Money, power, politics, and the internet's next battleground

Transcript

welcome to web 3 with a16z a show about building the next generation of the internet from the team at a16z crypto that includes me your co-host Robert hackit today's episode is the final installment in a limited series on read write own the new book by a16z crypto founding partner Chris Dixon today's episode features Dixon in conversation with a16z co-founders Ben harwitz and mark andreon their discussion covers the internet's corporate takeover and how startups and creativity and Innovation are affected blockchains as inheritors of the open source ethos where AI comes in and the next Battleground in global politics this episode is a crossover from the Ben and Mark show which you can

find and follow on the a16z YouTube channel or wherever you get your podcasts I deeply believe that most Innovation comes from the edges it's not just about sort of you know fighting over how a technology is built right it's fundamentally like do we have an Internet that creates incentives for entrepreneurs for Creative people what is the society we want what are the incentives we want do we want human creativity to still flourish I think of it as very analogous to the arguments for open source software the policy should be things that encourage entrepreneurship creativity Innovation at the edges not five big companies that control everything what kind of Internet do we want the content here is for informational purposes only should not be taken as legal business tax or

investment advice or be used to evaluate any in investment or security and is not directed at any investor or potential investors in any a16z fund please note that a16z and its Affiliates May maintain investments in the companies discussed in this podcast for more details including a link to our investments please see az.com disclosures hello and welcome to the mark and Ben show today we have a special guest Chris Dixon who is written a new book called read write own and uh it's an extremely exciting book for us because it's the first book that really explains the very interesting and complex field of crypto and blockchains comprehensively letting us understand

why they're important what they're going to be used for and how they're going to change all of our lives and so with that I welcome Chris thanks for having me so Chris read write own the title is very interesting because it's not just the title of the book but it's really a short description of a philosophy of networking technology and economics and how they work together and how they've evolved over time so maybe you could tell us a little bit about like what does read write own mean and how does it relate to the evolution of the the internet technologically and economically so what I want to do with the book so I I you know I've spent years talking about this topic and in in

those conversations realized that some of the sort of background context was missing and you know I I generally am of the school of thought that most business books don't need to be books they could be blog posts or podcasts or tweet in this case I felt or Tweets in this case I felt strongly that just the the kind of minimum time you know kind of space you could explain these Concepts was a book length so 200 Pages or so and specifically I wanted to kind of go back to First principles and discuss sort of how power and money works on the internet which is really what the first half of the book is right and it's going through and it does it as as the title alludes to the titles ref refering to kind of the three historical eras as I view it of the internet and so the book

kind of goes it starts with the um you which you guys create you know we're huge part in creating the kind of first era the commercial era of the internet starting with Netscape we really love that era by the way I know I know you got I'm I'm speaking to the people who invented a lot of this stuff so I think you know a lot of this stuff but but what I learned in the conversations with folks is a lot of people didn't have that background and so specifically the the idea that sort of the P power on the internet comes through Network effects this is sort of the unit of power you build a service like a social network or the worldwide web or email and these have Network effects and network in in the sort of offline World typically you know Moes as Warren Buffett calls them

come through economies of scale and scope and more traditional kind of economic modes on the Internet it's most the mo the main Moe that matters is Network effects and so what you do is if you're an entrepreneur or an investor as we have been for the last you know 20 plus years is you try to either build or invest in networks right and and up until blockchains we had two primary ways to build networks we had one which was the the original approach of the web and email which is via a protocol right so you a protocol is a set of Standards adopted by a community and the important feature is that it has a network effect email gets more valuable as more people use it but that Network effect doesn't ACR to a single company right it crues

to the community and so and there's still rooms for for-profit businesses obviously as we've seen on the web you know millions of of successful businesses are built on the web but those businesses don't compete you know they they they generally don't they don't compete by capturing the web's Network effects they compete by building better Services right right right the web the web captures captures the web's Network effects that's right the the the network effect you always have a network effect but it's a question of where it acrs does it ACR to a community or to a company right and so in the first year of the internet you know it was dominated by these open protocols and then and then you know and then and and I and the reason I call it the reier this is not my terminology this is a common way to describe it is that most

of the applications built in the 90s were were kind of around democratizing the consumption of information so you know the kind of killer app of the 90s was a search engine you type Abraham Lincoln into Google and you get a page about Abraham Lincoln and that was this miraculous thing but a lot of the applications were kind of skoric as we call them which meaning took and this happens with all new forms of media it sort of ped over old old behaviors from magazines and brochures and encyclopedias and ported them to the internet the newspapers some they still are to some extent were formatted exactly like newspapers I think the still pretty much that way as was in New York yeah no they have and and and if you go back and look

at those websites to collect like '90s internet you know it was very much kind of magazines brochures kind of displaying I mean they had you know fun fun little spinning graphics and stuff but for the most part it was you know people hadn't really explored the the fact that the internet was now a multi-way medium right and then in the sort of so-called rewrite era in the 2000s also called Web 2 era people started you know you had a couple things happen Broadband penetration started to hit a kind of critical mass and then you had a wave of entrepreneurs who were saying you say Zuckerberg Jack dorsy all of the kind of services that we use today who were saying what you know have we really explored the the full potential of this medium and and specifically they wanted to explore the

idea that it could not only democratize the consumption of information but also the publishing of information and that was the web 2 movement and the web so my my kind of core argument though is in that process and that was generally a very positive thing we now have five billion people with supercomputers in their pockets who you know can share information and consume information cost $10 to get a smartphone I think there's more internet users than than have access to running water I mean it's a miracle in many ways so you know I don't wanted that to get overshadowed in the discussion it's a very positive thing but there was kind of a fouy and bargain in that 2000's era which is in order to get that advanced functionality we handed over control to a new new type of Internet service where the network

effects were controlled by a company right and so that's what you have with all of these modern internet services and that and then and then I think specifically you had kind of a horse race for those who were really in the weeds back then there were there were things like RSS which is a open protocol for doing social networking which in the mid 2000 seemed like a credible competitor to some of the proprietary social networks of course that lost you know it's still around but it's you know most people you talk to on the street don't say they use RSS as their social media although one of the critiques of my book so far has been that RSS is actually very successful it's well not not successful at its original Vision at all yeah I mean it's used like http2 they're used as transport layers in some cases but

they're not you know they're not the the that you you don't ask an average person how you get your social media and they say RSS right they go through a a company and so anyway so that kind of LED my argument is that led to the current state today where you have a small number of companies who through these these Network effects have now Consolidated power right so in that context so what are blockchains blockchains are they basically my core argument in the second half of the book is they provide a new way to create networks a new way to create internet services and specifically they they're kind of The Best of Both Worlds of the prior two ways to build networks they combine a lot of the societal benefits of protocol networks so you have an incentive to build on the edges if you

build build a business or you build an audience as a Creator you own that business you own that audience you have full control of it the economics are much more favorable to the network participants so there's a whole ser and I have a series of chapters that go through the economics and the what's called composability which is the ability to build services on top of other services the way you do with open source software I go through kind of network governance and I go through a lot of specific benefits of blockchains but basically the core argument is It's the Best of Both Worlds you get the societal benefits of protocol networks but a lot of the advanced functionality that people have come to expect from from what I call corporate networks that that both lets you do again sort of skew morphic native it lets you build

existing networks like social networks and existing applications in a in a better way I argue but also unlocks a whole new class of new applications that couldn't have been built before and the last sort of third of the book I go through seven areas Finance social media AI couple of two sections on AI so one on like kind of media and nfts and another one on called collaborative storytelling and just kind of go through specific applications some of which are kind of skoric they're doing old things better and some of them are brand new things you couldn't do before the last point I'll make is on AI obviously we're all very excited about Ai and the firm's investing very heavily and I think it's a very positive technology and will have all sorts of benefits I do think that

that without a counterbalancing force it will tend to be a centralizing technology and that it will kind of reward companies with large amounts of data and capital and I I argue that this makes the need for blockchainbased networks kind of more urgent because it's an important kind of counterbalancing force to offset that that centralizing power so Chris so Peter teal has the famous line sort of theory that he's been saying for the last several years which is AI is inherently communist and blockchain is inherently libertarian and it's sort of based in this idea that and say say Chinese Communist Party loves AI hates hates crypto that sort of AI will lend itself extremely well to wise power and and you know today the the strong form

of this argument would be today you see this with you know everything up to it including you know Sam mman going out to raise $7 trillion to build you know sort of proprietary chip Fabs but you know the the to build the big models build big models is you know now it's in the billions of dollars and maybe heading into the trillions of dollars and then you know blockchain at least has historically had a lot of affinity from the sort of Liber you know sort of tech libertarian you know kind of community and has had this sort of Promise of decentralization do you think Peter's framing is is would you make an argument as as as directors Peter does there or what what would version of that me yeah that's interesting I mean I I mean like the my default answer and this sort of

what I argue in the book is is blockchains are decentralizing AI is centralizing so it's a it's sort of a less political less political spin on the same idea I think I don't know it's an interesting question like I do think that there's some truth to the fact that culturally today you know like you could you could separate the essence of the technology from who happens to be excited about it today right and the I would argue the essence of blockchain is more about shifting power to the network or participants and that could you could do a spin on that that's kind of more left-wing collectivist like you think about a dow and if you had all the artists in the world get together and share their art and collectively bargain with AI systems as to the licensing rights uh of their you know almost like

unionize you can use a blockchain to unionize like that that would obviously have a leftwing spin Bitcoin obviously has more of a you know kind of the anti-government right-wing spin so so I I kind of would decouple the essence of the technology from the specific mations of it I would also argue this is why it's kind of a shame that it's that if we're going to get into politics here why you know the it's a shame that that a lot of that some folks on the left have decided they hate blockchains because they're basically opting out of participating in this world when they could be contributing to it and and sort of nudging it in the direction they want instead they're just sort of saying it's the bad guy and I think that has a polarizing effect and it tends to you know kind of politicize something that I

would argue doesn't need to be as political but yeah I I've got the answer Mark so AI is what communism actually is a massive concentration of power and blockchain is what communism is advertised to be which is power to the people so they're both leftwing just depends which left Wingers you're talking to well the other angle on this that's a little bit less partisan and maybe more philosophical the other angle is a AI you know at least in theory AI represent Central planning right in other words like if if you were going to build a machine to try to centrally plan the economy it would be a large scale AI system and in fact the the the Soviets the USSR actually had that as a mission for a very long time and various other communist regimes it was always this kind of idea there

there's actually a book on this from from a from a modern communist called fully luxur fully automated luxury communism right which is sort of this idea that if you have smart enough machines in the center of the economy they can plan everything and sort of realize the Communist dream and then correspondingly you could say that blockchains right are econom you an economic freedom economic Liberation argument which is you know sort of the fullest expression of a market economy you know would be would be would be giant blockchains because it would be truly decentralized and then it and then philosophically that would be in line with Hayek or or misus in sort of saying that actually no economic economic activity should be coordinated Bottoms Up in a peer-to-peer fashion yeah I always thought the best haek argument was that that that no Central planning whatever be good is a

distributed price signal economy right at figuring out what goods you need and I guess what you're saying is maybe if the AI is good enough the central planners can get can be be as good as the decentralized price signals well that's the argument so that's the argument the mo no by the way that's the argument the comic made if you go back through the history of Communism that's the argument they were always making which is we we're always on the verge of a breakthrough in centralized economic Administration and you know it's going to be the Mainframe computer it's going to be the PC it's going to be you know there was a documentary years ago that interviewed the guy who ran uh Gau plan which was the central Soviet planning agency in the in the Kremlin um and you know it interviews this poor guy in his

office and his office is just like covered with you know just like it's just a blizzard of paper because he's like trying to plan the entire Soviet economy like pricing out toilet paper jeans shoes yeah milk everything everything in production orders for all of those things and trying to balance it and this guy by the way this guy looked frazzled right this guy is like not you know that actual job actually is like fairly stressful apparently cuz like when you get it wrong people starve to death and so but in in the documentary it was like an 85 or something and he had just gotten a PC in his office for the first time and he had a stack of floppy discs and he was very excited because he's like you see all this paper I can put it on these floppy discs and now and now I'm finally going to be able

to do this job right so so there's there's this long running you know the dream and yeah you might say yeah giant AI you know giant llm can do all this I mean the counter argument Chris your point the hyek argument would be you know no look even if a computer can deal with you know analyze lots of details the 8 billion or 10 billion people where you're trying to model all of their preferences and needs and wants and productive abilities and coordination and so forth the problem is like even if you know what they what they all want to need right now their preferences are all shifting over time and so you you not you not only need to understand the current state you need to be able to flexibly adapt and and without a price system you you you can't do that and you can't have a price

system if you in a central planning environment you have to have you have to have decentralization for that so you you have to have decentralized economics and I you know obviously that you know that that's what I believe but that's that's the strongest form of this I guess the counterargument would be if you have enough you know if they're searching and and doing social networking all day and you have enough data maybe you can outsmart them and know their preferences better than they do or if you just go full Wall-E and you just like plug everybody into a pod with a VR headset and and a in a feed of nutrition drink and maybe some heroin ontap then you you really reduce the the preference need but anyway all right so we'll finally try real communism real communism requires Ai and we'll finally well and or we'll try full you know real

market economies because we'll have we'll have distributed Financial system through blains that for the first time can actually be like an actual full decentralized economy so one of the things let's get into the economics a little bit because it's I think one of the things that's really striking um to me that you point out in the book is that when you have these Network effects ACR to companies they do things that are you know I think most people you know when you take a step back and look at it are unbelievably exploitive in terms of take rates so kind of a take rate in a competitive market versus a take rate in a kind of network effect concentration of power Web Two World just turn out to

be very different so maybe you could take us through that and how that works yeah so take rates just so folks know is is in an internet service or network it's the percentage of Revenue that goes to the operator the network so the in the case of these corporate networks the corporate owner so think of it almost like a toll that's charged and so for example credit cards charge something on the the order of 2 and a half% although a lot of that's given back in rewards to Consumers Apple charges 30% for the right to just simply distribute your app basically yeah social networks outside of YouTube take all the take all the money so they make about 150 billion last year in revenue and through advertising and other and other business models and they take you know the vast

majority of that it's sort of it's sort of hidden from users so they don't see it directly because they don't see the money flowing but but you see it in the results which is if you talk to a Tik Tok influencer or something they're always doing these kind of gymnastics to figure out how to make money you know they're selling stuff sponsorships or stuff in the offline world because they can't make it directly the way they would on the web or email where you have a direct relationship and that by the way web and email which are these open protocols there's no take rate there's no one in the middle and that's a very important kind of economic consequence so yeah one thing I want to do in the book is you know you hear these words like decentralization I I try to almost avoid that that word in the book and a

lot of tech jargon and really dig into the detail so like when we say decentralization that could mean de centralization of software production it can mean decentralization of economics and so when I talk about that's one sort of choice I made in the book was to really sort of say like let's get specific and like how does the money flow and that's the that's the idea with take rates and so what essentially means though the effect of it is a in a blockchain and I have a whole argument in the book as to why blockchains basically the design of the blockchain constrains the take rate and that there's a bunch of reasons why including the fact that with a blockchain the designer of the network is forced to commit upfront to the take rates and then can't change change them and that creates a competitive Dynamic where

people can sort of shop around and empirically I have a few charts in the book like the take rates and for example ethereum is sub 1% and all the kind of common blockchain networks are very very low empirically as well and so and and and so that's very important from a you know from like if you build a social network like we're investors in one called foraster which is an emerging social network where you know it for the end user it feels like a kind of a tra like a typical social network like Twitter but a very important difference is if you build an audience there and you want to you know put up advertising or sell them a subscription or do whatever you want you get the money you get all the money right and that's just a dramatic shift that it's really like

$1 150 billion dollars a year in current social networking Revenue that you sort of like I think if it like a train track you can reroute it back to the users in a lot of ways the economic argument is s like I think a lot of people focus on things like Shadow Banning and like these sort of obvious effects of having a centralized operator like Elon Musk buying Twitter now you know the rules have changed around freedom of speech and who gets banned but really the economic effects in my mind are some of the most consequential it's also what creates the opportunity because I think you know a lot of historically a lot of opportunities for new businesses on the internet have been ones where you take an existing high margin business you know your your margin is my opportunity Jeff Bezos would say in the same way

like your your take rate is my opportunity that you the fact that you can this is also what makes me bullish on these networks succeeding is if you can go to these creative people people and say hey do you want all the money instead of none of the money like that's a that's a pretty that's a pretty powerful proposition and so so I think there's a lot of pent up energy there for better models and people are just kind of used to this existing system but when they see real Alternatives which I'm hoping that that they'll see in the near future they'll realize that that that's a really compell because the other things like governance are subtler right like are you really going to switch your business over as a Creator because they have better governance rules or it's it's it's subtler and more nuanced

whereas money is very straightforward right it's like you you just can have a much better business yeah there there's also a kind of Freedom ownership aspect to it which kind of is is very reminiscent of web 1.0 where like in the early days of the internet if I was building a business you know I put up a website that's my website it's not like any company's website they can't take it from me they can't set roles on me they can't you know Harang me and then it's all my money whereas you know now if I've got my social media account I don't really own anything in fact like if I upload a photo to Instagram or whatever I actually they own that photo now it's no longer mine the handle my name is not

my name my followers are not my followers they're all owned by the corporation how does that like so how does that change with something like forecast or how does it work in web 3 world yeah I mean the key idea in something like Broaster is that just like with the original web you own your identity and that that identity is typically this is where blockchain comes in is you're you you own it on a blockchain so think of it something like an nft where it's a digital object that you own and you also own your audience you own your follower list and so what that means in practice is if the software provider does something you don't like like tries to remove you from the network tweaks the algorithm to show less of you as you see on Twitter now people are complaining about you know if

you have a link in your Tweet you get demoted if so any of those Behavior or the take rate changes or whatever happens that you don't like you can switch right that's the key thing just like with an email provider like if you don't like what substack is doing you can take your email audience and you can leave and you can go to ghost or some other certain MailChimp or something in the same way with something like forecaster you can you can change software providers and so you can shop around and that even if you don't shop around the fact that you can shop around is what gives the user leverage in the same way that like if you have a if you host your website with Rackspace or AWS they can only with you so much right they can raise the price they can

do this but in the end it's a pain to switch but it's not the end of the world to switch because you have the domain name and you have the kind of property rights that you were assured on the original web right but we've kind of Forgotten those property rights now and I think it's only look I mean I thing I would say is like obviously social media has been around for 15 20 years but really only in a mainstream way in the last less than a decade I mean that it's gone mainstream and I think only recently have these companies as part of my core argument is that the incentives of these Network providers changes over time when they start off they I call it the attrac stct cycle when they start off they are trying to recruit people to into the network whether they're users

or complement like content providers but over time they start to squeeze you and you see this like look in your Google Google search today or Amazon searches today Google search most of your searches now are Google Google properties the results are Google Properties or sponsored ads very very different than it was 10 years ago and this is happening more and then on social media what's happening is that people are are basically they've capped out their kind of organic growth for the most part they're growing like 10% a year or something to get to to get to juice further growth they need to keep you on the keep you in the app longer and that's why they're demoting links and doing all these other kinds of things so they're kind of turning so I would argue also that we're relatively early in the social media Revolution and

that only now are a lot of these companies really turning the screws and that I think creates greater opportunity for Alternatives because people are starting to sort of see these effects that people like me have been talking about for a long time but seemed theoretical and now are becoming more kind of practical yeah you know we've SE we've seen this kind of pattern before I think it originally started probably with Windows and PCs but then you know kind of over time where if the platform provider has to get all the money in order to to continue growing then eventually nobody Builds on the platform so I think that you know kind of in the early days of social media we imagined a world with all kinds of applications that could make use of your friends and

your you know your Associates or whatever and all kinds of things you could build your business on but kind of what's happened is you can only build something if it's very very small or you'll get basically shot in the head or outlawed or Changed by the platform provider so how talk a little bit about how that works yeah you guys saw this with me like we used to invest in things that were built on Facebook and Twitter would we ever do like when I I would say around 2013 12 13 probably people like us all the VCS stopped because of platform risk right this is not a theoretical thing like it just was very clear the writing was on the wall at one point like zingo was built on Facebook and ipoed and so there was a there was a

very broad mainstream School of tech thinking that it was okay to build on social social media platforms and that just completely I mean would you guys ever fund somebody building whose entire business was was based on one of these social media platforms like so okay I'll I'll recuse them I'll answer that but no but I mean and then that and that ended what eight years ago or something I mean this is something I think that that the outside kind of mainstream world hasn't realized yet like this has real consequences these these platform decisions I would actually argue Ben with respect to Microsoft maybe this is a loaded topic with this group but uh I would actually argue they're in some ways benign relatively like Bill Gates always said that the plat that the apps need to make

more money than the OS he said right like oh yeah he did say but compare it to look look what Apple's doing now like no you see this no one none of the major apps would build in the in for Vision Pro because they're the spotifi of the world because they'd been so screwed over like they're much harsher 30% and was just people don't business or just don't realize like how owner that is on a on a business yeah I mean Microsoft's methods were different know they're old saying Lotus 123 or dos ain't done till Lotus 123 won't run was their motto they would just keep putting bugs in the operating system that destroyed dos or destroyed one 123 and by the way they did the same thing to us at ncape so I think that you know if you go back to

like the mid90s you could not get an application funded on a PC by a VC because you know they knew that my Microsoft would just put you out of business so it's it's a kind of a common pattern where if the network effects a crew to the company then the only way for the or the way the primary way the company company likes to grow is by basically capturing everything that's involved in that Network effect and you know as a result you kind of get these very stale ecosystems over time and that's you I think that's what made Windows vulnerable to the internet that's you know and hopefully that'll be what makes these monopolies uh vulnerable to a kind of new better decentralized system where ownership is

distributed and not just in one company well one of my belie I don't know is it maybe I'm wrong but this I believe this is that there's there's a lot of pent up developer energy and that sort of we've lived in a decade of very closed platforms yeah and people have forgotten what it's like to be able to really build on a on a on top of an Internet service yep and you know we saw that the excitement level early Twitter was all these developers building things and we saw that level of excitement and I I my belief is that if you look at the 80 years of software history like that's a long ongoing Trend most vividly embodied in open source software yep but also with the early internet you know with

that 2008 year of social media and I believe it's sort of this pent up energy that with the right blockchain application we can release energy and there will be this huge wave of kind of developer excite around it I don't know so I think there's sort of a dam that could that's about to break or could break with the right application yeah yeah no I think that's right and I think that you know like one of the things that we talk about and and you know because you know one of one of the things we we should bring up we can't ignore is we've had like these hype and crash Cycles in crypto blockchain and they're kind of typical of Technology it's a little more visible in this case because there's this token value

associated with with the rise and fall that that we haven't had in previous kind of hype crash Cycles but talk a little bit about you know like where are we in terms of the infrastructure buildout the performance of the blockchains the cost of running on the blockchains and how you think you know are we there yet in terms of are we at that point where people are going to you know kind of build these new worlds and these amazing new applications or or is it still a little early in the process yeah I would say a couple things there so first of all you know the common a common argument against crypto is it's been around 15 years and like where the where the big

applications I would say a couple things first you know Bitcoin has been around that long but ethereum which really generalized the ideas of Bitcoin and and and built a blockchain that's a general computing platform that was 2015 and then just sort of V1 ethereum was had severe limitations specifically it would cost you know $10 to do a simple transaction so imagine if every time you click like on the social media thing you have to pay $10 like it's not a viable platform yeah that's a different kind of take rate yeah and so and so like that kind of curve of like how much does it cost to to and how performant is a blockchain and how how secure performant and expensive is a blockchain is in some ways it's sort of the Moors law or the

an AI would be the equivalent of like the number of parameters in your neural Network it's kind of this core infrastructure Trend that I think is highly I think those core infrastructure Trends I would argue in the history of tech are quite predictive you know you could you could argue about all I mean I'm sure there were a lot of Genius things done in the AI algorithm side but you guys would know better but I think a big part of the development was just the improvements in gpus and the ability to run models and there's some sense in which you could sort of have projected out I think from 5 to 10 years ago when we might hit those tipping points and I think a similar exists in blockchains and so I think the good look I think it's the timing is always hard to

predict but I like for example there's an ethereum upgrade happening in 3 weeks 4844 which is going to Pro like basically 100x the Improvement of ethereum l2s which are the main way of scaling ethereum today and you get sort of sub Penny transaction costs for most applications so it feels like we're getting very close to something that's very usable for a lot that that just really widens the aperture of possible applications if you if it costs you know if you if you were to ask somebody if it cost $5 to do a transaction what applications are possible like the reality is a lot of the applications that are POS possible are things like trading and lending and that's exactly what happened to work on ethereum three years ago right right right right but

right it's still cheaper to trade and lend with the transaction cost right if you're borrowing $ thousand doll $5 is fine right if you're trying to play a game or do something on social media it's completely unacceptable right right so I sort of think of it as like like each each decrease in cost and increase in performance sort of it's like concentric circles get unlocked of different application categories right and then at the same time we have you know like in our portfolio you know something on the order of many dozens of high quality application companies and entrepreneurs building things on you know that take advantage of that infrastructure so it's very hard to predict I found historically exactly when it will all come together and you'll have the right infrastructure and

the right applications but it does feel like the pieces are in place and so you mentioned the Cycles I mean we've been through you just look at prices like bitcoin price there have been since we've been involved 10 years three kind of bull markets you know Bitcoin going up and then dropping and you know potentially there's a you know maybe it's gone up lately maybe we're entering a new one uh you know my hope is that this this this time it's much more based around real applications that have utility that was non-speculative and not sort of just pure kind of excitement as as it was somewhat in the past yeah know it's it's very interesting because it it is so reminiscent of the internet kind

of boom and crash so Mark and I used to get asked constantly about you know it was like isn't the internet dead like what are you doing it's no longm now about that like it drives me crazy like people are like the internet was inevitable I mean I you guys know you guys know it better than me but I did start my career during the downturn and like it was far from inevitable and far from obvious I mean it was like it was a thing people used it but it was this thing that sat on your desktop and 15 minutes a day you'd go get your travel tickets or something like it wasn't you know it was nothing like today well yeah and and it was very kind of it was the exact same situation I mean you know and you know Paul Krugman

the Nobel prize winning economists you know kind of famously said that it's never going to be more important than the fax machine all that kind of thing um but he wasn't the only one at all and the reason was the economics didn't work the way people imagined they would one day in that you know if you go back to 96 I think we had 90% browser share Mark and we had 50 million users so there was like 55 million people on the internet so that's the first thing the market wasn't that big and then the second thing was you know half of those were on dialup so there was limited kinds of applic you could run and then the other thing was like building a website was really complex the the

software infrastructure the tools were really really primitive and you know not really designed for anything but serving a page and so the amount you know the number of Engineers you'd have to feel to get like a mediocre working application deployed to 55 million people was just like it didn't work the math didn't work on the economics for most things it worked for a few things like eBay and Amazon and so forth but it certainly would have worked for you know Facebook or Twitter or these kinds of things and so you know at that point you know if you just Mark that point in time you'd go oh where are the killer apps like this stuff is all Bs like nobody's making any money they're selling dollars

for 95 cents like all that stuff came out which is kind of exactly what's going on in crypto where it's not that like the technological path isn't correct and obvious and inevitable it's that like we're just at a point in time where there's cold classes of applications that don't make economic sense right now and and that seems to be changing fairly rapidly well what they and like so like in the my book I site there was a Pew study I think it was 2003 that asked Americans if they want broadband and the majority said no yeah and of course you know what was going on there is it when people thought Broadband when they thought the internet they thought email and a few other applications yeah and what they ignored I I'm not blaming the consumers I'm blaming the pundits here but like yeah

what they what they ignored was that it's an interactive feedback loop between applications and platforms right so as Broadband grew people created Youtube and video sites and that created new applications right and these things like to understand these processes like the growth of the internet and just I would argue this is what's special about software people map Hardware onto it when they don't software has this much more malleable nature where you can have these interactive Fe feedback loops and crypto like the internet is a software-based medium and so you what you're saying I think is if you just draw a line through the current applications you get one result if you then imagine people are really creative and they'll be creating new applications and the platforms are getting better and those two will feed back into each other you end up with a very different kind of

development curve yeah no absolutely and it and and like you know it just takes time um that's the other thing and and what happens is investors always get ahead of the which is kind of a good thing but it's a bad thing so they they get they get all wrapped up in the hype they're like oh my God this is going to change the world it's going to do everything you know the take rates are going to go down people are going to build these massive worlds da D which is all true but they're not going to get a return tomorrow you know that the money is not going to come out the other end of the machine and like you know a quarter which is a lot what investors are used to and so then they get massively depressed and they sell

everything and it's and the Press writes all these super negative stories well like the internet bubble it was I mean it was it actually a bubble because in the end it was correct it just took long time right right right like I mean and so in some ways it just the market got ahead of it but then some a lot of a lot of those sort of breathless magazine articles in the 90s which people laughed at were actually accurate they just were ahead of their time yeah well and and every crypto kind of bubble has kind of been exceeded by the kind of next wave of applications and things that people can build you know in terms of the pricing so it does seem like it's fallowing like a really wellknown well-worn pattern but of course and even more so with crypto I think then with

the internet the Press only like there's only ever a new story if the price of Bitcoin and ethereum are going down like when they go up like it's not in the news at all but when they're going down there's like a thousand stories yeah there's a website Bitcoin obituaries it's like the 400 400 times that it's bitcoin's been declared dead yeah no it's very interesting I mean it which isn't amazing I always you know when we talk to our investors and they ask well like you know you know is crypto just a fat I'm like well you know like Bitcoin started in 2008 and it's you know a piece of software and there's probably four Engineers working on it at this point and there's no company and it's

worth a trillion dollars that's a hell of a magic trick you know like if that's not a real thing then then what is a real thing you know at this point yeah I would think at some point you would imagine that the people that have said bitcoin's dead I'll just stick to bitcoin for 15 years would say okay I've been wrong for 15 years yeah maybe it's time to reevaluate my theory that it's just beanie babies and but I guess but I haven't seen that self-reflection but the my my argument would be that that you know that the core that the core idea of Bitcoin this idea that you have a financial service that the community owns is just an incredibly powerful idea that has really appealed to people and then of course has been expanded to other platforms

like ethereum channeling that excitement into specific useful applications is sort of the is the next challenge but the kind of genuine deep excitement for community-owned internet services I think is demonstrated through the just the the sheer resilience of service like Bitcoin yeah and you know it's it's really kind of important societally and I think that you have a great metaphor in the book as you kind of get into you know things like okay how is VR gonna work and so forth and you talk about well we can have Disneyland which is fantastic by the way or we can have cities and maybe talk a little bit about that and you know kind

of why like what's good about cities versus dis land and and you know what's a world where like a corporation owns you know everywhere you live and everything you do and every restaurant and every everything I mean this goes back to what Mark was talking about earlier I mean I just look I I believe there's lots of evidence for and I deeply believe that most Innovation comes from the edges Right comes from individuals creative people entrepreneurs and that no matter how much you for example try to centrally plan let's say a city you'll never do as good of a job as you know a million people all being creative right and like I think we have just the reason I like the city metaphor is I think people see this viscerally in the real world right

I think almost everybody would agree that New York City is a more interesting Dynamic place than some you know planned city or theme park and that it works quite well and and how does it work it works through a series of incentives it also works I think through a balance of public and private spaces so you know a city block is like you have the sidewalk and the street which play you know an important role for enabling entrepreneurship like you know you can open a pizza shop and if that were a toll road owned by another company you'd be afraid of of you know take rates and hold up but because you know it's open you know you can build a business at the same time you know I don't think we want all the pizza shops to be government own because that there's a lot of value in

having the creative creativity of Entrepreneurship so I I like cities I mean I like cities personally and I I live you know I live in cities and I I think they're exciting and I just find energy out of them and I think a lot of people other people do but to me that's sort of also how I thought of the early internet is you had these public resources like the the web protocol and the email protocol that acted almost like city streets and then you had all of this creativity at the edges and that for me that just made it fun and exciting and enabled entrepreneurship and Innovation at the edges so that that's part of what my kind of core argument and belief is and why this is an important topic is it's not just about sort of you know fighting over how a technology is built right it's fun

fundamentally like do we have an Internet that creates incentives for Innovation at the edges for entrepreneurs for Creative people it's very I think of it as very analogous to the arguments for open source software which I'm also obviously a proponent of and you guys are in the sense that open source software just allows for all of this other like I hope that we have open source AI systems that are competitive with the closed one so that entrepreneurs can build around that right it's a I mean think about how Val I think the world just really underestimates how valuable things like Linux are and all all of that open source software that that is the reason why a a a team with a million dollars can go build a awesome saf platform or something right and I think we could have the same thing

I sort of think one way to think about blockchains is they're doing for the service layer what op Source software did for the software layer for like for software running live and production you know you can now have services that are open and committed to staying open and therefore provide incentives for people to build on top in a way that you couldn't in the older model yeah that's a really great point because you know open source software is kind of it it broke the network effect that concentrated all the power in software and software applications into a single company with an operating system Network effect and that kind of opened up the world for so many companies and you know businesses have been gotten so much more

efficient and so forth and none of that could have happened uh without kind of Open Source unlock bling it and saying look you don't have to rewrite an operating system and then you don't have to contribute most of your money into somebody else's Network effect who's gonna eventually come kill you you know that that's such a profound change but but I would argue that so like but then what happened right is the the corporate the companies responded by saying we're going to move up the stack we're going to move up to the stack to the service layer we're going to monopolized Services data right right and and I would argue like this is one the things I I wish I could convince the open source folks of if you like open source you should really like blockchains as well because it's

essentially open source's response to that move up to the service layer right right so as these companies move to the service layer to make that the new choke point we now have a way to build open services that are committed to staying open that can compete with them and that should be yeah an extension I believe is an extension of the open source Mission not not a different Mission yeah yeah no and a really kind of amazing distribution of of power kind of getting back to the original kind of communist versus libertarian technology argument you know these Network effects concentrate power so severely and is it concentrate power and it's kind of you know is it concentrating the power with the stakeholders the entire Community all the users or is it concentrating

power with a single Corporation and then that's really the the key delineation I mean I don't see I mean I'd love maybe you guys have a different View I I just have trouble seeing outside of blockchains right now how we don't end up with sort of you know a little bit of a Wally World with like five companies controlling the internet I mean that's certainly where we're headed right now it's where we are forget headed we are I mean we are and I think yeah and so I don't know like I just I wish you know I mean I think in theory there's a regulatory solution I think in practice it's 10 years you know well you could debate it but like blocking figma or Activision is a sideshow well the

regulatory the regulatory apparatus in both the US and in Europe seems to actually want that right to want the concentration I mean they certainly are that seems to be their their their they behaving as if they do even though they don't say that but sure well it sets it up to for the government to seize the means of production right like it's which is kind of what they're doing in pieces so it's like okay we're we're not going to get all the money from Google but we're going to cont what Google publishes and says um and and that basically transfers tremendous power to the government and away from the people so let's if I could I don't want to cut you guys off but there there was a relevant question from from Twitter from from X there was a relevant sheet on

this which is basically Central Bank currency digital currency so you know there there are various governments that have already have projects underway to do so-called Central Bank digital currency sort of national Sovereign you know kind of centrally managed you know not non-blockchain Central managed digital currencies in in competition with systems like Bitcoin and and ethereum and and and other crypto web three things and then of course you know lots of speculation in the US and statements from government officials and politicians over the years that that would be a good idea here as well yeah Chris like how how would you compare and contrast everything you talked about in the book with the idea of a central bank digital currency and then what's your what's your take on the whole thing yeah I think there's a couple Dimensions to the to the central bank digital currency

like there's one idea which is having a digital dollar right and I would argue we have a digital dollar today and that's stable coins like usdc on platforms like ethereum and that this the my argument would be the smart way there's a there's a bill a stable coin bill that's pending in Congress that you know that you do need some regulatory guard rails around that and that bill would provide it but don't go and try to reinvent what the technology Community has built already then so that's so that's you know now the the strong form of the of the Central Bank digital currency is an actual government created digital dollar payment system that's tightly controlled and I think that there are people that worry that you

know sort of the trucker thing in Canada that you're essentially going to have that as a way you know government to do government assigned credit score government controlled payments it becomes a new lever in the sort of the the operation choke point stuff where people are getting debanked right you're going to have just endless and I think it's I don't know my own view I'm not a political expert but like I think it's very likely the next debate we kind of debate the way that speech has been debated the last 5 years I think money is very likely to be debated in the next five years and cdbc in one formulation of it is kind of the the main embodiment of that'll be the main embodiment of that debate right

yeah let's let's dig into that for for a bit because I'll just give you my view and see what you think which is my view is the the thing with the and you guys have talked about this from a bunch of different angles already but one of the things that just is really changed like the underlying thing really changed is that like computers and software used to be like you buy it you use it you do what you want you install whatever you write whatever software you want you install whatever software you want you write whatever you want with your word processing software you print whatever you want on your printer and then we kind of imported that that ethos into the internet kind of web 1.0 which is you know you send whatever email you want you do whatever vo call you want you put out whatever

website you want and you know if you're doing something like blatantly legal and if you're like sending somebody like terrorist you know threats over email you get arrested based on existing like anti-terror laws but there was no idea of like content filtering on email or there was no idea of like cutting off your accounts you know getting getting you know getting Bann nobody ever got banned from email right from tcpip for that matter in fact and in fact there was this whole movement right which was the net neutrality movement right which was which was this you know basically people who were like they they very much did not want corporations in a position ever be able to kick anybody off the internet and certainly not on the basis of speech and then there was just this thing that happened and it started about a decade ago a little bit longer and and

and I describe the metaphor I use as the you know the ring of power you know the sort of Lord of the Rings thing which is you know the thing with the ring of power and the Lord of the Rings universe is It's Just Simply Irresistible right like the the ring of power is irresistible nobody can resist it everybody's subject to it if you're thinking you can resist it you're wrong and you're you're going to use it it's too powerful right you're going to use it and so the ring of power is centralized internet service control or a centralized banking system control it's just you know if if if you can monitor other people's Communications you will if you can filter and censor their Communications you will if you can monitor people's Financial transactions you will if you can debank people for who you don't like you will and so it's

it's all of these these sort of central chokepoint systems in in a sort of an era where they're all live and online and can be like you know basically used you can you can search them and you can scan them and you can tag people and track people and so forth and then you you can cut people off from things like they're just going to get used and if your political allies are in power you probably think that's a good thing because your enemies are getting punished because they're getting their bank accounts canceled and they're you know getting kicked off the internet if you know you're on the other side if who in power or there's a a regime shift then obviously that's very bad for you or even if it's not political even if it's just something that's socially out of fashion you know I I just give you an

example like you know right now the sort of overall momentum in the US is they want to ban nicotine and and and promote marijuana right and so you know if you're like if you're if you're if you're doing like marijuana Vapes like they they they're all in favor and if you're doing like tobacco Vapes they want to kill you and they'll like they'll like use the banking system and they'll use the internet censorship controls and so forth to promote and ban by the way that could flip tomorrow right 10 years ago that was the opposite it could be the opposite again in 10 years and then the ring of power will get used the other direction so anyway point being is that a central bank digital currency I think is kind of the ultimate ring of power like it it's it's very difficult for me to see a system

like that getting built and then politicians not using it to reward their friends and punish their enemies do you guys think that is it am I being too dystopian or does that does that match what you what you guys have seen and think well I think it's actually already kind of happening um at certain levels I mean we've seen compan debanked um for you will choke point 1.0 uh the famous Ben you might just describe for people who don't know what that was what was that yeah so basically um as states started legalizing and particularly marijuana the US government you know the federal government could kind of or didn't want to or didn't want to kind of challenge that activity through like some kind of heavy-handed law enforcement and so forth and you know

although it was in conflict with the federal laws so they did this kind of thing that was kind of extra legal administrative State Crackdown where they went to the banks and said well like if you Bank a marijuana company and you let them have a bank account then you know we're going to punish you we won't let you borrow the FED window if you get in trouble we won't bail you out all that kind of thing which if you're a bank you can't tolerate that kind of risk and so it was kind of this weird you know like the people didn't vote for it there was no legislation it was underground it was like this extreme use of power in a very kind of Nefarious way and by the way we're seeing you know

this Administration do the same thing in something called chokepoint 2.0 but this time with crypto companies and you know there's no law that they're following there's no rule there's no legislation there's no vote there's no nothing it's just the government exercising power over the private sector via private corporations and it's you know it's quite scary and this is you know for those of you who are students of History know this is exactly how fascism worked this is how Nazi Germany worked they use private corporations to kind of confiscate people's stuff and you know do these kinds of techniques to them and the fact that we're seeing it like right now in

2024 from the current Administration you know do you really want to amp up that power and say well forget just Banks but any use of money is now subject to this kind of you know ring of power to to your point I've been just continually surprised I thought that I don't know I guess growing up I thought we understood there was a tradeoff that on the one hand there would be stuff we don't like and there's certainly stuff I don't like that's said spoken and shared on social media but I thought we understood there's a trade I mean and obviously you ban illegal stuff as you said and that was by the way it's banned on the web it's banned on email like it's having Law and Order is completely consistent with decentralized networks um but I thought we understood that that

you know that sort of handing the power to control speech and money and things like that to the government was a bad trade that even though maybe short-term it it seemed appealing it was a bad idea long term and I I've been surprised and I think as we all have probably in the last 10 years because I just thought it was obvious like a word processor shouldn't be the thing censoring you right I mean you obviously should have some layer of blocking bad stuff but it doesn't happen at the tool level and and I think I thought we understood that as a society and I guess we don't and now we're replaying that with now like the AI stuff yesterday with Google and like I I don't even know what's going to happen with these AI systems you guys are closer to it to me it just seems

like they're they're I I don't even see how they're useful to people if they just if they lie to you like it just really undermines their value as a tool but I guess if we have five companies and we have no choice that's what we'll use well we learned something very valuable we over the last few days with a new Google image generator which is we learned out that the Nazis were actually quite diverse it turns out there were lots of black and brown Nazis in Stormtrooper uniforms in in the streets of in the streets of Berlin and Paris in in the 1930s and 40s I actually didn't know that so the whole Master a thing and the Aran thing that that's all Bs no no Hitler was very inclusive he was he was happy to have he was happy to have SS officers of any of any race and

ethnicity in fact in fact if anything it looks like he was biased against white people okay by the way that actually comment on that without getting myself into trouble but yes that's how the New York Times actually wrote up the story today that was the problem that they zeroed in on which you know in this case more credit to them so we know what we don't want the kind of government to do but what do we want the government to do and why and talk Chris a little bit about okay like why in this with this technology is there this huge like speculative Casino aspect and and how why do we have to regulate that in order to protect the kind of the the creative

important uses that we've been discussing so far yeah so that so so crypto intersects with policy in a number of layers and there's there's so for example there's discussions around what are called self-hosted wallets which is the ability to custody your money yourself and this goes to the question that we were just discussing around Central Bank digital currency because it sort of you know that would give a lot of power to users away from centralized actors the specific kind of issue that's been the flasho Recently is Securities Law so Securities Law is a you know set of laws from the from the in the US from the 1930s that are essentially about protecting protecting Market participants from actors that have asymmetric information so

specifically you think about Apple stock and there are people including the management of Apple who have information that is relevant to the price of the stock and therefore there's all these rules around how they disclose that information and how they can trade and things like that so so it's it's intended to create a Level Playing Field and and importantly those law those rules don't apply to Commodities so for example gold is considered a commodity kind of the legal theory is that that yes there are people that are experts in gold and study that you know supplying demand of gold and things like that but but it the information is decentralized enough that there is not a sort of a Sharp asymmetry of information and therefore it's regulated differently and there's generally agreement that things like Bitcoin are Commodities because it's decentralized enough ethereum looks like it's in that status as well when

you first create a project it's by definition centralized because it's a person with an idea as as was Bitcoin as was every invention in the history of humanity right it starts off with a person or group people with an idea and so there's a there's a pathway at some point you start off centralized but you can eventually be decentralized and how do you get there and what are the what are the Milestones you need to hit and and so that that has been it's because it's a new technology it's very different than than the World in which these laws were designed in the 1930s there's been ambiguity in that and that ambiguity we've argued for a long time for many years has had the effect of encouraging Bad actors because Bad actors like ambiguity because they otherwise would be stealing money and

hacking and doing whatever and so having some risk of a lawsuit is actually appealing to them versus their other Corr options and meanwhile good actors if you're a topend student out of Stanford do you want to go into an area with gray with legal gray area we just stick to AI or something right and so what we've seen for a long time is that that ambiguity has created a disincentive for good entrepreneurs an incentive for Bad actors and I think has in many ways contributed to a lot of the things that happened like for example with FTX and other scandals and things because it just sort of Drew in the wrong people and so we saw this Dynamic happening I don't know five years ago or something and have been calling you know trying to advocate for policies and clear rules obviously we want a pathway

to allow inovation but really a lot of it's just about having that Clarity because entrepreneurs want that predictability right they don't want to they're fine spending money and jumping through hoops they just need to know what the Hoops are and that's and so instead what what's happening because there has not been any legislation or or or Ru making from the enforcement bodies instead it's all be happening through courts and so there are lawsuits happening and that's going to take many years to play out it'll be appealed and then there'll be and by the way this is I think happening in AI right now we'll see what happens similar thing with like New York Times open AI lawsuit you know you're going to have potentially copyright important decisions that have effects on huge economic effects decided by judges three to five years from now

who are interpreting you know 100 plus year old rules as opposed to society coming together as a democracy and jointly deciding on what the best outcome is which I you know we think it's a better way to do it right we should we think I think the my argument is the best way to think about policy whether it's AI or crypto is look at the technology expansively look at the pros look at the cons and then through a democratic process ideally you know and this is very idealized because it's not the politics of today but like have a intelligent discussion discuss the pros and the cons and then come up with a policy solution that maximizes the pros and minimizes the cons that would be the the I think in my view the smart way to approach new technologies from a policy

perspective yeah yeah no absolutely okay Mark what does the internet have to say Great Ghost of Twin Peaks a great show uh in both incarnations says how will crypto benefit the American national interest I think I like my my argument would be the core I mean America's very good at entrepreneurship and Innovation and we want to see and I think by the way this benefits VC's interest when I get asked is this in your interest like am I doing this am I arguing for a dynamic entrepreneurial Rich internet out of self-interest to some extent I am I work in the in the Venture Capital business as you guys do like we depend on there being a very Dynamic economy and so I think having the build the kind

of the technological building blocks and and I would the two big buckets I would do say would be blockchains and open source software are critical for preserving you know high level of dynamism entrepreneurship I think you mark talk about this like the US economy should not be thought of as a static lump of jobs I think it's every year what eight million jobs are destroyed or something and then ideally you know more than 8 million are created it's a constant churn and we need to make sure that keeps happening and so I I think yeah so the policy should be things that encourage entrepreneurship creativity Innovation at the edges not five big companies that control everything yeah I I would add to that Mark that you know if you think about America and why it's

important in the world you know we often refer to ourselves as you know a superpower the superpower and that that's superpowers is derived really from you know a few areas one is military power which I I think is kind of declining for us and that you know the there's disputes spread out all over the world I think as a relative you know Superior strength as the technology of warfare is changing our lead is not what it once was the second is the dollar itself and we've seen we've tried to use that in Li of military power in the Russia Ukraine comp and it it's been very ineffective and then the third is the internet where we're exporting our

values our culture and making the rules of the internet and that was enabled Because the Internet largely got built in the United States and you know the government didn't undermine it in fact it um promoted it and that that that remains a huge source of power for the country and for the ideas that come out of the country currently and the kind of the American way of life so so to speak speak and you know if we forfeit the next evolution of the internet to whomever and there are many countries by the way who are have been much much better on crypto regulation to date you know as a as a way to kind of preserve this ring of power which has been what's

been going on you know it's it's one of the most destructive things we can do to the country so so it's you know and a huge reason you know other than like I agree with Chris it's in our interest because you know like it's a good investment for us if it goes well but like you know for the country it's probably you know the most important thing that we're doing as a firm good and then a related question from D do you see adoption of crypto occurring you know I would say and we might say like past present and future here in regions with fewer regulations or less regulatory capture before the United States it's a good question I think I mean look we're seeing I think there's different dimensions to that like so for example usage there's a lot of data that shows for example stable

coin adoption is much higher in countries with with volatile Curren so like Argentina something like last number I saw was 18% of argentinians have own a stable coin in America 50 million people have crypto and mostly Bitcoin so pretty you know pretty big number I think there's a separate question where the projects will be based so pretty a lot of projects now are blocking the us because of the regulatory situation here which says something the fact that us is the only country you block is kind of I think a sad statement and so yeah where those companies are those projects are based where where they allow users will be a question I think a lot of will come down to regulatory questions and like look we're working we open an office in the UK

because they seem to be taking a a forward-looking approach there towards regulation here my view is I like maybe I'm overly optimistic I think that eventually all of the major countries will coales on a reasonable policy here I hope I just think it will be a question of how long it takes and sort of our pitch to various jurisdictions like the UK has been There's an opportunity to get ahead of that as you guys know people have come to us forever saying they want to create a new Silicon Valley and and our you know and they they say things like we'll provide free office space we'll provide funding these are not what people need or want what they want is regulatory Clarity like that is the way like

getting I believe getting ahead on regulation whether it's again AI crypto whatever the emerging area might be is the best way for a country that you need other things you need good universities and sort of Entrepreneurship and things like that but that that is the smartest way to get ahead of and create a new Silicon Valley and I think we're seeing some like Asia some Japan just did some positive things UK is doing some positive things even EU I would argue is better than the us right now it's not perfect but like the MAA which is the new crypto regulatory framework they have is actually better than the us so I think it does create an opportunity so we'll see how it plays out like we're working like we're not we're here in the US we're working very hard to work with policy makers here and would like to see

it happen here yeah and actually to give you a concrete example of that Mark of of kind of companies not being able to function in the US you know we have an investment in a company called worldcoin which is like a very kind of topical relevant technology because it it's proof of human they can do a zero knowledge proof Pro that proves you're a human being and not an AI bot but the one country that they cannot list on an exchange in is United States they only list in foreign exchanges and and and they're blocking the they're not going to launch the product in the US either so yeah and then let's you know actually building on that point so there were a bunch of questions around Ai and you guys touched on this a little bit already but let maybe let's dig into the

next level of detail because it's a very very people very interested in this so two questions so krux asks what is the current relationship between AI and web 3 cryptocurrencies blockchain where do you see it going in the next decade and then Bob Shu asks what are some practical use cases you think Ai and web 3 technology together can solve yeah I think there's a bunch of interesting things I think one maybe I'll start with the simplest which is proving that something came from an actual human as Ben just alluded to proving that a sort of the provenance of a video or piece of media a very natural way to do that to me to me the only correct way to do to to sort of say this this this video is attested to be true by Mark andreon or this video is

attested to be true by the New York Times the natural place to store that attestation is on a blockchain a blockchain is a community-owned database a public resource um and is made to have sort of an you know as a key feature has an immutable audit Trail um so all of that kind of fits very and then similarly with people like having I I think in some ways the internet you guys when you built the internet you forgot to build an identity system right like we tried we tried it's very hard to distribute private Keys you had a lot on your plate but that would have been nice and so instead we have these ridiculous you know how many traffic lights are in this capture and and essentially what we do today is Turing tests right like does

that email look real and everyone's supposed to do their own Turing test on every email they receed to see if it's real which is not going to be sustainable there probably isn't today right I mean these These llms are good enough to fit all that voices everything right so that whole system is about to break down and how what are we going to replace it with right and so so to me that's an obvious area of just sort of I would call it kind of direct counterbalancing features for a new world where you have infinite content in people the next layer is things like incentive like blockchains are very good at designing incentive systems what's the incentive system in the future for some artists to put their Art Online knowing it will get become training data don't we want to create a positive

incentive system for that like so that there's there's like what you're seeing now like Reddit just shut down their their API Twitter's doing that you have more and more artists taking content offline because they're just they see it as just fodder for training data and I'm not getting into who's right and wrong or anything like that just more like just think of it just purely from like first principles you want to design an incentive system that encourages creativity that encourages participation and blockchains are they're incentive machines right you can go and using a blockchain design a Network that has incentives and gives out tokens and does other things based on what the incentives you want are another layer to that question would be the AI systems themselves so for example we have an investment in a company called Jensen which is building a decentralized GPU

training Network so instead of having to go buy you know Facebook just bought I think it was 10,000 h100s 10 billion dollars in capex like what if instead kind of Airbnb style you harness all the latent GPU power in the world by creating a network where people have incentives to provide GPU Supply and someone else can access them on demand you could do a similar idea around data so you know I want to contribute data to a network and I get paid in some way so I think there's just like so there's just another area I would say is like in a world where content is infinite you know are there new business models for Creative people one idea I think is really fun that we've invested in is called I call collaborative storytelling and the idea is a group of people get

together kind of Wikipedia style but instead of creating encyclopedia they create narrative universes sort of like the next Marvel and Harry Potter and those can have tokens involved where they get kind of rewarded based on their participation and they could create AI generated movies and content and then and then go out and evangelize that content and get and make money according to how popular it is so you can kind of harness all that fan energy in a new business model and I would argue that AI will accelerate the need for the new business models right because it's GNA nuke the the model of selling content is going to go to zero I assume right that the value will shift to sell and community and attention and you know participation and all these other kinds of things that become more relevant in a world war we we're watching content yeah

I mean I think that's a great kind of comprehensive description and but I just the one thing I would add is that like it's there's not really another answer on the horizon to any of these really significant AI problems you know like I mean the other answer is the AI companies will continue to do what they do which is take all your content without asking deny that they did close Source everything and you know and then buy whatever hundred billion dollars worth of gpus and train a giant model that you can't compete with and generate a network effect so I think that you know an AI world without kind of Block

Chain Solutions is a is a potentially dystopian Place well I was going to say like one reason I wrote the book and I wish and sort of like I'm not claiming I have all the answers but I just wish we were having a discussion at a higher level like for example with the like artists and AI like today to me the discussion is like this very binary thing of like we'll either do it offshore in a Content Farm or we'll you know go to court like but like what's the right answer like what like let's think through the second order effects of these new technologies and like what what is the society we want what are the incentives we want you know how do we do we want human creativity to still flourish maybe the answer is no or yes but like let's have that discussion is

what I'm kind of hoping to do by writing this book and talking about this topic yeah and I I would argue then blockchains are very important as you just said Ben like probably the only plausible answer but I don't even see people having this discussion maybe I'm missing it but I don't I for the most part I just sort of see people having this legal discussion of like it's is it is it copyright violation or not as opposed to to me the more interesting and important question is what kind of Internet we want you know and let's how do we design that internet and how do we take a proactive View and not just reactive like let's just Sue each other like let's like don't we want to like think bigger than that and like don't we want to take control of the future in a

way in in a in a way than is opposed to just reacting to it yeah you know it's funny it's kind of like that the thing that elon's been saying which is like there are the acting like you're a good person and actually being a good person and it seems like an AI World everybody's acting like they're a good person I'm Oppenheimer I'm an effective altruist I I I blah blah blah and then everything I do is against everything I'm saying and I'm not really trying to solve the problem I'm just you know continuing doing what I'm doing and then I'm saying a bunch of stuff to try and put a cloak of decency over my head I mean like to me the canary and the coal mine was stack Overflow which my you know we used to obviously we used to be investors before they got Acquired and

my understanding is that's one of the key things that went into the training algorithms for the code generation and now the traffic is down 40% or whatever because you don't need it which you know by the way stack Overflow always had an open source view of their data and you know that was they understood that and so not specific but I just wonder like is that the canary and the coal mine and if that happens with every piece of content on the internet like that goes into training data like is that and look maybe that's the outcome we want maybe we want five websites and you just go in the Philippines and have them you know a new programming language comes along and you just have a company in the Philippines add some new training data but that that that's where we're headed right now and I don't feel like people

are talking about it I don't think that's the world we want I think we want a world with incentives so like people have incentives to create new new things that go into these systems and participate in the internet I I just don't see people even discuss it I feel like I'm this crazy person on the street corner talking about these issues and I don't know at least there's three three of us in the street corner yeah the night the the hour is getting late and the lights the overhead lights are flickering so Zack Zack pandle asks what is your perspective on Bitcoin specifically at this point in its history is it a finished product or could it evolve into something different with lightning and or Roll-Ups what is bitcoin's Tam total addressable Market yeah it's a great question I mean so Bitcoin there's Bitcoin the

technology and there's Bitcoin the you know the actual culture and everything that exists around today there was a you know for those who know there was a giant Civil War in the Bitcoin Community five or whatever five years ago seven years ago um around the block size debate it was called which was some ways a proxy war for should Bitcoin be a store of value or a payment system um and the store of value people won um and I think that sort of look store value means like it's a good place to store your money you anticipate the price is going to go up if you think the price is going to go up why would you want to spend it on a pizza or something and be the guy that spent you know be be the be the guy that spent money on a pizza when

you could have saved it and so there's a natural tension between being used as a payment system for example and being a store value and the community has leaned into the store value use case which has made it much harder for people to build kind of Payment Solutions and other kinds of utility around it that said people are trying like we're investors in David Marcus's company Light spark that's that's building a kind of a layer on top and this is sort of how people are approaching it they're building like sort of these layer two systems that in his case it's a system where you can pay in like stable coins like dollars but then ultimately know that you can settle in Bitcoin and that provides this kind of Universal ba base layer that's that's sort of trusted and independent and you know can of can can't change the rules

on you and things like that so there are people trying to do it I think a lot of that energy though in my opinion the developer energy has moved to ethereum and other ecosystems that have been friendlier to this type of innovation part of the result of that Civil War was that the the kind of the more Tech focused people like me felt like we lost and moved over to ethereum and other blockchains right there's a question of just like there's a technology itself and then there's the culture around it and that so the strongest the strongest kind of Bitcoin bull argument you know kind of the the Bitcoin the Bitcoin Mass is like the strongest form of the argument I think you tell me if you disagree the strongest form is like you actually want the store of value to not change right you you you don't want gold

to change right and in a similar way you don't want digital gold to change you just want it to be like permanent enduring unchanging and then then and then that in and of itself is a big part of why it's a good store of value it's just because you know that in five years and 50 years and 500 years it's going to be the same thing and you know I think I think that's actually a pretty interesting argument the other side of it though is you know if other systems like you know ethereum maybe most likely right now or salana or others you know if they kind of if they grow up and they become useful in many different ways and they become you know as as as as they're doing if they become kind of true swis Army knives and if you know many

thousands of applications get built on top of them and they're used for payments and like all kinds of other things you know aren't those also equally good stores of value if not Superior stores of value at some point just because you know to your point there'll just be far more investment going into them and they'll just like stay much more modern and there'll be a lot you know in general anything Tech related that stagnates dies right and anything that has like lots of innovation flourishes and if you're generally in Tech you want to bet on the thing like if you're betting on the thing it's going to be around in a decade you want to bet on the thing that has a lot of a lot of Technology investment going into it or at least Chris would you agree that that's the point Counterpoint or would you no I

agree I think I think that is the strongest I think that and the brand of Bitcoin just it's a real it's a true Global brand and then the fact yes I agree with you that like the the store value argument is that you do want this predictability and certainty and security that it does provide I think the question another way to frame the question you asked those is it like you know are they are they are they over kind of overtraining on gold because I mean that that that makes it more like gold right but is gold actually what you want in the modern internet world something that's that is simple predictable but very hard to but hard to build on right I mean it's sort of the analogy breaks down and and I think also like is gold like is the dollar a better

store value or gold then dollar is partly a better store value to your point because it's also used as a means of exchange and a unit of account and so I think one I don't know I'm not an economist but like you AR if I can break it the only I mean the reason the dollar is not a g St value obviously is inflation yeah yeah well and that's by the way that's the strong commitment that Bitcoin makes that other blockchains don't make as strongly which is 21 million that's it yeah you know ethereum's not making that claim yeah I think look I think that I mean I I I guess I would say we lost the Civil War I was annoyed by it but then in the end I realized that the that the way they're approaching store value to your point is smart because you do want that kind of

certainty and conservatism but I do think it also limits the range of applications to store value and that there's opportunities for other blockchains to kind of come in and provide these kind of more Tech forward products good good okay the next question and Ben this this is a topic I of close to your heart also so please weigh in Dave two-part question Dave wearing asks it seems obvious that one of the uses of web 3 is allowing users to maintain digital property rights and be paid when their content is used what are the early exciting examples in this space and then Manny who is an eak asks what is what are the future of nfts yeah I mean I I have a chapter in the book on nfts which I argue so it's a little more detailed but I essentially argue that that if you look at different

forms of media and how they've responded to the internet that video games are by far the most sophisticated and that they so the internet is very good at the internet likes to copy things it likes to propagate information and when the video game industry started off in the internet their business model was to sell a video game sort of sell the scarcity and over time they evolve that model and the into the dominant model today which is to give away the video game for free to let people stream it and copy it and let the memes propagate and then to charge for an adjacent layer of value namely virtual Goods right and if you whereas let's contrast that with the music industry they evolved a little bit they now allow streaming but they still still have this sort of scarcity

model where if you go and share the song and do other things they'll sue you over it right and developers who try to build like as we know from our business if you try to build on top of you know like turntable FM and these types of things that tried to build on top of music or with music as part of the product had a very tough time legally the result of that is that the video game industry went from about 20 billion dollars in Revenue at the beginning of the internet to 180 billion today and almost every other form of media has been flatted down right so so I think that like the the proof is in the pudding like it has worked very well you want to lean into what the internet's good at and so kind of one of my core Arguments for nfts is

it does for other forms of media what virtual Goods did for video games nfts are virtual Goods they're an adjacent layer of value where you can monetize different things and then give away some of the media right and so you see people doing this with music for example we have a couple of startups who allow musicians to sell digital Collectibles and behind backstage passes and other kinds of things that that complement the music right and they can then get either give the music away for free or be more locks about it or maybe even sell the music whatever and it's an just additional Revenue stream so so I I think that people have overtrained on the idea that nfts are like digital avatars like pfps because that was the I mean one thing people remember is nfts

were invented or standardized in 2020 it's literally four years old and even with the kind of downturn there were 8.6 billion in sales of nfts last year so actually quite large for a four-year-old technology but a lot of the original stuff was around these avatars and in fact it's a it's a very general technology it's a an nft is an atomic unit of ownership right you can you can put anything in that bucket and you know there's a whole bunch of really interesting projects that we're involved with and that just generally in the space where people are sort of saying what could that be another another use of nfts is talking about forecaster earlier it's your identity and social network that's your nft your you control but you know the nft lets you control your name and your audience and you can move the nft from one application to

another so it's a it's a very broad technology that I think people have so far have just we've only begun to explore what you can do with them yeah and I I I would kind of take a step back and say okay like if you look at a society or a country you know a nation or a world then like what are the fundamental underpinnings of civilization and like how it evolves and becomes better and you know two things that are really really important are property rights like there's never been a civilization without good property rights and then the other being kind of you know money and the fact that you can count on money and that your money and your property is protected and you know when when kind of societies and civilizations degrade it's usually in

some form of you know no longer protecting your property rights or you know kind of hyperinflation and the degeneration of of the society in the country and I think that you know when we think about cyers space it's really important that we get kind of money and property right and that it's a strong foundation for building you know kind of a world that we all want to live in and that's kind of fair and everybody has a chance and all the kinds of things that we want in a society and look we're we're seeing you know some you know breakdown of those in the real world in the United States lately where you know the the rise of easy money is kind of priced young people it's it's kind of a theft of of money from the Next Generation to

the prior generation and you know it's priced young people out of the housing market we're seeing that and then you know with the large increase in crime and so forth you know people like we're we're seeing kind of the the kind of eroding of a lot of the things that make a society great so I think that as we start you know in digital world or we move a lot of physical world into the digital realm this is just like a fundamental underpinning to making the kind of world that everybody's going to want to live in okay let's go we got two final questions uh okay Doomer asks you guys are going to love this question and this kind of goes a little bit back to our our Peter teal debate earlier but this is a different lens so do you agree do you agree that the web three movement can

can become a legitimate third political Wing I.E a gray tribe combining Progressive plus libertarian ideals and those you will probably both recognize I think great tribe was it's ay it's it's an idea from our bology or at least he he either he either came up with it or he's been popularizing it I'm not sure which but it's a bology idea and so basically it's yeah it's sort of the way I think I describe it gy if you agree with this is it's like it's basically yeah it's basically Tech it's basically Tech libertarian futurism but not it's not conservative right it sort of has a forward thrust and it's sort of socially you know at least it's like modern let's just say but it's you know it is about it is you know sort of an ideology around building and an ideology around technology and including technology

enhancing human freedom and so what do we think I would love that I feel like we're it's I I sure it's I feel like it's far away right now but I think that the to's point I mean bology I think calls it more BTC and I think that I think there's more of a biy is a tripar he said it's it's it USG CCP BTC is that right those are the three choices yeah I think that that I think he's my sense is Bitcoin is more of a political movement than web web 3 is more of a tech movement so to me it's more like I think of the web 3 kind of crypto blockchain as more like open source um in that it began as a political Movement Like

Richard stalman in the 80s um and that was sort of this anti-copyright you know socialist thing but it morphed into a tech movement um and that's that's kind of how I put myself and the people I'm involved with is more of that like we're trying to we're political in the sense that Linux is political I guess not in the sense that Bitcoin is but obviously there's different kind of wings of the movement he says this is his tweet where he defines said anyway Grays were once part of Blues which is to say progressives but have broken away are increasingly siding with the Reds see for example elon's Twitter or at least against Blues Grays are finally non-blue because Blues have been waging total media war on Grays and reds for the better part of a decade and you know by this this apology yeah yeah this apology

but he's like look he's like the blues the blues the progressives right the progressives you know and their and their media arm have been you know just shellacking Tech you know for a decade Blues arguably lost that media war after 2021 after the population lost trust in them and Twitter got uncensored they did capture big Tech in the federal government for blue tribe though so they got something out of it now with the soft Power Media gone Blues are moving into phase two which is not media War but money War remember they've already weaponized the banking system abroad see for example the Canadian truckers now they're bringing that war home and turning the banking system itself against gr and red right so sort of kind of saying like you have to like if sort of his if you're on the side of Freedom like you can't be blue anymore and you

might not be willing to go red and so there has to be a third way I think that the Third Way is probably going to be against who's ever in power I would think just because none of them are going to go full biology but that that that's interesting yes what do you think Mark you're the most political here yeah I don't I don't know I mean there's there's different kinds of Pol I mean there's the actual there's the actual like actual political fight which is actually fight for like elected office and you know as you guys know in the US it's very hard you know in Europe they have Coalition governments they have many more political parties and you can actually have multiple movements you know you can have four five six parties at a time in the US because of how the electoral system is structured

mechanically you tend to only have two parties and so it it makes it hard for you know it's classic problem in US politics it's hard for a third party to break through so there's a there's sort of a structural impediment and by the way maybe that means that but bi's idea actually happens in Europe first and and look there have been some precursors to it there was the pirate party you know which actually became quite successful I think in Iceland and you know there's there's you know there's more and more sort of poit I say there the European political landscape is Shifting very quickly right now so yeah maybe that maybe that maybe that happens and then yeah look I you know the other thing is just the thing I I would think about a lot on this is just like you know look a

lot of politic like most people's politics for most of recorded history right are you know kind of people's offline lives you know kind of by definition like why do I care about politics so it's like you know I've got my job in the real world I've got my possessions in the real world I've got my money in the real world I've got my f you know my friends are in the real world I've got my you know it's it's like it's like you know my ability to speak and politically organized it's in the real world and then know young people now to the extent that they're living more and more of their lives online it does make sense that you know sort of Internet politics are going to become more Salient and possibly dominant in how they think about things and and sort of therefore what what sort

of Internet policies get put in place and and and correspondingly Ai and and web 3 policies are actually going to become more Central to their entire concept conception of politics okay and then we can close on uh the um final question so Vince asks um Chris is there something you wish because you you're the nature of book publishing you wrote the book a while back is there something you wish you could have included in the book and will there be a followup I wrote I know the book's 230 pages I wrote almost twice that much and cut it out because I really wanted the book to be compact so there's all of that there was some like more technical stuff that I just thought was it was you know it's one of the hard things with a book like this is meant for to be a

general audience book and so I really wanted it to be you know accessible and so I cut a lot of that out I mean My Hope Is that the movement grows and succeeds and then there's a need for a fall on book I think at the moment though this is probably it for the moment but yeah I mean I think I'd need I'd need more more things to develop to have to feel like the need to explain more or something I feel like I hope this is enough for now but good fantastic on that note and obviously of course anybody who hasn't read the book uh definitely should book is available in physical bookstores the book's available on Kindle and um is it also on Li gen or should we not talk about that it's on audio and then Li sure yeah I mean I want it to be so I

decided to go one question I get you I think you asked me Mark is why why a traditional publisher I mean it's I think it's traditional Publishers you know can still provide signaling value they get you into bookstores I always want to make it as accessible as possible but yeah I'm hoping to have it sort of be everywhere and and everyone who wants to read a can so I I would just say definitely read the book you know if you don't have time to read the book read the introduction because it's a good kind of shorthand and will make you smarter than 99.9% of the people on on this top good thank you Chris thank you Ben all thanks guys