Welcome To Bankless

Date: Monday, March 2nd Episode: #1 Bankless is a podcast about leveraging the revolution in Internet money and internet finance to benefit you as an individual. Join Ryan and David for a journey into the frontier, where both treasure and bandits await! Bankless is all about replacing the traditional financial system with internet protocols for money and finance. Ryan and David are here to discuss how these protocols work, how they benefit the individual, and how the world may come to adopt and use these systems as they have the internet. ----- Tools from our sponsors to go bankless: Rocket Dollar https://www.jdoqocy.com/click-9261763-13920047 - tax shelter your crypto ($50 w/ "BANKLESS https://www.jdoqocy.com/click-9261763-13920047") Monolith https://monolith.xyz/ - holy grail of bankless Visa cards Aave https://aave.com/ - money lego for lending & borrowing Ethereal Summit https://www.etherealsummit.com/ - the most bankless crypto conference yet ----- Episode Actions: Subscribe to this podcast http://podcast.banklesshq.com/ Subscribe to Bankless newsletter program https://bankless.substack.com/ Make the commitment to go more bankless ----- Subscribe to podcast on iTunes https://podcasts.apple.com/us/podcast/bankless/id1499409058 | Spotify https://open.spotify.com/show/41TNnXSv5ExcQSzEGLlGhy | YouTube https://www.youtube.com/watch?v=VRdCtNEKcHE | RSS Feed http://podcast.banklesshq.com/ Leave a review on iTunes https://podcasts.apple.com/us/podcast/bankless/id1499409058 Share the episode with someone you know! ----- Don't stop at the podcast! Subscribe to the Bankless newsletter program http://bankless.substack.com/ Visit official Bankless website http://banklesshq.com/ for resources Follow Bankless on Twitter https://twitter.com/BanklessHQ | YouTube https://www.youtube.com/channel/UCAl9Ld79qaZxp9JzEOwd3aA Follow Ryan on Twitter https://twitter.com/ryansadams Follow David on Twitter https://twitter.com/TrustlessState

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

• 0:14Ryan 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. I'm Ryan John Adams. I'm here with David Hoffman. We're here to help you become more bankless. Hey, David, how's it going?

• 0:32David Hoffman?

  Really good, Ryan. Really excited to start off this podcast. I think it's going to be a very important role for people learning to get into the world of being bankless.

• 0:43Ryan Sean Adams?

  Yeah, what are we up to today? Are we here to talk about the revolution that's going on in the world of money? Are we here to talk about Ethereum, Bitcoin, DeFi, all of those things?

• 0:52David Hoffman?

  Absolutely. And more importantly, we're going to talk about those things and how they can be tools for you and your bankless future.

• 0:59Ryan Sean Adams?

  Absolutely. This podcast is going to be directed towards any skill level. So if you are new to crypto, this is a podcast for you. We're going to take time to define terms, pause the episode, take timeouts, and make sure that everyone is on the same page with the topics that we're discussing. Before we get started on the podcast, we want to tell you about some of our sponsors. Bankless is an ecosystem. You need tools, you need products, you need services to help you become more and more bankless each and every week. We've partnered with some of the best in the business. So I want to tell you about our first ecosystem partner. That's Rocket Dollar. This goes out particularly to our US listeners. So if you have an IRA

• 1:44Ryan Sean Adams?

  account or a 401k, that's a retirement account, the problem with it is it's jailed in your brokerage. So you don't have access to good crypto options. You can get stocks, you can get ETFs, not crypto. Where you can buy crypto inside of a brokerage, the fees are massively higher. So 400% higher to buy ETH in a brokerage versus buying it off of a crypto exchange. Don't do it. Don't get ripped off. Create a self-directed IRA. Rocket Dollar can take care of the pain of setting that up. You can break your retirement accounts out of jail. You can roll over your IRA or your 401k. All you have to do is go to rocketdollar.com and use the code BANKLESS to get $50 off.

• 2:29Ryan Sean Adams?

  David, you want to take the next one?

• 2:33David Hoffman?

  If you are looking to get into the bankless community, you need to go to the Ethereal Summit Conference in New York on May 8th and 9th. Me and Ryan are both going to be there. We will be talking on a panel about how Ether is an internet currency with our close friends Eric Connor and Anthony Cisano. Also going to the Ethereal Summit are some of the biggest leaders in the bankless community such as Mariano Conti, the head of smart contracts at MakerDAO, Hayden Adams, the founder of Uniswap, Michael Dunworth, CEO at Wire, Mateo Leibowitz, lead researcher at The Block. The Ethereal

• 3:14David Hoffman?

  Conference is shaping up to be one of my favorite Ethereum conferences of all time. All of the coolest people are going to be there. If you are looking to learn more about how to engage in the bankless world and who to talk to in the Ethereum community, you must come to the Ethereal Conference in New York. If you pay in crypto, you get $50 off of your ticket price, which is really, really cool. You need to, we always love it, when companies give discount to crypto. So, big shout out to Travis Blaine, the orchestrator behind the Ethereal New York Conference. Again, May 8th to 9th, buy your ticket in crypto and we will see you there.

• 3:57Ryan Sean Adams?

  Why don't we start with the term "bankless"? What do we mean by "bankless"?

• 4:01David Hoffman?

  Yeah, "bankless" is this term that you coined, which I'm a huge fan of. And to me, what "bankless" means is using this new infrastructure that is being built inside of the internet to manage your personal finance, manage your money in ways that no one else can touch, and using your money and your assets in a self-sovereign way. And this is something that we have not yet seen before in the outside world, the legacy world of traditional finance. When you use a bank, when you use a brokerage, you are using other people to To store and manage your money, your wealth. And the bankless revolution is all about taking this back into the hands of the person.

• 4:47David Hoffman?

  It's about being a self sovereign individual that doesn't need institutions or governments to use money and use a financial system. Bankless is all about opting out of the financial system and opting in to this new internet native, by the people, for the people, financial system. That's what bankless is to me. What's bankless to you, Ryan?

• 5:09Ryan Sean Adams?

  So absolutely, I mean, the term bankless is used intentionally because it's about less dependence on the banks. And there are two types of banks that control our lives and control our money system today. We're going to talk about these a lot during the podcast. The first is central banks. So these are organizations like the Fed, Chairman Jerome Powell, folks in Washington DC, folks instituted by nation state, who set the monetary policy of a nation. So monetary policy sets the interest rates, sets the supply of cash.

• 5:52Ryan Sean Adams?

  It really is the base layer of the entire world financial system that exists today. And it's something that we've all grown up into. But these are the masters of the financial world, the masters of the economy, and it's held and controlled by a small group of people today. So that's the first type of bank, the central banks. And with protocols, like crypto protocols, there can be less dependence on those central banks.

• 6:24David Hoffman?

  What do you mean by protocols? What's a crypto protocol? How does this work?

• 6:29Ryan Sean Adams?

  So a protocol is really a set of rules. So you can think about this in the analog world, about protocols that exist today that we sort of take for granted. The US Constitution, for example, that's a protocol for the governance of a nation to set up a constitutional republic. It's a 4,000-word document that essentially spells out how a country should be governed. That's a protocol that we live by. It's a set of credibly neutral rules. And I think that term "credibly neutral" is important because it has to be socially accepted as something that one party doesn't get undue control over.

• 7:12Ryan Sean Adams?

  And that's key to any successful protocol. Now, when we talk about crypto protocols, which we will a lot, we're talking about embedding these types of rules into code, into digital code, that can be immutable, that can be difficult to change, and that can be credibly neutral. And it turns out what crypto has really discovered is that we can even set things like monetary policy. So we can set the supply schedule of currencies in a credibly neutral way that's difficult to change, and that protocol can be the base money layer of entire economic systems. So there are lots of different protocols that we're going to talk about, and each

• 7:57Ryan Sean Adams?

  of these are really defined by those characteristics. They're embedded in code, they're credibly neutral, and they're a set of rules that are applied to the system.

• 8:09David Hoffman?

  Talking about the United States government as a protocol for governance, I think, is really illustrative. And it's in stark contrast to the governance of the US monetary system. And like you said, the Fed manages the dollar. It manages the value of the dollar, how many there are of them, what they're going to be worth now, what they're going to be worth in the future. And the thing is, like, money is one of the most important things that we touch on a day-to-day basis. It is the substrate that We all stand on when we go to work, when we buy our groceries. And so in stark contrast to the protocol of the United States, the Fed is just a team of 12 people that dictate the whole entire value system

• 8:53David Hoffman?

  that we use to transact with on a day-to-day basis. And we didn't, they weren't democratically elected. Most people don't know who these people are. Most people don't know what they do. And it's not a money system by the people for the people. And so when we talk about crypto protocols, we're talking about protocols that have, we've relegated decision-making to computers. And computers run as programmed. And so instead of having a monetary system that is determined by 12 people behind closed doors, and these crypto protocols are protocols built into the Internet that everyone can see. Everyone can see the code. We can all look at what the code is doing and we can all see what the code is going to do into the future,

• 9:38David Hoffman?

  which is why we can trust these things and why so many people have a hard time trusting the Fed. So that's what crypto protocols means to me. And that's why I like to opt in to this crypto-economic future.

• 9:50Ryan Sean Adams?

  Absolutely, yeah. So those central banks, those are the first types of banks that in this bankless system, we can diminish or become less important or have less control of our lives. The second type is really closely related. And these are the day-to-day banks that we use, the Wells Fargos of the world, the Bank of Americas, your local bank branch where you go online and you have your bank account. These are the commercial banks. And they are closely related to the central banking system. Really, the central bank sort of sets the interest rates for the commercial banking system. And the commercial banking system essentially

• 10:34Ryan Sean Adams?

  carries out the will of the Fed. They are almost nodes on the central banking systems network, if you will. And so together, the central banks and the commercial banks are The banking system. Now, we can not only disrupt and diminish the role of central banks. We can also diminish the role of bank accounts like Wells Fargo. And essentially outsource that to crypto economic systems. So crypto and Ethereum in particular can become your bank account in a bankless system. That's really the journey that we're on.

• 11:16Ryan Sean Adams?

  Anyone with an internet connection and an Ethereum address and some Ether and Bitcoin gets access to a global money system. And they can transfer money, they can lend money, they can borrow it, they can invest, they can pay, all without a bank. And they can't be deplatformed by governments, centralized institutions, or mega companies. To get bankless really just means owning crypto money like Ether and Bitcoin, opening an Ethereum address, and then starting to use it in this new parallel financial system.

• 11:59Ryan Sean Adams?

  Because that's essentially your passport, your gateway to this new financial system. So why is all this important, David? Why are we starting a podcast? Why are we talking about a bankless revolution? Like, who cares? I mean, the banking system, maybe it works fine for me. I live in the US and, you know, Wells Fargo's great. Why is this important now?

• 12:22David Hoffman?

  Yeah, that's such an important question. And I think you would agree with me. But we both think that this bankless revolution is inevitable. It's going to happen regardless. And so we want to make it easy on people, easy on the listener, to learn how to become bankless. So that's what we're here to do. When we talk about why this is inevitable and why this is important, it's because of the way that money works. There's many different currencies in the world. The US government or the United States has the US dollar. Mexico has the peso. India has the rupee. The European Union has the Euro. There's a bunch of different monies all around the world. And there's basically one money per jurisdiction.

• 13:06David Hoffman?

  That's just a result of how nation states work. Governments get to impose a money system on the people that live inside of their region. And it's not really something that works well. And so money is a tool. It's a thing that allows two people to communicate value between each other in order to get something done. And really, people all want to be using the same money. It doesn't make any sense if inside of one jurisdiction, inside of one region, there's two monies. Imagine if I was a customer and you were a shop owner. And I came into your shop and I said, hey, do you take money A? And you were like, no, I only take money B. Having multiple monies doesn't make sense.

• 13:49David Hoffman?

  Now, when we talk about crypto money, things like Bitcoin and Ether, there's only one jurisdiction on the Internet. And also, there's 4.5 billion people on the Internet. So the Internet as a nation, as a region, is already much larger than every other country in the world. When we talk about crypto money, we all know that people want to use one money. And so instead of there being hundreds of different currencies out in the world, we know that if crypto money is going to take off, it's going to be just a very low number of monies. And we can already see that today. There's really only two crypto monies that you and I believe in, that there's evidence for, that people are using. And that's Bitcoin and Ether. And so that's why this is so important.

• 14:32David Hoffman?

  I think that this is going to happen anyways. This is something that is going to happen to the world. I believe that our kids are going to grow up using crypto money. And so it's important to understand these things today so you can front run the opportunity, so you can get ahead, because this is happening regardless.

• 14:51Ryan Sean Adams?

  Yeah, I think the essential point here too is like this is the first time we've ever had the opportunity to do this. I mean, previously, it has required governments, large governments, with guns and the ability to put people in cages, to essentially create a money system. But for the first time, starting with the Bitcoin white paper in 2009, we created, humanity created, this ability to create a credibly neutral monetary system without a massive military and government apparatus. That's new technology. That's game-changing

• 15:33Ryan Sean Adams?

  for civilization, and that's really a first in humanity's history. I think something else that's probably really important is the debasement of currency that's going on right now at the central banking level. So, we don't necessarily, in the US, see inflation in our day-to-day lives, though there are many countries around the world, like Argentina, and Venezuela, and Zimbabwe, that do. But we do see inflation in another form, and this is really asset inflation. We've seen a massive amount of asset inflation over

• 16:14Ryan Sean Adams?

  the past, you know, 10 years, in the stock market, in housing. People in the crypto industry, and Austrian thinkers in general, call this the Cantillon Effect. Do you want to explain the Cantillon Effect a bit, David?

• 16:30David Hoffman?

  The Cantillon Effect is really illustrative of why we need a credibly neutral money that is not managed by anyone. The Cantillon Effect is something that happens when some entity prints money. Inflation is the number that we measure how much prices of goods have gone up, how much more groceries cost, how much more cars cost, how much more houses cost. As there's more money, the value of these things go up. However... When money is printed, it's not immediately diffused across the world. And so whoever is the early receiver of money printing, because that money goes somewhere. It just doesn't immediately diffuse across all money holders.

• 17:13David Hoffman?

  It goes into somebody's hands first. And those people have the privilege of buying things before everyone else, before new inflation sets in. So the market absorbs money, but it doesn't do it equally. And so what we've seen with the Cantillon effect is when, especially inside of the United States, the Fed prints a bunch of money, and this shows up first inside of the stock market, inside of the housing market. And this is why, you know, Amazon is $2,000 a share, and 75% of America can't afford to purchase a single Amazon share, even like every couple of months that they generate savings. And so asset prices, housing prices, just go through the roof,

• 17:57David Hoffman?

  and it really contributes to wealth inequality. And so the belief here is that no one should really have the ability to print money. Money is a tool used by people for people, and no one actually deserves or should have control over the ability to print money, because it creates inequality. Whoever has the ability to print money will print money, and it will be an unfair distribution. And so I prefer personally a money system that no one can print, no one can control, and is equally distributed fairly across the internet.

• 18:32Ryan Sean Adams?

  I think we figured out things like the separation of church and state is a good idea for reasons of power centralization, for reasons of corruption. And I think the crypto revolution is really figuring out that the separation of money and state is equally important, or maybe even more important. And I think that's another reason that going bankless is important, is because once you have a bankless account, say, an account on the Ethereum network or a Bitcoin address, it's really unstoppable. You can't be depo- Platformed by anyone. This is peer-to-peer money. This is peer-to-peer finance.

• 19:17Ryan Sean Adams?

  And it's not censorship-prone to state actors or to companies that might want to deplatform you. And I think, right now, we're looking at a world that is becoming increasingly authoritarian. It's kind of a concerning trend that, you know, we're coming to realize across the country. More and more people are starting to live under authoritarian regimes that control all aspects of their life, including their money system. The ability to shut off someone's

• 19:56Ryan Sean Adams?

  bank account and remove them from the economic system at a whim is an incredibly powerful ability. And states have that now. And they shouldn't. They shouldn't. Money should be a public good. The money system and the financial system should be available to every single individual with an internet connection. That's why Bankless is important. You know, the final thing maybe to touch upon here is that the Bankless revolution can bring about better finance. So, the ability to move money across the world, any amount

• 20:36Ryan Sean Adams?

  in seconds, at a transaction fee of a few cents, that's incredible. We've never had that before. You know, what kind of better finance experience have you had in decentralized finance, David, that's really like given you a magic moment?

• 20:54David Hoffman?

  I love this question. And, working in the crypto world, I talk to a lot of people online from different parts of the United States, but also different parts of the world. I have a lot of friends in Europe and in Asia and in South America. And really, the cool thing is, when I need to pay any of these individuals, or they need to pay me, we're all using the same currency. And so, my friend Mariano, while we were in Not too long ago, we got dinner together and while he was back in Argentina, he sent me that money to my phone in a peer-to-peer fashion using Ethereum. It was the same currency that I accept and it was the same currency that he has. And it immediately showed up in my phone and we didn't, it didn't go through a bank.

• 21:38David Hoffman?

  It didn't, it wasn't a currency managed by the Federal Reserve. And it was just immensely easier. I just sent him my address and then he sent it to me and it showed up just moments later. And this is, this goes back to why it's so important for everyone to be using the same money. Cause money gets better when everyone uses it. We use money as a tool to communicate value. And if we across the world are using hundreds of different monies, it's like if we are using hundreds of different languages. It's just more efficient if we use the same language.

• 22:10Ryan Sean Adams?

  This is wild stuff. Like all this stuff is incredibly exciting, I would say. What I think about is going bankless really gives you superpowers. The ability to open a loan without any paperwork directly from a protocol. The ability to have money robots invest your funds across protocols. The ability to get an interest rate on US dollars that exceeds 8%. These types of things aren't available in traditional finance. And these are the types of things you can level up on when you're learning how to become more bankless.

• 22:50Ryan Sean Adams?

  So it's better finance too. Now, not to say there aren't sharp edges and there aren't risks along the way. There absolutely are. But together, and as the user experience improves, I think bankless finance is better finance. Hey guys, I just want to pause the podcast to tell you about two of our sponsors. The first is Monolith. This is for our European listeners especially. Monolith is the crypto Visa card you need if you're in Europe. It's the only bankless Visa card that I've seen. It essentially wraps your Ethereum address in a Visa payment mechanism. And unlike most crypto Visa cards out there. Monolith doesn't make you give up control of your crypto.

• 23:34Ryan Sean Adams?

  It's focused on spending assets like DAI instead of assets you want to keep, like Bitcoin and Ether. And soon, you'll be able to deposit the DAI that you insert in your Monolith wallet to earn 8% in the DAI savings rate. This is the closest thing to the Holy Grail of crypto cards that I've seen. It's close to a one-to-one replacement for HSBC or your Revolut account. You can download the app at monolith.xyz and get access to your first Bankless Visa card today. The second is a DeFi protocol you absolutely have to check out. It's called AVE. AVE is a lending and borrowing protocol on Ethereum. What does that mean? It means you can lend to it. You could put DAI into it. It will magically transform that DAI

• 24:19Ryan Sean Adams?

  into an interest-bearing DAI asset. You can also borrow from it. Most DeFi protocols you borrow from have a variable rate, so they could change on a day-to-day basis. But with AVE, you can lock in your borrow rate, and it's fixed. Developers, you could check out AVE's Flash Loan Protocol. You can go to ave.com, deposit your crypto, learn more about the AVE protocol. You can also say hi to them at Paris Blockchain Week. They'll be there in March. Check out AVE today. What are the tools and systems that are necessary to go Bankless, David?

• 24:56David Hoffman?

  First system that we all know is Bitcoin. Bitcoin was the first crypto system that ever came about. It's the thing that kickstarted this whole revolution. It started in 2009. And Bitcoin is just an interesting thought experiment for what money on the internet looks like. And so if you are trying to develop a credibly neutral money system, and you would go through kind of this same thought experiment. So how do you have a money system that has no monetary policy? You create one that doesn't inflate. And so Bitcoin is a hard-capped currency. There's only 21 million of them. And it's also on the internet, where everyone can access it. And there's no central issuer. And so these are all the good qualities of money that we've...

• 25:42David Hoffman?

  That we value. And Bitcoin came out in 2009 and it's the sole reason why it became first is why it's so heavily adopted. The other tool that you and I like to use is called Ethereum. It's this other platform that is similar to Bitcoin in the sense that it has scarcity and it has incredibly neutral monetary policy, but it also can do cool things. Bitcoin, Ethereum is like Bitcoin, but it has software. And so getting into a little technical jargon here, Ethereum is called something that is Turing complete, which means it can run code, it can run software, and that means it can

• 26:23David Hoffman?

  manage your money in ways that, it can manage your money in any way. A computer is Turing complete, whereas a calculator is not. And so Ethereum, you can generate and run software to manage your money as you see fit. So when you are talking about earning an interest rate, or having money robots invest your money, or pulling out a loan, you're actually talking about these applications on Ethereum that, like Ethereum and like Bitcoin themselves, are trustless and automated and just simply run as designed and don't have humans in the background for any of these processing.

• 27:03David Hoffman?

  And so Bitcoin and Ethereum and the applications on Ethereum, I would say, are the most useful tools for going bankless.

• 27:11Ryan Sean Adams?

  Absolutely. You know, one way I think about it is I came up with this concept called a Skill Cube as part of the Bankless Newsletter program. And it basically puts what you're talking about Bitcoin and Ether, the crypto monies, at the very bottom. These are the base money layers of the entire crypto money system. So an analogy would be maybe gold, or maybe US dollars in the traditional financial world. So that's the base layer, this money layer. And above that, you have these

• 27:52Ryan Sean Adams?

  Exchanges, sometimes I call them crypto banks because they require that you deposit your crypto money into them and they take custody of that crypto money. So the Bitcoin and Ether is deposited to them. So you have the crypto banks or the exchanges. A Coinbase would be an example of that. And then you have the money protocols. Other people call these decentralized financial protocols or DeFi protocols. And the banks and the money protocols, and remember, the money protocols, they're a bit more autonomous, they don't require custody of your funds, they are more automated.

• 28:34Ryan Sean Adams?

  But together, the banks, the crypto banks and the money protocols allow you to accomplish things in the money systems. Money verbs, like paying someone, or spending, or borrowing, or lending, or betting, or longing, or shorting, or investing. Those are the money verbs that the crypto banks and the money protocols allow you to accomplish. And those three layers, the crypto money at the bottom, the crypto banks and protocols in the middle, and the money verbs at the top, those are really the tools for going bankless.

• 29:15Ryan Sean Adams?

  And what we are essentially doing is creating a parallel universe. So this exists as part, not as part of the traditional financial system, but in kind of a parallel world that operates alongside of it. But is separate and is distinct and is backed by these crypto money systems. Maybe we should talk about wallets for a minute.

• 29:43David Hoffman?

  Yeah, wallets are incredibly important. A wallet is the thing that you actually use to manage your money. We all know what a wallet is. It's this leather thing in our back pocket that has our credit cards and our cash in it. A cryptocurrency wallet is the digital correlate to that. It is this address that you have that people send money to. It's and you can think of it like a mailbox and there's two parts to every wallet. People can send letters to your mailbox, but the mailbox is locked and you have a private key. This is kind of like your password to your bank account or your social security number. And it's the thing that unlocks the wallet and it allows you to get the money inside of it

• 30:27David Hoffman?

  and to use it and to send it elsewhere. And so for every wallet, there's one private key that is the thing that accesses the funds inside. And now you don't have to have just one wallet. The cool thing about crypto wallets is that you can spin up, you know, one, two, 10, 1,000 wallets free of charge. It's not like a social security number where you are given one by the government. It's something that you can go and make new ones. And so, you know, by the end of this podcast, if I really wanted to, I could have spun up 50 new wallets and sent my money in between all of them. The important thing about a private key is that it is the thing that accesses the funds inside the wallet, but it is not inherently owned by anyone.

• 31:12David Hoffman?

  And so that's why it's really important to keep your private key safe. Because if your private key gets into the hands of somebody else, they can go into your wallet and open up that funds and then use it. And so private key management is something really, really important. And it's also the tool that allows you to keep your funds under your control. And so a private key is if at the base layer, it is a string of 64 random characters and letters, like a very long password. But you can also turn it into, using an algorithm, a 12-word-long phrase that you can keep in your head. And we all know those rules. When you go from country to country, you're not supposed to take $10,000, you know, in cash along with you.

• 31:54David Hoffman?

  Well, if you just have your 12 words in your head, your money and your assets go with you wherever you are in the world. So long as you can connect to the internet, you can access those funds and you can go on to a plane. You can drive across the country, you can go wherever. And so long as you have those 12 words memorized, your money goes with you. It is tied to your identity, it is tied to who you are, so long as you don't forget those words. So those words are really important. And there's a bunch of different ways to abstract those words. And so there are apps on my phone that store my private key for me. There are different ways of storing my private key. But it's really the thing that allows you to be self-sovereign. It's the thing that allows you to access these crypto protocols without having to ask for permission from the government.

• 32:39David Hoffman?

  So wallets are really important and they are basically the tool that allows you to access all those money verbs that you talked about.

• 32:46Ryan Sean Adams?

  Yeah, I kind of think of them as a combination of a bank account and a safe. They're like a bank account because they have an address that people can deposit into. You know, if you have ever written a check, there is a bank account number on the bottom. That represents a series of numbers where if somebody uses that, they can push money into your account. So a wallet is like that. It has an address where people can send funds into. But it is also almost like a safe or like a physical wallet in that no one else owns it, you own it. And if you lose access to your safe, if you lose the combo,

• 33:28Ryan Sean Adams?

  or if you physically lose it, if it gets stolen, it's gone forever. So it's a combination of a bank account and a safe, to kind of use analog terms as well. Now, how do people get started in going bankless? Like, so how do they bridge the worlds from kind of the traditional financial world, where they have a bank account and some US dollars or euros, and this new crypto world? What's the process for that?

• 34:00David Hoffman?

  Yeah, so like I said, anyone can spin up a wallet, but that doesn't mean there's any funds in there. So if you want to get funds in there, you need to have cryptocurrency sent to that wallet. And cryptocurrency is money, so you need to get your hands on some money. And I like that illustration where there are two separate worlds, because that's Really what this what this whole process is. The legacy financial system, the US dollar, the stock, the stock market, etc. That all exists in this very big, very large financial world, legacy world that that we live in today. That's the Wall Street world, that's the central bank world, the the commercial banks. And we need to get the value and the assets that we have over to this other, this new world, this world that exists on the internet. And so we need a bridge.

• 34:44David Hoffman?

  And so there are many different exchanges out there that allow you to take your your legacy value and transfer it through the bridge to your crypto wallet. And and these exchanges, these are things like Coinbase, like Gemini, Wire. These are all kind of these new age banks. That's basically what their operation is. And they have one foot in the old world and one foot in the new world. And they allow you to transfer your value in between. And so the Coinbase is really turning into a a crypto bank is is what we've been calling them. And so they can take your fiat money, they can take your dollars and you can deposit it and hold it there. And then you can exchange it for crypto and withdraw on the other side.

• 35:25David Hoffman?

  And they are the main vehicle, the main on ramp for transferring your value from the old universe to the new.

• 35:32Ryan Sean Adams?

  And I think that's a great point because going bankless is it's really a journey and it's also a a spectrum, right? And that's why we we often talk about leveling up and becoming more bankless. Step one of becoming bankless is is really doing what you just said. It's buying some sort of crypto money, making that transfer from the old world to the new world. Setting up a Coinbase or a Kraken account and taking some of your fiat currency. By fiat currency, we mean central government nation state currency like US dollars or euros.

• 36:12Ryan Sean Adams?

  And taking that and transferring that, buying a crypto money like Ether and like Bitcoin. That's really step one of going bankless. It's kind of like entry level, right? You've just gotten started.

• 36:27Ryan Sean Adams?

  And from there, once you're in that universe, there's, it really unlocks a whole suite of other things that you can start doing. And we're going to be talking about a lot of the things that you can do with your crypto money. Once you're in the crypto money system, once you've started down that path of going bankless. And it's a process of becoming more bankless over time. And eventually, you might wake up one day and find out that you no longer need your traditional bank account. It's just not useful for you anymore. Same way, folks in the 90s woke up one day and realized, hey, I don't really read the newspaper anymore.

• 37:12Ryan Sean Adams?

  I get all of my information online, so let me just cancel that subscription. That is how we envision the bankless journey looking like. Essentially, banks become less relevant and more obsolete. And your crypto accounts, your Ethereum account, becomes more important and more useful for you.

• 37:35Ryan Sean Adams?

  Let's talk about this for a minute, David, because we've talked a lot about Bitcoin and Ethereum. But there are a ton of other systems out there. If you look at, you go to a website called CoinMarketCap and you can look at, you know, hundreds of different crypto systems out there. All of them say they're money. Why are we just focusing on Bitcoin and Ethereum in the bankless program?

• 38:01David Hoffman?

  Such an important subject. And so when you are opening up your crypto bank account, it's important to understand this, this concept. When you go to Coinbase or when you go to Gemini, you're going to be bombarded by a long list of cryptocurrencies. After Bitcoin and Ether, there's Litecoin, Bitcoin Cash, Tron, EOS. And it's really important to draw a line between Bitcoin and Ethereum and the rest of these things. Like I was saying at the beginning of this podcast, money is a social system. Money is a thing that we all use together to transact value between each other. There's no point in using money B if 98% of people are using money A.

• 38:46David Hoffman?

  And that's really the difference, the thing that differentiates Bitcoin and Ethereum versus all other cryptocurrencies. Litecoin, a well-known cryptocurrency, has a small fraction of the users that either Bitcoin or Ethereum has. And same thing with every other cryptocurrency down the line. And so I think, I think I can, I can speak for you, Ryan, because I share this belief. But if a new crypto money comes along that grows in adoption, grows in usage, then we would count that as crypto money. But right now it's just Bitcoin and Ethereum. And there's a really important metric for illustrating why these two are separate from everyone else. We'll get into the intimate details of how crypto economic protocols work in later

• 39:31David Hoffman?

  episodes, but for right now, you should just know that when you make a transaction on one of these blockchains, on one of these crypto systems, when Ryan, you send me Ether to my address, or I send it to you, you have to pay a small fee. And that is just the, the validation fee. And for Bitcoin and Ethereum, these fees vary, but they're generally a couple pennies, but they can fluctuate up and down. Again, we'll get into those details later. But the point is, you pay a small fee to the protocol. Now, the fees that Bitcoin collects and the fees that Ethereum collects are over 100 times larger than the fees of every other blockchain combined. And so it's, it's not even a contest. The level of adoption, the level of unique addresses used by both of these systems, and

• 40:13David Hoffman?

  the level of transactions that each blockchain are executing every single day, just dwarfs every other crypto protocol there is out there. Understanding that money is a shared system, that we all need to use the same shared system in order to effectively use money, we all need to be using the same crypto protocol in order to transact value between each other. And it seems to be that the, the world of internet money is Really converging on just these two systems, just Bitcoin and Ethereum.

• 40:43Ryan Sean Adams?

  Absolutely. You know, to add a couple of things to that, you know, I think we believe that money-ness is really a spectrum, right? So, different assets can have different degrees of money-ness. And that money-ness is also relative to a local economy. So, if you're in prison, cigarettes might be the money for your local economy in the prison system. If you're in a much bigger economy, like Europe, euros might be the currency. If you're even broader in the world, it might be US dollars. So, each of those assets has money-ness relative to its local economy.

• 41:27Ryan Sean Adams?

  And within the economy of Ethereum, ether is undisputably money. So, it has high money-ness in its local economy. But people get kind of wrapped up on the term money because they think all money out of the gate needs to have three attributes. Number one, it needs to be a store of value. So, something, an asset where people store their value for future use. Two, they think it should be a medium of exchange, you know, where you can go out and buy a coffee with it. And it's generally accepted by vendors and suppliers.

• 42:10Ryan Sean Adams?

  And three, they think it needs to be a unit of account. So, the Starbucks coffee that you buy is denominated in that currency. Denominated in US dollars would be the unit of account. And they say, "Well, if it's not denominated in Bitcoin and ether, how can those assets be money?" And that's where it's important to realize that these assets aren't fully money yet, but they are increasing on the spectrum of money-ness. And they're increasing first as a store of value. So, a value store for their local economies, they are very

• 42:49Ryan Sean Adams?

  Volatile, so they do fluctuate, so they're not yet a good unit of account or a medium of exchange. They are those things in their local economies, but they are not all three of those things at once. Yet, they are furthest on the moneyness spectrum relative to all of the other cryptocurrencies. And that's why we call Bitcoin and Ethereum and Ether, rather, crypto monies and are really the focus of the bankless program. Now, that's not to say, when you look at the CoinCap 100, MarketCap, all of these, many of these base, layer-one assets, as we might call them,

• 43:31Ryan Sean Adams?

  are competing to get better at moneyness than Bitcoin and Ether. So there may come a time where another asset achieves that, and they achieve it by being used money, as money in their local economies, and broadening out and branching out and increasing their moneyness. At that time, those assets might start to be important to the bankless program. But right now, we really narrow the focus on Bitcoin and Ether at this point. Those are the revolutions in money. And with those assets, you can really accomplish as much as you need to in the bankless program.

• 44:12David Hoffman?

  Going bankless is a journey. The crypto revolution is in the middle of the revolution. It is not finished yet. And as the crypto revolution progresses, it's going to progress alongside these monies becoming new age monies. And so this is why we are doing this podcast. We want to guide you and get you onboarded into this new system. But again, this system is not yet mature. There's three different qualities of money that Ryan laid out. And really, these crypto monies are really just developing their first quality, their store of value quality. They are young, developing systems that need to mature and grow.

• 44:54David Hoffman?

  And they are on their first of three phases of becoming money. And so as this podcast progresses, as crypto progresses, as Bitcoin and Ethereum, as internet money progresses, we are all going to progress alongside it. And that's really what Bankless is about. Watching this journey, going on this frontier, traveling into the unknown, and talking about what we see.

• 45:18Ryan Sean Adams?

  Absolutely, and that's exactly what you can expect from future episodes. We're going to talk a lot about this new universe, this new money system, this crypto money system that has been created, and more importantly, what you can actually do inside of it. So, you know, what are the areas where you can gain exposure to and front-run the opportunity and invest in? What are the money protocols that you can use today to pay someone, or to borrow, or to lend? How is this entire ecosystem developing? That's what we're going to talk about, because we're right here on the journey with you,

• 46:01Ryan Sean Adams?

  using these things in our everyday life, and becoming more bankless as we go. Let's talk about the rewards first, because this is an entire economy that's developing, an entire monetary system that's developing, and there aren't too many folks that are clued in. About 50 million crypto holders today, and probably the population of a small city, 250,000, to be generous, who actually are using these money protocols today, using their Ethereum address to actually accomplish things. It's a very small population.

• 46:40Ryan Sean Adams?

  So what that means is, if this crypto money thing takes off, if this bankless revolution catches on, there's a massive amount of upside on the base layer monies, particularly assets like Ether and assets like Bitcoin. Right now, the value of, global value of gold is something like 8 to 9 trillion. Right now, the global value of Bitcoin and Ether is something close to 150 billion. So if we matched gold, for instance, there's a massive amount of upside there.

• 47:19David Hoffman?

  Inherent into this new money system is a retail-first money system. How terrible would it be if Bitcoin was... Invented by JP Morgan, or if Ethereum was invented by by Google. That would be awful, because that would mean that these new monies are generated by the the old world, the financial institutions that that control everything, or or the the tech companies that that want all of our data. Crypto is about people first. Like I always say, it's money by the people for the people. And so this is inherently a individual, a people first revolution. Money is a shared social system, and people would reject money by these big institutions.

• 48:03David Hoffman?

  And that's that's why so much speculation and growth has happened in crypto monies up to this point. It's because people understand, people in the crypto world understand this. They understand that if all of the other people of the world start to onboard themselves into these new monies, then the institutions and banks and and central banks and governments will also all have be forced to come and also arrive in this world. And so this is a bottom up revolution. If everyone at the bottom starts using these new crypto monies, it forces the hands of everyone else above them to also start using these these money systems. And unlike the dollar, no one can add new supply to these systems.

• 48:46David Hoffman?

  The reason the Fed exists is to stabilize the value of a dollar. And so if the value of the dollar rises, the Fed starts to print more of it, which devalues it to keep it stable. The whole point of crypto economic systems is that there is an uncontrolled supply. No one can print more. So with Bitcoin, there's 21 million. With Ethereum, there's 110 million issued at a constant rate by an algorithm, which means that the more demand there is for these things, means that there's no one else to print new ones to control the price. And so this is a basic fundamental principle of these crypto economic systems. The more they are adopted, the more demand there is for the base layer currency, the more demand for Bitcoin and Ethereum.

• 49:28David Hoffman?

  Instead of new supply being issued, what happens is the price goes up. And this is just a law of supply and demand. And these, this phenomenon is built into the protocol. This is inherent to how these things are are grown and developed and adopted. And so if the the world starts to come to the world of crypto money. The prices of these things has to go up. And Ryan, I know one of your favorite subjects is economic bandwidth, which I'm sure we're going to give entire episodes or you know, numbers of episodes to that one specific topic. But the, the value of the whole entire world's financial system is trillions and trillions of dollars. And now Ethereum and Bitcoin, like you said, are just roughly 150 billion dollars.

• 50:13David Hoffman?

  We can't host the world's financial system on top of a platform that's just 150 billion dollars. The prices of these things need to go up in order to support more and more economic activity. And the prices of these things go up when more and more people use them and demand them and need them for their daily activity. So built into the protocol is the potential for upside appreciation, is the potential for growth. And that's why you and I are so excited about this bankless revolution is because it's a financially rewarding revolution if it gets adopted.

• 50:46Ryan Sean Adams?

  Absolutely. I mean, the upside potential is, is 50x, potentially 100x. But there's a big dependency there that, that you mentioned, and that's the dependency of will this crypto economic system get adopted? Will more people start to leave their central bank system, leave their commercial bank system and go bankless? If that happens, the upside is there. If it doesn't, the upside isn't there and crypto could diminish, could, could shrink, could stay stagnant for many years.

• 51:26Ryan Sean Adams?

  So that's really the, the reward that you get on the other side, but that's also the risk. The risk is that these systems won't take off. This is also, there's also some frontier risk here too, because these crypto systems are based on code. They can be hacked. Many of them are risky. There are scams out there. You know, it's, it's a dangerous place to be and it's certainly not for everybody. I know we've both known folks who've lost money in, you know, wallet hacks or from losing a password or from a crypto protocol that's gone wrong.

• 52:11Ryan Sean Adams?

  So there's the potential there to to lose all of the gains that that you made. So this is not something that is as safe as depositing US dollars in a bank account. This is a bit more like, you know, setting out for a journey out west and being beset by by bandits and being attacked on the road. It's something that you have to journey into with a full understanding of the things that that can go wrong and what can happen.

• 52:47David Hoffman?

  Absolutely. There would be no such thing as financial reward without financial risk. Where there is reward, there is risk. And Bankless is about exploring this frontier and we will do our best to show you the traps, show you, show you the bandits, tell you what's coming. At the end of the day, there is risks regardless. The financial protocols that we talk about, they, there can be bugs, there can be hacks, there can be backdoors. We will do our best to communicate. However, stepping into this new frontier is stepping into an unknown world. And where there is the unknown, there are risks. So this is not for the faint of heart.

• 53:27David Hoffman?

  This is for people that are ready to take on a bankless life, ready to explore the world of crypto economics, explore the world of internet finance, but it is indeed stepping into the unknown.

• 53:41Ryan Sean Adams?

  That's exactly what we're going to do on this podcast. We're going to explore all of those topics. We're going to step with you into the unknown. From a, from a tactical perspective, we'll be releasing one of these every Monday. So every Monday morning, you'll get a fresh Bankless podcast in your inbox. We'll talk about things that, you know, we, we talk about on the, on the Bankless newsletter as well. And this will be a regular system, a routine that you can get into to level up every single week on the podcast. Sometimes we'll bring in folks who can speak about topics in particular. You know, other times it'll be David and And I riffing over a thesis or an article

• 54:25Ryan Sean Adams?

  or something cool that you can do in this new financial system. And above all, we're just going to have a lot of fun with it. All right, so every episode, we're going to end with a list of to do's. Things that you can do, actions that you can take offline. Today's is pretty simple. One, make the commitment to leveling up. Make the commitment to getting more bankless and learning about this new crypto system. And once you've made that commitment, I want you to do two things. One, hit subscribe on the podcast. That way, we can send you information on a weekly basis and you can start leveling up and getting into a routine. And then second, if you haven't already subscribed to the Bankless newsletter,

• 55:09Ryan Sean Adams?

  that's at bankless.substack.com. And that will keep you clued into everything that's going on in the bankless space. Dave and I are exceptionally excited about bringing this to you every week, about exploring this topic with you in detail. And we're looking forward to leveling up alongside you.

• 55:31David Hoffman?

  Ryan, this is going to be an awesome journey. I'm excited to go on with you and I'm excited to bring as many people along with us as possible. I believe in the exodus of the old financial system into a financial system that's by the people, for the people. And I'm really excited to explain some of these really awesome, really powerful concepts over the next few episodes of Bankless. So, listen to Ryan, subscribe to the podcast. Also, subscribe to the Twitter account, @BanklessHQ. That's where we will be tweeting out the details of every episode, as well as tips and tricks on how to go bankless.

• 56:09Ryan Sean Adams?

  Let's do it, guys.

• 56:11David Hoffman?

  All right, see you next week.