Blockchain Today and Tomorrow Talk — CTO of Coinbase and CEO AngelList

You have to be in crypto to learn crypto. These are the notes I took at this amazing talk held at the Commonwealth Club in SF.
Disclaimer — I may have incorrectly captured the conversation while taking notes. I do not spend time cleaning up my notes.
One of my favorite predictions of the future (there are many in these notes)
Naval
- We’ll see rules encoded in the smart contracts so that investors get automatically paid when revenues hit certain clips, company hits various milestones
- The first company that defines this it will be open source and everyone can copy it and build on it. Over time this builds.
- A whole series of contracts can eventually be started with a button. Our kids can click a button and get a fully instantiated company with all legal and regulatory contract in place we will not need so many lawyers and burdensome licenses it will be baked in. A 14 old will be able to start a company with the click of a button.
FULL NOTES
Speakers
- Balaji S. SrinivasanVerified — CTO Coinbase
- Naval Ravikant — CEO founder AngelList
- Erik Torenberg — Villageglobal VC moderator
Naval
- Opens with a 3 min opener on what blockchain is and why it’s important
- Discussion on networks, power, government,
Balaji
- If you want a DB of all money in the world
- The DB needs to be tamper resistant, and audible has to be decentralized so no one person can take it over
- This is crypto
- Now that we have this you can represent stocks, bonds, mortgages…
- Things like contracts on hard drives on someones computer
- Once you have this you can solve a lot of problems
Naval — why are you interested in blockchain
- In a previous company I encountered a lot of regulation that was written for the situation 40 50 years ago etc
- I wanted to see if there were old rules in other places that helps back innovation it turned out that finance has this issue in spades…
- There is Uber and Lyft
Baiaji
- How to have a network without a ruler?
- This is a way out of centralized tech monopolies
- A way out of gatekeepers on money
- It’s rare that you have social, technically interesting… addicting and it can make you rich
- This is how I got into it
Balaji
- There is a 2x2
- Anti bitcoin says
- Pro Blockchain
- Pro bitcoin anti blockchain
- I am pro bitcoin and pro blockchain — this is where I set
- Internet we digitized every form of info
- We can digitize gold, we should also digitize stocks, financial instruments
Naval
- A blockchain controlled buy a government is totarianism
- There is trustless computing
- Ethereum is more attackable more vulnerable… they are not trying to be bitcoin its trying to be a shadow network to replace what we can do on wall street
- It’s programmable. You can have a 15 year old code something and a grandma in Zimbabwe can bet on this. Set the rules aside.
- This cannot be done in the traditional finance world. Its paper based, highly regulated.
- I am a crypto maximalist not necessarily a bitcoin maximalist
We look at history of the internet, there are winners take all, money’s history…
Balaji
- I would not say money has been winner takes all
- Internet
- Now we are digitizing everything that is scarce
- History can lead you wrong if you are too overly leverd on a previous parallel
- Use it as a guide not as a hard forecast
Naval
- I agree
- Money we use as a store of value
- We use it as a medium of exchange
- We use it as a unit of accounts — this costs $14 that costs $16
- Store of value is not as valuable. Real estate, gold, oil… we use as store of value.
- Medium of exchange and unit of account is the most important
- 99.9% of the world is not using crypto today
- The use case for crypto might not be Starbucks
- It might be micro payments. Pay a trillionth of a cent for a microservice.
- If I want to send a macro transaction sending $1 bill across the globe and I don’t want people taking a slice of it “Sticker finger people in legacy finance”
- It has many advantages over gold.
- We’ve not see sovereign nation states attack bitcoin with all of their resources. It’s not been tested
Balaji
- Voice was AN application of the internet but a nice to have feature
- Search for a book store was a true 100x of the previous
- Paying at Starbucks there are many reasonable options to pay
- Starbucks may get there eventually but this is one of the last applications for crypto
What are 0 to 1 apps for crypto
Naval
- Metering routers, metering, storage, computer power
- In the future the question of where do you host your website.. Will be irrelevant… there will be services that are instantiated…
- Setting up large distributed networks… solar power, bandwidth replace verizon with a distributed wifi set of networks
- There are a set of things we would want to exist but regulations wont allow it
- Hodge podge of rules… gambling, cross border transactions wet… that constrict
Balaji
- I was trying to explain bitcoin to my mom
- There is a civil war
- Crypto is a social phenomenon, the religion is as interesting and powerful as the technical piece of it
- Blockchain is a database… it’s not as much about their reads and writes… it’s also the reads and writes to everyone’s brain to value it. Think about money…. Green paper is valuable. You’ve been told this has value since you were a child…
- This is tribalism blockchain… today. There is a huge incentive of flipping people to take a specific point of view so that that point of view can take hold
Naval
- Governance — who runs things. This is a big tribal fight over things.
- You can see in crypto land… it’s easy to fork… you create a new fork on the technology… the red people go here the blues go here.
- The wars are easy to start… so that’s one side
- On the other hand it’s good. We’re trying everything.
- If we could do this in the real world would be interesting… you can live in SF or Texas! :-)
Naval
- The religious fanatics in this are the crypto people. Normally they align with the kinds here they are trying to sacrifice the kings
- The internet was supposed to get rid of all of the gatekeepers
- Google search, DSN gate keepers, twitter… and so
- So we got rid of some gatekeepers and got new nes revenge of the nerds.
- Crypto on the extreme is get rid of all gatekeepers and keep get rid of any emerging
Naval
- No macro economist can really tell you how the economist
- It’s the blind people feeling the elephant they all try to describe it
- This is is crypto and blockchain
- You have to get involved, try to describe it and evolve it, and evolve with it
Balaji
- Today you can post anytime you want
- Instant jobs are something new… you click a button do a job you make money we have that at Earn.com today
- We’ll get billions of investors… this is obvious that it’s happening but it’s under remarked on
- 99% of the world will be investors and a small slice will be investors
- With crypto you can invest $1 to get started
- People in any country can click a button… You’ll start to see financing rounds where a million people invest $1 each into a company
- Now you have skin in the game, you can follow the company… get behind things you are interested
Naval
- You could crowdfund an entire country, a way… its endless…
Balaji
- If you could crowd find a way I don’t think you would have war, people never want it
Naval
- Its people organizing the wars who pay for it with other people’s money and other people’s lives they don’t actually do the fighting.
What does society look like in a world where everyone is an investor
Naval
- First it goes completely crazy… people are doing some many things… it will take time to figure it out. It will take awhile. The recent downturn is good…. It will teach people you can’t trust everything and can’t just send money to people you have no idea.
- I think this is raising the bar for investments this is good
Balaji
In venture the terms are based on previous train crashes to protect the downside
We will start to see these things come into crypto
Once better rules and terms come together more people can invest and feel
Naval
- We’ll see rules encoded in the smart contracts so that investors get automatically paid when revenues hit certain clips, company hits various milestones
- The first company that defines this it will be open source and everyone can copy it and build on it. Over time this builds.
- A whole series of contracts can eventually be started with a button. Our kids can click a button and get a fully instantiated company with all legal and regulatory contract in place we will not need so many lawyers and burdensome licenses it will be baked in. A 14 old will be able to start a company with the click of a button.
What skill sets are now needed in thrive
N
- The same skills that have been needed…
- Computers cannot be creative
- You want to learn skills to create new things
- Entrepreneurship is an instantiation of this
- In the future either a computer tells you what to do or you tell a computer what to do you don’t want to be on the wrong side of that.
Regulation? How do you correct for market failures
B
- I think people want regulated markets in the sense they want trustworthy actors to ban bad actors and rank other actors. They want consistency.
- It can be different regulators. Amazon, uber…
- It does not have a to be a national actor
- You can have review and reputation sites arise… we are already seeing this
- Those that are good people will subsidize them with crypto
- We will see if there is more of this needed or if it will be enough
N
People can hop around easily from different crypto
B
- Email spam there is a period of tolerable anarchy
- What finally worked were the gmail spam filters
- If someone intercedes too soon you get a suboptimal solution
- Like government regulation on various communication spectrums
N
- Like the locking out individual investors from ICOs
- It should be a sophistication test…
What is your vision for the future and your role
B
- Driving creation of new assets
- Integration of Earn.com — we want you to earn as well as buy and sell
- We are investing in a lot
- Vision build an open financial system — this means think about Linux vs Windows.
- Building a more open financial system… tis hard to imagine a more closed financial system than what we have today
- We are onboarding people into this more open financial system now…
B
- Coinlist is a place for ICOs that are more regulated
- We are now doing legal compliant air drops of coins
- We have a fund that Chia, Basis, Coda… we are always in the first round of people scaling the fundamental protocol challenges
- We are not I do not think at a place where we can build large commercial applications
- There are fundamental scale issues with blockchain where everyone keeps a full copy of the entire database
Inequality as it relates to crypto
N
- You have to unpack inequality
- Equal outcome is what you get in north Korea
- Free people make different choices and you get different outcomes
- Blockchains offer equal access anyone can contribute code to it
- This is globally and at any age a 14 year old in bangladesh
- This is a meritocracy however and there are winners and losers here
B
- There is centralization of power and wealth and these are highly related
- We have our ability to fork off of a tyrannical force and move our money away from it
N
- Land ownership goes back many many years and is based on whose relatives got there with agun first
- There are sticky fingers in the current financial system those closest to the money get a larger share as part of distributing it
N
- You could have a bitcoin attack and have politicians crack down if there is some major attack and restrict
- Governments may not realize this — they are in a race with each other. We are lucky SV is here.
- We think in crypto land big chunks of the next generation of the internet
- If I was running singapore I would buy up as much of bitcoin as I can and or create my own and then use it and distribute it — the country would then potentially become the new master currency somewhat like the USD
B
- There is a big mental shift when you go to thinking about the government to governmentS
- SV is made of immigrants… if the opportunity is not in SV people will move and it’s easier to move today
- You also do not need huge amounts of natural resources to get started here you need an internet connection and a good regulatory environment
- The blockchain companies are the most distributed companies
- Some are so underground the people don’t know who all is in the company all of the developers are named after harry potter characters
N
- You could see a post communist Venezuela who gets smart enough post the current thuggary at rule you
B
- Malta, Bermuda, Estonia..there are all moving progressively. There are others working
- The single most important metric for your life is your savings / your burn rate = runway
- It’s much easier to reduce your burn rate by 5x by moving out of SF than increasing your earn rate by 10x
- Crypto is making it even easier to earn a SF salary if you are in the developing world.
- You can have a first world standard of living with a longer personal runway
- This is a trend that is going
N
- I was in a vacation town in Asia on vacation
- There are multiple incubators there
- They recognized me
…. Had to run to a ferry!
If you would like an email alert for my next post sign up here.
