Chris Dixon

23:30No gatekeepers. You might think, well, isn't that going to be chaos and crime? And the reality is, obviously, there have been bad websites in history, but first of all, laws govern it. If you put up an illegal website, you get in trouble. And then secondly, this sort of decentralized group of, you know, the email clients, the registrars, the website hosters, like they all in a kind of a collective manner take down the bad stuff. And like the world hasn't ended. Had you just, you know, proposed it in 1990 and sort of realize how important it was, a lot of people might have freaked out and said you need someone who's in center controlling it, like the way that people are debating around AI today, people are saying, oh, you need someone to control it.

24:12that what if it gets, you can't let the people have it. Well, you need a gatekeeper because otherwise it'll be abused. It turns out that it, I mean, they were bad things, but they were mostly removed. And for the most part, I think people would say that the internet had a positive impact on society. So it worked remarkably well, economically, societally. And then this is kind of my core argument. In the 2000s, a couple of things happened. A good thing about that, the good thing was that the internet got a lot more powerful. And so we were talking earlier about how limited the internet was. It became more powerful.

24:46First of all, we had broadband, mobile, the infrastructure got much better. But then also a wave of entrepreneurs said, hey, the internet so far is very kind of passive, you consume information. What if we designed a new set of internet services that were much more two way? You could not only democratize information consumption, but also information publishing. This was known as the Web Two Movement, that also known as the Read Write Movement, which is, again, the title of the book. I was an entrepreneur then, and part of that movement. It was very exciting, because it was after the Internet crash, Broadband was starting, and there were a whole bunch of entrepreneurs who said, you know, so far the internet, we've just kind of taken brochures and cattle hogs and put them on the internet, but really this is a new medium.

25:30I have this distinction I talk about called Schumorfig versus Native. And so what this concept is, is that whenever, and this is sort of barring from like Marshall McCluwen and people like this. But the idea is that whenever a new medium comes around, people often start off kind of borrowing from a prior medium. And then over time, explore and understand kind of what is truly unique to that new medium. So early films were like, if you watch them, they're kind of like plays. And they hadn't discovered yet the close up and the establishing shot, right? And then over time, you sort of develop this grammar or film and it becomes its own unique medium.

26:05early electricity was just a better way to make candles, you know, had light bulbs, and then it took about 40 or 50 years before you said, hey, let's standardize the plug socket and let a bunch of entrepreneurs come up with new ideas of like toasters and washing machines and that became kind of native. And so in a similar way, in the 2000s, people said, look, this is this new software -based network. Like, why are we just going and passively reading brochures? Couldn't you do all this other stuff? And specifically, can't you You kind of allowed the user to participate as a first -class citizen and publish.

26:38And that was the beginning of blogging first, the beginning of blogging. And then I think of blogging as kind of the primordial soup. If you look at early blogging, I was part of it. There was kind of like, there was what was called link blogging, which was like one sentence, which is now like Twitter. And then there was photo blogging, which is like Instagram. Like there's photo blogging, there was long -form blogging, there was link blogging, there was what was called tumble blogging, which became Tumblr. There were like five different genres of blogs and each of them ended up leading to a service that became very big Right because that was all kind of you know the sort of primordial soup from which it all developed

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28:43What would be a typical link blog? I did this too. It's just like you'd surf the web and then you'd see something cool and then it was almost like Twitter except you'd be hosting on a blog and you'd see you go to my website and I would just say, like, look at this cool surfing website link. Like, and it was the whole point was it was just short. It was just very short blogging. And it was just a genre. It was just like a fun thing to do. And then you'd have an RSS reader. An RSS reader would let you aggregate all of the blogs that you follow. And so you would just be scrolling through and then you'd see someone wrote a five pages, someone wrote a paragraph, someone else had six links.

29:16They found that day. And it was just sort of the serendip, but this thing you went through and it was fun because it was just other people instead of only going to professionally made websites, right? And again, there was no gatekeeper in that scenario. No gatekeeper. RSS is still around. It's a protocol network. In the 2000s, at one point, and I was part of this, I used to blog about this a lot. I was sort of a big supporter of RSS. RSS, I think of it up until 2008, was actually a genuine rival to the corporate alternatives, like Twitter and Facebook. It was sort of the open versus the closed, and it was a real horse race.

29:47And if you look at the data, they were actually kind of close. And there was a moment in which social networking, like fast, like in this alternative history, social networking developed as an open protocol with no gatekeepers, you say. But then for a variety of reasons, which I outlined in the book, it ended up losing out. It still exists in some podcasting things, but it's very, very niche. If you walked down the street and asked somebody, how do you consume social media, very few people say our assess anymore. Tell me why it lost out. It's interesting. It lost out and this is kind of leads into blockchains.

30:18I kind of summarized it as two things features and funding. So when you went to features, so what I mean by that is in 2000, let's say 7 or 8, if I wanted to create a blog, I had to do a couple things. I had to go register domain name. That cost $8. You have to go to whatever go daddy, right? You have to go fiddle with some dials to set, you know, so to speak, to set up a website, you had to then set up your RSS reader, and then you go to Twitter and Facebook and it's one click. You type I'm Cdixson, boom, one click, right? So look, the protocol, like email in the web, they developed in the 80s.

30:53There was no, it was a bunch of academics and tinkers and like, there was no Twitter, you know, kind of corporate alternative. And so people were like willing to jump through some hoops. Protocol networks asked you to jump through some hoops. That was fine in the 80s and maybe the early 90s. By the 2000s, you had these alternatives and they made it much, much easier. Number one, number two is funding. So the example I use in the book is YouTube. And this is something I see in my daily life, which is essentially the way you build these services is through heavy subsidization. So in the case of YouTube as an example, YouTube was started in 2005.

31:27At the time, it was sort of one of the genre of new video sites that was social video. There were a whole bunch of, that there was explosion of video startups then because broadband internet hit a certain level of penetration and entrepreneurs are smart. They figured that out. A bunch of people were going in licensing CBS content. YouTube took this more bottoms up sort of peer -to -peer approach if anyone could upload something. But their main feature was actually that they would subsidize the web hosting cost. It was very expensive in 2005. So if I wanted to have a video on my website, it was very expensive and time consuming.

31:59And so what YouTube started off doing was that I could go upload a video to YouTube and then I could embed it on my website. That was actually the original feature of YouTube. It was not to go to YouTube .com. It was to use it to embed, and they would pay for the hosting costs. And how did they pay for it? They raised venture capital. The venture capitalists gave them money because they calculated that if they can kind of get a bunch of people to start using YouTube, that eventually, instead of going to my website, they'd just go to YouTube .com. And eventually, who would be this big place where you'd have this giant inventory of videos and this big audiences, and they were right, by the way.

32:32That was what the, obviously Google bought them in 2006. Basically, the calculation was, let's subsidize this cool feature because the prize at the end is this very big economic prize if we control kind of global video, which they kind of do it. So it was a smart economic calculation. And so there was a thing called Media RSS at the time that was an open protocol that was intending to compete with YouTube, but they didn't have any subsidization. You had to pay for your own hosting. You had to get a domain name. me a fiddle with that. I was just wasn't competitive product. Sadly, I was part of that RSS movement.

33:07I used R, you know, I blogged for years. I was a supporter of these things. And it just, and then when mobile phones came along, it really kind of accelerated the different, you know, because the corporate ones were very, they had these slick mobile apps and, and then just adoption. If you just look at the number of people with computers, like it went from 500 million to 5 billion over that, you know, from 2008 to, you know, sort of the next 10 years. So RSS was actually widely supported until about 2012 and 2012 is when Twitter removed it, Facebook removed it, Google shut down their RSS reader and it just kind of became this hardcore nerd thing and then since then more and more consolidation around these five to ten companies and sadly the only protocols that still exist that have any scale that people care about or email in the web, although even those I think are under attack, you know, that shares is declining of time spent.

33:56You probably still go to a browser sometimes, but the percentage of time people spend online is more and more within TikTok and Twitter and these things. And actually the services got more aggressive about not letting you link out. And like they see it as kind of leakage in their system and they want to kind of keep you there. And so for a bunch of reasons, I worry that we're fairly soon going to just, they're still going to exist, but that they're, that sort of the relevance is going to be steadily declining. It was something I just learned recently that Instagram in some parts of the world it's mainly used as a communication device I for an interesting.

34:29Yeah, I don't know the exact data on it but email has definitely been in it's still used in corporate context But young people it's texting what's app Instagram DM like it's in severe decline So after the corporate version next comes blockchain. Yeah, so yeah, so sort of the summary in the 2000s, right? is I think we made this kind of faustian bargain. On the one hand, like let me just say to good sides, so I don't sound too negative, which is the good side is, we now have five billion people using smartphones. They have access to a lot of free services. Thanks to open source software and free services, you can buy a $10 Android phone and get on the internet and participate.

35:06And so I think generally the internet has been a very positive thing. I think that along the way in that process kind of shifted over to using networks that do have gatekeepers that are controlled by in a very centralized way by these companies. And that has had, I believe, has increasingly kind of negative effects. You know, if you think of a social network as a two -sided network meaning they're sort of consumers and creators, the main effect is on the creators, right? So, and I also think of the software developers because of my world, I work with them. It's sort of there on the kind of creator side, right?

35:38So the sort of so -called supply side has been mostly negatively affected. So if you go to, why does someone go to TikTok? They don't go to TikTok to see TikTok's content. They go to see the people on TikTok. Yet those people on TikTok are not making any money. TikTok is making many billions of dollars through advertising and other things. Those people are not getting paid. They get, sometimes they have these diminimous creator programs, but they're literally sub one percent of revenue. They're not material. And so what you have, and I, you may have friends like this. I have friends like this.

36:04You have to go and basically do all of these gymnastics to make money. to go and, you know, a sponsorship or sell body spray or do, like, this is what people do. YouTube, by the way, is the exception. They do a revenue share. Every other social network doesn't. They take all the money. In both cases, you don't own your audience. You don't own your audience. They can, they can remove you and that's the most prominent thing, which is called de -platforming, right, which we've seen happen, especially in the pre -eal on Musk Twitter era, where, you know, activists, this political figures were removed from the platform.

36:38That's very politically charged, obviously. There's also something that's much subtle they're called shadow banning, which we know happened. It does happen on all these networks, which is you're still on there, you're still using it, but your tweets don't show up or they don't show up as much. I think a much more nuanced version of that is there's dials essentially inside of these companies and they can just turn the dial and they can say I want less that person and more that person, right? Why would the gatekeepers care about this? Yeah, like when the book mostly I talk about economics. So there's a political dimension potentially, like I think with Twitter, pre -Elon Musk, there was maybe a political motive.

37:12And some of these tech companies have political motivation. So there's that. But I think it's primarily economic. And so let me explain. So like TikTok started all, you know, kind of blew up four or five years ago, relatively recently that it got, it's been around for 10 years, but it got really popular a few years ago. And it got popular with a few creators who had like hundreds of millions of followers. Social networks don't like that. They don't want to be dependent on five people. They want to have thousands of people with a million followers, not five people with a hundred million followers.

37:40And so you hear this again and again from the people that build audiences on YouTube and TikTok. They turn the dials. They turn the dials so that they have a more diversity of people that they depend on. Because if they get too big, Mr. Beast gets too big, he Joe Rogan gets too big, he cuts the deal with Spotify. He leaves YouTube. Number one, number two, how do these networks make money? When you go to a feed, there's two types of posts in the feed. There's what's called organic and promoted. Organic is just not paid for and promoted is paid for. When you go to search, by the way, same thing, right?

38:12You search and there's ads. Those are promoted, sponsored, and then there's the free links, right? So all of these tech companies are basically predicated on the idea that they have... You go read the Wall Street reports. They have to grow revenue year over year. You can't be a tech company and not grow revenue. But the problem is, you say, company like Google or Facebook, is they've kind of saturated the world. I mean, they can still grow somewhat, but they've got many billions of users. So how do they grow revenue? They grow revenue by shifting the mix of promoted and organic. And so if you notice this, like Google, for example, on your mobile phone, most of the times you search, you'll get almost all ads or Google products on the first page.

38:50Amazon, you'll see more and more of the page they just taken up a sponsored links, right? Same thing in all of these services. And so this is not, by the way, this is all kind of a pure capitalist. They're just maximizing profits. They're doing what smart businesses do. And by the way, a lot of them use AI and other things. So this is probably happening by machines doing it and things. But the machine saying, how do we optimize profit? Okay, this person got to a million followers. Now let's, you know, turn down the dial. And if they wanna keep growing, they're gonna have to pay for it. They're gonna have to pay for sponsored links, right?

39:17If we go to something to get clear information and what we're getting back is promoted information and sometimes we don't know which is which. It's really confusing. I agree. I mean, I think particularly like Google has become a mess. There's not really any choice there's being. There's not actually any other real, there's duck .go, but that's actually being. There's not really choices. It's a lot of their own properties. So like, Yelp used to be the top link. We've searched for a restaurant. It used to be the top link and they demoted them. They put the Google restaurants there. This got so bad that the CEO of Yelp was in front of Congress saying, hey, this is not fair, unfair competition.

39:54And then search for travel right now. I don't, I'm able to, I don't think you'll get a single actual organic link. It'll be all paid for. Look, I, when I use these things, I'm always like immediately scroll down to the organic stuff. But most people, I don't know if they know that. And they probably get bad results. And by the way, even the organic, I mean, this is, you know, the organic things too are highly skewed these days too. And I think it's severely diminished the utility of these services. I mean Google started off, remember very famously, with no ads on the page, they eventually added one link at the top and it was very clear, it was a big blue border.

40:27Don't be evil. That was their motto. And they were referring to other internet services that had too many ads and were deceptive. And that was kind of their whole thing. It was like, we're going to keep it clean and simple and not do that. And I think it's severely degraded the quality of the internet. Even the organic rate is messed up because of this huge industry that's about around gaming, it's called SEO. And it's like how can you optimize to get up there. And then there's other consequences like there. I mean, this is also getting to AI. It's like, well, how do if you're a content site, how do you make money?

41:00Well, you make money. Google doesn't pay you. They take snippets. When you have like a news site, you say Google, it's okay if you index me and you use my content. and just send me some traffic back. But then they'll do stuff like they'll do this and call one boxing where they'll actually, like if they do Wikipedia, they take the content and just show it and they'll maybe they'll put a link down here but it doesn't get clicked on. And so then you have this whole other problem which is people are giving their content and they're not getting clicks back. And so that's what that's doing is it's just kind of anyone who's not one of those five companies who's just trying to run a website is in freefall from a business point of view, which is why outside of maybe the top five newspapers, the rest of the media industry is going bankrupt, essentially, as an example.

41:44We haven't talked to AI, I think, well, if you're an illustrator, before a genitive AI, you could put your illustrations online and maybe show up in a search engine and then get some clicks and then maybe put some ads or have a subscription. In this new world, people are just going to get the image. They're not going to click through. So there's a whole other wave of this coming. I think it's created all of these downstream negative incentives that It's not only sort of a degrading, the search results, the social network experience, but also all the things downstream that depend on those things.

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43:55We haven't got to blockchain yet. Okay, so we need to talk about blockchain. So the origin of blockchain is a 2008 white paper by a pseudonymous character named in Toshinogamoto about Bitcoin. And the word blockchain actually didn't occur in that paper, but he talked about blocks and chains. And since then, it's become a term people use to describe a computer system that in this design. Bitcoin was designed to be a payment system that had no gatekeeper. A payment system, sort of going back to where time I protocol networks that are democratically owned and controlled, Bitcoin was designed to be a financial system where there was no gatekeeper, no boss, no one in charge, just the community, right?

44:39That was the idea, and that's what the paper talks about. Bitcoin is its own interesting thing, and it's evolved, and it's got its community, and it's kind of its own thing. But what happened in 2015 is that a group of people said, what if we took that same architecture? And instead of just focusing on a financial system, we made it a general purpose computer. So think about, like, kind of analogize it to like a Blackberry pre -iPhone. You had a Blackberry, it was a computer that did like kind of one thing basically, which like email, but then Apple came along and had an app store and said anyone can write an app for it.

45:10And so you can kind of think of Ethereum as saying let's have, it's not literally an app store, but it's like that. Like, anyone can write software for this blockchain. And then since then people have, Ethereum has evolved and people have created kind of variants on Ethereum and other, what I would call programmable blockchains. And then people build applications on top. And that's when I kind of post -theherium got really excited about it and said this is really interesting because to me it looked a lot like a computing movement. And so we have a history of computing movement, so computers sort of invented in the 30s and 40s and then you had mainframe computers and many computers and PCs and the internet and mobile phones and AI.

45:49And in each of these cases you had these programmable devices or systems. And in each case you had sort of the early computers that came out like the early PC. And then you had a bunch of enthusiasts come along and make stuff for it. And then at some point, some of the stuff they made got really popular and it sort of grew as like a hockey stick. And so when I saw Ethereum, you know, to me, I was, Bitcoin was interesting and I was into it. But then I saw Ethereum and I'm like, wow, this is really interesting because it's an open canvas. You can design, it's software, you can build anything on it.

46:20I refer to blockchains as computers in the sense that you write software for, they store information, they operate on that information. That's what a computer is sort of defined by its functional properties. but it's not a physical computer. Ethereum is not a physical device. It's a virtual computer that exists on a network of other computers. So the Ethereum today has, there's something like 20 ,000, 30 ,000 kind of what are called validators that are kind of computers that run. And when you submit code to it, it's actually submitted to those 30 ,000. And those 30 ,000 every, you know, so often, like every minute come together and say, this is the state of this computer.

46:57And then they run code. and then they functionally it behaves like a computer, but it's kind of this computer in the sky that's owned by nobody and accessible to anyone. Right? How similar is that to Bitcoin? That architecture is very similar. That's what a blockchain is a computer that kind of runs on top of these networks of devices. And the difference is that blockchain has one application that it runs, which is the Bitcoin application, which is this application that says you can have a Bitcoin, there's only going to be 21 million Bitcoins, you can't double spend. It's like a set of rules, financial rules, that underlie the Bitcoin system.

47:31But that's the only kind of application. It's like a computer, we have one app. Okay, Ethereum is a computer, where you can upload any app. You can write anything you want. My understanding of the benefit of Bitcoin is because of that 21 number, it creates a limit, you can't print money. Yeah, like Bitcoin is, the fans of Bitcoin tend to be kind of people who are concerned about inflation. they tend to be kind of fans of Austrian economics, Milton Friedman, Hayek, that kind of thing. And they see the main benefit is you can't tamper with the supply. And I think that's interesting and can talk about that.

48:10Ethereum has a different idea, which is sort of like Bitcoin's interested in money. Bitcoin is for people that have views on money. Ethereum is more tech. Okay, so it has less of an opinion on money. And there is a token that's called Ether that it's uses, But it uses it more as a kind of fuel for the computer. So whenever you want to run software on the Ethereum computer, you have to pay for it with Ether. It's like a time share system because it has limited resources. So you pay for it. And you pay for it with a token. And then it uses that payment you made to pay the hosting providers who run the code.

48:45And so it has this little micro economy. And so when you buy Ether, you're not making sort of statement about inflation or economics. It's more, you're saying I think this computer might get more popular and more people will want to enter this economy. So it's very different in that sense, right? So I think it gets lumped into it and that's partly because if you don't dig into the details, you just sort of see this, hey, this is thing, it has a price, and it must be like this, but it's actually quite different. Like Bitcoin is this sort of monetary thing. The people involved in it are much more political as an example.

49:18The people in Ethereum tend to be more sort of, they're interested in the tech. The people in the theory are more like, probably like me, like, concerned about the internet and big tech. The people in Bitcoin are concerned about big government. Maybe that's a way to put it. So there's different reasons one might, you know, blockchain world is very broad and there's also, you name it, there's some weird community that has a blockchain as into. Okay, so it's a much more complex, it's sort of like the internet or something, right? There's websites that do this and this and there's just different genres and movements and the same thing is true here.

49:46And so, you know, a natural question you'd ask is why you go through all this trouble? You know, why not just use a regular computer? I like to say blockchains are computers that can make commitments. So, Bitcoin, it commits, there will only ever be 21 million Bitcoins. And it commits that in the core code of the system. You can't change that. Like, you would need all of the people that run the software that probably I think there's at least 100 ,000 of these miners like to all kind of collude basically. We've actually technically 51%. You need more than half to collude to change that number. And actually with Bitcoin, you'd need not just the 100 ,000, you need all the different, what are called wallet providers, you need coin base, you'd need like this vast array of people to collude.

50:27So it's just not going to happen. And it's never happened. And in the 15 years it's been around, nothing has like that has happened. And so it's probably about as strong assurance as you're going to get in the world that there's this 21 million limit. And so it makes a set of commitments, and those happen to be financial commitments. With Ethereum, you can make other kinds of commitments. You can make a commitment that, like, for example, you can build a social network on Ethereum, and you can say, I commit to the following rules. If you're a creator, I chart, you know, and you make money, you get to keep the money.

50:59If you build an audience, you get to keep the money. You can do whatever you want. It's software, right? As I would argue, the internet today is one you can't really trust these companies that they change the rules. they change their privacy policies, they change how they handle data, they change how they handle, we were just talking about how Google has changed over the years, right? Blockchains, you can make a search engine, you can make a social network, you can make a game, you can make a financial service, where the rules are baked into the code, the code is open source, anyone can go look at them and they can't change.

51:26So that's why I call them computers that can make commitments. And yeah, you can build all these different kinds of applications and what we're seeing now, since the advent of Ethereum is sort of more and more people building things, including things like social networks and games. And that's what I do in my day job is invest in those things. How do we know that they can't get corrupted? Let's use Wikipedia for an example, which is an open platform, but a lot of the information on Wikipedia is not correct. Yeah. Wikipedia is an interesting case. I think that it's probably more political organization than those people realize.

52:00If you just go look at their budget and how they spend it and all the different donations they make and things like that, Like anything can get in the end can get corrupted. It's sort of how does it get corrupted, I guess I would say. Like for example, you know, the most popular operating system in the one thing we haven't talked about yet is open source software. So open source software began as kind of this radical movement in the 90s. Today 99 % of software in the world is open source software. People may not realize this, but like Linux is probably 99 % of the operating systems in the world.

52:30So every Android phone runs on Linux, every server in the world, you know, this is a operating system made by a community of software developers, right? Could it get corrupted? Yeah, it could. I mean, but like, it's thousands of people, it's all open. You can go and get hub and you can go read it. If it changes, you know, anyone can audit it. You'd have to go and get all those thousands of people to agree to corrupt it. What would be the incentive? And there's no incentive. I mean, maybe you company could hire people and try to bribe them or something, but But it's decentralized enough that it is stayed pretty good for that whole time.

53:05The assurance of the blockchains are similar. Everything is open. All the theorems code, anything you write for it is open. It's all auditable. There's nothing that's closed. Meaning you can just literally go and look at the code. And if you're not technical, you can hire somebody or you can have third party monitors. So it's all open. So you don't have to trust somebody. And then it just is designed in such a way that it requires a whole bunch of people with different sets of incentives to collude, to corrupt it, right? Anything in human affairs can be corrupted, but it's designed to be highly resilient to it.

53:36It was funny that there was prior work to Satoshi, the Bitcoin paper, including a dissertation in the 80s by a guy named David Chom who was a computer scientist that was sort of the inspiration in some ways for Bitcoin. The paper was essentially the title was something like, how do you get a bunch of adversarial actors together to act in concert. That's a lot of what Ethereum and Bitcoin are. Is there these sort of game theoretic designs that create these incentives that make it very hard to corrupt the system? And so you can actually, like calculate, for example, on Ethereum and Bitcoin, the cost it would take to bribe everybody, you know, and I think on Ethereum it's like $50 billion or something.

54:17There was a paper that came out recently on it. But that's sort of how they're designed. They're designed in such a way that they sort of assume the worst. Would there been a way to design Wikipedia that assumed the worst and where it was actually honest? That's a good question. I mean, it doesn't have any incentives, right? It's all based on sort of reputation. So like, one of the reasons that in blockchain, there is this financial element, right, is you need the financial element to be able to design the incentives to make what you talk about in blockchain, when you talk about the security is the cost to attack it.

54:49So I have to think about that, but you kind of need a Wikipedia with incentives in such a way that you have sort of a cost to attack it, right? This is a very relevant question, by the way, because it's about to happen with AI, the big debate now around AI. It should be open source. In most cases in history, when there are gatekeepers involved, usually the gatekeepers turn out to be the bad guys. I tend to agree. I think it's sort of the, you know, it's the Winston Churchill, the only thing worse than democracy is every other former government. Right? It's the sort of, I think the same as true of computing systems, like that.

55:24I'm generally a fan of sort of community control. Did their chaotic, their messy, but it's probably better than every other, you know, essentially what you have with these corporate networks is monarchies. And Linux is a democracy. And the web is a democracy in Facebook's monarchy, and like, which is better. and maybe it maybe those work for a while. Maybe they have a benign monarch, but at some point you probably don't, right? And is that what we want for the internet? Do we want to have it be set up in a way that we have five people to control it? And you see it with Twitter, maybe like people before Elon, maybe like Elon, but like then there's a secondary question of like should that matter so much?

56:07Like should it matter who happens to own this thing that the global town square can trade hands like that, right? Shouldn't it be owned by a community? You know, I think that that's the fundamental problem, right? Is that you even allow that to happen? And the communities are messy. And like, like, you said, like, maybe Wikipedia has gone off the rails. I don't know. Like, I think in theory, by the way, going back to your Wikipedia question, like, one answer is you, this is called forking in code, right? Which forking is you copy it and create your own version of it. And you can do that with a computer.

56:38You can, you can cut, it's all open and you can copy it. The challenge with copying it is then how do the Wikipedia is valuable because you've got some person out there who's like taking care of like the page on like Jupiter and someone else is like Abraham Lincoln and like if you copy it, how do you get that community and also how do you make sure it shows up in search engine results and how do you make sure it so there's all this stuff that like makes it kind of sticky the current Wikipedia but in theory that's it's voice and exit right of the two sort of famously the ways to have political influence and the exit is forking in computing world.

57:11You copy the code and you leave. There are other interesting things like prediction markets are interesting. So, there's a whole history of this, which is letting people kind of make, basically, make bets on what's going to happen in the future and what facts are true. And there's a whole kind of interesting area of research there. There's been, famously, like the CIA actually launched a prediction market. I think it was early 2000s as a way to predict disasters. The idea was you could let people bet on, is there going to be a terrorist attack? and even though that sounds awful and they shut down within three days.

57:45Chris, it was so controversial. But the idea was that you wouldn't be better to surface that information and then try to prevent that attack. And the one way to do it is markets are basically the stock market is when Tesla stock goes up, that's a bunch of smart people making a bet that Tesla's going to sell more cars in the future. And so there's been a lot of work around trying to create better information systems. Do you know what that CIA operation was called? I had to look it up. I could send it to you after. Yeah, it was like, it was sort of, because I used to follow prediction markets and I was like, I remember seeing that.

58:19And then I literally, I think it was like, a New York Times article the next day. And then it's like, I can't believe they actually did that. I get the academic motivation, but the pragmatic reality of it didn't play well.

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59:52So we're back to the benefits of Ethereum. Yeah, so you can build. So for example, there's a, you know, we're investors in a relatively small but emerging social network called FARCASTER. And what's interesting about FARCASTER is it's like Twitter or something like this, except you own your name and your audience. And just like with web browsers, you can switch software. So if you think that one piece of software, you don't like how they change the rules or the ranking or the way they look or the ads or whatever, you can change it and you control that. right? And if you build an audience, you own that audience.

1:00:26And if that service is messing with you and trying to take your money and do things, you can change that, right? You know, so like one interesting question in the future is people spend more and more time playing video games and soon they'll use virtual reality headsets and there'll be these giant virtual worlds. And, you know, will these worlds be kind of similar to what we've been discussing, kind of controlled by five companies, or will they be more like the World Wide Web? Will they be open systems where anyone can add another part to that world and can open the store and create goods that they sell or create music or create art or whatever they might want to do.

1:01:04And so using a blockchain like Ethereum, there's sort of a wave of entrepreneurs who are building new internet services, financial systems like we mentioned Bitcoin and there's other kinds of things around payments and lending and whatever you might think social networks media, I think is very interesting. So So you would know much more than I do, but I don't think that the Spotify and things have been particularly good for musicians in many ways. By their own stats, I think Spotify's stats is something like, of the 8 million artists, less than 20 ,000 make $50 ,000 a year more to sort of the average American salary.

1:01:36So obviously if you're a major artist, you're fine. You have many ways to make money, but if you're a smaller one, you aren't. There's a famous blog post, a guy named Kevin Kelly, who was a co -founder of Wired, who's brilliant author wrote a famous blog post called A Thousand True Fans. And the idea was that the internet, this is sort of in the early 2000s here wrote this, the internet was going to change the economics of creativity. Because prior to the internet, you had to get mass media. You had to get on the radio. You had to play in stadiums. And that was because you had all these intermediaries taking tolls along the way, and you would only get a small percentage of it.

1:02:12And the idea, and this was the hope in the 90s and early 2000s, right is that the internet would change that because you'd have a direct relationship. And you call it a thousand true fans because if you do the math, if somebody's, let's say somebody loves you, I'm a chef and I have great recipes and they love me. Can I get a thousand people to pay me 20 bucks a month? 10 bucks a month, that's $10 ,000 a month, that's $120 ,000 a year, that's a living, right? And so the dream was we would have an internet of millions of people pursuing niche interests, not having to kind of sell out to mass audiences, is building direct relationships.

1:02:45And this is kind of what should have happened and didn't happen. Now we go, we fast forward and you look at the economics of Spotify or YouTube or TikTok. And we're back to the mass market audience, right? The mass market logic. And so what you can do on blockchains like Ethereum is you can build internet services that I like to say that kind of combine the best aspects of corporate networks with advanced functionality. You can use things like I discussed earlier subsidization because blockchains have economic models and they can subsidize things with tokens and other things. Today you can build like, if you, the one I mentioned, like Farcaster, it feels just like a modern social network in terms of onboarding and all the other kinds of things.

1:03:21You can build things that have that really are as compete with these corporate networks, but which, because of the commitments the blockchains can make, have the societal benefits of protocol network and let shift power to users. Let's use sub -stack as an example, because that's sort of a new model, but it's not built on a blockchain, is that correct? That's right. But how would Substack be different if it was on the blockchain? Well, so Substack, look, my firm is an investor in Substack. I'm a fan of Substack. So Substack is built on an email. And so you go to Substack and you get people to sign up and they give you your email address and it kind of helps you manage that.

1:03:55And it charges 10%. And I think the Substack founders are great and well -intentioned. But the reality is you have no assurance as a user that they won't change that later. That's the difference with the blockchain. is that like that 10%, there's no assurance that that will change, that the data privacy policies won't change, that, you know, and look, I've been doing the internet long enough, I remember when Twitter had all these policies, it was open, you could download your stuff, you could do this, the reality is over time, like what happened with Twitter is that they raised a bunch of venture capital, they didn't have a business model, they finally decided, you know, with their venture capitalists that the only possible business model was advertising.

1:04:33at the time, for five years or so into Twitter's existence, they didn't have an app. You couldn't go to the App Store and download Twitter. You download Tweety, Twitter later, Tweetech. There were like 50, it was like the internet. Like you just go download a browser. They didn't have an app, right? Then what happened is they raised money, they needed to do ads, they realized to do ads, they had to have a controlled sanitized environment, they had to own an app, they bought an app, they shut down the ability for other people to make apps, and they fast forward as a Twitter today. So like if you follow the history of these internet services, they often start off very friendly, very low rent, because in the beginning they're a startup, they have to, right?

1:05:14And actually in my book, I have a whole section on this, I call it the Attract Extract Cycle. And I argue that every corporate network goes through this cycle. And so when it starts off, it's of course, it's a startup, it has to attract people and is doing everything as solicitous as possible as trying to get people to come in over time. So every technology follows kind of an S curve. This is just not my idea. This is just standard knowledge, right? There's an S curve. It starts off kind of slow. If it works, then it kind of moves up really quickly. And then at some point, you run out of people.

1:05:41If you're successful enough to get to the top of the S curve, at some point, if you've been really friendly, hey, I'm friendly, I'm open, you can build stuff, it's low take rate. At some point, you raise money, probably the founders are gone. Most of these companies, the founders are gone. It's run by professional CEO. And they're going to be like, why are we charging 10 %? like let's charge what we should. Why are we letting these other application developers on here? And this has happened over and over and over in the last 20 years on the internet, right? Like the only large tech company still run by the founder is Facebook, right?

1:06:12At some point the corporate logic takes over, look I mean as they should, they're fiduciaries to their shareholders and they are gonna maximize profits and the logic of maximizing profits when you own a big network is to start to extract from it at some point. So what I like to say is blockchains are, instead of don't be evil, it's can't be evil. You bake it into the logic of the code. You can dislike me, you can dislike everybody I work with, you can not trust us, but it's just like Linux, like you don't need to like me or trust me, it's in the code, it's open, and you can go look for yourself, and that's the assurance, right?

1:06:46The assurance is a game theoretic design that makes it very hard to corrupt, and the rules are in the code, right? That's the difference. That's what a blockchain gives you that an existing internet service does. And I would say even if you trust all these folks, like I do trust a lot of these entrepreneurs, I work with them. But eventually the logic of the kind of corporate profit logic just has to take over. Like it's just the nature of these things. And people leave and management changes. And if you don't do that, you get fired, right? Because if someone else is going to come in and double the profits, you can only sustain that so long.

1:07:17And so having computers and internet services that make these strong commitments is valuable. The next section of the book is community created software. Tell me about that. OK, so maybe just a little bit in the history. So up until the 1970s, the way you made money in computing is you sold hardware. Like companies like IBM would sell big machines. And then Bill Gates came along and he had a contrarian idea, which is I'm in a sell software. And at the time software was this stuff you gave away with the hardware. That was a contrarian idea. And he was right. So it turned out that the value was in the operating system and the hardware became interchangeable, right?

1:07:54Whether you had a Dell or a compact didn't matter, what you needed was to have Windows and to have Office. And that was a brilliant idea. But then what happened is this sort of rag tag group of left -wing activists, which is how open -source software started, Richard Stahlman and MIT, who didn't believe in property rights of software should be open and free. They started creating all of these really interesting software products, including all these variations of what's called Unix, which is a really powerful operating system. And in the 90s, you know, Linus Torvold, who was the creator of Linux, took these ideas and kind of I would describe it as made it a more pragmatic technology movement as opposed to being kind of politically motivated.

1:08:34And he built Linux, which is a fast forward today, the most popular operating system in the world. People started building kind of every level of software, so web servers, databases. And at some point, the software industry realized, wait a second, we're not going to be able to keep selling software because people are making it for free. Sort of a group of people on the internet who don't know each other are coming together as a community and writing software. And it turns out that software is open, it's great. And actually, this kind of surprising thing happened. Companies preferred to use that software because they can see the code.

1:09:07They want us to be able to see the code. They don't want to trust Windows. It's free, but really the more important thing to them is they can see the code and they can change the code. Right? People like that. And so open source became more and more popular. And then what happened is the tech industry moved into if you follow the tech industry you'll hear this buzzword of software as a service Okay, we can't make money on software anymore. So we'll move up to doing services. So Services means you know think anything you need internet service for is a service, right? Like Netflix is a service Microsoft calls himself a services company now like office like Adobe is now a service and their idea was well We can't really sell software anymore like selling shrink wrap $59 software, downloadable software is not going to work in a world of open source, so we're going to sell services, right?

1:09:49So I think a very interesting thing that happened right along the way is that people realize that a community could come together and actually build better technical software than companies. There's a famous essay from the 90s called the Cathedral in the Bazaar by a guy named Eric Raymond, and he was in the Linux movement and talking about this. And he calls it the Cathedral in the Bazaar because the idea is sort of Microsoft is the Cathedral, and you have these priests, right? anything, they're kind of secret and they're in this tower and they're creating this magical thing called Windows. And then you have the Bizarre, which is this Cacophonus chaotic mess of people, but they're sort of like markets or something like a Bizarre, right?

1:10:27Like someone will create something, something will be good, you'll take two steps forward, someone makes something bad, but then other people will come along and fix it, and maybe someone, you know, will suggest something and together in this sort of chaotic way, they end up creating better software. He had a famous phrase with enough eyeballs, all bugs or shallow, meaning no matter what bugs, like a security flaw, a mistake in the software, just by making it open, you see them, right? And they're more secure and you end up actually having much better software. And so a very surprising thing, I think, if you kind of were sitting in the 90s, it's too fast forward today, is that literally 99 % of the software in the world's open software gets just amazing how much it won.

1:11:07And I think that's, by census, that's underappreciated outside of the technology industry that most of this, by the way, even your Apple computer is probably 70 % open source, you know. And then Android is basically fully and all the back -end stuff you connect to from your computer on the other side. That's all open source. All the new devices, VR, self -driving cars, they're all Linux, open source. So it's completely dominated. Would blockchain be considered open source? Oh yeah, for sure. If you're not open source, you'll be immediately rejected and banished from the community. It's deeply embedded in ethos.

1:11:39The limits of software, right, is software, you know, Linux is a piece of static software. When you actually want to run the software, you got to pay money to, you know, to post it, to pay for electricity, to pay for bandwidth. And that's why the tech industry was able to sort of move up the stack and charge for services, right, is that you couldn't, there's no open way to run services. And these communities can't come together and fund that. They don't have financial, they're a bunch of hobbyists, right? So how are they going to create a community -owned Facebook? You know, how are they going to create a community on Netflix or something, right?

1:12:11Like you just can't, like it just has these operating expenses that can't be created that way. And so in that section, one of my arguments is that one of the interesting things about blockchains is they let you make essentially community created services. They do that partly through this economic model. So early I described the Ethereum token and so the way it works with Ethereum is you pay money to kind of access the system. And this, when I say you pay money, it can be the software provider can pay the money in the same way they pay hosting costs, so it's not something that users necessarily seize.

1:12:40And that then money cascades back out to pay for the electricity and the hosting costs and everything else. And what that means is, for example, you can have a social network where one person creates the client software and somebody else creates the algorithm for the feed and somebody else creates basically all these different people come together and create these services. And software, we talk about the concept of composability. And composability is sort of software as LEGO bricks. It's the idea that you can take these small pieces and put them together and build interesting things. And that's one of the main reasons why Linux has been so successful and open source software is one person comes along and builds one little LEGO brick.

1:13:20And someone else builds another LEGO brick. And then someone else combines us to LEGO bricks. And you have sort of all of humanity coming together and you get this kind of compounding growth of knowledge. And blockchains have a similar kind of way of doing that with services. So you can have one person can come along and add a little bit to this new game or social network or financial service and someone else can come along and do it. And then collectively, they kind of build through LEGO bricks these services that end up sort of going back to Cathedral and the Bizarre. How do these collectives communicate?

1:13:50I mean, so like with open source code, most of it happens on these websites like GitHub. There are communication in the code. There's things called pull requests where you make some change to the code and then you ask for it to be included. And then they have these forums where they discuss it and they have, you know, like forums. But there's a whole community where people who know how to do this stuff know where to go to be able to be involved. Oh, yeah, for sure. For sure. Yeah. And these are various large communities. And they exist around open source code. what they exist around blockchains and there are millions of people who participate in these communities.

1:14:26Take rates. So a take rate in any network or internet service, there's money flowing through the service. And so for example, when you use Uber, you pay some amount of money and the driver receives some amount of money. The take rate is the business term bar for what percentage of that money that the operator, like Uber or the company, takes. And so the take rate of Internet services varies widely. Social networks like Twitter and Facebook take 100%. And what that means is they run ads and sell products and do other things to make money. The aggregate revenue of the top five social networks last year was $150 billion, so they make a lot of money.

1:15:11And then they basically don't, with some minor exceptions, don't share that with the people who actually create the content on those networks. Apple has a 30 % take rate. And what that means is if you create an app, and you, this is actually a big active area of discussion going on now, like Spotify is assuming Apple, and a bunch of other people are, you know, Epic, the maker of Fortnite is very unhappy with Apple because of this take rate. So anything you do in the app store, if you sell products, if you, you know, If you're Spotify and you sell subscription, if you're Netflix, you sell subscription, if you're a game and you sell premium service, 30 % of that money goes to Apple, which is a very, very high take rate for providing payments.

1:15:51Typical payments, like credit cards are like 2 .5%. So they charge 10 times that. Android does the same. And by the way, if you notice, you've ever tried to buy an audio book in the Amazon app, and you can't, and they'll say you can't do that, and you have to go to the web browser. Why is that? Because Apple charges 30 % in the app and Amazon doesn't want to pay that and so you have to go to the web Which is this the last area of freedom on your mobile phone as a legacy of the open internet Where they can't do that like the web the browser on your phone For cultural and other reasons like it's the one place Apple won't touch because it's been around for you know 40 years And it's always been free and people will get really upset So take rates is the economics of networks.

1:16:41It's how much of the money. So just sort of one way to picture it is, you've got a network and it's sort of a bunch of nodes. People are sending information and money and other things back and forth to each other. And how much money does a gatekeeper take? And in protocol networks, which I talked about earlier, there is no gatekeeper. Therefore, there is no take rate. It's all free. That means that you make a website and people pay you $100. You get $100, like period. But on the App Store, they take 30 % on Facebook. They take 100 % on eBay. They take, I think, 10%. So it's all over the map and I kind of go through it in the book.

1:17:15The take rate, basically none of it is, it's not like eBay charges less because they're nicer. They charge less because it's easier for you to switch. If you're selling shoes, you can go to StockX, right? And Facebook, it's very hard for you to switch. So it has to do. The take rate is higher when it's harder for you to go to alternatives because you get the more you're stuck the more they charge is how it works. And so, yeah, the kind of main point of that is that there's a lot of money at stake. There's, you know, many trillions in dollars in value, if you look at the value of these companies, many hundreds of billions of dollars in revenue, and how that money flows.

1:17:51Does it flow to the center of the network, sort of the owners, or does it flow to the edges of the network, has to do with how these systems are designed. and had the world evolve differently, and had RSS, and an open protocol, been the dominant way in which we build social networks. I believe that that 150 billion in revenue that those social networks make would go to the edges instead, which is two million jobs at the average American salary. Like, these are massive. I think, like, I have a section of the book on the fall of RSS, which sounds like an arcane, weird technical thing. my view is it's the most impactful event of the history of economics of the internet.

1:18:32The fact that social networking is owned by five companies and why isn't it like the web? Why is information delivered in this open way? Why is email delivered in this open way? But once we add friends into it and audiences, it's now closed, right? And all that money gets rerouted. When people think about things like having these gatekeepers, they tend to think of the political aspects, they can de -platform because it's very visible and it gets a lot of attention. But I would argue, and that matters, but I would argue that the economic impact is really what matters is the most important thing, and that has to do with these take -rays, like where does the money flow?

1:19:14I'm personally concerned with censorship because living through the explosion of hip hop in in the 1980s, all of the gatekeepers were trying to ban hip -hop. So I've seen beautiful movements from the ground up be stifled and it's really a miracle that we know about hip -hop. Yeah, I mean, I come at it more from the tech angle, obviously, and you from the creative. Like I think of it, like my partner Mark Andrews, and you know, he created the first popular web browser. I don't think the web, you know, which then led catalyzed the growth internet. I don't think the web browser would be allowed in the app store today in the app app store One of the first things is you know his boss at the University of Illinois said was this can you remove the porn?

1:19:58No, you can't remove the porn from the web like we have not pro porn, but like it's an open system, right? And you know and that would be something Apple would say like hey, you have the new system where you can anyone can do anything like including You know make a bomb tell you how to make a bomb or do it. Yeah, it's an open. It's just an open It's a web browser. And I think you're right. I don't know the creative side as well, but I think that anything that's outside of some over -tune window is probably not going to be allowed. Maybe there's some exceptions like the new Twitter or something.

1:20:28But I come from the view that most interesting innovation comes from the edges. Absolutely. It always has. And that's so it's worrisome, right? That you'd have these systems that blows that off. and do so from a de -platform, like there's also, like I said, there's these subtle or things, or shadow banning. It's like they wouldn't just have to ban hip hop, they could also just demote it, or they could censor certain words, or they could, you know, YouTube does a lot of things where they demonetize. So they allow you to stay, but they don't let you make money off of it. So there's all sorts of, you know, it's a very, there's a whole range of ways in which that are kind of get less attention, but are still very impactful.

1:21:09When you're demonetized, is that me? Make don't put advertisements in your... And you can't make money. You'll see this. If you go on there, you search for that. You'll see all these people like, because they did something that the sensors didn't like, they can't make money and they'll be complaining about how they're demonetized. And they won't put ads and they won't share it. And obviously they don't get revenue then. And like their business goes away overnight. They're completely dependent. They have no... You can't switch, right? Because your audience is there. And all the things you built are there.

1:21:36building networks with token incentives. Yeah, so this is where blockchains are kind of inspired by the video game industry. Maybe I'll talk a little about the video game industry, which I think is very interesting. Great. I think William Gibson famously said the futures here, it's just not evenly distributed. And I feel like that about video games with respect to media business models. They have been very pioneering with new ways to think about business models. and rewind to 1990, the video game industry was similar to the music industry and that you sold the video game. It was like 50 bucks or 30 bucks and you'd buy a video game.

1:22:15That's how music was sold, you'd buy an album. The internet came along and fast forward, the most video games today actually don't charge for the game. They give away the game for free. Fortnite is a good example, League of Legends. and instead they charge for virtual goods. So, unfortunately, you buy skins and dance moves. And why do they do that? Because they realize that the internet is a giant copy machine. The internet likes to copy things. And when you create media, there's a trade -off between giving something away for free and charging for something. Because when you give it away for free, you can let the internet do its thing and spread it around.

1:22:54People can stream it, they can remix it, that they can chop it up. And the video game industry said, you know what, a little Adam do that. You can take Fortnite, you can stream it, you can remix it, you can play with it, you can play it for free, just, and like you go to social media, you go to YouTube and video games dominate because of that, right? And they said, you know what, we're gonna figure out a different way to make money. We're not gonna charge for the game. We're gonna make people so into these games and they become their social life that they're gonna wanna buy an outfit so that they look cool around their friends, right?

1:23:25And like Fortnite is 3 billion revenue last year, you're selling virtual outfits. That's how they make money. And so what they did is I call it the attention monetization kind of dilemma. Like there's a trade -off between giving something away and charging for something, right? Whereas the music industry evolved somewhat during the course of the internet. It moved from selling albums to streaming services, but still sort of has the same basic economic model, which is you charge for music. Maybe now you do it through a bundle. By the way, as a result, if you look at the music industry, it's mostly stayed flat in terms of its revenue over the course of the life of the internet.

1:24:03In the same time, video game industry has gone from 25 billion or something similar to the music industry to 180 billion during that period. Part of it is video games have gotten better and things like this, but I think a lot of it has been sort of really aggressively experimenting with new business models. They basically created these small, kind of, many economies in these games. There's a game called Eve Online that's a very famous game that is a spaceship battle game where millions of people play it, and there's an entire economy inside the game, and you can buy spaceship pieces, and there's all these other kind of crazy.

1:24:35They actually hired famously an economist. There's, like, a big New Yorker article about the economist, and they have interest rates. And there's a lot of video games like this, where they have these economies, and they have these sort of micro -economies, right? And so blockchains like Ethereum and blockchains systems were inspired a lot by video games, including this idea of creating these economies with virtual goods. And the idea is with something like Ethereum where you allow people to pay and then you sort of create this little micro economy and the more people that come into the economy, the more they want the token and they can go up.

1:25:07In addition, will you ask about token incentives specifically? So one of the interesting ways in which these little mini -economies can be effective is the following, which is one of the hardest things about building a network is what's called the cold -stark problem, which is think about a dating website. If you're the first person on a dating website, it's utterly useless to you. If you're the hundredth person, it's probably pretty bad too. Once you have a million people, maybe it's good, and then once you have 100 million, it's unstoppable. Like, no one can compete anymore. And so when you're creating a network, you have, at the beginning, it's really, really, really hard.

1:25:43Like, how do you get over that hump? And then later on, it becomes much easier. But that early hump is a problem. So what, you know, as I described earlier, YouTube helped try to get over that hump by subsidizing, by saying, hey, you can have free hosting. And this has been a long, my entire career, this is not blockchain. This is just the internet business, okay? It's like, how do you build networks and how do you incentivize people early on? This is kind of like books and theory. Because it's like this before in the network business, and the hardest part of a network is the cold start is the beginning.

1:26:14Like how do you get over that? Like Airbnb famously gave out cereal boxes and did free photography and this and that. You know, Facebook famously started at Harvard and then went to other schools. There's a whole series of tactics. With blockchains, one of the interesting things you have these economic models. And so what if you use those economics to help get over the cold star problem. And so the idea is providing incentives for early users, like financial and like early users, if you join, you get rewarded with a token. And that token gives you some upside in the future development of the network.

1:26:50So imagine an early Uber, right? So early Uber, you're trying to get cars on the network. You give each of those drivers, every time you drive somebody on a ride, you get a token. And that token eventually is connected in some way to the value of Uber as a service, right? And that value will decay over time. Like the first person who does it gets five tokens and the hundreds gets three tokens, right? Because at some point, you don't need to give them out anymore because at some point, like they can just get paid for the driving and they don't need extra incentives, right? And so the whole idea is you sort of taper them.

1:27:23And so there's been some really cool experiments. So there's this long time dream among technologists to kind of create a grassroots telecom company to compete with Verizon. So this goes back 30 years. So there was like, for example, MIT had a thing called RoofNet. And the idea was everyone would put a telecom, like a 5G receiver on the roof. And then it was a mesh network. So they would all talk, this is pre -blocking. So they would all talk to each other. And so I put one on my roof, and it would be like a 5G telecom thing, but it would also talk to you on your roof. And they got everyone at MIT to do on the roof.

1:27:56Actually, New York City has a pretty cool, called NYC MASH. And it's this MASH network of a bunch of Wi -Fi things. And so it's been this, like I've been involved in these things for like a long time, like it's really cool. Because like, what if you could get everybody to sign up for one of these things? And then you could have this sort of telecom system that's not dependent on these big gatekeepers like Verizon. So this is like old dream. I've talked about this idea for 20 years, right? There's a company called Helium that is a blockchain based company. and what they do is the same idea, except what they do, is they give out token incentives early on.

1:28:28And so they say, if you put up one of these systems early on, you get the first person gets x tokens. The next person gets a little bit less. And they did this five years ago, and they got basically the entire United States covered with these helium stations. Yeah, so this, like it was a really cool thing. Now, they originally had, they were using this, Instead of doing 5G, it was this esoteric IoT internet thing standard. So they picked the wrong thing and then switched it. And now you can actually have the service. You can sign up for it with your cell phone. And it's growing. And it's interesting.

1:29:05So they basically kind of bootstrapped the network using these incentives in a network design that had a giant cold start problem. And entrepreneurs had tried to solve for 20 years. And so the really cool idea is what if you could do that with other kinds of networks? For example, there are people doing it with electric charging stations. Anything where you need telecom, electric charging stations, financial systems, social networks. Anything where you need a large group of people to do it, what if you use various financial incentives early on to get over that early cold start problem? That's what that section is about.

1:29:39The other interesting thing, I'll give you another example of an idea I'm excited about, which is called collaborative storytelling. telling. And so the idea there is what if the next kind of Harry Potter or Star Wars was created by a fan community like in the same way that you have Wikipedia but you have a creative fan community who gets together and creates those worlds. Like you think about how excited people get talking and read it or something about Star Wars. Like people get really into this stuff. Now imagine it's like a fantasy football leave. Exactly. It's like fantasy football. Like they all get together but it's like fantasy storytelling.

1:30:13They come together, they create a narrative world, they get rewarded for their contribution through tokens. And you have to have a system for doing that. If you contribute more, you get more tokens. There's a whole bunch of mechanisms for doing that. And then if that narrative universe gets made into a movie or something else, they get some portion of the proceeds. And then what's really cool about this idea right is it's cool for the community because they now, instead of the used to mention fantasy football, instead of just being passive, of participants, you know, observers are actually participants and can come up with these stories, but it also is cool because it solves a problem for Hollywood because why is Hollywood making sequels all the time?

1:30:52Because it's so hard to market a new narrative universe, right? So what if instead you had these sort of million people come together and create it and then they become the evangelist for this new world? You already have the fan base built in, right? So this is another example where sort of token incentives are used. By the way, that idea too, like, you know, we're about to have a world of AI, we're a generative AI, will let you create a movie cheaply and let you create art cheaply. In that world, I think you're going to have sort of a day loose of media. And I think the valuable thing will be having communities of people around that media who care about it.

1:31:28And the way they have skin in the game and get rewarded is by having some piece of that system. And that's what tokens are for.

1:31:42So by which that ownership happens. A token is a unit of ownership. And it can represent a Bitcoin, it can represent an ether, which is like gas or what you need to run software there. It can represent a piece of a narrative universe, it can represent an identity on a social network. It's a very broad and expansive concept. It's a unit of ownership on the internet. Next is network governance. Network governance is a little bit what we're talking about with like de -platforming, which is if the internet's a network of networks, how are those networks governed and controlled? The web is this sort of this mishmash community of software developers and nonprofit organizations and internet service providers and all these other people who kind of come together and like, you know, if somebody does something really bad and you're a web hosting provider, you might take them down and someone else will take them down and sort of the community in this sort of messy democratic way effectively is governs the world wide web and email.

1:32:43If you look at modern internet services, they're effectively controlled by a single person or single company, but the companies are ultimately controlled by one person. Sometimes I assume the content filters on YouTube aren't actually happening by the CEO. They're probably some group of people that are annoying to buy the CEO. But essentially YouTube is owned by Google, and all Google services are ultimately controlled by Google and whatever policies they want. And they have various opaque committees who knows what the rules are. I don't know what they are. I would sort of liken it to like, we let AT &T decide who can make phone calls.

1:33:19Like AT &T made really good phones and they made really good phone lines, but does that give them some special ability to decide who can use those things? Like, it's very strange to me that we've allowed these opaque groups of product managers the ability to decide, you know, what is correct pandemic information, how the economics of the internet work, how, you know, who's allowed to say what, it doesn't seem like a good idea to me. I think the way that the web did it was much better. And I think that as we've now seen how important, I think 10 years ago, a lot of these systems were social media, for example, was dismissed by many people as somewhat frivolous and unimportant.

1:33:59I think it's now very clear that it's extremely important, and I think it's now time to think harder about how these networks are governed. One of the things that a blockchain allows you to do is it allows you to encode the governance of a network in software. And so you could write software that says, I'm going to give the power to... In one case, you could write software that says it's a dictatorship, and critics and controls everything. I don't think that would be a good design, but that you could do that in software. You could also design a system that says anyone who has a voting token is allowed to vote on it.

1:34:32That's a very popular way to do it. Other systems, a noint power to a group of foundations. The point is that you now, for the first time ever with blockchains, because they're computers that can make commitments, you can write code that says, here's how the network is governed. Essentially, it's a little bit like the move. I like it in the book for the move from to move towards sort of constitutional governance. You can now write down the governance. There's very interesting experiments going on in the blockchain world where people are trying different kinds of governance systems. So for example, Ethereum is much more Ethereum itself and Bitcoin are much more governed like the way the world wide web is.

1:35:10By the software developers effectively vote on what system they want based on which software they choose to adopt. There are other systems, a whole bunch of things like these in this area called DeFi decentralized finance where they have tokens like this system like Uniswap and compound where they have tokens and the token holders actually vote and these are very active discussions and votes where they actually go and they vote regularly on someone who commits a proposal and they vote on it and the vote affects how the code works like if you vote one way the code changes. And that's interesting, there's other ones that have bicameral systems, I mean two houses So like the token holders will vote on something and then there's also like a set of kind of appointed X kind of foundations and things and It's very interesting and so there's now for the first time there's sort of this I think this really interesting experimentation going on in like in the future when we have these important systems when we have gained virtual world social networks financial systems that end up being very important in our lives how how are those systems controlled?

1:36:11And so, like, for example, we have a guy named Andy Hall, his professor, Stanford in the political science department, and he's now working with us and writing all these papers and studying it, because for him, it's like this really exciting new test bed for governance systems. And until now, you just had, on the internet, you just had these old systems like email in the web, and then you have everything else kind of designed as a dictatorship. And now, you, for the first time, have a way to really, in a nuanced way, design new governance system. So that's another kind of interesting thing the blockchain's enabled.

1:36:39Is it fair to make comparisons between the physical world and the digital world and the way rules are created or is it just so different that you can't compare it to the physical world? A lot of the things I think about have analogues there. So, as I just mentioned with governance, I mean we've had thousands of years of governance in the physical world and experiments and obviously some have gone well and some not Well, and I think most people think that we, I would say, haven't really fully figured it out, but have some sense of what works. I think on the economic side, I think about this a lot.

1:37:16Like, I think, like, I have a bunch, throughout the book, I have these analogies to cities. I think cities are very interesting and have a lot of analogies to the digital world. And I'll explain that. Cities in many ways are networks. New York City gets more valuable to me because of the other people that are there, because of the businesses there, because of the parks that are there, because of the streets that are there. I think a very important aspect of cities is the balance between public and private space. The street is owned by the public, the sidewalk is owned by the public. The entrepreneur who starts a pizza shop knows that it's owned by the public and therefore knows that nobody's gonna, if it were a private road, someone could come along and charge rent to walk down that street if it was a toll road.

1:37:59It's not a toll road, they know they'll get foot traffic, they can depend on that, they know there's a park nearby, right? In a city you want both, right? You want the open streets, you want the people to walk around, you want the parks, and that's very important to give the assurances to the residents and the businesses. Certain things won't change, certain things will be the way they are. But you also want incentives for entrepreneurs because I don't think the city probably should be inventing new restaurants, right, like the creative entrepreneurs do. And so I think I've lived a lot of my life in New York.

1:38:28I think a part of New York have this feeling of working really well and balancing very well between the public and the private Cities are also bottoms up. I mean they have mayors and things But you know most of the energy in a city right comes from the people right and But by the way everyone every sort of attempted planning a city Generally hasn't worked well right the best cities have been organic and bottom up I think it's very much true in the digital world So I'd like to me the World Wide Web is like New York City It's a balance. The web itself is like those streets. It's open. Like the actual, you know, the transport.

1:39:03Like I go to a website and that relationship in between I'm walking down an open street. The website might be a nonprofit. It might be a for -profit. They vary. The for -profits Know they can build a business there because they know the streets are free, right? And so you have this sort of really healthy dynamic where you sort of have this public and private space. At least this is the 90s, sort of early 2000s internet, right? And that's why when we were talking at the beginning, the internet had that serendipitous feel. I think it had that feel of New York City. You turn a corner and there's like this antique bookshop, you know, the chess store and the Washington Square Park.

1:39:40Washington Square Park, yeah, yeah, yeah, exactly. So like the, you know, the back kind of stuff. Yeah, it's like these stores that like just, where else but New York City would there be like a store where the guys are all like in the back smoking and playing chess, right? It's like, um, and so, but that, that's what makes me a great, and that's what made the early internet great. And I think it really had to do with this, to me, it was about the bottoms up and the balance between the public and the private, right? And what, now what we have, what I worry about, what these five companies that control the internet is TikTok, Facebook, Google, Amazon, Apple, is it's all private space.

1:40:13Where do you get that bottoms up energy? Do you trust Facebook? Well, in what sense? I trust them all to act like profit -maximizing companies, which is why they will ask you for each of them. Do you trust Facebook? Do you trust Microsoft? Do you trust Google? Do you trust Apple? I think you need to look like Charlie Munger, show me the incentive, show me the outcome. In some ways, Microsoft is the best because Microsoft doesn't enterprise software company. You go forget it. They sell software to businesses. enterprises. Enterprise software is in some ways the most honest part of the tech industry because you just have a customer and they pay you.

1:40:50There's no data sharing, there's no advertising, there's no privacy policy, they just want you to buy word like an offer in Excel and you pay your whatever it is, 200 bucks a year. Whereas I think the ad -based companies, I think it's become very adversarial. They have this incentive to track you and follow you around. And by the way, Apple and Amazon have large and growing ad businesses. I trust Apple when they sell me a phone. I trust that Apple because they just want to sell me a nice phone. When they start layering and advertising, if you follow Read Wall Street reports about Apple, I love that.

1:41:24I've used Apple devices my whole life. I think they generally are a good company. But I do worry that their now, their focus is on services. If you read the Wall Street reports, all their growth, they're not growing by phones. That's basically tapped out. they're growing by services, which means like the app store fees, the payments, Apple Pay, all these other things, right? And advertising, they have a $40 billion advertising business, right? And they famously kind of cut off, they did this change to the iPhone where they really hurt Facebook and Google, the tracking, then sort of seem like a privacy move, but then they layer on their own advertising.

1:41:57So I think the incentives matter, like what's the business model? The advertising business model just is by nature adversarial, I think, because you just want to collect more and more data. And it just becomes this kind of cat and mouse game. So I think that the best tech businesses just sell your product and that's generally like business software, like Microsoft. No, I don't particularly trust them. I just think that they're going to do what they do to maximize profits and that has generally not been aligned with the user and the internet's interests in my opinion. Why do you think people are so concerned about digital currency in general?

1:42:34You mean the negative side? Does it push back? Yeah. I think there's different threads to it. I think there's sort of, there's a one school of thought. There's this thing called a central bank digital currency. And I've been part of this. OK, so there's a move to basically create like a US issued, US government issued dollar. And to move all of the banking infrastructure to that system. And so essentially you would have, the government would have the ability to issue money, to send money, and to decide who can send money and monitor all the money and all the other full control. And that's going to be a big political issue in the next couple of years.

1:43:11Yeah. And if you followed like the Canadian trucker thing, this was a big flashpoint where there was a protest in Canada with truckers and basically they had their banking count shut down, it happens in my industry with blockchains. A lot of companies have trouble getting bank accounts. This is not like they don't even have tokens in cryptocurrency. They just literally have the word blockchain on their website. It's hard to get a bank account. There's a famous single operation choke point 10 years ago where like gun companies I think marijuana companies like a lot of other kind of outside the overton window We talked about the overton window earlier like in some ways one way to look at the world as the last battle was who gets to talk on Social networks the next battle is going to be who gets access to the financial system, right?

1:43:51And that's become more and more of a political issue and having money controlled by the government the white mistakes Does it concern you at all? Yeah, I'm concerned about it. I mean, look, as we deal with it in our business where we have a lot of companies that just simply can't get bank accounts and they're perfectly within law. I don't think, I think, look, I'm a big believer in rule of law. I think there should be laws in our companies. Obviously, should follow them, but that should be, if you follow the law, you should get a bill to get a bank account, I believe. Yes. And that's not necessarily the case.

1:44:16So there's become this kind of extra paralegal, I mean, like, outside the legal system. So why are people concerned about digital currency? I think the The people that are proponents of these central bank digital currencies see things like Bitcoin as a threat to that because it's not in that world. And this is a very live political issue. There's a thing called the stablecoin bill that's made in the next year to become law that has to do with how. So stablecoins are crypto currency, blockchain based tokens that represent US dollars. There's one called USDC that's very popular. So it's a token that exists on the Ethereum blockchain and you can send I can send you a USD token and never Presents a dollar and you can redeem it for a dollar and it's become very popular last month There were 600 billion dollars of USD's decent around very very popular in the developing world Yeah, it's very popular in developing world like in South America That's something like 18 % of Argentinians own have some you know own some stable coin the last that I saw is that owned by someone There's a company called Circle that's one of the issuers.

1:45:20It's just they have a bank and then they are audited. This is what the stablecoin bill, this is bill that's being proposed and is working its way hopefully through Congress, that would put rules around it and say there's sort of different issuers and probably like every bank might have their own stablecoin in the same way, you know, banks issue credit cards or something. But then like credit cards, it would all be kind of interoperable and transparent to you and you just know it's like a digital dollar. But there's going to be regulations around it. Like, the money is very regulated. Like, the Bank Secrecy Act, KYC, sanctioned controls.

1:45:53Right? That's not at the date. Like, that's going to happen. The question is, do you go farther than that and actually let the government decide who can, you know, like, have this extra layer of control and say you get access to digital dollars you don't? And so I think there's basically kind of a showdown coming Whereas, is it going to be digital dollars to build on open networks like Ethereum, or are they going to be built by the governments? And I would predict that's going to be a major political discussion area in the next five years. There's many ways in which blockchains intersect with politics.

1:46:25That's one of them. You say currently there's difficulty for people working in the blockchains to get bank accounts. Is that based on fear? What do you think the root of that is? I don't know how deep down the rabbit hole you want to go here, but there's a, if you Google something called Operation Showpoint, I'll just talk about this. There's a single operation showpoint that happened, I think it was 10 years ago. There was accusations that the Obama administration had cut off bank accounts for people, for example, in the gun. They're political opponents. There was a series of lawsuits, and then in the discovery process of the lawsuits, it seemed as if what was happening is that various banking regulators were putting crushers on the banks.

1:47:06And there's a whole kind of system that works behind the scenes where that, you know, where it's not public. And like the Federal Reserve, the FDIC, like I mean, there, it's the banking system is very consolidated. So the 2008, yeah, the financial crisis, then you had this thing called the Dodd -Frank bill, which was meant to kind of reign in the banking industry. If you look, go to Yahoo Finance, you have to trust me and look at the market caps of the top five banks, they've all gone up dramatically and the banking industry has become much more consolidated than the top banks have a special guarantee from the government that they, I think GSIBs is the word they use.

1:47:40It means that they can't, they're guaranteed to have their deposits insured, which is why you had this regional banking crisis with Silicon Valley Bank and First Republic and others because they don't have that guarantee. And so this is big kind of advantage that big banks have, which is their guarantee. So the banking, depending on who you talk to, the banking industry is sort of like everyone is there's all sorts of ways in which the FDIC and the Federal Reserve can punish those banks. And they have these kinds of risk scores for like who your customers are. And what ends up happening is, in effect, is like a company will get like a 500 -page, hey, your high risk.

1:48:16You've been flagged as high risk. You're not told why. Sometimes you're just fully debanked. We won't be your banking customer. Sometimes you're sent like a 500 -page questionnaire that's impossible to answer. That's like a risk profile or something. But you don't get any feedback. You don't get this in that. And so it's very opaque. I'm not commenting on who's right or wrong here. I mean, it's frustrating these companies can't get bank accounts, but there's a whole separate kind of thread of political debate around should the executive branch have this much power? Should these regulators be able to decide these things or should this be happened more through like a legislative democratic process?

1:48:51There's another question. But you mentioned Sandbankman and freed earlier, I wanted to ask, what is effective altruism and why does anyone who do it go to jail? I thought it's effective. So I'm not an effective altruist and I just probably just learned about it from the internet. But I kind of think of it as sort of, I guess utilitarianism, you know, so meaning that you, it's a capitalist utilitarianism or something so you can make as much money as you want as long as you then give it away and do it in a very rational way that sort of, you know, I don't know, like these philosophers like Peter Singer and these other people who, like, you give it away in a way that maximizes aggregate human utility or something like this.

1:49:32Why would that be frowned upon? I mean, I don't think helping people, I don't think it's that. I think, again, I'm not taking a side here, but the accusation is just used as a front. It's not that helping people is a bad thing is that there's a group of people who say that that's their goal, but then end up creating casino, like websites, like FTX or lobby being to get rid of open source software. So a lot of effective altruists have funded these think tanks that have pushed very hard to regulate AI systems. So I think everyone's for maximizing human happiness and helping people. The question is, is it a fig leaf covering up another agenda, or is that the, it's also called like accelerationism, effective accelerationism?

1:50:17So that's like it's kind of a movement that's a response to effective altruism, because the perception is the effective altruism people are trying to slow down the adoption of technology in a kind of anti -open source AI, and then there's a group that called them effective accelerationists who are kind of co -opting the name, but they're actually their opponents who are saying the only way out of our troubles in society is to actually accelerate the adoption of technology in open source. And so there's a whole, it's like on Twitter you'll see EACC is effective accelerationists, it's like a thing they'll put in their Twitter handle.

1:50:47Back to the book, the computer versus the casino. So as I mentioned before, I think that basically two cultures have formed around blockchains. There's a culture that is more interested in trading and speculating on the value of tokens and in some cases taking that and creating like FTX did and creating a website based in the Bahamas that lets you kind of gamble essentially. And then there's another culture that's the one I'm describing here which is they're excited by using blockchains for, I think, kind of productive use cases for creating a new generation of internet services that are owned and operated by communities and set up by companies.

1:51:29And tokens are an important part of the design of those systems, but they have an intended use as a productive asset in those systems as opposed to existing purely for speculative reasons. Right? And so I think of it as there are two cultures and they're battling it out in some ways is to shape the narrative of this movement. I see myself as part of the computer movement. I think our side has failed in the narrative side. Most people you walk down the street, you ask them about crypto, blockchain, tokens, all these different concepts. And they'll think, oh, it's that silly thing like Dogecoin, which is sort of for gambling or Bitcoin, or maybe they'll have views on Bitcoin, or they'll just say it's a bunch of scams.

1:52:08I think the fact that people say that is a failure of partly, is a failure of our communicating, is a failure. but we need to build better products that where they can experience this viscerally. They need to understand what were the motivations and the reasons we're doing this. And so I think of it as, I don't know, probably true of other kind of movements in the world, but you have people who adopt the same kind of core things but for different reasons. And it ends up being that like I've come to the conclusion that in some ways these casino folks are, in some ways the biggest threat to the movement.

1:52:44Like FTX was a big mo, like I've worked on this for a long time. That was a catastrophic incident. We were one of the few VCs who were non -investors in FTX. We were not involved in any of those kind of scandals. But it was catastrophic and for the customers who lost money. And it was very, very bad for the image of this technology. You know, when that happened, I was kind of depressed about it. And I said, it's really a shame. Like what I saw is that there's this massive gap between how I saw blockchains and how the world did. And at first, I was kind of depressed about that. And then afterwards, I said, you know, I should chin up here and see it as an opportunity, which is why then I sat down for the next 15 months and wrote this book, because I was like, I want to see this as an opportunity to explain this and sort of the glass half full kind of perspective, right?

1:53:28Like how often do you get that opportunity in life to explain something that's so misunderstood? So that's what I'm trying to do. That's what I hope to do. I don't know if it'll work. I think ultimately technology is experienced, not read about. And that's what I spend most of my time doing is sort of helping entrepreneurs build products. And I hope that in a year or two there'll be a bunch of products that you know we I can build things that I can show you like look at this musician doing this look at this social network. And those are those exist by the way and they're growing but they're early still they're not mainstream.

1:53:57Yeah. Most of my understanding up until reading your book was the idea of it being like replacement for gold an alternative currency that protects value. The book is so powerful because it presents a whole other use case that I don't think anyone knows about. It was a very hard book to write because it's, I mean, it's a book about network design really. And so I was like, how do I make this tangible? Right? And so I spent a ton of time, I mean, yeah, just try, like as you probably saw, like telling stories, giving examples. I did a rewrite at one point where a friend of mine told me to remove every adjective from the book.

1:54:37Every ad vermin adjective from the book because I would, when you're writing about abstract things, it's easy to use, like I would say like genuine ownership, like what does that mean? Like and so instead remove it and then add five sentences, like give examples. Yeah. So I just kept doing that over and over and over and it's really nice to hear it just because you know you sit in a room and do that and you're like, I think it's more accessible but I have no idea until someone actually reads it. So I was excited to see that you found it understandable. No, it spoke to me right away and I'm not, as I said, not a technical person.

1:55:13That's great to hear. Thank you. The next section of the book is called the iPhone Moment from Incubation to Growth. Yeah. So I spend a lot of time thinking about and reading about technology history. And specifically computing history. And I think computing history, I think it was like part of my job and just my interest is to try to predict the future. And the best, I think the best guide for predicting the future is in many ways the past, because the world is incredibly complex and multiple, many different things intersecting and, you know, the past reveals patterns that sometimes recur. And specifically with computing, I think you have these kind of repeatable patterns.

1:55:54First of all, you have two major phases for computing movement. The early phase is the incubation phase. That's Steve Jobs and Wozniak. Went to the Homebrew Computer Club in Flip Flops and they hand assembled PCs. That was I think 1979. It wasn't until probably six or seven years later that PCs started to grow and get popular. And then mobile phones, you know, mobile phone, there's a great documentary called, it's on the company called General Magic. I think there were 1994 or 5 and they were trying to create an iPhone essentially. So that was 12 years before the iPhone. And in fact, it's funny because there were a lot of the same people like Tony Fidel and others who did create the iPhone, but they were 12 years too early.

1:56:41And then for those who remember, like, I had a sidekick, I loved the sidekick. It was just mobile phone that had this like flip thing, you know, it was like the early 2000s. And then the iPhone came out, right? And so, but if you look at the stats, and notice Blackbird before that too, if you look at the stats, it essentially like there was some usage, a couple million people, but then it just boom, hockey stick with the iPhone, right? Same with the PC, PC like there was some usage, it's not, you know, like maybe a million people had computers in the early 80s or something, but then it just hit and boom like this, right?

1:57:13AI has been around for 80 years. The first paper on neural networks was in 1943. Long history in AI. There was actually an AI bubble, financial bubble in 1980s, believe it or not. Yeah, it was a thing called expert systems. And there were all these companies going public and talk to AI veterans. They'll talk about all these different, like they call them summers and winters, or like summers when there was funding and people were excited. And then they'd get depressed. And there would be like a 10 year bleak period, 80 years. Right. And then you have chat GPT. and now probably AI's off to the races and going to grow in the same way the Smart BI phone did in 2007.

1:57:50And so I think every kind of computing movement follows this pattern and you have this moment where the right product is built, right? That right moment, it's computing is different than maybe in music or some other creative thing. You're dependent on other things. Like why did AI happen now? It wasn't, you know, open AI is a brilliant company, many, billion people. But fundamentally, it's because the neural networks can be much bigger than they were in the past because the processors they use, the GPUs made by companies like Nvidia have just gotten much, much better, which has followed this kind of thing, you know, Moore's Law, which is this kind of long -term process that's happened in the computing industry where you can pack more transistors on a computer.

1:58:31And so there's like a mill, so computing the big difference is it's not like one person doing it. There's all of these different forces where you can kind of look at these trend line. And by the way, why did GPUs get better video games? It's very strange. Like if we ever have, you know, AGI, like Ultra -Sovisticated AI, it was sort of bootstrapped by video games. People playing Fortnite is what funded GPUs. GPUs suddenly got so good that you could then run LMs on them. And so all computing kind of follows as pattern. So you look, I work on blockchains and blockchains or computers, but they have also to weaknesses kind of like early smart phones.

1:59:00So for example, I talked a lot about Ethereum, but the problem with Ethereum is if you go and you do some action, it can cost you like a dollar. is too expensive. And it can be slow sometimes. And sometimes if you go to some of these applications, like the user experience, there's a pop -up and this like this. And it's just like confusing. And it's very much like old mobile phones before the iPhone. It just wasn't the experience wasn't quite there. And so I think a lot about, as I have throughout my career, kind of like, where are we in this cycle? And when will it happen? And what investments and other things can I do to accelerate that process?

1:59:37So that's what the iPhone, the iPhone moment is sort of my shorthand way of saying all computing movements sort of follow some kind of predictable process. And then in all cases if they're successful, there's a moment where it all kind of all comes together and the world says, aha, I get it. Based on what you've seen so far, what would you say the best? What's the best use case you've seen thus far for a blockchain computer? Yeah, well I think the thing we talked about earlier like digital dollars throughout the around the world is a pretty, I mean that's actually the most popular use case and that's many hundreds of billions a month like it's really actually popular and like I think we take it for granted in the US that you have access to dollars.

2:00:16You can't take it for granted around the world and that's valuable and I think it should be like we go to I go to DC a lot and we argue it should be in the US as interest to make the dollar more popular like the dollar in some ways is the most it's really the most popular product in the world. And it's one of the reasons the US is so successful. And blockchain's make it easier and you know, to use them and to access them. Let's use another one besides that that gives it the casino feeling. Yeah, yeah. So we haven't talked about NFTs. So NFTs are tokens that are one of one token. So instead of being so like something like Bitcoin is what's called fungible.

2:00:52So like if you have one Bitcoin, it's like money. It's like if they're interchangeable. If I have a Bitcoin, when you have a Bitcoin doesn't matter which one. NFTs is just a concept of a unique token that represents something. People think of NFTs as representing like an avatar, like a photo on, that doesn't have to be, it can represent your social media name, it can represent your audience, it can represent your healthcare data, it can represent, it's just the thing you own on the internet, right? Like I just think, for me, things like social networks and games, if you look at the seven hours that A people spend on the internet, three to four hours is social networking and games and messaging.

2:01:24So like they just have to be important things. if you're going to try to work on something that fights the consolidation and concentration of the internet, you have to take those categories seriously. So we, you know, a lot of things around that. I think things around, before I talked about video games and virtual goods and buying skins and things, I think that there's a lot of really interesting ways in which you can think about similar models for other forms of media. We see, like, musicians selling digital merchandise and backstage passes as blockchain items, right? And so they are able to, when they do that, they can bypass the labels and Spotify and build a relationship with their audiences.

2:02:02So they buy a NFT as a musician and you show that you're an early fan and you get to go to see the special behind the scene show and there's people doing things where there's offline online interactions where the NFT becomes a ticket. And the interesting thing there again is removing the gatekeepers and they can invent whatever kind of creative thing they want. And then there's like I mentioned before the narrative, the collaborative of storytelling, like new business models for creative people, I think are going to become very important. And by the way, all these things I'm discussing, like the collaboration, we have two investments that are doing that, and they have products, and like these are real things.

2:02:32They're early, they're not, you know, they're tens of thousands, sometimes hundreds of thousands of users. Remember, the internet is now 5 billion people. So we have many companies that are blockchain based with millions of users, but they aren't at billions of users, which is what people kind of expect now for like mainstream. So these are all things that exists just so you know and like you know people are using. Yeah so I think anywhere where you currently have these kinds of big gatekeepers and games, social media, you know media businesses those are all interesting. I have by the way in the book at the end I have seven sections where there's specific application areas.

2:03:07Finance is interesting and this is not the speculative side of finance things like payments. So payments you know today every payment you do in the world there's a 2 .5 % fee that's associated with it right. One of the interesting things with blockchain and based payments is you can have a direct payment without having to have all those intermediaries and charge fees. That also allows you to do things like people have talked about for years like machine to machine payments. So like one investment we have is if you want to train an AI model, today the only people that can train big AI models are giant companies.

2:03:40So like Facebook just bought, I think it was 100 ,000 GPUs for $10 billion. How does a start start -up compete with that. So we have an investment, it's called Genshin, and Genshin, think of it almost like Airbnb for GPUs. So there's all these gamers in the world who have GPUs. I now as a startup can submit a job, I want to train this AI model, I submit it to this system, and the system then says to all the people with GPUs, hey if you'll run a little bit of code, you can get paid money, right? And then this allows the startup to compete on a level playing field work. Yeah, in the same way that sort of Airbnb, and the way Airbnb uses underutilized, like I'm at way for two weeks, why not sell it?

2:04:23I have a graphics card for gaming, but I'm not playing it right now, why not sell that GPU time? So that's a machine to machine payments. So there's all these ways in which you can use blockchain based payments to create networks that allow startups to compete on a level playing field with big companies. Another interesting one is like deepfakes, right? So, deepfakes are AI -generated video that fakes like a politician said something. It didn't say it. There's people building interesting blockchain -based systems where one of the things blockchain is very good at is proving provenance. It's proving where something came from.

2:04:57And by the way, you're also going to need systems to prove people are real. There's a whole bunch of people working on a thing called proof of person code. So I can prove cryptographically that I'm a real person. And I get a code and there's a whole kind of way to do that. And then I have a code that says, I'm critics and I'm a real person. When I send you an email, you can know that email came from a person and not AI. Because yeah, I can now, like, think about it up until now, you've just sort of detected it based on the text. That's not going to work anymore in AI world. And then moreover, I can say, I'm Chris Dixon, and I created, I test that I created this video.

2:05:29Or I'm the New York Times, and I test this as a real video, or I'm Joe Biden, and I say this is a real video. And so you have a provenance trail, and I think this is going to be just absolutely necessary today, but certainly in five years to have an internet where you trust that these things are real. That system will get created. It will have to get created that system that says I'm a real person, that this is a real video. Someone will create that. We're not going to live in a world of a wash with fake video. The question becomes, in all cases, I believe, is that created by Facebook? Or is it created by a community -owned system, i .e.

2:06:03a blockchain? Shouldn't that information your proof of personhood would exist on a community -owned database, not on a corporate -owned database. So I kind of view it as AI's coming, meta -versus are coming, there's a whole new way, the internet, remember, the internet's 30 years into its development. It sounds maybe hyperbolic, but I think it's credible to think the internet is as important as the printing press and a bunch of other kind of massive technologies. We are very, very early. There's going to be many, many more systems built on the internet. And the choice we have is how are those, those basically, are they gonna be systems that are owned by those five companies?

2:06:37because there's going to be a proof of person though. There's going to be a proof that the video is real. Like, or is it going to be built in this open community on a way, which is with a blockchain? And one other way to think about a blockchain is a community on database that it can also run code and do other things like a computer. But the point is it's owned by a community. Like, you can store that on the Ethereum blockchain that you're a real person. There's actually like a project called Worldcoin that actually we're investors in in Sam Altman from over the eye is the co -founder of, which is a company doing exactly what I described, the proof of person and it stores a record on the Ethereum blockchain, and I keep a private key where I can say, hey, I'm that person, and I prove I'm that person.

2:07:11And I suppose venture capital fits in to help the individual compete with the big corporation with all the funding that they need. Yes, I think the only reason that startups have, I mean, I'm pro people will tell you different things about venture capital, I work in venture capital, I'm pro venture capital. I mean, there's obviously good and bad examples of it like any industry, but I think at its best, it's a resource that lets startups compete with big companies, right? And on a somewhat level playing field, it's not fully level, but somewhat. I mean, the biggest demand, even if we give somebody 10 or $100 million, they still have far less than Google, but they also, you know, just have the energy and bigger of a startup.

2:07:51But yeah, I think it does play an important role to help them compete. We like to say, when we go to DC, we represent Little Tech, not Big Tech, because people say aren't you just saying this to, for the interest? Well, yeah, we are. But our interests are startups, dynamic economy, dynamic internet. So that is in our interest. It is self -interested. But I would also argue that that's generally in the world's interest as well to have a dynamic open internet. We're pro -opens or software. We're pro -opens or say, I, we're pro -blockchains. We want to see a big dynamic open internet. And that does benefit us.

2:08:24But I think I would argue benefits the world. It just so happens we're aligned with the world in this way. Tell me what was the cause for optimism? It's the conclusion of the book. Well, you know, the book was written as a general audience explainer. Like, one question when you write a book is like, if you actually look at book sales figures, like compared to internet products, like blogs and things, they're, they're, like, not that many people read. You can write a blog post, it gets read by a lot more people than a book. And so when you write a book, you have to ask, you wrote a book, you probably asked yourself this.

2:08:54But like, you know, why am I writing a book as opposed to a blog post or podcast or something like this. And I've had a number of books in my life that have really had a profound impact. And so when I wrote the book, I was a lot of it. I was thinking about people early in their career and what they're thinking about doing. And so that last section caused for optimism is a little bit more of a manifesto. And it's hoping to inspire some of the readers, especially people maybe that are building stuff. There's sort of various powerful forces in the technology industry that I think are kind of put wind at the back of this movement.

2:09:23And one of them is just sort of the fact that the infrastructure and all the kind of core technology has been on a steady improvement course over the last decade and continues to improve. And as that improved, talking about the iPhone moment, like you get to a point where it's just kind of good enough to build great products. Another is that there's a natural network effect. The more people that use blockchains, the more valuable they get because they're sort of fundamentally social technology. So, and I sort of ended with this, you know, thinking about, I always as a fan of history, like to think about the early days of people tinkering on computer systems and the sort of two ways to look at that.

2:09:59When you look at those, you know, the early Google founders, the earliest Wozniak and Jobs, one is, wow, they got a lot of work to do. They're really, that's a really nascent industry. And the other is, like, those are the good old days. Like, that's like the fun tinkering times. And so, that's kind of how I end the book, because I'm sort of saying these are the good days of blockchains that hopefully someday 30 years from now people will be talking about this important technology that is used by billions of people and the people now who you know are misunderstood and maybe mischaracterize are actually kind of going to be the tinkerers that led to that movement.

2:10:35So you know I think it's hopefully kind of an exciting time for them. I think the good news is that for the typical user it'll be the same experience. They won't necessarily know that they're figuring out they're working on as blockchain related. So if something great comes along and it happens to be on the blockchain, that would really open the doors. Yeah, I think the one thing that they may notice different is like what I was saying before, like the abilities switch. Right? And the same way you kind of, you may not know the details, but you understand the web is different. Like I can download Chrome or I can download Safari.

2:11:06Right? It's sort of the service is independent of the software. That will be the difference. But I think you're right. Otherwise, it should be, It should be identical in field just as modern in advance. If you were going to start today building anything is there any reason not to build on a blockchain? Yeah, so there's always a cost to building on a blockchain because there's this game theoretic mechanism I described before that kind of keeps keeps a bunch of different like computers that may not trust each other collectively honest and That's what's called a consensus mechanism and that has some overhead So if you're doing some very high -performance thing like a you know, Grand Theft Auto So you don't want to run grant .com blockchain.

2:11:45It's going to be impossible or something that's highly performant like that. Generally, what you want to store in a blockchain are the things that shift power to the users. If it's finance, it's like the user controls their money. If it's social network, the user controls their name and their data and their audience. So that's how I think about it. It's like there's a cost to it. You want to put just enough to shift the power to the users. But outside of that, you just like computers you do the regular thing. And it sounds like the cost to it has a benefit that's really worth the cost. I think so, and the benefit is that the user controls that aspect, the end user, the little person, not the company controls that aspect of the service.

2:12:24And so, you know, it's a way to shift power and money back to the edges of the network. So it's also possible that in the way that Linux took over, there could be this open version of the web going forward based on blockchain. Okay. I think so. I hope so. In the chapter on community -created software, I kind of, what I say is the Cathedral in the Bazaar, which was referring to the 90s battle over operating systems, like IC blockchains versus centralized services like Facebook as today's Cathedral in the Bazaar. Blockchains are the Bazaar and these centralized gatekeepers are the Cathedral. And I think ultimately communities and markets and sort of bottoms up processes, they're chaotic and they take more time and they create this casino culture and all the controversy and everything else.

2:13:09But in the end, I think bottom of communities are a very powerful force and can ultimately be better and win out over these kind of cathedral centralized services.