Forget the FUD: Why Web3 is Bigger Than You Think w/ Keith Grossman & Raoul Pal

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0:43That's S-Q-U-A-R-E dot com slash G-O slash R-E-A-L-V-I-S-I-O-N. Hey there. This episode of Raoul's Adventures in Crypto is sponsored by the Token 2049 Blockchain Conference. Join over 10 ,000 attendees for this year's biggest crypto event at Token 2049 Singapore on the 13th and 14th of September. Balaji Srinivasan, Mike Novogratz, Arthur Hayes and over 200 others will hit the stage joining the industry's most influential names for an unforgettable experience ahead of the iconic Formula One Grand Prix race weekend. Singapore will transform into a crypto hub for a week from the 11th to the 17th of September with over 300 side events that make for unparalleled networking opportunities.

1:31Builders and investors at the bleeding edge of innovation will drive an agenda that covers ever-evolving topics ranging from the regulatory landscape to the convergence of crypto and AI, Web3 gaming, NFTs in the metaverse, DeFi, scalability interoperability and much much more visit t2049.co slash real vision that's t2049.co slash real vision for 65 off regular ticket prices with the code real vision or click on the link below in the description so i'm really looking forward to the next conversation and this is starting to bring together a lot of what we're seeing. And I'm bringing together my really good friend, Keith Grossman, I've not spoken to in a while.

2:19So this is our authentic catch up. And it's always going to be fun. And I want to ask Keith, is it game on? And let's see what he has to see because he has a very broad perspective at MoonPay because they're doing some really unique things. The world of crypto is an incredibly exciting journey that we're all going on together. We don't know where it's leading to, but we know it's going to be absolutely massive. Join me, Raoul Pal, as I guide you on our adventure to discover just what this new world will look like. Keith, how the devil are you? I'm good. How are you, my friend? It's fantastic because we haven't caught up.

2:56So this is actually just an official catch up of you and I because you've been up to us so much stuff. And I just want to hear all about it. What the hell have you been up to? because last time you were at time you know i've got my come up later my time nft with aku you pioneered that whole thing then you moved to moon pay tell us all has it been that long since we've caught up yeah well you and i've caught up but oh like like everyone on the news front it's been this long like wow okay i don't even know where to start here's a funny way of thinking about it is July 2nd was my six month anniversary at Winpeg, right?

3:39So it was very easy for me to frame that I've now been there officially six months. And it's been a lot of fun, right? Like on every level. But what I realized through this is a lot of the people in the Web3 space had not known me in what I would call the like build fittings of me, right? Like a lot of people were introduced to me after time pieces came out. Right. Like, um, so they didn't see sort of all the work that goes in before that. Um, they never knew me when I was at Bloomberg. They never knew me when I was, you know, at wired or ours. Um, and so like I go into what I would say is, is tunnel vision.

4:20Right. And it's, it's, it's amazing and awful depending on what side of the tunnel you're on and then what your perspective of that is. But here's a company that grew very fast and had incredible sort of momentum. And I come in, Asif Harajee comes in as the president from Coinbase. Lindsay Haswell comes in from blockchain.com and previously Uber as the chief legal officer. And Ivan had done a really great job of just making sure that he, I would say, rounded out the executive team, which also included him and Max and Zee Feroz, who was the chief strategy officer and also was the head of Coinbase International, the CEO of Coinbase International at one point.

5:12And we've just been sort of building towards what I would say is the mass adoption of these technologies. So we had Ivan on a while ago as well, but give us what, for people who aren't familiar with MoonPay, because it's not as consumer facing generally, but you do a huge amount of stuff. So let people know what MoonPay is up to and then what you're doing there as well. Sure. And where you're going. You know, MoonPay was originated as a payments widget, right? Like it should be very easy to be able to buy crypto, use your credit card and enter into the ecosystem, It solved a lot of the problems, the complexities that were up in the front.

5:53Over the course of four years, as it evolved, it really started to focus in on how can it be a payments sort of rail, but then also how can it be an infrastructure company, right? And how can we do everything for people from the payment solution to the minting and the on-ramping to the off-ramping to treasury management to the likes? And so as we started to think about the infrastructure play, what was really important was MoonPay had solved sort of the, I would say, horizontal convenience of entering into the ecosystem, with the exception of a few things. You had to assume that the company or brand wanted to enter into Web3.

6:43And then second, that they knew what they wanted to do in Web3. And so in January, when Moonpay acquired Nightshift, the agency out of Toronto, which we renamed to Other Life with them, that solved that part of the question, which was like, if you don't even understand how to enter into the space, but you know that there's something there, that there's something really interesting there, we can help you from end to end, from ideation strategy and front-end dev to all of the tech integration to enter into these types of solutions. and so what's what's your role there and why have you been on planes all the time i never get hold of you because i get whatsapps i'm in dubai i'm in tokyo you know like my my role is is to really focus on the business of moon pay right and you know there's different areas of the business of moon pay that rolled up roll up into me on one end you know all of the on-ramp business you know and the monetization there um on the other end it's the infrastructure right like how do we monetize and bring brands into web three um uh on another level it's concierge right so like how can we make sure that you know anytime that we can really think about strategically you know servicing our customers like i i think that's where i come into play so where when you're talking to people now what's the state of web three where where are you saying because i'm seeing a lot of Brands are really interested.

8:08You know, you know the guys in Science Magic Studios as well. People are interested, but most people aren't yet ready to pull the trigger, but they're definitely watching. How are you seeing the landscape right now? Sure. So like first, I love the guys over at Science Magic Studios. Like, and you know that, like, I'm just a gigantic fan of Tariq. Like, I think he is a tremendous leader over there. Um, you know, I would say my definition of Web3 is matured. When I first started thinking about Web3, my definition was crypto, blockchain technologies, you know, NFTs, like all of that stuff as one.

8:50As I think about Web3 today, I actually, I had to actually change my mental model of it when it was brought to my attention, right? Like what we're really seeing is the complete reinvention of the internet in front of us, right? And if you think about Web3 as really three things that are leading to that reinvention, I would say it's blockchain technology as the base layer, right? And like the rise of Web3 came with the blockchain technology being the sort of leading story. And I would actually posit that blockchain technology is the background, right? It's the invisible base layer. And I'll tell you what also changed my mind on this.

9:34In the middle, like if you were to think about it as like the hamburger meat, I would say is GPT and AI technology, right? In some instances, AI and GPT technology can exist invisibly behind the scenes. In some instances, it's very visible and consumer facing. And then 100 % within the sort of visible layer at the top end, the top part of the hamburger bun, I would say is immersive experiences, right? So that is AR, VR, and metaverses, right? And I think that if you think about Web3 as those three things in combination contributing to the holistic evolution of the internet, then I think that all of a sudden you start to realize like, wow, we're seeing something really big, right?

10:15Right. And what sparked my thought on that was the New York Times published this article and they have this picture and it was from Mid Journey. And it was these four kids, I think, you know, on it. And it said, can you is this picture real? Was something like the headline. And I tweeted and I said or they said, how how would you know if this picture was real? And in my mind, I said, well, you know, if you had an immutable source of truth, right, That you could literally show the authenticity of the picture. Then all of a sudden, AI and blockchain technology have a very complementary relationship to each other.

10:57And that started to really change my entire perspective of how I was even thinking about this evolution. And I think it has changed my perspective of how I've been engaging with clients and talking with clients. right? It's not a lot about what's the marketing play as much as what's the infrastructural play. And I think that if MoonPay is successful over the coming years, a few things happen. One is nobody says the term Web3 anymore, right? It just goes away like the same way. It just becomes the internet. Totally. Nobody calls it Amazon.com anymore or Salesforce.com. It's just Salesforce. It's Amazon.

11:35They're not.com companies. They're just companies. And then number two is MoonPay is an invisible layer, right? It's an invisible infrastructure layer. And if you know, you know, right? And that's really important to me. Yeah, it makes total sense. I've always thought somewhere similar, but you were very eloquent as how you put it together, is blockchain being the kind of infrastructure layer, AI is kind of the knowledge layer or what moves everything along. and then on top is the experience layer. I think I've been talking about this a lot. This identity layer, which is both human identification and content authentication, is like the most important single part of the infrastructure now we've got AI.

12:26I mean, you and I are watching every day on Twitter, these mid-journey models get better and better and better, and you're like, oh, my God. Well, I'll give you one. How about this? A very, very, very dear friend of mine today sent me, and he's CEO of another company, so we're talking very senior in his role, sent me a clip of a kid hitting a golf ball into a lightning storm, and the golf ball is struck by lightning. Wait, mid-air, okay? And they catch this. and my first reaction to it was, how do you know it's real? Right? Think about how messed up of a world we're in. That's my first reaction.

13:12How do you know if it's real? And his response was, it was published in USA Today. Okay, if you Google, you know, golf ball struck by lightning, USA Today, you'll see the article, you'll see the video, okay? And what I would argue is that if you think about the world that I came from, which was media, right? The value of brands, especially a brand like Time, historically, was the red border, right? Acting as a trusted filter. The value of USA Today, trusted filter. Value of New York Times, Wall Street Journal, Bloomberg, any of these brands, trusted filter, right? The onus on these brands will be, how do you take that trusted filter and add a truth layer And that truth layer is going to be whatever you can validate on a blockchain to show authenticity that you as that brand have done the onus of proving that this is real.

14:09And I think that that's where publishing goes. And I actually think in the weirdest, most positive spin of it, that is going to be the undoing of fake news. Because like there will probably be a checkmark or something that consumers will not care about going down and looking at the authenticity just the same way that nobody clicks on somebody's, you know, blue checkmark in Instagram to see that they buy it or did they earn it. But the checkmark does mean that it was validated somehow. Right. And I think that that trust and that truth factor is going to be really important over the coming years.

14:43So how do you provide a solution for that? Because a lot of it is quite difficult. It's okay with all the photographs and stuff like that. Probably with copy because it's relatively straightforward. So somebody can't fake up the New York Times because you can do that. The big problem is video. We haven't really solved that yet. No, I mean, look, these are all the challenges that we're going to find ourselves in over the coming years, right? And you either have to look at it and say - Well, the coming election is what I'm worried about. Oh, yeah. I mean, you saw the other day, there was that girl that was fully made up on Twitter, right?

15:20That made the comment about the affirmative action ruling, and it sparked outrage, and it turned out that it was total social manipulation on Twitter, right? She doesn't even exist as a human being, right? And so this is a crazy world that we're going to enter into. The one thing I would say about it is this. It feels like we're entering into this moment of time where things are coming out of our control and the world's being reinvented, right? I just spoke at my high school at their graduation ceremony, and my speech was about navigating uncertainty and change. and to write the speech i actually um uh went to chat gbt and i said to chat i look by the way great taste okay the i i coconut's my favorite but i chose my favorite as well the lemon's my least favorite i don't like the lemon one lemon and coconut are my two favorite coconut's my go-to right coconut hands down early in the morning late at night coconut the best by the way this can be this this has been sponsored by la croix coconut and lemon even though raul hates lemon okay actually back to the speech for a second i actually used chat gpt and i said to these students i said you know you think that this is such a unique moment in time but i'll give you a totally different perspective between 1879 and 1903 right between 1879 and 1903 the telephone the light bulb, the automobile, and the airplane were all invented.

16:55Okay. So picture this. If you were born in 1904, you entered into a world that was completely different than if you died in 1878. If you died in 1878, you literally missed out on everything that was about to happen. And if you were born in 1904, you don't even know the worlds that preceded you. And so we're in a moment that's very similar to that timeframe, right? Where the world is changing drastically and people don't know how to make sense of it. And so people's minds go into two totally different areas. And you have people make these comments that are so drastic about AI, right? Like Warren Buffett, someone who I have tremendous respect for, says, like a few weeks ago, he said, AI is the equivalent of the atom bomb, right?

17:41Think about that for a second. AI is - I think it's the same. I think it's the most powerful technology we've ever invented. Correct. However, let me ask you this question. When you say AI is the equivalent of the atom bomb, do you think clean nuclear energy or do you think explosion? I think clean nuclear energy. Okay. Do you see my point? Yes. The reality is that, and Kevin Kelly said this the best, and I'm really paraphrasing from my speech, but Kevin Kelly said this best is the future is defined by optimists, right? And so the people who see AI the way that you see it as clean nuclear energy, that's how I see it, recognize the opportunities it will present.

18:25The people who see it as an atomic bomb will never be able to see sort of the opportunities it will present, right? And so if the onus is on the optimists to be able to navigate us through this moment in time, um but you know it's scary and it should not be sort of dismissed that there's no technology that can be invented for good that can also be used for bad yeah i it's exactly that it's good and bad at the same time as everything is now all i know is you know my mental model for all of this this what i call the exponential age is there's nothing there's not a damn thing you can do to stop it it is going to happen so you might as well either invest in it or go along for the ride Because if you're going to fight it, you're going to drive yourself mad.

19:07If you're going to fight it, you're just as ridiculous as the person in 1904 that said, you know what, I'm going to skip the automobile because I'm going to stay with my horse, right? That's exactly what it is. Like, it's true. I don't know what else to say. Part of my thesis of the exponential age, which plays into your broader ideas, is like there's a lot of these technologies all coming together. AI, robotics, Internet of Things, genetic sciences, and all of these things, EV, everything. But something that I've talked about for a while that I feel that you will get involved in at some point in this journey is Internet of Things.

19:47Machines are going to talk to machines, and they're going to have to pay machines. So whether it's car streaming payments, that sort of thing. You're laughing because you're obviously thinking about this as well. Listen, I've been thinking about this since my time at Wired, and I left Wired in 2014. routine like i just i think it's the most fascinating thing in the world machines paying machines think about that what you said it's yeah but continue your thought because i i couldn't agree with you more yeah i just look at the simplest level for people to understand there's no reason cars don't stream payments for whatever it may be right so whether you're using localized is information networks, or you can receive payments by giving map images or information to something.

20:32There's a payment system that can come from almost anything that can stream directly from the car without the need of a human. Let me ask you this question, right? Like, here's a really interesting thing. Why does Google care about autonomous vehicles? Like, have we even like, has anyone ever even like been like, okay, why does Google of all people care about autonomous vehicles maybe it's because if the person doesn't have to drive it frees them up for more time where they're trapped in a vehicle that they could be served ads or information have you thought about that like like i would love for google to respond to that thought for a second of like am i wrong nobody's ever said i'm wrong when i've said this publicly before Well, look at every taxi.

21:17Right? They serve you ads. They trap you in the taxi and then serve you ads. There's actually no better mechanism for ad delivery than figuring out how to automate automobiles because the person is legitimately trapped. And that's true. Right? They cannot escape. And so it's like, guess what? We got you trapped. We're going to serve you some ads. Right? And we're going to monetize the time. And I think that that's a really important reality of how to think about sort of the world that we're in, which is how do we squeeze more efficiency out of everything? And when I do think about Web3, going back, you like how I could turn this full circle back to Web3 for a second, right?

21:58And you think about how it's evolving. You know, I think that the blockchain portion of it is evolving both in a visible manner and in an invisible manner. In the visible manner, it's a lot about membership, super fandom, rewards, loyalty, subscriptions. In the invisible manner, where it is the area that will actually impact TradFi and all of those other areas, it's really just an exercise in efficiency. right and that's why it's going to win right because like ultimately it will enable companies to extract more margin out of everything because it will reduce all of the intermediaries and so the only thing that's actually prohibiting its adoption today in my opinion is clear regulation policy and too much money vested interest you know standing in the way saying whoa i haven't figured out how to monetize this yet i need to make sure that uh that i don't lose everything that i have in the way yeah my thesis for a long time has been everything that gets digitized goes to zero in cost yeah i mean it's happened in everything right even the media industry i mean just everything everywhere so here's a question for you about media because you'll be able to try to throw that one one thing further so i say anything anything that can be digitized will and to take it one step further, anything that is digitized that can be tokenized will, is my argument on this.

23:24I think that it will go - Although blockchain itself solves digital scarcity, so some assets can retain value, right? Which is a really important concept that people haven't yet figured out. It's not just about monkey JPEGs. No. It's like in a digital world, in this digital future of the metaverse, you need some shit to hold its value because if not, nothing is worth anything. Yes, there's something eloquent about that statement. mean you need some shit to hold its value i'm sorry so sorry you were gonna go on the question in six months outside i know we have to get we have to get the real vision fans like something to laugh about right always now here's a question for you that i'm trying to think through which is what is the future of ads in an ai world and is there solutions in what people like Brave Browser did, which is attention tokens.

24:19How are you thinking through that future of ads idea? So I haven't thought about the future of ads a lot, to be honest, because it hasn't been in my mind the primary sort of solve that I've been looking for. What I will say, though, is before you get to what the future of ads are, you have to think about what's actually happening in the media ecosystem. And you have to realize what, I would say, blockchain technology offers media providers as a solution. One of the biggest issues that every media company and marketer is going to face over the next few years is going to be regulation and privacy, consumer privacy.

25:07right? And you see it with GDPR in Europe, CCPA in the States that's rising. You see Google has announced that they are going to be sunsetting third-party cookies. This is the basis on which the entire digital advertising ecosystem is sort of set. What blockchain technology actually provides, this is what I saw with timepieces, was the ability for privacy-compliant engagement with the consumer, where the consumer can engage with your brand. You as a brand can still gain a lot of information about that consumer, but you don't know that consumer's first-party identity outside of their wallet unless you give them some sort of value exchange where they opt for it.

25:50And so right now, if you think about it, the entire Web2 ecosystem is an extractive ecosystem. We will give you your identity in return for your data. Everyone is so thrilled about threads coming out this week, right? I went on to threads on Thursday, right? But like all of my identity is now, you know, more data in the Facebook database, right? And like people have to recognize like, look, like here's this brand and it has, you know, Facebook, it has WhatsApp, it has Instagram, and now it has threads. And I've never registered a Facebook account for myself personally, but I'm on WhatsApp, Instagram, and threads.

26:31It doesn't make a difference that I don't have a Facebook account. They know everything about me, right? And so the Web3 promise is like, how can you escape that sort of extractive surveillance sort of monetization that you have for a world that is better from a consumer privacy aspect? The problem with consumer privacy, I apologize for the long-winded soliloquy is people believe in it, but they're willing to sacrifice it if the trade-off is good enough, right? So the theory and the reality don't align. And so the reason I think that this time is different is because regulators are saying, no, no, no, we're going to actually enforce that you have to respect these privacy rules with these GDPRs and CCPAs you know uh legislations emerging i also think that maybe mark zuckerberg is not doing what everybody thinks and he's not really competing with elon what he's actually doing is training his own large language model because that's why elon i think bought ai and bought twitter which just to have the best training model has been closing down all the apis so nobody can use it so he's got the madness of humanity debating and discussing and talking about everything relevant on earth as his database so i think it's very hard to dismiss that as a reality or as a potential reality i am just so you know i am the furthest thing from a conspiracy theorist and the reason i am so far from a conspiracy theorist is um i like being that i've i've been in news organizations almost my entire career like i know that there are no journalists that sit in the back room and like debate on whether or not they're going to publish or not publish stories.

28:19They're going to go out and find great stories, and they're going to tell the stories, and they're going to do it independently. So I do not believe in conspiracies. I think that if something was happening, a great journalist somewhere will find it. To that extent, I would be hard-pressed to tell you that I have not thought the same thing. I mean, you're looking at a world where AI is going to be the most dominant form of technological change that we'll probably experience. And Zuckerberg's sitting on some of the largest data sets on the planet. Amazon's sitting on some of the largest data sets on the planet.

29:00Google's sitting on some of the largest data sets on the planet. Twitter's sitting on some of the largest data sets on the planet. And there's no way I could see a scenario where they let a newcomer startup displace them. No way. I just don't see it. It's terrifying, though, because we're giving so much power. You know, this fight, the Web3 fight that we're all having is to take some power away. And here they are in front of our eyes because they can outspend everybody and they have more eyeballs than everybody. And it's almost unstoppable unless open source does it. Right. Well, here's I mean, here's the way it's stoppable.

29:37but nobody wants to ever do it, is if you look at the history of Facebook and Google and all of these companies, all of which, by the way, I'm a fan of and I'm a critic of at the exact same time. So I don't fall on either end. I just am saying from a pure observation, they have all violated the law consistently. And then when they get hit with fines, What do they do? They pay the fines. And what are the fines? They're really just the costs of doing business. But when you're sitting on$20 billion of cash and your fine is$50 million or$100 million, like who cares? To be honest, right? Like they're like, just pay the fine.

30:21If they really wanted to curb some of these actions, they should make the fines$20 billion. Okay? Okay. Like literally make the fines, almost the entire cash that they're sitting on. The only company that could afford to pay a$20 billion fine is Apple at this point. Right. Like, so like, I'm okay with like, Apple has only done me good, to be honest. Like, like I'm okay with Apple. Like they come out with great products. It's beautiful. Like whatever. But, but kidding aside, like it's really the only company that could afford right now with all the cash it's sitting on to be able to sustain multiple significant billion dollar fines but as you said the governments don't want to cook the golden goose either because they like the fact like the banks they could just keep repeatedly finding them fill up their own coffers and everybody carries on slap on the wrist it kind of works for everybody right yeah it does but i guess like the thing i would ask is is what really is 50 million dollars or 100 million dollars to the U.S.

31:24government at the end of the day, right? Like it's sort of like me getting$5, right? Like the U.S. government getting$20 billion though, that's a great sort of windfall, right? And I think honestly, like that would be my preferable way of moving forward and cleaning some of the stuff up is, you know, stop with the adjusted inflation, adjusted fine base of like the 1920s, like literally like recognize, like this has to be like billions of dollars of fines, people will wake up. So let's move back into the world of Web3 and the kind of NFT token space. What's, what are you seeing that you're enjoying?

32:10Something that's making you look at, you know, there's a, there's a shit show going on in NFTs as well with the blurring token incentives, plus general bear market. What's your kind of overall thesis? What are you looking at? What's interesting to you sure so i i mean i have to say that like when when you say nfts right um like when you look at the world that blur plays in or open c plays in or or others playing like that's the collectibles and art market right yeah and i would say that like when you get into the art market it's even differentiated right because like the art market is its own little it's really bifurcated the high-end market's gone like that it's it's it's its own little ecosystem but so is collectibles Right.