Blockchain Insider Ep. 41. Twitter Blocks Bitcoin, Monero Splits Opinion & is Ripple a Security

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ST:  We are here, in the 11FS offices in WeWork Aldgate, for Episode 41 of Blockchain Insider. Today, we bring you, "@Bitcoin, where art thou?", is Ripple a security? And George Soros gets his hands crypto-dirty. 

[Break]

ST:  Alright, let's get started. Colin G Platt, how are you? How was Deconomy? And welcome back to the UK.

CP:  Thank you very much, I'm doing fantastic, it was excellent, I am still fantastically jetlagged.

ST:  You are wearing a Centra t-shirt, that's some good swag right there.

CP:  I-, I had to get it. I mean, it was probably the last opportunity on the planet to get Centra swag.

ST:  You've gotta get the Centra swag, it's crypto-dirty, like George Soros. Alright, first story this week comes from Coin Telegraph. "BCH promoting Twitter account @Bitcoin suspended. Internet debates the death of free speech." This had to be the biggest-, biggest, kind of, mass market story this week, a Twitter account got hacked. Tells you everything you need to know about this community.

CP:  I-, I don't know that it's even hacked. Like, so, there was @Bitcoin on Twitter, which, if you're not following it, and you're interested in Bitcoin, that's a good place to start, um, run by the guys, Roger Ver, and the guys that run Bitcoin.com, which has been supporting Bitcoin Cash, obviously one of the forks that came out, mid last year, of the Bitcoin scaling debate. Very different views on where Bitcoin should go. Lots of people who have been following Bitcoin for a while, and don't like the idea of Bitcoin cash, were very upset about the notion of something that seemed legitimate, like Bitcoin normal, the handle, would be supporting something that isn't Bitcoin, in their view.

ST:  It says a lot about that split in the community, because a lot of the people who, like you say, Roger Ver, who are core to-, you know, early on, many years ago, were key supporters of the whole Bitcoin movement, and Bitcoin community, are now key supporters of the Bitcoin Cash movement and community. So, to them, Bitcoin Cash is Bitcoin. You know, it forked off, it's the-, it's got the entire heritage of Bitcoin, and it just happens to be going in a different direction to that other thing, also known as Bitcoin.

CP:  Yeah, and I-, I-, I had dinner with Roger, about a week ago, and-, a really great guy, and it was-, it was fantastic to finally sit down and speak with him, after several years since I last saw him-,

ST:  Big time name drop.

CP:  Big time name drop. I also saw Satoshi Nakamoto, thank you very much, John Lilic, for saving me from that conversation-,

[Laughter]

CP:  Um, so, there's a lot of people that are big names in this, and I completely get where they're going. I mean, Roger Ver, in the early days, saw this as a way to have, uh, a payments mechanism that could be used in your everyday life, and he's still a strong supporter of that, and that's where Bitcoin Cash supporters are trying to go, uh, and they see Bitcoin Core, the-, the software development group, behind the implementation that is referred to as Bitcoin, or BTC, as going a very different way. And this was one of the things that irked him off, he's obviously a very strongly libertarian supporter, saw this as kind of a-, an attack on freedom of speech, people like Jameson Lopp have debated whether that was actually the case, and, at some point, after the Bitcoin.com team that was running @Bitcoin got booted out, some random person ended up with this account, and started tweeting about Turkey, don't know why. They got about three tweets in, and, um, then, I guess, Twitter turned that off, and reverted.

ST:  Yeah, so, the interesting thing here is, uh, Jameson Lopp actually commented, saying, "Freedom of speech means that the government won't throw you in a cage for saying something that it doesn't condone. Freedom of speech doesn't mean that you can do whatever you want on somebody else's property." And somebody else's property here being potentially Twitter, and the @Bitcoin account, and all of this sort of stuff. Twitter have probably done what you would expect that organisation to do. So, as ever, Jameson's being very sensible.

CP:  Very sensible, and-, and what I always love about all these things is, you know, Bitcoin and cryptocurrency are not prone to quickly going in to conspiracy, but a lot of people hypothesised that, um, because Jack the, um, the CEO of Twitter, supported Lightning Network, which is Bitcoin, and not Bitcoin Cash, very different view in life, uh, that he turned this off, and it's all a big conspiracy, because-,

ST:  I love this conspiracy theory stuff. Like, people just have-, they make up this stuff. It's beautiful. Like, the imagination of, like, how the world works, in their mind, like, what a world they live in.

CP:  I love it [laughter].

ST:  Just, what a lovely world they live in, where-, where people have this-, this insane amount of power. Time for Tweet of the Week.

[Tweet of the Week jingle]

ST:  Today's Tweet of the Week unsurprisingly comes from the @Bitcoin account itself, where it was temporarily taken over, as we said, and-, I love this bit here where it just says, "Turkey is so cool," with a little Turkey flag [laughter]-,

CP:  [Laughter]. That's what's funny, because I was, like, coming up to London, and this all transpired as I got on the plane, and then all, kind of, wrapped itself up quite nicely, when I got off the plane [laughter]. Twitter is fantastic, isn't it?

ST:  And that's some goood crypto Twitter right there. Back to the news, moving on, a bad week for crypto exchanges this week. There was one positive story. CNBC.com covered that Coinbase launched a venture fund, and it seemed like, as soon as this happened, everybody on WhatsApp reached out to me going, "Who do you know at Coinbase?" I was like, "Woah! Why-, why is everybody getting in touch about this, all of a sudden?"

CP:  Yeah, in a world where, you know, everybody can go out and raise tens of millions of dollars with ICOs, the fact that somebody wants to do it an old-fashioned way, and everybody gets excited about that, is quite funny.

ST:  Well, so, they're launching an incubator fund for early-stage startups, and their President says, "We're going to invest off our own balance sheet in to crypto companies." They'll invest in companies that are in the space, and are aligned with their values, and you might see them invest in companies that look competitive with Coinbase. They're not adding any new cryptocurrencies at the moment, but, according to them, as soon as there is more regulatory clarity, they're going to start listing more. Which really interested me, because I looked at the written testimony of Mike Lempres, to the House Committee on Financial Services, from Coinbase, and really, really read that as being, "Hey, look, we think that the global formation of capital, ICOs, could be a good thing, but we, Coinbase, only list Bitcoin and Litecoin, Ethereum and Bitcoin Cash, because they're the only ones with regulatory certainty." But also, bear in mind, as we've said on this show a few times, SEC thinks this is a security, IRS thinks it's property, CFTC thinks it's a commodity. Like, it's kind of all-, and FinCEN thinks it's money. It's hard to do anything with this space. But this-, this, kind of, early-stage venture fund, this idea that they may do more in the future, suggests that there's a real push towards, how do you change that position, and how do they start doing more for companies in the space?

CP:  What I really take as a positive, as well, in this whole thing, I mean, we're talking about the coins and all that, but Coinbase is a company that has made actual revenues, and not just had a token go up in value. In fact, they don't-,

ST:  Mm.

CP:  The tokens that they cover go up and down in value, but they actually make money from customers.

ST:  And that means they've got cashflow, or cash sitting on their balance sheet, and they want to do something productive with that cash.

CP:  And that's-, it's great that they're not just investing in buying other currencies. But, I mean, if we go back, about a year, a year and a half ago, Union Square Ventures came up with "fat" protocols versus "skinny" protocols, and-, and I, and I know a few other people, and I think, you, as well, kind of critiqued this-, this way of looking at the world, where they said, essentially, all the money's going to be in the token itself, and there's no value on top of it. Coinbase is a multi-billion-dollar company that isn't deriving it from the fat protocol, the coin. They're investing in other companies, or they're looking to invest in other companies, doing the same. So, this is kind of that starting-, there is value on top of this, in offering services.

ST:  And I think fat protocols was, uh, looking at the world to say, "Right, yeah-," as you say, the coin itself, the protocol itself, historically, never made a lot of money. HTTP doesn't make money. SMTP doesn't make money. The people that invent those protocols go on to be famous, but not billionaires or big companies. They're just free to the point of use. But the problem was, now we have this world in which every protocol has a currency, so they're all competitive because it's commercially interesting, it means the protocol can't gain mass adoption, because it's not free. So, there's this crazy idea of, "Well, it's free to access, but it costs money to access it-," it's-, it's really strange. But actually, it's hampering adoption, that people have these currencies attached to the protocols. The fat protocol may never take over the world. It's too fat.

CP:  Too fat.

ST:  Um. Alright. Next story. CoinDesk.com, "Japanese regulator suspends two crypto exchanges over KYC failings, because of insufficient procedures." Interesting, this one keeps coming up, I have a number of people ask me, you know, "How do we get bank accounts? How do we get bank accounts?" It's like, "Sort out your KYC." It's as simple as that, like, it really can't be hard. Our next story, on news.bitcoin.com, "CEO of Korean Exchange Coinnest among Four Arrested for Fraud."

CP:  Ooh!

ST:  You were in town at the time-,

CP:  I was in town. I had nothing to do with it, I promise. So, Coinnest was one of the smaller Korean exchanges, so, essentially what the story describes is alleged, is the founders were actually taking money, and the cash that should have been in KRW, were actually buying Bitcoin with their clients' money. So, you had Bitcoin on-, on the left side and the right side of the balance sheet, which is fun! What I heard, which was quite interesting, when this all happened, because I was in town, all of them are doing the same thing [laughter] it's just these guys happen to have lost money, and couldn't pay back investors. So, you know, pick a gamble, it doesn't always pay off, but it speaks volume to not just the KYC aspect, but there's everything behind running a business where you're running massively volatile risks on the back end. And how do you fix that? Probably don't take more risks on the back of that. I think that's a lesson learned.

ST:  It's really strange to me that people try and run businesses without doing their homework, without doing due diligence. Like, you've got to get this stuff right, people. Like, if I'm going to put a load of money in to an exchange, or to any sort of other business, I want to know that the people running that, whether it's a decentralised exchanged or not, whoever's running it, I want them to have done the thing well, I want to know that it's going to be at least well managed and looked after. Not that, like, "Hey, fuck the system, these guys can run away and do whatever the hell they like, because I believe in this, ideologically." Actually, if we want decentralised exchanges to deliver the value they're going to deliver, or even centralised exchanges, they're going to have to be operated well, and sometimes, that means-, you know, some of the rules-, some of the reasoning and rationale behind why we built these compliance rules in the first place, they still make sense. How they've been implemented historically, and how you might implement them in the future, could be two different things, and there's room for debate there. Alright. Next story, from bloombergquint.com? Is this a real website?

CP:  It's part of Bloomberg.

ST:  Oh, okay. Bloombergquint.com, whoever they are, um, "The Reserve Bank of India bans regulated entities from dealing in virtual currencies. The central bank has given three months to regulated entities like banks to unwind their positions with entities related to cryptocurrencies." This is really quite strong, from the Reserve Bank of India. However, it's decided they're going to promote the use of "blockchain for a public ledger that serves as the backbone of Bitcoin". What on earth are they-, is this just a really bad translation of a story? This-, this reads like somebody's very, very confused.

CP:  I think you hit the nail on the head [laughter]. I mean, honestly, look, the problem is, a lot of people are coming in, and they're selling, you know, "There's this great thing you can do, and there's all these new controls, and blah de blah de blah, and, by the way, Bitcoin's horrible." Um. And, you know, we can debate all these factors, but when it really comes down to it, it's very hard for a country like India, or like China, or lots of the other countries that have been looking at this, to say, "On the one hand, we absolutely hate cryptocurrencies, because they get around the rules, but on the other hand, we're going to learn everything we can about the system, but then we want to try to control it." It doesn't quite work that way, and it's great, and new things will come out, and there will be different levels of permissions, but, at the end of the day, it's always going to come back to, if you are able to get Bitcoin, you can do, kind of, more or less what you want. That's the problem-,

ST:  I mean, you've said this before. The more you try and ban the thing, hide the thing, control the thing, the stronger it gets. The best thing you can do is kind of bring the thing in to the system, in some way, and make it make sense. And, now, I would argue that the way that's been done in the US has been a bit knee-jerk, it's been a bit like, "Hey, this is the existing bucket that this sort of fits in to," whereas the Japanese approach of, "Hey, we're going to build a law that's more tailored to this," probably is right in the long-term, but we'll see how this one plays out, because I think, internationally, you're seeing a lot of different approaches. The more permissive, sort of, Crypto Valley approach, of Zug, Switzerland, some of the things you're seeing out of Gibraltar, Malta, even more on the permissive side. Japan, arguably quite permissive, but also very thoughtful about risk. And I think we will see, as the likes of FATF, the FSB, CPMI, these international bodies that are governed by the G20, start to talk about, "How do we harmonise some of this stuff internationally?" Because they are really worried about counter terrorist financing, and money laundering, that could be happening through this stuff, but as we've said on this show many times, the amount of actual money laundering going through these things, compared to the existing world of financial services, is incredibly small. The thing is, I think there is just this-, this irrational fear of, "Oh, it's going to take over central banks' control of the world," which it's just not.

CP:  And I don't know that central banks are even saying that, and that was something in this article, they said, "If it does get bigger, it could really challenge where we sit," and for a-, it's still a very, very large economy, India, like-, but it isn't-, it isn't the size of the European Union, it's not the size of the United States, it's not even the size of Japan. Um. It is, really, kind of a concern about, in a country where they had complete demonetisation, what, about a year ago, because they were worried about forging money, there are some interesting lessons. And rather than saying, "Do this or don't do that," you really run yourself in to a corner, and either you're not going to have the talent in your country that understands this stuff enough to help advise you, or you're going to be relying on bad advice from the people that are left, and will get you to do whatever pays their bills.

ST:  It's a really interesting point about the-, the fact on the ground in India, and the, kind of, the realities of it as an economy, and cash within it as an economy, and trying to push cash out of the system. And generally, I mean, this, kind of, links to the next story, this comes from CCN.com. "An R3 Research Director says Central Bank Digital Currency Could Go Live This Year." So, this comes from Antony Lewis, who's their Director of Research, and he says, "We've had conversations with central banks who have mandates to fix certain payment problems, and one solution they look in to is a blockchain type of platform." So, there's this other quote in here, as well, which is, "Don't make your secondary (decentralized) system look like your primary (centralized) system. Otherwise, if a primary system goes down, you'd be able to play the same trick." So there's a couple of nice points in there. But the broader point, here, about central bank digital currency, is firmly on the agenda, at this point. Central bank digital currency is something that's really exciting, from a policymaker's perspective, because if I could give you something that looks a lot like cash, but it sits on your phone, one, I'm taking actual paper notes out of circulation, I'm taking cost out of the economy, but two, I can see how much cash is in circulation, and potentially even prevent money laundering, but it does feel a bit state control-y.

CP:  Well, I mean, so this came out of-, this article was actually about one of the panels at Deconomy, and Antony, amongst a few other people, including Ian Grigg, were speaking on this panel, talking specifically about how central banks would have money on a blockchain. Obviously, they're all talking about on their own platforms, but more generally, as well. It is a bit state control-y, or at least central bank control-y, and that's kind of the issue-, or not the issue, that's kind of the point. What I thought was really interesting and promising is how far they are along. Because if Antony's saying this, it's not just some guy speculating, it is one of the companies that's being contracted by central banks to do it. And if he's saying it could go live this year, I'm thinking that's a pretty good sign that it's going to go live this year, and if not this year, early next year.

ST:  And so there was a report that came out from the Bank of International Settlements, FSB, and the-, so, the Financial Stability Board, and CPMI, around-, on March the 12th, saying they could-, central bank digital currencies could impact payments, monetary policy and financial stability. And I'm a big fan of Bank of England Working Paper 605, 605 represent, which has been saying this for some time, and actually, a lot more there is about how can we do things that help make banks more capital efficient, and raise GDP. This goes really in to the bowels of the organisation. But then you start to think about it, like, we're really talking about payments as a token, right? We're talking about tokenising payments, and not dealing with payments the way we do today, through one central point, but actually having many people be able to hold that token and reconcile it. So, a central bank could issue a payment token, a commercial bank could issue a payment token, a non-bank financial institution could issue a payment token, or an algorithm could issue a payment token. And if we understand all of those, and the challenges with each, then suddenly, it goes away from cryptocurrency bad, central bank money good, to, this is a spectrum here, and this replicates real life, and all of these have pros and cons. Alrighty. Next story comes from Reddit.com, there was a Mike Hearn AMA, or Ask Me Anything. Was there anything that struck you from that?

CP:  Well, so-, so, this-, bear this in mind, we need to have some context here. So, Mike Hearn was an early adopter of Bitcoin, spoke a lot with Satoshi Nakamoto, or was integral in suggesting to Bitcoin Core, at the time, which wasn't called Bitcoin Core, but some of the early development groups that ran the GitHub, different changes, and lots of those changes were actually pulled in. So, Mike Hearn famously left in early 2016, with what they called a "rage quit", and so he's basically said it was a failed experiment. A lot of the questions around this were, "What do you think now about Bitcoin Cash?" He was kind of negative on it, but did see some positive aspects, as well, because they did take some of these changes. Mike Hearn, of course, works for R3, and is very central, talked a lot about Corda, some of the ideas that come out in the next story that we'll get in to, why they build Corda the way they built it, and what I thought was really interesting was, he kept relating this back to the promise that Bitcoin was actually trying to deliver, and he saw this as a continuation, in building Corda.

ST:  Isn't that super interesting? That, like, we were talking a moment ago about central bank issued digital currency, tokens, or representing value as a token, and he sees-, he sees, this guy who was really core to some of the things, so he was one of the first to argue for larger blocks, he was one of the first to argue for some of this stuff. He's now spent two years working within this, and he's still seeing that quite core to the vision, which is always interesting to me, because people tend to view Corda as, like, by the banks, for the banks, but actually, there's a bit more-, there's a bit more sense there than people give it credit for, sometimes. But the next story is a link from Medium, so, Richard Brown, the CTO of R3, talks about universal interoperability, and why enterprise blockchain applications should be deployed to shared networks. So, there's a bit of drama about this one on Twitter. Colin, walk us through it.

CP:  Oh yeah, come on, because we need to have drama in the enterprise blockchain space, like we do in cryptocurrencies [laughter]. So, Richard Brown put out this-, this comment, and I thought there were some really interesting points. Now, we can argue about the way that it-, it was put out, and I know people like Chris Ferris, at IBM, who's core to the Hyperledger Fabric, which, of course, was originally set up, and contributed to the Hyperledger project, which is opensource, by IBM, but is now opensource and not IBM, as well as some people over at the ConsenSys Group, were really taken aback by what they saw Richard as saying. And I think what he was pointing out, and we need to get Richard back on the show, was it's not only about how you design the ledger and the architecture of who holds nodes, and all that great stuff. It's also about how you build the business solutions. And this is something we've talked a lot about, and it's shared networks. You shouldn't replicate the centralised logic of how you do stuff now inside these things, and run tonnes and tonnes of ledgers, and maybe you also shouldn't share absolutely everything. And Corda's trying to thread that needle, to say, "This is the problem that we see, that we want to solve-,"

ST:  Mm-hm.

CP:  And maybe the greater issue here, and Simon, you were saying this, earlier today, was maybe not everybody is agreeing on what the problem they see is, and that's why they have a different solution.

ST:  Well, so, the thing-, I mean, you and I were involved in it, so, full disclosure, we were there, in the early days of R3, but one of the things in the initial discussions was, we were being really pedantic about what is the requirement? What's the problem we're trying to solve here? And that's something that I think a lot of the other technologies hadn't been. A lot of them started out, "This is a blockchain, how do I make it go faster?" or, "How do I make it work for private parties?" The-, R3 kind of comes at it from the other side, which is, "Okay, let's understand everything that's going on in the blockchain space, and let's look at all of the new ideas, but let's also look at all of the old ideas, and everything else on the table, and let's figure out, and be really close to, what is the fundamental problem? And I think some of the fundamental problems is, it's hard to move money globally. It's hard to represent money in many places at once, especially in some complex financial agreements, where you've got, sort of, 10 to 12 different parties, who all need to be updating stuff, based on a price movement that can be moving in real-time. 

And so, you know, fundamentally rethinking those problems was-, was kind of really key, and then, of course, the drama comes in, not only that there was the chap from IBM, and the folks from ConsenSys kind of jumped in, there are different visions. The ConsenSys view of the world is actually much more, "Well, no, we need something that's more applicable to this future version of the internet, this Web 3.0 story, this view in which the internet becomes a world computer, and that we need to start there and work back, because that's more forward-looking, rather than just solving a problem that a few financial services companies have." But has Corda solved something, in solving something for a few financial services companies, that could work in more places? That's a really interesting question. And then IBM comes along and goes, "Well, neither of you are right. Actually, we need something in the middle ground of those two. It has to be a bit more like a blockchain sort of thing, a bit more world computer-y, but at the same time, can't be just raw pragmatism. Let's get people together, and let's do it for many industries, by default. And so these different worldviews are playing out in how the code bases are being developed. 


[Advert]

ST:  Alrighty. Speaking of R3, and interesting timing, it's the Corda ad time. So, today's episode of Blockchain Insider is brought to you by Corda, and Corda is an opensource blockchain platform that allows businesses to transact directly, in strict privacy, like you said, privacy is very important for businesses, using smart contracts. Corda enables complex transactions, using real assets and legally binding agreements, without the need for a trusted intermediary. Corda is the result of a collaborative effort, led by R3, and over 160 of the world's largest banks, and it's ready to build on today. The financial community is deploying Corda to manage their agreements and move assets globally. You can transform your business ecosystem with a platform selected by the world's largest institutions to build their future on. Go to Corda.net to learn more.

[Advert]


ST:  Alright, Colin, next one is from Bloomberg.com, actual Bloomberg.com, not weird Bloomberg.com-,

CP:  [Laughter].

ST:  "George Soros, the billionaire investor, prepares to trade cryptocurrencies." What's going on here, Colin?

CP:  Do we know if he's buying or selling? I mean, he might just be shorting the shit out of it, right?

ST:  Well, yeah, there's the futures market now, he can do this.

CP:  So, a lot of people are seeing this, kind of as a "we've made it". Um. Bitcoin loves to have "we've made it" moments-,

ST:  Mm.

CP:  And it seems like every single thing that ever happens is a "we've made it moment"-,

ST:  [Sings] "looks like we've made it".

CP:  [Laughter]. So, George Soros, obviously got a lot of money, $26 billion in his family office, decided, "Hey, you know, I want me some of these Bitcoin, and some of these shitcoins." So, jumping all in, and getting involved with things like Overstock.com. Hey, you know, why not get more deeply involved, because right now it's just so low volatility, uh, it's the time to be getting in. Maybe he just wanted to (? 23.51) the dip.

ST:  Yeah, no, so-, because he called cryptocurrencies a bubble in January, uh, this is really interesting. So, there was a lot of people talking it down, when it was at a high price, only to get in later-,

CP:  This is a conspiracy theory, Simon, come on! "George Soros was talking it down so he could get in!"

ST:  Yeah, or talking it down so that he can get in on the futures market, I mean, you just don't know what's going on here. But also, you mentioned he's got a stake in Overstock, but actually, he's the third largest shareholder in Overstock. That's-, that's pretty significant.

CP:  I mean, he must have heard the vision from Patrick Byrne over there. Look-,

ST:  But also, family offices are offices. It's not a person-,

CP:  Yes.

ST:  Right? So, his family office sees some value in this space, and are probably looking at that space more-, more broadly, and starting to move in that direction, as part of a portfolio, as, um, we saw the-, they're not the only ones. So, from CryptoSlate, apparently the Rocker family-, Rockerfol-, bleh-,

CP:  Rockefellers.

ST:  The Rockefellers, there we go, thank you, Colin. The Rockefeller family, god that's hard to say, they've partnered with a cryptocurrency investment fund, so that's another big name, the-, Venrock, a venture capital firm, the $3 billion company is looking to start investing in cryptocurrencies. The partner discussed their company's new alliance with Coin Fund, a Brooklyn-based cryptocurrency investor group. "We wanted to partner with this team that has been making investments and actually helping to architect a number of different crypto economies and token-based projects."

CP:  What I think's really interesting is a thing that we've kind of hit on. It's not how can these things be a currency? It's how can these things be an asset? And then the natural question is, what do you actually do with these assets? And I think that question is still up in the air. But, you know, it's probably a very small portfolio that both of these have in there-,

ST:  Yeah.

CP:  So, we're talking about billion-dollar funds. Maybe, maybe they're investing $10 million. So, it's quite small, for them. It's a big number, still.

ST:  Did you guys also see something about the Rothschild family, as well, looking at this space? Like, for a long time, the smaller family offices were rumoured to be in this space. Now, this, sort of-, this speaks to me as, like, a different level of investor, who takes longer to do their due diligence, is starting to move in to the space. So, even though the price move has been really significantly downward, since the beginning of the year, there's definitely more interest out there in this idea of a new asset class that can move globally, and I think that core concept, there's something to, but you're right. To what end? For who? It hasn't really been figured out. That's still-, the killer use case is still a big question mark.

CP:  Oh, I always thought it was Crypto Twitter.

ST:  Ah, it's Crypto Kitties, clearly. Alright, next story comes from CCN.com. The SEC have apparently quietly put Bitcoin ETF, exchange traded funds, proposals back on the table. They're back on the table, Colin.

CP:  That seems like wishful thinking. Uh, yes, they've talked about it, they put out some things, but basically, they were-, it reiterated where they were. The New York Stock Exchange has pushed back, and-, or, sorry, the CBOE has pushed back and said, "We'd love if you took all this on a case by case basis." Essentially, what happened last time the SEC opined on this, in mid-2017, was, essentially, "The market structure's not ready yet." We don't have good, solid exchanges that we can back these things with, and even the big exchanges we've seen come in on the futures markets, are kind of hacking around and using some of these unregulated exchanges. Maybe some of the things that we've been hearing about Coinbase looking to become a broker/dealer might give them some comfort, and we might be able to actually have this discussion, a real discussion, around actually having Bitcoin ETFs. Now, the question I have is, is that really a good product that adds value to people? Bitcoins are still pretty easy to get to, if you're a retail individual. It maybe makes sense for big institutions, but there are other avenues, as well.

ST:  They are now Robinhood and Revolut, and other fintech apps, kind of, give you access to them, but also the price at which you're buying Bitcoin from a Coinbase, at 1.5%, is different to the nature of the economics of an ETF, and an ETF can more easily be held in a 401k, or a pension portfolio, or-, or savings pot, or interest-free savings accounts, in the UK. Like, ETFs are a different kind of structure. They fit within different portfolios in a different way. And because they are this-, this regulated product, they-, they are-, the ETF is seen as really, really key, by some people. Alright, next story comes from CryptoGlobe.com, it's about Monero Mitosis. So, a hard fork has led to four new cryptocurrencies. Walk us through this one, Colin.

CP:  [Laughter]. You know, sometimes these coins get out there, and they just want to outdo Bitcoin-,

ST:  [Laughter].

CP:  So they're like, "We're going to fork and not have one airdrop token. We're going to have four." So, Monero is a cryptocurrency that is focused on privacy, it's one of the older coins, got a lot of play last year, when-, when the price started going to the moon, we started getting lots of comments from people that were focused on privacy, because they saw this as really a central problem inside of Bitcoin. One of the early uses in Bitcoin was around dark markets. The problem is, very quickly, we found out that law agencies could track Bitcoin payments, so the next thing was, you know, "How do we get in to Monero? How do we get in to Zcash?" How do we get in to the one we'll talk about in a little bit, things like Verge, and Dash, and all these other proliferation of privacy-led coins? One of the things, specifically, that Monero has to do, to guard that privacy, is have regular hard forks. They recently had a hard fork to stop ASIC, so these are the big miners, we hear about them in China, and places like Quebec, and Washington State, that are using really cheap electricity, centralising that through specific hardware that makes mining more efficient, from an electricity point of view, also known as cheaper. So, Monero started to see ASICs come online, they wanted to fork away from this, so that it would be more difficult to do it, and a lot of people disagreed with that, and they happened to be supported by miners, and some of the exchanges, and boom, we have Monero-Classic, Monero Classic, Monero Original, and Monero Zero, now. So, congratulations to all these new currencies. I still don't know why you would use any of them, because they seem-, they don't seem to really have the following that Monero Monero has-,

ST:  Mm-hm.

CP:  But we'll see.

ST:  Monero Monero. Monero Classic. Monero Original. Monero Zero. Monero-Classic. You make a good point about the ASICs, because this happened to Ethereum, recently, as well. We see that enthusiasts start mining a cryptocurrency, upon the original vision, and then, eventually, somebody comes along and figures out that I can build a-, a dedicated chip that will make it far more profitable if I have these chips, and so on, and you get a race to the bottom. So-, and then there was the other story on Wired, I think we covered last week, about Monero isn't as-, as, kind of, invisible as people thought it was, and law enforcement, and agencies, and technology companies, can now trace Monero. So, it kind of has to do this, it kind of has to keep moving. But, at the same time, I think this-, this game of constant privacy coins, for the sake of use on dark markets, is not necessarily going to be effective forever. Coins that give you privacy, that also allow something to be unlocked in the event of a court order? Those sorts of things could become more-, more doable in the future. It just seems to me like crypto might be looking for its edge all the time by forking, and in so doing, diluting itself.

CP:  Potentially.

ST:  But it also could be a let many flowers bloom, and this is how you discover the thing that makes it successful.

CP:  I think it's a good way to experiment on these.

ST:  Yeah, no, I-, I agree. Thinking out loud there.

CP:  Thinking out loud.

ST:  Thinking out loud happens on this show, people.

CP:  We can fork our opinions here.

ST:  We can fork our thoughts.

CP:  [Laughter].

ST:  Wait, hang on, that sounds dirty. It's like crypto dirty [laughter]. Alright, next story, from Bloomberg. Bloomberg's been busy on the crypto stories this week. Ripple has allegedly tried to buy its way on to major exchanges for cryptocurrency. The article reads, "If XRP is classified as a security, it would be removed from the largely unregulated Wild West of cryptocurrencies and become subject to requirements similar to those that govern assets like stocks. So would the exchanges that offer it." Indeed, Jesse Overall, which is a great name for a person [laughter], I wonder what he wears, an attorney at Clifford Chance, said, "Paying for a listing could be perfectly legal, given that traditional markets, like Nasdaq, for instance, charge such fees, but things could get more complicated if a digital token were later deemed to be an unregistered security. In such case, both the exchange and the issuer could face penalties. Listing on an exchange is an integral part of the process of facilitating an unregistered, unlawful legal securities issuance to people who are not allowed to buy. In the equity space, listing fees have always historically been coupled with the notion of regulation, while digital currencies are relatively unsupervised," although there's-, there's a position from regulators that they should be more supervised, especially in the US. Any thoughts on this one, Colin?

CP:  Yeah, I think, being very careful on how we word this, because I know it's-, it's-, Ripple is walking a very tight line, in its relation with XRP the currency, what it's classed as, what their role is with regards to it. And there's a lot of pushback on the fact that XRP has existed longer than the company known as Ripple. And I know everybody thinks of them as one and the same, but they are different. There are lots of arguments for and against the fact that it could be a security. What I think really, kind of, gets in the heart of this story is, if these allegations are true, that Ripple, the company, is actively going out, and proposing to companies like Gemini and Coinbase money to get XRP on that platform, you have to go back and question the assumptions of, how tenuous is this link between them, or are they really, really, actually supporting it? Now, Ripple has come out and said, and Brad Garlinghouse has come out and said, "Ripple is supporting XRP. We want to support the markets of XRP." So, you would think within that-, it's perfectly within their rights, that they would want to make something that is seen as very easy for retail and institutional money to get in to these new assets, as potentially helping some of the products they want to put out, but it does ask that question of, are we not picking and choosing when it's convenient to use it as a security, or not a as security? And it's not whether it is or it isn't, but it's what's convenient at your particular time. And I know, if people start to raise this question, if there are losses, they will start to look for compensation, and Ripple, the company, that happens to control a large chunk of these XRPs that they've locked up, so they can't easily access them, might be held liable. So, I think it's dangerous, but at the same time, it is also positive, from the point of view that they're trying to get out, and make it easier for some of their prospective clients to actually use these things, and do, as they said, support the market.

ST:  Indeed. A relatively linked story from CoinDesk.com here, about XRP being a security, which has some of those same points that you made. We'll move on to the stories we didn't have time to cover. A story from CoinDesk.com, "The Anti-Petro? Zcash Throws Venezuelans a Lifeline," apparently.

CP:  Another privacy coin.

ST:  Another privacy coin. And I always think of the Coin Telegraph, like, what would the graphic for this story be, if they'd covered it? Like, throwing them a-, a lifeline from a-, from a ship, or something? That's very visual, in my mind.

CP:  I love the artist over at Coin Telegraph. That's like the best thing going about Coin Telegraph [laughter].

ST:  Yeah. Oof, alright. Colin's opinions are his own. CoinDesk.com, "Crypto Exchange Huobi Registers With FinCEN Ahead of Their US Launch." So, interesting that some of the, kind of, Chinese exchanges that had-, that had gone all crypto-to-crypto, are now looking for registration elsewhere, so they can do fiat-to-crypto in other jurisdictions.

CP:  Yeah, and I think they had, at least on-shore in China, didn't they have at least CNY to-, to Bitcoin and Litecoin, I think. But yeah, outside of that, obviously, if you were a non-Chinese domiciled investor, you maybe could only do Bitcoin to Litecoin. So, interesting development.

ST:  I think it starts to talk about the exchanges that are generating lots of revenues daily, that are profitable businesses, are now looking at international expansion, and actually, because these exchanges have done well, because they are cash-rich, you see Coinbase growing a VC fund, you see Chinese exchanges looking at international expansion. This has to signal something in the market, of a growing, or a maturing, of the financial infrastructure there, that is global in nature. These businesses are quite different to market infrastructure that we saw historically, and that, if I'm sitting in financial services, is an interesting indication of the future of financial services. Cointelegraph.com, "Bitfinex Denies Fraud Allegations Tied To Confiscated Funds in Poland." Just-,

CP:  And their graphic wasn't as good as I sold, the previous story [laughter]-,

ST:  [Laughter] aw, so it wasn't a whale-,

CP:  No, but it-, you've got a little Bitcoin with arms, looking at paper, and-, ah, check it out.

ST:  Yeah, and it's not the same. And a story from news.bitcoin.com, "Verge Is Forced to Fork After Suffering a 51% Attack." Again, another hard headline to say, forced to fork.

CP:  Forced to fork. I-, I wish we had time to cover this, because it really was an interesting story. 51% attack, for people that don't know, look it up, is when somebody in the-,

ST:  [Laughter] that's it, just leave it there. "Just look it up!"

CP:  Just look it up. Google it, as Craig Wright would say. Um, is when a single party, or colluding parties, are able to take over more than half the hashing power of a network, and change the blocks, as they see fit, which could be censorship, in some cases, if you have enough, it could be actually rolling things back. They also found another hack inside of Verge.

ST:  And what's interesting is, I remember, two, three years ago, when everybody was talking about Bitcoin, they were going, "[Gasps] is it going to suffer one of those 51% attacks? Is that possible?" and it was one of the first things people brought up. But, you know, like, they always talk about the electricity now, or they talk about, "Oh, quantum computers, is that going to end Bitcoin?" the 51% attack was a thing, and actually, that network got big enough to where it's not really a likely outcome, that a 51% attack would happen in Bitcoin, because of the economic incentives, but it actually happened in Verge.

CP:  Yeah, and Verge is a relatively small coin, it's number 20, with only, what, something like $1.25 billion. It is quite small [laughter].

ST:  [Laughter] teeny tiny.

CP:  Teeny tiny.

ST:  Alright. Before we leave you today, Colin, you spoke to Tim Swanson, Greg Wolfson, and John Collins, at the Deconomy Conference. Shall we throw to that?

CP:  This was-, this was the first part of Pitch Token Classics Devcon. Or "Pitchcon", as we call it.

ST:  [Laughter]. Over to that.

[Break]

CP:  I am here, in Seoul, South Korea, just on the back of the Deconomy Conference. I'm here, joined by Greg Wolfson, John Collins, and the one and only Tim Swanson. Thanks for coming on, guys.

TS:  Thanks.

JC:  Thank you.

GW:  Thank you.

CP:  So, we had a fantastic couple of days here, thanks very much to the organisers, Jeff Paik, Ash Han, and all the wonderful team behind Deconomy. It's been a really interesting conference, big drama, it started all out with Centra kind of getting permabanned by the SEC, and then, actually, at the conference, we saw them out here, and there was some good swag-,

JC:  Yeah-,

GW:  Yeah-,

[Laughter]

TS:  Some-, some memorialised swag.

JC:  Yeah-,

CP:  Memorialised swag, you know-,

GW:  Collectible.

CP:  Definitely-,

GW:  It'll be on eBay soon, so-,

TS:  Yeah.

[Laughter]

CP:  Well, guys, can you tell me a bit about, first, who you guys are, for those that don't know, what you thought of the conference, your highlights, your lowlights, and some of the way lowlights. Um, don't want to hear too much about the party last night, but it was a good party, wasn't it?

JC:  Mm. Yeah. It was-,

GW:  It was nice.

JC:  Yeah, it was pretty good. Yeah.

[Laughter]

JC:  Airdropping Champaign.

TS:  Airdropping in Champaign-,

JC:  Yeah, which is important.

CP:  And, of course, about some of your favourite tokens that you've seen this whole time.

TS:  Oh, you mean, like Pitch Token Classic, obviously-,

CP:  Obviously Pitch Token Classic.

[Laughter]

JC:  Pitch Token is-, yeah.

[Laughter]

CP:  So, Greg.

GW:  Hey, so, I'm Greg Wolfson, with Element Group, I'm the Head of Business Development there. We're a crypto investment bank, we do advisory, OTC, and we have a fully-regulated hedge fund, so-, and I was here for the panel on blockchain startups. We're about 30 people, split between Los Angeles and New York.

JC:  And I'm John Collins, I'm Head of the US for Red Flag Consulting. We're a strategic communications and advisory firm, with offices in Dublin, in Brussels, in LA, in DC, where I'm based out of, and I am former Coinbase, where I did policy work.

TS:  And what panel were you on?

JC:  Oh, and I was on the policy panel, with Tim Swanson.

TS:  Ah, speak of the devil! Yeah, so, I'm Tim Swanson, I've had the pleasure to be on this show with Colin before. I guess most people know me as, uh, my role, previously, at R3, but I run a company called Post Oak Labs now, and a number of my clients are on the enterprise side, but most of them are trying to do something, as young tech startups, with blockchains, and they almost always never need to use a blockchain, but, you know, this world is-, is a blockchain world, so it's a-, it's a world in which we-, we need to understand, I'm mostly joking about all this stuff, but, uh, bottom line is, I came out here, I've known Jeff, we worked together, previously were colleagues at R3, and he was putting on this-, this little event, it turned out to be a really big event, and I had the pleasure to be on a panel with John. Didn't have a panel-, oh, and Colin, you and I were on a panel, too, at the beginning of the day, or the first day. And Greg, you know, we just-, we just say snarky things when we see each other. So, no, it's great to be here, and thanks for-, thanks for the invite, Colin.

CP:  Yeah, and definitely a lot of zero-knowledge snark the whole time-,

TS:  Zero-knowledge snark, yes.

CP:  Which is what we're all about. So, guys, I wanna hear, what was the drama, first of all?

TS:  So, do you want me to give a replay of this?

CP:  Let's get the whole replay.

JC:  Yeah, were we all sitting together, or separately? Because I think the perspectives from the room might also be interesting.

GW:  Yeah. I was on the BCH side of the room, for the record. You guys-,

[Laughter]

JC:  You know, the bride and groom's side-,

[Laughter]

CP:  Not just physically, but ideologically, as well.

GW:  Just physically. Physically.

[Laughter]

TS:  Yeah, so, uh, to give people an idea of what this layout was, it's a room filled, between 800 to 1,000 people, depending on how many people were standing. The last panel of the day, Jeff was moderating Roger Ver and Samson Mow. For those who aren't familiar, Roger Ver was an early investor in the space, who's a big proponent of something called Bitcoin Cash. Samson Mow is considered kind of like his, you know, nemesis, arch nemesis, on social media. He works at a company called Blockstream. And they slugged it out, uh, mostly metaphorically, or-, I don't think they actually hit at each other, did they? No? I didn't see-,

GW:  There were swipes.

TS:  Yeah, little-,

GW:  Yeah.

TS:  Uh, fisticuffs. So, at the end, though, for whatever reason, they opened it up to the audience, without microphones, and they-, the very last question, Vitalik stood up, and said, you know, a number of things related to a person not on the stage, at the time, named Craig Wright, and basically called him out for being, what he said, an alleged fraud, and-,

CP:  So, Craig Wright, Satoshi Nakamoto, had given a speech, at a presentation about his view for Bitcoin, um, just previous to the panel, um, and-,

TS:  And there was some controversy, because he was supposed to be on that panel, but Samson Mow refused to be on it, claiming that this guy is a fraud, and fake, and stuff like that. So he sat in the audience, as well. Yeah, but bottom line is, Vitalik-, it's funny, if you guys go to these events, people are like, "Who's got questions?" and then you have somebody stand up there and, right, say a comment, right? So, Vitalik's statement was actually a comment, and then asked a question at the very end, and there was lots of boos, hisses and clapping, depending on which side of the debate you were on that, and then they hastily closed down the mic, and everyone was airlifted out.

JC:  Yeah, but before that, Craig Wright was in-, so, like, Vitalik is in the right side of the room, right? In the front. But then Craig Wright is on the left side. And so, after Vitalik does his thing, you hear the applause, and hisses, and all that stuff. Then you just hear Craig Wright, sort of, inaudibly yelling some kind of response, which I didn't hear-,

GW:  Yeah, he jumped up, and said something to the effect that whatever Vitalik-, Vitalik's correction of Craig's presentation was incorrect. I mean, it was basically defending what he had already said. And said that it was very simple, and, uh, didn't have time to explain it all, but it was all very-, all very dramatic, sort of, bringing to a head all these conflicts that have been brewing in the space for a really long time, and it kind of-, it kind of overshadowed everything else that was said, because it was-, it was just like Jerry Springer stuff.

CP:  Very much. And I think Joseph Poon, who's the creator of Plasma and Lightning, was also kind of over next to Vitalik, and started screaming something, at one point, as well.

GW:  That's right.

TS:  Yeah, he said something to the effect, like, "I'm the co-author of the Lightning paper, and I still have no idea what kind of babble was said by Craig," so, uh, there's videos of it, I believe some people posted some guerrilla photos, or-,

GW:  Yeah.

TS:  Video, or something like that.

CP:  Yeah, we should definitely try to get some links in here for that, because there-, there was some interesting drama. But, aside from the drama, which was good fun, what were some of the other things, maybe tell people a bit about what came out of your speeches, your panels, and some of the other things you liked, during the two days here.

GW:  Okay, so, I think what came out of my panel, and related panels, was mostly related to ICOs, new token issuances, and the general direction, and which way things are going right now. You know, my panel, in particular, it seemed like-, that-, we reached a consensus that it's very much moving in a fully-regulated direction, basically the bankers and lawyers are taking over everything, and that that space is going to follow the marching orders of various government regulatory agencies. So, it was-, so, we kind of see it evolving in that way, over the next year, where it's-, it looks much more like traditional venture capital, much more like traditional markets. The, sort of, regulatory arbitrages that people have been playing, you know, running off to various jurisdictions, is gonna get squeezed, to a big extent, and the real institutional money is waiting there on the side lines. But the major gating issues are that there's just-, there's no regulations, and no infrastructure around it. So, that's what's-, that's what's stopping it from coming in. But I guess the point, the long view is that these-, these small jurisdictions, wherever, you know, in the Caribbean, or islands off of Europe, or whatever, you know, those-, those will-, you know, may prosper for some time, but their time is limited, and the real big markets will exist, and establish bases. That was the take away from my panel.

CP:  And I'm curious in that, were you able to get in to, or do you have another view on, whether this will affect the size of the raises? Because I know one of the really interesting things that people have talked about in ICOs is not just that they're, kind of, wildcat operations, but that the numbers are really, really big.

GW:  Right. I mean, I think right now we'll see-, we'll probably see a period of somewhat depressed raises. I mean, you're not-, I think that, you know, certainly the market's down right now, but once you do get that legitimacy, and that institutional money, there will be, you know, there'll be a liquidity multiplier, so-,

JC:  Well, yeah, and I think, too, some of these projects, like, they raised-, I know you can never have too much money, right?

TS:  Of course. Of course.

GW:  Yeah.

JC:  Impossible, impossible to have too much money-,

GW:  Yeah.

JC:  But some of these projects have raised too much money, where they literally need to spend it because they need to show their investors that they're doing something, and they literally have too much to spend-,

TS:  These aren't investments, FYI-,

JC:  Yeah, yeah, yeah-,

TS:  Yeah.

JC:  Well-,

TS:  Donations.

JC:  Yes, donations-,

GW:  Right.

[Laughter]

JC:  Sorry, sorry. But they can't spend it fast enough. So maybe that helps? I mean, I don't know-, 

GW:  I agree. I think that especially for, like, kind of, like, smaller teams, especially more immature teams, I think this is one of the things that we look at carefully, is actually, who you're giving money to, and can they usefully use it at all? You know, are they-, or is this liquidity event something that's just going to fracture a team, which indeed happens, especially with some of the younger, more immature groups. So, you know, so that-, so I-, I think our-, you know, we-, we-, you know, re-regulation is good, and it's just a natural maturation of the market. It's nothing to panic over.

JC:  Yeah, and I mean, it's-, my panel was on the regulatory, sort of, schemes and-,

TS:  You also gave a presentation-,

JC:  Yeah, yeah, I gave a presentation-,

TS:  200-size font-,

JC:  Yeah, I had massive font. Uh. Because you know it's important if it's got 200-plus size font. Um-,

CP:  And it was a giant screen, as well, so not only was it 200-plus-,

JC:  It was a lot of giant screens, yeah-,

CP:  Yeah, but the letters were bigger than you.

JC:  Yeah, they were bigger than me-,

[Laughter]

JC:  Which is-, which is pretty easy to do, 

TS:  So you're like a (? 47.25).

JC:  I'm not a very tall man-, [laughter] yeah, exactly. But no, my presentation was mostly on, sort of, what's happening, uh, on the political and regulatory spheres, you know, sort of internationally, in the US, in Europe, in Asia, and then talking a little bit about, sort of, what I think we might see as, um, major activity drivers, going forward, um, probably in the next year. And really, it's around ICOs, it's around, you know, the decentralised web, and-, and, sort of, the, um-, the increase in those applications. You know, I think the BSA, the Bank Secrecy Act, and a lot of the AML KYC issues that, um, pretty much have been settled, I think, for the past few years, at least in the US, I think they're gonna rear their heads again, in a major way, because I think there's a lot of concerns about nation state actors using some of this tech to get around sanctions. I think, also, there's a lot of concern about some of these platforms and projects that have perhaps not done the due diligence and AML KYC they should have, and I think, uh-, I think that's actually gonna play a major role in some of the discussions we'll have in the next few months. But, uh, then we did a panel that was moderated by the one and only Tim Swanson.

TS:  Yeah, no, it was-, it was cool. I actually didn't even put together-, Jeff, actually, is the one who put together the ideas, and stuff like that, and I just, kind of, filled in the blanks. Uh. So, yeah, I had a great panel with Colin. To give some perspective, the night before, we all had a speakers' dinner, and a funny guy, who you guys should have on your show, at some point, Kirill Gourov, he was at the-, the funny table, as it were, and you guys all came up with [laughter] uh, a term "pitch token", this kind of-,

CP:  I think this was actually at lunch, right before then-,

TS:  Yeah.

CP:  Because we all got in pretty early, and we all spent some time-, because there's not much around the-,

TS:  So you were, like, pre-pre-pre-sale, and I'm like-, I got in at the pre-sale, is that what you're saying?

CP:  Yeah, sorry-,

JC:  Yeah-,

CP:  Yeah.

TS:  Oh, man. Alright. Well, anyways, the genesis is roughly everyone trying to come up with the most zany idea for a token that shouldn't exist, but should-, it does, uh, and inadvertently-,

CP:  (? 49.19).

TS:  There is a Pitch Token-, yeah, so we-, first day, everyone's kind of making jokes about being an advisor to something that didn't exist. Then we Googled it that night, and we found out someone had made it-,

JC:  Mm-hm.

TS:  And so-,

JC:  There's, like, a very active Telegram community.

TS:  Yeah [laughter], and-,

JC:  For this fake idea.

TS:  And they actually-, they actually did an ICO, apparently, like a month ago.

JC:  Yeah, and the price is gonna pop after this podcast, so-,

GW:  Yeah, yeah-,

[Laughter]

TS:  So-, so-, so, I had the foresight of saying that we forked it to Pitchcoin-, uh, Pitch Token Classic, uh, and-,

[Laughter]

TS:  Obviously, that's-, somebody's going to squat that domain, at some stage. So, that was an ongoing gag. Um. So, yeah, as far as panels go, we had a fun time, it was-, it was nice meeting Frances, and, uh, David on that panel. And then, yeah, I ended up speaking about GDPR, which, I suppose, uh, is originally from Europe, so you guys may have a clientele who cares about that, but irrespective of what clientele you have, if they have customers in Europe, then GDPR, obviously, is something that could impact them, and then, uh, yeah, the panel, um, I tried to be as snarky as possible with my-, my comments to you. Danny Yang, who provides AML-related services, through a company called Blockseer, was on there, as well, and then, um, apparently, one of the top lawyers from South Korea-,

JC:  Sam Yim.

TS:  Yes, he was on there, as well. Um, so I-, the videos will be online, and I'm happy to take questions about what I wanted to say, but couldn't, because I was on stage.

CP:  Alright, well, let's start there [laughter].

[Laughter]

JC:  Well, you know what was interesting about Sam's-, learning about the South Korean market. Because, obviously, you know, sitting in the US, you know, you see a lot of incoming news about-, whether it's the "kimchi premium", and just the-, the retail investment that's going in to this space from, you know, normal people, right? Grandmothers, and-, and Millennials, and that sort of thing. So, it was interesting to talk to him about what-, what drove that, and a lot of it seems like it's cultural. You know, in terms of, especially Millennials, this is a really tough economy, for-, for young people to, you know, make a living in, so they're always looking for, you know, investments that are gonna make them quick cash, or-,

GW:  Well, I think, you know, like, even above and beyond, uh, cultural, I think there's just a strong macro element to it, you know, where-, where, you know, places like South Korea and Japan, they-, I mean, the economies are not keeping the same sort of breakneck growth that they had in the past, and we're, you know, in a period of quantitative easing, and there's not a lot of investments other than, you know, real estate, and the stock market. And, uh, you know, gambling is basically, uh-, is illegal in most forms, in South Korea. And, so, I think that-, that the new token market has fulfilled some of that demand.

CP:  So, being here in South Korea, there's a lot of interesting things that happen, and I'd love to delve a bit more in to that, and, kind of, what you guys have been seeing, the people you've been speaking to at the conference. And I know we were-, we were out in town yesterday, and meeting some interesting people, talking about tokens. What are your overall impressions, in how being in Seoul, and I know you guys did a bit of travelling around in Asia before, and John, you're taking off later today, to go-, go out to Japan. How do you think that the average people, thinking about these, may be different from back home, back in the United States, for you guys, um, or what you've seen, travelling around the world? Is there a different mentality? Do you think there's more optimism for it? Less optimism? Or is it not about that at all?

GW:  At least where I've been, it seems more optimistic. You know, I was-, I was based in Shanghai, for a number of years, and, um, I was there during-, uh, you know, last fall, when they really began to shut down all the markets, and I was just there recently, and, you know, really surprised at how-, how vibrant it is, at least in terms of, you know, introducing a lot of new technologies that are seen as really-, uh, really-, really still happening in a big way. You know, before that, I was at Token 2049, in Hong Kong, also one of the-, one of the better conferences I've been to, uh, you know, it seems like the appetite there is great. You know, I think the regulation in the States, um, and-, you know, and maybe someone else can speak to this with a bit more authority, you know, I think it is-, it is extremely constraining, as far as what you can do. I can understand consumer protections, in that, you know, all finance in the States is considered a national security issue, you know, which is, uh, you know, not necessarily the best for financial innovation. So, I think that the environment-, the environment out here seems-, it seems-, you know, people are cautiously optimistic, and I think, more or less, I see-, you know, I see these regions, or these various jurisdictions, moving more towards the Japanese model. Certainly, I think, or at least it's arguably true, that Japan is currently the, you know, the world leader for regulations.

JC:  Yeah, and I think, you know, I was talking to some folks yesterday who are focused, sort of, on fintech more broadly, in country here in South Korea, and I think, one of the things that they talked about is, the government here is really struggling to figure out how to regulate this space, and so, they are trying to coordinate maybe having some US regulators come talk to them, and perhaps some Japanese regulators, um, come talk to them, because right now what's interesting about the way in which, like, AML KYC, for instance, is done, with some of the exchanges in South Korea, is that-, so, if you're an exchange in the US, and you have a banking relationship, it is not up to the bank to put in your AML KYC compliance programme. It's the exchanges. In South Korea, it's the bank that actually is responsible for that. So, what they're doing is they're using the banks as the gatekeepers, um, and the compliance officers, basically, for these exchanges, um, which they seem like they want to move to a more permanent solution. I mean, I'm of the mindset that clarity actually helps the industry. I think, you know, you saw that in Japan, you saw that in the US, I think it's been good, at least on the exchange side, and I think there's a multiplier that-, that companies are more valuable, if there's regulatory clarity around them. And, frankly, I don't think Japan would've ever come as far as they did without Gox, which is an unfortunate truth, but I think it is the truth. Um, so, yeah, it'll be interesting to see, sort of, how they develop out.

TS:  Yeah, so, much like Greg, I've spent a lot of time in Asia, so I've had a-, not only living out here, but travelling back and forth, and I was just in Tokyo, and then in Shanghai and Beijing. Yeah, uh, for whatever reason, FOMO still exists, even though there's been quite a bit of crackdown, um, on all the fronts, from what you guys are saying. There was-, it seemed like there was fewer people at a couple of the events I was at in China, just before this week, uh, but it could just have been the weather, or something like that. It was unclear if-, obviously, it's banned, to some extent, and exchanges are-, or spot exchanges are banned on the mainland, but if you-, if you talk to any of these people raising funds for these different projects, Chinese are still being pitched as investors, usually offshore, uh, or discreetly. Again, I'm not endorsing any of this, I'm just reflecting on what-, what people were saying to me. 

As far as the-, the Korean market, as a whole, I mean, we've seen that-, well, you mentioned the kimchee premium kind of disappeared, and, you know, Sam was explaining some reasons why. And, again, we could talk about, you know, capital controls, and stuff like that, at some stage, if you guys want, but, yeah, overall, everyone seemed fairly on the up-, uh, upbeat, compared to, say, a number of months ago. There was actually, just for people listening, there was a view, maybe even, um, late November, or something like that, that the Korean market would be completely frozen out, like China. There was lots of rumours about-, well, not even rumours, there was actually, like, press releases that, "Hey, we're gonna ban this stuff." In fact, Jeff, who put this event on, I remember talking to him, like, in mid-December or so, and he's like, "Tim, I'm not even sure if, like, when we actually hold this event, there'll be a market here at all." Obviously, he-, he made that gamble, as it were, to take the risk, and it turned out to be that the market wasn't shut down, so there's still quite a bit of enthusiasm here for that.

JC:  I mean, one of the things that I gathered, yesterday, around that, is that, that was, like-, because it's very paternalistic, especially, like, the regulation of financial services here is very paternalistic, and it's very based on physicality. So, the idea that you have-, and this is broader than just, I think, cryptocurrency related businesses, it's a fintech issue, is that businesses that are not physically here, that cannot be examined by the regulators, they are very sketched out about, and are very, um, hesitant to allow. But it seems like that they backed off that and, you know, are looking for a more permanent solution. But, I gotta say, one of the things, and you mentioned this, Greg, that I noticed, was the, um, the fact that people are as-, so, they're accepting that regulation's coming, and they're trying to figure out, like, the way to do it, whether it's security tokens, or otherwise. If you had-, like, the move from crypto anarchism to crypto capitalism, among these sorts of conferences, is pretty striking, because I don't think you would have seen that same mindset, even just, like, three or four years ago.

GW:  Right, I mean, I think you-, yeah, it definitely was. I mean, you still get some doses of, you know, the, sort of, crypto anarchism, and the, sort of, like, you know, self-serving libertarianism, that some people will throw out there. There was a comment made about, you know, disallowing Bitcoin was killing babies, or something to this effect-,

[Laughter]

GW:  Um, but, you know, yeah, I think that, you know, the-, you know, following the trend is-, you know, I think, you know, there's enough money that's been pouring in to the space, and enough innovation that's been occurring, that it's all been really positive, and any regulator worth their salt recognise that, and try to create frameworks that facilitate that sort of innovation. So, you know, so I expect some, you know, some interesting things coming out in this space. You know, looking towards the next year or two, you know, I think, certainly-, you know, I mean, right now, we kind of assume that everything could be construed as a security token. I think that will become more explicit in the next-, in the next year or two, and, you know, and really, really beginning to, you know, work out exactly what are the efficiencies gained, and which are-, you know, which parts are necessary and useful from crypto, and which parts are just simply reinventing the wheel, and are actually redundant with existing markets, is, I think, what's going to be necessary, and getting the, sort of, guidance from regulators to, uh, you know, to make that an effective, efficient market, is something that I hope to see soon.

CP:  Great. And I think it would be remiss-, like, there was a really interesting thing, right at the beginning of this conference, where-, we're talking about the cutting edge, what's going to happen next. There was a really good contextual part, that came from Professor David Chaum, who, for those that don't know, has been working in cryptocurrencies, if we can call them that, since the seventies. So, he put together something in the eighties, to set up the first crypto-, cryptography, not cryptocurrency, uh, panel, international organisation, he was telling us stories about that, one of the original cypher punks. He also had some way where you could have, like, bearer instrument, that those of us working in cryptocurrencies would, kind of, recognise. But the context that he brought to this conference was, amid all the speculation, amid all, you know, "number goes up on token", what are we actually trying to achieve? And it's this money aspect, it's, what are the efficiencies that are brought in? And it was really good to, kind of, come back and say, "With all this fervour, what are we actually trying to achieve?" and whether it's, you know, bold statements about whether cryptocurrencies will end world famine and poverty, it's really trying to solve this problem of bringing a bit of privacy back to your transactions, trying to actually develop a new form of money, to be more inclusive, however you want to define that, and I really appreciated that. 

The other thing that I thought, and I'd love to hear you guys' opinions on this topic, and on the next, was, outside of what was going on, on the panel, there was a lot of discussion, because-, I had always been under the impression, I don't know what you think about this, but Ethereum was always, kind of, lagging behind in the mindset, in this part of the world. Obviously, there was a lot done in China, obviously there was a lot done, um, by the Ethereum community, by companies related to it, including ConsenSys, amongst every other one, but Korea had felt a little bit behind. They had a very prominent role during this conference, there weren't a lot of big announcements, but there did seem to be a lot of interest. I know I was sitting, kind of, towards the front, when Aya, the new Executive Director was there, and all of the press rushed up to take pictures of her, and of Vitalik. What did you guys think about, kind of, the David Chaum, and then the Ethereum, where we're going in the world, and this whole, kind of, juxtaposition of where we are?

TS:  Well, yeah, my understanding, from talking to David, the times I did, and I don't want to put words in his mouth, is he-, he sounded both optimistic and pessimistic at the same time. He was optimistic that, you know, people are being clever with technology, but also, the trade-off, the dual-edged, or the double-edged sword, that this technology clearly could be used for malicious means, and what's going to keep that in check? And I didn't see that particularly answered by anybody, at least at this event. I know that he had a chance to talk to Vitalik, but I don't know, I haven't, you know, debriefed either one, what they thought about it all. But, yeah, the Ethereum community, just as an aside, definitely had groupies. Whenever you saw Vitalik walk through, there was a whole flood of people walking alongside him, trying to take photos, and trying to just touch him, and stuff like that. It was-, it was pretty funny. So, yeah, I can't say, you know, how, um-, how-, actually, maybe we should talk to Jeff, how-, how much penetration the Ethereum community has made, versus these other cryptocurrencies out here, but yeah, the David Chaum stuff, I've-, it would be great to have him as a guest-,

CP:  Absolutely.

TS:  I'm telling you guys to bring him on-,

CP:  Thank you, yeah-,

[Laughter]

CP:  It's-, I'm taking notes here [laughter].

GW:  Yeah, I mean, I think-, I mean, it seems like, definitely, you know-, I mean, I think, right now, the-, the Korean token market's very subdued, um, and there are-, I mean, there are some major Ethereum-based projects, like ICON, that are, you know, gaining a lot of momentum here. You know, I think that the-, you know, the developer community is very large and enthusiastic, for some of the projects that we're working on. We-, you know, this is definitely one of the places that we bring them to, to get new developers and gain traction. You know, there's certainly a lot of engineering talent out here, and I think that, you know-, I think that, you know, Bitcoin-, I mean, we all know that it has limited, you know, quite limited functionality, and I think, you know, remittances, and so forth, were a big part of what was driving demand before, but I think that inventing really, you know, really clever-, really clever applications is the next phase, and I can see that people are much more focused on that, than in the past. It's-, you know, it's less the free-wheeling casino, and more about innovation. So, you know, so, coming to this place for, you know, for here, and other parts of Asia, to introduce new technologies, and get, you know, get developers, you know, cracking on various platforms, is-, you know, that's a high priority for us now.

JC:  Yeah, I mean, I've never been super involved in the Ethereum community, uh, and so this was one of the first times that I actually, kind of, witnessed, up close, over an extended period of time, sort of, that whole thing, with Vitalik, and all of that-,

TS:  John's wearing an Ethereum hat, an Ethereum shirt right now-,

JC:  Yeah. Yeah.

TS:  And he's-, he's turned in to a big, big shill, at this stage.

JC:  (? 01.04.41).

TS:  We literally can't get him to stop talking about Ethereum.

JC:  I took off my-, my Centra hat. But the-, so, that was interesting to witness, but-, and it was clear, it's very clear there's not a lack of capital, and it's very clear there's not a lack of good intentions, and it does seem, obviously, that there are a number of structures being set up around that community, whether it's ConsenSys, or the Foundation, or the Alliance, or, you know, whatever else is, kind of, being built around that. And so it'll be very interesting to see, sort of, how that plays itself out, and, you know, what applications actually come from all of that effort. Um. But it was-, it was very interesting to witness, and, you know, look, I have zero thoughts about whether Bitcoin or Bitcoin Cash is better, I just really don't care, but-, and I talked a little bit about this, during my talk. The governance thing in Bitcoin is a problem, and the community issues that Bitcoin has, you know, continue to be a problem. So, especially if you're talking about, you know, making, sort of, this open financial system, in whatever way that means to you, you know, Ethereum, for the shortcomings that it certainly does have, I think, has a really good, at least centralised, governance process, right? Like, you have, like, this group of people, and they seem to be positive, and, like, be aligned on the same things, where, you know, the Bitcoin crowd tends to be a little more, maybe in that classic, kind of, crypto anarchist, you know, sort of, uh, phase, that we talked about earlier. So, that-, that's very interesting to witness, just, like, the differences between those two communities. Because one seems super positive, super aligned, and, you know, well-intentioned, um, and then the Bitcoin community just can't seem to stop fighting with each other.

GW:  And I think that's something that goes back to what Tim was saying, as far as, you know, Vitalik's following, and a few of the-, a few of the other, the new other currencies, like, you know, like Zcash, and so forth. They have-, they have a governance structure, and a figurehead, and someone to, sort of, set the tone, you know. Whereas, you know, I mean you have this, you know, this non-governance model in Bitcoin, where no one is responsible for anything, and you don't really have a crowd ethos, except a, sort of, like, a "slug it out", you know, as, you know, Roger and Samson did, uh, as we mentioned in the opening comments. You know, but just further to the development of the space, this is-, you know, I look at it like this, you know, blockchain would probably be a technology that was in a laboratory somewhere, if it weren't about money. The fact that people are actually incentivised to do it is something that's brought it out of the lab really quickly, and so it's developing, it's developing very rapidly, on that basis, just because, you know, money attracts people, it attracts corporations, and so, you know, we'll see how many more years we can say that it's still early days, but, you know, it is still very early days. So, you know, as far as, you know, which applications are actually out there in the wild, and doing innovative things, and creating new incentive models, um, you know, those are-, you know, they're out there, and there's a lot of proposals for that, but they're very much in their nascent phases, you know. So, when we actually-, when we'll actually see, you know, sort of, like, you know, killer apps, beyond Crypto Kitties, I think that's, sort of, open to interpretation. But it is moving quickly, and, you know, so I would expect something, you know, something above and beyond Crypto Kitties, certainly within the next year.

CP:  Definitely. Well, guys, thank you very much for coming on. Can you tell us-, tell everybody listening where they can find out a bit more about you?

GW:  Sure. We're at elementgroup.com.

CP:  And on Twitter?

GW:  Uh. @TheElementGrp [laughter].

JC:  Nice. Easy. Uh, thisisredflag.com, and then follow me on Twitter, @JohnCollins.

TS:  Um, yeah, it's pitchtokenclassic.com-,

[Laughter]

TS:  I'm kidding. Actually, probably somebody's going to squat that, and make a lot of money-,

CP:  We should probably buy that before this goes out, yeah-,

TS:  We should definitely buy it before it comes out. So, uh, you know, my website's ofnumbers.com, um, my company's Post Oak Labs, and you can follow me on Twitter @ofnumbers, as well.

CP:  Great. Thank you very much.

JC:  Thank you.

GW:  Thank you.

[Break]

ST:  Alright, thanks very much to Tim, Greg and John, and, of course, thank you, G-Sass himself, Colin G Platt. Where can people find out more about you?

CP:  On-, on the Twitter, @ColinGPlatt, unless that gets taken over, and then find me at @Bitcoin.

ST:  Uh, yeah. Also, why don't you own a Twitter handle for fields yet? @ColinGPlattnearafield, @ColinGPlattG-Sass, like, we-,

CP:  Because Petrit squatted them all.

ST:  Ah, okay. Right, let's-, let's make those a thing. And I have to thank the production team here at 11FS. Laura, our Producer, Laura Watkins, Terence, our Editor, and our Assistant Producer, Petrit, who managed to get through the show notes, unbelievably, with not a minute to spare. Kudos to you, sir. As a reminder, 11FS, the company that brings you this podcast, we're a challenger agency and consultancy who help you, or anybody with a challenge in blockchain, to achieve more. If you want to understand how you're going to get this stuff life, if you're going to commercialise a blockchain project, or where regulators' heads are at, maybe, just-, or even have a speaker for your next event, we hope you're going to get in touch, at 11FS.com. And thank you, if you're just listening, if you like what we do, please reach out, @BChainInsider, or podcasts@11FS.com, and if you like what we do, leave us a review on iTunes. Those reviews really, really help us. Spread the word, tell all your friends and colleagues to listen, too. We'll have more Blockchain Insider next week. Goodbye.

CP:  But without you-,

ST:  But without me! No! I'll be gone forever! Yes, I am going travelling next week. You'll be in the good, good hands of Colin, and many, many others. Goodbye.


END OF AUDIO 01:10:29

Blockchain Insider Ep. 41. Deconomy Panel Discussion

START OF INTERVIEW


CP:  I am here, in Seoul, South Korea, just on the back of the Deconomy Conference. I'm here, joined by Greg Wolfson, John Collins, and the one and only Tim Swanson. Thanks for coming on, guys.

TS:  Thanks.

JC:  Thank you.

GW:  Thank you.

CP:  So, we had a fantastic couple of days here, thanks very much to the organisers, Jeff Paik, Ash Han, and all the wonderful team behind Deconomy. It's been a really interesting conference, big drama, it started all out with Centra kind of getting permabanned by the SEC, and then, actually, at the conference, we saw them out here, and there was some good swag-,

JC:  Yeah-,

GW:  Yeah-,

[Laughter]

TS:  Some-, some memorialised swag.

JC:  Yeah-,

CP:  Memorialised swag, you know-,

GW:  Collectible.

CP:  Definitely-,

GW:  It'll be on eBay soon, so-,

TS:  Yeah.

[Laughter]

CP:  Well, guys, can you tell me a bit about, first, who you guys are, for those that don't know, what you thought of the conference, your highlights, your lowlights, and some of the way lowlights. Um, don't want to hear too much about the party last night, but it was a good party, wasn't it?

JC:  Mm. Yeah. It was-,

GW:  It was nice.

JC:  Yeah, it was pretty good. Yeah.

[Laughter]

JC:  Airdropping Champaign.

TS:  Airdropping in Champaign-,

JC:  Yeah, which is important.

CP:  And, of course, about some of your favourite tokens that you've seen this whole time.

TS:  Oh, you mean, like Pitch Token Classic, obviously-,

CP:  Obviously Pitch Token Classic.

[Laughter]

JC:  Pitch Token is-, yeah.

[Laughter]

CP:  So, Greg.

GW:  Hey, so, I'm Greg Wolfson, with Element Group, I'm the Head of Business Development there. We're a crypto investment bank, we do advisory, OTC, and we have a fully-regulated hedge fund, so-, and I was here for the panel on blockchain startups. We're about 30 people, split between Los Angeles and New York.

JC:  And I'm John Collins, I'm Head of the US for Red Flag Consulting. We're a strategic communications and advisory firm, with offices in Dublin, in Brussels, in LA, in DC, where I'm based out of, and I am former Coinbase, where I did policy work.

TS:  And what panel were you on?

JC:  Oh, and I was on the policy panel, with Tim Swanson.

TS:  Ah, speak of the devil! Yeah, so, I'm Tim Swanson, I've had the pleasure to be on this show with Colin before. I guess most people know me as, uh, my role, previously, at R3, but I run a company called Post Oak Labs now, and a number of my clients are on the enterprise side, but most of them are trying to do something, as young tech startups, with blockchains, and they almost always never need to use a blockchain, but, you know, this world is-, is a blockchain world, so it's a-, it's a world in which we-, we need to understand, I'm mostly joking about all this stuff, but, uh, bottom line is, I came out here, I've known Jeff, we worked together, previously were colleagues at R3, and he was putting on this-, this little event, it turned out to be a really big event, and I had the pleasure to be on a panel with John. Didn't have a panel-, oh, and Colin, you and I were on a panel, too, at the beginning of the day, or the first day. And Greg, you know, we just-, we just say snarky things when we see each other. So, no, it's great to be here, and thanks for-, thanks for the invite, Colin.

CP:  Yeah, and definitely a lot of zero-knowledge snark the whole time-,

TS:  Zero-knowledge snark, yes.

CP:  Which is what we're all about. So, guys, I wanna hear, what was the drama, first of all?

TS:  So, do you want me to give a replay of this?

CP:  Let's get the whole replay.

JC:  Yeah, were we all sitting together, or separately? Because I think the perspectives from the room might also be interesting.

GW:  Yeah. I was on the BCH side of the room, for the record. You guys-,

[Laughter]

JC:  You know, the bride and groom's side-,

[Laughter]

CP:  Not just physically, but ideologically, as well.

GW:  Just physically. Physically.

[Laughter]

TS:  Yeah, so, uh, to give people an idea of what this layout was, it's a room filled, between 800 to 1,000 people, depending on how many people were standing. The last panel of the day, Jeff was moderating Roger Ver and Samson Mow. For those who aren't familiar, Roger Ver was an early investor in the space, who's a big proponent of something called Bitcoin Cash. Samson Mow is considered kind of like his, you know, nemesis, arch nemesis, on social media. He works at a company called Blockstream. And they slugged it out, uh, mostly metaphorically, or-, I don't think they actually hit at each other, did they? No? I didn't see-,

GW:  There were swipes.

TS:  Yeah, little-,

GW:  Yeah.

TS:  Uh, fisticuffs. So, at the end, though, for whatever reason, they opened it up to the audience, without microphones, and they-, the very last question, Vitalik stood up, and said, you know, a number of things related to a person not on the stage, at the time, named Craig Wright, and basically called him out for being, what he said, an alleged fraud, and-,

CP:  So, Craig Wright, Satoshi Nakamoto, had given a speech, at a presentation about his view for Bitcoin, um, just previous to the panel, um, and-,

TS:  And there was some controversy, because he was supposed to be on that panel, but Samson Mow refused to be on it, claiming that this guy is a fraud, and fake, and stuff like that. So he sat in the audience, as well. Yeah, but bottom line is, Vitalik-, it's funny, if you guys go to these events, people are like, "Who's got questions?" and then you have somebody stand up there and, right, say a comment, right? So, Vitalik's statement was actually a comment, and then asked a question at the very end, and there was lots of boos, hisses and clapping, depending on which side of the debate you were on that, and then they hastily closed down the mic, and everyone was airlifted out.

JC:  Yeah, but before that, Craig Wright was in-, so, like, Vitalik is in the right side of the room, right? In the front. But then Craig Wright is on the left side. And so, after Vitalik does his thing, you hear the applause, and hisses, and all that stuff. Then you just hear Craig Wright, sort of, inaudibly yelling some kind of response, which I didn't hear-,

GW:  Yeah, he jumped up, and said something to the effect that whatever Vitalik-, Vitalik's correction of Craig's presentation was incorrect. I mean, it was basically defending what he had already said. And said that it was very simple, and, uh, didn't have time to explain it all, but it was all very-, all very dramatic, sort of, bringing to a head all these conflicts that have been brewing in the space for a really long time, and it kind of-, it kind of overshadowed everything else that was said, because it was-, it was just like Jerry Springer stuff.

CP:  Very much. And I think Joseph Poon, who's the creator of Plasma and Lightning, was also kind of over next to Vitalik, and started screaming something, at one point, as well.

GW:  That's right.

TS:  Yeah, he said something to the effect, like, "I'm the co-author of the Lightning paper, and I still have no idea what kind of babble was said by Craig," so, uh, there's videos of it, I believe some people posted some guerrilla photos, or-,

GW:  Yeah.

TS:  Video, or something like that.

CP:  Yeah, we should definitely try to get some links in here for that, because there-, there was some interesting drama. But, aside from the drama, which was good fun, what were some of the other things, maybe tell people a bit about what came out of your speeches, your panels, and some of the other things you liked, during the two days here.

GW:  Okay, so, I think what came out of my panel, and related panels, was mostly related to ICOs, new token issuances, and the general direction, and which way things are going right now. You know, my panel, in particular, it seemed like-, that-, we reached a consensus that it's very much moving in a fully-regulated direction, basically the bankers and lawyers are taking over everything, and that that space is going to follow the marching orders of various government regulatory agencies. So, it was-, so, we kind of see it evolving in that way, over the next year, where it's-, it looks much more like traditional venture capital, much more like traditional markets. The, sort of, regulatory arbitrages that people have been playing, you know, running off to various jurisdictions, is gonna get squeezed, to a big extent, and the real institutional money is waiting there on the side lines. But the major gating issues are that there's just-, there's no regulations, and no infrastructure around it. So, that's what's-, that's what's stopping it from coming in. But I guess the point, the long view is that these-, these small jurisdictions, wherever, you know, in the Caribbean, or islands off of Europe, or whatever, you know, those-, those will-, you know, may prosper for some time, but their time is limited, and the real big markets will exist, and establish bases. That was the take away from my panel.

CP:  And I'm curious in that, were you able to get in to, or do you have another view on, whether this will affect the size of the raises? Because I know one of the really interesting things that people have talked about in ICOs is not just that they're, kind of, wildcat operations, but that the numbers are really, really big.

GW:  Right. I mean, I think right now we'll see-, we'll probably see a period of somewhat depressed raises. I mean, you're not-, I think that, you know, certainly the market's down right now, but once you do get that legitimacy, and that institutional money, there will be, you know, there'll be a liquidity multiplier, so-,

JC:  Well, yeah, and I think, too, some of these projects, like, they raised-, I know you can never have too much money, right?

TS:  Of course. Of course.

GW:  Yeah.

JC:  Impossible, impossible to have too much money-,

GW:  Yeah.

JC:  But some of these projects have raised too much money, where they literally need to spend it because they need to show their investors that they're doing something, and they literally have too much to spend-,

TS:  These aren't investments, FYI-,

JC:  Yeah, yeah, yeah-,

TS:  Yeah.

JC:  Well-,

TS:  Donations.

JC:  Yes, donations-,

GW:  Right.

[Laughter]

JC:  Sorry, sorry. But they can't spend it fast enough. So maybe that helps? I mean, I don't know-, 

GW:  I agree. I think that especially for, like, kind of, like, smaller teams, especially more immature teams, I think this is one of the things that we look at carefully, is actually, who you're giving money to, and can they usefully use it at all? You know, are they-, or is this liquidity event something that's just going to fracture a team, which indeed happens, especially with some of the younger, more immature groups. So, you know, so that-, so I-, I think our-, you know, we-, we-, you know, re-regulation is good, and it's just a natural maturation of the market. It's nothing to panic over.

JC:  Yeah, and I mean, it's-, my panel was on the regulatory, sort of, schemes and-,

TS:  You also gave a presentation-,

JC:  Yeah, yeah, I gave a presentation-,

TS:  200-size font-,

JC:  Yeah, I had massive font. Uh. Because you know it's important if it's got 200-plus size font. Um-,

CP:  And it was a giant screen, as well, so not only was it 200-plus-,

JC:  It was a lot of giant screens, yeah-,

CP:  Yeah, but the letters were bigger than you.

JC:  Yeah, they were bigger than me-,

[Laughter]

JC:  Which is-, which is pretty easy to do, 

TS:  So you're like a (? 47.25).

JC:  I'm not a very tall man-, [laughter] yeah, exactly. But no, my presentation was mostly on, sort of, what's happening, uh, on the political and regulatory spheres, you know, sort of internationally, in the US, in Europe, in Asia, and then talking a little bit about, sort of, what I think we might see as, um, major activity drivers, going forward, um, probably in the next year. And really, it's around ICOs, it's around, you know, the decentralised web, and-, and, sort of, the, um-, the increase in those applications. You know, I think the BSA, the Bank Secrecy Act, and a lot of the AML KYC issues that, um, pretty much have been settled, I think, for the past few years, at least in the US, I think they're gonna rear their heads again, in a major way, because I think there's a lot of concerns about nation state actors using some of this tech to get around sanctions. I think, also, there's a lot of concern about some of these platforms and projects that have perhaps not done the due diligence and AML KYC they should have, and I think, uh-, I think that's actually gonna play a major role in some of the discussions we'll have in the next few months. But, uh, then we did a panel that was moderated by the one and only Tim Swanson.

TS:  Yeah, no, it was-, it was cool. I actually didn't even put together-, Jeff, actually, is the one who put together the ideas, and stuff like that, and I just, kind of, filled in the blanks. Uh. So, yeah, I had a great panel with Colin. To give some perspective, the night before, we all had a speakers' dinner, and a funny guy, who you guys should have on your show, at some point, Kirill Gourov, he was at the-, the funny table, as it were, and you guys all came up with [laughter] uh, a term "pitch token", this kind of-,

CP:  I think this was actually at lunch, right before then-,

TS:  Yeah.

CP:  Because we all got in pretty early, and we all spent some time-, because there's not much around the-,

TS:  So you were, like, pre-pre-pre-sale, and I'm like-, I got in at the pre-sale, is that what you're saying?

CP:  Yeah, sorry-,

JC:  Yeah-,

CP:  Yeah.

TS:  Oh, man. Alright. Well, anyways, the genesis is roughly everyone trying to come up with the most zany idea for a token that shouldn't exist, but should-, it does, uh, and inadvertently-,

CP:  (? 49.19).

TS:  There is a Pitch Token-, yeah, so we-, first day, everyone's kind of making jokes about being an advisor to something that didn't exist. Then we Googled it that night, and we found out someone had made it-,

JC:  Mm-hm.

TS:  And so-,

JC:  There's, like, a very active Telegram community.

TS:  Yeah [laughter], and-,

JC:  For this fake idea.

TS:  And they actually-, they actually did an ICO, apparently, like a month ago.

JC:  Yeah, and the price is gonna pop after this podcast, so-,

GW:  Yeah, yeah-,

[Laughter]

TS:  So-, so-, so, I had the foresight of saying that we forked it to Pitchcoin-, uh, Pitch Token Classic, uh, and-,

[Laughter]

TS:  Obviously, that's-, somebody's going to squat that domain, at some stage. So, that was an ongoing gag. Um. So, yeah, as far as panels go, we had a fun time, it was-, it was nice meeting Frances, and, uh, David on that panel. And then, yeah, I ended up speaking about GDPR, which, I suppose, uh, is originally from Europe, so you guys may have a clientele who cares about that, but irrespective of what clientele you have, if they have customers in Europe, then GDPR, obviously, is something that could impact them, and then, uh, yeah, the panel, um, I tried to be as snarky as possible with my-, my comments to you. Danny Yang, who provides AML-related services, through a company called Blockseer, was on there, as well, and then, um, apparently, one of the top lawyers from South Korea-,

JC:  Sam Yim.

TS:  Yes, he was on there, as well. Um, so I-, the videos will be online, and I'm happy to take questions about what I wanted to say, but couldn't, because I was on stage.

CP:  Alright, well, let's start there [laughter].

[Laughter]

JC:  Well, you know what was interesting about Sam's-, learning about the South Korean market. Because, obviously, you know, sitting in the US, you know, you see a lot of incoming news about-, whether it's the "kimchi premium", and just the-, the retail investment that's going in to this space from, you know, normal people, right? Grandmothers, and-, and Millennials, and that sort of thing. So, it was interesting to talk to him about what-, what drove that, and a lot of it seems like it's cultural. You know, in terms of, especially Millennials, this is a really tough economy, for-, for young people to, you know, make a living in, so they're always looking for, you know, investments that are gonna make them quick cash, or-,

GW:  Well, I think, you know, like, even above and beyond, uh, cultural, I think there's just a strong macro element to it, you know, where-, where, you know, places like South Korea and Japan, they-, I mean, the economies are not keeping the same sort of breakneck growth that they had in the past, and we're, you know, in a period of quantitative easing, and there's not a lot of investments other than, you know, real estate, and the stock market. And, uh, you know, gambling is basically, uh-, is illegal in most forms, in South Korea. And, so, I think that-, that the new token market has fulfilled some of that demand.

CP:  So, being here in South Korea, there's a lot of interesting things that happen, and I'd love to delve a bit more in to that, and, kind of, what you guys have been seeing, the people you've been speaking to at the conference. And I know we were-, we were out in town yesterday, and meeting some interesting people, talking about tokens. What are your overall impressions, in how being in Seoul, and I know you guys did a bit of travelling around in Asia before, and John, you're taking off later today, to go-, go out to Japan. How do you think that the average people, thinking about these, may be different from back home, back in the United States, for you guys, um, or what you've seen, travelling around the world? Is there a different mentality? Do you think there's more optimism for it? Less optimism? Or is it not about that at all?

GW:  At least where I've been, it seems more optimistic. You know, I was-, I was based in Shanghai, for a number of years, and, um, I was there during-, uh, you know, last fall, when they really began to shut down all the markets, and I was just there recently, and, you know, really surprised at how-, how vibrant it is, at least in terms of, you know, introducing a lot of new technologies that are seen as really-, uh, really-, really still happening in a big way. You know, before that, I was at Token 2049, in Hong Kong, also one of the-, one of the better conferences I've been to, uh, you know, it seems like the appetite there is great. You know, I think the regulation in the States, um, and-, you know, and maybe someone else can speak to this with a bit more authority, you know, I think it is-, it is extremely constraining, as far as what you can do. I can understand consumer protections, in that, you know, all finance in the States is considered a national security issue, you know, which is, uh, you know, not necessarily the best for financial innovation. So, I think that the environment-, the environment out here seems-, it seems-, you know, people are cautiously optimistic, and I think, more or less, I see-, you know, I see these regions, or these various jurisdictions, moving more towards the Japanese model. Certainly, I think, or at least it's arguably true, that Japan is currently the, you know, the world leader for regulations.

JC:  Yeah, and I think, you know, I was talking to some folks yesterday who are focused, sort of, on fintech more broadly, in country here in South Korea, and I think, one of the things that they talked about is, the government here is really struggling to figure out how to regulate this space, and so, they are trying to coordinate maybe having some US regulators come talk to them, and perhaps some Japanese regulators, um, come talk to them, because right now what's interesting about the way in which, like, AML KYC, for instance, is done, with some of the exchanges in South Korea, is that-, so, if you're an exchange in the US, and you have a banking relationship, it is not up to the bank to put in your AML KYC compliance programme. It's the exchanges. In South Korea, it's the bank that actually is responsible for that. So, what they're doing is they're using the banks as the gatekeepers, um, and the compliance officers, basically, for these exchanges, um, which they seem like they want to move to a more permanent solution. I mean, I'm of the mindset that clarity actually helps the industry. I think, you know, you saw that in Japan, you saw that in the US, I think it's been good, at least on the exchange side, and I think there's a multiplier that-, that companies are more valuable, if there's regulatory clarity around them. And, frankly, I don't think Japan would've ever come as far as they did without Gox, which is an unfortunate truth, but I think it is the truth. Um, so, yeah, it'll be interesting to see, sort of, how they develop out.

TS:  Yeah, so, much like Greg, I've spent a lot of time in Asia, so I've had a-, not only living out here, but travelling back and forth, and I was just in Tokyo, and then in Shanghai and Beijing. Yeah, uh, for whatever reason, FOMO still exists, even though there's been quite a bit of crackdown, um, on all the fronts, from what you guys are saying. There was-, it seemed like there was fewer people at a couple of the events I was at in China, just before this week, uh, but it could just have been the weather, or something like that. It was unclear if-, obviously, it's banned, to some extent, and exchanges are-, or spot exchanges are banned on the mainland, but if you-, if you talk to any of these people raising funds for these different projects, Chinese are still being pitched as investors, usually offshore, uh, or discreetly. Again, I'm not endorsing any of this, I'm just reflecting on what-, what people were saying to me. 

As far as the-, the Korean market, as a whole, I mean, we've seen that-, well, you mentioned the kimchee premium kind of disappeared, and, you know, Sam was explaining some reasons why. And, again, we could talk about, you know, capital controls, and stuff like that, at some stage, if you guys want, but, yeah, overall, everyone seemed fairly on the up-, uh, upbeat, compared to, say, a number of months ago. There was actually, just for people listening, there was a view, maybe even, um, late November, or something like that, that the Korean market would be completely frozen out, like China. There was lots of rumours about-, well, not even rumours, there was actually, like, press releases that, "Hey, we're gonna ban this stuff." In fact, Jeff, who put this event on, I remember talking to him, like, in mid-December or so, and he's like, "Tim, I'm not even sure if, like, when we actually hold this event, there'll be a market here at all." Obviously, he-, he made that gamble, as it were, to take the risk, and it turned out to be that the market wasn't shut down, so there's still quite a bit of enthusiasm here for that.

JC:  I mean, one of the things that I gathered, yesterday, around that, is that, that was, like-, because it's very paternalistic, especially, like, the regulation of financial services here is very paternalistic, and it's very based on physicality. So, the idea that you have-, and this is broader than just, I think, cryptocurrency related businesses, it's a fintech issue, is that businesses that are not physically here, that cannot be examined by the regulators, they are very sketched out about, and are very, um, hesitant to allow. But it seems like that they backed off that and, you know, are looking for a more permanent solution. But, I gotta say, one of the things, and you mentioned this, Greg, that I noticed, was the, um, the fact that people are as-, so, they're accepting that regulation's coming, and they're trying to figure out, like, the way to do it, whether it's security tokens, or otherwise. If you had-, like, the move from crypto anarchism to crypto capitalism, among these sorts of conferences, is pretty striking, because I don't think you would have seen that same mindset, even just, like, three or four years ago.

GW:  Right, I mean, I think you-, yeah, it definitely was. I mean, you still get some doses of, you know, the, sort of, crypto anarchism, and the, sort of, like, you know, self-serving libertarianism, that some people will throw out there. There was a comment made about, you know, disallowing Bitcoin was killing babies, or something to this effect-,

[Laughter]

GW:  Um, but, you know, yeah, I think that, you know, the-, you know, following the trend is-, you know, I think, you know, there's enough money that's been pouring in to the space, and enough innovation that's been occurring, that it's all been really positive, and any regulator worth their salt recognise that, and try to create frameworks that facilitate that sort of innovation. So, you know, so I expect some, you know, some interesting things coming out in this space. You know, looking towards the next year or two, you know, I think, certainly-, you know, I mean, right now, we kind of assume that everything could be construed as a security token. I think that will become more explicit in the next-, in the next year or two, and, you know, and really, really beginning to, you know, work out exactly what are the efficiencies gained, and which are-, you know, which parts are necessary and useful from crypto, and which parts are just simply reinventing the wheel, and are actually redundant with existing markets, is, I think, what's going to be necessary, and getting the, sort of, guidance from regulators to, uh, you know, to make that an effective, efficient market, is something that I hope to see soon.

CP:  Great. And I think it would be remiss-, like, there was a really interesting thing, right at the beginning of this conference, where-, we're talking about the cutting edge, what's going to happen next. There was a really good contextual part, that came from Professor David Chaum, who, for those that don't know, has been working in cryptocurrencies, if we can call them that, since the seventies. So, he put together something in the eighties, to set up the first crypto-, cryptography, not cryptocurrency, uh, panel, international organisation, he was telling us stories about that, one of the original cypher punks. He also had some way where you could have, like, bearer instrument, that those of us working in cryptocurrencies would, kind of, recognise. But the context that he brought to this conference was, amid all the speculation, amid all, you know, "number goes up on token", what are we actually trying to achieve? And it's this money aspect, it's, what are the efficiencies that are brought in? And it was really good to, kind of, come back and say, "With all this fervour, what are we actually trying to achieve?" and whether it's, you know, bold statements about whether cryptocurrencies will end world famine and poverty, it's really trying to solve this problem of bringing a bit of privacy back to your transactions, trying to actually develop a new form of money, to be more inclusive, however you want to define that, and I really appreciated that. 

The other thing that I thought, and I'd love to hear you guys' opinions on this topic, and on the next, was, outside of what was going on, on the panel, there was a lot of discussion, because-, I had always been under the impression, I don't know what you think about this, but Ethereum was always, kind of, lagging behind in the mindset, in this part of the world. Obviously, there was a lot done in China, obviously there was a lot done, um, by the Ethereum community, by companies related to it, including ConsenSys, amongst every other one, but Korea had felt a little bit behind. They had a very prominent role during this conference, there weren't a lot of big announcements, but there did seem to be a lot of interest. I know I was sitting, kind of, towards the front, when Aya, the new Executive Director was there, and all of the press rushed up to take pictures of her, and of Vitalik. What did you guys think about, kind of, the David Chaum, and then the Ethereum, where we're going in the world, and this whole, kind of, juxtaposition of where we are?

TS:  Well, yeah, my understanding, from talking to David, the times I did, and I don't want to put words in his mouth, is he-, he sounded both optimistic and pessimistic at the same time. He was optimistic that, you know, people are being clever with technology, but also, the trade-off, the dual-edged, or the double-edged sword, that this technology clearly could be used for malicious means, and what's going to keep that in check? And I didn't see that particularly answered by anybody, at least at this event. I know that he had a chance to talk to Vitalik, but I don't know, I haven't, you know, debriefed either one, what they thought about it all. But, yeah, the Ethereum community, just as an aside, definitely had groupies. Whenever you saw Vitalik walk through, there was a whole flood of people walking alongside him, trying to take photos, and trying to just touch him, and stuff like that. It was-, it was pretty funny. So, yeah, I can't say, you know, how, um-, how-, actually, maybe we should talk to Jeff, how-, how much penetration the Ethereum community has made, versus these other cryptocurrencies out here, but yeah, the David Chaum stuff, I've-, it would be great to have him as a guest-,

CP:  Absolutely.

TS:  I'm telling you guys to bring him on-,

CP:  Thank you, yeah-,

[Laughter]

CP:  It's-, I'm taking notes here [laughter].

GW:  Yeah, I mean, I think-, I mean, it seems like, definitely, you know-, I mean, I think, right now, the-, the Korean token market's very subdued, um, and there are-, I mean, there are some major Ethereum-based projects, like ICON, that are, you know, gaining a lot of momentum here. You know, I think that the-, you know, the developer community is very large and enthusiastic, for some of the projects that we're working on. We-, you know, this is definitely one of the places that we bring them to, to get new developers and gain traction. You know, there's certainly a lot of engineering talent out here, and I think that, you know-, I think that, you know, Bitcoin-, I mean, we all know that it has limited, you know, quite limited functionality, and I think, you know, remittances, and so forth, were a big part of what was driving demand before, but I think that inventing really, you know, really clever-, really clever applications is the next phase, and I can see that people are much more focused on that, than in the past. It's-, you know, it's less the free-wheeling casino, and more about innovation. So, you know, so, coming to this place for, you know, for here, and other parts of Asia, to introduce new technologies, and get, you know, get developers, you know, cracking on various platforms, is-, you know, that's a high priority for us now.

JC:  Yeah, I mean, I've never been super involved in the Ethereum community, uh, and so this was one of the first times that I actually, kind of, witnessed, up close, over an extended period of time, sort of, that whole thing, with Vitalik, and all of that-,

TS:  John's wearing an Ethereum hat, an Ethereum shirt right now-,

JC:  Yeah. Yeah.

TS:  And he's-, he's turned in to a big, big shill, at this stage.

JC:  (? 01.04.41).

TS:  We literally can't get him to stop talking about Ethereum.

JC:  I took off my-, my Centra hat. But the-, so, that was interesting to witness, but-, and it was clear, it's very clear there's not a lack of capital, and it's very clear there's not a lack of good intentions, and it does seem, obviously, that there are a number of structures being set up around that community, whether it's ConsenSys, or the Foundation, or the Alliance, or, you know, whatever else is, kind of, being built around that. And so it'll be very interesting to see, sort of, how that plays itself out, and, you know, what applications actually come from all of that effort. Um. But it was-, it was very interesting to witness, and, you know, look, I have zero thoughts about whether Bitcoin or Bitcoin Cash is better, I just really don't care, but-, and I talked a little bit about this, during my talk. The governance thing in Bitcoin is a problem, and the community issues that Bitcoin has, you know, continue to be a problem. So, especially if you're talking about, you know, making, sort of, this open financial system, in whatever way that means to you, you know, Ethereum, for the shortcomings that it certainly does have, I think, has a really good, at least centralised, governance process, right? Like, you have, like, this group of people, and they seem to be positive, and, like, be aligned on the same things, where, you know, the Bitcoin crowd tends to be a little more, maybe in that classic, kind of, crypto anarchist, you know, sort of, uh, phase, that we talked about earlier. So, that-, that's very interesting to witness, just, like, the differences between those two communities. Because one seems super positive, super aligned, and, you know, well-intentioned, um, and then the Bitcoin community just can't seem to stop fighting with each other.

GW:  And I think that's something that goes back to what Tim was saying, as far as, you know, Vitalik's following, and a few of the-, a few of the other, the new other currencies, like, you know, like Zcash, and so forth. They have-, they have a governance structure, and a figurehead, and someone to, sort of, set the tone, you know. Whereas, you know, I mean you have this, you know, this non-governance model in Bitcoin, where no one is responsible for anything, and you don't really have a crowd ethos, except a, sort of, like, a "slug it out", you know, as, you know, Roger and Samson did, uh, as we mentioned in the opening comments. You know, but just further to the development of the space, this is-, you know, I look at it like this, you know, blockchain would probably be a technology that was in a laboratory somewhere, if it weren't about money. The fact that people are actually incentivised to do it is something that's brought it out of the lab really quickly, and so it's developing, it's developing very rapidly, on that basis, just because, you know, money attracts people, it attracts corporations, and so, you know, we'll see how many more years we can say that it's still early days, but, you know, it is still very early days. So, you know, as far as, you know, which applications are actually out there in the wild, and doing innovative things, and creating new incentive models, um, you know, those are-, you know, they're out there, and there's a lot of proposals for that, but they're very much in their nascent phases, you know. So, when we actually-, when we'll actually see, you know, sort of, like, you know, killer apps, beyond Crypto Kitties, I think that's, sort of, open to interpretation. But it is moving quickly, and, you know, so I would expect something, you know, something above and beyond Crypto Kitties, certainly within the next year.

CP:  Definitely. Well, guys, thank you very much for coming on. Can you tell us-, tell everybody listening where they can find out a bit more about you?

GW:  Sure. We're at elementgroup.com.

CP:  And on Twitter?

GW:  Uh. @TheElementGrp [laughter].

JC:  Nice. Easy. Uh, thisisredflag.com, and then follow me on Twitter, @JohnCollins.

TS:  Um, yeah, it's pitchtokenclassic.com-,

[Laughter]

TS:  I'm kidding. Actually, probably somebody's going to squat that, and make a lot of money-,

CP:  We should probably buy that before this goes out, yeah-,

TS:  We should definitely buy it before it comes out. So, uh, you know, my website's ofnumbers.com, um, my company's Post Oak Labs, and you can follow me on Twitter @ofnumbers, as well.

CP:  Great. Thank you very much.

JC:  Thank you.

GW:  Thank you.


END OF INTERVIEW