Bitcoin Quantum Threat Accelerates!🚨Charles Hoskinson INTERVIEW🔥Cardano + Midnight

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The quantum threat is real, and it's coming much faster
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than everybody is anticipating. I'm going to have Charles Hoskinson
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on today. It's going to be a good one. I
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do want to kind of start off with this right here,
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and that is Google's quantum warning. Could Bitcoin really be
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hacked in nine minutes? This is kind of the breakdown
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and also the narrative that has been pushing for about
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the last six months, and the acceleration of this has
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even surprised me, someone who's been in tech for a
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long time. I kind of question whether or not this
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could be done. And we've had several people on before
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talking about this very issue. Justin Drake was on not
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too long ago, and even then he wasn't really mentioning that.
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But I want to play a clip for you before
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we bring on our guests. Take a look.
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Most recently, I heard you say you think QDA would
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be roughly around twenty thirty twos.
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Is that still kind of your timeline.
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The specific number that I put for publicly is that
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there's at least a ten percent chance that will have
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one of these crocs by twenty fifty two, and a chance,
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you know, for etheroreum is enormous, right, we can't take
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this chance now. Over the last three weeks, basically, I've
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been obsessed with these neutral atoms and I you know,
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I'm not ready to make a final prognostication. But my
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Q day is going to come forward, so it's likely
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not going to be twenty thirty two anymore, is going
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to be you know, a smaller number.
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All right. So that is one of the lead devs
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over there with Ethereum. Of course, we've talked to him
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at length about this, and now we're starting to see
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much more alarm in the community. One of the people
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that is bringing the alarm signal up has been Charles Hoskinson.
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YouTube took down as BP three sixty one proposal and
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we're going to talk to Charles about that today and
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we wanted to bring him on the show and welcome
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him in to PBN. How's it going, Charles, Hey, Paul,
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thanks for having me on. All right, So you saw
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some of the line up there. You saw justin talk
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about moving forward their plan. Quantum threat is real. You
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see this as a major issue right now when you
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look at the current state of where we are. How
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dire is this.
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Really well, what you do if you want to have
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some degree of objectivity and transparency to the process, as
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you kind of widen the aperture, and you say, who
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has the strongest incentive to care about the problem? So
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the US government does, the US military does, the intelligence
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agencies do because it's life or death for them. So
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the thing I look at is DARPAS QBI, the Quantum
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Benchmarking Initiative. So it's an open project. Eleven major companies
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from IBM to Quantinum, we're participating in it. And basically
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what DARPA did is they brought together all the physicists
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and engineers and they're through a three stage process trying
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to figure out are we going to have a working
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quantum computer by twenty thirty three, and if so, what
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can that computer do? Can it break encryption? Can it
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do quantum chemistry? And all this other stuff. So eleven
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of those companies have passed through the first gate gate one,
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and there's two more, and so we'll probably know within
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the next twelve to twenty four months. Is this a
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near horizon problem or is this a problem that's longer
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horizon like the twenty forties or twenty fifties, as Adam
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Back believes. So regardless you look at where the standards
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are at, do we have countermeasures to defeat quantum computers?
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And the entity you look at for that is nissed
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whether you agree with them or not. They control the
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Department of Commerce's opinion and all US government procurement and
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thus all hardware in the United States, So they do
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what are called phipps, and phipps are standards that the
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US government adopts for cryptography. So PHIPS two three, two
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four to two five and two six are the post
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quantum standards, and they have both on the hash and
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lattice side, a variety of good options. And so we
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have countermeasures, and we have basically a group of people
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that are waking up every day telling us when QDA
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is going to occur, if it's going to occur. So
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does the natural question asked, why hasn't the space just
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adopted this stuff proactively, like what's the harm? And the
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problem is post quantum stuff is much less efficient and
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much bigger in signature size than quantum than elliptic curve.
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Excuse me, lyptic curbs are awesome. You know, you have
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lots of lots of optimizations, and they run really quickly,
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and they're very small signature sizes. If you look at
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a Stark for example, you're talking about a forty to
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two hundred kilobyte signature, and when you look at a
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comparable elliptic curb, you're talking about like half a kilobyte
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or smaller. And when you look at lattice based, it's smaller,
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but it's still in the kilobyte range. So nobody wants
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to be the guy to say, hey, let's go adopt
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this thing for this thing we don't know is going
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to happen, that we're going to take a ten to
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one hundred x performance hit in terms of TPS for
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our blockchain. For let's do this a little bit more slowly,
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And that's why we've seen a resistance to wholesale adoption.
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But some blockchains have been leading, like al Grand for example,
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with the Falcon signature scheme and other ones. That's their
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entire resindetra, which gives us pretty good data and practice
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what these things look like at scale and what they
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can and cannot do. Ethereum has also been a pretty
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big leader with the Stark side, and they've been very
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aggressively pushing towards post quantum, so it's you know, it's
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it's nice to have those data points. But Bitcoin in
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particular has some hard decisions to make hard decisions.
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Who would you say is closest right now? Of the
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blockchains that are currently out there that are somewhat active around,
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who would you say as leading the back.
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Well, some are easier to secure and faster the secure.
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Other ones are much more complicated. Anything in the proof
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of stake space a lot of work has to be done.
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Anybody in the zero knowledge space even more work has
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to be done. If you're a proof of work.
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You don't have to do too much.
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You just have to secure your signature scheme and be
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comfortable with your hash size for your puzzles because of
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Grover's algorithm. So Bitcoin has further behind, but they easily
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could add a post quantum scheme, things like ethereum or
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cardono or otherwise. You have to think about your VRF
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or your vdfs. You have to think about user an
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old strategy. So there's just a lot more work to do,
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which is why they're more involved. We have the algorithms,
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we have the quantum analysis. We wrote a paper in
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twenty nineteen on bitcoin, specifically if there was a quantum adversary,
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explaining what's a problem and what's not a problem.
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So you know, we've been thinking.
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About it for seven years, so i'd say, you know,
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if you look at Cardino, Midnight, algorand or ethereum, or
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any of these things, we're going to be okay in
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the twenty four to forty eight month time horizon. On
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the Midnight side, we have a project based on work
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from Stanford and Microsoft called Nightstream that we're doing with
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the Linux Foundation the LFDT, and that's going to give
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us a post quantum foundation. And on the Cardinal side,
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we have a lot of things that we're starting to
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pull into Cardinal in the next twelve to twenty four
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months to do that. But what we're slated for is
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it's got to get all tied up with a bow
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tie before the end of the decade. And I think
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that gives us a comfortable marchin for this coming fast.
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For sure. We've had Paul Stork on before. He's a
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long time bitcoin developer. You may know him out there
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in the community. Now he's proposing a fork that would
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reassign part of Satoshi Kamoto is one point one million tokens.
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The plan is to copy bitcoin into a new chain
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called e cash. I think it's actually doing a countdown
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right now, one hundred and fifteen days out. What do
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you make of this one in terms of possibility?
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When's the crowd sale?
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Yeah, okay, I get you. So, I mean, is there
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any other solutions out there besides what you're proposing?
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Yeah?
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I want to be fair to Paul. So the problem.
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The problem is that there's no good solution right now
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for bitcoin because it requires interaction. I ran into this
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with the Ata sale where there were vouchers sold for
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Cardono twenty fifteen and about ninety nine point seven percent
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of them redeemed and they're now out there. But then
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there's a small group of people. They do nothing, and
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if they end up falling into insecure addresses, what do
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you do? You have to develop some sort of custodial system.
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So in our case, we had KYC data, so we
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could create an off chain process for that. The problem
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with bitcoin is they don't have ownership associated with the
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initial distribution, and so when you have kind of three options,
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you can do nothing, in which case about six point
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eight million coins are vulnerable at rest, and then all
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future spending is problematic, so that's not good. You can
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do what bit three sixty proposes, which is use what's
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called paidamrcle route, and you had a post quantum signature,
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and then people can migrate of their own accord and
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the people who don't migrate their funds are effectively going
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to get stolen for the legacy addresses. Or you can
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do what Paul is advocating, or what bit three sixty
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one is advocating, and instead of just adding the signature scheme,
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you also freeze the legacy accounts and you create a
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migration path. So in the case of bit three sixty one,
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what they're saying is, we're going to create a zero
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knowledge proof and if you can prove that you own
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the bit thirty nine keywords, you can redeem and that
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would be post quantum awesome. But there's still one point
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seven million coins that you can't do that because that
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standard didn't exist until twenty thirteen. Bitcoin was created in
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two thousand and nine. So Paul is like, well, what
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do I do with those four years of history? You
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can create another chain and migrate that over and then
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you know, use that as an off chain redemption mechanism.
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But the problem without a hard fork, bitcoin won't really
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understand how to reconcile that accounting, and those coins will
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be stolen and put into circulation. So unless you're willing
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to admit a hard fork, then you're not going to
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resolve the theft consideration. And if you do do a
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hard fork, under what legal authority do you have to
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seize other people's property? Yeah, there's no achievement process, you know.
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And this is the problem with not having on chain governance.
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There's no terms of service to seize people's assets. It's illegal.
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Yeah, this is a this is a major challenge. I mean,
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you look at the probability of what would get done here,
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where would you put it in the camp of what's
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most likely to occur? Because this is going to have
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to get addressed. It it's not an if, it's a win.
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So the most likely outcome is the adoption of something
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like BIP three sixty where they add a post quantum
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signature scheme using the tap root construc diruction and they
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allow the coins to be stolen. And the argument for
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that is, look, we survive Silk Road, we survive Mount Gox,
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we survive bigger events. It's okay for a temporary cycling
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of ten or twenty percent of the supply, and exchanges
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and off chain processes can probably be used to somewhat
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resolve that. And also people knew the risk they were
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given in formed consent. They said, hey, you know, you
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don't move.
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It is what it is.
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The challenge is that people like black Rock and these
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other large scaleholders who have a massive influence now over bitcoin,
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they're not going to be super comfortable with this concept
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that magically twenty percent of the supply is going to
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be seized by North Korea dumped on the open market.
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It's just a regulatory, logistical, and value nightmare. They have
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produci your obligation to their shareholders for their structured financial products,
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so they have to advocate for avoiding the theft, which
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means they have to advocate for hard work to prevent
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that from a current Because it's easier for them to
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just take those coins out of circulation kind of makes
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their individual coins more valuable and they don't have to
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deal with the theft and the dump. So that's where
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you're going to have a big cultural clash, and it
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may actually break bitcoin or not. It's we've never had
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a situation where a company with over ten trillion dollars
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in assets is on one side and you know, the
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philosophical bitcoin people are on the other side, and they're
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gonna they're inevitably going to reach a conflict.
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Yeah, this is listen. It's been all brewing for quite
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some time. So here we are right in the in
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kind of the midst of this. Right now, what about
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Midnight and Cardonal What what would you say you could
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enable for bitcoin security right now or in the near future.
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Well, you know, we do the quantum research and we
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worked with amongst others, because we have one of the
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largest research groups in the world. We have one hundred
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and sixty eight scientists that we work with in probably
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a dozen institutions.
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We published about two.
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Hundred and fifty papers, so we have a lot of
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academic stuff, and we were actually the first to prove
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bitcoin was secure. It was the GKL fifteen paper, which
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is one of the most cited papers in the industry.
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So we have a lot of academic stuff about things
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they can do, and we've written BIPs in the past
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and they've never been adopted, but you know, they can
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certainly cite and gain inspiration from that, and then obviously
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we're a utxosystem.
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They're a utxosystem.
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So if they're considering it like the real life implications
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of a post quantum signature scheme, they can look to
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Cardono as a case study of what impact does that
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have on a system like theirs. So there's some analogies
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that one can draw there, but ultimately there's not much
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we can do because there's no good answers here. They
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don't have a governance system or a constitution we do.
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So when these things come up, we take a vote,
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decisions made, we move on. And it's not really a
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problem with bitcoin. There's no means to take a vote,
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so no matter what happens, you'll basically have some form
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of fragmentation and Bitcoin Classic and other things. And it's
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an unavoidable thing because it's an avissarial capability. It's like
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a group of pirates are sailing in. Your house is
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unlocked and the vault is unlocked, and who knows if
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they come in five years or ten years. But you're
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making a decision do we just leave the gold in
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the vault or do we take it? So bit three
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sixty one is take the gold and move it somewhere else,
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or maybe just destroy it because we can't do anything
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with it. And Bit three sixty is give people the
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option to move their gold and anything that's left behind
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the pirates are going to steal. There's not much Cardano
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or any other ecosystem can functionally do for that. That's
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a Bitcoin specific concern.
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Yeah, for sure. I want to move over to Midnight.
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I'm looking at the Midnight Passport teaser here and I'm
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noticing a couple of things here. One I wanted to
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notice was the accredited investor verification there. Why go that
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route in terms of adding accredited investments into something like
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a midnight platform?
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Well, I mean, the real world asset space is the
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fastest growing vertical.
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We already have some of them.
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They're called stable coins, and they trade trillions of dollars
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every year, and they're effectively under the hood tokenized treasury bills.
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So our WA's are here to stay, and a lot
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of people like Securitize and dozens of others have tried
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for years to create standards and bring them about. The
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challenge is to play with these types of things, you
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have to have some blending of identity and wallets to
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do the KYC, the mL, the suitability guidelines to restrict
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certain jurisdictions, and other things like that. That's really hard
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to do unless you have a privacy system because if
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you do it in just a native blockchain way, your
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PII goes onto the blockchain.
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Everybody can see it forever.
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Bad news though with Midnight because we can cover this
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use case, we can cover it not just for ourselves
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but for every blockchain like Ethereum and Bitcoin and Cardano
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as kind of a natural extension, and people can.
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Pay a fee.
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What makes us different from other systems is the self
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sovereign concept. So other systems, a central authority owns your
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identity or some federation of them, and basically they control
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as a gatekeeper whether you can use your identity or not.
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What we do is we have DIDs and it's self
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sovereign identity. You own that, and then you basically go
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and verify what you choose and choose how to do that,
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and then you use selective disclosure through zero knowledge disclosures
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to prove properties of things. So one of the most
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common patterns is actually blacklisting the United States, so you
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have yield bearing stable coins not really legal in the
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United States, so a lot of people say, well, if
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you're a US resident, you can't participate. Even the president's
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children did this with World Liberty Finance, so pretty much
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from the top down, Okay, well, how do you prove
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you're not under US jurisdiction? The naive way would be
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for you to give me your address and I say, oh, well,
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you're in Gibraltar and you're not a US citizen. Okay,
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so you're probably outside of jurisdiction. But what if you
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had an ability to do a zero knowledge proof that
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proved you're not under an American IP address and you're
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not under American jurisdiction, but you don't actually tell me
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where you're.
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At and who you are. So that's the space that Midnight.
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Operates in, is to build a collection of partnerships and
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capabilities and technologies and in that at the DAPT level,
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not the protocol level, the DAPT level, on a case
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by case basis, people can build this in and kind
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of put it into their wallet and they control the
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credentials and the assets, and some are more restrictive, like
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a government ID system would be, a voting system would
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be a clearance system would be like the CACK card
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system for the military, for example, and others are much
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more open and voluntary and they're based on open standards
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and things like that. And what we did is we
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built the technology for both to coexist in the system.
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And it's not at the protocol level. It's at the
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DAPT level, so there's no s gro keys or back
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doors or things like that, and the operators of the
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system don't see or care they're beneath that.
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So this is a I mean, this is kind of
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one of the things that we've talked with Canton about,
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which is the privacy side of thing. But why would
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CANTON need to exist if you have this more advanced
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layer of privacy and now you're doing midnight works with
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banks already, so why would you not Why would you
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need Canton if this exists out there?
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Yeah, this was kind of you're old enough to remember,
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and I'm on enough remember because we've been in the
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industry a while, like the big fight between the consortium
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chains and the open systems, so you had like Fabric
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and R three and all these other things. It's all
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these permission blockchains are just going to rule the roost
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and then everybody started picking like Solana and Ethereum and
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other things. So it's much the same like what is
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the home of what we call Web two point five?
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So when you look at things like Circle or Binance
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or Tether, they're not quite Web two, they're not quite
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Web three. So they have a token, they have an asset,
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they have an ecosystem, and it's trading on cryptocurrency rails.
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But usually there's some form of regulated financial business with
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owners and licenses and it's in a jurisdiction.
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On the other side. So that's your Web two. You
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put them together. So there's a question of what should
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the home be for that.
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Should people build their own chains like Circle is doing
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with arc and Binance did with B and B and
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now you have Canton where it's kind of a consortium
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of things, or should you build open infrastructure where everybody
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can no matter what their Web two point five business is,
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can come and they can do both things comfortably. So
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Monument Bank, for example, is chosen to come and bet
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on that paradigm like men people before bet on ethereum,
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and we'll see what the market decides. There's advantages in
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a federation. Typically they're faster and cheaper, and maybe they
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have some more vertical integration. The disadvantages is a club
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and you have to be invited into that club, and
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so if you don't meet their suitability guidelines, basically you're
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shut out. So open networks, there's no club. Anybody can
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come and join, Anybody can come and do anything. And
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I think our industry has preferred open gardens over walled
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gardens throughout its history. So that's what we're doing, and
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we'll see in the court of public opinion which side runs.
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We think the privacy tech and the standards that we're
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betting are pretty good. The other thing is where do
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the agents live. That's the single biggest user growth in
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cryptocurrency in the next five or ten years. It's not
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going to be people, it's going to be AI. Because
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what we want to do is we want to delegate
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authority to an agent and have them just do a
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bunch of stuff.
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Because cryptos hard. I don't want to really know how.
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Ethereum works or Canton works or all this other stuff.
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I just want to buy stuff and make sure that
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people don't steal from me. So what I'm going to
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00:18:59.440 --> 00:19:02.559
do is get smarters delegate to them through standards like
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00:19:02.599 --> 00:19:05.680
the open wallet standard or and they'll talk to each
402
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other through X four, O two and these other things.
403
00:19:08.079 --> 00:19:10.160
So where does that live. If you have a closed system,
404
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those people gate keep what the agents can and can't do.
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If you have an open system, your agents can do
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whatever they want to do with any chain, any open system.
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So that's another reason why I think long term the
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open systems are going to win over the closed systems.
409
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And you know, everything we've done has always been open.
410
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Sometimes people disagree with it, but it's very clear we
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have a strong commitment to decentralization, even when it's cost
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us to adoption in the in the past. So we're
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just carrying those principles forward into into midnight.
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You look at the midnight Monument program. Why not? Okay,
415
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so why not just listen to it like an on RWA.
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If this was equated out there, if you look at
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represented right now, this would end up falling. You'd end
418
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up somewhere probably in the top three, maybe top four.
419
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Well it's probably gonna happen. Yes, you know, it's not
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just tokenized deposits. It's like the whole stack. It's like
421
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asking the question, what would a bank of the future
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look like because it's going to change. We now have
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a payment system and all this other stuff and the
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protocols doing. It's not the legacy system. So how do
425
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banks compete and what do they do? And this is
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kind of the conversation with it. So you start somewhere
427
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tokenized deposits, but then you're really having a deeper conversation
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vertically and horizontally. So vertically is what other services could
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be added in, like insurance products or structured financial products
430
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or what have you. And then how do you create
431
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this spoke experiences for high net worth individuals and these things.
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And the horizontal is how to get more banks in
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And you kind of create a whole network within a
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network and they can have reciprocity and bypass the legacy
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financial system entirely. And the advantage they have is they
436
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get to set much more fair rules, better rules, and ultimately,
437
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you know, have cheaper operating costs. If you look at
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a bank, compliance is often the most expensive components b
439
00:20:54.400 --> 00:20:57.640
third of their budget and their people, and it's horrendous.
440
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You could buy Tokyo every year for every three years
441
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for the global cost of compliance, it's about five hundred
442
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billion dollars a year, and you look at like compliance failures.
443
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JP Morgan Chase I think has nineteen twenty billion dollars
444
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in fines over the last twenty years. And so if
445
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the largest bank of the world is getting like eleven
446
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figure fines for not following the rules, what the hell
447
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chance does anybody have in a global economy where everything
448
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changes every six months or twelve months. So what they
449
00:21:24.119 --> 00:21:27.160
want to do is just create synthetic networks that are
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above jurisdictions and they have zero knowledge, proofs and predictability
451
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because if they do that, massively easy to automate, massively
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easy to optimize, and you see like an order of
453
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magnitude reduction in the operational costs. So these smaller banks,
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it's extremely appealing to them because they don't have a
455
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balance sheet with two trillion dollars on they need to compete,
456
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but they're still big. They're like twenty five billion dollars
457
00:21:49.440 --> 00:21:53.720
fifty billion dollars one institution. The Ethereum's entire TVL I
458
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think is around one hundred billion dollars. So if you
459
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get to your point, like three or four of these
460
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guys in you could leave frog and basically be number
461
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one on the chart, and that money could be brought
462
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to bear and put into bitcoin, DeFi and all kinds
463
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of different things and actually enter the Web three space.
464
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So it's really exciting to be at the nexus of that.
465
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Well. I think the institutional capital also looks at the
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growth of RWA as a major pin of what the
467
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next generation of finance is going to be. If you're
468
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floating around the top five, you're going to just buy
469
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you know, pure attrition. You're going to be able to
470
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garner quite a bit of investment going into those you know,
471
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those particular programs for sure. So I would agree with
472
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you big move there. I want to move over to
473
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Clarity before we get into our lightning round with you.
474
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You have big issues going on right now. Of course,
475
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one of the things was getting away from the situation
476
00:22:46.160 --> 00:22:49.160
with the FED chair. That appears to be off the
477
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table now and now we're moving on to Clarity. But
478
00:22:51.279 --> 00:22:54.279
you've got Tom Tillis coming in here saying indicating that
479
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ethics language is now the new redline for him with
480
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the Clarity Act, and we all know what that means.
481
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That means the Trump family. So what do you think
482
00:23:03.279 --> 00:23:07.440
in terms of odds of getting clarity through now with
483
00:23:07.559 --> 00:23:11.799
what Tom Tillis is saying, well, the fundamental problem is, first,
484
00:23:11.839 --> 00:23:14.160
ye have hearnessy. I've worked on things like clarity since
485
00:23:14.200 --> 00:23:17.799
twenty twenty two. I worked won the original legislation during
486
00:23:17.799 --> 00:23:21.119
the Biden administration with Senator Lumbus and jillibrand the FIA
487
00:23:21.240 --> 00:23:23.359
and the Senate, and there we wrote this big bill
488
00:23:23.440 --> 00:23:24.920
and it was very modular and it was meant to
489
00:23:24.960 --> 00:23:27.839
be passed in pieces, not as an omnibus. And then
490
00:23:27.880 --> 00:23:31.039
I testified before Congress at the House Agricultural.
491
00:23:30.440 --> 00:23:31.599
Committee in twenty twenty two.
492
00:23:31.680 --> 00:23:33.799
So you know, it's like, this is something that we've
493
00:23:33.839 --> 00:23:36.559
talked about for a really long time, and you have
494
00:23:36.720 --> 00:23:40.119
to separate concerns here. And what's created a lot of
495
00:23:40.200 --> 00:23:43.160
heartburn with clarity is kind of two domains. So the
496
00:23:43.240 --> 00:23:45.160
first one is the one you've already mentioned, which is
497
00:23:45.599 --> 00:23:47.799
the President of the United States and his family should
498
00:23:47.839 --> 00:23:51.559
probably not be actors within the markets while they have power,
499
00:23:51.759 --> 00:23:54.720
because they have an unfair competitive advantage over the rest
500
00:23:54.759 --> 00:23:57.160
of US. I don't have the power to start a
501
00:23:57.240 --> 00:23:59.920
war he does. I don't have the power to show
502
00:24:00.079 --> 00:24:02.200
off trade in a certain area or increased the price
503
00:24:02.279 --> 00:24:04.359
of a commodity or decreased the price of commodity. The
504
00:24:04.400 --> 00:24:07.839
president actually does so if he's allowed to make market
505
00:24:07.960 --> 00:24:10.759
bets or share those with other people, that's about as
506
00:24:10.799 --> 00:24:14.480
insider trading as you can get. It's a big ethics concern,
507
00:24:14.960 --> 00:24:20.720
and historically presidents have traditionally recused themselves through disclosures and
508
00:24:20.799 --> 00:24:23.599
blind trusts. This is the first family where they've gone
509
00:24:23.640 --> 00:24:25.440
front and center and said there's no problem at all,
510
00:24:25.599 --> 00:24:26.880
and it created a lot of heartburn.
511
00:24:26.920 --> 00:24:29.359
Trump Coin. We went from a bipartisan concern.
512
00:24:29.160 --> 00:24:32.599
To cryptoequals Trump equals bat. So that's already one area
513
00:24:32.720 --> 00:24:35.160
that's very problematic and it's hard to get through because
514
00:24:35.200 --> 00:24:38.200
it's like billions of dollars to the president's family and himself.
515
00:24:38.680 --> 00:24:41.519
The other area that has a lot of heartburn with
516
00:24:41.960 --> 00:24:45.279
this is the definition of a security. So when we
517
00:24:45.359 --> 00:24:47.880
first started this process, I sat down with a lot
518
00:24:47.920 --> 00:24:51.799
of people, from Senator Scott to other senators to other congressman.
519
00:24:51.839 --> 00:24:53.519
I had a lot of dinners, I got a little
520
00:24:53.559 --> 00:24:57.279
fat hating at the Capitol grill there in DC, and
521
00:24:57.799 --> 00:24:58.559
we talked a lot.
522
00:24:58.519 --> 00:25:00.680
About well, one of the biggest issues is no one
523
00:25:00.720 --> 00:25:01.119
wants to be.
524
00:25:01.160 --> 00:25:03.400
A security but you have a lot of things that
525
00:25:03.559 --> 00:25:06.079
kind of look like a security, and yield bearing stable
526
00:25:06.119 --> 00:25:08.799
coins and these other things, these Web two point five businesses,
527
00:25:08.880 --> 00:25:12.359
they're kind of securities. So we got to update and
528
00:25:12.480 --> 00:25:15.759
modernize the Securities Exchange Act of nineteen thirty three to
529
00:25:16.480 --> 00:25:20.039
address these new digital securities and make the compliance burden
530
00:25:20.079 --> 00:25:23.640
substantially lower by allowing automated regulation in the blockchain as
531
00:25:23.640 --> 00:25:26.480
a vehicle of disclosure instead of a company. We do this,
532
00:25:26.839 --> 00:25:31.440
then Brad wouldn't really care too much and Brian Armstrong
533
00:25:31.480 --> 00:25:33.880
wouldn't really care too much about the particular text and
534
00:25:33.880 --> 00:25:34.960
the Clarity Act, because they would just.
535
00:25:34.960 --> 00:25:35.759
Have a dual asset.
536
00:25:36.119 --> 00:25:38.599
You'd have your stable coin under genius, and then you
537
00:25:38.640 --> 00:25:41.240
would have this additional token that's a digital security, but
538
00:25:41.319 --> 00:25:43.880
it still has the same liquidity bitcoin has, and it's
539
00:25:43.880 --> 00:25:47.200
easy to disclose and there's no boogeyman sec behind it,
540
00:25:47.440 --> 00:25:49.400
so it wouldn't be a barrier to the thing passing.
541
00:25:49.759 --> 00:25:52.160
But instead what they did is they said, you know,
542
00:25:52.440 --> 00:25:54.079
we're not even going to touch that definition.
543
00:25:54.480 --> 00:25:56.359
We're just going to try to make everything a commodity,
544
00:25:56.440 --> 00:25:59.279
even security like stuff, and it creates just a room
545
00:25:59.319 --> 00:26:01.640
making nightmare. And the other problem is there's no money
546
00:26:01.680 --> 00:26:04.759
at the CFTC to do this, so effectively, what they
547
00:26:04.839 --> 00:26:08.119
have to do is create a miniature securities Exchange Commission
548
00:26:08.519 --> 00:26:11.519
at the Commodity's Futures Training Commission. They don't have the money,
549
00:26:11.559 --> 00:26:13.440
they don't have the people, they have the time, so
550
00:26:13.640 --> 00:26:15.920
it's going to take them, even if it passes years
551
00:26:15.960 --> 00:26:19.200
and years and years, like the CFPB to write rules
552
00:26:19.240 --> 00:26:19.440
for it.
553
00:26:19.880 --> 00:26:21.359
And it's not clear if those are going to be
554
00:26:21.440 --> 00:26:22.039
durable or not.
555
00:26:22.079 --> 00:26:24.759
Because the minute Democrats get elected, they through rulemaking can
556
00:26:24.799 --> 00:26:28.920
reverse everything because it's not statutory, so it really needs
557
00:26:28.960 --> 00:26:31.279
to be scrapped, and they need to go smaller. Deal
558
00:26:31.359 --> 00:26:34.359
with the security problem head on, clean that up. Once
559
00:26:34.440 --> 00:26:36.240
we're okay with it as an industry, which by the way,
560
00:26:36.440 --> 00:26:38.920
the cat is it creates the real world asset industry.
561
00:26:39.319 --> 00:26:42.200
We get ten trillion dollars worth of securities to trade globally.
562
00:26:42.680 --> 00:26:45.039
Then once that's done, the other stuff inside the Clarity
563
00:26:45.079 --> 00:26:48.400
Act is a lot less innocuous, and frankly, Trump is ephemeral.
564
00:26:48.599 --> 00:26:50.400
You know, he's not going to be president in a
565
00:26:50.480 --> 00:26:53.359
few years, and so these ethics concerns there will receive
566
00:26:53.440 --> 00:26:56.240
and reasonable people would put things in like the president
567
00:26:56.319 --> 00:26:59.200
should recuse himself and not issue a cryptocurrency and trade
568
00:26:59.240 --> 00:27:03.079
it and let foreign parties buy it while he's in office.
569
00:27:03.559 --> 00:27:05.440
Wait until of office.
570
00:27:05.720 --> 00:27:08.440
Okay, So, so odds are right now at least you
571
00:27:08.519 --> 00:27:10.160
think and I'm actually I'm going to that'll lead us
572
00:27:10.200 --> 00:27:14.599
into our lightning round with you and let's just go
573
00:27:14.720 --> 00:27:17.440
on it right here. So you and I we would
574
00:27:17.599 --> 00:27:20.440
endorse the Clarity Act without even reading it. I'm assuming
575
00:27:20.559 --> 00:27:24.720
that's an absolute no for you. No, yeah, okay, all right,
576
00:27:24.839 --> 00:27:27.920
So my only position on this would be if we
577
00:27:28.079 --> 00:27:30.960
were to get clarity, and I do I understand your
578
00:27:31.039 --> 00:27:35.599
argument about that. And it's it's possible that the Democrats
579
00:27:35.640 --> 00:27:37.799
could take the White House in the next the next
580
00:27:38.039 --> 00:27:42.920
presidential run. It's possible, but at the same time, at
581
00:27:43.039 --> 00:27:46.720
least having some kind of framework, at least at this state.
582
00:27:46.880 --> 00:27:50.359
And do you not think that's important enough from a
583
00:27:50.440 --> 00:27:54.599
global position of what's happening everywhere else around us, whether
584
00:27:54.640 --> 00:27:57.680
it's in Asia, Europe with Meka, et cetera. Do you
585
00:27:57.799 --> 00:27:59.920
not think that's enough to just say, Okay, maybe we
586
00:28:00.079 --> 00:28:01.960
need to pull this through and then we get changes
587
00:28:02.000 --> 00:28:02.440
as we go.
588
00:28:03.200 --> 00:28:06.960
Yeah, So what you do is you run a retroactive text.
589
00:28:07.119 --> 00:28:09.559
You's called retrodiction. So you say, if this law was
590
00:28:09.640 --> 00:28:12.839
in place in two thousand and nine, you know what
591
00:28:12.960 --> 00:28:16.400
would happen Ethereum would be a security, XRP would be
592
00:28:16.480 --> 00:28:18.920
a security. ADA would have been a security. And there's
593
00:28:18.960 --> 00:28:21.599
no path for them to really meaningfully escape it. And
594
00:28:21.680 --> 00:28:23.960
there's no court that's going to decide because the law
595
00:28:24.039 --> 00:28:25.839
is now on the side of the SEC. During the
596
00:28:25.880 --> 00:28:29.240
time of the XORP litigation, the law was ambiguous and
597
00:28:29.359 --> 00:28:31.039
so they were able to kind of split the baby
598
00:28:31.079 --> 00:28:34.039
in the primary sales for security, but the secondary market wasn't.
599
00:28:34.440 --> 00:28:36.680
So that's one dimension of it. The other dimensions of
600
00:28:36.680 --> 00:28:39.440
the SEC has already issued guidance under the new chairman,
601
00:28:39.640 --> 00:28:42.680
and they physically declared what is a security, what's not
602
00:28:42.759 --> 00:28:46.039
a security, and that is sufficient. If we allow that
603
00:28:46.119 --> 00:28:48.640
the grow and foster for a lot of the ambiguity
604
00:28:48.640 --> 00:28:50.039
in the space to go away. It's going to be
605
00:28:50.200 --> 00:28:53.200
very difficult after two or three years for future administration
606
00:28:53.279 --> 00:28:56.240
to go in and overrule the prior SEC guidance and say, hey,
607
00:28:56.279 --> 00:28:58.119
we just didn't like that, so we're going to do
608
00:28:58.160 --> 00:29:00.160
our own thing. So if you're going to pass a law, law,
609
00:29:00.240 --> 00:29:02.799
you have to pass a law that actually accomplishes something
610
00:29:03.160 --> 00:29:05.680
and also it has checks and balances and how the
611
00:29:05.759 --> 00:29:08.519
law is going to be administered. In a video I did,
612
00:29:08.720 --> 00:29:11.160
which I highly recommend you check out, I found four
613
00:29:11.279 --> 00:29:14.640
separate attack vectors in the current bill as written that.
614
00:29:14.880 --> 00:29:17.240
A adversarial SEC could use to make.
615
00:29:17.200 --> 00:29:20.039
Something a security forever and never allow it to become
616
00:29:20.079 --> 00:29:24.240
a commodity. When you have those structural problems in the law,
617
00:29:24.640 --> 00:29:26.519
you don't really want to pass it as it is
618
00:29:26.680 --> 00:29:28.240
because you already know how to weaponize it.
619
00:29:28.759 --> 00:29:29.559
So it's better to.
620
00:29:29.559 --> 00:29:31.599
Actually have the ambiguity because at least then I can
621
00:29:31.680 --> 00:29:34.759
roll the dice with the courts. Otherwise, what the SEC
622
00:29:34.880 --> 00:29:36.839
will do is just simply cite clarity and say there's
623
00:29:36.839 --> 00:29:39.160
clarity and we're good to go. And will end up
624
00:29:39.200 --> 00:29:41.359
happening is there will be a wealth transfer from new
625
00:29:41.400 --> 00:29:44.079
projects to old projects. Why Brad is so for this
626
00:29:44.279 --> 00:29:46.039
is XRP and ADA and other things.
627
00:29:46.279 --> 00:29:46.839
We're exempt.
628
00:29:47.200 --> 00:29:49.440
We're going to be commodities no matter what happens. We're
629
00:29:49.480 --> 00:29:52.880
not securities, but new projects they're always going to be securities.
630
00:29:52.920 --> 00:29:55.759
And what they could do is lobby future administrations to
631
00:29:55.799 --> 00:29:58.119
make those projects securities so that they.
632
00:29:58.079 --> 00:29:59.079
Never have to compete with them.
633
00:29:59.400 --> 00:29:59.559
Yeah.
634
00:29:59.599 --> 00:30:00.799
Yeah, that's my problem with it.
635
00:30:01.440 --> 00:30:03.920
Okay, all right, all right, we're gonna try to speed
636
00:30:04.000 --> 00:30:05.359
up here because I got a lot of good, I
637
00:30:05.440 --> 00:30:07.880
think good questions for you. And one is this one
638
00:30:07.960 --> 00:30:10.559
right here. What's actually more of a danger right now,
639
00:30:11.119 --> 00:30:13.720
lazaruth and Ai or quantum thread?
640
00:30:14.720 --> 00:30:16.160
Well, right now, Lazarus and Ai.
641
00:30:16.319 --> 00:30:19.759
Absolutely I'm in agreement with you on that one. For sure,
642
00:30:20.799 --> 00:30:24.480
bitcoiners will successfully hard fork Bitcoin by calling it a
643
00:30:24.720 --> 00:30:26.720
soft fork, and nobody will care.
644
00:30:28.079 --> 00:30:30.160
No, they can't escape that.
645
00:30:30.880 --> 00:30:32.759
If they're going to hard fork, everybody's going to know
646
00:30:32.799 --> 00:30:35.079
it because a node won't work, and then that guy's
647
00:30:35.119 --> 00:30:37.119
going to be just every day be the most miserable
648
00:30:37.160 --> 00:30:37.680
bastard and.
649
00:30:37.680 --> 00:30:39.839
Complain about it on the way to escape that.
650
00:30:40.599 --> 00:30:45.640
Okay, conspiracy theory here. Layer two. Bitcoin is actually micro strategy,
651
00:30:46.200 --> 00:30:49.240
hence the push back to upgrade Bitcoin because of all
652
00:30:49.279 --> 00:30:50.960
their new products and services they've got.
653
00:30:51.920 --> 00:30:55.039
Yeah, no, no, no offense to Mike Sailor. But I've
654
00:30:55.079 --> 00:30:57.519
met Mike Sailor. I don't think he's playing forty chess.
655
00:30:58.240 --> 00:30:59.720
All right, so that's impossible.
656
00:31:00.319 --> 00:31:02.559
All right, let's go with this.
657
00:31:02.640 --> 00:31:06.119
When kelp dal hack destroyed all bridge sentiment and trust
658
00:31:06.279 --> 00:31:08.759
for the foreseeable future. Do you think that is true?
659
00:31:09.440 --> 00:31:11.000
It's like the meme man, like the guy with the
660
00:31:11.039 --> 00:31:13.319
new surround as deck. He's like, first time, uh, you know,
661
00:31:13.359 --> 00:31:15.160
I was like, we have bridge hacks every week. We
662
00:31:15.200 --> 00:31:16.200
don't give a shit anymore.
663
00:31:16.400 --> 00:31:18.200
I don't think it's contritted ejeeuz.
664
00:31:18.240 --> 00:31:21.480
Okay, I'm gonna say it's it. I'm a little bit
665
00:31:21.519 --> 00:31:23.960
scared of bridges, and I feel like I'm pretty advanced
666
00:31:24.000 --> 00:31:27.480
out there. But then again, sometimes for new people coming
667
00:31:27.519 --> 00:31:30.559
into crypto, it's it's not even what they don't know
668
00:31:31.000 --> 00:31:33.640
that matters, because they wouldn't even really understand this, you know.
669
00:31:33.799 --> 00:31:37.359
So it'll be interesting to see how this really is
670
00:31:37.480 --> 00:31:41.160
affecting the market. How do banks respond if Clarity Act passes?
671
00:31:41.279 --> 00:31:43.880
Will they accept it start innovating or do they continue
672
00:31:43.960 --> 00:31:46.519
fighting and try to undo benefits for DeFi.
673
00:31:47.039 --> 00:31:49.160
Oh, they'll accept it and dump a ton of money
674
00:31:49.240 --> 00:31:52.200
into crypto, and then they'll begin immediate litigation to destroy
675
00:31:52.400 --> 00:31:55.000
all the non bank cryptos using the Clarity Act as
676
00:31:55.039 --> 00:31:55.400
a weapon.
677
00:31:56.279 --> 00:31:59.880
Wow, that's a that's a dystopian future.
678
00:32:00.279 --> 00:32:01.880
That's what they've always done, you know.
679
00:32:02.000 --> 00:32:05.200
When Sarbaines Oxley was passed, or the Consumer Financial Protection
680
00:32:05.519 --> 00:32:07.359
or any things. And that's what the banks keep getting
681
00:32:07.359 --> 00:32:10.200
bigger and the small guys get wiped out, you get smaller.
682
00:32:10.319 --> 00:32:13.480
Yeah. Yeah, If Clarity Act passes, what will Ripple do
683
00:32:13.720 --> 00:32:16.599
about the XRP token utility? Do you think it'll be nothing?
684
00:32:17.200 --> 00:32:21.079
Or would they enable buybacks and revenue share its taking? Oh?
685
00:32:21.119 --> 00:32:22.680
I don't think they're enabled any buyback.
686
00:32:22.720 --> 00:32:25.279
They're going to keep dumping XRP and making billions of
687
00:32:25.319 --> 00:32:28.279
dollars and then buy hard assets with a company that's
688
00:32:28.400 --> 00:32:31.480
disconnected and XRP holders will have no ownership of those that.
689
00:32:32.240 --> 00:32:33.839
You know, you don't get the prime broker, you don't
690
00:32:33.839 --> 00:32:35.680
get any of that good stuff they own real USD
691
00:32:36.440 --> 00:32:38.279
that's been their MO for ten plus years.
692
00:32:38.759 --> 00:32:41.519
Let's argue this for a second. They are putting money
693
00:32:42.039 --> 00:32:45.880
when they sell tokens back into the XRP ledger ecosystem,
694
00:32:45.960 --> 00:32:48.880
So that would not be at least an investment in
695
00:32:49.440 --> 00:32:51.839
that ecosystem. Would you not agree?
696
00:32:52.400 --> 00:32:55.160
Well, what they should do is find some way to
697
00:32:55.319 --> 00:32:58.359
connect their business model to XRP buybacks directly. I mean,
698
00:32:58.359 --> 00:33:01.559
it's what Hyperliqui's doing. These other use the system. They
699
00:33:01.599 --> 00:33:04.079
buy stuff back. There's a reason they've gone from number
700
00:33:04.160 --> 00:33:07.319
thirty into the top ten displaced data. Those buybacks are
701
00:33:07.359 --> 00:33:09.599
real nice, and so if their business model they say
702
00:33:09.680 --> 00:33:12.759
twenty thirty percent of what we get goes into x
703
00:33:12.839 --> 00:33:16.519
orp buybacks, that'd be awesome and it would make Xcorp
704
00:33:16.640 --> 00:33:19.480
a very attractive relationship. But right now they have no
705
00:33:19.599 --> 00:33:22.960
financial incentive to share the wealth and no statutory incentive.
706
00:33:22.960 --> 00:33:25.880
And I'm cynical because I saw Block one, remember back
707
00:33:25.920 --> 00:33:27.880
in the day, when they raised four billion dollars for
708
00:33:28.000 --> 00:33:30.559
EOS and then they immediately said, we have no fiduciary
709
00:33:30.599 --> 00:33:33.279
obligation to the EOS token and Block one ran away
710
00:33:33.279 --> 00:33:33.839
with all the money.
711
00:33:34.279 --> 00:33:38.400
Yeah, it'd be It's hard bad. That would be bad.
712
00:33:38.559 --> 00:33:40.920
That's a civil war waiting to happen. When I make
713
00:33:41.000 --> 00:33:44.279
civil wars meant because the XRP community is very passionate
714
00:33:44.319 --> 00:33:48.720
and powerful about that. Yeah, Canton will successfully sell privacy
715
00:33:48.880 --> 00:33:53.440
and permissionless features to institutions until the incentives dry up.
716
00:33:54.039 --> 00:33:55.880
Yeah, on hundred percent. It's the same old crowd.
717
00:33:56.079 --> 00:33:57.880
They're cut from the same cloth of the people that
718
00:33:58.000 --> 00:33:59.599
destroyed the market in two thousand and eight.
719
00:34:00.079 --> 00:34:02.920
You know, it is what it is. I don't even
720
00:34:03.000 --> 00:34:03.599
worry about them.
721
00:34:03.640 --> 00:34:06.920
To be honest, Okay, all right, let's move here. Proof
722
00:34:06.960 --> 00:34:10.679
of steak will become the favored plan over proof of
723
00:34:10.760 --> 00:34:13.840
work by whoever the next administration is.
724
00:34:14.760 --> 00:34:16.000
Yeah, one hundred percent.
725
00:34:16.159 --> 00:34:19.320
It's environmentally friendly, and the token holders typically have rights,
726
00:34:19.679 --> 00:34:22.039
whereas proof of work they don't, so it's easier to
727
00:34:22.119 --> 00:34:22.519
work with that.
728
00:34:22.679 --> 00:34:24.719
Within any statutory friend you would you.
729
00:34:24.840 --> 00:34:27.840
Not argue though that, or at least make a case
730
00:34:27.960 --> 00:34:33.440
that there's enough investment by defense, government and the global
731
00:34:33.519 --> 00:34:37.199
stage on proof of work in bitcoin that that that
732
00:34:37.440 --> 00:34:41.440
would maybe be at least agreed to by the new administration.
733
00:34:42.159 --> 00:34:44.000
Sure, I don't think there's going to be a statutory
734
00:34:44.039 --> 00:34:46.360
prom where they ban it. The EPA may have some
735
00:34:46.480 --> 00:34:46.880
issues that.
736
00:34:47.440 --> 00:34:50.480
You think they'll favor. You think they'll favor the proof
737
00:34:50.480 --> 00:34:51.519
of stat.
738
00:34:51.519 --> 00:34:53.039
Because there's just so much more you can do with it,
739
00:34:53.199 --> 00:34:55.440
like you can vote on forks and all this other stuff,
740
00:34:55.480 --> 00:34:58.079
And when you're a politician, you're like, well, more dimensions
741
00:34:58.360 --> 00:35:02.320
of governance, flexibility means better outcomes for the investors.
742
00:35:03.239 --> 00:35:05.480
What's more likely to get banned in the US before
743
00:35:05.559 --> 00:35:11.039
midterms polymarket or x poly market. I'm on the same boat.
744
00:35:11.079 --> 00:35:16.320
I think polymarket gets gets that if there is a possibility,
745
00:35:16.400 --> 00:35:18.480
you know, you think about just the way it leads
746
00:35:18.559 --> 00:35:21.239
right now, especially on the political side. I saw the
747
00:35:21.360 --> 00:35:23.679
chart just a little bit ago. When you take sports
748
00:35:23.679 --> 00:35:27.400
out of the equation, poly market is leafs and bounds
749
00:35:27.559 --> 00:35:30.920
ahead of Calshi in terms of penetration. When will someone
750
00:35:31.000 --> 00:35:34.360
be able to send USDC from coinbase directly to a
751
00:35:34.440 --> 00:35:36.199
cardonal wallet, Well.
752
00:35:36.119 --> 00:35:40.199
They can already do it, so auto converts. Yeah, yeah,
753
00:35:40.239 --> 00:35:42.159
but it auto converts when they send it through it.
754
00:35:42.239 --> 00:35:45.760
There's never going to be directly into USDC yep.
755
00:35:46.119 --> 00:35:46.320
Yeah.
756
00:35:46.400 --> 00:35:48.360
So there's a bridge that does that, and it's real time.
757
00:35:48.400 --> 00:35:51.000
You can use it today right now, you send it through.
758
00:35:51.519 --> 00:35:54.079
You're scaring me here because I don't like bridges, you know,
759
00:35:54.440 --> 00:35:55.480
I'm a very concernive.
760
00:35:55.519 --> 00:35:58.159
But the bridge is facilitated by Circle itself, I mean,
761
00:35:58.239 --> 00:36:00.280
and the root of trust is they're asked set and
762
00:36:00.320 --> 00:36:03.960
there's chang network. Yeah, and so so you trust circles,
763
00:36:04.039 --> 00:36:06.000
So you trust Circle. There's you can't be like, well,
764
00:36:06.039 --> 00:36:08.400
I don't trust them here, but I don't trust them
765
00:36:08.440 --> 00:36:08.840
over here.
766
00:36:09.159 --> 00:36:10.679
Again, I don't trust the government.
767
00:36:11.000 --> 00:36:14.719
So yeah, you got to understand circle. What USDC has
768
00:36:14.760 --> 00:36:18.320
become is the EVM circle and the non EVM circle
769
00:36:18.400 --> 00:36:21.360
is really usdc X. And so when you look at Canton,
770
00:36:21.440 --> 00:36:24.000
a Lao and all these other projects a bitcoin itself,
771
00:36:24.119 --> 00:36:26.199
the intention is to grow the usdc X side of
772
00:36:26.239 --> 00:36:28.639
the house. So convertibility between the two it has to
773
00:36:28.679 --> 00:36:31.400
be trustless and seamless, and that's what we've been working
774
00:36:31.480 --> 00:36:33.360
on with them, and it's it's seamless.
775
00:36:33.079 --> 00:36:34.000
From a user experience.
776
00:36:34.079 --> 00:36:36.320
Right now, you can go straight from a Cardinal wallet
777
00:36:36.360 --> 00:36:40.079
to coinbase or finance into USDC. Straight from USDC to
778
00:36:40.280 --> 00:36:42.960
Cardinal and back. It's a one to one for it.
779
00:36:43.960 --> 00:36:48.119
Here's one for you. Snack goes cross chain the Soul
780
00:36:48.199 --> 00:36:51.119
and eath via Midnight. Could that happen?
781
00:36:52.079 --> 00:36:54.159
I could. I don't think it's a problem.
782
00:36:54.280 --> 00:36:56.960
But they're very loyal to the Cardinal ecosystem and they
783
00:36:57.079 --> 00:36:58.760
love the they love the ecosystem.
784
00:36:58.800 --> 00:37:01.280
We love them. But you know it's a great community.
785
00:37:01.400 --> 00:37:03.000
I'm going to put you in the middle on that one.
786
00:37:03.480 --> 00:37:04.719
Okay, Yeah, it's hard.
787
00:37:04.760 --> 00:37:07.039
It's hard to say because because crosschain can mean a
788
00:37:07.079 --> 00:37:09.599
lot of things. Right, they can cross list the asset,
789
00:37:10.199 --> 00:37:13.840
but will the krack and listing move from Cardono to
790
00:37:14.280 --> 00:37:16.559
like finance smart chain or something like that. I don't
791
00:37:16.559 --> 00:37:18.480
think that'll I don't think that'll ever happen.
792
00:37:19.800 --> 00:37:22.440
Onto and STA and X stocks token is stocks become
793
00:37:22.559 --> 00:37:23.800
tradable on Cardno.
794
00:37:25.119 --> 00:37:26.239
Oh, that's a good question.
795
00:37:27.079 --> 00:37:28.519
There's a lot more work we have to do to
796
00:37:28.559 --> 00:37:31.280
make that seamless and easy, like with the usdc X side.
797
00:37:31.599 --> 00:37:33.199
But I can see a world where that happens in
798
00:37:33.280 --> 00:37:36.039
twenty twenty six, twenty twenty seven, somewhere in that timeframe on.
799
00:37:36.280 --> 00:37:40.280
Slightly Yes, not all the way in on that one
800
00:37:40.880 --> 00:37:44.320
uh USD one flips Cardno in market cap before Trump
801
00:37:44.480 --> 00:37:48.119
ends his turn, Yes, griff continues or no at deep eggs.
802
00:37:49.320 --> 00:37:49.719
I don't.
803
00:37:49.840 --> 00:37:52.280
I don't think that's going to continue to grow. I
804
00:37:52.559 --> 00:37:54.679
think the maximal extraction has occurred.
805
00:37:55.280 --> 00:38:01.360
Maskall MeV has occurred. Right, Why has no blockchain focused
806
00:38:01.400 --> 00:38:05.119
on its efforts on point of sale zero percent merchant fees?
807
00:38:06.039 --> 00:38:07.679
Why have they done that? I mean, I feel like
808
00:38:07.760 --> 00:38:10.639
I argue this a lot, and then I realize, well,
809
00:38:10.760 --> 00:38:12.239
institutional is where the money is.
810
00:38:13.000 --> 00:38:15.480
Yeah, well we have that with Midnight.
811
00:38:15.559 --> 00:38:17.679
When you look at the dual tokenomics with Night and Dust,
812
00:38:17.960 --> 00:38:21.039
you can have provider pay or user pay. So anybody
813
00:38:21.039 --> 00:38:24.000
who has Knight can subsidize the dust cost of the transaction,
814
00:38:24.519 --> 00:38:26.880
So you can create worlds where merchants and users have
815
00:38:27.079 --> 00:38:30.199
feeless transactions with Midnight and just leave it up to
816
00:38:30.280 --> 00:38:32.840
that model. That's the advantage of a dual tokenomic system
817
00:38:33.000 --> 00:38:35.559
is that you can separate the speculative side and governance
818
00:38:35.599 --> 00:38:38.519
and control side from the consumptive side, and then the
819
00:38:38.599 --> 00:38:42.079
consumptive side can be further segregated between who pays.
820
00:38:42.440 --> 00:38:44.840
Because you're right, this question is really smart.
821
00:38:45.440 --> 00:38:48.119
When I go to Google dot com, I don't put
822
00:38:48.159 --> 00:38:51.119
a token in to make a search, so it's free, right,
823
00:38:51.519 --> 00:38:55.320
So the vast majority of consumers expect free transactions and
824
00:38:55.639 --> 00:38:58.519
free utilization the system and some subsidies somewhere else like
825
00:38:58.599 --> 00:39:01.559
advertising to cover that. So you have to have a
826
00:39:01.599 --> 00:39:04.039
token system that can facilitate it, and a dual token
827
00:39:04.119 --> 00:39:05.960
model lets you do that. So Midnight's one of the
828
00:39:06.000 --> 00:39:08.760
first cryptocurrencies to have that capability.
829
00:39:09.639 --> 00:39:12.400
But the issue is, right now, you'd still have to
830
00:39:12.440 --> 00:39:15.599
fight Visa and the marching clearing houses, all of the
831
00:39:15.840 --> 00:39:19.239
basically the institutions that have pretty much propped up point
832
00:39:19.280 --> 00:39:23.559
of sale forever, versus going the route of saying institutional
833
00:39:23.639 --> 00:39:26.159
business is just easier to get to profit wise.
834
00:39:26.239 --> 00:39:28.840
Yeah, the first step is the network itself has to
835
00:39:28.920 --> 00:39:31.079
have provider payer user pay, and then the next step
836
00:39:31.199 --> 00:39:33.119
is how do you bridge the legacy component of it?
837
00:39:33.559 --> 00:39:37.599
And that requires some breaking into that system and some
838
00:39:37.800 --> 00:39:39.920
use of standards, which is the good news is it's
839
00:39:39.960 --> 00:39:43.960
not impossible. And actually having banks like Monument that can
840
00:39:44.000 --> 00:39:46.320
be one of those verticals that you look at. But
841
00:39:46.480 --> 00:39:49.360
it's certainly a lot of work and we've poked some
842
00:39:49.440 --> 00:39:51.719
holes in that cup. As an industry, there's a lot
843
00:39:51.800 --> 00:39:54.719
of cryptocurrency debit cards and other things like that we
844
00:39:54.800 --> 00:39:56.599
haven't been able to We haven't been able to get
845
00:39:56.639 --> 00:39:57.320
completely there.
846
00:39:57.400 --> 00:39:59.039
But I think in five to ten years it's going
847
00:39:59.119 --> 00:40:01.440
to be a solve problem well.
848
00:40:01.320 --> 00:40:03.320
And you know, listen, it's going to be a domino effect,
849
00:40:03.360 --> 00:40:05.960
I think, because the first few that fall will start
850
00:40:06.039 --> 00:40:07.920
to accelerate in the industry and then you're going to
851
00:40:07.960 --> 00:40:09.679
see the winners, you know, that come out of it.
852
00:40:10.280 --> 00:40:15.119
If if Canton got hacked, there would be no DeFi
853
00:40:15.519 --> 00:40:18.239
United Fund donations to help save it, like ave.
854
00:40:19.639 --> 00:40:22.840
That's true, Live by the Federation, die by it.
855
00:40:23.320 --> 00:40:25.599
Yeah, I'm on that boat as well, which is great.
856
00:40:25.679 --> 00:40:28.079
I mean I'm loving to see what's going on out
857
00:40:28.119 --> 00:40:30.559
there with the DeFi United Fund. We just covered that today,
858
00:40:30.679 --> 00:40:33.800
so listen. Charles Hoskins and it has been great having
859
00:40:33.840 --> 00:40:35.639
you on the show. Thank you so much for being
860
00:40:35.719 --> 00:40:38.960
straight up with us on the Lightning Round. We love
861
00:40:39.039 --> 00:40:40.800
that and we'll definitely get you back in. Thanks for
862
00:40:40.880 --> 00:40:41.159
coming in.
863
00:40:41.840 --> 00:40:43.199
There's been a lot of fun. Thanks Paul.
864
00:40:50.079 --> 00:40:52.599
If you like this video, like and subscribe, drop a
865
00:40:52.639 --> 00:40:56.199
comment down below, and also join our free private member group.
866
00:40:56.519 --> 00:40:57.599
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