#190 Erik Voorhees: Erik Vorhees: Prism - The World's First Portfolio Market Platform

Transcript

[Music] this episode of epicenter is brought you by the I prize and the energy innovation hub the I cross is an international startup competition to build the machine economy go to epicenter that PV plus I cross that I who are I said II to learn how to join the competition hi welcome to epicenter is the show us talks about the technologies projects and start-up striving decentralization and global blockchain revolution my name is Sebastian Cujo and my name is Ferran

Todman crane we're here today with Eric for he's a for he's probably somebody most of you will already know he's been on the show before and some of you may also know him from shape shape so he stays CEO and founder of shape shift who of course has been a sponsor of this podcast while ago and they are now again and he's also known for a whole bunch of other projects that he has done in this industry he he got involved in 2011 he has worked on a thing called Satoshi dice which once upon a time span the entire Bitcoin network in the view of some or at least was responsible for most ever a lot of transactions then he worked on something called coin appalled bitinstant and now shape shift and

chrism of course which we'll talk about as well today which is a new product they're developing a shape shift so thanks so much for coming on Eric thank you guys for having me I'm sure you have told this story many times but so people will enjoy hearing about it can you run it through a little bit you know when did you originally get involved in Bitcoin how did that happen so I I moved to Dubai after college in early 2008 and while I was over there I was watching the entire global financial crisis happen and I got really interested in money and banks and central banks and I started realizing that government probably shouldn't be

involved in money at all and certainly shouldn't be centrally planning it like some kind of Soviet shoemaker phenomenon and I just I didn't really know how that would be resolved I didn't know what kind of money could ever replace government Fiat and then fast forward a couple years I had moved back to the US join the Free State Project up in New Hampshire and I learned about Bitcoin from a Facebook post and I was mid 2011 and I immediately realized that this was the answer to that issue it was a free-market form of money and the world had never had that in any in any sense where it could just be transferred anywhere in the world instantly so I'm I

fell down the rabbit hole and I stopped doing everything responsible that I had been doing and ever since then I've been involved in in Bitcoin in helping this industry to grow and with all the projects you've worked on what's what's the common thread the common thread in some degree is that they are somewhat simple I'm not a technologist I'm not an engineer so my understanding of blockchains is a very high level and that kind of precludes lots of projects that are very intricate and complicated from the at least on the surface because I wouldn't be able to understand them anyway so and

I guess the other thread is their services that I would want to use so shape-shifts conception was because I wanted to buy some kind of old coins several years ago and I had Bitcoin and I I wanted to be able to do it quickly I didn't wanna have to sign up at an exchange and wait for a few hours or approvals or my bid order to fill I just wanted to snap my fingers and have that other coin so I realized that needed to be built and yeah I mean in crypto there are a thousand good ideas just kind of hanging out waiting to be built and so one of my one of my challenges has just been in trying to focus on specific

ideas instead of letting myself get overwhelmed with all the various things that could be done as if there's so many great ideas what's the process by which you arrive at you know this is the one and not some other one I don't think there's necessarily a scientific method to it sometimes it's just one of those kind of Eureka things when you when you think of a concept and you get excited about it and then the next day you're excited about it and a week later you're still excited about it and eventually just to get it out of your head you have to do it and then you know you dive in and you start figuring out some of the finance behind it and if it can actually be a viable business what you would need to get it started who you would work with and if it starts

passing all those checks then it it starts to become a viable viable project to pursue cool maybe one one last question sort of on this your new evolution in the early stage so when you think back to when you first learned about Bitcoin inside to understand the concepts and the implications and then you know kind of projected forward okay where is this all gonna go what's going to happen what what did you get right about this and what are some things and developments that have happened that or just you know completely surprised you yeah great question um so what I got right was that Bitcoin would be huge and it would start to take over the global

financial system that is absolutely happening so that's been really exciting to see you know Bitcoin costing a couple thousand dollars every major financial institution investigating this technology tens of millions of users around the world and you know really just a incredible growth in the transaction count and the number of services and it's it's just continuing to expand which is what I hoped and what I predicted would happen what I didn't predict was that money as a usage would be just one little branch of what blockchains would end up doing I'm still most interested in the money branch I

think that's what the world needs the most is a form of free market money but block teams have now spawned all sorts of these other tokens some of which are really fascinating even though they're not related to money and in 2011 I didn't didn't imagine that kind of thing whatever would ever happen and certainly up until about late 2013 I was very much a Bitcoin maximalist and I thought all these other digital asset coins were were stupid or distractions at best and I was totally wrong about that so that's something I got wrong as well it's great to see someone that has so the humility to be able to say you know I was wrong about this one thing

and now you know I've changed my viewpoint on that after getting all this new informations and that's something that's not really common in this space so I applaud you yeah I mean I'm wrong all the time so I don't mind admitting it so you just recently raised a significant round congratulate all though compared to a token sale not so significant but yeah I know a series a yeah back in March we we closed our series a we raised ten and ten point four million in an equity deal for shape-shift led by early bird and lake star out of Berlin and access venture partners in the US Plus antara block teen capital and digital currency group

so tell us a bit about about that round so these investors are they strategic for you in any way why did you choose to work with these specific investors so there are sort of two two groups the crypto investors in a block team capital Pantera and digital currency group and then the more traditional VCS that have not really been focused in crypto and you know I probably spoke with at least 70 VCS maybe 80 or 90 over the over the course of four or five months and a lot of them really I think didn't understand Bitcoin very well especially the u.s.

VCS I was really disappointed in them European VCS were a lot more had a better understanding of block chains generally they also had a better ability to imagine what it could be and the u.s. feces and I'm generalizing of course but they were largely disenchanted that Bitcoin had gone through this correction after 2013 and that the Bitcoin companies hadn't just gone directly to the moon I think they're sort of Fairweather investors they invest when Bitcoin is hot which is kind of silly because if you're a sophisticated financial individual or firm that should not be the reason why

you invest in something you should invest in things because you see the fundamental value of them and you're there before the rest of the world starts buying them up but for all the sophistication that some VCS proclaim they really are not able to see the potentials of technology until the price is spiking that's interesting as you say I mean I I've seen the same thing in this sort of understanding of boxing as you mentioned by the by the your PVCs and what's interesting is that although they understand it they seem to understand it more that the casinos them that the potential a lot more they have

this sort of risk averse there's sort of more risk-averse and so it's harder to get them to sign on and we recently recent funds as brown as well and actually we're also a PCG and and we saw a lot of BC's that just like they understood it they saw the vision they they understood the vision they understood the potential but it was just it was too early for them you know and and so yeah there's a there's the sort of a difference in investment pieces between the US and and in your okay I'm not fun yeah I also think that us VCS are just more frightened of regulation understandably the u.s. is really

problematic in that regard so I can understand that u.s. VCS would be more hesitant to invest in really innovative projects that push the boundaries of things which is really tragic that that in the u.s. people are scared of that and projects that really provide a lot of value don't get funded because people are scared of regulations yeah I mean I would imagine and I've Kherson and you take on this that a lot of disease probably would not invest in something like shape-shift because of you know the anonymity and you know no you know you don't have user accounts you can like track people properly or really right so the whole I mean of course you guys are the thing first one

of the first companies to say we don't do business in New York so I'd imagine like around ISA probably a lot of concerns UCS have yeah it's it's really ashamed that the environment is like that I think when they're in when the internet was getting started it did not have a similar kind of environment where everyone was paranoid about regulations I think being in a post-911 world government agents always just have this fallback of if something increases any kind of risk of anything related to terrorism that thing must be illegal immediately and which is absurd because every useful technology can be used by

any any bad person around the world and I feel like now the useful technologies have this greater burden of moving through that regulatory morass and they had before 9/11 and this is a little off topic I suppose but I might say that that the terrorists kind of won right if all of Western society chills itself chills its own business and its own growth because of this perpetual fear of the terrorists then I think they want let's talk about the price road map a bit key tell us about what is in store for shape-shift in the next you know the next two years are you

looking is this round going to help you build more products or build more stability and scalability in the existing product size both so we're trying to do we're trying to build new products like prism is our latest and there's another one called arbiter which we're hoping to release later this year but we haven't revealed many details about and then we have corn cap which has been sort of a side prize until now so we have these various projects that we're working on and at the same time shape-shift itself has gone through absurd growth and just keeping it running and growing and scaling is an immense engineering challenge on its own so trying to balance our resources and our people and

our attention and our coordination between keeping shapeshift running and growing and then you know kind of advancing the state of the art with some of our newer products has been interesting and with all of the growth that use that you've seen recently how has how have you your infrastructure and the products being able to deal with that with that growth have you had any issues there we've had a million issues yeah we have issues every day things we got to take care of and fix and some of the issues are our own software some of the issues are the block chains themselves and we then become like the steward and the mechanic of the block

chain itself and this has been true at Bitcoin has been true of aetherium this has been true of almost everything that we've plugged into they all have their different eccentricities and we're using the the node software for these coins on a scale that generally the developers have never used or been able to test before so for example shapeshift is about 2% of all the Bitcoin transactions in the world right now and and and the number of transactions we do per day and the the issue that causes with the fees we have to pay and and whenever you know blocks start getting full thousand support tickets can immediately open up

from people who didn't get their transaction processed when they thought and on the etherium side like these ICO transaction spikes never have just been like horrible for the user experience and and because this industry is growing most users are new and this is something a lot of people don't realize is that as long as we are doing our jobs well and this industry is growing the majority of people using this technology will be new to crypto so there needs to be really a good focus and attention paid to taking care of those people and welcoming them in and understanding their issues and not dismissing them just because they're not you know highly technical yeah I mean that makes La Senza perk for someone who's even even

for someone who is familiar with crypto I think it can be frustrating when trying to invest in token selling you can buy your ether of time you're trying to get that transactions work I had similar experience recently something that it's not like that let's take a short break to talk about the AI price it competitions being run by the energy innovation hub the AI price is all about the Machine economy the rapidly evolving relationship between humans and machines with huge technological revolutions coming like blockchain and artificial intelligence some crazy changes new developments are ahead of us like

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epicenter TV slash I prize that's i PRI Z II to learn more about the competition and how you can apply we'd like to thank energy and the AI prize for their support of epicenter touched us about the where we're ship ship is going like what where would you like to see shape-shift in the next two to five years my thesis since I started shape-shift has been that digital assets would become greater in value and quantity than all analog financial assets combined which might sound a little crazy but you could have said the same thing about digital communication or digital mail back a few decades ago that some day

digital communication in emails would dwarf the quantity of traditional mail and that would have sounded kind of crazy but now of course that's true and not only did a dwarf it but people use digital communication in all kinds of ways that didn't have anything to compare it to in the analog world so I think the same now is happening in finance and you're going to have a whole world of digital assets that are vast and diverse and shape-shift is meant to be the best fastest safest easiest exchange to convert any digital asset into any other so in that future shape-shift can really be a massive company and that's that's the goal I

mean we we want to be processing tens of billions of dollars of trade every day on shape-shift and that's the future that we're we're building for so you see kind of shape-shift that stays as is you know almost the infrastructure layer that we've seen happening to some extent too right when you have in and of all it like Jackso and other services where you know shape shapes is directly integrated it's like a you know service in a way or it's like a functionality that you can add to a product which is and it pervaded by shape shift yeah and roughly 75% of our volume comes from not our website so it comes from some partner over the API somewhere and that's

another thing we expected we think you know a year or two for now that number will actually be 99 percent and shape shift will essentially be this utility that exists on the background so that any service anywhere can allow their users to convert one asset into another just at the touch of a button it should really be no harder than that those users shouldn't need to come to us and sign up with an account with us just in order to change one asset into another that should be something that just happens and shape-shift is a technology that exists to allow that to happen what's fascinating is that you've managed to onboard all of those partner is a cracking I'm wrong here but there's no there's no affiliate Commission for

any of these transactions that they send to you like this 75% of transactions going through shape shift from from B's partners that like they're doing it just out of wanting to have this feature in their wallet right well they're also making a lot of money from it we have a commission split with them so oh well with us yeah we pay roughly well exactly 25 basis points on any volume sent through us and that has become a huge payment every month to some of these wallets and we are really their only source of revenue or it or at least they're the primary one and our growth has actually provided a revenue model for wallets which didn't exist

really before shape shift what people making wallets always had like the worst of both worlds were they simultaneously was making projects that was holding tens of millions of dollars of customer money so security was paramount and yet no one wanted to pay for the service so they had to do something that was super high risk without any financial reward and it's been really nice to see a sustainable business model now provided to some of these wallet companies you know when I first learned about shape-shift I felt like it was a bit of a hack in some way you knowing that you like you're plugging into these exchanges right and it's like you're almost providing this kind of glue between exchanges that okay makes it easier right because you don't have to

sign up and and you know make account and transfer there right so you obviously take out friction from the process but it's like you you know you're riding on the back of centralized exchanges with your order books do you think do you see in the future that this is going to disappear and the back end is going to look completely different without the big goal of centrality changes shape shifts will always just plug into whichever exchanges have high liquidity and right now the ones with high liquidity are the traditional order book exchanges if that changes in the future and if people have more decentralized order books or something like that

she shift will just plug into those as well so we're kind of we don't we don't really care which exchanges succeed or how many there are or what their makeup is we just plug in wherever is most liquid and we take away a bunch of friction for users but that's that's really like our point the point of shape shift is to reduce a significant amount of friction from something that a lot of people in the industry have to do and by offering that we accelerate the entire growth of the industry by by just removing work and time and cost from what people would otherwise be doing well let's talk about prison so can you just give it a high-level overview what

is prison and why did you guys choose to to launch this product yeah so prism is arguably the world's first smart contracts commercially available product financial products in existence there's a million projects that are being created with smart contracts but few of them if any are really released yet and we've been working on prism for about a year and a half and essentially it allows someone to gain exposure to a basket or a portfolio of digital assets so someone who wants a ten thousand dollar portfolio half of litecoin 25% - and 25% rep they can do that with prism

very very easily and the key is they don't have to leave their money at an exchange and the industry has continually not learned this lesson that these centralized exchanges with hundreds of millions of dollars or even billions of dollars some cases of customer deposits are a huge risk not just to the users but to the action to the entire industry and we saw what happened in box one and the whole industry was set back by a year or two because of that prism hopefully will help pull some of that usage away from centralized exchange and people can hold their funds in a way that doesn't require the trust of another party the only way to change people's

behaviors to actually provide something that's easier than that what they were using before the reason people will leave money out in exchange is because it's easier it's easier than setting up a whole bunch of different accounts or node wallets and so they just they're very lazy or efficient depending on how generous you want to be so prism is easier than them using an exchange and removes the counterparty risk that's that's the idea and also sort of adds the functionality right of having your portfolio being able to manage your portfolio rather than having you know it funds at one exchange and another another amendment of managing it yourself this also has the feature of

also has that feature yeah it just it makes something that a lot of people are doing easier same thing with shape-shift and who did you launch this for who's your target audience you target audience for current version of prism is casual and moderately serious crypto investors who are who wants a portfolio that's you know between fifty dollars and fifty thousand dollars of digital assets and one something easy and quick it is not meant for like high frequency traders it is not really meant for super active day traders it's meant for anyone who's holding a portfolio of assets over a few

days to a few months to a year that kind of thing and I think quite a few crypto users like fall into that back category they just want to say from easy way to get exposure to this as an asset class and one of the things that I've been thinking about is you know trying out prism and genifique okay ready Cisco I mean first of all you know you can choose between different crypto assets but I'm like okay what if you feel sort of bearish to encrypt in general it would be nice to sort of have up in there too or gold and then of course you think like or you know shares of companies and so do you see it going in that direction too yep pretty much yeah yeah we have a lot

of things to build onto prism and the first version is just what we're using to test the technology get people to try it out you know make sure it's all working properly and get that UX smooth but there are a lot of really exciting things that we will build into prism in future versions the kind of you run through how does prism actually work so it's an experience Marc contract you know what what are the kind of mechanics behind this first of all the whole thing can be interacted with on the ABI layer so it theorem itself without using prisms website at all we haven't published how to do that yet but it can work that way if someone figures it out but basically you a

normal person would go to the website they would say I want a prism of you know a thousand dollars worth and I want it in this allocation twenty percent of this and fifteen of that and ten of that and you'd give it a name they say who created it if they want and then then it tells them to send an amount of ether so if they did that of prism they would send in a thousand dollars worth of either and shape-shift will send in a thousand dollars of eat there as well and in that two thousand dollars worth will go into a smart contract deployed specifically for that user and that smart contract then tracks the value of the components in the portfolio tracks the prices and then the user can close

it an hour later or a day later or a month later and if their portfolio components have risen they will get back more ether than they put in and vice-versa so if it goes down so basically they never the users never take delivery of the assets that's part of the point is that they don't mean to have wallets for each asset they just need an ether wallet send an ether as collateral they receive Uther back after they've closed the portfolio and so it just really abstracts a lot of the value that someone is trying to get by acquiring the underlying assets it makes it easier and safer to do and then important to this so shapeshift is the opposing party we are the ones putting up the opposite

side right now which technically means shape-shift is going short that same basket of assets we can hedge ourselves in a number of ways most simply by just buying the assets ourselves but that's all irrelevant to the user if shape-shifts heads or hedges or not the users prism will perform as the code tells it to and it's already fully collateralized in the future because shape-shift does not want to go short on tens of millions of dollars of prisms we will open up the other side so that users can go long or short on any basket of digital assets and that will that will then become the easiest way to go short on digital assets as well which I think a lot of people would find useful

you mentioned that the smart contract is tracking the price of the asset we explain how that works how you do that yes so the smart contract listens to an Oracle and the Oracle is a program we wrote that is another SPARC contract on etherium and it pulls in prices from various exchanges it removes the outlier it averages the remaining exchange prices and then it pushes that price into the do the Oracle smart contract and then a prism will read that Oracle and that's how it knows what prices are happening so a critic could say that shape-shift could manipulate those price

feeds and that's true long term there will be a large market of Oracle's that will come to being in this industry so long term prism will allow people to choose which Oracle's they prefer shape-shift will offer a default Oracle or people can use other Oracle's if they wish but that's that's basically we'll just follow the industry there that's interesting so at face value it looks like I pretty like a pretty straightforward simple product but when you look when you look behind the scenes and look at the future the potential is for potential like a marketplace where people can go short on

on crypto assets also a marketplace for for Oracle's can you explain so what do you see as the as a long-term vision for shape-shift as a prop as a platform for shapeshifter for print okay I'm sorry for prism limit yeah so prism will be heavily gamified so it'll be like a highly social experience repeat there's a leaderboard already and people can kind of compete and see who's who's doing well and not and not but it'll it'll be where people acquire exposure to digital assets long or short in a simple and easy way and they manage their their fund it'll remain relatively focused just doing that better and

better and that'll become an important part of the industry just as shape shift as a you know relatively simple tool itself of just converting an asset into another asset has now become a very important part of the crypto market as well and often to make these simple products it requires an immense amount of behind-the-scenes technology a good example is like Google right which is just this stupid little blank web's web page with a search field very simple all it does is search and yet behind Google is this vast empire of technology that they've built to continually do that one thing better and better and better and

better and we we kind of take that same the same principle that we offer a simple service that we know people like and we just work to keep making it better and better and better yeah I mean if one looks in prison it's actually the complexity of it it is it's very interesting and it does get very complicated very quickly so for example you know you mentioned okay if I could take at the other side right so if I want to go short some of these assets but then you know like what so do I put this either into the same small contract but then what if the person B bounces and this isn't these aren't anymore the assets that I wanted to go short on for example yeah so there's logistical

challenges like that so if the person going long who is the user now wants to rebalance but the person went short doesn't have you handle that one way you handle it is whenever there's a change for a prism you just invite someone else to take whatever new short position exists and shape-shift will always be one of the parties that can be involved right so if there's a prism and someone rebalances it and no other party in the market was found to take the short part shape-shift will just take it and we can we can hedge ourselves and do it that way so there yeah I mean those are those are the kind of things that we have to work out to offer those features but they're all over criminal well I like about this too you mentioned the sort of gamification

aspect of an industry I you there's a leaderboard you can see what users portfolios are performing better than others and I'm not sure I mean I'm not like well like train attacks or anything like that but is this sort of one of the first examples of social sort applying social networking and gamification to asset management not really in the in the traditional financial world there are a number of sites to do this like I think eToro they were one of the pioneers in this and you you know there's a lot of sites where people can claim what their portfolio is but what's cool about prism is that because it's on

smart contracts you don't to trust that their position is what they say it is whatever you make a prism as that's the prism you know that the funds are absolutely there and you know that that person has that that stake and it also because there's no borders to it it allows any person in the world to become like a essentially a hedge fund manager and have people so you can follow prisms right if you know someone who's really good at picking cryptos you can follow their portfolio and then whenever they change their allocation it'll change years automatically and future version will have like some portion of the fee of the follower go to the leader so what this means is that like some 15 year old

kid in Africa who really knows his could make a prism and have a thousand people around the world following him and he could make millions of dollars because he has you know immediate access to this crypto market and this is um is I think a really exciting aspect of this technology is that it really just flattens the whole world anyone who takes the time to learn this technology can rise to become you know a dominant figure in in the new financial order which would have been totally impossible pre blocking yeah no that's a that's an excellent point and of course if one thing to you know let's say now ask shares and gold and stuff like that also being on there and explore things to you

know countries like China or others where they have a very restricted access to capital markets that this will also be an amazing tool for people and places like that yeah thing or think about someone in Venezuela right like they have zero way to get exposure to traditional financial markets either banking or more advanced things like equity markets future versions of prisms that allow people to put in non crypto assets would allow that person in Venezuela using nothing but his phone to get exposure to any asset around the world without asking permission of anyone using nothing but you know aetherium is the underlying technology that's I think immensely

powerful and important let's talk about one important topic here as well which is and so so for example I you know I I set up a prison right and you know like your law but then I was a you know kind of changed my muse about what we're doing so far yeah good actually I wanted to complain to you because it's up like so almost 30 percent but because I put in one ether anymore actually leaderboards showing the absolute gains and sister relatives yes we had lots of uh we have lots of arguments internally about that right so currently the way this ranks is the absolute gain of the asset right so if you put in just point zero one ass but

you had 100 percent gain personally I don't think that that is as impressive as someone who staked 10s and got half that gain so so right now it's um it's the percentage gain times the prints full is how its ranked but we've definitely had people that said it should just be ranked by the percentage gain and this will probably be a never-ending never-ending debate okay yeah yeah I guess it's early they should probably be options to just show it in different ways yeah but where I wanted to go with this so I rebalance the portfolio and then the cost of that chasing gas is around six dollars and of course that kind of ties into the general question here about you know

hiriam scalability costs of transactions on there and you know now if you mentioned already in the context of shapeshifter I believe I cos that you know like the status one just fill up the etherium network for a day or even longer and you know you can hardly do anything so you think it's really possible to build you know consumer facing application that will have you know even a tenth the number of users that chase ships has you know only hiriam yeah totally but these things are like a continual process of improvement and this is true of any blockchain they

don't they don't come into existence perfect they come into existence as a prototype that gets built on and improved over time and this is why it's important for block chains to be able to have some degree of adaptability and upgrade ability over time theorem is running into a whole bunch of scaling problems just just as Bitcoin has they're not the exact same problems and just because they both ran into it doesn't mean that both technologies don't need to take it seriously but these are the challenges that the protocol developers have to have to handle and ultimately whichever block chains do a better job of adapting and making things more and more efficient those will be the ones that win business over time yeah it's a good point I mean

one one way I think thinking about this is that you know if you look at Bitcoin I think the scaling problems are mainly political I think it's perfectly possible right but then if you look at the hiriam I think it's a much healthy community in that you know if somebody proposed like you know a really good way forward scaling I think they would actually adopt it but it's just the scaling problem is like extremely harder and they really need to have major technical breakthroughs like charting a proof of stake to probably both to actually be able to scale it to you know to have applications that creates a multi-site heõs and all these other things that people are working on really work on it here in yeah and there will be

trade-offs and this is one reason why I left the camp of believing that there would just be one blockchain in the universe that would handle everything is because if you have a block chain that is maximized for efficiency in one way that might actually decrease security in another way or usability in another way or simplicity in another way and I think there are going to be a number of law teams for quite a while and maybe forever and there will be millions of tokens on these different block chains and it's an immensely complex industry and an immensely complex set of systems in it everyone is just experimenting in all different directions it's a really intellectually exciting process and you know I I'm hopeful that people realize

that it is a process and that this is the challenge that us in the industry face is how to make this stuff better and better and better and the reason that's important or it because of that it's important that people remain civil with each other remain productive with each other and helpful because we really need a lot of people working all the time to make these block chains increasingly useful for the broader world so one last question on prism you mentioned that thing in the ether review podcast and and it's come up in other conversations too is that you can tokenize a prison right so that I can basically send somebody to token and then kind of behind this it would be a portfolio of assets and that you know very interesting new applications could

be built on prism or using some of these tokenize prisms what are some of the ideas you have in this direction what kind of applications do you think would be most exciting to see yeah so to sort of reiterate that point um you make a prism let's say you made one that was worth $100,000 and it had the top ten crypto assets in it you then have a smart contract on aetherium that is as valuable as that hundred thousand dollars and the port and the assets within it someone and shape-shift won't do this but someone else anyone else could tokenize that smart contract they could issue let's say a thousand tokens

each one equally a thousandth of the right into that hundred thousand dollar basket and those tokens now can trade around as liquid assets and move between people and us at shape-shifts in prison we can't even prevent that from happening if we wanted to which which we don't but that's kind of the cool power of this stuff and to really blow your mind imagine if since people will be able to go short you can actually create negative coins you could tokenize a negative basket a short basket and you could have a token that moved around it was like a negative coin or like the antimatter you can make like an anti

Bitcoin which would move at the opposite direction of the price of the coin and this is like the really cool kind of financial technology that's going to be normal in the future but which we're just starting to explore now that people have figured out how to tokenize value so we're really exciting to see that kind of thing get get experimented with and built on technologies like prism so you mentioned earlier that there were some other products that you were working on ketone both models nope we can I can say the name we our other major project is called arbiter and we're hoping to release it later this year although with the growth of shape-shift it's really kind of gone on the back burner unfortunately but we

aren't releasing any details on that yet but we will when we can okay trait okay so moving on to other topics so we've covered the scalability topic and ASEAN seems over the last few months and we recently did an episode with Jerry song talking about what is what is happening in the Bitcoin space at the moment what will likely happen in the next few weeks with regards to decorated witness and all these different proposals and so we'd like to get your thoughts on where you see so Bitcoin at the moment and more broadly what are

your impressions on what's happening in the crypt space and by that I mean specifically the up rise and the ridin Nico is these last few months yes so with scaling I'm a big proponent of the Segway to X plan not because it is perfect not because it is you know better than any theoretical alternative but because I think it is the only viable actual option to moving Bitcoin forward and given that it has more than 80 percent of the mining hash power supporting it or at least indicating that they will support it

I'm I'm pretty bullish on it and I'm really excited for that too to move forward and activate I want seg Witt on Bitcoin as soon as possible I also want a hard fork to a larger base block size as soon as possible and Segway 2x hopefully will make those things happen and if it does it will move the coin out of the trough of misery that it has been suffering in over the last greater than two years and this summer might be really volatile because no one's quite sure of segue to X will activate or if you ASF will happen on August 1st or something else so who knows what will happen in the short term but once

Bitcoin moves past this debate actually gets seg wit and and hopefully gets a larger base block size the rally that I would expect to occur in Bitcoin will be unlike anything that people have ever seen before and it will finally allow the community to get back to it's important progress it's important progress of actually building on Bitcoin and making it better and building cool things on it this stagnation has been really horrible for Bitcoin and I I almost don't care what plan moves past it I just want something to happen if it doesn't if the summer fails to find some kind of resolution to this debate then I'm pretty bearish on Bitcoin and I think

it'll probably be replaced yeah no I a very much agree with with this assessment it's a I mean it's been way too long and Bitcoin certainly has it's also been interesting right to see how it's informed a lot of new protocols almost any new kind of blockchain that's being launched right whether that's cosmos or tasers or many other start coming they all have a definitive deal you know have governance and on chain governance is like a high priority I think we've seen in Bitcoin just a massive problem I call this when your people is users you know you don't feel you have any say

in this it's just a bunch of people who are in a very small number of people who are really deciding when it goes yeah and something to point out with that is like most people in the Bitcoin world read the reddit our Bitcoin page and I think that still feels kind of like the locus of the industry like sort of the main information hub even though it's gotten totally toxic and there are like 250,000 subscribers to that there are like 10 million users of blockchain wallet alone there are like 10 million users of coinbase the community is so much larger than reddit and people

that live on reddit don't realize this so I was in Berlin last week at a meet-up and Peter Smith's of blockchain asked the group how many this was a like a Bitcoin crypto meetup in Berlin he asked the group how many of them knew about seg wit 2x and I expected like 80 or 90% would raise their hands and it was maybe like 5% even knew about it at a crypto meetup in Berlin what that what that means is that the community is vastly larger than most people realize it is more diverse and a lot of people are just using Bitcoin as an economic tool they are not involved in the political discussion they are not

hanging out on reddit they're not part of all this stupid drama and all the hatred and vitriol from one person to another and I was really inspired by that and I was really glad to see it so I again I just am really hopeful some kind of conclusion will happen this summer and then the coin can get back to it's important fight which is actually taking over the world of finance I don't want to be like Debbie Downer in this but I mean I've got like a more nuanced I would say pessimistic but maybe realist view of things and I'm not entirely hopeful that if Sega 2x goes it passes and becomes a standard that just will do anything to eliminate you know

this drama and these fights in the Bitcoin space I don't know what that means after segue to X if segue to X gets implemented but I don't think that segue to X turns on and then like everyone's like happy you know just like now we're going to go take over the role right you're right but it does move it does move the debate forward and the debate has not moved forward in over two years and what it does is people no longer will argue and bicker about whether seg which should be activated because it will be active people will no longer argue about whether a block size increase to two megabytes should happen

because it will have happened or it will be locked in to happen that doesn't mean that all debates go away and it doesn't mean that scale over the next hundred years is solved but it does mean that we actually got through the clog of the last last couple years and I think just psychologically that will be a huge relief to the entire community yeah I think I think it would be like the pressure valve will definitely be depressed but look I think fundamentally as Brian pointed out these these are the blockchain suck evidence built in and and Bitcoin will still not have governance built in a small number of people will still be controlling essentially the evolution of

Bitcoin and the new features that come in the ninety five percent of people that don't know what's going on will continue to not know what's going on or how to say in new features and to me the evolution of the protocol you know but that's kind of I think what we'll just be here again you know for the next thing whatever it is they like moving to forex or some other feature in the future maybe we'll have to see but no blockchain is going to be immune from that same problem right you're you're always going to have like a central group of people that are very much skilled and with a lot of experience in the technology that's spend their time developing it and really know it well

and then you're going to have the 99 percent of normal users that are outside of that that will be true on aetherium that'll be drawn Bitcoin that'll be true on any other different blockchain project and so that's something that's that's unavoidable but it's also okay right we you don't need the 99 percent of normal casual users to be involved in deciding how the technology progresses that's that's okay I don't think you would want that even if you could have it that's true I think that's true however I think that in this particular type of technology those those people can be greatly affected by by by decisions made by by the small number of

people and and I think that having more balanced there is something that we should try to move towards I don't know how but having some sort of governance at least some sort of governance that is structured and would be a step towards that I don't know it's a it's a slippery slope when you start having structured government you governance you start moving toward an organization that can be compromised part of you know as difficult as Bitcoin has been in making progress on this one debate it also is show immense resiliency to change which is which is good and bad right it depends with you with the issue at hand is but

you have you have to be careful if you want something like a blockchain project to turn into a more traditional looking organization with a hierarchical structure and certain people who make key decisions like that's not necessarily the best way that a blockchain should exist and I don't know what the best way is either but thankfully there's not just one blockchain in the world thankfully people can experiment with this technology and try all different kind of things and the world 40 years from now will will have the benefit of all that learning that we dealt and suffered through right now it just occurred to me that I'm speaking to a libertarian so I was just reminded of that oh yeah I mean personally I'm like you Eric I'm super excited about the the

just a financial use case of you know money you know decentralized money in payments and things like that but the other main thing with blockchain said I'm most excited about is the era of basically new forms of organization of decentralized forms of organizations and decision making so I think that's going to be one of the most exciting areas to see and I think if you do a sales are a really good prototype of that right absolutely yeah yeah token sales are this incredible phenomenon I mean they're they're in a mega bubble they're mega frothy a bunch of them are going to just fail and go to zero and that's okay like most startups fail and go to zero

but the model of token sales is absolutely worthy of people experimenting with and I think a lot of funding of projects both for-profit and normal organizations in the future are going to be done through token sales and then you get a very different dynamic of how things work today where money comes from a small group of people like in a VC and instead you have millions or hundreds of thousands of users that all participated in something and and the governance of that organization will look very different so that that'll be pretty cool to see as well yeah I agree and I think the implications I mean governance but even more than government so I do have to build

different kinds of products because this token SV at the center of it said I think we'll just completely change the way startups are structured owned organized funded really create organizations of shape that I don't think we can even imagine today yeah I and one prediction I will make is that traditional equity markets are going to go away like right now the world has these sort of jurisdictional based equity markets like the New York Stock Exchange or Nasdaq and they're very much Geographic you can't necessarily access them from anywhere in the world and they have a very you know strict set

of rules and you can participate and there's just an immense amount of friction in actually doing an IPO in these markets with tokens you're actually going to discover companies don't IPO they they do a token sale and that is the that is the final liquidity event and that's that's what trades around the world is the token whether it's equity token or an hour nap coin it's not equity is depending on a project but I think this traditional model of these jurisdictional markets is going to go away and people all over the world will trade tokens on international markets that have no borders at all that's one of the things that I think blockchain is absolutely guarantee your inevitable cool that's an exciting and

exciting picture unless you're someone who wants to enforce borders yeah well probably not most listeners or people in the industry so if you look at the the industry today people working on blockchain Bitcoin if you're emulated things do you think there's something that people just get wrong and that you know you you you feel very strongly about that most people don't have on the radar or basically with you on I think there seems to be this like sentiment that if a project fails that it was never worth trying in the first place and that if if a if a company like does a token issues a token and a million

people invest and millions of dollars are raised and it fails they see there seems to be this idea that it should have never happened that those people got ripped off that it was a scam necessarily simply because it's failed and I think that's a really bad way of looking at it I think most experiments fail most new projects fail and people should be allowed to fail without it being like some sort of horrible thing and that means that people investing in projects should expect most projects to fail they should expect the token they buy to go to zero instead of you know assuming that just because a token is issued that the project is valid and I think it takes a little bit of personal responsibility and willingness to

willingness to let things decay and be rebuilt many people are not comfortable with that but I think it's an important part of any healthy market so today you're working you know you have shape-shift and imprison and a bunch of kind of projects that came out of this but you know what let's if you kind of put yourself into position you know if you were where you were in 2011 you know you're just kind of starting in this industry in this area what would you what would you do what would you focus on if I do everything I know now no no I meant today you know like it you know somebody like you if they came to you and asked like well I do what kind of area would you work on I mean because

you you have kind of your legacy and your history and your company in your commitments right so you maybe I don't have the same kind of freedom to just look at everything and make a decision based on that probably the most important lesson is that ideas are worth almost nothing and that it's all about execution every single time and what that means is that people spend way too much time like looking for the next big idea and not enough time like training themselves and working with others on how to execute something much much better to have a mediocre idea and execute well than to have an amazing idea and not execute and this is something I've I've sort of learned over

my career in Bitcoin so that would be lesson lesson number one and number two would be don't expect to figure out what you should do right away like I spent a good six or nine months after I learned about Bitcoin before I was doing anything that was you know commercial before I joined bitinstant or started Satoshi dice and it just it takes time to really learn an ecosystem to learn who people are to learn what projects are happening so just spend a lot of time like learning this stuff meet people go to conferences not because you want to strike a deal with someone but because you want to learn and just absorb spend a long time absorbing the stuff and then the right

path will probably present itself and then it'll be wrong and you'll fail and you can to go do that again and if you do that ten times something magical will happen cool well that's a wonderful note to end on so thanks so much for coming on Erica it was a great pleasure talking with you yeah thanks guys there's fun of course thanks again for a listener as well for tuning in we're going to have links to to prison to shape-shift and to some other resources people want to dive more deeply or try out some of the product and yeah with that we at the end of our episode so thanks so much for listening we're going to be back next week with another episode and if you want to support the show then one valuable thing you can do is you can

leave a review and iTunes or some other platform you listen to the show and then of course ignore sensitive in the economy hole so thanks so much for the for being back [Music] [Music]