120 - Marc Andreessen & Chris Dixon of a16z | Reinventing the Internet

✨ DEBRIEF ✨ | Ryan & David's Unfiltered Thoughts on the Episode https://shows.banklesshq.com/p/120-debrief ------ Marc Andreessen was a key player at the genesis of the internet. Chris Dixon is the master of Web3 mental models. The journey of a16z is the history of the internet—from Web1 builders to Web2 disruptors. And now they stand as core capital infrastructure of Web3. Having just announced the $4.5B raise of their Crypto Fund IV, as well as their new web3 Podcast, this episode will break the internet... or fix it. ------ 📣 SUBSCRIBE to the NEW a16z PODCAST: https://link.chtbl.com/HObAJQDL?sid=bankless ------ 🚀 SUBSCRIBE TO NEWSLETTER: https://newsletter.banklesshq.com/ 🎙️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com/ ------ BANKLESS SPONSOR TOOLS: ⚖️ ARBITRUM | SCALED ETHEREUM https://bankless.cc/Arbitrum ❎ ACROSS | BRIDGE TO LAYER 2 https://bankless.cc/Across 🏦 ALTO IRA | TAX-FREE CRYPTO https://bankless.cc/AltoIRA 👻 AAVE V3 | LEND & BORROW CRYPTO https://bankless.cc/aave ⚡️ LIDO | LIQUID ETH STAKING https://bankless.cc/lido 🔐 LEDGER | NANO S PLUS WALLET https://bankless.cc/Ledger ------ Topics Covered: 0:00 Intro 5:30 The Internet Problem 13:47 Encryption & Regulation 20:20 What the People Want 26:04 Cathedral and the Bazaar 34:07 Internet History Rhymes 39:46 Net Neutrality 47:15 An Improved Design Space 53:30 Speedrunning Everything 59:24 The Web3 Solution 1:03:55 The Mature Internet 1:11:50 Art and the Internet 1:15:21 Web3 Critics 1:19:15 Political Ideology 1:25:13 Marc’s Advice 1:31:25 Closing & Disclaimers ------ Resources: Marc on Twitter: https://twitter.com/pmarca?s=20&t=KszkLZCPKDd3zwBLcU0aiA https://twitter.com/pmarca?s=20&t=KszkLZCPKDd3zwBLcU0aiA Chris on Twitter: https://twitter.com/cdixon?s=20&t=KszkLZCPKDd3zwBLcU0aiA https://twitter.com/cdixon?s=20&t=KszkLZCPKDd3zwBLcU0aiA 5 Mental Models for Web3: https://shows.banklesshq.com/p/-90-5-mental-models-for-web3-chris a16z Podcast: https://link.chtbl.com/HObAJQDL?sid=bankless ------ Marc Andreessen's Book Club: The Mystery of Capital - Hernando De Soto https://www.amazon.com/Mystery-Capital-Capitalism-Triumphs-Everywhere/dp/0465016154 In Defense of Globalization - Jagdish Bhagwati https://www.amazon.com/Defense-Globalization-New-Afterword/dp/0195330935 Free to Choose - Milton Friedman https://www.amazon.com/Free-Choose-Statement-Milton-Friedman/dp/0156334607 Capitalism and Freedom - Milton Friedman https://www.amazon.com/Free-Choose-Statement-Milton-Friedman/dp/0156334607 A Conflict of Visions - Thomas Sowell https://www.amazon.com/Conflict-Visions-Ideological-Political-Struggles/dp/0465002056 The Vision of the Anointed - Thomas Sowell https://www.amazon.com/Vision-Anointed-Self-Congratulation-Social-Policy/dp/046508995X Knowledge and Decisions - Thomas Sowell https://www.amazon.com/Knowledge-Decisions-Thomas-Sowell/dp/0465037380 Intellectuals and Society - Thomas Sowell https://www.amazon.com/Intellectuals-Society-Thomas-Sowell/dp/0465025226 The Managerial Revolution - James Burnham https://www.amazon.com/Managerial-Revolution-What-Happening-World/dp/1839013184 In Defense of Global Capitalism - Johan Norberg https://www.amazon.com/Defense-Capitalism-Norberg-Institute-Defence/dp/1930865473 The Machinery of Freedom - David D. Friedman https://www.amazon.com/Machinery-Freedom-Guide-Radical-Capitalism/dp/1507785607 God of the Machine - Isabel Paterson https://www.amazon.com/God-Machine-Library-Conservative-Thought/dp/1560006668 Economics in One Lesson - Henry Hazlitt https://www.amazon.com/Economics-One-Lesson-Shortest-Understand/dp/0517548232 Men, Machines, and Modern Times - Elting E. Morison https://www.amazon.com/Men-Machines-Modern-Times-Press/dp/0262529319 The Cathedral & the Bazaar - Eric S. Raymond https://www.amazon.com/Cathedral-Bazaar-Musings-Accidental-Revolutionary/dp/0596001088 The Declaration of Independence of Cyberspace - John Perry Barlow https://www.eff.org/cyberspace-independence ----- 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.

• 0:07Ryan Sean Adams?

  Welcome to Bankless, where we explore the frontier of internet money and internet finance. This is how to get started, how to get better, how to front run the opportunity. This is Ryan Sean Adams and I'm here with David Hoffman and we're here to help you become more bankless. Guys, we have a fantastic episode for you today. This is an episode that's gonna break the internet, or maybe fix the internet, David. One of those two things, because we have two big brains on this podcast, Marc Andreessen and Chris Dixon. Marc was here at the genesis of the internet, okay? He was a builder in Web 1, he turned into an investor in Web 2 and Web 3. And also Chris Dixon, whom you know from previous Bankless podcasts, the master of Web 3 mental models, put them together and we get this fantastic episode, a few things to look out for. Number 1, we talk about the original

• 0:52Ryan Sean Adams?

  sin of the internet, what exactly that is. Number 2, how Web 3 actually fixes the internet, or maybe a better term, reinvents the internet. Number 3, all the different ways crypto is like the early internet, including the fight for freedom. And of course, Marc knows these things because he was there in the front row. Number 4, why the open version of the internet, including crypto, eventually wins. And number 5, we end with this, and this is a perfect way to end it, Marc giving advice to his 22-year-old self, okay? What a fantastic episode, David. Any thoughts going into this one?

• 1:30David Hoffman?

  Yeah, we frequently use the line, and we brought it up a number of times in the podcast, of how crypto is speedrunning the history of money and finance. And so, history is known to rhyme, of course, and history never repeats, but it rhymes. And we ask Marc about the parallels between the rise of the early internet, the rise of Web 1, and the rise of Web 3, and how strong those parallels actually are. And of course, this is when the "history always rhymes" line gets brought up. But Marc says that he doesn't That statement lightly. It's always easy to say that history rhymes, but Mark says that to the degree that Web 3 is playing out in the same exact path that Web 1 played out is quite salient. All the same players exist, all the same patterns exist. And so having this one particular person who is here for the fight of the open and free Web

• 2:15David Hoffman?

  1 and is also here for the fight between the open and free Web 3s, I think is a very unique perspective, especially as he grew up from being a builder of the early internet to an investor in the Web 3 internet. He has a lot of lessons from history to teach us in an industry that so well is mimicking the early path of its own predecessor.

• 2:35Ryan Sean Adams?

  Guys, there's so much more to talk about. In fact, David and I are about to go talk about that. That's contained in the debrief episode. Okay, so if you are a Bankless Premium subscriber, you get access to the debrief episode where David and I talk about the episode after the episode. To unlock that, upgrade your membership, become a Bankless Premium member. We'll include a link so you can do that in the show notes. Guys, we are going to get right to the conversation with Mark and Chris. But before we do, we want to thank the sponsors that made this episode possible.

• 3:03David Hoffman?

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• 3:48David Hoffman?

  to all the DeFi apps and services that you're already used to doing, like swapping tokens and staking. So if you don't have a Ledger hardware wallet, go to ledger.com, grab a Ledger and take control over your crypto.

• 3:59David Hoffman?

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• 4:43David Hoffman?

  between Ethereum, Optimism, Arbitrum, or Boba Networks. Arbitrum is an Ethereum Layer 2 scaling solution that's going to completely change how we use DeFi and NFTs. Over 300 projects have already deployed to Arbitrum, and the DeFi and NFT ecosystems are growing rapidly. Some of the coolest and newest NFT collections have chosen Arbitrum as their home, all the while DeFi protocols continue to see increased usage and liquidity. Using Arbitrum has never been easier, especially with the ability to deposit directly into Arbitrum through all the exchanges, including Binance, FTX, Quobi, and Crypto.com. Once inside, you'll notice Arbitrum increases Ethereum's speed by orders of magnitude for a fraction of the cost of the average gas fee. If you're a developer who wants low gas fees and instant transactions for your users, visit arbitrum.io/developer

• 5:27David Hoffman?

  to start building your DApp on Arbitrum. If you're a DGen, many of your favorite DApps on Ethereum are already on Arbitrum, with many moving over every day. Go to bridge.arbitrum.io now to start bridging over your ETH and other tokens in order to experience DeFi and NFTs in the way it was always meant to be: fast, cheap, secure, and friction-free.

• 5:46Ryan Sean Adams?

  Bankless Nation, we have a special treat for you today. Never before been assembled. We've got two of the biggest brains alive in technology investing: Marc Andreessen, Chris Dixon. Allow me to introduce them to you for a moment, although they need no introduction. Marc Andreessen, he is the Andreessen in Andreessen Horowitz, otherwise known as A16Z in the crypto space. He's also the founder of... Of Netscape, I believe he accomplished this feat at 22 when he built out the Mosaic browser. And he is perhaps the only person in the world who navigated both the birth of the internet, going from a web one builder to internet investor to where we are today. A16Z, of course, is a massive investor in crypto, in web three technologies.

• 6:30Ryan Sean Adams?

  We're going to talk about that, including a $4.5 billion fund, their fourth fund that was just announced. Mark, how are you doing?

• 6:38Speaker 02

  I'm doing fantastic. Thanks for having us.

• 6:39Ryan Sean Adams?

  Yeah, it's great to have you on Bankless. We've been wanting to have this conversation for a while. And of course, we also have Chris Dixon, who is a repeat Bankless guest and one of the key people leading that new crypto fund that I was just talking about. I've called him on Twitter, anyway, the Kendrick Lamar of mental models. Okay, because this guy drops influential ideas.

• 6:58Speaker 03

  I had to Google Kendrick Lamar, but thank you.

• 7:00Ryan Sean Adams?

  You're very welcome.

• 7:01Speaker 02

  Everybody else had to Google mental model.

• 7:06Ryan Sean Adams?

  Anyway, he's certainly given Bankless listeners a fantastic set of mental models through which to understand and explore this whole crazy thing we call crypto or web three, or whatever we're going to call it in this episode. Welcome back, Chris. How are you doing?

• 7:18Speaker 03

  Good, good. Thanks for having me.

• 7:19Ryan Sean Adams?

  All right, Mark, we got to set this up because we haven't heard from you yet. We've heard from Dixon on a few things already, but you were here for the birth of the original internet, the thing that we now call web one dot O, but wasn't so obvious. You know, that was just the first version of this thing. But there's this perception around, I think it bleeds through crypto as well, that there's a problem with the internet of today, that it's somehow broken. Do you think the internet is broken today? And if so, where did we go wrong?

• 7:46Speaker 02

  Yeah, I call this the original sin. So there was an original sin of the internet. And it's actually sort of this, this ironic twist. So I'll take you all the way back. Once upon a time, it was actually illegal to have money on the internet. Like, it was quite literally illegal to do business online or to transact online. And this is prior to 1993. And the reason it was illegal is because at that time, the US government was paying for the internet backbone. And they had something called the AUP, the acceptable use policy. And it basically said, it's a research project. It was a federally funded research program through the National Science Foundation. And so, you know, taxpayer money. And so they quite plausibly at the time said, look, this is not for commercial use. You can't like set up a store. You can't do, you know, stock trading or anything. You can't transact money. And so that began the sort of internet ethos, you know, as a very kind of non-commercial thing.

• 8:28Speaker 02

  And there were a lot of great aspects to the non-commercial ethos at the time. There was, you know, this is kind of, you know, the rise of open source, you know, the so-called free software movement, and then the open source movement, you know, kind of went hand in hand with this. And then just the general internet ethos of sharing and openness and open protocols and so forth kind of emerged out of that. So, so there was a lot to like. And in fact, you know, when I got involved, when I did my work, which was originally also funded by the National Science Foundation, you just assumed that everything was open source. And then when we started Netscape, the company, you know, the overwhelming reaction we got out of the gate was, well, that's just, it's impossible to imagine. There can't be an internet startup. There can't be an internet company that would ever make money because everybody knows there's no money on the internet. You can't do business online. And so the big reaction to Netscape was just like, well, that's impossible. Like that won't work.

• 9:11Speaker 02

  And so, you know, and then at Netscape, we kind of set out to, you know, basically turn the internet into a commercial medium. Like, we wanted to make it real for people in their normal daily lives. And a big part of that was to make it real for people in their economic lives. And that worked, right? Ultimately, the rise of e-commerce and so forth. But the sort of, you know, original sin was this sort of lack of money, right? Which is the big virtue of the internet is anybody can plug in, anybody can like send email back and forth, anybody can, you know, upload whatever data they want, anybody can communicate with anybody else. That's all great, but you know, there's no money. And by the way, the fact that there was no money on the internet actually was because of a sort of a deeper underlying, you know, I would say flaw or again, sort of sin, which was basically zero trust. Right? The internet was built as an untrusted network. And again, you know, and again, like that worked really well for what it was, but there was no trust.

• 9:55Speaker 02

  There was no trust. There was no money. As a consequence of there being no trust and no money, there are sort of none of the other aspects that you kind of expect from a modern market economy. There was no concept of, you know, economic incentives were just simply absent. And the, the lack of economic incentives has caused all kinds of problems, you know, including like the entire problem with spam, which has been dogging the internet for, you know, 30 years is basically a consequence of not having correct economic incentives built in for who sends messages, who receives messages. And then, you know, we can spend hours talking about all the ways in which the internet kind of, you know, in a lot of ways went sideways over the years because you just, you couldn't have money. You know, the fact the internet, the sort of consumer internet economy got built on advertising, right, which has all these kind of external, you know, kind of, you know, kind of questions, issues now. Again, it's a consequence, like if you can't charge people directly for things on the

• 10:38Speaker 02

  internet, then, you know, advertising is the only viable business model, you know, basically indirect payments, you know, somebody paying behind the scenes. So this was just a fundamental issue. We spent actually a lot of time, like we knew this at the time and we actually spent a lot of effort in 1993, 94, 95, 96, trying to fix this. And I could take you through the sort of disaster stories of how we tried to fix it at the time, but none of the fixes took. And, you know, in retrospect, we just, we didn't have the blockchain. Like this was, you know, way prior to Satoshi. This is way prior to the Bitcoin white paper in 2009. You know, this is way prior to the conceptual breakthrough of the blockchain, as sort of was first incarnated with Bitcoin. And so in retrospect, like we now know, we couldn't do it at the time because we didn't have the foundational technology needed to actually do this. But now we have that technology. And so now we believe we now have a chance to kind of go back and fix those original problems.

• 11:22Speaker 03

  I would just add to that, the, I mean, Mark, Netscape created JavaScript, created cookies, right? SSL too? Was that Netscape? Okay. So the other thing I think, the one I think about the history of the internet is, I think of just sort of these core primitives, which you need to have. So you need encryption. You need, ideally you have some system of identity. You have some system of money, right? And you were, if you go back and look at it, the 90s, you were racing Netscape and there was a fight going on. So I think this is often sort of revisionist history around it. There was a, there were two visions of the internet. There was a so-called information superhighway, which was Disney, Comcast and a very centralized internet. And Mark was on the other side, which was sort of the open decentralized internet. And as I tell you, you'd know better, Mark, you were racing against those, that other

• 12:07Speaker 03

  side to add features. And that's why you had to build JavaScript, right? You had to build SSL and these other things so to be kind of feature parity. You know, but because it was moving so quickly, you know, people didn't really have the time to step back, step back and say, hey, let's rethink this advertising business model. Let's go build internet money, right? And even SSL, right? Was extremely controversial and Mark can tell this story better than I can. In fact, it was illegal, right? 128 bit Netscape was classified as munitions and you'd go in front of Congress, just very similar to crypto today, where they would say, well, who wants to use encryption? Obviously only criminals would be and terrorists and things would use it. And of course, Mark would say, well, someday people will put their credit card

• 12:49Speaker 03

  on the internet and buy things, you know, buy kitchen appliances on websites and things like this. And they would laugh at you and say, who does that today? And so why shouldn't we just ban it? And so they actually literally did heavily regulate encryption. And in fact, there was a big battle to try to actually ban it altogether because it was so obviously only for criminals, right? You can tell the story better than me, Mark.

• 13:09Speaker 02

  Yeah, that's right. I mean, look, so encryption, right? So the original crypto encryption, right? Being able to actually like have secrets, like, you know, encryption has been used in like warfare for, you know, hundreds of years, right? All the way back in the American Revolution, they used ciphers and so forth. And then, you know, obviously the World War II was won in large part due to breaking the enemy's encryption. So like, there was this sort of heritage of encryption and this sort of military intelligence fears. But encryption was never used in daily life. Like, ordinary consumers didn't really have access to any encrypted anything, basically, all the way up through, up through the early 90s. And we actually negotiated, I believe, the first contract. I think we actually had the first kind of consumer facing contract for encryption with a company at the time was known as RSA, which had all of the rights for encryption at the time, encryption protocols. And so we actually negotiated that at the time. And then we subsequently released the first

• 13:52Speaker 02

  consumer product that had encryption built in, which was the Netscape Navigator. And then, you know, as Chris says, we had to actually invent a protocol. We had to invent a protocol called SSL, which was the first encryption protocol that was used online and is still used today. And yeah, so we had to do that all from scratch. And then, yeah, because encryption had this military heritage, there were literally two regulatory regimes for crypto. We could actually, for encryption, we could actually ship strong encryption inside the US. We were actually, were allowed to do that, which was good, although they kept trying to ban that. For export, the Netscape Navigator was actually classified under the same munitions regulation as Tomahawk cruise missiles at the time, right? And so you could have a missile, you could have like Sarah nerve gas, or you could have like Netscape Navigator. And it was equally, it was sort of under the same regime. And so we were not allowed to export the strong encryption version. So we actually had, you know, at this point, software still came in boxes, right?

• 14:37Speaker 02

  And so there were literally two different boxes. There was the strong encryption version for US citizens who got the special one. And then, you know, there was international one. And we put, you know, a big warning label on the international one, like, you know, this is weak encryption, like this is the bad version. You know, but then, of course, what happened was encryption was like, you know, it's just math, right? It's just math and numbers and bits. And so people outside the US knew how to do it. And so they started building competitive products. And then we basically had this giant fight with Congress and with the intelligence agencies at the time. And as Chris said, yeah, they tried to ban encryption outright. You know, they still try every now and then. It still comes popping back out again where the, you know, different governments try to ban encryption, but they keep kind of swinging and missing on that one because it's hard to ban encryption because like, if you ban encryption, then everything is open for, you know, basically for attack and hijacking by terrorists and criminals. And so you have the other side of that problem. They did all the same, you know, it's all the same dark warnings, you know, they'd

• 15:22Speaker 02

  come in and they do the briefings, they'd give you the, you know, we're going to give you a security clearance for the day. And then they open the briefcase and out comes the parade of horribles of all the awful shit happening in the world, right? And it's like, it's all going to be your fault. All right, from here on out, it's all going to be your fault. Like anytime anything bad happens, right? Anytime, you know, there's a bombing or anything, it's going to be like on your head and we're going to pin it on you, right? And so, you know, they tried all that stuff. They tried all the stuff they're doing right now in Washington with crypto and blockchain. We fought it out then and we're basically fighting it out again.

• 15:48Speaker 03

  It points to this fundamental asymmetry as well, which is with new technologies, it takes a long time for the positive use cases to develop and especially with things like encryption. And the early adopters will just naturally will be sometimes bad actors. So you take e-commerce, right? So encryption, SSL encryption, right? In 1995, a senator saying it's mostly used by criminals, that might've been correct in 1995. But you had this slope of adoption of legitimate uses of encryption, which was a hockey stick, which of course today we take for granted, right? But it'd be very easy for an over zealous regulator in 1995 to have, you know, killed that growth at the beginning. And of course, you wouldn't even know 10 years later, you'd done that. You know, there's probably a ton of regulations that have already done that anyway.

• 16:32Speaker 03

  So I think we're at sort of, we could talk about that maybe later, but I think we're at kind of a moment like that now with. With, you know, our crypto web three where, you know, you have this chorus of cynics who only point to the bad things and ignore any possibility of good things.

• 16:47Speaker 02

  Well, and I would say there's several, and these are the counter arguments that we deploy, that we deployed then and we deploy now. So one is, yeah, the good use cases are going to emerge. So this is going to have all kinds of positive use cases. So that's one. The second is like, look, this is going to be a giant industry, right? This is going to be like a giant industry. This is going to create jobs, like this is going to create economic wealth, like job creation is itself is a national, national security thing. Like you actually, if you're concerned about national security, you actually want your economy to do well and you want your economy to be the place where, where new things happen. There's also another national security argument, which is if these things are going to exist, you want them to happen in your country, right? It's a big argument we used at the time, which is like, look, there is going to be commercial software on the market that's going to have strong encryption. There are going to be hundreds of vendors outside the US who do this from all these other countries, if we're not allowed to do it. And then you, the intelligence community is not going to be able to get to those companies the way

• 17:32Speaker 02

  that you can just come like, talk to us because we're American citizens and you know, we're patriotic and so forth. And so you might not get everything you want, but at least it's happening on your territory in your government, you know, under in your country as opposed to somewhere else. And then there's just the broad thing, the really big thing, which is what I keep coming back to, which is like, look, like, you know, a lot of the same people who are very worried about like bad use of crypto are also worried about like privacy, right? They're worried about like, is people's private information going to be held secure? Is people's health information going to be held secure? Is the national power grid going to be held secure? Is the banking system going to be held secure? And it's the same, you know, evil cryptography that gets used by bad guys for coordinating terrorist attacks that gets used to secure the power grid and all the hospitals, right? You know, it's a tool, like encryption is a tool. It's going to get used in various ways. On net overwhelmingly, it's a positive. Like you'd much rather live in a world that has high security, you know,

• 18:17Speaker 02

  than a world that has no security. And then, you know, I think the exact same, you know, concept applies to, frankly, it applies to money, right? Money, money also gets used for lots of bad things, right? Criminals and terrorists use money all day long. And yet we don't say like, we shouldn't have money because they use it because overwhelmingly, like the positive use cases dominate. And so there is adaptation that the world has to have as these technologies become widely accepted, but. You know, basically 20 years later, you look back and you're like, okay, that was overwhelmingly good that that got adopted. And then the world was actually able to adapt. And that's basically what I think is going to happen with crypto.

• 18:45David Hoffman?

  Mark, I'm interested in gaining your perspective as to how obvious some of these things were all the way back then. Because the parallels between the fight for the freedom of Web 1 versus the fight for the freedom of Web 3 are so strong, as you guys have illustrated just now. And I see like me and Ryan and like a lot of the cypherpunk ethos built into the Web 3 world as truly fighting for the open and permissionless Web 3 in the same way that you were fighting for the open and permissionless Web 1 of the world, where we had a fork in the road with two possible outcomes, the centralized web with open surveillance, or the decentralized web with permissionlessness and privacy. And then we had the government regulation player kind of tinkering with the incentives of everyone and having their own role to play.

• 19:28David Hoffman?

  And that same exact pattern is following out now, where we have open, public, permissionless blockchains versus centralized blockchains. And we are trying to tilt towards open, public, permissionless, and private systems. But I'm wondering your perspective on whether I'm being a naive youth or not, whether I kind of just hope and assume that natural humans will always pick the open and permissionless system, and crypto is just going to win ultimately hearts and minds of the people, and just because it's what the people want. And eventually, Web 3 will win, no matter what. Am I being naive here? Or is there a counterfactual universe where like, the open and public permissionless Web 1 did not win, and we have a different future? Like, how hard do we really have to fight for this thing?

• 20:11Speaker 02

  Yeah, so the big bull case on the open systems and the internet then, or crypto now, the big bull case, the way I describe it is, there's this guy Bill Joy, who was one of the legends in software, who developed one of the main versions of Unix and co-founder of Sun, which was one of the central companies for the build out of the internet originally. And he had this thing, you know, Sun was always this company that had developer platforms and did a lot of open source work. And he had this thing he called Joy's Law, you know, after his name. And Joy's Law was, no matter how many smart people work for your company, there are a lot more smart people who don't. And you can apply that also, by the way, for countries. No matter how many smart people are in your country, there are a lot more smart people who are outside your country, right? It's the same thing. And so the the advantage of an open system is that basically everybody can participate.

• 20:51Speaker 02

  Like you can go basically recruit and draft, right, and build a community and, you know, basically every smart person in the world, every smart person in every company, every smart person in every country, and they can come participate. The economists use the term permissionless innovation, right? Which is like, okay, I want to build something new. I want to build a new app. I want to build a new site. I want to build a new service. And, you know, do I have to fly to the corporate headquarters of, you know, XYZ Corporation, you know, and put on a suit and go into a room with 40, you know, other people in suits and like give them a PowerPoint presentation and try to get their approval? Or, which is permissioned innovation, right? Or I can just like build the thing, right? And so, you know, the internet was classic permissionless innovation. Crypto is classic permissionless innovation.

• 21:32Speaker 02

  So the potential is to draft all the world's smart people and then to collectively build something that's just like much bigger and better and, you know, more comprehensive and more innovative than any individual company could ever build on their own. You know, kind of as Chris said, though, the problem with that is it's like, okay, it's like, in the moment, it's like, okay, everything I just described is like hypothetically possible, like it's hypothetically what's going to happen, right? But it's not what, you know, XYZ government bureaucrat today wants to happen. It's not what XYZ, you know, it's not what Jamie Dimon. I'll pick on the people who have picked on us. And so this is all me, I'll return a little fire. I'm not going to attack anybody, but I'll return a little fire. You know, it's not what Jamie Dimon thinks should happen, right? It's not what Warren Buffett thinks should happen, right? It's not what certain, you know, government officials think should happen. And so you're arguing this hypothetical against people who are like, no, I want to stop it now.

• 22:17Speaker 02

  And as Chris said, like, the problem is, the dog that doesn't bark, the problem is like, if it's stopped, it's all of the gains are in the out years, right? All of the things that were going to happen on their out years, and when they don't happen, like, nobody ever knows that they were possible. And so you're in this weird situation up front where you're kind of arguing in favor of a hypothetical future that hasn't emerged yet. My hope, right, would be that like we've seen this movie before, we've seen this happen over and over again, we saw this happen to the internet, we saw it happen to the PC, we saw it happen to the iPhone, like, there have been lots of examples over time of how you have these systems that other people can build on top of, and you get this much bigger and kind of more powerful thing. And so I always kind of, you know, I was kind of, I don't know, like, they're getting married for the sixth time or something, right? It's like, you know, finally, you know, optimism, you know, is going to win over experience, right?

• 23:01Speaker 02

  And, you know, finally, people are going to like, understand this, and I just kind of find like, no, you know, it's like, whatever bureaucrats are in charge of the status quo today, they're still going to fight it the exact same way the last ones did. You know, we're going to make the exact same arguments, you know. Quite honestly, there's a generational component to it, right? Which is like, you know, kids coming up, look at these new things as an opportunity for them to make their way in the world. You know, a lot of people, when they get older, not everybody, but a lot of people when they get older, they view this as like, they want, you know, they have status quo bias, you know, they don't want anything to change, they have their existing power, you know, they run their existing companies their own way, and they don't want things to change. And so there's a, there's a generational momentum kind of aspect of it. There's a real movement aspect of it, right? There's a whole aspect of all this stuff that has very little to do with the technology, just has to do with movement characteristics, like being able to have a lot of people who

• 23:43Speaker 02

  sign up sort of into an army and actually have, you know, kind of collective power. And so I think we're kind of doomed, or whatever, fated to kind of fight these things over and over again, and I don't know, I know what side I want to be on.

• 23:53Speaker 03

  I would add to that, that I think of the history of computers as sort of, there's really two threads. There's the open and kind of closed, there's open, Cathedral and the Bazaar, if you've read that essay, that was a famous essay around open source software. And so the cathedral is, you know, Microsoft, later on, Apple, most of the big tech companies today are cathedral. Bazaar was, early PCs are interesting, they had aspects of both, I would argue, the early seventies PCs were more bizarre, and in fact, Steve Jobs, Homebrew Computer Club, it was a bunch of, you know, that was effectively like a, you know, an NFT Discord or something of the day, right? And then I think the big, then Mark was involved, and I think there was this sort of understood history of the internet where there was this kind of battle, and the OpenSide won. Open source software is probably the most successful example of that kind of ethos

• 24:38Speaker 03

  playing out. Ninety-nine percent of the software in the world now that we run is open source software. So I think, to me, crypto has picked up the baton there, right? I mean, open source software continues, but this is kind of the major, important, new kind of fight over openness. I would say one thing, David, is that the open side has Joy's Law, what Mark just described as an advantage. The disadvantage in the open side is a two-step process. You first recruit the developers and then you build the apps, right? Users didn't opt to have Linux in their data center, right? They opted to have a, you know, a system that didn't crash. The developers went and built that system and a system that had robust libraries and ecosystems and everything else, right? And that's very important for, and so like I, example I used in a blog post a couple of years ago was Wikipedia versus Encarta. So Microsoft had a encyclopedia, a CD-ROM encyclopedia thing that had beautiful pictures.

• 25:23Speaker 03

  It was 1998, 2001, actually 2001, I think was Wikipedia. So at the time you have Encarta, beautiful pictures. You go look up an elephant, you see a picture of an elephant, some esteemed person wrote a description of the elephant. Wikipedia in the beginning is this, you know, chaotic shit show, right? You know, it's people, whatever, putting whatever they want up. But, but it's two steps, right? First, you recruit the contributors and once you get that set of people that are excited and putting in good content. If you look at the stats, it's just hockey stick passed and Encarta was shut down. I think it was 2006, it was pointless, right? And so, once you hit that, you get that incredible growth. But I think that's important to understand and I think that's why so much of what we've been doing in crypto in the last few years has been kind of developer focused and I think only now are we seeing kind of that second step really kind of mature.

• 26:08Speaker 03

  I think there's a great story, Mark. One of my favorite Mark stories is, uh, this also affects your design choices. So in Mark's world and Netscape, they chose to make all of the transport protocols of, you know, HTTP, if people that use that, you guys chose to make it all text-based as opposed to binary, right? And if you go back in time, I'll let you tell the story, Mark.

• 26:26Speaker 02

  Yeah, yeah, yeah. So any expert protocol is anybody who had ever worked at a big company who understood how to design networks. Because there were networks, there were computer networks for, you know, 40 years before the internet emerged. They were just all proprietary. And so you'd buy an IBM mainframe and they would sell you an IBM network. They had a technology at the time called Token Ring and it would connect all your IBM computers together. You know, you couldn't connect other computers to it. You couldn't connect your Apple Macintoshes or whatever to it, but you could connect all your IBM computers together. And so then they'd have all these protocol designers, right, who were like, you know, world experts at building network technology. And the one thing that they all knew for sure was you do binary protocols. And the reason you do binary protocols is because you need to, you know, networks were very slow at that point. You need to optimize every single bit, right? And so you want to like hack as much data as possible and a few bits as possible because that's how you get performance out of what we're.

• 27:07Speaker 03

  So not human readable?

• 27:08Speaker 02

  Not human readable. And so, right.

• 27:10Speaker 03

  The text is not human readable. Yeah.

• 27:11Speaker 02

  Yeah, that's right. So if you looked at the protocol data going over the wire, right, you would just see a gibberish. There's just a bunch of random numbers, you know, coming across and then you would need specialized software to try to decode that and repack that. And this was this whole kind of arcane area of network design. And then the internet people, starting originally with things like SMTP and so forth, the internet people started to do these text-based protocols and then HTTP was a text-based protocol. And the idea of a text-based protocol was it's human readable, right? And so I can read it, you know, without having to look for things and then I can write it. I can emit it, right? And so one of the things that made the web take off early on was that you could build a web server with four lines of Perl script at the time, right? Because you could use all of the standard text parsing technologies built into, you know, languages like Perl and Python, which made it very easy to process and to emit text. And so

• 27:56Speaker 02

  you could basically have this little text processor that basically generated this protocol and then you could create a web server to do whatever you want. And at the time, you know, there, people ran thousands and thousands of experiments of different kinds of web servers they could build. And you could just kind of hack it together. You could, you could write a new web server in five minutes. And all of the experts, right, all of the protocol designers from the old world, all were like, you guys are out of your minds. Like, this is so dumb. Like, you guys are deliberately going backwards. You are like, just avoiding all the hard work of actually making this work. By the way, don't you see how slow this is? Like, this is just like unacceptably cripplingly slow. You've got all of these handshakes back.

• 28:29Speaker 03

  And by the way, they were in some sense, right. It was slow. At that time, you really had slow modems. And so it's a really interesting design choice that you guys made.

• 28:36Speaker 02

  Yeah, that's right. So we decided to create a problem, right? Because the big problem was how do you get broadband rolled out, right? So part one of the problem was like, how do you get anybody to use the web? And in that case, you would have wanted to optimize performance for the networks you had then. But the other question was like, what could you do that would provoke people to actually roll out and buy broadband, right? When that was going to be very expensive. And so we actually deliberately created. The problem like we deliberately made the performance problem worse in the short term to actually motivate people to invest in broadband.

• 28:58Speaker 03

  But wasn't it also so that by making it human readable, you were making it easier for developers?

• 29:02Speaker 02

  Easier for developers.

• 29:02Speaker 03

  Pitching developers.

• 29:04Speaker 02

  That's right.

• 29:04Speaker 03

  Who would then build great apps, who would then compel you, who would then provide a reason why you wanted to buy broadband.

• 29:09Speaker 02

  That's right. So the users would sit there and they'd be like, wow, all of a sudden the internet does all this amazing stuff. And then, oh my God, wow, is it slow?

• 29:16Speaker 03

  Yeah.

• 29:16Speaker 02

  And then it's like, then you call the phone company or the cable company. You're like, when can I buy a cable modem? And then all of a sudden the cable companies are like, oh my God, there's all this demand for cable modems. And that's where all the broadband. But right, the critiques in the moment, Chris, I think this is where you were headed. The critiques in the moment were like, this sucks. This is slow. This is stupid. Like it's all these same things. There was another analogy I always love pointing to is that the New York Times reviewed the first laptop computer that shipped in the, it's like 1981 or whatever, 1982 is, and I think it was probably the Compaq or Osborne at the time. It was the first laptop computer, the first laptop computer in 1982, it weighed, I think it was like 43 pounds. And it was basically this giant suitcase.

• 29:51Speaker 03

  Luggable, luggable, they'd call them.

• 29:53Speaker 02

  Luggable, they called it. And so you'd have like this 43 pound thing on your lap in the plane and you'd like unfold it. And you know, if your legs didn't snap under the pressure, it had like, you know, a four inch screen and like, you know, it's slow as hell. And so the review is hysterical in retrospect. It's like, you know, laptop computers are the dumbest idea we've ever seen. This is ridiculous. Nobody is ever going to buy one of these. This is never going to work. Right? And of course, what they don't anticipate is like, okay, all of those problems are all of the opportunities for all the entrepreneurs that are and come along and miniaturize everything and you know, create what we have today. And so again, it's this overall theme of like, okay, there's the reality of what you have today. There's all the critics who are arguing against the reality of what you have today. In a lot of cases, they're actually right, but the fact that they're right is actually totally beside the point.

• 30:32Speaker 02

  Cause what they're not understanding is the potential. They're not understanding what this is going to turn into. And they're, and in particular, they're not going to understand what happens when like a lot of the world's smartest people devote themselves to solving all these problems. And that's how you ultimately get these amazing outcomes out the other side.

• 30:44Ryan Sean Adams?

  So Mark, this entire conversation, I do want to go back to the problem of the internet at some point as we tie up this thread, but the similarities here between, you know, Web 1 and what we're calling Web 3 are just so juicy, right? I mean, you talked about the ability to spin up a web server with four lines of Perl, right? And how, you know, that was human readable, but it seemed like such a bad idea at the time. It just reminds me so much of like the Ethereum white paper and solidity, smart contracts, and the ability to spin up a token with like just a few lines of code. Now, everyone said that would be a terrible idea. And you talked about actually doing it this way created another problem, which was how do we get broadband? And I feel like that's very much what we've seen in the past five years since the birth of smart contracts, at least in our world, which is very much like, okay, now we have

• 31:29Ryan Sean Adams?

  smart contracts, we have tokens, but we don't have bandwidth. Okay, we don't have scalability, we don't have enough block space, we don't have fast enough transactions per second. I'm wondering here, Mark, before we get back to kind of the problem here, but do you see these similarities? Like, how similar is Web 1 to Web 3? Do you just see them everywhere and you're like, oh, I've seen this exact same story before, it's going to play out in the exact same way? Tell us about the similarities, but then maybe also tell us about some of the differences, because each wave has got to have some differences, even if it's a sort of a fractal of the last.

• 31:59Speaker 02

  The most easiest way I think about it is when you get something like this that has a movement, that has this sort of collective effect, has a movement behind it, and is attracting many of the world's smartest people to work on it, basically the criticisms play out differently than the critics think. So the critics make this long list of all of the problems. And, you know, you alluded to like, you know, this long list of all the problems with Ethereum today, or a long list of all the problems with Bitcoin, or whatever. But you're getting these genius engineers and entrepreneurs, right, would flood into the space, which is what's happening right now. And what happens is they look at that list of problems as a list of opportunities, right? They're like, okay, like, that's the punch list. Like, these are the things that I can do, because if I fix these problems, it's going to be really important, it's going to really matter, I'm going to be famous, right? I can build a real business, like, you know, this is going to be how I'm going to make my mark in the world, is I'm going to fix these problems. And so, I don't know, it'd be like if you had a house project or something, your house

• 32:44Speaker 02

  was going sideways, and you get all these complaints, and then like all of the world's best architects and like, you know, master builders like showed up, you know, the next day to like fix your house, like, and you've got like all these incredible, you know, amazing, you know, whatever. It's just like, all of a sudden, you've got the best house in the world, right? And this can actually happen in this kind of world, this can actually happen. So the big dissimilarity or the thing that's not the same, I think, is it's this untrusted versus trusted thing, right? So on the internet, the answer almost always was to liberate, right? For the internet 1.0, 2.0, the answer almost always was to liberate. It was to create, basically, break down walls, have more people to be able to participate, have more people be able to build apps, right? Have more freedom. You know, it's why the internet had this incredible ethos of freedom of speech for a long time, right? That kind of changed a bit more recently, but like, you know, for a very long time,

• 33:28Speaker 02

  it was, you know, this is, you know, sort of inherently a free speech environment. It's a sort of this iconic, you know, the classic essay, as John Perry Barlow wrote, this was like 25 years ago now, he called it "The Declaration of the Independence of Cyberspace," right? And it was basically, and if you read it, it's like a very poetic thing, and it's like, basically, "We're gonna leave you and your grubby world behind." Again, it was this kind of spirit of liberation. Actually, a lot of it actually came out of the 60s. It was kind of part of the cultural revolution at the time. And so you were kind of driving towards, you know, less and less trust, you know, less and less permission, less and less authority, right, over time? And then, but like I said, what were we missing? We were missing the other side. We were therefore missing trust. We were missing authority. We were missing permission. We were missing, you know, the ability to transact with people, form trusted relationships, transact, send money, store money, like, and then have all the other economic arrangements

• 34:13Speaker 02

  that, you know, kind of that the world wants to have, you know, loans and contracts and insurance and all these other things, like, we just didn't have any of that. And so there is this other side to it, which is, at least the way I think about it, is Web 3 is bringing trust to an untrusted network, right? And look, there was trust involved, like, people had to believe that encryption worked, right? And so, you know, there were trusted components to what we built. But the big thing here that strikes me is just like, this is an opportunity to build the sort of internet phase 2, you know, or Web 3, is like, an opportunity to basically build trust into this untrusted environment and have people come out the other side of this being like, okay, we're like, for example, we could actually imagine the entire global economy running on the blockchain, like, the entire thing. Like, we can imagine 30 years from now, or 50 years from now, like, the entire global economy cuts over. Right? And everything cuts over. And what would it mean for that to happen? And how would people have to feel about that?

• 34:56Speaker 02

  And that's a, that's a very different kind of problem than the one that we have.

• 35:00Ryan Sean Adams?

  Mark, one thing I want to jump on here, because this is something that Bankless believes a lot. We often say here, when they adopt crypto protocols, they adopt crypto values. And it strikes me that one of the things that was done very well in Web 1 was the preservation of neutrality. Like, you know, TCP IP, HTTP could not differentiate and make a judgment call on what free speech was allowed and disallowed. Right? And what seems to have been the case is with the advent of Web 2, let's say, we started to inject another layer into this, kind of like a governance, a decision-making type layer into the process. And at the base protocol, maybe, you know, everyone has the right to say whatever they want, and that's great. But now that's a few layers down. We have this app layer that is now making governance-type decisions.

• 35:45Ryan Sean Adams?

  So you have Twitter in a place where they have to decide, should we ban this person or not? Should this speech be allowed or not? And one thing that we see as part of the Bankless movement, the Web 3 movement, is this getting the Internet back to the basics of credibly neutral protocols on the base layer that can't make the decision, hey, you can't send this money to that specific address, right? No, anyone can, regardless of race, gender, you know, socioeconomic status, where they live in the world. All they need is an Internet connection, and they're treated equally by these protocols. That is some of the restoration of the dream. But how does that sound to your ears? Does that sound naive? Are we just like building the same thing? And, you know, it's going to all consolidate again and aggregate again, and we're back to the same boat? Or is this kind of a refresh and a course correction

• 36:29Ryan Sean Adams?

  on the direction that the Internet's taken in the last couple of decades?

• 36:33Speaker 02

  The real illustration to your point is what happened with this issue called net neutrality. And so you correctly described what the ethos of the Internet was, you know, kind of up until basically around 2015. In fact, you know, Twitter originally described themselves as, quote, "the free speech wing of the free speech party," right? Was kind of this, you know, kind of this thing. And again, it was very consistent with the John Perry Barlow Declaration of Independence of Cyberspace, is very consistent with the open source ethos. So I think you very accurately described that. That movement, that ethos culminated in what was known as the net neutrality movement. And to this day, if you type in hashtag net neutrality on Twitter, it's got the special emoji that pops up like this was a big deal a few years back. Lots of media coverage, lots of activism. And if you remember, like, the big fear of the net neutrality activists, right? The big fear was basically without quote unquote net neutrality regulations, big companies would

• 37:18Speaker 02

  be able to regulate speech. The companies would be able to basically decide who could say what, they could ban, they could censor, they could deplatform, whatever. If today you do a search, there's almost a one to one correlation between the people who were pro net neutrality and the people who today are pro censorship. In almost every case, they've done a 180. And Google, Google's still honest enough, Google has its own issues now, they do their own censorship, but like, they're still honest enough where you can go back and you can find all the news articles from the net neutrality days. And it's like shocking, like, how many of those people did like a complete 180 and are now very much activists for censorship. Davos is happening right now. By the way, I want you guys to know I'm skipping Davos so that I can be on this podcast.

• 37:52Ryan Sean Adams?

  Thankless not Davos.

• 37:54Speaker 02

  No, that was, that's not true at all. I just completely lied, but, um, you know, Davos is another, it's already coming out. It's just an orgy of basically self congratulatory demands for more censorship. And again, it's like, it's the exact opposite of what a lot of these people were saying even in three or four years ago. And so, yeah, there very much has been an ethos shift and all of the big internet companies, all the big kind of proprietary network stovepipe, you know, kind of walled garden things that Chris talked about, like all these companies, they're under like intense pressure to censor and deplatform and block. And we could spend hours just talking about that. Yeah, look, I mean, the fact that Web 3 is, as we've been discussing, open protocols, open networks, permissionless, like, is definitely an architectural drive back towards the original internet vision, back towards a vision more consistent with what you might call net neutrality.

• 38:35Speaker 02

  I 100% agree with you that basically technology does bring its values along with it, like, there is a real link there. So I think everything you said is true. I would give one cautionary note, though, and this is just based on a lot of scar tissue over the years, which is You know, look, everybody's in favor of free speech up until some point, right? And you can take some very basic ones. Everybody's in favor of it right up to the point where you have child pornography, right? Or everybody's in favor of it right up until you have terrorist recruitment, right?

• 38:59Speaker 03

  We had ways to solve that in Web one, Mark. I mean, it's not like Web one. I mean, the frustrating part for me in this debate with Web three is, well, look, I mean, the world didn't end with Web one. We just took things down at the website level. Like, you don't take it, it wasn't regulated protocol levels, regulate the gateway, same with email. But it was a more decentralized, right? I mean, it was regulated by laws and then implemented by a decentralized group of web hosting providers and email hosting providers, et cetera, as opposed to being implemented and decided by, you know, one of five big companies.

• 39:27Speaker 02

  Yeah, that's right. Well, I mean, look, where we ended up is not where we started. Like, I totally agree with that. And yeah, look, there are practical things to do. This is kind of where I was heading, which is like, look, every new technology, um, has everybody seen the movie Public Enemies, the, the movie about John Dillinger, the great Michael Mann movie about John Dillinger, Johnny Depp? Great movie about John Dillinger. Bonnie and Clyde was another movie like this. So when the car was invented, actually, two things happened in the 1920s, 1930s. One is the automobile was invented, like, that was a big deal at the time. And then two is the Tommy gun, automatic weapons, automatic rifles were used for the first time in World War One. And so the military had all these Tommy guns and a lot of people got trained up on these and a lot of these guns became available kind of throughout the world. And so there was this crime wave in the 20s and 30s, John Dillinger and all these people, Bonnie and Clyde, and basically it was the car plus the Tommy gun. And they went on this, like, you know, basically, you know, national rampage, right?

• 40:12Speaker 02

  You know, stealing from all these banks and like the banks at the time were like not prepared to deal with like professional thieves with cars, you know, who had like machine guns. And so there was this like mass panic in the 20s and 30s about, oh, my God, right? The combination of, you know, the car plus the machine gun has basically like banks are all dead. You can't put money in banks anymore. Like this is, you're not going to be able to protect money anymore. Like, the world's coming to an end. It was this thing. And of course, what happened is like, you know, banks adapted and police forces adapted and the FBI was formed and, you know, people figured out ways to do like time release bank vaults where the manager of the bank can't even open the vault. And so you can threaten him all you want, you still can't steal the money. And, you know, now they have, you know, controls on, you know, when you can do wire transfers, which of course has now led to things, you know, demand for things like Bitcoin, right? And so the point is like, there are ways to adapt. There are societal adaptations.

• 40:56Speaker 02

  There are ways to deal with these things, you know? The world finds a way, like these things adapt. But I just wanted to, in specific answer to your question, you know, there is going to be another side to this. There is going to need to be attention paid to certain things that are, like, fall anarchy is not a good idea either. There are going to be attention paid to certain numbers of things. And then the question ultimately is a question of judgment. Right, it's a question of judgment on the part of leaders and then ultimately the part of the community, which is like, okay, how do we draw these lines? And then how can we use all of the experience of the past to be able to make a better set of decisions today? You know, I'm quite optimistic about that, but there will be some high tension questions here also.

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• 43:35David Hoffman?

  There is no setup or account fees, and it's all you need to do to invest in crypto tax-free. Let me repeat that again: you can invest in crypto tax-free. Diversify like the pros and trade without tax headaches. Open an Alto Crypto IRA to invest in crypto tax-free. Just go to altoira.com/banklist. That's A-L-T-O-I-R-A dot com slash banklist and start investing in crypto today. Earlier, we touched on the critiques of Web 3 and how you kind of illustrated them. Well, those are all just all the surface area for entrepreneurs to start tackling. The way that we've talked about this on Banklist is that when like the gaming ecosystem says, "Hey, get your NFTs out of our game," or the arts industry says,

• 44:17David Hoffman?

  "Hey, get your tokens out of our arts," really, they're just pushing back on the industry and saying, "Hey, you guys haven't solved enough problems yet. Come back to us when you have." But there's one conversation when we talked about credible neutrality and governance over these applications that we all use that I think is differentiated from just the evolution of Web 1 into Web 3 and is actually unique to our industry, where Twitter and Facebook and generally Web 2 platforms are deplatforming people. Now, we can have this into the hands of the community with tokens and governance tokens, and the community can govern over these systems. But a critique that I think is unique to Web 3 is that, well, as soon as we instantiate governance into capital assets, then the surface area for that becomes influencible by capital. Mark, I'm wondering your thoughts on this particular critique of Web 3,

• 45:02David Hoffman?

  whether we truly have broken away from typical centralizing forces of capital and power in the world, and these things can actually be uniquely community-owned and credibly neutral.

• 45:14Speaker 02

  Yeah. Chris, why don't you take a swing at that? And I'll follow.

• 45:16Speaker 03

  Yeah, no, it's a good, I mean, so it's an interesting question. You know, I guess me sort of referring to kind of like bribery, governance bribery attacks, I guess. My mental model for software is it says flexible and sort of plastic a medium as something like, you know, writing fiction, like you can express in the form of tokens, like literally anything, any design somebody can think of, you can write software to implement. So, you know, I think there's by no means are we done exploring that design space. And it may just be that, for example, having the same token, you know, govern a system and also provide economic rights to the system and be influenced by capital, maybe that's a bad design, or maybe there's, you know, various safeguards need to be put into place, voting thresholds, sort of bicameral systems.

• 46:01Speaker 03

  I've seen a whole bunch of different designs, you know, recently in all those areas, right? So, again, I think it kind of goes back to Mark's point, like to me, this is just another really interesting problem for entrepreneurs to kind of go figure out, you know, and I would imagine that enough smart people thinking about it in a really, really rich design space, that is software, right, can come up with some really interesting systems. So, and I think we have examples where it works, by the way. I would say like MakerDAO is an example. I think it's a well-functioning DAO. It's not perfect, but I think it basically has worked for five years and done what they plan to do. And, you know, I think there are other cases like that in DeFi and other areas. So, go ahead, Mark.

• 46:35Speaker 02

  Yeah, look, the other thing, David, I think to your question, so like you also get into like political philosophy here and political theory and political history, right? So, and this is kind of implicit in a lot of the assumptions around these things, which is like, okay, it's sort of the logic is like, finally, we're going to have a technology that's truly democratic, right? And finally, it's going to be one person, one vote, or one bot, one vote, or like whatever, you know, and finally, we're going to have systems that aren't, you know, hijacked by capital. Finally, we're going to have systems that don't have, you know, the hierarchy, that don't have the power law distribution of influence or authority or financial return or whatever. And it's like, okay, you know, look, this is a chance to like try those things and experiment with those things. You know, look, having said that, there's a lot of political history on this question of like what democracy actually is. And, you know, Mekki Belli, who wrote about this at length, he basically said there's three forms of government, rule by the one, rule by the few, and rule by the many.

• 47:18Speaker 02

  And then he said there's a good and bad version of each of those forms of government. So there's basically six total forms of government, rule by the many, the good version we call democracy, the bad version we call anarchy. Or by the way, these days we call it populism. And so like, democracy is good when the mob goes your direction. Democracy is very, very bad when you're on the other side of the mob. And if you just look at like, the entire history of democratic politics going back now thousands of years, you see very few actual full democracies. But by the way, we actually have one in California. We have this whole direct democracy thing with this ballot proposition thing. And it's just like a freaking disaster. People in California agree on very little. Almost everybody agrees that direct democracy in the form of ballot propositions is just a horrible thing, which we could talk about. You know, the Florentines actually tried direct democracy. They actually put the people in charge for about two years.

• 48:01Speaker 02

  And I think the late 1400s, it was such a catastrophic experiment, they never repeated it. Right? Because it collapsed into anarchy. And so basically what happens, if you look at the history of kind of politics, basically what happens is nobody actually does full democracy. What they do is basically, you know, sort of a democratic backstop with the selection of some kind of decision-making sort of capability that's actually going to be, you know, somewhat rational and somewhat coherent. You know, in the American system of democracy, that's why we're in a representative democracy, not a pure democracy. You know, that's why we have elected officials. You know, historically, most democracies have some kind of overlay, like, you know, somebody's in charge. Open source software developed this on its own, right? The idea of like, fully democratized open source didn't really work. What you had instead was the emergence of the benevolent dictator. Right? So the line of Torvalds, right? Who would kind of help shepherd the entire thing.

• 48:46Speaker 02

  Or, you know, for Bitcoin, the Satoshi, you know, or for Ethereum, Vitalik, who would kind of help shepherd the whole thing. And so when you get into this, what you kind of find is you actually tend to want kind of hybrid or mixed models off the other side. And then there's like, a lot of questions and, you know, kind of opportunities to kind of design that different ways. I just go through that to say, I would not be disappointed if the ideal of full democracy doesn't happen here in the way that people might hope, because I think that might be an unrealistic expectation. But it might be possible, and I think is possible, and I think is happening, to have a whole set of governance models that let different communities make different trade-offs on how this actually unfolds. And I actually think we'll learn a lot on how we can structure political systems in this new world.

• 49:21Speaker 03

  I would also add that my understanding, you guys may know better, as to why, for example, Vitalik is against on-chain governance for Ethereum, is kind of for similar reasons, right? So you effectively get the governance through the node operators, right? People, the validators, the wallets decide what to upgrade to. I would argue... That even with pure on-chain systems, that over time, they end up being more hybrid systems because the nature of software is it gets integrated into lots of different places. And if those places, so you know, as, let's just imagine, so Uniswap today is fully on-chain governance. Let's imagine a world five years from now where Uniswap is sort of embedded throughout the fabric of the internet. At that point, all of those various integration points will also effectively get a vote on changes and forks to the protocol.

• 50:04Speaker 03

  I think actually, I would argue, on the internet, as things get more adopted, you actually add sort of more, more and more, I mean, look at like Linux today, look at Python, there's all these, you know, they can create the new version, but there's, you know, forks and debates and, you know, as these things kind of get more and more embedded, you actually add a lot more kind of friction points to the governance process.

• 50:22Ryan Sean Adams?

  Yeah, it does strike me that what we're doing is something that David and I have talked about with finance, but it's also true of governance. We are speedrunning all of humanity's governance, like governance debates and trials, experiments, and good and bad. And we're doing that in crypto and we're doing that right now. So we'll get all possible experiments, including the new ones. And you're just making the point about Uniswap and we were talking about the similarities with Web1. I remember, guys, it was not too long ago, three years ago, when people said crypto was dead, including Bitcoin, Ethereum was dead, smart contracts would never work, DeFi is not a thing, don't even talk about it. That's, by the way, when we started the Bankless Newsletter, okay, and shortly after we started the podcast, now Uniswap today, okay, Tuesday, May 24th, just hit

• 51:06Ryan Sean Adams?

  over a trillion dollars in cumulative trading volume. Okay, a trillion dollars. And so this is another, I guess, piece of evidence that we can add to the list of people being wrong about technology and being wrong about the power of the open permissionless internet because now here's Uniswap.

• 51:23Speaker 03

  Well, I would add to that, by the way, you know, I looked at all of the DEX designs before Uniswap, you know, as you remember, they were peer-to-peer, they had to do matching, and you couldn't do them, it was very hard to do them, given the Ethereum performance characteristics. And I remember a lot of people saying, basically, you're never going to have a successful DEX until we have much more performant blockchains. And then sure enough, this goes to our earlier conversation, the power of developers, you know, Hayden, aided by Vitalik's blog post, comes along and you now have the peer-to-pool model, right? And the same thing happened with lending and Compound and Aave. So I think it speaks to a whole bunch of things, including just when you create permissionless systems with eight billion people. Interesting things happen and smart people come up with things that might be unexpected.

• 52:06Ryan Sean Adams?

  Completely. You know, one thing that strikes me, though, we've gotten this far in the podcast, right? And we haven't actually talked about the definition or the solution that Web 3 brings. I know we've done that in previous podcasts, Chris, but I want to link that in for the listeners. Maybe this is their first podcast and they're learning about crypto for the very first time. So we've established kind of the problem. What is the problem with the internet today? Right? We've talked about this. We forgot to put, we didn't put money in the browser for lots of different reasons that Mark said. That's resulted in basically our eyeballs are getting sold. So the business model of the internet is advertising. We also have some new trust assumptions. So everything is very trusted and we don't have the decentralization of the original internet protocols. And this has caused a lot of trouble, including censorship type issues.

• 52:51Ryan Sean Adams?

  So these are some of the core problems of the internet today. But I think on the listener's mind, who's gotten maybe to this point in the podcast, you guys talk about Web 3, talking about how great it is. You're talking about how it's like Web 1, how like that fixed so many things. What is Web 3 and how does it actually fix these problems? Maybe, Chris, you want to start with that?

• 53:08Speaker 03

  Yeah. So I think, look, so actually it was kind of with a framework for this recently. So the way I think about it, sort of blockchains are the kind of core tech here, right? So blockchains are, I think of them as new kinds of computers that have new capabilities and specifically allow you to make software that continues to run as designed. I call it computers that can make commitments. And then on top of that, you have kind of two overlapping but slightly different movements. Like one, we call crypto, which is sort of this movement that involves money and DeFi. And then Web 3 is kind of my favorite sort of version of the movement, which is, tilts a little bit more toward reinventing internet services in a way in which they're owned and operated by communities instead of owned and operated by companies. One way we'd like to phrase it is the first era of the web, roughly 1990 to 2005, democratized information. So kind of the killer feature of Web 1 was you go to

• 53:53Speaker 03

  Google and anyone in the world can go to Google, type something and read about it, right? Web 2 democratized publishing. Anyone in the world could go to Twitter, to Facebook, type something into a box and share it with the world. Right? And by the way, that was amazing. And Web 2 is, I think, generally a very net positive thing. But it had one kind of drawback, which was sort of all of the assets and control and money and everything else went to a small set of companies. Web 3, I think, have democratizing ownership and specifically through tokens, NFTs and fungible tokens. These are units of ownership and control, governance and economic rights. And to me, like an example of a kind of a killer experience in Web 3 was the Uniswap airdrop. Right? So Uniswap created a token. The token controls the protocol.

• 54:36Speaker 03

  It's effectively by having a token, you own part of the protocol. And the day they created that token, they gave, I think it was 15% of the tokens to all the people that had used the protocol in the last couple of years. So imagine if, you know, we saw that with Uber or Airbnb or some other kind of system where the people that really built the network ended up owning a big chunk of the network. Right? The default in Web 3, as you know, is at least half of the tokens end up, you know, being airdropped and given to community members based on various behaviors. And this is a great thing for a number of reasons. I think, one, I think it's just a better model so that people can actually, you know, have ownership over the things they build. I think it also solves a really important problem for entrepreneurs, which is traditionally when you build networks, which are most of the most valuable business on the internet are networks. The hardest part is this, what we call the cold start problem.

• 55:21Speaker 03

  It's the beginning. It's the chicken and egg problem of getting over that kind of initial hump where it doesn't have enough kind of network effects and value. And tokens are an incredibly powerful tool for incentivizing that early stage and kind of getting through that. So I think if in the strong form, if we're right, we will see over the next 10, 20 years, a whole set of both existing kind of networks that we're used to, you know, social networks, things like Twitter and Discord and a bunch of other things, which in fact we funded a bunch of stuff like this recently, and also brand new networks. Maybe it's a marketplace for AI data or some other kind of thing I'm not thinking of right now. And it'll be architected in a way that kind of has, I think, is the best of both worlds. The open, democratized governance, control and economics of Web 1, but the advanced functionality of Web 2.

• 56:05Speaker 03

  So I really think that fundamentally it's about democratizing ownership of the internet.

• 56:10Speaker 03

  In the same way, yeah, Web 1, democratizing information, Web 2, democratizing publishing, Web 3, democratizing ownership.

• 56:16David Hoffman?

  And Mark, I want to throw this one to you because I know you talk about social structures and how it impacts society these days. And when we were talking about the original sin of the internet and how we didn't embed money in it, it kind of broke the internet or it turned it down a path that created some social problems and some flaws in our social structures. And as we were talking about governance and political democracy, and also about crypto speedrunning the history of social organizations, all of a sudden, when we talk about the Web 1, 2 to 3, going from read to read-write to read-write-own, it's that own aspect that really makes it politically relevant. And all of a sudden, governance and social structures become really, really relevant into the world of Web 3. So as somebody who's watched the birth and progress of Web 1, 2, and now 3, are we on

• 57:01David Hoffman?

  the cusp of seeing the full manifestation, the full expression of the actual true internet? And so when we look back in history, we'll just see Web 1 and 2 as just like these early stages trying to bootstrap Web 3? And so what happens next when we finally bake social structures and governance structures into our internet platforms?

• 57:20Speaker 02

  Yeah, so this has to do with the role of money. So I'll focus on money for a moment, and then we'll go to the deeper concept of trust. So this goes to the role of money, which is like a lot of intellectuals are made very uncomfortable by money, right? Well, let's say, a lot of people are made very uncomfortable by money, but intellectuals in particular are very uncomfortable with money because like, you know, in the intellectuals' view of the world, like it should be ideas that win, and money is sort of a corrupting influence on ideas and, you know, so forth and so on. And there's a lot of that kind of in our politics. And, you know, a lot of people have had that view, and maybe there's aspects to that that are correct. Um, you know, there is another view, which I think is, let's say, more correct, and that view is that money is a tool, right? Money is a way to do things. Money, at the deepest level, like money is crystallized human effort, right? It's crystallized human productivity, right? You know, when I was a kid, I had lots of minimum wage jobs, like I had a very tangible relationship with money, you know,

• 58:03Speaker 02

  and I worked really hard all day long washing dishes in a hot restaurant after 10 hours, and then I got a certain amount of money out of that, which was the crystallized result of all of that work, that I could then go, you know, use to buy things that made my life better. Or I could save the money and invest it, and so forth and so on. And so there's this incredibly positive aspect to money, which is it's a way to basically crystallize human effort, to be able to actually incent people to do things, to be able to actually measure the actual value of things to people, right, as expressed by, you know, price signals. Like, it's sort of this foundational thing. Like, we would say, we would very much not want to live in a society without money. And in fact, we tried that, and it was called the Soviet Union, and it did not go well. You know, it's actually really funny like Star Trek, every new Star Trek series like it basically, they try to basically like, it's like, oh yes, you know, our system is space communism.

• 58:45Speaker 02

  Like we've evolved beyond money and I'm sitting there just like, oh God, like, you know, more mass famine and death. This sounds great. Um, so like money is a fundamental tool for building everything that we consider to be modern civilization, like whether people like it or not, like that is the thing. So, and then let's go deeper into like what it means for trust. So what, there's a great book that goes through this called The Mystery of Capital by this really legendary guy, really well regarded economist, very deep thinker, Hernando de Soto. And it was actually, by the way, I think I'm pretty sure he's Venezuelan by background, which is kind of, you know, ironic, bittersweet, given what's happening in Venezuela right now. But he talks about the, you know, which went to for full socialism and now is going into the classic kind of meltdown. But anyway, he talks in his book about mystery of capitalism. It's basically if you go to the deep foundations of what made the modern world possible, he said

• 59:27Speaker 02

  the, the big economic turning point was clear title to land. It was the ability to actually own land and it was the ability to own land, knowing that it wasn't going to get arbitrarily taken away from you. Right? Because if you have clear title to land, then you have a motivation to improve the land. Right? And you have motivation to turn the land into a farm or to be able to build a house or to be able to build an office building or, you know, do whatever airport or whatever it is, the things that, that people do with land. And basically what he said is that that was the turning point for what we consider to be modern civilization. Clear title to land. And then once you have ownership of land, it's the core asset, like it's the foundational asset. And then once you have clear title to land, you can borrow against the value of the land. And what he basically shows is that basically everything else that happened in the economy that resulted in the consumer cornucopia that we're all surrounded

• 1:00:12Speaker 02

  by today is a consequence basically of originally being able to borrow against land value. It's borrowing against land value that made businesses possible, right? Made R and D possible, right? The whole idea of being able to, you know, employ engineers to work on a project like it was only possible once you could actually, you know, basically unlock capital by borrowing against the value of land. And so anyway, I go through this to basically say there's a very deep thing here, which is this concept of ownership. Like this concept of ownership, this concept of title, this concept of assets, this sense of like, I can actually own something and it's real. And if I do nothing, I will own it in perpetuity. And then, you know, at any point I'm in a market economy, I can sell it, I can realize the value. You know, that inspires people to start to think very, you know, kind of creatively about the kinds of things they might want to own, or that they can borrow against it and they can start unlocking other value and investing in things.

• 1:00:54Speaker 02

  And again, this is the deep kind of interpretation of the original sin of the internet. Like there was no ownership. Like there was just no ownership. There was no ability to have a claim in anything. Like Web 1.0, like it's actually, you could own a domain name. Like that, the closest we got was that you could own a domain name. Right? And by the way, like some domain names are actually like very valuable and have turned into real assets. And people have retired on the basis of domain names that they own. And so that was like an early signal flare.

• 1:01:17Speaker 03

  And by the way, that was, and I would also argue, Mark, that owning the domain name was pretty much the linchpin of how we kept Web 1 decentralized, right? Because you could, if your hosting provider messed with you, if your email provider messed with you, you could switch, right? It was the ability to switch that one little, it was actually a really interesting architectural fact of Web 1. It was sort of DNS was the original blockchain. It was the one thing you could own. And we kept, my view of it is we kept overloading it and then we, it's a longer conversation, but tried again with RSS in 2008.

• 1:01:42Speaker 02

  Right.

• 1:01:43Speaker 03

  And it just, in the end, a domain name in my view is not a consumer product. It's $8 a year. It's, you gotta be a semi programmer and it just, that was the moment at which Web 1 kind of just started losing because DNS could only be overloaded so many times. Longer story, but sorry, go ahead.

• 1:01:57Speaker 02

  Yeah. Well, so there's a counterfactual. So people may remember, Chris mentioned RSS, all right? RSS was basically an open protocol to do blogging, which basically turned into social networking, right? So, you know, basically Twitter started out as a microblog. And so there was an open protocol for blogging called RSS. And like, there's a counterfactual universe. There's a, is that what they say in the Marvel? There's a multiverse. There's another shard of the universe that we're not in, in which RSS had basically Bitcoin, right? Where RSS had crypto, where RSS had value. And then you would have had an alternate world in which this entire world of social networking and user-generated content would have gotten, you know, built out completely differently in an open model.

• 1:02:29Speaker 03

  And like, and you had identity, namespace, follow, like, all that stuff, right? That's when Twitter and Facebook, et cetera, stepped in and said, hey, we'll do that for you.

• 1:02:37Speaker 02

  Right.

• 1:02:37Speaker 03

  Because there was no way to do it in the open internet. How do you store your friend list in the open internet, like, without a company back then? Right? You didn't have a blockchain.

• 1:02:44Speaker 02

  Right, that's right. That's exactly right. And so, basically, like, this is the opportunity to do that. Like, we finally have the technology to be able to do that. We finally have the technology to be able to go deep, to be able to establish trust, to be able to establish money, to be able to establish incentives, and then to be able to establish prices. And again, I think there's a natural intellectual instinct to basically say that, you know, if it's capitalism, it's bad and evil. And I guess I would just really encourage people to read the book, The Mystery of Capital, and to think hard about the fact that actually, there's a lot of virtue and a lot of positive things that come out of being able to actually start to have real incentives and real prices, and we're right on the cusp of being able to reinvent the internet around those ideas.

• 1:03:16David Hoffman?

  One of the most favorite podcasts that we've done on the Bankless Podcast, in fact, the only podcast to have actually dethroned Chris's podcast, was titled The Crypto Renaissance. And Mark, when you tell me that the way that we really unlocked the next era of humanity was via unlocking capital from land, by providing strong property rights, strong assurances that you own the things that you own. And then you're also taking me through a history of just having the internet allow for more expression, right? First, you want a donate name. Then you can get your Twitter account and connect with your friends and express yourself that more that way. And now we have the ERC 20 and ERC 721 tokens, which are just the full spectrum of possibility of expressing human interests. If you can code it, you can put it into a token.

• 1:03:58David Hoffman?

  And so, I'm wondering just what you see when we finally kind of work out the kinks of this whole Web 3 thing. Like, are we just on a cusp of like, an explosion of culture? An explosion of self-expression? Is that what you see coming out next?

• 1:04:10Speaker 02

  Oh, yeah, for sure. Look, I mean, for sure, that's a huge thing here. Actually, this is why we take NFTs really seriously. Um, no, and I'm not, last thing I'm gonna do is give advice on people buying or selling or whatever. I don't mean to do any of that. But like, the reason we take NFTs really seriously, we take NFTs really seriously all the way up to and including all of the art experiments that are happening on NFTs, which is basically right, exactly right. Like, it's a way to connect culture, basically, to the internet. It's a way to connect art to the internet. It's a way to actually have ownership of art. If you look at the entire history of art, it's always been a really big deal to be able to have ownership of art. It's always been a really big deal to be able to fund art, to be able to have providence of art, to have artists being able to make money making art, right? And, you know, to this day, when you buy a piece of art, like, you want to know who's owned it. Like, the value of the art is very much tied to the provenance. Like, is this actually from the original artist? And do you actually have the chain

• 1:04:53Speaker 02

  that basically says, no, this is actually, you know, hanging in Andy Warhol's studio in 1973. It's not just a, you know, it's not a fake. And so, yeah, I mean, look, from an art and culture standpoint, like, we take that stuff incredibly seriously. You know, look, one view of this is that, um, you know, I think I'd make the strong form of this argument, like, the world has a fraction of the level of art that it should have, right? Though there's just a fraction of the amount of music that there should be. There's a fraction of the number of books that there should be. There's a fraction of the amount of visual art that there should be. And, you know, why is that? It says, well, like, funding art has always been actually a really tough problem, right? In fact, you know, traditionally, traditionally, artists play this role, this incredible role in developing, you know, communities, because famously, like, artists are always starving, right? All the cutting-edge artists are always starving in the beginning, and so they always move to, like, whatever is the cheapest neighborhood. And then that begins the process of, like, neighborhood revitalization. It's because, like, the artists have no money, because

• 1:05:38Speaker 02

  nobody's willing to, like, stake the money up front for the artist to be able to do his or her thing. And so, you know, quite literally, to be able to have the ability for an artist to be able to go online and do this, and to be able to, you know, access an entire global marketplace of potential collectors and sponsors and patrons. I mean, you see this now, right? You know, Patreon's like a Signal Flare, you know, Substack, you know, we're involved in Substack. Say they're not yet in this world, but like, you know, there's an amazing surge of incredibly high-quality writing happening on Substack, you know, that literally was not happening before that. Like, it's just been summoned into existence by the ability for people to actually get paid doing it. And so, I'm incredibly bullish here that we could have a level of explosion of global creativity that we never even imagined was possible.

• 1:06:15Ryan Sean Adams?

  Mark, I do want to just address the criticism even more head-on than the question David asked earlier, because, like, Bankless, we believe all of the things you're talking about, about the potential of unlocking property rights for the internet, the potential We're on board. Yeah, we're on board, okay? And we've been on board. But there are some, you know, critics, obviously, and, you know,

• 1:06:32Speaker 02

  Really? There's what, three critics?

• 1:06:34Ryan Sean Adams?

  Yes, there are a few. There are a few. And by the way, if you are a Web3 critic, come on Bankless. We want to talk to you. But one criticism actually came from a camp that was surprising to me, and that was late last year from Jack Dorsey, who's actually, you know, one of the original founders of Twitter, which is obviously incredible product in the Web2 world. And he said something to this effect, "You don't actually own Web3." And by "you," he meant everyone who he's talking to, the regular people. "The VCs and their LPs do. It will never escape their incentives. It's ultimately a centralized entity with a different label. Know what you're getting into." Okay. And I saw this tweet, and then I saw stories sort of echoed. And I'm wondering what you make of this criticism, Mark. And then,

• 1:07:16Ryan Sean Adams?

  like, is this also kind of a current thing criticism? I know you've used that term sometimes. I'm seeing a lot of these current thing criticisms in crypto, whether it's, you know, ESG and Bitcoin mining, or whether it's, you know, some of the criticism coming from politicians on the left or the right. What do you make of this criticism and others like it?

• 1:07:34Speaker 02

  Yeah. Chris, do you want to start on the Jack stuff?

• 1:07:36Speaker 03

  Well, just on the specifics of the Web3 thing. Like, look, I wish we... I mean, I don't. But I mean, we, like, the norm, and I think across our portfolio, is sub 5% of the tokens that we own. And I think generally, like, the entire, you know, set of investors is definitely well below 20%. And I think the trend is actually downward. And this is by design. I mean, like, you know, Uniswap, 60% of the tokens went to the community. I think the norm is 50 to 60% will go to the community, another chunk to, like, developer grants. And so, you know, it's a minority significantly, like, a lower minority position across the board, both economically and in terms of control. So I just don't think it's empirically true.

• 1:08:18Speaker 03

  You know, I hear it also, the other kind of form of it is like the moxie kind of thing that says, "Look, we have these new things re-centralizing, like OpenSea." I think they fundamentally don't... I think that where I would disagree with him is that, sure, OpenSea is a centralized website, but they have real competition from multiple sources because the NFTs, they don't hold the NFTs. People go to OpenSea and they think it's architected the way that... Airbnb is architected and all the inventory is owned by the by the company. That's not how blockchain technology works, right? Those NFTs are on the blockchain and therefore anyone else can pop up a competitor. And that puts significant pressure on the take rates that these companies can take. OpenSea takes two and a half percent. That's unheard of in the web two world. It's so low. So I just disagree on the facts on that claim.

• 1:09:00Speaker 03

  I would also say, you know, with with Jack Dorsey, I think he shares a lot of our vision, like the blue sky. Twitter project. My understanding was that it is an attempt to create a decentralized Twitter. I think we just disagree on some of the details. Like, I don't think the right way to build that is on top of Bitcoin. In fact, I think it's impossible to build on top Bitcoin. And I feel pretty confident about that because we spent 2013 through 15, me and Mark and some some rest of us funding and trying to do that. So, look, if he's right, God bless him. And if you can build Twitter on Bitcoin, like more power to him. I don't think it's possible. So I think we actually, I would argue, really overlap a lot with Jack Dorsey and his values. And just maybe have disagreements on some of the details.

• 1:09:36Speaker 02

  Yeah, and then on the broader topics, a lot of the other critiques that you mentioned, a lot of them is basically a sign of this sector and these technologies kind of getting wrapped up into larger social and political debates that are happening kind of across our society. You know, I think that's overwhelmingly a testament to the importance of what's happening here. Right, like, it's one thing. There's this great book, another great book, I'll recommend this book written 50 years ago by this guy, Elton Morrison, about the societal adoption of new technologies. And he says societal adoption of new technologies always follows a three step process. Step one is ignore. People just like, don't pay any attention to it because it's just, you know, obviously silly or trivial, or people just don't even haven't even heard of it. Step two is refute, in which you get a long list of basically substantive objections. Right, it's like the examples we went through around the internet early on or the early luggable PCs. You get all of these actual concrete objections to why the new thing can't work.

• 1:10:20Speaker 02

  And then step three, he says, step three is name calling. Right, step three is when people get mad, right? And step three is when people get mad, they start doing name calling. And the reason they get mad and they start doing name calling is because they basically realize in their gut that the new thing actually is really important. Like, it's actually a really big deal. It's not going away. It actually hasn't been ignored. It can't be ignored. It hasn't been refuted and can't be refuted ultimately because the problems are going to get fixed. And then basically it's going to be a thing. And when it's a thing, like when a new technology comes into society and actually works, it represents a reordering of power and status. Right, and you know, it basically shifts who's in charge and it shifts who has authority and who has influence and ultimately, right, who makes money and all these other things. And so people get like really, really upset. And basically, like, I think that's the phase we're entering now. And as part of that is you just basically get the technology all of a

• 1:11:05Speaker 02

  sudden gets wrapped up in these broader political and social debates where people are kind of already mad about the direction in which society is headed, or they're already scared about the direction society is headed. And so they kind of pull all this stuff in. I guess I just say, look, you get into politics, I don't really want to get into partisan politics, you know, it gets into these political debates, you know, and by the way, there is opposition, there are arguments against all this from both the left and the right. So it's not like either side is completely clean on this. But I guess what I'd say is what I'd encourage people to do is try to like pull the issues back apart a little bit and kind of look at it and kind of say, okay, how many of the critiques are just like flat out anti-capitalism, right? How many of the critiques are just flat out, people don't like capitalism, people don't like money, they don't like, you know, anything about it, they just inherently distrust and disbelieve anything involving money. You know, look, some people are just anti-capitalist, and I probably can't reach them. Again, if you're interested in this, there have been outstanding

• 1:11:50Speaker 02

  books written. Thomas Sowell is another great author to read a lot of his work on Milton Friedman and others, where they talk a lot about, um, Bhagwati is another guy I sent you guys links to, talks a lot about this. There are really, really, I think, important reasons in which capitalism has been a fundamental force for positivity and progress and human flourishing on planet Earth for the last 500 years. And I think that will continue. And a lot of what we're talking about here is like a new turn on capitalism. And so, you know, I think that's one thread to pull on. You know, look, then there's just all these intersection points about, you know, censorship and so forth. And again, here, people need to decide what they think. But, you know, Western culture, Western society, civilization, we have a, you know, like an 800 year heritage now of freedom of speech and freedom of thought and freedom of expression and freedom of association. And I happen, I happen to think those things are important.

• 1:12:33Speaker 02

  I'm old fashioned. I think those things are actually quite important. I don't think anybody should be in charge of controlling what other people say. I think that's a very bad idea. And so I think that these technologies are very powerful at being able to, you know, put in place systems with much more freedom of speech, freedom of expression. You know, look, they're all legitimate social and political issues. I just think like, if you pull them apart, dive deeply into them, look at the history. In my view, there's a lot here to be very optimistic about.

• 1:12:55Speaker 03

  I would just add also internally to crypto, right, there's multiple things going on too, right? There's sort of the speculative aspects that do exist in this world. And then there's sort of the builder aspects. And obviously, I think all of us here are kind of more interested in the building aspects. But at various times, like two months ago, maybe the speculative aspects got more prominent as prices went up. And that shapes the narrative around the space. I think also, my view is the history of the space with Bitcoin and a lot of the early Bitcoin adopters being kind of libertarian has created a narrative, a mainstream media narrative that crypto kind of skews right. And that, as Mark said, has, I think, has inserted crypto into this kind of national, you know, political kind of food fight that we have.

• 1:13:36Speaker 03

  Look, I obviously think the technology is politically neutral and can be used in a variety of different ways. You know, one reason I'm fans of what you guys are doing with permissionless and bankless and just sort of this general kind of, let's call it Ethereum and related movements, is I think as this movement becomes more prominent, it's going to make it clear to people that this is sort of a politically, you know, important, this is an important technology that cuts across partisan lines. I kind of liken that to open source. So you may know that the open source began very politically with Richard Stallman and sort of this anti-copyright movement. And then morphed into, you know, with Linux, I think particularly into a really a pure tech movement. And I kind of think the same thing kind of is happening now in crypto. And so that's sort of an important thing that we can do, us in the community, is sort

• 1:14:18Speaker 03

  of push forward and show people all the different use cases. Today, we announced an investment in Flow Carbon, which is a system for putting carbon offsets on the blockchains. You know, which is an example, I think, of a use case that, you know, I think counters a lot of the anti-environmental kind of arguments around crypto. This is one of many examples I think you'll see over the next couple of years.

• 1:14:39David Hoffman?

  Certainly. And I think if Bankless says anything, it helps the crypto world win the hearts and minds of the people. And that is really ultimately how we become immune from current thing attacks where, for some reason, people just decide that we, they don't like us anymore. But Mark, taking lessons from Web 1 and the rise of the Internet, how did the Internet supporters, the free and open Internet supporters, win the hearts and minds of people? And overall, if we can extend the trajectory of the Internet from the lessons that you've learned over the last few decades, how is this next decade for the Web 3 world going to play out?

• 1:15:12Speaker 02

  Well, look, the truth wins. I mean, look, in the long run, the truth wins, at least what I believe to be the truth. Like, the Internet was like a fundamentally good thing, fundamentally good thing, you know, not without its issues, but like a fundamentally good thing for human civilization, for Western civilization. It's fundamentally a good idea for people to be able to communicate, to be able to, you know, transact. You know, the world is a much better place as a consequence. And so, you know, if that's the truth, then people feel it, they experience it in their daily lives and they know it and they understand it and they buy into it and, you know, democracy, like we live in a democratic system, democratic world and like if people want, if this is how people want to live their lives and they get value from it, then it is ultimately what they'll do. And I think the same thing is true here. I mean, look, like I said, none of this, this is a complicated thing. It's not like there are never any issues. It's also not like, you know, everything always works right. It's also not like every project succeeds.

• 1:15:55Speaker 02

  It's also not that there aren't legitimate criticisms along the way or big debates to be had. But if the result of it are systems that people use in their daily lives that make themselves and their families better off, that is the core truth. And then the system, I mean, at least in the West, you know, for a long time now, like the system will adapt to that and these things will ultimately happen. It's like, I don't know. Yeah. You always have like a lot, you know, there's always arguments on all kinds of things and people always have all kinds of agendas and everything. And then at the end of the day, what you're left with is like, okay, what is the actual truth of the thing? And the reason I'm so excited about this is because I feel very confident in that. Like that I have total certainty on.

• 1:16:26Ryan Sean Adams?

  Mark, let me ask you, you know, another maybe more direct, more personal in some ways question. So you got aboard the first wave of the web and you're like 22 years old, you're starting this new internet thing, you know? We have a lot of Gen Z listeners, okay, that think David and I are boomers, okay? Cause we're, you know, like millennials, all right? But what's your advice to the 22 year olds, when he's young, just getting into the space, super excited by what they're hearing about in crypto? How do they ride this wave of the next decade or the next two decades or what you've done, which is you've made it like a three, four decade thing?

• 1:17:00Speaker 02

  Yeah, well, first of all, I'm glad you clarified. I do think of millennials as boomers. I do think it's from the other side. I do think that, I do think that they are conjoined, you know, us poor Gen Xers, I don't know, we're kind of getting squeezed out somehow. But let's just say I'm hoping that Gen Z saves us because it's certainly not going to be either the boomers or the millennials. So, no, no, no, I shouldn't say that. Some of my best friends are boomers. I shouldn't say that. So, I mean, look, there's the broad patterns of everything that we've talked about in terms of, you know, the kinds of projects to be involved in and the kinds of things to shoot for. You know, look, a lot of the advice, you know, for younger people, I think it's basically, it's always the same advice. It has to do with basically how to make your way in the world and how to choose what to work on and then how to conduct yourself. And so my advice I always give people is like, look for a place where you can make a contribution.

• 1:17:45Speaker 02

  Here's a maybe a thing. People always talk about follow your passion. I don't really believe in follow your passion. Cause like if your passion is like basket weaving or whatever, like, you know, great, but like, that's probably not. Like follow the places where you can make a contribution, like find the thing that you can really contribute to. Right. Another way to think about it is pursue less happiness, pursue more satisfaction. It's something to think about, right? Like happiness is like an ice cream cone on a warm summer day. The first one is great. The 30th one is disgusting. Right? Like satisfaction is like deep and enduring satisfaction is like a battle hard fought. Like a project that took a very long time that you had to really put a lot of sweat into. And then ultimately like you saw it pan out, you know, months later, and maybe it was actually painful the whole way. But you're very satisfied that you did it and you're very proud of it and you'll tell your grandkids about it. And so look for the places where you can make a contribution, look for the things that are satisfying as compared to happy.

• 1:18:31Speaker 02

  You know, basically go deep, like, you know, go for the things that matter. And then, you know, the other two things, yeah, I think you just always have to say is look, all of this stuff, ultimately it's about people. You know, every business ultimately is a people business. You know, we see this in venture all the time, you know, we sit around all day long and argue about technologies and trends and markets and, you know, protocols and all this stuff. And, and it's all very interesting and, you know, it is important, but like the overwhelming thing is like the quality of the people. And then how well the people are able to form together as a team. Right? Almost everything great in the world is the result of teamwork. And so what makes a great team is it's like, okay, people who actually like share a lot in common, who share a very deep level of point of view about something that they want to do. And that they're willing to actually come together as a team and sublimate themselves to some extent. As individuals into the team to build something bigger than they could build individually. And so, you know, attach yourself to the right people, you know, think very hard about that.

• 1:19:17Speaker 02

  And then look, you know, I'll give you the ultimate unfashionable advice, you know, for young people is like, you know, hard work, right? Like, like, you know, one of the huge advantages of being very young is like work, life balance is often not, you know, not a huge requirement. Like, you know, if you don't yet have a family, you have a lot of freedom to kind of define how you spend your time. And so there is no substitute for hard work. Every great thing I've ever seen happen in the world has happened as the consequence of somebody who were like, really like put poured their heart and soul into it. You know, at a very intense level for a very long time. And you have this window, before you have a family, you have this window where you can really dedicate yourself to something like that. And I think that's very well worth taking advantage of.

• 1:19:52Ryan Sean Adams?

  Amazing advice to end this on. Hard work when applied with leverage will get you far. And that leverage can be Web 3. That's what we make the case for every single episode in Bankless. Chris, last thing for you, of course, A16Z just raised its fourth fund. This may be the largest crypto fund that at least I've ever seen, maybe the biggest yet, $4.5 billion. What are you going to do with that money? And what are you looking for?

• 1:20:14Speaker 03

  Yeah. So we're going to do what we always do, which is we're going to invest, venture investing, mostly early stage. So we've earmarked a billion and a half for seed stage and then $3 billion for venture. You know, invest in great people, big ideas over the long term. You know, we have a 10-plus-year time horizon on our investments. We're going to, you know, really invest in also things for the community. So we have a new research team we're building out, which will help our portfolio company with hard technical problems. But also, we hope to do a lot of things for, you know, everything will be open source and hope to do, contribute a lot to the kind of the general crypto community. We're doing a lot on the policy side, you know, kind of the regulatory and policy kind of questions around here. We've hired a bunch of people there. We're going to invest more there. We're just now launching a podcast, Web 3 with A16Z. We're going to invest a

• 1:20:58Speaker 03

  lot in content, into sort of evangelizing, you know, showing these positive use cases, talking about the technology. So we, you know, we really want to, the nice thing about the money is we invest it, but we also can use it to build out our team. We have 72 people, I believe, now on our crypto team, and we're going to continue to grow that. And that spans all sorts of different functions, as I mentioned, like research and content and policy and legal and regulatory and recruiting. And I think, look, we could be entering, and it seems like we're entering on maybe another winter. You know, with winters come pain and some difficulties. I also think it's a real opportunity to roll up our sleeves and solve the hard problems Mark was talking about earlier. I'm really excited. I think we're at, I believe we are. So if you go back and look

• 1:21:42Speaker 03

  at every computing movement in history, there was always kind of this one magical period of a couple of years when a whole bunch of really great stuff happened. You know, in mobile, that was so Snap, Instagram, Uber, Venmo, all started between 2009 and 11. That 2009, 11 window was sort of this golden period where there's huge influx of entrepreneurs and people had kind of figured out, you know, what some of the cool things you could do with mobile apps and you had the funding and you had all these kind of ingredients come together. And I think my belief, we'll see if I'm right, I believe we are in that period now with Web 3. And this is going to be a magical next couple of years. And so because of that, we decided to go big, raise our biggest fund and, you know, and we're hire a bunch of people and just go all in.

• 1:22:20Ryan Sean Adams?

  Biggest raise ever. This is A16Z saying, what bear market? We don't even see it. Mark, Chris, thank you so much for joining us on Bankless. This has been an absolute blast.

• 1:22:30Speaker 03

  Awesome. Thanks, guys.

• 1:22:31Ryan Sean Adams?

  Good. Thanks for having us, guys. Action items for you guys, Bankless listeners, of course. You heard Chris mention it. A16Z is launching a Web 3 with A16Z podcast. It's coming out soon. We will include a link in the show notes to that podcast. I think you might be able to snag episode one if that is out by the time that this is dropped. Also, Mark just listed a whole bunch of books and I jotted a few down. You know what? We're going to get with Mark and make sure we get that entire list to you. Include that in the show notes because of course, Bankless listeners love Bankless book recommendations and I'm sure all of these are fantastic books, particularly on the principles of property rights and capitalism. Risks and disclaimers, as always,

• 1:23:12Ryan Sean Adams?

  crypto is risky. You could definitely lose what you put in, but we are headed west. This is the frontier. It's not for everyone, but we're glad you're with us on the Bankless journey. Thanks a lot.