But I think there's a great impatience where people don't see the price moving up
and so they instantly infer well, if that's the case, it must mean
that it's a dead ecosystem and it's in a great decline. Meanwhile, we're
just about to do the greatest governance upgrade in the history of the project and
probably the history of the industry. We have the best scalability plan. We
have a very vibrant, rich community. When you look at rare Evo and
you look at the Kardono Foundation summit, you look at all the cool things
the communities building, and there's all these cool DAPs and DeFi projects which are
all home grown and they don't have ponzonomics or any of these other things.
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in the description. Welcome to the Thinking Crypto podcast. I'm your host,
Tony Edward and with me today is Charles Hoskinson who's the founder of Cardono.
Charles, great to have you back on. It's great to be here,
Tony, thank you so much for having me on. Yeah, Charles,
I'm excited to chat with you. Obviously not your first time on the podcast.
I'm a Cardono token holder, so I have a lot of questions.
The community sent me a bunch of questions to ask you, and of course
want to get your take on the general crypto market. I would love if
we can start off with what's upcoming for Cardana. What's the latest. One
item I read is an upcoming hard fork. Yeah, So we're working in
parallel on the last two parts of the Cardinal roadmap. There's bas Show and
Voltaire. You need Voltaire for certain parts of bas Show. So Voltaire is
all about governance, and there was always this idea of creating the largest,
most representative on chain government in the entire cryptocurrency space, and we spent two
years as an ecosystem having those discussions. So we wrote first to SIP.
SIP sixteen ninety four were named after the birthday of Voltaire the poet, and
we we then socialize that throughout the entire community. There was more than twenty
five workshops all across the world, and it took over a year and a
half of dialogue to get to a final design. And now we're in as
an ecosystem the last stages of implementation of the test net for these governance tools,
and then it's called Sancho net. So Note nine dot zero, which
is going to come out probably next week, is basically the fork ready candidate.
So how it works in cardoto Land is that once all the discussions have
been had, the SIP process has been followed, which takes quite a bit
of time and a lot of hands touch it from many different institutions. This
stakepool operators have to be that final line in deciding whether to conduct a hardfork
or not. So we need seventy percent of them to install and then the
hard fork will get initiated. So we're almost there. Usually it takes about
a month for that to occur. But this is a very significant hard fork
because not only does it add a completely new governance system, so de reps
and a constitutional committee and constitutional guard rails and representation in these types of things,
it also actually adds a bunch of enhancements to Plutus, so Plutus B
three which allows for BLS supports, so that basically brings roll ups and zero
knowledge stuff and all kinds of really cool scalability things into the Cardino ecosystem.
So this is the largest and most significant hard fork ever done, and it's
the most meaningful because it basically builds a whole un chain. Government turns on
the Cardino Treasury. There's almost a billion dollars of value floating around there,
and it basically turns on democratic consent and constitutional representation. So people will register
d reps just like they register stake pools, and they can delegate to them,
and those de reps can vote, and those de reps and constitutional committee
members basically control all the major governance actions, whether it be hard forks or
treasury withdrawals or protocol parameter updates. It's the largest and most significant doo ever
built for for our industry. So obviously this one's being closely watched by many
people and it's really exciting, but it's a little scary because there's no going
back. You know. It's like the domino effect. You've pushed the domino
and you just have to watch what happens afterwards. But we're all in good
spirits about that. The other major thing is Basho, and there's kind of
a multiprong scalability approach that we've been taking as an ecosystem. So we have
Hydra which is rapidly approaching version one, and there's a lot of cool and
interesting things that will be demoed at rare Evo for that, and that's kind
of our off chain state channels play, which is usually very useful on a
DAPT by DAPT basis. Then you also have things like or worse layoffs.
We just published the paper for that six years in the making, so it
took a really long time to get there, but in our view, it
solves a big chunk of the blockchain trilemma, where you get pretty much the
fastest protocol you can get. It's called a one minus delta protocol, but
you preserve that fifty percent Byzantine resistance, and actually you have a higher degree
of decentralization than we currently do, which is best in class for consensus.
So we're very proud of that. And now it's entering the prototyping phase.
And then we have things like partner chains, for example, which take very
high load applications off the cardio network and into their own dedicated side chain that
basically can run in parallel with the system. And then of course all the
enhancements we're making the zero knowledge space and recursive space thanks to pluted V three
and Midnight so very vibrant, and it's kind of an all of the aboves
scalability strategy and a little bit of optimization, a little bit of new capabilities,
some of the old things that you've all come to know and expect,
like state channels and roll ups, and some new things like or horse loos,
which really innovate and bring a completely new way of looking at this stuff
to the industry as a whole. So Bascho is in deep development and there's
a lot of really cool things happening. You need Voltaire to get to Bacho
because there are certain decisions that have to be made about how to roll things
out and where to break backwards compatibility, and that requires complex governance to be
able to have that discussion and debate and eventually converge to it. You can't
really do that in a more simplistic governance. Since so I have a couple
of fall up questions here in regards to governance. Let's say there's a new
CARDONO tooken holder at to token holder listening. Is there like a threshold how
would they be able to participate in some of these votes if you could take
us behind the scenes at or is it still too early to talk about that?
No, it's not too early. The design has been over a two
year period, people have talked about it, and so the design is completely
known and fully formalized. Yeah, so basically it's a representative democracy, and
so we try to take the best elements of a republic, so you have
constitutional representation and representatives and combine that with liquid feedback, which is a concept
that the Pirate Party came up with about twenty years ago. So basically the
idea is that there's two primary houses and kind of a fallback. And so
the two houses are the d reps and the Constitutional Committee. The d reps
they register very much like a person registers a stake pool operator and then you
can delegate to them a vote, so you can be your own de rep
and delegate to yourself and that's how you participate directly in votes. Or you
can delegate just like you do to a stakepool somebody you like or coalition of
people that you like, because you can delegate to multiple d reps. So
this allows political parties to form, and this allows special interest groups to form
and these types of things. And there are seven different governance actions that can
be brought before a d rep. Everything from was drawing money from the Cardino
treasury, to initiating a hard fork, to changing protocol parameter and everything in
between. Now, each of these actions are defined in SIP sixteen ninety four,
so if you're curious, you can kind of look up the table and
see that. Now, for more significant governance actions you have to then involve
the Constitutional Committee as well. So for example, hardworking the system is very
significant. So there's an odd chain constitution. We wrote an interim constitution,
and there's going to be a constitutional convention in Argentina at the end of the
year to get the final constitution written with the community as a whole. And
basically that establishes some baseline and variants like hey, maybe there should only ever
be forty five billion eight because that was the social contract that people signed up
for these types of things, and then some operating variants that need to be
put into bootstrap the system. And basically the Constitutional Committee's job is to look
at governance actions from the perspective of the constitution and ask is this constitutional or
not? For example, are they trying to print money out of thin air
or these types of things. In some cases, you can algorithmically protect the
system, so we actually have a smart contract that was written with one hundred
and thirty one on chain guardrails. So in many cases like that print money,
you can stop that. And others are social consensus, which means that
the constitial Committee can basically act as a stop and for very significant things,
the stake pool operators get involved as well, and so it's a tripartite model.
So what's so cool about it is that we took some of the best
ideas from traditional governments and some of these new ideas that come from the Internet
governance, and we try to put them together in a way that creates a
really nice minimum viable government system. And you really judge the quality of your
government by three parameters efficacy, efficiency, and integrity. So efficacy is basically
are you making the right decisions or not? So you usually have some goal
in mind, like hey, I want to reduce poverty or make homeless people
get homes or something, or improve the GDP. Then you can measure it,
so did it happen or not? Efficiency is how quickly can you get
to a decision. So does it take a year to get to yes,
Like if you're voting on a budget, does it take six months to get
a budget done or something? Like that, or do you do it in
a week or something like that. And integrity is who do you leave behind
in the process of making decisions. So high integrity systems take everybody along.
Low integrity systems tend to only focus on a certain group, minority or majority
and benefit them and kind of throw the other people in society away. So
just like there's a blockchain trilemma between scalability and decentralization and security, there is
actually a governance trilemma where it's really hard to have all three properties in the
same governing system. So China, for example, is fairly effective and fairly
efficient. They make decisions very quickly, and also those decisions tend in the
long arc of things to have built up their country into superpower. On the
other hand, a lot of decisions they made don't have a lot of integrity.
You know, a lot of people get left behind, human rights are
violated, these types of things. Switzerland is a high integrity and very effective
government. When they make decisions, they tend to be the right decisions,
and the Swiss have one of the freest, most central societies and most representative
societies in the world. However, it's highly inefficient takes like ten years to
build something in Zurich. You know, it's very slow moving system. The
Swiss, you know, think in terms of decades and centuries, as do
the Japanese. So you know, usually you get two if you're lucky.
It's really hard to have a situation where you get all three. We tried
to design as an ecosystem the governance system of Cardono in a way where we
could try to solve that trilemma and be efficient, effective and have high integrity.
And you typically do this with institutions and constitutions. Your constitution is basically
a memorandum on the integrity principles that you desire, and then your institutions are
there to help take complex decisions and get them to a yes no state so
that they can be voted on quickly and so they can pass quickly after you've
done the desk work and the prep work. So the strength of your institutions
really does tell you if you can be efficient, effective and have high integrity.
And that's the great social experiment that we're conducting kurdon a land. So
we have institutions like Intersect, the members based organization. Anybody who holds ATA
can join and it's taking over a lot of these functions like the product function
and the budget functions and these types of things which are very complicated. But
there are other institutions like the Cardono Foundation and so forth, and they're there
to basically lend support aid as well. And so it's kind of a giant
experiment, and we're the most significant blockchain to do something like this. It's
a little scary at times because you have no idea how these pieces are actually
going to come together in practice. But so far, every social signal we've
seen has pointed towards a commitment desire for the community to decentralize this as much
as possible. For example, the first Constitutional Committee elections are being held for
the interim Constitutional Committee responsible for turning this all on. We already have seventeen
candidates running for that Constitutional Committee to be voted on by the ADA holders through
some dow So that's real exciting to see, even pre governance, that governance
is awakening. And I expect to see dozens, if not hundreds of de
reps probably in the next ninety to one hundred and twenty days. So you
have a very diverse set of people whose only job is to think about the
governance of Cardono as a whole Charles hard question. And I don't know if
you can answer this at the top of your head because it requires or there's
a lot of factors and variables. Let's say we're using a scale of one
to ten for decentralization, right, and ten may be impossible to have complete
decentralization. I don't know. You're smarter men these things. But where would
you say Cardono is on that scale? And then with the upcoming hard fork,
where would that put you? So we wrote a paper and then partnered
with the University of Edinburgh to build an index called the EDI, the Edinburgh
Decentralization Index, and that paper identified and the EDI identifies eight different areas that
you can look at decentralization. And so you don't look at decentralization just from
one lens, but you look at it from everything from who controls the consensus
nodes to how many full nodes do you have inside this system? To who
writes the software, to the tokenomics of the system, to particulars behind where
security comes from, is it proof of work or proof of stake based?
And so each and every one of these things can either move you towards a
state of more centralization or less centralization. It just depends on those facts and
circumstances. So the goal of EDI is to come up with a number and
basically tell you explicitly what is the aggregate of all those different activities together.
Now they've been working on it for about two years and they've started measurements,
and so if you go to the website of the Inverurt Decentralization Index, you
can actually see real time some of the measurements of Bitcoin and Ethereum and Cardano.
So I think with the chang hardfork, what this is going to do
is sit Cardano on a path within the next six to twelve months to become
the most decentralized cryptocurrency project ever, including Bitcoin. Now, people have a
gut feeling all I disagree with that. Well, you know, I don't
care about your feelings. I care about facts and measurements. And you know,
when we say it's the most decentralized as measured by the EDI, you
can choose to agree or disagree with the EDI, And if you disagree,
it's an open source academic metric by an academic institution. So then participate in
versioning. The whole point of the EDI is to be version, you know,
version one, two, three, four, in each version tries to
be more representative of what it attempts to measure, which is decentralization as a
whole. So they've already begun pretty extensive conversations with regulators like the FCA,
the ady GM over Abu Dhabi Vara in Dubai, the US Department of Commerce
and others to kind of say, hey, you have this notion of sufficiently
decentralized and your statutory viewpoint, maybe just maybe we should begin discussing and measuring
it. And actually, the pay for EDI was approved and is going to
be submitted, is going to be presented at your financial crypto, so it's
already going through the peer review process as well, and there's been some phenomenal
feedback and that's already feeding into the discussion of whether EDI is an effective measurement
or not. So my view is you have to start somewhere, and because
the industry doesn't already have an accepted index of decentralization, we kind of had
to start from one oh one and get that index bootstrapped. And now the
next step is to apply that index in every dimension, and that is one
of the design goals. When you look at protocols like arbors, layos or
the Unchain government system, they're not just being built from a position of efficiency
and effectiveness or throughput, but they're also looking at is decentralization preserved and protected
because that's so sacred for these systems long term viability. Yeah, I need
to do my reading on that, but that's great that some sort of index
and scale is being made here. I think really good for the industry.
Adopt a standard like that and it can help, you know, stop some
food because we know how. We'll talk a bit about crypto media and things
later, but you know, we can use actual data in facts versus people
just tweeting stuff now and by the way, we've been reaching out to a
lot of blockchain projects, don't look. I just had a conversation with the
al Grant folks and others, and there's a lot of excitement about these indexes
existing because they suffer from the same problem that we suffer from, which is
how do you actually measure decentralization? Right? You know, and then you've
got to get away from feelings and these cults of personality and really get to
the facts of the batter and can we establish a baseline? And once we
have that baseline, how do we then apply it and at least measure the
top thirty forty to fifty projects in the ecosystem And then you have a starting
point, and then you go talk to policy makers and lawmakers and you say,
look, this is our view as an industry of what we think sufficiently
decentralized means. Do you have a differing view and if so, why,
what are you worried about? Is it disclosures, is it information at symmetries,
is it unpredictable failings or cascading failures like we saw in two thousand and
eight because of over centralization or lack of transparency, you know, these types
of things. And so they're obviously going to have a view on that,
and then our goal is to address that view and get that into the index
as well. And then the hope is over time that this becomes a steering
tool for project management, roadmap development, and ultimately regulatory compliance. Yeah,
great point. I know you're hinting towards let's say, like the SEC.
I'm sure the industry would love to have that data to fight back, you
know, against government overreach. That would be pretty significant in these lawsuits and
so forth. Yeah, and also in just lawmaking. So like FIT twenty
one, which everybody prays past, it has embedded within it a definition of
decentralization. So that's an example, and it's the same for the FIA with
the concept of the Financial innovation ACLAMUS is build with the concept of an ancillary
access asset and FIT I believe they call it a restricted digital asset, whatever
the nomenclature is. You have this concept of it starts as a security and
then it goes through a series of upgrades and then eventually it becomes a commodity,
and the gatekeeper there is the level of decentralization of the project. So
the Hindman test with ethereum kind of implied this. But this is eventually going
to be written down in a law somewhere in the United States. So for
this to work appropriately, the policy makers are going to have to decide what
that test is, and usually that means they're going to form a committee between
the CFTC, which regulates commodities and the SEC which regulates securities, and for
them to agree on something having an academic standardized benchmark that universities use and potentially
even standards bodies like Department of Commerce could use, is probably a better approach
because then it takes subjectivity out of the assessment and you have an objective measurement.
For better or for worse. Now you can argue that that measurement is
not a reflection reality or doesn't cover enough use cases. And that's the point
of versioning it, you know, that's the point of waking up every day
and say, well, tell us what version two should look like. What
did we miss in the in the index? And if it becomes an industry
accepted print a project, then very quickly one or two years, it'll probably
converge the right measurement. Yeah. You know, as you were saying that
I was thinking of, and I think you alluded to it, is that
something starts as a security, but eventually it becomes decentralized, then it would
go under the cfdc's jurisdiction. But that same scale or index enterprises can look
at that or individual builder. Let's right, I want to launch an NFT
and I'm like, I want to go to the most decentralized blockchain or what's
in the top five of the centralization I can do that. That helped me
so man remove a lot of ambiguity and confusion. We have like government standards
like Phipps, you know one ninety and et cetera, et cetera, And
there's all these different government standards for how to build stuff. And typically those
are gatekeepers or whether you get a contract or you can bid on something,
or if a large corporation can work with you or not so or CMMI is
another example of that. And so by having these benchmarks, what you can
do is in the procurement process or quality process or security process, say I
only feel comfortable building on a system that's above this particular threshold, and you
really have to dig into the governance of it other such things, because nobody
wants to build on Quicksand you don't want to go as a company and make
a bet, you know, for a half billion dollar piece of software only
to discover that the core maintainers have disappeared or you know, it's been forked
because of political problems and now you have a much weaker project. You know,
that would be pretty problematic. Like if you're Samsung, would you feel
super comfortable if the governance of the Android project is really bad and it's having
all these issues. You know, would you really want to use that as
your operating system of your phone? Probably not, you know, So it's
really important that you have some sort of metric that not only tells your level
of decentralization, but part of that decentralization is looking at the continuity and governance
components of the chain itself, because that kind of gives you a sense of
whether that's a high quality product to deal with or a low quality product.
Yeah. Absolutely. Now you had mentioned earlier the Argentina partnership, so that's
what the Cardono Foundation tell us about that. How did that come about and
what's the mission there? So the ecosystems pretty big. So the Cardino Foundation
has been doing some independent work of us in Argentina. We're of course aware
of it because we talked to the same people, and my understanding is that's
an extension of some of the projects that they've had, like in the country
of Georgia, where they've done some really interesting government contracting. What we've been
working on has been basically building strong relations in anticipation of the constitutional convention in
December. Because I have very practical problem to solve. We're bringing more than
fifty people from fifty different countries to be delegates to the Constitutional Convention. Well,
how do visas work? You know, little stuff like that. So
there's a lot of ground game logistical things, and it's incredibly important that we
have connections at the highest levels of the Argentinian government so that nothing gets in
the way of the constitutional delegates. You know, they deserve if they're going
to take time and effort to commit to writing the government of Cardano to get
white glove treatment, so they need to stay at safe places, they need
to have good transportation, good food, and also get their visas approved.
In these things, so there's a very practical, tangible set of engagements that
have occurred, and we've already sent two delegations to Argentina to begin building up
that corpus. I would also like to spend some time with the President,
so we'll see if we can get our schedules aligned in July and at that
to happen. But it would be very nice to sit down and understand more
deeply about what his goals are for Argentina because there's actually a very strong cardinal
relationship with Argentina. We didn't just start conversations today. People have been working
on Cardono from Argentina since twenty sixteen, eight years ago. It's one of
the very first firms to write code for the Cardinal project was Atex, which
has now been acquired by Globin. But Alan Werbner and his team started working
on that code in twenty sixteen, So there's almost a decade long Buenos Aire's
connection in particular to the Cardinal project. And so there's a lot of really
cool things, whether it be a talleprism, or it be work on partner
chains, or work on Midnight or Cardinal Core, that I think could be
done by Argentinian developers. And so really, if the president wants, you
know, I think it would be very easy for us to actually set up
a center of excellence to do cryptocurrency development in the country. But you know,
you always extend the Curtis see and try to get a deeper understanding what
each administration values. In some cases they're quite compatible, you know, in
other cases they're not, And so it's really important just to have a dialogue
and engage with people and say, okay, well we bring jobs, and
obviously we bring a great ecosystem and would this technology be useful. I happen
to believe that Argentina is in a very interesting place in history where this current
government has, through a process he likes to call the chainsaw and the blender,
the chainsaw cut programs and the blender not increase the spending and let inflation
cut them, has basically decimated the existing government. And that's step one.
Step two is to rebuild. So then there's an open question of when he's
rebuilding, what does he rebuild with. And my view is that it would
be sensible to rebuild with blockchain based technologies, blockchain based supply chain systems and
voting systems, and transparency systems and accounting systems, and maybe even a blockchain
based money system for the for the state. So obviously we need to get
a deeper understanding if that is on the horizon and what time horizon does that
need to look like. And then that's not going to be done by a
single entity. It'll probably be done by a coalition of actors. And there's
a lot of very prominent Cardono projects that are actually in Argentina. For example,
people don't a lot of people don't know TX pipe is based in Argentina.
You know, that's a major Cardono project, twenty six people on that,
so there's a local coalition of people. And that's also another thing that
the government needs to be educated on. Oftentimes you have Western companies come to
South America and they say, hey, we'll do everything and we'll be these
guys up north, come on down South. Well, actually, any meaningful
government contract would probably be serviced by Argentinians if it was actually enacted. So
that's the conversation they have. So you just meet with people and you know,
I'm trying to solve both problems at the same time of getting that constitutional
convention to a great state. We already have some great partners ships. We
just signed an MoU with the University of Buenos Aires, so the convention will
be held at the School of Law, and it's an absolutely stunning place and
it's the perfect place to write a constitution and ratify it. And you know,
if you actually take a look at some of the pitchers, it's one
of the most beautiful all hauls around. And UTN is another university that we're
looking at. We'd love to build a relationship there and there's a lot of
local government that we've been working with as well. So that's the practical side
of it, the meat potatoes side, and then there's just talk to the
government about what its goals are and if they coincide, maybe that's something for
us to take care of the foundation, to take care of our local partners
like t x pipe to take care of and let them be aware that they
actually have a domestic option to blockchain the entire country. Yeah, as you're
saying that, I remember our previous conversations where we talked about countries in Africa
adopting blockchain. Obviously you guys are doing some work there too, and that
they're starting from the ground floor, not like the United States where he's trying
to steer a cruise ship and all the bureaucracy, all the red tape.
But they can move faster and a greater infrastructure faster than maybe the United States
and sebities for US world countries. So that's really great that they can adopt
this technology and just catch up, so to speak. Yeah, and we're
still in Africa. In fact, we're growing by leaps and bounds. We
just launched the Real five website. So if you go to Realfi dot Co.
You can see that, and that's a microfinance play. It's made by
John O'Connor and the other guys that he was our director of African Operations and
now he's the CEO of real Fi and it's one of our portfolio spinouts.
And that company employs I think almost fifty people and they're based into Robi and
we've already deployed five million dollars of capital to lend through channel partners who are
regulated actors the microfinance business. So we've learned a lot in that process and
we've been a bit more concern are deliberate about how to approach these types of
jurisdictions. And everyone's different. You know, Kenya is radically different places in
Nigeria than Ethiopia. And in some cases you get great outcomes and other cases
not so much. And you don't let those things dissuade you. You have
to be a bit relentless and resilient and every day you wake up and you
try to find a different approach. So maybe doesn't work in one system fertilizer
vouchers, but then maybe you make it work with fast moving consumer goods or
maybe that doesn't work out, so you do remittances, or maybe it's microfinance.
That's the key, because at the end of the day, it's infrastructure.
And every time somebody does something, if they're touching a blockchain system,
they get a wallet, they get an identity, they get cryptocurrencies, and
once they have it, they are their own bank. It's a self sovereign
identity, and ultimately they're in charge of their economic agency. And that's the
mission is to bank the unbanked. And you don't have to bank the unbanked
through way A versus WAYB. It doesn't matter which road you take. You're
heading to one destination, which is getting people economic autonomy, so they have
agency and they're in control of their lives. So I think the model that
John has come up with, which is tempered with about six years of history
there in Africa, is a really good one and we're real excited to see
that grow. And it's already starting to take off by leaps and bounds,
and we've gotten some great preliminary data. You know, interest rates fell from
eighty five percent to like thirteen percent. NPL which is a non performing loans
fell from forty percent to two percent. Imagine having a forty percent default rate
and then you go down to two percent twenty times better, So we make
more, they pay less, and the overall structure goes from you know,
a big chunk of loans failing almost more than a third, all the way
down to two ninety eight percent success. It's just remarkable all things considered.
Now there's a lot more to do. There's a founder effect in that,
and you know a huge amount of work on the credit scoring side, and
you've got to syndicate, so it has to go across border, and then
eventually you have to add in some more of the blockchain crypto components and then
eventually open it up to the retail side. So that's a multi year journey
that they're going on, and they've already spent two years of that multi year
journey, you know, getting that into play. But we built all that
technology out for like a talleprism, it's not just an identity system. It
can also be used as a credit system as well, and we've built out
the voting software and built out wallet software, and some variant of Lace will
eventually work its way into that pipeline, and then we'll see where the stable
coin side of Cardinal fits and then you know that works its way in as
well. So we built capabilities over a long period of time and you know
it works just as well in Argentina as it does in Kenya. So that's
another thing you bring to the table and you say, by the way,
we're doing this amazing stuff in Africa, would this be interesting to you guys
as well? And so that's the great part about having that conversation and you
can bring people together. Yeah, I love it, and I'm just excited
to see what the future like ten years from now with blockchain, AI and
all these technologies helping some of these countries which you know, in the old
I guess industrial system got left behind, right because maybe they didn't have the
natural resources or currency problems or bad governments. But now blockchain and can really
bring a lot of benefits to people and the average man, not just the
guys sitting at the top in the government. So that's great. I didn't
want to ask you about Midnight side chain, tell us about Midnight what is
it? How Cardono will benefit? And then some people that we are saying
there's an ear drop coming from this, Yeah, that's correct. So there's
this problem of how do you sell the centralized services to the entire blockchain industry.
So you know, you have an application on Ethereum, is it really
on Ethereum if it's also on Infira or Alchemy and that the bulk of your
logic runs there, Like open c is another example, Yeah, okay,
we have an NFT on the Ethereum blockchain. But if all your APIs and
your wallet and everything basically just talk to open see and they don't even check
the Ethereum blockchain, if open sea gets rid of it, like just disappears,
you know. Marty Marlin's book wrote about this. He's one of the
founders of Signal, and he kind of demonstrated the hypocrisy of things where people
are saying it's decentralized and trust lists and Web three, but it's really Web
two or Web two point five. So services matter. And I thought a
lot about how do you do blockchain blockchain deals, and so what I thought
would be really cool is to have a layer that basically specializes in that.
And I wrote this in twenty sixteen and why Cardono and I had this idea
of Cardino SL and cardinalcl. So SL is the main system and cl is
the control layer of the system. So for eight years, you know,
we've been kind of talking about this and exploring this, and eventually we resurrected
the idea with a framework called partner Chains. So what we did is we
looked around. We looked at Cosmos fabric scorex, which was an in house
framework, and Parody Substrate, and we said, which one of these blockchain
builder kits makes the most sense, And a variant of parody Substrate made a
lot of sense. So we took that as a base and then built it
up and created Midnight on top. We'll get the Midnight in a second,
but let's talk about partner chains in general. But basically, the idea is
that you launch something that looks like a layer two to everyone, so it
can talk to and appse from Ethereum or base or BnB or Solana can use
it for whatever service it's providing. Maybe it's computation or privacy, or its
storage, or maybe it's your DAP back end, and instead of running it
in centralized infrastructure, you run it in decentralized infrastructure. Okay, so you're
a layer two to everybody and you run this model and when they query it
they pay in the currency of that chain, so ether or soul or what
have you. And remember we created that technology babble fees. Well, then
what happens is then it can consume the token of that system and then it
can be secured by the Cardano stakepool operators, which means then these transaction fees
and the inflation actually gets paid through to ATA holders and to stakepool operators.
So basically you have your cake and you need it too. You have these
pseudo independent networks where they partner with each other. So the service provider partners
with Cardano for security and infrastructure and decentralization from day one, as well as
the security of the Cardino Native Asset standard. But then that pays it's tokens,
it's inflation, and it's action fees to Cardano for providing that service.
So you actually get multiple revenue streams now and then in turn it sells its
services to Cardano and the broader blockchain industry. And you say, well,
why would I want to do that, Why not just use a DAP or
something like that. Well, first, this economic model is wildly viral because
you can actually pay that to multiple systems at the same time, so you
actually have inflation go in many different places, so it gives people an interoperability
incentive because they actually care about the token. The second thing is that you
can create chains of consensus algorithms together. So part of the partner chain's framework
is Minotaur and minotaurre It's this multi resource consensus system. So we all the
time we have the bitcoin maxi's proof of work, proof of work, and
then you work proof of steak, proof of steak. And here's what I
happened. You take your peanut butter, you take your jelly, and I
see what I'm doing. See what I'm doing. I'm putting them together.
There we go, peanut butter and jelly. Yay. So what if I
could put proof work, proof of stake together, and more abstractly, what
if I could take proof of X whatever X is, proof of history,
proof of storage, whatever it is, and chain it together with multiple consensus
protocols in the same ledger. What does that mean? It means that your
partner chain can borrow security from Cardano. Cardon gets paid for that. But
then you can also have your own independent consensus algorithms that also secure the system.
For example, let's say you wake up tomorrow and you say, you
know what we need to do is we need to create a competitor to chat
GPT. So we're going to create our own open ai. Okay, well
what do you need for that? Well, you need data, lots and
lots of data, so you need some storage incentive. Okay, what else
do you need? Well, you probably won't keep that data private, so
you need like a privacy system for that. Okay, Well, well what
else do you need? Computation? You need a ton of compute power.
You know, Elon Musk just diverted all of his Nvidia chips from Tesla to
Xai. He's building a ten billion dollars center. Mark Zuckerber is in my
backyard building a center down in Cheyenna million square foot data center that he's building
there. You know, Microsoft is with open ai building one hundred billion dollars
supercomputers. So you need a lot of compute power. Okay, Well,
what if you could create a proof of useful work where the useful work is
training for lllms and inference for LMS. Then you've built a decentralized supercomputer that
it's sokenized as opposed to these central data centers that are being built by Meta
and Microsoft and Xai and these other people, and you could combine that with
BFT protocols and proof of stake protocols and these other things, so you have
fast finality and all these other things, and at the end of the day,
the user experience is the same. It has a chat GPT style interface
and you type it in and when you do your query, you paint a
token for that query, kind of like the API model that everybody has.
So somebody can construct that chain multiple algorithms together, and one for incenttivizing storage
and data acquisition, one for incentivizing useful work and computation, and then one
for fast finality and fast transaction. You put it all together, guess what
you have. Metataur that's partner chains in a nutshell, and somebody's going to
build that. Iagon, for example, is already building proof of storage in
center our ecosystem, World Mobiles building a telecommunications system. It's a blockchain for
telecommunications, which is very different than a normal blockchain. Midnight is one about
privacy, preserving things for private smart contracts because businesses can't keep a secret,
and you know, well, blockchains can't keep a secret. But every business
requires a secret, doesn't matter if you're McDonald's or Microsoft. Every business has
secrets. Your amount of money and your cash register. You're probably not going
to go tell people. Well, you can't put that up on a blockchain
unless your blockchain has privacy preserving smart contracts. So that's the purpose of Midnight.
It is the first of a kind of a new kind of blockchain,
a fourth generation system that can work with everybody. It's kind of a metachain
that can talk to everybody, and it's built in a framework that basically allows
a broad distribution. So typically, if it's a service token, you want
as many people as possible to have that, So you do an air drop
and you just distribute the token across to everybody, so from day one they
can use it. They don't buy it, they don't pay for it.
It's just there because the goal of the system is to be a service,
and it's to be used and provide utility to DAPs and then over time and
economy forms and it allows the ledger to sustain itself just like any of these
others. And then eventually you get many different services and there's there's so many
social networks, large language models and AI telecommunications, storage and infrastructure and hosting,
you know, to replace the inferiors in alchemies, privacy as a service.
You know, you can look at medical records, you can go down
the line and you create this spoke infrastructure. What's really cool though, is
because they settle in their own domain, those transactions don't bloat the main card
Ono network because you think about it like a world Mobile. Let's say they
get to their goal of a billion subscribers. Well, every single time your
cell phone connects to a tower, that's a transaction. Okay, so that's
a lot of juice. And does that value anything that you're doing. Does
that help your NFT collection or your financial settlements or these things. No,
but that's an example of what that network will need the process. So they
need slightly different technology than what Ethereum is going to offer, a base is
going to offer, Solona is going to offer, Cardono's going to offer,
So they really need kind of their own blockchain. But at the same job
token it's not their primary prerogative to go and figure out how to replicate or
boris or our security network effects or these types of things. So really you
want to be a partner where you have the parts of the chain that you
can build in a modular way for you, and then the parts you don't
care about that are commoditized, like security and consensus, you can borrow that
from a different system, and the process of doing that you pay for it.
So that's the partnership of the partner chain, two blockchains coming together and
partnering with each other, which is a really cool concept. We don't typically
think this in the cryptocurrency space. It's always master slave, like Bitcoin will
dominate all and you'll all be side chains, or Laier too is a bitcoiner,
Ethereum will dominate all, or a Solana will dominate all. It's well,
I'm sorry, business doesn't work this way. Microsoft's existence doesn't put Google
out of business, or Apple's existence doesn't put Microsoft out of business. Somehow,
they've all coexisted and at times they're competitors, but the market's large enough
to sustain that. So I do believe there's going to be an internet of
blockchains, and it's really important that they can talk to each other and transact
with each other. That's the missing link we have right now, interoperability.
Now, speaking of partnerships, and you mentioned Elon muss folks wanted me to
ask you that are their plans to engage with Elon and is it along the
lines of using like the Midnight side chain for things that he's doing at SpaceX
or Twitter or x or Tesla, whatever it may be. It's strange because
there's such a strong overlap and some of the things that we both mutual we
think about and we've reached out numerous times to try to engage with various people,
whether it be at X where we even offer to do free work like
with verified tweets or other things, just because it's so bad right now with
bots and these other things, and it's just always silence. I even know
Kimball Musk and I've talked to him on several occasions, and I know many
people in Eland's orbit, and never once has he mentioned Cardona or me or
anything. President Argentina just retweeted us. Yes, it's like, you know,
a lot of people know about us, but for some reason, we
can't break through. And I don't know why. He's certainly where of Crypto,
he's ware of Doge. She's said things like I agree with metallic you
know, he's friends with Lex Friedman. I'm friends with Lex Friedman. We
share mutual friendships, So I don't know why we haven't been able to square
that circle. And maybe he's got some people in his social circle that don't
like me, and so he's gotten some intel that I'm a bad person to
work with there. Maybe it's just he wants to do his own thing.
I don't know. You know, it makes me sad because I'm an ex
user and I have a million followers there, and it would be problematic for
that platform to fall apart or not be relevant anymore, because that social capital
is so valuable to us and it's quite useful. So I would like to
see X succeed and grow, and if we could ever be part of helping
that out one way or the other, we'd like to do that. But
anyway, you know, there's an old saying, the dog parks, but
the caravan moves on. And you know, Elan does his thing, and
he's Elan Musk and he's a legendary entrepreneur and no one can challenge that,
and people are pretty stupid if they do. You know, all the people
who said Twitter was going to die in two weeks not only did it thrive
and survive, it survived was one tense of the staff. And he just
raised twenty one billion. He just raised six billion dollars out of twenty one
billion dollar valuation for a company who's comes from the Twitter data set. Yeah,
so he's already gotten half his investment back just off of that one play,
and there's a lot more to do. So the guy's a business genius.
You can never count him out. I think the issue is that politically
he's gotten to a point where in certain circles he's become kind of a giga
troll, and so people conflate that with the fact that there's a guy right
now sitting quadriplegic in a wheelchair playing Civilization six with his brain because of Elin
Musk, and they conflate that with Starship now landing, you know, when
it was blowing up on the pad beforehand, and that's probably the platform to
take us back to the moon in Mars, and that's going to happen within
our lifetimes, likely the next ten years. That's this guy, you know,
he does these things for better or for worse, and he's ruthless and
has very bizarre social skills. And ten kids from a pile of different women.
There's probably more we don't even know about. He's just one of those
guys. He's a magical guy. So it's really like a sphinx hard to
understand his motivations and understand why he does what he does. Why does he
have this bizarre fetish for doge coin. Is it that he owns twenty percent
of the supply or is it just he's just like the fucking logo. You
just don't know. With the guy like that, that's the magic of Elon
Musk. So it's a lot of fun and where I think things are very
unfair, like Twitter, the Tesla compensation issue, I thought that was horrendously
unfair for a judge to overrule the will of the shareholders and the board.
Seventy three percent of the non Musk holders of Tesla stock voted to give him
this pay package, as did the board. The judge overruled that, and
in the process of doing that created an avenue for the lawyers who brought the
lawsuit on behalf of a single shareholder who had nine shares which went in value
from two hundred dollars to two thousand dollars five billion dollars. So this particular
affiliated with Joe Biden basically said that it's in the interest of the shareholders to
retroactively overrule them for a very fair deal and hand five billion dollars to attorneys
on behalf of a single shareholder who made a ten x on his investment,
claiming his investment was hurt by that pay package. I just I've never seen
anything in my life, you know, like this. It's an unbelievably unfair
judgment. And it just shows you never to incorporate a business in Delaware,
So you know, put your politics aside. It's you call it how you
see it. There's plenty of things Must does that you know, bothered the
hell out of me. And there's other things that he does that I think
are quite fair or he's been treated unfairly because the positions he's taken. I
can't, for the life me understand, for example, why he has not
put did sinto Twitter so that we can do verified tweets and much more security.
And I can't, for the life we also understand why he hasn't embraced
things the app protocol or the fetiverse or other things that Twitter Blue was trying
to achieve project Blue s guy. There's a lot of really good ideas in
the decentralized social networking space that I think would be quite valuable. I can't
understand, you know, why he hasn't integrated a crypto wallet yet or partnered
with a vendor like Brave for example, to do these types of things.
There's a lot of low hanging fruit who would be dying to partner with them.
And he could make doge the currency of Twitter for example, if he
really wanted to, and actually connected to state channels, so payment channels,
so you can do micro twipping and tipping on tweets and these types of things.
There's a lot there. Now. I know he's moving that direction,
like he's getting money service business licenses. I think he has him more than
twenty states, and he's starting to turn on features. But I mean,
X space is still suck. You know, it's been three years. They
suck and I use them all the time, and I just need a little
bit more, and it would be such an effective tool. You know,
in our own community, there's this neckathon where this next community came together and
they've been going for twelve days straight now and they're going to still and they're
going to keep a twenty four to seven X space open for until Finance lists
them. So I told them, guys, Binance, you might be in
it for the long haul on this one. So that's neckathon might be one
hundred days or two hundred days or three hundred days. But I've joined a
few times and just to wish them well because I admire the effort. But
the point is that they've had to restart that space numerous times because it's rugged.
It'll last like one hundred and twenty hours, one hundred and thirty hours
and it just collapses. It's not enterprise grade software, you know. And
that's okay as a beta, but this product I think has been around for
three years or so forth and it's still where it's at. On the other
hand, I don't know of any other platform where you can just create an
X space and four or five US senators will join, you know, a
president of a country will join. You know, you get a CEO of
a Fortune five hundred company that it's just like on a drop of a hat.
They just see it there and they join. It's pretty remarkable as a
town square. Yeah, that's pretty amazing. Obviously, it kicked off with
Clubhouse I think it was, and then uh, you know, yeah,
adopted it. But yeah, they have to fix it. I get I
have a bunch of problems with it. Anyway, we have to talk about
the building on Cardano because I use, for example, a platform called Sentiment
where I look at different cryptometrics, and Cardano just recently wasn't number one,
or it has been in the top three of developer activity, which is awesome.
You know you mentioned snack. Is there What insights can you give us
as far as what developers are doing on Cardano, you know, anything big
happening that you can share. Yeah, well, there's a lot of really
cool projects like Indigo or Axo or Mehun. There's the usual suspects, and
there's some interesting meme coins too, Like the Hosky community is awesome and I
always enjoy talking to those skies. And then obviously sneck is doing its thing,
and then there's a lot of cool tooling. Like there's this misconception that
you have to know Haskell to be able to program on Cardona. Well,
Aiken is the fastest growing language in the Cardinal universe. It's based on Rust,
so very different dialect, much easier to use for a lot of developers.
Typescript is also coming to Cardona JavaScript dialect, So the developer diversity of
the tooling has really improved over the last year in particular. And that's how
long it should take. You know, there's this enormous impatience in the cryptocurrency
space. But I talked to both Rich Hickey and Martina Durski about this years
ago, and I said, you know, you guys created Cloakture in Skala,
respectively. How long did it take to actually get that language where it
needed to go? And they said, hey, three to seven years is
how long it takes for when you create a programming language where it to mature
and stabilize to a point where people actually feel comfortable using it building actual applications
with it. So twenty twenty one, late in twenty twenty one is when
Plutus came out for its first version. So we're about three years into it
twenty twenty four, and lo and behold, now you have a vibrant ecosystem
and all this great tooling, which is exactly how long, by the way,
it took for Ethereum and for Solana and for these other ecosystems to kind
of get their sea legs and get people to do that. So we haven't.
We're not really super slow. We're following what the best in class languages
like skull Cloature or Python or Rust. By the way, it came out
in twenty fifteen, and it took about eight years for RUSS to really reach
a prominence where it started displacing real C plus plus jobs or these tipsing.
Only recently has Rust really taken off. So it does take a little while
for new languages, new tooling, new platforms, new paradigms, especially when
it's not just a language. We don't have an account style model with Cardono.
It's an extended UTXO, so it's a different accounting model, so you
have to write your apps differently. So it's much akin to like single thread
to multi threaded, you know, like single core to multi core, where
there needed to be a translation when people are writing programs to take advantage of
those processing cores that are inside your system. And we're working our way through
it, and the community is doing really a phenomenal job building tooling and making
that devex better. I'd say we probably have about another twelve to twenty four
months of rough edges. How dishonest the crypto media is. Oh, that
means you can't build anything on kard On for another twelve to twenty four months.
Well, first, go fuck yourself. Second, there's hundreds of great
projects that are building every day. When I say smoothing it out, I
say you get to a usability where the set of developers that you can work
with comfortably broadened to the beginner because it started out advanced and now we're kind
of at the intermediate level and it's moving to the beginner set, meaning that
basically any script kitty can come in interface. I don't necessarily know for a
blockchain system if that's really a good thing or not. You know, it's
inevitable. You can't stop it because people always want to improve accessibility. But
you are dealing with distributed systems, key management, a lot of security,
and if you write these things in the wrong way, regardless of how accessible
the tools are, you will introduce security problems and you'll get hacked, which
is why there's like, you know, billions and billions and billions of dollars
every year of DeFi theft that occurs. I think it's like eighty million dollars
a day or something like that of hacks that occur, and a lot of
that comes from poor application design. And yes, you can audit, and
yes you can use quick check and formal methods and these types of things,
and you can certainly get a higher degree of quality, and maybe through static
analysis you can get some good suggestions. But at the end of the day,
if you don't know what you're doing, you're going to get yourself killed.
And so at some point, as you move your boundaries of developer accessibility,
you move to a level where you're actually inviting non productive applications inside this
system, and it's inevitable. You can't stop it. My job as a
tool builder is to try to at least give people as many tools and social
processes like certified applications and testing frameworks and auditors and kind of you know,
quality assurance stuff, DAP stores, these types of things, and we try,
you know, where we can. But all things considered. To see
the progress year by year from twenty twenty one to twenty twenty two with Vassal
to what we achieved in twenty twenty three to where we're at now with plutes
P. Three, it really is impressive, and by every metric transaction volume
and TVL and other things, it's growing the way it should grow. The
problem is just people lie. They say there's no TVL, no DAP activity,
there's no stable coins. There are stable coins do You might not like
JED and USDM and these types of things, but they do exist, and
the foundations and tough negotiations with Circle back and forth. I view it like
Coinbase. Remember everybody's when coinbased, When Coinbase, when coin Base, if
you're remember back in twenty twenty one. There's an inevitability behind it, but
there's also a responsibility in these types of things where you probably don't want Walmart
to come and shut down all the small businesses in your town. So analogously,
maybe just maybe if you bring a circle in, it'd be good to
shore up the smaller, you know, stable coins as well, so they
don't get obliterated by the existence of USDC inside the system, because there are
people who've invested millions of dollars in their time in building that infrastructure up.
And as stable coin's a stable coin, you know, it's as long as
you can find the right bridging and translation of these things that ought to work,
so you know, it is what it is. There's an inevitability behind
it. But I think there's a great impatience where people don't see the price
moving up and so they instantly infer well, if that's the case, it
must mean that it's a dead ecosystem and it's in a great decline. Meanwhile,
we're just about to do the greatest governance upgrade in the history of the
project and probably the history of the industry. We have the best ailability plan.
We have a very vibrant, rich community. When you look at rare
Evo and you look at the Cardono Foundation summit, you look at all the
cool things the communities building, and there's all these cool DAPs and DeFi projects,
but you're all homegrown and they don't have ponzonomics or any of these other
things. It's a cool ecosystem to look at, and it's a fast growing
ecosystem. And then I'm just told again and again on Twitter and by the
cryptomedia it's dead. There's nothing there, And you say, okay, well,
all that stuff doesn't exist. Even bank List was a great example of
this. It's a microcosm of the broader macrocosm. Where they petulantly and arrogantly
say, come kiss the ring and come on our show and explain to us
why it's not a dead ecosystem. I said, okay, well, if
you're really serious about it, why don't you just come to rare evo and
you literally can see all the different projects building, and then what are you
going to do? Go up to them and say, tell us why you
don't exist, tell us why you have no transactions? Tell us, and
they'll be like, but we do exist, we do have try, we
do have people. It's here, it's running. Uh huh uh huh.
Yeah, yeah, but you can't because our thesis is you don't exist.
So what they and that's the issue. It's like you. Then then they
say no to that offer, and they try to say, well, you're
a coward, you're afraid. You just don't want to have the debate.
Guys. I went on a stage eighty five thousand people at web Summit with
what's his name, Ben Ben Kingsley or whatever it is, the guy from
the OC who hates crypto and the thesis of the panel Ben McKinsey. I
think it was. The thesis of the panel was is crypto a scam.
Yeah, okay, so I'm sorry if I did that in the US Commerce
at Congress. I don't think I'm super scared of sitting on a podcast for
an hour or two of these two clowns. No, it's more principles of
saying, are people actually giving us a fair consideration or have they already made
up their mind and they're just looking for evidence to confirm a preconceived notion that
they have or not. And I think that's the biggest issue right now in
marketing is there's already this preconceived notion that's fomented, and Arthur Hayes will throw
his shade at us, or well, Paul will throw shade us. He
just saw that, you know, and they dance around it. But they're
always from three generations ago. Well, Solana went from nothing to where it's
at in six months. Well that's different. What about Ethereum, Well that's
different, guys. Crypto, everything moves super fast here. You're dead today,
big tomorrow, dead again. Rights, It's okay. It's really about
your fundamentals. And the question is do we lose community And the answer is
not usually, And in many cases we develop an immune system and certain projects
that aren't compatible with that immune system, they don't get a good time here,
and they naturally get pushed out. I won't name names. Pictures do
disappear from walls, you know. And that's a good ecosystem. That's a
healthy vibranty system when it has that immune system. And the fact that we
keep growing, we keep gaining, we keep evolving, and we keep challenging
the you know, taking on the biggest challenges and problems. That's a good
indicator that this thing is going to be around in five years, ten years,
and twenty years. It's not dying, it's growing. But then you
get no acknowledgment from cryptomedia from that because they're bought paid for. So on
that note, I was about to ask a follow questions on that bought and
paid for? Is this crypto VCS pulling some strings? You know, we
don't want capital going to Cardinal because we're backing this specific asset or assets,
so we need to frame the narrative. And I don't know which media is
bought and so forth like that. In addition, there's also a natural tribalism
that takes place in crypto because of the financial incentives. So what are your
a BDC MAXI even though you're slow high fees, you still I No,
don't worry about Cardano, don't worry about smart contracts right right? Or is
it all of it above? Right? All the above with these things?
Yeah. I mean people talk their book and they talk their money, and
I can't speculate why a particular VC views them some things the way it does.
I mean, look at the Farcaster investment. They have almost no utilization
or adoption. I'm sure that there's plenty of cool and interesting things in that
project, but there's been several statistics that I've looked at where the daily active
user count other things really don't justify a multi billion dollar valuation for a social
network. Yet they got a very significant investment. I think it was from
A sixteen and Z. So why are they doing that? Well, the
more cynical people say, well, it's because of tokenomics. You know,
they get access to something and they make quite a bit of money. Less
cynical people say maybe they're investing in the future and they think they're going to
get the hockey stick, whatever have you. There's no rationality behind the valuations
and inflows and outflows of things you can't chase the price. That's something I've
learned from being in the cryptocurrency industry for twelve years. Then markets are just
going to do what they do and you can't predict them. You can't chase
them, and you can't wake up and do some magical kabuki, and then
suddenly you've doubled the price or tripled the price. Like there's no greater example
of that than when Stellar burnt a gargantuan pile of coins. They destroyed like
ten years of runway for their foundation, burnt all those tokens and they got
a little blip and the market took all of it. So you see all
these people burn aid to do this. Do that first there's nothing to burn.
And then second, even if you could, it doesn't really do anything
for you because the markets do what they do and you can't predict them.
So what you got to do is you go put your nose to the grindstone
and say, are we producing real value? Are we building real things?
I don't care if we're in the club that vcs love or the media loves
for these types of things. Is this useful to the country of Argentina?
Is this useful for all the people in Kenya getting their loans? Is this
useful for Midnight and its ability to offer computational privacy to people? Is this
useful for identity systems that can basically give credit scores to millions of unbanked people,
or put academic credentials on a blockchain? You know? Is this useful
for my synthetic biology companies where I have track and trace glowing plants? You
know? Is it useful? Does it solve real problems? And if it
does, it has a right to exist, and it's going to be here
in five years or ten years or fifteen years. The markets eventually will recede
from this madness that they have, and eventually it's going to pick the right
winners and losers like it did with Amazon versus pets dot Com and you know
these other things. So on that note, you know, in regards to
narratives and media and so forth, I saw you put out a poll regarding
card potentially Cardano treasury being used to create a non for profit, not not
for profit media now that fairly reports crypto news across the industry. Tell us
about what you're thinking there? Well, you know, I just like pulling
people. You know, it's always funny. The minute you put up a
poll, people say, I guess they're doing that, and then they instantly
start criticizing. You start the conversation. You know, I thought about buying
coin disk a few years back, and I and we eventually got their data
room, and we thought that they were wildly optimistic about their their value.
And obviously, whenever you're so far off on a meeting of minds, you
don't pursue it. But and of course they one of their podcasters mocked me
for that, for that acquisition. But okay, but anyway, why because
I thought it had been really cool to actually run a fair media organization.
See, here's the thing. It's like we did EDI and even though we
started it, it's at an academic institution, it's neutral, and there's already
a federation of entities forming around it to start talking around how do you fairly
measure a blockchain? The news should not be in facts should not be partisan
concerns. But we're so fucked up from lim in a world of hyper propaganda
and partisanship that we automatically believe it's not possible to be objective. Guys,
When we report the temperature when we say it's thirty degrees outside, it's thirty
degrees or not in a specific place is specific time. Okay, it's a
fact that happened. George Washington was President of the United States. It happened.
It's a fact. It should not be partisan. We should be able
to converge to objectivity in these types of things. So here's the thing.
You create veracity markets, so marketplaces for truth. So they're called prediction markets.
Robin Hansen did foundational work there. You create veracity bonds that if somebody
publishes a story and if it turns out not to be true, they have
a bond that's connected to the story, they lose their money. So you
create marketplaces for fact checking in these types of things, you crowdsource knowledge.
That's what Oracle systems are doing. We see them all the time, and
apparently those are nonpartisan. But we just can't do it when news involved use
AI summarization. Grock is experimenting with this on Twitter, where you take a
plurality of different things that people do, and so you can put open source
lolms to inject these types of things, and then you do allow editorialization to
occur by balancing things so you know you do is you say, okay,
well let's go to all the major crypto projects and let them every month write
an article about their ecosystem. Now, of course that's not an objective article.
It's subjective because it's written from the perspective. But you know, it's
a salon article written by and for the salon of people, and it gives
them a showcase of what their ecosystem is about. And if people challenge those
types of things, then you invite people on the other side wright op eds
criticizing that or saying that there's stuff there. And what you do is you
create a dialogue, okay, and people start creating content around that, so
you can easily curate this entire thing as a doubt. And if you,
the reader are interested in the truth of something, you can put a bounty
up so you can say, you know, I because one of the things
I always bothered me. I'll give you a great example. I live out
here in Colorado and there was a fast food restaurant where somebody drove a truck
into the restaurant and I happened to drive by the restaurant shortly after it happened.
So I was looking as like that pickup truck should not be in that
McDonald's. That doesn't make any sense. So they wrote an article about it,
and it's in the papers somewhere, but I never got a follow up
article, so I never really found out what happened to the driver. You
know, why did he drive into the McDonald's. Was it alcohol or drugs
or lost attention or had a heart attack or you know what happened? And
you know, did the restaurant go out of business or these things? Because
it changed ownership after it happened, became something else. So it was there
was so many open questions there. Well, if I had the ability to
put a truth bounty up, I could actually put it up there and say,
hey, this story, read a follow up story on what happened with
that. Just that's something so simple, right, yeah, but it's so
powerful because then things never die. Could you imagine the bounties that would be
put up for the Epstein story. Keep it going, keep it going,
you know, keep the eyeballs going, keep people looking at it. Maybe
just maybe we're interested in that client list. It's Eric Winstee calls it anti
interesting. So ordinarily, when markets are fair and free, every person in
the world would be trying to write a story about this, because you talk
about some of the wealthiest, most powerful people in the world doing despicable,
terrible things with kids. Do you think about the effect of publishing something.
You would get more clicks and more advertising than you've ever seen in your life.
So why don't they do it? Because those people also happen to own
the organizations and they prevent anybody from writing stories about it. Well, if
you have to centralize media, you can't stop it because the inputs of the
system are done bottom up. So people can put a veracity bond in when
they make an assertion, can put a bounty to find something. You can
use prediction markets the way the likeliness of something that happens, and people can
make bets on outcomes or these types of things. You can use AI summarization
and you can balance it amongst different political persuasions. And then you use the
editorial process and you just invite people to have a dialogue and a conversation and
you create a comments for news to come through, and over time it eventually
converges to a mechanism to get to a pretty objective reality. Now you create
that who will criticize it. Two groups of people, the group of people
that don't like the media that's being written about them, fairly or unfairly,
and the other group of people is the group of people you're firing with a
system like this. So the mainstream media will say, well, that will
be a cess pool for misinformation. The existence of that will be a fundamental
threat to our democracy and the force of state of democracy, a fair and
balanced mainstream media. In other words, we've lost our monopoly on truth.
We can't possibly allow such a thing to exist, and it is dangerous.
You're going to go back to elon Musk. He had fifty six billion dollar
pay package, and the politics worked in a certain direction, and lo and
behold, one shareholder with nine shares could convince a single judge in Delaware to
overturn one hundred plus years of business precedent and overrule the will of the shareholders
and the board and strip him of money he made. By the way,
Norwegian Sovereign Wealth Fund, who's voting against must pay package, Are you going
to give back the ten x that you made from your position on Tesla?
Because he kind of did take it from a fifty billion dollar company to a
trillion dollar company. That was the deal, and he gets five percent.
I take that deal. I mean Tony, if I called Jeb say,
if I make you a trillion dollars, will you give me five percent?
Yeah, most people take that deal. It's a good deal, and he
did. And he's one of a few people allow to ever have done that.
So it bollowed us too much. We can't pay them. Well,
the shareholders alread approved it. Why do they do this because of politics?
He's being punished, you know. SpaceX is another example. There's this immigration
lawsuit with the DOJ brought where SpaceX doesn't want to hire asylum seekers and people
who aren't citizens of the United States. Well, hang on a second here.
To have a security clearance, you need to be a US citizen.
SpaceX launches spy satellites. SpaceX deals with classified technology on a daily basis.
So the Department of Justice is saying, well, even though the Department of
Defense and the intelligence community is telling you that your employees have to have this
criteria, hire people who could never meet that eligibility. So what does SpaceX
do do They just sweep the floors. You go hire this engineer and they're
not allowed to read anything or look at anything because they can't get the clearance
for it, so they don't hire them, and then suddenly they have a
discrimination lawsuit. Huh yeah, I wonder why they're bringing such a thing.
Battery power cars. The White House has a convention on battery powered Cars for
making battery power cars in America. I think Tesla makes like ninety percent of
all the battery power cars in America. They weren't invited. It's crazy,
you know, because the politics don't align, and a lot of the stems
from the purchase of Twitter, because they went from a controlled source of media
to an uncontrolled source of media, and that is the single biggest threat to
the establishment. So we do have to be careful as an ecosystem in embracing
a news now because if we're too good at it, it actually becomes a
replacement for how people get their news, not just in the cryptocurrency space,
but more broadly across many spaces. So that is something that even if there
is a desire, we have to do it a very considered and deliberate way
because it'll put a big red target on the back of the cardinal ecosystem and
in ways that we currently haven't experienced. It's a threat to power structures when
they no longer have a monopoly on truth, and anybody who tries to chipway
at that monopoly, they really do not do well long term. You see
Julian Assange and you know all these other people. Alternative preveyers of information seldom
survive long Charles, I want to get your thoughts on meme coins. We
talked a bit about it with Snack. I have a love hate relationship with
meme coins. On one hand, it's amazing to see the crowdsourcing and culture
and the blockchain and all these things. But on the other other hand,
they're so risky and volatile. Don't get me wrong, there are certain meme
coins that have a track record liquidity. They've been around multiple bull market and
bear market cycles. What are your thoughts on it? And you know,
maybe you have the same sentiment. I don't understand them. You know,
it's but I'm not hostile to them. You know, I've been in space
for twelve years and there's a lot of things that I've seen in this industry.
I just can stand like EOS raises four billion dollars and then they say
they have no fiduciary obligation through ecosystem. They keep the money settle with the
SEC and now they're just living off that four billion dollars they raised. I
got so angry when that settle a came. But that was the only time
in my life I ever threw my laptop and it because I was there.
I saw them take over Consensus and have the fucking billboard with eos and these
other things, and it was just extraordinary to me. And we've all forgotten
about it as an industry. You know, turned the page have to move
on certain exchanges listed bitconnect and I called them out. We never got listed
on those exchanges and it took years to get listed because of that. There's
no consequences for it. But yet CZ's the one who goes to prison for
compliance issues because Elizabeth Warren's angry with them. Okay, great, huh.
The coin basis one filing. You know, they are allowed to publicly do
an IPO and SEC says it's perfectly fine. Then the same agency suites them
for an illegal business model. Yes, okay, maybe you shouldn't allow them
to do an IPO because they're kind of exposing all those retail investors to like
illegal equities, right, I don't know. I so mean points are another
example. I just don't understand. I don't know where the value comes from.
I don't know why, because yeah, there's a society and a culture,
but there's not an intention with a lot of people in these ecosystems to
even be a member of it. The only reason they're in it is to
profit and leave and then they always look for another one. So it's not
like I can get doge from a perspective that it seems to be almost like
a lifestyle or like a culture or something like that. Okay, yeah,
people collect Pokemon cards and magic and these types of saying. I say,
I get that, that's like a culture. People like that doge lifestyle.
They're very committed to their doge you know. Okay, it's kind of a
religion at this point. Yeah, all right, but dog that you know,
you know, all this stuff is what is it? I don't understand
it. And you talk to people, because I've gone to several mean coin
spaces on X and you say, hey, you know, why are you
buying this mean coin? And they say, I want to make money?
Okay, but do the math here? You have to understand that if there's
one hundred x, where does that hundred x come from? There has to
be a counterparty who's purchasing, and if that person's motivation is to make money
to a Ponzi scheme, And if you're in early, you do really well,
but ninety nine percent of you are going to lose all your money.
You do understand that it's not really anything new. I mean, Charles Ponzi
invented it. You know, it's it's been around for a long time.
So all the power to them, but I do believe that they have a
strong tendency to devolve into ponzonomics that are super unproductive and there's no circular economy
Like you know, bats is a perfect economy because you have a situation where
tokens are given to you for sharing, and then the process of sharing creates
a channel for advertisers to buy to get your eyeballs. So you are the
product and it's a medium to make you that product. But that's every single
advertising model and web two whether it be Google or Facebook or so forth.
You get the product for free. The only difference between Brave and the other
guys is that they're cutting you into the action. And because there's an incentive
for a person to buy the token to get ads, you have a circular
economy inside this system. So so okay, that makes sense to me.
This attention token, and there's a reason why it's issued, and there's a
reason why it's consumed, and it's completely irrespective of the price of the underlying
asset. If I'm an advertiser, I don't care if the token's at price
fifty or price one hundred. I'm just going to buy it for what it
is and as much units as I need, and that's my price of advertising.
Okay, So that makes sense when you have a mean coin, the
person buying off of your one hundred x to divest you so you can realize
that value. They're not getting anything other than a belief that it's going to
have another one hundred X. And how many times can you do that before
the system goes down catastrophically. And once it goes down catastrophically, who covers
the losses? No one, So you're entering into a game where ninety nine
percent of the people lose all their money. There's no circular economy, there's
no natural consumption or utility inside that system. So that's my big issue with
mean coins is the best case scenario, they're kind of clubs, and they're
social groups, and people are there to participate in a culture, and I
get that, and I understand that, and if they're having fun with it,
who the fuck is us to say that that's a problem. You know,
it's like Baldar's Gate three. I think at this point has like sixty
thousand years of playtime or something amongst the communities, the single biggest waste of
productivity amongst white collar professionals and certain age demographics, says of for twenty twenty
three. Great, it's not our business to say whether that was a good
thing or a bad thing. On the other hand, if it's not about
community and culture, it's just about profit return. I can't endorse a system
where ninety nine percent of people lose all their money for some insiders to dump
on them and walk away from it doesn't make any sense to me. Yeah,
final question herefore, I let you go to Charles crypto regulations. I
mean, we've seen an incredible one pint eighty from the government, you know,
in getting cryptoregulations through repeal ABSAB one two one in the House and Senate
fit twenty one out of the House Democrats sighting with Republicans Donald Trump coming out
and supporting crypto, it seems like crypto is going to be have an impact
on elections coming up. You know this this cycle. What are your thoughts
and could we see that the FIT twenty one make it through the this year
or next year? Well, there's no companion bill so now, and this
really bothered me. I reached out to some senators who shall remain nameless,
and I was like, why could we not retrofit X, Y and Z
to be the companion bill, because basically that guarantees that FIT twenty one can't
get in this legislative session through and that was by design. So yes,
it was very impressive that many Democrats broke rank in the House. But the
parliamentary procedures prevent this from actually becoming law this year, which is sad because
it's such a simple law all things considered. It's a very common sense,
reasonable framework. So I'll go to DC and you know, we'll talk to
some people and we'll see if there's anything we can do to put our finger
on the scale. But you know, we've been talking to politicians since twenty
twenty two. You know, our first engagement was with the Financial Linovation Act
Senator Lumis's bill and Julibrand's bill very similar to FIT twenty one, and went
nowhere because of FTX and Luna. So why is there a sudden interest.
It's very simple and very cynical. There's more than fifty million Americans. I've
seen countsil all the way up to ninety three million Americans who hold crypto.
Most are under the age of thirty, and most are liberal. And if
you're Joe Biden and you're sitting here staring at a very very close twenty twenty
four election, if you're seen as the person destroying the gains of liberal young
people, they might get radicalized and mobilized because you've just cost the money.
His party is the party of Everything's free. You know, your student loans
get canceled, and this is an entitlement, and this is an entitlement,
and this is you deserve this, and you deserve this, and here's your
handout and your Obama phone and these types of things. You know, and
you don't want to be the party of take ee taki. And so if
you go and person's got ten thousand dollars in crypto and then suddenly the sec
shows up and destroys all their gains. They're going to hold that very personally
and get very angry at Joe Biden. So what the Democrats are doing is
pretending like they didn't start a war on crypto. You know, they started
Operation Choke point two point zero. Don't fucking tell me that was the Trump
administration. There were certainly people in the Trump administration, like Secretary Amnusi,
for example, who was not a pro crypto person, But there wasn't a
coordinated all of government response where the administrative agencies systematically sued every single exchange and
started going after DeFi and created anti clarity and reverse things like the Hindman ruling
or other things like that. That just didn't exist during the Trump administration.
It was more an annoyance and a passive disdain, and the President wasn't even
aware of it. Trump really didn't understand crypto at all. Now he does
because he knows he can make money from it. He's going to be pro
crypto if anything, because it's transactional for him. By being pro crypto,
he will raise tens of millions of dollars. He'll make money for Truth Social
and he'll sell garbage NFTs it's doing that, he'll make tens of millions of
dollars. And Trump likes anything that impersonally enriches him. That is the one
guarantee that is always true about Trump is if it makes him money, he
probably likes it. And crypto is the ultimate mcguffin to invent money out of
thin air for Trump. So he's going to be very pro crypto in the
policy because he wants to keep that cash cow. And Vivic Ramaswami he does.
You know, he's part of Trump's campaign, He's part of Trump's infrastructure.
He's super pro crypto. There's a strong possibility that Trump was elected,
he'd be the Treasury secretary, so he's definitely pushing pro crypto policy behind the
scenes. So I can see something like a FIT twenty one passing under a
Trump administration. I do believe that if Biden is re elected, he will
embrace and empower Gensler like people to accelerate the war on crypto because there's no
political consequences at that point, and we will see a dramatic damage to the
US cryptocurrency industry, every single Layer one be sued, every single US exchange
will likely be shut down or under extreme scrutiny, and no cryptocurrency legislation will
pass. Because if this administration wanted to, it could have passed crypto legislation
in twenty twenty two. It could have passed it twenty twenty three. When
FIT twenty one was coming in the White House could have called Chuck Schumer and
said, how do we figure out to get a bipartisan companion bill and get
these things done. They didn't care to do that. So if they put
the people in power that are suing everybody, they're calling the banks and telling
them to unbank cryptocurrency companies, they're writing their own people are writing documents basically
seeing cryptocurrencies like rat poison and it's pointless and has no utility, and they
are not participating in the legislative process, in many cases offuscating it. Like
when he vetoed SAB one twenty one's repeal, even though sixty Senators voted on
it, including Democrats. You can't with a straight if you're a Democrat look
at me and say this administration is giving crypto a fair shake. Also they
lie when they say come in and register, and it's just mass non compliance.
Well, Coinbase tried to come in and register and you ghosted them and
sued them, you know, so don't lie to me. And it's a
lie to say this. You have commissioners telling the general public that it's not
possible to comply. The people who are actually on the commission are saying these
types of things, you know, and that's just it's so insulting to our
intelligence. And then finally a framework comes out to actually clearly articulate what the
SEC's role is and what the CFTC's role is, and to create a construct
that the SEC and the CFTC work together on to handle that. And you
have the chairman come out and say this is harmful to everybody, because apparently
living in a state of paranoia, fear, and ambiguity is a better state
of affairs. This is completely at the throne of Biden's completely responsible for it.
He hired the people, he appointed, these people, he established the
policy. I'm sorry. The buck stops at the president, and the president
has the power to put his foot down on the table and on the floor
and say, look, guys, this is what we're going to do and
presidents have done that. You had Kennedy say we're going to go to the
moon. You had Bill Clinton say we're going to do or balance the budget,
and he did. You know, they It's sometimes very hard to do
it, and it takes a lot of political capital. Obama with the Affordable
Care Act he never quite recovered from the political blow that he took from the
ACA, but he did it. He put his entire political infrastructure on the
table for it. So Biden easily could go out there and say, it's
madness, what's going on. We're going to end the ambiguity. Come on
in, let's talk about FIT twenty one and FIA and these other things.
And there's plenty of Democrats who offer to work with him. Rokannah from the
Congress. Senator White was another one who offered to work with him. A
lot of moderate Democrats were coming in, but no, there's just one who
really really hates it, Senator Elizabeth Warren. And the reason we're in this
mess is she dropped out of the race in twenty twenty with an agreement that
she would run domestic fiscal policy for Joe Biden. That was the detante that
they formed, so she got to pick all the people that right now run
the Treasury Department. So one senator was given carte blanche. They will basically
run rough shop over our entire industry, which is just a horrendous situation and
it's shameful. But that's why, maybe just maybe the most qualified person in
the United States to run the country isn't an eighty three year old person's showing
signs of dementia who handed Afghanistan back to the Taliban and sometimes forgets that he's
not a senator. You know, maybe, just maybe we should have some
political diversity. I was really hopeful with RFK, you know, and he
was running as a Democrat. I said, well, okay, you know,
I'm not really a huge Trump fan. We've been there, we've done
that. We need to move on as a nation, and so we have
a breath of fresh air with somebody totally new who's by the way, his
grandfather was the first chair of the Securities Exchange Commission and wrote the sec bill.
Okay, been around for a while. He's at a front royal seat
to American politics since nineteen sixty one. He was told straight up by the
Democrat Party you could win one hundred percent of the votes in the primary,
you still will not be the nominee because the super delegates won't pick you.
So is that democracy and freedom? The party made a decision the most qualified
person to be the nominee of their party is an eighty three year old guy
showing signs of dementia, who turned Afghanistan back over to the Taliban with our
thanks and blessings in our military hardware, and let all our translators get murdered.
It's just, it's so far beyond the pale what's going on right now,
because at the end of the day, it's about power, and it's
a just about the perception of things. And I saw pull the other fifty
six percent of Democrats voting for Joe Biden are voting because they hate Trump,
you know, Tony, That's where we're at in America political system. So
you can't look at crypto separate from this. You have to look at in
the overall trends and tides of where the macro's at, what's going on with
Trump, and what's going on with Kennedy, and what's going on with Biden.
And you know, the Democrats only care about crypto at the moment insofar
as it has a political cost to them, So if young people are going
to vote against them, they're pro crypto until after the election's over. But
as far as I'm concerned, there's absolutely no good faith there. If there
was good faith, tell Genzler to resign. Yeah, you know, if
there was good faith there, then we can have a conversation, because at
least you're saying we're going to restart the things we need a fresh, clean
slate. You don't get good faith by saying, well, maybe we'll let
a bill pass every now and then, by the way, a bill repealing
something that we did wrong SAP one twenty one, right. You know,
it's just so out there for them to say that, and there's no good
faith negotiations. It's just the same double speak you come to expect in Washington,
especially with this particular administration that's made a habit of never answering any questions.
And I know I'm infending some of your audience because they're Democrats and they
absolutely love everything from Team Blue and Trump is just literally Orange Hitler to them,
and he's such a threat to democracy. The mere even utterance of his
name, like Simon's bad ju jew that will haunt you at night and give
you turbi answer. But at the end of the day, like I'm keeping
my comments to crypto, I'm not talking about the broader, you know situation.
Just in crypto alone, it's very clear there are now differences between the
political parties. Rank and file Republicans are pro crypto, and the Republican Party
as a whole would be willing to and has demontrated the ability to pass meaningful,
common sense legislation. The Democrat Party is the one by and large that
is obstructing this process right now. And when you go in November, if
you're a single issue voter, you have two options. You have Robert Kennedy,
who showed up at Consensus and spoke there, showed up at f Denver
and spoke there and is very pro crypto, and you have Donald Trump.
Those are your two options. But you know, unfortunately with Biden, that's
not an option for you. If you vote for him, you're voting for
the destruction of the American cryptocurrency industry in my view, as demonstrated by four
years of actions he's had. Charles, I wish we had another half an
hour but thank you so much for joining me, and I appreciate all your
insights, and we'll have to have you back on as things progress, maybe
in another couple of months or so, all right, thank you so much,
Tony. Cheers, bask boost task stok bakk