A Historian's Take on Crypto's Bear Market | Josh Rosenthal

Transcript

fractionalized equity, which was seen as awful. The federal institutions at the time tried to ban that and resist that. That eventually went on to become our stock market, the Dow, the Nasdaq, 401(k)s, modern financial system, greatest wealth creation for individuals. It's like our initial reaction from federal regulators and government institutions was to try to ban the company, the limited liability company, fractionalized equity, who needs it? We already have property right the same arguments you hear. We tried to ban that. That didn't work much to our citizens' benefit. This episode is brought to you by Carbon. Carbon is a new DEX on Ethereum that makes concentrated liquidity super easy. With Carbon, LPs can now automate your liquidity strategy with custom

on-chain limit and range orders all from a beautiful UI. Check out Carbon today for unprecedented control over your liquidity. All right, everyone. Welcome back to another episode of Empire. Uh I woke up this morning. Uh my wife looked at me. She said, "You're you're you're in a really good mood today." I said, "Yeah, I get to record a history podcast with Josh Rosenthal." So, I'm very excited about this. Um today we are going to take a break from the a lot of the noise, right? A lot of the surface-level conversations around price action and regulatory mechanisms and and and what typically powers your your your your crypto newsfeed. And I'd like to um with Josh here, this might be a longer

episode, take a step back and highlight kind of how we got here. And I'm not talking, you know, since ETH launched in 2015 or Bitcoin launched in 2009. I'm talking several hundred years how we got here. And specifically what I'd like to try to do in this conversation is look at this specific subject of crypto in a historical context, which is which in in kind of put it in the the light of like, you have this fight between institutional hegemony and decentralized generations and and the experience of the participants both from in times of the Renaissance to the American Revolution to today, right in 2023. And I think we'll be talking about some kind of crazy historical things here, and I'd

invite you to suspend your thoughts of what you think crypto is and and and what we're doing here in 18-month bear market. Get that out of your head. And I think if we do our job right, hopefully the conclusion and the takeaway here is that in the long run, optimists win out on a long enough time horizon, and that we are fighting for something much bigger than yourself here. And I don't think that's aspirational thinking, and I think Josh agrees with that. But I think we can kind of back up that claim with some some historical precedent. So, Josh, shall we?

Yeah, absolutely. Not Not a lot of people, I don't mean to out you on a pod, but not a lot of people may be aware that you're actually a historian by training. So, it's we're going to do a bit of role reversal today. Jason's actually not just an entrepreneur like historical background around rebellion and human experiences and revolutionary movements and like not faint flattery. Like I think you have one of the best perspectives, multi-disciplinary vantage points on on the space from macro to media to markets collectively. And I'm going to be saying some things outside the historian's hat, and that's partially drawing on some background I usually don't talk about, which was work at the Cervantes Institute for Advanced Studies around complex systems. I was an entrepreneur and EY Entrepreneur of the Year with repeat exits in AI, natural

language processing, which is like a a subset of LLM, sold out. And so, we're going to be kind of switching roles and kicking it back and forth. It may be a little bit more fluid than people are used to. Hope that's okay to out you on your pod. If If you think that I'm a good historian, that I'm I'm glad to hear that my my late-night Wikipedia rabbit holes have fooled you into thinking that I'm a historian. Yeah, really I'm just good at repeating whatever Wikipedia tells me on my on my rabbit holes. But Josh, maybe if you could We did this episode maybe a year and a half ago or two year I forget when it exactly was on the Renaissance and the and the and the link between the Renaissance and crypto. So maybe we could frame this conversation um by going back to the Renaissance

um as just a starting off point if that sounds good to you or do you have somewhere else that you want to take this? Yeah, yeah, maybe. Yeah, that seems like decades ago given given recent events honestly. Um maybe uh Yeah, let's start there and maybe even before we we get into that we set it up just a little bit and um you know, your audience and macro audiences love the fourth turning by Neil Howe, right? Everyone's heard of that book and it's this it's this idea around, you know, every four generations you have this kind of this uh you know, tumultuousness and recreation of society and you know, people go nuts for that. Um and that's uh that's true. That's not wrong, but every four generations it's like it's a smaller scale. Like really how I see history is with, you know, these mega

turnings or mega waves instead of just ripples on the surface every three or 500 years and that's largely a function of tech outpacing institutions. And so the model I kind of think about, you know, for the Renaissance as we get into that is is really, you know, as like an ocean and there's ripples on the surface with kind of, you know, immediate current events and then there's kind of deeper flows which are these generational turnings and there are these really deep currents or jet streams that, you know, create these mega waves. And so it kind of it kind of gets us into like what drives history? Is it generations? Is it demography? I you know, it's not just one thing, but I see technology as a key driver and specifically like the social use or the mechanism or interface with a spectrum of different kinds of technology like

between coordination and automation and usually when you hear historians talk about technology or people on your Twitter feed they're saying, "Hey, tech's neutral. It's it can be used for good or bad." Um um but that's not that's not the way I think about it. Like I think different types of technology have different drivers like embedded in them and you know, values the architecture and social impact. And there's kind of two ways to think about it in terms of the spectrum. There's decentralized technology with communities, you know, generating versus centralized technology with institutions compiling. And so there's history kind of moves back and forth like this this, you know, pendulum on a grandfather clock basically, you know, or a metronome going back and forth, you know, maybe it's thesis and antithesis

or synthesis or maybe it ratchets in a direction. And it goes back and forth between centralization and decentralization. And like as it interfaces with a socio-cultural mix. And so we're going to go through a lot of stuff and you know, from the Renaissance into today, not just crypto but touch on some pieces of AI. That's why I mentioned some of my my background with those technology companies. Um and the reason why I want to like draw attention to that is, you know, crypto's really this way to prevent re-centralization and ensure this, you know, there's widespread decentralized technology. Um And we're going to look at like visibility into the creation, you know, you're going to have visibility into the sausage making which makes some people uncomfortable but it's it's a unique opportunity versus building in public, you know, against

the black box model. Also this long tail of distribution for small businesses and economically viable creation. Like not just coins but different business models. And then we'll also talk about crypto as the solving the zero to one mod mode of centralization. Like how do you break through that aggregation? And so that's like disclaimer disclaimer disclaimer, my model what drives history. So just in a minute to recap like the Renaissance, um I see it as one of those mega unlocks or those like big waves like a tsunami and the thesis basically goes and that was my my PhD was in, you know, late medieval and Renaissance transition between those two play those two worlds.

And really what I see driving history is, you know, communities using technology, not just any technology but this decentralized technology. And you know, there's a series of technologies that came in waves. You know, double entry bookkeeping or ledger-based accounting with credit and debit and was was radical and it unlocked finance from doing centralized reconciliation and increased, you know, series of financial products. It meant that you didn't have to stay on a farm and be subservient to someone as you know, a common labor. You could actually have access to capital through someone else besides an authoritative uh institution that wouldn't give you access to that and set up your own shop.

And the historians talk about that as the birth of capitalism or proto-mercantilism. How would you know about that if you were on a farm? Well, simultaneously there was another decentralized communication protocol. It was called print. And print's a little bit more nebulous, the printing press. It wasn't just text, it was images. There's aspects of the web where you can create things and you have the birth of mass media. The theoreticians like McLuhan love talking you know, the modern media people see the birth of modern media as uh as beginning with Luther and Gutenberg. There's aspects of crypto as well where you actually own it, the things you're creating instead of just write, there's ownership. And you have control over that ownership as well. And there's a little bit of synthetic you know, it opened up synthetic worlds.

You suspended disbelief in terms of where you were physically. You went somewhere else. You lost track of time and space. You went to, you know, a a universe next to you and met a universe and you came back with knowledge and it was this bidirectional doorway. There's also some aspects where print is not unlike AI where it's a different type of synthetic nature and there were mix-ups and mash-ups and it took on a life of its own which was why printers marks and proof of humanity and authorship and the data trail and breadcrumbs became ever important. So, communities used a new financial protocol and a new print protocol and they basically transformed the world. Their world was fundamentally hierarchical. I don't just mean church.

I just don't mean nobility. I mean they had a series of permissions over their entire life. Where they could go, what they could say, could they whether or not they could own certain things, whether they could communicate ideas, and how they identify themselves. You know, did they identify themselves as belonging to a certain group or were they belonging to someone else? And they didn't have control over that, which sounds crazy to us today, but you know, in many ways we're in that the same boat. It was only with the advent of this unlock of value, you know, ledger being crypto today, this unlock of communication being now web, AI, or crypto, and identity, the ability to choose the other. It didn't occur to them until that point, which which sounds like madness, but you know,

the ability to take your money was impossible until even if you cannot read and write, you had a little ledger and you scribbled out things and you could go on your own. The idea to occur never occurred to you because it was like you're a fish swimming in this water and like the idea of choosing something other was completely unimaginable. And so, with these technologies, they literally recreated their world. We call it a renaissance, which means a a rebirth of the world as we know it. And largely that was a function of this advent of using these tools for, you know, different community formation, the advent of like meaningful pluralism, and capitalism. You know, not capitalism in the sense of crony capitalism or aggregating as much of the pie as you can, but this idea of generative capitalism, striking out and hanging a

shingle, you know, for yourself, and not a zero-sum game, but giving you optionality. You could stay on the farm if you wanted to, but now you could do something else, and that choice was radical. It unlocked awareness. And the key thing I'd like people to take away is that that's only obvious after the fact. People didn't know they were locked up until it was opened. You know, there's modern analogs you can use today. You think you can spend your money, your credit card company may, you know, turn off payment to a crypto conference, or your your, you know, your stock account is, you know, an IOU, or something can get seized. Your communication can get deplatformed, but it goes deeper than that. There's still mobile devices and broadcast layers, and this idea of identity being able to choose something other than what's predetermined for you is just absolutely

radical. So, it sounds super cool. It sounds like oh, that'd be great. I wish I were back there. I would have boldly stepped out into history. But, um the experience of that moment was anything but um was anything but uh what you wanted to be in. It was volatile. Their money was worth something then not worth something. It was undetermined. Every Their world as they knew it, all the institutions that controlled, you know, who they were, what they could say, what they could think, what they could share, how they identified themselves generationally over millennia, it was all crumbling. They literally thought their world was ending. And at that moment, the next chapter, the recreation, the renaissance wasn't obvious. All they saw was chaos and confusion. Um this is, you know, literally thought their world was

ending. And so, for the participants, like, the next generation wasn't the next thing wasn't obvious. It wasn't visible because it was beyond themselves. And so, the people who chose to participate in these movements were seen as, you know, the revolutionaries and changemakers were they're seen as crazies or zealots. You know, Martin Luther or Erasmus, they're they're seen as heretics. You know, George Washington and American revolutionary was was labeled a traitor. Jefferson an anti-federalist and anarchist. The Whiskey Rebels we'll get into Appalachian hillbillies. You know, just like today's current crypto bros and shadowy super coders. This is kind of what you expect. And like, at that time, the institutional reaction is always to tamp it down. You know, the shift from medieval to renaissance, they tried to

KYC printing and like, it didn't work. The technology was generative. It had a life of its own. The harder they squeezed, the more it went through their fingers. It went to other geographies and then they were faced with a choice. Do they cut themselves off from that or do they engage in it? And as their enemies and adversaries engaged in it, they had no choice but to but to do that as well and thereby legitimize it. That's kind of how it tends to work out historically. Um and it's just worth noting that the initial reaction is always to clamp down on it and it always seems like that's going to win in that historical moment because the aggregated institutions have a structural advantage. And so, that's the Renaissance theory of crypto in a nutshell.

All right, that was a doozy Josh. So, I want to almost like I want to contextualize that for a second, but also say that if anyone wants to really double click on the Renaissance crypto connection, we recorded an hour and a half podcast on that that they should go listen to. The TLDR of Renaissance of the Renaissance is 99.9% of people lived in this permissioned world, but you don't realize that you live in a permissioned world until the world until your world becomes permissionless and until the world unlocks. And there were these two great unlocks of of really the Renaissance. It was the printing press um uh and double entry bookkeeping. And those two things basically unwound the hierarchy of society. So, if anyone

wants to go deeper into that, I'd recommend this podcast. We'll link it in the show notes. But now I want to move on to the next big topic, which is the American extension of the Renaissance. And it kind of ties in with with this thesis that yeah, every 80 years you have the you know, the fourth turning, etc. etc. But it's really every like 300 to 400 to 500 years you have technology that outpaces society and kind of breaks institutions. And the next big time that that happened was the 1700s. You have the French Revolution, the American Revolution, you have the Haitian Revolution. You have all these revolutions going on and they're all tied together. But maybe we can focus on these like let's just talk about these global rebellions in general that start happening in the kind of starting in the

17th century, but really moving into the end of the 18th century. Why don't you take us there? Yeah, so so you can really think of you know, if history's ticking and talking after the Renaissance, there's a re-aggregation or re-accumulation of power basically. And that's where you get into the rise of the nation-state and, you know, where your identity was again forced on you as being a member of this specific geography and state you're again born into. And so, um that again unwinds, you know, in this kind of pendulum going back and forth.

And, you know, part of it when we say American Revolution, we're all saying, "Hey, this is actually it's a global phenomenon. It's not just, you know, American-centric in the sense that it's a it's a continuation of the Renaissance." You know, once you have unlocked, you know, your identity to choose what you want to do, your vocation not have to be a farmer or a smith, you can choose. And particularly the idea of creating capital for yourself as an entrepreneur and that sense of being a small business owner for yourself and others. And there's whole background where previously, you know, the meaningful stuff was holy and that was being locked away in a monastery and now you could be out in the world benefiting yourself and your neighbor using these new financial tools, these new communication protocols exercising self-determination, having a vocation, doing it through print, choosing your

identity. That that's very tough to take away from people once that's out. So, out of the box. So, as as you have power re-aggregating and re-accumulating, like even very early on there was a a series of attempts to to fight this re-aggregation, you know, starting, you know, through the Renaissance and these revolutions take, you know, different forms. So, when we say US, US was part of a, you know, Americans view it as, you know, being a US Revolution, but it was part of a global phenomenon. Even American Revolution was was global in nature. And so, you have different revolutions in different forms. Sometimes they're bottom-up, sometimes they're geographic, sometimes they're within the system. A lot of that depends on your point of view. The Europeans will say the American Revolution wasn't actually a revolution in the sense of the French Revolution. It wasn't class within the

estates. It was uh it was an it was a British Civil War where the secessionists, meaning that the colonies actually won. So, the point of the story is there's there's different ways of thinking about that. But the idea is that the Renaissance is this global revolution and immediate after you have this breakup of these institutions and hierarchies, there's this pursuit of unlocked ideas, you know, value and communication identity. And immediately after that, you have different, you know, flights pursuing religious liberty starting straight out of the Renaissance with, you know, New France and Acadia and Brazil. A lot of these are the losers in history that you you tend not to hear so much about. So, there's diaspora with, you know, the French Huguenots into New France and Acadia, little-known settlements where they're

pursuing religious liberty and civil rights, you know, from as early as the 16th century into Brazil with Nicolas Durand, you know, and these small islands where the imperial French and Portuguese are crushing them. The Huguenots are fighting with indigenous peoples, the Tupinambá people and Tamoio people. And like this culminates in a series of what we call the Wars of Religion, you know, throughout the 16th century. And that's kind of bad press. It wasn't just about religion, it was it was really religion was their identity and their ability as being part of that group they identified with to pursue their own economic location was forbidden to them as well as talking about matter, you know, through communication.

So, so it was a series of on-again, off-again physical wars, you know, eight of them, and it ultimately culminated in, you know, the end of the 16th century, beginning of the 17th century with this Edict of Nantes, which was the the first very fully realized federated federal checks and balances political infrastructure, which was a blueprint for a lot of what happened in the American Revolution. And it guaranteed religious liberty and civil liberty aside from flight, but you know, internally for those people, property and finance, location and jobs, ability to print and communicate freely, worship freely. It legitimized their identity as a dissenting group and had checks and balances for overreach. And that that blueprint was was a lot of those people uh the blueprint was very much taken up

into the American Revolution. As we talked about, it wasn't just American, it was global by its nature. And it wasn't just about tea. Again, it was, you know, being in a colony and saying, "It's not just taxation without representation in terms of political ideology." It was very pragmatic. It was, you know, get your hand out of my pocket. And so, you know, everyone knows the the mean, you know, ideas behind that, but it was a it was a it was a global experience. You know, France, the reason one of the reasons why the American Revolution succeeded was because we had international support from France and from the Netherlands and from Spain. And so, it was one way to look at it as one of the very first, you know, world wars.

Um and largely that was around that was around the pursuit of these Renaissance ideas that you were literally reading when you read the participants. That's, you know, back to Weber and the Protestant, you know, work ethic spirit of American capitalism. It's a little cliché, but pursuing these ideas that you had the ability to strike out and benefit yourself as well as others were were what we considered inalienable rights. That was a geographic revolution. You know, next up is a French Revolution, which is very much class and, you know, bottom-up, but following, you know, the blueprint of the wars of religion and the American Revolution. Um and that's not that's that's well-known in terms of kind of how you how how people think about that, but there's a series of other, you know, revolutions of oppressed and

marginalized people. Haitian Revolution is one of the better ones where everybody's rebelling against the same thing that we saw with the transition from medieval to Renaissance. This imposed uh limitation of value, what can you own, are you an object, are you a person, communication, can you share these ideas freely, and like how can you identify, are you something, are you someone? And if you're someone, do you have rights of of being able to express ideas, own things, and identify as part of a group, is it legitimate or not? And so, that's that's one lens to look at all the Caribbean Haitian rebellions. Um the point of the story here isn't to get lost in the the details, but the core takeaway is that you as you have a reaccumulation of

power, there's now that this has been unlocked, the ability to have self-sovereignty over over over owning things, being able to share ideas, and being able to select what group you have allegiance and demand that that's legitimized. That That's a very difficult to take away and when you try to cramp clamp that down again, you naturally have a series of, you know, global rebellions. Um and that that We generally kind of divide up American history into, you know, kind of rebellions and revolutions versus, you know, American history proper with this great experiment. But the American Revolution wasn't a one-time thing. It wasn't 1776 and then done. Those revolutions or rebellions took on different forms and we had a series of them. And American history's like

largely defined by that that great debate and that continuing fight. Um just the nature of the rebellion changed. Um instead of becoming territorial versus British, it was an ongoing fight again over the exact same things. Taxation without representation, Whiskey Rebellion, the fluid nature of the Fed, against charter and revoked regulators, the idea of always improving and building in the sandbox. And that kind of takes us into the the next chapter of this Renaissance, you know, inalienable rights, being able to choose, controlling your own stuff and your own ideas, and then resisting re-aggregation. And then so what does it look like in terms of like the American experiment after that? It It didn't go away. The rebellion and revolution was ongoing. It happened within very specific structures. And we

can we can go through a few of those if you'd like. Um but it's all the same thread. Well, Yeah, I mean I just I think it's interesting to actually just think about uh the similarities between the Renaissance and and the American Revolution, right? One, like just hearing you talk about this, the the biggest thing that comes to mind is this emphasis on individualism, right? Like both periods saw this really strong emphasis on the value and the agency of the individual, right? Renaissance, you see a shift from uh a focus on the divine to a focus on like human potential. And and and and really like what could you achieve, right? And then you have the American Revolution where it emphasized like the rights and the liberties of the individuals as foundational to society.

Um so that's the first big thing. Second big thing, break from tradition, obviously, right? Renaissance marks this break from the medieval period. Starts to focus on like innovation and rediscovers these ancient texts and like new ways of thinking. Then the American Revolution, you have marks a break from colonial rule and and the monarchy, right? And establishes this new form of government centered around democratic principles. So that's the second big thing. I think the third and these all end up tying into crypto pretty well, right? Like the third thing is rejection of authority. Obviously, that goes without being said. Like American Revolution rejects the the crown.

Renaissance rejects rejects the the authority of the church. I think you have focus on human rights and and dignity. And then I think you also have like global impact, right? Like the Renaissance and the like the Renaissance influenced culture and thought throughout all of Europe. And then the American Revolution, you have, you know, it inspired these movements for independence across the world and and really had a I mean, we've seen it like a very long-lasting impact on global politics. And I think all of that, if you think about it, like the global impact, the rejection of authority, this focus on like intellectual and cultural flourishing, break from tradition, the emphasis on the individual, it's the exact same thing that crypto's actually fighting

for today. Nah, that's we could double click and go down any of these like in in great detail like the Yeah, that the shift from you know, medieval into into Renaissance, you know, it's divine is off. It's like a class for the locus of the divine. Like the divine is off outside the city. It's in the monastery. And with the Renaissance, all of a sudden, it doesn't get rid of the holy thing. It says there's holy transcendent meaning in the everyday stuff. All of a sudden, the locus becomes like here and now what you do. You You work to the glory of your creator not just by being a monk, but by by being a small businessman or a milkmaid or sweeping.

And you do that to help your neighbor. Like your neighbor doesn't need your prayers. They need your like help, basically. They need a job. They need like economic generation. And so that That's why you have these ubiquitous fruit bowls. And And that That idea that's like straight-line thought throughput to the American founders when they talk about, you know, uh city on the hill and all of that imagery. You can write it off as rhetoric, but they they believe that. That's what they were talking about. Like the idea of an experiment where you actually do this de novo from re- recreate the system. And they did it geographically, which we're doing it, you know, globally today. That global That global piece like too far into the details, but you know, the Renaissance there weren't countries.

They were They were Rizzo. They were networks, basically. And these like These decentralized networks of power by patronage and clientage, you know, they were familially oriented, which wasn't just by the bloodline, but by people who opted into these uh into these uh these uh Rizzo, what would you say? Like social networks, right? And like so this is like families like uh Medici controlling France and Italy and parts of and Habsburg. Like So they're trans-European. They're transnational. And the fight is, you know, triangulation. Enemy of my enemy is my friend. And so that's why you have different nations jockeying around. Same thing with the the American Revolution.

We think of it as it was just purely succession between, you know, geographically between, you know, the the colonies and the British, but it's not. It fails without munitions and training and soldiers and naval support from France. It fails without similar things from Spain. It fails without, you know, recognition and of legitimacy from the Netherlands, which was one of the Renaissance low country like hubs. And like all of this around like what constitutes legitimacy. And that gets down to the idea of inalienable rights. Like you aren't born into a thing. And I realize this fails in practice and you can point, you know, all sorts of issues where this isn't consistent. There's egregious abuse of human white rights.

Trigger warning. Trigger warning. Trigger warning. We're going to talk about like things that are that are not good legitimately. But there is a pursuit of what is good. Like you aren't born into a Holy Roman Empire by birth. You aren't born into into a regime. You can actually like impact that regime. And part of the impact is like is like resistance theory. Like Vindiciae contra tyrannos, and like all of that political theory from Hotman and de Bèze and Mornay comes out of like those pieces. You have the first civil liberties and religious liberties as marginalized communities coming out of like 16th century and like the blueprint for that is largely cut and paste with those same communities that failed in the Carolinas and failed in Maine and failed in Florida that Huguenot like they became uh you know,

straight line, you know, through to the founding fathers like cutting and pasting from that. That's why you have that like transatlantic dialogue, you know, back and forth, bidirectionally. Even though we didn't support, you know, French Revolution as a nation because of geopolitical context, we ideologically Franklin saying this is the best thing I've ever seen. Like not the bloodshed, but the idea of you know, not being born into not not obligation without representation. Another way to frame that is like unfair rights. And like that's that's what continues. Like we tend to think you teach this like as a professor, you teach this there's medieval, you're done. There's Renaissance, you're done. There's Revolution, you're done. And now you're into American history proper. Now you're into current events, right? And it's like what's really interesting is the transition between each of those periods. That's where you have those

three and 500-year like epic shifts. The late medieval to Renaissance, you're born into a situation it didn't occur to you had another choice and now you could work with, you know, community using different types of decentralized technology to get out of it. And it didn't unwind something. Yes, it crashed medieval like hegemony. It recreated at Renaissance what we would call capitalism and like individual pursuit of, you know, call it life, liberty, and happiness. Or you can use value, communication, identity if that's more appropriately fitting. Same thing yet again, you know, working with the American Revolution. It's all part of the same story of those great transitions. And then the next chapter we say, "Okay, we're done with Revolution. Now we get into American history proper." It's like, "Well, those revolutions and rebellions keep going.

They're not minor footnotes." If you really drill into them, like Shay's Rebellion, Whiskey Rebellion, like all these like these pieces which we can go into, like they determine Shay's Rebellion is we're trying to pay off revolutionary debt. It's straight-line applicability next chapter in the Revolutionary War and it's pushed onto people on the frontiers, the people who are hanging out there on Shays' Rebellion as, you know, American entrepreneurs and business people. Those are farmers we'd call them. Like they're no longer medieval serfs. They're actually taking risk onto themselves and they're tasked by the federal government, Madison and company saying, "You have to pay off our debt." Like disproportionately placed on them, unfair. That creates absolute rebellion.

Like that actually accelerated, some historians would say caused, like uh you know, the the uh assembly around articles to revamp it. That In other words, it's how we get Washington as president out of that Shay's Rebellion. And it was Springfield, Massachusetts, exact same place, exact same issues as the American Revolution. Or the next chapter, which is like one of my personal favorites, not just cuz I'm based in Kentucky with bourbon, but like the Whiskey Rebellion is like a great example. It's not just taxation without representation for ideological reasons because it personally impacts you. It restricts your pursuit of economic of your economic viability for yourself and your neighbor. Like Whiskey Rebellion, like they're out in Appalachia, you know, it's a bunch of, you know, hillbillies and what have you is usually the popular, you know, caricature of it.

But you're a farmer. You're now responsible for your own economic viability for the first time. Like farming is inherently volatile. Some Some years you get a bunch of stuff, some years nothing grows. How do you arbitrage that? You arbitrage by borrowing money, by over planting. If you have a bad crop, it gives you net positive in like the market, like having lack of supply like equals out. If you have too much crop, that's where you go broke. So they distilled it into whiskey, which was stable and viable. It allowed them to economically arbitrage to feed the coasts. Without doing that, like that would have cut off supply lines to the coasts. And like that took on a life of its own. It was currency and unregistered unregistered security.

And so the crackdown on that from like Fed and participants was was it was poorly executed in terms of they didn't understand the economic creation that that had disproportionate impact not just for those people primarily but for everyone secondarily and that was hence, you know, the revolt basically and you know, resistance. The idea here was resistance to the Fed having arbitrarily made decisions without understanding impact and part of the experiment was, you know, putting checks and balances on that. And that that continued, that kicked off, that was largely straight line, you know, through to through to you know, Federalist papers with you know, Madison and Hamilton there and Jefferson as a response to that. Everybody loves Hamilton because everybody's seen the play and they're

tap dancing whatever but it's like Jefferson is the drunken anarchist. He's portrayed in cartoon characters as, you know, working hand in hand with the devil. Sometimes it's not hand in hand, sometimes it's like, you know, sexual. I won't get into that but the point is these cartoons and like they're working with he's Jefferson's working with Satan as an satanic anarchist pulling down the United States on behalf of the British basically, right? This is like what dominated 1790s and like the point of the story is there's an ongoing debate about the nature of the Fed and when it oversteps it bounds. It's bounds. There's different types of resistance in theory. Some internal, some external, some through the courts, some through rule of law, like through a variety of ways. That's like what characterized our history not just at the revolution but like throughout throughout all the way

up until now was like literally a continuity of that. Like it was the formation of like what we call there's a reason why we say it's like the great experiment. Like people didn't expect democracy to last. Like the European prototypes we saw like in France and with those international like Edict of Nantes was revoked with the rise of the state. It didn't last. Democracy did not work. So the question wasn't could the United States set up a democratic environment, republican environment. The question was could it last Because you would be building out in the open. You were granting your own citizens visibility into the sausage making.

You're granting the global stage visibility into your your your machinations, warts and all. And like, the idea is that that you're going to get mocked. It's going to be awful. The aggregate institutions are going to have asymmetric advantage at the beginning. But the bet is that by doing this in public and building in public with participant citizens, you're go using these types of decentralized technologies undergirding all of us, which provides financial substrata for entrepreneurship and the pursuit of experiment. The bet is you're going to lose the first round, but like you're going to come back as it goes along and it's worth doing that and worth making that. It's like what's that Marvel movie where they kind of get beat up and then Tony Stark's like, "Hey, we we did a bad job in the beginning. Like, grant you

that, but like that's the bet you're making basically. Let's face it, concentrated liquidity is hard. And that's why I'm super excited to partner with Carbon for Empire. Carbon is a new DEX on Ethereum that makes concentrated liquidity easy. With Carbon, LPs can now automate your liquidity strategy with custom on-chain limit orders and range orders. Want to buy a token when it dips and sell it when it spikes? With Carbon, you can now set a strategy that buys in on one price range and sells in a higher range on repeat using a single source of automated rotating liquidity. Strategies can be created for any standard ERC-20

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link in the show notes. Two, create a new Carbon trading strategy. And voila, you are now eligible to win USDC rewards based on the performance of your strategies. LPs, it is time to take back control of your liquidity with Carbon. Check out the link and get started today. Now, let's get back to Empire. Maybe you could uh context like contextualize the SEC clampdown right now because when I um I don't know, just like hearing hearing what you said like hearing you describe the Renaissance and then hearing you describe the Revolutionary War like and the American Revolution like it it went well, but there was there was obviously pushback, right? And like when you look at the Renaissance, you have like the Holy Roman Empire tries cracking down, but technology was and and honestly the

memes, right? We're just better, faster, cheaper, and that it was bottoms up, right? You allow the Renaissance gave communities the ability to co-create and to to and it was gen- it was a generative movement, right? But you still had people like I you know, you had these people like the the Holy Ro- Roman Empire very much tried to crack down. And then like even in the American Revolution, right? Like you had the British pushback, but then you had even internally like Hamilton versus Jefferson and like it it did it was not smooth, I will say. You had the Federalists shitposting basically. Um create creating their memes and stuff like that. Um the Tea Party obviously, you know, anger against values like govern- government started was basically preventing them

from pursuing the creation of value. Feels very similar to the SEC, but would love for you to maybe walk uh walk us through like how you contextualize the SEC's pushback today in light of, you know, in in in in a historical context. Yeah. Yeah, no, that's so that's There's You can see that as like You can look at it a couple different ways. Like one One way to think about it is like just part of the experiment. Like the the idea of like federal republicanism is to prevent like an It's like Locke's Leviathan, right? You're all Hobbes and company. You're always going to have Once you cede power, it's going to grow and grow and aggregate until you unwind it. And then the question is, how do you unwind it? And they believed in, you know, the

individual citizenry citizenry working together. I would say through social coordination means, blah blah blah. It's like to do that, like So, that that's that continues. It doesn't go away. It's constant. It's the thread There's this epic fight. If you're into crypto, you're like part of this much larger story. And there's this There's this ticking and talking constantly between aggregation and decentralization. Like aggregation, like the institutions use different types of technologies, like surveillance, control, the whole, you know, any any 101 like survey of hegemony and like if like trying to figure out like how you control like the the mind Overton window of what you think is possible, not just technically, but in terms of like what what you what

you have availed to you or like you have opportunity to have with your personal life, liberty, and hap- happiness. Like is privacy a right? Oh, I don't It used to be. Now it's not. Like controlling that is like is the the game that's that's been played like since since day number one. And so, like that debate going back and forth is like controlling the inevitable like accretion of craft like over government institution. Like And it takes a number of different forms. It takes like, you know, unfair implementation without representation is like the classic one. It takes overstepping bounds in terms of like what the institution is actually set up for in its charter. That would be someone like a commissioner saying like, "I don't think we need this technology.

We already have something else." Well, that's like clearly outside like the the domain of the charter. That's an individual acting as like a rogue agent in that sense like against the charter. There's There's different ways of like thinking about this. And this was like The battle was like constant and consistent like throughout like Federalist anti-Federalist. But like over like since the '70s like would be one of these ripples on the surface. There's like a market and the Bitcoin guys talk about this like not not wrongly. Like there's a market like demographic like re-aggregation that almost like requires like a synthetic economic strata like to that requires like a empowerment of institutionalization. Like all that sounds like esoteric abstract like I think the best way to walk through like

what the SEC is doing today is to think about what the SEC has done previously even within our own history. So if you if you think about like these 300 and 500 year like, you know, epic waves and you view like these generational turnings and other things as ripples on the surface like even within our own lifetime for some of us and within a recent memory like we've had like this is what we do. The institutions try to not only exceed charter but also unforcely and unfairly um and unfairly like implement. Part of that is game theory. If you're in office it behooves you to like seize as much power as you possibly can. You file a bunch of court cases that are not going to be resolved till you're out of office. Like you win. It's egg on somebody else's face when it when it

doesn't work out. Nobody remembers that except for the historians. But like the bet you're make the bet you're making is that like that's not going to play out long term. And like part of that's just like a function of like our short-term memory. We're all surprised that the SEC is doing this. This was if history rhymes at all this is always going to happen. You don't have to be a medievalist or early modern European historian or kind of, you know, LatAm like rebellionist. Like within our own lifetimes like the same thing is happening. There's a re-aggregation of institutional powers like outpaced by tech like for the past 40 years like we've seen the SEC and other institutions at every level not only jockey with one another but like take turns lining up to do this. Every time technology outpaces institutions, like

there's a cracking basically, right? And like you can talk about it in terms of fractional equity or Apple stock protection, tech crackdown, post office running, taxing email, net neutrality, code is free speech, online payment. Like I think it's worth like focusing on a couple of those examples because if you're listening to this, you're like, I don't know what this guy is talking about, medieval history, boring, rebellion, I that was bad. I don't know, is that what we want to be doing? Like let's just even think back like throughout our lifetime is like part of this ongoing experiment where we do the default wrong thing and then eventually we cracked it. So it pays to like bet on like fixing it in the end. Like it's a little bit different in the sense of it's ongoing, it's more subtle, you know, rebellions. They're working within the system sometimes, but it's it's

super important to get an idea behind that. Even into the 19th century, like the idea of the company or fractionalized equity was heresy. It was crazy. It was indemnification saying I want to set up liability company with indemnification rights was was the worst moral thing you could front page of every major paper saying this is awful. Like why? Because then you're going to be able to do things and be indemnified. So that will be the end of economics. They thought that would undo the Renaissance, you know, spirit of capitalism. Um and that's why at the time, again, like in the medieval context, you were locked out of opportunities. You as an individual citizen, you can now be a farmer and run your own farm, but you're not going to you're not going to like work with some in some like entity that has asymmetric

upside because nobody's going to let you in. They they aren't going to let you in because like you only let your friends and family and like very small minority of people in there because of the indemnification like requirements. And so by saying I want a limited liability company and corresponding fractional equity, like that was uh that was seen as a social evil and what what actually happened with the birth of the company was that that that was so a fed process and indemnification and they tried to ban it, you know, decentralized finance essentially. Like um the point is that fractionalized equity, which was seen as awful, the federal institutions at the time tried to ban that and resist that.

That eventually went on to become our stock market, the Dow, the Nasdaq, 401(k)s, modern financial system, greatest wealth creation for individuals. It's like our initial reaction from federal regulators and government institutions was to try to ban the company, the limited liability company. Fractionalized equity, who needs it? We already have property right the same arguments you hear. We tried to ban that. That didn't work much to our citizens' benefit. You know, and then when that didn't work, then the feds, SEC, even at state level, they they you know, they tried to decide who could buy what under the guise of protecting the consumer. One of the best examples that like springs to mind, and you can go out and find it, there's great like images of it, is when when Apple went IPO,

there's a great Wash- Wall Street Journal like headline, Apple Computer Set to Go Public Today, Massachusetts Bars Sale of Stock as Risky. The state of Massachusetts and government authorities on behalf of protecting the consumer protected the consumers from purchasing stock within the NASD. After it was already okay to have fractionalized equity, they said, "That's okay as a general principle, but this one here, we think this token this fractionalized equity is different than all the other ones for these reasons, and we as regulators are going to like make that decision." In retrospect, if you put in, you know, a thousand bucks into Apple at the time, it'd be worth, you know, a million million and a half today depending upon price. Like that was obviously the wrong thing to do, but that's that's what we do. We ban the class, and then we ban assets therein.

Like or like continuing on even like through the '90s, like the the UK rise of like global financial system is largely a function of like US being unwilling to deregulate in the way that they did. This is derivatives, rise of the Eurodollar market. This is trillions of dollars, which we opted not to participate in, and like didn't work out well. It's global triangulation is the lesson. If you don't participate in this, someone else globally will. Like, we lost a battle like that where, you know, the UK successfully succeeded. So, the crypto playbook they're following right now is what worked really well for them in the '90s. That That's all finance stuff, and that might be like a little bit outside if you're not into crypto or finance and you're listening to this, like the more tactical or practical example of this is

the post office. It's like one of my favorites. Nobody believes this, but like if you're into it, there's a there's like academic lit, but there's also popular stuff like book Neither Rain nor Snow by Devin Leonard. And like, the point of the story is like the post office tried to deliver email. This is like a quintessential example of technology out pacing institutions. And like, so the USPS, you know, set up an e-com e-com service, you know, back They launched it January 4th, '82. And the idea was that they're going to give every American an email address ending in .us, and they were going to control that. And they're very explicit about it, you know, their leadership said, "Hey, it would be a great opportunity for the postal service if we could quote, if we can control millions of physical mailboxes in the United States effectively, we can certainly control

email addresses." This was the This was the plan. Like, when that didn't work, because it just failed to do so because of the technological nature, because that was decentralized by nature to your point, like obviously we tried to tax it. That's like written off as myth, but you can certainly find those records. Like, even in 2004, like Senators Republican Lamar Alexander and Democrat Tom Carperter like introduced legislation that would temporarily extend expired internet tax moratorium ban. They tried to tax it directly, then they tried to tax it through ISPs, like up to 25-30% of like your ISP bill. Like, very similar to like Apple's Like, this is kind of what we do. Like, it might not just be Fed or regulators.

You can think of net neutrality, like this eternal vigilance. That's That's currently active court cases going on now. Like, but I think that it's best seen in like it's best seen in code is free speech. That's like really important. People just talk about it a little bit um as if it's a civil right, privacy, or free speech, and it is, but there's also like economic it's worth viewing through the lens of what we tried to shut down economically as well. So, then encryption was was was it was classified as an ammunition, right? And so, like despite creating the internet, we tried to ban a major use of it. And like in other words, we tried to ban the tech that became the basis for privacy for your iPhone, for credit card payment, for for online payments. It We tried to ban what would become e-commerce like

$5.2 trillion in the US alone each year. Like like in that case, you know, regulators did their thing, it was resolved favorably for the citizenry in the courts, forcing the government's hand, and then, you know, government interest because the unique generative power, they couldn't ban it. Like if the US was going to ban online payment and encryption, other companies were doing it. That's one reason why that was walked back. But because the economic creation was generative, it created more than they otherwise thought was possible. Like it's like you know, if you're talking about taxi market, like why is Uber worth this much money? Like it can only be a fraction of the existing market. No, it like once you unlock it, it's generative. It ends up being like magnitudes of order larger TAM to be able to do that. So, the the

the regulation was walked back through Congress largely because other countries were effectively using it, and so we didn't want to lose out on that. Like it's already out of the box international triangulation, but also because of the generative aspect of that. So, like like our model isn't perfect. It always falters initially. This is what we do. It's expected. The bet is that we we get it right. Like just as a thought experiment, like imagine a world where our initial resistance from the SEC at every one of these cases or other government, doesn't have to be the SEC, it can be the USPS, that's kind of a funny example, like imagine in a world where that won, our initial resistance.

We'd have no stock market. Government literally delivering message through through tape. No online payment. No online electronic privacy. Imagine it was a quote unquote compromise with the government banning asymmetric stocks, letting you pick the the losers for your portfolio, taxing email, or selecting privacy, you know, bit by bit, not as a right, but in determining what code is acceptable. Like, we got it right, but it's a fight. Like, what the SEC is doing right now is it's very similar to Holy Roman Empire. It's very similar to like British Imperialism. It's very similar to, you know, Federalist vision.

It's very similar to It's very similar to just what we do over these past 80 years. This is just kind of how we do it. Um like that's probably the best way to think about it. I feel like a lot of it works. Is that what you're going for? It is. I feel like a lot of this just stems from like fear over chaos, basically. Like um like if you think about the Renaissance, right? Like the they were right to think that governance from the bottom would be chaos. Yes. And that self-governance would be chaos because oftentimes it was. And there were rebellions, and it was very chaotic. But at the end of the day, it was this massive transformation of society that was a that was a net benefit. And um I feel like if you look at just the like what the SEC is concerned about, like

their tagline is protecting consumers. But I do feel it's a combination of um uh fear of chaos, and just something that they can't control. Um and then an inability to understand the magnitude and the size that this can get, right? Like when the printing press when the printing press came out, like they there was there was no there I'm trying to remember the exact story, but there was like something about, you know, will we have, you know, we had there's like 10,000 books or something. And it was like, could you imagine the world with 100,000 books? Now there, you know, now there's like billions of books out there, right? Like there's no it's very tough to comprehend the size that this stuff can get. Um and it's just how big this can be. And I'm sure the you know the pilgrims weren't imagining a

country of 300 million plus people, right? Like it's very uh it's very it's almost scary to have those thoughts in some care like Yeah. Yeah, you can look at it like part of it's just ongoing American history fight, institutions overseas power. That's like by their nature what they tend to do. That was like baked into our articles of federation, right? That's like that was our that was our political philosophy to prevent that. Just like the reformation, we know bad stuff's going to accrete over time. We have to always be vigilant, always reforming, always be like don't leave the fence alone, the fence is going to rot. You always have to be repainting it. You always have to be adjusting that. Like we we know that. Part of that is like there's a particular type of accretion where there's like gamesmanship on this.

Like that's kind of what I was alluding to and like you know jockeying between you know different agencies um and and like as any individual basically saying you have a set time so you know grab as much as you can especially if the fallout's measured in years and you may or may not be there. Like why would you not do that? You have like a you have like a perverse incentive to do that. Like you can't even get mad personally. That's just like it's the nature of like historic accretion. Like part of it is like as institutions like this gets into some of the fourth turning or some of the demographic stuff with like technology outpacing institutions whether it's like how or is AI on or whoever you want to pick. Like part of it is like the failure to imagine like infinite compounding like benefit for citizenry.

Like you're betting on the bizarre, the chaos rather than the beautifully architected cathedral that that's like the nature of how we're doing this. It's not just like an American experiment. You can write it off and say oh we don't care about it like the crypto will be fine. And that's true. It will be. Like the market will 2x or 5x depending upon who you believe Americans are involved and like we will get there. It's a question of are you going to do it now or you going to do it you know 10 years later and like that early advantage opportunity is where all the asymmetric alpha is. So like that's it's worth like fighting for. But part of it is the not just protecting. Like that's why that Apple example is really good. but like there's a there's another charge in the charter. So they're not just overstating

like charter like in in terms of like being able to pick what is and what isn't. Like being able to give an opinion on like we don't need something. Now the market decides like what we need. Like you don't get to say like we don't need a certain type of technology or have a business case for that. That's like not within your role. That's like the the point of like federated description or like charter. Like the other side of that also is is like empowering consumers and you know national competitiveness. That's the other side of the coin which like that part of the conversation is like markedly absent from many of this, right? Except for like occasional Congress people like pointing that out.

Like part of the SEC's charge is to ensure American competitiveness. In this case it's not just America first. It happens to benefit the entire crypto market. So if you're listening internationally like you should you should be pro this as well. It's like So that part is like generative. They can't like imagine that's always the way it is. Like the the ripples on the surface are better, faster, cheaper. The deeper waves like unlock the previously unimaginable which can happen until the the second unfold. You can if you're not in a just think of like Uber on your phone. You can't have that without your phone. Or you can think of like yeah books basically. How are you going to have more than 100,000? Or you can think of you know computers. Like I could never famous quotes of different people saying that how could I ever have a

computer with more than 120 megabytes on it? Like what would I ever use that for, right? Like you as an individual much less as a regulator aren't charged like make that determination. Like you're having faith in the market which is like you know pursuit of like individuals for their benefit and others. And so like this is like it's like very very much on par. Like the only difference now is that like we're playing for like much higher stakes. Like there's kind of ticking and talking and little ripples and like now we're entering one of these 300 to 500 year waves. And that that's not hyperbole. That's like if you believe that Renaissance thesis you can also see the fourth turning stuff line up, you can see the the Zion demographic deep and all school people like like all

these models are lining up right now and like part of that is is uh part of that yet again is like entering into call it exponential age or new Renaissance or like this type of like qualitatively different types of technology. That's why we started off the conversation with like technology driving history and different types of technology working in different ways. Like and so like we're entering into you know not just like not just like a Jerry on you know a geriatric or gerontocracy based you know kind of stale institutional structure.

We're entering into like AI, quantum, whatever you want to call it but particularly crypto like is different in that we're building this in the open. And so just like the American experiment was different than all the others because everybody had visibility into the sausage making. So too in crypto we're doing that. That's like a very different playbook. Like the That's why I mentioned some of my past experience building successfully exiting AI companies like MIT spinout. It's like what you do is you bake up your model, you don't tell anybody about it, you get all of your regulations set, you do your lobbying, then you release it and it's fait accompli and like you're done basically. Like crypto is not like that.

You're you're building in the open. Everyone can see your economic model. You as a startup have a price which is like horrifying. The community can impact that. Like your code may be forked. That's like the crypto is the technological version of that great experiment of building in the open. And so like the fight isn't just for like America's place, dollars, jobs, competitiveness, participation in the next internet which is all true. It's also for like global crypto like as a function of two to three to five times market size and like speed of adoption isn't just for yay for anybody here in the states. Speed of adoption benefits everyone. The crypto model is generative by nature. It's not zero sum. So that means like if you're an international

you want more users and you want more capital. Like you benefiting yourself benefits others. So instead of taking the pie, you want to see this succeed. And like it's very different. That black box model is like it unnerves people. And the truth is cuz like you're a medieval farmer, you haven't seen the sausage making behind the scenes. You haven't seen like you haven't had visibility into like how this is done. And like the American experiment was a bet that this process like will lose in the early innings. Like and then we'll overcome structural advantage of aggregation through this you know, institutionalized tech. And like that's the the same thing you're seeing with like the SEC like right now. It's a participation return to the great experiment. And it renders like everyone who was American Revolutionary was an

entrepreneur in the sense that they they were betting on themselves or the community is like a breakout function from something else. And so there's like this culture of like tinkering and like no longer being subservient to the farmer sounds great until you're you're looking at a crop loss and getting wiped out and going back into indentured servitude. Like hence like arbitrage into whiskey. And so like with crypto you're you're in the same spot now. You're an entrepreneur not in the sense of like, you know, Y Combinator I'm raising a big fund, but like you are now having opportunity and awareness of like being able to place your capital and your time and attention and data, which is worth like six, seven, eight figures over your lifetime. It's what powered Fang. Like And so like now you have opportunity to do that with like applicability to that

and and to equity around that. So like what you're playing for isn't just isn't just like a coin. It isn't just digital gold. It's like on one sense it's like, you know, your ability, life, liberty, pursuit of happiness, like ability to like own your assets, communicate freely, and uh and uh like choose your your group and your your affinity is like identity. Like But you're also playing for like again this like recreation of the world. So it's particularly galling when you have these same sorts of like you know, archaic like fracturing as tech outpaces institutions that you've seen for past 80 years, for past couple hundred years, like now at the point of another renaissance. And like that gets lost in a lot of the conversation. What are we

playing for? Like are we playing for a coin? Are we playing for like a a pixelated cat? Like no, we're actually playing for like something like we're playing for a new renaissance and that's like that's worth taking a minute just to drill into. Like if history rhymes, what are the big buckets that like a historian or like a cultural anthropologist might like use to evaluate like crypto if history rhymes at all. And like we can we can get into that a little bit if you'd like. I I think let's go there. And I think like you know, you're talking about demographics and Zion and fourth turning and all that kind of stuff. Like I think the one indicator that to look at that is more important than anything else is trust in institutions. And if you look at I've got two polls pulled up here.

You have the Gallup poll, average confidence in major US institutions from '79 to 2023. Exactly. Used to be at 50% now it's at 27%. I'm looking at a Pew Research study 1958 public trust in government government was at 73. So that means 73% of people said that they trusted to do the government to do what is right just about always or most of the time. It was 73% in 1958. Today it is at 18%. And you know, so we've gone from 73% to 18% and that is a number that doesn't go back up. Right? That isn't chart that is a I'm looking at this chart that is a down only chart and it's nearly

impossible to for a government to do something to pull that back up. Right? It's very tough to uh to to turn that around. And the only thing that basically happens that that the only thing that really turns that around is letting this grassroots organization recreate society and recreate who the new institutions end up becoming, right? So, I'm cur- I Let's go Let's go to like self-sovereignty. If history rhymes, like there are these big buckets of society that will get completely flipped on their head and then rebuilt and then in hundreds of years they become the new institutions, but like there are these buckets, right? Like finance, culture, your identity, your education, your

work. Like, maybe walk me through how you think about all of this. And and maybe you do have like a more structured view of this, like these buckets. No. No, that's so that's super good. That uh that No, you're It's like a good news, bad news situation. Like the the the big picture like grand durée big sweep historians like have models for this. Like, you know, how like 13 sages of civilization in decline, right? And they would put like United States in like the 11th or 12th, depending Like the these don't go backwards typically, right? There's an arc There's a There's a overarching sweep of stuff going down.

And like those those poles are like one of the indicators that like a sign that like that taxonomy. And like it tends not to go down that the experiment like So, that's bad news, right? Like the what you're betting on is you're betting on a continual recreation. You're betting on a a semper reformanda. Like, you're betting on an always repainting the fence, basically. You're betting that, you know, communities will use this decentralized technology building in the open to recreate themselves, to literally overcome the innovator's dilemma. Like, if it works, it will fail. It doesn't work immediately. It will fail at first and then they'll get it right like over time. But it's it's worth painting a picture like the people the revolution people at the time they couldn't picture what the world would be like, you know, um if if it actually succeeded in this world. And it doesn't

mean it's getting worse. It means like this is the bet you're making. And like in the big big sweep, maybe it ratchets back and forth towards decentralization over time, but definitely ticks and tocks backwards. And like the picture that like you can imagine even with like these little embryo even with these little, you know, kind of you know, shadows types and shadows you already see right now. You could picture like I generally talk about it in terms of like five buckets, finance and culture and work and education and like this idea of like meta and IRL and like a thread throughout with governance. And so like I'll just take a minute on it but just to like lay out big picture like what could possibly happen like if it rhymes, if it matches medieval to Renaissance, if it matches like revolutionary as extension and if like the 80 years are

end done and we're like at this epic point like finance is like everybody in crypto talks about it. It's obvious but it's under appreciated. Like it's it's massive benefit for the unbanked. It's displacement of payday loans. It's global access to stocks which people don't think about, synthetic or what have you. It's access to like early stage companies like previously through accredited or VC and like most importantly it's like being able to invest with the assets that you create. Like not just your money but your time and attention. Like that is the data that is harvested by Fang like a medieval lord. That's like what what powered the rise of Nasdaq.

except a free subscription or maybe subsidized subscription. Like you having access to that is like unbelievable in terms of like theory. It might not be, you know, universal basic income but like equity of those things which has like particular salience like in an AI dominated world. So like finance like very much redistributing, leveling, giving asymmetric opportunity like out of the stuff you do. Like turning you from product into participant. Like that's culture is like a little bit trickier in terms of identity like you pick signs and symbols like you can talk about like NFTs and memes like but property rights are a function of that culture. You don't have culture without property rights and that's property rights not just for synthetic things but things on chain like real world items as

well. And so that's that's that's in some ways rectifying the original sin. You can think of the internet as a false fork we went down, you know, where we weren't able to persist state and so we outsourced state to companies that persisted that for us because the protocols weren't rich enough. And so that HTTPS couldn't do it and so it ended up being Google and Apple persisting. That's why you log in with that. That throws off data which powers those economies and you get 0% of fractional equity out of that. And so like the ability to to rectify that is like very significant like for the rails of that value capture which like transforms work is another bucket. Like when crypto people say work they say, "Oh, we're going to have DAOs." It's not just that. The idea of a formation of capital is like is like radically

different. Um, like so previously like as a founder we never took venture. We always bootstrapped it but we took some angel and like we do invest and blah blah blah but like usually like venture capital like very well maybe like have conflicting expectations and incentives with like founders. A founder may want to found something that doesn't have like if you run a small $100 million fund and you're making 10 bets one of those has to hit a billion dollars for you to have a meaningful IRR after you like after like after not only illiquidity but like liquid you have to have a billion dollar bet to make up for all your other strike outs basically. And you're better off in terms of IRR for like closing those other ones down that are only going to be doubles or triples. Like our last

company we built from scratch and sold for over 100 million. Like that would have been a massive venture failure like because like we wanted to return their fund and we would have been better off as like, you know, loss against that. And so like you have this inherent tension like when I teach the class on this stuff like we kind of go through that and like now you don't need to do that. You can actually get capital like usually on shows people are talking about like venture funded things and that's great. That's like a meaningful opportunity and go for it. But there's a whole long tail of distributed like ideas, concepts, businesses which might only return a million or 10 million or 100 million and that's like meaningful that doesn't fit into that venture model and like, you know, crowdfunding you're not able to do that without like

fractional equity of ownership without a crypto under railing. and so like that's significant. Like the greatest amount of like value created like within these past 80 years is like arguably through open source software which people did for free pro bono. Like you maintained your GitHub library just because like imagine keeping a piece of that not just like not just paying you to do that but imagine if you were paid to do that instead of working a meaningless office job as a drone like what you could have created if you were good at that. Like that's fantastic like a recapturing of that like data is like power. Like your time and attention is like it isn't just like depending upon whose estimate you believe you throw off like seven maybe eight figures of like data doing that.

Like being able to like opt in for product development with ownership even in like say take a trading platform and there's a few of these out there which are built on crypto rails where there the algorithms are outperforming like alpha like based on like opt-in contributing your data and like you get equity as part of that. Like that's transformational just for playing around in simulation not spending a penny. Like the core idea of like being able to start with a price as a startup from day one where people have visibility into your code and can fork it community. Imagine if you could cut and paste Google's code base. Like it's a very different game which is scary and chaotic and and you know kind of bizarre over cathedral and so but it's like unprecedented

opportunity for capital formation like especially resolving modes. Like aggregated institutions like you know defend themselves with bureaucracy. It's a it's a feature of the system not a bug and that means like for an entrepreneurship perspective a moat basically. How do you overcome a moat an impenetrable wall like done by capital regulation physical infrastructure? You do that through a decentralized technology which has economics like one of the most interesting examples of that is like into deep deep end decentralized physical infrastructure networks like where you're you're taking on Telco where they run billions of dollars of op-ex by negotiating with cities to put up towers versus individuals doing that with backfill. And so they're turning cost centers, what they used to pay for

a physical location for rent, into revenue generation for them. And like unlocking the ability to do ancillary businesses in pricier areas that they wouldn't have been able to do, or to pay for their rent or their mortgage by doing that, and like following their own interests. Like that capital formation, like we we aren't even at the second unfold yet. We can't imagine what that will be like, but like with that visibility into that passage making, expect it to be volatile. Like education is a third bucket, and that's like closest to my heart, and it might even be the biggest unlock. Like you have education, you have it's like the most medieval contract. It's like the the medieval institution that never went away. It's like the university is like a medieval function, basically. You go, it's geographically proxy, you have

to have the right credentials to get in, and like you basically study, and then somebody determines like you're doing a PhD, it's two or three people going to decide like did you get it? Did you not get it? Like no recourse, blah blah blah. Like it doesn't you're relying on an institution to literally put their stamp on a piece of paper to give you like accreditation. Like that's you need to show the diploma, right? Like imagine not just like a like the future where it's peer-to-peer, not just like a Poap, but proof of experience, proof of expertise. Imagine it weighted in a rating, but not quadratic voting, but quadratic recommendation. The people that have the highest repositories on a on an individually owned GitHub have an algo like the their recommendation of somebody who knows what they're doing

means more, and you can hire that way on chain instead of going through it. Like that changes all of that. if that isn't if that's too esoteric, just imagine no student debt. Like like new perpetual swap products like with like intelligence and information and expertise. Like that's that's like a very fundamental unlock. Like not just in the states, but like globally in terms of doing that de-identified. And like the fifth bucket's a little esoteric. It's this meta IRL stuff. And like if you basically are running a small business and we do some of this like we just personally cuz we're into it like the building I'm doing this from used to it's a old old bourbon bar that was going to get knocked down for mini storage in a parking lot right and like we ran a little deep in unit to do a historical transformation that I use as

a community center and then work with like coffee shops and restaurants and like they have a list of cost centers in the web 2.0 world. Some of it's like rent and mortgage, some of it's subscription, some of it's like payment on a credit card, some of it's like yeah, they're paying 10k to a specific music licensing service to be able to license to run that at their bar. Like you don't think about that for Spotify but they do that. You can make a list of every one of those cost centers. There is a crypto version of that which is not only free but which gives you access to like to payment which you can sweep aside. So your rent you can be paying out of deep in proceeds and then like it benefits the long tail. It's not as beneficial in Manhattan if everybody's there but if you're out in like rural or

esoteric Kentucky it like it is more beneficial to you economically and so you'll hear like more of the market get pissy about that but like that definitely benefits like redistribution like for people who want to go off into the frontier and like that basically means you know instead of paying 5% to Amex there they're making 5% on auto staking on you know perpetual swaps out of a payment system. That's a 10% swing for a small business like with deep in paying their rent with music instead of licensing free with participation with there's 20 other examples or they're freeing up GPUs to use for like you know AI training like that if you do that it's a little bit of work but it pays it pays for the barista it gets you through a pandemic it pays for an extra kick on the line. More broadly speaking that

allows you to set up something which wouldn't be economically viable. Crypto is like a business model with like a bolt on like economic engine for you. You're into some weird esoteric subject like you can go ahead and do that like with by swapping out your cost centers for like revenue generation like it's not glamorous and sexy but it's really powerful and like throughout all of this is like governance, which again is like totally exposed. So like you know, this was our This is a sandbox for speed wrapper and running representation doing it through simulation. Like that's a in terms of like, oh, Magna Carta and you have not people forget about that and then you have American Revolution. It's like what if and maybe it's not just purely political, maybe it's like economic representation. Maybe if you're

locking up your stock and you're not going to sell it as an activist, you can actually like have greater voting rights for us. So you're like you're tamping down perverse or unintended consequences or even within representative government, you're you're you're doing public like you can you can experiment and let a thousand flowers bloom and figure out which ones that's the only way you can get out of institutional gridlock to be able to say, "Hey, here's something that works in a synthetic world." And like if you do that, that opens up you know, the way you bring that into like IRL is by creating more value than you take.

And so that's like doing public good and that's kind of green pill stuff, but like public good funding from private entities like actually and we do some stuff where you're like planting trees and you're subsidizing it, you know, for far you can like use the mechanisms which are decrepit and not working and realign the perverse incentives through this type of social coordination. Like all of that is like is is we haven't yet wrapped our minds around what that will look like over time. So just saying like we're not into it and we don't see a viable use for it. It's just like not significant.

So those would be the five buckets like if they work out like how you might like think about that basically. So so this world sounds great, Josh. Like the world that you lay out sounds sounds great for you and me, right? Um and I think it's this very idealistic world, but one question I'd have for you is how much does society have to unwind for this to be possible, right? Like the breakdown of societies and governments and institutions usually follows the the a pattern, right? Whether it's the Renaissance or the revolution or whatever it may be, you have people who at first are just kind of annoyed with their government or their big institution, then they uh rebel, and then they are no longer at the whim of the of the institution, and

they kind of just usually they become self-sovereign and and just kind of go somewhere else, right? This could be people moving away from the Holy Roman Empire. This could be uh literally the pilgrims getting on a boat and leaving and leaving Britain, right? How bad though does society have to Not maybe it's Maybe bad is the wrong word, but like how much does society have to unwind for for all of this to be possible? Yeah. Yeah. No, you're That's like a thousand percent like the right question. Like um and there's a wide range of historical precedent on that.

Like there's sometimes it doesn't unwind Sometimes it's there's gentle Renaissances and there's cataclysmic Renaissances. And like some of that is a function of like what you're particularly talking about, what type of thing, what institution. Some of it is a function of geography. Like at the la- you know, previously where things unlock and there's international triangulation. And so in some geographies it gets very bad. In some geographies it's relatively seamless transition. The thing I think that's different about this time is you have like you have it it's one of those the technology itself is going to be a forcing function. There's like there's not a matter of like if, it's just like literally when. When you're looking at like when you're looking at, you know,

decentralized computing, not just, you know, a computer, not just mobile, but like the strata for that. When you're looking at like decentralized like economic generation like through entrepreneurship, that's a that that's stuff we haven't seen before. That That in the context of also these things tend to come in twos and threes. Like that in the context of AI as well. Like I think that that uh there's going to be institutional cataclysm coming like regardless of whether we want to see it or not. The question is like how well we're going to manage it and that like that happens that varies like widely um each time and like by geography. And that honestly is like the fight we're in right now. Like part of that is like in some sense like I personally am a fan of like how the

SEC and institutions are playing this. This is beautiful like overplaying your hand and just making it so egregious is just is the best possible thing that could happen. There's going to be like institutional pushback and squeeze each time. It gets into really dangerous territory when you don't recognize that. Like if you're an institutional regime, the way you manage this decentralization is you can threaten physical force. Like that's fine. If you use physical force in Wars of Religion, 70 Years' War, blah blah, like you get an F. You've failed to manage it. If you have to threaten it, you get a C. Like you threatened it, but it's fine. If it doesn't even occur to them that what you're doing is wrong, no pushback or no resistance theory then you get an A. You've effectively you're like a hegemonic like poster boy.

Antonio Gramsci would be like proud of you, right? Like that isn't the case. Like this is so egregious. It's like it's perfect. It's a forcing function for us. And so like some of this won't even matter. There's going to be massive like institutional overhaul partially just because of demographics. There's no way to like get outside of that. Like that with like AI and crypto as like either in symbi- in one way like reinforcing each other and another way like as counterbalances to one another, it's it's unknown how bad it's going to get. Like but like it the nature of how bad it's going to get, the thing I do know is like that's part of the recreation, the chaotic like reconstruction process.

So it may be super bad um and it may it may be relatively smooth. Like I think it's going to be fairly bad in terms of institutional like it's not going to be collapse and decay. There's always like cigar budding or cigarette budding like going on basically. Like the legacy institutions, it's like you can survive off an endowment for a long time if you're careful and like how you do that, right? Like those won't go away basically and like part of that'll be generational shifting, but there it's going to be like very chaotic and very volatile in terms of not just institutional authority and uh and some of the polls he cited, but also like their functions. There aren't enough like once that once that our lifetime is going to be managing volatility. Volatility of price,

volatility of business, volatility of communication, and volatility of like how we identify. And I don't mean in like a culture-y type thing, I mean in like specifically like what groups like we used instantiate identity and retract it in kind of a one-to-many type thing. Like that that's stuff we haven't wrestled with previously, so it's going to be highly volatile and our job is going to be managing that. And like the way I think we manage that, particularly some of the AI stuff, is like with crypto is a counter-balance to it. Like lots of people talk about like crypto in symbiosis with it or you know proof of humanity or training an LLM or decentralized compute power or maybe universal basic income equity stuff.

Like that's true. Like our sources of authority, you think the authority polls go down now, like it's black box. You don't know what pops up. You pop something in chat GPT and it gives you a resume and says something with cited sources that aren't true when you actually fact-check them. So, being able to preserve perspicuity like on chain is going to be incredibly important. Like it's going to be a different types of collapse and a different type of recreation, I think, is the way to think about it. Yeah. Yeah, I tend to agree with that. I mean, if you I mean, think about the Renaissance, right? There was the Renaissance sounds all great and fun, but then after it for 150 years, there was like mass chaos and these wars, right? You had the Italian wars and the uh

uh what else you had you had the um Wars of Religion, right? You had the uh French Wars of Religion. You had the Anglo-Spanish War, right? Like you had like hundreds You had the the English Civil War, right? You had the Ottoman Wars in the in in in Europe and like it was just mass chaos. Bunch of wars for 150 years. Um but at the end of the day like the political and religious and social upheaval that kind of categorized Europe during the this transformation from the Renaissance to the early modern period, it's very tough to argue that like life is not better because of that, you know?

Yeah, it's it's like the theorists will talk about like it's split ontology from epistemology for the um the wars were always going on. You just weren't privy to them. Like there was always like geo- there's always like physical mar- martial campaigns. Like you just didn't know about them. And so like after the fact, there were skirmishes. They were inter-party like, you know, tribal like familial like there's there's like roving mercenaries that are displayed. There's like there's more carnage pre-Renaissance than there is post-Renaissance. It just gets a bad PR app. Why is the question? Like cuz you actually know about it now. You actually have visibility into it. And like now you have choice. And so it's

going to resolve that way. Like some people say, "Well, it was the it was the same, you know, different tribes and networks and they just swapped labels basically and carried out the same, you know, kind of feuds and skirmishes that went on." Like other people say, "No, no, they really like they really believed in the thing that they were like advocating for." And like it which like I personally take that view from some of our archival work. Like you see like the you see society being like in an XY like conservative social this tribe this group that group type of thing. And you see that split down the middle with a reformation and a Z axis like poly sci like cleavage with like a with like different groups reforming around that. There's like a very good archival argument to make about that.

Like what does that mean? It's like you're going to hear there may or may not be more chaos. It's definitely going to feel that way cuz you're going to have visibility into that. And to your like very excellent point, like that's never fun. Like it doesn't feel good, cuz you don't know what that next world that's recreated looks like. You're in this no man's land. You're in the dip. You can't see what it's going to look like. Like it may not work. The whole thing may collapse. That's totally true. Like I have very good reason, if history rhymes at all, like based on like decade in the archives reading manuscripts looking at this like around it looks very, smells very, seems very similar to me. Like not a teleology that's determined, so there's like open agency, but like definitely rhyming and

following these contours. And if if if that rhymes, like it's going the way I know it's going to be if it fails, it's going to fail with a whimper. And if it succeeds, it's going to succeed with like crazy volatility, where the PR around the volatility like outstrips the actuality around that. And like that's what's happening now. Like if you see this, like here's your takeaway. Like if you see this, don't be scared. It's supposed to be crazy. Like you're seeing the sausage making. It's the American Revolution on display for like global community theater taking shots at it. It's like calling one another like traitors and Satan spawn. Like that's just that's what we do, right? It also renders you

as an entrepreneur. And so like you haven't done this if you haven't been a founder, you haven't been in charge of your own destiny before in like a meaningful way. Like you're now on the frontier is like running your own shop or farm. You can't put on your startup hard hat. Like the volatility doesn't mean it's ending in a whimper. Counterintuitively, that's a really good sign. Like that conflict tends to be a leading indicator historically speaking that it's like significant in terms of transformation. And the really good news is you're aware of it. Most people weren't aware of it at the moment. They didn't know what was going on. Their world was falling apart. They're right to be fighting on it. They're a thousand percent right. You have some analogs.

You have some previous iterations where you can see this. And like thanks to this episode, like this whole thing may be cracked, but hopefully like suspended disbelief and said, "What if that's right? If that were right, that's what it would look like." Like if if the whole world's going insane, like maybe you're the mad one. Like it's the opposite of that. Like if this were to like work out very very positively, it would look like this. Specifically because the nature is like a bet on decentralized technology, communities using it within this particular form of government where it's all on display. That means they're going to lose the early innings. That means they're going to get hammered. Like I'm actually very optimistic, like immediate like response of SEC and what have you. It's great how they're playing their hand. That's going far far better than I would have

anticipated. Like I will say like you can expect a fight. It's like naive to think it's just going to be smooth adoption. Like we cited all those examples, not only over long arc of history, but over the past 80 years that we should be aware of. Like where we do the wrong thing initially. Like lots of people got into crypto cuz they didn't want to deal with politics and like nothing is more understandable for me. But like crypto doesn't mean that you get out of a fight. It means that it's like uh a epic like, you know, like once in a millennia opportunity. It means crypto doesn't mean you don't have to fight. It means it's actually like a fight worth having. And like those opportunities are rare. So, expect a fight. Expect to be branded as like a zealot, a heretic, a traitor anarchist drunkard crypto

bro, shadowy super coder. This is right on cue. I get worried if it goes away and it's not an issue. Like that's when I start to get significantly worried. Josh, this was amazing. Um anything else that is like very top of mind for you in terms of looking at the market, looking at just crypto. We're 15 years, 14 years into this Bitcoin thing, you know, 8 years into decentralized protocols and these apps being built on on open smart contracts.

Like Anything else that that we haven't talked about? No, I think that the key is you have visibility into the creation of this and it's unique in crypto and so like you're making a bet on that building in the open and that feels uncomfortable and like you have two ways to to beat a market like you can you know bet against the market which is tough to do or you can get in big on something early and if you say reworking finance and work and education and the structure of governance like that's that's worth like strongly considering like it it but you have to like weigh the cost it's not going to be easy like the only thing I'm like really thinking about is how to get into SBF's bank so.

Yeah, I mean we've seen this before Josh you have failing institutions at the same time that we have technology that's outpacing society and that is a recipe for disaster but it's also a recipe for entrepreneurs and optimists to take advantage of it and um yeah, it's a good time. Yeah, don't shrink from the fight like this is not a it it's it's it's nothing we didn't expect it like means significant from a historical arc like don't run from the fight like now it's worth fighting for like step in the ring. Yeah, exactly. Josh appreciate as always I would recommend folks if you want to double click on the Renaissance connection we will put a link in the show notes to the first episode that Josh and I did go in deep on the on the Renaissance what it was what it meant

and how it is relatable to crypto so Josh as always my friend thank you thank you for your time. Thanks so much I appreciate as always.