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1:21:59

COIN TALK is produced in partnership with Medium and hosted by Aaron Lammer and Jay Caspian Kang. Press “Listen to the story” above to play the episode. (You can also subscribe on Apple Podcasts, Google Play, download the MP3, or email us at hi@cointalk.show)

Show Notes


Transcript

Aaron Lammer: Jay. It has been a while.

Jay Kang: yeah. I mean, it hasn’t been that long since we’ve released episodes, but it’s been a while, yeah.

Aaron Lammer: Well, we had them a bit stacked up. In that period, in the first run of the show, Bitcoin would have gone up like $2,500. Instead, it’s probably down $200.

Jay Kang: It would have gone up and then gone down a tiny bit, and then gone up again, and we would have been mad at one another for not buying the so called dip when it went from 14,000 to 13,500. We were like oh, I should have bought that dip.

Aaron Lammer: When I bought that dip of Ethereum at 1,100, that was just great. That was a great move.

Jay Kang: Yeah. I think I bought that too. I think it was at 1,040, and I was like, it can’t go any lower than this.

Aaron Lammer: Always buy the dip, Jay. Always buy the dip.

Jay Kang: Always buy the dip.

Aaron Lammer: Tons of news since we’ve last talked. I could barely hold my horses on some of this stuff. First up, I think we have to, because of the nature of this podcast, I think we have to talk about the prophecy.

Jay Kang: What is the prophecy?

Aaron Lammer: If you spend a lot of time on crypto Twitter, which I really don’t recommend that you do, but there’s a core group of shit talker, developer, investor analyst kind of people. Anyway, one of them is this guy Romano, who’s behind Via Coin. Do you remember, we were Viacoin heads.

Jay Kang: Yeah, I think that was your first … I feel like it was your first love before Sumo Coin took your heart. I remember you telling me all the time about Via Coin.

Aaron Lammer: I remember the very first thing when I told our friend, Ledger Status, that I was in camp Via. He was like, “Isn’t that made by some kid who’s 21?” And I was like, “Uh, what?”

Jay Kang: Is that true? Is the kid 21?

Aaron Lammer: Yeah. Romano is the developer behind Viacoin. I think he lives in the NetherlandsI don’t really recommend you follow his Twitter unless you’re comfortable with some fairly problematic libertarian crypto views. But that goes with the territory.

Jay Kang: Shocking, yeah.

Aaron Lammer: That goes with the territory. That was what I previously knew Romano as. But, some of … I think actually CryptoMessiah, who I think also knows Ledger Status, was giving him shit about being literally I think 21 or 22 years old, and was like, “You’ve never eaten ass, right?” And he was like, “No.” And then somehow this went into a larger snowballing phenomenon that the only way that they could end the winter for alts was to convince Romano to eat butt.

Jay Kang: Can I ask you a question?

Aaron Lammer: Yeah.

Jay Kang: You and I are about the same age, and-

Aaron Lammer: Yes. How did it take to the 44th episode for me to use the phrase eat butt on this show? I don’t know.

Jay Kang: No no. What is going on with this eating ass trend? I mean, I first noticed it when I was writing about Barstool Sports and I followed all of their Instagram feeds. They have like 40 different Instagram feeds. There seemed to be amongst college kids, especially in the south, because they have a lot of … They have this thing called Old Row, which I think is a southern fraternity Instagram account. And every other post is about eating as. And I was like, what is going on with this?

Aaron Lammer: I think Ledger is-

Jay Kang: Do you have any idea?

Aaron Lammer: Look, if we want a question about how did ass eating get so popular in the American south-

Jay Kang: Yeah, that’s what I wanted to know.

Aaron Lammer: … we need to save that for the Ledger Status, get him back on the show, which I’m very eager to do, and I think he probably has some thoughts on the issue. Do I have an explanation for the popularity of ass eating on the post millennial internet? I don’t think I do. But I’ll say when the story happened, it wasn’t like … It didn’t shock me. I was like, okay. There was gonna have to be some kind of a crazy event to pull crypto out of its slumber, and this seemed like an appropriate one. It seemed modern.

Jay Kang: Okay. Is there an overlap between the ass eating meme and Pepe memes? Are they in concert at all? I’m trying to figure it out, because-

Aaron Lammer: I think you actually just invented a conspiracy theory. But I think the younger generation’s interest in ass eating is bipartisan across all sorts of cultural spheres. It’s not just a Pepe thing. The woke kids are talking about butt eating also.

Aaron Lammer: So Romano was, I believe, flown on someone else’s dime from his hometown to Las Vegas, where a porn actress, actor — that seems weird if I say actor because of the gender implications — but a woman porn actor who is active in the blockchain world and him consummated this prophecy.

Jay Kang: Yeah, I mean-

Aaron Lammer: With pictures on the internet.

Jay Kang: … I won’t plead full ignorance of this. I saw some of the photos that were going around. And-

Aaron Lammer: I’ll plead full ignorance other than looking at photographs of it.

Jay Kang: But it also … It seemed to actually crack some of the more national crypto news. I don’t really know what that means, but I think the Verge or the Outline wrote about it as well.

Aaron Lammer: Yeah, I think Motherboard, I think Romano had tweeted a photograph from the editor of Motherboard getting in touch. I’ll admit that I did send him an email inviting him to come on the show and talk about it. I have not heard a response. It did cause the markets to wake up. There was a 10% plus alt run within 24 hours of this happening. And I’ll say that I actually thought that this had set off the rocket from the bottom.

Jay Kang: Well, it did actually … It was great marketing for Via Coin, I guess. Do you still have yours?

Aaron Lammer: I don’t. And I believe that the woman involved, I think her name is Brenna Sparks, is an advisor to or somehow part of the Spank Chain project. So a good look for Spank Chain also. Via Coin I think was up like 17% that day. So regardless of what we think about Romano, he did a service for his project. It’s more than some of the developers out there are doing for their coin.

Jay Kang: Yeah, I mean, I don’t know. I don’t really see too much wrong with this. Two consenting adults trying to snap the alt winner. If it works, it works. But I don’t know, I still can’t quite get over my confusion about this, of why everyone talks about ass eating all the time.

Aaron Lammer: It’s a bummer that you’re no longer with Vice News, because I do think that this is the kind of millennial, hard hitting reporting that would have worked there, where you could investigated how did butt eating get so popular among the kids.

Jay Kang: Yeah.

Aaron Lammer: Yeah, so I assume that this won’t be the last time someone tries to jump start the alt market by eating ass.

Jay Kang: I feel like they have to go further now, you know?

Aaron Lammer: I know. That’s what I’m worried about. It’s almost more dangerous if this works, because then you jumpstart a series of oneupmanship starting there.

Jay Kang: Yeah. It’s like when rap went into the horror core era. Do you remember that?

Aaron Lammer: Like Gravediggaz?

Jay Kang: Well, the Gravediggaz put out what I think is an iconic and very good album, and then the Swollen Members put out even more horror core, which is about killing people. The whole thing was about brutally murdering people, especially women. It feels like at some point it’s gonna have to peter out just like horror core rap did. I don’t even know … I mean, horror core rap though, at least it was interesting. I’ll also defend horror core rap. I’m in a very generous mood today.

Aaron Lammer: This totally is a podcast about cryptocurrencies.

Jay Kang: Yeah. With the … I feel like the people who are our age who went through horror core rap who are into cryptocurrency right now will all defend horror core rap. There’s no one who will condemn it.

Aaron Lammer: There’s only one person who even knows what you’re talking about, and that’s me. Okay.

Aaron Lammer: Also in the news this week, I’m gonna file this under … I feel like we need a name for this. News that seems like it should be a big deal but that no one gave a shit about.

Jay Kang: Yeah. Basically, anything that’s not about the markets.

Aaron Lammer: Yeah. It’s kinda like a red herring. I would love if … You know how things happen during the NFL week that move the line? News comes out, injuries and whatnot? It would be interesting to study those and have gambling handicappers say this is how much it’s gonna move the line. You know what I mean?

Jay Kang: Sure.

Aaron Lammer: Like, I’ll give an example. Khalil Mack on the Raiders right now. What does it move the Raiders win over under if he does or does not play this season? And that’s something that you could debate amongst people who really know odds.

Aaron Lammer: This piece of news with Ethereum is something that I thought would have a big positive effect on the market, and as we were taping this, Ethereum is reaching full wet bed $226 right now. I never thought I would see this day. Holy fudge.

Jay Kang: It’s in range. It’s in range for FOMO Kang.

Aaron Lammer: Jay, how did I decide to go deep into Ethereum on the way down? It’s something I’ll never understand.

Jay Kang: I don’t know. But it’s something that I thought about when you were doing it, because it coincided with us trying and unsuccessfully signing into Augur. Remember that?

Aaron Lammer: Oh yeah.

Jay Kang: It was around that time when you were like, “Wow, Ethereum has a product now. But it doesn’t work.” And I was like, “Well, that’s not good.” And then you’re like, “Yeah but it’s like, you don’t understand open source software and beta products.” And I was like, “I don’t. However, it’s not good that it doesn’t work.” And then your response was to buy more Ethereum. I didn’t question it at the time, because I generally am so checked out of the market market that I felt like maybe you had some justification.

Aaron Lammer: Well, look. I don’t pretend to know exactly what’s going on in Ethereum. I think Ledger Status’s explanation that no one gives a shit about ICO’s is the biggest thing to keep in the front of your mind. But Ethereum has these, I think, four stages in its evolution. The newest one is Constantinople. So they were doing a call to developers. The developers basically said, as part of the Constantinople upgrade, that the block reward for Ethereum was going down to two at, which means less Ethereum that expected is getting injected into the Ethereum ecosystem in 2019. And it also means that the difficulty bomb which is looming out in the future in Ethereum is being deferred one year, as I understand it.

Jay Kang: Okay, so I have a good term for this type of news, which is shit we would have cared about in the summer of 2017.

Aaron Lammer: Yes. I would say right up until fall 2017.

Jay Kang: Because Constantinople was talking about, on Ethereum Reddit boards, last year. Right when we got into crypto. They were like, “Well, Metropolis is gonna happen, and then Constantinople.” And it was interesting. It sorta made it seem like the people who were designing Ethereum were using the same vocabulary as Civilization, the game Civilization expansion packs.

Aaron Lammer: Yeah.

Jay Kang: But this stuff doesn’t matter anymore, and it’s really strange because I would say a year ago, when all of us were much more hopeful and trying to learn the tech, and before crypto had become a funny meme generator, that we did care about technological things like this, even if we didn’t fully understand them. I read a lot about Metropolis and Constantinople and what Vitalik’s plans were. And I would say I probably understood about 25% of what I read. But the 20% I understood made me very, very bullish about the future of Ethereum, because it seemed like there was a real tech team that was working on it.

Jay Kang: Now this stuff is being realized, which it should be important, but it is … I agree that it is strange that it seems like nobody cares about it. I understand why the people who … Crypto moderates like you or me, or people who have Pepe avatars in their … And just post charts and shit post all day. I get why we don’t care about it. But the thing that I don’t quite understand is why institutional investors who are very interested in the technological part of it, why don’t they care about it? And if they do, why isn’t that reflected in the price at all?

Aaron Lammer: Well, look. I don’t … We’ve talked many times on this show about how Bitcoin does what it’s gonna do now, and Ethereum is this bet on an increasingly complicated future. I guess in lieu of something that makes you excited about that future, I’m not sure that it’s enough to say the economics are tilting in favor of ETH holding right now. It’s facing an existential crisis in which failure is total failure, not like oh, it’s helpful that there’s a lower supply in that thing.

Aaron Lammer: It’s possible we’re being overly caustic. I feel like Ethereum’s a little bit like a team that went 0–3, and you’re like it’s all over, they should end the franchise. Fire everyone. And it’s like, okay. Another way to read this is that the entire market is in a horrible, horrible bear cycle. Everyone’s more violent than Bitcoin. And there’s nothing special about Ethereum.

Jay Kang: Yeah, yeah, I think you’re right.

Aaron Lammer: Yeah. Look, I would say me and you understand Ethereum the least of any of the worlds. It’s always been an opaque mystery to us. Perhaps that’s why it’s particularly mystifying that I have included so much of it in my portfolio. But I would say we are reaching peak existential playing death in chess in the seventh seal Ethereum world right now.

Jay Kang: Well, okay. Can I ask you a question?

Aaron Lammer: Sure.

Jay Kang: Why did you swap out a lot of your Bitcoin holdings for Ethereum over the past couple weeks?

Aaron Lammer: Completely neophyte thinking, which is just if you’re in crypto right now, you believe that crypto markets are gonna come back, and my dumb believe is that they’ll come back more or less like they were. And if they go back more or less to where they were, or at least in that general trajectory, Ethereum will gain a bunch on Bitcoin because it’s traded much higher against Bitcoin in the past. Assuming that all these fundamentals are unchanged, that’s my hope, is that we pull back the clock to, let’s say October 2017, and that move will look smart.

Jay Kang: So there’s … You see crypto as Groundhog Day.

Aaron Lammer: Yeah, it’s a nostalgia. It’s all I think is gonna happen is what already happened.

Jay Kang: At some point, the same spike that happened yesterday will happen today, and this time you’ll remember to sell Ethereum at like 1,200.

Aaron Lammer: I mean, I probably will continually trade that Ethereum for Bitcoin if and when Ethereum recovers against Bitcoin. But I would have never in a million years imagine that it would fall this far in relation to Bitcoin, so at this point I don’t think I know anything.

Jay Kang: Yeah. It’s strange to me. I remember that at some point I was at a conference and there was a guy there who happened to be wearing a crypto T-shirt. I asked him, and he seemed very knowledgeable about it and very smart. And he said, “I don’t ever think that Ethereum is going to be able to scale to be usable at any sort of level.” And I wonder, given the fact that these projects that have launched have had rough starts in terms of usability, things like sinking to the blockchain or even making something functional, that doesn’t take forever. I wonder if that’s the … If people who are smarter than you or I who wanna make big investments, I wonder if stuff like that is concerning to them. I wonder if there is a technological reason why people are not really throwing all their money into this thing.

Aaron Lammer: Oh wait, I think I remember the other reason why I bought a bunch of Ethereum. Which was, no matter how much I talk spicy about the power structures of Silicon Valley, I also don’t bet against them. The fact that there’s a concerted core emanating from coin base and moving through the VC world that I think wants Ethereum to win, it’s at least enough to make me think that’s an interesting at the bottom play into it. That I just don’t see these guys being like, that’s it for Ethereum.

Jay Kang: So you saw Ethereum as almost an EFT to buy into interesting new Silicon Valley projects that might be using Ethereum, like it is the catchall, it’s-

Aaron Lammer: No. I think I mean literally, even if Ethereum doesn’t know what it’s doing right now, there’s a bunch of people with deep pockets who are willing to keep experimenting with it.

Jay Kang: No no, that’s what I mean.

Aaron Lammer: Yeah.

Jay Kang: As part of my dumb, dumb, dumb portfolio, not crypto portfolio but stocks portfolio, I own this ETF called IPOs, which I don’t own much of it because it’s so dumb. But it’s an ETF of all the IPOs that happen. So buying Ethereum in your mind is kind of like that. A catchall for any project that might be successful.

Aaron Lammer: Well, but the weird thing is that was what I think Ethereum was doing in the last bull run was catching all the momentum of all the ICOs that were built on top of it. We’re in an extremely bad climate I think right now, at least from a public perception standpoint around ICOs, and I think that’s probably what’s stopped the momentum. And my hope is that Silicon Valley, with its very deep pockets, and I think very talented people honestly, will find a different approach to making Ethereum work. I don’t know that the ICO utility ERC20 token approach worked. I think right now I’d call that a failure. But I think that using the very basic idea of smart contracts, I’m hoping that the smart minds of Silicon Valley can create some product of value. And I’m willing to bet they’re gonna keep ramming their head against the door trying for a bit longer, which makes it maybe okay to buy a little ETH now. I’m not really sure.

Jay Kang: Wow. Ethereum is really not doing well right now, huh?

Aaron Lammer: I mean, it’s really bad. I mean … Another way to think about this from a really dumb investor’s math perspective is if we got to all time highs again for everything, that’s more than a 6X for Ethereum, while it’s a 2 or 3X for Bitcoin.

Jay Kang: 3X, yeah.

Aaron Lammer: 3X. So that’s like a-

Jay Kang: Well, no no. Not really. It’s like 2.5-

Aaron Lammer: Yeah, 2.5. and I think, to me I call the Bitcoin high 15,000. Everything above 15,000 may have been some weird smoke and mirrors.

Jay Kang: I’m glad that you draw the line there.

Aaron Lammer: I know that you think everything above 2,000 may have been smoke and mirrors.

Aaron Lammer: But okay. One more piece of news from the week.

Jay Kang: Sure.

Aaron Lammer: You know what Shapeshift and Changely are?

Jay Kang: Yeah yeah yeah, the Shapeshift is the protocol that apparently stole a [Monero 00:21:46] from you, right, or two Monero from you?

Aaron Lammer: I won’t say they stole them.

Jay Kang: Stealing is a strong word. But you lost it through Shapeshift.

Aaron Lammer: That’s like saying that United baggage stole your bag rather than lost your bag. They lost my two Monero bag. But the way these things basically work, they’re actually I think one of the better products out there in crypto. They’re pretty simple.

Jay Kang: I agree too.

Aaron Lammer: You send them one currency, they create an anonymized address that then sends you back a different currency. So rather than going through an exchange, you can basically do this very lightweight transaction. It’s almost like you send an email and you get back an email. Except when that email gets lost, which I’m gonna say probably was my own fault. It’s a pretty cool service.

Jay Kang: Yeah. I actually remember I used it while we were recording your other podcast, the long form podcast, and before we recorded, I was like, “Aaron, I need to buy some All Coins, because Bitcoin is too boring,” and you showed me how to use Shapeshift. I think I bought some ZCash.

Aaron Lammer: Yeah.

Jay Kang: And it was very easy. I mean, it took longer than I had hoped. But that’s just crypto. But I exchanged some Bitcoin for ZCash and it worked perfectly.

Aaron Lammer: Compared to our experiences with something like Augur, which listeners can go back to, where it was like nine steps, the [inaudible 00:23:08] wouldn’t sink. Shapeshift and Changelly operate like first class products. You go to them, it’s a nicely designed website, everything works, the FAQ makes sense. But we’ve, I think both … As with many schemes like this, you have to wonder, other than people who are dabblers like ourselves, who’s using this? This seems pretty money laundering-y.

Jay Kang: Yeah, well, the way in which it’s been discussed since that time when we first learned about it is that whenever we talk to people about how crypto is really traceable, or how we get emails, or we get tweets saying, “Well, you could just Shapeshift it.” And it seems like the way in which it’s in the ecosystem is as a way for people to change and make things untraceable.

Aaron Lammer: Yeah, and you can basically see … I don’t think you can see how you can totally avoid know your customer regulations with it, because they don’t allow fiat swaps. So you need Bitcoin in the first place. But once you have the Bitcoin, you can operate totally anonymously within the Shapeshift and Changelly environments, which means that once you have money in Bitcoin, you can pretty effectively get rid of any sort of a trace of where it went through a series of Shapeshift or Changelly transactions. And obviously, some people are using this to obscure their tracks. Both companies in the last week or two have made changes that seem like they’re to address this.

Aaron Lammer: Shapeshift’s change is that they’re introducing some sort of a membership tier where to really fully use their service or to use it the most efficiently at the best rate, you have to become a member, which involves giving up your identity.

Jay Kang: Oh wow.

Aaron Lammer: This has been pretty highly controversial, I think, within the Shapeshift community.

Jay Kang: Is there a Shapeshift community?

Aaron Lammer: I think so, yeah. I mean, it’s Erik Vorhees, and I feel like he has his people.

Jay Kang: Sure, Erik Vorhees being … I think he’s the first person mentioned in Nathaniel Popper’s book. I mean, it’s a guy who’s been in the crypto space since the beginning, basically. A guy who has made a lot of money and a lot of impact in the space. Man, so he came out and made a statement about this?

Aaron Lammer: It’s on the Shapeshift blog. He says, “The final point, there’s five levels of membership, much like we’ve talked about Binance’s BNB, there’s a loyalty system, benefits, trading limits, et cetera, at various tiers of membership, discounts on rates, et cetera. But, the final point is, membership requires basic personal information to be collected. Today membership is optional, but it will become mandatory soon.”

Aaron Lammer: Then he says, “Yes, that last detail sucks. We would prefer if the collection of personal information was not a mandatory element. We still firmly believe that individuals regardless of their race, religion, or nationality deserve the right to financial privacy, just as they deserve the right to privacy in their thoughts and their relations,” blah, I can’t finish this sentence.

Aaron Lammer: Anyway. Basically he’s saying we’d all like this to be anonymous, but it’s not gonna be anonymous anymore. It’s gonna be like an exchange. You’re gonna need to reveal your real identity if you wanna use Shapeshift.

Jay Kang: Is someone leaning on him? I mean, did he get a call from-

Aaron Lammer: I don’t know.

Jay Kang: … get a call from the SEC or something like that? So he doesn’t say-

Aaron Lammer: He doesn’t say he was threatened or anything like that. But I do feel like he, in this message, is basically suggesting this is the right move for this business.

Jay Kang: Well, I mean, like all things in crypto it seems like they did also create a coin around this. I’m just reading … This is from the Bloomberg article about this, which … It says, “Vorhees said Shapeshift’s membership program will be tiered in five levels.” You just said that. “The most basic level is free and open to everyone, and levels two to five will give users benefit in exchange for ‘possession of specific amounts of Fox token,’ an Ethereum based digital coin.”

Aaron Lammer: Fox. Not bad. I do like Fox, they have a good logo.

Jay Kang: So once again, we’ve created … I mean, I really doubt that Vorhees is doing this to try and shill the Fox token, and it seems like the timing between this and Changely might mean that somebody is quietly leaning on them. It is nice to know that anytime a crypto company changes that one thing that will happen is that they will create a currency or use a currency to do something that probably is not necessary.

Aaron Lammer: All right. Two conflicting ideas here. One, he says, “On one hand, this is something that our users have requested, to be able to have an account history.” And in that sense I understand what he’s saying. It’s very difficult to run totally anonymized services. You got people like me who’ve lost two Monero and are walking around with a grudge forever, and if I had an account, I could probably more easily solve that. So I understand that.

Aaron Lammer: But he also says, “To the extent that digital asset technology remains a legal gray area, we need to be prudent and thoughtful in our approach as we navigate the regulatory environment.” And that says to me you’re not allowed to do this. You’re never gonna be a first rate, big, successful American business running a service that does business with anonymous cryptocurrencies. And that’s also the theme with Changely, which say that it’s been flagging suspicious Monero transactions in the system. So when someone sends a bunch of one currency and gets back a bunch of Monero, if it checks off certain flags for them, they will hold the transaction until you can go through some sort of an approval process, which sounds a lot like a know your customer process.

Jay Kang: Does that mean that right now, that this generation … There was one generation Bitcoin seemed anonymous. Then we had a whole generation of supposedly anonymous shit coins. Are all coins that now seem to be beating back, does that mean that right now there’s probably a cryptocurrency that nobody knows about or perhaps one that’s in development that is being used for these markets now? Because I know that Changely putting up this policy doesn’t necessarily change the way in which people are going to use Monero. It’s just one exchange, it’s just one method of doing this, same as Shapeshift. But, if this is part of a trend where the larger companies that handle these sorts of transactions are going to become less and less friendly to anonymous users, I wonder if that means there’s a new generation of crypto coming. Because the only thing that’s going to spark this actual, usable and utilitarian innovation here would be the fact that the last generation of anonymous stuff isn’t quite as anonymous anymore.

Aaron Lammer: I mean, I read it the opposite way, which is it seems like that market has so closely aligned itself around Monero that rather than outlaw the entire practice of Shapeshift, Changelly transactions, they’re like, no, it’s okay, just not Monero. And they make a big thing about how they don’t have a problem with Monero, there’s nothing wrong with Monero. But they’re not flagging Z Cash transactions. They’re just flagging Monero transactions. And the crazy part is, if you get a transaction flagged with Changelly and you can’t provide the necessary documentation, they don’t refund your money. They just keep it.

Jay Kang: Oh my god. That’s terrible.

Aaron Lammer: They’re basically saying anonymously change large amounts into Monero at your own peril. We’re not supporting this on the level we support our other products because it’s such a problem.

Jay Kang: So it does mean that … Yeah. You know what, I kind of agree with you, then. It means that Monero actually is a problem.

Aaron Lammer: Yeah, I mean, all this stuff seems like it would be wildly bullish for Monero. Monero did have a really great week.

Jay Kang: Well, I mean, bullish if you need to make a fully anonymous transaction.

Aaron Lammer: Well, I just … I mean, it’s a real use case for Monero that suggests not only is there’s a use case but people are using it in enough volume that these kind of services are seeing a pattern of this kind of usage. But on the other hand, if you can’t do anonymous Monero transactions, if you can’t get on an exchange without turning over your driver’s license, Monero remains anonymous, but there’s no real anonymous acquisition route for Monero. I do see a pretty clear path to where government can wall in a currency like Monero and say, “Well we haven’t banned it outright, but we’ve made it impossible for any of these companies to use it.”

Jay Kang: Well, I mean, you could still get it in different ways. You could have somebody bring you a flash drive with it on-

Aaron Lammer: I mean, there’s always gonna be local Monero. But, you’re never gonna grow on a Bitcoin scale without in some ways making it possible for people to buy your coin online, I think.

Jay Kang: Yeah. But maybe that’s not it’s future.

Aaron Lammer: No. And maybe there’s gonna be some Tahitian island that figures out how to sell people in Monero anonymously, and it’s only these American businesses that have a problem with it.

Jay Kang: Yeah. I mean, I feel like the demand for that type of thing is so high. And for everything from funding Al Qaeda to buying credit card information-

Aaron Lammer: Jay. Jay. We’re a pro Monero show. Pro Monero.

Jay Kang: In terms of Monero’s uses, I mean, as long as people need to send money to do those types of things, then there’s gonna be a need for it, and if it’s working then it’s working, and I imagine that for the people who run Monero, that they feel pretty conflicted about it. Or maybe they don’t. But they at least-

Aaron Lammer: I don’t think so. That dude has a million dollar watch.

Jay Kang: That’s true. That is true.

Aaron Lammer: Okay. This is a good one. Should we call our guest?

Jay Kang: Yeah.

Aaron Lammer: Welcome, Tony Sheng.

Tony Sheng: Thank you. Happy to be here.

Aaron Lammer: Jay just asked what you did for a living, and I tried to describe it, and he was like, “I think I’ll just ask him.” So, before we start talking about the more esoteric topics, you work in the blockchain world.

Tony Sheng: That’s right. Yeah.

Aaron Lammer: Tell us about the project you work on.

Tony Sheng: I lead product on a product called the Central Land, which is an open virtual world owned by its users. You can think of it like … If you know Minecraft, or Roadblocks or something like that. Rather than have everybody have their own server, you have one big world, and as a user you walk around and all of it loads dynamically. So it’s pretty novel, and the only way that you’re able to do that is to issue the property itself as tokens. We built it on top of Ethereum but you could do it on other blockchains as well.

Aaron Lammer: Does that satisfy you, Jay?

Jay Kang: No. What are you buying? Is it like Second Life and you’re buying like a house in it, or what are you actually buying?

Tony Sheng: Yeah. It’s kinda like that. We build the protocol layer of this. It starts off with land. The world is represented by 90,000 parcels of land. And those are non fungible tokens on top of Ethereum. We did an initial auction of that, and now thousands of people own these parcels of land. Some of them own a lot of them contiguously so they can build larger experiences. With land you can upload web VR experiences to the land, so that starts to appear in the world when people walk around.

Jay Kang: Oh. Huh. It is like a sort of amusement park then, or like a department store.

Tony Sheng: It’s really up to the user what they wanna do. It’s like a website. I can’t really-

Aaron Lammer: Yeah, that makes sense.

Tony Sheng: It’s like calling the web an amusement park.

Aaron Lammer: Yeah.

Jay Kang: Cool.

Aaron Lammer: It’s interesting, these metaphors. We were talking earlier in the show about the Ethereum builds being named, Constantinople is the next one, and how this feeling echoes these classic video games, sort of Civilization like outlook. And it’s interesting to me how different games contribute to what we imagine these things as. I always like thinking of, for some reason, Mist when you were talking about it. But then when you just said like websites, I was like, oh yeah. You can build anything on top of anything.

Tony Sheng: Yeah. Totally. So yeah, there are definitely people building stuff that would be more like Mist. But other people wanna build furniture stores.

Aaron Lammer: Were you previously a developer and then got interested in the blockchain, or did you get interested in decentralized stuff and decide you wanted to build up a skill for it?

Tony Sheng: Yeah. My background’s mostly in product and startups. Most recently I worked at Google. Before that I was at a startup called Alt Space VR, which was a early social VR app. Before that some enterprise stuff. I’m not an engineer by trait, I’m a really bad programmer, but-

Aaron Lammer: Same. I’m with you.

Tony Sheng: Yeah.

Aaron Lammer: It’s funny because I feel like certain times people have the impression that anyone who dedicated enough time could learn to be an effective software developer, and I’m like nope, couldn’t do it. Much like professional sports, I would be very bad at this, I would never do this on a high enough level to be employed doing it.

Tony Sheng: Yeah, totally.

Aaron Lammer: So what got you interested … You write about Bitcoin and decentralized currencies on your blog, which is how I first came across you. But I’m assuming your interest goes back before you were writing about it.

Tony Sheng: Yeah. I went to a nerd high school. It was called the Math and Science Academy, Illinois Math and Science Academy. A lot of folks that I went to school with actually ended up being pretty early folks on Bitcoin and Ethereum. So I was exposed to it pretty early on, but thought it was nerd stuff.

Tony Sheng: And then in college, my roommate was from Venezuela freshman year. So I got some exposure to what it’s like to have family live in a country that has really poor monetary policy. So that made me take a second look at Bitcoin. I was like, whoa. This isn’t just weird magic internet money, it’s weird magic internet money that people might prefer over their state issued currency. So it picks them up around then and watched it.

Tony Sheng: But with Ethereum, as I mentioned, my background’s in apps, so I was like oh, maybe I can make some stuff on Ethereum. And that’s when I started digging in more deeply and got involved with the community. Met up with Arian Esteban, the founders of Decentraland. And ever since then, it’s been … I mean, there’s so much to explore in the space. It’s gotten more and more of a commitment to the space.

Aaron Lammer: It’s funny. Sometimes I think part of why Ethereum holds such a sway over people in San Francisco and in Silicon Valley is when you imagine that future, there’s a bunch of opportunity to build software products. And you’re talking about a community of people whose number one hobby and passion is basically building applications.

Tony Sheng: Yeah, totally. I mean, that was definitely the case for me. I saw one and I was like oh, let me play around with this. And I think that’s a case for a lot of the early Ethereum folks. They saw a new set of primitives to work with and they came up with all sorts of stuff. And there was a lot of nonsense that came out of last year, but I think that’s how you get to the more important apps that come out of Ethereum.

Jay Kang: What was the nonsense? You don’t have to say it by name. But this is a debate that Aaron and I have been having for the past I would say month or so since Augur launched, and we did two episodes about Augur, and we even made an Augur market, and we’ve put in an Augur [crosstalk 00:39:29]

Aaron Lammer: well, we still have our Pee Tape market, which I would like to say thank you to our friends over at Coin Desk who included our Pee Tape market in their roundup on the weirdest Augur markets, which has attracted a lot more energy and attention. The market is still live. It runs until the end of the first Trump term. So get on there, sink that note, and bet on our market. We need to get some rep baby.

Aaron Lammer: Sorry, go ahead.

Jay Kang: But Tony, one thing that we have been talking about, because I have … The only thing that I have a lot of experience in is gambling. So I know quite a bit about prediction markets. So when Augur launched, I was very excited, and I would say even before Augur launched, really part of the reason why I was interested in crypto was because, and Ethereum particularly, because it seemed like it might be innovative ways to gamble, to get around some of the problems of gambling that happen when you have a bookie system or even an offshore sports book. The one thing that we’ve been discussing is whether or not Ethereum itself is really ready to handle products like Augur, which should seemingly be pretty simple. In your experience, is that true? Are you running up against limitations in Ethereum itself and the Ethereum network as somebody who programs for Ethereum, or works with Ethereum to try and build products? What’s the biggest challenge you have?

Aaron Lammer: Gets other people to program products.

Jay Kang: Sure. What’s the biggest challenge like in terms of functionality? Why is something like Augur, why is it so hard for us to sign on to it? You don’t have to impugn or slander Augur itself. But is there something technologically that is a bottleneck or that is causing problems?

Tony Sheng: Yeah, well, I think there are a couple concepts embedded in that question. One’s why deploy anything on Ethereum. And then two, given something that you deployed Ethereum, what are some of the unique challenges that you have to face. As a developer … And then maybe three, as a user, why is it so freaking hard to use any of these things?

Tony Sheng: I think first … Augur’s a great example. It’s one of those things that really can’t exist without the blockchain. Because … Some of it’s legal reasons, some of it’s … It’s mostly legal reasons.

Jay Kang: Yeah, it’s mostly legal reasons.

Aaron Lammer: Because it’s illegal. Yeah.

Tony Sheng: It’s a-

Aaron Lammer: But I think that’s fair. Jay said that the thing that got him interested in the first place is gambling, which is illegal. We wouldn’t be talking about this if it was really easy to legally gamble, which maybe it will be in the future, but.

Tony Sheng: Right, right. And illegal activities are an easy target to pick on. But it’s a subset of things that are not really possible, or somebody would prefer to do it without trusting some person moderating all of it.

Jay Kang: Yeah. For sure.

Tony Sheng: That’s kinda like … When I think about should something exist on the blockchain, it’s like, okay, is there an adequate substitute that is operating in a censor-able way, and are people fine with that? And if it’s yes, then maybe it’s not really that needed. But with Augur, it’s pretty clearly needed for some set of people that wanna make these markets. And it extends beyond degenerate gambling on various topic, things like, you know.

Jay Kang: Hey.

Aaron Lammer: My fifth question is, why are you gambling so much?

Jay Kang: Okay. So what about the second question, which is, is it possible to build these things on Ethereum?

Tony Sheng: Yeah. Yeah, I think the answer is an obvious yes, because it exists. Empirically, there area lot of things that have been built, and Augur’s pretty complicated from a smart contract perspective, and as I understand it’s largely due to security concerns. You need to make it so that it’s not easily gamed by other people, and that your funds are not at risk to technical vulnerabilities in the smart contract code or whatever.

Tony Sheng: That itself is challenging, but then the Augur team needs to throw away their control of the smart contracts. Throw away the keys, so to speak. And because they have to do that, they have to be super super sure that it’s in really good shape before they throw it away. And part of the reason they in particular have to throw it away is because in order to continue having it run, they can’t be the point of failure if some guy comes and says, “Shut this down. They have to be able to say, “I can’t.”

Tony Sheng: That’s part of the reason why what they’ve built is both possible but also very challenging.

Aaron Lammer: It reminds me of someone setting up an elaborate set of rules for an Easter egg hunt, where it’s like everyone’s gotta be blindfolded and walk backward. We can’t tell you whether the eggs are really there are not. You have to look all over the place for them. You know? It’s not impossible, but it’s like, okay, you’re making it really hard.

Tony Sheng: Yeah, yeah. And it’s gotta be perfect.

Aaron Lammer: Yeah. And we have to set up the system now to work into the future without breaking compatibility, which for most software applications is like, oh god, that sounds like a pain in the ass. At least let me patch it.

Tony Sheng: Totally. Yeah, I mean if you’ve ever worked in a modern technology startup, it’s the complete opposite approach, where you ship out something really crappy, full of bugs, but the stakes are pretty low, so you just iterate on that. It’s like the complete inverse of that.

Aaron Lammer: Yeah. I mean, I think we get — Jay at least — gets frustrated by the state of it, and I think it’s a totally valid criticism. If you shipped Augur as a normal software product, I’d be like do not hire that team. They’re very bad at their jobs, they’re not good at making products, there’s no FAQ here, the [inaudible 00:45:18] doesn’t really sync most of the time. And then I try and defend it in this weird way, where I’m like it’s so hard. But I do recognize that-

Jay Kang: Well, no no. Okay, to be fair, my problem wasn’t that Augur was full of bugs. My problem was that they were taking large amounts of people’s money and not telling people that it was full of bugs. And that was a problem that I had. If they had just given everybody, let’s say, 200 rep, and the entire market ran on play money, and that was the way that they were doing it, and it failed all the time, that’d be totally fine with me and I would have really expected it. But-

Aaron Lammer: You’d immediately be like, all right, come on, I wanna bet some real money.

Jay Kang: Yeah. That is true. I would-

Aaron Lammer: You’d have no interest in Augur if it was fake money.

Jay Kang: [crosstalk 00:46:05] out of it. But … Although I will say stuff like Zinga Poker, which is an iPhone app came that is entirely run off free money, I mean, that’s a huge app, and it’s actually had some pretty fascinating weird inflation problems that have happened because it’s all play money. But I actually think as a way to figure out how these things work and whether or not … What types of markets people will make. I wouldn’t have had a problem with that. It was really the fact that a lot of people, including us, the only reason why you and I didn’t put in more money into the will Ethereum crash market — which, by the way, we should have done very [crosstalk 00:46:44]

Aaron Lammer: … to us on our Ethereum under $500 January 1st bet.

Jay Kang: Yeah because you wouldn’t listen to me when I was like, “No, let’s bet more.”

Jay Kang: But my problem with it was really that people were putting their own money into it, not that it didn’t work. It was that at a point where they were asking people to put a lot of money in, I felt like it should have been more functional. That was my issue.

Tony Sheng: Yeah. I mean, I think … It’s a pretty interesting … Thinking about the user’s experience here is pretty interesting because Augur just shipped a set of smart contracts. They didn’t have a website that you logged into and really used. You have to run all of it yourself. And they’re relying on other people to build front ends using their protocol. And then some of the bugs might be because of the way that the front end implemented it. Some of it might be because of the way the software using to run your node. Some of it might be like, I don’t know, some random bug with your computer or your internet or something.

Tony Sheng: We’re used to playing with an app and being like oh, Facebook sucks for having this super long load time when I’m trying to send this emoji. And you’re usually right in blaming Facebook for that. But here, there are so many different parts of this that could fail for whatever reason. And it might not even be a bug, it might just be a syncing problem. But at least they’re kinda bad experience. These are all some of the challenges that everybody’s facing and delivering on user experiences.

Aaron Lammer: I wanna talk about an article you wrote recently. The article is called We Can’t All Be Friends: Crypto and the Psychology of Mass Movements. This issue I think we’re talking about here actually speaks to mass movements. You have to just believe in Ethereum to believe in Augur. You have to believe all this stuff is gonna somehow work. And I found that it can separate. But you describe this idea of tribes within crypto, which I think is probably the most accurate way for an outsider who doesn’t follow this stuff to understand what the difference between an Ethereum and a Bitcoin person is.

Tony Sheng: Yeah, totally. I mean, if you go to Thanksgiving dinner last year, maybe there was one dude at the table that was really into crypto, and everybody else at the table that wasn’t was like, oh, this is this weirdo that’s really into these tokens. And they can’t discern between is this person really into Bitcoin, are they really into Ethereum, or some other random thing, or some narrative around open finance or whatever.

Aaron Lammer: Yeah.

Tony Sheng: But once you look inside, it’s like there are all these really ossified groups of people that are really, really passionate about their beliefs, and the people around them, and the projects they support. It’s quite strange to observe. And they sometimes behave in these really erratic and seemingly irrational ways, which can be … I’m really interested in what it’s like for somebody who’s just getting into crypto for the first time, to show up on crypto Twitter and see all the weird stuff going on.

Aaron Lammer: That was us one year ago. That was like 14 months ago.

Jay Kang: Before figuring out what was going on with Augur, I would say that our recurring talking point was us trying to figure out if the type of tribalism that you’re talking about, which I think is different than the type of quote-unquote tribalism that everybody talks about in larger politics right now, in the sense that these communities, I think, are … It’s an exaggerated version of a lot of it. Whether or not that was going to be a deterrent for people to get into crypto, because the way in which we saw the path of people who got into crypto getting their information ultimately did follow some of the same pathways. There wasn’t at that time, there wasn’t like a New York Times or a CNN or a highly produced, almost neutral site that people would have to go to. Everybody went on Reddit, everybody went on Twitter. And ultimately, you would find yourself surrounded by a bunch of people who were screaming at each other in ways that you didn’t quite understand.

Jay Kang: At that time, I felt, at least, that this was a problem, that there were a lot of people who were getting into crypto around the fall of last year who wanted no part of these types of conversations, especially around the 2X fork. If they came in and they looked at what the landscape was, they would assume that everybody was fucking crazy. And Aaron felt like maybe it didn’t matter as much. Aaron can probably explain his perspective more than me. But that’s why I found the article that you wrote pretty interesting. Not because I think that you confirmed or didn’t confirm that sort of thought, but that you saw the same source of tribe, and tried to explain how they had formed.

Tony Sheng: I think my main insight from that line of thought was … I read this book by Eric Hoffler on mass movements, and I realized that there’s been a long study on these phenomenon throughout history. It’s not just a crypto phenomenon. And typically, some set of people write some subversive pieces or give some subversive talks, and then it stirs the pot and offers some kind of future that’s better than the one today. Then some dude or dudette stands on a box and says, “Come join me in this revolution and package up all those ides.” And then people that are really susceptible to these mass movements — and not everybody is — but people that are start to rally around this, and they behave in these predictable ways.

Tony Sheng: If you use that lens to observe what’s happening in crypto, it’s pretty complementary. Getting into crypto at all is a pretty weird thing to do. And you have to justify it … It’s kinda like being vegan, you know? You have to go around and explain to all your friends why you care about these magic tokens that much. But it’s all rooted in these foundational texts around freedom and self sovereign everything, and taking power away from governments and authoritarians and all of these people that abuse their power.

Tony Sheng: But then once you get into the crypto mass movement, there are all these sub mass movements that prioritize different things. Like, the Ripple people care about banking infrastructure, Bitcoin people care about sound money, Ethereum world computer, and there’s all these different subsets of it. But, because mass movements compete with each other for adherence … And people that are susceptible to mass movements can switch teams quite frequently. There’s this meta war inside of crypto of all these different tribes fighting each other for members. And it’s all accelerated by these coin prices.

Jay Kang: I have a question for you about that, because it’s actually a question that I had while reading your article that I wanted your opinion on it, which is that I agree that these groups are extremely fungible within crypto, that people tend to switch back and forth. The ways in which you describe their reasons for feeding into that-

Aaron Lammer: I accidentally became an ETH maximalist this week without even wanting to.

Jay Kang: Yeah yeah. I guess that’s my idea, which is that how much of it is ideology that maybe was part of the person beforehand, and how much of it do you think is just the coin that they got into that spiked when they got into it, if that makes sense? I think the reason why it’s so fungible is because I think that the allegiances are pretty shallow. You know, I think that the allegiances probably do have to do with whatever coin caught you first, and in that way it is a little bit like gambling. Like you generally play the game, or you get into the form of gambling that you did well on the first time you did it. And even if you lose at a horrific rate afterwards, you remember the first time you did well.

Tony Sheng: Yeah, I mean, I think the coin presses definitely confound this whole thing. Maybe it’s even a direct implication. Because when … Somebody who’s susceptible to a mass movement wants hope and some sudden and spectacular change to their conditions. And you don’t really need too much data for this. If you watched on eBay in 2017, the majority of the retail folks that came in new to crypto wanted to see some spectacular financial change in their circumstances. And once you-

Jay Kang: Guilty.

Aaron Lammer: We’re still here.

Tony Sheng: And I think once it starts happening then the speculation is the gateway drug to getting exposure to the actual ideas behind this stuff. And it’s hard for somebody who is very strongly prioritizing the financial possibility, the gambling aspect of this, to be patient enough to really dig into the reasons. Like a first principles level, would think does this make sense, is this valuable?

Tony Sheng: I think it’s okay for a lot of the folks to churn and jump to the next thing because they see a bigger possibility for return or leave the space altogether when the market turns. But some people, like my colleagues and folks in the industry, they get in for whatever reason and then they get exposed to the deeper ideas and they stick around. So you can think of it like the final overtime. As long as those true believers don’t turn out, then you end up growing that core community, which is always there, regardless of the market cycle.

Aaron Lammer: I do think it’s cultural though. We were giving Ripple shit on this show, so we had on a true Ripple believer. And he was a guy, a British guy with a background in banking, and he was like, “This is the thing I gravitate to, this is the language I know. This is my thing.” He was like, “I was always weirded out because Satoshi’s anonymous.” You know. And I think Ethereum people gravitate to Ethereum for cultural, ideological reasons, but I also think that the culture flows back the other direction, which is I’ve heard a lot more people criticize the fiat, inflationary banking system then I remember in the past. There’s certainly always been Ron Paul people in America. But I do think crypto, even though there’s a tribalism within crypto, it can radicalize a population to ideas like that.

Aaron Lammer: When people would talk to me and say, “Oh, crypto, that’s like the tulip bulb thing.” I don’t find these mania buying things to be a very close corollary. I see Marxism as a corollary. An idea that spreads and gets its tentacles into the world, and has this viral capability.

Tony Sheng: Right. And it’s both. And I think that’s … When you talk to folks that feel like Bitcoin might become the global reserve currency, that’s the path that they expect to happen. You have this small core group of people that really believe in that now, and then over time more and more people get indoctrinated into this idea that Bitcoin is harder money than any of the other money in the world and they should use it. And while over a period of time, not everybody uses it.

Tony Sheng: Because money is really a sure delusion anyways. They’re just slips of paper. So if you can get enough people to buy into this ideology, then you have money.

Aaron Lammer: I just have to warn you that anytime someone says money is an illusion on this show, we do insert bong sound effects behind it.

Tony Sheng: Yeah.

Jay Kang: Tony, what do you think in crypto is the inflection point? You talk about three stages. You talk about how there’s the stage in which an ideology is created, usually by thinkers or philosophers or writers. Then you have an almost like a missionary stage where people are, [Antopolis 00:58:42] or Roger [Verrer 00:58:44] out evangelizing this project. And then you have almost a capitulation point where enough people are doing this where it becomes an actual thing. Now correct me if I’m wrong, but you don’t think that we’ve reached that point with Bitcoin or Ethereum yet. But what would you imagine is the point where this thing starts to really pick up steam? Because I think a lot of people thought it was last year, when there was so much mania about it. What do you think that would actually look like? Is it a price run, is it a very popular figure getting into crypto? What does this thing look like?

Tony Sheng: Yeah, I mean, I think it’s pretty hard to define, which is kind of a cop out answer, but a mass movement is a mass movement when a mass of people believe in it. So you could say you measure based on total population that’s behaving in a certain way that’s aligned with the mass movement. You could also try to measure it based on people using these technologies for their intended purpose, like for Ethereum you could imagine some set of apps that actually have millions of users. Like maybe 10s of millions of people use Augur or something and there are a bunch of other apps like that. Then you’d start to see real contention between this school of thought and the competing schools of thought.

Tony Sheng: Right now it’s like crypto’s kind of a mosquito against the legacy financial technology institutions. It’s interesting and people are keeping an eye on it, but there’s relatively so little engagement with the technology that it’s just rumblings.

Tony Sheng: To use Bitcoin as an example, I think if a few countries started, announce that they were accumulating Bitcoin and using that as part of their reserves, that would be pretty reflective of entering this middle stage of the movement.

Jay Kang: Sure.

Tony Sheng: But just like people speculating on the price on Coin Base or finance, I think it’ll never really reach real mass movement. Unless the mass movement is like, the right way to live is to speculate on random tokens.

Aaron Lammer: We like to talk on the show a lot about the narratives of crypto. I’d say maybe we’re more interested in that than anything else. Crypto as literature. And your article’s really interesting insofar as thinking about who these leaders map to in the phonetical movement, where I’ll have leaders like Lenin, Gandhi, you have Trump listed here, and this is the phonetic leader who galvanizes the right population.

Aaron Lammer: The two biggest figures being Satoshi and Vitalic, we couldn’t have asked for a more operatic contrast between the two of them. How do you think this mass movement model, looking at Ethereum and Bitcoin as the two major strands, what does the mass movement model tell us about the difference between a leaderless and a … An anonymous and a messianic figure movement?

Tony Sheng: Yeah. It is very fascinating. And you see with Bitcoin people try to backfill and be that messiah, and it leads to all sorts of drama. Like people claim they’re Satoshi, and they try to move the Bitcoin community in their direction to serve their needs.

Aaron Lammer: Are you familiar with Excerptoshi? He’s a figure we’re trying to popularize on the show. He’s a person who purports to be Satoshi Nakamoto and is publishing a memoir about founding Bitcoin. He’s been putting out these cryptic messages from the Nakamoto Family Foundation.

Jay Kang: He’s awesome.

Aaron Lammer: No one takes him seriously except us.

Jay Kang: He’s like half our show content.

Tony Sheng: It’s a real person?

Aaron Lammer: It’s a real person, and he’s put out excerpts from the book, and they have all these weird tantalizing details in them, but absolutely no proof, and the book isn’t out, he just keeps revealing these little bits of it and cryptograms on his website. Anyway, we are currently pushing his candidacy as the backfill candidate.

Tony Sheng: That sounds like Satoshi. I’m convinced.

Aaron Lammer: Yeah.

Jay Kang: Yeah, thank you. That was our point.

Aaron Lammer: Which, every time we start talking about this, we go off course.

Jay Kang: Yeah, it takes like a half hour.

Aaron Lammer: You were talking about the non Excerptoshi Satoshi.

Tony Sheng: Well, it sounds like they’re one and the same. So yeah, Satoshi, Excerptoshi. But yeah, people try to fill that vacuum and be the figurehead and move the community in one direction or the other. A single person hasn’t really succeeded in doing that. But there is this quorum of folks that all agree with each other in general that seem to have a lot of influence in the community, and at least have power over the direction of protocol changes.

Aaron Lammer: So if we can’t get Jesus, we’ve at least got the apostles.

Tony Sheng: That’s right. That’s right. But in contrast, Vitalic clearly plays a very important role in the Ethereum community, but I don’t think he would characterize himself as the leader, as crazy as that sounds. And I think he actually-

Aaron Lammer: That’s how it always works in a cult. Actually, he does not want to be called guru. People have just been calling him guru.

Jay Kang: Yeah, it’s like how Edward Sharpe was not the lead singer of the Magnetic Zeros, even though the band was called Edward Sharpe and the Magnetic Zeros.

Aaron Lammer: Yeah. I mean, Vitalic is doing a great job accidentally convincing people he’s a leader. If he got run over by a bus tomorrow, I think that would be the end of Ethereum as we know it. He’s as closely linked in his very soul to the project as a person can be, I feel like.

Jay Kang: I think the one innovation that was in your piece that I found … I think the term innovation is correct, because it did make me think of crypto in a different way. Which is that you seem to think that more than a group of technologies that exist in a vacuum, that what the crypto space has become is a set of social movements almost. That Ethereum is a technology, but more than that it is a movement of people that are falling for one ideology. Just as Bitcoin, for the types of people like [inaudible 01:05:13] or all the people who don’t eat vegetables and only eat meat, like the-

Tony Sheng: What’s up with that? Why is there such a huge overlap between these communities?

Jay Kang: Okay, so we … Going back to what Aaron and I were asking, a completely unrelated question, but-

Aaron Lammer: I like how earlier you were like, “It’s like choosing to be vegan.” It’s both like choosing to be vegan or to only eat steak. They’re both similar character choices.

Jay Kang: What is up with that? I mean, I was hoping you would know, because we’ve never really been able to figure it out, except that both are hardcore ideas, I think, and basically saying society has been lying to us all the time [crosstalk 01:05:47] vegetables.

Tony Sheng: I do think it’s … I mean, you can explain it with this idea that people that are into mass movements are this certain type of person that’s into lots of mass movements. Not just technology or social ones, but also maybe dietary ones.

Jay Kang: Yeah yeah. It’s an all encompassing type of thing where you feel like all of society has lied to you about everything your entire life, and therefore why not question what you’re also eating? If you’re questioning what money is. I guess the with that I have is that I don’t disagree with your characterization of it, and the thing that I’m interested in is whether or not you think that these things have to be by definition antagonistic towards one another? Does Ethereum have to be at war with Bitcoin? Obviously the Bitcoin maximalists, like [inaudible 01:06:34], they’re extreme … I don’t even think intolerant is the right word. They almost have a … They would like to exterminate the Ethereum movement, and they would like to-

Aaron Lammer: Whoa, Jay, Jay.

Jay Kang: No, no, no.

Tony Sheng: I mean, I think you’re using the appropriate language.

Jay Kang: [crosstalk 01:06:51] Like, I don’t think it’s-

Aaron Lammer: No, you’re right.

Jay Kang: He says, “I want these things to not exist anymore. Everyone who is involved with them is stupid and [inaudible 01:06:58] my movement.” Those are actual … They’re not actual quotes from him. But do you feel like they must be antagonistic towards one another?

Tony Sheng: It can’t be helped. The reason is, if you think about the incentives, there are always gonna be incentives for people to try to create things that enrich them, and in this space that means generating a new token and trying to make that go up in value. As a result, if you, assuming that there’s a fixed amount of attention or capital or whatever resource you can think of in the industry, then you’re competing with everybody else for that same resource.

Tony Sheng: You see it come out way more in bear markets than bull markets, and it’s for that reason. There’s this feeling of scarcity of developers and supporters, capital, attention, all this kind of stuff. And if those scarce resources are allocated or even just distributed to other people, that means it’s not going to your project, which decreases the likelihood that your mass movement wins out in the long term.

Tony Sheng: It’s game theoretically sound to do this, but it’s a very unpleasant vibe.

Aaron Lammer: It’s the right game theory, but it’s not a cool thing to do at a party. You know how [Nasim Taleb 01:08:13] always has that thing about, you should go to a party because it’s a high opportunity event with a low cost, or whatever, and it’s like that is exactly the opposite person you want at a party, someone who’s talking about the opportunity value of going to a party.

Aaron Lammer: Yeah, I tend to think, Jay, that the Marxist parable bears out. It’s like saying, “Hey, why can’t these Stalinites just let these Trotskyites be? Why do they gotta keep trying to exterminate them over there?” As long as all these things exist at once, the flippening in any direction is always gonna be possible. And I also mean the cultural flippening. What is the thing of these that is the most capturing of the hearts and minds?

Tony Sheng: Yeah. I think, the question that I’m interested in, I don’t really have a good mental model for, is whether this is net positive for crypto as a movement or negative.

Jay Kang: Oh yeah. That was the central question of the first three months of Coin Talk, and Aaron and I really disagreed about it, and I don’t know if I was right, or I don’t know if Aaron was right. It’s something that we’ve thought about. I thought it was a net negative, and the reason why was because I felt like … And I actually don’t believe this anymore, but I still sort of agree with myself but for different reasons. But I felt that the types of people that I knew who were trying to get into crypto, that there would be a point where they would come across this toxicity and that they would be turned off by it, and that the messaging of crypto-

Aaron Lammer: Right into the arms of Ripple.

Jay Kang: Sure, but the guy that we talked to who really liked Ripple, I mean, that was his actual narrative. He was like, “Crypto is too toxic of a space, it was too outlandish, the revolution that they wanted we didn’t want.” And Aaron and I both, we both hold some Bitcoin, and we both are obviously interested in crypto. But neither of us actually think that Bitcoin hyper coinization or whatever is a good thing for the world. We think it would be a terrible thing for the world if the ideas of people like [inaudible 01:10:28] were across the world.

Jay Kang: I felt like this type of competition, this sort of tribalism that you talked about, had made all the messages so severe and had made them so angry, because they were mostly led by people who were I guess zealots in some sort of way, that this was gonna be ultimately a turnoff, and that you could talk about Bitcoin all you wanted in Bloomberg or CNBC or something like that, and you could try and present a technological or interesting thing, but at some point, people would find the beating heart of it, and it would be this toxic fighting, and I thought that that was bad.

Aaron Lammer: People love toxic fighting in this country.

Tony Sheng: It’s true.

Aaron Lammer: That’s our most popular entertainment product.

Jay Kang: That’s why I’ve been mostly trying to … That’s why I’ve mostly been, I’ve been wondering if I was wrong, because … Aaron and I spend most of our podcast now just taking and laughing about that type of stuff. We’re highly entertained by it. And I think that’s helped hold our interest through what has been an extended bear market.

Tony Sheng: Yeah. I mean, I haven’t … Anecdotally I haven’t really met anybody who has at least positioned themselves as some kind of true believer in any aspect of crypto, who has actually left. There are a few people who have quit Twitter for like eight hours and then come back.

Jay Kang: I’m on four months. No, three months, three months now.

Aaron Lammer: Three months.

Tony Sheng: Whoa.

Jay Kang: Yeah, yeah.

Tony Sheng: That’s impressive.

Aaron Lammer: He’s got a powerful spite factor though.

Jay Kang: Tony. Where do you lean? Do you think that it’s a problem or not a problem?

Tony Sheng: I think you can’t divorce it from the market cap of crypto. If the market cap continues to go down until it’s zero, it doesn’t matter. Nobody’s gonna join in the revolution.

Jay Kang: Sure.

Aaron Lammer: No one’s gonna join your broke ass revolution.

Tony Sheng: Yes. I got a job to do. If it goes up then I think it’s a good thing, because it’s kind of like … There’s a meme in the community that these corrections are for building and improving the technology. But it’s also a time to refine the messaging and figure out what’s resonating and what’s more accurate, and it’s kinda like sharpening your swords for … Well, swords is probably not the right way to welcome the retail investors.

Aaron Lammer: No, it’s like getting out your long knives and waiting for the revolution.

Tony Sheng: Yeah. You know what I mean. It’s like decorating the house for the housewarming. When new people come in attracted by some up cycle in the market. I think it’s probably good, because evolution and anarchy and all of these things make you more fit to survive. That’s how I view it. I think if there’s a silver lining to this toxic infighting, it’s that it leads to people having more conviction in the messaging and clearer messages to give to people that are coming in.

Jay Kang: Would you wanna live in the no vegetables, only eat meat Bitcoin world?

Tony Sheng: I don’t know. I really don’t. And that’s the third phase of the mass movement, when you’ve gotten everybody on board, you’ve started this new way of doing things, and inevitably it’s like sure, we overthrew the government, but we don’t have running water now. And how do I convince these people that’s a good thing?

Aaron Lammer: Now there’s frozen steak but no water.

Tony Sheng: Yeah. It’s really hard to predict that far out. But if you think about it from let’s reduce power from authoritarians and give it to people, then you should expect that freedoms increase overall, and more freedom is good because people are happier when they’re more free. But then you’re like, oh well, if everything is Bitcoin, then all of our financial systems aren’t gonna work the same way, a lot of stuff’s gonna break. It’s gonna be like a way worse version of Y2K. That might not be great.

Jay Kang: Yeah.

Tony Sheng: I think … And maybe more importantly is if we do reach a point where it’s starting to crest and you’re seeing these crypto revolutions bump up against traditional systems, like legal, government, et cetera, they’re not just gonna be like, “All right, you win. This is better.” There’s gonna be an awkward transition period.

Jay Kang: Oh yeah. I mean, I think that there’ll be a full attempt to wipe it off the face of the earth, I think.

Tony Sheng: People don’t like uprisings.

Jay Kang: And also, a lot of people with a lot of power and money would no longer have that power and money, and they would be looking at a world where the Winkelvi own 1% of the world’s wealth or something like that. That sounds terrible.

Aaron Lammer: This kind of was my kind of, I guess … I don’t really think me and Jay disagreed about this, we maybe just look at the darkness in two different ways, which is I think it’s a confirmation that crypto is a dangerous idea. The fact that it operates like a mass movement like this to me suggests that it potentially could have the same kind of earth changing effect of a true mass movement, where a total reformation of society, currency outside of national borders, seems within the grasp of people who are this ideological and motivated. To me, that’s not an entirely good thing. But I guess I take it seriously.

Tony Sheng: Yeah, yeah. Totally. And I think the un-state is less undesirable than the transition state. The transition state is, if we get to that point, is what I’m most uncomfortable about. But if we get to a point where most people are using Bitcoin for money, I think there’ll be some inconveniences as we get adjusted. But overall it should be better.

Aaron Lammer: So the transition phase is when most of the Monero hits will happen.

Tony Sheng: Yeah.

Jay Kang: Or I think it’s when the government will send you to the gulags for ever opening a coin account.

Aaron Lammer: When the last vegetable goes extinct from this earth and we go through extensive beef reeducation. That part of the history, right?

Tony Sheng: We’d stop growing vegetables because we wanted to only eat beef, and then forgot that cows had to eat vegetables, and now we’re out of cows too.

Jay Kang: Oh yeah. Oh, that would be … You know what? That would be the saddest, saddest extinction.

Aaron Lammer: Tony, what excites you right now in crypto? What is capturing your attention?

Tony Sheng: I think it’s the developers coming in and building a bunch of stuff.

Aaron Lammer: Yeah.

Tony Sheng: Last year, there was a wave of developers that could tolerate all of the pins of building on top of blockchains, and they made some interesting stuff, but we learned a lot of it doesn’t work that great. And now I feel like the space is way more intelligent about what might be useful and usable. So seeing all of that is really exciting, and I am hopeful that we’re gonna get to the end of the year and start seeing some really exciting applications that people use and don’t complain about the way that Jay complained about Augur.

Aaron Lammer: To be fair, Jay’s probably gonna give a lot of things a bad review.

Jay Kang: Yeah, yeah, yeah. I mean, I did like Crypto Kitty. Tony, what are the things that were built last year that excited you? What were some of the exciting projects that have happened in the last, let’s say, six months or so?

Tony Sheng: Yeah, I mean, this may be boring, but the infrastructure stuff is what’s been most exciting to me. Scaling solutions for Ethereum that will make the transaction cost trivial, and the through put as fast as you need it to be for whatever app you have. That resolves a lot of the problems people were having with building apps on blockchains. UX stuff, like making crypto more invisible to end users, so you can go to a website or download an app and use it pretty similar to how you would any other app. You don’t have to go save a private key and go onto Coin Base first to get some Ethereum and then transfer it to this other account and all this kind of stuff. I think abstracting that away is gonna be huge.

Tony Sheng: Both fall into this general theme of let’s make this stuff usable, and get stuff out to actual users that don’t really care that much about maybe the mission yet, and have that be the Trojan horse for them to get brought into some of these more idealistic things.

Jay Kang: That’s a very good answer. Very sensible. And I’m wondering if Aaron right now is trying to buy more Ethereum.

Aaron Lammer: No. I already have too much.

Aaron Lammer: You’re in a unique … There can’t be that many people in this country who do what you do, actually build, working in product teams building this kind of stuff. Is this a growing field? Are college students studying to work on this kind of stuff?

Tony Sheng: Definitely on the engineering side. Every major computer science program I think has some courses on blockchain now.

Aaron Lammer: Wow. That was fast.

Tony Sheng: Yeah. And it’s really … At least Ethereum feels very bottoms up. I mean, the whole thing feels pretty bottoms up by design. You have this organic entrust in learning how this stuff works and what they can put on it. Just like with mobile, there’s gonna be a few years where there’s a massive shortage of people with expertise to make any of this stuff, but very quickly people are coming up to speed, the community of developers is growing really fast.

Tony Sheng: On the product side, though, a very, very tiny, tiny, tiny community. So not a huge industry around product function in crypto. But that’s starting to change, and a lot of teams have been coming to me asking for recommendations on how to hire. There just really aren’t that many people with experience here yet. And I feel like it’s a huge need, because sooner or later we’re gonna get to a point where things are actually good and usable and attractive to end users, and designing things in such a way that people want to use them is a big role for product people. So I think it’d be really good for the space if there were more product people.

Aaron Lammer: Tony, I’ve really enjoyed your writing. People can find it, it’s all at tonysheng.com.

Tony Sheng: Yeah, that’s right.

Aaron Lammer: And I also very much enjoy your newsletter, so everyone should go there and sign up. Actually I was gonna talk about the most recent newsletter you sent out, which was about history of the term decentralized, how much it appeared at various times in the pre Bitcoin writings. That was really interesting. So I encourage everyone to check that out.

Tony Sheng: Do it.

Aaron Lammer: Thanks so much for the interview.

Tony Sheng: Thanks guys, yeah, great meeting. This was fun.

Jay Kang: Hey, thanks, Tony.