Crypto vs The State: Are we ready to live outside the system

Transcript

good morning Paris the Sun is this look oh there we go uh good morning Paris um hi um Stephen Waterhouse also known as seven I'm here to chat to you about some ideas I've had as we enter a new stage of crypto um I'm old compared to a lot of you I got into the space 10 years ago a little bit over 10 years ago and it was on the back of a career in Tech in San Francisco post acquisition post IPO I ended up with a venture fund that we sold to

Fortress so suddenly I'm at a hedge fund and I'm like what the hell am I doing at a hedge fund um techie guy geeky just no idea what I'm doing there so I was gonna leave and uh so I chatted to Pete briggert who ran Fortress and I said I'm out I'm gonna go he said do you have any other ideas I was like what do you mean to have other ideas like I love many ideas he goes well come back with another idea and we'll take a look at it so I went around and chatted some friends and I don't know if he's here today but a good friend of mine Sean said you should try Bitcoin I was like oh Bitcoin I've been kind of busy with other things but yeah I'll take a look at that I read about it sometime in

Wyatt so I checked out Bitcoin I was like this is really interesting I could really get into this um just made a lot of sense I'd watched him peer-to-peer attack before and I was like I'm gonna try this so I went back to Pete and I was like hey how about Bitcoin he's like great idea we're doing it too we've been buying a bunch of Bitcoin this is like Feb 2013 March 2013. um and over the next six months uh together with Dan Moorhead we incubated a team in Fortress which eventually spun out into Dan's fund Pantera and we invested in some companies over the next three and a half years uh we invested at least in the first fund a bunch of these guys and it was a very different world back then

2013 through 2016. um it was much smaller like you could put a bunch of people you knew in crypto in this room but it really also to me as I talk to people today and they talk about how you know the state's really coming for us now the SEC is after us all these things it reminds me of a period back then where a couple of things happened and it was such a small industry and it was sort of like kind of irrelevant to a lot of people it doesn't just if you really got it you got it but it's like they shouldn't have really got anyone's attention but it did so the beginning of this Interest really was Cyprus so Cyprus got had a bailout um from the European Union uh because I had a banking crisis from 2008 which had

a hangover in Europe until 2012 2013 and the value of Bitcoin shot up during this period of time when uh essentially was a massive Bank Run in Cyprus so all of a sudden from nowhere from this tiny little island there was all this interest in this thing called Bitcoin um Bitcoin actually shot up to 165 like one of the first Bubbles and back down to 50 and a lot of people thought it was over then um subsequently shot up during that year to about 1200 and it's more about that story then and these were the killer apps in crypto back then so just give you a sense of like you know why does anyone care about the stuff so you had a very successful um Marketplace on the right hand side and then this was the largest Exchange and this was this was it this is crypto

back then 2013 and yet a bunch of bad things happened you guys are probably familiar with these stories it happens every few months something bad happens like you're not alone these things have been happening for a while um so first one 2013 Silk Road gets used then in 2013 China like comes out and says we're just going to ban this thing like it's not that big a deal why you guys Banning this thing it's not like affecting anybody no one's in threat no we're gonna ban it like going down um and then in 2014 Mount gotz goes down um interestingly and I think it was March 2014 we launched Pantera so we were in uh we're in the fire um and on in March 2014 bitstamp where I was on the board also became the largest

Exchange in the world in Bitcoin I'm talking like we we ran Bitcoin for quite a while um mostly yet and then there was a moment there where if you wanted to you could kind of take down the system you could take down Bitcoin yes it would carry it on running but the banking rails were so fragile there was only really One exchange in town and in particular some of the really large Banks such as JP Morgan Jamie dimon here quoted in 2013 how much he likes Bitcoin um and as you can see the bank account which bitcent was using was at that point struggling to accept other people who basically refusing to other people in Bitcoin um this stuff eventually got

other Banks and this problem that a lot of us face in the banking world and crypto is something that's been perennial it's been coming along for a long time so the state didn't just wake up and say Hey you know we're going to take this thing out and I don't want to sound like I've got paranoid conspiracy theories but the more I spend time in the space the more I realize that maybe these conspiracy theories are right um so they've really been after this for a while and you kind of like look at this stuff and say well what's happened what's the big deal well China keeps Banning it like ends time Banning it again more recently we've got this debanking of crypto companies individuals got silvergate Silicon Valley Bank First Republican sort of a side effect of that um you've got like market makers moving

out of the US you've got tokens getting delicited you've got like this whole set of things happening in the US right now um you've got this like Global lack of regulatory Clarity really led by the US and the SEC and yes Europe is better and other places are better but yeah there's this strong regulation by enforcement they just don't like us um we have our own goals like we have not these are our goals but these are like own goals as in like football um you know feds and bad things happened especially this last couple of years and we got to do better like and probably we're going to do bad things about things I think things will go wrong again as this hopefully uh gets bigger again and we can actually find some real traction and real world applications um my friends are wrecked um have a lot

have a long list of things that have gone wrong the last couple of years and this is reflected also VC funding is way down and you can interpret this on the right hand side as like either it's about to pop up again or maybe it's just like it's going to keep going down and we're kind of screwed um tend to think it's going to keep coming up again but uh you know things are tough things are tough out there for startups but you know it's not really a bear Market this was a period of time in which when we started Pantera until just before I left and uh started a different company which we'll talk about in a minute um we just went Flatline it was like there was no activity in the space it was just kind of yes ethereum happened and so on

but like the main you know kind of the big dog in town Bitcoin it was just dead for a long time and there was no funding nothing was happening and yet it finally kind of came back so on the one hand I'm kind of giving you some warnings the other side I'm giving you some hope and inspiration that but on the other hand the conspiracy theories we talked about like finally they're showing their cards right we have the sitting president United States with an anti-crypto tweet on the right hand side you know challenges to the throne is with Warren potentially has a literal into anti-crypto army they don't like us they really don't like us at all they're actually coming for you so that comes back to us it's like why don't we just all pivot to Ai and like

piss off and forget about excuse me like leave this space and go do something else where someone's not coming for me all the time like what are we trying to build why do you do this why does everyone just get up in the morning and say I'm gonna go do more crypto and maybe it's for the parties I mean the parties have got a lot better in the last 10 years so maybe that's it um maybe it's because you like to do difficult things that's also a possibility maybe you've got a lot of friends in the space maybe you've been doing it so long like me you can't think of anything else to do um is there Utopia out there is there something that's going to be so much better that we're going to like really build some like really beautiful shiny world well I tend to think of this stuff

really in its core it was like what is crypto like we take this idea it's about the decentralized nature and when you think about what does decentralization mean decentralized governance this is you start thinking back as to why the so-called State doesn't like it you're telling people who whose job is to run things that you have techniques to decentralize how to run things so they don't have to do anything anymore they're not going to go oh that's awesome and go play golf they're like no I guess it's a terrible idea I want to be in charge you guys don't know what you're doing you're going to mess the whole thing up but this ability to disintermediate entrenched power structures I think is incredibly important and when you think through like the struggles that are happening outside of

this this beautiful city outside of the world that we most of us live in and you think about the the new uses that crypto is finding in uh areas of the developing world within communication within people trying to break through surveillance systems there is hope there is like a reason to get up and do this at least I hope that is why we're all here maybe just like the party is that's also fine too whatever your reason is you need to find that reason because I don't think it's going to be particularly popular this year maybe it gets better next year but these things have cycles and so what are these killer apps like what are we going for when people ask you the killer apps often it's like well we don't really have one yet or maybe it's gaming or maybe it's something else I don't know

like do we have one yet I don't know but we actually do have killer apps so you kind of rewind a bit Bitcoin has been successfully proven as a store of value yes it goes up and down I know but it's like it's a it's a effective mechanism for storing wealth and for moving it efficiently in a decentralized manner that's a huge huge achievement initial coin offerings other offerings Griff was talking about things in the procedure before was talking about different ideas here these are actually efficient fundraising mechanisms you don't need to go on bended knee with your hat and your hand and you know Kiss the Ring of Silicon Valley to go get funding anymore there are other techniques for doing this and this is very important this is very very efficient way for raising money

decentralized Finance I I don't even know where to start it's like an incredible Innovation and things are happening there and then of course digital assets and OT so like there's a series of of actual killer you killer applications that are being built and having spent far too long in the tech space even before this the feeling I have at this point is that this is a little bit like just before social head just before like Facebook came online just before like social and mobiles for these these applications which suddenly went hockey stick upwards and exponential growth that's the feeling I have with this space right now I don't maybe this is hoping but that's the feeling I think if you kind of like take a step back and start looking at what's happening in this room in the in the conference around us that's where I

think we're at but the state has other ideas they want to make this happen on the left hand side and on the right hand side is actually fictional it's from the Mr Robot but there's the potential right now that if we don't get these things right if we don't build systems that are white that like start getting Mass adoption and start being used by people the state will make the mass adoption the state will take up blockchain technology and get people to use it in different ways where you know maybe I don't need to explain ctbc's asking me after this but imagine a currency which you can move easily which can store value and then the state can just flip a switch and suddenly you don't have that money anymore suddenly you can't buy the thing that you wanted to buy anymore suddenly you're locked out of your entire bank

account because it's crypto you can just do that so um I'll go back a little bit I probably should plug my my own company current company so I work for orchid I'm co-founder and CEO um we've been looking at the idea of how to use crypto for anti-surveillance anti-censorship Technologies um now looking to expand this Beyond to a broader application suite and developer platform you can reach me here and this is my company now any questions I've got a couple minutes thank you [Applause] I would like to hear based on everything

that you just said thank you very much uh you did not mention cbdc's so our government finally opened their eyes and looked what blockchain can do for them um talking to Islands uh digital money and where that movement is going if you could tell us a little bit about that would be wonderful um yeah sure so cdbc is a pretty simple it's um it's just everything you've you've learned about stable coins and crypto so far except that is not decentralized it's centralized as in centralized digital banking currency and and so when you are centralized and you can apply discretion as to who is allowed to do

what and where with their money um as what I was mentioning is that you end up with a completely new and advanced level of control over citizens so hopefully you're in a Democratic Society and everybody gets to say but maybe you're not and if you're not then the government decides what happens to you and what happens to your money I think I have one more question hey Steve nice to see you again on this big stage so my question would be you know with your mission right to help the Privacy happen um did you feel already some kind of like you know people in governments and institutions that don't like what you do did you already experience huddles on

your way and how do you cope with them um yeah well in the various things I've done I've directly experienced governments and Banks and you know there's all these kind of the same things the state if you like uh coming for crypto and trying to shut it down directly and and sometimes almost exceeding um and like I said it initially you kind of brush these things off because you think well this is a one one-off case or maybe this or maybe that but I'm increasingly convinced that this is sort of like the final stage of uh crypto's journey I think if if and when we get through this it'll be it'll be a much much different situation

thank you [Applause] [Music]