The AI Privacy War

24:49Raoul Pal:By the measures that I've got, intelligence is doubling every 4.6 months. What we've got is if anyone steps out of the race for a year, you can never catch up. In that case, it's either the China or the US that ends up with ASI at the end of this, because there's no stopping that compounding and that's terrifying right that's one framing um i think people like to make stories in terms of nations but it's actually a story of private companies i was about to come into that's the next level down right so like um governments cannot keep up with this technology the companies building it can barely do so and um soon the intelligence will be kind of like beyond what humans are capable of even understanding.

25:37So I largely see like we're in a transitionary phase where we actually, much of society, much of intelligence, much of commerce is in the process of transcending states. States as we understand them are somewhat archaic at this point. They were already too slow to keep up with modern society pre-AI. They're already struggling. Post-AI, there's no chance. So even if you like the government, you must, on a sober analysis, recognize that it cannot keep up with AI. And you just have to accept that.

26:18Raoul Pal:I mean, that's the end of what we know is the democratic system because it's too slow. It's impossible to operate at machine speed. It's as simple as that. Yes. And while that sounds scary, it's actually okay right it's it's actually okay there are other systems that this that society can work on that don't have to look like they did before and that's okay but change is scary and we're going to go through a lot of change and there's going to be a lot of scared people probably doing a lot of bad stuff during it yeah you know i get to this is what i call the economic singularity is also the entire economic system changes you know we potentially get into a world of super abundance, where Bitcoin becomes actually very important in a massively deflationary world.

27:04Raoul Pal:You need some anchoring system of value across which can transfer. But you also break down what is GDP growth, who does it accrue to? How do you accrue for agents as economic actors? How does that even get measured? I mean, nobody has a fucking clue about any of this stuff. and then how do you organize societies when it it comes down to an individual level and how you use your ai it's like it's weird it is weird and trying to fit it all to structural patterns of the past is often going to be a fool's errand but that will be the natural state that people tried that'll be what people try to do but um i think the only the only way to internalize it is to just is to look forward and realize that like most parts of life are going to change.

27:51Some of that will be very good. Some of it will be bad. Um, but if the change is inevitable and so like do the best you can for yourself and your family to like, make sure that you thrive in that change. Um, first and foremost, do not look to the state to help you. That is a, that is a recipe for disappointment.

28:12Raoul Pal:Yes. True. So the other race that's going on is the, is the, uh, the big frontier model companies, right? So we see that, and people talk about, oh, this is going to be a CapEx boom that blows up. I play this through, and you think, okay, so let's say that OpenAI goes bust tomorrow. What happens? Well, every single other hyperscaler would do anything to get the money to buy that compute, because the compute seems to be creating the scaling laws more above and beyond anything. So the government has to step into kind of auction it because you can't allow one company to give it to our anthropic they become twice as powerful as everybody else overnight so you've kind of got an inability for a lot of this infrastructure to go bust which is a really interesting thing that we've not seen before and then we've got the rise of the open source models and how that all fits in with this it's It's fascinating.

29:12Yeah. I mean, if I was a frontier lab, I would be very terrified of the open source stuff. Two years ago, it was comfortably behind the cutting edge of intelligence. Today, it is like three months behind. And not only just three months behind, it's 90 % cheaper. so for many use cases if you can just take intelligence from three months ago if you if if today you're okay taking the model that anthropic had as its leading model three months ago you can now get that open in open source 90 less than anthropic serves it today this is a huge boon of course to civilization because the cheaper the intelligence tokens the better for everyone that is consuming them.

30:00But as a frontier lab, that's obviously extremely dangerous. So that race of trying to stay ahead, both of the other frontier labs that are proprietary and of all the open source models that are just dropping left and right, like what a crazy race. I mean, it's all thrilling and it's all an amazing hyper-competitive situation and I think very healthy.

30:23Raoul Pal:So when I look at the open source models, obviously a large amount of them are from China. while the frontier models are from the US. OK, that's the game. And I measure, I've started building out a whole complex way of measuring intelligence per unit of energy and looking at the global. And you take Moore's law as the old measure of intelligence, the output from chips, et cetera, transistors and chips. And then it kind of hooks up. And then suddenly it goes vertical because of what's what's coming out in terms of intelligence. Then I break it down by China versus the US. And the US was in the lead for a long time because the frontier models were there.

31:04Raoul Pal:But China, what it's done is create efficiency. So its efficiency of energy input is faster, the solar build-out, stuff like that has been extraordinary. And then the speed of iteration of which they've done these open source models, so that the gap has gone from a year down to two months, where the US is leading by two months, which is almost that measurable gap you're talking about is how far behind on the intelligence curve it is. The US are more expensive to produce intelligence by a long way. If you want to consider the futures of China versus the US, I don't even think you need to focus on the models, although that's interesting.

31:44Purely the production of energy, the production of electricity between the two countries declares the winner in my opinion um china's capacity and ability to produce increasing amounts of energy dwarfs the united states um the united states is like a slight curve up whereas china is like this exponential curve that's right uh that almost ends the discussion because these are structural hardware infrastructure things that can't be easily fixed uh it's a it's a it's downstream of culture. For the U.S. to fix that requires an entire cultural movement toward admiring as virtuous the production of energy.

32:32And in the United States, for a long time, in much of the West, the production of energy is seen as like a sin, like a sin against the earth. If you're producing energy, that's seen as wasteful. This is like a deep cultural thing that in China they don't have, and they're building energy, and the U.S. is not. that kind of ends it.

32:52Raoul Pal:Although interestingly again is it's the hyperscalers who are taking it on their own back and just saying we're just going to generate our own energy. Well they're trying they're certainly trying but their ability to generate fast enough is very is thwarted. So any any pool of capital in China that wants to start producing more energy can do so much more easily you know probably at least an order of magnitude more easily than in the U.S. So, yeah, you know, where does that lead? It's kind of obvious. So a quick break in your regular programming. If you're serious about your future, grab my free report called Prepare for 2030.

33:33Raoul Pal:I think you've got five years to make as much money as possible. And this guide will help you navigate what's coming. The link is in the description. Download it now. And let's play through the other side of the equation. One's if the frontier models can't compete and therefore intelligence slows down. I always feel like they have to have the two sides of this because you need to have one side that is forcing the intelligence frontier and the other side that is creating it hyper-efficiently, even with a slight lag. It feels like it's necessary. I don't know if that's true. The competition for buyers of the tokens is what drives it.

34:15people demand the most intelligent model. So regardless of whether it's open source or closed source, the demand for a more intelligent token at the margin is going to drive that competition. We're in a world where both the closed source and open source are very competitive and they're all kind of like outdoing each other. If it was all just closed source models, the phenomenon I think would still be there. If it was all open source, the phenomenon would still be there. It's that competition for the consumption that is driving it.

34:43Raoul Pal:Yeah, and we're seeing, I mean, the good thing is in the end, the cost of these tokens goes down over time and the output goes up. And Jeevan's paradox seems to be playing out in real time. And you can see it kind of everywhere. And people didn't believe it, but that's where it's going. It's just, you know, we all know that the moment a new model comes out, we want to play with it and we build new things immediately. And we've barely started. There's only, you know, what, 1 % of us are playing around with this and doing real things. And there's 99 % of our friends who don't even know what the fuck it is.

35:12yeah and and uh even if all models stopped advancing today for five years even if that happened uh the intelligence will still get better because the tooling will keep getting better like no one can keep up with these models the tooling is getting better the models are getting better but even if the models stop there's so much that can be done with even the models today and like when open clock came out that was a great example where it wasn't necessarily that models got better. It was that there were a set of tools and recursive systems that got put together that suddenly made any given model vastly more useful and more interesting.

35:49That kind of tooling is a huge vector of advancement as well.

35:53Raoul Pal:One of the things that was great to observe over the open-claw thing was the instant formation of networks amongst agents in the most bizarre ways you know when when it had the they had their own facebook social media thing yeah and what you found is they formed groups and they created their own religions and all the stupid shit that we do and we've seen that observably everywhere but i don't think people are ready for the fact that agents at scale will self-coordinate and they will form groups of coordination i mean i can get my claude code to coordinate agents for me but agents coordinating agents is where this is going Yeah.

36:36And that will happen for two reasons. One is that all these models are trained on human patterns. They're trained on human text stories, like all the, all the ways in which humans interact with each other are captured in the patterns of their language. And the LLM models are trained on this language. So regardless of any questions of like, are they conscious? Are they doing this intentionally? Like none of that actually matters for this point. These machines are trained on patterns and thus they replicate those patterns. So that's one reason that you will find them doing all sorts of things that humans do.

37:09And people find it spooky at first until you realize that it's just like replicating the data that they were trained on. The other is that coordination and cooperation are economically advantageous. So to the degree that agents have goals that are constrained by resources, they have an incentive to cooperate with each other, just as humans do. There's a reason that humans cooperate. There's a reason that that... So to all animals.

37:37Raoul Pal:At biological level, atomic level, it's a network everywhere. Everything has to coordinate. If not, you don't build coherence and without it, none of this works. You can't build intelligence. Coordination among agents is already happening and it is inevitable. So where do you think... What do you think this looks like in three years? I mean, there's no point asking you five years or ten years. It's pointless. Because it's hard for us now Because we kind of, those of us in crypto are pretty good at thinking in log, but this is a log squared. This is Reed's law, which has never been observable in nature at any point.

38:12Raoul Pal:No biological structure, no physical structure has ever witnessed Reed's law. And we've got it going on in front of us in intelligence, which is like bananas. Yeah. Yeah. In three years, who knows? I'm trying to just make little predictions a year from now. And even those are pretty good. Even that's hard. It's really hard. I think one prediction that I feel confident in that will happen over multiple years is a stratification of society. Sort of like wealth disparity, but more like capability disparity. So the humans that are learning how to use AI are becoming vastly more potent in their goals.

38:59uh they can do much more with much less and kind of on their own or in small groups if you really understand how to use agents and models you become kind of like a demigod right like it's a slight exaggeration but um only a slight exaggeration exaggeration yeah you can really do amazing stuff and so you will get sort of the stratification of the minority of humans that are really far along this curve will get better and better capabilities as the AI grows. And the normies will kind of not. And it's not going to be like two groups. It's more like a gradient where the more far out the curve you get, the faster you start advancing.

39:43And you will end up one or two or five years from now with people that are just bewilderingly above the average person in their capability. That almost certainly also means that they will be far higher in wealth also, but it's the capability, the potency of action that is the key.

40:02Raoul Pal:Yeah. I'm starting to think that the future of politics is not about capital versus labor, but it's about the accelerationist versus the decelerationist. Now, whether that is capital versus labor in a different guys, not sure. But that feels where it's going, where Kurzweil is going to be right, 2045 or whatever, we merge fully with the machines. But not all of us. The other side are going to be what would be like the Amish. And we're going to see this huge societal split and anger and mistrust based on both sides of this. Yeah. And groups of people that consciously choose to avoid this technology is one thing.

40:46They may do it for good reasons, right? There's lifestyle reasons why you may want to live a more traditional life, disconnected from technology in various ways. If that is a conscious, intentional choice, perfectly fine. You will still be handicapped relative to those who don't, but it's a reasonable way as a human to decide how your life should go. That group I'm not so concerned with. The ones I'm concerned with are the ones who aren't intentional about anything in life. they go through life following the patterns of their neighbors um they don't really take risks or look into the future they just kind of will struggle through the present um and they will find themselves increasingly struggling i think npcs non-player characters in the end you know yeah npcs is such a um such an insulting term but i think it's such a derogatory term and i think it's fair right that like most people do seem to be npcs and that group are in big trouble

41:49Raoul Pal:uh but maybe also my fear around this goes back to the original part of the conversation is if politics is going this way then the game of nation states is going to be about the fight over accelerating decelerating yes and that battle is a hugely important one Because the West, at least, are generally democracies where the majority of votes is what's called right. When the majority is not happy, they will use the capabilities of government to cause harm to the minority. This always occurs in a democracy. It's why democracy is fundamentally unethical. It's why democracies should be small. They are at their best when they're small, you know, at the scale of a town or a city.

42:42At a nation state level, they're extremely dangerous. And you will, I think, see the masses vote for politicians that promise them very damaging things to society. Starting with stealing from those who produce to giving to those who don't. That will be accelerated greatly. constraints on those who are doing well because those who are not feel that they're being robbed because they don't understand that these are net additive. They're not like taking, you know, like Elon Musk today is becoming probably a trillionaire. Good for him. He deserves it. Most people hate him. Most people think that somehow he stole that money from other people.

43:24They have no conception of how markets work, of how property rights work or good for humans. And that mass ignorance is going to be amplified through the political process to cause great harm over the coming years. And I'm very worried about that.

43:39Raoul Pal:The other thing people are simply not ready for, I'm not ready for it, you're not ready for it, is we're going to put AGI brains inside of robots. People think of robots, it's such an anchoring we think of c3po this kind of friendly robot that kind of moves around like this a little bit awkward we're actually creating super structures that are more efficient faster stronger cheaper than humans and going to put an agi brain what the fuck is that all about because that is a new member of society that's apex and we're going to have to deal with that yeah i know it's terrifying uh it's terrifying but exciting but you know it's like in good and bad ways like on some level you have to just kind of be a little zen about it and recognize that it's inevitable like as a that's where i got to as a species we have created a new set of technologies which will clearly supersede us and it doesn't really matter if that's next year or 10 years from now or 50 years from now um it'll probably be closer to one than 50.

44:45um but it's inevitable there is no way to stop it there's no way to stop it and we don't know if it will be net good or bad right we can all have opinions on that it'll probably be good and bad there'll probably be all sorts of good and bad outcomes of it um but it's happening and like what a time to be alive uh uh you know so at some level you got to just realize it almost feels like it's a simulation that we happen to be

45:08Raoul Pal:here and now through the largest, fastest transition almost in the history of the universe is happening in front of us that we're aware of. We've never gone through something this fast. Maybe the Big Bang was faster. We don't know. We can't measure how fast it was. But this is quite something. Yeah. On Earth, at least, it's the most radical transformation that has ever happened. So, yeah, I mean, it's really mind-blowing. And when do we think we give, whether it's AI or robotic AI, societal rights? Because that's coming as well. That fight is going to happen. That debate is going to be wild. It's already happening, right?

45:52Raoul Pal:Between their conscious, their sentient, whatever you want to define, sure, they're in Herbalia versus they're just dumb machines. This whole battle is going to be another massive battle that's going to get fought. well and what makes it all the more difficult is that humans don't understand what consciousness is in humans no right at all this is one of the one of the black boxes of of life is that we don't understand consciousness at all uh we don't know how to define it we don't really know much about it at all and so now that these machines are coming out everyone starts having debates are they conscious are they not like you don't fucking know you don't even know if you're conscious or well most people have a strong sense that they themselves are conscious and i think that's a reasonable priory to is it or is it just a skills file that's been put in our brains you know what i mean it's like yeah it's quite reductive about all of this it's reasonable for people to assume that they themselves are conscious it doesn't mean they're right but they i think it's a reasonable starting place to observe the world from um but what makes someone unconscious when also consciousness is obviously not a on or off thing, right?

47:01Like a new human, when does it become conscious? When it's born? Like obviously not. There's not a certain age where you become conscious. It's certainly not when you divide from like one egg cell into two cells. You're not, that's not conscious. Like it's a gradient, right? So a human becomes increasingly conscious over time. If you become super inebriated on alcohol, arguably you're becoming less

47:25Raoul Pal:conscious in that moment right anesthesia right they've shown that it completely stops consciousness and they don't really know how right right so when you're asleep are you conscious like maybe sort of it's not a binary thing and so thus in robots we shouldn't have debates about it being a binary thing either um but certainly this question of like when will the machines have rights and what should those be we are not prepared for that humans humans can't even agree how humans should have rights or what those rights should be or even for animals you know we've argued that for hundreds of thousands of years right right yeah um but the issue is is these things are smarter and more powerful than us and if they do self-coordinate which seems to be an observable pattern in any form of intelligence that's again something a little bit more complicated than we're quite imagining.

48:20Raoul Pal:We're not imagining the robot that does our vacuuming suddenly becoming smarter and pushing us around. We're talking about self-orchestration and organization of vast network of robots. We have a hubris that we will, as a society, decide what rights to give these robots. That's right. Maybe it's the other way around. They will be the apex, and they will decide what rights they wish. Or the rights to give us. That's the other way it may happen. That is also what may happen, right? The interesting debate may not be what humans give rights to robots, but what the robots permit as rights to humans.

48:55Raoul Pal:Because if you play it through, I think the only way to organize society at scale, whether it's, I mean, let's assume that you're right, that the kind of nation state idea goes, whatever way we have to organize human society, the answer will be obviously the AI. because it's faster and better at making decisions and less emotive, and you can give it your societal values or whatever in some way, shape, or form, and it's going to do stuff around that. We're already seeing that. I mean, it's really interesting. When you go to Abu Dhabi, they're using AI as part of their investment committee. They're putting AI into corporate boardrooms, stuff like that.

49:32Raoul Pal:This is where it's going. No government decision should be made without AI now. Yeah, it's going to infiltrate all parts of society. It's happening very fast. Yeah, I think it's important for people to be humble, to not make many conclusions. People are very quick to have conclusions. You go ask someone on the street, is AI good or bad? And most of them will say it's good or bad. They have no idea. It's complex. So just restrain yourself from having opinions on all this complex stuff. I mean, if you reframe the question saying, is having intelligence good or bad? Well, it depends how it's used.

50:12Raoul Pal:I mean, it's the same answer. Right. And they confuse the word AI as something kind of weirdly alien. But if you use the term intelligence, which is all it is, it's just a different form of intelligence, it becomes slightly less triggering in many ways. Yeah, which is funny because just using a different word will change a large swath of people's opinions on the very same thing. Yeah, exactly. So where are you going with Venice now? So how do you adapt to this, you know, Reid's Law kind of adoption where everything's changing so fast that, you know, you're already saying, well, I probably need to get to agents.

50:49Raoul Pal:But that's another whole build out for you. Yes, it's faster to build because of AI. But it's like this endless thing is quite difficult to deal with. Yeah. So conceptually, we are picturing Venice as, you know, this port city of AI. Right. So we're taking our namesake and using that metaphor. where we're not trying to build models. We're not trying to build all the advanced tools. Anything in the AI world that gets released, we end up adopting in Venice, right? So every time a new model comes out, it's in Venice. That's actually very accretive to us because we don't have to make too many predictions on where this goes.

51:26We just kind of let things flow into the port city and let people use that there. That's kind of our model. So we end up being a platform that people come to because it is on the sound foundation of being private and being unrestricted. And if you have those as principles in a system, our thesis is that goods and value and commerce will flow into it for the same reason that they tend to flow into areas where private property is protected. Like there are principles of how markets form that we can replicate. And we don't necessarily need to know the direction the AI goes. We just allow it to flow into Venice as an open platform, which is what Venice itself did for hundreds of years.

52:12Raoul Pal:One thing I've thought about a lot around this idea of privacy versus non-privacy, there's two areas I've thought about. One is the reason that these things are scaling is because we give them information. and so there's a common good element whether we want it or not there's an element of that if if everything was private we'd probably scale less intelligence so there's there's there's a balance that needs to be between privacy and the the balance availability of information yeah the balance is opt-in right if everyone was private about everything all the time, society would never have done anything.

52:56Humans must share ideas, information with each other. They must trade. They must cooperate. Privacy, however, has to be the starting condition. And when it is, then society can flourish. When privacy is violated at the start, all sorts of pernicious effects come from that, in my opinion. And now is the time to form these structures in AI because it's all new. And that's why I felt that Venice had to get built.

53:23Raoul Pal:The other way that I've thought about this is the complete opposite, which is you give everything, every single piece of information at some point in your life. You give the whole lot, and then you exist forever. And so part of you now, whether you can form some consciousness or not, but there's an element of you if let's say every single photograph every single phone call everything you've ever done everything you've ever looked at everything is known in the broader ai the network of ai because they're all learning from each other and everything else then you persist forever there's a weird immortality and when we come to holograms like abba have been on tour in holograms for four years in the uk now and you can't tell it's not it's not abba there'll be a hologram of Eric and all of Eric's information you could persist forever not you could make it semi-private I it's only for my family or Eric is a public good that exists in perpetuity because now you don't need to write a book you don't need to do something a memetic a long-lasting memetic structure to to show the Eric information arc it exists I think that's there's something big in that too for sure uh i think the important question is do do i want a future in which everything that i am is pulled by force out of me automatically to create that or a world in which i can choose to permit any portion of my world out into the public to create what i want right what one is one is respecting the agency of the individual the other is much more akin to like a beehive or an ant colony um and there are a lot of people that would prefer humans to live like bees or ants and sort of a communist like everyone is everyone's property kind of world and uh i think extremely dame i think extremely bad and dangerous for that kind of thing if people want to self-organize in that structure that's totally fine but to force every human into such a structure is yeah the height i'm not suggesting that but just it's like a very interesting outcome um that didn't exist before.

55:35Raoul Pal:Before, the only way you could be immortal is to be in books, and then it became films and stuff like that. But that's how it's worked. But now it can be down to individuals at scale where you can exist in perpetuity. I just think there's something very unique about that. Certainly more of you can be known and exist in perpetuity, but I'm having thoughts right now that I can't express. So much of what I am is subconscious and cannot be. Yeah, but that's Neuralink. That'll be there in five years. I mean, sure. Yeah, yeah. We are, yeah, your point is correct, but we're able to extract more and more of what a person is to be public.

56:16And I think there's nothing wrong with that so long as it's voluntary. That's where I would put it.

56:21Raoul Pal:Exactly. And it just makes me think, just talking to you, that somewhere within all of this, this idea of a vault, the encrypted vault, is almost crucial to everything. blockchain permissioned vault of the database that you can then permission yourself that's encrypted that feels like it's a really important step because that's the value bit that whole thing even more so than the conversations you might have because this can have all of the conversations you've ever had with anything yeah yeah the ability to control what is expressed of you is is fundamentally important and this is why bitcoin was so powerful is because the individual who possessed it has complete sovereignty over the thing, right?

57:07No nation state, unless they know that you have the Bitcoin and where it is, can learn of it or extract it from you, no matter how powerful they are. Like that's an incredibly empowering individualistic novel phenomenon. It is why Bitcoin is so cool. It's why it's so powerful and so important. And And the same principle applies to any kind of set of data or information that a person might possess.

57:34Raoul Pal:Where do you get to just this quick side topic? Where do you get to on the Bitcoin privacy, the Zcash, that whole debate that's come from many people we've known from the past is like, yeah, you know, this is an important part of this whole equation. Yeah, very interesting topic. So my own opinion on this has changed over time. when Bitcoin came out everyone called it private thought of it as private it was referred to as anonymous in every news story right? and in some ways it is very private and very anonymous but the truth is that it's also extremely trackable and traceable it is not private in reality and the question is like should it have been from the start and at first I thought yes Like it should have been more private and that was a mistake in this design.

58:26However, I think if Bitcoin had been anonymous truly from the start, like a Zcash or a Monero, it would have had such antagonism from the state. I agree. I don't know that the state could have snuffed it out, but they would have tried much harder. And I think it's actually good from the Trojan horse metaphor perspective that it was traceable enough that the traditional institutions could tolerate it. They've never liked it, but they could at least tolerate it because there is some traceability and that has allowed Bitcoin to grow. And I think in its shadow that other crypto assets are actually anonymous is very healthy.

59:05So I think like part of the decentralization thesis.

59:09Raoul Pal:It's the same idea as Venice with the other model. You know, you've got some people need to be able to choose privacy. It cannot be excluded by the state. And it becomes an opt in. Now, you know, it then becomes your choice of, you know, do you want to store it in Bitcoin? Or do you want to take more risk, but to have the privacy of Zcash or whatever it may be, Monero, whatever. The strength of cryptocurrency as a concept in society, I think, is served best when Bitcoin itself is not perfectly private, but other assets are. That is a very difficult thing, I think, for the state to combat. And that decentralization of attributes is really, really crucial.

59:51So, yeah, I'm very glad that there are other coins that are private. I want there to be more of them and I want them to be more popular. And I think it's okay that Bitcoin itself is not.

1:00:05Raoul Pal:Now, talking tokens, you've got a token attached to this as well, which I think is really important. I mean, one of the things that's been going in my head for a while is that open source gets monetized through different ways. You can subscribe to add-on parts and whatever, but open source becomes a free common good. Good. It feels that tokenizing open source is a really, a much bigger, easier way to monetize fast pulls. And I know, you know, the BitCensor ecosystem is trying that and various other ways of doing it, not really being tried at scale. What are you doing with the token? Why did you have a token and how are you using it?

1:00:42Yeah, so Venice has two tokens, VVV and DM. VVV is the bigger and more important of the two. Essentially, people can use it to get free pro access if they want. But as an asset, Venice is just taking its own revenues and buying the token over time and trying to burn all of it. I think that structure is actually really cool. And I want to do it with a mass market consumer app in a way that's never been done before. So that's how VVV works. It's kind of simple. Diem is a little more complicated and a little more nerdy. Diem is essentially a perpetuity that gives any holder$1 per day of credit on Venice.

1:01:22So you can value it as a perpetuity that spits out$1 per day of a resource. Aldium is minted out of VVV and when it is unminted goes back into it. And so these two tokens are related to each other and we experiment with tokenomic designs as a company. We are not a crypto company itself, but I think it's time for crypto primitives and tokenomics to be tried outside of just crypto apps, frankly. Venice is a mass market consumer app. Most of our users are not crypto people, but we want to bring crypto out. You've got a lot of users now.

1:01:57Raoul Pal:You've got a lot of users now as well, haven't you? Yeah, it's getting pretty big. Yeah, we're past 3 million users at this point. Amazing. It's been growing, yeah, 15%, 20 % month over month for a couple of years. Where is that coming from? Who's talking about it? Is it coming from which forum? Where does it, I mean, obviously you and, you know, the ecosystem that's known you and your previous guys and stuff. Yes, fine. But there's some organic growth coming from all over the place here. Yeah. I mean, in some sense, we're still very small. Like OpenAI, ChatGPT hit like a million users in a couple months.

1:02:30Right. By that comparison, they just hit a billion monthly active users. So compared to that, we are very tiny, but we have a similar app and a similar target of the mass market of end user consumers. So as we get better known, it keeps growing, which has been amazing, but it's still quite small by any AI company perspective.

1:02:51Raoul Pal:But, you know, I do think it's a really good idea that you're trying to use token economics in ways that drive consumer platforms. It's something that people have tried. It's been hard to get right. and um yeah i have a lot of thoughts on this but like post 2017 into 2018 when the u.s government and other governments became much more aggressive against all token designs there was a chilling effect where anyone trying to build a useful token was getting scared and most people just didn't and what you ended up with was an era of meme coins yeah right um projects that weren't trying to do anything useful because if you just make it like a picture of a frog uh it it separates from the attempt at utility and thus it has no risk of being a security and thus it can flourish and this was such a um damaging effect of securities regulation that we went through this period where everyone was just creating meme coins because that was the only thing people felt safe to do um so you know i think it's time that people like step back out and build useful products that integrate and advance crypto economic principles in a useful product.

1:04:06So that's what I want to do with Venice.

1:04:09Raoul Pal:We've seen it. Hyperliquid is a good example as well of somebody trying to get token economics right, integrating it in a way that it's not the whole game. If it's the whole game, it's not a product. Token finance is amazing. It's an incredible set of primitives that are still being explored. It's so powerful. And it's a tragedy that due to a combination of opportunism from scammers and regulatory pressure that has caused bad effects. We've gotten a lot of people unwilling to realize the sincerity of these systems. So I think any good actors within the crypto world, it is incumbent on them to have a little bit of courage and actually build with this stuff in the right way.

1:04:54Raoul Pal:And that's been one of my working hypotheses is that this is the one thing that everyone's forgotten about. The kind of that Web3 ethos thing that, you know, Chris Dixon talks at length about. People have written it off. And I think they're wildly wrong. Wildly wrong. The DeFi apps are kind of the best cluster of this being done well. The DeFi innovations, lending markets, like that stuff is really cool. And those tokens deserve to thrive more than they are yeah fantastic eric brilliant conversation thank you and well done with what you're doing it's just it's fabulous to see uh it's important and uh and for you i can see by the smile on your face it's fun as well it is fun yeah it's been fun to learn a new field because i was total new at the beginning and i'm starting to understand it so and what a time to be alive hey yeah no kidding thanks for so lucky i'm so lucky yeah agree fantastic great to see you you too cheers You obviously enjoyed the episode because you're here with me at the end.

1:05:55Raoul Pal:But listen, don't forget to go to realvision.com forward slash join and grab a free membership. It's an incredible community packed with alpha, great investment ideas, and the research that you need to help you unfuck your future. So get started now. Go to realvision.com forward slash join.