Kind: captions
Language: en
Crypto is eating the last big part of
the world which is finance. No human can
comprehend it. The reason why America
has been so successful is that we end up
building things faster than anyone else.
Do you think that crypto will completely
replace fiat? [music]
>> Our government is aging. I think the
Democrat uh leadership kind of shot
themselves in the foot with crypto.
>> What does the future of finance look
like?
>> I'm a super optimist. I think if all our
problems are [music] money problems,
we're truly blessed. Wow.
So you have said that crypto will win
against traditional finance but I want
to know why. What is it about crypto
that's better for the average person
today?
>> The the basic reason is that a lot of
the kind of growth over the last you
know I think since the 80s been software
eating the world. Um I think this is a
Mark and Dre line and you kind of see
technology as it improves start to
automate more and more pieces of what we
do um with like humans and fax machines
and and stuff like this. Um, and crypto
is eating the last part, I think, of the
the last big part of the world, which is
finance. And finance has been really,
really hard to replace with software
because there's just so much trust baked
into finance. Like, if you actually kind
of go through the process, anyone that's
been through the process of buying a
house, you get all the work that people
have done legally to make that as
trustless as possible.
You see that in the, you know, eight,
you know, 800 pages of disclosures that
you read and no human can comprehend it,
right? There's just no way to consume
that information and make a rational
decision. So, you trust the people in
the process, the brokers, the dealers,
etc. to kind of not screw you over. And
we have laws and stuff to kind of keep
everyone in line, but because of that,
it's really expensive. Um the cool thing
about blockchain and crypto is that you
can start replacing some of those pieces
with software and cryptography because
we have mathematical guarantees that you
cannot violate the um the cryptography
portion. So you can trust that
particular thing. Um it's still a really
slow and hard process because we still
have humans writing the software and
that software is going to have bugs and
and stuff like that and you see that
come out as you know big hacks in DeFi
and stuff like that. But I think uh
slowly but surely you'll start seeing
people replace their back office and
kind of all the stuff that they do
that's expensive that some person that
is doing a job can charge 20 basis
points can now be done with software.
It'll get switched over.
>> I've heard you talk about the current
way that the financial system works is
basically like a regressive tax on the
entire economy. What do you mean by that
and how would crypto solve that? Yeah.
So, um, my engineering brain like think
of it as roads. Like if you have roads
with potholes and tolls that that are
expensive, it that that's a cost that's
paid by by everybody in that, you know,
economy. Like the cars wear down faster.
You got to spend more gas because the
roads are inefficient, stuff like this.
And when you straighten everything out
and remove all the potholes, you remove
that tax on the economy. So you're
paying less less of that tax in every
transaction that you do.
>> If you were going to remove the analogy
and just say like these are the beats
that create the expense or the friction
or whatever like what are the actual
potholes?
>> Yeah. Basically anytime like especially
if you ever bought a house there's
always somebody that for every little
fee and every person that you interact
with they charge some percentage of the
sale of the house. They're doing the
same amount of work no matter what.
Right? This is kind of a that little
pothole or whatever that an expensive
truck full of expensive items drives
over. That's a cost that those items pay
and that cost is borne by the whole
economy. Um so can we replace those with
software and I think the stable coin is
kind of the easiest product to
understand. um you have
an a ledger, right, that represents
money in some bank account that has been
invested in treasuries and then you have
a digital representation of that that
anybody can transfer on a blockchain
like Salana or Ethereum and the cost to
transfer that doesn't require you to
pass that those funds through some
intermediary like you have with uh a
credit card payment that has to go
through the credit card issuer Visa or
the transfer of whatever agent, the
Visa, then the credit card issuer, the
credit issuer, the bank, then the
receiving bank, then the actual
merchants account, those all those
little hops somebody charges a fee for.
>> But on a blockchain, you've kind of
virtualized all of that and replaced it
with software where I can send you a
token. The cost to send that token is
the cost to move memory around in a
bunch of computers. And blockchains are
excruciatingly inefficient computers,
right? We're talking about like doing
the same computation tens of thousands
of times over and over to give you those
guarantees that nothing can go wrong.
>> Um, but even though that is the most
expensive computer ever built, it is
thousands of times cheaper than humans
or tr agents that can charge a spread on
trust and stuff like that. A very
specific example, we launched a phone
seeker and made it available everywhere
in the world and we had an option for
credit cards or stable coins without any
incentive, same price. And about half
the people picked uh the stable coin
option to buy this phone. It's 500
bucks.
>> And we sold like 150,000 of them. So
it's roughly $40 million through both
channels, credit cards and stable coins.
As a merchant, we had to pay a fee on
the credit cards about 2%.
>> And that we didn't have to pay that fee
on the stable coin part. And we got the
stable coin funds immediately. We were
able to use them immediately. On the
credit cards, we had to wait 60 to 90
days before we actually got the funds in
our bank account. So that 90 days is a
cost. The 2% is a cost. And with the
stable coins, we literally had the funds
and we could use them immediately to pay
salaries and to go build the phones and
stuff like that. So that's a very clear
example of inefficiencies that just for
that one small kind of phone launch uh
added up to like several several
engineering salaries. That's like three
people's salaries that I could have paid
that I could paid for. Right? So we have
essentially a system that's made before
the internet. [snorts] uh a system that
overcame trust by essentially building
all this human infrastructure around it
and everybody just sort of holds their
nose and goes I'm going to trust the
credit card companies or I'm going to
trust the escrow or whatever uh to get
these things through. So assuming that
we can solve the trust problem and
people on mass really either become
completely agnostic and the companies
just integrate blockchain techn Yeah. So
you don't have to trust blockchain
because you can verify it. And this is
the the bene the reason why it's slowly
overcoming traditional finance is that
you're not replacing it with I got to
trust Joe at you know Bank of America
and now I'm trusting Vitalic at
Ethereum. No, you can verify the that
Ethereum or Salana work from the
software itself because the software is
open source. You can go download it
yourself. Now, vast majority of people
are not going to do that. But you have a
business that wants to compete with
those other kind of middlemen and wants
to cut them out and create a service
that's cheaper and faster. They can
verify that Salana is open source
software and they get the what exactly
what they get out of it, what they
expect. So somebody like Circle can
issue a stable coin on top of Salana
without trusting me or anyone else. And
this is how that that replacement of
trust of humans to software ends up
benefiting consumers. Um so we as a
merchant you know I ironically built the
built the protocol initially and now I'm
using it for the its intended purposes
right. So me as a merchant I could use
circle and know exactly that I'm getting
that I'm getting digital dollars without
paying all these intermediaries.
>> Okay. The reason I say there's probably
still a trust element or the reason I
believe there is a an aggressive trust
element is just
uh science doesn't advance one insight
at a time, it advances one funeral at a
time. People tend to get so locked into
their frame of reference, their way of
life that something new is just like I
don't know how it works, I don't
understand it. And so people are some
will just not do it because they don't
understand it. And so even if it's like
hey this system doesn't even require you
to trust it, they still need to trust
that it doesn't require trust if you see
what I Absolutely.
>> So, we'll have some of that, but
assuming that we can overcome that, do
you think that crypto on a nearishterm
timeline will completely replace fiat?
>> Um, so if you have a business and you
employ somebody to write a check and to
put it in a mail into the mail and send
it out, you're never going to replace
that person because this is just too
much risk, right? You've already paid
for them to to do that job. And finance
is one of those things you just as a
business owner, you just never want it
to break,
>> right? The cost is like a pain in the
butt, but you just never want to touch
it. So that process is like you said,
one funeral at a time. [laughter]
It's going to take some time for these
things to kind of to move. And the other
part of it is that much like the
internet, I don't know, I had I think a
very interesting experience with it
because I arrived to the states in like
91 and my neither me or my parents
understood computers at all, right? Like
so because I was young, I immediately
like my mind was very much malleable and
I immediately like adopted it. like I
was on chats as soon as my parents got
me a computer and you know playing
online games and whatever trying to
figure out IRC and stuff like that.
[laughter]
My parents didn't understand any of it
because to them it was very alien and
the idea that a link points to a
document that goes to a different server
domains and all this stuff just took
took him a very long time to build that
mental model that the web exists and how
it works. I think the same problem with
crypto is that you have mathematical
cryptography that is really hard to
understand and then it's hard to build a
mental model around it that this secret
seed phrase that you keep is like cannot
be broken with atomic bombs, right? Like
it is something that guarantees
ownership and trust. And what a public
decentralized ledger means is very
similar to like how your county keeps
track of who owns the house, right? All
those mental models for people to build
will take time to wrap their head
around. I think kids and stuff like
immediately get NFDs. And I don't know
if you ever played Ultima Online. This
was like one of the first it
[snorts]
>> I was I like my first experience with
crypto I would say was Ultima Online
because I would I wrote like some very
dumb Visual Basic scripts to mine to go
farm um wood and stuff like that and
then I would sell it on eBay.
>> [laughter]
>> That's so wild.
>> For like cashier's checks. Those were
like those those were digital currencies
>> like late '9s.
>> That's hysterical. [laughter] Selling it
on eBay
>> like whatever platform or C channel or
whatever it find like eventually on
eBay. [laughter]
>> That's pretty funny.
>> Interesting. We'll get back to the show
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Now, let's get back to the show.
>> Yes, maybe replaces fiat, but one
funeral at a time. So, not something
that is going to happen overnight. Um,
but right now, stable coins is like a
big deal in when you start talking
politically, people are really talking
about, hey, we got to get stable coins.
What do you have like a piffy breakdown
of what a stable coin is and why they
matter so much?
>> Yeah, stable coin is uh a bare asset.
Um, which means that it's stuff that you
own. Like it if you lose it, it's gone.
So this is something that is very
different from a bank account where you
can never lose it because the bank holds
your money. They owe it to you, right?
As a you effectively kind of lending it
to the bank. But if you own a a stable
coin, if you lose it, it's gone.
Nobody's going to recover it. So it's
kind of like old school stock
certificates that you put in your safe
deposit. If it burns down, those things
are gone.
>> Yeah.
>> So that's a very different ownership
model. But um the reason why you can
implement it now is because of
cryptography and all these all these
things that blockchains provide. Um and
the reason why you can lower the cost
now is because since you own it, when
you transfer to somebody else, that's a
peer-to-peer transaction. There's no
third party. So when you transfer it,
you have full guarantees that you
received it because of the cryptography
and blockchain. So the problems that we
had with those original stock
certificates are all gone in a similar
way that you know e-commerce in the '9s
added SSL and everyone started seeing
that cryptographic lock symbol and they
knew that their credit card is not going
to be stolen.
>> When I transfer you a token you have
full guarantee from cryptography the
same exact guarantees as you do with
like e-commerce. you can see that this
particular token that I transferred to
you was issued by Circle and you have
full control over it. So now you know
that digital dollars that Circle is
selling right um are now under your
control. Um
>> now why does the Trump admin for
instance why do they care so much about
this? Um, obviously
>> I think uh politically it was probably
just this weird environment where
this is I hope I'm not going to get in
trouble. My [laughter]
there's [clears throat] like kind of
similar problem with like people
adopting technology like my parents in
the '9s. I think our government is
aging, right? Like we have this kind of
entrenched problem where it one once the
the Senate moves forward one death at a
time, one retirement at a time.
>> Not exactly spring chickens.
>> Yeah. So there's just a lot of really
old people that don't understand it. And
for whatever reason right now in the
generation that we live in, Republicans
are younger. So they see this.
>> That's interesting.
>> They see a technology, they get it more,
they see the benefits of it. and they're
kind of more adapt uh like kind of they
truly I think more believe in that um
people can solve their own problems
given the tools and they see it as a
tool to solve problems. They don't care
that it competes with banks and I think
the old school Democrats Warren and
stuff like that are one getting old so
they don't it's takes them a long time
to understand any anything new
>> and two it disrupts the uh how they
control the systems that they've built
up um through the banking regulation and
all this other stuff. So they don't want
to disrupt it. They see it as like
reducing power. Um this is kind of my
theory. So you saw a lot of kind of this
adversarial
uh behavior from the previous
administration towards crypto and the
crypto people are like why like this
like if you own a stable coin on Salana
it takes it's a redeemable 10 cent fee
to open an account effectively no bank
offers you that [laughter]
you you it's just you're paying for
memory storage in all these computers
and there's no overdraft fees there's no
fees at all right so this is a net
benefit to consumer and it's not through
regulation where banks will find every
which way to like bypass the regulation
and find a loophole to charge people
fees. It's by design like it is
impossible for the chain to start
charging fees or or doing some something
that like through some weird loophole.
So it should be a net benefit to
consumers but there was this massive
resistance on the democratic side and
just like in a dynamic system like I
think vast majority of founders were a
fairly liberal and were probably not
Republicans or ever would talk to
Republicans
[laughter] just simply because one side
was so against this like thing that
we're building and us as engineers see
it as a net benefit. Um they were like
what the hell [laughter] man.
I think that shifted uh kind of I don't
know huge foot gun that I think the
Democrat uh leadership kind of shot
themselves in the foot with crypto.
>> How much of especially because as we're
recording this you've got the revolution
potential revolution going on in Iran.
There's a whole sense uh for some people
that like power to the people is a big
deal. It's something that if you're
Iranian some are willing to die for just
to be able to control their own destiny.
How much of that is inherent in the
engineers that are building crypto where
it's like no no no I want to get the
power away from the bankers. I want to
put it in people's hands. Like is there
some of that or is this an engineering
challenge purely about efficiency? I
think uh vast majority of crypto people
that I that I've talked to are fairly
libertarian and kind of believe that um
contestable markets are like the best
way to um deliver the most goods and
services to consumers. So like I think
at our heart
>> contestable market meaning uh there's
competition.
>> Yeah. like you you want to like
eliminate points where um this is
probably the biggest kind of if you're
deep into the crypto nerd uh trenches
the hardest problem right now is called
MEV uh which is
>> math ma
>> mev meuh okay like math I've heard of
math
>> maximally extractable value
>> so finding like points in these systems
where um if you if you operate in that
in that whatever part of the stack that
you can maximize how much value you can
extract because you have a uncontestable
market. There's no way for somebody to
use something else. So all the crypto
people I feel like from an engineering
point of view are against any kind of uh
unnatural monopolies or natural
monopolies. And so the view is the
current financial system has a horrific
me
>> and you see that right now like with the
banking lobbyists fighting the stable
coin regulation because they don't want
stable coins to to give uh consumers
rewards.
>> So you have this uh
>> wait I don't understand why.
>> Well if you deposit money in a bank
what's the savings rate that they give
you right now?
>> Low
>> like half of a percent maybe. But the
treasury yield when they take that
deposit and they put it in the in
treasuries is 5%.
>> So that difference the spread your
dollar [laughter]
>> they're paying you half of a percent
they're getting 5% right is it's an
astronomical 100x difference
>> in any kind of contestable market
>> that would be impossible. There's just
no way that the that wouldn't compress.
So when people are giving rewards,
they're basically saying, "Hold on a
second. I can beat the legacy system
simply by doing the same trick
>> but actually giving some of the benefits
back to the customer."
>> Exactly. I mean, like to grow your
stable coin business, you would offer m
the maximum reward you can. Maybe it's
not 5% because you still got to pay for,
you know, operations and whatever, but
it's four.
>> And then that shrinks the margins in in
the banks.
>> Very interesting. I have a growing
distrust of banks. my audience will be
well familiar with uh where I fall in
all this but okay so um basically in one
of the reasons that there's resistance
to this is these guys are just using
traditional business principles of like
I'm going to outperform my competitors
by giving a benefit to the customer and
one of the ways they're doing that is
just taking a smaller margin y
>> on the differential
>> that's the whole point of capitalism
>> very straightforward yes
>> it's very simple
>> yeah [laughter] okay so
>> somebody's profit is my opportunity
Right? Like as soon as as soon as I can
build something that is a competitive
product for less,
>> that's my incentive to go do it. And
vast majority of time as as soon as you
remove the friction for pe for people to
solve their own problems, they will
solve them.
>> So as an engineer, are you looking at
this and going I don't understand why
the rate of adoption isn't even faster
or is there a not a gotcha but like a
thing you get sort of why people aren't
moving on it? the benefit to consumers
is really small. Like you as a you're
you're most people are gotten so lazy
that they don't want to pay for c with
cash over credit cards even if the
merchant offers them a 2% rebate, right?
Like
>> and that 2% is just not enough to change
behavior. So we have so we have these
kind of like
>> um even if the markets are contestable,
people's behaviors have gotten so lazy
that they're not um they're not
incentivized enough to go make the
switch.
>> But it's a pretty big deal on the
savings side. Like if you think about
wait I could be getting 4% of my money
instead of 0.5% of my money. I get the
the sort of 2% on a transaction. Uh but
likeoo
>> you start talking about savings. So I'm,
you know, and to me like I'm totally
fine with that. Like I think if you've
built a product that is so convenient
that people are willing to pay the
spread, that's great. It means that
you've eased people's lives, right? Like
it is uh it is like a lot of work to
keep track of the minutia of finances
for humans. And if you like fine, I'll
pay more to do less. That means I can
spend most of my time doing something
else that I enjoy scrolling Tik Tok or
whatever. [laughter]
But at least like at least people are
making the choice to do that and there
is an opportunity for a merchant to go
fight him on it. Um what it obviously
like really irks me is when that
opportunity is taken away. Like a
merchant should be able to with a stable
coin to incentivize their consumers to
go use that stable coin for purchases.
And maybe that's not going to be just a
2% price difference, but an exclusive
product that is like the only way you
can get this particular product is if
you use, you know, a stable coin. That's
a way to start people to change
behaviors. And a merchant is really
incentivized to do that because 2% is on
their topline number that they sell,
right? We sold a $500 phone. We pay 2%
on the 500 bucks. But that's not our
profit margin. Our profit margin is $50,
[laughter]
right?
If if you've ever run a business, right,
you know exactly the difference between
uh your like your bomb or like your your
cost of components and what you can sell
for. [laughter]
>> For sure.
>> Yeah. So that that becomes actually a
huge incentive and merchants are I think
well positioned to do that and I think
it would be a shame if it was they were
legally not allowed to compete.
>> Yeah, agreed. And certainly uh there for
a while we weren't driving people
offshore, stifling innovation. It's
interesting. I never thought about um
the Republicans simply being younger
than Democrats. But I look at let's say
David Saxs who's a cryptosar. He's I
think even a little bit older than me.
So certainly not a super young guy.
>> No, none of them are spring as old as a
bag of dirt. So
>> look look look at the congressmen and
senators and you start seeing like an
age difference and I'm like okay this is
kind of we're blessed to at least have
two parties where there is competition.
>> It's interesting. So when I look at
them, so the thesis that I came up with
was very much more along the lines of
okay uh they tend to be though not now
historically speaking Republicans were
uh let's put the power in the hands of
the people, keep government small, let's
be fiscally responsible. Again, I am
hyper aware that they are not currently
fiscally responsible at all. Uh and so
my map was oh we see an opportunity here
to we've got a debt problem and we're
going to leverage stable coins to create
appetite for US debt by creating a
regulation that says you can do a stable
coin but so that we avoid any sort of
rugpull that you've got to have a
provable one to one backed like if
you've got a dollar's worth of stable
coins you've got a dollars worth of
treasuries sitting on the balance sheet
that's not comingled with anything and
so
>> yeah and that that is the right way to
do it and that that's basically like I
think Um, this what the Genius Sack
does. I think it's it's a like a really
good build overall.
>> If you were going to grade David Sachs
on what he's done so far, where would
you put him?
>> Um, probably A+. Like I think Yeah, I
think
>> given the the really hard challenging
problems that he's working on. I think
they've done the maximum amount they
can. I think market structure is just is
really complicated. I'm hoping they pass
it this year, but we'll see.
>> Market structure. What's that?
>> Digital dollars. I think everybody can
understand and grasp and that the fact
that everybody wants dollars outside of
the US to transact like literally a
merchant in Argentina will pay their
supplier in China using USDT
>> because it's the most convenient for
both of them. [laughter]
>> That's great. And that creates demand
for for treasuries and we need a lot of
demand for treasuries because our
deficits are so huge. So,
>> so barring the Congress cutting
spending, I think we [snorts] got to
like figure out all the all the possible
ways that we can incentivize people to
buy our debt. Um, so I think that part
is great. The other part of it is for
securities, if you think about when how
the securities law came to be, there was
this massive railroad boom in the late
19th century. and your neighbor would be
like, "Hey, buy my railroad certificate
[laughter]
and it was a piece of paper." And when
you bought it, you had no idea that the
railroad company existed, that they were
actually building any railroads
>> or you weren't like all those all those
things could fail in all the possible
ways you imagine, right? Somebody could
create a fake certificate, somebody
could create a fake railroad company or
buy, you know, sell a bunch of stock and
never spend it on actually building any
railroads, stuff like this. Mhm.
>> So
in that free-for-all that led to kind of
the failures in in 1929 and a lot of
laws came about with the securities act
to prevent that from happening. And the
way they're designed is they separate a
lot of those functions. Broker dealers,
transfer agents, the issuer, all those
things are different people. Much like
when you buy a house, you have different
people that do all the all the different
parts of the transaction. And the reason
for separating them is that
hopefully if one of them is honest in
this chain that they catch the bugs of
the other one or the the fraud that any
anyone else could do and they can
surface that and you don't end up with a
bad transaction and they report them and
the bad guys go to jail. That actually
works really well. US I think is the
best financial system that's been built
in in the world but has been built in
that time before the internet. Um, so
much like what with e-commerce when we
built like just cryptography SSL so you
can pass a credit card through the
internet without it being stolen. when I
transfer a certificate to you that's a
token you actually full have full
cryptographic guarantees that some
company you know SpaceX hopefully one
day issued a token as their stock on
Salana and when you receive it you know
exactly that it was issued by SpaceX
because there's a cryptographic chain
from the token when you receive it all
the way to the issuer you can validate
the certificates your browser should be
doing it for you so all of that
effectively becomes cryptographically
verified. So all those middle guys,
transfer agent, brokers, all those
things can go away. Um this is
effectively what market structure is
trying to resolve. That tension of all
these people that are existing
businesses and making money [laughter]
and are part of this very successful
financial system um can be replaced with
something that's cheaper and faster and
that's a good thing. Uh but we need to
do it in a way that doesn't create
loopholes for people to take advantage
and and kind of start doing the stuff
that was happening before 1929.
>> Okay. It's just really complicated to to
merge those two. It's it's a regulation
or they're trying to deregulate
essentially in a sensible fashion away
from the old
>> um create like a path for the new to
have the same level playing field uh as
the as the old
>> because right now there's some
regulation tied to that era that trips
up.
>> Yeah. There's rules that just don't make
sense. Like if I transfer this token to
you, there is no transfer agent or
broker dealer. You you actually received
it like as if I gave you a physical
stock certificate. But legally they're
supposed to be. Got it. Got it. So
they're essentially forcing a middleman
into the scenario which 100 years ago
made sense but today not so much.
>> Got it. And undermines the entire
advantage of the current system. Okay.
The big thing. So um I'm very invested
in crypto both from uh things that I'm
building. It's integrated into our video
game to being as an investor. It's
something I'm heavily invested in. And I
have anxiety around the social
engineering part of all this. You were
talking about look, this is a different
kind of ownership.
>> You've got this stable coin. If you lose
it, that's that game over.
>> Um, do you see that as a critical part
that's going to need to be solved before
we get mass adoption?
>> Yeah. And this is I think uh part of I
think Shroudfy as well. Like I think the
the biggest spend they have on security
right now is effectively um um identity
fraud. Like people stealing your credit
card and spending it somewhere else or
pretending to be you and and like
applying for credit and all of this
>> and that's nightmarish. However, because
I've had it happen to me, you can call
the bank and be like, "Nope, that that's
fraud." And they'll for the most part
back it out. And so you want to talk
about something that's worth 2% of the
transactions. that one feels worth the
2% of the transactions. Do you just see
that as an opportunity for this? And in
fact, let me let me paint a picture
really quick for anybody that's gotten
this far, but they're pretty new to
crypto. Um, one of the big anxieties
that people have is that um you're now
in the digital world, so you're clicking
on links. Is that link real? Is that
being spoofed? Was that email that
reached out to me sending me the link
one letter off from the actual person
that I'm expecting it to be? Is the
person in Discord actually who they say
they are? Are they just spoofing that
person? And so there's like feels like a
thousand ways that people can get you to
do a thing that is technologically
sound,
>> but like they've moved you through
what's known as social engineering over
to clicking the wrong link or giving
them access to your computer or god
knows what because there's no banking
infrastructure. It's just scammer versus
you. And if you're tired and not paying
attention one day and you click a link,
like the number of people that I've seen
get like their NFTs just cleared out of
their wallet. Oh, it's terrifying. And
so I'm relatively sophisticated with
this stuff. And I live in a constant
state of paranoia. And so I'm just like,
will somebody please solve that problem?
So this is where I think uh crypto
adoption will probably be faster outside
of the US is because interesting
>> you have like you have all this
investment in that's paying for with a
two with a 2% fee that everyone's
willing to pay out of a convenience to
basically solve this problem in trady
and it's also being solved in parallel
in crypto without the 2% fee. So you're
saying because of this legislation
that's still slowing us down, people are
solving it. But
>> no, I think the the problem is that the
marginal improvement over the existing
system in the US is minimal to
consumers, but outside of the US
>> where it's a bigger pain point.
>> You don't have these
>> banks and third parties that are
effectively very trusted. Like I I
effectively trust my bank, right? Like I
mean
>> stuff will happen, but for the va v vast
majority of people, you're right. like
they actually have better UX and safety
out of the traditional financial system.
But outside of the US, they don't have
those traditional financial systems that
they can trust.
>> Like it's no way you can do that in
Ukraine or anywhere else or like half of
Eastern Europe, even if it's part of the
EU still. [laughter]
>> Wow, that's wild.
>> Right. So you you're much much better
off actually using um the tools that
people are building to prevent all of
the same fishing attacks but on top of
crypto rails. Uh people there's a ton of
investment in that like wallets are
becoming more sophisticated and
identifying links and responding to
fishing scams and all this stuff just
like in Trafi. M
>> um so I think you're going to see that
adoption grow much faster outside of the
US and especially cross border where
that really like that trust that you
have with a bank doesn't actually work
as soon as you go across borders you do
something in Mexico or vice versa um it
becomes much much harder to reverse that
transaction once the money's gone. We'll
get back to the show in a second, but
first let's talk about getting the most
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first month free. That's I think a good
primer for people about where we are,
why this is um on a long enough timeline
seems pretty self-evident that it will
win. Less friction, it's cheaper if you
grow up with it. You're not going to be
weird about the transition. You're just
going to go with it. Um, also you can
take the upside instead of the bank
capturing the upside of loaning your
money. Um, what does the future of
finance look like? So, in a world where
I think you said in 2026 that we're
going to see something like a trillion
dollars in stable coins.
>> Basically, I think the you're going to
go from 1 trillion to 10 much faster
than from 0 to one.
>> And I I think that part's inevitable.
Like I I think the growth of stable
coins is is is
like growing I think faster than anyone
expected. Um I think we're at like 300
billion I think issued already. Um and 1
trillion to me is like an astronomical
number. Like it's hard for me to imagine
but that means that all these funds are
effectively digitally available in all
these public permissionless blockchains.
So this is where you start seeing that
inflection point where in the internet
to me in the late 90s you kind of went
from um 6° to frontster and all those
people were kind of experimenting with
hyperconnection of humans and that was
happening right when we hit that 500
million people on the internet mark that
were active like internet users. So as
you start seeing like one trillion, you
know, we hit that one trillion number in
digital dollars, you can build a very
scalable business that with hundreds of
millions of revenues a year on top of
crypto rails alone. And that's a similar
moment inflection moment where
cryptonative businesses will just not
even think about trad.
>> Okay.
>> So, it's a weird world to think about.
There's no way I could have predicted
Facebook in the '9s that it would be
such a huge, you know, thing and own no
assets at all, right? Like Facebook is
just a social graph in fact, [laughter]
right? Like it's just data.
>> Yeah. So,
>> who would have thought the data would be
so useful?
>> Yeah.
>> So monetizable. That's the wild thing.
>> Um, yeah, it's interesting. I had, do
you know Brian Johnson of Do Not Die
Fame or Don't Die Fame? Yeah.
>> The super optimizer. I had him on the
show. I mean, this has got to be eight
or nine years ago.
>> And that was what we talked about. We
didn't talk about not dying. We didn't
talk about AI. We talked about him
saying that data was like a right and
people needed to own their own data. And
I remember thinking, what? Like, why do
we even want to talk about this? And
obviously that ends up being like this
super insanely impactful thing. So when
I look at this um the sort of data idea
that I see maybe years ahead of other
people just because I've the more I've
researched money and finance the more
angry that I've gotten. So my background
to speedrun I told you a little bit
about it. Did not grow up with money.
Came into wealth through
entrepreneurship. Uh in that transition
realized I knew how to make money but I
didn't understand money itself. I
certainly didn't know how to invest it.
And so as I started learning about that
to try to help people during COVID blah
blah blah, uh you end up going down a
rabbit hole of understanding that when
people say money makes a world go round,
they're they're really glossing over
something that's kind of terrifying that
right now because we've created this
global K-shaped economy, people can
feel, but they don't necessarily
understand what's driving it. So when I
think about, oh, we've got this um
libertarianleaning
ideology that's pushing people to put
control of money back in the hands of
people, I go, that is transformational.
Because people don't understand, the
reason you can't make ends meet right
now is precisely because bankers and
politicians understand how to create an
extractive system where they run
deficits, print money like crazy, use
the hidden tax of inflation to
confiscate wealth, and then only the
people that understand asset ownership
are protected. And since they all
understand asset ownership, they're
like, "Me, I don't mind." And so the
bottom essentially falls out of the
world every so often, which is what
we're living through right now. But my
maybe overly optimistic eye is
as we move towards
a world that's built on cryptocurrency.
Now it's like you get to choose what
currency would would you like to be in?
And if you go into one like a Bitcoin or
something like that that can't be
inflated now you at least have that
hedge.
I think the big problem is people just
can't build the new mental model. So
it's like the generations that grew up
with fiat, they're kind of screwed. But
generations that grow up where it's
like, yeah, this is just how money
works. They don't have to understand
like shadow banking and all that stuff.
They can just be like, oh, I put my
money in this one. It can't be inflated.
Yay. Now I can actually save my way to
prosperity. Uh, I don't have to invest
my way to prosperity, which is the game
that's being played right now. Um, do
you think I'm overblowing it? Is that
delusional? Never thought about it.
>> Um, I think I'm I'm a super optimist. I
think if all our problems are money
problems, we're truly blessed.
>> Wow.
>> Because I think uh money is virtual.
Like Bitcoin is virtual. It is just
data, right? If you double the amount of
Bitcoin in the world, the world's not
any wealthier, right? like I create more
Bitcoin networks. It's not [snorts]
marginally wealthier, but not really as
as as if I like double the number of
Teslas in the world. You can measurably
say we have more stuff now. There's more
stuff per person. There's twice as many
people have fully [snorts] autonomous
cars. I can't kill somebody. It's all
good things, right? But doubling the the
fiat is just a value of exchange. It's
just super virtual thing. Um, it sucks
when we don't have contestable markets
and there is middlemen that can extract
that value uh without ever being
challenged. I think that's where you
start getting these hidden taxs that
drains the rest of the economy. The
vampire squid. That that part is bad.
>> The vampire squid.
>> This is what
>> I never heard that before.
>> Oh, this is the the meme of what to call
Goldman Sachs the vampire squid or
whatever.
>> That's funny. Just cuz it's tentacles
everywhere extracting every turn. But
like I think if it's contestable, if you
can go and bid against their business
and charge less, then you start converge
at a value that that's appropriate to
whatever service they're providing. I
think that that part is good. Um, so I
think what like how I think of store of
value I think is actually I've I mean
I've gotten in trouble on Twitter for
saying this, but if you look at the
intelligent investor uh book um store of
value or commodities, they don't have
they're not investable instruments. you
shouldn't actually be investing in them
because they don't have any model
[snorts] that can show that they're
going to actually build something like
create more in the future.
>> So
>> there's no fundamentals upon which to
base your investment. Is that the
>> exactly? So what the traditional
fundamental valuation is called discount
cash flow. So you look at the future
>> and how much money this thing will make
and think of your investment as if
you're buying a hot dog stand. [snorts]
You're gonna pay money, right, to own
this physical thing. And then you're
gonna sell hot dogs. And the cost of
materials and your profit margin should
tell you how much you should invest in
this particular hot dog stand over
another one.
>> It's very straightforward,
>> right? And if the hot dog stand doesn't
sell any hot dogs, it'll make zero money
and you've just bought a stand that
maybe you can eat your own hot dogs, but
that's about it, right? [laughter]
It's it's pretty much useless. Um but
there's still reason I think for store
value to exist and for the reasons that
you said there is a lot of middleman and
a lot of these inefficiencies that are
run by humans throughout all the stack
whether it's banking and even like
private sector or public sector um
that is effectively like bitcoin can be
a small hedge and the example that I
bring up is kind of unfortunate but like
just in my lifetime you um roughly 50
years I've seen one superpower collapse
that was really bad. My family had to go
through that and flee to come to America
right in '91. So just based on my
priors, there's 2% chance of a
superpower collapse per lifetime.
>> Yeah.
>> Right. That and that and when that
happens, you got to take all your stuff
in a suitcase and go somewhere else. And
you need enough stuff to go restart your
life. So you need something that you can
sell somewhere else. And Bitcoin is very
easy to sell somewhere else and also
very easy to take in that environment.
So without thinking of Bitcoin as an
investment, I don't care what price it
is. It's a natural kind of rule of
thumb, I can put 2% of my wealth into
Bitcoin and if it drops, I put more in.
If it goes up, I'm overinsured. I don't
think of it as an investment. It is
effectively an insurance hedge when the
worst thing that happens where I
actually have to flee because of my
entire place where I'm living is
collapsed to the point that it's like
unlivable, right?
take take all my kids and go somewhere
else, right? And then I sell my Bitcoin
there and I restart my life. So, if you
think of it that way, a store of value
um with the properties of Bitcoin that
there's no essential third party that
could ever prevent me selling it
somewhere else that it's and that means
that that it's truly censorship
resistant um from an engineering first
principles, right? It relies on extreme
redundancy of the internet, relies on
cryptography, so nobody can mint extra
Bitcoin. Nobody can um run miners long
enough to prevent me from selling it
when I actually need to flee. All those
properties that Bitcoin has because of
its simplicity and the proof of work and
all this stuff are actually like the
right product properties. Like if you if
you're selling this insurance thing,
[laughter]
how would you build it? You'd probably
build a Bitcoin, right? and you're like,
"Here's my insurance product for, you
know, hitting the fan." [laughter]
Bitcoin is a very very decent like very
good implementation of it. I, you know,
I'm not sure what I would change about
it. Um, so this is my bull bull bullish
reason for store value Bitcoin to exist.
My bearish reason is that it has no
discount cash flows. There's no other
way to price it fundamentally. But
that's true about gold and it has 30
trillion market cap. So
>> yeah, gold has historically if it's been
issued by the bank, it's gotten just as
abused as anything else. But gold from a
trusted party um is interesting because
it inflates at sort of a roughly
knowable rate of around 2% a year. Um,
but what I've come to understand about a
store of value is in a world of fiat,
which we have been in exclusively in the
US since 1971,
um, empires always and forever will
inflate the life out of the currency
until it ultimately collapses. Like it
it just it repeats over and over in
history. They can't stop themselves. You
get a good run. I mean, you get like
150ish years. So for most people it's
like I don't really have to think about
it until you do and then all hell breaks
loose and for anybody paying attention
what's going on in Iran. Um that's what
kicked this most recent round of unrest
off was their currency started to
hyperin not technically hyperinflate
like 50%. And so that's pretty bad and
people are going to react. And I didn't
take the time to verify this, but
supposedly purchases of Bitcoin in Iran
have like just a straight vertical line
because people suddenly realize, oh wait
a second, I don't control this currency.
The government is doing policies that
make bad things happen to this because
it's not backed by anything. So once if
something's backed by the full faith of
the government and the government is no
longer full of faith, then it's like
poof, that thing no longer has value. Uh
and so while I get what you're saying
about there's no business fundamentals
to um invest with, I don't think people
certainly people do not always invest
based on that. Oftentimes I think
investing is people fleeing the
stability of a currency and so or
instability. They're trying to get out
of the fact that you can inflate a fiat
currency, get into the stock market,
art, gold, whatever, because they're
like, "Well, there's a far more limited
supply of this, and my money is likely
to hopefully grow, outpace inflation,
and now I've got um a way to get out of
the problem of the fiat currency."
Because I look at the stock market today
and I'm just like, none of this is about
business fundamentals. None. And once
you have a entire market that's not
about business fundamentals, something
else is happening. And to me, it's
you've got people that realize, oh,
they're going to print more money. And
because they're going to print more
money, my dollars are going to devalue.
So, I've got to go somewhere. And so,
I'm going to go into the stock market.
But because there's a finite number of
things in the stock market just to pick
one asset class then it goes up in value
uh because there's more money being
printed and then like you said earlier
value is not actually going up but when
you relate it to dollars because there's
more people chasing it the same number
of things the price appears to go up.
Um, so
I'm less I think tense about the fact
that crypto as yet another asset class
that people are investing in that isn't
tied to business fundamentals. It
doesn't have as good of a cover story. I
will give you that. Um, but I look at
the stock market and go, nah, it's
largely a cover story. The fact that
there are businesses that underpin it.
Does that seem crazy?
>> Um,
yeah. I would push back on that a bit.
[laughter] I think I think uh
US [snorts]
corporations are really good at
producing products like I think they
produce the best products and actually
really rapid adopters of uh adopters of
of new technologies. Um, a lot of the
problems right now is like we're kind of
in this weird there's definitely a
recession going on but there is uh
accelerated growth in like a very
particular segment which is like AI data
centers and kind of mag 7 adopting it as
fast as they can like always right you
got the your only free lunch in finance
is uh perfect hedge is like hedging
diversification
can I wouldn't put any eggs in one
basket um
>> not even Salana Yeah. No, [laughter]
this is my my advice to everyone is read
about like in intelligent investor and
uh like Kelly portfolio management and
all this stuff and like think through
the those problems of what each asset
class you're investing in what that
serves. Um do the do the smart thing. Um
but if you're a professional investor,
the only way that you make these
outsized returns is if you do this you
don't do that. you actually don't
diversify and you make a big investment
in something that is a contrarian bet
that is underpriced by the market
massively. Um but that is what
professional that that's their job right
and the win or lose right and they most
crash out some make uh a fortune and
become legends.
>> Yeah. Yeah. It's interesting. Um I think
that the world probably shares your view
um more than mine. I think that mine is
more accurate right now, but I'll ask,
do you think that the going back to your
hot dog stand analogy, do you think the
AI justifies the price that people are
paying?
>> It's my my guess is just like the
internet, it's both overpriced and
underpriced. Like I think
>> meaning if you knew who the winners were
going to be
>> and the time scale like I think um it is
like mindboggling of how fast the
progress is just from a year ago. if
you're a software engineer, how much of
your work you can now do with [snorts]
AI, like fully automated
>> um and how much scientific work you can
do with it is is like growing
exponentially. So, we're going to see I
think some really weird things happening
over the next 5 years like in terms of
like acceleration of like product
development like software boring stuff.
Yeah. But I think the fact that you can
take a paper that somebody published and
vast majority of scientific work is
software like you have to go simulate
and do a bunch of stuff just spit out
the code that implements it exactly and
then integrate into your product. Um is
like it's crazy how fast that is. So,
um, the overpriced thing is that like
like you said, we printed a lot of money
since 2008, like 14 trillion according
to the Fed or something like that. And
that's slloshing around the system
[laughter]
and now it's shooting itself out into
all of these like uh AI company
investments. Um, and they're building
tons and tons of data centers. They're
buying all the GPUs they can. My sure
all of that stuff is maybe overpriced by
a factor of two to 10, some small
constant, but the wealth that was
actually going to be created over the
next 10 to 20 years should be way higher
than that.
>> So, it's just kind of like 2001.com
crashed. It took Microsoft 15 years to
get back to the same valuation and now I
think they're 10 10x that. So like this
is kind of cycles are much much faster,
but my my gut expectation is that yeah,
there's an AI bubble. It's going to
crash and there's going to be a recovery
and the value created is going to be 10
times more than the peak. But
>> yeah, it's interesting. So to me,
>> it's just nobody knows when the crash is
coming. It's very true. Very true. Um
you're absolutely right about that. My
thing is if you're looking at it and you
know whatever whether you use Warren
Buffett, whether you use um the Kelly's
smart investor or whatever,
>> um they're all going to give you numbers
that are completely unrelated to the
numbers that you will actually see. Like
XA I think raised money at like 150x.
That means 150 years worth of today's
revenue is what you're pulling forward.
That's wild. It's certainly historic.
It's ahistoric like you're not going to
see gains like that.
>> Um so my gut instinct is partly people
are just excited. They really believe
that the technology is going to be that
transformative. Go
>> ahead. And they don't have any other
option.
>> That's my next point. You got to go
somewhere because the currency is being
inflated. You've got to find the gains.
So the wild thing to me is I'm curious
how you think through this. Uh does
everybody just think that they're smart
enough to pick the winners? Are they
going wide or are they just like, "Nah,
in 20 years I know it'll be fine and I
don't need the money right now."
>> Uh, I mean like I think it's a mix of
they're managing other people's money
and they don't [laughter]
>> different calculus,
>> right? So they they get paid two on 20
no matter what happens, right?
uh they get paid less if it goes down,
but right they're managing other
people's money and there's a lot of it
and the only alternatives are treasuries
and investing in markets that you
otherwise would like maybe China. You
can't because um there's other risks
there. It it's just you may never be
able to access it because they don't
have this kind of property rights that
you do in the west. So out of out of the
places that you have property rights
like the western world, your amount of
investable stuff is limited. Um I think
for large part is why crypto has been
successful is that you can't trust it
anywhere in the world. You don't trust
the property rights of uh you know your
county keeping track of your houses.
>> Yeah. [snorts]
>> It's crazy. It's just a county office.
They have a blockchain on paper that
tracks who owns what house and it just
works.
>> [laughter]
>> for the most part it works like for
extremely reliably and you don't have
that globally because we can't trust a
county in somewhere else, right? Like
that
>> it's it's funny how that works, right?
So, I think a lot of the financial
system we have right now, kind of these
astronomical numbers, yeah, they're
scary. There's a lot of debt between
these companies. It's very circular.
That could all unwind really quickly and
suddenly. Um but you know
the
it's all seems goofy um except that
the difference between this and the
Soviet Union is that the [snorts] actual
data centers are being built. There's
actual physical stuff that with GPUs
that consumes energy and turns out
intelligence. Those exist no matter what
the numbers in the stock market do.
Those things are are real, right?
they're physically real and people are
using them and that's the actual wealth
that's being created and the actual
input like flywheel that's spitting up
the economy. So even if we'll see a
crash and we might we might not um you
can look at the outputs and see those
things being produced and I think that
part is unprecedented. The amount of
energy that is required to build these
things and the amount of energy that's
being turned on and the data centers and
the silicon that's being made uh that
growth is like going bonkers. So no
matter what happens with the numbers, I
think
>> why the USSR failed is they they would
complete a four-year plan in 5 years,
but nothing was built [laughter]
>> like [clears throat]
ahead. So the numbers were real. They
would put them in the ledger and publish
them, but the physical thing didn't
exist.
>> Here we have fake numbers may pro maybe
probably, but there's actually real
stuff that's being built. Um, and I mean
I don't wish anybody to be in the wrong
side of that trade. That sucks, right?
That could be ruining to people's lives,
and it is often times, but I think the
the reason why America has been so
successful is that we end up building
things faster than anyone else.
>> Okay. So, you brought up the USSR. What
do you think would happen to crypto if
the what I think is um the Democratic
party fully embracing socialism? Uh what
happens to crypto in that scenario?
Because that gives me a way to get
outside of a system where they can
snatch all my stuff.
Um I'm again an optimist. I think you
come you start seeing the es and flows.
People call one side socialist, the
other side fascist, but when you
actually look into it, or if you're an
immigrant with experience in either one
of those, you're like, "Yeah, come on.
Give me a break."
>> Now, [laughter] in my defense, they call
themselves a New York socialist. So, you
look at that and you think, "Nah, this
is a watered down American version that
we don't have to worry about." um you do
worry about it and you people should
push back and like um be critical of bad
proposals and like really actually like
test people like you really you know the
problem you're trying to solve is solved
by building more houses or building more
hospitals and you haven't built any of
those things in the last 10 years so
you're full of like give give them
that feedback
>> and I think the l the feedback loops in
the US are fast enough that
um the people who want to get elected uh
want to get elected so badly that they
will do the right thing if you push them
on it. This is I think the best part. Um
they want to get elected, right? That's
their career. That's the career they
chose. So there's incentive for them to
like do the right thing if that's what
will get him elected. So it's ultimately
up to the the people and the voters to
kind of push them on on meaningful
measurable like uh results. Um, where a
lot of problems come in is like
people will like, you know, claim that
they solved housing affordability with
subsidies, but no new houses being
built. So, you got to call them in that
You haven't solved anything
cuz you have the same number of houses
no matter how you move the numbers
around. Some more people, fewer houses,
somebody's screwed. You haven't solved a
affordability unless you build stuff.
But that requires kind of that's
ultimately up to the people and I think
there's enough smart people that kind of
push back on stuff that I think
ultimately things work out. Um I think
um
neither like even the worst
administration like Gensler and Warren
and all this stuff during the last four
years had no meaningful impact on crypto
adoption slowing down. like I think
stable coin growth went like 5x or
something like that during those four
years
>> and this is because a lot of the
adoption is happening outside of the US
and because they don't have these
trusted financial systems that can
guarantee that when I send you money you
actually receive it especially cross
border like Argentina to China who are
you going to trust right if you go
through the traditional finance channels
that are trusted you're paying a lot and
it takes 14 days
>> like 10 plus days to settle like that
it's just
business people that need to get
products and services shipped
immediately to sell them will use the
rails that work and crypto actually
works and it and it removes all all
those intermediaries and removes a whole
bunch of failure cases.
>> So you're not going to be able to stop
that from United States um no matter
what um the next administration tries to
do. So from my perspective I think kind
of um it doesn't really matter like I
think who's in charge. It matters for
founders like founders will just move
offshore where they don't have to deal
with the hassle of like paying the
lawyers and figuring out like all of the
stuff they'll just move to Singapore
some other place like that like they did
during those four years. But I think in
terms of product and real adoption, not
much will change. Like it'll it'll
continue growing no matter what.
>> So I have a giant region of my brain
dedicated to America needing to avoid
becoming a has been
>> uh which happens all throughout history.
And so I am I I am also optimistic but
my optimism is really about uh humans
are the ultimate adaptation machine. We
can get very good at anything that we
apply ourselves to, but history tells me
that countries can and do go wrong for
very long periods of time and that
people will suffer. And so I have a much
higher degree of paranoia than you do.
Uh so I look at this and I'm like, oo,
who's in power matters a lot because
it's cold comfort to somebody who's not
going to leave America that America's
moving in the wrong direction. Um
>> yeah, for sure it does. It matters to to
people's lives. Um, I mean like it's
crazy that the Palisades fire homes
haven't been rebuilt yet.
>> Oh,
>> but it's nothing to do with lack of
bricks or mortar like short USSR level
shortages where they just didn't have
any of that stuff.
>> It is a selfinduced shortage. [laughter]
Like it's it's purely our own politics
that's preventing those homes from being
built, which is nuts, right? But it's a
different problem than literally factory
says that they built all the bricks but
the bricks don't exist.
>> [laughter]
>> That's why
>> um so I think we have a lot of problems
that are um you know of our own choosing
and I think what's important is that
people actually kind of look at why we
have those problems and take agency and
action to go address them and push back
on like you know like I I think if you
look at there's so many stocks that you
cannot possibly track them all and
invest all of them. There's so many
layers of government like we have very
decentralized government. You have city,
county, state, federal, and many layers
of federal. There's like 12 people that
you have to track of to do a good job
that affect your specific where whether
you can build stuff locally
>> and it's just too much for any single
person to do that. I think that's kind
of part of the problem. Who do you
actually push back on to unblock
building buildings in in California is
like a difficult question.
>> Yeah.
>> And a lot of it is very much local
people that don't want the value of
their house to go down because right
stuff like this.
>> So a lot of it is of our own choosing.
Um and we can fix all those problems.
You just got to kind of actually just
talk them out. Go throw a block party
and talk to your neighbors.
make some hot dogs in your hot dog
stand. [laughter]
>> That's good. I like that.
>> I'm I'm I'm very much I'm extremely
bullish in America because I think
ultimately people do are have a sense of
fairness and have a sense of uh belief
that they can solve their own problems.
I think that's very much a true American
entrepreneurial spirit. And people that
come here from all over the world um
come here because of that. So they're
almost self- selected through survivor
bias. like the biggest defenders of
capitalism are going to be exo exus USSR
immigrants
>> if you if you ever meet any.
>> Yeah. Well, I I have thankfully sat
across this very table from uh several
of them and there's no doubt that
there's some of that and I don't know
how much we want to take this
conversation there, but I will say uh
that there seems to be a very big
difference between somebody who comes to
the country under duress uh fleeing like
you're a Cuban refugee and you end up on
Florida uh and you're like I got to get
to work, rebuild my dental practice or
whatever and you like scrimp and scrape
and rego to school and all that and you
build it and like that's gangster and
what you're going to tell your kids work
hard all that works. When you throw the
bat symbol up and you say anybody that
wants to come here we've got um federal
aid for you that's going to attract a
very different kind of person.
>> Yeah. Subsidies break incentives 100%.
>> Yeah. So I'm I'm worried that we're
headed in that direction. But let me
look through your eyes. You were I think
we only talked about this before the
camera started rolling. You came to
America at 11. uh from what is now the
Ukraine and how much of that colors your
perception of America.
>> So when I was a kid I thought United
States was like Manhattan just coast to
coast with no nature just like
skyscrapers.
>> Yeah. [laughter]
sound my kind of place, but alas, no.
>> It was bizarre, right? Because the west
like the western films and stuff like
that colored my idea of America and then
like gangster Chicago, New York films
and I had just had this belief that
America was just rebuilt into just
skyscrapers coast to coast. It's kind of
silly, right? Like [laughter]
>> so landing in Chicago, I was both
disappointed kind of like it was a shock
that there was like country and farms
and all of this.
>> Like literally, it was just bizarre to
me that there were farms in [laughter]
America.
>> That's funny.
>> And at the same time though, 91 Chicago
was like the center of music and
basketball and sports. And I was a kid
that didn't have access to any media.
So, I was like a sponge, absorbed all of
it. [laughter]
>> That's crazy. Now, did you feel an
unlocking of opportunity in coming to
America?
>> Um, my first dollars that I made was
that winter, me and my friend, we walked
from house to house asking people we
could shovel their snow. We didn't have
any shovels, but they would use their
shovels, and they gave us like a couple
bucks, and then we spend it on candy and
movies.
>> And was that like, oh my god, I can't
believe how good this is, or were you
>> It was great. It was awesome. Like I we
we bought like
>> upper deck basketball cards and played
Street Fighter [laughter] in the arcade
with it.
>> We fully bought into the American dream.
[laughter]
>> No. So he was also from
>> Yeah. Yeah. There was like a little
community of expats uh as soon as the
like you couldn't leave the Soviet
Union. This is how you know it was bad.
>> Um because they didn't want
>> locking you in.
>> Yeah. They didn't want all the smart
engineers to leave. Yeah.
>> Um,
>> so you couldn't leave. So that you, my
parents were denied exit visas, but as
soon as uh the USSR kind of fell apart
end of '91, my parents
left and they would only let you take 50
bucks per person of value.
>> So this is why my parents landed in $50
per person.
The immigration folks were sell telling
us that US is in a recession. This was
like ' 9192
>> and it was bad. Whatever. My parents
were like, "You have no idea. We've been
in a depression for like 80 years.
>> We'll take your Thank [laughter] you
very much." Yeah.
>> Yeah.
>> Wow. That's wild.
>> Okay. So, go ahead.
>> They were Yeah. Yeah, I mean they were
extremely like proud that they got jobs
immediately, never got any assistance,
worked their entire life for like love
to pay taxes like these they're like
[laughter] right like they are felt so
blessed to be in America that they want
to pay taxes. They don't want any
handouts or anything like that. Mh.
>> Um, they moved to a place like the
reason I think I can credit a lot of my
success is that they moved to a city in
like Chicago area with high property
taxes because they had good schools. So,
I had access to AP classes and ACTs and,
you know, I was able to just on my own
merit like study and get decent grades
and go to Urbana Champagne,
>> take engineering.
>> That's it. That's it. from like 50 bucks
a person. That's a trajectory
that anyone can achieve here because you
have access to the best schools in the
world. And you don't actually need to go
to Harvard to succeed. Like UIC is a
excellent engineering school, like best
in the world, but it's a state school.
>> No, it's incredible. Um, going back to
what you were saying about AI, what do
you think is AI's role in all of this?
Does it um is it the big thing to watch
and it completely terraforms planet
earth or does it integrate with uh
crypto in a way that is going to be more
grounded but highly useful?
>> I think oddly um these are like two
parallel lines. Um crypto is going is is
transforming finance and I think all all
financial systems are going to be
rebuilt on top of crypto rails because
they're cheaper and trustless. You don't
need to trust an intermediary. and every
and it's going to happen slowly like
basically every failure will cause you
to go switch your processes to crypto.
Um and it kind of happens in Tradfi. I
don't know if you if you Google for it
like
like Goldman Sachs has lost like or City
Bank has lost hundreds of millions of
dollars with an accidental transfer out
of the country or whatever
>> that then gets challenged and you can't
crawl crawl it back. And this is with
traditional finance. they just flub a
flub a transfer and their processes are
too slow.
>> So as soon as something like that
happens, you start how do I fix this
that never happens and you use
cryptographic signing and double signing
and all this stuff that you can do in
crypto and you start removing those
processes. It's just a slow thing.
>> Um but AI is also basically rebuilding
how technology is made. I think um I
just can't imagine any company with
engineering any kind of engineering
chemical whatever bi bio biology
software that's not using AI.
>> Um
>> how much do you use it?
>> Uh
every [snorts] day like basically
probably more than I tweet. I send
commands into Claude.
>> Wow. So
>> I tweet like 20 30 times a day.
[laughter]
>> That's hilarious. Now, are you doing
like a co-pilot thing where you're just
constantly?
>> I have I pay for all of them. So, I have
Grock and ChatgPT and Claude and and
Gemini.
>> And I use Claude for coding. So, it's
what generates the code and I use the
other three to basically build like a
planning document that I can then give
to Claude.
>> Um, I like
>> so that you're essentially architecting
the system and then you say here's what
this whole thing is going to be now. But
I'm not actually like it's weird what
I'm I'm It's very much like I'm a
manager now [laughter]
>> of the AI.
>> Yeah. I I have [snorts]
>> I don't I don't need deep understanding
of the details. I just kind of have a
high level of the thing that I want to
do. But I want the I try to create an
adversarial environment for the ais
between the the agents to to come up
with a planning document that is precise
and concise and unambiguous and then I'm
like claude here's the doc go build it.
>> How close will it get you? Because I've
done vibe coding uh and I find that it
always terminates where it gets in a
loop and it will fix one problem only to
break another. Yeah, this this is where
I think uh AI is a massive accelerator
for experienced engineers because
>> you're you kind of like step back and
you're like, okay, I'm dealing with like
college grad that knows everything but
is a college grad, [laughter] you know?
So, you're you have to kind of like
smell their what they're doing and
course correct them. And I think if
you've been like an engineer 10 plus
years and you've dealt with like teams
that are new grads and whatever, you
kind of can like start kind of use your
experience to guide them. Um, so for me
it's a massive accelerator.
>> Like I don't know if I want to for the
side projects I'm working on. I don't
think I need to ever hire for them.
>> Whoa.
>> It's it's it is that weird. like I can
build the product and ship it and
maintain it myself and kind of like
basically I would hire somebody to
replace that one person that's me
because
>> I can go be that person for another
project.
>> Yeah.
>> But I don't think you need a team for
for a lot of things now.
>> Wow.
>> Which is weird.
>> Very weird. So, so, so that is like I
think
I think you'll see actually like this
probably benefit big companies the most
like the Googles of the world can will
be able to ship a lot more products um
and maintain a lot more products because
one they have the experienced engineers
and you basically assign one product per
engineer and that's 60,000 products at
Google 60 at Microsoft you know insane
number of of breath that they can cover
now
>> when you reach into the future three
five years what do you see like how
dramatic is the transformation
>> for engineering and science uh I think
it's very dramatic it'll just be an
invaluable tool like I don't buy into
this like
the your national output will be based
on the amount of silicon and energy like
kind of the Elon science fiction thing
is like that's like planetary scale
versus some alien civilization
like how much sun energy you're
converting into intelligence thing. I I
think that's too far out. Uh um the
bottleneck is ultimately like there's
just it's really hard to succeed. Uh
like it's both easy and hard and to
succeed as a in as a business in United
States because consumers already have
everything. They already have
effectively like perfect lives. This is
why all our problems are self-induced.
Nobody wants to build housing because
they're all kind of have decent housing
and they don't understand the like the
opportunity cost that it creates for
everyone else that's trying to rise up,
right? Like
>> um so it's just hard to convince
somebody to download a new app or to use
a new product or [clears throat] to do
change their behavior in any way because
they're so comfortable already.
>> Yeah. Yeah. Tell me about it. Trying to
get them to uh try a new video game, I
imagine, is going to be a pretty brutal
task.
>> Yeah.
So that that's I think is is like we're
we're very blessed and the vast majority
of kind of lifting people out of poverty
is happening outside of the United
States
>> because we are already so saturated with
with stuff that people need.
>> Now do you think about Go ahead. like
there's real big huge improvements that
can happen I think in healthcare and
medicine where you can probably get a
better diagnosis right now out of AI um
for like a good number of cases and
better prescriptions and all this stuff.
So a lot of health care like probably 99
95% of it is uh non-emergency like you
don't need like a human AR person to
like stitch you up. vast majority of
healthcare is you call your doctor, they
poke at you, run a test and give you a
drug. A lot of that is seems like AI
could do that. Go to an uh you know like
a Bender Futurama machine pokes you
[laughter] and then spits out a drug.
>> Yeah, it's interesting. So Elon was
saying three years that at scale
surgeons will be AI and robotics. Even
if he's off by 3x, that's still only 9
years. Yeah,
>> that at scale the best surgeons in the
world are AI. So when I start trying to
reach into the future about how much
things are going to change, it feels to
me like 10 years from now, the world is
pretty unrecognizable.
>> Yeah. I think robotics is like kind of
like star it you got to trust his
timelines on robotics like Starship.
Like
>> it feels like all the theoretical
problems are solved and it's just
engineering. It's really hard
engineering. Um, so if it's not 5 years,
it's within 10 or 15 for sure.
>> And do you see anything in your
experience that says intelligence is
going to asmtote in any way or does this
feel like um more more chips plus more
efficient algorithms just equals it gets
smarter and smarter?
>> I I think the scary part is that that
that will happen. And it's scary because
>> it's just hard to fathom the changes.
>> Yeah.
>> Like the problems that we have right now
are self-induced because we have too
much. But what if the the world is like
the the worst kind of my AI dumerism
isn't that AI takes over us like
Terminator is that it entertains us more
than anything else.
>> That would be like the most sub like
subversive AI you can build is one that
just tells the best joke. Nobody can
tell a better joke. [laughter]
>> Yeah.
>> Right. Right. Yeah. I think about that a
lot. In fact, I think about that a lot
with crypto. So, for instance, uh AI,
super intelligence comes along or
quantum computing, whatever. But you get
to the point where it's like, I've got a
better Bitcoin, this that or the other.
Um do you think about that that sort of
the fundamental structure of even crypto
is up for grabs if you've got somebody
that's super intelligent? Yeah, there's
there's stuff that um
um that's hard to solve right now. uh
and it's uh so kind of my high how I
think of it is that we have enough
compute to solve Newton's laws like
really really well to a t and this is
like starship and robotics all that
stuff fits within that but um when you
look start going to like atomic level
subatomic
um interactions it's the endbody problem
at like maximum scale and we there's
just not enough classical compute to
solve it and quantum is limited by that
Like I think
AI will will get to a level of being
able to do write papers and solve
mathematical problems and like proofs
and stuff like this, but it's just
really really hard to go and build a
quantum computer with low error
correction. Um so my if if we didn't
have AI, I would say that quantum
computing is like 50 years away.
>> Whoa. Um because AI can accelerate
scientific research, it's hard for me to
tell whether just in the break
breakthroughs will start accelerating
and we can get there faster. And if we
can get to like true quantum computing,
then we break that through that like
information barrier being able to solve
like the endbody problem at scale for
like large systems. And um that's where
like I don't know that's science
fiction, diamond age, whatever. Yeah,
>> it's exciting that I could have a chance
to maybe live long enough to see some of
that.
>> Agreed. Do you have advice for the
Bitcoin community about switching their
protocol to be quantum resistant?
>> Yeah. Um, so the for for Salana, what
I'm advocating for is you start seeing
Microsoft and Google and Apple kind of
pick a standard that they're comfortable
with for quantum resistant encryption.
Um once that's finalized, that's my kind
of like let's ship that within a year
support for that.
>> Um for Bitcoin, I think they maybe could
go a little sooner and pick a standard
that is simpler, like the most simplest
possible form of quantum resistant
cryptography.
>> Um the problem is like all of those blow
up the signature sizes by 10x. So
>> whoa,
>> this is the stupid block size debate. Um
20 megabyte blocks are fine. Just suck
it up. Like it's not a big deal.
[laughter]
Like uh the we have a lot more bandwidth
now than 10 15 years ago.
>> That's interesting.
>> So it'll grow the ledger 10 times faster
and people are going to complain. But
like I think it's fine. Like I think
that that's basically just suck it up.
>> [laughter]
>> So block size World War II basically is
is what your
>> Yeah, I think I think SegWit actually
kind of makes it I think easier because
the the witness is segregated. So your
witness size blows up and you could just
download the ledger which is
transactions without the signatures and
see the proofof work proofs for those
and then verify the and discard the the
witnesses
>> kind of but you still should keep a copy
of them. And this is you don't want a
third party intermediary to control
that. If you really really want that oh
I got a superpower collapse. I need
to be able to sell these bitcoins
somewhere else. You need that guarantee
that somebody else always can get a copy
of the ledger and process transactions.
And this is where I think that debate
isn't Like if you actually
like buy into this sovereign store like
self-s sovereign store wealth that can
survive a superpower collapse, you do
need the most trust minimized system.
Salana is not that. We have a totally
different problem that we're trying to
solve. Like there's no point to solve
the Bitcoin problem twice, right? Right.
So,
>> so knowing that you guys are the
execution layer, and I don't know if you
feel like you need to explain that, but
um what is your guys' future? What what
are you pushing into?
>> So, out of that stack of broker, dealer,
transfer agents, exchanges, it's big
deep stack of people that are all taking
a spread.
>> The one that I've nerded out on is the
exchange part. And it's got this weird
problem. Um, so like imagine you're
sitting in Singapore and there's a
container ship full of iPhones and it
just sinks right outside of your window.
That's a market moving event for Apple.
That real value that that the company
Apple depends on and now it has
disappeared.
The news wire for that event has to
travel speed of light through fiber to
New York for to trade on it. So there's
like a 60 70 millisecond worth of
latency um before you can take action on
it. Um so the New York Stock Exchange
with its nancond trading or whatever is
80 milliseconds behind the real world in
in that scenario regardless of how fast
that centralized exchange goes that
signal exists everywhere in the world.
And a decentralized distributed system
like Salana, our ultimate goal is that
as soon as you see that signal, you can
actually submit a transaction and its
ordering becomes immutable in that
moment in Singapore. So then by the time
that speed of light through fiber
newswire goes to New York and you look
at the market for Apple token stock,
tokenized Apple stock on Salana and one
on the New York Stock Exchange, the one
on Salana is already priced that
information in and there's no arbitrage.
So we've eliminated a whole bunch of
middlemen by solving a fundamental
physics problem and reducing spreads and
improving prices for consumers. And to
me, this is like the coolest thing I
could be working on where I have the
ability to like have [snorts] impact,
right? I I there's there's Starship is
very cool, but I'm not a rocket
scientist. I'm a nerd that has spent my
career optimizing software and stuff
like that. So, this is like this really
cool physics problem that if we solve it
and we do well, it solves real it
benefits consumers. like prices will get
better fundamentally because we are able
to encode more information faster around
the world.
>> Now, does that only play out when cuz
when you were talking about 80
milliseconds or whatever being like this
interminably long time, that's funny to
me obviously thinking that's just such a
not even the blink of an eye. Um so is
it that by solving those problems that
much faster or communicating that
information that much faster you shut
the um ongoing ability for people to
like frontr run transactions like what
is
>> yeah we we have to solve it in a way
where we don't create a intermediary
that is essential that can create this
non-contestable market. So exchanges
like are one of those places where you
can create if you control the exchange
and there was no regulation like before
1930 you can just extract unlimited
number of dollars from trading and
markets break down and that means you
can't have a system with corporate stock
that public can invest in and take and
gain profits out of like the whole
corporate our whole world collapses
right [laughter]
so the way that regulation works in
United States is they've basically kind
of created these slices of exchange,
broker, dealer, transfer agent, etc. And
they've kind of capped how much you can
extract. They said, "You guys can't make
any more than that. I don't care what
you do, but if you make too much, we
will bring down the hammer [laughter]
because if you make too much, you're
like screwing people over." But these
systems are so regulated that they're
stuck in their technology and the amount
of physical information they can encode
is limited because of this like because
New York Stock Exchange has to exist in
New York and designed in a very specific
way with a very specific order book to
follow regulation.
So they are minimizing how much money
they make which is good for consumers
but they're also minimized with how much
information they can encode
>> right
>> and that means that consumers actually
get worse pricing
>> like on on stocks. So crypto through
happens chance was just created bottoms
up. Nobody knew what we were what we
were doing in a way that was just not
nobody thought about this as as an
exchange or something like that. So we
we were able to build these systems from
first principles and kind of think of it
what does this look like without any uh
essential third parties because we have
to do it in this decentralized way. So
we have to build it without control. And
when you're thinking about solving the
store value problem where carrying this
thing across state lines in the Soviet
Union, that's a different problem than
how do we eliminate exchanges or
essential third parties that are have
control of this information and can like
use it to to extract pricing value.
>> So totally different problem set. So
we're not thinking about store value. So
we're not constrained by ledger size or
something like that. What we want is we
we actually want a high throughput
system. We want people to go build uh
validators inside data centers with a
lot of bandwidth and stuff like this,
but we want to make it so anybody can do
that. And that creates a contestable
market. So we have lots of data centers.
If you were a nerd in the 90s, you could
build an ISP by going to a data center,
which is literally a closet [laughter]
at like a Bell Labs or at a Mama Bell
whatever place, and like put a computer
with some network cards and plug them in
and all of a sudden you're the ISP for
your neighbors. So, that was a very
contestable market in the '9s. M
>> um we want people to be able to go go
find their local data center with 1 GB
connection which is available everywhere
build a validator and participate in
this and create a fair open market where
there is no intermediaries and
information can flow into the system
without any anyone being able to extract
from it
>> and that will result in better pricing
for consumers. So this is where we can
like eliminate all these middlemen and
like give you a token with cryptographic
guarantees that SpaceX issued it and
you're not paying all these bips. Like
you're talking about 2% like hilar
hilarious thing is that like 2% merchant
fees, Apple is like 30% on transactions.
All these things are like are huge but
finance is like 50 basis points.
>> [laughter]
>> Oh,
>> or lower.
>> Wow.
>> So, we're trying to
>> razor thin.
>> Yeah. We're trying to eliminate that
razor thin edge. And
>> is it important? Um
the scale of trading and volume is so
large that it it does become important.
>> Sure.
>> You're talking about like trillions per
day, right, at scale. So,
>> wow. If you take derivatives and forex
and all this stuff, if you can [snorts]
shave that those basis points off, that
is money given back to consumers and at
aggregate it makes a huge impact.
>> Well, I didn't realize just how much was
being traded daily. Now is that what you
see as the ultimate use case for Salana
is to be the transaction layer of the
>> it's yeah it's the message bus for
finance like we want it to be as close
to this giant global information
like sync as we can as physics allows.
>> Um
>> now one thing that made crypto so
popular with traders is the volatility.
Salana being one that delivered a lot of
wins for a lot of people but it came at
the like you needed big swings. Do you
want to see like to you is the
volatility of Salana advantageous or
something that you hope diminishes over
time? What I hope eventually is that the
fees generated by providing the service
like as a message bus are discount cash
flows that people can backtrack into the
value of it and be like okay there's a
fundamental hot dog stand here that
creates hot dogs [laughter]
and it's worth owning for that and it's
a very very boring thing like I don't
care about this thing being money and
being Bitcoin or anything like that. Um,
this is actually I think uh why a lot of
bitcoins are like Salana that's
[laughter] pretty cool. But
fundamentally
what I care about is that we we're
delivering consumer value that can be
captured by the protocol and that those
captures are future cash flows
>> and would you see Salana at any point
paying dividends? So when you stake and
especially if you run your own
validator, you create blocks and people
pay tips to be included in those blocks
as priority fees and you capture those
priority fees and that is effectively
you run your own business, you run a
validator business or you pay somebody
else to run it. You are making money off
that hot dog stand. So Salana is not
like a corporation or a like a
traditional like what you would invest
in a stock. It is kind of like
thousands of hot dog stands that all
share the same protocol and all work
together. But because they have this
guarantee that every hot dog stand
cannot break any other hot dog stand and
they can provide a service from that
redundancy, right? Because they can be
everywhere and take information from
everywhere. Um that creates value like
there's network effects that are
captured from that.
>> Okay, that's one way to make money.
Certainly logical, easy to track the
Salana hot dog stand. You're a
validator. You make money off the tips.
That makes sense. I've made money off
Salana though just by holding the token
and it went up in value.
>> So I could I mean I guess it's all
theoretical right now, but I could sell
it and presumably assuming price holds I
would make a a pretty penny off that. So
that's the second way of making money.
Is there going to be
>> Well, that's speculation. You're not
making money. You're speculating. You
can speculate on anything.
>> For sure. For sure. Now on that though
that's a part that requires the
volatility to be interesting. In your
answer I heard that the volatility is
not interesting to you far more
interesting that people judge it by how
much value are we adding to a user. Y
>> and so treat it like you would treat a
standard investment. That makes sense.
Um, but is there going to be a third
way, which is I speculate on the token,
I'm holding it, and much like I give it
to a bank and the bank pays me for me
loaning them the money. Um, are people
going to be able to get any sort of
rewards for staking?
I mean staking is a part of the protocol
you to be able to participate to build
your own hot dog stand that can
>> but can I do it without that? So like
take um
>> you can st
>> Gemini I can just do uh I think you just
Bitcoin with them, right? And they pay
you in Bitcoin.
>> You can you're if you participate in the
staking protocol, you're effectively
paying somebody else to to run your hot
dog stand.
>> Got it. So you're saying I'll contribute
my coin to your hot dog stand.
>> Yeah.
>> Got it. And there's there's a very
there's a very contestable market for
those that offer different rewards and
fees and you can go pick any of the
thousand out there.
>> Why do those guys care about like what
are they doing with the token?
>> So the only thing that the token does
fundamentally from if you look at this
the software is it prevents spam. Mhm.
>> So if we have this like information bus
where information is valuable, people
will just submit arbitrary amount of
spam like they do to your email inbox.
They just send you infinite amount of
data and it becomes impossible to figure
out what is valuable, what isn't.
>> But let's say that I'm a validator
and why would I pay someone rewards for
loaning me their tokens? So the more
tokens if if we could allow infinite
validators or we had no limit of how
many validators block producers there
are you end up with val effectively a
spam problem where you have infinite
number of validators
>> and they all submit information at the
same time. So you have to limit it
somehow. So what Bitcoin does is proof
of work where you use electricity and
your mining equipment to create a block
and that limits the number of blocks
created in the network to roughly one
every every 10 minutes. Um we need a
high frequency of blocks but we also
need to limit them. We can't have
infinite blocks because again you run up
into the spam problem where infinite
amount of people want to make a block.
There's limited capacity and that thing
gets through, right? So how do you limit
that is with the coin itself. So if you
stake with somebody, their proportional
weight of how many blocks they can make
per second goes up. So if you make more
blocks per second, you earn more tips.
So this is the feedback loop. And then
>> they're incentivized to give you their
tips or portion of their tips as much as
they can given their economics of their
own business.
>> Totally understand. and anybody can run
this hot dog stand validator and give
you back rewards. And because of that,
it's very contestable market. So if
you're in Singapore and you're the only
validator in Singapore, you can go and
find people local in Singapore to stake
with you and you can ingest information
local to Singapore. That could be
valuable.
>> Very interesting. So what do you guys
have cooking in 2026? So for people that
pay close attention to what you guys do,
what what's the alpha? IBRL increase
bandwidth reduce latency. Uh this is our
motto. Um so the biggest change that's
cooking is Alpenlow which is this. Um my
uh B+ state school engineering degree
uh is not a PhD in computer science uh
for consensus. So uh when I built proof
history and and Salana,
we built something that solved the next
generation problem which is how fast can
you make blocks without interruption.
But we kind of did it with uh just brute
force engineering.
>> Um at that time and like basically over
the next like eight years it's just a
ton more research has been done on
building new consensus algorithms that
solve the problem that we identified.
And I think the reason for for like all
of Salana's success is we were able to
increase the bandwidth per block and
reduce the latency of how fast we can
make blocks at the same time and how
quickly we can come to agreement on
them. Um so this Alpenlow upgrade is uh
like bleeding edge next generation
consensus algorithm that was developed
in ETHZurich
um by a bunch of really really smart
folks. So they're ripping out all my
code which is great. So the only way a
engineer can actually retire is once all
their code has been ripped out.
>> So I'm like I'm halfway there.
[laughter]
>> That's Do you want to retire?
>> No. No. I'm writing now with Claude. I'm
writing even more code. So it's
terrifying that I may never get to
retire
>> now. Do you just have like constant
ideas of things you want to create and
that's why you're always doing side
projects or
>> uh Yeah. That's been probably my I don't
know disease or whatever me mental
illness since a being a kid is just
always trying to build something.
>> What are you building right now? Um
I wanted to see like um part of this
idea how do I trust software is humans
write software and it's really really
hard to trust it because humans create
bugs and there's idea called formally
verified software which is
>> you mathematically try to prove that
properties of the software that you
wrote. So there's these formal
verification specs but they're extremely
complicated. It's just really really
hard to to write formal verification for
software because again you're trying to
take the software that was written to
solve a problem like to to move money
around or whatever and then you're
trying to mathematically model it. It's
almost like I don't know if people
remember differential equations and in
calculus and proving them
>> the name but that's
>> yeah it's I mindbogglingly boring like
and and hard [laughter]
like it it's just tedious. Uh Claude is
really good at generating formal
verification. So, uh, my toy project is,
it's on GitHub called Percolator. I was
trying to see if I can write a risk
engine for a perpetual decentralized
exchange that's formally verified. So,
other people I don't have to launch a
product. they can just build a formally
verified system that's proven that other
people can then go fork and build
products with
>> and they can tr and they can understand
the formal proofs and the properties
that they prove and therefore they can
trust the software to be bug-free for
those properties and this this is I
think this step where we can take go
from
um how fast we can replace traditional
finance like it's risky right like I
have this system that I'm trusting
humans and every once in a I screw up
and I lose tens of millions of dollars
or whatever, right, at a bank or
something. Switching to software is
still risky. What if there's a bug? What
if there's a hacker and stuff like that?
So, can we create a mathematical
guarantee that those bugs don't exist?
It is kind of
>> it it's just one one way that I see AI
really rapidly accelerating crypto is
through that.
>> That's interesting. So, you think that
will become possible in the nearish
future with AI? It was a year ago I
tried to do this and um it it just
generated nonsense and basically over
the last month like with the new release
of Claude
>> it was just a dramatic shift.
>> Um it it's crazy how how good it's
gotten.
>> That is wild. That's one of the most
exciting things about AI. We use it like
crazy in the game development.
>> It sped us up dramatically. Now you're
talking about formal verification. This
is something that's haunted me. So, I
have to constantly train my mom and my
dad who are boomers, literal boomers.
>> And that I'm like, even if you think I'm
calling you and I'm asking for money, it
is not me. It is AI. You need to be very
careful.
>> And I just cannot understand why we have
not yet put some sort of crypt
cryptographic signature where if a
video, let's say, has me in it that I
can stamp it and say this came from me.
>> How how would they trust that it's your
public key? Um, that's for you to find
out. I don't know how to solve it.
>> Yeah, this is the civil problem, right?
You tell them here's my
>> civil problem.
>> Yeah, here's my public key. Only trust
messages for me. And somebody will craft
a public key that is just uh almost
exactly like yours. They will like get
it to be as close to yours as possible.
When they call you, they fake the
picture, right? Like you're
>> But why if I can sign a transaction, why
can't I sign a piece of media? uh you
can but they will sign it with a public
key that looks very similar to yours
>> because you're saying the visual
representation is the problem but why
not like an SSL type certificate that
says
>> so domain so again domain fishing right
you go to Google where all the O's are
zeros.com
>> like people will fake the domain like
ultimately
>> this must be harder than I think
otherwise
>> this is like the human brain problem
right is we're really good at simil like
recognizing similar things so If you can
trust a domain and the problem is people
generate a domain name that is one
letter away and it looks exactly just
like the domain you went to and this is
where 95 99% of the fishing attacks with
NFTs and stuff like that is that
>> there's a launch somebody's really
excited for the launch and they have to
be first to click to win it and a
scammer will post a domain that is
almost exactly like the real one and
you're [clears throat] like
>> you fail the check. So [snorts] yeah,
these are really really hard tough
problems. Um, the way that people solve
them is they build layers of trust where
you have like effectively smaller and
smaller allow list like you and your
parents have like a specific like device
like app that you use with the specific
kind of thing. Maybe it's signal, maybe
it's iMessage, like these other third
party channels that an attacker can't
hack all at once. So when they present
like they sign a piece of media to you
like column you're like send me a
message over our signal conversation
that we established before that kind of
thing. So
>> so you don't see currently a way to
solve for it looks like me sounds like
me but it's actually not me.
>> No, it's just the human brain is not
cannot do this. We're just
>> Wow. I really thought this was just a
matter of time. That's wild.
>> Computers can do this and robots. So
maybe you like have a robot that you
trust, but then somebody can replace it.
Like it's just really really really
hard.
>> Wow. Well, that's interesting though
because if I can go into let's say that
I have a bot. It's just on my computer
and I say, "Okay, uh I care about these
people, um official government post,
whatever." And I go in and I say, "This
is the official one. This is the
official one. This is the official one."
Then at least it's like it can warn me.
No, no, no, that didn't come from the
official account. So at least from the
group of things that I track with
regularity,
I could have some sort of uh
>> my advice is uh throw more more block
parties, get to know your neighbors.
>> Well, but I'm talking about like global
stuff where, you know, you've got the uh
Trump goes on and tells some nation
tells Greenland, "We're coming to get
you." It's like, well, there's no way
that's him. uh you know something like
that where a world leader says a thing.
>> We built uh you know people built
massive republics and empires 2,000
years ago where everything was fake.
>> Yeah.
>> And they did it through basically like
you trust your neighbors because you can
smell them, you can shake their hand,
you throw a party with them,
>> right? And out of those 200 neighbors,
you trust their feedback first,
>> right? And we all like the fun fun
fundamental like foundation of a
republic is that like okay we'll all
look at we'll all watch out for each
other's property like all our neighbors
right that you throw a block party
together and then there's some other
neighborhood of 200 people that does the
same thing and we all each one picks a
representative from each neighborhood to
go to smell each other somewhere
[laughter]
>> right and shake hands. that that's the
foundation of of Republic is that you
throw a block party and you get to know
your neighbors and all of this like
digital verification. You try to diffuse
it through intermediaries but those that
you trust personally that you have a
really high trust with. Um so my advice
to people is like go throw a block
party, shake hands, get to know your
neighbors, smell them, give them sell
them some hot dogs.
>> Yeah, that's wild, man. [laughter] All
right. So, what are some signals that
you want people to look out for in 26
that say that Salana is hitting the
strides or the marks that it expected to
hit?
>> Um, the ones that I'm excited about is
like more real world assets, more stable
coins, stuff like that.
>> Do you have people lined up that are
going to be uh putting things on the
chain?
>> Um, yeah, a lot of this stuff happens
like so Labs works on random little
products. Um, I'm the CEO of Labs, but
there's other organizations like Jetto
and Salana Foundation and Anza. They do
all the work at this point. So, there's
a bunch of announcements on Salana.com,
which is run by the foundation. They
work with a lot of third parties to go
like it, you know, like super um um was
it Securize or whoever else like issues
SpaceX stock on Salana. That would be an
announcement coming from them. Um,
>> and so that would be somebody that says,
"Okay, we bought this on the traditional
market and then tokenized it and put it
on Salana."
>> Yeah, the these are like the version uh
zero versions of this. They act as a
transfer agent. So, they're able to this
is how they interface within Tradfi and
and crypto. M
>> this is kind of the the biggest pain
pains in the butt is like where in the
traditional finance layer can you like
set up an entity get regulated and then
become the the bridge or the proxy or
the interface between that and the and
the crypto world. Now is it destructive
of the traditional like bond of the
stock so that it only exists at that
point on Salana or does it exist in two?
>> So similar similar like uh stable coins
there's a onetoone backing. Um so this
is where like market structure
regulation or stable coin regulation can
provide that guarantee that okay we need
to have a essential trusted third party
to be the bridge for that interface
because we don't have the
>> and they basically hold it. So we have
the physical thing or however that is
recorded
>> and now we have the onetoone
representation. So you know when you
trade this
>> that you're the one that owns it.
>> Got it. Makes sense. So your
cryptographic, if you think of it like
as a cryptographic chain, your
cryptographic chain goes to securitize.
So you know that you got something from
securitize and they are the ones that
are guaranteeing that that's backed by
real stock.
>> Um what I want to get to a world is
where people just IPO like a startup
raises money and does an IPO directly on
chain and your guarantee is then to that
startup's their domain, right? like
SpaceX.com or whatever. By the way, like
I've said SpaceX a billion times.
There's no way that Elon would ever do
this and I have no knowledge of him even
considering it. But this is my dream
that someday
>> something really really impactful like
SpaceX would just IPO directly on chain
and you have a full certificate chain to
their domain saying SpaceX issued this
token.
>> So you know exactly what where you're
getting it from.
That would be like we've eliminated all
the layers. That would be like the
coolest thing.
>> What are the regulatory hurdles to that?
Because I could see a small company
saying, "Yo, this is a way for me to
essentially raise money."
>> Yeah, I think either uh market
structures like this bill that's being
mowled over right now in Congress. I
think they just released a draft of this
um like last night or something. M
>> um so there's a bunch of kind of
regulation and probably the right way to
do it is if you have like a um future
forward SEC give them the tools to go
and build like little experiment green
lines on how to do it. Um and they'll
probably need to like cap it by dollar
amounts raise and stuff like that. So
space it would be impossible for SpaceX
to do it in the near future. But my hope
is that sometime in the not so near
future, like the companies that I feel
like people should be investing in
like or anthropic, open AI, all of these
that are building the future of of
science are private and that's a shame,
right? Like I think there's a lot of
kind of overhead and regulatory hurdles
for it to be accessible to um the
general public, which sucks.
>> How much Yeah, sorry.
>> No, please. Not that you should put all
your money into like uh high-risk tech
stocks, but having the ability and the
option to put a small amount of them, I
think is part of the American dream,
right? Like I think that is critical.
>> And and to participate in that like kind
of growth engine creation, I think is
really important.
>> Agreed.
>> How much do meme coins negatively impact
like the perception of IPOing right on
chain? I think the biggest challenges
are actually more
that like when a company CEO gets to the
point that they can IPO, it is such a
high-risisk event that they like all the
lawyers and everybody else will tell
them just minimize risk. Just go with
like whoever uh even if it's the vampire
squid and they'll take like [laughter]
10% of what you're raising or whatever
like some absurd amount, some absurd
cut. Just minimize risk. I think um it's
more of a you need like a CEO with a lot
of agency and like that's like kind of f
the system to kind of break the mold
first and they're not going to care
about like meme coins or anything like
that. It's more it's more of like you
need like somebody that's willing to be
really um you know personally want to do
it. And you know historically like
Google actually did a direct listing as
a big FU to the banks
>> and the financial world was like
on them. was terrible,
whatever, because they didn't get a cut.
[laughter]
>> Yep.
>> And that was the wrong thing, right?
Like it obviously became like one of the
biggest most successful like companies
that created a ton of value for for
people.
>> Do you think at all about the memecoin
phenomenon and what it means? Like what
is it about human mind? It's just like
Ultima Online in my mind. Like I think
there's something weird about like and I
wish more of this was happening in the
real world like where you do throw a
block party and you meet people like
there's persistence in the world
>> like your neighbors can see like your
Halloween decorations, right? And that
is persistent. And this is I think very
important to culture. So as soon as you
have any sort of persistence like Ultima
Online was a persistent massive
multiplayer game where if you made
changes in that game they would persist
overnight and other people could see
them and that creates culture and trade
and all this other stuff and people
start valuing that with real dollars.
Um, so I think NFTTS and memecoins are
just kind of part of that weird
phenomenon that because these systems
are persistent, people start valuing
them and start speculating on the value
of those things and you kind of get into
these like hot ball of money over
ultimately things that are digital that
have no fundamental value.
>> Yeah, it's interesting. That one to me,
the memecoin thing is absolutely
fascinating in terms of what it is that
people are actually doing. Like just
gambling on culture. Uh but they seem
super surprised when people rug pull.
>> It's a Canisian beauty contest.
>> Canian Kenzian. I'm I'm uh this is this
is where my wife catches me eye. You're
a spy.
>> You're a spy. [laughter]
>> That's hilarious. Uh say more about
that. What do you mean?
>> Um so he uh they they ran this
experiment. I don't know if it was him
as a professor or some university where
basically you were given a bunch of
options in a newspaper and you would
over mail you would send in the option
that you think everybody else would
pick.
>> Not the option that you would pick but
you're you're trying to guess what will
everybody else will guess, right?
>> Literally.
>> So this is basically I think this kind
of game that people uh like to play
because it's a it's a winnable game,
right? Like you can you can kind of
think, oh, I'm smarter
>> than everyone else and I can guess
exactly which memecoin everybody else
will pick and I'll be able to sell it
first
>> and that's how it runs. Even though
there's no fundamental
>> like uh discount at future cash flows
that you would use to
>> value your hot dog stand. There's no hot
dog stand there.
>> Yeah. [laughter]
>> What do you take away from the
financialization of everything? Like you
can bet on everything now. Poly market
will let you bet on the most random
There are like apps now that let
you like gamble on I've got a gas bill
due and you can gamble the value of the
gas bill.
>> Chicago school of economics boy like I
think this is financialization is the
absence of politics.
>> The absence of politics. What do you
mean? Well, like to decide polls and
which polls to trust and all this other
stuff without a financial open
contestable market to pick is a
political game, right? Somebody will say
you trust this poll versus another one.
They build a reputation
>> and that's one way to do it, but it's
ultimately a very political thing.
You're trying to build a a trust
reputation with people in a
relationship. It's you're pitching to
them. trust me, don't trust this this
other thing,
>> right? And that's all politics.
>> And when you force people to say doesn't
matter like none of this reputation
stuff matters, put your money where your
mouth is, you're removing the politics
out of it. So the reputation political
aspect of it is not valued anymore. You
don't care about the the
>> the reputation of the poll. What you
care about is the liquidity and the
amount of money at risk,
>> right? So you can measure that directly
and objectively versus like I have to
trust Nate Silver, but then he sold 538
to some other company and now do I trust
him as much, right? Like that's a very
political thing.
>> Yeah.
>> Like Poly Market or Kalshi or whatever.
Those brands could die. It doesn't
matter. But the next market, you know,
Kali is great. It's very easy to I think
use it with Jupiter on Salana through
the through that interface. What matters
is the amount of liquidity and the
amount of value at risk and that gives
you all the confidence you need to
decide whether you trust how much you
want to put faith in that poll or not.
>> That makes sense. Man, this has been
fascinating. Where can people engage
with you?
>> Uh I am Tuli T O L Y on Twitter. it's
probably or X as it's known to the
>> to the new generation.
>> Um, follow me there. Most of my posts
are technical gibberish
or technically gibberish
[laughter] either way.
>> Awesome. Well, thank you, man, for
coming on. I really appreciate it. Boys
and girls, if you have not already, be
sure to subscribe. And until next time,
my friends, be legendary. Take care.
Peace. If you like this conversation,
check out this episode to learn more.
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