00:00hi everyone welcome to the asic sincere
00:02podcast I'm sonal I'm here today with
00:04Chris Dixon and Olaf Carson we the
00:06founder of a six in the investment poly
00:08chain which is a cryptocurrency hedge
00:11fund and we're talking today about what
00:12that means both as an asset class and in
00:15terms of protocol development and more
00:17broadly what happens when you bring
00:18capitalism to open source development
00:22that's the intro welcome guys so off if
00:24you don't mind people in oh but
00:26cryptocurrency hedge fund is maybe you
00:27could just play with it absolutely so
00:30poly chain capital manages a hedge fund
00:32that invests exclusively in crypto
00:35currencies and by the way are there a
00:37lot of crypto currencies so you've
00:40probably only heard of Bitcoin yeah
00:41you've heard of a cerium there are
00:43hundreds of others like oh I remember
00:45hearing about dogecoin and things like
00:47that exactly and new ones are launched
00:51all the time much more than you might
00:52think so in March alone there's been
00:54about 15 launches of new holy so
00:57instead of investing in companies that
00:59are building on top of these protocols
01:01we invest directly into the protocols so
01:05we take equity ownership of protocols
01:08instead of taking equity ownership of
01:10companies let's pause on that for a
01:12minute because that's so
01:13counterintuitive honestly because the
01:15whole thing we've been touting here and
01:17the committee's been talking about for
01:18ages is how important yes that bitcoin
01:21and blockchain and everything related to
01:22the crypto currencies the protocol is
01:24obviously very important but because of
01:26what it enables so I'm very confused by
01:29this concept of investing in a protocol
01:30you guys the way I think of it is it's
01:32like imagine you were back in 1993 and
01:35the internet was starting there were two
01:36ways you could have imagined investing
01:38in that one was to invest directly in
01:40companies like Amazon and if you were
01:42fortunate enough to invest in Amazon of
01:43course that would be a phenomenal
01:44investment a lot of people didn't have
01:46access to that or invested in companies
01:48that weren't as successful as Amazon
01:49another way to have sort of bet on the
01:52internet would have been to do something
01:53like buy domain names which a lot of
01:54people did actually and they're called
01:56them domain errs and there were a bunch
01:57of people that saw the value there and a
01:58lot of them bought you know whatever
02:00pizza calm or something and at the very
02:02beginning who'd buy for $8 or whatever
02:04the domain registration fee was the
02:07aggregate value of like dot-com domain
02:10you know it's hard to add it up but it's
02:12certainly in the many billions of
02:13dollars you know so just like you know a
02:17typical five letter English word is an
02:18example comm is probably five hundred
02:21thousand two million dollars so you know
02:23you can just sort of go to the
02:24dictionary and figure out that having
02:25the total value and so I think it's very
02:28obvious to that what you have is people
02:29menteng these new protocols that have
02:31you know things like they they could be
02:33for doing distributed storage or
02:35distributed payments or a bunch of
02:37different use cases the difference now
02:39is that you can invest for example
02:41indirectly in a company like coinbase
02:42which we here did and actually Olaf used
02:45to work at Quinn base or you can invest
02:47directly in a protocol and so what Olaf
02:49is doing is essentially think of it as a
02:51bunch of new things like the internet
02:53getting started today and they have the
02:55feature where you can just go buy domain
02:56names and you're buying domain names in
02:58a sense right yeah in a sense it's a
02:59more of a pure play is the way I like to
03:01think about it so instead of investing
03:03on the application layer which you're
03:06taking a bet on a specific team a
03:07specific business model a specific so
03:10that's like Amazon Yahoo application
03:12exactly and we're betting a layer below
03:14that I think in this space
03:16disproportionate value accrues to that
03:18protocol level so even if you look
03:21empirically at say Bitcoin the seed
03:23investors in coinbase have done very
03:25well on that investment but when they
03:27made that investment Bitcoin was at
03:28about five dollars yeah and they would
03:30have done effectively just as well by
03:32simply buying Bitcoin you look at the
03:33etherium ecosystem there's been very
03:35little venture funding into aetherium
03:37companies aetherium here being an
03:40alternative blockchain to Bitcoin but
03:42ether itself has grown in value by over
03:44100 X since it was created in addition
03:47the crowd sales where people are
03:50actually raising money for application
03:52specific crypto currencies like app
03:55coins really gap coins are app tokens
03:57those those token launches on top of
03:58aetherium have raised over 300 million
04:00dollars can you talk about that for a
04:02minute because I'm actually just trying
04:03to understand what the hell in-app Queen
04:04is in the first place when a lot of
04:06people think about Bitcoin they think
04:07about money or currency they think about
04:09this broad-based way to generate value
04:12and transfer value really what's
04:14happening now is people are creating I
04:16like to call them application-specific
04:19these are basically a monetary layer
04:21added on top of a specific type of
04:24I'll give you a concrete example there's
04:26a project called golem named after the
04:28Lord of the Rings character I don't know
04:32maybe did so Gollum is a peer-to-peer
04:35marketplace for computation this means
04:37that instead of shutting my computer at
04:39night I can rent out the CPU and GPU
04:41cycles to some developer in South Africa
04:43or Japan or something and all those
04:45payments happen in these column Network
04:47tokens so the that golem network token
04:50is not really money in a sense it's
04:52really meant to just at a monetary layer
04:54to this one specific peer-to-peer
04:56network and so when you're when you're
04:59buying that token you are buying either
05:01the ability to rent out CPU or GPU
05:03cycles but you can also look at it as
05:06owning equity in this peer-to-peer
05:08protocol that's fascinating so when we
05:11you know hold something like Gollum
05:13tokens we're really betting that this
05:15peer-to-peer protocol for computation
05:17will grow now the interesting thing
05:19about these projects in this ecosystem
05:21is that they're literally aren't
05:22companies so suppose you want you like
05:25to this Gollum protocol and you wanted
05:27to invest like andreessen horowitz
05:29investing companies there's really no
05:31vehicle we can't invest in Gollum
05:33because it's a project not a company it
05:35literally doesn't exist so the only
05:37means to gain exposure to this new
05:39ecosystem is to buy cryptographic tokens
05:42or if you rewind like it would have been
05:44awesome you know like Linux started in
05:46whatever the early 90s you know there's
05:48a foundation there's no company at the
05:50time it was a hobbyist project today
05:52it's 99% of the computers in the world I
05:54mean it's Android it's everything in the
05:56data center it's you know etc so like so
05:59you're saying if there was a way to
06:00invest in like the company would have
06:02been invested in something that that
06:05that had some correlation to the
06:08adoption of Linux it would have been one
06:10of the all-time great of estimates yeah
06:11are there any other benefits to people
06:13investing in these at the protocol layer
06:15the way you're describing because I mean
06:18in don't take this the wrong way
06:18it's just benefiting off it monetarily
06:21like is there any other benefit to the
06:23ecosystem in the flip side of it is you
06:25go look at like Linux noise other
06:26open-source projects they had to run
06:28around raising money or look at Linux
06:33get the heart bleed air bug right so
06:35this is a fundamental flaw on SSL that
06:37was discovered I think a year ago yeah
06:39and if you look at it like the the
06:41foundation that's this nonprofit
06:42foundation that supports SSL which is
06:44the core kind of encryption protocol the
06:46Internet and I think their budget is
06:47like five hundred thousand a year or
06:48something they have to go every year and
06:51do like what nonprofits do and and so we
06:53basically we you know we've got all
06:55these funding models in Silicon Valley
06:56for companies but these companies are
06:59mostly built on these these open
07:00protocols and these open protocols are
07:02neglected and the developers are forced
07:04to kind of go around and and kind of beg
07:08what this provides is is it now kind of
07:10brings capitalism into protocol
07:13development yeah exactly so we've
07:15already seen the creators of many of
07:17these open-source protocols make lots of
07:19on this I mean the creator of Bitcoin
07:20whoever he or she or they are has you
07:23know over a billion dollars in in
07:26Bitcoin so I think we're already seeing
07:28this play out a little bit and it
07:30creates the same economic incentives for
07:32these projects that you might get as a
07:34start-up so when you look at you know
07:36taking golems crowd sale as an example
07:38when they launched this golem token
07:40network they raised nine million dollars
07:42in 19 minutes they now have nine million
07:45dollars cash to hire developers pay for
07:47offices things like that and that looks
07:49very much like a series a round of
07:50fundraising they also kept an 18 percent
07:53equity ownership in the network they're
07:55building so they have the same kind of
07:57economic model that you might see at a
07:58start-up like coinbase where as an
08:00employee you have equity and you have
08:02salary and now you have quote
08:04shareholders yeah exactly and so the
08:07thing is that it creates this economic
08:09incentive model for founders of
08:11open-source protocols in a way that has
08:13never existed before absolutely
08:14unprecedented the flip side of that as
08:16you pointed out is that now the users of
08:18the Golum network or any of these
08:21peer-to-peer networks and and there are
08:23so many of these launching it's pretty
08:25they are the equity holders right so
08:27when you look at centralized web
08:30platforms the last 15 years
08:31all the major web services have you know
08:33Twitter Facebook Oberer Etsy eBay
08:35whatever it might be
08:37it's basically a company that built a
08:40platform all of the value for users on
08:43that platform comes from other users
08:46peer-to-peer network and these are the
08:50networks that nobody owns just like
08:53nobody owns the internet nobody owns
08:54email these are networks where the value
08:58instead of accruing to a central entity
08:59actually accrues back to the users and
09:02the thing is that this creates a really
09:04really strong network effects among the
09:06user base so you can see in Bitcoin sort
09:09of fanatics of Bitcoin I was once one of
09:12these and I even I would admit I was one
09:13yeah and and you don't see that sort of
09:16fanaticism around users of Facebook or
09:19your users have uber
09:20even the power users like they like the
09:22product but whatever people in Bitcoin
09:25are fanatics and it's because they not
09:27only gain a value in a more traditional
09:30sense of network effects when when the
09:32user base grows they also actually gain
09:34wealth from that user base growing and
09:36so this idea of users owning the
09:39networks that they participate in on the
09:41I think is extremely powerful I think
09:43another broad historical way to look at
09:45it is if you look at the protocols we
09:47use today so emails SMTP you know the
09:50Internet is tcp/ip HTTP you know HTML
09:52etc these these were all developed 20
09:56plus years ago right there's very few
09:57protocols that we use today that were
09:59developed in the last 20 years I can
10:02think of I mean maybe BitTorrent or
10:03something but for the most part like you
10:05know that's sort of niche and so and
10:06those were specifically developed by you
10:08know academic academic and
10:09government-funded projects and so you
10:12had kind of this golden era of protocols
10:14and that was funded by governments and
10:17academics and then just to remind people
10:19that was a time when you actually needed
10:21those entities only to be able to fund
10:24those well there was because there was
10:25no there was no a capitalist sort of
10:26economic motive it then of course the
10:28Internet bubble happened the capitalism
10:30moved in and what you've seen since that
10:32period is as all off was saying like a
10:35dramatic kind of centralization of power
10:37in private companies which you know and
10:40a dramatic drop-off in the rate of kind
10:43of open protocol development yeah
10:44there's only been like one or two
10:46like like one of the big battles you
10:48know like RSS is a good example where
10:50that was a that was a more recent
10:51protocol which was with sort of an open
10:53social protocol which last decades sort
10:56of in the in the you know 2000s had made
11:00it run and got popular for a while and
11:02could have been a real rival to these
11:04closed social platforms like Facebook
11:06and Twitter it unfortunately lost I mean
11:08it still used the fringes here but it
11:10basically lost I mean so basically the
11:12central feed the way the last decade you
11:15blog who might not have been aware of it
11:17but but there was a battle between open
11:18and closed in social in closed one right
11:20I mean there was actually been there the
11:22whole way of a companies that we're
11:23trying doing the alternative Facebook's
11:24and the all closed one and open los
11:28unfortunately I think for the benefit of
11:30the world anyways whatever your
11:31political views on that it's clear the
11:32close close one there's a lot of
11:34different theories but one obvious one
11:35is just they had all the money they had
11:37all the inner you know they had all the
11:38people they had all the developers like
11:40to add that the other reason for the
11:42theory is that they also had a
11:43centralized model of coordination which
11:44meant a better user experience and a
11:45bunch of other features that you have a
11:48great user experience with email Gmail
11:50is a great user experience and it's
11:51built on open protocols I disagree with
11:53you I think that Open Pro like web
11:54browsing is great user experience it's
11:55an open protocol like my view people can
11:57disagree on this I think it's because
11:58that's where all the money and all the
11:59and everything else that they had the
12:01better business model they mean clothes
12:03had the better business model for the
12:04last 15 years now that clothes camp okay
12:07now open is developing its own kind of
12:10business model around this which i think
12:12is going to shift a lot more energy I
12:14hope and money and funding and a whole
12:16bunch of other things back to the forces
12:18of open have a new set of new arsenal
12:21and it actually happens on multiple
12:23levels they have a new funding mechanism
12:24which is the app coins they have just a
12:27new infrastructure which is things like
12:29you know kind of the blockchain mining
12:31infrastructure which is the first time
12:32we've seen an example of we've had open
12:34source software we've never had opens
12:36open services so these are services op X
12:39running so basically it's effectively
12:42it's a public AWS is what you think of
12:44as the miner network so miners is this
12:46thing which you know if you read the New
12:47York Times they're like oh it's a waste
12:49of energy like okay but it's actually
12:51running this public and it's like saying
12:52a public park is a waste of space or
12:54something it's a pub it's public
12:55infrastructure yeah it can be used for
12:57all sorts of things like the
12:58coordination of essential
13:00authority there's no central authority
13:01and a central owner and it's they sent
13:04there are owners of the protocol token
13:05owners and individuals and no central
13:08point of control no choke point no no
13:10one can pull the rule no one can say
13:11they can't just cut you off the way that
13:13like you know certain social networks
13:15cut off developers as a developer you
13:18can now invest in this you can build
13:19things on top of aetherium with the
13:21knowledge that no one can you know
13:23Vitalik who's the kind of the you know
13:24the leader of it theorem can't pull the
13:26rug out from under you even if you want
13:28it to self-sustaining so clearly the
13:30reason that open might be winning
13:31besides the fact of your argument that
13:33this capital is rushing in and all these
13:35other things how do we solve the problem
13:37of trust without having a central
13:39authority in the middle the brilliant
13:40thing about these systems is the premise
13:43is that you do not trust any individual
13:47yeah you trust no one you if you're a
13:49very paranoid person these systems make
13:52great sense because you assume that
13:54there are all sorts of bad people out
13:57there trying to steal trying to dupe the
13:59network trying to convince the network
14:02that they have a valid you know
14:03transaction when they don't or things
14:05like that but when you have this
14:06decentralized sort of swarm incentive
14:09structure and this is what's created say
14:11through Bitcoin mining you create this
14:13protocol that actually incentivizes very
14:16precise human action and then without a
14:19centralized kind of top-down hierarchy
14:21but instead of sort of swarm of
14:23naturally incentivized economic actors
14:25you can create amazingly precise
14:28organization through this kind of
14:30decentralized incentives drug let's
14:32quickly break down why those people are
14:34incentivizes because they're getting
14:35something out of this Network yes
14:37exactly efforts failed because no one
14:40had incentive to contribute resources
14:41and you know you know the contributors
14:43to Linux had to monetize in all sorts of
14:46you know other supplementary ways but
14:48they're actually building Linux and
14:50growing the Linux user base didn't
14:52really make them any money directly
14:54right now as a lead developer behind one
14:57of these blockchain based protocols you
14:59can actually make money every single
15:01time a new user signs up and is
15:03interacting with this blockchain so this
15:07this incentive structure as you as you
15:09put it is very important because
15:12it leads to this organic growth that's
15:14completely decentralized completely
15:16trustless it's totally permissionless
15:18nobody owns the blockchain just like
15:21nobody owns the internet so you cannot
15:23shut down anyone anyone can participate
15:25in any way that they want and it's for
15:28that reason to me an open and free
15:30system how do you know which protocol
15:33and I think this is important because we
15:35all heard about Bitcoin but as you
15:36mentioned there's a theorem in
15:37apparently there's like 15 more this new
15:38new ones this month how do you know
15:41which ones matter and and how did it
15:43affect what you're trying to do yeah I
15:45mean this is what I spend all of my time
15:47doing so we think a lot about basically
15:50technologies that are enhancing what
15:53these protocols are capable
15:54etherium is a great example via KOIN has
15:56a kind of programming language that
15:57allows you to interact with the protocol
15:59it's called a scripting language and
16:00Bitcoin scripting language is really
16:02limited it was designed this way
16:03intentionally so that people couldn't
16:05kind of screw up the protocol in the
16:06early days yeah now the creator of
16:09etherium vitaliy uterine and the great
16:11team behind him has created a
16:13programming language that is Turing
16:16complete what Turing completeness means
16:18is you can basically build anything so
16:20any computer science language that is
16:22Turing complete can build anything that
16:25any other Turing complete language can
16:26build what does that mean it means that
16:28if you can build an application in one
16:30language you can also build it in any
16:31other Turing complete language what this
16:33pragmatically means is that you can
16:35write arbitrarily complex software and
16:37have it execute in the etherium
16:38blockchain much in the way that a
16:40Bitcoin transaction would execute in the
16:41Bitcoin blockchain so you can build all
16:43sorts of more advanced features in
16:46aetherium that are simply not possible
16:48with Bitcoin and if you're you know
16:50Assyrians language it has it has
16:52solidity which is like JavaScript and
16:53serpent which is like Python whereas
16:55Bitcoin is more like bytecode it's
16:57almost like assembly very very low-level
16:59solidity is very similar to JavaScript
17:00yes it's a very accessible language so
17:02if you if you're familiar with basic you
17:04know web scripting you can kind of write
17:06in the theorem contract and so of people
17:08may have heard of Bitcoin and aetherium
17:10can you talk and you mentioned Gollum
17:11can you talk about some of the other
17:15so so I can cover you know both
17:18application-specific tokens as well as
17:20new block chains that are are kind of
17:22you know meant for developers to build
17:24these applications on top so one
17:27underlying blockchain that I'm excited
17:28about is called Tasos Tasos is
17:31interesting because it uses a proof of
17:33stake consensus mechanism instead of
17:36mining or proof of work what this means
17:38is that the actual stake
17:40yes the actual holders of the coin act
17:42as the miners so they are the ones
17:45actually validating transactions the
17:47really interesting thing about Tasos
17:49proof of stake system is that the
17:51governance is also pushed to the coin
17:54holders at the protocol level what this
17:55means is that instead of governance and
17:58by governance I basically mean decisions
18:00about how to upgrade the protocol
18:01instead of those happening in in a room
18:03full of developers or conversations with
18:06minors that are these conversations are
18:07very opaque and they don't happen at the
18:09protocol level they happen outside the
18:11protocol in Tasos all of those
18:13governance decisions happen at the
18:15protocol level people effectively vote
18:17with their coins and the protocol will
18:19change based on what those coins like a
18:21stockholder of a company appointed by
18:24early on more equity if you own more
18:26stock exactly it's there for more coin
18:28is more it's a much more democratic
18:31system where the holders of the coin
18:33actually have say and how the protocol
18:35moves very directly so that's an example
18:36of a more underlying blockchain that's
18:38really designed for developers to plug
18:41into in order to build kind of
18:42application specific tokens applications
18:45that could be built on top of taser is
18:48very similar in some ways to aetherium
18:50in that it has this turing-complete
18:51scripting language so again it's it's
18:54unlimited you know anything that you can
18:56imagine is possible okay so thinking
19:00about a more application specific token
19:03one that I'm interested in is just an
19:07are due for a second when you keep
19:08referencing application specific tokens
19:10that's your version of saying app coin
19:13which is a shorthand everyone else uses
19:15standardized I like to be very precise
19:19in my language is because they're all
19:23that's it's usually a good sign it's an
19:26it's a sign of fertile creative if no
19:32one knows what to call something that
19:33means it's new so that's right so in its
19:35fertile days you're saying
19:35application-specific quote tokens which
19:38can also be up going
19:39interchangeable so you know an
19:41interesting you know token that I'm that
19:44I like is is called maker or MKR so
19:47maker is is really a sort of whole
19:51governance and insurance system for a
19:54for a separate coin that is pegged to
19:58the USD dollar value so break that down
20:02because well I don't even understand it
20:05too because I thought for the whole
20:06point of all of this was not to peg it
20:09to like things like so this is actually
20:12you can view that as a feature or about
20:14these coins are traditionally very
20:15volatile and it's because there's
20:17speculation and trading and things like
20:18that now for certain applications this
20:20causes problems suppose you're holding
20:22money in escrow or you're fundraising on
20:25the blockchain well you know you're
20:27taking in money that could change in
20:29value sometimes aggressively over over
20:32days or weeks so I think there is a need
20:34for a stable coin and basically the idea
20:37is a coin that doesn't change in value
20:39now the naive way to do this is to put
20:41ten million dollars in a bank account
20:42issue 10 million stable coins and say
20:44hey it's back then it's a peg to the
20:46dollar but that doesn't really work
20:47because now there's a bank account and
20:48someone has control of that bank account
20:50there's a legal entity and it's just not
20:52how box chains work there's all sorts of
20:53flaws there so you have to have a stable
20:55coin that's actually endogenous to the
20:57blockchain and actually creates that
20:58stability through incentive mechanisms
21:00that are on the bar yeah what the maker
21:03system is attempting to do and I view it
21:05as hugely ambitious with you know likely
21:07a high chance of failure but if they can
21:09pull it off its massive and it's it's
21:12basically a system of smart contracts
21:14smart contracts here being the pieces of
21:17code in the etherion blockchain that are
21:18a bit more complex complicated than just
21:20transactions it's kind of a patchwork of
21:22smart contracts to create a stable coin
21:25and this coin then is pegged to the
21:26dollar value and so then you can do
21:29transactions on the blockchain that you
21:31know will hold the value as well as at
21:33least they don't just tell you you can't
21:35invest in these things
21:36now without a mechanism like poly chain
21:39so this is the the great thing to me
21:42anyone in the world can go by maker and
21:46these coins often have venture style
21:49returns if you pick the right ones
21:51but they're available to anyone in the
21:52world Amazon as Chris pointed out
21:54earlier was available to a very elite
21:56group of venture capitalists it you know
21:59it's kind of Club of who you know right
22:02and now intelligent twelve-year-olds can
22:04go invest so you're saying that's where
22:05the democratization comes in there's a
22:07bunch of exchanges that where they call
22:09crypto to crypto exchanges so usually
22:10what you have to do is you go to Quinn
22:12base and convert your dollars or fiat
22:15into something like Bitcoin and then you
22:18can go to these other exchanges and and
22:23now you know the probably the most
22:25liquid exchange for maker is a smart
22:27contract based exchange so we're getting
22:29even more abstracted from centralized
22:32server exchanges so let's do Central
22:33yeah the exchange itself lives in the
22:35earthy room that's really really
22:37interesting just to take a real world
22:38example it'd be like completely removing
22:40NASDAQ and Dow Jones and letting people
22:43just it's like a decentralized Nasdaq
22:45exactly right so this is a whole new
22:47asset class you're describing if you can
22:49invest in it directly or go through a
22:50hedge fund or why does I mean I
22:52understand the broad argument that we're
22:54bringing capitalism to open source which
22:56has been as you guys have observed
22:57traditionally very under-resourced so I
23:00buy that argument I don't get why
23:02there's a hedge fund in this space yeah
23:04that's a great question so as you've
23:07probably picked up based on this
23:08conversation this space is very esoteric
23:10yeah and it's hard to understand a lot
23:14of these underlying protocols yes it
23:16would actually be a 12 year old just
23:17throwing a dart in the dark well we
23:21don't recommend unless you really know
23:24what you're doing you should not go buy
23:27Bitcoin have gone up a lot but there's a
23:29lot of these things that have gone down
23:30in value and it's very likely that an
23:32average person who's not spending all
23:34day on these things will lose their
23:35money so if you're listening to this we
23:36are definitely not recommend
23:38you get that message loud and clear I
23:40just I make a point though that that's
23:41also true of the regular stock market
23:44most people should not be investing in
23:46individual stocks you buy ATF's I mean
23:48and someday hopefully they'll be a
23:49crypto ETF they could buy too but for
23:51now they should stay away unless you
23:52really know what you're doing
23:53I completely agree so yeah I think the
23:57as an asset class the thing that's so
23:59interesting is that you have units of
24:02protocols that you can invest in you
24:05there's equity ownership in open source
24:07projects so to go back to this maker
24:10project when we wanted to do a deal with
24:12maker and purchase some of these tokens
24:15there was no legal entity behind them
24:17it's a pure open-source project and
24:19there was no bank account they had so
24:21there was no way we could send them
24:23money so we actually had to send them
24:25etherium this cryptocurrency in order to
24:28receive mkr this other kind of crypto
24:32token and that's how the deal was done
24:34there was no bank account anywhere yeah
24:36I involved in this process so it really
24:40is a brand-new asset class in that also
24:42just when when you look historically
24:44this is uncorrelated with oil gold
24:48emerging market currencies the equity
24:50markets bonds it's it's really just
24:52uncorrelated with everything else and
24:54it's because it's a totally new
24:56phenomena that's so fascinating ok so
24:58going back to the the protocols you had
25:00your scribe column you describe maker
25:02what are some of the other interesting
25:04ones and how do you tell what's
25:06interesting I mean I know we're saying
25:07don't try this at home yeah just how you
25:09tell so what we do is we read white
25:13papers religiously so these white papers
25:15are formal specifications of how the
25:18protocol should work yeah I mean it's a
25:19cushy nakamoto wrote the original white
25:21page there's an italics famous etherion
25:23white paper y'all start off as beautiful
25:25white paper they specify how the
25:26protocol should work and then we want to
25:28talk to the founding team so we'll talk
25:30to the developers and make sure that
25:32they have a good sense of actually how
25:34to build this but what we're interested
25:36in more broadly is a stack of
25:38technologies that can recreate a lot of
25:40the centralized services we see on the
25:42web today but in a decentralized manner
25:44so when you look at we talked about
25:46earlier Lee's centralized platforms that
25:48connect to different people they're
25:49built on a massive stack of web
25:51technologies and so they have like the
25:54the DNS system which Maps comm domain
25:57names into IP addresses and they have a
26:00server client architecture that they're
26:02built on so we need to recreate all of
26:04those slices of that centralized web
26:07stack in order to build Twitter the
26:08protocol and uber the protocol that can
26:10actually compete with these centralized
26:11companies so right now what a lot of
26:13what we're interested in is those kind
26:15of low levels of the decentralized
26:17internet staff they're the fundamental
26:19building blocks exactly like AWS
26:22everything that you can do stock
26:23launches spawns the next generation of
26:26so there are there are projects related
26:28to etherium you know IP FS or the
26:30interplanetary file system which has
26:32kind of a silly name but is actually a
26:34really sophisticated piece of technology
26:35to build a decentralized server
26:37architecture yeah there's also swarm
26:39which is a kind of a similar project on
26:42aetherium that helps you build
26:43decentralized apps like the domain name
26:46system or DNS there's ENS the etherium
26:48name system that Maps dot 80h aetherium
26:52domain names to small contract
26:54cryptographic addresses you know this
26:56whole underlying stack of technologies
26:58needs to be in place before a lot of
27:00these application specific tokens that
27:02are more user facing like normal person
27:05facing yeah can can really flourish so
27:08we're investing in a lot of these things
27:09that are part of the low levels of that
27:10internet stack as well as what I might
27:12call the middleware so something like
27:14Gollum for example is a computing
27:16platform on top of aetherium but even
27:18Gollum is a product for developers it's
27:20not really meant for normal people but
27:22using say Gollum and and safe I'll coin
27:25which powers the ipfs system developers
27:29can build more complicated emergent
27:30applications right I mean in golems case
27:32you're essentially reallocating GPU
27:35resources that are unused yes exactly so
27:37you can do all kinds of things
27:38yeah and so then you know it's too early
27:40still in my opinion for really viral
27:43end-user applicants or app tokens so I
27:46think that's a lot of what we're
27:48thinking about is is what technologies
27:50will enable that and that's what we want
27:52to invest in right okay so assuming that
27:53this becomes a real asset class that we
27:56really are bringing capitalism to open
27:58source and all the wonderful mechanisms
28:01that come with it what are some of the
28:02obstacles have to be overcome these are
28:04brand new technologies so these aren't
28:07facing just a market challenge these are
28:10hard technology challenges as in no one
28:13knew that something like aetherium was
28:15possible it's not that it was just a
28:17matter of time right we're actually
28:19creating things that previously did not
28:21exist and some of the things will fail
28:24because they are literally impossible so
28:26these are hard technology challenges
28:27where you're actually sometimes making a
28:29bet on something that it could turn out
28:32is not even really feasible I think we
28:34need literally thousands of brilliant
28:36technologists around the world to come
28:37together in order to build this
28:39decentralized web stack that's a massive
28:41challenge luckily I do think that the
28:43space because of groups like poly chain
28:46is seeing more and more capital
28:48available to build these great projects
28:50so I do view it just as a matter of time
28:53until these things very quickly become
28:56it kind of are you know or rather are
28:59building the next era of the Internet I
29:01have to ask a tough question which is
29:03you know there's so many stories in the
29:05media and in in the developer
29:07communities around Forks and conflicts
29:09and frankly open-source is a bunch of
29:11people working together at the end of
29:13the day we can talk about technology but
29:14it's humans coordinating to work and
29:16develop code and for build something
29:18building something are there any
29:20challenges that are unique to this world
29:22that aren't because I think of like
29:24there are no politics or disagreements
29:26of media companies large groups of
29:36people have politics and disagreements
29:38yeah and I think the only difference is
29:39that the arguments happen in public
29:41corporate board might have just as large
29:43an argument and one side fails but the
29:45shareholders never hear about that
29:47you're right very right in this case
29:49these are literally on public forums on
29:51mailing lists that anyone has access to
29:53IRC channels that anyone can join that
29:55does one more question though around
29:56like resolution conflict resolution
29:58because when I think of a centralized
29:59how does conflict resolution like if you
30:00listen you have a group of people trying
30:01to design their friend it's all built
30:03into the protocols so like in Bitcoin
30:04there's a there's the miners through
30:07their hashing power vote essentially
30:09vote on what solution they believe in
30:11mm-hmm and then and you know some of the
30:13things that we're investing in or
30:15alternative governance mechanisms like
30:17that project tasers I mentioned allows
30:20one coin one vote kind of democracy
30:22style voting on how the protocol should
30:24upgrade so what comes next if this
30:26becomes an asset class there should be
30:28more players like this in this space and
30:30a lot more activity what does that mean
30:32like what comes after this I think we'll
30:34see a lot of competition as other people
30:37kind of catch on that this is a new and
30:39growing asset class don't get mad at
30:40this podcast makes that happen yes
30:42that's totally funded by the time
30:43there's lots of competition that means
30:45that the poly chain fund has done well
30:46but a long-term vision for me that
30:49really matters is a web that is owned by
30:51the users of the web yeah so you know I
30:55think there's massive problems around
30:58privacy and data mining and sort of
31:00pseudo monopolies that exist on the web
31:02today and I think right now we're seeing
31:04a wave of technologies that could swing
31:06the pendulum all the way in the other
31:07direction you really own your data you
31:09decide what to share with services and
31:12those services are ultimately
31:14peer-to-peer protocols that are owned by
31:15the users so all of the wealth that's
31:18been generated by venture capitalists
31:20and entrepreneurs of centralized
31:22companies I think will get pushed back
31:25to everyday investors who have access to
31:27all of these things and that all the
31:30value that accrues will go to the early
31:31adopters and users of those platforms
31:33and protocols instead of to the people
31:36that kind of owned these these web
31:38platforms part of this is that's gonna
31:40have emergent behaviors that show up
31:42that we have no way to predict is there
31:44anything that you can anticipate though
31:45that might happen after that reality
31:48very easy to compare what's happening
31:51right now to the centralized web because
31:54it's what we know right but just in the
31:56way that the internet was not simply a
31:59digital library right you know it
32:02actually enabled much much more than
32:03that I anticipate that these protocols
32:06and economic incentive structures that
32:09create sort of swarm intelligence will
32:12generate things that we could never have
32:13imagined yeah just like the internet
32:15generated behaviors we never could have
32:17imagined it might sound a little hand
32:19wavy but I do think the biggest things
32:21that come out of this right now no one
32:23has ever conceived that's amazing
32:25well Olaf thank you for joining the a
32:276nz podcast thanks guys yeah thanks for
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