The Agentic Economy: How AI Agents Will Transform the Financial System with Circle Co-Founder and CEO Jeremy Allaire

AI agents can already collaborate, but they lack a trustworthy medium in which to store value and execute contracts. Enter Circle’s Arc Blockchain, an economic “operating system” designed for a world where machines drive the real economy. Circle co-founder and CEO Jeremy Allaire joins Elad Gil to dive into the future of programmable money and the agentic economy. Jeremy explains why traditional banking fails to support the needs of AI agents, and how stablecoins like USDC facilitate an internet-native economy. They also discuss the tokenization of real-world assets, the move toward full-reserve banking, and Jeremy’s predictions for double-digit GDP growth as AI and blockchain reach their “broadband moment.” Sign up for new podcasts every week. Email feedback to [email protected] Follow us on Twitter: @NoPriorsPod | @Saranormous | @EladGil | @jerallaire | @circle Chapters: 00:00 – Cold Open 00:05 – Jeremy Allaire Introduction 00:21 – Origin Story of Circle 02:11 – Rethinking the Financial System 05:26 – The Role of Stablecoins 09:52 – Use Cases for USDC 11:30 – Programmable Money 12:25 – Blockchain as Operating System 14:37 – The Agentic Economy 17:45 – Arc Blockchain Use Cases 27:00 – Scaling Models and Privacy Tech 30:45 – Securitization of Other Assets Under the Blockchain 34:16 – Prediction Markets 35:09 – Incremental Revenue Through GPU Usage 37:19 – Jeremy’s 10 Year Future Vision 41:12 – AI and GDP 44:00 – Conclusion

• 0:05Speaker 00

  Today on No Priors, we have Jeremy Allaire, the co-founder and CEO of Circle. We'll be talking about cryptocurrency, AI, agentic payments, AI evolving on the blockchain, and a variety of other topics. Okay, well, thank you so much for joining us today. It's a pleasure to have you.

• 0:19Speaker 01

  It's great to be here. Thank you.

• 0:21Speaker 00

  So maybe we can start with you just giving a quick overview of Circle, what you do, how you approach the world, because I think we're going to be talking a lot about stablecoins, crypto, AI, and how all these things tie into sort of the agentic future. But I'd love to just start with sort of origins of the company, what you're all up to, and we can go from there.

• 0:36Speaker 01

  Yeah, for sure. So yeah, Circle's been around for a while. I co-founded the company over, yeah, 13 years ago or so, 2013. And really, at inception, I was really excited about this idea that we could create a protocol for dollars on the internet. And I had been really excited about what was happening with technologies like Bitcoin and had been, you know, working on the kind of internet infrastructure for a long time and got really excited, like, if we had like a protocol for dollars on the internet, that, you know, potentially, we could have a way to store and move value, you know, instantly, globally, frictionlessly, at no cost, ultimately. The other idea that we were really excited about back then was this idea of programmable

• 1:20Speaker 01

  money and the idea that eventually, these networks, blockchains, would become like operating systems and you could actually have machines that intermediate economic activity and financial activity on the internet, including like autonomous software machines. And back then, we didn't have generative AI or anything like that, but this sort of idea of kind of commoditizing the kind of payment utility layer with like very safe digital, dollar digital currencies, and then having like programmability of that with machines that are kind of tamper resistant, can run on the internet. That's what kind of drove the founding of the company. And the view was like, if we could do that, like, we could actually improve the financial

• 2:01Speaker 01

  system, make it safer, make it more accessible, make it more efficient, and kind of derive new utility from money that we haven't had before. And so that was sort of where-

• 2:10Speaker 00

  Why is the dollar aspect of that important? So if you look at a lot of the things that happened in cryptocurrency in the early days, it was really about creating things that were divorced from the traditional financial system if possible. Or we're not dollar centric. So for example, Bitcoin was in part a response to the great financial crisis.

• 2:25Speaker 01

  Yeah.

• 2:25Speaker 00

  And the view that all sorts of weird bailouts happened there and therefore we needed some alternative sort of financial infrastructure for the world.

• 2:31Speaker 01

  Yeah, so I think, so I actually, it's what's very interesting is like, I, I, you know, I believe in kind of Austrian economic thought. I was, you know, studying Austrian economic thought like in the early 1990s for a very long time. And so I've been interested in sound money theory. And actually, it was studying the, the kind of impact of the global financial crisis that, that drew me into this because my view is like, there has to be a way to build like a safer financial system. And the key issue there was, I was interested in this idea of full reserve money. And in some ways Bitcoin is full reserve money because you, you know, you kind of, there is no way to fractionally lend Bitcoin, per se.

• 3:12Speaker 00

  Full reserve money means currency that's backed by something hard behind it, some asset.

• 3:17Speaker 01

  Doesn't necessarily mean it's a hard, hard, hard back. Full reserve money is different than say fractional, full reserve banking, I should say, is different than fractional reserve banking. And so, you know, back in, in, there was another major economic collapse, which was the Great Depression, the run on all the banks and all that fun. And in the 1930s, there was a really big debate about like, what's the right construct for the banking system and the financial system. And there was a proposal from a group of economists called the Chicago Plan. And the kind of Ringler was a Chicago economist, actually, it might have been a Yale economist or Princeton at the time, but Irving Fisher, who wrote

• 3:56Speaker 01

  a book called 100% Money. And that idea was that full reserve money was essentially, you know, government obligation money. It's so it's still the obligation of the government, like the US government in that instance. But that essentially, you can have that and you can hold that, but you can't take that and then fractionally lend against it. So you have kind of a full reserve and you can only lend full reserve money. And so that was a big proposal for how to structure the, the way the financial system worked. And it was actually lobbied very, very hard. Against it by the banks and the banks really liked fractional reserve. They like to be able to have the inherent kind of leverage and risk taking.

• 4:38Speaker 01

  And instead convinced the government to establish, or they collectively with the government sanctioned, established a insurance company called the Federal Depository Insurance Company Corporation. And so that was a kind of corporate insurance model, but the risk taking still existed. And so we've continued to kind of face those issues. The great financial crisis was an example of 30x leverage, 12x leverage, 14x leverage against against these sort of base layer. And so my philosophy has been, well, right now, in terms of general utility, our existing economic system, like it does depend on really major reserve currencies like the dollar.

• 5:19Speaker 01

  And my view is like, that's going to continue for a while, maybe 30, 40, 50 years. It will continue for a while, but what we want to do is construct a system that is in fact safer. So a full reserve form of money, and that's what stable coins are. That's what dollar stable coins are. And in fact, with the Genius Act that passed last year, it's sort of codified in law. Like you can't do anything with this. It's like this very narrowly bound, narrow money kind of model. And so I think in some ways like that original vision, we've now got established in laws around the world. And now we have to do more with it. We have to make it extraordinarily useful. We need, you can, you can lend that form of money as well, but it's just that you can't do fractional reserve.

• 5:58Speaker 00

  So what, what, what are stable coins currently backed by? My understanding is, for example, they're, the stablecoin companies are big buyers of treasuries or US treasuries and other sort of instruments like that. Could you explain a bit more sort of what tends to back these things?

• 6:11Speaker 01

  Yeah, so up until really the last couple of years, you know, stable, the stable coins like USDC were, were, had to be always one for one redeemable against, you know, very safe liquid assets. And we couldn't take risk outside of what was permitted under the kind of payment system laws that regulated us. And so that was circled. There are other people who didn't take that approach. And, you know, but, you know, sort of fiat stable coins in this. We're back that way. Now, laws have now come into play in major jurisdictions, whether it's in Europe or Japan or the US, et cetera. And we've been following the whatever laws apply to us, you know, whenever they apply to us, obviously.

• 6:54Speaker 01

  But what that's really led to is an architecture, which is basically what's now federal law, which is really holding only short duration US government treasuries or treasury collateral that is overnight with like global banks. So that's, you know, very safe overnight treasury collateral for cash. And then, you know, some amount in cash that is for kind of immediate liquidity. But in that case, it's sort of holding it in these sort of big custodial institutions like Bank of New York that holds hundreds of thousands of dollars, et cetera, of assets. And so that is essentially the architecture of USDC.

• 7:35Speaker 01

  And we're very transparent. We have daily transparency on to most of it through a system we set up with BlackRock.

• 7:40Speaker 00

  But yeah. So USDC is like a crypto token that anybody can effectively purchase. And in exchange for $1, you'd get one USDC. And the USDC continues to be backed by a government treasury, like a short term T-bill or some cash or some.

• 7:56Speaker 01

  That's right. It's backed by treasuries, repos and short duration T-bills. The average duration tends to be of like the of the T-bills. And that portfolio tends to be around like 13 days. So it's super, super liquid and kind of it sort of allows it to be treated as like a cash instrument.

• 8:14Speaker 00

  What do people do with it? What are the main use cases of USDC?

• 8:17Speaker 01

  The the conception of this obviously is like a general protocol for dollars on the internet. And in fact, the whole design is this is like a general purpose, general architecture money. And we actually see it used, you know, from at the very smallest end, like someone who's paying, you know, 25 cents for a digital object in a digital game that's built on a blockchain. That would be like one end. Or even now, we're starting to see, and we'll come back to this topic, I'm sure, you know, AI agents that are paying for the output of essentially the AI tokens of another AI agent. And they're. You know, spending again, just, you know, a dollar, 50 cents, 20 cents, et cetera. So super tiny transactions that went in all the way to the largest electronic trading firms in the world

• 9:01Speaker 01

  that do huge amounts of capital markets activity, who are, you know, settling multi hundred million dollar transactions. And the powerful thing is it's all the same, just like, you know, if I send you an email, uh, you know, the, and my email's like, hey, this is what I had for breakfast. The payload of that is the same as if I sent you an email that had like a dossier attached to it, like USDC doesn't care. You know, so as a, as a general architecture, it can be used across a huge range of things. And we have everything from merchants in Stripe and Shopify that are using it to Visa actually using it themselves to actually move money on their own internal network instead of using the legacy banking system to lots and lots of kind of neo banks, remittance companies that are using it as a way to move value.

• 9:45Speaker 01

  You know, a great, uh, uh, kind of B to B, uh, fintech ramp just yesterday launched, you know, USDC as like core to their treasury system. You can use it to pay invoices, pay anywhere in the world.

• 9:55Speaker 00

  Some of the reasons people do this is number one, um, you can do it at any time. So for example, if I send a wire, I know a lot of crypto companies, for example, that when they raise money, they ask you to send USDC because instead of hitting a wiring deadline in the afternoon, you can wire the money on the weekend. You can send money anytime.

• 10:10Speaker 01

  It just works the way the internet works, right? I mean, our expectation is like, I can pick up, you know, my WhatsApp or I can pick up my WeChat and I can just communicate in video with anyone, anywhere. And it just works, right? And my expectation is like, hey, if I make a piece of software, like, and I put it on the internet, like billions of people can access it. I don't need to do something special. And, and, and I think that's, you know, basically this is just internet native and it runs on internet protocols. And so it behaves the way that any piece of data or content behaves on the internet, which is what our expectations are. You know, most people's expectations are.

• 10:41Speaker 00

  Yeah, I was just trying to enumerate a little bit of like, what makes it a superior instrument for all sorts of purposes? And one is 24 seven accessibility, two, maybe some form of transaction fees relative to the volume. And then three is, um, my sense is it's also a way for people to participate in US dollars who often would not have access directly. And so they use crypto as almost a proxy.

• 11:00Speaker 01

  Yeah, for sure. I mean, I think store of value is a really big thing and we see that. And in fact, like the law that was passed last year, the Genius Act, like a big motivation for the administration. And this is something that we've been proposing and kind of pushing for a long time is that this is a way to continue to export the dollar. And so we're now exporting digital dollars and we're doing that all around the world. And that's like strategically important to the United States and from a geopolitical, geo-economic perspective. But you know, there's other things too, which is, this comes from my own background as well, which is, these are, this is programmable money. There's never been programmable money. Like you actually have essentially like our stablecoin network is just a public API on the public internet that

• 11:45Speaker 01

  anyone can plug into and use. And so if I'm a developer and I want like global dollar settlement and I want to provide that as a capability to my users, I don't have to ask permission. I can just go connect to that smart contract, connect to that public API and boom, I have now an application with global digital dollar utility. And so that's really different.

• 12:06Speaker 00

  Yeah, and smart contracts is basically a way to write code that's wrapped around this money that allows you to effectively have a virtual contract online. So you can say, under XYZ conditions, pay this out, we're going to generate a financial instrument off of this. And it's just kind of based on this other layer that you can plug into effectively.

• 12:23Speaker 01

  Yeah, that is definitely the case. And I think like, you know, the idea of programmable money was like, again, this early idea that we had and smart contracts was sort of the original expression. But when I looked at that 13 years ago, my view was that blockchain networks are operating systems. They're going to be operating systems. And so when we think about operating systems, we have lots of paradigms for that. We have mobile operating systems, the web was itself kind of an operating system with a runtime and a language model and an object model. And you know, clouds became kind of like these big virtual operating system environments. AI foundation models are now essentially operating systems that execute tasks and other things. Blockchains are operating systems and they have compute engines, they have virtual machines,

• 13:07Speaker 01

  and you can write Turing complete code, you can write software. Software that runs on these, but there's some really key attributes that make them different. So the first is that the code is is sort of tamper resistant. It, once it's published, it's sort of like out as like a machine that's tamper resistant. The second is it's perfectly audible. You can audit every single input and output of that machine of that code in real.

• 13:29Speaker 00

  Cause it's all on a public blockchain, so anybody in the world can.

• 13:31Speaker 01

  That's right. So it's like all the compute is public accessible. It's open source by nature and and that's really powerful as well. And and, you know, it also has these sort of essentially kind of transaction and compute integrity assurances. And this is really key and it ties back to AI as well, which is like, you want assurances that the machine is doing what it said it's going to do. And you want kind of the inputs and outputs to be provable to and the state of the machine to be provable. And these are, these, these are things that it was not easy to do in the past. And so these, these network computers, these operating systems now provide for that. And as we're moving into the AI driven economic system, right?

• 14:16Speaker 01

  Having those mechanisms becomes even more important. It happened to be important for financial transactions where, you know, integrity, proof, audibility, verifiability are like intrinsic in a fiduciary apparatus. That was like really key, but now when we're dealing with, you know, kind of autonomous actions in the economy, that also becomes extremely.

• 14:37Speaker 00

  It would be great to talk about that because, you know, geez, probably seven, eight years ago, me and my friends used to speculate that the most likely place maybe the AGI would emerge, which again, I don't think is going to be the case in the future. Would be off of the blockchain because you had these effectively agents, very simple agents even running back then in some sense, in terms of doing transactions on the blockchain. And you had these economic games that were multi turn economic games to some extent that these actors could play. And so we said, isn't that a great place to basically evolve intelligence, right? Because you have these multi turn games, you have economic incentives, you have game theory, you learn all sorts of lessons off of that. Obviously there's a very different world now with sort of generative AI and foundation models. But I'd love to hear your view of where is, where are agentic payments going?

• 15:20Speaker 01

  Yeah.

• 15:20Speaker 00

  And is it gonna be crypto? Is it going to be more just traditional banking systems? Is it a hybrid? Like, what do you think are the drivers of that?

• 15:27Speaker 01

  I mean, there's a lot in there. There's a lot we could talk about. So maybe first, like, I think, you know, my own view is that, you know, we're going, we're going through a pretty steep kind of curve right now. We're like in, in the, you know, about three months into a pretty dramatic shift in kind of the fundamental capabilities of technology, probably the most dramatic that I've ever seen in my own time in, in technology. And I think, you know, that shift is, is effectively going to mean that a couple of things in my view. So the first is that more and more of the actual work that is

• 16:07Speaker 01

  done in the real economy, especially in, in, in, you know, kind of the, what we call the white collar economy, but, but in, in many, many areas of service and delivery and, and so on, like so much of that is going to be conducted by AI agents. And so AI agents conducting the work, AI agents collaborating with each other, AI agents, you know, consuming services from each other and, and kind of, you know, purchasing effectively specialized intelligence or output, et cetera. Like this is, we're on a really interesting curve there. And so the kind of agentic economy is being born as we speak. And in that world, we need a different infrastructure for the financial intermediation layer. Why?

• 16:51Speaker 01

  Well, we don't have an infrastructure that can support that. We don't have an infrastructure that can work globally, interoperably, instantly, that can be programmed through software layers by arbitrary pieces of software. That doesn't exist. We need an infrastructure where the agents themselves can dynamically create and spin up different kind of financial endpoints themselves. We need transactions that can scale potentially into the, you know, billions or trillions of transactions. We don't have that. We also need, we need the ability to kind of handle transactions at micro scale as well. So, you know, for example, consuming a certain amount of intelligence might be five cents or 10 cents as it is with these.

• 17:37Speaker 01

  So we need, we need that to work. We need that to work in real time. Again, between any piece of hardware, software, anywhere in the world.

• 17:42Speaker 00

  Isn't arguably all that, those stuff that people have been talking about for a long time in terms of just crypto, like the benefits of crypto.

• 17:47Speaker 01

  It hasn't really become possible until really just the last couple of years. So you, it really took kind of third generation blockchains to actually deliver on this. So now today, like, you know, you, you actually can look at like transaction volumes of USDC, which is by far the most transacted digital currency in the world, way more than anything else. And transaction volumes have grown incredibly and off of like a monetary base, it's also growing, but the transaction volumes are growing way faster. And that's because money velocity has picked up. The, the cost to transact is now sub sent reliably. And so when you take out the cost, you can do more transactions.

• 18:28Speaker 01

  And so with ARC, which we can come back to, we, we now have an infrastructure where we can conduct transactions for a millionth of a penny, which just was never feasible before. So.

• 18:38Speaker 00

  Yeah. Tell us more about ARC, because I know you folks are ruling this out as your own blockchain, etc. I would just love to learn more about what it is, what are the use cases, what the blockchain is.

• 18:46Speaker 01

  I would, I would love to talk about that. I want to finish one other thought on this sort of, the, the sort of agentic piece, which is, I think, in addition to this sort of like financial infrastructure that's needed in, in this world and, and the role that will play. And it ties back to your, your actual kind of question and stuff that you were thinking about before is,

• 19:06Speaker 01

  my own view is that, you know, agents and, and you're seeing what happened with OpenClaw and Moltbook and all this stuff is all really interesting, because it showed that you could actually see emergent forms of, of cooperation, of, of interaction, of, of, of engagement amongst AIs. And that's pretty powerful. And clearly like we're at the front edge of that, like there's going to be a lot more of that. And so if you have AI agents that are from around the world, they could be generated from lots of different models and LLMs and the like. And, and they need to kind of coordinate, they need a medium, a trust, a trust, a trustworthy medium where they can do that, where they can.

• 19:47Speaker 01

  instantiate an entity where they can store value in that entity. They can execute and arrange contracts that intermediate the work and the tasks. And that where all of it is real time mathematically and computationally provable. And so blockchain infrastructure now actually gives us the building blocks. For when I say agentic economic activity, most people think, oh, that's e-commerce or payment. It's not agentic economic activity is actually how does the organization of of what we used to talk, think of as labor and capital, but essentially like kind of how does this organization of kind of compute work happen and and what kinds of kind of corporate forms might emerge in that world to do that.

• 20:32Speaker 01

  And so I'm actually quite interested in that. That does tie to ARC because that's a design surface that we care about, which is basically. We describe ARC as an economic operating system. And this goes back to a comment I made earlier, which is these networks are operating systems. And we're we're moving now from the kind of like early adopter era, which you're very familiar with, which was mostly around like, you know, speculation on different things. There were some interesting things like NFTs or whatever, but like we're now moving very squarely because of stable coins into like the real economic activity side of this. And and I think my view is that.

• 21:12Speaker 01

  As we go forward, the the substance of what we think of as contracts, the substance of what we think of as corporations are going to be software machines themselves. And so we're we're going to see this progression. And so ARC as an economic operating system is conceived of as a compute environment for laying down all of the building blocks of economic activity, whether that's storing value, moving money or instantiating a corporate form or manifesting and intermediating complex contracts. Like a lot of this stuff, which was conceptual a long time ago, is now like real. And we have a legal basis for it. We have a regulatory clarity for it increasingly.

• 21:53Speaker 01

  And it's interesting is is that the drivers of this machine economy are actually machines. And so, you know, our our view is.

• 22:03Speaker 01

  You know, ARC is designed for this moment, which is a moment when machines are going to play a larger and larger role in all of the output of the economic system.

• 22:15Speaker 00

  So if I look at a lot of the blockchains that people have found exciting over the last few years, obviously, there's Bitcoin, which was almost purposefully designed in a certain way to make it a little bit less adaptable to all these new things that are happening now.

• 22:29Speaker 01

  Yeah.

• 22:29Speaker 00

  You know, Solana, Ethereum, et cetera, have been in the past, the traditional places that people have thought about ways to build smart contracts, to build a lot of the types of things you just described. What do you think is the difference between some of these more traditional L1s or blockchains and sort of what you're doing at ARC?

• 22:44Speaker 01

  Yeah, so a few big things. I think the first is that, you know, as I think you were sharing or we were talking about before we started recording, but like, you know, I think a lot of the designs on blockchains from, let's call it the early adopter phase, a lot of it was sort of like, hey, we're going to build something that is completely censorship resistant or outside of the reach of governments. It's sort of like, we're building an alternative universe. And that's like the goal. And I think decentralization is itself a good goal. But I think as we move from early adopter to sort of mainstream scaling, where, you know, whether it's a major company like Walmart

• 23:27Speaker 01

  or it's a household that's thinking about like how they store their wealth, the intermediaries, and there will continue to be intermediaries, we're not all going to be your own bank. The intermediaries have obligations in terms of the kind of like robustness of the infrastructure that they have to run. And so ARC is actually set up with a number of features. One is that it's actually a known validator set. And so the infrastructure operators of ARC are

• 23:58Speaker 01

  Major financial infrastructure companies. And so, and those are companies that are held to these very high standards for InfoSec compliance, reliability, availability. What are some examples of some of the validators on your network? So, we haven't announced the validators yet, but that will come in due course. But, you know, the, the, the model at a, at a high level is that you have financial companies, financial infrastructure companies, including possibly like large technology companies that are responsible for running the infrastructure. So, it's a distributed infrastructure, but because of that, we're able to provide assurances. We're able to provide assurances that like the bad guys aren't running your transactions.

• 24:42Speaker 01

  And we can also run assurances that transactions actually have settlement finality. Like, they can't be hard forked, they can't be reorged. And so, you can get what's called deterministic settlement finality. And that's really important, whether it's a security or a piece of cash or whatever it is, in, you know, in essentially hundreds of milliseconds. And that's really important. The, the other piece is that it's sort of designed with real money as the foundation. So, there's not like a volatile gas token. USDC is actually the default native token, which is now, under the law, essentially like a legal form of electronic money. So, you have real dollars as the way that people understand. And so, to a company that's like doing this, it's like, I pay AWS credits.

• 25:24Speaker 01

  I understand how to budget for that, my treasury, my operations, my compliance, et cetera. So, this allows basically for like actual usage to be, make sense, both to the user, to the developer, to the corporations, the FIs that, that deal with this. So, that's really important. And then, I think the other is like, we've been building in a lot of, of primitives that are important to like the way that payment systems work, the way that capital markets work, the way that, you know, the privacy requirements that are needed in some of these cases, but still allowing for like compliance to happen. So, we've kind of purpose built this for a different kind of set of participants who need to run on it.

• 26:05Speaker 01

  And we've had the advantage as Circle of working with many of the leading financial institutions that are getting into this space over the last couple of years, whether it's the visas or the Black Rocks or the Bank of New York Melons or all these types of companies. So, we've had, we've been able to work with them and we've been able to work with governments around the world to hear like, hey, Like central bankers all over the world, like what's important as you think about like allowing this internet infrastructure to run the financial system? And we're kind of trying to incorporate in a lot of the kind of requirements in the sense that they have. And so that's, that's very different. I think it's a different design space. And I think, um, you know, these new distributed network operating systems will, will need to support like the real economy's activity, not a kind of shadow economy.

• 26:50Speaker 01

  And so that's just substantively different. There are a lot of other technical things I could talk about which, um, that, that are part of it, but those are, I think, helpful just in terms of framing this.

• 27:00Speaker 00

  What else do you think is interesting that's happening in the crypto world today outside of stable coins and sort of related infrastructure? Cause I know that there was a whole wave of things that people were doing. Um, on the infrastructure side, there was ZK rollups, there's a variety of approaches over the last few years. Besides stable coins, is there anything that you think was especially interesting or that will be impactful or a lot of these things kind of infrastructure, looking for solutions? Or I'm sort of curious how you think about crypto at large right now?

• 27:24Speaker 01

  Yeah. I mean, look, I think, um, um, there's a lot of attention that has gone into kind of what I'll broadly call kind of scaling models. And so if you, if you take as your, as your kind of design center, that these are network computers and these network computers are really good at establishing, uh, record keeping that is kind of public and available to all and to perform computing on those records that's public and available to all. That's a, as a, as a general utility space, that's like super, super interesting. And so a lot of the, a lot of this has been like, okay, well, how do we make sure that that can scale? And so as an example, right? In a, in a world of like billions of AI agents that are swarming and doing other things,

• 28:08Speaker 01

  like scaling this is actually extremely important. So ZK, you know, rollups as an example, or zero knowledge proofs more broadly as a way for, um, proving compute, which allows you to do compute off, off chain and then prove it to the on chain. That's actually really important. So you, these sort of off chain or trusted execution environments and other things that provide cryptographic proofs of compute or, or, or, uh, other kind of. assertions becomes really key. So that actually, a lot of that research is now becoming extremely valuable. The same thing goes for a lot of that research and development is critical to enabling privacy. And so we want, you know, we want all the benefits of of kind of open interoperable

• 28:52Speaker 01

  kind of permissionless infrastructure, but we also want to be able to have privacy. Like corporations don't want everyone to see what they do, or we don't want to be doxed and like all this kind of stuff. And so the that's now coming into into real production. That was like researchy for a long time, like ARC day one is shipping with like built in privacy primitives, which is, which is again, the result of a lot of work for a long time. And so those are, those are important pieces. And then, you know, I think as kind of more large scale financial infrastructure comes over to this as we move, you know, where the New York Stock Exchange or the the biggest derivatives clearinghouses are like, yeah, we're going to move to an on chain world, like the scaling stuff becomes really, really critical.

• 29:37Speaker 01

  And so I actually feel like now more than ever, like those big work streams are are coming online. And, you know, if I use as a reference point, like, you know, I spent a long time building on the early internet and early 90s and the early web and like all this stuff all the way up until like 2001 for like, you know, for me, it was like 10 years and it was still, it was like awful still like it just like you kept grinding. And it was like, how do we make this useful? How do we make this useful? How do we make this useful? And then you had, you know, a whole bunch of things happened that were in the background, like, you know, wifi, broadband, you know, you finally got like usable other internet connected devices. And you could actually really start to do stuff. So you could actually actually deliver software over the internet.

• 30:22Speaker 01

  You could actually deliver media over the internet. You could actually do communications, like real time communications over the internet. But it was like 10 years in the desert or longer before you could even get there. And I kind of feel that way about the blockchain space, like it's been a dozen years or so. And and now we're kind of having like the broadband moment and the demands of society and the financial system, the agentic economy, all of that is sort of coming together at a really interesting time.

• 30:45Speaker 00

  I guess one thing that people have been talking about for a long time in the crypto world is securitization of other assets under the blockchain.

• 30:50Speaker 01

  Yeah.

• 30:50Speaker 00

  And so that would be stocks. So should you be able to buy fractions of Berkshire Hathaway?

• 30:55Speaker 01

  Yep.

• 30:56Speaker 00

  Using crypto.

• 30:57Speaker 01

  Yeah.

• 30:57Speaker 00

  And should that be globally available? Given the success of USDC and other stablecoins, that's made it even more interesting in terms of approvable model. When do you think that stuff will happen and what approach do you think will be taken? And how does that tie into the agentic world?

• 31:12Speaker 01

  It's totally happening. There's a great site, if people are interested, called rwa.xyz, Real World Assets is sort of what that refers to, rwa.xyz. I'm very proud because there are tokenized stocks that are out there and the most active tokenized stock today is not Tesla, it's not the S and P index, it's actually Circle. So that was cool to see.

• 31:35Speaker 00

  That's cool.

• 31:36Speaker 01

  We also have seen this growth in like tokenized money markets. So basically like on-chain treasury bills. We actually operate the largest tokenized treasury product called USYC, like US Yield Coin. That's grown quite fast as well. And we run the largest tokenized euro as well, E U R C. And so we're definitely like looking at this broadening out. I think there's a huge effort right now at every layer of the whole financial system stack to go into tokenization. So all the way down at the layer of like the people that keep the records of the stock, which is like, you know, if you're familiar, like the computer shares of the world, opportunities of the world,

• 32:17Speaker 01

  up to like the layers that like are the depository clearing systems, like the DTCC, which, you know, most people don't know, but it's actually like the backplane of how all securities work. Like they're moving to tokenize. And then the actual like brokers and exchanges want to take those and support those tokens and trading on those tokens and distribution of those tokens. So NASDAQ, New York Stock Exchange, all of them, they're all doing this as we speak. And as we speak, the SEC has been providing clear guidelines on how to do that. And so they actually issued guidance just about a month or so ago that basically said, here's what you do in all these layers, here's, you know, Here's your obligations. And so we're at a point where like technology and then the market's desire is creating that.

• 33:02Speaker 01

  And right now, the interesting thing about things like tokenized stocks is mostly it's interesting to enable people not in the US to access these. That's where a lot of the growth has happened because not everyone has access.

• 33:15Speaker 00

  It used to go the other way, right? There used to be Chinese stocks that were basically held in a third party instruments that you could purchase.

• 33:21Speaker 01

  Yeah.

• 33:22Speaker 00

  On stock exchanges, so you could participate in some of the Chinese listed.

• 33:24Speaker 01

  Right. Yeah, I know. There's, I mean, that's definitely some of the packagers of like ETFs and funds and stuff of kind of mirroring for sure. But, you know, I think like, this is similar to like, you know, when, when we went through like the web becoming available or broadband really hitting the scale. A lot of times people just think, oh, I have this existing product. I can now put it over here. Like, here's the TV show. I'm going to put the TV show over here. I think what becomes a lot more interesting, or here's the game. It's this game that used to be on a CD and now I can, you can download it or whatever. I think the really interesting thing is like, what can you do that you couldn't do before? What kind of utility gets unlocked?

• 34:04Speaker 01

  Whether it's fractionalization, or how you can, how you can borrow and lend on these things, or how you could package them together in different ways and enable. And AI could play a pretty significant role in that as well.

• 34:16Speaker 00

  Seems like it could really tie into some of the prediction market stuff as well that's been happening because to some extent, the world's biggest prediction markets are actually stock markets. And so, or financial markets, I should say, broadly.

• 34:26Speaker 01

  Yeah. And, and prediction markets themselves are becoming kind of, kind of parallel infrastructure for people who participate in stock markets, right? In fact, the biggest adopters, it seems, of the market makers of prediction markets are actually the people who are trying to figure out the, what is reality? And what does that mean for companies and equities and stuff and the interplay or whatnot? And, and yeah, I mean, we're, we're seeing that. I mean, USDC powers, polymarket, for example. And, and so the same guys that are, you know, trading derivatives over here on, on, you know, oil or Bitcoin over here are also like, I'm moving my money quickly using USDC over here to like, figure out what's going to happen in some event.

• 35:08Speaker 00

  Let's call. The one other thing that I think has been happening a little bit recently is there's been a couple of papers that have been focused on. Basically tying proof of work into just generic inference work.

• 35:18Speaker 01

  Yes.

• 35:18Speaker 00

  In other words, can you tie those two things so you're being very GPU efficient in terms of what you're doing, but also you can effectively generate incremental revenue through GPU usage while you're using it for inference or other purposes?

• 35:28Speaker 01

  I'm really interested in that. And I think, again, a little conversation we were having before we recorded, like, you know, proof of work, obviously, was itself an innovation and sort of essentially like the exhaust of the proof of work of Bitcoin is just like the exhaust of energy consumption. And so it doesn't actually, in some ways, it's waste, in a sense. The energy is waste. And so I think the idea of essentially like inference compute as GPU, inference compute as proof of work, and so the work itself is the inference.

• 36:08Speaker 01

  And that as the underlying basis for a proof of work cryptocurrency is pretty interesting. And would be, you know, potentially something that could align with the kind of monetary principles of something like Bitcoin. But actually be productive, productive proof of work. That's really interesting. And so, you know, I, my own view, and this is like, you know, I think goes back a long time is like, the, you know, people have kind of axiomatically sort of assumed like, well, Bitcoin is the, the, the, the thing. It got the network effects. It has all of this. And I've always said, like, I don't know what we're going to be using in 10 years. Like, we don't know. Now, Bitcoin has lasted a really long time.

• 36:52Speaker 01

  But I think like the paradigm shift that we're seeing in, in, in energy infrastructure, in the performance of, you know, the conversion of energy into intelligence and the compute layers and that, it certainly opens up a new avenue to think about this that wasn't readily available, you know, 15 years ago.

• 37:11Speaker 00

  So if you were to give one piece of advice to agents, it would not be buy Bitcoin?

• 37:18Speaker 01

  I'm just joking.

• 37:18Speaker 00

  I have a better question. So in terms of, say, we're to think out 10 years. What does that world look like in your mind? And obviously, we're going through a period of intense change.

• 37:28Speaker 01

  Yeah.

• 37:29Speaker 00

  I'm finding incredibly hard to predict the future right now in terms of just what's going to happen in AI, much less AI plus crypto, plus the global economic system, plus everything else. So given all that.

• 37:39Speaker 01

  Big bang theory.

• 37:40Speaker 00

  Yeah, exactly. What is your vision of the future?

• 37:43Speaker 01

  Yeah. Well, I mean, a couple of things I would say. The first is sort of the thing that everyone is debating right now is the pace of AI diffusion. Right? So what is the pace of AI diffusion? And what does that then imply in terms of the kind of amount of change that we're going to have to deal with? And so that's all debatable, right? You hear Dario debating that versus others and so on. But like, it definitely feels like, you know, the diffusion limiters are, in some cases bureaucratic, in some cases legal, in some cases, human risk or other things, right? But we have, we have these limiters that are there. But it does seem like the pace of diffusion is accelerating and will continue to accelerate. And, and that's pretty dramatic.

• 38:28Speaker 01

  And so I guess like my own view, it's very rooted in my own like political and economic philosophy, is, is that we have a real opportunity to create essentially new, new social, political and economic organizational structures. And in many ways, like, we have to. There's a kind of, you know, in these periods, whether it's the Enlightenment and the Industrial Revolution and other things, like, there's these periods where there's like a new definition of the social contract. And, and that new definition of the social contract is then in turn reflected in social,

• 39:09Speaker 01

  political and economic ordering and the mechanisms that we use for those things. And I, it feels like to me like. We're going to be forced through that. And I think that's simultaneously terrifying, exciting, et cetera. And I am of the view that we are going to have a lag effect between the disruption and the establishment of those new institutional forms. But at the same time, I actually believe like new institutional forms are going to be emergent out of this. And so, as I talked about earlier, like the formation of these kind of on-chain organizations that have different forms of governance and contracting and a mixture of human and agentic actors, like that seems like we're going to have a lot more of that.

• 39:54Speaker 01

  We're going to probably have huge proliferation of that. And it may be that those corporate forms are like the most productive corporate forms that we've ever seen in economic history. And then, you know, there'll need to be kind of like an overlay into the governance systems of, you know, political organizations and systems as well. And it, yeah, so my view is we're going to have simultaneously all around the world, a renegotiation of the social contract. And it's going to be, it is going to require new systems of participation in economics and governance that we haven't had.

• 40:38Speaker 01

  That's like very high level mumbo jumbo-y, but it's also, you know, sort of how I think about it at a high level.

• 40:43Speaker 00

  That's super interesting. Have you ever read a book called Lady of Mazes?

• 40:45Speaker 01

  No.

• 40:46Speaker 00

  It's like a sci-fi book from, I don't know, 15 years ago about the post-AGI world. And part of it is, as a big enough block or demographic emerges in human society, an overlay AI agent that's observing everything spawns a specific agent that represents that viewpoint that then is part of this sort of virtual senate.

• 41:03Speaker 01

  I see.

• 41:03Speaker 00

  Agents negotiating policies. So it's kind of this interesting view of how can you spontaneously spawn these sorts of systems from a governance perspective, which is kind of cool.

• 41:11Speaker 01

  I would love to do that.

• 41:12Speaker 00

  What is your prediction?

• 41:15Speaker 00

  And so if you look at a lot of prior ways of technology, their actual impact to GDP has been difficult to tease out, right? So the productivity gains of the internet versus actual GDP growth or things like that have been notorious. And there's all sorts of reasons for that. It could be measurement. It could be deflationary aspects of some of these things. There could be a variety of things. How do you think about the GDP impact of AI? So if you think ahead five years, and you know, what do you think the global economy is 10% bigger, 50% bigger, three times the size? Does that even matter as a metric anymore?

• 41:45Speaker 01

  Yeah, I mean, like, I see this debated all the time. And Kathy Woods talking about, you know, we're gonna have 10% GDP growth for the 2030s, et cetera. I don't quite know what to think. I mean, I think, you know, it's quite plausible that the, the kind of giant leaps that we see in kind of productive output in a huge range of industrial to other commercial services, et cetera, like, really drives a very significant discontinuous jump in GDP at an absolute level. It'll have, in many ways, probably less meaning than

• 42:30Speaker 01

  we've historically had with GDP. And, you know, the kind of economic well-being indexes that we think about, like GDP will be, you know, the risk here is that GDP effectively, like, the GDP growth is a sort of capital, capturing more capital at the expense of humans. Like, that's the real risk. And so, like, GDP growth generally has been like a really great thing. And so the question is, is like, will it remain a great thing? Do we have the new social contract to deal with that yet? But I guess my general view just sort of as a technologist, talking about, you know, seeing what we see with diffusion

• 43:11Speaker 01

  and kind of other, other changes, like, it does, it does feel like we have the potential for double-digit GDP numbers in the 2030s. Like, that's, that seems not unrealistic to me. Not that that's going to be uniform all around the world, but certainly in large, large parts of the world, that seems very achievable, based on what I see.

• 43:36Speaker 00

  Amazing. Thank you so much for joining us, Daniel Pryor. Super interesting conversation.

• 43:39Speaker 01

  Thank you.

• 43:43Speaker 02

  Find us on Twitter at NoPriorsPod. Subscribe to our YouTube channel if you want to see our faces. Follow the show on Apple Podcasts, Spotify, or wherever you listen. That way you get a new episode every week. And sign up for emails or find transcripts for every episode at no-priors.com.