The Crypto Transformation

Kicking off 2021, we’re going to widen out the lens and explore the big picture social and economic impact of crypto. Rapidly accelerating adoption of blockchains and crypto currency are merely early indicators for and enablers of a much larger global social and economic transformation. Crypto infrastructure offers a radically new infrastructure on which to construct social and economic institutions, creating a new fabric for how individuals collectively work to create and share value. New ‘corporate forms’ made possible by crypto offer the potential for human economic freedom that transcends the legacy nation state system and forges a new path for how people will organize themselves and society.

Joining Money Movement host Jeremy Allaire for the 2021 opening episode, The Crypto Transformation, are two innovative leaders and thinkers from the crypto world who are envisioning what the world could become as we keep building. Jeremy will be joined by Balaji Srinivasan (, the storied technology entrepreneur, innovator, disruptor and futurist, and Ian Lee (, crypto investor, builder, writer and thinker.  Join us for what will hopefully bring us up to the 100,000 foot view on what’s emerging to be a millennial scale change in how the world is organized.

[00:00:08] Hello, I'm Jeremy Allaire, and this is The Money Movement, a show where we explore the issues and ideas driving this brave new world of digital currency and blockchains since our last episode in mid-December, there's just been just a breathtaking amount of of activity in the crypto space. There's been, you know, obviously just this incredible growth in and what's happening with digital currency. And it's been obviously really inspiring. [00:00:41][32.7]

[00:00:42] And I think just on the whole, all of us can can see increasingly that, you know, crypto is just lurching further and further into the mainstream. [00:00:54][11.5]

[00:00:55] And I think this is obviously like on a broader basis, driving more interest. That interest is surging. It's not just on the investing side. [00:01:04][8.3]

[00:01:04] It's really people trying to understand, you know, what what this change really represents. [00:01:10][6.0]

[00:01:12] You know, we have obviously like these store value assets and we have an incredible amount of of of interest around that. But there's more fundamental things that are happening. And I think it's really easy to get focused on things like the price or the investment thesis in in these underlying assets. And while I think that's really important, I think the much more interesting thing to focus on and I think a lot of why so many of us got involved in crypto over the past decade is the real transformation that this can bring to the world. [00:01:48][35.6]

[00:01:49] And I think kicking off twenty, twenty one, I wanted to kind of widen out the lens a bit and explore more of the big picture, social, political kind of economic impacts of crypto. [00:02:06][17.6]

[00:02:07] I know for me, when I got involved in this back in 2012 and early 2013, the there were a lot of light bulbs that went off about what this infrastructure represented and what it could represent in terms of changing the way economic activity and human organization happened. And so I think when I when I kind of zoom out like that, the sort of this rapidly accelerating adoption of blockchains and crypto currencies are really just like early indicators for and obviously enablers for what I think is ultimately a much, much larger global social and economic transformation. And, you know, crypto infrastructure itself offers a radically new infrastructure on which to construct social and economic institutions. In many ways, it creates a new kind of fabric for how individuals collectively work, how they work to create things, how they work to share value. And ultimately is is giving birth to we're already seeing it giving birth to new kinds of corporate forms that are only really made possible by crypto and that offer the potential for human economic freedom that even conceptually and literally transcends the legacy nation state system and forges this new path for how people and society can organize themselves. So this week, I'm really excited to explore all this and really excited to be joined by two innovative leaders and thinkers from the crypto world who are envisioning what this world could become as we keep building. [00:03:50][103.4]

[00:03:51] Buyology Srinivasan, the story tech entrepreneur, innovator, disruptor futurist and Ian Lee. He'll be joining us in a little bit is a I think a fantastic thinker, builder investor are going to be is going to join joining in a bit for this conversation. But I just first want to kick things off with you. Balaji, welcome. [00:04:09][18.5]

[00:04:11] Hey, great to be here. Yeah, it's awesome. Awesome to have you on. [00:04:14][3.2]

[00:04:14] I know just before the show we were talking about last time we chatted and stuff, but I wanted to actually just start and thank you actually and just just offer my gratitude because I don't know how many people are aware, but you obviously played a really, really pivotal role in in what became USDC. And, you know, for for folks that don't know the history, you know, Coinbase and Circle obviously collaborated together to launch USDC over two years ago, almost really started like two and a half years ago. And biology was really, I think, just an incredible person to collaborate with in making that happen. [00:04:54][39.4]

[00:04:54] And I think it wouldn't have happened without you. And and I think. We're all really proud of that, and I again, I just want to first just offer my gratitude and thanks, because you've been a really big part of that. [00:05:06][12.1]

[00:05:07] Well, I appreciate that. And you guys. Yeah, that was absolutely a team effort, you know, and I was I was really proud to work with you folks. You built a great initial smart contract. And I think, you know, that was quite a sprint. We did that in about 30 days, as I recall, and not much sleep on my side and probably not mature on yours. But those great launch and I really think that we have we built probably the best stablecoin out there, I think, in the fullness of time. I also respect what the dye people have done. That's a different approach. But but I think that that we really have we put a dent in the world. And, you know, I was really proud to work with you on that. [00:05:46][39.2]

[00:05:47] Yeah, very cool. Well, thank you again. And, you know, I think it ties into some of these other themes, which is like, you know, there's these building blocks and what are these building blocks? And and obviously, like representations of the money is like a building block. It's interesting and useful in a lot of different ways. But like like I said in the intro, like, I want to zoom out a bit and I think, like, maybe just to start, I'd love to have you chat a little bit about, you know, when you think about, you know, Blockchains, Tether, second generation, third generation kind of where we are, you know, what do you think? [00:06:23][36.3]

[00:06:24] You know, very big picture. What do you think that this technology represents? What do you think this technology enables on a on a very large kind of global social economic macro kind of kind of level? [00:06:36][11.6]

[00:06:37] I mean, it's a new system of property rights that basically I mean, I think. Everything is becoming digital, you know, that, say, 20, 20, I mentioned this in a previous talk, but Crypto natives a year that things switched over to the Internet as being primary. And I think a non obvious concept is that all wealth becomes digital. And so that's obviously true for a lot of wealth, you know, software seeing the world. [00:07:01][24.0]

[00:07:02] But obviously it's all wealth until you start thinking, OK, it's not just PDF, but the instructions to go and print out a machine part or to deliver something or for a robot to manufacture something or for a drone to deliver something, more and more of the world will be automated. And as that happens asymptotically, all wealth is digital because the instructions to instruct those robots are digital. And then how do you protect that kind of digital property? Well, it's all crypto. And so essentially crypto is the basis for the next system of property rights that goes extremely deep. Go to lock and his theory of government and you know, government's legitimacy comes as a guarantor of property rights, but that it's a different guarantor online. It's it's cryptography and crypto currencies. And so this is like a really foundational philosophical thing that has deep implications for many disciplines beyond just computer science or economics. [00:07:56][54.5]

[00:07:57] Yeah, yeah, absolutely. [00:07:58][0.8]

[00:07:59] I mean, I think, you know, this this bigger theme of, you know, when when we think about what units of organization even are and how individuals kind of collectively interact in those and what the mediation of that is and how people can form those and so on. We're going to talk a lot more about that. But, you know, just at a at a at a at a very high level, and when you look at kind of where things are today and sort of, you know, as I sort of like to say, like we're we're sort of entering the like the third generation of Blockchains tech right now. [00:08:36][37.5]

[00:08:37] And, you know, I think like whatever whatever kind of Moore's Law equivalent you want to apply to, like the evolution of Blockchains tech over whatever the next 10 years, you know, what do you think taking your concept of basically all all property, you know, becomes digital and a little bit of what you've elaborated? [00:09:00][23.1]

[00:09:01] Like, where do you think that takes us in, you know, in 10 years? And, you know, obviously I'd like to remind people like 10 years is very fast. Actually, it's a really fast period of time. Like and even, you know, these big arcs of change that happen with the Internet, like there have been a lot of times over like these 10 year periods. And, you know, so it happens pretty fast. But, you know, obviously like bitcoins over 10 years old now. But but where where do you see this kind of leading us? And what impact do you see that having in terms of the kind of social and political institutions that we know of today? [00:09:36][35.0]

[00:09:37] Well, so one thing I think is that Bitcoin and more generally crypto becomes the option for lots of countries that don't want to be caught in the US versus China Cold War. So becomes like the the the option of the rest of the world because they don't you know, the dollar is increasingly being weaponized and used to impose sanctions and platform people and not just quote unquote terrorists, but but it's just a much, much it's it's a constant expanding set of people. It just is mission creep, you know. And then conversely, China's digital yuan. Well, I mean, it's probably going to be quite functional. I mean, they're they're smart and they execute and they are really serious. But, you know, you may not want to have your entire, you know, economy based on digital yuan also. Right. That's got its own risks. And and so a demilitarized zone is attractive to everybody who can't be number one. Yeah. And so that's a very powerful thing, like, you know, kind of the human psychology. If I can't be number one, then no one should be. Well, crypto is for you. Yeah. And and that's very interesting. You know, I was just joking to a friend of mine the other day that we're going to be giving a new term to our new definition of rootless, cosmopolitan. You know, if you know that old term is kind of an epithet against the what we call the digital nomad today, somebody who didn't have roots and moved from place to place and so on. But rootless means something different in the context of a blockchains because a blockchains is a database that doesn't have a root user. [00:11:03][86.4]

[00:11:04] Right. I'm listening to some of your comments on this on another talk. Yeah, yeah, yeah. [00:11:09][4.6]

[00:11:09] So, you know, the reason I came in from this angle is, you know, there's different ways of cutting the space, obviously. But let's say, you know, your audience, you're talking to somebody who's Awassa or a Zuhur person who understands databases, understands PostgreSQL back in engineering. Right. And their common kind of opening gambit is, oh, blockchains just a slow database and say, well, OK, let's make a table of features. Yes, performance is less. But guess what? No, we've massively increased. We have made it massively multi-client. We've massively increased the number of simultaneous users. And I can. Prove that because what is your Posterous password, did you post on the Internet PT. five, four, three, two, you know, and so on, most people don't write. You cannot read every table and row in the main Twitter database, let alone all their data warehouses and so on. Those are not public datasets. And then immediately the response is, well, we don't just trust anybody on the Internet to read our data. I'm like, oh, so you don't trust everybody? And so therefore, trust is actually an implicit design consideration. Right. And so then you start to get to the idea of, OK, well, this all this problem of having essentially a database that anybody can read. Every single byte. Yeah. Anybody with the digital asset can write to anybody with enough compute, can write blocks to, you know, if, you know, if you're mining, if it's a proof of work and of course there's variations and that just this completely different world. And one thing that's kind of obvious to me is crypto is not just open source, it's open state and open execution. And but what that means is you don't just have the source code visible. You have the back in the database visible. And you can also replay the entire history of the Blockchains, including Ethereum code. This addresses, obviously, many of the problems with social media, you know, because, you know, the market power that Twitter or Facebook uses to these platform competitors, which they did to Meerkat and to countless companies, have have been hit by Bitcoin and prioritize out of the Facebook feed or the Twitter feed or just people, individuals who've built up followers or what have you and just can't reach all of them on Facebook without paying ads. All of those kinds of things go away if that back in was actually open. And, you know, the fundamental thing about an open state backend is that anybody can write different clients to it. You know, this is what Twitter used to be. You remember it used to be an API in the back. And the issue was that folks started implementing new front end that replicated all of the features of Twitter. And so then what happened was they were no longer the monopoly provider of advertising and they couldn't figure out how to monetize the API sufficiently. And so they throttled access and they nursed it until it was just something that were being hit through the main client. Today, though, the next Twitter would basically tokenizing. And so you might there's different ways of doing it. Could be internal currency of it. You could you could tokenizing messaging. There's many different ways to do it, but it's obvious that there will be a tokenizing version or versions. And when that happens, it's going to happen as blockchains scale. I think too much promising some of the new L1 chains maybe promising. I think actually those chains, rather than chasing digital gold or DFI, they'd be well suited to chasing these kinds of application areas and just specializing. [00:14:21][192.1]

[00:14:22] Go ahead. Yeah, totally. Yeah. I wanted to come back to something you said earlier, and it sort of is on that kind of currency kind of store value kind of kind of piece that, you know, I think, you know, obviously people who kind of looked at the history money realize like Fiat is sort of the exception, not the rule. It's a it's a really relatively recent phenomenon. And for the most part, the world wanted to operate on non sovereign forms of money for for almost Tether. [00:14:55][33.3]

[00:14:56] And and so the idea that the much of the world would would want to be able to transact for value over the Internet in a non sovereign stored value is is quite in some ways it's obvious that that's sort of what people will increasingly want to do, you know, not not just to sort of get outside of the US and China kind of implicit kind of economic warfare. But but just as a as a as a general matter, as a peer to peer thing. [00:15:27][31.7]

[00:15:28] Yeah, absolutely. And I think, by the way, that's our thing. That's interesting. Our crypto it's the second choice for many Americans and many Chinese, you know, millions of dollars, tens of millions of people in both countries like crypto. And so that's a good backup plan where Americans are using crypto. Well, at least it's not China, Chinese using crypto. Well, at least it's not America know. So so I always look for something like that, like rank choice, voting or what have you. You know, it's like everybody's you know, it's a lot of people's first choice and a lot of people's second choice. That means it's kind of a global first choice. It's a very important thing to look for. [00:16:00][31.8]

[00:16:00] Yeah. And obviously we're going to see a lot of experimentation in in synthetic algorithmic types of stablecoins. We're going to see, I think, synthetic fiat, digital currencies, all kinds of fun stuff. So it'll be interesting to watch. I guess. You know, one of the things that I'm I'm interested in exploring as well is, you know, the ultimately like the broader social and economic and political implications of this technology. [00:16:31][30.1]

[00:16:31] We have an infrastructure which by design doesn't have a concept of a border. I mean, the Internet itself is like, well, like routing tables. And I. That doesn't doesn't care what a country is, but, you know, fundamentally, when we're now we're dealing with these fundamental forms of record keeping, fundamental forms of kind of trustworthy compute, you know, the sort of layer there. [00:16:59][27.9]

[00:17:00] Again, it doesn't care what the border is and but it has these, like, underlying materials that you can work with. And the thing that I've really been drawn to is this idea that we're going to see, you know, new micro economic units of organization that are created that exist entirely as sort of transnational corporate forms that are effectively the entire the existent tokenizing they entirely exist on chain and individuals can kind of connect into those participate in those. I'm interested in your thoughts just at a very high level about where you see that, where you see these new corporate forms kind of birthing out of public chains as well. [00:17:51][51.4]

[00:17:52] It's a great question. So I think we're going to see, you know, on and corporation is going to be very important. Aragón project is like a V one of this. And there's a smart guy. I think we're going to see more. And, you know, I'll give a few concepts on that. You know, last year I wrote that this is before the pandemic. I not last year, OCC 2019, now 19, I wrote that San Francisco and setting up in San Francisco and incorporating Delaware is now starting to be clearly wrong. But we haven't yet got into remote first. And launching incorporation is clearly right. But that's obviously the future. Now, 12 months, not even 12 months later, remote first happened. Right. And and I think the next step for a truly global business is launching a corporation. Right. And so we're already part of the way there in terms of a lot of these DFI things. Are there you know, they're basically doing on training corporation. The wallet is on chain. They have, you know, UniSuper, something is receiving fees on this model of talked about. Go ahead, sir. I just saying governance, voting, et cetera, the governance, voting. That's right. And you know, this model I've talked about called SACE for gas, which is what it sounds like. It is a new SACE model where you have an en chain address and you receive features as somebody uses your smart contract. Right. And why do they use your smart contract rather than fork it? Well, it may be linked to some offline code. It may simply be that they trust that that's the main one and it's not going to have some weird security bug and so on and so forth. [00:19:27][94.1]

[00:19:27] It might be composed into a bunch of other things that are valuable for you, too. [00:19:29][2.5]

[00:19:30] That's right. That's right. So SACE for gas is cool because it's very self-explanatory and it's a new business model right where it is. It's open source and open safe. It's so monetized. Well every indication you pay the the invoker. Right, OK. And so I think that Onchi and a corporation, the way to make it happen is there's, you know, 100 plus countries in the United Nations. And we want to do is first rate a series of blog posts that show every step in setting up a company. So like, for example, V1 is you set up a company and then you, you know, acquired four million dollars and you should liquidation waterfall. Right. And then two is you set up a company on chain and you have a series of investment and you show what that looks like and then it's acquired and you do a waterfall and you start getting more and more complicated. You have to pursue and you have all the crazy structures. Exactly. And the thing is, every single venture capital term arose because of some historical train crash. And then people got together and they said, actually, you know, let's avoid that by actually spelling out drag along. Right. Then we can figure out what happens in that situation. And an entire cap table is basically an equation for who gets what money when. Yeah, right. And then, of course, you've got, you know, the debt stack and and so forth. That's that's basically just a set of equations. And, you know, the way of thinking about it is that the corporate charter has a has like almost an ACL table. Right. [00:21:00][90.4]

[00:21:01] Which is, for example, you've got you need a series A, A, B and a C majority in order to issue a series D shares. Right. That kind of stuff. Right. And so you can actually and I have at times gone and taken corporate charters. And, you know, just as a VC, you go through a lot of this stuff. And just for me to understand it, I would enumerate it like this. And I just get a lawyer to be like, did I read the legalese correctly? And so I kind of got my PhD in corporate theology or whatever doing this right. So I think that a very useful thing. See, those terms are actually very useful terms. And one of the problems with the echo boom of twenty seventeen is it was just raise money online without vesting schedules or all the mechanics that we found since the. [00:21:42][41.3]

[00:21:43] You have corporate farms, right? It's not just like we can do whatever the fuck we want and yeah, that's exactly right. [00:21:49][6.6]

[00:21:50] So especially when it's online and you have a lower trust environment than you do with B.S., it's actually quite important to take some of those OCC concepts and put them online, setting a series of maybe 100 exercises and you build up to something like the Facebook IPO or something very complicated like that. Right. And, you know, which has debt and has proxies and it has the whole shebang. Right. And and you show all of that happening on chain. And now you've got like basically exercises that show like the whole lifecycle of a company. [00:22:19][29.7]

[00:22:21] And then you merge the the Treasury is, you know, digital currencies. Right. The Treasury is it can be an stablecoins. It can be. And, you know, essentially like a corporate form is essentially, you know, a treasury and a governance around the Treasury. And the Treasury can have its own native token, which is called that equity. [00:22:38][17.3]

[00:22:38] And the Treasury can have, you know, obviously like obligations and it can spend and receive and so on. So you can. [00:22:46][8.0]

[00:22:47] That's right. And so by doing this, what you do is you sort of build the on chain analogs of everything. And and then what you do is you start taking that to law reviews. Right. You you take that to, you know, folks at Yale Law, you take that to lawyers in different countries and you say, look, you know, here's what I did. I showed a bunch of scripts that essentially replicate Delaware stuff, but put it on chain. And how can we write some law review articles on this proposing that this be accepted as a you need supports to say, yeah, this is valid and this is a form of, you know, that that has substance. [00:23:29][42.0]

[00:23:30] You've seen that in some places, like even Delaware started to do some of that as well. [00:23:33][3.1]

[00:23:33] But that's that's right. That's right. And Delaware and Wyoming are fairly far sighted on this. But in this fashion, you would then so you get the code that you can do pretty relatively quickly. I might put up like a bounty or something Bitcoin prize to this. Right, relatively quickly. And then you send it to far sighted people who have been writing blockchains regulations, say, take a look at this. This is a translation map. It's basically like, you know, it's like a scanner scanner will take something from paper form and put it digitally. This is like a set of instructions for the next year. [00:24:05][32.5]

[00:24:06] I want to I want to I want to get in here because I know. Please. Of course. Yeah. Let's say that around this topic as well. [00:24:12][5.7]

[00:24:12] So I'm excited to to invite you in to join us as well. In the conversation, Ian Lee, who's with IDEO idea of OCC and working in the crypto space and building in this space as well. [00:24:25][12.6]

[00:24:25] Welcome in. [00:24:25][0.3]

[00:24:26] Yeah. Thanks for having me. Thanks for having me. And also, I just want to point out that when you get Germi and Biology on the same line, Bitcoin breaks 40 K for the first time. [00:24:35][8.3]

[00:24:35] Oh, that's really how we can do this more often. Awesome. At least once every four years. All right. [00:24:42][7.5]

[00:24:43] That's a good idea. Yeah. All right. We'll make sure we come back around it. One hundred and sixty. How's that? That's awesome. Very cool. And maybe just just for for everyone's benefit. Just take a moment, share a little bit about yourselves and about yourself. And then I want to I want to pick up on this idea of these sort of new corporate forms. [00:25:00][17.3]

[00:25:01] Yeah, sure. So quick background is done in crypto. In 2014, I headed Bitcoin and crypto at Citigroup for three years, which was the fastest way to get fired at a bank during that time. But I been studying to open software for quite some time. And after reading Satoshi White Paper in 2014, I immediately realized that what it was was not a digital coin. It was actually an open fintech stack. And when you have an open fintech stack, what that could do to the financial system is is profound. So I got kicked out of Boardroom's for several months, got reinvited actually back in when Goldman invested in Circle in early 2015, that that obviously a lot of waves and effectively ran our strategies across the bank for for those those period of time. When I was there, I met a team at IDEO, which is a 40 year old design and innovation company that was setting up a crypto team in twenty fifteen. So that was called The Ideal CoLab stands for Collaborative Lab. We've been working with hundreds of crypto startups and enterprises over the last five years. And then two and a half years ago, we spun out a venture capital fund focused on crypto and had been investing and building crypto companies ever since. So it's been a lot of fun. [00:26:12][71.3]

[00:26:13] Yeah, that's awesome. I know. I know some of the topics that we're talking about are are obviously near and dear for you. [00:26:20][7.2]

[00:26:21] And, you know, I'm obviously excited to hear at some point about what you're actually working on building. But maybe just to latter off of what we were just talking about, like you had a recent tweet storm and you're sort of developing this thesis around these kind of Internet cooperative's. And I'd love to kind of you know, I think the idea is. That that we were just talking about, which is sort of taking what we think of as a corporation and organized that bring that on chain Aragón obviously like creating this of community based treasuries and governance and other things like where do you where do you see this now? [00:27:01][40.6]

[00:27:02] Yeah. So, I mean, I'd love to get your guys take on this as well. You know, almost two years ago I was I was really fascinated by where was crypto and decentralization going to make a really big impact in people's lives. Right. I mean, that was kind of where I started six years ago. And one of the things that was really interesting to me is IDEO had been studying for actually numerous years the future of work, not even related to crypto. Right. And when you look at a couple of things, work itself is decentralizing. It has been over decades. Right, with the rise of like the gig economy and things like that, you have more and more freelancers like thirty five percent of the US as freelancers today, like 50 percent will be that in a few years. You combine that with this other trend, which is that technology is starting to centralize power and centralized wealth among a very few number of people. So you've got these interesting platforms that are right in the middle of that, like Uber, right where you have some people who have become in some cases Decha billionaires or whatnot. And many of these people on these platforms that are contributing resources or services to these platforms are often below the poverty line. I mean, we live in Silicon Valley and there's people like sleeping in their their cars, driving movers. Right. And this is not specific to Uber. This is happening everywhere. Right. 50 percent of jobs are expected to be automated in the next decade. So you look at those two kind of seemingly unrelated things, right? Work decentralizing, technology centralizing. And you wonder, doesn't there have to be isn't there a better way? And so one of the things that I've been looking at for the last year and a half and researching into is this this this topic that I call crypto cooperatives, Internet based cooperatives enabled by crypto, which is can you decentralize organizations and the ownership of these organizations to the people that actually provide value to these platforms? And I think we actually have a lot of precedent for this to actually be very excited about the potential, even though there's a lot of work to be done. So the the concept of cooperatives is not a new thing. They were actually invented in fourteen ninety eight. So five hundred years ago. [00:29:27][144.9]

[00:29:27] I mean, this is a corporate form, right? It's just end of the day, it's sort of how do people get together and organize their work and write the fruit out of their work. [00:29:37][9.9]

[00:29:39] RCI Ace Hardware, Vangard Tripoli Insurance Visa was once the cooperative. The Green Bay Packers was a cooperative starting in nineteen twenty three, like 15 percent of the world belong to cooperatives and cooperatives today, which are mostly in agriculture and retail, employ 10 percent of the global workforce. Now, here's here's the question, though. Why haven't cooperatives effectively been able to? Why isn't that model shown up in technology? Well, because ownership of technology has not been very easy. So going back to what Bolaji said, you can actually now encode the ownership of a enterprise organization into these crypto tokens and distribute that across the workforce. So that's that's what I think the big opportunity is here. [00:30:25][46.5]

[00:30:26] Right. Right. So it's it's. Yeah, it's many things, it's sort of the mechanism that is that is needed so that you actually have a trustworthy infrastructure to know kind of what ownership is now, how people are contractually entitled to different things, to make decisions, but to have the actual participation in that be dramatically more distributed. [00:30:50][24.4]

[00:30:51] Yeah. And here's here's the the big idea is that, you know, could the provocation is could crypto cooperatives start to solve massive challenges that we have around the world right now and that are creating really big problems, second order problems around wealth inequality? Right. Ninety nine percent of the world now owns the same amount as the top one percent. Or maybe I should have said that the opposite way. The other thing is that when you look into the research of cooperatives, cooperative models have shown to be more resilient and actually outperform in some cases, traditional corporations, like in 2008 when the financial crisis happened. Credit unions, for example, had a five FX lower failure rate than corporate banks, many corporate cooperatives. I think there was a study that the five year survival rate of a cooperative is 20 to 30 FX higher than a traditional business. And so this these systems, the combination of the infrastructure like Aragón and things combined with the design and implementation actually within sort of particular work context, like freelancers or creators of influencers online, they talk and stuff like that. Yeah, like Instagram. This is all connected. Like the combination of these things can start to more equitably distribute sort of wealth and value. [00:32:18][86.9]

[00:32:19] And no, to make these systems much more resilient long term, I'd be interested that it's super helpful. I be interested in both you and your perspective. And I think, you know, what we saw with the Internet in the past, whatever twenty years is things became possible that people didn't know we're going to be possible like you. And, you know, like, for example, like fundamental new communications. Utilities emerged out of just like simple pieces of software, mobile devices, billions people connected. Those just that was unimaginable some some period of time ago. Is this a similar thing? Like are we getting the building blocks in place where whatever people call like the Uber moment where someone just like synthesized enough interesting features together that that we're right in front of everyone like a GPS and 3G and and a reasonable UX and and like, you know, has such a profound change and people can participate in it. Is that is it something like that where where some group of people are going to envision maybe, maybe, maybe it's a social media platform that is that is sort of owned and operated as a platform for operative that is built on decentralization, or is there something that happened where there's just massive scale and success and it just works and it's independent of nation states. It just is out on chain and you've got mass participation and value creation and so on. How does this how does this how does this kind of burst into into being in the same way that certain things like social media or other other dimensions of the Internet kind of burst into existence? [00:33:56][96.9]

[00:33:57] So I have a lot of thoughts and I actually have a book that I've been writing. So if you want to call me, I'll try it out at some point. But so tentative title of the book is called The Network Shape. And the idea is that, you know, we have mechanisms to start new communities and new companies and now even new currencies, but not yet new cities and new countries and I think new cities. There's actually already legal processes for doing this where you can go and take unincorporated land, for example, and incorporate it. And with Starlink and with social networks, you could imagine actually building a community in the cloud of the crowd from territory and build a city. You do the whole city in VR before you build a single brick. So you argue over everything in the cloud. You build an actual community before you move there. The structure is similar to the eighteen hundreds when people would move out and build communes and so on. And in the the west of the US, I think to get to like something like new countries are going to need new new techniques. Most importantly, you're going to need international recognition. And that might seem crazy, but think about how far Bitcoin has come in the last ten years. If you have a community of a million or ten million people that considers themselves to be a digital nation as a footprint worldwide and is serious enough about it for long enough and does all the diplomacy necessary, I do think that you will get a new country recognized in the UN, just like you've got new currencies that are being recognized on Bloomberg and and so on exchange rates. I think that's a mechanism by how that happens. Ian, to your point earlier, by the way, on influencers, I'm an investor in tribe role dotcom. Which is doing social money, and I do believe that I mean, that's just one, but I do believe that it is going to be influenced. [00:35:36][99.4]

[00:35:37] I mean, this is maybe obvious, but the next social media platforms will be rating influencers from the existing ones and giving them a better experience. So locals, dotcoms, there's actually another company called Circle, as you may know, is like a like a it's a different it's a it's a it's a creators platform like Circle. So I believe and there's you know, there's there's also newsletters, you know, like Sub Shack and Ghost. And so people are starting to pull their communities off of these platforms that, you know, the free model was actually wonderful 15 years ago because, well, you can freely communicate with everybody. But now free is table stakes and we want the better than free model. We're actually getting remunerated for all this work. Right. And so, yeah, I think that's an obvious thing. And it's not just also remunerated. You know, some people think that major social networks have too much moderation. Others think there's too little or too much censorship or too little whatever. But actually what really people are saying is I don't feel that my community is properly like flipping the dials. Like, you know, I think this place is too big and, you know, I'm not I'm not in control enough. And a smaller community that's run by a de facto or not de facto, but an actual influencer has a very clear set of rules associated with it. I think you're getting way more of those big social networks which still exist will be sort of war zones that people transit through en route to these more monetize all communities. I mean, am I kidding? I'm not even kidding, really. Rather different war zones. [00:37:03][86.0]

[00:37:03] Basically, there's like these like what I sort of think of as like the horizontal platforms kind of kind of universe that could move into these entirely digital forms. And but then I kind of come back to like your basic corporation. Right. So, you know, it's a corporation. People invest in it, people work for it. They make something. Maybe they make in software, maybe they make a physical thing. They sell it because it can be seen around the world or what have you. Just the kind of, you know, globalization is created this way where people can be products, sell them anywhere, all this kind of stuff. How do you like how do we envision, like beyond a digital name or far short of a digital nation that I should say a you know, just making it possible? I think this gets back to what but Bolgar, you were talking about earlier, just like that, that people figure out that they can form something and form capital in it and have governance and have that be done entirely routine and and create things and that individuals can kind of contract to that, you know, all of the sharing economy like contract that no, you're getting that appropriate renumeration and stablecoins and tokens or what have you. [00:38:16][73.0]

[00:38:17] Yeah. Yeah. I mean, like one thing is, you know, an interesting view on what a company is, is it's a contract execution engine. I mean, if you've ever sold a company, there's a diligence process where you have to assemble a folder with every contract the company has ever signed. And if you haven't done that periodically during the life of the company, there's some contract, somebody sign it's floating around in email and so on. And it's actually kind of an antiquated process. I mean, it's kind of amazing to think that people could ever do this in the paper age where you have to make copies, like there's really just a file folder with every contract companies over time. It's actually insane to think that being able to operate before the Internet at all, you know, they keep copies of all that in paper. Yeah, yeah, exactly. I mean, like, it's kind of crazy to think that there would be an archive with all the important pieces of paper on the company. Those would be the only copies of it. And it's also kind of crazy, I think in ten or twenty years people think, well, they just had like a warren of PDF, you know, like on DocuSign. And that's crazy, right? [00:39:16][59.5]

[00:39:16] The natural thing is right that this is obviously all of these ought to be, you know, contracting, right? That exactly. That's right. You should be right up on it. It's sort of like people scan open source libraries and say, is this toxic, toxic code because it's God or whatever. [00:39:33][16.2]

[00:39:33] That's right. And, you know, just just, for example, you know, sign and wire. Right. That's the same thing on the blockchains, you know, like you're basically presenting your digital signature and initiating the payment. And if you do it from your official corporate account, like Circle, for example, if you use DNS right, then it's like it's like an official stamp that I publicly committed to something. The Blockchains has witnessed it. There's just so much cool stuff that comes out. And of course, you can eventually Zurin encrypted or what have you. But but that's like the right way to go. And then you get you know, what's interesting is it becomes easier to to sell companies, you know, because one way of thinking about it, when you sell a car to somebody, what do you do? You just hand over the keys, you know, and it's taken for granted that they can keep it RMV and titles and and. OK, sure. Sure. Now, you're right. That does. That's true. Right. But. But basically, a car is a machine that you can just sell to somebody and they pay but over a thousand dollars for it and they could turn the key and it works, right. The original operator usually doesn't have to be there. A company isn't like that yet. A company is not a machine that you can just sell. [00:40:44][70.8]

[00:40:44] But what we saw, a sushi swap was pretty interesting, right? It was like that. Here's this thing and who's got the keys and who's got the multisite keys. And like we're now we're actually appointing other people at the Multisided Keys. And now this this machine has just been passed over to another set of operators. I mean, that's like I think the closest thing we have in the in the in recent times to something that's. [00:41:03][19.0]

[00:41:04] That's right. And so I think that you're going to see more of these things where with smart contract a crucial aspect. I mean, you can automate setting up and tearing down software. Right. You can automate APIs integration testing. What was hard to automate with the flow of money. You know, you couldn't deploy easily on that. And now you can and a program can actually hold money. And so where you can do is actually build a digital machine. You know, for example, a good example would be something like Right. That's just file conversion. And that's just doing MP three to M for A and it's got like 50 file conversion things. That's something where with Smart contract you could turn that into a digital machine that's literally just a cash in the definity kind of vision. [00:41:47][42.9]

[00:41:48] A little bit is like these they're they call them basically like it's it's much more fulsome, like you could actually have like a media conversion blockchains. And that's right. I seen this piece on the cannisters, as they call them. Right. [00:42:03][15.5]

[00:42:04] But that's right. And everything you get out of that is you get on Sina accounting. So now you can basically look at five years of audited financials, so long as they use the, you know, let's say, somebody else's auditing package or what have you, you've got a consistent format and it's cryptographically signed and it's very hard to falsify. And so, you know exactly what their growth rate is. I mean, Quynh market cap is so interesting because, you know, crypto such as odd space where you can see public numbers on the traction of almost everything. Right. That's that's not the case for drones. That's not the case for other industries that don't have all their numbers on. Can we take that for granted in our space? But it's actually quite atypical. Right. And I think that that aspect and I thought is crazy, actually, many years ago when there's a company called Buffer that was trying to that that did this. And it's a good company. Right. But it's being, like, super transparent. I was like, that's kind of weird that you're doing. That is like a small company because it's a lot of, you know, small company, as you know, it starts are hard. [00:43:01][57.4]

[00:43:01] And something like these seeds are like, you know, it's good to be private. You know, all your dirty laundry is not out there, you know. [00:43:07][5.9]

[00:43:08] That's right. But but what they have done, which is interesting, is they turned it into essentially a content marketing gimmick for themselves and an accountability mechanism. And the upside of just taking the hit, so to speak, on transparency was they took the hit like once and then they were sort of inured to it. Right. Like, yep, we failed this quarter or. Yeah, we succeeded this quarter. Now, what I don't like about it is if they really succeeded, you know, then it reduces their leverage. For example, like, this is not the biggest thing. [00:43:40][32.5]

[00:43:41] I'm not saying that every company and issues but Google for a very, very long time did not disclose what percentage it was taking out of AD since to its publishers. It's just like, hey, you put the switch there, you're getting free money here. I could tell you for taking 50 percent or 70 percent or 30 percent or whatever it is. And eventually they disclosed it under a lot of pressure. But, you know, you can't keep any numbers like that proprietary in such an environment. And maybe that's good overall. But it is a constraint. It's something new. You know, Ian, I want you to get a word. [00:44:07][26.5]

[00:44:08] I would love to hear you about this, too, just like the immediacy of like how do we how do we create these today? [00:44:14][6.2]

[00:44:15] And yeah, I mean, just piggybacking off of what would you say? And I think I think when when media starts to get encoded on chain, you know, all those things happen. And what we've learned from crypto recently around like D5, for example, is that it enables higher order possibility. Right. And when you were asking about like, is this going to be a moment where, like the Internet, there are things that get created like Instagram to talk, which we not necessarily could have predicted, you know, ten years ago. I think that's going to be the case. And I think that that's going to be enabled by a range of things, including composed ability. So like DFI, right. You have exchange protocols like Schwab and Sushi Swap and other things. You've got interest earning protocols like you're in finance and whatnot. You've got lending protocols like are they in compound? And they're all composable. And those that Campo's ability enables things on top of it, whether they're centralized products or more decentralized protocols, you take that same thing. And you thought that over to something like media, for example, which I think is really, really interesting because it has enormous kind of. Opportunities and potential related to social networks, social media, art, there's a lot of things going on right there right now in Nettie's and the idea of composable media that creates composable media experiences, whether it's like new kinds of social networks, new social media experiences. Is there kind of like a composable YouTube or YouTube experience that based on composable media? And then what happens when that composable media? You can take some of that and then put that into of and get a loan on it. Like we're going to start to see some really, really weird stuff. [00:46:05][110.4]

[00:46:06] Like, what do you mean by composable media? Did you define that? [00:46:09][3.2]

[00:46:09] Sorry, let me give you an example. So like let's say there's an artist. I actually was an artist by training in undergrad and then I realized that I wouldn't be able to make it. I probably wouldn't be alive right now. [00:46:21][11.8]

[00:46:22] But that's pretty good. But go ahead. [00:46:24][2.4]

[00:46:25] Well, you know, so in this world, it's really interesting. Like, if you're a really, really talented artist, let's say you tokenizing your art and you start to sell that and a T on like open sea or airable or something like that. Right. Let's say you go a step further. Right. That media, which is an art piece, is an NFTE that is composable and let's say you can also encode into that certain unchaining revenues that go into a down, for example, and that Dow ends up being owned by your followers now that NFTE also has financial value. So let's say you have someone buys Minuti from you or let's say you you have some of these art pieces still in your collection. Maybe you can lend that out into Avi or something and get the other way or make or something like that, like one hundred thousand dollar loan to then die or USDC or something to then build credit to then reinvest in yourself and the growth of your business. This kind of stuff is not possible really in web to. Right. But because of the the the fact that media gets put on chain, that these financial kind of things can be encoded within that. And because of the ability of media combined with this rich ecosystem of DFI, that is also permission unless these these new possibilities emerge. And so I think like, for example, these these potential hybrids between social media networks or social influencer networks and fintech now start or like even gaining in fintech start to become possible. Another good example in gaming, right. If you're like a 15 year old kid, let's say you're in the Philippines. Some of this is happening right now around like APSA Infinity or this thing called Yield Gilb. If you're a 15 year old kid in the Philippines, you don't have a bank account. You love playing Blockchains based games. You earn some. And it is through playing those games, you put those nets into a wallet. That wallet and those assets end up being worth like ten thousand dollars. Then you start to ask yourself the question like, what is the difference between an NFL game wallet and a bank account? And and that sort of insight starts to lead to really interesting possibilities that that we haven't seen before. [00:48:43][138.6]

[00:48:45] There seem I mean, a lot of what you're describing does feel like I mean, even even those things are kind of imminent in the next year, right? [00:48:52][6.8]

[00:48:53] Yeah. I mean, in some cases they're already happening, which is really exciting because the truth is that these these problems and these needs for people, they've existed for decades. And so that's what I like to see, is when there is a latent or existing human need, combined with the new capability of crypto that we can now offer. [00:49:15][21.4]

[00:49:15] Yeah, well, one last question for for both you guys. And obviously we could just go on with some of this is sort of I think as we get into some of this, like these on chain entities, whether they're they're collaborative economic or independent of a nation state, kind of exist on chain like rubber meets the road, like people's live places where there you have like there's militaries and borders and guns and taxes and like is your view like these things exist and kind of meld with that just by virtue of how property is classified, how securities are classified, how all that happens or, you know, what is that intersection with let's just call it like national or local jurisprudence and and these forms? [00:50:10][55.2]

[00:50:11] Is it a matter of like we just need some case law to start getting established and some of this? Like what? Where do we go on that? I'll start with you. Biology. [00:50:18][7.2]

[00:50:19] Well, I mean, one huge difference here is that when you disrupt Microsoft, Microsoft can't shoot you. So that is that is a big. Difference, but I actually think that. There's a whole envelope of possible outcomes, one thing that has been kind of interesting is that there is a large group of people within Western countries and within the U.S. that are activists and advocates for this technology. And we saw that with Vincent. Right? We see that on Twitter. In fact, I would go so far as to say that, you know, I think with BTC versus MMT, the battle will really be joined because there are people who are very big advocates for MMT, but there aren't that many people who are advocates against crypto currencies. You know, what I mean by that is there isn't grassroots opposition to crypto currencies because grassroots support and that support, importantly, comes not just from companies, but comes from many individuals. It comes from overseas. It comes from every pretty much every country in the world at this point. And it comes from activists. It comes from nonprofits like if it comes from academics like MIT and it comes from financiers now legacy financial institutions like fidelity. Right. So we're really starting to build a fairly big coalition to do a lot of the fabric of society. [00:51:47][87.8]

[00:51:48] And that's right. [00:51:49][1.2]

[00:51:49] And I think we're going to win 55, 45 or 60 40 or something like that. I don't think it's it's going to be easy. And I'm not saying it's going to be without reversals, but it just makes too much sense to digitize the stuff. And it's fundamentally a technological advance, you know? And so ultimately, you know, there's lots of different models and I can give some historical ones. [00:52:13][23.4]

[00:52:13] One of them is the encryption wars of the 90s. Right. And that was quite a big tug of war. And there were there are a lot of things thrown around. But ultimately, you did get, you know, SSL. Right. And what happened was the U.S. government completely turned and they went from saying, oh, encryption is ammunition. You can't use it to. Have you seen past Ushioda of now the U.S. government requires every U.S. government website to use strong encryption because they want to protect. Right. [00:52:39][25.9]

[00:52:39] Things happen with crypto and German troops and all of this. It's just going to be like this is like so much better. We should all be using this. Right. [00:52:46][6.5]

[00:52:46] And we've actually already seen a flip of that where even a few years ago you probably experienced this yourself. But, you know, when the Big Four audit a crypto company, they use the Blockchains as a Circle of truckloads and they operate the nodes and they're like, holy shit. [00:53:00][13.5]

[00:53:00] Yeah, exactly. And I think about that from 2010, 2013, people are saying Bitcoin is a scam. Less than five years later, they're saying it is the gold standard of truth for accounting. It's triple entry bookkeeping where we can check your internal numbers against an external standard of truth and reconcile that way. That is that is amazing. And and it's just underreported in terms of how important that is, you know. And so so I think that the the ineluctable logic of it, this is this is something which is technically superior. And I do believe that at least in some countries, it will win the day now. [00:53:32][31.6]

[00:53:33] Yeah, I also think it's possible, like New York State has actually, you know, driven a lot of companies to to launch in New York last year simply because the license is actually fairly onerous. You know, and this is possible that there's places, jurisdictions that take, you know, a more aggressive view. But but I think, net, the world's a big place and a lot of places are going to see that wealth is created by corporations is going to want that to come. They're in your thoughts? [00:53:57][24.6]

[00:53:58] I just I'll just make a short comment, which is I think, you know, piggybacking off of what you were saying earlier about how the world is is now living on the Internet as a result of it and stuff. We are going to start to see new behavioral patterns that that we haven't seen before, namely this rise in pseudonymity. And like I think you wrote you wrote something or tweeted something about the pseudonymous economy. Right. I think we're going to start to see more of that where people actually have multiple identities like a named identity and a pseudonymous one like you can be both Clark Kent and Superman or Bruce Wayne and that same time in the digital world. And I think I think we're going to see stuff like that where in certain cases to to address maybe some of those issues where you might live in a state or in a country that isn't as supportive of cryptocurrency is maybe that starts to go to your pseudonymous identity as opposed to your real. [00:54:56][57.7]

[00:54:58] Awesome man, this is great conversations, guys, I am going over my my typical time because I think this is so much fun to talk about on this. So I just I want to thank both you guys for for joining us today. And we'll look forward to doing this again. [00:55:16][17.3]

[00:55:16] There was a correction that also happened during our might've been when I think it might have been right after I joined. So already. And now it dropped three thousand. Well, it was rising when you guys were on this thread, so it's fine. The long term trend is up. So that's one lesson I think about later. Thanks. [00:55:40][23.6]

[00:55:43] All right, until next time, stay well, stay safe and stay informed all. [00:55:43][0.0]


Balaji S. Srinivasan
Angel Investor & Entrepreneur
Ian Lee
Co-Founder & Managing Director, IDEO CoLab Venures