The Great Epicenter Host Extravaganza 2021 #374

Transcript

[Music] hi i'm sebastian girl and you're listening to epicenter the podcast where we interview crypto founders builders and thought leaders on this show we dive deep to learn how things work at a technical level and we fly high to understand visionary concepts and long-term trends if you like epicenter the best way to support us is to leave a review on apple podcasts and if you're on a mac or ios device the easiest way to do that is to go to epicenter dot rocks slash apple and if you're new to the show be sure to subscribe on apple podcast spotify or wherever you listen today we have something special for you

we have a host roundtable discussion where brian felika sonny mayer and i are going to reflect on what happened in the last year and also make some predictions about where we think things could go from here this is something that you guys our listeners have asked us to do more frequently and it's been hard to find the time to to do these these host round tables but i can promise you one thing we're going to do them more often we're going to try to do them once a quarter and if not at least twice a year because we really like doing it every time we do these we have a great time and this was no exception so in case you haven't noticed there's a

pretty significant bull run happening right now as i record this bitcoin is somewhere around forty thousand dollars and ether is at about twelve hundred so that is going to color a lot of this conversation and so we're making some price predictions which is not something we typically do on the show but we try to make some informed price predictions at least and speculate on where things could go from here but to counterbalance that we're also talking about what all of this fervor could bring in terms of negative attention to crypto and how the system the traditional finance system and also governments and nation states how they could react to this tremendous

amount of enthusiasm around crypto one of the ways that governments could react is by imposing stricter regulations we're already seeing this in europe and also in in some form in the us there's also the potential for stricter taxation on crypto assets so we'll talk about that at length before we go to the interview i want to tell you a little bit about one inch one inch is my go-to decks aggregator and i actually used one inch yesterday because i needed to make a little trade and i was surprised to find out that they had recently done an airdrop and that i was entitled to receive some one-inch tokens uh which i claimed and they were worth a

nice chunk of change so if you've been using one inch and you used it in the last couple of months you should definitely go to epicenter dot rocks one inch and have a look and see maybe you've got some uh maybe you've got a late christmas gift there waiting for you so with that please enjoy this conversation with all of the epicenter hosts so the first area that we're going to be discussing today is on the market cap or the price crypto currently unless you haven't noticed the uh crypto has been in a pretty significant bull run uh these last couple weeks and we have some predictions on where where we think things could go from here

maybe it would also be interesting to have just anybody everybody like share a little bit about like how their last year was also like yeah actually i'd like to start with that that'd be good all right let's uh go ahead ryan yeah so we wanted to make an episode today to like look back a little bit the last year and you know kind of catch up we've done those a few times in person around conferences of course now with coronado it's been a long time since we had a conference and so we're kind of doing it remotely and so we want to talk about last year and like all of the things that happened last year and i guess also especially like our own the things we did and maybe that kind of impressed us the most

and then talk about this year and you know what's coming up as we're sort of at the beginning of what seems to be like another big and probably crazy bull market yeah so i've had a bit of a crazy year uh i think you know i think someone was asking me about like there was like some there was something that like you know a couple of months ago where like some talk i was a panel about like you know what it's been like working through kobe and how was like your work situation changed uh during that and this was back when i was still that tendermint and you know i was like well honestly a lot has changed this year but a lot of it wasn't from like coverage stuff it was more just like other stuff that happened and so you know basically for me

personally i left uh this is probably one of the biggest change years for me because i left uh my first full-time job that i've ever had uh i was at tendermint for three years and you know working on uh launching the cosmos hub and thousands sdk and all that and so i left about back in like june or july and then from that i needed like a temporary break from crypto so i just started doing a bunch of random stuff um you know working on some web of trust stuff working on some education stuff i made a twitter bot of myself um and then but you know crypto will always drag you back in and so i got dragged back in of

course and just started working on so me and my co-founder dave we started working on our validator company called sikka uh still running validators but also just working on a bunch of more development projects that um we're pretty excited for for launching in 2021 so last year for us was a lot you know a lot of work on on course one was kind of the main the main focus and definitely has been like it was really great year we started with you know seven people we grew it to around 12 people and there's the whole staking ecosystem is of course like blossomed as well you know with so many networks launching so much like

innovation happening around that and you know it's been kind of like very cool to like help many of these new networks getting off the ground and then we've also done been doing some work around interoperability uh so we did some work on cosmos uh kind of a well cosmos substrate bridge and then we did some work on other kind of ivc related uh projects so we're doing some work on a cello cosmos bridge and we've been exploring like solana interoperability so of course that's also still very beginning uh where you know it's not yet sort of really affecting you know it's not yet been used but i think in this next phase that's going to

become a significant uh significant thing as well and yeah that's the only thing missing was of course like the the in-person team retreat as well because we always did those every three months we went somewhere and that was of course after the january one a year ago we didn't do any but now next i mean we did them remotely but now next week we're doing the first one in person again so we're going all to dubai and well now everyone's coming but about half the company is coming so that's uh really excited to get on the plane again and uh like travel somewhere because i haven't haven't been on a plane for almost a year now so you know like i'm working with brian

on chorus one and now most of my year was you know knee deep in onboarding some of these networks and last year was the first year where chorus felt stable where i'm like no no longer worried about the company surviving it's going to survive for at least the next few years and it took us three years to get to this psychologically comfortable point so i feel really happy i also feel blessed that who it did not impact our business like we grew a lot like last year we onboarded maybe 10 new networks on a personal front

like something really interesting happened on the regarding my body and physical well-being so in the in the christmas of 2019 i read this book called lifespan by david sinclair i really recommend all the listeners to to read that book so it's a it's a book it's essentially about you know like the science of aging and how we may be able to control the aging process itself and so i i read that book and it was a revelation and then i did one of these tests which measure your biological age so how old your body actually is as opposed to your calendar age which is the number of years you have lived on

planet earth and it turned out that you know like my biological age is 12 years older than my calendar age so you know i'm 32 but biologically i'm like 44 and and like this data is kind of um outside the norm like at the complete edge of the normal distribution so if you gather like 10 000 people this 12 year difference i'm probably like i have the greatest difference between my calendar and biological age in a sample of like 10 000 people so this was something really odd i discovered and it and this kind of observation sent me down a path of exploring a lot of different things and so one of the things i've done is like

i've done some supplements and i've done a lot of fasting in the in the previous year and what i also discovered on my body is like the weight just started dropping off my body so i lost 20 kilos last year without even trying just having made some changes so and i feel much more energetic as well so yeah 2020 brought me some deeper realizations about about the body i inhabit and how to run it better so yeah i'm thankful to to sound 20 for that have you done a second test on your biological age now has it changed so i had decided i would do like this regular fasting for

a year and the supplements for a year and then do the run the test so hopefully i'll run the test again in february of this year i'm not expecting my clock to be very different because as far as i can see we don't know how to influence the clock really well today and i am skeptical my changes would have done it but let's see brian you you recently switched to uh carnivory uh how is that going i was i just wanted to kind of like yeah jump in because absolutely yeah so i mean i've i've also been interested in like diet and fasting for a long time and i've been on some sort of like paleo-ish diet for maybe 10 years and you know probably like many people

you've seen some of this like carnivore you know on twitter right there's quite a quite a few sort of bitcoin carnivores and so yeah i also saw those and it just seemed like an absurd idea uh but then at some point i decided to actually like learn about it and watched a bunch of videos on youtube about it read some books about it and uh yeah so i then i i tried it out for a while 2019 and then actually felt really good but went to kind of eating back normally again but now i've been basically six months eating 90 ish percent carnivore probably

but uh it feels really uh amazing so i i highly recommend people and try it out it's i think the biggest difference is i know this is there's no food cravings uh there's you know you just eat until you fall and then you stop like you can't really overeat uh and the energy is much more stable so you eat like kind of what does it mean you don't eat actually vegetables and fruits or grains or you you literally just eat meat is that it well so i eat meat eggs uh i do eat like so i i do like some phases where i just eat meat next sometimes i eat some um cheese as well and i

i occasionally eat some fruit i don't eat any vegetables i mean fruit is just because it like it tastes like i don't notice any it doesn't if i eat like a little bit of like mango or something like that it does i don't know it's a negative difference but it's just it's such a different flavor and taste that it's kind of you know you miss it so brian's officially a bitcoin maximalist now [Music] yeah so i had a third kit this year so i'm still on the fish fingers diet in terms of uh you know professional stuff we did a lot of things at nosis this year so we launched the gnosis dao the gnosis safe launched noses safe apps there's two and a half billion dollar

student in in nose savers saves now we launched the gnosis protocol which is a new way of swapping assets that kind of uses uh the blockiness of blockchain to its advantage um we launched the a prediction market framework that a couple of projects have built upon namely poli market and omen we took over open ethereum so basically the the client that used to be the parity client is now operated and run by gnosis it's called open ethereum um sadly we didn't get to hold a conference this year so we were planning to do a debcon this year as

well i'm looking forward to getting back to that last year other than that i did a decent amount of yield farming and kind of knee deep in the d5 yeah so basically that's that was more or less my year there was a lot going on and i don't really see a debating at the moment i'm so happy that like the gnosis prediction markets finally launched because i used to joke that gnosis has built half the stuff on ethereum except the prediction markets that they were supposed to and but it's like this year they finally you guys finally launched prediction markets which is really fun so basically prediction markets as most of you know is a regulatory fraud topic so basically you don't want to operate a an unlicensed fraction market so basically we we try to

to get a license for the longest time um and basically now that we have a license it's kind of the the ground has changed so much that that a couple of fully decentralized projects were actually able to build on the decentralized framework that we had built so basically we're not operating a licensed prediction market at this point but it feels super good to actually have this framework out there and have people build on it and um i mean you you can actually launch your own bridge markets on omen and i think the user experience is actually way beyond what anyone could have imagined you know interacting with a fully decentralized step would be like in the past yeah like i'm pretty sure i saw like

paulie market mentioned in like mainstream news during like the election this year and i'm like wow that's pretty cool that like for me the personal failures that people don't realize that it's built on knows this technology and people go like oh but you haven't launched any brick markets like yeah but really we have yeah i didn't realize that i also saw like the headlines about poly market prediction markets i had no idea this was built on on the gnosis yeah it's a nosy stack so we've we've built a lot of infrastructure cool well i guess i'll go next um well this year it's been uh it's it's i think it's been a really fascinating year lots of really positive things happened so on the epicenter side i

think for me it was a year of in some ways provoked by by covet is to to make epicenter much more leaner as a company and i think in many ways we've been able to do that and just have the company run at a much more leaner pace but what has occupied a lot of my time this year has been working with adan we had simon palaho the president on a couple of months ago and then is the association for the development of digital assets here in france and that's been extremely positive uh on on a personal level but also just uh you know the accomplishments that we've been able to achieve there i think are like really really great um so we have like over 50 members now and uh what's what's really encouraging um is to see this initiative now go to

the eu level as uh many of you are aware i'm sure um our listeners i mean uh there is uh crypto regulation coming both in europe and in the us and at least here in europe there is there isn't or there wasn't um sort of unified voice uh representing the entire crypto space uh the entire like european crypto industry and so this initiative uh aims to um to fill that void and to have a a more more unified voice in you know in the face of these regulations that could be quite uh damaging to to innovation in the space so that's been really great it's been great to kind of focus my my time and attention on other things

i've been really enjoying uh the work that i'm doing there and you know start it started off as uh you know the thing that i think i'm you know more comfortable in which is like structuring you know all the all the things in the organization and everything all the tools that we're using but now is moving more and towards uh advising a lot of the um a lot of the papers that we're writing bringing my own uh sort of technical and privacy-minded touch to the position papers that the uh that is writing and a lot of this work is is also uh being used for the for the european um initiative so that that's been really great uh and i think with kovid i when things

started when things started going remote you know sometime in march around that time it was a really stressful time for me like personally it was you know it was really like it was driving a lot of anxiety there was a time there where i was like a bag of nerves and uh especially around the time that we organized uh reset everything but then you know then when things in like in the summertime uh kind of cooled off a bit and i was able to go on vacation and like take a breather that was it helped kind of take some of that some of that pressure off i i've really enjoyed this year being able to uh spend more time on doing things that i like like playing electronic music for example uh

so you guys can't see this here but my desk is full of devices and things that light up and instruments and things like that so i've been spending a lot of time doing that and yeah i'm hoping for 20 21 i i want to uh what i'm what i'm hoping to do is to be a little bit more because i've got you know my eggs in different baskets is uh to little to be a little bit more structured and organized and how i spend my time in these different things and sort of like be a little bit more mindful about uh about like time spent on on on different on different endeavors oh other thing too this year that that was really beneficial and i hope to continue doing next year but also it's challenging and crypto because that's where most of the information comes from is like i

really i really turned down the twitter i tried to go on twitter as little as possible uh because that was also i think for like it before we were talking about like how much the phone brings anxiety i think that was one of the things that helped a lot i actually tried to decided to start going on twitter more again because i feel like i so i started like i i started this whole like geography thing because i was like uh there's too much crypto stuff on my twitter i think that's the thing that i appreciate the most about my twitter experience is reading your geography tweets yeah yeah i know this is sunny your your twitter quote is amazing no no no not the twitter button twitter geography tweets that's

something else well the twitter bob does a lot of geography tweets yeah yeah and the twitter bot is so good that sometimes i don't know whether it's the real sunny or the twitter bot i was thinking of like making the profile the profile pictures are different right now for the twitter bot it's my like epicenter like blocky picture but i think if i make them the same it'll really confuse some people yeah so you're going more on twitter yeah you know i feel like um i feel like one thing i've like toned down a little bit if i've been a little bit less vocal and like i feel like i want to get back to being more vocal um like you know like it's like sharing my thoughts and

on stuff like so i have like you know and also just like writing more so like at the beginning of the year i was trying to write more like blog posts and stuff and i kind of like paused from that af uh and then i but i'm trying to get back into that so i have like you know after that after the episode we did with uh martin on circles i like have this like blog post i've been writing about circles and like and i have a couple more blog posts like in the works that i want to like publish and i feel like using twitter as a good like you know drafting board because i think some of my like better blog posts actually came from being like twitter tweet storms that then i uh turned into blog posts and so i don't think i've

done those kind of like tweet storms in a while i think i think what i need to do is just unfollow everybody and then start again from fresh i think i just i i think i just follow the wrong people maybe that's the problem you can also keep following them and press show me less of this yeah that that also helps perhaps maybe you guys need to train me and coach me on my on my twitter use one inch is a decentralized exchange aggregator that sources liquidity from the top dexes and amms to save you money and time on swaps one inch finds the best possible trading paths across over 20 supported liquidity protocols and splits them up across multiple market depths i started using one inch last summer and since then it's

become my go-to aggregator i use it every time i need to make a swap they recently launched v2 which has a brand new api it greatly improves their routing algorithm and my favorite part about the v2 is the new ui it's super clean and easy to use these improvements ensure that you get the best rates on your swaps with the lowest possible response time so the next time you need to make a swap forget about getting the best rate or optimizing your gas fees make it easy on yourself just use one inch and you can let them know that we sent you by go to epicenter dot rocks slash one inch that's one i n ch we'd like to thank one inch for their support of the podcast yeah let's dive into these predictions so uh

we all agreed that the first thing that was on everybody's mind that we would want to talk about is the current bull market and so we're going to talk we're going to give our predictions about where we think the cycle could take us and uh i think mayor and brian you guys had some pretty accurate uh accurate price predictions precise precise there's an actual number as opposed to like big number go up or something so i'll just like kind of like read them roughly but you know here claims that the total aggregate crypto market cap will rise 15 x so approach 15 trillion within 2021 followed by a 95

crash at some point in the following years which is interesting and then brian claims that he believes bitcoin is becoming a recognized asset class and will reach about 350k by the end of the year uh and then he added on at the end ethereum will reach 15k by the end of the year so all right dude here we want to like go ahead and like give the defense of your uh prediction to start with this is an irrational market it's a mad market and like prices i mean there are no fundamentals in crypto so prices cannot really go beyond fundamentals but they have having lived through like two two crypto

bull markets one gets an appreciation of how crazy crypto bull markets get and i think i personally think this is the 2021 is the big one where like this this bubble will become bigger than the what the dot-com bubble was in 1999 and why i think this will be bigger than the dot com bubble is that this is the first post internet technology bubble where the information transmission has been accelerated by the internet and in crypto the speculator trader market is much much larger than than the dot-com market so this will be absolutely bigger than the dot-com bubble if you think of the dot-com bubble um that's around

10 trillion when adjusted for inflation and now what i'm claiming here really is that we are going to enter into a bubble that's larger than the dot-com bubble and then once the bubble bursts the come down is yeah is going to be as as drastic as the dot-com bubble so there i think the app the market lost 96 of the value i think something similar will happen to crypto so it's going to be a crazy ride so one question i have is like you know uh do you think this will you know you very specifically said the market cap of crypto rather than like any specific coin so do you think this will come mostly from like new

assets or will it come from a price increase of existing assets or obviously it'll come from some combination but what where do you think most of the value will come from it it has to come from a combination right so i mean i'm saying it's like rising 15 x right so bitcoin will rise but it won't rise 15 x it's going to rise a little less so you know like 9 x or 10 x ethereum probably will rise like 15 x but then there'll be other coins that will rise 100 x 150 x and of course there will be completely new coins that will pop out of nowhere and have like five billion dollar market caps yeah there'll be a coin that's like three months old and has a

multi-billion market cap and all those things are going to happen and the aggregate market is going to be like 15 times higher so i don't know how much like value bitcoin captures versus the other things this is interesting actually listening to you because it kind of makes me wanna like almost like rethink my prediction i mean so i think one of the things that is going on like right now it's just that it's becoming like an asset class right where you have these like hedge funds that you know are buying or buying crypto buying bitcoin at the moment and i was listening to this podcast a few days like a week ago that i kind of really brought this point home where this was some no like non-crypto

financial markets investment podcast and you know you listened to the conversation and they were talking about the price of gold and about the price of bitcoin and you know they said like oh gold had rallied less in the last while because bitcoin had taken market share from gold you know so this is like the first time that i've heard kind of bitcoin become actually something that's like has a role in kind of the larger financial markets and so i think that's like happening you know and you see all these hedge fund investors that have kind of been like the first wave so now i think and then everyone has to follow right i think it would be in the pension

funds like just being in a kind of i don't know you know one percent two percent three percent or something of like assets and so i think i think you have that and of course we didn't have that with with the dot-com bubble right where he had this because this was just equity everyone was owning equity anyway or maybe it was so that's i think one thing that's going to drive this like very high and gonna be like a huge this almost unstoppable uh shift and then i think if you compare it with the dot-com bubble i mean the interesting thing of course is i mean you said adjustment for inflation but like is that inflation is probably not like the actual the inflation of the

money supply right because if you look at this gigantic inflation or increase in the total money supply with you know kobe and you know already financial crisis and i think is just going to keep going uh at a crazy pace right if you can't adjust for that actually i would think that this crypto bubble should become much larger than the dot-com bubble or you know at least maybe maybe relatively adjusted to the money supply at the same level but probably that would be a lot more than 15 trillion so it kind of actually makes me rethink it's like maybe this is going to be even much more insane than like [Laughter] yeah i mean i i i think you're right i

agree that like i feel bitcoin has actually found like really solid product market fit at this point like i think i think it's inevitable that bitcoin like because like replaces digital gold and i don't know if it's gonna be my uh replaces goal i don't know if it's my one year prediction i think it might take two more psych like this cycle plus one more but i think bitcoin will flip in gold within the first within the next five years for sure yeah i think in the current macro environment i think that bitcoin just really has this like product market fit and it's like you know it's this is like thing where in the us where everyone's getting like air dropped money and there's this like crazy inflation or like um monetary expansion that's happening it's like well okay now people have the means and the reason

to just go buy bitcoin and like i've noticed a lot of like a lot of normal people just like talking about bitcoins now so which is like you know it's starting to happen again on this product market fit idea one of the things that i found interesting and listening to to some of these kind of more general you know macro finance podcasts is that because it's really the only exposure that i have to you know people in in that world and it's to see how bitcoin always gets grouped with gold and the sort of institutional financial markets have clearly put uh bitcoin in the in the store of value use case like no matter what the crypto space says like bitcoin's use case should be if it

should be payments it should be whatever for for traditional finance markets it's it's clearly you know a store of value and i wonder you know what that means for bitcoin uh bitcoin's future and like how the protocol might evolve or like how that will drive maybe like some technical evolution in the protocol yeah i mean i always hate this term store value i feel like it doesn't mean anything i feel like a better like more precise term would be something like a like a macro hedge asset like that that's what i guess that's what we mean when we say store value everything stores value but i i think what it is is it's like you know it's a selling point game right where it's like

currently everyone just agrees on gold as this selling point where like if you want to bet against the rest of the world economy you buy gold and so that acts as a selling point which naturally then like moves counter to the rest of the economy and so i think that's like it's just a selling point game that's gonna shift from gold to bitcoin and i find these like financial shelling point games really interesting because like one of my friends he was working at jane street in like during the 2016 election and he was telling me about how like you know during the uh election night you know they had a poke they were playing poker but on the tv they had this like two screens open there was one was the predicted uh prediction markets

and the other was the uh peso us dollar exchange rate because essentially all of wall street agreed on that market as the selling point to play their like prediction game on who's going to win the election and so it's like it's crazy how much of like financial like markets is just like taking it like you know acting as pseudo prediction markets given the lack of like you know actual prediction markets available so can we then make a prediction about the bitcoin price on on uh on gnosis build infrastructure absolutely so i i was going to do this tonight so i was actually going to make i was actually going to set up fridge markets on all of the things we talked about

right now on omen uh we can link to it in the show notes speaking of the product market fit the next prediction i had there was that the flipping won't happen uh i i don't think that eth is going to flip in uh bitcoin at least this cycle because i still my opinion is still that bitcoin has this product market fit and i still don't know the product market fit of each as an asset i'm extremely bullish ethereum as a platform and i and i like build on ethereum but i don't really quite fully um see the role of eth in the system over time yeah the narrative isn't as coherent so basically i think there's um

different narratives as to what ethereum is and uh yeah i think that that's easier for bitcoin because it's kind of it is a meme in itself like gold yeah i think like for me i just think the fundamentals of eth just aren't the same in the sense that like i think a lot of the premise of eth comes from like you know especially as we see like eip one five five nine and stuff and like you know has to switch to proof of stake it's basically like trying to tie the value of eth more directly to the product of ethereum which is like this like decentralized computer but the problem for me is that i i mean this will get into a topic we'll get into later in the uh

in the show but um i i don't think decentralized compute is a scarce uh asset like i think that like if we want scalability we need decentralized compute to become more widely available and we're gonna see like a massive uh increase in like layer two and like all sorts of things and so if decentralized compute is not a scarce commodity then i don't see why east is going to accrue that much value yeah so that's kind of how i see it the alternative for my view though is i think that there's this narrative that can be played where you know bitcoin is a another way of thinking of it is it's a fashion statement right it's like if you want to hang out with a certain crowd and you want to like

show this certain message about yourself about the type of person you are you buy bitcoin and you show up you know like if you're if you really love eating meat you buy bitcoin because it just like fits in with your persona right i think like eth has the ability to find that sort of fashion statement where i think bitcoin is this very like techno pessimistic world view where it's like or like it's like techno right wing libertarian fashion statement well i think ethereum has the capacity to become a more techno-optimist like left-wing fashion statement and i think that i think that's like where it might end up going i love the misuse of the word fashion statement here by the way um so uh sunny what do you think about

the thesis that bitcoin will eventually move the ethereum for security reasons i think that's what happened i the reason i joined cosmos was to build the application layer for bitcoin bitcoin is gonna flow off the bitcoin blockchain into uh many many chains like that that was the original reason i joined cosmos like three years ago i mean i'm but at that time i also thought bitcoin was gonna be money i don't think it's gonna be money i think it's gonna be you know it's just gonna be the financial asset that we already talked about um so i don't i i really think stable coins are really gonna also eat each lunch like i think a lot of the premise of eth was like hey it's going to be the money of ethereum but i think we're going to see that's not going to be true

i think stable coins are going to be the money of ethereum i agree i also have my personal price prediction so um it's somewhat in the same vein but i think out of the top 10 crypto coins by market cap i think half of those will no longer be in the top 10 by end of year and the half that i kind of see dropping out rip oh not even sure why it's still there um cardano um stella chain link and the most controversial tether which also has potentially enormous con implications for the entire d5 ecosystem and also the use case of crypto as money because it's the but by market cap

it's by far the largest uh the largest stablecoin so but i think we'll talk about this later do you think usdc will take its place i'm not sure maybe i think something centralized will for sure for the moment so i don't think it's going to be um i don't think it's going to be die or something similarly decentralized but i think it's one of my uh my later predictions um about facebook and the dm dollar and so on uh so i'd save it for later well so one of the predictions i have which is not contradictory to yours is i said that litecoin will stay in the top ten and i brought this up specifically because when we did our

host episode two years ago brian and i got into a a mini debate about this whether litecoin will be like in the same position as it like five years from then so it hasn't been five years since but it's been two years and litecoin is still number four on coin market cap so and i'm convinced that litecoin will not yeah totally you've been winning that one so far like i said it's all about shelling points and memes and and dosh coin has had like a big rally up so that that meme is also making some kind of comeback yeah i think this whole like digital silver meme is gonna be very hard to kill and i think it's gonna

always like continue to be there yeah okay so we and they i can go to the maybe we have this next thing something i wrote which is basically about like okay now you have this huge bubble and then what happens what's kind of like the response from from the system and i i i see kind of a bunch of different stuff so first of all now you're gonna have these crypto businesses competing with like traditional businesses and the crypto businesses are gonna have like some weird advantages but also they're just gonna be different and not really fit into the like the way things are done and so i think one big thing would be like trying to use regulation to like protect

like incumbent industries and to to make it like harder for decentralized alternatives to compete so i think that's going to be one thing i think we also of course going to see this huge wealth transfer right if this happens right there's all these crypto people going to get very rich and like people with other types of assets they're going to like you know lose uh to some extent and it's gonna be very visible right because a lot of these people are like on twitter and on instagram and you know you're gonna have like the rappers in there and and the lambos already and so i think you have all of that like in your face and then maybe traditional businesses that are becoming like more under attack by crypto so i think this is going to be this backlash

and i one avenue where i could see this playing out will be with like taxes as well where you know the the it's so complicated a lot of descriptive stuff that even if you wanted to like perfectly pay your taxes it's often not totally clear what what to do so i i could see going after like crypto people for like tax evasion and like you know maybe requiring people to like disclose their addresses to the government and then they run like software to look at like all your transactions and kind of so i could see stuff like that happen but

i just think there's gonna be like you know a real much deeper kind of backlash to try to yeah so can you be a little bit more specific of like what the type of backlash will be do you think it will come mostly from like a government backlash or are you saying there'll also be like a social backlash as well i i think there's gonna be governance backlash but kind of driven by or it will have some public support i think because people will a lot of people will be alienated by like some of the stuff that's gonna happen in the crypto space right some people be inspired and love it right but i think there's also going to be a big people who are like oh this is anarchist

insanity here in this anarchist casino so we are already seeing some stuff right i mean i think this was also like the this treasury idea that you can't transfer or you know you have to identify when you withdraw from a wallet you have to identify the counterparty and so like how do you deal with smart contracts there right i mean in a way this is like a direct regulatory attack that makes it harder for a smart contract to compete with a traditional business so i think we could see a lot of that and then yeah i mean imagine if if your tax authorities ask you hey look you have to give them like all your crypto addresses and then you and then they could like

i've always thought that taxes will be one of the ways that you know you can go i mean that's how they put out the phone in jail now it's like that taxes but but brian how do you feel about privacy enhancing technology because basically in in a way you can actually you can build or you know you can engineer your way out of this right that's i don't know yet but i think that's going to be kind of one of the battle lines right well of course people then are going to build more privacy-centric stuff and like some people will use it others won't so i i think that's going to just become one of these big battlegrounds and i i could see there also being more of a segmentation where you're going to have like you know regulated crypto and then i mean we saw that even i think

that just recently that bitcoin fine for uh violating sanctions law even though it's sort of like an unhosted wallet or it's just multi-sig wallet so you know if you argue is an unhosted wallet hosted world but i think they got some fine because there were some people in iran or some some sanctioned country using it and so now they're okay they have to say oh we have to shut this off more make sure nobody is touching that and so i can see this sort of segmentation of the industry into a more of a regulated and then more like offshore unregulated part i totally agree with this prediction and it really overlaps with

uh some of my predictions i wanted to bring up later on and um i i think that the regulatory aspect so a couple things the taxation aspect i think is is clear and at least here in france we're already seeing some uh version of that so when you file your taxes in france you have to declare all exchange accounts in fact you have to declare all foreign financial institutions where you have an account and so crypto exchanges are usually part of those and i could definitely see that the way that government has been forging policy here i definitely see addresses being one of the things that's required to disclose in the next couple of years and then just on the on this idea that your part of crypto would be regulated

and part may you know stay outside of the regulated space i think that the mika regulation makes it pretty clear that that is what could happen uh in in the mega regulations for example privacy preserving coins are are forbidden and so privacy preserving coins can exist they simply can't exist in a regulated space now with regard to other coin other types of uh use cases like like stable coins etc there's also some question there about whether or not those could exist in a regulated space and if indeed there are you know some crypto use cases that are regulated and some which are not there could be sort of this as you

describe it right like this separation or what i call like a schism where part of crypto exists and tradition sort of linked or somehow tied to the traditional finance space it's regulated either on ramps etc but part of crypto exists outside of that and then there's you know you can extrapolate from there does that mean that there are companies that exist solely in that market and this creates sort of like a sort of shadow economy where there's all kinds of other businesses and activities happening but that never interfaces or rarely interfaces or where it's very difficult to interface with the with the traditional finance space the shadow side will probably exist in that case but do you think it will be a big space or no because like the current uh premise of d5 is

that eventually this stuff is supposed to interface back with like normal people in the real economy at least in my opinion but if that if that door is closed then would you think that like the shadow side will basically like you know go back to like 2013 days like yeah you can use it for dark net stuff but like that's about it so currently like the wild west of d5 has this like at least public state like view of like hey eventually this stuff is going to be used by normal people but if regulation comes and like clamps that down will the wild west like disappear or will it continue to like grow despite the let me throw the question back at you you know let's let's

let's assume that mika goes through as it is today without any without any modification i'm not so familiar with the with the us uh crypto uh regulatory proposal i've heard that it's a lot more uh open to innovation et cetera but let's let's just let's just presume that like stable coins are illegal or the staple coins exist outside of the regulated space then that means that exchanges won't be able to list them then it's it's really up to interpretation whether or not exchanges can deal with coins that have also interacted on smart contracts you know with exchanges be able to to uh receive liquidity from coins that have went through like the maker smart contracts for example uh

or this sort of thing when when you say exchanges you mean centralized exchanges yes right central exchange regulated exchanges so basically in in a way i think this ca actually comes down to being a philosophical and historical problem so basically what good are laws that you can't enforce where basically you cannot make sure that a law is abided by i think those are laws that kind of get overturned or repealed by history itself well so i mean the question though is uh yes so like with dexes and stuff you can skirt the law but i guess my question is what percent of the population do we

think is going to do that well i think it's a very low percent of the population i think if like if these things are meant to be if the vision for defies that d5 becomes the the underpinnings for for for finance and where markets are able to operate and like things that we already know and that already exists like commodities markets etc like just the stock market and all this can exist on defy at least the way that mika is worded uh it it definitely does seem as though they are trying to bring the parts of of d5 that already resemble and mimic traditional financial markets things like you know securities things like electronic money they want to bring that into the traditional finance system and have that be regulated

but all this other innovative stuff like all the all the uh the the gen stuff definitely exists outside of of the regulation and there's no room for it in the regulation and so i i think that and i certainly hope so that's the work that we're doing with with our initiatives is that the regulation leaves room for more innovation but as it's currently drafted it closes very many doors so do you think will people be willing to i guess it's like a cultural thing as well right so it'll probably change from like country to country like one obviously the regulation will change country country but also just the willingness to break rules probably changes from country to country as well but also the acceptability of of

breaking rules right so basically i remember when i was a kid and basically content sharing started um and you had napster and you know all of these kind of services i i remember they ran these ad saying you wouldn't download a car and i know that basically with my generation this that this didn't resonate because basically it didn't feel like downloading a song was morally wrong i mean look what happened i mean people don't really buy and hire rackets any more people now pay for streaming services and this is how how this is monetized and through you know advertising deals and so on and arguably interacting with privacy preserving crypto was way less enforceable than punishing someone for downloading a

song or napster so i think in a way the law doesn't stand on its own but it kind of mimics what people feel is right and what is wrong and i think that understanding is just going to change over time but i mean in a way isn't that actually the music piracy is basically dead now right like i mean no one like barely anyone pirates music it's all spotify and you can think of that that is sort of like the you know you have the traditional music industry if they're like selling cds then you have this like this radical thing of like piracy and then you found some synthesis in like spotify and so like maybe i mean wouldn't that be what happens here as well you have the traditional finance industry then you have this like crazy

d5 thing and then we're going to find like some synthesis in like regulated defy yeah i think that's reasonable and valuable hd5 will kill piracy just like spotify killed the music but but only if regulated defy isn't so heavily sequestrated that you know it doesn't really qualify as the real thing yeah just as with with uh dismantling of the the music industry but also like the the movie industry to some extent like i think that we will come to some some kind of middle and but you know where where the cursor stands in terms of what that middle looks like i think is

is really an unanswered question at the moment i think like one of the most compelling things for me about defy over traditional finance is the ux of it i think the ux of it is like what's really nice and i think you could say the same thing about the piracy like uh i think the ux of like digital streaming is just way better than going to buy cds and so if regulator defy can like provide the ux benefits over traditional finance but i think it's gonna actually follow you know through the course of this conversation i think i've actually been like i'm very analogizing it to the music industry i really think that like regulated d5 is gonna probably like wipe like wild west defy once it provides the ux features to like

normal people but only if you have things like stable coins for instance i mean basically and privacy preserving coins and so on so i feel like if the thing that is then caught regularly my claim is i don't think the normal people care about privacy i think normal people probably don't care about privacy preserving coins and stable coins will exist i mean it depends on how they'll exist i'll probably be more regulated like you know maybe it has to be issued by a bank and stuff but i think that my claim is that normal people don't care whether it's issued by a bank or by like circle you know they just care that is i know the ux is as nice as like it currently is i think that's all they care about i don't think they care about privacy but i mean the user experience is

pretty okay right now on d5 and it's only going to get better right so why would people kind of leave the wild west to start with because the regulation will decrease the ux of wild west d5 and make the ux of regulated d5 better because with the pirating music you always get those like dmca complaints every time you pirate them that's like that's sort of you can think of that as a negative ux component right and so i'd rather just pay the eight bucks a month to spotify get as good of a street of a ux as or probably better than uh pirating music yeah i'm just questioning how good the ux under my curve would be yeah i mean on

the topic of of stable coins i i think it's worth noting that at least in europe the european commission is considering crypto euros and i don't really have well-founded thoughts on this but maybe this is something that we can launch into into some some debate at some point but i think that generally there is going to be an opening up of currencies are in the future are no longer uh monopolized by countries and by like central banks right so i think here in this rundown we're talking about like the the facebook libra initiatives et cetera and so i think things like libra are going to exist and they're going to exist alongside things like a digital euro or a crypto

euro and that is a power shift that resembles the power shift that we saw with the music industry and the movie industry you know 20 years ago where highly centralized power in those industries was uh broken apart and now exists in in all these digital startups like spotify etc we may see a similar sort of disruption of the of the power monopoly around currencies uh to favor private currencies like the libra and and others i don't know if this is something you've you guys have thought about too i think governments are going to fight tooth and nail to protect their power

here and i think it's going to be very hard i'm not saying they're not going to fight but the record labels didn't have power of taxation and a military governments do and the one thing that they care about above all else is to maintain their like monetary dominance and i think that like they will fight very hard to prevent someone from trying to disrupt that i agree with you sunny and i think in the end they will fail and i think that's in retrospect that's going to be the pervasive paradigm shift of our times basically powers diverted away from nation states and to companies or other collectives why do we

think this is the case like like what what are the triggers that's going to make that the case like you know historically we've seen a continuous increase in like state power what's what's going to be the cause of this reversal i mean it depends on which scale of history you're looking right i mean basically the roman empire collapsed and the very state power very much regressed so i don't think that's not possible anymore laws are only good if you can enforce them and this is kind of segwaying into our regulation part of the conversation but um so basically this was this was my one prediction on regulation that i actually alluded to earlier namely

that if you look at the way that the facebook proposal for libra has moved so in the beginning it was a basket pegged to basically it was a coin pack to a basket of different assets and under u.s regulatory pressure that has kind of switched to a usd backed sable coin right so i still think that despite the fact that that is probably the best deal that the us can actually get right now i think they will still clamp down on this and i think facebook will lose in this instance and i think facebook is very much on a path to demise anyways but in its wake i think

we will see a stable coin that is global and basket packed and that will merge into the mainstream and that will be set up such that it will not have the same regulatory exposure as facebook and i think this will herald a couple of things one being the end of the global dominance of the united states because that is in essence based on controlling the supply of you know the world's reserve currency but i think this is also in in the wider sense it's also going to mean that nation states will become less powerful and i would actually argue that nation states are at peak power right now

and i think that corporations and possibly later taos and other sort of collective schemes will kind of take that place i very much agree with that i think this is like missing partially like the cyclical network effect of the us dollar like it seems like your claim here is that the u.s power comes from the dominance of the us dollar which is true but that also is a feat the other direction as well the power of the us dollar comes from the power of the us government like the entire petrodollar system is built on that like idea of like you know the us military will enforce it and so you know the reason the us dollar is the

like global reserve currencies that you needed to pay for oil and when you stop someone from trying to if you try to pay for oil and something else the u.s military will come and invade you and so it's like we need to see like what is the um i need to see what the path is to an alternative well one one path is the the client if there's the decline in the in the demand for oil i mean that's one path i mean i i i don't have like specific information and you have countries like iran right that are basically locked out anyway you know they're gonna you know they can use something like bitcoin right we saw some news there and then i think you have other countries you know like china like which will be a big oil buyer like do they care about like protecting

the us dollar i'm not sure but so china's not gonna push china's gonna push the yuan right like you know what china is doing right now is they're building like they have a viable strategy to building a reserve currency what they're doing is they're going to every country and like saying hey we'll fund your ports as long as all imports and exports from here are denominated in rmb that's like a viable path yes but i mean that that actually that puts pressure on the dollar right i mean so basically that that fragments the system even more yeah exactly you're gonna have alternatives right you can basically say oh i'm gonna get yan from china or like you can get like maybe do something with bitcoin with iran and then definitely there will be others that are also like

like russia i'm sure is going to be happy to do deals like outside of the dollar system so i don't think that they're gonna the military is gonna be able to sort of like maintain the this dominance of the dollar i think there is a big shelling point around the dollar right where everyone keeps their accounts on that and this liquidity and that and i think that's of course going to be more sticky but in the end i i don't know about the dollar i would guess it's still some ways away until we are gonna see the dollar kind of lose its status i would guess that's not gonna happen in like this bull run but you know maybe like five ten years from now

maybe i can i can step in like when i hear all of you talking i think i would like to actually someday categorize your predictions into like a framework so you think of state power like what does the state want state doesn't want one thing it wants multiple things right so maybe it wants to preserve its monetary sovereignty over their own population meaning u.s government wants a operational transaction us dollar so that's one thing they want the second thing they want is tax collection which is making tax evasion really hard via crypto the the third thing they want is which is like preserving the market structure right which

which is like the sec wants that if there's a crypto coin there's no information asymmetry vis-a-vis the crypto coin so they want to preserve market structure and then the id the fourth thing is they want surveillance surveillance comes in more from a law enforcement so it could be that the government wants four things four major things so we can identify a different number maybe in the future they will get some of these things from crypto but on the others they will fail to get what they want so you know like you could imagine different futures there's one future in which the government gets this surveillance capability so they're able to surveil everything way better

than are they able to today via crypto but they lose their monetary power i mean the coins being transacted are not us dollars but they are surveilled really well that's one kind of future but the different kind of future is they preserve the monetary sovereignty but lose their surveillance power so you know like the future has like different outcomes based on which of these powers is accentuated for the government and which of the powers is weakened for the state and all of you are like on like different spectrums of some of you are advocating for a particular thing will be strengthened and another particular thing will be weakened and like that's the sort of difference in your predictions so maybe we can actually like

classify your predictions using some model like that right i think that i think that's actually a really good way of putting it i think personally that for me i think the surveillance is something that will be harder for them to enforce and i think they know that and i think which is why maintaining the monetary dominance is something that they can do more easily it's like surveillance is like this hard problem where you have to have like monitor literally everything but like with monetary dominance it's not like it's something you can like kind of enforce not by like needing visibility into the entire thing but just this like

larger thing where you like i don't know how to describe it exactly but yeah i don't know maybe someone else can bring it in a way you actually have that now right i mean so it basically caches to a large extent not traceable and um you still have monetary dominance as as a nation state so in summary i think what we can say is that with some with some amount of certainty is that uh crypto markets are going to see a pretty significant increase in prices uh this year and i think we all welcome that and but at the same time the attention that will that that will bring to crypto may in fact cause the space to regress

in terms of its ability to innovate as freely as it has you know in the last like three years since the last bull run um would you say that that's would you guys agree that that is sort of the overlying trend that we should expect in the next year i do think we will see a large amount of regulatory pushback but i do think i mean this is kind of where where we disagreed on the episode right so whether whether this will actually mean that a large proportion of the ecosystem will become regulatory compliant or whether there will still be a large unregulated part and i think the ecosystem will very much

uh rally to avoid being regulated in an overly transgressive way i mean if we bring it back to the just kind of brief i just want to briefly bring it back to this analogy if we bring it back to the to the to the piracy and like music download example i mean that exists it it still exists in in massive scale there are still you know terror like hundreds of terabytes of day probably even thousands of terabytes per day of music and movies being uh downloaded and that's despite governments trying to to stop it it just doesn't interface with any regulated uh with any regulated entities i i don't know what that how that

overlaps to in the crypto space but it might be one indication that there can still be a sort of wild west of crypto while a lot of uh the innovation that's come in the last few years and that will continue to come will be sucked into a regulated space i mean it really might it depends on what the regulated alternative looks like right so basically if you think back to itunes where basically you could buy any song for 99 cents um i mean i i don't even know whether that still exists i haven't seen itunes in years so i i assume that it kind of was probably discontinued because the people didn't like it enough or people it wasn't appealing enough for

people to stop pirating right well better alternatives came around exactly because better alternatives came around and so i think unless the regulated open finance or defy space is as attractive as the unregulated one i think it's not going to happen and people are going to find and engineer ways around it all right cool thanks to all of you and i think we can all agree that this is so you guys have our audience uh has really i think over the years like asked for us to do more of these and uh what we've all agreed on here i think is that we'll try to do these at least once a quarter because um you guys like them and also like we

think they're really fun and we're good guests so yes awesome so with that um happy new year to everybody and we'll see you on the internets thank you for joining us on this week's episode we release new episodes every week you can find and subscribe to the show on itunes spotify youtube soundcloud or wherever you listen to podcasts and if you have a google home or alexa device you can tell it to listen to the latest episode of the episode podcast go to epicenter.tv subscribe for a full list of places where you can watch and listen and while you're there be sure to sign up for the newsletter so you get new episodes in your inbox as they're released if you want to interact with us guests or other podcast listeners

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