. We're going back to Eliza.

I mean, fuck, isn't Eliza a small language model? Yeah, we're just doing that, you know? It just repeats your shit back to you. Yeah, how do you feel about now is time of monsters? Pretty good. Basically, the whole main requirement of large language models is a large amount of information, right? Or not just large language models, but really any AI model, because it's whole use cases,

it says, or it claims to, we will find the hidden structures in the thing that you give us. It's like, okay, well, if we're going to create some kind of AI-enabled fitness device, we need huge amounts of people's running data and other various things, right? And of course, the crypto solution to every problem is just more transactions. If there are more transactions, there's more freedom. And we can square that conceptual circle of AI requiring mass surveillance at sort of no real benefit to the people being surveilled by saying, hey, what if we created NFTs of little robots in pillboxes and then people just strapped surveillance devices to themselves in every digital object

they own basically forever so they could... The cold world is real. We're all going to be wearing bodycams. Cool. Okay. That's as I understand that. Have I basically gotten the premise right, Molly? Yeah, that's about right.

It's sort of taking the own-your-own-data wet dream of a lot of the Web3 world and saying, oh, but what if we added AI to it and you can now profit from your data somehow. Didn't they try and do this with Google Glass like fucking 10 years ago or however many years ago it was and then everyone hated it and they just... Yeah, they did. And it only fell short of its most ambitious goals. Yeah, and one guy got hate-crimbed in a bar for wearing Google Glass, which was great. It was like anti-tech hate crime.

Google Glass. Yeah. So the ad copy says, you can use our apps in fitness, dating, games, and education. Crypto GPT. Can we just flag that up? Yeah, I don't understand how looking across the table into your date's face, which has been replaced by the ape that you own as an NFT. Yeah, that's so it can enable you to have an emotion about the person.

Yeah, sure. You feel like you just want to go spend some time with your remaining apes. Have you ever dreamed of fucking the ape? I mean, the dating one is weird because I feel like there's a bit of a barter mine-off phenomenon that I'm experiencing. Where... Oh, where you start kidnapping executives and shit. Yeah, I love that phenomenon. Yeah, you blow up stuff in West Germany.

Wear a lot of turtle necks, get like very European submachine guns. Yeah, I fuck it. We should do more barter mine-off effects. Sounds cool as fuck. End up being photographed by Gerhard Richter towards the end of my life. Yeah, it accidentally inspire Helmut Newton to do a series of big nudes that inadvertently really inspire my transition. Yeah, the barter mine-off effect.

That's more of kind of like the barter mine-off butterfly effects, but still. In this case, there was another AI app that is supposed to help you be charming called E-Riz or something. It's a Google Glass, but for one of the... No, it's a Google Glass, but for one of the plotlines of early season black mirror where John Hamm basically tells you how to fuck, but this time it's chat GPT, telling you how to basically being a dating coach that lives in your glasses.

And anyone you're talking to will see that your eyes aren't meeting theirs and you're just reading a dialogue. Yeah, you're just watching Rocco Sifredi or whatever. The next evolution of this will be to bring in that AI that changes your video so it looks like you're making eye contact. They can just put that onto the glasses lenses and then there will be no issue. Look, Don Drape is up there and he's like, how about this sex?

It's an unplanned explosion. I think we could put the whole thing on top of one of the Boston Dynamics dogs. Just really take the people out of the dating experience. Yeah, take the people out of the equation and the dogs can date each other. Yeah, it's legal now. You can age a fucking dog to get married. Two Boston Dynamics dogs doing the spaghetti scene from Lady and the Tramp on each other. With glasses that allow them to make just unbreaking eye contact.

Yeah, gorgeous. What a great use of two systems which both require incredible amounts of confusing power. I got this really powerful car. That's why I'm driving it with the handbrake on to show everybody how powerful this is. Basically, what happens is you get in with CryptoGPT. You have it surveilled basically everything you do and then here's what they say. AI algorithms need your data and currently big tech firms monetize this to become trillion-dollar corporations. But now it's your turn.

That's right. The CryptoGPT ecosystem lets you build your data capsule so AI development requests can use it only with your permission and for the amount of money you want. And then based on how common your attributes are, they assign you a rarity like a human Pokemon card and you're more expensive the rarer you are. So the more outlandish things you do, it seems the higher value your data is. Alice, you're going to make a lot of money out of this. I'm going to say this is designed for me.

The person who absolutely baffles any kind of predictive algorithm on what I'm going to do or buy or say next. If you really need data on a woman who's getting stamped on while wearing a Polish Army Sniper's uniform that was mismade in 1993 to have not quite the correct camo pattern. Who wouldn't want to market to that market of one? The target demo, it's her. This data is very expensive, but it's only one source. Crucially, it's not useful, but it is expensive. Well, their slogan is, earn as you live every day becomes rewarding.

Which it wasn't before. Today, I also write this slogan. My life has no meaning. My life had no meaning until I replaced all of, until I allowed my dates to all be surveilled so they can be packaged up and resold to match.com. I do like that the system both incentivizes dating apparently and also being as weird as humanly possible so that your data is more valuable. Those two things should definitely go together.

You know what it is? It's for theater kids. It's for theater kids to make money from being weird. There is a market there. Oh, no. That's right. Previously, before that, you had to get into sketch comedy. Oh, you don't know that.

That's crypto GPT. Very funny. The last thing actually I'll say on it is it is very amusing to see tech people completely misunderstand why these things work and are popular. It is much as the theory is that all of these trillion-dollar companies exist because they offered a service that was the only one available where there wasn't one with more consumer choice available. Based on the crypto ideology, if you just create a space that has consumer choice built into it,

then it will necessarily win because everyone just wants to transact as much as possible because the amount of freedom in the world seems to be directly proportional to the number of transactions. The amount of almost like a Hegelian type of recognizing humans as free and equal and your own life is having worth and purpose is just a function of transacting. That's all functions of transacting for me. Yeah, but it's so ideological in such a bizarre way because it's something that doesn't actually work in the real market

because of things like network effects, because of things like social behavior, but because these crypto developers can't stop imagining people as perfectly alienated market-participant Homo economicuses who just fucking love to transact, they keep on making these very, very strange projects that offer something that nobody really seems to actually want. Does that make any sense? Yeah, that's classic like VC shit, right?

It's just imposing this stuff on you and now you're like, oh, I have to drink my verification can of Red Bull before I like get into my email or whatever. There's also this really weird sort of imbalance around the motivations behind it because they all acknowledge that the problem that has led to them needing to develop this solution is that AI companies are just scraping the internet and other sort of freely available sources of data. And so they say, oh, well, what if you were getting paid for your data while also acknowledging that AI companies have no reason to do that because they're just scraping all this freely available data?

And so it's like, wouldn't it be great if you got paid for it? And they're like, yeah, it would be great. And then there's like complete recognition of the fact that there is no one who is going to pay for that data. Of course, like every major crypto project, right? What you have to remember is that really the use case isn't the use case. We've just described makes no sense. It would never work. The actual use case of every project like this is that they say, hey,

you first buy our token and then stake it in the validator vault and then you can farm earnings by validating transactions. But you farm earnings in the native token. So what really they're saying is, I hope a few people give us a few hundred thousand dollars to buy our quote-unquote utility token because they believe the story that if you create personal choice in the world of big data and AI, that it will necessarily become a core part of that industry. Right. That in VC funding. That's the other one.

Yeah, those two. I think crypto GPT has already landed their VC funding. So congratulations. They've done it. Yeah. So that's fine. They have already won doesn't matter that the thing that they're selling doesn't like is clearly a ridiculous idea. So before we get though into the state of crypto report, I want to talk about one more thing, one more thing,

which is the recent hearings that the SEC has been conducting on crypto as securities on regulation and more specifically, Gary Gensler getting dragged up in front of the US House of Representatives, which has created another one of my favorite fucking situations that ever happened, which is some Florida Republicans ask a serious, ask a serious person some interesting questions. Yeah. How do I turn on my email? And we have look is do we have a new Stooby?

I don't know if we have a new Stooby, but we definitely have a very fun new character to enter into the pantheon who I'm very excited to see what he does next. So just to introduce things generally, the overall tone of the hearings essentially from Republicans largely were basically that, hey, you can't regulate by enforcement. Basically, you can't just regulate these things as though they're securities without saying they're securities.

You're punishing digital asset firms. This is Patrick McHenry, a Republican from North Carolina. Yeah, no said bow tie dipshit. Yeah. I mean, with the name, who could avoid it? You're punishing digital asset firms for allegedly not adhering to the law where they don't know if it will apply to them. And, you know, it's just like the only argument just seems to be like, oh, what me? Oh, was I dealing in unlicensed security?

Oh, my, I had no idea. Do you mean that this utility token that I was selling to vote on my platform to see what shoes lace colors the Manchester United team would come out in? Are you saying to me that was the security the whole time? And that seems to have been the consensus among the Republican side of that particular hearing. The US government would have you believe

that this completely uncontrolled distribution of highly volatile assets was some kind of unregulated security. No, I mean, what was your main takeaway? I mean, we're going to talk about Byron Donalds, but what was your sort of main takeaway, Molly, from sort of viewing these hearings? Because I know you were following them. Yes. I mean, it was the sort of performative stuff

that we tend to see in a lot of these hearings where there was just a lot of acting for the camera, I think, where, you know, most of the questions were not truly intended for Gary Gensler. And in many cases, he was not even allowed to answer them. But the, you know, various Congress people were playing to their constituents, and that meant that the Republicans spent most of the time

expressing shock and horror that the SEC might dare try to regulate something so innovative and, you know, society changing as crypto. And then on the other hand, the Democrats basically just thanking Gary Gensler and looking kind of sorry that he had to be there. I mean, what's really funny, though, right, is that you know who's playing two different sides

of the same tune is the Republicans in the States and the Tories here, because Coinbase, after that hearing, has now, like Brian Armstrong noted thumb, has said, oh, that's it. We're leaving the U.S. because they're not going to create, because basically the rule of, hey, you can't use it for crimes and you do have to follow the law. They were like, oh, we couldn't possibly operate

in these circumstances. So all those times we were saying, please regulate us, please regulate us. What we hoped what you would do was put up a big barrier to entry around our industry, but instead you've told us that we can't do the main thing that our industry does. So we're going to performatively talk about moving to the UK, which has said to Coinbase, ooh, we'd love to have you here

because the only, because... Yeah, primarily scam-based economy. And like, this is the thing, it's between us and Canada now that Canada has lost Drake. Yeah, yeah, yeah. A crypto moving to the UK is a rare case of a sinking ship fleeing onto a rat. Yeah, and there were several congresspeople

who basically said that it would be impossible for any crypto company to comply with existing regulations. And it's like, yes, that is the problem. You have identified the problem here. Well, look, we just don't really have a business if we're not allowed to, you know, do stuff that they used to do with stocks in 1927. Listen, if we can't sort of like,

if we can't do these things that evade regulation, we don't have a business model. And that doesn't indict the business model because... Freedom. Yeah, that. Yeah, consumer choice. Now listen, as you can see from these braces I'm wearing in my head, it's still 1927.

So this method of trading securities will never go wrong. So like Brian Armstrong is already coming to the UK and meeting our senior politicians. So he said, meeting economic secretary Andrew Griffith said, the UK is moving fast on sensible crypto regulation to both drive economic growth and consumer protection, excited to keep investing in the UK. So I guess what we can conclude is,

Lex Greensill is going to be removed from his human hunting estate. We're going to have to give it to Brian Armstrong. He's not even going to use it. They've got to bring Matt Hancock back. Have you seen that Coinbase documentary, I think it was? Or maybe it was the book about him. Oh, we have. There was like this weird,

there was like one interesting scene in it, which is when they wanted to bring all their employees to a retreat where they would have to kill their own food. And someone was like, no, let's not do that. And the biographer was like, and that's how that ended and just moved right on. And it's like, no, no, no, no,

can we go back to that quick little montage? I want to know a lot more about what was going on there. Yeah. Weirdly, there was a job opening at Coinbase the following week. Look, we never said we were going to eat people. All we were saying is this is a kill your own food retreat and everyone is locked in a sealed room. So the high point though of the crypto hearing,

came from Byron Donald's Republican from Florida, much like Greg Stubey. Byron Donald's an unholy marriage of two dignified burger houses. You said that the players in the digital asset space don't have a choice that they have to comply with the rules. Again, much like the normal asset space. But once again, Congress has never given you a framework for regulating digital assets.

Where are you pulling that one from? Which again, like if it looks like a security and talks like a security quacks like a security, then it's not because it's on the computer. Yeah, exactly. This is this is computer. This is data. Congress painted with a broad brush in 33 and 34,

but not 23. We've not touched it into new industry. And then using the rest of his time, Donald said, hey, quick question. I think it might have come up. It's so cool that like American politics is great that you just get to be like, sorry, you're the head of the SEC.

You have to be like richly humiliated for something. It doesn't really apply to your job. Isn't going to change anything, but you just have to be on TV and a bunch of guys are going to have to be like, yeah, no, in the 30s or whatever. Cool. Yeah, you have to as that's the price that you pay for being prominent in a powerful American industry.

Yeah, and the only price for sure. That's the one price that you pay as a prominent regulator or industry player is that for like two hours every two years, you have to go and like entertain Byron Donald's and Greg Stubey. That's the price. But Donald's, this is his last question. This was great. Hey, quick question.

I think it might have come up the number one, just going into it casually like, oh, yeah, just one more thing, like Colombo. This is also the last question of the hearing. This is where it ended. It's so funny as Senate hearing to begin with. Hey, quick question. I don't know if you saw this, but like, yeah.

No worries if not, but you were Hillary Clinton's CFO in the campaign. Did you facilitate payment for the steel dossier since you were CFO of the Clinton campaign? Yes or no? Yes or no? He does repeat the yes or no. But the fucking the steel dossier? I haven't thought about that in like five years.

Jesus Christ. That was the like, the like, alleged proof that Trump got fucking pissed on. Who is still thinking about this besides Byron McDonald's? I mean, look, now we all are. We're talking about it. True, true. That's true.

I mean, I'm still, you know, p-type real, I believe that. But like, that's so funny though to be like, yeah, a bunch of questions about what you're ostensibly here for, source of, and then at the end, what was it like when you killed Seth Rich hoping to get him because you have him under oath at that point and he's just going to be like, yeah, let's chill. Oh, damn, fuck.

Yeah, yeah, yeah. Well, those two Russian, those two Russian sex workers were wearing bodycams because they were participating in a AI experiment to sell their data. They were just trying to be as weird as possible to make their data more pricey. It doesn't get much more weird than pissing on Trump in a Russian hotel room.

I will say that. Trump got pissed on by the Boston Dynamics doc. It is just very amusing. He, I guess, you know what it was, is he was just like, all right, he's one of those global homo sickos under oath. So I'm going to see. I'm just going to crack the whole thing wide open.

So clearly Byron McDonald's just was like, all right, I'm going to flip back through every conservative like bugbear issue. Like, I like how I've infected everyone was calling him Byron McDonald's. No, that's just his name now. I'm sorry. Yeah, yeah, I'm afraid you've misspelled it on your thread, Molly. But just like going back to be like, all right, was he involved in Dominion voting records?

Fuck no. All right, Lev Parnas. God damn it. No. Okay. Oh, here we go. He was CFO of the Clinton campaign. So I guess he would have,

was he invited any of the pizza gate emails? No. Okay. Here it is. Steel dossier. That's what I'm going to get him on. Well, Byron McDonald's doesn't eat pizza. He's a burger man to the core.

So Gensler just says that's not something and then gets, is interrupted by Byron McDonald's who says, you are under oath chairman Gensler. Yes or no. Did you order the code red? Did you pay this British, this like former SIS operative for like a dossier saying that Trump got pissed on? It's a financial services committee meeting.

This is the Trump piss tape. Do try not to lose it. Yeah. Do try not to buy it with camp with funds directly from the Hillary Clinton campaign organized by Gary Gensler. Just in case he becomes the head of the SEC and is then questioned under oath about something completely unrelated by an idiot from Florida. Florida man.

I absolutely love, I absolutely love like, we don't generate Stoobies over here. You gotta understand that. Well, Florida is known for it. British politics is dumb in a much more subtle way. Yeah. We just, we are so, we have an enormous Stooby gap between the UK and the US and every year.

Imagine the British kind of like version of this gotcha question. It would be like fucking Lee Anderson asking to see your grocery bill. Like, it's just shit and dismal. Whereas this, this is like high camp. I really like it. The one positive thing about a huge Stooby gap is that you can fill it with just one Stooby. He's a very big guy.

That's right. He's a huge dude. All right. All right. I want to get onto our main topic now and talk about the state of crypto report. Everyone remember crypto? It seems to be still around. This was the, the intro on the Andreessen Horowitz and to remind everyone,

Andreessen Horowitz is of course a huge investor in various crypto projects and coins and has made quite a bit of money by promoting them and getting, being like, oh, we're not owning the company. We've just invested in its utility coin to grow the community. And by the way, now that utility coins worth a huge amount of money, we're going to sell our valuable utility token to you for some of your worthless American money, which we would, we will take. Yeah.

That's right. Well, they, they control all of the money from the Alex Ryder series of books and they have to invest it somewhere. And the most sensible place is utility tokens. So envisioning the shape of this sort of business structure. And it's something that like sort of tapers to a very distinct point, a point that's really noticeable if you saw it in a photograph, for instance. Yeah.

Mark Andreessen's head. Yes. Thank you. I was trying to be a bit subtle about that one. You're like, oh yeah. Cause he's got a fucking, he's got a weird shaped head Mark Andreessen. And he does to be fair. The Humpty Dumpty of VC shit.

Okay. All right. So this is what they say on their website. They say emerging technologies. Our guys got a weird shaped head. Weird that they like. The King's Holsters and all the King's Florida men. His data is worth so much money in the head market.

Specifically his head data. Yeah. Yeah. You got Andreessen Horowitz.com. It's like, you know, our stuff, our partners, careers. And then there's like one vertical that's like Mark's weird shaped head. Just click on that, get some information. Yeah.

The state of Mark's head 2023 still pointy after all these years. So it says emerging technologies evolve in cycles. And in crypto, this includes periods of high activity, followed by so called crypto winters in the period marked by our now annual state of crypto report. It would be easy for a casual observer to overlook the rapid progress the crypto industry is making. Major developments. Casuals. Like the merge of immense achievement and decentralized and open source development.

Don't simply don't make headlines as often as high profile. Bankruptcies bust and flame outs. That's right. Absolutely not true. I had to start a whole website because they weren't doing that. If you look at the mainstream press, it's just, especially when like the number go up. They were just deliriously excited about the number go up. Yeah.

You have to have such a shows up on your TV or Mark Warburg. Yeah. We bought it. We bought an ape to go in our zoo. And I imagine like the amount of just self pitting that these VCs would have to do in order to write this and believe it is astonishing to me. I'm not astonishing because the venture capitalist is the world's most self pitting life form. But yeah.

Another single T reacts in pointy head chat this week. But also I like that they talk about the merge because they use probably my favorite misleading comparative metaphor to talk about how much less power the Ethereum network is using, which I'll let Molly describe because I know she'll get a kick out of it. I did some of the most incredible data manipulation in the slide about the energy usage of Ethereum now by taking the electricity consumption, the annualized energy consumption, and then converting it into a height, which they then said basically that if the annual Ethereum energy consumption was half a penny tall, you following me, then the YouTube energy consumption

would be the height of the Burj Khalifa. Incredible. Which is like, apparently there's no way to visualize energy consumption such as say, I don't know, the amount of electricity takes to power a house or to keep a country supplied with electricity. They had to instead convert it into a totally different unit and then create these insane graphics based on data that was drawn from some of the most bizarro sources ever to say that YouTube is actually the problem here because they didn't want to impugn Bitcoin.

To me, all crypto is beta manipulation. According to data drawn from bodycams worn by these two Russian women, we can confidently state. So the other thing is you say this is basically horrible data. I've seen how they basically just made up the number, but then they cited it from someone who was like, we definitely didn't make up the number and they were like, good enough for us. Yes. So this is the level that we're looking at in this report, but it is absolutely delightful. I actually listen to the podcast sort of cover of this, like where A16Z did a podcast to discuss

this and they start out the podcast by completely disclaiming all of the data in this report saying that they did not fact check any of it independently and that it could be totally wrong. Fact checking, that's Web 2.0 stuff. Web 3 is just about how you feel and if people will vote for you using their utility tokens. It's really just about the vibes. That's right. The vibe economy. Fact checking.

What am I, a lip-dem? Come on. Our 2023 report aims to address the imbalance between the noise of fleeting price movements such as the gigantic slide downwards and the data that tracks the signals that matter. If you average it out like 1929, a pretty decent year for the US economy. Like, okay, there's some variation if you get granular with it, but on average, it's fine. Yeah, the combined annual growth rate from 1773 to 1929, it's still pretty good. You just make the arrow keep pointing up even though the graph data takes a very strong

turn towards the bottom of the chart. I actually, there were a few slides in here that do do that. And I spent a while looking at them being like, well, how, wait, what am I missing here? And I realized I wasn't missing anything. They have a chart towards the beginning where they have just like the general Bitcoin price over time. And then they start an arrow that appears to go back to like 2000 maybe, and they just sort of like skip it off the top of the Bitcoin price at like November 2021.

And it just keeps going in that trajectory even as you can see the chart behind the scenes start to just take an absolute tank. I was going to say, I mean, who do they expect to be fooled by this stuff? But then you remember that this is an entirely self-referential economy and it doesn't really matter what you, what you're saying. So long as you're continuing to be out there saying stuff, like so long as you're publishing a state of crypto report, like you can maybe, all you need to do is survive one more day, which means getting a few more people to put money into your thing so you can get exit liquidity.

And that's the game now. Yes. Yeah. As you can see, if you chart the price of Bitcoin since the Trojan War in the 1580s BC to now, there is a clear and steady trend. That sure is one. So they say it reflects a healthier industry than market prices may indicate in a steady cycle of development, product launches and ongoing innovation.

But again, like ongoing innovation. But on market prices, like the one thing we've kind of developed to assess and used to assess all market health. And also that the innovation is still stuff like crypto GPT, right? The things where the innovation is like, yeah, it's a way to get money from venture capitalists. Cool. Okay. So that's a form of innovation.

So they say there's progress because new builders are entering web three at a record pace. There are setbacks. They say noise drowned out signal with negative events dominating headlines. So that's right. Anything bad, that's noise. Good stuff. That's signal. Well, noisy means bad and signal means good.

That's what I understand. Market cycles. The price innovation cycle we previously observed continues today. That just reminds me of like in the Coinbase documentary because it came out after as crypto was becoming very, let's say a bad investment. They had to have a guy come in to sit Brian Armstrong down and been like, you know, when crypto crashes, it just gets cheaper and then more people take advantage of the lower price and it goes back up again.

That's the market cycle. Oh, yeah. Yeah. I remember that guy. He had like an economist in to explain that like every time it like bounces back more. So this is, it's got to be a big bounce coming, right? That's the impressive thing about crypto is that everything is good for crypto. Like every single development is great news for crypto.

Yeah. What a great technology. Everything's good for it. It's impossible to regulate. Crypto crash. Great for crypto says Andreessen Horowitz. Wow. It's almost like some kind of a wonder technology.

Sneak oil, you know. We believe recent setbacks underscore the failure of opaque centralized systems in contrast, the resilience of decentralized infrastructure, which again is very funny because they say, you know, you know how it's impossible to scale anything on a blockchain because like Bitcoin is a global payment system. It takes 10 minutes to buy a donut. We've solved that with something called a zero knowledge layer two proofs, which considering the, that they're still talking about how incredibly valuable decentralization is,

I think is fucking hilarious that they bring that up in the same report. Molly, just do you want to quickly pray see like for our audience, what is zero knowledge layer two proof is because it is very funny in this context how it works. Yeah. They're talking about layer two scaling solutions, which are basically a network that is built atop the layer one network, which in this case would be something like Ethereum or Bitcoin. And basically, many of the transactions are taken off chain and they happen on that separate network, which is, and then eventually are rolled up to the initial network.

So you don't necessarily have to do all of the processing via, you know, the Ethereum or the Bitcoin transactions, which are very expensive and slow and difficult to scale. You just do them somewhere else and then sort of publish the summary back to the chain. And one way of doing that is using something called zero knowledge proofs, but there are other ways of doing it. There's optimistic rollups and various things like that. But all of them basically involve just sort of doing the transactions somewhere else on this other chain and then bringing them back to the initial chain.

And all of them are incredibly centralized at this point. That is one defining feature of layer twos is that they're all just sort of a bunch of guys running their servers and their new networks and promising that at some point in the future, maybe we hope they will make them decentralized. But this is all great for crypto and decentralization, apparently. What they appear to have done is not content with inventing reserve banking, not content with sort of inventing the Federal Reserve, not content with inventing banks, standard kinds of lending, not content with showing the need for basic financial regulation from

first principles. They have now created Visa. They have now created a centralized payment processor to overcome the fact that a giant decentralized computer doesn't work because the information still has to travel between the fucking nodes. There's kind of a theme in the crypto industry where they invented this blockchain, this technology that is supposedly going to be the future of everything. And then basically every development since has been them trying desperately to overcome

the shortcomings that they have introduced themselves by choosing to use a blockchain. So, you know, everything since then has been to try to deal with, oh, God, it's so slow or oh, God, it's so expensive. And it's like, man, if only there was some way to solve this huge drawback from this technology that we've chosen. Well, it's one of the reasons why Elon Musk again, it's exactly what he's doing with Twitter. He's just like pulling out all the Jenga blocks and then being like, hmm, need to put some of these back in.

I did see someone unironically suggest that the SEC needed the Twitter treatment that Elon Musk get applied to it. And I was like, oh, good. Yes, that was a great idea. To get kicked out of their offices for not making rent. Yeah, it's now it's now impossible to commit to crime and doge. Everything's legal and doge. This is what I always strikes me about the anytime the crypto people are dragged, kicking

and screaming into another element of the global financial infrastructure is that the whole thing is based on this individualist fantasy of exit. I mean, exit is something that also like Bellagio talks about a huge amount in his book on network states, which is that the only way you can truly be free in a society with other people is if you have the right to exit anything at any time to just walk away. The share zone. Just walk out. You can leave.

Yeah. And if you're rich, then you're fantasizing about just walking away from every institution that you don't like because of its institution this because it makes you live with other people. And so the share zone, but it's becoming the stock zone. And so in this case, right, you're like the whole point of Bitcoin was, look, there is this global medium of exchange. And you could say there's a global medium of exchange that is basically driving the

towards extinction, you know, with like, you know, financing of oil and or this, that and the other, right? All of the things that the global financial system does, they look at it and say, the problem with it is that it's institutional. That's the issue. Not if only it could do all these things or it wouldn't do them if everybody sort of had some kind of equal vote. And the only way they can conceive of that kind of power is if they and the sort of the

specifically minded ones, everyone else has the ability to walk out on anything at any time. It's amazing really that a bunch of people have actually managed to come up with a far, far worse for everyone use case for cryptocurrency than the original use case of buying hit, hit men, child pornography and hard drugs on the internet. Well, Milo, I'll have you know that this is from the presentation. Web three is more than a financial movement. It's an evolution of the internet.

Blockchains are more than ledgers. They are computers. They are not computers. Crypto isn't just a new financial system. It's a new computing platform. Except, of course, it absolutely fucking is not. No, the computers are the same. I haven't changed my computer.

Molly, Molly, how are you leaking in and like putting Bitcoin in your computer? So like, here's my question for you, Molly, as well. How do you react to any time someone says, Oh, it's just you have to think of computers differently. You have to think of this as a distributed world computer. Some kind of, you know, Weltgeist, but you know, rendered in Ape. Well, the convenient thing about words is that if you just change what they mean, anything can be true.

And that is, I think, kind of the strategy here. I've been reading Wittgenstein, I see. Like, you know, if they just say it's kind of like what happens with AI where people will talk about how AI is sentient or it has, you know, human level of intelligence. And what they're really doing is just completely changing their beliefs about what sentience is or about what humans do. It's kind of like that with the internet or the computer, you know, they're saying, Oh, this, you know, this new technology is like a whole new computer, or it's like the

internet all over again. It's like, I guess if you very much simplify how you define a computer, or if you completely ignore the sort of historical development of the internet, then I guess that's kind of true in a way. But when you just say it as sort of like a catchphrase and you don't give all of the asterisks, it means something totally different. Because they talk about, they talk about blockchains as things that you can run programs on. But again, you're not really doing that.

You're running it on computers. You're just settling transactions between them on a blockchain. Yeah, what they're trying to refer to is that the Ethereum network, for example, could be sort of the computing substrate, you know, it could be like the state machine. But the problem is that that actually doesn't work very well. And that, you know, there, that is sort of the like ideological end goal where you have this state machine that is shared and that nobody actually has to pay for. But at the moment, you end up with, or you currently have a network that falls apart

anytime someone launches like a half interesting Web 3 game. So I'm going to go through a few of the slides as well here. So we've one slide we've been referring to a few times, which is the, if you start counting from Middle Kingdom, Egypt, crypto actually has grown quite a bit. That's one. And it has, again, the arrow pointing up as the graph points down, which is like the follow the birdie trick doesn't work if it's stationary and on a page, like it has to be moving.

But if you make the text a little bit wider over where the Bitcoin price starts to go down, then you really do have some potential there. That's what they've done on one of the graphs. Hey, they put Mark Andreessen's thumb over half of this. Wait, no, it's just his head. Sorry. Well, it does look quite a bit like his head. No, one of the others very funny ones is interest, which is measured in social media

activity, which what all that all that's measuring is just like bots. That's measuring bots doing scams. Number of tweets, but the tweets are just like, you know, by crypto in replies to Elon Musk or like covering the latest thing and crypto is just imploded. Yeah, that's kind of the theme behind the new metrics that they've decided we all should be using instead of the price ones is that they're all incredibly easily gamed and also pretty much completely useless measurements of the thing that they're saying it's trying to represent.

So like the idea that social media activity actually, you know, adequately represents interest, I think is maybe worth questioning. They also use things like GitHub stars to represent developer interest, which is like, I don't know when the last time I starred something on GitHub was. Yeah, I re get at it. I re-truthed this this code base on GitHub. I also I just like that if you don't look at this at the at the footnote, they just say new ideas and then new ideas is on a graph from 500,000 to one and a half million.

And the trend is up. You'll also notice that the middle number there is actually wrong. It goes from 500,000 to 15 or to one and a half million to one and a half million again. So they kind of forgot to copy it. There's a there's some kind of irrational parabolic number of new ideas in cryptocurrency. I assume it's a typo and not some crazy attempt at gaming the graph, but you never know. And then of course, we've got to stop these people having ideas, having too many. There are so many new ideas.

We tried to count all of the ideas in crypto. If you chart the number of ideas from Middle Kingdom, Egypt to now. Yeah, back then they only had one idea, which is build pyramid. Yeah. Oh, that's pretty much the same idea they're having now. Don't worry. So they also say Web 3 counterbalances the trend toward Internet consolidation, which again, like to make it work, you have to consolidate it a huge amount.

Need I remind you that the only reason Axie Infinity was playable is because it was so small is to be easily hacked. They say three companies now generate a third of all global web traffic, Google, Facebook and Twitter. And five companies represent 50% of the Nasdaq 100s total market cap. And they say with Web 3, blockchain now without using any numbers, they just say blockchains transfer control from centralized entities to decentralized communities. Don't look at the VCs who funded all the previous ones. They're now funding these.

Ignore who those are. It was different guys back then. Yeah, it wasn't us specifically. That's my favorite thing about these state of crypto reports that Andreessen Horowitz does is they spend a lot of time absolutely dragging companies that they themselves helped to fund. And in some cases are still invested in. They are really, really tough on these Web 2 companies. Despite the fact that without Andreessen Horowitz, I think a lot of Web 2 might not even exist.

Yeah, it's like without Facebook, Mark Andreessen would not be able to afford his Swedish made head sharpener. Yeah, we didn't fund any of this stuff. What Owen Colford does with the proceeds, the Artemis Fowl books is up to him. So also there's a really funny slide that I enjoy. Web 3 advances the Internet, not through crypto, through crypto computers, not crypto casinos. Casinos, of course, which has a big X mark next to it says financial speculation, trust in management, opaque operations and fragile. That's what anytime I think about a casino, I'm like, you know, who's a trustworthy guy? The pit boss.

I love him. My favorite friend, the blackjack dealer who I trust with my life. He tells you when you get to 21. He's a reliable person. Well, that is kind of the complaint, right? Which is, look, you have to trust that the casete that the blackjack dealer tells you when you get to 21 as opposed to computers, which are the opposite of casinos and have a little tick mark beside them, which instead of financial speculation have tech innovation. Who wouldn't trust their computer? You know, and are resilient instead of fragile.

You know how their blockchains are never failing or being easily scammed? How Web 3 is going just great? Isn't an ironic title for a blog? You know, that kind of thing. Well, we'll remember that famous tweet. All my apes still there. Yeah. Although I keep saying these are my, I love all of these slides.

They're like my own dear children. Honestly, for a 60 slide spreadsheet or a slideshow, it is impressively high quality. Each slide is like a masterpiece. Yeah. Every slide of painting, it's not a single filler song here. It's as banger after banger. Yeah. How I drank coming in with the bangers.

So one of my favorite ones was NFT creators have earned more than $1.9 billion in royalty revenues, which at the start of 2021 is like a little half a penny compared to the Burj Khalifa height of NFT creators earning royalty revenues in 2022. And then very bravely, they don't cut the graph off there. They show it resembling the price of tulips in the Netherlands. Yeah. That would have been a great chart to just cut in like sort of late 2022. I mean, the Burj Khalifa has got two sides, right? It's got to go up and down.

Like what are you complaining about? That's why it's impressive. If it was just up the whole time, it would just continue forever. Be very frightening. Existentially, I would say. Yeah. Like the price of crypto will do. Yeah.

You know, well, it's the Burj Khalifa goes in cycles. You ought to understand is as you go, Oh, it's getting like a bigger Burj Khalifa. Well, actually, this is what they actually believe. Yeah. We're just going to keep getting bigger and bigger Burj Khalifas until the entire world is a 20 star hotel. It's going to be a great day for Russians. That's vision 23.

Yeah. You know what that is? That's a Warhammer 40,000 Hive City. That's what that is. A few more of these before we... Back to Neon. A few more of these before we end. One of my other ones I really enjoyed was Web3 Games.

They're a huge opportunity to welcome new users to crypto. And the only thing they can cite in the last year as a Web3 game is Dookie Dash. It's basically a Newgrounds Flash game where board apes running around getting bananas or something. Cool. They're swimming through a sewer, actually. That's the one. Yeah. Yes.

And they also, for some reason, decide to use the number of transactions or other transfer events as the metric for how good, I guess, games are. But ignore the fact that the spikes that they're showing, like the huge spike in transactions that coincided with the other side NFT release, absolutely killed the Ethereum blockchain. I remember during that period of time watching someone pay several thousand dollars in gas fees to buy an NFT that costs like $200. It was like not the most incredible moment for Ethereum. So yeah, that's how you measure if something is high quality art is how many transactions have been involved in it. Right. Because again, I think it's if you have no theory of mind, right?

If you don't fully believe that other people exist, if you're not able to access any kind of empathy, then yeah, what's going to happen is you are only going to be able to see these things in terms of numbers going up, numbers of bigness in terms of just, oh, well, I know this is good because many people made the choice to transact within it. Not least of the remember like in Axie Infinity, most of the people playing were playing because they had like coercive wage jobs to play it doesn't mean it's a good game. It just means it was a site of exploitation for people in Malaysia. Massive in the Philippines this game. Yeah. Excuse me. I think it was the Philippines actually.

Excuse me. Not Malaysia. Sorry. And, you know, they also the other another couple of funny things as well as like, look, not only that, but participation in DAOs is growing where, you know, people are like, yeah, wow, I love being part of a distributed autonomous organization, controlling a voting share of what is legally a limited corporation. I wouldn't imagine that, I don't know, binds me in any way that doesn't obligate me to do anything. No, no, no. I just vote on what color I think the shoes should be. And then I have, I'm not exposed to any kind of liability, for example.

To be clear, they are. Yeah, they absolutely are. If you are owning a piece of a Dow, there is legal precedent that you are liable for what the company that you are a sort of director of does. So, good luck. I hope you had fun investing because you have some responsibilities there, Bucco. I just love the slide that says, Web 3 is experimenting with novel forms of community governance. And then it has a whole box about how DAOs are finally figuring out how to become a legal entity and can fulfill their tax obligations. And it's like, oh my God, what a novel form of governance.

Like, we've done it. We figured out how to form an LLC. It's revolutionary. So, the last slide before we hit the old Dusty trail, or second last one, rather, is the world's biggest brands are exploring Web 3 beginning with NFTs, including Starbucks, Tiffany & Co, Budweiser, DraftKings, Reddit, Nike, Nickelodeon, Time, Adidas, Porsche, Gucci, Louis Vuitton. What do all of these soy companies have at some point said in the last like two years that they're doing NFTs and then all quietly dropped them? Oh, yeah. If you get an NFT of Budweiser, you can't shoot that. So, that's pretty good for that.

Yeah, you just end up shooting. Like, the person who's the crossover between the gun nut and the Web 3 guy just ends up machine gunning his own MacBook because it's got a Bud Light on it. Yeah, like Israeli border security. So, the Starbucks, Starbucks, for example, right? Like, there's not a liquid market for its virtual coffees anymore. Like, that doesn't exist. Porsche couldn't sell any of its NFTs. No one actually bought these because they were made by customer facing marketing departments.

Fucking like, no actual valuable company was experimenting with NFTs or rather no big company was experimenting with NFTs in a way that was meaningful to its business outside of an ad campaign. Chevron wasn't using fucking NFTs, for example. Yeah, it's pretty damning. I mean, cause Porsche guys will buy anything. Like the amount of like key rings and jackets that they own. Gucci guys will buy anything. Yeah, if they won't even buy an NFT, you're fucked. My favorite thing about, or my favorite company on this slide is Reddit because they went to such great lengths to try to hide the fact that the things that they were trying to sell to people were NFTs.

Like they came up with a whole, they were like, no, no, no, no, they're digital collectibles. And they like basically were like, don't worry too much about what it actually is because we know you'll hate it. Don't worry too much about the fungibility of this asset. So finally, what we're expecting for 2023 and beyond, some of the most iconic web three products will be built during financial downturns in crypto. That's right. Any day now, some genius is going to figure out a way to finally come up with a use for all of this digital infrastructure we built. Smart contract security will improve as people adopt techniques like form of verification and symbolic testing. Designer adoption of zero knowledge tech, developer adoption of zero knowledge tech will accelerate, which means yes, that's just centralization. The internet will continue consolidating into big tech, underscoring the importance of web three.

So everyone is going to continue moving away from our thing and onto things we don't like. On-chain games will rise in popularity, to which I would say, yeah, from where they are now, if they're going to move at all, it would probably have to be a rise. And there will be further advancement in hardware optimized for zero knowledge proofs. Concerns about social media giants will heighten, highlighting the need for decentralized social networks. Ask me how Mastodon's going. Good, I assume. Again, just imagining, yes, people will make the rational choice to go where their data is valuable or whatever, but you also have to pay 25 cents to retweet something. And also, you can't take down spam because there is no moderation.

Yeah, absolutely. No mods, finally. I mean, look, Mastodon has got all the most annoying people from Twitter. It must be going well. Governments will pass bipartisan crypto regulation. As block space becomes more affordable, non-speculative uses of tokens will proliferate. That's my favorite one and the one we're going to end on. Yes, that's right. We're finally going to find a real use for this at long last.

One day a real use is going to come and wash away all the speculation. Yeah, that's one thing that's really remarkable to me is their claims around block space. And they also keep in the podcast that I was listening to, they sort of go on about how transaction fees are going to get so cheap. And they sort of ignore the fact that there are blockchains out there that have really cheap transaction fees and they are impossible to use because they get spammed so hard because there is no monetary incentive not to do it. And so I was like, I don't understand why they assume that this time it will be different because it is our special blockchain. That's well, you know what? Every blockchain is special to me. So I think that's about, I can close the big dusty tome that Andreessen Horowitz sends all of its annual reports to me and say, once again, to Molly, thank you very much for coming on and hanging out with us today. It has been a delight.

Thanks for having me. And thank you to all our listeners out there in podcast land and to say, don't forget, we have a Patreon. It is $5 a month. You can get a second episode every week that also includes bonus episodes like Britonology and Alice in my series where we read books called writtenology and other various things. It's not derivative, folks. It's not derivative. We came up with it independently. It's coincidental.

That's right. For a mere fraction of an ape, you can get all of this. You have a Twitch stream on Thursdays and Mondays, 9 to 11 British time, which Alice and I are currently 15 minutes late for. Milo, he's in Australia. You should go see his comedy. It's at his website, which will be linked in the description. Yeah. I have a special.

You can, it's just kind of like an NFT in a way. You can log on to the internet and you can view it with your computer, which is my understanding of what the blockchain is. You can contribute to YouTube's Burj Khalifa of electricity compared to Ethereum's half penny. That's right. Where you can take a break and watching MrBeast and go and watch that. Check out his special. I promise he is more awake in it. Yeah, that's true.

And that newsletter again for Molly is newsletter.mollywhite.net, so do check that out. Anyways, I think that's all from us and we will see you in a couple of days in the bonus. Bye everybody. Bye