Plain English with Derek Thompson - Crypto Crash, Part II A Debate About the Future of Web3


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Today is the second half of our special two-parter on the state of crypto.


In Monday’s episode with the financial journalist turned venture capitalist mollywood, we discussed The up-and-down Saga of web three and that’s a good place to start.

If you are flummoxed by all things crypto and it settles on the idea that even if you think blockchain technology is interesting and even if you are desperate for someone to build a better internet there is a strong case to be made that cryptos promises got wildly out of line with its actual use cases in the last few weeks, use cases have been Come a popular Trope in the crypto debate.


Crypto has tens of thousands of people working with dozens of billions of dollars on new technology and I think it’s fair to ask what have they built?

That is better than the status quo.

What as Monty Python?

My task has blockchain ever done for us?


Today’s guest is packing McCormick.

Paki is the author of The not boring newsletter, which is a great read.

He’s a popular web, three writer who’s not afraid of sparring with Skeptics about this space and he’s been particularly active taking on the question of cryptos.

Use cases in this episode, we talk about his journey in crypto land.


What he’s learned from the last nine months of chaos, we debate the use cases and we talked about where this technology goes from here.

As always, if you have feedback questions ideas, for new shows, email us at plain English at

I’m Derek Thompson.


This is planning.


Packy McCormick, welcome to the podcast.

I’m a big fan.

Great to be here.

So I have three goals for the next 30 or so minutes, and I think it’s worthwhile for me to be totally transparent about what those goals are goal.

Number one, I want to get an Insider’s view on the state of crypto.

I want to know how the last nine months have changed your mind and haven’t changed your mind about the promise.


Of this movement and the Peril of this movement.

Number two, I want to make sure that I give you space to make the best full-throated defense of cryptos potential as a technology of mass progress.

And number three, I want to make sure that I give myself space to respond or to express my uncertainties and my doubts.


My skepticism about crypto, a lot of which have solidified because the news the last 10 months.

So does that overall sound, like a fair roadmap to you?

This is going to be fun.

My number one goal is is to not have a video clip of me saying something dumb.

So I think those goals are aligned.

There is no video component to this particular podcast.


So right off the bat, I think that particular goal is going to be met.

Let’s start with an easy one.

I do want to know how you got so into crypto.

How did you fall down the rabbit hole?

Yeah, so I mean I think first things first I was a skeptic for a while as well.


I bought Bitcoin back in 2013.

I read a Fred Wilson blog post about In coinbase, I worked at Bank of America Merrill Lynch at the time, I wasn’t allowed to buy stocks without them knowing about it.

So I guess like a lot of people I came in as a criminal trying to kind of get around vac of America’s rules there, but Bitcoin ended up selling it, a few months later to 50%, gain to go to Oktoberfest with my friends.


I thought I was a genius.

That was like, you know, the Peak at 2 million dollar mistake.

So I avoided it really for maybe the next seven years and every time I looked at the price is going up.

I was just a little bit better about it and I didn’t get it.

I mean, Bitcoin, in particular, I didn’t really get It as a particularly valuable thing, I’d see some value now.


But it’s not the thing that excites me the most, I think I got back into it, I started writing not boring in the beginning of 2020.

Didn’t really write about crypto that whole first year, had more of kind of a finance and a little bit of tech oriented audience for the first year.

And then I started investing and I talked to a few kind of web three entrepreneurs and one conversation in particular kind of just talked about the value chain and how it changes, when more value, accrues to the kind of The Creator and the user of the product.


And I think one of the things that it kept me, kind of on the outside of the space for a while, was a lot of the language, like, replacing the institutions and cutting out the middleman and all of that kind of stuff didn’t appeal to me.

I don’t think that’s how things work, but just thinking about it in terms of the value chain.


And just what happens when you take an entity out of the middle to the business models that are possible.

That’s what kind of started getting me into.

And I remember the first time I wrote about it, I Apologize for writing about crypto at the top of the email and said I was like maybe going to do it every so often and then it became every month and then it became every you know couple of weeks probably and have invested a bunch in what three startups as well.


And still I mean I I’m not going to be the most kind of full-throated, you know, blind believer in what’s going on.

I think there are lots of scams and there’s certainly lots to be concerned about, but I also think it’s incredibly fascinating and probably being too dismissed right now.

And so there’s probably, you know, Dan That somewhere right in the middle, that hopefully will agree on that end of this.


Yeah, the hype pendulum is, certainly swung, very, very far.

You mentioned a couple motivations and I just want to tell you what, I see as the motivations and ask you to figure out it asks you to tell me, sort of how you think these motivations are divided among the people that you follow most closely.


So number one, I see a huge motivation behind crypto that is somewhat philosophical that there’s this idea that the web to internet Revolution between 2003 and 2006 say 16.

Empowered a kind of digital Behemoth that Ben Thompson, called aggregators, and Facebook Aggregates, social media, and Amazon Aggregates consumers, and Google Aggregates information, Spotify music and so forth.


And these aggregators provided extraordinary value to Consumers but they were often seen as disempowering the creatives and so web 3 was really interesting.

It seemed to me to a lot of people because they thought up, I’m a creative.

Understand dividual I don’t work at the Facebook.


I’m not in executive.

It Amazon in this new economy where I just make stuff, I can own my own property and I can get rich on it number to that number one was Agency.

Number two is Adventure, you know, the frontier of tech.

I think kind of felt closed to a lot of people like social media was done.


And cloud computing was being competed upon by, you know, Microsoft and Amazon, and big, big companies, and the number three was money.

And I think we need to Or ground the whole money thing.

Like web 3 got massive amounts of money from venture capital and look doing something new is fun but doing something new that’s paying you.


A ton of money is really, really fun.

And it was always difficult for me to disentangle.

Exactly how much of the height is truly philosophical, like, sincerely about the product and how much of the hype is just about, all the money is Flowing here.

So in all honesty, like how much looking At like the last few months.


Do you think the hype around crypto was just about the money?

Oh my God.

I think a ton of thigh Brown could probably the most vocal hype around crypto has been just about the money maybe.

Like, even today we’re recording this on a day where you know, aetherium Rozonda box and it’s been doing well finally, after crashing for a little while.


And so much of my time line is just people drawing charts and like making predictions based on the 200-day moving average.

Like all of that kind of stuff.

Certainly, I think it was a big kind of motivator for the hype.

I mean, it’s just really interesting thing where it’s at.

The same time, Financial instrument gambling, a new technology like all baked in from the beginning and probably the first big technological wave that people could talk about on the internet while participating in it on the internet.


I mean, like, you know, it’s things like Ai and other things are happening in our interesting.

But people can’t get quite as involved.

And so I think there’s just all of this.

I part of it from the fact that Money is baked in from the beginning, which is both a blessing and a curse.


And part of it, just because we’re doing this thing on the internet and people are bragging about making money to me, that was never, and this is, I’m sure what every single person will say not, what got me interested in the first place, I really approach.


It almost is like an academic thing in the beginning like that, talk about aggregation Theory, and that first, post that I wrote about crypto because I do think it’s interesting not necessarily to take down Facebook, or to take down Twitter, or Amazon.

I think those companies are going to survive.

I’ve and do a great job for a very long time and I’m interested in projects and I’m sure we’ll talk about, I’m like Shopify, getting involved in something like token, gated Commerce.


I think a lot of the answers are going to be kind of these hybrid solutions.

That take the kind of decentralized crypto pieces in some spots and take more centralized pieces, where it makes more sense.

And we’re scalable architecture is a valuable thing to have and where but big organization is a valuable thing to have.


So I do think there is probably among the people who are building real products in the space.

It’s a, it really is very philosophical like even more philosophical than I am, and I’m fairly philosophical on it and then I think a lot of the noise and hype ends up being on the financial side.


I’m glad you said that, I think 90% of it is greed.

And what’s really difficult for me to figure out is how much of the rest of it is mostly an interest in money, versus a sincere sort of early cracking of the case of what can we actually do in this entirely novel space?


That It may have use cases in frankly, like just may not have use cases that changed the world before we jump all the way into the use case pool and this very polite conversation becomes a little bit more of a fight.

Let me ask this question, how have you changed your mind in the last nine months?


Like you cannot possibly have gone through this crash and have none of your priors changed.

So tell me one way that your mind has been changed by the last nine months.

Yeah I mean I think I think probably the biggest one is just time.

And for me, like I kind of thought that you could just jump into some of these things being workable in the very, very near term without doing kind of like, all of the infrastructural work on the way up without, you know, having having use cases for people that aren’t purely Financial without, like kind of skipping, all of these steps people in the space, talk about speedrunning governance or speed running the economy or speed speed running the history of finance.


And I think you do have to make a lot of mistakes and build a lot of the same stuff frankly, over and over again, to get to even kind of Paris.

Or with with kind of the, you know, the traditional internet of the traditional Financial system before building up on top of that.

So I think it’s going to take a little bit longer than I had expected.


There are certainly more scams even than I thought there were in the space.


If you look at my DM’s every day, it’s 50 and ft projects that have no shot of doing anything above any value.

Asking me to you know write about them or to promote their and ft project or whatever and so there’s just like a lot of that crap.


But overall I’m still I’m actually probably more optimistic Space now and we can talk about some of those use cases.

So, we’re talking about money and greed in crypto and that money comes in large part from Venture Capital.

Let’s get some hard numbers on that.

How much have Venture Capital firms invested in crypto and how does it compare to other categories like software or climate stick.


If you look at the pitch book that I think pitch book says that in 2020 131 billion dollars was invested into crypto and Block Chain.

That includes like a 3 point four billion dollar growth stage round and Robin Hood and a few other stuff.

So it’s actually closer to like twenty six billion.

If you look at SAS, it’s 160 billion if you like software as a service.



Keep going software as a surface.

It’s is 160 billion if you look at fintech and there’s overlap in the categories, but fintax like 120 billion.

And so I think, as actually as a proportion of all the money spent in Venture Capital, it’s not one of the largest categories biotech.

Thankfully is higher.


It’s like right.

Kind of in line with climate, I think climate might be a little bit higher so I think Maybe the amount of money that’s gone into the space is just a little bit over.

I have to when people are talking about the talkin about Theses role in crypto.

So I’ve been following that coin with some interest the last seven years or so.


And if you had told me in 2016 when Bitcoin was worth about $500 that by 2021 it would be worth, sixty thousand dollars.

I would have been totally stunned but I also would have predicted all of these widespread uses for Bitcoin.

But something very interesting happened, which is that Bitcoins value increased by a factor of 100, 20 x + 5 years.


But it’s use cases, I would say, conservatively did not increase by a factor of 100, 20 x.

Like it did not become a common medium of exchange.

It did not become a daily currency and I wonder if it ever concerned you as you were watching all of these prices, go up and up and up as a writer investor thinker that this new technology, not and not just Bitcoin, but a lot of other cryptocurrencies, a lot of other companies, We’re 100 Xing and value before.


Their obvious use cases had multiplied.

Like, did that concern you at all?


I mean, I’m Bitcoin a particular like I said, I’m not going to be the biggest Bitcoin bowler or Defender here.

I think the thing that was really valuable about it was in an environment where there was cheap money money being printed.


Bitcoin is an incredible receptacle for all of that extra cash.

Maybe not because it’s an inflation hedge or any of that kind of stuff.

But because even The stock like you look at something like zoom and it performed incredibly incredibly well and it you know, it broke the rule of 40 which is the sufferer rule that compares growth and that adds growth and profit margins like by 10x incredible performance during the pandemic.


But there are still numbers and you can still look at a PE multiple and be like, this is absolutely insane.

Whereas, with something like Bitcoin, there’s not really a way to Value it may be you compare it to gold, in which case it looks cheap or maybe you compare it to, you know, X Y or Z other thing, but it doesn’t have the same Relation framework.


And so it’s like really nice repository for all of this money that people all of the sudden have.

And by the way it’s going up in all of your neighbors and friends got rich off of it.

So of course you’re gonna put money in that I did not think that was sustainable and I think if you look back at my writing, you’re not going to find a lot of like Bitcoin to the Moon kind of predictions in there.


I probably you know, another thing that maybe I got a little bit have changed my mind on.

Was thinking that ethereum was maybe a little bit ahead of where it was.

I mean if you looked at their high gas prices, Isis and all of that.

Contributing I just stop right there, stop right there and just do a little bit on what etherium is and how it’s different than Bitcoin.



So etherium is kind of an answer to bitcoin vitalik pewter and who’s one of the cofounders of ethereum started out, actually writing Bitcoin magazine.

He wanted to build smart contracts on top of Bitcoin in the beginning.

Bitcoin really is a database that night I’m sorry to do this but smart contracts are smart, contracts are pieces of code.


That Act like kind of contracts on the internet so it says it will do this thing and then it just executes that thing based on certain inputs.

And so Bitcoin really is this database that says how many people own which Bitcoin whereas smart contracts are more general purpose and can allow people to build all sorts of applications on top of them.


And so etherium was a blockchain that after trying to figure out how to do stuff with Bitcoin and even actually looking into kind of more purpose-built chains is supposed to be this kind of like General World computer that anybody can build all sorts of applications on top up and and the theorem is had you know all sorts of its own challenges with high gas prices and with scaling but really most of the things that people have heard about and used in web three over this kind of path cycle are built on top of the theorem So I want to get fully into the use case debate here at I think the strongest case against crypto, the strongest case, I’ve heard in a nutshell is to fold that the hype doesn’t reflect reality and that the risk isn’t worth the reward and we’re going to get to the hype versus reality part of this in just a second but I want to spend some time on risk and reward and should have mentioned this a little bit earlier.


There are incredible challenges in the world that Tech could play a role in.

There’s climate change and biotech and housing automation.

There’s all these things that Mark can Jason talked about in his it’s time to build essay and crypto doesn’t seem to me to directly go to solving most of its may be any of these problems instead of innovates often, in the space of decentralized Finance at the risk of massive energy and electricity demand and arguably in the process.


Slurps up all of this Tech Talent away from the physical world problems that I mentioned.

So how do you take on this criticism that crypto gobbled up the talent and the funds that could have gone more?

Actively to all these other challenges.

Yeah, I think it’s not nearly that zero-sum.


Like I am a huge abundance, agenda supporter.

If you’ve read my writing recently, I mean I’ve called it out, but I’m also investing in companies like Hadrian that are doing kind of automated Manufacturing in the US companies like primer working in educationally.


I really deeply believe that that can help solve a lot of those problems.

I don’t think crypto is stealing.

It’s probably stealing attention frankly and maybe It’s actually a good thing.

Like if you look at every Tech Trend in the history of the world, there’s a hype cycle work, it’s overhyped.

And then people get disillusioned and then maybe there’s something that comes out the other end and maybe some of those categories can build and maybe a little bit more of a sub a little bit more, obscurity because of crypto.


But I think if you looked at the number Electric optoelectronic, Capital did a study on the number of developers and web three and I think it was something like 18,000 developers again, if you look at the 26 billion dollars invested by VC’s in a crypt Up ton of money has been going and climate companies like Adrian can raise every single dollar they want and real can raise every single dollar that it wants.


I don’t think, I haven’t personally seen looking at companies, kind of across the Spectrum, very good companies.

Solving the problems that you’re talking about, not being able to get funding because when was like, no, no, actually we’re going to fund this NFP project instead so there’s two ways to look at risk and reward.


One is to look at the number of Engineers and the amount of funding and you’re making the case that yes there are.

Are really talented Engineers that are being taken from Project a to work in crypto.

But if it’s eighteen, thousand engineers in all of crypto and Google, by the way alone, employs 27,000, that suggests that crypto isn’t stealing essential talent and bankrupting, other fields of innovation.


But there’s another way to look at risk and reward.

You could say, the reward of crypto isn’t worth the environmental risk considering so much electricity is required for men.

Singing mining tokens.

You could say that the reward for consumers ordinary investors isn’t worth the risk.


We’ve seen hundreds of millions of dollars, stolen trillions of dollars of wealth.

Wiped out in crypto markets either because people made Investments that crashed or the money was stolen.

They Park their money in crypto and Banks like Celsius that guaranteed a rate of return.

And then those Banks exploded, you know, there’s also this case that the risk isn’t worth the reward. 100%.


I think there’s a bunch of different pieces to this, right?

Like something like Celsius That is centralized and and all practically guarantee you just you just a 10.

Second definition.

What Celsius is?

I’m sorry.

I introduced it without defining.


So there’s a category of companies that are called, kind of see fire centralized Finance, where they’ll say will hold your crypto will give you X percent yield.


Next percent is often 10% or 20% of these crazy high yields and so people will hold their crypto with something like a Celsius.

And then Celsius in the background is taking that crypto and lending it out to get high yields.

Sometimes Could be in a quote-unquote sustainable way and sometimes that’s lending the things like Tara Luna and putting money in Anchorage and Tara Luna where they promised 20%.


But it’s an algorithmic stable coin, kind of Ponzi that ends up falling apart and then those yields aren’t that aren’t there anymore.

The principal’s not even there anymore and then the centralized Finance institutions have have a challenge.

So I think that is a like that that’s that’s awful, right?


Like that is people who you expected to treat your money with with care.

Respect going out and doing unsustainable and irresponsible things with that money.

And then all of the sudden you’re left with less money than you thought.

You put in a safe place.

Like that is not good.


I do think it’s worth separating that from people trying to participate in nft projects that end up not being worth something.

And the motivation there like really is I think in a lot of cases when someone dies you and says, do you want to buy this new enough to project?

It’s going to Moon.

That does feel a lot more like gambling and so people lose money, doing things like that.


It sucks but it’s very different than Someone putting.

Money and something that kind of looks like a bank.

Even if it says that it’s not a bank and then loses the money.

Quick point on the future of web three during the boom.

There were all these memes among people who were crypto fans saying stuff like you know good luck, staying poor, not going to make it and now the shoe is on the other foot and I wonder if you look back at some of your writing in 2020 and 2021 when the crypto markets were really just on a rocket ship and I want if you think like maybe I should have called out this culture for its braggadocious Vibe, maybe I should have offered more warnings that a lot of people that were behind crypto were rooting for something, that seemed like it was going to crash.


So do you ever look back and it to 2021 and look at those posts and see, you know, maybe I should have saw that seen this coming, maybe I should have written more post encouraging people to have a little bit more humility.

How fragile this entire project is total.

I mean, I think there’s there’s two pieces of that question.


Like, one that have fun staying, poor stuff, and all that.

I hate, I never participated, like all of that I think is just it’s from that group of people that I’m talking about that are more there to speculate and trade and all of that.

I don’t think you see a lot of Builders who are building companies and actual projects also yelling at people to have fun say more like that maximalism.


The infighting among different blockchains.

Like I’ve called that stuff out before for being Dumb.

I think my biggest challenge as a writer as an investor, as all of these things in general is that I see the upside a lot better than.

I see the downside and I see the good in people and projects and all of that more than I see see the bad.


And so certainly like it wasn’t even something that I was really thinking all that much about frankly, like calling it out.

Because if you look at any of my writing across, what three across other stuff, it really focuses on like, oh, this is super interesting.

If this company succeeds is what World could look like now, for sure, you know, I wish that I had called some of that out a little bit more, but I don’t think that I kind of leaned into that persona.


All right, what if I finally get to the meat of the use case debate and this gap between, you know, hype and reality, that’s been talked about in so many different podcasts and so many different circumstances.

So, I hope you don’t mind if I just quickly and painlessly foreground a famous debate that you had with Zach.

Weinberg Zach is an entrepreneur who’s been debating web, three people on his cartoon avatars, podcast last few weeks and you.


And he had this exchange where basically you amusing about various ways that putting a title on the blockchain like for a car or a house might be A valid use case of the technology and Zack, essentially, after several minutes of back-and-forth, made this point that, okay?


But enforcing that title in court requires police officers requires judges in the physical world.

And so it’s not clear the titles presence in the blockchain makes a huge amount of difference is that a fair quick and dirty summary of your exchange?

Because I want to just point out mostly that it highlighted, this open question of.


Wait what is the major use case of web three that we have right now.

But did I do an okay job?

Just sort of summarizing each person’s perspective, their you did.

So it could actually see the video clip that kind of went viral was really focused on that one piece of the conversation, it was like, as dumb as I’ve ever been with a microphone in front of my face, which is, which is saying something.


But, you know, the conversation before, that was talking about news stories, then talking about the Solana then talking about defy on Solana and then looking for a use case.

And then, you know, he asked me about a use case, I think in defy on Solana, that touch the real world.

Was a real use case.


And then I just like kind of pulled mortgages out of my butt and didn’t have kind of like the you know, I hadn’t thought through that use cases really ever before.

And so you could tell either went on that, he has even a second question and I was like, actually, I don’t know.


Um, so this is is not the best the best you sleep that I’ve listened to a bunch of his debates recently.

And I do think there’s this really interesting point.

And again, this goes to a lot of the way that people talk about crypto people from with inside.

Add the, the web three community that it needs to be fully decentralized and not touch the outside world to be a value.


And so I’m not going to way back into the mortgage debate here necessarily.

But what I do think is interesting.

It’s like, I don’t think that it means that you can’t make something a little bit more efficient and also have the police and the courts and whoever else get involved.

And I don’t think those are two necessarily opposing viewpoints.


I think it’s totally fair.

I think what was useful about that exchange, you know, as someone who is a bit of a crypt, Skeptic but is curious to know more is that it put its finger on this question of how is web three better than the status quo?

Crypto has a time and money and low interest rates and lots of talent.


It’s like you guys have been in the kitchen for a few years now and people want to know like what have you actually whipped up for like on mass consumer use and so here’s your spot.

The stage is yours, the spotlight is yours right now.

Today, what is the single Product that best shows how web through your crypto can make something that is better than the current system and ripe from Mass adoption.



Oh, great question, I think even this framing is a little bit because I would agree with you actually and I think a lot of people in the space would agree that there’s not very much that’s ready for wide-scale huge consumer, adoption in the space.

I think there are things that are interesting and, and that point That direction, I mean, stable coins.


I think are one example and they’ve been going back and forth.

I know SPF over at FDX tweeted about this and then people ripped on him because Y is very good at International remittances.

And so why do you need crypto to do International remittances?

But I think that stable coins are really interesting.


And one of the things that interests me about crypto and general is this idea of kind of combining the best properties of physical items and and digital items, and internet superpowers.

And so, you can think of a stable coin like USC, See, which is fairly you know fairly trusted in the industry and has 20% of its money in cash. 80 percent of its money in short-term us treasuries fact kind of 121.


Something like a u.s.

DC kind of behaves like a regular kind of physical Dollar in that you can hand it to somebody.

You can keep your own dollars, but then has this kind of like internet scale where you can send that same dollar to a person across the world without paying a fee for doing.


I think so and it doesn’t matter which country they’re in.

And so I think things like that are interesting and that they’re not going to replace the US dollar.

They’re not going to replace Bitcoin but they can make things a little bit more efficient.

I think I should have called you here to talk about several coins for a second and stable coins and remittances specifically.


So I have close friends that work in remittances and I know how grueling the on-the-ground work has to be in order to get people.

In Africa, in Southeast Asia, to put the apps on their phone, right?


In order to be able to do these kinds of transactions.

And I wonder how much what the stable coins obviously?

Don’t solve that problem.

They don’t solve the grueling work of essentially of customer acquisition.

And so, I wonder that once you’re a company that’s working intermittence has.


And, you know, that so much of the problem here is, Sure, that all these people on the ground, have on their phones, the infrastructure required to receive and send money internationally.

How much does stable coin really change the game here?


And I’m not, I’m not even talking about, permanence is to developing countries right now.

And my sister has a fantastic in Ghana that works with smbs.

And that is a real struggle, getting the app onto people’s phone.

I mean, she did dumb phone development for the first X number of years.


Because There weren’t enough smartphones for people to download an actual kind of iPhone or Google Play app.

And so I know that that is a very, very, very challenging problem to solve.

I would imagine at some point you’ll probably see some of those companies.

Maybe work with something like you SCC or Circle, which is the company that that issues usec to maybe make those rails a little bit more efficient.


But certainly in this, like kind of next phase, we need apps that are actually worthwhile and get into people’s hands.

I think, for right now, it’s probably easier for me to send money to my friend in Europe.

Or to invest in a company in Europe or I have LPS who are investing in not boring, Capital with stable coins because they’re in company country X where it’s just a lot easier to send money, kind of point to point that way.


And so these are not huge needs.

I mean, I would imagine that the volume of stable coin.

Stable coins usage overall is probably largely for crypto trading today but I also think that there are these kind of rails that you know stripe has started to kind of incorporate A little bit of you SC see into their rails, I talked to accompany the other day that is now going to be launching in Europe after launching in the u.s. because Circle issued Euro coin.


And so just makes their processes a little bit easier, cheaper faster.

And I think that’s maybe one of the misunderstandings and when I say the things are going to take a little bit longer to develop than they were first.

You need to get to the spot where people trust this thing where the infrastructure is actually.


Kind of is As good.

And as stable as as the existing infrastructure before, people can build on top of it and build these applications.

That you and I would both agree.

People want to use and it might not be a.

Here’s my stable coin at that might be here’s my thing to happen actually stable coins power.

This one piece of it and I can build on top of this open infrastructure as opposed to paying for an API that I need to.


Then charge you know you need to then pay 3% of the transaction be to to make this whole thing work.

And so I do think a lot of the progress on something like that is going to be unsexy and feel incremental and then as it gets to this like kind of base layer where it’s trusted people, be able to build kind of more and more things on top of it.


What is the metric along which stable coins would make remittances better?

Do you think?

Because if you transfer a stable coin from, let’s say the u.s. to Ghana, then that family that’s received the stable coin in Ghana.


Let’s say that they’ve done the on-the-ground work, they downloaded the app.

Now they have a stable coins in there.

Little wallet, they can’t buy anything in Ghana with that stable coin.

So they still have to transfer it into the local currency in order to go shopping at the local market.


So it’s not clear to me.

Exactly what problem the stable coin being sent internationally is solving here.

Yeah, I mean, I think kind of the point that I just made a holds that I think it’s probably gonna end up looking a lot more like infrastructure for the, you know, for the fintax themselves and a lot of these cases, particularly when you’re talking about low volumes of money and low dollar amounts, I think it’ll operate as as the rails in a lot of cases.


I think for larger transfers where there’s people in countries who understand how to, you know, if if you send me US easy right now, I could transfer it out, there will be fees for that but it might be a lot smoother and take, you know, a lot less time than Then going through the bank and sending a wire and paying $10 for that and all of that kind of stuff.


But I do think it’ll be probably in those cases maybe nothing and maybe, maybe useful as kind of browse for the context.

But I think there’s probably been too much focus on my born on SPF on the use case of I think because probably plays well and it sounds good that you want to help all these people in developing countries get money where their local currency is unstable and all of that I think there’s probably Been a lot more focus on that than there.


Actually is volume.

I think it’ll make it over a little bit more efficient over time, but I don’t necessarily think that, you know, everybody in the world is going to be sending stable coins to people in Ghana anytime soon.

Yeah, it’s just an, it’s just interesting to me because, you know, I again, just I feel like I’m still on the hunt for a use case.


That, like, obviously blows me away.

And for a while I thought like, you know, maybe maybe it’s gaming.

And I know that one of those popular articles that you’ve written was about a game, actually Infinity, you described it as a Pokémon like game.

It’s on the ethereum blockchain in which people buy digital pets called, axes is n of t, s and breed battle and trade them.


This is like, you know, it’s an online world where you are operating within a kind of with a digital economy of like nft pets and it was incredible growth in axi Infinity, you wrote that in April 20-21.

The game did six hundred thousand dollars in Revenue by July at did 80 million.


That’s wild.

But then this year hackers stole 540 million dollars.

I’m cryptocurrency from this game, the value of the tokens crashed and then and this is what’s most important I think as of July 4th users were down almost 90 percent and that’s important because it strongly suggests to me that going back to one of the first things that I said, in our conversation, how much of this is about agency and power and how much of it is just about money?


Well, in this game, when the tokens crashed, 90% of the users left, and it suggests to me that a lot of People are in this space, not just for the philosophy, not for the frontier, not for the agency.

But basically, for the money, it seems like a perfect metaphor microcosm for like crypto skepticism.


Like the use case is the money.

The use case is the money and when the money goes away, so, does the use case?

Convince me that I’m wrong here.

Convinced me, that the axi.

Infiniti story isn’t a perfect microcosm for the idea that the vast vast vast, majority of crypto interest was just about people hoping to get in, on a get-rich-quick scheme before it overturned.


Yeah, I think I mean, I’ve actually the actual story is one of the most fascinating, I mean, I’d never seen growth in something like that.

Like the girl that you just mentioned and a lot of it.

Obviously, at this point was fueled by speculation both from As in from people on the outside, it’s been really interesting.


I’ve been reading, you know, a bunch of the same stories that I’m sure you have on acci recently.

And a lot of it I think makes it out to be almost this like villainous Ponzi scheme where I think it got started in 2017 or 2018 when they’re, like, a couple hundred users or a couple thousand users and then this like, you know, external Capital came in and prices got pumped to the Moon, certainly, you know, writing that This I feel the hip there for sure and that wasn’t my intention.


I just thought it was fascinating that this thing had grown so much, but I think that instead of being an intentional Ponzi like the economics just weren’t ready for that, kind of usage.

That from 2017 2018, when they started, the company could not have possibly predicted that in the first conversation that I had with.


With Geo over on the team a taxi, he admitted and said, you know, like look we need to now that this is blowing up so much like we need to get our gameplay in order.

We need to build an ecosystem of other games in the system like it’s not Much fun as it should be to play this game.

And so certainly I think in this case a lot of the use was speculation as I talk to a lot of what their gaming companies now that are building, you know, kind of what they call play and Darren as opposed to play to earn.


And so a company that I invested in called goals is building a soccer game.

Where if you want to just play the game for free, you can play the game for free.

If you want to go into Pro mode, then all the sudden you can start accruing value to the players and to your Stadium into your team.

And so instead of everybody needs Has to pay money to get into the game and the economics are a little bit less sustainable.


It’s kind of that Pro mode where you maybe be competing in Esports tournament or you just really really good.

And then you can opt in to, you know, turn all of your work into an mft, make that tradable and kind of a crew value to it.

You mentioned the people who are building actually Infinity weren’t trying to build a Ponzi scheme.


Do you think it’s possible though that the combination of cryptocurrencies and gaming might naturally lead to let’s call them accidental Ponzi schemes?

Like typically when you play a game Him with that, you’re not essentially being rewarded for playing with literal money, like there’s no sort of game, it’s a game but also it’s a casino you can play and play and get better and better at their game.


And there’s no reason to stop playing because your facility with the game is merely improving but when cryptocurrencies are introduced into gaming then you risk the possibility that there’s a huge spike in cryptocurrency is within the game and then people are incentivized to sell out of them.


And Move to the next game because we’re like, well, I’ve made a lot of money playing this one game.

I can’t make that much more money playing this game.

So I’m going to sell out of it and move to something else.

Like that seems like essentially a kind of like petri dish for accidental Ponzi schemes to you know, I maybe some of them are purposeful Ponzi schemes and trying to be generous here.


But you see how the intersection of tokens plus gaming might naturally create this phenomenon where people are essentially building a casino in one space and then bidding up the coins and Telling down the coins and move into some other space where they can get in at the ground level and build up the value of more coins and other game.


Like, well, I don’t think you’ve gotten far enough, really?

I think that applies to a lot of companies as well and other kind of non-gaming projects that are being built in the space where I think, probably, for the first wave of people didn’t design against that stuff happening and it was sexy to have your own token, even if you didn’t really need it in the system because that was a great way to make money quickly and it wasn’t necessarily even Bad actors or people trying to scam.


And people are just like this kind of what you do.

You just you have your own native token and and hopefully the price goes up as more people, use it and then they’re all these other challenges that maybe people didn’t game out enough.

Some of this next generation of games isn’t even using their own native token, some are and you know there’s economies that are designed around these tokens.


And and they’ve taken the lessons from kind of past games and, and are trying to build coconut mix in a way that makes it a little bit more sustainable.

And I think that, that whole area is one of the most fascinating spaces, it’s going to take a long time to figure.

Out exactly how to kind of get it.


All right and then there are other games that are just using us DC and and FTS and saying like look you’re putting all of the time and effort into the game.

You’re one of the best thousand players in the world at this.

Your players should be worth something if you want to stop playing the game or you or, you know, team that you built up should be worth something to you and that might not be a native token of a game, but there’s still this idea of being able to own kind of the fruits of your labor.


And so I think that again this Next wave, you’ll see a lot more of that kind of design.

That’s not meant for the token to just kind of go up as much as possible.

But more to say, like, here’s this, here’s this problem, the games have you can’t move your, you can’t move your assets from one game to another if you quit.


Playing the game, all the work that you put into the game, just goes away.

What if we designed a way to reward the the best players and create an economy out of that?

I’m reading this book right now that has nothing to do with crypto but it’s a book about technology and so I can’t help but overlay the current big Tech Story on The book is build by Tony fadell, and it’s about the history of building the iPod and the iPhone.


And it made me think something that might be very germane to this conversation when 2050, L, tried to build the first personal Computing devices in the late 1980s.

It was a huge, massive failure, and he tries again in the 1990s, and it’s another huge, massive failure and the history of personal Computing devices goes like fail, fail fail, small success with palm and Palm Pilot then like another fail, fail fail.


And then he It Blackberry more failures and then finally Boom the iPhone which is the most successful influential consumer product of the last 50 years.

And I was thinking about, you know, cryptos own problems, or its own challenges to build things that have obvious, Mass use cases, and something struck me that’s very different about the crypto industrial cycle, with personal Computing devices, you had experimentation, before you had money, right?


Like, people were experimenting and failing in the market.

Place in trying to create product Market fit.

But with crypto, it’s fascinating, is you have all this money coming in before, there’s an obvious product that has massive user appeal.

And I wonder if you think the amount of money has just made the system a little bit berserk in a way like, it is the rare Innovation cycle where you get billions of dollars before the Home Run.


I think that is 100% true, and Britain is for that cryptos kind of original sin.

Sin is that it came with money baked in and it does distort things in the early days I and I think this lashblast crash is I think a little bit kind of what you’re what you’re describing with whether it be early smartphones.


If you go back and look at like kind of even early networking device, if you look at the App Store when Apple released the App Store there were a ton, a ton, a ton, a ton of apps being developed, none of which had any real utility even though they had a lot of usage because they were absent.


It was cool to down.

Apps and to try something on your phone even though they were terrible.

And then, you know, the the next generation of apps came out and there was boober and Airbnb and you can order food on on your phone and all sorts of stuff that now we just take for granted, but the early days of the App Store were a mess and now you have all of that and all of the excitement about something being web three and you might be able to potentially make money by buying the tokens of this thing and maybe participating, maybe not.


And so, of course, I think it probably amplifies the hype cycle.

In this really crazy way where the highs are higher, the lows are lower.

And then I think that, you know, those kind of bigger use cases.

I mean, look at, you know, swap already, you know, it’s done over a trillion dollars worth of volume.

So if that is so you know swap is a decentralized exchange.


So instead of trading through something like a Robin Hood with thousands of employees and essential order book people can go to, you know, Swap and essentially based on kind of formulas, that sit in the middle trade, different pairs of crypto tokens against each other.

So I might say, I want to swap you TC for ethereum or aetherium.


Four units, new to swap token or whatever else, and it’s all based on math.

I think they have a 60-person team and they’ve now done a trillion dollars worth of volume without going down.

And they built this infrastructure that other exchange products can build on top of.


So I think that’s a really great example of like a real valuable thing that has produced value for the people who invested in it.

For the people who use the product early, they are drop tokens on early users and just gave them tokens.

That ended up being Being fairly valuable.

So there’s like real things that have come out of it but I think for this like next way when you need to justify you know if its twenty six billion dollars maybe the D.C.’s


own 10% of a project.

So you need two hundred sixty billion dollars worth of value to kind of break even there.

I think that’s probably coming in this in this next cycle.

Now the infrastructure is being built up last question.

Do you think it’s possible that say 10, 20 years from now we will look back at crypto and web three as Something that just didn’t quite work out that stable coins and remittances almost worked.


But it turns out we couldn’t get enough people on the app to think that this was more valuable than the Roman system that already exists.

That n FTS enjoyed this.

Like, really sharp increase in popularity.

But we didn’t quite know exactly what to do with them.


And it largely outside of unregulated ways for tens of millions of people to trade risky securities.

Purity is often a way that was very fun for them as they were training them.

It didn’t quite go here outside of that use case, like do still think it’s possible that this just doesn’t work out, I think.


Yeah, I think it’s possible that anything doesn’t work out and certainly we’re in a spot now where it feels easy to say.

Wow, maybe this might not work out, I think.

What’s more likely is it will get to a spot where not a single person in the world is talking about 10 ft because that will just become kind of a piece of the Picture in a piece of the way that that people handle digital items on the internet.


I don’t think people will be talking about token people.

Gamble people will always talk about things mooning, but I think that it will become a lot less kind of sexy and exciting is some of the novelty wears off and you’re not going to get people to kind of keep coming in and just hoping that the price goes up 500%.


I don’t want to get pigeonholed into the stable coins and remittances point because I think it’s just right now easier to send kind of large amounts of money to different people across the world.

Maybe They’ll be apps that use it, and maybe they won’t, but I do think stable coins as something that other people can build on top of is just faster.


I mean, the way that I view it and the way that I think about the next kind of 10 to 20 years is that looking at something like a wise and saying that we’re done, or looking at something, like a Facebook and saying that we’re done or looking at the way that companies are organized.

And saying we’re done is just, as we really kind of defeatist and and anti historical way to look at the future.


Of course, technology is going to continue to improve and get better, maybe something will come.

That’s even better at doing all of these things.

Then the blockchain, is it doing all of these things and all the efforts of people are putting into making it more scalable and enabling it to support larger and larger use cases like, we’re all for naught.


But I don’t think that the fintech apps and the social apps and all the things we have today are kind of the end of Internet history.

And I do think that if we wake up in 10 or 20 years, a lot of the stuff will have just infused itself into A lot of the things that we do on the internet and Beyond, and it’s fundamentally a place that I think we agree.


I think we’re both Tech positive.

I think we both are aghast at the idea that we’re done that all of the tech behemoths and all the systems that we have now, despite their obvious failures are the best, we can possibly do.

And that the frontier is closed forever on digital technology.


I think that’s horrific to contemplate and I think we need to fix these problems and come up with systems and companies that Serve our needs better.

I think the big difference between us is that you and I both look at current products in the crypto and web three space that are unfinished, that are imperfect, that are maybe getting their maybe not getting there.


And you look at them, you look at these larval products and you see like the Chrysalis, you know, you see.

Like the thing it’s going to become as a full-fledged organism and I see A failure to obviously overcome, the threshold of is this better than the status quo?


Is it easier than the status quo and will it serve many people?

Millions of people more consistently efficiently than what we have and right now I I still am skeptical but I also still am curious.

So back in the quarterback.


Thank you very much.

You can have the last word so I think one of the and I I agree.

I mean I think we probably agree on 95 percent of stuff in the space.

I think one of the other difference is is that those the larval companies that I’m seeing.

I’m seeing a lot of companies just because I’m investing kind of as a VC in some of the stuff that aren’t close to Market that have taken their time probably 5% of my web, three portfolio, has a token now because they’re making sure that they get it right before they go to market with a product.


And so, I think hopefully this job lets me.

See, like A little bit further into the future on it and see what people are developing and how they’re thinking about developing in the challenges that they’re trying to address.

And, you know, those entrepreneurs, I think give me a lot of Hope in in what’s coming.

But I mean, you had Matt ball on the other day to talk about the metaverse, which was an awesome conversation.


I would be absolutely shocked if there was a meta verse and there wasn’t some form of nft and letting people own their digital items as they Traverse the metaphor.

So if you believe that, that’s there, I think that it A piece of it and I certainly don’t want to spend time in the Facebook members and if you want to get like really weird, I think one of the fun kind of upside things here is that it just lets us run experiments that internet speed in this like really weird open Messy chaotic way that hopefully, I think at some point whether it’s 10, 20 50 years in the future help, solve a lot of the problems that you’re talking about, at least figure out how to get fundings for a lot of the, the real world problems that were talking about.


I’ve done a couple investments in companies that Touching biotech or climate and they’re still early but that’s my like big hope for the space is that all this messiness on dumb stuff like you know the 50,000 ft project gives us lessons that you can kind of take and apply more broadly than just the crypto sphere or even the internet back in Mccormick.


Thank you very much.

Thank you very much for listening.

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