ep 15 – Mainstreaming NFTs: Use Cases, Art, More, with special guest Punk6529

Transcript

welcome to web3 with Asics and z a show about building the next generation of the internet from the team at Asics and Z crypto that includes me your host sonal choxie this show is for anyone seeking to understand and go deeper on all things crypto and web 3 whether artist or other Creator developer entrepreneur or other Builder so in this week's episode Chris Dixon and I chatted with punk6529 who joins us by voice modulator as he is pseudonymous by the way fun fact we've only had one other guest in the history of the a6nz podcast Network who joined mediated via voice technology and that was artist Murat Pak I'll link to that episode in the show notes as well for more background about punk6529 you can visit his Twitter account for further links and as a

reminder none of the following is investment business legal or tax advice please see accency.com disclosures for more important information including a link to a list of our investments so anyway in this hallway style conversation we chat out all about nfts from use cases to Art and generative art as well as briefly touch on metaverse VR versus AR the recurring theme of bridging physical to digital and digital physical we also discussed the recent news and moves around nfts launched on Reddit and in-app purchasing on Apple as well as mindsets around regulation and more including ending on a broader view of network effects as applied in web 2 versus web 3. but we begin with Punk sharing his Frameworks for use cases for

nfts [Music] I have two Frameworks that are my starting point for thinking about uses and the more important parts of the framework because if someone has that framework in place they're going to find other uses that I'm not going to think about today right we're just at the beginning and so for sure there will be some very successful nft usages in three years and everyone's going to look at each other and say wow how can we even think of that that's such a obviously great idea that was sitting in front of us the whole time we had no idea until it happened right so the two Frameworks of the following the first framework that I have is nfts are a transportation technology a carrier

technology Financial technology transaction technology and ownership technology for intangible assets and intangible assets people might listen to that and say okay sure maybe I can buy that but that doesn't sound hugely important and that's a mistake intangible assets are a gigantic category of societal assets particularly in any advanced economy there is a report that comes out every year where this consulting firm analyzes the amount of intangible assets just on publicly traded companies books which is obviously a subset of all intangible assets right because there's

many intangible assets that don't appear on any financial statement you know the Statue of Liberty is an intangible asset and it means a lot of things and it means a lot of things to the United States and it makes the United States more valuable than that specific piece of land would be in a you know the landing the United States would be an absence of the United States being thought of as a welcoming place for immigrants to make their lives and careers right that's an intangible asset you're not going to find it anywhere on any financial statement but it makes the United States and everyone in the United States on the margin wealthier right so this number I'm going to tell you Misses a lot of major intangible assets and the

number that's explicitly on the books is 77 trillion dollars so I remember in the early days of Bitcoin people would have these discussions of well how big a market is Bitcoin possibly targeting there might be multiple different views right some people would say well it's money supply and then you'd get into the questions m0 M1 M2 and depending on which one of those you think is relevant I don't think it matters too much that these are not like specific formulas it's in the low tens of trillions of dollars and then other people say oh it's gold it's not really like money it's more like a commodity and the kind

of Premier store value commodity is gold and so how big is gold Gold's about 10 trillion and so that's the right logic and I remember having these discussions when the market cap of Bitcoin was four billion dollars I found a memoir to someone that was like those four billion dollars and I read what it says you know if it becomes X percent of this or why percentage of that maybe in a few years it can be 10x or 100x what it is today well the same logic holds here that nfts gold has a very strong multi thousands of years Network effect right people are going to trust gold for a long time A

lot of people are going to trust gold instead of imaginary computer coins for a long time intangible assets non-functional intangible Assets in general don't have that right there's not as much risk in moving some IP of a streetwear company into a tokenized format as there is in thinking about you know National Sovereign currencies as you're thinking about old Reserve right you can eat up this market cap incrementally and each specific decision isn't a big scary decision you know if Adidas moves effectively some fractional percentage of their brand Equity into some token it doesn't create any

systemic effects you don't need to worry about what this means there's no risk that Adidas is going to you know wreck the global economy if it does that or anything of the sort right so that's mental framework one it's a gigantic adjustable Market and we can use these tokens to move around any of these things but I don't understand how to right click save or there's no rule that says this is how it works but all of these things what thing represents something else the social convention if an artist agrees that this token is the owner of this piece of art and The Collector agrees with this token is this

piece of art doctors agree that this token represents this piece of art well then it's okay it's done you don't need anything else other than social convention and then people will say okay but let's say I was really wanted to formally transport an exclusive license to I don't know some Adidas shoe and under the U.S IP laws that needs a written agreement okay but it's like the Instagram like one day we'll agree that a token-based transaction of this certain type is legally binding to transport that IP and the way that's going to happen the way will actually pass the law is first you have to start using it before the laws pass the reason Congress passed the

law to enable e-commerce is that e-commerce already started if e-commerce hadn't started there wouldn't be any percentage of need to do something because it would seem completely theoretical right so people started buying things online and people would send their money and people would send them their goods and on the whole it worked fine because on the whole people aren't trying to cheat each other right on the whole if you bought something online November 1 to send it to you so whether or not it was officially legally binding it wasn't practice and enough people did it long enough so then you actually got the official check box in the legislation right so this is framework one great and what's the next framework framework two most of the world is non-function we forget this because we spend a lot of

time thinking about financial markets and basically other than financial products everything else is not functional look around you your house is not fungible your office is not fungible and I remind everyone that the largest asset class in the world is real estate right so the largest hospital is not functional the national park connection is non-fungible your clients are not funds what are cars not functional nothing is fungible right nothing the only things that are functional are some forms of Mining and some Securities that's it everything else is on function and so if you think about what we've been thinking about since the beginning of crypto assets are we also going to tokenize Real World assets well sure we will eventually and most of them are

non-fungible right most of them are not going to be fungible tokens see we take these two Frameworks together what do I think they mean I think we're going to start as we have when things that are natively visual right so nfts started with collectibles and then art and then there's this whole like discussion of are they collectible and are they aren't which ones are art was real conductables of course for the purpose of this discussion none of this matters even 0.1 who cares right they're clearly intangible assets and everyone is moving them around using nfts will we go to in-game objects of course will we go to Brands and communities of course and you know we're seeing the

very beginning of this in fashion but only the very very beginning you know religious groups will use them universities will use them alumni associations sports teams are going to use them someone is going to make the society for hot chili sauce lovers right and you'll organize them through nfts right there's no particular point where this ends right so you'll be able to organize Brands and communities and those Brands and communities might be organized virtually but then they will have impact in the physical world you know maybe they'll figure out how to produce hot sauce and you'll eat that hot sauce right then you'll have more generalized IP and you know my pet topic which it

incorporates all the previous topics is metaverse objects and you know I have my own bespoke definition of what the metaverse is and I think a lot of the confusion happens if you ask 10 people what the meta versus they'll all say yes metaverse and they'll mean 10 different things is that the metaverse is going to be the internet in all its messy Glory that it is today but with better visualization my whole life visualization has gotten better in the browser I mean you can't see me but if we were doing a zoom call normally we'd have free Global video conferencing we didn't have that 20 years ago right some of the things we're doing now in the browser with 3D spaces like

um I often look at Museum websites and they look low very flat now right they look like an Amazon page relative to seeing things in a three-dimensional Gallery but the end state is for sure going to be augmented or mixed extended reality right sometime in the 2030s the glasses will be light enough good enough that you can wear them all day I'll be like wearing a pair of sunglasses and your field of vision will include most of the world around you and some digital objects whether it's your spreadsheet or your credenza or anything else so what is better visualization and the second is persistent digital objects and this is a big one right wait so say more about the persistent digital

objects like why do we need that too I mean just for the listeners the previous and for you too the previous episode we did a deep dive on metaverse including this topic but I actually want to hear your take because arguably I have a persistent digital object I'm going to be more precise her assistant cross-application digital options on LinkedIn my boring LinkedIn photo but that is not interoperable it's not application it's not cross application if I want to make it interoperable I've got to get an API key I got to follow the terms of service I got to integrate with each application individually it's a nightmare so that's who nobody doesn't right it's effectively not interoperable even if there is an API whereas token six five to nine is a crypto plus

contract can represent my Twitter profile and it can represent my avatar in om and I can take it to a lending platform and borrow against it not that I would ever do such a thing kids don't use leverage but let's say you did you could do it and any number of thousands of different things you'll be able to do with a crypto pumpkin five or ten years right someone's gonna make a game and instead of just making objects a game obviously scratch they're always like if you have a crypto point in this game you could have a special one Whatever It Is Right it's interoperable that's great and just really quick just want to pause and rephrase one of the definitions you had Punk just for the audience so basically you're saying those two points that the metaverse is the internet but with

better visualization and persistent digital interoperable objects so that's basically your definition there just wanted to highlight that stuff correct and once you've seen that once you've thought to yourself oh I can do something visually and I can actually own it I'm not just a user in the terms of service agreement of some company where I can be kicked out of their database at any point in time all right you know Chris has a big put her presence I have a big Twitter presence but we're a guests in someone else's house totally but we don't own that presence we can be thrown out with zero recourse at any point in time right where guests on Twitter servers and as

it should be right Twitter is a private company they can do whatever they want with their servers right it's not eye jobs tell them what to do but we are guests what was that of Jesus you don't have to be against the three digital objects if I mean when people tell me like oh I don't like enough tears me I think this is bad for a b c d e f g reasons ask them okay you don't want to own a piece of art as an nft you don't want to own a piece of digital art a credenzo let's say as an nft and I'm going to assume for the person's discussion that like this is someone who agrees that the digital world is real we should do things in the digital world and the art shouldn't just be oil paintings that are on your wall in your

house right well the alternative is fine tell me which company's database you're comfortable holding your art for the rest of your life and then giving it to your kids and their kids and so on which company do you trust which company you tries to operate a digital art service and that you will actually own it and be able to give it to whoever you want and so on and I have no problem with tech companies I use all their products but I wouldn't trust any of them with this thing because the most likely thing that will happen is three years after they launched the digital art service they'll be some strategic reveal at the CEO's office and say like oh yeah we're not making enough money of this just shut it down we need to focus on search or selling cell phones or whatever right so it's obviously the

case that if the internet is going to be more expressive if it's going to be better visualized if it's going to be more immersive and all of these things are 100 sure things there's not a single person there's no future technologies that the internet is going to have worse visualization in 10 years it's going to be vastly better and it's going to be more immersive and we will spend at least the same amount of time we're spending now and if maybe even more in which case we're going to want our stuff there right people like owning stuff I consider this uncontroversial if I call up anyone and say do you like owning a car a TV a dining room table a clothes your house yes it's normal well we should own stuff in the digital world too and since most of the stuff we're

going to own in the digital world other than our money is going to be non-fungible it is now solved how we should own it and I'm not sure anyone's really realized this I mean a few of us here on nfg Twitter have realized this but certainly like in the big decision-making Powers I mean I'm 100 certain the EU was five years away from setting up some completely pointless committee on interoperability of digital assets right when the problems are already solved we have interoperable digital assets they're called nfts and there is literally endless intangibles right intangibles there's no physical complement that can be moved on Shane and the very nice thing about

intangibles they can be natively digital you don't need a bridge to the physical world and I know it's a very long answer but let me just complete and then we'll bracket it we will also later trade hotel rooms and weeks at a vacation Villa and billboards and a stadium for a certain minute and a certain day those will also trade as nfts and there the big difference is going to be not that they are decentralized because these need a bridge to the physical world and obviously the stadium operators not decentralized they're centralized the hotel owner is not the centralized very centralized so for these to happen you need the regulatory Bridges so that the transaction is enforceable off chain but

they're the benefits something different the benefit is you're going to move things out of massively fragmented databases into markets so there is even today in 2022 there is no market for Knights and hotels in San Francisco I can see what's available what is unbooked by going to whatever it is but there's almost certainly the case that someone who has that night might be willing to sell it for more than they bought it to someone else right that's what the Market's called and if the hotel nights were tokens and you had something like open C you could

see hey what's the floor price for tonight in this hotel well you'd have markets today we have kind of semi-functioning markets you can have completely functioning markets and if you're the type of person who believes markets are good and useful and a good way to allocate resources this is obviously another social good and another social good that is already solved and we could just get on with doing it now as opposed to spending 10 years going there kicking and screaming which is I'm afraid which might actually happen I love that you said this very profound idea which I just want to pause and pull out for a second this idea that you move things out of a database into markets that we actually believe we have to be locked into these databases I think that's a really profound idea to

pause on for a second so let me stop there but it's safe to say that I think the overall addressable market for Ft is on these two categories right intangible goods and tangible non-fungible goods food that can be tokenized is utterly gigantic yeah I would just add to that I think you can learn a lot by as Punk mentioned by analogizing to the offline world where you know clearly having the ability to own things is important not just you know for personal satisfaction I think people do get satisfaction from knowing that they own their house or their car or whatever it might be it also you know imagine sort of as a thought experiment a sort of dystopian offline world where

you know four or five companies controlled everything and every time you went to a new restaurant you had to choose from their selection of clothing and other items that you're going to wear I mean this is literally how the internet works today I think there's a really important kind of knock-on consequence to having everything sort of centrally owned and no kind of user ownership which is a huge drag on entrepreneurship so you know the fact that Airbnb could exist as an example was a consequence of the fact that people truly own their homes and are free to do things with them obviously there's local regulations and things like this constraining them but there isn't some big megacorp that owns all their homes and sets the terms of service and so I think a lot of

Entrepreneurship just look at a city as an example you know a typical city you'll have on a single block very importantly you'll have public infrastructure like the sidewalk and the roads which are a network that have a network effect but that Network effect occurs to a community and then you'll have intermingled with that people you know may own Apartments businesses will own a restaurant or barber shop and it's very important that you have this combination because the entrepreneur is willing to make an investment in that restaurant let's say knowing that the foot traffic has a zero take rate is you know unabated in Network affects part of the community and they can make a real investment there right they know the kind of rules of the network so to speak that's very very different from how it works today I think this is something

maybe you see from my vantage point from sort of the entrepreneur side that basically all entrepreneurial activity that used to exist around networks for example in the 90s people building websites around the web Network the worldwide web and people building companies around email that's all stopped people don't build companies on Facebook or Twitter or Tick Tock anymore they build companies that try to hack those networks and sort of sneak in and then you know get to scale and then hopefully get off of them that's kind of the game for the last decade and so traditional Tech startups but they don't build on top of networks anymore the way they did in 90s and like so much of the Innovation you saw you know in the early internet with people building around this public infrastructure the web and you know having the assurances that they

could make investments and not sort of have the rug pulled out from under them the way that these companies like apple are doing so I think the default assumption as Punk said should be that ownership is really important in the offline World why wouldn't it be important in the online world that most of the offline world is non-fungible I also believe that probably the default assumption should be that non-fungible online world is sort of the biggest category of tokens and then I'm not saying I'll say is you know I think sometimes people sort of see these things tokens and the words sounds like you know Chuck E cheese or something but I think it's a very important concept which is that what tokens do is they encapsulate there's a constant software encapsulation they encapsulate sort of a really big idea of ownership into a very

simple Computing primitive in the same way that websites encapsulated they took this big idea this big kind of grandiose idea that we're going to democratize the world's information anyone can create you know can send and deliver information linked information it was a big idea but it was encapsulated in a very simple software mechanism website it's the website you know and the website had certain interface to other websites you could link Etc and of course at the beginning they started off as I like to say very skeuomorphic people built them to look like magazines and other kinds of things that existed in the pre-digital world and over time they really kind of grew into their own and became as we say internet native and with much more advanced functionality and I think nfts will follow a similar

path but I do think that the fact that the virtue of encapsulating it in this very simple saying has also thrown a lot of people off and made them dismiss it as something smaller and less impactful than it is if you tie together what your boat's saying it's actually really interesting because on one hand you're saying Chris like the original premise of any Innovation that works internet all of it is just honestly fundamentally honoring property rights which is literally a predictor of where Innovation clusters they've done in countless studies in any country any place in the world the most successful Innovation clusters or those that honor property rights as a key factor and then the second thing just kind of tying to what Punk was saying about nfts as an ownership layer for the internet and

metaverse and Beyond you're basically saying that the encapsulation of it which I think is actually a more profound idea than I think people realize it's funny I read this book we read this I think it's called own it's like these economists talking about six different kinds of ownership and it's an interesting book they go really deep and it's about property rights essentially came out a few years ago and it was a good book well written it was remarkable about it though to me was that it went you know 300 pages around property rights in the modern world and never once did it strike them that this is all missing from the digital world is sort of the zealth in the room and I think that's generally for whatever reason and maybe it's just sort of this pre-internet kind of bias or something but yeah I think it's virtually an axiom

in economics that property rights enable entrepreneurship and yet somehow uh this is a yeah totally well Chris I honestly can't remember if it was you who treated this that said you can like figure out people's reactions to like almost any of these issues the heuristic is do they think the digital world is real or not right it's the real thing I think that was me actually yeah yeah I think it was you and it's funny because I think a lot of people do not yet think it's real and yet when I asked and I talked to them that I've stolen that and I use it all the time I said okay I mean most people I know work in an office and most of what they do in the office is look at

the screen all day and so what do you mean the digital world's not reality what do you think you know of it you're like where do you think your economy and your job are being implemented all day and they're being implemented in a digital context and overwhelmingly me myself Mr decentralization if you'll track my computer usage you would see that I spend the vast majority of my computer time on one of 10 centralized tech companies servers right and this to me is problematic right we've like gone all the way around back to the Mainframe here I mean there's always cloud and scaling and whatever effectively it's no different than where we were in the 70s

where you run to time when someone's memory and whether the Mainframe is a bunch of individual yeah instances who cares like it's effectively the Mainframe mirror and that does not seem well appreciated both by individuals or by institutions and they're like that this might be problematic and I wonder and I don't know if Chris should have any view on this it's not like we started yesterday right like the crypto people started a decade ago and of course we made very good progress but also of course I think I just grabbed an average person on the street and started talking about crypto assets let alone like kind of teasing Bitcoin or ethereum I still think the

median person is still in the mode of like why do I need these things and you know maybe I'll make money maybe not make money babies this again but like there's like I don't think the median person's gonna tell me but oh yeah it's important that I own something digitally or that I need these things what's gone wrong like is it just early are we not communicating correctly why is this happening I think that it's a couple things well one I think it's been held back somewhat by the strong you know political and kind of cultural some of the pushback so for example let's take gaming you know gaming I think because of the controversy around nfts and things it's pretty clear that this will come kind of pure nft games will come from brand new companies and not from incumbents and it just takes time to

build games there's some really exciting things in the pipeline so you know I agree with you on that to me the big question is the regulatory question I think there's a pretty clear path towards greater adoption and really compelling products with that being the kind of one big variable that could significantly slow things down like I do think these things take time so you know I started a machine Learning Company in 2008 and I thought I was late to Ai and I sold the company in 2011 and clearly I'm now having an incredible Renaissance and so I was clearly too early but you know Alan turing's famous Turing test paper was 1950 I think he predicted a much more rapid kind of evolution you may have been around for this but I had friends who started mobile companies in the 90s the early 2000s I had one friend

who quit mobile and he was an entrepreneur in like 2005 because it was never going to happen you know there was General magic which is a serious attempt that the iPhone was 1993. I also think you know how long we had programmable blockchains I mean I think 2015 right and then you know each one remerge was you know a significant performance problem I would say like just as someone who spends their day with application developers in this stack maybe only today do we have kind of acceptable infrastructure to build things yeah so clearly there's more work that needs to be done because I think ultimately as you said the median person will will get it I think through experiences they need to have the visceral experience of it by the way Chris your theory about the strong

versus weak technology adoption that also plays out well yeah my kind of General view is that the really meaningful Technologies they don't adapt themselves to the world they require the world to adapt themselves around them an example I use in a blog post was Steve Jobs releasing the iPhone that required you to type with your thumbs and everyone was you know the journalists and others were saying how are people going to type with their thumbs and how they work and job said your thumbs will learn meaning essentially the device was so amazing that you'll make the changes that are required but what happens is when really kind of profound Technologies are introduced some people look at them and they say wow that requires a lot of changes let me take that and kind of dilute it and create a version that doesn't require that many

changes in the world and as a result I believe you see these Technologies come in pair so it's a very simple example would be an electric car that's radical it requires a charging Network requires changing vast amounts of infrastructure and so for a long time car companies would make hybrid cars right which sort of adapt themselves to the world as it is and frankly aren't that exciting from an energy kind of savings perspective and things like that and it took a Visionary entrepreneur to come along and kind of bite the bullet and say no we're going to change the world around them right it's happened throughout the history of computing Punk alluded to the internet how to people forget this but it had a centralized rival the information Super Highway it was like Disney and Comcast and things which is sort of the safer corporate diluted

version of the Wild West internet or Skype and voice chat had VoIP for people to remember that well it's over IP yeah I list a whole list in my blog post of examples and I think clearly that's going to continue to play out and maybe now that we're potentially in another crypto winter now we'll see a whole other wave of bad diluted ideas I don't know but I think it's been a pretty predictable pattern but that's also going back to your question that's also why these things take time is you need the World to Change around it including developers including users you know it just takes time for people to adapt sometimes it takes probably generational change maybe some people just simply won't ever come around to this and I also think we're suffering from this we're in this weird period where I I think the longest in the history of

computing where we've had very centralized platforms at this level of power and I think that has created a little bit of a Stockholm syndrome where people think that's a good thing and think that these are sort of benign overlords I think they're starting to see that come a part of the seams you know and I think they will more and more and start to realize the trade-offs that they've made that this Mainframe era as Punk describes it is is not all good I'm sure that will play out over time and people will start to see the benefit of Alternatives I love that you said it's like a Stockholm syndrome and just for those who don't know that reference I think a lot of people do but just in case it's like this feeling of affection or trust that you get when held hostage by their kidnapper it's like a way of

coping but I know we're jumping around a bit let's just talk about VR for a bit because I definitely want to hear you guys Jam for this because it relates to this theme of strong versus weak Tech and also for thinking about how things come about when it comes to like Innovation sure my view on VR is the following I mean I've bought every consumer VR goggle since that first Samsung Gear came out in 2015 and part of how I develop my views on things like any new tech thing happens I do it and then I see if I do it again and so one question that I was asking was oh this is going to happen and then ask well are you spending any time doing this and if the answer is no well it's

unlikely that it's actually ready and to me VR is still in that phase of it's unimaginable on today's generation of VR goggles that you can have that on your head all day it's just it's unnatural No One's Gonna Do It and if that's the case it can't become the main platform because you can't have a situation where you spend all your day doing something else but then there's anything important in the zero minutes or 10 minutes or 30 minutes you're spend in VR right like I think VR as it is now can enable some interesting gaming experience but it's not there for day-to-day computer usage

and Apple's supposed to have these cool goggles coming we'll see what they are right but what is in the market today what you can use today it's not something that people can go to the office and spend all day using right so I think part of what happens and I've seen this reaction for many people including like extraordinarily Pro technology people where I'll tell them something like oh I'm trying to build a better person oh yeah you know but like I'm not really into wearing VR goggles I'm like I really like real life and I just can't imagine what's been spending all day in that was like yeah no of course not I mean I can't imagine myself spending all day in VR either right what I actually think

today these richer experiences are primarily still going to be intermediate and by your computer screen right on a computer just like you do everything else and in time we will gradually get there on VR and AR but further to that it's still going to be most of your hours in AR and the AR can easily switch to VR but now it's a little way around but you can replace everything with the VR thing you want to see you're going to want to see the world around you you're going to go get a coffee right like I mean you have to go to the bathroom if you're in the office you're going to see a colleague walking down the hallway right you can't literally spend all day and not see the world around you so that

point is very specific to where we are in the technological development of the hardware like in some medium to Far Future like well someone figure out how for these things to be contactless yeah well in their contact lenses you're literally nowhere at the moment all right and that's fine but we're just not there yet one thing you didn't close at thred-on Punk is a little bit more about the real world connection can you talk a little bit more about where you see the real world connection playing out especially because I saw your Muse a couple of weeks ago about your collaboration with Vivian Tam on the fashion brand side and kind of more digital physical I'd love to hear a little bit more about that connection so on the integration to the physical world and by this I mean not VR Arabic

integration off the computer screen I'm going to say something which may or may not make sense may or may not be the exact right model okay I don't think of the main event is you have a token and that token gets you a Vivian Tam t-shirt like there will definitely suffer that right definitely so that's absolutely fine and it's a useful way to manage and potentially closer relationship with your customers that's possibly a nicer way to do it than you go to check out at a retail store you know right what's the normal experience you go down to a retail store

you buy a pair of jeans and then the poor person working the cash register is now bugging you for your cell phone and for your email and they usually have to do some types of incentives for you to give them to them because what you know as a consumer is when you give them to them you're going to get a bunch of spam email you probably don't really care about right and you'll now every week hear about I don't know the latest new genes whatever Levi's well this is not a particularly good customer experience right so you could imagine instead that instead of getting a receipt which you're going to throw away you get an nft which you might want to display you might enjoy and you know not

just for genes right you go donate to your Alumni Association what you will literally get today is an email receipt extremely not exciting five thousand dollar donations if you donate 50 million dollars you'll get a building with your name on it that's different for civilians you donate 50 bucks you go under 100 bucks a thousand bucks you get an email receipt well it seems to me getting the badge of your silver Buckeye you supporting Ohio State you can show this in your wallet it's better than getting an email receipt right but this this you have a token and it's hybrid and there's a tangible object it's cool it's going to happen we need to do a lot of experiments with that I think it's going to be a better way for a retailer to manage their

Community but to me the real question is the physical world it's not necessarily merch it's aren't people doing things in the physical world and does the token serve as a coordination mechanism that's great and those things I think doesn't necessarily mean they bought a t-shirt right you could imagine a token coordinating a bunch of people to clean up beaches oh that's in the physical world the beaches in the physical world and anything that matters anything in life that matters ultimately comes back to people there's no successful product of any type that doesn't involve people in large amounts of people and significant quote unquote

engagement with people and so what I think we will discover is the much greater expressiveness of nfts will allow us to do much better social organization with crypto than we could with functional tokens you know one of my frustrations a few years ago was okay so we can do payments on bitcoin that's cool like that's pretty cool in 2013. what else can we do and I would be racking my brain and I couldn't think of learning anything you could do additionally but with an NFC you can represent much more complex social structures you could represent a company right and different

roles in the company the different access rights income and different decision making rights to the company and half of those things represented not in your HR database and your policy manual but represented in something that's on chain and you can have like a smart contract that unlocks certain decisions right and I'll start with the most trivial of trivial examples we have this nft fund right and we have these internal sets of rules and we have people who are experts in different areas generative art one of Wands and Pepes and all these things but there is a decision-making Grid it's a deal any individual can make a decision for up to so much and then to a

certain other level so much more eth and if it's a bigger approaches then everyone has to agree or everyone minus one has to agree whatever it is right the details don't actually matter this is the type of thing that is represented in Bank databases and policy documents and constitutional documents non-programmable but there's no reason you couldn't have your East and hypnosis safe you have a module that represents these rules and so someone needs 10 each and that's within a small decision that they can make by themselves their key unlocks it if we need 200 Ethan you need three votes three votes

unlock it and this is I mean this is literally a trivial example right so let's trivial example you can imagine it's signature Authority or bank account yeah but you can express that with them right you're gonna Express that and you can express any arbitrarily complex social structure with nfts and if you can do that then they can serve as a coordination mechanism to actually do things in their work now is it straightforward no we're still figuring out I mean there's like maybe a million people using it if these are two million or three million right but the initial adoption early early adoption option we've only had it for a year and we've already seen in my opinion more interesting things done in the last 18 months of nfts but it would happen for

years in functional terms and I think this is not because nft people are smarter or better or what have you than people who are making altcoins or something but that the technology is more expensive I mean in the limit case you can express functional outcomes with an nft but you can't do the opposite right I can make it 11 55 token and make a trillion of them and I have a currency and then I can make another token and do something else with it right and put metadata and control the size and Link it to different things so it's just a much more generalizable platform but also one where the power to generalize is standardized with the end

consumer right you could say I could do a lot of these things in a smart contract yeah but then you need to be a smart contract developer which is really the hardest thing a planet Earth to find you don't need to be a smart contract developer to change some metadata on an nft delivery you need to be like basically capable of using a computer and so we suddenly have this extremely expressive tool it can represent arbitrarily anything anything can include anything that people do in the real world and it's in the hands of individuals you don't need a developer to do anything right so I think we're going to see a lot of quote unquote real world stuff but we should think much more abstractly than real world stuff

means your token means a t-shirt we can also do that that's fine I don't think that's the big idea oh there's a lot there um so uh I'll just make a couple points so I would say first on like the metaverse digital world thing I hear this a lot that sort of people call it kind of physical world privilege like I don't know what the word would be like people say oh these Silicon Valley people are working on atoms not bits they say a couple things that one is people I think the average is now like five hours a day on their phone like people just live in this world but two clearly the digital world and the physical world are strongly interacting so just a simple example is politics is mostly playing out on Twitter these days which clearly has offline implications you know online dating I mean you just

go through a whole list of like core life activities and social activities that are mostly determined on the internet now and so therefore these structures of how these conversations are organized and things like that become incredibly important which is not to say the offline world doesn't matter of course it does it just doesn't happen to be for example my expertise and what I work on but I think it's clear those two things interact one of the critical questions that bunk was talking about and I agree with is a question of this metaverse quote unquote which I think Loosely means just an internet it becomes increasingly important higher engagement deeper engagement may or may not be mediated through new interfaces like VR but I think the key question is there will be lots of interactions between these different digital

experiences and offline experiences and the question is are those interactions you know primarily driven by users who own their assets and are free to switch around or are they owned by you know a few Mega Corps who kind of control that experience the way the current mobile phone experience works and that's a very important question and I think one that really only of all the different areas in technology only crypto is even discussing I don't know I mean there's these sort of semi-defunct like semantic web and I don't know there's just so if you hear these occasional things of like other kinds of proposals but they have these like principled objection to any Technologies created in the last 20 years and that puts them at a significant disadvantage but it's not like a serious discussion anymore

outside of crypto and I think it should be a very very Central discussion like is the metaverse going to be uh Facebook controlled you know system or is it going to be kind of like the web right where anyone could create like a different site and they link together and users move around and beyond that you have assets that the users own and control and so that seems like a really critical question and what are your thoughts Chris on the VR discussion and Views that punk shared on VR I'm a little more bullish than punk I do think it's early but like the Oculus Quest 2 sold more units last year than the new Xbox did is like over 10 million units you know I think if the right things happen they create the right device in the next iteration they just released a pro version which I thought was a little

I don't know I think it was to me it was a little bit of a distraction but the next Consumer version and then I think you really need need some hit experiences in the vein of Minecraft and fortnite they'll be clearly social experiences and you know I think Facebook's taking a too closed approach they're heavily curating some of the best games on VR I play VR there's like our games they actually won't allow in their App Store like I think they may have changed their stance but for a long time onward and Pavlov and a few others I think the big thing with VR right now is one company working on it apple has a rumored thing hopefully it'll get into it but like we're in this weird moment where these tech companies have virtually infinite money and yet are barely doing new aggressive things

outside of Facebook yeah so that's just a broader kind of question of like I mean I got the iPhone 14 but gosh it's hard to see what's different with the 13 like these things were really top of the S curve yeah it's like internal Innovation you know very incremental yeah anyway so I think the interfaces could come in different forms the implementation in different forms but the key question is really this question we've been discussing around nfts and the economic and political structure of these new important Virtual Worlds yeah we had Perman narula CEO of and probably on the podcast last week I don't know if you've read his new book virtual Society it's very good on the topic of metaverse and VR and interoperability more but he had a great take on the VR point which is simply that it's actually not

necessarily VR or not VR but about you know how connected linked interoperable composable all these things are and really about the what you said Punk it's about the people at the experience wanting to be together which I think is probably the right take on the VR device front Chris I think the most interesting thing is you probably don't remember this but a few years ago right before the pandemic we did a quick episode on some of the then latest Oculus news and I think what was most interesting then that they had finally allowed better pass through on the headsets for the Oculus and I think that was a critical moment yeah well that's the new one they just the release the pro I haven't gotten money I ever won the proquest is coming out this week I think actually leans in on the pass-through thing yeah

yeah exactly but it's also fifteen hundred dollars and but yeah it's not accessible but I think the key point is that it actually is no longer the separation to your point earlier Punk of physical in real life is not real online you don't agree well I think there's different the word connect is doing is different senses this way like there's connect like literally in the same frame and there's connect like I met my spouse on the internet the latter probably is more important in my view I'm a little bit more bullish on VR than they are like yeah essentially AR I just think AR is a little bit weak in the way we described before and VR stronger a 13 year old in 2050 is going to want to go do they want to go

partially into the metaverse with their sofa next to them or do they want to go all the way in yeah you joke about seeing the coffee cup I don't know I just I've never seen like 14 year olds want less intensity so that's why I'm a little bit I should clarify my time frame like I think in the 2020s for non-gaming applications or at least today for non-gaming applications it's not going to be there like for gaming applications change it might be there an hour with these two devices and by the 2030s my view on these mixed devices is will switch seamlessly from AR yeah yeah I think we're probably agreeing then I'm not I was just sort of uh yeah refining the point well this is a great point to switch topics like so far we've covered nft use cases metaverse VR AR kind of

the golden Trifecta of topics which also connect with each other and we've also touched on the connection between physical and digital throughout as well as Tech adoption timelines on that note I have to ask you this question specifically because you're such an art lover and so am I and I had asked Kevin Rose this to in our last chat with Chris two episodes ago if you haven't heard it and when it catches answer there too but I've been obsessed with generative art a very very very long time I'm not kidding and I want to know what you think or why you think if you think generative art has found its native medium on blockchain even though like generative art came way before blockchain by several decades like why is blockchain so natively perfect for generative art like do you have a point of view on that

oh yeah it is the absolute native medium for generative art and I think the definitive essay on this is Tyler Hobbs essay on long-form generative art right what it allows a generative artists to do is the following like pre-blockchain and also today I mean people do this with nfts right even the top artists including Dimitri cherniac and Tyler Hobbs also do one of one generative pieces where something was created with an algorithm and then they meant it as an nft or pre-nfts right it was displayed in some type of installation format Etc and that's great I mean there's nothing wrong with it right it's

normally how you make art the amazing thing with generative art is that you can probably show the breadth of the algorithm right yeah and it's a different form of challenge then I have an algorithm and who knows what it normally turns out but I found this good output so I'm going to this is my artwork I'm not saying this in a criticizing way that's also absolutely fine one of my favorite pieces I own is of in this format a piece that Dimitri made from an algorithm that he never actually used and it's a beautiful piece it's stunning so there's nothing wrong with that but it's different versus saying look I'm going to release this algorithm and kind of the instant of

that is what's happening now with qql right which is not just we're going to Mint a thousand qqls but everyone can see as many outputs as possible or as they want from the algorithm and you know where I don't know 5 10 15 million outputs in well I think this is just incredible right like it's a more interesting experience it's a more expressive occupational Sword version of seeing what the algorithm does it has more integration with the collector right because even in the normal case even in a normal type of generative drop the randomization is created by the time that you meant so you're in some very

minor way a co-creator and in something like qql you're very much in a very practical way a co-creator yeah and so this ability to have an artist create with a community or something that I'm going to go towards sofa was always talking about right like the one of one of X it's the mass customization we used to talk about in the 90s right I remember much much nicer much much fancier much much more aesthetic much much more interesting and so ask the question in reversed if this is not the natural meaning for generative art what would be the natural

medium what does it look like it's probably not like anything existed before this what could get better and it's not totally obvious to me what that would be yeah that's a great way of putting it I mean what you're really saying is it's democratizing creativity and the creation you know just one quick note you mentioned this moment in like the 90s when we talked about Mass customization you know I would argue that back then it was actually very limiting Vision because they were really doing Mass configuration which is actually very limited because it's pre-constrained by the designer's view of what those parameters are whereas at the generative model today it's actually true Mass customization not mass configuration so that's one note I would make why don't you think about it as democratizing Beauty oh I mean I agree with you I'm all for democratizing beauty right

because we used to have a world a pre-industrial world where everything was handcrafted and because it was handcrafted you know we didn't have a lot of things right but they were all fairly unique because they were handcrafted before so this didn't have a lot of things and then we industrialized which is great because everyone can have a lot more consumer goods because they were made in a more efficient manner and because they were made in a more efficient manner they ended up being standardized and so we got used to seeing everything in a standardized manner in the digital world we don't need to have that anymore right like we can go back to handcrafting democratizing Beauty and I think it's a very good thing also I think something that people don't think about so much most pfps are generative too right like crypto punks are

generative you're gonna know when you were minting them it's not like they were all drawn and advanced by lava Labs right most properly done PSP collections that properly do the randomization on minting are a very simplistic form of generative art and so if you look at the market cap estimates for nfts tfps and generative art are probably 90 of the market cap something like that so 90 of the nft medium is generative and so it seems fairly obvious to me that this is the natural fit and I think we're going to see a lot more of it like you know what art blocks

is going to try and do now is open up their generative engine to all types of things and so that you can create whatever it is you're going to create a certificate let's say right and yeah great alternatively right give someone something a little special interesting more artistic it's making the world more beautiful richer more artistic that's fantastic Punk when you describe generative art that way that you know especially with art blocks making that move where people can kind of remix anything using these kind of generative tools is this idea of democratized creation and in fact going back to what you said earlier because I agree it's about bringing us back to this old world of artisanality but now at scale where we got limited when we

got industrialized and now it's like actually mass industrializing in a good way beauty and the access to Beauty I think that's why people are so excited about AI right now it's like really like bootstrapping that kind of like innate like if you think about it like it's crazy to me that children are born with this innate love of Art and then we literally beat it out of them by the time they're adults it's like very very sad and it's great to be able to give these tools back it's literally all good things right I laugh when I see the criticisms like people coming harass me on my Twitter feed you know I'm patient I don't block anyone right and at my point so we only had an example

someone was yelling at me about cc0 obviously not an actual nft collector yeah and I'm like so I just want to get this right I am spending a decent amount of money to buy something from an artist and supporting artists and then I am also making it available to the global public IP Commons now not in like a hundred years where all of us are dead but like right now so people can use it now so the artist wins their paid for the art the rest of the planet wins that they can now use this and remix it as a one who exactly is the victim is it it wouldn't have crossed my mind that somehow the mainstream world would be

upset that artists are making more money my whole life was like oh we don't support the Arts enough we don't support the Arts enough suddenly a bunch of crypto people are supporting the Arts and oh that's a problem too right you know but it's speculation it's there so okay your concern is that me a wealthy collector don't know my own interests that's a very weird concern I mean I'm like I'm the least sympathetic victim on the planet I have enough money to buy credenzas why am I a victim if finances go down in price okay I'm actually fine with it but even if I wasn't fine with it the artists have won the world has won everyone can see them enjoy them in some cases remix them it's all good and generative arts in this way right it's going to make the world more beautiful

it's going to make the world more authentic and it's an endlessly good thing in my opinion you mentioned there's a lot in what you said I just want to pick up on a couple of things in that really quick one is the qql project you mentioned was also a Tyler Hobbs project just for contacts and the listeners who may have not heard our Kevin Rose episode with Chris could check out that episode for more details on the qql framework by the way just for the audience so they know in your Zoom background your background is a fedenza it's gorgeous but one interesting thing in Tyler Hobbs his famous essay on like you know why generative art is having its moment he had a whole section in it on how it actually creates new questions of how do you then determine the quality of and I am curious because I do like

asking all the nft collectors who love collecting nfts for art this how do you assess that sort of quality well I mean whether you ask people who are involved in that space to give you their personal views or just look at the market prices or just look at the press or discussion around them I don't think there's even like the slightest doubt which ones are better than other ones I mean they might not be to someone who was looking at generative art on day one for the first time right if you have not thought about shutter divart ever in your life and now I just start flipping a bunch of art block stuff at you you're gonna say like well what are all these squiggly lines this is all weird like I don't know what

this is but the same thing would exist if I took someone who was not art sophisticated and showed them a bunch of Contemporary Art and asked them to tell me which ones are the good ones right and if I took someone who was not wine Savvy and gave them a whole bunch of expensive wines and said tell me which ones are the good ones and the reality is someone who's brand new to the space is not going to know and that's true of any specialized area right but in the people who are the creators the collectors the markets at large they've spoken and they all say that approximately the same thing so I don't think there's any like had a question that like to stick with an example we won't say what are bad

collections will be positive like I don't think there's anyone who has a serious point of view that fidenzas are bad generative art right I mean I think some traditional old-school Trad folks you know have a very limited view on some of the art that's coming out of nft world but yeah I agree with you overall but there's there's a bunch of junk art coming out of that if you will but that's not the question right the question is like can you identify the glitter right that's right there's a bunch of junk art in the real world too you can go on eBay and buy ten dollar representational oil paintings that of course are completely unimportant from an artistic perspective and that's fine and people like them and put them in their house is 100 but obviously they're also not getting into

a museum you know the median video online is of course complete junk but the best Netflix series are very very good all right the median YouTube video is not going to win an Academy Award but so what this is how the internet is right there's no barriers to entry it's user generated content and so users and you see look at it in a terrible world like users right web 2 world it's democratized haunted and so of course there's going to be a bunch of silly things who cares why does that matter why does it matter at all I agree with that dgc you know it when you see it you don't have to have like a crazy sophisticated framework I think that's a really great point of view okay so let's

switch gears and to you know for the remainder of the episode let's talk about some recent news and moves and also more about the regulatory context and how to mainstream you know nfts and these topics I'd love to hear your guys's reactions actually on the recent news both about Apple's in-app purchasing guidelines or some would say restrictions on nfts as well as reddit's move into nfts like I'd love to hear your guys's quick takes as well as what's going on more broadly there yeah okay let's take them one at a time because I think they're different issues I think the Reddit news is a generally good news right like my theory is that the way cryptocurrency survives and doesn't get regulated away is if a lot of people are

using and the way a lot of people use it is by different communities companies organizations implementing it in whatever it is that they're doing and so in the first instance in the first go around the fact that Reddit managed to find a way to introduce nfts to their Community to their people in a way that was accepted by them I think was very good and the way they did it was they did not use the word nfts they used the word digital Collectibles and it's really interesting right because the Reddit Community was fairly anti-nfts recently like famously anti-nfts and you wouldn't think that just

changing the name would make that much of a difference but it didn't want to say some things that just things to look out for but the things that I said look out for don't change the fact that this is obviously a nice thing that happened a good thing that happened the more people using nfts the better the only thing I would just flag there's often a discussion in the nft space itself including by people who are you know deep Pro cryptocurrency crypto assets decentralization oriented people who say well we're gonna have to Rebrand because the nft name has been burnt

because you know people associated with quote-unquote overpriced you know cartoon characters and nobody likes that so we have to change the name and yeah maybe about that is that I don't think it's gonna happen that way and I don't think we should worry about that as much because there's really no other name that is going to end up I've seen all the suggestions and all the suggestions cover some subset of what you can use nfts for so digital collectibles doesn't even cover the basic Art Space of nfts let alone utility NFTA is let alone vacation rental nfts right I mean it doesn't cover any of us so it is a subset of the space that's number one

yeah you also know and I think this is the dangerous Point there's nothing about a digital collectible that needs to be decentralized right there have been digital Collectibles sold for years and in game in-game objects or digital Collectibles and this and their enemies and so it is important that at a minimum the people who no one in nft is know what crypto assets are know what being unseen is who are actively promoting these values and approach to societal organization don't lose heart just because someone's out there complaining that it's overpriced it's a scam it's money laundry I mean we've been hearing this

since the beginning of Bitcoin totally it's fine it's gonna happen people will progressively get over it and the analogy that I have in my mind I remember in the kind of 2014 2015 era it kind of became forbidden to say the word cryptocurrency or the word Bitcoin ever was like we're going to blockchains blockchains and so for three years we all had to go around pretending we're doing blockchains and just like in the mid 90s we had to go around and we were doing information Super Highway we weren't going to do the internet and we've now passed out all the Enterprise blockchain stuff is more or less dead and we're back to where we were in the beginning and where it

actually matters which is in public blockchains public cryptocurrencies and crypto assets and I think the same thing's gonna happen here so if they need to call them digital Collectibles or whatever else they need to call them that's absolutely fine I think we the people deep in mind of two space should not feel like we have to hide what they are I don't think that's necessary and I do think in time we're going to end up back with nfts because the person who bought a digital collectible which is really a polygon nft is going to learn how to use a wallet eventually and then they'll do something else and they'll realize there's other things they can do in those wallets aren't digital Collectibles so I suspect we'll spend two or three years in the blockchain phase of nfts I think my conclusion here yeah I agree a little bit I would just

add a few things I think one the way Reddit did it to me was they're sort of a line somewhere for example I remember stockx which is a sneaker resale company did sort of an nft thing and it was all just stored on their local database and all the messaging being sort of consistent with that and to me that that crossed the line to not actually being nfts I think Reddit sort of softened some of the messaging but ultimately you know did architect it in a generally correct way so to me it was on the right side of that line I would also agree that Tech products are fundamentally marketed through experiences and not through kind of names and a good example you know MP3s jpegs like these are you know I remember way back people

you know debate there's a lot of sort of technical terms that have hashtags was once a technical term that have sort of propagated out and they've done so through people creating extremely compelling experiences so for example at some point there'll be an incident where there are two games and one game has nfts and one game doesn't and the game that doesn't takes away all the assets the users have built and the game that use nfts doesn't and people will experience the difference and understand this early why blockchain matters in that case those are the kind of key moments if you look back at the history of tech that end up being so consequential in marketing more so than the I don't know the Mad Men view of marketing that sort of it's a logo and a brand name and

things like that yeah I agree completely what was I forgot what was the second question that you had asked me yeah so the second question is what do you think of the recent news about Apple's announcements of nfts and taking sort of the in-app purchases and how they're structuring all that well I mean it is just incredible to me that we the broader ecosystem of people who often find all types of random things to complain about crypto are somehow comfortable with the fact that we have effectively an oligopoly in multiple parts of the tech industry but certainly in mobile phones and it is absolutely being leveraged to pick up oligopoly style

returns I mean the idea that twenty percent thirty percent of the app economy and anything that touches an app should be a sensible take rate to your cell phone provider it's just odd it's weird you know I speak with some regularity to regulators and policy makers and what I tell them is look you're in a technological environment or a digital landscape that is dominated by less than 10 verbs and if you're thinking about your own National digital sovereignty if you're thinking about your own economy in 10 15 20 years is going to be digital than it is now I

mean a lot more we already have a highly digitalized economy in any developed country that's going to continue and continue and continue and you don't have a level of discomfort that the web 2 era or 2005 or 2020 era firms that have established take rates in the 30 range are also saying by the way yeah this is great that there's all this other new technological development and we're going to be happy to continue these types of take rates in the future so you know meta had mentioned for some Creator Assets in their metaverse but it would be 30 plus 25 percent of the profits or the calculation came out to 48 which is I mean a shocking number and

the argument on their side was like well look it's like the App Store and this is the type of this is the type of take Rich we deserve and expect and once you're deep into the crypto space and you see that you know open C has a two and a half percent take rate and is attacked from 20 different directions by other competitors trying to move that effectively to zero the idea that 30 or 40 or 48 is a remotely reasonable solution it's something that we should be happy with in a market economy it's just bizarre right and this is not me saying like oh we should necessarily regulate apple or break up Apple or what have you but it

is a reason why it's pro-consumer to push for open systems it's pro-consumer to push for systems that have a right to exit the reason luxrayer was able to attempt a vampire attack on Open Seas you can see everyone who opens these customers you can see what trades they did you can see what transactions they did and then you can go Target them whereas if I called up coinbase if I called up Brian Armstrong and said hey I was thinking of launching a Computing exchange and I'd really appreciate it if you just sent me over your customer database I'd like to know everyone's bank accounts and in fact their complete trade history and in fact how profitable

a customer they were for you so I can just really Target your best customers to take them away I'd be laughed out of the room or like reported to the police or something right then this is a crypto-centric firm whereas open so you can do that and it's fine that is how it is you can actually see the trends and so this type of thinking of how you should have a proper architecture for a world that will be primarily digital in the coming decades I feel as it's lacking in Washington it's lacking in Brussels I don't think we've done a good job of getting the message across that all of the stuff is deeply pro-consumer it's deeply Pro competition it's deeply Pro markets and

might be on the starting positions you should be actively promoting this is a platform it's a better platform it's a public Commons for things of value and just like the internet was for information it will lead to Greater competition greater Innovation than the alternative just to add to that a key question I think about kind of the power consolidation in Tech is Network effects are an incredibly powerful force that increase the cost of switching of user switching to a different network and create pricing power for platforms Apple has massive Network effects around their IOS app store Facebook has massive Network effects Twitter you know Google at least in some respects certainly on

YouTube a key difference with crypto and as Punk was saying and openc is it the network affects a crew to a community instead of to a company and because of that openc is just similar to sort of an email provider an email provider like Outlook or Gmail they don't control the network they provide access to it and that's a very important concept for analyzing kind of monopolistic power on the internet I find the discussion frustrating because I think outside of a few technologists and maybe forward-thinking economists I don't think people are even using the right framework around Network effects to analyze these things and as a result you have basically Apple doing what they did is the Death Star allowing like a small

group of Rebel ships to pass through and meanwhile many of the policy makers are supporting them at the expense of the crypto Community which I think is the only credible the blockchain crypto web 3 movement is the only credible countervailing Force right now to the increasingly monopolistic power of these Tech incumbents and you can disagree around the nuances of it and how far along it is and the things that need to happen but I don't think there's any question if you seriously look at the landscape that that's kind of the the basic market dynamics look even companies like epic which makes fortnite which you know I don't think of as a very physically crypto forward company even they are you know in a lawsuit with apple I think you're going to see these issues become

more and more prominent it's just they have incredible choke hold and spunk was saying that they would have sort of a 30 take rate throughout the economy which is an incredible drag on Innovation and Entrepreneurship I think part of the root of this is Anti-Trust thinking that is not developed in a physical Goods era that had marginal costs right so the whole logic is looking for Price related issues right they look at it through like Michael Porter five forces Frameworks which is an industrial error framework in my view correct they don't have a mental model for even something like Google search or Twitter where

there's all of the product's free like what's the consumer harm right where is it well it's more indirect the consumers built the network effect and then rent seeking happens on the back end right so the same things what's happening with with app stores and I have not seen any good thinking on this topic come out of Washington and this is not to say that I think Washington is necessarily even right on the tech companies when they get annoyed at them but you can see when they call up various Tech CEOs to Congress and they grow them with a bunch of questions and all the questions are wrong but I mean they're either like actively factually wrong they don't understand how those companies work or even if they understand how those companies work

they don't understand the architecture of why they work the way they work and then they're always hidden against the wrong points and it's not just a Washington issue it's an eel issue it bothers them this American company Tech dominance and then they go do a bunch of things that help American tech companies right like no we're going to give them a bunch of extremely annoying legal legislation to comply with which of course Facebook and Google whatever can hire 50 people to deal with exactly that EU comes out with but some small startup in Frankfurt can't and so yeah it's interesting to see I don't think the policy makers have the right framework I mean and just to clarify this is

something I think actually a lot of people don't even realize except for those of us who are very immersed in you know competitive theories and network effects and anti-competitive thinking but even a huge difference traditionally between us and EU mindsets around competition and antitrust is that it's only anti-consumer if it's something that's hurting consumers not other companies in the U.S whereas in the EU it's much more the other direction like oh is it preventing other companies from getting in so in the US one of the very unique qualities is that a lot of the legislation and laws have formed in a way that actually is only is this harmful to Consumers which is exactly the right lens to use which is why I think the EU is actually particularly

tied up and contorted and Knots around this one I have a quick question for both of you what would you guys put forth as an alternative view then you know like you're saying you don't think that anyone has the right views out there and how to think about Network effects on this new world of business how would you like what mental model would you put out in the world to help people really understand what's happening here so we're not only reacting to what we don't like but we're actually putting forth view into the world of what we think is the right way to think about this new world look I don't think they even need to do very much I think if they gave predictable clear non-punitive framework for crypto assets we'll take it the rest of the way right

like I don't even think you need necessarily enforcement from the government I don't think you need the government to like do crypto asset spinning but you do need I think a clear policy position that for example self-hosted wallets quote unquote non-custodian wallets or as we call it in the real world just your wallet right the wallet you have in your pocket with money you don't think of it as a self-custodial non-hosted wall it's just your wallet right the other things are bank account but they're fine and I think a little bit more clarity on tokenization would be helpful you know the SEC at least in the current SEC seems uncomfortable in saying literally

anything other than Bitcoin is not a security well there are certainly tokens out there than insecurities but it's certainly not every token other than Bitcoin and all of this what it does it's a gigantic drag on investment in the space both by companies or investment firms who have to deploy Capital but also by talented individuals who wonder if they should dedicate one and three and five in ten years of their career and you know I do believe that both Washington and Brussels don't exactly love the dominance of the current tech companies and yet they're effectively promoting policies that are a subsidy to the tech

companies which is weird and what I'm saying is that I don't want the subsidy for crypto but I do want an even playing field and there's precedent for this right when we started with e-commerce there was a lot of fear and certainty and doubt about whether you could sign electronically and if electronic signatures meant anything and they're like oh well this is never going to work because someone has to send a contract and you know you're going to buy from Amazon and they're also going to send you a physical contract to make your order and back to them I think there was a more Pro technology approach to Washington for both parties uh more Pro Innovation approaching very quickly and much before the EU Washington passed the

e-signaturct because I guess this is something new we used to sign things on pieces of paper now we can sign things on a web form by the way you're watching the same issue play out in crypto and nfts you know all over the Israel can you transfer IP rights through a token simultaneously strictly speaking as the law is written not exactly so in some cases but also the law is just made up right you didn't used to be able to buy things on Amazon without a physical signature and then we said all right the internet exists so we should enable people using the internet and now cryptocurrencies exist and they're obviously useful and can do things and

let's figure out how to get out of their way and let people use them Cricket but I don't think that's the attitude I think the attitude tends to be very begrudgingly Kicking and Screaming to like not literally shut the industry out and I mean everyone forgets this but we're what now like 13 months away from the new infrastructure bill passed the fact that any transaction you do over ten thousand dollars you need to send kyc information within 10 days to the government otherwise you've committed a felony this is currently the law of the land that comes into place in 13 months and if that happens it's going to be I think fairly devastating to huge

aspects of this economy right like it's going to be very tough for D5 it's going to be tough for nfts and I don't think we're worried enough about it and even in the United States even in the most pro-innovation Pro Freedom Pro capitalism Pro technology country in the world there is still tremendous hesitation around crypto assets tremendous that you just didn't see with internet oh Chris how do you see these topics no I agree with you I think just to illustrate some of those points you know I've been involved with non-crypto startups as well as crypto and with non-crypta startups you would typically start your company by hiring a bunch of Engineers and designers and maybe you know an employee 50 or something start

thinking about legal stuff Beyond you know basic incorporation and things with our crypto portfolio I mean the first few million dollars and ultimately tens of millions of dollars goes into lawyers and legal fees because of all this uncertainty you have to basically hire people to read a bunch of you know enforcement actions and try to infer policy because to this day we've never actually gotten any kind of clarity on policy Beyond Supreme Court cases and then various enforcement actions so that's one cost I think a more important cost that's less obvious so I was involved with coinbase for a long time and what you saw there was coinbase you made a massive investment you know many hundreds of millions of dollars in

compliance another things around it not to mention all the products that they wanted to do that they couldn't do because of compliance issues meanwhile they were competing with offshore companies and it was sort of this constant game of whack-a-mole where the offshore companies would be able to move much faster have a much wider range of products and yet the enforcement sort of stuff was always directed to coinbase and never at those companies and so you created this really perverse and this happens not just a coinbase but look at all this fast goes that just happened around stable coins and around these sort of centralized Bitcoin lenders you basically had all this attention focused at what I think are pretty clearly good actors and to the neglect of the Bad actors and that both cost the good actors a lot of time but also actually

creates an incentive to be a bad actor to go offshore and then led to I think if you look at some of these offshore or stable coin issues and other things I think ultimately led to much more consumer harm so yeah I definitely think that's frustrating I think there are some very positive green shoots in the poll policy Arena and that more and more policy makers are starting to understand kind of the importance of this but ultimately you know we need to continue to work to explain these issues I think it's important also that entrepreneurs build products that get widely used as we were discussing before things like Reddit and I hope Facebook and a bunch of other companies doing stuff even though as Punk was saying that some of the purists might not like it I think it really ends up benefiting the space as a

whole and in terms of teaching people about the technology and kind of changing some of the negative Impressions and by the way I just want to thank you two Punk for your amazing contribution when earlier this year I don't think people realize you did this you wrote a glossary of terms and lingo that people use in the crypto Community I think that is still one of the most valuable pieces of content ever because it's so inclusive in terms of welcoming people into the space thank you so much Phil we got to get people on board let's leave you that's great maybe this is a good time to just close on describing what you're up to punk yeah it's awesome so the data stuff is the same four things at all this is the 6529 Museum I try and buy interesting nfts and it's permanent they go in they don't come out

and so I think it's important for the space to have this idea of a permanent repository of important cultural objects and also they will only be displayed in decentralized lists right so that's number one number two we have the fun the third is what we're doing with minting you know we're having a lot of fun with the meme cards and so the meme cards are pieces of art that are meant to promote decentralization oriented messages and because of this for also cc0 their public domain people can remix them as they want and they are large editions they're affordably priced I think by nft standards I hate this idea of like oh nfts are just for multi-millionaires

it's the type of thing you can go buy in a global store right and right that's a lot of fun we're getting a lot of exposure for emerging artists to a much larger audience we're seeing some emergence of the remix culture and I'll be some exciting things I think happening over the next few months as this develops further as the community grows and this is an idea of saying look we have messages we need to get out and not all these messages are going to get out through policy papers on sub chapter 5 i7 of the latest AML framework yeah we need to get out messages like freedom to transact in visual formats right so

that's the goal here we're going to try and get these messages out in visual formats we're probably three four months away from being sufficiently decentralized and the idea there is what is a truly censorship resistant metaverse base looks like and you know like everything else there's trade-offs right you can obviously make it more performant by centralizing it but the same way that an Oracle database is more performant than yeah it is but you need all types of spaces and the I am going to use Unity or Unreal Engine to stream a game from a server this is all covered the whole plan is going to introduce right this is something that is highly hardened and adversarial resistant we're

not there yet but we're getting there and then the super fun thing we're doing this fall I am competition of course at the University um nfts in the universe and there are three interesting things about the post the first interesting thing is we have an absolutely absurd son of dust including your very own Acoustics in government a lot of the top artists in the space a lot of the top collectors in this case some of the investors from a traditional format like VC firm some of the investors from daos so there's going to be a wealth of knowledge and everything we're doing there is going to be CC by attribution so people can take all this work both the presentations the videos and spread them around so again

we have to get people engaged in this topic that it matters but then there are two interesting things that I haven't seen before the first interesting thing is the course is going to run on chain and so you will get ultimately into the token created spaces or the token you'll be able to make your straight to them or the token or trying to figure out and it's very stressful because we don't have much time left thank you forgot how to do the exam on shade which means you need zero knowledge proofs otherwise everyone's gonna cheat right so the ideas to do it on chain which I've never seen anyone do this before and also in a metaverse environment and here we're doing it at home and we're learning all types of

things I mean the first thing I've learned is the Om type experience works pretty well for educational context people like seeing each other around even when you're doing something very basic like you're interviewing someone on video like we're doing today and this is all just social visual aesthetic right it's not strictly speaking technical it is somehow more interesting more Community oriented for people to go there with their avatars and watch this in a 3D environment then just be a username watching the exact same video on YouTube that's right more present yeah it's more presence it's more Community people see each other because it's all the same people who know each other from Twitter and from Discord and they're like oh look it's so and so I know them from Discord I know

them from Twitter I see them in class they're here with their Avatar and that's better than if they're just like some comments reply person on YouTube you feel less a part of the community there so the substantive point of the course is to find a way to get a lot of these messages out in a structured way and I think it's targeted really well in that the base lessons that I'm doing I'm trying to keep them at a level that someone who is not into nfts can at least get a sense of what's going on right and then when we bring the speakers you know last speaker was four one five six who's Big thinker on decentralization we can get

into really sophisticated topics that are going to be I think interesting even for the most sophisticated people that it's exists and so the course is free you can comment them that it's all open it's all free to use we're trying to get the message out to everyone and hopefully it will leave a corpus of work and material that people can reuse every semester and getting the word out to people because generally people are badly confused about these topics right so having something that's well structured but we get the best of our field in front of everyone and have we have discussions including what the pluses and minuses we want to say thank you for taking the time well great well thank you for

having me thank you yeah thank you both that's great thanks Punk thank you so much you guys take care have a great day all right take care thank you for listening to web3 with A6 and Z you can find show notes with links to resources books or papers discussed transcripts and more at asicsnccrpto.com this episode was produced and edited by sonal toxy that's me the episode was technically edited by our audio editor Justin golden with seven Morris credit also to moonshot design for the art and all thanks to support from Asics and Z crypto to follow more of our work and get updates resources from us and from others be sure to subscribe to our web 3

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