DAVID READS: Crypto is Here to Set You Free

Free markets are an incredible force. They allow humans to come together and produce a global price on something. But today's 'free markets' aren't really free. Access to markets is gatekept, and the ability for something of value to become instantiated into an asset is permissioned. Read along with David’s most recent thought piece on why 'Crypto is Here to Set Us Free.' Read the Article: https://newsletter.banklesshq.com/p/crypto-is-here-to-set-us-free?utm_source=url ------ 📣 NOTIONAL FINANCE | DeFi's Leading Fixed Rate Yield https://bankless.cc/Notional ------ 🚀 SUBSCRIBE TO NEWSLETTER: https://newsletter.banklesshq.com/ 🎙️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com/ ------ BANKLESS SPONSOR TOOLS: 👀 POLYGON | LAYER 2 DEFI https://bankless.cc/Polygon ❎ ACROSS | BRIDGE TO LAYER 2 https://bankless.cc/Across 🦊 METAMASK | THE CRYPTO WALLET https://bankless.cc/metamask 💳 LEDGER | THE CRYPTO LIFE CARD https://bankless.cc/Ledger 🧙‍♂️ ALCHEMIX | SELF REPAYING LOANS https://bankless.cc/Alchemix 🦄 UNISWAP | DECENTRALIZED FUNDING https://bankless.cc/UniGrants ------ Topics Covered: 0:00 Intro 1:25 Crypto is here to set us free 2:27 Expressive Markets 9:54 Societal Change 14:19 Private Keys & Value Flow 19:04 Extract to Enable 22:57 Aligning Systems 26:03 Changing Societies 30:49 Building a Better Future ------ Resources: The Crypto Renaissance: https://shows.banklesshq.com/p/-the-crypto-renaissance-josh-rosenthal Governance & Capital: https://shows.banklesshq.com/p/-governance-and-capital-joel-monegro Cobie Clip: https://twitter.com/BanklessHQ/status/1480999234526613504?s=20&t=XCMeIZiOb3toUyRPgo_7Gg https://twitter.com/BanklessHQ/status/1480999234526613504?s=20&t=XCMeIZiOb3toUyRPgo_7Gg ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://newsletter.banklesshq.com/p/bankless-disclosures

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00David Hoffman?

  Hey Bankless Nation, today we are going to read the article that I'm putting out on the Bankless newsletter. I also gave this as a talk at ETH Denver, but I was kind of just like using this article as notes to inspire the talk and then use the pictures that are in the article as what was being displayed on the slides. But today, we're going to actually read the article for those that don't want to read it themselves and prefer audio content. And then maybe I'll talk and pause and ramble about some other stuff that's not in there. But before we do, I gotta shout out the sponsors that make the show possible. Polygon is the fastest, coolest Layer 2 that you've ever used across Protocol. You can use across Protocol to get to Polygon and then also to other Layer 2s. While you're

• 0:43David Hoffman?

  doing that, you're probably going to be approving tokens in your MetaMask, so use MetaMask. And then if you're doing things right and you're truly bankless, holding your private keys, you'll actually be using your Ledger to connect to MetaMask, to use across, to get to Polygon. And maybe one day, Alchemix will deploy on Polygon. I think maybe they already are, actually. But you know what definitely is, is also Uniswap. So you can use all these products together. And that's why the Bankless advertisers are so goddamn dope, because we get to talk about them all at the same time. Thank you, sponsors, for sponsoring Bankless. Let's go ahead and read, "Crypto is here to set you free." And shout out to the guys over at the Design Guild out of the Bankless DAO who helped me put this awesome graphic together. I really like that. Okay.

• 1:25David Hoffman?

  "Crypto is here to set us free. Free markets are an incredible force. They allow humans to come together and produce a global price on something. This is how much we value that," says society via the market. But today's free markets aren't really free. Access to markets is gate-kept, and the ability for something of value to be instantiated into an asset is permissioned. Traditional financial institutions worked in the analog world, but the technology that supports traditional markets has lagged behind what society is ready for. People these days associate markets with strictly just finance, which is a shame, because they are so much more than that. With just a few new primitives,

• 2:08David Hoffman?

  smart contracts, tokens, private keys, we can unlock our innate human desire to express what we see valuable upon the world." By aligning personal freedoms with free markets, we can unite culture and economics in a new age of expressivity and efficiency. And cool things will happen as a result. All right, so here's what captures market, captured markets look like. On this graph right here, we have the grayscale GPTC charts. I can't zoom in, sorry. Does something seem missing? Does it appear unwhole? What's with all the gaps in the chart? Like, look at all these gaps, like, it's all this blank space. I mean, you get, you get the gist, but like, it's so ugly.

• 2:49David Hoffman?

  But here's the BTC chart on Coinbase, where Bitcoin trades 24/7/365. And there are no gaps. It looks like it's a good looking chart, like, there's data there, like, it's holistic. It's fully expressed. Bitcoin is fully expressed by Coinbase, because Coinbase trades 24/7/365. The difference is between these two charts reflects the different systems upon which this asset is expressed. The grayscale GPTC trust trades on the traditional stock market, which is only online 253 days out of the year. And since these markets are only open for six and a half hours a day, the value of GPTC is only expressed for 19% of the year.

• 3:31David Hoffman?

  For 81% of the time, the market doesn't have a price for BTC. It's just not being expressed by the legacy platforms. Bitcoin and all of its properties can't be expressed 81% of the time. It's silenced. Bitcoin's system is designed for 100% uptime, enabling the truest expression of the nature of the assets. Yet, the expression of this value is throttled upon the, by the medium upon which it trades. So this, this feature of the traditional stock market has left the door open for innovators to build new exchanges that enable a higher fidelity relationship between the markets and their participants. Early crypto exchanges like Coinbase, unbridled by regulations, spun up 24/7/365 crypto marketplaces,

• 4:12David Hoffman?

  enabling Bitcoin to more fully express its unique properties upon its users. DeFi is doing the same. DeFi didn't invent finance, but for the majority of humans, it might as well have. Financial institutions have put up walls around their products and services in order to gatekeep access to their tools of power and control. And by charging a toll for this access, they can create power for themselves and use it to dictate the future direction of our society. Where is DeFi in the traditional world? It's behind the walled gardens of banks and brokerages. When you deposit your US dollars into Wells Fargo, they take it and then they go yield farm it with it inside the closed doors of TradFi. There's a world of financial activity going on behind the walled gardens of Wall Street,

• 4:56David Hoffman?

  only accessible by banks, brokerages, hedge funds, and Nancy Pelosi. As a result, the majority of us are under their control. If you want access to financial tools of the world to get a mortgage, a student loan, a credit card, we must pay for access. So the inherently free and open institution of the marketplace is currently owned by the many, oh, excuse me, owned by the few and sold to the many. The place in which we discover what we value is kept away from the majority of society, which restricts people from being able to express their opinions about how the world should look. Platforms can enable our expression. The assets we trade on various marketplaces are reflections of what we value as a society. It's not Bitcoin that imparts its value upon us.

• 5:39David Hoffman?

  It's us that imparts our values upon Bitcoin. Bitcoin doesn't tell us that we're valuable. We tell it that it has value to us. We provide the value. We value provable scarcity. We're the ones that like peer-to-peer money. Because Bitcoin aligns with our values, Bitcoin has properties that we value, we collectively produce a price for it on the secondary markets. And it's important that we have platforms that enable us to fully express the value of the assets that we trade. In addition to having marketplaces that do not throttle our ability to express ourselves, it's also crucial that we have platforms that are unconstrained in what types of assets that we can trade. Tokens. A token is just a vehicle for value. They are empty containers for us

• 6:22David Hoffman?

  to deposit our perceptions of value into. A token is just a blank slate of an asset and it's up to us to ascribe value to it. And we use smart contracts. This is, smart contracts are the writing. They're the language upon we etch value into these blank slates. The EVM is the writing we use to say, this is valuable because, and then a bunch of code. If we want to fully express what we deem valuable in this universe, we need to open up the design space for financial assets. If we want capitalism to more closely align with our human values, we need more assets to trade that aren't just equities on the stock market. DeFi tokens, DAO tokens, social tokens, JPEGs, one of ones, membership NFTs,

• 7:05David Hoffman?

  music NFTs, beam coins. How limited are we in our ability to express what we value? And the only values that we have out there to receive that expression are equities, bonds, and derivatives. The difference in human value expression between our current options on traditional markets versus the endless possibilities in ERC 20 and 721 tokens is a difference between a dystopia and a utopia. So I'm going to diverge out of that article. Something I said in the talk that I wish I had included here, maybe I will, is like, a lot of people in the world of crypto, or that hate the world of crypto are like, "We don't want crypto because it's hyper-financializing everything." Especially the NFT haters out there. They're like, "You're putting finance into art. Like, I don't like that.

• 7:49David Hoffman?

  Get your money away from my art." And, I mean, yes, point taken, but also, when you inject finance into something, you give it an economic foundation to stand on. And so Ethereum seems to be intent on minting any and every token possible, and it's allowing more, it's allowing the funding of the arts, the funding of culture, and it's allowing more and more culture to become more viable. So while one critique is like, "Crypto's going to financialize everything, and it's going to take the soul out of it." But on the flip side of things, what we're actually doing is we're hyper-culturalizing finance. We're making finance into culture. So it's a meeting in the middle, and this is why, like, this is where I say,

• 8:33David Hoffman?

  if we want capitalism to more closely align with our human values, we need more assets to trade that aren't just equities on the stock market. People think that finance is culturalist because we only have like equities and securities and bonds, things that are boring. But if we have artist tokens and like DAO tokens and community tokens, we get the power of finance to, instead of create capitalism, we can make it create culture. I should put that part in. Um, okay. Fungible tokens and non-fungible tokens. These are all of the tokens. These are all of the types of tokens. There are no other types of tokens. Non-fungible and fungible. Between these two token standards, we have the tools we need to create any token that the market decides has value.

• 9:15David Hoffman?

  And using these tools, humans are enabled to maximally express our human values using markets that never turn off. Asset issuance in TradFi is intensive, expensive, and fundamentally constrained. Whereas token issuance in DeFi is cheap, easy, and limitless. We're going from marketplaces that only work 19% of the time and only allow for like three categories of assets to unstoppable, always-on marketplaces that allow us to freely create any possible type of token we could ever come up with. And so this is how we go from a Wall Street-centric world, uh, version of the world to a world centered around cultural expression. This is where we put money into our culture and how we put culture into our money. Societal change.

• 9:56David Hoffman?

  Living in a paradigm of trust and intermediaries prevents value from being able to flow outwards. When a new source of value is discovered in the world, intermediaries descend upon it like vultures and then like then circle it and, and capture as much as possible. Prevent it from getting out because they capture it. The tolls that intermediary intermediaries take limits how far the, uh, this value is able to permeate through society. Every intermediary adds friction to this outbound flow of value and prevents it from reaching the margins. This is a movie that I kind of enjoyed. Uh, it's kind of cheesy, but it's pretty good. Um, it's a vertical jail. There's only, and every jail is just one room and there's a hole in the center of the room. And this platform, once a day with a bunch of food on it, like just descends down the jail.

• 10:39David Hoffman?

  And so the, the jail is a level, like, you know, floor one, floor two, floor three, floor four, like going down. Um, and you want to be at the top because that's your closest to where the food is. Like if you're in floors, like, and the, and the platform just slowly just lowers. It just like slowly gravitates just like downwards with all the food on it. Uh, and you, if you're in like floors one through 50, you're like pretty chilling. Like it's a good spot to be, you're gonna have plenty of food. 50 to 100, there's like food there, but it's kind of the shitty food that sucks, like, you know. Boring food, the bad food, the reject food. And then beyond, like below 100, it starts to get real scarce. Like the food starts to have gotten eaten. And then like it can go, you can go real low. And like this movie is just about this like thought experiment, basically. And this is a metaphor for intermediaries. Like there's flow of value.

• 11:22David Hoffman?

  Look, I mean, you can see like there's cakes and like, you know, delicacies. It's like a, it's a comment on, you know, society and luxury and all luxuries at the top. But then the luxury doesn't make it to the bottom. Because intermediaries eat it up along the way. There's not enough value to make it all the way there and it gets eaten. Okay, so that's that.

• 11:42David Hoffman?

  Because, because of this paradigm. Yes, because of the paradigm of intermediaries, the world is one of inwardly concentrating wealth. This makes the long-term equilibrium of Web 2 and TradFi conclude to inner billionaires competing for power using their respective platforms. We've got Jeff Bezos and Amazon. We've got Mark Zuckerberg and Facebook. We've got Jamie Dimon and Goldman Sachs, Tim Cook and Apple. And so much of our lives are captured. Most of the world's population are captured by some mechanism somehow. Banks capture us via interest payments on our student debt and mortgages. And as a consequence, we become vulnerable to capture by our nine to five wave jobs, which can become toxic and exploitive as a relationship as a result.

• 12:25David Hoffman?

  Because if they know you can't go anywhere because of your mortgage, they can bully you around, basically. Which then, and as a result of that, you can become locked down to specific geographic areas, forcing us to engage in domain-specific behaviors that we might have not otherwise have chosen to express. And the net effect of all of this can even result in being locked by, locked in by toxic relationships with those around us. You just have to say yes to things that you would have otherwise said no to. But because you have all of these financially capturing systems, you can't.

• 12:58David Hoffman?

  So as a society, we currently operate inside of a social structures that extract from us rather than enable us to be better. This is not always true. Facebook once created a free and open social network and Instagram unlocked tons of creative potential and Twitter unlocked a torrent of free thought. Going back even further, double entry bookkeeping unlocked a DeFi for the 1500s. Previously, before double entry bookkeeping, the value was just stored in the vaults of the church and the king, the monarch. And then double entry bookkeeping allowed for finance to be able to be expressed by the common man because of the, all you need is a book and a pen or pencil. That's like permissionless technology. It's decentralized

• 13:42David Hoffman?

  technology. And boom, DeFi happened and then the Renaissance happened. And because the DeFi, the finance happened and then all the finance people went to the arts and funded all the arts. And then boom, we had a cultural expression of the Renaissance. Episode 63 out of Bankless, if you want to unpack that more. But as society adapted to the new normals that these social systems brought, they in turn evolved from enabling to extractive. The long-term equilibrium of these systems ended up being wealth concentration at the center with a bunch of vultures around the periphery and the rest of society at the margins.

• 14:17David Hoffman?

  New equilibrium via private keys. Long-term equilibrium of Web 3 protocols places power and wealth, which are the same things. This is another Bankless episode. Joel Menegro talks about how governance, capital and wealth in episode 62, one right before 63, are all the same concepts. It's really, it's really just a function of which one allows you to impact the world the most in the ways that are favorable to you. Money, wealth, capital, these are all the same things. Okay. While Web 2 TradFi billionaires are summoned to Congress to answer for nation-state jealousy, Web 3 protocols disappear in a cloud of airdrops and community exits. T-Rexes can't see you if you don't move and nation-states can't find you if you're

• 14:59David Hoffman?

  decentralized. By pushing power to the many rather than the few, these protocols invisibly walk among us. They're owned by the people on the bus, the mom at the grocery store, the laptops in our bags and the desktops in our homes. There's the tokens in our ledgers and the cold storage wallets in our brains. Access to private keys is essential for this new equilibrium to emerge. Previous systems of value did not favor the individual. Gold was large and heavy, fiat had a backdoor theft via the money printer. Equities are held in brokerages and ownership over these assets ultimately just comes down to court rulings, which are a third party that can be influenced, like courts are gamable. Like, do you really own something if a gamable court, if you have to rely on a court that can be gamed?

• 15:46David Hoffman?

  Usually, yes, sometimes no. Sometimes when it's important, no. Cryptography puts power into the hands of the individual. With cryptography, we rely on math and math alone and no one else. Private key cryptography enables self-sovereign property rights to exist at the margins of society disproportionately empowering those that need it the most by allowing value to route around the value extractors and be directed directly to the value creators. So you combine this with a financial system as ubiquitous as the internet itself and no two people can have differential access to asset ownership and financial possibility. Cryptography sets us free.

• 16:27David Hoffman?

  So inward versus outward flowing value. Web 3 and DeFi reverses the natural flow of value from inwardly concentrating wealth to outwardly distributing wealth. This is an inversion of the equilibrium of value and it impacts, and its impacts upon how society organizes are going to be massive. Inward flowing value in Web 2 and TradFi makes work an uphill batter. Work is harder. You need to work hard to just stay in the same spot. Outward flowing value in Web 3 and DeFi turns progress from being uphill and makes it go downhill. With aligned protocols at our backs, humans will be able to venture further into the frontier. We've seen eras in which value was discovered outwardly rather than inwardly.

• 17:09David Hoffman?

  The 1400s to 1750s era of gold, god and glory was about the extrinsic motivational forces that convinced many adventurers into seafaring explorations, which expanded the map beyond Europe and onto new frontiers, new wealth, new opportunity. Same thing with the American westward span. Mansion during the 1800s. It was motivated by the economic opportunity of the West and desire to access more freedom than the East Coast had to offer. The space race, there was the moon out there and we wanted to go there. So we made this space race happen and all this awesome fundamentally important technology was created as a result of that because we wanted to claim something on the frontier.

• 17:51David Hoffman?

  Web two concentrates power into Silicon Valley and TradFi concentrates wealth into the Wall Street. But in contrast, Web three takes a $10,000 airdrop and just like chucks it over the horizon into the metaverse. And sells you like, go fetch, like you gotta go get it. You can't stay in the same spot. You gotta move on to the frontier. So if you want some of the value that these protocols are spitting out, you gotta get your private keys and you gotta journey into the frontier.

• 18:19David Hoffman?

  Web three social structures. The metaverse is the frontier, by the way. Web three social structures. Cryptography allows us to design social structures with a baked in assumption of strong individual property rights. Access to private keys is permissionless and free, enabling Web three structures to have the maximum ability to choose how it distributes power. Web three and DeFi can access the maximum number of individuals. It can also, it also has the two types of tokens needed to maximally express the best way of generating value. So we have the maximum number of individuals combined with a maximum number of ways to express value. Ethereum has collided these two particles together, unleashing a new paradigm of what finance even means and how society will engage with it.

• 19:04David Hoffman?

  Extract to enable. Our relationships with the platforms we use are going to evolve from extraction to enablements. And here's a tweet from Kevin Owoki that says, Web two is endothermic, as in it sucks in heat. And Web three is exothermic, exothermic, as in it pushes out heat, it produces and pushes out heat. Like energy.

• 19:26David Hoffman?

  Value. The capacity for our systems to compete for our attention using financial assets over hearts and likes fundamentally changes how these platforms will behave. Both Web 2 and Web 3 protocols want what's best for themselves. In the Web 2 world, this meant concentrating wealth towards the those who fight for the protocol the most: the founders, the CEOs, the inner billionaires. Platforms that try and distribute the value quickly discover that it's captured by the nearest intermediary. Therefore, Web 2 and TradFi keeps power at the center because they don't have the option to push it out because it keeps on getting up. Pushing power to the margins in Web 2 is lossy. Like you lose the signal, the electricity doesn't go through the wires.

• 20:11David Hoffman?

  Web 2 platforms do not have a path to distribute value to their users. The best they can do is provide social connections with likes. With no monetary value able to push out, the flow of value becomes one way: from the users to the center. And so they can't give us money.

• 20:29David Hoffman?

  And we just give it our attention, which ends up being our money due to advertisements. And so there's only an outbound flow of money out of us to the center of Web 2.

• 20:40David Hoffman?

  This is why we have a toxic relationship with our Web 2 platforms. They are a narcissistic, bottomless pit of our energy, attention, and emotion. They'll take whatever you give with no thought of returning the favor. In juxtaposition, Web 3 protocols do have the power of distributing value efficiently to the margins. They have the ability to granularly issue assets and send money directly to the users. This gives these protocols the ability to answer to the desires of their users with perfect fidelity. The ability to send users' value is a powerful new primitive that is going to be a source of significant amount of competition between protocols for decades to come. And competition is good for the consumer.

• 21:21David Hoffman?

  This is a new vector that the apps that we use in this world have to compete on. Like this is a new tool in the tool belt that it's a fight to the bottom of who can make their users the most enabled, give them the most money, spread around, create the most value, and spread it around. Around to the most people because those are going to be the protocols that generate the network effects and generate adoption and like Facebook and Twitter they weren't able to compete on this factor. They weren't able to compete on giving their users money. Our Web three protocols, our DeFi protocols have that tool in their tool belt and now they're all forcing each other to use it because one can use that tool, others, others also have to use that tool. This is what yield farming is, this is what airdrops are, this is whatever,

• 22:03David Hoffman?

  like this is what this new paradigm is. Private keys and unlocked this. Instead of Web two platforms competing on which can capture the most attention, Web three protocols compete on which can sustainably create and distribute the most value. How can I extract from my users evolves from how wealthy can I make my community? How can I generate rage adapts to how can I answer to the needs of my people? How can I take some of that turns into how can I amplify that? Where the Web two platforms suck our attention so billionaires can compete in their billionaire games, Web three platforms compete on which platforms enable their users the most.

• 22:41David Hoffman?

  Yeah, this is Web two, starts attracting all the users and then once it hits adoption, it extracts from them. And this is DAOs and Web threes and TradFi or DeFi where first it attracts the users, but then at the end it enables them.

• 22:57David Hoffman?

  All right, aligning with the systems around us. When systems find alignment with each other, good things happen. Once upon a time, humans learned to cooperate with plants for the mutual benefit of both species. Humans use plants to produce food and plants used humans to grow more plants. Humans did the bidding of the plants and the plants supplied the humans with nutrients. This was able to sustain more humans, which were then able to sustain more plants. We find, when we find resonance with the systems around us, really good things happen. We once learned to domesticate plants and animals and we will also learn to domesticate the protocols that dictate our lives. As our ancestors once trained wolves to become dogs,

• 23:39David Hoffman?

  so too will we train our protocols to provide us with unconditional love and appreciation for who we are as humans. In the 2020s, our relationship with our social structures, we evolved from eating poisonous mushrooms to learning how to cultivate farms and grow crops. And as a result, there will soon be protocol-level abundance. Protocol artificial selection. The open and permissionless nature of Ethereum produces an intense and highly iterative foundation for experimentation. Competition in DeFi is fierce, and the rate of protocol adaptation is faster than any technology development cycle we've ever seen before. Artificial selection experiments typically use organisms that have a high rate of generational turnover.

• 24:22David Hoffman?

  You can get like 20 generations of fruit flies inside of a month, allowing scientists and researchers to be able to produce desired results quickly. The same is true for DeFi and Web3 app development. DeFi was born in December of 2017 and has already morphed through many, many app development cycles since then. In December of 2017, MakerDAO launched, and people were absolutely blown away that you could mint a token called "Dai" from your collateral called ETH. And today, that's so basic, so boring, like we're used to that now. We've iterated and developed so many, many more generational cycles beyond then. And that was just like four years ago, like four months, four years and three months to the day, not to the day-ish.

• 25:05David Hoffman?

  Since then, we've invented and appended many new genes into the Ethereum ecosystem: yield farming, governance, NFTs, etc. Every new gene into these protocols gives them better tools to be able to reflect the desires of the developers building them. Not only are we refining our genes to be more precise by improving the tools we have, but we're also finding new genes to create, to help create more elaborate structures. We get more tools, and in addition to better tools, we get more of them. As we are capable of making new protocols from these new tools, they will in turn add their own tools to our tool belt. At first, our Web3 and DeFi protocols are dull, imprecise, and rounded, but as we iterate, they become precise and effective.

• 25:46David Hoffman?

  They become precisely and effectively capable of expressing the values that we embed into them as we build them. In the same way that we give treats to our dogs to get them to sit, stay, and shake, we will also train our protocols to behave and be nice to us.

• 26:04David Hoffman?

  Becoming the best version of ourselves. I've had the privilege of personally being set free by crypto. I've had a taste of what Web3 has had to offer and my previous bias towards saying no has turned into a bias of saying yes. Simultaneously, it's become easier to say no to things that I was previously cornered into saying yes to. Because of Ethereum, it's become easier to discover how I truly want to spend my time on this earth and it's become easier to learn what is my own true nature as a human after becoming unbridled by the shackles of misaligned social structures. Kobe discusses the same phenomenon from a different angle in a clip that reverberated across crypto Twitter.

• 26:41Speaker 01

  Before I had money, I thought everything was a scam and it was all rigged and blah, blah, blah, blah. And now, having money and being able to help my family out, for example, and seeing my parents' personalities change because they don't have to worry about certain things anymore, like making ends meet or like what's gonna happen when they retire. Seeing their personalities change and getting to know them more as people because some number changed on a screen makes me, A, like, everything seems like a giant scam, but B, feel like I was also slightly robbed of experiencing that while I was growing up or while I was younger because they had these burdens and had to worry about them.

• 27:23Speaker 01

  So it doesn't weigh on me so much, but I do think a lot about about that. Like, it feels like everything is a bit of a scam for some, like, weird numbers on a screen and it means that people, like, live their lives in ways where they don't get to properly know the people around them because everyone's always worried about short-term stuff.

• 27:40David Hoffman?

  Financial insecurity plagues the planet. In order for society to evolve into the best versions of itself, we must solve for abundance at the protocol level. We've actually not yet met the best versions of ourselves. Who will we discover when we become collectively enabled by the protocols that guide our lives? How does society change when our social structures turn from extractive to enabling? What happens when we replace soul-sucking doom-scrolling with invigorating actualization? What happens when the net effects of our platforms are for us to be more free and experience more things rather than capturing our attention and filling us with rage or envy? What happens when we combine strong individual autonomy over our money with a permissionless financial platform that seems to be intent on minting every type of token possible?

• 28:26David Hoffman?

  What happens when the maximum number of people are unable to express their values upon an infinite array of possible tokens? What happens when our protocols compete for our love rather than our rage? Thanks to the decentralized power of the printing press and double-entry bookkeeping, 1600s Europe became completely unrecognizable from 1400s Europe. 200 years is a long time, but in comparison to the progress we made from like 0 to 1400s, it was a blink of an eye. The 2050s will be completely unrecognizable from the 2020s, and it will be because we found much better answers to what is our true nature that we've ever had before. In 2050, we might have flying cars and editable genes, but that won't be why society will appear so different.

• 29:09David Hoffman?

  It will be because we produce social structures that align with our interests and have a stake in our betterment.

• 29:16David Hoffman?

  Culture emerges out of the social structures that guide us, and Web3 is building social structures that produce emergent positive behaviors for us and those around us. So here's a meme that I made. Everyone thinks that crypto is here just to give you $1 million so that you can finally complete yourself, but here's what crypto actually is. What crypto actually is are producing social systems that empower you. There's a reference to this at the end.

• 29:44David Hoffman?

  Rising tide. The future of Web3 is where we live inside of a sea of protocols. Like nature, protocols will grow to fill the void around them. The protocols that will enable us in ways that are the most aligned with what we want are going to be the systems that propagate to the furthest reaches of the world. As humans, we will bounce from protocol to protocol as we go about our day, and as a result, we'll receive generalized economic outputs from the inputs that we contribute to the protocols around us. Generalized economic output is the most sustainable form of UBI that I could imagine, universal basic income. Rather than a government-issued UBI, we can have protocol-issued rewards. And rather than receiving money unconditionally, our protocol-issued income is dependent on actually being active members of society. You actually have to engage with things in order to get the...

• 30:29David Hoffman?

  have to contribute to the protocols in order to get the value back. You will actually have to be engaged members of society in order to receive this basal level of income, yet this income is still permissionless, censorship-resistant, and universally accessible. By returning value to its participants, the web of Web 3 protocols produces an emergent safety net for all of society, building a better future. We will need to be careful as we advance into this future. The power of Web 3 is that our social structures will naturally reflect the values of the communities that compose them. They will resemble and represent our wants and desires upon the world. It's been a huge unlock that we can have protocols that reflect our values, but also it's pretty damn terrifying.

• 31:11David Hoffman?

  The biggest weakness of Web 3 is sometimes humans suck. Humans are shitty, like we're flawed, we get corrupted. Humans made the Holocaust happen. That was us. We did that. Having social structures that reflect our human values is a double-edged sword. It will also reflect our flaws. Worst case, it's that actually amplifies them, as we've seen in late-stage Web 2. There have been plenty of ways to reread this article using a dystopic lens. The Chinese social credit system and protocols that enable us if we do good kinda sounds like the same thing. Who decides what's good? It's great if our protocols reflect the values of the majority, but does that mean that they will oppress the values of the minority?

• 31:54David Hoffman?

  Will these protocols funnel us into homogeneity and restrict our ability to think outside the protocol? What if we make social structures that ultimately come to box us in in the same way Facebook has, but instead of with likes, with money, which is worse?

• 32:12David Hoffman?

  How we build these things is important. And what values we embed into them is really important. I take solace in the fact that the development in this space is rapid and iterative. The foundation itself is highly conducive to experimentation, allowing us to easily amplify what works and move on from what doesn't. Our ability for us to abandon one protocol and migrate to another is always just one transactional way. In Web 2, we can't easily migrate across protocols. Facebook doesn't allow us to export our social graph, neither does Twitter. They have us locked into their system. And this feature is how these systems slowly turn from enablement to extractive. Web 3 drops the cost of protocol migration down to zero, forcing protocols to fight

• 32:53David Hoffman?

  tooth and nail to keep us aligned and contributing to their system. Converging on values. The legacy that crypto will leave us with is an infinite array of assets with market capitalizations that reflect our human values. Market value based on human values. As this industry develops and matures, we will be able to audit ourselves as a society. Our ledgers are transparent and our assets are infinite and our markets are unstoppable. And so, once crypto platforms are as adopted as the internet currently is, there will be no hiding from who we are. We will be able to clearly determine who we are as a society and because we will... because where we collectively choose to put our money will be viewable on CoinGecko.

• 33:38David Hoffman?

  We can just go look at what we care about and sort it by market cap. Because like, "Oh, we care about this this much." Like, it's kind of crazy. This is why we must have free markets. This is why we must have the ability to mint any kind of token which trades on markets with 100% uptime. What we value and what our values are will be the data that our nodes gossip over our peer-to-peer communication networks. These technologies will enable us to come to a global consensus about what we care about. Only once we know the answer to this question can we begin to iterate and improve upon it. This is how we scaled Dunbar's number from 150 to Planet Earth. Say that aliens visit Earth. They see our cities, our tech, our moral code. They're curious.

• 34:22David Hoffman?

  They say, what are you guys doing here? What you up to? And humans in our current form, we respond. We're trying to get coordinated. Like, we're trying to figure that out. Humans first need to get coordinated so that they begin to formulate an answer to the question, what is our collective purpose? Where phase one of humans is everyone trying to get on the same page. And then, once everyone's on the same page, then we can be like, alright guys, what do we want to do now that we're on the same page? Like, what's next? That's phase two. Answering that question comes later. Right now, we're just trying to get on the same page. So, two phases of crypto. As it stands, crypto isn't so hot on the whole reflecting humans' values thing. Saying that crypto reflects human values would indicate that we're all greedy pump and dumpers

• 35:07David Hoffman?

  who are trying to get ours and leave. Will crypto be about greedy pump and dumpers and rug pulls for the end of time? Or will it actually mature into social structures that produce long-term, stable equilibria for the next leg up of humanity? From the wise words of Kevin O'Waki. While greed is necessary for the blockchain system to bootstrap itself, it is not the final form of the ecosystem. Greed is just the bootloader. Crypto is a multi-stage rocket. Phase one is the rocket of financial incentives, where you would get rich. And then, boom, we blast off and into orbit. And then, phase two is more sovereignty. It's like, once we're in at orbit velocity, escape velocity, once we're past escape velocity, that is when we become more free.

• 35:51David Hoffman?

  Crypto wasn't here to make you rich. Crypto is here to set you free.

• 35:57David Hoffman?

  Thank you for listening. Appreciate that. Hey, we hope you enjoyed the video. If you did, head over to Bankless HQ right now to develop your crypto investing skills and learn how to free yourself from banks and gain your financial independence. We recommend joining our daily newsletter, podcast, and community as a Bankless Premium subscriber to get the most out of your Bankless experience. You'll get access To our market analysis, our alpha leaks and exclusive content, and even the bankless token for airdrops, raffles and unlocks. If you're interested in crypto, the bankless community is where you want to be. Click the link in the description to become a bankless premium subscriber today. Also, don't forget to subscribe to the channel for in-depth interviews with industry leaders,

• 36:42David Hoffman?

  Ask Me Anythings and weekly rollups where we summarize the week in crypto and other fantastic content. Thanks everyone for watching and being on the journey as we build out the bankless nation.