WBD405 Audio Transcription

The Bitcoin v Crypto War with Udi Wertheimer, Crypto Cobain, Alex Gladstein & Allen Farrington

Interview date: Monday 4th October

Note: the following is a transcription of my interview with Udi Wertheimer, Crypto Cobain, Alex Gladstein & Allen Farrington. I have reviewed the transcription but if you find any mistakes, please feel free to email me. You can listen to the original recording here.

In this interview, I talk to Allen Farrington, Crypto Cobain, Udi Wetheimer, and Alex Gladstein. We discuss tokens and securities, scalability vs decentralisation, nation-state resistance, and building on Bitcoin.

“On a long enough timeline every single social, political, etc., pressure is going to be applied to test the strength of these systems and anything that’s not strong enough will be erased.”

— Crypto Cobain

Interview Transcription

Peter McCormack: Right, hello, thank you, welcome everyone.  I think this is the most diverse panel we've ever had in terms of talking about Bitcoin and various things.  I think Alex Gladstein and Cobie on the same podcast is hilarious and really interesting.  So, listen, welcome everyone, welcome Allen, great to have you on the podcast for the first time.  Actually, Cobie, this is your first time as well, which is great.  I've tried to get you on for a couple of years now and never made it work.  Alex, a regular guest; Udi, regular guest.

So, this has been triggered mainly by Udi.  Udi recently has been talking quite a bit about Ethereum and Bitcoin and triggering people, but we've also been talking about it in the background, and I think I know what he's trying to do.  Allen, you wrote a fantastic paper, which I've read and my brother also read and hasn't stopped talking about.  Alex, you're an advocate of Bitcoin and a human rights activist and talk a lot about why Bitcoin is so important.  Cobie, you are a degenerate trader, but also very technical, which I don't think a lot of people realise; you've talked to me a lot about this stuff.

So, I thought it would be good to bring everyone together to talk about this stuff.  I'm going to moderate as best as possible for impartiality purposes, but let's be honest, I am a Bitcoin maximalist, but recently I've come to the position where I think Bitcoin's won the war on money and I can't be bothered to fight and argue people about altcoins anymore.  Listeners to my podcast aren't all maximalist, some invest in all kinds of coins, some just in Ethereum, and they're always writing to me.  So, I think it's a good subject to cover.

So, that's my intro done.  Udi, I'm going to start with you, firstly.  Can you talk to me, or just explain what it is you're up to at the moment?  You're triggering people; what's this all about?

Udi Wertheimer: Me triggering people is not new, but I guess the current topic is new.  Look, I guess it's a good opportunity actually to talk about it, because people when they read tweets, it's very easy to take them out of context and misunderstand.  Here's what I'm not saying, and actually it's kind of ridiculous that I have to clarify that, but here's what I'm not saying: I'm not saying that you should buy Ethereum, I'm not even saying that I like Ethereum.  The fact that I have to clarify that is absolutely ridiculous, because anyone who knows me for over a week sees me as an Ethereum hater.  Most of the people triggered by me are because they consider me an Ethereum hater, so it's kind of funny.

Anyway, what I am trying to say is I do think that Bitcoin is the most important invention, or discovery, of all time, or at least of our time, and I think we're doing a very bad job of convincing people of that recently.  I think that the arguments that we're making are really bad, and they're basically four-, five-, six-year-old arguments that don't match the current reality anymore.  So the thing is, if someone is undecided about whether or not they want to invest in Bitcoin, and then we tell them the reason they should invest in Bitcoin is because proof of stake is bad, we're not realising this, but we're making a very bad argument that's going to convince them to not listen to us.

So, that's kind of my point, and I've been talking a lot about toxic Bitcoin maximalism, and I've been saying a lot that toxicity's bad.  But the reason I'm saying that is not because I think people should be nice to each other.  I'm not being particularly nice to anyone; I don't think people need to be nice if they don't want to.  But the toxicity I'm referring to is specifically about calling things that you don't understand, a scam.  It makes you look not very smart and it makes you look very unconvincing to people. 

So, if people already give you the time of day, if they're saying, "Okay, I'm going to listen to this person about whether or not I should be interested in Bitcoin", and then you say something like, "Ethereum had a premine, so it's bad", you lost the argument, because the person who's interested in maybe buying Ethereum, they know that Ethereum had a premine and they don't care.  Like an investor who bought Amazon stock yesterday, they know that Amazon had a cap table of founders and seed investors and they know that they got a premine of Amazon stock, and it's 20 years later and they don't care.  It's not why they're buying Amazon.

Similarly, for people who consider allocating into Ethereum or anything else, Ethereum is just an example, or anything else, they don't care about the premine.  They're not seeing it as a replacement for Bitcoin, they're not seeing it as hard money for the world, which is how a lot of bitcoiners try to promote Bitcoin.  They're not saying that those things, as compared to that, and they don't care that it had a premine; it doesn't matter, they're trying to make an investment.

So, whatever we think about that, we can think, "Oh, the premine is bad for reasons ABC", that may be true; but if your goal is to convince those people who are just seeking to generate a return on their investments, then you're making a bad argument that's going to make them not listen to you anymore.  That's my point.

Peter McCormack: Well, it's a good point.

Udi Wertheimer: Also, I think we need to kick out all the toxic maximalists.

Peter McCormack: I think it's a good point, and that's why I found Allen's paper super interesting.  I think it's not a good idea to be scaring people off by acting like dicks, and I think it's a much better place to be teaching about the different technologies, why they work.  But hopefully, if people are making money on their altcoins, I would want them to possibly consider also thinking about investing long term in Bitcoin, and I think it's far better to have a constructive dialogue than yell at people.

And actually, the reason I liked Allen's paper, I'm going to quote you, Allen, from it, because there's something that really stood out in it for me.  Bear with me, I've just got it here.  It was when you made the point regarding Ethereum, you actually referred to, "The permissionless nature of Ethereum-based applications collapses barrier to entry", etc, and you said, "This is an admirable achievement.  It's easy to see why this combination of features enormously benefits consumers", etc. 

The point being is the paper wasn't just there to criticise Ethereum for its technical structure or proof of stake; you actually gave it credit where credit was due, and just made more economic and technical arguments.  How much do you want to talk about that, Allen, because this is the first time you've been on the podcast, and your position with this?

Allen Farrington: I'll talk about it for as long as you want.  I guess it depends how much you think I'm going to disagree with Udi and how much of a debate we're going to end up having, because I mean I don't disagree with anything that you've said so far; I doubt I will.  I think to the extent we even have a difference is probably just a difference of perspective.  I mean, I said this on Twitter the other day, and it's not meant as an insult in any way, it's not like I have the right perspective and Udi doesn't; it's, we just naturally, given our roles and our interests, we think about this stuff differently.

I think picking up on the, I know you didn't exactly quote it, but the part of the paper that you're referring to, Peter, I think that fits very nicely.  I'd actually like to hear what Udi thinks about this, because I think it fits very nicely with his introductory comments in that, if somebody is coming to this, for the sake of argument, via pro-Ethereum people who seem perfectly reasonable to them, I agree that it is unlikely to be helpful to that third party, who's potentially on the cusp of being interested, to immediately shut it down by calling them scammers. 

I would much prefer to invest the time educating them why, to go back to Udi's point, the premine was a bad idea, rather than just, "It sucks because of the premine", because they don't know what that means.  Udi, debate, go!  What do you disagree with?!

Udi Wertheimer: Dance!  So, I think first of all, the article, Allen's article, I read most of it.  It's, unlike a lot of the discourse on Twitter, it's actually making actual arguments and I thought they were well-reasoned and they didn't go to the length of calling other people scammers, which is great.  So, in that regard, I thought it was much better than most of the discourse on Twitter, for sure; it was a good read.

The thing is, it's more than just, yeah, you can go into why the premine is bad; maybe that's what we should start talking about.  I think it's not bad, is kind of what I'm saying.  I think not only that it happened and I think it doesn't matter at this point, and some people made the choice.  If you're going to look at the premine in the setting of 2015 when the decision actually mattered, and you had to choose if you're going to invest in the Ethereum presale or not, then I can see the reason in saying, "Well, I believe [back in 2015] that in order for those things to succeed, they need to be well distributed from the start.  Ethereum isn't, so I'm not going to invest in it"; that's a reasonable argument.  It turned out to be wrong, by the way, but it was a reasonable argument back then.

But now, in 2021, it's just not a reasonable argument anymore, it just doesn't matter.  It does matter for one thing, which is if you're going to say Ethereum tries to be Bitcoin, then you can say, "It can't be Bitcoin, because it will never have the distribution of Bitcoin", and that is true.  However, setting that as a moral framework is, in my opinion, an incorrect one; there's nothing immoral about it, it's a choice.  They decided to design something else, which is not Bitcoin; so, just because it is not Bitcoin and never will be Bitcoin doesn't make it wrong, it just makes it something else.

If we're going to tell people, "You shouldn't buy ETH, because it's something else", just because it's not Bitcoin, I think that's a bad argument.  Of course it's not Bitcoin.

Peter McCormack: Yeah, let me bring Alex in now, because Alex, you approach this whole subject from a point of human rights.  You and I have lots of interviews and discussions and debates.  I'm joining you at the Oslo Freedom Forum to discuss Bitcoin being used in more challenging parts of the world.  Hard money and the importance of Bitcoin, you look at it a different lens than maybe other people, so your point of view on this is super helpful.

Alex Gladstein: Yeah, maybe, and obviously I think I'm going to organise some disagreements here, but I just wanted to throw this out here.  I just think generally, crypto, the word, doesn't really mean anything.  I think that the crypto revolution's failing.  I think that anything where the fourth largest asset is Cardano, and that's representative of the industry, is failing; I think toxic maximalism is helpful for Bitcoin; and I think that proof of stake is the existing system and it's what Satoshi wanted to get us out from.  And my perspectives are very different from a day trader, who's trying to make money in the short term, meaning trying to put money, dollars or pounds, into an asset and then withdraw more dollars and pounds later.  We're trying to get out of the system entirely, so I think I have a different perspective there. 

Then finally, one of the reasons I'm so critical of non-Bitcoin projects is not necessarily because I have any sort of animosity towards them; it's that I think a lot of the creators of those projects are acting in some way fraudulently by claiming that their project is decentralised, when in reality the US Government's just going to come and get them at some point.  Gary Gensler has been talking about DINO, literally he says DINO, Decentralised In Name Only.  And the long arm of the state is coming.

If you're not actually decentralised, like if you're Uniswap and you've got to have a chief legal officer, I'm sorry, the government's going to come and get you.  That doesn't mean I'm rooting for the government to come and get you, it means that I'm acknowledging that the government's going to come and get you, and that's why Satoshi disappeared.  So, those are just some things I want to throw out there that should hopefully stir the pot a little.

Peter McCormack: Okay, before we get into stirring the pot, I'm just going to let Cobie come in.  Cobie, we've known each other for a couple of years now.  A long time I've wanted to get you on the pod and talk to you.  I think a lot of people know you as your Twitter personality, but don't realise you actually have a very technical background, you understand the technical side of various crypto projects a lot better than I think people realise.  I wanted you to join this conversation just because of your background understanding.  You're one of the longest people that's been in the crypto space, and I just thought you'd bring a different perspective into this.

Crypto Cobain: Yeah.  I like that you started the podcast with, "We've got the most diverse panel we've ever had", and if you squint, everyone looks exactly the same!  Gladstein hasn't got a beard, but otherwise we're just interchangeable; there's maybe a slight variation on accent.  I like that!

Peter McCormack: Do you know what, as the words came out of my mouth, I was thinking, "Yeah, that's not what I meant"!  I meant diverse in terms -- I know what you're saying.  I meant diverse in terms of, we've got from human rights activist down to degen traders, that's what I meant.  But obviously, we're all white, middle-class males, probably within about ten years of each other!

Crypto Cobain: Yeah, and I've got to say, Allen, you've got a lovely voice, I could listen to you talk for ages, mate.  You should do an audio book version of your paper, because the paper's very dense and I struggled through it.  I did read it, but I struggled through it.

Allen Farrington: Guy has done it and actually, Guy and I have talked about this and I far prefer his voice.  But sure, I'll do one for you.  We can talk about that later!

Crypto Cobain: Yeah, I'll send you an NFT in exchange or something!  Yeah, I mean I guess my perspective is not super exciting on these debates.  I think they're all very philosophical and not super actionable.  And ultimately, what a bunch of people are saying to each other on Twitter does not really matter in the grand scheme of things; whether someone's being a bit mean in calling someone a scammer on Twitter really only matters to the person that's saying it and the seven people that see it.  And on a proper long timeline, it doesn't really matter, does it?  It doesn't materially impact the success of…

I think it's a little bit arrogant to suggest that any of us can say some shit and then Bitcoin wins or loses because of how we behaved on Twitter.com on our fake accounts; I don't think it matters that much.  But it makes a good podcast; people tune in.  So, yeah, I'm for it, I'll say some stuff I don't mean.

Peter McCormack: Well, listen, so let's start at the point of decentralisation.  So, my podcast is an onboarding tool for people to understand about Bitcoin and as I say, new people are coming in all the time.  I get emails every day and they always ask me about Bitcoin and altcoins and should they invest in Solana and why don't I have an allocation to ETH?  I've come to a conclusion, as I said, Bitcoin's won the war on money and that's all I care about, and I consider other crypto projects really just to be things that aren't meaningfully decentralised, and really their innovation is that they are permissionless, in that you can essentially swap assets between wallets.  And that's kind of interesting, but it's just not something I care about and I'm not going to invest in.

Allen, I think you coming in here would be super interesting, because you've looked at the innovation that these protocols achieve.  I don't think there is a war of Bitcoin versus Ethereum anymore; I think it's Bitcoin versus sovereign currencies, and I think there's a separate war which is coming, which is protocols versus protocols.  I've seen NFTs moving between Solana and Ethereum, and so I think they're actually fighting two separate battles now.

But you've done a technical and economic analysis of why these protocols may fail.  Do you want to give a bit of a TLDR on what you think the issue with them is?

Allen Farrington: Yeah, sure.  It's a little bit tricky, because there's, what is there, like six?  Well, one of them's just why we could be wrong.  There's five different sections of this, which are all different in theme.  I don't want to waste everybody else's time with it; it kind of deserves its own episode.  I think you're going to get the Big Al, who has stingers, to come and talk about it specifically. 

But I guess, to pick something that ties it all together, or that the consequences are evident in each of the different areas, I think it's really simple and I think this is going to make Udi really mad, because this is the kind of thing that you absolutely cannot say to a newbie, it will just confuse the shit out of them, which is that the innovation of Bitcoin and, if you really wanted to annoy different people for different reasons, if you want to call it, "the underlying blockchain technology", what that innovation achieves is a better, and/or the best way to do money.  How it works requires money and if you change the innovation to try to achieve something else, I don't mean to be too sweeping about this, because I don't think it's a logical necessity, it just seems to have been the case with every attempt, it breaks in some or other way.

I think the most obvious way that it's likely to break and it seems to have broken, is something that Alex alluded to before, is that it becomes impossible to credibly claim it's decentralised.  And then, depending on what the individual project is, you get into other issues of possibly the credibility of the marketing, so this will be the point about whether or not it's a scam, and whether or not the people promoting it are being honest, which I don't really want to take a view on completely holistically, but I understand where those issues come from.

Then the other point that Alex mentioned too is, if it isn't sufficiently decentralised, and people are perfectly free to disagree with this, but my argument would be none of them beside Bitcoin are, they kind of have a catch-22 in that either they won't succeed organically, in which case who cares; or they will, in which case they'll be shut down, and therefore they won't.  That's probably a good point to leave it at.  I think all of that though follows, and we take that in a bunch of different directions, but I think it all follows from, blockchains are for money.

Peter McCormack: So, do we think these will be shut down, because my experience from following the SEC investigations is that actually, they tend to get a slap on the wrist and a fine, which is perfectly affordable because of the amount of money they made.  I mean, I can't remember what the EOS fine was.  I think it was millions.

Crypto Cobain: $20 million, $25 million?

Peter McCormack: Yeah, something like that, $20 million, $25 million, on something that raised billions in Bitcoin, 120,000 Bitcoin.

Alex Gladstein: Much more likely is they get pressured to change a little bit.  If you look at Uniswap, v1, v2, v3, much more likely is that over time, the VCs who invested in it and who helped make the company run kind of twist the arm of the people making it, so that the code that they release is more in line with what the regulators want.  It's probably not going to be something where they come in and shut it down, although they'll do that for some projects.  We'll see with the Gensler regime.

But it seems like they're going to try and just pressure these projects to be a little more compliant with the KYC AML regime.  I mean, look at Binance, look at what happened to BitMEX.  So, I think they're going to try and take both "decentralised" and also centralised projects and just try to pressure them so that they're compliant with the state.  And that's the big test that all these projects are going to face in the coming years.

Crypto Cobain: I do think that is right.  I think that is basically true, and I think Uniswap is a good example, because when you say Uniswap, you could be talking about a bunch of things.  You can have Uniswap as a company, which has got employees and a chief legal officer, as you mentioned; but you can also have Uniswap v2, which are contracts that are deployed on Ethereum and they're out there, they can't be changed anymore.  Then you've got the Uniswap front end, which is owned and run by the Uniswap company, but you could also have other front ends that are run by other people that Uniswap are not in control of, that interact with the contracts that are on Ethereum, that Uniswap, the company, can no longer change.

So, sure, Gary comes along, Big G comes along, and he puts a bunch of pressure onto the VCs on Paradigm or on whoever is behind Uniswap, don't really remember, I think it's Paradigm; Paradigm and the Uniswap general counsel.  They'll be like, "Look, we don't like what you're doing".  And maybe Uniswap v4 then is completely permissioned, or maybe they change their front end to have KYC requirements.  I think 1inch, in the last couple of days, has added a weird thing on their front end, where if you're on a VPN, it actually blocks you going onto the site now.  And sure, that will happen.  You see that already in motion in a lot of places.

But contracts that are deployed on Ethereum, Uniswap v2, with a front end that is spun up by whoever, those can't be changed, Uniswap can't do anything about that anymore, they've already put it out into the world; it's stuck.

Alex Gladstein: Right, so I think the question is just going to be the platform that has the most users and network effect, that's where the government's going to focus on.  And we can also look at Dai.  I think Dai's a really interesting example as well, of state capture, or attempt on state capture of a "decentralised" protocol, whereas of today, most of Dai, as far as I understand, is backed by USDC.  So, I think this is the way the government comes after these projects and not necessarily putting them all in prison tomorrow.

Crypto Cobain: Yeah, I think stablecoins is a good one --

Udi Wertheimer: There are two approaches.  It seems like there's the Gladstein approach and there's the Cobie approach and they're very different, and I think we need to talk about the difference between them, because none of them is invalid.  The approach that Alex is talking about, and I feel that I'm pretty close to that one too, is that you need to be as reliable and as sustainable as you can be, and not depend on anyone else, and not allow any form of single point of failure, and that's what Bitcoin is.  I think that's very important to have.  I think, if we don't have that, we're going to have problems.  I think we need that and it's great that Bitcoin exists, and we don't want to take risks with that.  We want to keep that at the same thing.

But also, there's another approach for censorship resistance, which is just, "You know what, we're going to shoot all of our cannons at those people, and it's just going to be hard for them to handle all of it".  So, they're going to take some of it down, but it's going to be difficult for them to take all of it down.  And, once they take something down, we'll just pop it up again with a different name and we take it and fork it and change it a bit.  Maybe we keep the files a bit more anonymous so that they're safer and we just keep doing it again and again and again.  And then, maybe for the specific particular project, that project might be a risk, existential risk maybe, but for the bigger picture, we might be able to just keep doing this.

Now, I don't know if it works; it might fail.  Some people say, "No, it's not going to work.  SEC's going to take all of them down".  It's possible; so far they haven't though.  And you give an example of something like Binance or Ripple, well Binance and Ripple have done extremely well and they're still around.  So, are they going to have to take some concessions?  Probably.  They're not going to be like Bitcoin, that's for sure.  But they did gain some ground.  If you look at where we were five years ago, SEC just had more power over those things, and now it has less power.  That's a fact.

So, I don't know what happens.  I think both approaches are interesting to explore.  I don't think one of them is immoral.

Alex Gladstein: I want to be careful to separate out doing well and earning a lot of money, and then being decentralised.  I think that Binance and Ripple, yes, have delivered enormous returns, especially to the creators, and we can't deny that the best performing coins are Solana, Dogecoin.  It's not Bitcoin, right, recently at least.  Historically, Bitcoin is the best performing since its inception, but not recently.  And I think that's an important distinction, and you can have that distinction, you can understand that Bitcoin is not going to generate the best return in dollars for an investor in the next 6 to 12 months; but you can understand that it has really important qualities which may make it the best investment for the next ten years.

Then, we're trying to sort out what happens in the next few years, and with regard to some of these other projects, I mean if you just look at stablecoins, which we maybe want to focus on for a second, I mean the overwhelming volume on these things is with Tether and USDC globally, and those are both state captured.  They have blacklists that can be censored, etc.  So, we haven't seen the decentralised stablecoin take off.

Now, you guys know the numbers better than me, but also still, Uniswap, it's incredibly impressive what they've achieved, but still not comparable to the centralised alternatives daily.  So, I don't know, that's kind of where we are, right.

Crypto Cobain: I think it's important to look at decentralisation as a spectrum, right, where you've got Binance, which is not decentralised at all, because it is a company, although no one seems to know where it's headquartered, so maybe it's a little bit more decentralised than Apple, but it's just obfuscation, or whatever.  Then you've got Bitcoin on the other end, probably the most decentralised project in existence. 

Then somewhere in the middle, you'll have Ethereum, which is more decentralised than a centralised company, and less decentralised than Bitcoin.  And then you have Uniswap, let's say Uniswap v2, where the contracts are deployed on Ethereum; it inherits Ethereum's decentralisation.  The contracts are not owned by anyone, they can't be modified anymore.  Uniswap as a company, which is very similar in decentralisation to Binance, is not the same level of decentralisation as Uniswap v2, which inherits its decentralisation from Ethereum.

Then you can argue, is Ethereum decentralised enough to withstand social and political attacks, etc.  And I think there's a bunch of nuance there.  A bunch of people will say yes, a bunch of people will say no.  I would probably lean on the no side currently, but I think over time probably it's fine. 

Alex Gladstein: Just on that, do you think that the proof of stake thing is the Ethereum folks bowing to that kind of environmental pressure, or do you not really buy that?

Crypto Cobain: No, I don't think it's bowing to environmental pressure.  It was on the roadmap way, way before anyone really cared about the environment stuff; they've just been very slow to deliver.  If they delivered it two years ago, no one would have even been talking about NFTs ruining the environment, would they?  So, I don't think so.

But I think it's important to recognise that spectrum of decentralisation when you talk about these things, because you get projects that spin up where they do own the rights to the contract, right?  There are people that you can apply pressure to that you can threaten to -- you can say, "Turn that off or you go to jail", and those people are probably going to turn it off in that situation.  They're going to go on the run, or they're going to turn it off.  Most people are going to turn it off.

Then, there are projects where there's not really a person you can apply pressure to anymore.  You can say to Uniswap, "You've got to close your company", but Uniswap's deployed contracts that they don't control anymore will continue to exist on Ethereum.  And that's why I think the philosophical arguments about stuff and how you talk about it on Twitter don't matter too much, because I agree that Big Gary's going to come for people; and I agree that on a long enough timeline, every single social, political, etc, pressure is going to be applied to test the strength of these systems, and anything that's not strong enough will be erased.

I think stablecoins are a massive weak part in the ecosystem, because they require a central issuer and I think it would be relatively trivial for a government to say to Circle or Tether, "I want you to blacklist Tether USDC or USDT interacting with Uniswap ever", and that is a piece of pressure they can apply, but it's applying it to the stablecoin issuers.  I don't even know if it's Circle; that's quite bad, isn't it?  It's applying it to the stablecoin issuers, rather than to Uniswap.  You've got to figure out where is the centralisation in the system, where can regulators or political actors or whatever apply pressure.  And I think stablecoins are a massive weak spot in that.

Peter McCormack: That's a very interesting point, Alex, where you refer to state capture.  How do we compare that to, say, how we have now OFAC-blacklisted Bitcoin addresses, so if somebody was to make a mistake in dealing with a blacklisted address and that was publicly available, and you could find out who that person is and potentially face criminal charges?  We've seen what's happened recently with Virgil Griffith, what he did over in North Korea, and he's probably facing a long jail sentence. 

Obviously, the state capture's different, because there's not a centralised point where you can blacklist an address and force it to not be able to be used, which is my belief you can do with Tether and USDC; this is more of a threat that if you interact with an address that you could face charges.  How do we feel about that?

Alex Gladstein: Let me give a real-world example.  I was on the phone yesterday with people from state department, from OFAC, from Treasury, we were talking about Cuba.  Biden Administration wants to figure out ostensibly how to get money to Cubans from America from their families.  Now, obviously the easiest way would be to lift the restrictions that Trump put on, which basically ended all of these 400-plus Western Union brick-and-mortar shops inside Cuba; the restrictions Trump passed closed them all.  So, Cubans have been really not able to get money to their family very easily since then. 

That's why people have been using Bitcoin, which has exploded on the island; so much so that the Cuban dictatorship came out with a statement publicly three weeks ago, instructing the central bank to acknowledge and regulate Bitcoin.  That is just unbelievable that that is happening.  There are hundreds of thousands of Cubans using Bitcoin.

It was interesting, because in these conversations, you have big tech companies, and they need to get permission from the US Government to go in.  That would be the same with Strike, with USDC, with any kind of company that has a legal officer; they would be worried about going into Cuba, they would need permission from OFAC, they would need a licence.  So really, at the end of the day, it comes down to, is your team worried or not.

Is the MakerDAO company, or is Andreessen Horowitz going to be worried about people using its stuff in a particular country or jurisdiction?  And that to me, as a human rights advocate, is what separates Bitcoin from the other stuff.  I'm on this call listening to the government argue with these companies.  It's useless; it's just word salad.  They're not achieving anything.  Meanwhile, Bitcoin is out there empowering people every day, and that's why I'm in this thing.

Peter McCormack: Allen, can we just talk a little bit about the part of your paper where you referred to the centralisation of Ethereum, and the reason I ask this is because we talk about whether something's meaningfully decentralised?  I think we can agree, you cannot switch off Bitcoin; it's just impossible now.  You can regulate it, you can ban it, but you can't stop somebody running a node and you can't stop the network now.  There's no single point of failure, I believe, within there.

But with regards to Ethereum, last night I was out with somebody who works for Amazon, and one of his jobs is essentially to keep Ethereum running and to keep it up, and he was talking about some of the challenges.  But he's a bitcoiner; he wasn't highly critical of Ethereum, but he just said, "One of my jobs is to just keep it running; I have to keep it running.  We had downtime recently and I was involved in what happened with that".

You talked about the fact, in your paper, that Ethereum is centralised enough that if people were threatened at the right point like, "Switch this service off or you face jail", I'm paraphrasing what you said because I can't remember exactly, but can you just talk about that bit, because that would imply to me that Ethereum isn't meaningfully decentralised?

Allen Farrington: Yeah, I think you're right though to make the clarification, and Cobie made this point very well earlier.  There definitely is a spectrum of decentralisation; I think you have to be honest about that.  I don't mean to speak for Udi, but I imagine that his complaint would be of "toxic maximalists" that they also pretend there is no spectrum of decentralisation; it's Bitcoin, and then everything else is completely centralised, or whatever.  So, that is important to clarify and to be honest about.

But I think I said right at the beginning, half an hour ago or so, that I would deem Ethereum to be not decentralised enough, and I think Alex's comments just now reflect that perfectly.  But it shows you what it is not decentralised enough to achieve, if that's the kind of thing that you care about achieving.  And actually, you were quoting me quoting Pomp, I've just pulled it up in front of me, who says, and this is a quote when he's speaking to Jack Mallers on his podcast, "All the stuff that claims to be decentralised, I just asked the founders, 'If the government came and said you had to go to jail if you didn't shut it down, would you shut it down?'  Oh, you could?  Then it's not decentralised".

Obviously, he's being a bit trite there, but I think that basically is a good test to keep in mind.  And I'll admit, by the way, that I'm probably, even on this call, I doubt I'm the foremost technical expert about how decentralised or not Ethereum is, but when we were doing the research for this, some of the data that we were pulling up quite easily, and actually your Amazon friend's comment I think, well not even his comment, his entire job, sort of validates this, it is really difficult to make -- if you assume enough malice on the part of the state, then it's quite clear to me that it's not sufficiently decentralised.

That's probably my preferred framing, not shouting about whether or not it's decentralised, and also not completely putting it down on that basis, but just being honest about how decentralised it is, and why that even matters in the first place.  So, I think Alex mentioned this before, Udi's tweeted about this a lot, although usually in a kind of troll-y way, that the problem is, I think certainly to my mind, probably to Udi's mind as well, it's not the fact of how decentralised it is, it's whether or not people are being honest in their communication, particularly to retail investors, or just anybody, I guess, who is new to all of this and to whom it doesn't mean anything.

If they were to imply, "Oh, it's like Bitcoin, but it's different in this way", that's obviously dishonest, because it doesn't have any of the nuance that we're trying to convey just now.

Peter McCormack: So, Udi, on that point them, do you think this really comes down to framing and Bitcoin is completely unique compared to all these other crypto projects, and we should really separate, there is Bitcoin, then there's this "crypto industry", and therefore the crypto industry, we should really be considering these as companies?  Because, if it isn't meaningfully decentralised and it's going to be state captured, it's going to be regulated, then it really should be considered more like a company, and that's how we should be framing it.

Then, if these are companies, then at least if we consider them like companies, at least we can recognise, "Well, what is the innovation here?  What is it these crypto projects do that offer some kind of innovation?"  Maybe Uniswap is a better way of trading; maybe there's something better there.  But then also, when I say that and I ask this question, I think if these are state captured, is there any real innovation, because scaling is an issue and should they really just be operating on an Oracle database?

Udi Wertheimer: Right, so first off, I think there's a lot of hubris in just flat-out announcing that those things are going to be destroyed by the state at some point; we don't know that.  They might, I think it's very possible, I think that there's no doubt people like Gensler would want to shut it down.  I'm not sure they succeed, I'm not sure they have the political capital; I'm not sure.  So far, they've failed pretty miserably; it's been many years and they didn't.  Now, I'm not saying they won't, we just don't know.

So, proclaiming Ethereum is not decentralised enough, I can see the logic for why that might be true, but it's not a fact.  And if it's not a fact, then people who are saying that it is are not liars.  You have an opinion and they state their opinion and maybe their opinion is wrong, but that's not false marketing; that's what they truly believe.  Of course you'll find in the Ethereum community and the Bitcoin community and whatever community you want, you'll find people are being dishonest; they exist everywhere.  But I think most people, they truly believe what they say.  They're not lying, they're not scamming anyone, they're just saying what they think.  So that's for that point.

Now however, there's a piece by Pete Rizzo today on Forbes about this topic exactly?  I read it, I thought it was very good.  Pete obviously believes, like I kind of do as well, that there is a lot of merit in focussing only on Bitcoin and not the other things, and that it makes sense to separate them as different things.  And I think that is the way to look at it, because they are two separate things.

However, on the point of why we should even be talking about this, it's actually a good point.  A lot of people have been telling me, "Why does this matter?"  We're talking about this on Twitter, we're talking about this on this podcast, it doesn't change anything, it's not going to affect the trajectory of Bitcoin.  And I fully agree, I think Bitcoin is going to do well in the future and I don't think that whatever we do is going to change that significantly.  It will to some degree, but it might affect timelines, it might affect things like that, but it's not going to change the trajectory of history in my personal opinion.

However, those people that we call bitcoiners, or Bitcoin maximalists, a lot of them are my friends; I consider them friends at least, some of them don't consider me a friend anymore, but I consider them friends, and I think they're hurting themselves with this position.  I was attending a hackathon that Jeremy Rubin threw together in Austin, I believe it was a month or two ago, and the idea of the hackathon was, "Let's open our minds, let's look at what things are happening on other ecosystems and maybe we can learn something from it".

I gave a panel on that hackathon and these are all Bitcoin developers, right, and I wanted to talk about Uniswap, just I had a point to make about Uniswap.  So, before mentioning it, I asked, "Who in the audience knows what Uniswap is, or do I need to explain it, or do you guys know?"  It turned out, out of close to 100 people, maybe two even knew what it was, or what the concept of an automated market maker was.

Now, that is an issue, that is a cultural issue, it shouldn't be the case.  Even if you think that Ethereum is bad and you think that it's not going to survive, I kind of disagree, but even if you think that it's not going to survive, that's fine; but that's no reason to shut yourself down and not learn about any of those things.  There are important things happening and we've created this culture war.  It's literally considered immoral to talk about Uniswap, just to mention it, and that's ridiculous, that's absolutely ridiculous, that's hurtful.  Not to Bitcoin, Bitcoin will be fine; it's hurtful to us as a community, and it's just not a way to go about things.

Alex Gladstein: Can I push back there?  Yeah, that's a lot.  Great stuff, Udi.  Let me go one by one.  The first thing you said, Ethereum, I mean if we're talking about Ethereum decentralisation, we have to talk about the monetary policy, we have to talk about the hard forks.  I mean, nobody knows how much ETH is going to be minted in 2023, 2024.  A small group of people will decide and I think it's really dishonest actually to not mention that, and that's why I think it's centralised.  So, that's my point, my perspective.

Second thing is on innovation --

Udi Wertheimer: But it is mentioned, everyone knows it.

Alex Gladstein: No, I had to go dig and interview ETH engineers to find out how much ETH they thought would be minted.  Nobody knows, literally nobody knows.

Udi Wertheimer: Whose job is it to mention it to you?  People are talking about it all the time.

Alex Gladstein: Well, no they don't.

Udi Wertheimer: Who's the dishonest actor who's supposed to represent those facts and isn't?

Alex Gladstein: Anyone who's saying it's decentralised, when clearly a small group of people is going to determine the monetary policy and not the public.

Crypto Cobain: Are you talking about -- do you mean because they can EIP and there's EIP-1559, so the economic activity on chain impacts the future inflation, right?

Alex Gladstein: Yeah, it's a hard fork, and the users don't get to decide, they just get hard forked out.  I mean, this to me is quite clear, but again we can debate.  And then, I'll do a couple of other things and then we can keep going. 

On the innovation: why are we all here?  The innovation is to escape regulation.  Bitcoin is money beyond regulation; NFTs are trading art beyond regulation; Uniswap is trading assets beyond regulation; ETH is supposed to be running contracts beyond regulation.  So, it's all about can you evade regulation or not, so I do think that's the important thing.

With regard to crypto and being nice to people and this idea, are these toxic people bad for Bitcoin?  I agree with you, Udi, Bitcoin's going to be fine.  Bitcoin's going to, I think, complete its mission over time.  It's the people that aren't going to be fine, right, the people that are going to miss this project, the people who have been gaslit for a decade by the mainstream media about Bitcoin, who have been told not to buy Bitcoin because it's dangerous, because it's scary.  Those people, a lot of people, have really lost a huge opportunity, especially in the emerging markets, because of what their government and the media have told them, to stay away from Bitcoin.

When it comes to these crypto projects, I think it's the opposite.  I think we need to be more outspoken, otherwise what happens is that Ripple is in Bloomberg today and you have smart people who don't know a lot about the space thinking that Bhutan is going to adopt Ripple as their currency.  That's in fucking Bloomberg today.  And, you have Carnegie Mellon, a very prestigious institution by the way, which is a very important institution in America, taking all this money from Hoskinson and promoting Cardano.  This is what happens when we don't speak out, people get scammed. 

So, I think it's actually the opposite; we should be talking more about these things, because Bitcoin's going to be fine.  People need our help.  And, look, if you've got all the time in the world and you're a talented trader, you're going to be fine, you're going to clean up in the coming years as we go through these different kinds of crypto bull markets.  But the average person is going to be confused, they're not going to know what's going on, and it's not like the average person bought a bunch of Solana last Thanksgiving; they bought it in the last couple of months.  The people who created Solana made the most money.  So, these are the things on my mind.

Peter McCormack: Well, so that's a really interesting point, because if you listen to Charles Hoskinson's interview on Lex Fridman, I think everyone can agree he's a complete dishonest prick when he talks about Bitcoin, and his job there is to convince the listeners of Lex's show, and perhaps Lex, that Cardano is something they should consider.

What's really interesting is I moderate all the comments on my YouTube, because there's so many scammers.  And when I talk about scammers, it's like, join my Telegram group.  If you go on any vice video at the moment, you can see what we're dealing with; I have to delete hundreds a day.  But in there, what we also have is, there is consistent shilling from people saying, "But you need to consider Cardano.  Why aren't you considering HEX?" and it's always the same projects.

So, I'm going to throw this over to Cobie.  How much do people actually care?  Look, you mix in the trading community, there are a lot of people out there trading, and the way I explained it recently to somebody, I don't buy anything apart from Bitcoin, but I almost feel like I'm sat in a conference room in Vegas with Alex Gladstein, discussing human rights, and through the window, I'm seeing all my friends on the roulette table having fun.  And whilst I know they're gambling, I see all this fun they're having and feel like I'm not part of it.

What is it like amongst the trading community?  Do they generally, in the background, are they all still holders of Bitcoin, or do they just not give a shit about any of this and they're just aping in and not caring?

Crypto Cobain: I mean, I think the timescale they care about is shorter, because if you're coming from a perspective of what is going to be around in 15 to 20 years, then the only thing that you can reliably do is buy Bitcoin, right?  But I think in the trading community, they're not thinking, "How can I allocate for the next 20 years?" they're thinking, "How can I allocate for the next 20 minutes or the next 20 days", or whatever.

If you're willing to pay a lot more attention, then the centralisation vectors in other projects, which increase the newer the project is, and over time ideally get erased, those centralisation vectors, you can pay more attention to them, right.  So, there are centralisation vectors in Ethereum, like Infura and yeah, Amazon runs 20% of ETH nodes, or whatever.  And, Ethereum's development community has a much more flexible attitude to Ethereum; they're much more willing to change things.  Whereas, Bitcoin they don't, and it's very difficult to change anything.  It takes a long time to make significant upgrades to Bitcoin.

So, I think the trading community is willing to pay a lot more attention.  That's why, when Gary Gensler starts doing stuff, it's very interesting for market participants, because those centralisation vectors are exploitable in certain circumstances.  So, if you're thinking, "Yeah, cool, I want something that's going to be around in 20 years.  I want to hedge inflation and I don't want to be eroded by government monetary policy", then you buy Bitcoin. 

If you're willing to pay attention to the news and you potentially want to outpace Bitcoin, you want to perform better than Bitcoin, then you can buy other things, and you make sure you move as appropriately when you think certain things can get exploited.  If Gary's coming for stuff, he doesn't do it in that one day, everything's turned off.  He's been very vocal about what he's trying to do as part of the SEC enforcement strategy, to dissuade people launching stuff and put a bit of fear into the hearts of market participants and stuff. 

So, I don't think they really care, because a lot of people that are trading and speculating, they're not in regimes where they have dictators and they don't have access to a form of money that is stable for multiple weeks.  And I think they can be a little bit more optimistic in the future.  They can say, "What happens if the centralisation vectors in Ethereum are erased over time?  What happens if, as the project matures, they go, 'Right, these central plans of money, we never do that again, we completely erase that, we reject all those proposals'.  What if people start using DigitalOcean as well as AWS?"  Is DigitalOcean still a thing; is it still around?

Then, if you're optimistic about it and you look at it that way, buying those things now probably has a decent upside.  Then, of course, maybe they missed out on the entire bull run.  Things with smaller caps are easier to move, so if you add a $10 million buy to something that's only worth $20 million, you increase the market cap by a ton.  So, if you add $10 million to Bitcoin, it doesn't do anything, and they're looking to make money, rather than just hedge inflation as an investment.  So, I don't think they really care.

One thing I have noticed in sophisticated trading communities is they don't want to hoard things that they think is retail vapour, because you never know when the light's going to go out.  I've spoken about Cardano a ton, I get a lot of hate for my comments on Charles.  Actually, I kind of like Charles sometimes; he's grown on me.  I don't think he gives a fuck anymore; I kind of like that.  But I've spoken a lot about him negatively in the past and about Cardano negatively in the past, and in the sophisticated trading communities, you see a lot of people that don't hold those assets, because they don't really understand why it can justify its valuation.  They don't understand what makes it that popular, and they don't want it, whatever it is, if they don't understand it, to disappear one day.

I do see in the sophisticated trading community a lot of people buying Solana early thesis around FTX and mirroring BNB, etc.  But I think they're just a lot more optimistic about the future.  And if you go back through my tweets to 2015, 2016, you'll find loads of stuff that's super cringed.  I mean, that's all my tweets actually, but you'll find stuff --

Peter McCormack: That's all of it!

Crypto Cobain: Yeah.  I said stuff about Ethereum, "It's centralised garbage, it's only fucking function --", am I allowed to swear on here?  I've done it, it's too late.

Peter McCormack: Of course you can.

Crypto Cobain: "The only function of Ethereum is a legal fundraising platform", then I think I was shilling Bitcoin and Monero as the only two viable options at the same time.  If you took that from an economic perspective, you'd have done terribly.  The reason I changed my mind is when practically, it started to change, people started building things on Ethereum that weren't just, "You can fundraise for a flying car, or you can…", etc.  When, ETHLend, now Aave, started materialising and Synthetix and Chainlink, and all these things started to be built. 

For me, it was a realisation that, okay, right, there is something happening here that is important and is building stuff that I always imagined to exist in crypto.  I didn't know whether it was on Bitcoin, on Ethereum; honestly, I don't really care.  If I see similar progress happening on Bitcoin, I'll pay more attention there too.  It's just, in crypto, you don't need to predict the future and you don't need to, in my opinion, have these philosophical arguments about what's going to happen so far in the future, because you can just watch and see what's actually happening, and then use that data and extrapolate based on that.

You got to buy Ethereum at just $80, if you just looked at what was happening in DeFi in 2019, 2020.  That was basically the same as buying on day one anyway. 

Allen Farrington: So, this is really interesting actually.  This is an excellent point of teasing out differences in perspectives.  So, what I am about to say in no way means any disrespect to Cobie, because I think actually --

Crypto Cobain: I'm going to take it as disrespectful anyway!  I can be offended, so watch your words carefully!

Allen Farrington: I will be extra rude in that case!  I don't know how you can possibly spin this negatively, so go for it in your reply to my reply!  But professional traders are, to my mind, the only obvious exception to what I'm about to say, because they have to be short term.  And I'm not using short term as an insult, this is a point where I'm trying to be clear about the lack of disrespect; it's just an accurate description of how they do their job well.  A trader can't have a ten-year view, because they'll immediately lose all their money.

But everybody else can have a ten-year view, and I think what a lot of bitcoiners get annoyed by around this kind of discussion, to my mind, doesn't actually even originate from non-Bitcoin crypto.  I think non-Bitcoin crypto is kind of a vessel for it, and actually it's really coming, to get extra philosophical, Cobie will love this, is really coming from the kind of degeneracy of fiat culture as a whole, that time preferences are so high that things appeal to people who are not professional traders that really shouldn't.

So, what I'm saying is I don't actually know if everybody on this call is even aware of this; I'm saying this as a professional capital allocator with a ten-plus-year time horizon, and I guess an interest, to be a bit more qualitative about it, an interest in betting on extreme outliers of real capital formation.  So to me, it's really disappointing that regular people talk this way and think this way and act this way, because to be completely cynical about it, it means that they don't buy into my investment thesis, or the thesis of my firm, or the people who think similarly to me and ultimately, they don't give us any capital with which to invest.  They go and punt around on trading and they lose it all to Cobie, right.

So, I think this almost suggests a kind of chicken and egg problem, in that you need to get Bitcoin to get Bitcoin.  And so actually, maybe to build a bridge, I'll give it back to Cobie, and then he can insult me a whole bunch for being far too long term!  I think he's absolutely right that you do, in order to break this chicken and egg role, I mean aside from maybe back to Udi's points earlier and just general point in trolling everybody about this, you do need to be more constructive in terms of what you expect Bitcoin to achieve, I think, to convince people who otherwise don't know anything about it.

But to pick up on exactly what Cobie said, you'll need to see similar functionality replicated on Bitcoin, I think, to convince these kinds of people.  So, my preference would be that these people don't even exist, but they do exist, so we need to build more on Bitcoin to convince them.  That would be my take.

Peter McCormack: Just to interject there before you reply, Cobie, on that ten-year time horizon, I think there are some people who may have taken that long-term time horizon in believing that Bitcoin Cash would be the winner, or even those who have been convinced that Craig Wright is Satoshi and invested in BSV, and they've both potentially lost a lot of money if they've picked a long time horizon, especially I mean BSV is an absolute shitshow now.

So, I just want to interject that some people have bought into those ideas and therefore, maybe on the nuances that we should be toxic around specific ideas and maybe not others, these Bitcoin hard forks, I believe all of those we should be absolutely toxic towards and have no time for the people who are selling people on a long-term dream that something else is Bitcoin when it clearly isn't.  So, that's just an interject on that.

Crypto Cobain: Yeah.  I think people can always make bad investments on a ten-year timescale, and that's why, if you're making ten-year timescale investments, it's good to use data and not attach your investment thesis to the dream that someone -- like, to a person basically, I think, especially in crypto.  

I think, to answer your question maybe more simply, Peter, from before, you said, "Do people care?" and I think what's an interesting behaviour pattern is, in 2013 through to 2017 or so, you had people who would trade other stuff to stack Bitcoin, right, you would use Bitcoin as the reserve currency of crypto and you would trade other things temporarily in order to increase your amount of Bitcoin overall, because Bitcoin was going to keep going to $2 million, and you needed to have a certain amount of Bitcoin by then.  And I think there was a general handshake agreement between all market participants that it was a game of chicken and back then, everything was basically vapour.  Stuff was rubbish and it was just all kind of pointless, and I think everyone implicitly understood that.

As 2017 through to now has happened, I think there's been a fracture and that is no longer the default behaviour of everybody.  I think now it's relatively split between people who trade to get more Bitcoin, people trade to get more dollars and people trade to get more Ethereum, and that's never really happened before.  You didn't have large percentage of the market trading to get more Litecoin, or trading to get more Peercoin or Namecoin or Feathercoin, or whatever.  Maybe you got one or two of them, but you know.  And, I think Ethereum has taken that place, and I think it's probably the smallest.  If you do it by percentage, it's probably 50% trying to do dollars now, because we're in the middle of a bull market, maybe 35% doing Bitcoin and the rest doing Ethereum.

But it is a substantial percentage of the market trying and it is a changing trend.  There's no one doing that for Cardano, there's no one doing that for Ripple; maybe subcommunities that have made the same mistake they made with thinking the ten-year thing with Craig Wright, or whatever, but I don't think it's large percentage of the market.  And, I think the reason that's happened is because Ethereum was built on an ecosystem of stuff you can trade on Ethereum, and you can participate in crypto without interacting with a company, kind of, if you want; as soon as you've got Ethereum, you can stay entirely on chain.  So, it becomes a useful denomination asset. 

I don't know if that would be a good idea in the long run.  My using data, you can just say, "In bull markets Ethereum outperforms Bitcoin, and in bear markets Bitcoin outperforms Ethereum".  There's no reason to think that that will change, no matter how much Ethereum try and fiddle with the economic policy to make it not the case.  But I do think that has started to happen.  That is a behavioural change that has happened in the trading community, or the sophisticated trading community.

Maybe it's a fiat money phenomenon, people just trying to get rich as soon as possible, but you also have to acknowledge that a result of the global, at least western government economic policies, has created a very large wealth divide and a lot of people, especially during the pandemic where the jobs weren't working, or whatever, feel that they don't have a path to a sustainable life, or at least an acceptable lifestyle.  There's no path for them to own their home, there's no path for them to do whatever, and that's why you see on Robinhood, people are just becoming options traders and shit, and it's just, that is the same phenomenon as people with a very short-term attitude in crypto; because, if charts are going up, then people are going to flock in.  There's a viral K-factor that that spawns and people are going to participate in that.

Unfortunately, if you tell them the chart that's going up is a scam, they're not going to listen to you and they're probably just going to double-down on their investment thesis, because when you tell people information that they don't want to hear, psychologically often humans go, "Well, I believe it more now and I think you're wrong.  You're the scammer for telling me my idea was a scam".

Alex Gladstein: I just want to bridge to Udi here, because I think -- thank you also, Cobie, for sharing your perspective on how it's changed, that's really helpful.  I mean, that's I think the heart of the matter, is how much has changed from the 2014 to 2017 era and how much remains the same, and I think that's what I want Udi to answer.  But I have three things here.

First of all, what coloured me when I entered the space in 2016, 2017, and then I got fooled into thinking it was blockchain and not Bitcoin, and then I learned that it was not blockchain.  We don't really talk about blockchain anymore, but let's not forget how sinister that was, that social attack on Bitcoin, and it convinced every single humanitarian organisation, governments worldwide, massive corporations too, to throw millions of dollars, hundreds of millions of dollars at blockchain projects that ended up doing nothing.  You also had ICOs, you had all this other stuff, and people got crushed.  And I just wonder how much of that we need to pay attention to, or are we indeed now building the blocks of the metaverse and now we're not going back?  So, that's the one question.

The other two pieces to take back from that era, Udi, are toxic maximalism was essential to defending Bitcoin during the Blocksize Wars.  Maybe you say it's not essential anymore; fine, we can have that conversation.  And the third one about human behaviour is, if you were an information insider during that era, you killed it; if you weren't, you didn't.  I believe that's sort of the same today, maybe it's not, so I'll throw it back to you.

Peter McCormack: I just want to throw something in there, because there's a particular tweet this week, which both Alex and I took issue with from Chris Dixon, who's a16z, and it was part of a thread talking about Web 3.0.  The particular tweet he said, "Web 3.0 is the internet owned by the builders and users, orchestrated with tokens".  The reason I took particular issue with this is they're an investor, so they have an incentive in this.

One of the things that Jill Carlson said to me four years ago when I very first started the podcast, she said, "The investors in tokens now are getting into IPO at the seed stage.  They're doing an IPO and seed round at exactly the same stage".  So, somebody like Multicoin can buy $20 million of tokens in Solana from the presale, and that value's now something like $2 billion, or something ridiculous.  Congratulations, Kyle Samani, you've made a lot of money there.  I think you are a dishonest actor, but congratulations.

The point I'm trying to make here is that there is an incentive structure now to create things which have tokens, which vastly inflate when they go live, without having product market fit.  So, my understanding of the investors, Silicon Valley investors and funds who invest in projects, is that they make a small seed investment and you go through a round A and round B and you prove product market fit; and if you prove product market fit, then you get to IPO stage, and then you see a return.  Then you have, what is it; they say eight in ten failure rate, but your two successes pay for everything else, and that incentivises to invest wisely.

The incentive now is to create projects whereby you see massive returns, ridiculous returns, even before product market fit, and it feels like retail is now paying for that, because somebody has to lose in these situations.  So, the retailers are getting the access to invest in projects early on, but they're not getting in at the same stage as someone like a Multicoin.  So, they're really paying Multicoin before product market fit is here.  That, to me, is a new form of venture capital that I find massively dishonest.

Crypto Cobain: I have a controversial answer to this, but I'm confused now about the order of operations, because there's three unanswered questions going on!

Peter McCormack: Well, I wanted to throw that in though, because Alex talked about blockchain not Bitcoin and how that affected institutions worldwide.  I also think that blockchain not Bitcoin has changed the investment structure, and I think that is also a dishonest approach, but anyone can jump in at any point and answer any of Al's.  Alex, do you want to reply to that first, and then we'll throw it out, because Chris Dixon blocked you?

Alex Gladstein: No, just to reframe for Udi, I think that's perfect, because Chris Dixon comes in here and he says, "We're building the Web 3.0 that the users are going to control".  It's nonsense; he's controlling it and it's so dishonest for him to act like a freedom activist that he cares about decentralisation.  No, he just cares about making as much money as humanly possible, and that's what's upsetting me.  He can make as much money as -- great, be a capitalist, wonderful, I'm happy for him; but for him to try to pretend that he cares about decentralisation is really a problem for me, and whatever, he blocked me.  But he's having a good time.

But anyway, the point is that fits into the narrative, Udi, because we had this time that we're trying to draw lessons from.  Which ones are applicable lessons and which ones do we need to discard?  Are we really building the metaverse now, or are we going to lose everything?

Peter McCormack: If you say "Udiverse", I'm going to block you!

Udi Wertheimer: Well, Udiverse thinks that…!  First of all, the metaverse thing is a joke.  It's a joke, Mark Zuckerberg is trolling the world by saying metaverse and getting people to think that it's a thing.  No one knows what it is, Mark Zuckerberg doesn't know what it is, Ethereum people don't know what it is, no one knows what it is; maybe it becomes a thing, maybe not.  Either way, it has nothing to do with this discussion, in my opinion, other than being a joke.

Now, VCs are always -- nothing is new here; that's always been what they've been doing.  They invest early and by the way, they do a lot of work to invest early, it's not just their connections; they do a lot of work to make it happen.  They need to do a lot of research and weed a lot of the stuff out, but that's what they do, they invest early in things and then they sell it to other people.  That's always been their job, it's not new. 

They also said that green energy's going to change the world and you need to buy electric cars, and other than Tesla, most of those flopped.  So, I don't understand why suddenly the Bitcoin community's so eager to point out the VCs are dishonest.  I'm not saying that they are, but to point out that VCs are dishonest, that's always been their job; it's not new.  If you don't want to, you don't have to buy Solana; if you don't want to participate in buying Solana, you don't have to.

I think that, of course, someone like Multicoin is going to make a huge profit off Solana.  I don't know what the terms were and if they can already sell their coins or not, I don't know; probably not all of them.  But it doesn't matter.  People who are going to buy into this, they know.  They know that Multicoin was early, they know that other people were early and they can make a decision.  Is it worth buying it now or no?

Similarly to Apple, are you going to buy Apple stock now?  In the past, the earliest VCs got Apple stock for free basically, and now they're selling it for trillions of dollars.  So what?  Buyers on the public market know what they're buying, they know that they had early investors and they can make their choice if they want to do it or not.  Do they believe Apple's vision of becoming the world's biggest entertainment company and technology company and everything, or do they not?  That's up to them.  Apple are saying they're going to do things that a lot of people disagree with too that they say they're not going to be able to pull off.  Are they going to be bigger than Netflix?  Some people say, "No, that's ridiculous".  I don't know.  You make a bet if you want.  If you don't want, you don't have to make the bet.

So, yeah, Solana is saying that it's going to be decentralised; is it true?  It seems like a stretch to me, but it's up to you to decide.  They're going to try and I don't think they're going to -- that's the big difference between now and 2017.  If you look at something like EOS and you look at something like Solana, you can't ignore the fact that Solana is delivering much more than what EOS did, so there's a difference.  It's better than it used to be.  Is it good enough?  That's up to you to decide.  If you don't want to, you don't have to. 

But Alex, when you asked, "What do we learn from what happened in 2017?" well, the things that happened in 2017 don't happen anymore.  You cannot raise money to build flying cars with a blockchain company.  People did learn some lessons.  Now, you might argue that this will implode too, I don't know, but the things that happened back then, they're not happening now.  Some of them do.  There are presales and there will continue to be presales, because that's how capital formation works; that will always happen.  But that doesn't mean that it's wrong.

We talked a bit about Cardano and Ripple before and maybe HEX and how these people keep leaving comments everywhere and they kind of destroy the conversation.  Everyone kind of agrees that they are, at least to a certain degree, kind of vapourware, and shouldn't we fight that.  And I mean, if you want to fight that, you definitely can.  I think though, if we're going to call Ethereum a scam, then it's going to be very difficult for us to convince anyone that HEX is a scam.  This is the main problem. 

If you think that HEX is bad, and I would agree that HEX is very dishonest marketing at the very least, if you want to make that point, then the people who you kept telling that Ethereum is a scam, they're not going to listen to you.  The people who you told to not buy Doge earlier this year because Elon Musk is going to scam you, and I've seen a lot of bitcoiners literally saying, "Elon Musk is going to scam you out of your 20 cents"; so, the people you told that to in early-2021 are not going to listen to you about HEX and about Cardano and about any of this stuff.

So, I don't have a rule book or a play book for how to approach those things and which one is okay and which one isn't; but I can tell you for sure, if you're going to call everything a scam, people are not going to listen to you, and that's a fact; you see that.

Peter McCormack: I just want to refer this back over to Allen, because he is somebody who allocates capital into projects.  And also, I just want to refer back to my friend who works at Amazon, who I was with last night, who keeps Ethereum up.  He was very critical of Solana last night and he said, "Solana will not be able to scale to the level of transactions that Ethereum has; it's fundamentally broken in that sense".  And I've also seen some recent reports with regards to Cardano, which is fundamentally flawed as well, with regard to its smart contracts and UTXOs. 

I'm not going to pretend I understand any of this, but that's kind of the point, is that when these companies are buying tens of millions of dollars of tokens that are premined and they're releasing a project that is fundamentally flawed, it's only somebody like the guy I met last night who can really understand how these things work, can they scale, and are they fundamentally broken. 

That's why I think potentially it's slightly dishonest, because we will have somebody like the guy from FTX, Sam, talking about, he'll buy everything, all the Solana that's available, and the price of Solana shoots up, a lot of people get invested, they get involved.  But if it's fundamentally broken, if it can't scale, it may be flawed and it may be that people will lose money, which is why I kind of prefer the model of product market fit being hit first.

Allen, as somebody who allocates capital, what do you think of this new model of raising money for protocols and projects?

Allen Farrington: Yeah, I mean basically I find it very, very worrying.  I'm not sure I'd go quite as far as to say that it's implicitly dishonest, even though probably every live version of it that I have come across has been dishonest to some or other extent.  But I actually want to put this back to Udi, because I disagree with something he said, but I obviously don't want to put words in his mouth, I want to see what he thinks of my response that, I think comparing these, and in particular comparing the role the VCs play in all of this, to public markets for equities, is not helpful at all, and it obscures a couple of very important differences. 

Actually I'm glad, Peter, well you've said a few times, but actually a couple of people have referred back to product market fit, because that's a good way of framing what the main difference is, that never before have venture capitalists been able to immediately realise gains, which otherwise would have remained unrealised, because they're essentially paper gains on something that doesn't even need that.  It's not even a question, to my mind at least, of whether it does or doesn't have product market fit.  It's utterly bizarre that it doesn't need to have product market fit, because it's a live public market from day one, and it can be dumped on retail.  That has never been the case before for venture capitalists.

The venture capitalists that invested in Apple, I don't actually know the precise dates or numbers off the top of my head, but I would imagine that they had to back real capital formation for, what, at least ten years, I'm guessing, before an IPO.  And then the people who bought that IPO were predominantly also institutions who understood the information that they were being presented with.  And I think the key thing to keep in mind here that I'm not actually sure many people realise this, I feel like I'm sure everyone on this call realises it, but your listeners, retail investors and all of this, is that the reason I think this is so insidious what this handful of VCs are doing now is that, they now have a perfect storm where they can realise what would have otherwise been unrealised gains, and the way that they actually make their money is purely by skimming what should have otherwise been unrealised gains.

So, I wouldn't name anybody, because everybody knows who we're talking about anyway, but the way that they get paid is not by these projects coming to fruition; it's by them having any temporary value, that they can then take their management fee off their LPs.  So, that's fine in general with a regular VC, where you have to form capital and get it to a point where public market investors will believe your thesis; but here, where it's public from day one, I find that very unsettling. 

So, I want Udi to respond to this as he's unmuted himself anyway, but do you at least acknowledge that this is different, Udi, if not outright awful?

Udi Wertheimer: I agree 100% that it's different and I think if you're in tune to what the communities who are investing in those things are talking about, you will see that this is a major concern.  Everyone knows about it, everyone's talking about it.  So, everyone knows that it's at least theoretically possible, for VCs to do this schtick where they buy a presale and then dump it a week later.  It's technically possible; there's no regulator who will tell them no, for now.

Peter McCormack: Well actually, they will.

Allen Farrington: That's very precisely not what I mean.  There's a subtlety here.  So, my whole point is that they don't even need to dump it.  They will still make money, provided it temporarily pumps.  They don't need to see it through to any actual realisation of value, which isn't -- I think that's what's so tricky about this, is that to my mind, it's more like just a conflict of interest that ought to be more -- I know you're saying people are aware of it, but it ought to be discussed about far, far more openly and far more clearly, I think, purely for the sake of honesty.

Udi Wertheimer: I think it is being discussed very clearly in those communities.  It is not discussed very clearly in the Bitcoin community which is not participating whatsoever, so the discussion is pretty shallow; but in the other communities, it's discussed very heavily.  And the thing is, it's true that you're not going to have regulators to protect the investment of those things, at least for now, but what you do have is the potential, not the necessity of, but the potential for transparency.

What happens in a lot of those communities is that the smaller investors, or the retail investors so to speak, are demanding transparency as to what the VCs get, at what prices; when can they realise or when can they not realise.  And for a lot of these projects, I'm not going to start naming names, but for a lot of these projects, the information is open and clear, which it wasn't in 2017, by the way.  That's an improvement that happened, because a lot of those retail investors did get hurt pretty badly back then and they learned the lesson, so now they're demanding this information, and then they can make their judgement.

You mentioned Solana before.  Everyone knows that a lot of people got in early in Solana, and everyone knows when they can or cannot realise their gains, and people can make up their minds.  A lot of people, if you go to how people are talking about Solana, you'll see a lot of people are talking about the VC problem in Solana; that's the main criticism.  It's not like people don't know.  So, you can make your decision if you want to do that or not.  You're making a bet that Solana is going to be the biggest, whatever, smart contract platform, I don't know what, making a bet that it's going to be the biggest in the future; you're going to have to take a risk to make that bet, and maybe you're wrong, maybe you're right.

I think that assuming that for sure, Solana's going to scam everyone, is maybe a stretch.  Maybe they will, but…

Peter McCormack: Can I just throw a couple of things in there?  So, one thing I wasn't aware of with Solana, and maybe somebody is aware or can confirm this, but my understanding is that someone like Multicoin, they don't have to sell the tokens to pay their LPs; they can actually pay their LPs in the token itself, which is something I wasn't fully aware of.  But also, if we want the analogy of public markets, there are certain disclosures that companies have to make.

So, for example, if Apple is having supply chain issues, they have to make these disclosures so people are fully aware; but I don't feel like with projects like Solana, you get the full information of the scaling issues they're having coming centrally, where people should be actually explaining, "We have a massive scaling issue here.  If we want to compete with Ethereum, these are the challenges we face.  We potentially might not be able to do this", which was what the Amazon Ethereum guy was explaining last night.  It is fundamentally flawed.  So, I'm not sure we always have this information public.

Alex Gladstein: Peter, I just wanted to give a short, little parable about what I think is one of the core issues we're discussing here, and that's sort of ethics, right.  So, I'll just one example of a coin that was between the 2017 and today, Algorand.  So, the reason I pick Algorand is because they used the MIT name to promote the coin, which I find really disturbing, and it's really an embarrassment to MIT.

But basically, what happened is that a bunch of VCs and people like Multicoin specifically got in on this presale which was, I don't know, a few cents, in May/June 2018.  Then they did a public auction and the coin auctioned for about $2.  And there was publicly knowledge of an algorithmic lockup where people couldn't sell their Algorand over time, therefore they were stuck with it.  Nonsense.  The original investors were able to get out by swapping their positions with other people.

So, I'm okay with the Multicoin people as a proxy for all these other investors making as much money as they want.  I hope they don't get in trouble and it's wonderful, great, go ahead.  What I'm not okay with is them going out and saying, "We're the leaders of this decentralised world and we're promoting freedom for people".  It's complete nonsense and that is important for us to stand up and make a statement about, I think, at least. 

At the end of the day, the reason I choose this parable is because it shows the difference between crypto and Bitcoin.  In crypto, we're not equal.  There's a handful of people who have insider information, and they get a lot more rich than everybody else.  Everybody else still gets rich, but they get a lot more rich.  In Bitcoin, we're all equal.  We rise and fall, and that's what gives people pride in Bitcoin, and that's what gives people hope for a future where things are a little more equal.  And, I don't know, that was my little parable.

Udi Wertheimer: That's great, I mean I think it's great, it's fantastic.  And if people find that value in Bitcoin, that's awesome.  I also agree with you that Multicoin are not the champions of freedom in the world or in the crypto space, or in anything; we agree.  I mean, it's definitely fine to say that too.  I don't think we have any disagreement there at all.

The thing is that I think we shouldn't -- I don't know what happened in Algorand, and maybe that's what happened, I've no idea.  But that's in the past and people learn from those bad experiences, and it's possible that some actors are bad actors and they remain around and they keep doing bad things.  But the point is, in this unregulated for now environment, the way that people regulate those things is they take the risk, sometimes they make mistakes, they learn from their mistakes; the next time, they're going to demand to do it better.

I don't know if that approach is going to work for them or not.  But importantly, I don't think they're bad people for trying.  I think, I'm not talking about the people who are doing bad things, I'm talking about the people who are trying to make it work.  I don't think they're bad people, I don't think it's an immoral attempt, and I think it's another approach.  It's interesting, to say the least, and we'll see what happens.  I don't think it's necessarily evil just because some bad apples existed; a lot of apples, I would concede that.

Crypto Cobain: We spoke a bit about 2017 and what's changed since 2017, have people learned stuff, is it better or is it worse; and then we spoke a bunch about VCs and VCs getting these private deals, buying Solana for less than a penny, or whatever.  And one thing that has changed dramatically since 2017 is, in 2017, and I know they were all bad and they were all scams, and I'm not trying to be an advocate for them, but you had ICOs where all market participants were able to buy on day one, effectively at the same price.  Then a presale was invented, etc; but in general, it was relatively fair for all market participants.  There was no Multicoin buying ages before everyone else for pennies on the dollar.

As regulation, like the DAO, the SEC got involved, projects instead have moved to a model where instead of doing an ICO, a public, anyone can buy, here's the entry level price, like what Ethereum did; they did the premine and sold all their premine for a penny, or whatever.  Instead of everyone getting in on the same price, now projects do what you described.  They do a round with Multicoin, they do a round with a16z, they launch their coin, they do another round after they've launched their coin with coins from their own treasury at a 50% discount to VCs, that are locked up for four years; and retail buys way, way higher, because retail does not have the opportunity to buy on day one anymore.

You don't see the Ethereum ICO really happening anymore, because it's a bad regulatory strategy for someone that wants to launch something to do an ICO; you're doing a securities sale basically.  And that, I think, has actually been worse for retail investors, because the first opportunity you get to buy is now similar to actual IPO moment, where all the great deals are long gone, and you'll only get to buy high.  This is the reason for the regulated investor law, the accredited investor laws in the US.

I think a lot of that, in crypto, just makes the VCs rich.  It means it's really difficult, even if you do all the work, to get the opportunity to buy something at a good value.  You can do all the research in the world and then still not have access to the deal that you wanted, because you're not a VC, you don't have the accredited investor, etc.  I think that's actually a step backwards from ICOs in terms of ethics for retail investors.  I reckon both of them are bad, but only being able to buy the top is much worse than being able to buy on day one.

But if you think about it from the perspective of a project, and again try and be optimistic, so try and imagine a good actor that thinks Ethereum is shit, Solana is shit, and they think they can build something better.  And, they're a regular person, they want to contribute and build something in this industry, and they think they've got a good idea.  How can they go about it today in a way that is fair, or should they not build anything at all; is that now forbidden, because Bitcoin exists, so we should not contribute anything new?

If you were in this position, you want to do something and you want to contribute and build something in crypto, you need to hire your friends, you need to hire some people from the market, you need funds to work on this full time; you have to raise money from somewhere.  You can do it, once again, having another job if you want, maybe, but it's not reasonable to expect everyone that wants to build something and contribute to work multiple jobs just to try and contribute to the industry. 

So, you have to raise money from somewhere.  Is it better to do an ICO?  Is it better to do a private fundraise?  If you're doing a private fundraise, how do you avoid having a massive FDV and retail investors buying the top?  Do you never go public?  How do you even reach product market fit if product market fit requires your blockchain to be public, and therefore having a unit of account on the blockchain?

So, I totally understand where Alex and Allen coming from, but I think there's so much nuance and Bitcoin had this immaculate conception where no one knew anything about the industry.  It wasn't like Bitcoin had bubbled up and had these huge price increases as it has now, because it didn't exist, it was brand new.  There was this beautiful moment that only Bitcoin could have done and now you can't do.  If you try and do what Bitcoin did, this fair launch, it doesn't work anymore, because you just have massive capital allocators that hoover up all the coins.  A fair launch cannot happen anymore; it's a complete fiction that you can do a fair launch, because Alameda and Multicoin will just put their $3 billion into the single-sided staking and end up with 30% of the supply anyway and you just gave it to them for free.

Alex Gladstein: That was just a beautiful explanation of how the establishment took the one glimmering hopeful possibility of innovation here and just squeezed it out and figured out how to reassert its dominance.  I just thought that was brilliant.

Peter McCormack: Well, I think you make a really good point there, Cobie.  I don't think you can ever do a fair launch like Bitcoin again, I think it's very difficult.  But what I do think you can do is an unfair launch, and what my concern is is that this flip in the incentive model, companies like a16z can invest in projects and see very significant returns on things that will ultimately fail.  There's no incentive to find the projects that will work; they don't have to work.  They fundamentally see a return whatever, because it doesn't have to work.  That, to me, is like something that --

Allen Farrington: To answer Cobie's question, what we do now is we try to convince people to build on Bitcoin.

Udi Wertheimer: And why do you think they're unconvinced?

Allen Farrington: That's a very good question. 

Peter McCormack: Time preference.

Allen Farrington: I don't think there is a single answer to that, but I do tend to agree with you, Udi, that there are better and worse ways to convince them.

Crypto Cobain: Let's say they're convinced, right.  Let's say you're building Uniswap on Bitcoin, you're building a decentralised lending protocol on Bitcoin, and your builder's a good actor, he's 25 years old, grown up, working class.  Do they launch a token on Bitcoin and if so, how is it different to launching a token elsewhere?

Alex Gladstein: I think the incentive structures are different.  I think what's going to happen in the next two years is you're actually going to borrow a lot of innovation from Uniswap and from Contracts For Difference and from stuff in Ethereum; it's just going to come to Bitcoin.  One of the things I'm most excited about in Bitcoin is this idea of stabilised Lightning where, after Taproot, you'll be able to have a non-custodial Lightning wallet at home, anywhere in the world, and you'll be able to peg inside the wallet without connecting to the banking system, to fiat money.  That will work with a Contract For Difference where some of the users are long Bitcoin and some are short with dollar exposure. 

That's going to be revolutionary, and that's one thing that's going to be strictly borrowed from the alternative currency space.  So, in that regard, that shows it can be a very helpful scientific experiment.  And that's the one thing I've always said; it's always worthwhile to look at what's happening, because we're going to borrow from that and bring it over to Bitcoin.

But I would say that it's funny to me that people are like, "No one's building on Bitcoin".  I can now tip someone on Twitter using Lightning.  I just think there are different interpretations of what is "building on Bitcoin".  To me, nation state adoption, Twitter adopting Bitcoin, is way crazier than, I don't know, a lot of the stuff happening on other coins, but maybe that's just my perspective.

Peter McCormack: I did an interview with Greg Carson from XBTO, and his take on this was, "Bitcoin is the best form of money that's ever existed and it necessarily moves very slow; it's a glacier.  But we should embrace crypto projects, because the people working on those projects are innovating and finding out what people want, and that stuff will eventually end up on Bitcoin". 

I've seen arguments back saying there's things that people are doing that's innovation happening in the crypto space that could never happen on Bitcoin; but his idea is that we should embrace this, allow these projects to happen because ultimately, they will end up on Bitcoin and most people should be considering therefore a Bitcoin allocation.

Crypto Cobain: I think if that happens, then most people will consider a Bitcoin allocation.  I think most people just see stuff happening in practice and go, "That's cool, I'll follow that.  I hope that trend continues".  And if you see large amounts of TVL and stuff on Bitcoin pegging to dollars and doing interesting stuff, then people will go, "Cool, that's cool now".

At the moment, a lot of that happens on Ethereum, people just go, "Well, that thing's cool, I want to be able to do that".  I don't think people really care what chain it's on.  I don't care.  If we never have to use Ethereum again I'll be like, "Great, sounds good".  I'm not using Avalanche though; sorry, Udi!  I'm not using Avalanche, never.  But if it's on Bitcoin, that's great as well.  I always thought it would be on Bitcoin first, I think.  I don't know if that was a naïve view, I don't know if it was just what I thought because it was the first crypto I ever owned and held and I was full maxi for the first three or four years of my crypto journey, I guess.

When that stuff's happening, I also thought all the innovation from other chains, altcoins are just a play, a testnet for Bitcoin; everything will be moved back to Bitcoin.  I haven't seen it really play out in practice, and I don't know now if it's actually bullish or bearish if it did.  On one hand, it's super cool if people start doing interesting things and you can use Bitcoin for a lot of things that you can't currently use Bitcoin for.  You can exist a lot more on an on-chain-only ecosystem I guess with Bitcoin.  I think that would be great.  I'd be a lot more interested personally in my Bitcoins day-to-day then.

But at the same time, I quite like the idea that Bitcoin is just this extremely simple, uncomplicated thing, where there's not many things that can go wrong.  Ethereum, you've got to ask yourself, "What's the collective noun for black swans?" because at any moment, there's 17 different things that could collapse on each other and that's fine, that's a risk I accept.  With Bitcoin, I like the idea that it's simple, it just does its job.  And I kind of think it's won its category. 

I think I agree with what Peter said.  Bitcoin is this thing, it's like a digital gold; it is the generally accepted inflation hedge for modern people, people that were I guess born after 1975, etc.  And smart contract chains are always going to compete to be a speculative something else, so they don't really compete with each other.

Alex Gladstein: Just to add off that, and what Udi said earlier, which you're watching live now in emerging markets is a battle between the two things that Udi pointed out: how do you avoid regulation?  Well, number one, you can build on Bitcoin; or, you can just have a ton of different projects and hope the government doesn't catch you.

So, in Nigeria and a lot of West Africa, a lot of stablecoin activity is actually based on stuff like Tron; it's not even on Ethereum anymore.  Whatever, it's cheaper, faster, people don't care; they don't care what's under the hood; they just don't care.  The question is, for people like Allen, who are thinking five, ten years ahead, is what's more likely: that it's going to be on Tron; or that people figure out how to make value in native Bitcoin tenable and scalable?  And that's the big question for a lot of people who have that long-term time preference.

Personally, to me, it just seems really obvious that over the coming years, in emerging markets, you won't need stable coins on Tron or Tether, or whatever; you're just going to have Bitcoin and you'll choose to be able to peg it to whatever you want, and I guess that's the main difference in, I guess, short- to medium-term philosophy here.

Udi Wertheimer: It's a valid view, but I think it's assuming that there will be regulatory push back against stable coins on Tron, which might be true, but a couple of things there: one, if I'm just a guy who's using USDC on Tron, I don't care; I just use it and if something happens to Tron, I'll stop using Tron.  I mean, I don't care.  If I'm an investor, and I made a lot of jokes about Tron in the past, but I'm not trying to convince anyone to invest in Tron, but the assumption that necessarily Tron is going to be taken down, or Ethereum, or whatever it is, is going to be taken down by the regulators, is not a given.  It's an option, it might happen and if that happens, then the more decentralised projects will obviously do better, but that might not happen.

Also, Bitcoin does not have those solutions right now, and that kind of takes me back to what I'm concerned about.  I am with Allen and with Alex on how I believe Bitcoin is much more important; it's the vast majority of my portfolio, I think the others are just not very important.  And that's why I'm concerned, not about Bitcoin itself, but about the Bitcoin vocal community, that in my opinion we're kind of educating them that they should not look at those things and they should not think about those things, because it's a scam, it's immoral; and I think that's a problem.

There have been a few attempts in the last year to do Bitcoin DeFi, most known things are RSK and stuff like that, and those obviously fund themselves in the same way.  They have their own token and they have their own presales, and there just hardly has been anything else that doesn't have that, because again, how are you going to fund it and how are you going to build it and just technically, how is it going to come to be?  We don't have those answers yet.  Maybe in five years' time, we will; but for now, this is what we have to learn from, and I don't think it's immoral to learn from those things, I don't think it's immoral to try to improve on them.

Alex Gladstein: This is why even Liquid is something that a lot of bitcoiners are super sceptical about.  They're just like, "I don't think so, no thanks, I'm not using your corporate sidechain".  So, I would agree that maybe that's a vulnerability.  I guess what I'm saying though, Udi, is that I don't necessarily see a resistance into looking into the mechanisms of these other chains in the developer community.  I mean, I see people looking at Uniswap and saying, "Oh, we're going to do that on Bitcoin, and here's how", so I guess it's just a matter of where we're looking.

Peter McCormack: Sorry, can I just come in there?  Sorry, I just want to throw in there that prior to Bitcoin and Ethereum and the token infrastructure, or the token world, HTTP, email, BitTorrent, Tor, Git, Wiki, are all essentially decentralised projects that were built without a token.  So, there is an ability to raise money or bootstrap projects and build things without a token.  And my question really, and I want it put to Allen is that, from reading your paper, it's the token that fundamentally breaks many of these projects?

Allen Farrington: Yeah, I think so.  I mean, this is exactly what I wanted to jump in with just now anyway, that I actually think this is back to, I think it was Cobie originally mentioned this, is the question that innovators, and I try to do this in as good faith as possible, the question that innovators would face in terms of how to raise sufficient money to do anything in the first place.  But I think, if that's your starting point, it's really unfortunate that these people will look at Bitcoin, or could look at Bitcoin, and see one of the innovations of Bitcoin as being a way of raising money.  And I think that is just a really unfortunate misunderstanding of why decentralisation matters in terms of how Bitcoin works. 

It's almost like interpreting the decentralisation as conferring an escape from traditional finance.  That's how they're looking to tap into it.  They don't need to go to a VC, they don't need to get a loan from a bank, or whatever, they don't need to use a traditional way of raising capital; they can do it in this decentralised manner.  To my mind, that's just so far from the point, it ends up defeating the point.  So, yes, there is a new asset with a blockchain that requires a token, but that new asset is money.  And this is right back to the philosophy that we started with at the beginning.  People can disagree with this, by the way, but my take on this is it has to be money.  The token on a blockchain does not make any economic or technical sense if it's not money.

What's interesting here is that, if you are suffering from this misunderstanding, I don't think you even realise, you're not even thinking yourself about money; you're thinking about the security.  What you want to do in that case is issue securities.  And just to be completely clear, I'm not making this distinction as a way of calling for regulation; I don't think securities regulation really has anything to do with this discussion.  I'm calling just for clarity of thought. 

I would prefer for people to know what a security is, to know what money is, to know why they're different, to be able to think more clearly about why they would need or want a token maybe, or a security maybe, or just capital to fund a project; and I think if they go through all of this, that will ideally get them also thinking about why they might want to build it on Bitcoin, hopefully.

Udi Wertheimer: Allen, when people buy Avit, for example, they know that's what they buy it for, they know it's much more close to equity than money.  No one is buying Avit and saying, "Oh, this is the new replacement of Bitcoin as money".  And I think I read the paper and I'm listening to what you're saying; I think what you're trying to say is, and correct me if I'm wrong, blockchains are useful to create money.  Although there are inefficiencies, they're the only ways we know how to create digital money, hard money. 

However, for securities, we don't need blockchains, we can do that without blockchains.  And therefore, using a blockchain in order to secure equity is a waste, or inefficient, and I kind of agree with that.  Even if it's not the most efficient way to do it, why does it matter, as long as it works?

Allen Farrington: It matters because, to go back to Cobie's original question, which I was trying to answer there, it matters because being clear about this will influence what people decide to build in the first place.  So, I would prefer that via all this clarity and thought, they arrive at deciding to build on Bitcoin.  That's why I think it matters. 

Crypto Cobain: Let's say they build on Bitcoin, right, so let's say they're a good actor, they're trying to do the thing right, they want to build an AMM, they're going to build on Bitcoin.  It's got to be open source, because it's got to be available for everyone to audit, and you don't want code run in a black box, etc.  Then I, bad actor, Cobie, complete scammer go, "I'm going to copy your source code.  I'm going to add a token on top called 'Cobetoken', and then I'm going to incentivise everyone that trades on Cobieswap with Cobetoken; I'm going to give 100% of Cobetoken supply to everyone that's ever traded on here over the next six months, and then Cobetoken holders will get a percentage of the fee that goes through Cobieswap".

The person who made this stuff originally didn't do a token.  They tried to do everything right, they built on Bitcoin.  Me, a bad actor, total dick, came along and now my platform's going to win, because rational, economic actors want to do the thing where they make money, instead of doing the thing where they don't make money, which is what happened with SushiSwap, right, and forced Uniswap's hand into launching their token defensively.

The token stuff is a bit triggering, or tilting, for me, because I do think, "What is the point?  They all seem a little bit pointless".  Uniswap's a good example.  You can just vote to give people money, apparently, you can vote to give student groups money, or whatever; you can't do much else.

Allen Farrington: Did you not have a proposal about this recently?

Crypto Cobain: Yeah, I wanted them to give me $20 million to shave my head, but they said no.

Allen Farrington: Oh, okay.

Crypto Cobain: I wasn't in with the insiders!  I tried to get in, but no one would vote for me.  They thought it was facetious.  I was being serious, dude, I would shave it all off; it would go.  And I would do it while reading the Uniswap developer documents out, so it would be a big hit for them.  But they do seem all a little bit pointless, until you realise that if people can clone your work and issue a token, then you need to defensively have your own token already.  A lot of people are just saying, "What is the purpose of this token?"  The purpose is, someone else is going to do it if we don't.

Alex Gladstein: You've just described perfectly the entire alternative currency movement from the beginning, but I do think there's something that happens over time.  Look at Lightning.  It was really hard for people to build on Lightning to raise money, they didn't have a token and it looked dead.  I was joking around, retweeting all this stuff from last year, people saying, "Oh, remember Lightning?"

Lightning's going to win, Lightning's going to change the world, and it's just slow, it takes time, but I think it's going to eat everything else.  So, the question is, yes, you can keep doing what you just described where you're, "Oh, I have this thing like Bitcoin, except I'm going to mint my own coin on top and we can all get rich".  You can do that to an extent, but eventually there's just diminishing returns and the open network wins.  This is something I believe.  I mean, Jack Mallers talks a lot about this.

Now, that's in the realm of money.  We don't know what's going to happen in terms of trading and finance and trading art and collectibles; that's unclear at this point and maybe Allen has ideas on that.  But at least when it comes to money, what we've seen is that game you've described, it eventually dies and the open network wins, but we don't know what happens in the other industries.

Crypto Cobain: I mean, I hope that pattern plays out, honestly, because I think it gives a lot more legitimacy to an industry which is very easy to mock as an outsider already, so I hope so.  But I don't see it playing out very often in crypto so far.

Allen Farrington: Cobie, I think that the answer to your concern is, as trite as I'm sure this sounds, it's just education.  And it's why actually, as far as I'm guessing, actually I'm not even sure, but the continued lack of legitimate debate between me and Udi, because we actually fundamentally agree on most of this stuff; I think Peter was hoping we were going to yell at each other, I'm not sure.

Peter McCormack: No, I wasn't, I wasn't.

Allen Farrington: Because we yell at each other a lot on Twitter, but it's all trolling that no one else seems to actually understand, and then we're really nice to each other in private.  But, Cobie, I think the point ultimately is just education, so this lack of debate between me and Udi comes from me being very, very sympathetic to -- and I think it's funny, because I would imagine that you're, probably prior to this podcast and then I'll be destroyed, people would have, especially if they read that paper, they would have thought that I was a Bitcoin maximalist, and I kind of get what they would mean by that.

But I am very sympathetic to this view that the tactics also matter, in terms of how you get people into Bitcoin, which is weird, because I think both these things can be true at once, and I imagine that Alex probably feels very strongly about this, that ultimately what we say doesn't really matter to Bitcoin's long-term success.  It would be highly hubristic for us to think that we're going to solve it now by deciding what the messaging's going to be, right.  Obviously, we're all on board with that.  But that doesn't mean we can't help a tiny bit at the border by, for example, putting out the kind of message that would encourage somebody, in the position that you just described, Cobie, to build on Bitcoin. 

I think the really annoying thing is, you're never going to know who this person is.  There's going to be somebody who decides to build on Bitcoin, because they understood all of this; unless they come on the podcast and they're like, "Oh, yeah, I remember that time where Allen and Udi and Alex and Cobie were all chatting about this.  That was my inspiration".  Unless that happens, you're just never going to know.  So, I do think there is value in, I'm not even sure how to put it in a way that won't get me cancelled, not being too toxic; being toxic enough, but not too toxic, something like that.  Anyway, I can see Alex getting angry!

Alex Gladstein: No, no, you can't just raise easy money to do Bitcoin stuff; you have to raise hard money, it takes time, it's tough.  But I guess, what I'm saying is that over time, it's highly effective and really decimating for the legacy system.  I think the question is just, again, I think we all agree, we can't really change Bitcoin's trajectory, it's going to do its thing.  I guess what I'm arguing is we can change people's trajectory, and we're about to enter a decade, I think, between 2021 and 2031, we're going to go from 200 million Bitcoin users to way over 1 billion, and the price will react accordingly, exactly how you think it's going to react.

That's an asset that's open to anyone in the world and right now, the media and governments are gaslighting people about it, and we should just unite around that and help people onto Bitcoin and then, look, if they want to get into this other stuff that takes more information asymmetry and more time, as you described, Cobie, to sit there and look short term, fantastic; but I'd love for more people just to realise that, hey, in ten years we're probably just going to regret we didn't talk more about Bitcoin and try to get friends and family involved, and we're upstream against a state and a government and a media apparatus that is desperately trying to get people to not invest in Bitcoin.

Udi Wertheimer: Funnily enough, if we issued a token that rewards people who will take a stand against the government, we will probably do a better job, because that's a way to direct resources.  And actually, the exact thing I'm describing is happening on Ethereum and other ecosystems, and a lot of it is a joke.  But also, it would encourage the most capable people to do those things for profit.  That's why it attracts capable people.

Alex Gladstein: We've got plenty of people out there who are encouraged by other motives beyond profit, I just see it, man, it's happening.

Udi Wertheimer: We have them, but the question is, do we have the most professional and the most capable people doing the work?  That's a capitalistic question, it's a question about capitalism.

Peter McCormack: Well, I'll bring it back full circle and why I wanted to host this, and I've been discussing this subject recently with people, and it's very interesting to see the mild coercive pressure that comes through, say, on YouTube comments where it's like, "Oh, Pete's now a shitcoiner.  Pete's now shitcoining.  This is a soft introduction to him shitcoining".  I just want to be very clear, I only hold Bitcoin and I only intend to hold Bitcoin.

But the reason I wanted to have this discussion and Udi and I talked about this on Telegram a while back, but the reason I wanted to talk about it is that I've wrestled with this idea of toxicity.  And bringing it fully back to an individual level, I have one job in the world, which is to provide content that helps people understand Bitcoin, educates people about Bitcoin.  And if shouting about other projects actually harms that, then I'm not doing the job in the right way.  What I want to do is encourage enough people to either come to the podcast and learn about Bitcoin, or come to the podcast and learn about why it's a better investment.

I see there's a potential risk by, we've got massive growth now and every time we go through a hype cycle, it's 10X more people coming in.  And, how do you provide the right level of education?  It could just be a Bitcoin-only podcast and I only ever talk about Bitcoin; or, I can bring people along like yourself, Cobie, Udi, Alex, Allen, and have a civilised conversation about what are the flaws with these other projects and what are the risks; and hopefully, bring you in and consider Bitcoin as at least your primary asset, or something you all have an investment in.

But I feel like these conversations are worth having and it is worth diving into the nuance of them, whether you're a Bitcoin maximalist or not.  So, I just wanted to bring it back full circle and just say, I am Bitcoin only and focussed, but I want to make these conversations happen so at least people have all the information, because I don't believe they always do.  Udi, you said everyone understands how these things work; I don't believe they always do.  I don't believe people always understand what they're getting into.  Actually, I know they don't, because you see the stupid emails I get from people.

Udi Wertheimer: Of course not, yeah.  I didn't think everyone understands that, I'm just saying that those conversations are happening.  And if we want to look at them, they're there.

Peter McCormack: All right.  Well, I think we can close this one out, we've done two hours, it's great.  I appreciate all of you coming on and I think it's a very good discussion.  I think I'll reverse the order and let anyone have their closing comments.  Cobie, I'll start with you, mate.

Crypto Cobain: Allen told me we were playing among us, is that not happening?

Peter McCormack: What's that.

Crypto Cobain: I don't know, he said that's what we were doing after we did the thing, we were all playing a game together live or something; not happening?!  All right.

Allen Farrington: Yeah, but Peter changed the topic though.  We talked about Bitcoin instead!

Crypto Cobain: Yeah, I don't really have any closing comments, to be honest.  In general, I think it's smart to keep your majority allocation Bitcoin Ethereum, and if you're not going to look at the markets for ten years, those are the only two things that I have confidence will be around after that time period.  I don't have confidence anything else on the top ten of CoinGecko, or whatever, is going to be around.  Some of them might be, some new stuff will be there for sure.

If you look at the top ten on CoinGecko, it's kind of disappointing that that is the representation of where the money is allocated in our industry, because look at it; it's a joke.  And I agree with tons of stuff Gladstein and Allen have said, to be honest.  I actually think I might just take Gladstein's external approach from now on, because it's by far the coolest approach to have; you sound way cooler than the rest of us!  So, I'm going to go with that one.  It's like meaningful and shit and I got some sense of purpose from it and I really liked it.

For people that are long-term allocating into your Cardanos or your Solanas or your Avalanches or whatever, I don't know what they all are, to be honest, I think you do need to take a hard look and figure out what you own and what are the practicalities about what you own, what is the actual upside in what you own, and what are the risks, and reallocate some of that to value.  I think where I disagree with most people on this podcast is I think there is value in Ethereum as well, and I think there's value in Bitcoin, and I think it's a mistake not to have some allocation.

Udi Wertheimer: That's ridiculous, Cobie.

Crypto Cobain: It's a mistake not to have some allocation in both.  And I think there might be some people that hold one of the things I've just named, or some other thing, that actually hit it out the park, and maybe Ethereum goes to number three and this thing goes to number two, because that's the industry we're in.  Weird stuff happens.  And they might listen back and say, "You told me not to hold fucking whatever" and I was wrong, and fair enough. 

But in general, I agree with everyone.  Thanks for the invitation, and yeah, I've enjoyed talking to you all.

Peter McCormack: For a man with no final comments, that was a good summary!

Crypto Cobain: I felt like I had to say something.  You put pressure on; I just babbled!

Peter McCormack: Alex, final comments, man?

Alex Gladstein: Yeah, look, and again, there's a huge difference in short-term dollars made versus long-term enrichment of your own understanding of the world and your economic view and your family's future economic place in the world; but I found tremendous value in trying to understand the flaws in other platforms, and I think it's something we should do more of, also in Bitcoin, but criticism and real criticism and trying to dive deep down and understand things about monetary policy and who controls these platforms, I think is really important and shouldn't be hid from the public and should be part of the dialogue. 

I think you, as an individual, gain a lot when you start to ask these big questions about, "Well, actually, who gets to decide the monetary policy of this thing?" and, "What would happen if this company turned off all these servers?"  These are all super valid questions and we should just continue to ask them all.  And at the end of the day, this was a great conversation, I really enjoyed it, and I think what some of us have pointed out here is that there are two ways forward: you can build on Bitcoin, or you can flee the cops, and you just have to see how it's going to work out.

I agree with Udi that it is unlikely that the cops are going to catch everybody, but it's a risky game and they will catch a lot of people and we haven't seen the full -- I would say it would be arrogant to think that we've seen the full might of the state at this point.  I would be concerned about that.  You just saw what the Chinese Government just did.  I would be hesitant to say that we've seen the full force of the state, and I'd be worried if I was someone making a DINO project right now, if I didn't have a plan to comply or flee essentially.

So, that's why I think building on Bitcoin's so important.  It's already Trojan horsed its way in.  We already have it in fricking Twitter and it's not going anywhere.  So, I'm excited about the world ahead and about the next decade and, yeah, more dialogue and debate will lead us to a better place.

Peter McCormack: Thanks, Alex.  Allen, thanks for coming on; first time having you here.

Allen Farrington: No, thank you very much for having me.  Yeah, last words, let me think.  I guess I'd ask people to just make sure they really understand what problems are trying to be solved here and how they can contribute to that.  So, from my personal, and professional as well, perspective, I think what irritates me about a lot of this, not this conversation, but the wider conversation around this space is that it gives the impression that the problem with finance and with capital markets is that they're almost not digital enough, and they're too analogue, and that's what we're setting out to fix.

I think that the problem with finance isn't that it's not digital enough; it's that it's far too digital, it's far too short term, it's nowhere near as interested in long-term capital formation as it should be, and I think the way that you take on the establishment, if that's what you want to do, if that's why you're in this space at all; the way that you really achieve decentralisation, not of some token, some software project, but of your life, is that you look more into this single greatest project that has ever existed to do that, which is Bitcoin.  That's my final word.

Peter McCormack: All right, Udi, follow that up, mate.

Udi Wertheimer: Well, what does Udiverse want to say?  Let's see!  So, I think that a lot of people, in the last two weeks or so, have been looking at what I've been saying and they're like, "Oh, what is going on?  Is Udi trying to convince us to buy shitcoins?  Is Udi trying to convince us to build on shitcoins?"  No, absolutely not.  I would not recommend any of those activities. 

I'm actually saying those things, because I think that we've been conditioned to not talk about them and I think, as a Bitcoin community who cares about Bitcoin, we need to talk about them.  And I think that as much as I love cool things like Taproot and Lightning, and there's been a lot happening around those two in the last year, there's been in a ton that's been happening in the last year outside of the Bitcoin ecosystem, a ton; much more than in previous years.  We should not ignore that, we should not attach immorality to looking at it, and I do think that it's possible, and I hope, that we'll have this future where everything is built on Bitcoin. 

I think to get there, we need to start looking now at what's happening elsewhere and start learning from it.  And it is okay, it's moral.  If I convince a single person listening to this that it doesn't make them a bad person to try out Uniswap to see how they can convert it to Bitcoin, then I'm happy.

Peter McCormack: Awesome. Well, listen, I appreciate you all coming on. I think it was a wonderfully civilised conversation. Nobody yelled at any point, and I do think these conversations are definitely worth having, and I think they're a lot more helpful and it helps people understand the nuance of what is going on out there. So, yeah, big thanks to you all. Viva Bitcoin, I absolutely support Bitcoin and I think it's amazing what we have here and hopefully, if a success from this conversation would be a few more people having a better allocation to Bitcoin, I would be happy with that. So, thank you all, take care and I'm sure I'll see you all soon.