Crypto Renaissance: A Historic Opportunity for Business

Crypto Renaissance: A Historic Opportunity for Business

Show Video

- If you believe this historical thesis and this chat we're gonna have today, one of the things we say is that, crypto will cease to exist in a certain sense. It'll just become the fabric of reality or the air we breathe. And so, they'll become an economic engine for small businesses. (upbeat music) - Today. I'm very excited to be joined by Josh Rosenthal.

If you don't know who he is, he's a professional historian turned crypto investor. He's the founder of 6ixth Event Venture Fund. And has lectured at MIT and Harvard.

He successfully exited Web 2.0 Ventures and is all in on Web 3.0. Josh, welcome to the show.

- Hey, thank you very much for having me here, Michael. Appreciate it. - I'm super excited to have you Josh, 'cause, folks, we're in for a treat today. Josh is gonna bring some perspective from a big picture perspective and kind of explore what history can teach us about what is happening right now, which is us making history again. So we're gonna explore how the Renaissance era and what's happening right now is a Renaissance. But before we go there, I wanna hear your story.

I wanna understand, start wherever you wanna start, but, how'd you get into crypto, how'd you get into Web 3.0? - Oh man. I'll try to keep it short, but there's, usually I hate introductions but there's a couple points that might be helpful because a bit of an odd path. So, yeah, I have an earned PhD in late medieval history, Renaissance reformation, early modern history, received a Fulbright to the (mumbles) Institute of Advance Study and basically spent a decade looking through documents of power and privilege that were cloistered away, hidden in these encoded languages. We had to have letters of recommendation to get in the building actually.

And started looking at economic roles and social networks, and how people made decisions, as well as how they started to communicate. And at the end of the late middle ages, all of a sudden people did all those things very, very differently. And that started to define a very different world, the world we know, the early modern world. And so, did that then founded a company with with a couple of partners in artificial intelligence and natural language processing, sold that to an MIT spinout, did it again. Which is like Web 2.0, B2B SaaS and analytics.

And did that for a while. Successfully sold that to publicly trade company helped take 'em back private. And so we vested out. And we're thinking, we wanted to invest and help other people and help blue collar folks, in particular, were based here in Louisville, Kentucky. So, not in the power hub. And as we were looking at it, the venture world was very concentrated on the coast.

And at the same time, crypto came on. And so we looked at that and I said, "Wow, this is very, very similar to what happened in the transformation between the medieval world and our current world." And so we went all in on that in '17, and basically play at every piece of the stack. From venture, to investing in small companies, to running the technology ourselves. And then being here in Louisville, Kentucky, and thinking about blue collar, if you believe this historical thesis and this chat we're gonna have today, one of the things we say is that crypto will cease to exist in a certain sense. It'll just become the fabric of reality or the air we breathe.

And so, they'll become an economic engine for small businesses, whatever they're doing. So we did a couple experiments, running a little Helium node for like $250, that anyone could do with no coding on an app. And we did that, and that essentially paid for the office or the building behind me, which is an old bourbon bar that was a drug den and slated to become mini storage. And so, turned a neighborhood disaster into something that we're using as an educational center. And so, from history-- - Just explain to people what the Helium is, just for those that don't know what that is. - Yeah, that's a crypto protocol that operates at broadcast layer.

So it essentially broadcast out a signal, like internet of things, or 5G, or satellite. And so it's like a crypto version of Verizon or AT&T. But the basic idea was to say, "Hey, could anyone, just for a couple hundred dollars not trade a coin, but actually participate actively." And if you did that, could it transform physical space in your neighborhood and sustain a small business? So that's kind of the blue collar playbooks we're putting together as we speak. We want to try to do the things that we're talking about, essentially.

And part of that was a test to see if that whole historical thesis actually will work out the way it did last time. At the Renaissance, that's what changed. Everyone could set up small businesses, and stop being indentured farmers and they actually create their own businesses and is the advent of capitalism.

So we wanted to see if this would work out the same time. So we're deep in the midst of that. - Well, you've got a fascinating background that I think is very timely. Let's talk about your understanding of medieval and Renaissance era, and how we, as businesses, marketers, creators, entrepreneurs can learn from what happened then because it seems to be happening now.

And I'm absolutely excited about what we're gonna talk about next. So, take us there, Josh. - Oh, sure. Thanks. And first of all, I mean also, kudos to you for doing this.

When I listened to the earlier episodes. It's really difficult for people to really master one world or climb up a mountain and then go back for more and do it again. And so, essentially that's the opportunity that everyone has listening to this conversation, to the show you're putting on. So, I mean, sincere kudos to you for doing that.

So I'm gonna do... Like history's really boring, right? So usually you hear a historian, and they're talking, and they're rattling off names and dates and facts. I fell asleep in class all the time, right? It's like what Mark Twain used to say, just like one damn thing after another. And it lacks imagination. But if you do it well, hopefully, we can learn from the past and see what could have been and figure out how to manage unintended consequences and make a better possible world.

So, I'm gonna try to do that today, but rather than just rattling off names and dates and facts, I'm gonna try a little experiment with your audience. 'Cause if I'm listening to this, I'm saying, "What in the world does medieval history have to do with me? And it certainly doesn't have anything to do with crypto?" So, what I'd like to do is ask the audience to kind of suspend disbelief. And I'd like to introduce 'em to somebody that looks very different at first glance but is a person that they actually share quite a bit in common with. And that's you.

That's your medieval twin. That's you 500 years ago. I wanna take a step back and just say, "Hey, let's think about what your life would've been like in another reality." And so statistically speaking, then you're a farmer.

you work dusk to dawn every day. It's hard. It's backbreaking. You rarely get any time off. Your life is totally permissioned.

You don't own anything. You can't get a loan. You can't set up a shop. You've never really been more than a few miles away from your home.

You can't even leave it without permission. And when historians think about times, they tend to think about value and information are a couple of good buckets. And so value, your world then, wealth is land and animals and coins, and you don't have it You can't spend money as you want to. There's things called sumptuary laws.

And information, if you had an idea to change that, you couldn't. You don't read, you don't write. That information's locked away in those manuscripts I was talking about.

And even if you could access to them, you couldn't read. So it doesn't matter. A book costs a year's salary, a 10-year's salary.

And so it's very difficult to get access to new ideas and information, it's privileged. And you couldn't even change jobs without permission. You're a farmer.

Your parents were a farmer, their parents, their parents, their parents, their parents, their parents, their parents, their parents, about four more sets of those. It's like your identity. Your name is farmer. It never would've occurred to you to do something new.

You've been locked for a thousand years. Culture flows top down, art comes from royalty or a patron, and they tell the artist what to do. Your world's flat. It's symbolic. The art is 2D. You haven't seen anything outside of your own immediate experience. And in a word, your world is...

Power is aggregated and your world is permissioned. And if you ever have an idea to change anything, yeah, efforts happen to change things historically, they bubbled up, but they're brutally stamped down as a warning not to do it again. And if that's not enough, the crazy thing is the idea of changing something wouldn't have occurred to you.

It was the air that you breathed. And so, let me take a pause and say, it's very easy for us to look back and say, Oh, those silly medieval folks or medieval you. We're so smart now because we're modern. We have science, and we can think about things and a good thing, we're much more sophisticated.

But I'm here to say that, historians 500 years from now are gonna look back at us today and say, "We're in the exact same position." And just like your medieval twin, we aren't aware of it. Specifically that our world, how we share information, how we share value, our identity and our work, it's all fundamentally hierarchical and locked and aggregated. And just like at the eve of the Renaissance, there was a new world that was created through different types of technology, so too, like, are we standing on the eve of a new Renaissance, a new recreation, or rebirth that will recreate the world. And so, when I say like you're medieval, essentially, and you're not aware of it, I literally mean that. If you think of value...

You think you can spend money, right? Like, "Of course, this guy's crazy, we can spend any money we want to. We own things." If you have a Robinhood account, you've seen recently that you really don't own the things you think you do. Even in Fidelity, that stock you own, you don't own that stock.

You own an IOU, through a middle man. And, if you wanna spend your money, you can't... (Josh chuckles) I was trying to buy a pass to a crypto conference for a team member, it was Bitcoin in Miami. And the credit card company wouldn't process it.

And when I called they said, "We know that it's not fraudulent. We just don't like the content. So we're not gonna process that."

Like those ideas that we don't really own things or we can't pay in the way that we think we can, that never occurs to us. And the same thing with information. We think, "Oh, we can share anything we want to anytime."

Right? Yeah, until you get de-platformed. And it's easy to think, "Hey, that's for the crazies." But, historically that doesn't really work out. There'll never be another Arab Spring again. That cord can be cut free flowing information through algorithms or through the broadcast layer, like not having that Helium thing we're thinking about. And your audience, being marketing and social media folks know how those algorithms work.

And so, as a historian, we can all ask, pretending to be historians today, like playing the role. What changed? There were dozens of Renaissances before the last one, we just don't remember them. Because the last one was so successful. And it was successful for a very specific reason. And it kinda gets to the heart of like, what drives history? Different people think different things drive history.

Is it means of production? Is it great men with ideas? I actually think it's communities that drive history. And they do so by using technology. And not just any kind of technology but very specific types of technology. Decentralized or distributed technology. And that's what they did at the advent of the Renaissance.

In two specific ways. Two technologies came on the scene at the same time, just like they are today. The first was this ledger-based bookkeeping.

And it was like small loans, the advent of capitalism, new players on the scenes, thousands, tens of thousands, hundreds of thousands of loans. You could set up a shop and change your status essentially. And then communication. Like the printing press is a protocol. We tend not to think of it that way, but that allowed communication to flow and it was fundamentally decentralized. It wasn't just the text.

It was also the image or the birth of the meme with crazy images that talked about toppling the hierarchy of power. People hadn't seen images like that. And so... So what happened-- Yeah, let me pause there, that's a lot to throw at you. Let's take a breath.

- This is so good. So, in the Renaissance era you could not... Or the medieval era before the Renaissance era, pretty much there were power lords, if you will, and you couldn't change if you didn't want to. And you didn't even know how to. It was considered ridiculous.

Why would you ever do that? Because you weren't taught that stuff. You didn't understand that stuff. Your worldview was limited to the plot of land that you and your family lived on for generations, right? - Exactly. - And then along comes some technological innovation.

A ledger and the Gutenberg press, right? And the ledger and the Gutenberg press, just explain a little bit more about why those two innovations were so significant. - Yeah, yeah, sure. And it's a great...

It's great. It's like trying to explain to yourself 10 years ago, oh, you should join a Dow and do some of this... You wouldn't have had... The technology wouldn't have exist and mentally, you wouldn't have been able to understand what to do until those technologies came online and started developing. And the ledger was totally fundamental. It was a rediscovery.

The Renaissance means rebirth or recreation. And it was a return to these sources. Ledgers had been used a thousand years before. And one guy, basically dusted off an old, dirty book and saw it (mumbles) this other guy was using it.

And it literally allows finances to flow freely without a centralized accounting. The idea of having a debit and having a credit was essentially using a ledger. And what was significant about that was before there wasn't enough currency in play, there wasn't enough wealth. It was fundamentally aggregated. And the means of control around that aggregation was through a centralized accounting, a reconciliation. So very few people that had control over the money and limited its circulation.

With a ledger, it literally allowed the advent of credit and the advent of small micro loans or peer-to-peer loans or trading balances across these ledgers. So all of a sudden, you didn't have to go to a centralized power broker to get access to money which they wouldn't give you, you were able to go to someone else and get a small amount of money without actually having the currency. Just having a little bit of credit on the book. So you could say, "I want to set up a shop," a print shop or whatever, and you wouldn't have to get permission. You could actually get a peer-to-peer loan at a micro level. And the currency of that, when you wanted to pay your rent or spend it on something, you didn't have to produce a plot of land or a cow or some gold coin, there wasn't enough of that.

You could actually use that in a wallet. They had these little wallets and they had credits and debits written on that. And that wallet was, it was an account of record.

And so you had the advent of, all of a sudden hundreds of thousands, they call it the birth of capitalism or proto-mercantilism where all of a sudden there are all these small business owners that didn't have to get permission that was restricted from capital, that actually had access to capital so they could start something new. And you might ask, why didn't they cram it down? It was because because it was decentralized by nature, it was really tough for them to control that. And you might know about it if you're a history buff about like the Medici.

They're this wealthy family. They were nobody at the time and they were the ones who discovered this. And they were the first movers in the south of France and they adopted this and put it into play.

And within one generation they took over like the Papal seat and the throne of France. All the power hierarchies shifted instantly based on first movers and who adopted it. The problem with that was you wouldn't know that that was available to you. And so the idea of value goes hand in glove with information. So how do you know that you could set up a shop? How do you know that to this thing called a ledger? How do you know how to carry a wallet? So you actually need access to information and that's where the printing press or the print protocol was just fundamentally transformative.

From one perspective, the printing press was a horrible idea. 5% of the population was literate, probably under that. So, how are you gonna set up this printing press idea? It doesn't make any sense. Every venture capitalist would've kicked Gutenberg outta their office.

No doubt, it doesn't make any sense to do that. But what happened was it allowed the circulation of information at a scale of magnitude, which was unthinkable. And it was also decentralized. Where previously the power brokers had control and said, "I want you to create this information. I want you to have access to it." And they could control that through, not just literacy, but geographic proximity, with the printing press, everyone everywhere could create and share information.

And the authorities tried to tamp it down. They tried to... They essentially tried to get people to register and said, "Only you can print and you can't print." But the technology itself just like the ledger was decentralized, peer-to-peer. It didn't have to go through a hierarchy.

And so you could set up a little shop in a back room of somewhere and print out a thousand things in an hour. The thing I will say is that it looked different. The decentralized technology changed the nature of what they thought of as information and what they thought of as finance.

Finance wasn't gold coins and huge sums, all of a sudden it became little credits and wallets, peer-to-peer. And information, history buffs think of Gutenberg as the Gutenberg Bible, big text with a lot of words in it. Most of what was printed was an image with a snappy tagline. What we may call a meme, it was flugschrift and it was a big broadsheet and it had an image of something which was easy to understand even if you couldn't read and they read it as a performative act. And so they couldn't stop that information flow.

And part of that information flow was that the hierarchy was illegitimate. And there were a variety of reasons why they said that. And previously the powers that would've stamped that down but this time they couldn't stop it because the technology was decentralized. The information got out as did the access to capital. And so communities organized themselves using, if you wanna get someone to do something, you give them the idea and you incentivize them to do it. And both of those were decentralized and they couldn't stop it.

So it was like magic, basically. - How fast and how big of an impact did these two inventions really have? Help people understand. Because obviously, back then, I would imagine there was a limit to how fast it could spread but, help everybody understand how transformative to the world we know today was this stuff that you've been talking about? - Yeah. So some people, when they're looking at crypto today they'll say, "Hey, we have to..." It's such a change we have to get a historical analogy.

So they might look back to Web 2.0 or Web 1.0. And that's legitimate. That's a little microcycle. Some of the bigger funds might say, "Oh no, crypto's bigger." We have to broaden our gaze, our lens back to 19th century or advent of telephone or advent of the automobile. I literally think it's so transformative because we have these two new technologies in a new instance or iteration today, the ledger is cryptocurrency and the printing press is Web 3.0,

which we can talk about in a second. The reason it was so transformative was because it was decentralized. It didn't have a throttle. It didn't have a gating agent.

Where if I wanted to make a manuscript, previously it went through centralized hierarchy. And so, it cost me a year's salary or 10-year salary. Someone had to allow me to do it. I had to get access to a physical location where that could happen.

With a printing press, It's not arithmetic, it went hyperbolic social media people think of network effects, right? So think of network effects. It's like the... Give me a penny for every... However that proverb goes or whatever, the grain of rice on every board on a checker and all of a sudden, you end up with half the rice and a kingdom or whatever. And so it went super sonic. It went from a few manuscripts being produced a year to literally tens of thousands of, not long-form books, but these like ideas baked into crazy images with snappy taglines, tens of thousands instantly, each one being seen.

So the bulk of the population had access to it within 20 years. It just transformed everything against the backdrop of nothing having changed for a thousand years, right? History tends to happen slow, slow, slow and then fast and it's too late. And the same thing with credit as well. All of a sudden, your wool merchant is basically acting as a broker between farmers and taking it to...

They're doing it on a little ledger and the bulk of the population is engaged in this somehow. It's completely transformative instantly to such a degree that medieval world, which is hierarchical, that hierarchy came crashing down and created a series of new forms of society. New art, new types of businesses, the idea of a corporation or a shop. New types of political constructs. You might look at, democracy as a result of that. New types of economic setups, capitalism, and even new types of new types of communication and at-will societies.

Everything... The transformation is from late medieval to early modern, which is our age today. Just like it's crazy for us to meet our medieval twin and say, "I can't imagine that."

That's because we're at the we're on the other side of that. And I would say that if you play the story forward, if you think of history ticking and tocking or going back and forth like a pendulum between aggregation and consolidation and then decentralization, at the end of the Renaissance and reformation, that started to get aggregated again through different types of technology where they seized those decentralized technologies and they started to gate it. And that's the rise of the nation state and some other things and the rise of concentration of wealth in the stock market to FAANG, to Facebook and Amazon and Microsoft and Tesla, like you talked about basically. And so that's why I was making the argument that, we're essentially medieval.

We're in this like hierarchy today and we aren't aware of it just like our medieval twins aren't aware of it. And just like at the Renaissance, there's an advent of the rebirth of society and culture and economics and corporation and business through these two types of technology. A decentralized way to share value. Their ledgers are our ledger. We call crypto, ledger-based technology.

And this decentralized communication process, which we have said was the internet but I actually think it's Web 3.0. I think the internet hasn't really happened yet. Historians, we're in this weird phase. It's only been around for like 40 years, right? We're in this weird phase where basically we say we have the internet, the historians will look back and say there was no internet until Web 3.0.

The idea of sharing zeros and ones, bits and bytes of information whether they represent value or whether they represent content and ideas is fundamentally the same thing. And it only achieved takeoff, gravitational... It only achieved prominence at the point in which it became decentralized. And just like we don't remember those previous renaissances before the last one, historians in the future will look back and when they say Renaissance, they'll think today, basically, this one will eclipse the last one.

- Yeah. This is so fascinating. I think many people that are listening right now, their dots are starting to connect in their brain about everything that Josh has been talking about and everything that seems to be going on as of 2022 when we are recording this.

Now, for the record, we are going to... Josh provided some cool images that we're gonna put in the show notes of these Renaissance flyers, examples and stuff like that. But Josh, I wanna now talk about, given this backdrop that you just built with words, this beautiful picture, explain why today we are in the midst of a new renaissance. Connect the dots. - Yeah, yeah, yeah. - If you wouldn't mind.

- Yeah, absolutely. So, back in the the late medieval error, value was fundamentally, it was hierarchical. 10% of the people own 90% of the capital. Et cetera, et cetera. And economics is hierarchical. Certain forms of economics and businesses controlled all of the capital and that's very similar to the state we're in today, basically, if you look at the stock market where where is wealth created? A lot of economic historians actually think we're in a recession and have been in a recession since 2008, 2009.

We see GDP climbing but when you look at where that accrues and accrues in a very concentrated area, and they call it FAANG or Facebook, Amazon, Microsoft and now Tesla in there. And that doesn't benefit everybody along the long tail of the distribution curve. They've actually had their fortunes degrade significantly over the past couple of decades. And so, our wealth like their wealth is fundamentally concentrated. And our communication, like their communication is fundamentally privileged and permissioned. Yes, we can go on social media now.

And we think we have ability to share and to talk. And we sort of do. Some of the edge cases might be deplatformed or you might not be able to say certain things, but it's much more subtle today. And having, that's why I mentioned this on the background around building some of that AI algorithmic stuff once upon a time, and your audience may or may not have a better insight into how it works in the sense that, what you see and what you communicate is filtered through a lens of those same people who control the capital. When you search something, if you go onto Google and you say, "Show me Google alternatives. Why Bing is the best thing since sliced bread."

You're not gonna see a natural, neutral response, right? You're gonna see something crafted for their interest to maximize you. So in this world, just like the medieval lords were harvesting the fruits of the farmer's works. So in Web 2.0, basically you are the product. And what we mean by that is you either pay a service or you do things and say things and it's filtered against, what you is actually there, you just aren't aware of it just like medieval you wasn't aware of it. Or they harvest the fruits of your interactions to build value and that accrues their wealth.

And you're not aware of that. Your audience maybe, most people aren't aware of that. And so with crypto, again, we have these two types of decentralized technologies, just like at the last time, a decentralized way to share value, to pay for things, to own things, to send money, which isn't through a permission system. Just that essentially turbo charges finances.

They call 'em financial Legos or fundamental composites. It essentially digitizes value, which moves it into a synthetic world. So it doesn't have to go through a middle man holding that choke point.

And on the communication side, the same thing as well. Like that communicating through, now we've found a word for it. So we call it Web 3.0 but it's essentially cryptographical communication which basically means, I can put things on permastorage that are outside the domain that are peer-to-peer. That are outside the domain of those power hierarchies and those power brokers. And the thing that changes from Web 2.0 to Web 3.0

is that it actually gives me ownership. So if in Web 2.0, they harvest the fruits of my interaction, like a medieval lord taking it and then giving me a little cut and them growing richer while my fortunes deteriorate, with Web 3.0, instead of them doing that, I actually get paid for my ownership or for my usage. Which is crazy. And your audience right now has no idea what I'm talking about.

And that's why we did the little historical story to say, hey, you wouldn't have been able to imagine saying join a Dow or go set up a small business if you're a medieval farmer. So in Web 3.0, there actually isn't a corporation in the same way.

And the protocols themselves are co-owned by individuals. And we've seen little bits of this and kind of crowdfunding and buying stock and what have you. But I don't have to go through a stock broker where I get an IOU for only certain things. Anyone has access to own the protocol and to own the pieces of the technology.

And the way this starts, historically, it always follows the same kind of... Or it follows the same pathway. It doesn't always repeat, but it tends to rhyme. And when these two decentralized technologies allow communities to interact with one another without having to go through a permissioned hierarchical middle man that's extracting rent and doing rent-seeking activities, crazy things tend to happen. There's a rebirth of finance and economics and what have you.

So, in this sense, the Web 3.0 piece I'm actually paid for usage. And so, instead of just buying coins, which is the first phase, finance, then it moves into kind of art and culture, which we're seeing with NFTs and with different things. Then it moves into corporations. How do I propagate that value? We're starting to see that with Dows, it's still early but it'll play out.

And then into education, how do I propagate that long term? And then eventually where it becomes call it Metaverse or IRL, which is crazy. In real life, actually interacting with a synthetic world where crypto stops being crypto and it starts just being everything. It starts being an economic engine for restaurant owners and small businesses. And telemarketing or what have you. Just like there's no longer internet venture capital funds or internet businesses, everybody uses it. And so, to really connect the dots and in Web 2.0,

I use something for free. They harvest my data and accrue value. In Web 3.0, I can buy the token or the stock and the protocol if I want to, but I actually get paid for using it. So if I run a little Helium thing, I get paid in the token. If I listen to music on Audius instead of Spotify, I earn the token.

If I play a video game, kids call it, pay to play or earn to play. If I earn the token by participating in the community. And so in terms of a network effect, instead of spending 80% of my budget on advertising on these aggregators, Facebook, Google and what have you, I give out pieces of the company to my community. And now everyone is a co-owner.

And then there's governance in how we make decisions and things like that. So, it's a fundamentally transformative arrangement. And we're starting to see that right now as we speak.

It tends to happen in two waves. The first wave people use the technology to make things a little bit better. Better, faster, cheaper, but do the same thing.

And then the second wave is where, they use an endemic unlock. They use the technology to create things that wouldn't have been possible to even imagine. Let me stop there. That's a lot to throw out there. - Yeah. I mean, this is... First of all, some of this stuff for a lot of us is gonna be hard to wrap our head around just like it was hard for the medieval farm workers and owners to understand this.

And again, I've said in prior podcasts, we couldn't have imagined in the 90s what the internet would make possible. But one thing that was clear is the existing infrastructures said it was not worth paying attention to. You had newspapers and magazines and radio and television saying, ah, nothing. It's nothing.

Now we know it's been completely eviscerated by the web. Now we've got Google and Facebook and Amazon threatened by this and trying to get into it and trying to even co-op it in the case of Facebook with what they're doing. The truth of the matter is that this decentralized blockchain is not new technology.

It's been around what? 12 years, Josh? - Yeah, absolutely. - Yeah, it's becoming mainstream right now. So we should talk about, if it took about 20 years to transform the world, we're nearly there and I think it's going parabolic. What do you think? - Yeah, that's why... you can think of history kinda going back and forth or doing these big arcs or circles and these macro ones like every 500 years.

I see very historical rhymes. But there are these mini circles too. And we saw that with Web 1.0 and Web 2.0, where previously to get information, I had to go to a newspaper. And then all of a sudden I could go on a computer and that decentralized it.

And so those people, those aggregators lost their permission and their value. And then new businesses could spring up around that. And then in Web 2.0 I went to a mobile device. So I didn't have to sit at a big computer and do that. And if I'm creating a business, in Web 1.0, like we did, we had to use a mainframe.

In Web 2.0, we could just rent a... We could use Amazon Web Services as processing. So the capital was a lot lower just like it was lower previously in the medieval time going to that. And so we could start a business and now in Web 3.0,

I can do it for just pennies basically, because I'm actually the owner. That's one way... Yeah, so going parabolic, the question is always, how quickly do things happen? So the technology's been around but it achieves a gravitational takeoff when communities start to use it, not for the technology's sake, but for the benefits of it.

So if you're a small business owner you can say, "Oh, that's interesting. I might..." People start out by saying, I might wanna buy these tokens. That's fine. Sure, go ahead. But you could also think about it as, I might want to get paid to use the products and services I pay for today and get ownership in that, which is a very different approach. If I'm a small business owner, or, say I have rent and I'm paying rent, I'm able to use this technology to unlock I run a Helium (indistinct) and that covers my mortgage.

If I'm a restaurant owner, Spotify is a few bucks for you or me as individuals but if I'm running something in public, I have to pay BMI or Sony. I have to pay these licensing arrangements. $10,000, $50,000. I can replace that cost owner with a crypto service or product which is just coming online right now.

And all of a sudden, I'm not paying that money. I'm actually earning from that. That's one called Audius, A-U-D-I-U-S.

And that's where... And you'll look at it now and it's gonna look like AOL. You're gonna be like, "Oh, it's kind of glitchy and weird." But that's like opportunity for people.

You can say, oh, I wanna build a business, no code on that. I can curate a playlist for different restaurants and when they use my playlist, I start earning more tokens. Or if I'm building... We build web-based analytics, right? So we had to use Amazon and other things. Today we could use crypto protocols instead of writing a check to Amazon, the protocols are giving us tokens so I can replace my cost centers with revenue generation.

And that's when things get really interesting. Only right now are we seeing crypto as a... Crypto is tricky and it's tricky for your audience in the sense that people mean different things when they say that. In ones sense, crypto is like money and value transmission for sure. In another sense it's technology.

It's a technological stack. That's what people mean when they say Web 3.0. And then in another sense it's a business model. Just to believe that Helium example. In full disclosure, we either have stuff or we don't have stuff or we like 'em or we don't like 'em, we're totally conflicted and not investment advice blah, blah.

But it's an interesting example. Like how do you take on Verizon and AT&T, multi-billion dollar companies with just a couple million bucks? Well, you give it all away to your community and you have them run these little nodes. And instead of having one giant antenna, everyone has an antenna out there. And when China, Forbes just wrote about it, China can't crack it down 'cause it's peer-to-peer. And so there's tens of thousands all over China now. And so that's what I mean, just like the printing presses, they couldn't tamp down.

The broadcast layer of transmission is out there. So yeah, I think it's just achieving it's... It's actually, the Renaissance was long, long, slow. Historians say it was hundreds of years in the making and then, bam! it happens. Or the reformation, we look back and after it happens and after we have a word for it, we say, "Oh yeah, now we see it. That was that thing the whole time."

Now that we call it Web 3.0, people are like, "Okay, I get it." Or when Satoshi does the Bitcoin paper, it's like Martin Luther nailing up the '95 theses we say, "Okay, that's when it started." But to your point, it started before. Right now in this year though, we're starting to see not the deep tech coding protocol stuff, but good UI, good platforms built on top of it for listening to music, for podcast distribution, for broadcasting things off of a building. So, that's when it's gonna achieve lift, I think.

And for your audience, now's the time. This may sound kinda crazy. And the crypto guys will hate this. But it's important for your audience in the sense that, in Web 1.0, that was with the birth of venture capital. And so like, you didn't have to go to a bank and get someone to give you permission. The venture guys could do it.

And the capital at that point became a commodity. You want smart money instead of dumb money. And then in Web 2.0, in Web 2.0 the technology was a differentiator. So capital was a commodity and your tech, your company was valued on how good your tech was basically.

And yeah, you wanted a community 'cause you wanted users but it was really about the technology. In Web 3.0, all that technology is not only open source it's forcable.

Which means, imagine cutting and pasting Google's code base. So your technology in some sense becomes a commodity. So what's the differentiator between one company or protocol and another company or protocol it's actually the community. The community is where all the value is at.

Which sounds like something you'd put up on your VW bus but it's really true. In Web 2.0, you built a community to get eyeballs and attention and you're always kind of fighting against them. Your interests weren't aligned with the value aggregators. You had to go back and forth. In YouTube, you'd go back...

They tamp down the algorithms, you had to spend more on your ad budget. In Web 3.0, the more valuable the company becomes, the more valuable all the participants have money and equity given to them. So in some sense you can say, "Hey, all the Web 2.0 stuff you guys did that was like... it wasn't wasted it just," The internet has only come into its fruition right now with Web 3.0.

And so all the things that you did, it was like training and now is the start of the race where you get compensated for it. If that makes sense. - I wanna dig in on a couple things here, first of all, the concept of open source. Many of us understand that open source like Linux is a operating system that enabled all sorts of development to happen.

GitHub is a place where there's just a bunch of code out there and everybody can go grab it. But maybe not everybody understands that Ethereum was a fork of Bitcoin. And all these other coins are forks of Ethereum, right? 'Cause it's all open-sourced. And now you have all these people innovating and creating new technology and they're doing it in a rapid way and it's free. And it's out there for the world to exploit.

That is massive. Because prior to this, Facebook keeps their code and Google does too, locked down, it's a secret. It's a mystery. Nobody knows how it works. Talk about that a little bit. - Yeah, no that's... I mean there are always edge cases where this chain or this fork where this technology will be proprietary but essentially everyone in the industry is into doing it to decentralized.

To get rid of these aggregators. If you think of a distribution curve of power and money and wealth, it's concentrated at the top and then there's this long tail of you and me and everybody else, everybody in the space, the values of the space are about taking that aggregation of wealth and power and to redistribute it, decentralizing it. And so lots of times these companies and protocols, if it starts out centralized just 'cause it's based in the US and blah, blah, blah, they have it on their roadmap or they actively disintermediate themselves.

Their path is to no longer exist as a company and just have a people's network out of it which is... Like that's crazy. Imagine if Microsoft said, "Hey, we no longer wanna be a company and we want to give all our equity to users and we wanna have you guys make the decisions 'cause you make better products than we do anyway. And our goal is to get rid of ourselves."

Nowhere in history do you have people trying to say, "Take power away from me." And so they do this through a variety of ways. And, what you're talking about is this forking is really important. You can literally take any piece of it, go off and do your own thing in most cases. And the differentiation around that is gonna be based on the community. Based on who uses it.

Based on how you develop around that and based on new and novel use cases that haven't even been imagined. And to use one example, there's something called Uniswap which was... A way to buy and sell different tokens and what have you.

And the community wasn't happy that it didn't have certain features and functions on it. So something came along called SushiSwap and it forked it and basically took a bunch of the users with it. And then Uniswap said, "Oh no! I need to do something. We'll actually implement these features and functions." And they basically implemented 'em and a lot of the community came back. And so you just watched something that would take 10 or 20 years in a normal world happen over the case of what? 18 months basically.

And the differentiation around that was, is the community loyal to the thing itself? Partially because do they have ownership in it? Do they believe in it? Are they playing an active role in creating it? And then partially it forces the powers that are to respond to the community. 'Cause they're aligned. And when I say community, I should be super clear. Crypto right now 'cause we're in early stages of that progression, it's a bunch of finance people and coders, if community is the differentiator, it literally means, can you build a community and can you clearly create ideas? Those aren't Web 1.0 or Web 2.0, that actually is the differentiator in this Web 3.0.

And so the job descriptions have different titles but it's the same skillset to be able to create that. And that's actually what crypto needs right now more than anything. Not just protocol development but community development, community managers, so, editing what... Anything you did in the old traditional world you can do in the new world and in fact, we sorely need that.

It's not trendy to say but it it's true. - Well, I love that community is at the core of really everything that's happening inside of Web 3.0. I wanna go back to the connection of the printing press and the Web 3.0, the communication side of it. You've talked about Helium a little bit but where is this all going? Help people understand 'cause right now most people in 2022 when we think of anything related to crypto, we're thinking about NFTs and we're thinking about maybe decentralized autonomous organizations and coins.

What's the layer that's coming? Help everybody understand that. - Yeah. So there's a couple different ways to think about it.

So one is... One is a world that is coming where you're not paying a subscription service to listen to music or to watch a video. Anything you pay for right now or you get for free, which means they only show you a little sliver of it that's in their best interest and they harvest your interaction.

All of that gets changed into things you own and you own more of for participating in. And you own more and more depending upon your level and nature of your participation. Sure you can code but you can also share.

You can also help in these different ways, et cetera, et cetera. So, instead of a cost center where you're writing checks for products and services you use, there'll be a Web 3.0 version of that where you own a piece of that for your use of it. And so that's one way to think about that.

So too, with small businesses, anything where you have value locked up that you aren't able to access, that might be physical space or it might be computing services or it might be the community you already have. You'll be able to monetize that in a generative, mutually beneficial way. Not exploitative but mutually beneficial around that. And kind of big picture that basically allows you to do different things economically.

Means you don't have to raise capital to have access to these things. Just like in the old days, you had to raise a boatload of capital to do something to buy a mainframe. Then you didn't need to raise as much when you're able to just kind of rent the software. You're gonna need to raise very little and anyone can do it without raising if you actually own the stuff itself, not only is it free.

So you'll have this explosion of all these different ideas and small businesses where crypto acts as this engine, not just for coders and finance people but for blue collar stuff in the real world. Which takes us to NFTs. So NFT is like, right now when you say the word people think of pixelated cats and what have you.

And that's fine. That's fine. But really an NFT, taking a step back historically, went from the middle ages, aggregated and then Renaissance where it's distributed. And then we kinda built it back up to aggregated to where we are today.

One of the tools that the people with power used for reaggregating was a contract. And you could have currency and you could have information from a printing press or from a ledger, but if you wanted something that wasn't just currency, if you wanted land or a title or a deed, that was in a document and that was in a physical... That was in an archive and that was subject to judicial interpretation of opinion depending upon who you knew and blah, blah, blah.

And so that was a choke point that allowed reaggregation. The thing that they didn't have was on chain or decentralized rights of ownership. And so that's what an NFT is. That's something new. That's a superpower. That's plutonium. There's an argument that actually may become all crypto when we step back at it.

And what I mean by that is, I actually have on chain smart contracts. So NFT started out for real estate, not pixelated cats, as a deed to your house, title for your car, blah, blah, blah. And so if I have on chain ownership, that allows me to do a couple of different, really interesting things. First of all, all the craft that got built up over the middle ages, a document, I read it in different language. Somebody else has an opinion, an opinion, jurisprudence lawyers, Canon lawyers, all that got raised basically. And if you think about how you spend your time as a small business owner, I'm doing my taxes and then this interpretation and this...

It's like you spend all your time doing stuff that isn't really that important. And sometimes you actually work doing this job aren't important and you kind of know it. And that gets all sorts of bad perverse incentives going. Like if I automate my contract and it's smart, what that allows me to do and give me rights on chain where my ownership of something isn't in a safe, it's not in my lawyer's office, it's not subject to interpretation but it's automatically executed, that frees me up to do different things in different ways. I can monetize that. I can actually have a deed or a title and get a mortgage for that without permission, put it into a protocol, swap protocol.

Bam! I can do that in two seconds. I can create businesses around that, blah, blah, blah. Fundamentally what's interesting about that is because it's on chain, it actually acts as a bridge between the synthetic world, what people call the Metaverse and in real life. That on chain right to an asset, isn't just a digital asset.

It can be real world stuff or it can be digital. And that allows me. So I kind of have a minority opinion on this in the sense that I actually think the metaverse isn't going to replace real life. It's going to, just like the printing press did, it opened up new worlds which were imaginary and synthetic, and those had impact on real life in the ways we couldn't imagine at that time. So too will the NFTs allow synthetic worlds that we create to impact in real life and augment it fundamentally. And what I mean by that is, the NFTs allow you to work in the real world and enjoy the fruits of that in the synthetic world, through land or assets or experiences, or to work in the synthetic world and enjoy the fruits of that as you transfer it back out into land, assets and experiences.

Which is kind of a different way. So I think we'll stop talking about the Metaverse as something synthetic and fake and using pink and blue and purple font like it's Miami. I love it by the way, I'm super into that, but all of a sudden it'll become just opening up new worlds where we're able to transmit value and information and we're gonna get super dicey. And I don't know if your audience is into it but there's two other ways we could take it. Like one, you could think about what that really means deep down on a couple different level.

One on the political level, not US politics but just what it means to organize around communities and create values. You're gonna see an explosion of governance, tokens and protocols. And what I mean by that is like, how do you make decisions as a group? How do you do new things? How do you control who has access to the assets and informations? That too is actually mutually agreed upon.

And so there's a thousand flowers of different governance. Think about a thousand different versions of the constitution that are out there and we'll see what happens as the fruits of that experiment. You can think about crypto, the political historians will say, hey, the way that things reaggravated today was the powers that were came back and knocked on your door and they said, "Hey, you never thought you were part of a nation. You didn't even know what a nation was.

You just thought you're a farmer that belonged to this village and this family. Guess what? You're a nation and that means you have obligations and we have rights to look and see things and do things." And they said that's actually an imagined community governed by consensus where everybody kinda agrees and it's instantiated by currency and contract. And if you think about crypto, it's a consensual community, instantiated by currency tokens and contract NFTs.

And so that's why you get a bit of the friction with the current nation state setup because it's not just threatening Facebook and Microsoft. It's not just threatening the Federal Reserve and currency, it's actually threatening what groups of people are and how they make decisions. In that sense, it might play out long term, just like Bretton Woods, just like the cold war, whatever. When we use the words first world, second world and third world, we kind of think rich or poor but that's not what it means historically. It's communism, capitalism and undecided.

It's us-them. And you're starting to see that happen in crypto. Everybody's gonna go to crypto, it's what flavor crypto are you gonna want? Some people are saying we want decentralized, that'll be stable coins and blah, blah, blah. Other people are saying, no, no, we want centralized decentralized.

And that's gonna be like digital yuan, that's gonna be China and what they're doing. And then there'll be people in between. And then people will align in these different kind of consensual communities in different ways. And the metaverse will make it really interesting to actually have residency in these virtual communities as well as in the real community. And there's some slippage that happens in that which gets us into like a whole different conversation.

So I should probably stop there. There's a philosophical thing you could talk about from the internet too. I guess one other way to think about if you're asking viewers, what I think will happen in the future? In Web 2.0, the main philosopher about communication and media and community.

This guy named Marshall McLuhan, who's like the darling of Web 2.0. And he basically said, "Hey, the medium is the message." How you transmit something is intricately related to what you transmit. And we see that with Facebook and Amazon, blah, blah, blah. And he was a big fan of this guy named Sherdan who had this idea of like the news sphere.

Like a consensual, linked world mind. This was before the internet. And they were drawing upon this guy named (indistinct), who basically said, "Hey, the image is more real than the thing itself."

Which sounds crazy. But what you project actually becomes more real than the thing itself. And so all that's like esoteric philosophy. What do you care about that? Now you have a technological framework for it. So my NFT is actually like my identity. Not just like my VW bus, I'm a hippie, it's my identity, but it actually gives you access to experiences, events.

And that becomes in some sense, the new corporation, the the new consensual, either political group or corporation around this technological undergirding. So, I think it's gonna unfold in like a different type of politics, a different type of what's real or not what's real and like an unfolding of the universe, just like we saw in the middle ages. Like right when with print we have access to new fiction and reading, all of a sudden literacy takes off. We never imagined that.

And new global world's unlocked and explored. We're gonna have the same thing. New fictional worlds unlocked, tied to the real world through this technological grid work. - Wow. Okay!

- You asked me a big question so I wanted to give you a full answer. - First of all, that was awesome. Folks, I knew this was gonna be amazing. I hope you found this as amazing as I found this. Josh, please tell people where they can find you on the socials and/or if you have a website you wanna send 'em to because there's so much more. Last time Josh and I spoke for practically an hour.

I mean, like there's so much more. But you've done such a great job today and we could go for another hour but we're not going to. But tell everybody where they can discover more about you. - Probably Twitter's the best place. I think it's @JoshuaRosenthal, maybe.

And If I can leave your audience with one thing it's like, in history, it's odd. Most people don't recognize transformations when they're happening. And rarely do you get to witness it epic transformation and even more rarely do you get to knowingly be aware of that transformation when it's happening. And you never get to actively participate in and shape it.

And like, that's our opportunity today. It's a stunning opportunity to recreate society, economics, corporations and there's also a responsibility that comes along with that, to think through how to best do that and create the best possible world we can. So I'd like to leave them with that thought.

Don't miss out on this historic opportunity and exercise it responsibly. - That's a great way to end it. Thank you so much. - Thanks Michael. - Hopefully we'll get you back on the show again. - Any time, take care.

2022-03-13 02:34

Show Video

Other news