Raoul Pal: Real Vision - How the World’s Fastest Blockchain Is Making the Future - Transcripts

September 16, 2022

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Raoul Pal: Real Vision - How the World’s Fastest Blockchain Is Making the Future


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Hi everyone, this is raoul pal, the ceo and co founder of Real Vision and welcome to my podcast every week. I'm lucky enough to speak to tons of smart and innovative people in the financial game. I get so much insight from these conversations and that's why I want to start this podcast so I can share that knowledge with you. I hope you learn from the discussions and you can always find more in depth content at real vision dot com, enjoy the show and a totally great to get you on real vision. I've been after this for a while. Yeah,

thank you for having me.

Not at all. I mean I've been fascinated by what up to since we met a while ago in Utah I heard you speak and I'm like, wow, okay, there's a lot going on there, but before we get into all of that, I know a lot of people know your story, but a lot of people don't and your story is actually very important to Selena itself and why you got there. So you want to give a bit of your background, your crypto journey and how the hell you decided to come up with the whole idea on the basis of Selena. I know you probably told us a few times but there's a lot of people who watch this. Yeah,

For sure. Um the origin story. So I spent most of my career welcome. I was there you know from 2003 until like 2015 when I started I was working on like the flip phones to megabyte devices like the really dinky things. But I ended up lead Colonel engineering this platform called brew which was built by Qualcomm and it was the first thing that ever had like any kind of any kind of development attraction. And I remember there was this application jammed at bowling that had like two million app downloads and this was maybe 2008 or something like that. 2005 before the iPhone and like three years later iPhone came out and just killed everything. Uh so I was there like I think in the most exciting part of the, of the mobile industry and 2017 rolled around and I saw that Fees and Bitcoin were really like going to like $60, per transaction. So Bitcoin conferences stopped taking Bitcoin to buy tickets. Just kind of funny but

why did you care about Bitcoin at this point?

I heard about it as an engineer. Like in the early days I even thought about, I tried mining it a bit with Cpus, thought about like building my own like Gpu mining and stuff but as soon as I would kind of get interested in like building something for it, somebody else would have already came out with it, you know like uh there was an asIC project that promised to ship people dedicated a six but they kept them for themselves for like six months and mind all the advantage with them and then they ship them


was like

I thought

that was like a very pure crypto experience, you can't get better than


Yeah, in the in the early days basically. But like what I thought was really interesting in 2017 was ethereum because of the smart contract side and it really reminded me of like early mobile days, nobody thought that mobile phones should be computers and they should run apps. People thought that they were voice only very similar kind of thing there. I kind of saw it as a new way for developers to write a new kind of code smart contracts just were weird and interesting and like it didn't make sense but they were good at but I kind of thought that they were good at something and that's what like kind of got my like got me way more interested in crypto than anything else and had a side project with a friend of mine later became one of the co founders, uh mining crypto in the background while we were building deep learning hardware and I had two coffees and a beer with him at cafe Soleil in san Francisco, we're talking about mining and proof of work consensus and I had this Eureka moment that there's a way to generate proofs for time and I didn't know what to google, but these are called verifiable delay functions. Had I known how to find these things, Selena probably would have never happened because I would have found that like amazingly smart folks out of stanford have been working on these things forever. But I thought that I had something and that was really what spurred me to go and uh that I literally like called a bunch of my friends were welcome that worked with me on brew was like this is a chance to build another platform and you and you kind of operating system and let's go do it. And surprisingly a bunch of them joined me. These were like super senior folks with 10 plus years of experience, it's pretty rare for them to like, you know, leave their tenure jobs. Um, but at that time broadcast was trying to work welcome morale was low, literally the ceo to call president trump to stop the acquisition. So it was like a perfect time. I got my part and a lot of amazing folks joined and we build Selena

how much of your telco experience allows you to build salon because again, it's an easy thing. So yeah, we had this idea and then we built it. The reality is never that easy. Right.

A lot of the kind of the protocols felt very familiar like the communications protocols because you are dealing with a massive number of states and connections and users any time you're dealing with like L T E or C D M A or anything like that, it's just those are, I would say more complicated than consensus and it just felt like um similar like we were like not out of out of like fish out of water or anything like that. And the ways to make this network fast really were based on a lot of our experiences as engineers. We were really kind of had this idea that you know this I don't know if you heard of the dilemma. This is something that metallic proposed and there's a tradeoff between performance, security and decentralization. So you could you can kind of make the system, you can kind of pick to um and what you mean by decentralization is the number of participants in the network. So you can and like what you mean by security that how hard is it to make it inconsistent. So when you have this tree lama, you are you're kind of picking 22 of these and the only this trial Emma really only applies if you are exceeding the bandwidth of the network. So that means that the number of the amount of data that's being replicated through the network is limited by the connections that each one of these machine has. Um, so if all of your machines in the network have one gigabit should be able to use all of that up and transmit a lot of information. But ethereum and all these other networks were not designed to use like even 100 megabits, let alone one gigabit or more. And us as like a bunch of welcome engineers were like, well we were, we were like, you know, five G is one gigabit just selling to learn. That's gonna force 1, 10 gigabits to the home 40 plus two data centers like a standard.

So why don't we build a network that at least uses that much and then see what happens. That was really kind of our premise was that a lot of the other approaches and the market, we're really trying to tackle the tree llama with a lot of complexity and like very academic solutions, but it wasn't clear that they would be able to solve it in such a way while making the network cheap and fast and easy to use and doing like the problem like kind of the old fashioned way or the way that, you know, a bunch of hardware engineers would do. It makes the nodes more expensive, but definitely solves it. And if the hardware is the only expensive part, it gets cheaper every two years by 50% you know, there's always always more more organized and so that was really kind of, we thought like you can get it to yeah, you can get it to work with hardware. You're basically done because the rest of the, you know, the hardware industry is going to catch up to you

and what is explain to people the idiot proof version of what proof of time is versus, you know, proof state, proof of work.

Yeah, everything has to be a proof of something we call it, proof of history. And it's really this thing called a verifiable delay function and it's a pretty clever thing. It's a mathematical uh it's it's a chunk of data basically that this data structure, when you look at it, you can infer how much time was spent generating it because there's limits how fast computers can go and based on those physical limits, there's no way for anyone, no matter how much money they have, unless they build a faster chip to speed it up. And building a faster chip means out competing TSMC or intel. And that's like, you know, upwards to $50 billion these days to build a faster fab. So there's a limit to how fast you can build a computer even with cooling and everything. And the trick is to create a mathematical function that is sequential. So it cannot be parallelized. That's a somewhat tricky part because you have to make it that but also make it verifiable. So when you generate this data you need to be able to verify it and some amount of time that's faster than it takes to generate. Otherwise it's a pretty useless data, pretty useless proof. And our construction is extremely dumb and it was like one of the most trivial ones you could build and not even being researched anymore because it was so trivial.

But if you're familiar with chapter 56 that's the cryptographic hash function that Bitcoin uses for security. It's a very standard hash function used everywhere and cryptography and basically anything you do on the web anytime you like when you see that like little lock on your neural bar that has encryption behind it. It's probably using shout to 56 as the hash function to enable that encryption. The way that we run it is we run it sequentially. So when you run it, its output is the next input and you keep running it in this loop. And because it's cryptographically secure, there's no way for you to paralyze it. There's no way for you to know ahead what the result is going to be 100 generations and there's no way to make it any faster. But the way you verify it is you kind of checkpoint it every 1000 iterations or 100,000 and then those checkpoints are part of the data that you transmit and when I receive it, I start this process in parallel and as many courses I have and then to verify all of them in parallel. So in real time it takes me less time to verify than it takes somebody to generate. But I thought this was like a really clever thing because there is no arrow of time in mathematics when you, you know often physics equations when they're described in math, they work forwards and backwards in time. There's no, there's no nothing really that says that time was forward. But this is an inherent process that only moves forward and it's a pretty wild thing thing to think about it um is you know, is the universe, it's simulated?

Is it driven by this kind of process that's only sequentially moving forward, Is that why we don't like we can't reverse entropy all these other things. And that like the Eureka moment was a pretty wild experience for me. I was, I would say manic for like four days, couldn't really sleep or talk to my wife and she had to like sit me down and

and then, so what you solved was something that was essentially fast and secure. Right, and how fast did you think it was going to be? And we'll talk a bit about where it is now. But what kind of Tps, what, what were you thinking? It was gonna be there. And what, what was that compared to anything else at the time as well. Because that's a very,

very ambitious. And on the back of our envelope we thought that with hardware at that time we could get it to run. We called it 710,000 transactions per second and a one gigabit and we got to about 1/10 of that, which is still really, really good.

Like for example, just so people can frame

that uh ethereum um can do about 20 I think 20 to 30 transactions per second right now and bitcoins about seven ish and there's modern networks to do of hundreds when you look at salon as it's running today. Um it's normal load is about 5 to 600 transactions per second. That's just like what it does on the just from applications but the capacity is we can measure. It really depends on the hardware that's deployed and what connections it's running it. We have a test nut that's even bigger than the remaining with the same kind of hardware, similar hardware I would say and similar operators running it and there we can try to spam it and try to knock it down And we've seen tests that perform over 15,000 tps.

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Let's talk a little bit about the issues that the chain has had as well before we start moving into the future a bit more because it's always cuts stuff that comes up with Selena. You know, there's been a few times the change had to be halted talk through that process. What's going on? And and how are you guys thinking about that?

This is like the our biggest challenge which is maybe the one that I like to have because it's all these challenges are coming because we have users and uh the chain is on a daily basis when you look at it in normal transactions from applications from users just from people using the network. When you look at those, those about 30 million transactions per day. 30 peak day was like 65 million. That's more than than all the other chains combined. Finance marching is 1/10 of that. I think ethereum is 1 1/30. And because of the slowed we kind of see things that we didn't expect. And we were a bit, I think short sighted in the kinds of attacks people would would throw out the network and what we started seeing our bots that are designed to snipe mint like 50 minutes. This is all because of N. F. T. S.

There's some auction for some N. F. T. And people want those N. F. T. So much that they figure out how to create these boat armies that generate 100 gigabits. And once that's like tend to you know I think some people have seen 10 million packets per second being submitted to a validator. And if there's a bug in any one of these validators where memory grows you know really really quickly or some some something that we didn't do well for that load. Um That validator could shut down right could break, could run out of memory for whatever reason and if a third of them do that then the network is basically stalled until some manual intervention brings it back up. So that has happened a couple of times. And not only that there's also been congestion events where there's enough spam but it's not enough spam to knock it over but it's preventing users from using it.

So that's been I guess our curse. But it's because we did like the network is so cheap and fast that there's enough users and applications that is driving that. Um And it's one of the really most frustrating problems because the release process for these networks that's the closest thing I've seen in software to how a chip is built. You know once the ship is out if there's a bug in it. You're kind of screwed right? You've taped out the wrong thing. It's hundreds of millions of dollars to fix those bugs. Um, so once there is a release like 1.9 was plagued by these, we had one dot and baking and chestnut. We're verifying it, getting it through audits and we knew that was going to address some of these fixes but that time to do it right and make this release is like 10 weeks. Right? So for those 10 weeks, it just sucked like us, like us as engineers were like, no, we can like stuff is gonna get fixed and it's hard to predict how well the fixes are gonna like have impact on the, on the problems you're seeing. But luckily when the town shipped and a bunch of these issues have been solved and there's a bunch of technologies that are being unable to, I think really address a lot of the reliability problems to the point that I think we can stop calling, it may not beta and just call it may not.


And I think, you know, I've always taken the view of it. It's really interesting because I don't ever look at anything in its current state, particularly in this world because to do that is ridiculous because you know, the pace of accelerated change and improvements and iterations is so fast that you have to say is this likely to be resolved or not resolved. There may be other problems and other issues that come that's fine. Right? And that's how I look, you know, I've always looked at it and I saw this happening and I thought uh I find that a positive signal because it's not because what it means is we see issues you can get them solved and work on them now, whether the fix comes out in a month or a year, you know, depends what it is, but


don't like it because you know the Bitcoin world doesn't work that way, at least hasn't for a long time.

Yeah, Bitcoin has had has different issues. It's designed you know to be extremely resilient um and some some things that are normal for Bitcoin, like when a bunch of chinese hash power shut down there. There were times where there two hours between blocks and Bitcoin and that's totally fine if there's two hours between blocks and solana, the network's dead because it's designed to make a block every four milliseconds. So like pager duty is going off. People are trying to figure out why like how is this possible? Right. So you kinda have, once you make a faster network, the failure case is different than one on something like Bitcoin or ethereum right? Even though in both cases the data is never lost. You you're never um you never you never threatened the state like the actual thing that the network is securing is this copy of the ledger that's replicated until ana it's close to, you know, 4000 times and Bitcoins about 12,000 times and ethereum 6 6000 times. That's the security and network, that's what you're trying to protect as long as that state is replicated and at least one of those copies survives and is able to tell the world no, look, here's the valid copy. You have all these cryptographic signatures to prove it. Everything is fine in terms of the security of the network.

But reliability when you've designed something to run like at a foreigner, millisecond step is totally different than something that runs at a 10 minute step like Bitcoin. So we have, you know, just a whole different set of challenges than a network. Like Bitcoin.

One of the things that, you know, you've probably heard that, you know, I spent a lot of time looking at Metcalfe's law and how to value these networks and that's when you really go onto my radar screen because it's the only thing since that I've seen where we've seen so many users accelerating such a pace over time. You know, it slows and slows down depending what's happening the market with the amount of connectivity between the nodes i developer activity and other stuff going on. How the hell did that happen? Because it's pretty extraordinary. Was quite a big breakout versus almost any other chain. Right. I think the only one polka dot has something similar, but not in the same way with end users, They've got quite a lot of developers, How did that happen?

We got lucky in a couple of decisions I think. Um, so we never raised a ton of money in those early days. We, you know, are, We were always kind of 18 to 20 months of runway. Our competitors raised hundreds of millions of dollars. We had like a big break where we raised 14 in like the summer of 2018. So we never had enough runway to, to like build tv incompatibility or anything that wasn't like purely necessary to show that the network was so fast. So we had a, our own set of like our own language, smart contract language and engineers are naturally curious and that was like, I think a really good decision had I had more resources, we probably would have built the VM compatibility and then we would have been one of the 10, the VM chains trying to compete with, you know, L two's and ethereum itself and like a whole bunch of other like things. The other thing that we made the right decision was that, um, when we were launching, We launched March 16, like we announced at auction, think March 9th or March 10th or something like that. Uh, the network went live three days later was the double blacks won everything in the market crash. Bitcoin dropped and the S and P 500 dropped by by 70%. This is 2020 March. We were just so exhausted from getting to the point that nobody wanted to delay.

So we just went for it. And that was another, I think lucky decision because we're just a hair earlier than all the other next generation chains earlier than polka dot then been in smart chain than anyone else. And because we were new and had like new properties that I think got the ball rolling with doves like doves are naturally curious and they want to try new things. You give them new tools will go start messing around and just being I think, you know, these are like decisions that are really hard to predict will have that much of an impact. But looking back at it that I think those two things like played really outside roll

the other thing that had an outsized role that you probably weren't expecting was N. F. T. S.

Yeah, this was N. F. T. S. You know, crypto kitties, like literally you know, you this uh this was something that you know, we always in our marketing slide like look crypto kitties knocked down the theory and this wouldn't happen on Solana. But we didn't really think about him. Like the Solano's tagline was Blockchain and NASDAQ speed and really focused on projects like serum. But we saw N. F. T. S were um started to happen on ethereum and they were interesting because they were forming communities, there were people that were getting into these PFP sets and kind of acting like early bulletin board style social networks, you know like in the nineties. So we had to, engineers from labs build out the smart contracts to define the N.

F. T. Standard and kind of like that was the meta plaques being incubated and as soon as that was launched and we had like a couple of minutes that we got together like we scoured the earth for anybody that would want a mint on salon and nobody really wanted to at the time. But we got the tools out there and the decision that we made, which was again lucky one was that we should make the tools available freely and easy for non engineering doves to just go mint some art. So we tried to minimize it to the point that it was kind of like wordpress still had to be somewhat technically savvy, like Kelowna Git repo and go run through it and then run run through the, through the minting process. But um that was enough to where we started seeing first, you know, just a few people and then hundreds and then thousands. Like some cases it's like half a million N. F. T. S. Mint. Yeah, half a million N.

F. T. S minted a week. We've seen days where it's been to over 200,000 and FTS minted in one day. It's crazy amount

that and that whole period for me felt like it was a total pivot or a lightbulb moment in salon, I'd like to hear your thoughts on this because you start off as like you know, NASDAQ speed right? Your your idea is we can do financial market, computational staff Blockchain for financial markets and from what I can sense and this is what I really want to hear from you about is you figured out actually you can be the mass market consumer application. Is that where you, if that is where your head is moved to?

Well I always thought that if we can get the serum use case to work, then everything else from an engineering perspective will be easy because that's a really really hard thing. That's a central limit order book that runs on chain. I think we're still the only the only smart contract platform where that's functioning. So if we can solve that problem, I thought all the other things would be at least easy from from like a technical perspective, but if kind of but like actually supporting something like N. F. T. S took our team and our ecosystem and a lot of people like in our company, like a lot of work because just because you have the tag doesn't mean anyone's gonna use it. So you kind of have to go out there and find those folks and support them and those degenerates meant um That person who who ran the mints, they didn't, they didn't like build any info to launch it. They had no clue that like they could, they ran like they're they're meant on a karaoke a server that went down like instantly because instead of you know a few 100 people showing up they had like 50,000 people show up. So like we like our engineering team like went and like rebuild they're in for like uh that weekend and like got it up and running like basically it was a lot of hand holding. Um but because we saw the demand, it was just exciting like how could you not like you know try to figure out and make this work? It's really unexpected where the stuff's come from I think with N.

F. T. S. Especially because they seem so like kind of um silly like ephemeral right? Like you can't actually believe that they'd be worth anything. But then you kind of start thinking about it. How does artwork, why is this why is my woodcut prints from the artists that I like worth anything? Like why did I spend hundreds of dollars on it? And it's just a print, right? And once you once you start thinking you know like thinking a bit deeper about it and how communities form and how culture forms it makes starts making more sense.

I also think that the Blockchain world is trying to is now starting to figure it out that narratives are the most vital thing in the space regardless of the technology because there's always something new, there's always something different coming along, there's always faster cheaper, whatever it may be. And that being known as the by the narrative for owning a particular class in space and Bitcoin has done a good job of that, has done a pretty good job with that and then we start to see other chains if they don't stand for something, they're nothing because people don't get behind it. So you don't get adoption effects in the same way. And it feels that some of and what really struck me when we met in Utah is that is the kind of mass adoption consumer layer is something that it feels that you guys are really focused on the kind of people you're talking to the kind of applications, you're doing the phone, the shop, you know, there's a lot of stuff that makes me think, huh, these guys are actually going after the the bigger picture stuff. You know, we talk about N. F. T. S. Like the big picture for N. F. T. S for me or the next faces ticketing.

I mean it's a no brainer and it's much faster way of getting 100 million people to use Blockchain than it is to get them to buy a picture of a penguin. You know, it's it's so that consumer phase I think is the next phase and I think you guys have sniffed that out somewhat.

It's the hardest thing because what I've noticed is that non crypto native communities reject crypto and Blockchain like their immune they have like an immune response and you see that with gaming you know I thought gaming would be an extremely obvious thing and it's really really slowly incrementally moving forward. But you know when anybody ever announces like any game announces N. F. T. Support gamers just grown like oh this is just another way to like milk money off of us right? Like so how where this like consumer breakout things could happen is really really really hard to predict. The same. Like stepping again was something that none of us expected to get any attraction.

That was the that was another great accelerant super. I don't know how long lasting is going to be but it's proven something and I think that was really

important like I think people have to start thinking about how I build something useful like that. Uh The end user really enjoys, maybe it's running maybe it's playing the game and the entertainment value of it is worth the cost of whatever they're spending in that in that game that that's the key part is that like you have to even if there's a component where there's N. F. T. S. And digital ownership and free markets that the end user is fine with all of that going to zero because they're effectively buying like a ticket to a show right? Or whatever right? Like and maybe the the outcomes that they're like receiving are more entertainment or health or whatever like their actual real value delivered to people unless on um markets like and in retirement or whatever or like an investment like especially like something like a game you know like does it make sense for some games to have like token driven economies like you can have like a first person shooter with guns that are N. F. T. S. And bullets that are the token.

And me as a user, I shouldn't be thinking about like these are my retirement bullets, this is my investment in bullets right? But me as a somebody that played a bunch of games um I was a lot more involved in Rune scape because it had a free market and you could kind of buy and sell things and there was a bit of of my brain was made way more engaged and it was a lot more entertaining but never when I played it that I think okay I'm gonna this is gonna be my my like uh you know portfolio of of like of you know resources like wood and like whatever like gold and stuff like that. Landscape, gold. Um So there's like a ways too I think make make crypto and entertaining or useful part of something but I think there's a lot of ways where it just fails completely and that's where I think developers and people working in the stuff have to be really careful and again like a lot of communities that are not crypto native will reject it outright. So I I want to see this like figure out how to get us from 10 million people that signed transactions globally. Like this is probably including Salon, a meta mask, all the chains. How many people actually go click sign on any of these wallets, it's probably 10 million globally. How do we get that? 200 million? There's a really really hard problem. Um And you know we're throwing darts at a board. Hopefully some of those will stick.

I'm seeing a lot of people coming from outside of the main space who are solving some really interesting wallet stuff. So people shouldn't care what chain a token is on. You know an N. F. T. S. On. They shouldn't even know they should be able to transfer easily,


it easily, store easily.

Maybe that does it. Again that's not uh I think decided question because people care about Bitcoin because it's something that's

a group of people right? We're talking about getting the random person in the street to be involved in using Blockchain technology at scale not just tokens for for storing wealth and stuff.

I think there's some things that that's true. So like us dc transfers like transferring dollars. I think most people shouldn't care about Blockchain if it's us dc is natively supporting it. It shouldn't really matter to them which one they're using, they should probably use the cheapest fastest one Alana but that's because the dollars are basically held by U. S. D. C. And you're using a representation of it that's kind of trusted. But folks that are like true believers of Bitcoin believe that it's gold like digital gold for a certain reason and you can't kind of move it like you can't take that concept to move it somewhere else. And similarly if you truly believe in digital ownership something has to guarantee it. And that is the chain. Right?

Sorry I'm what I'm not suggesting is that I'm suggesting the wall it should be in different so I can have my salon A. N. F. T. S. And my Ethan F. T. S. And it's a seamless experience without that

100% 100% that that I think we're still ways away. But that should be you know like when I started Selena my initial like like somebody worked at mobile it's like why isn't signing just natively supported? I literally worked on secure elements and trust zone at welcome. Like I know the team that built this thing like why don't they do these cryptographic signatures on the on the device and give you a trusted display that cannot be spoofed by any application and like really guarantee that no one can ever steal your seed phrase or mess with that signing process. It just seemed so obvious and so easy for me but we didn't have the resources or I think the kind of the right team to to do it until six months ago when we met awesome.

Another area that I think is coming, Love to hear your thoughts for mass adoption is music and that whole industry,

I've talked to a bunch of people on music and it's also really really tough because there's a lot of value. That's awesome from music N. F. T. S. For artists for platforms even. But it's it's hard to show that value to the fans yet. And this has been like I think the biggest challenge like I think but what potentially N. F. T. C. Could enable is this idea that artists can self publish, set their own royalties.

They have that kind of what effectively all the legal financial infrastructure that our label provides. Do that with a metal plaque sport press click next style thing and boom you're done and you have all of that baked in for life and that's a really really powerful tool. But why does the fan care? Right. And it's a it's potentially an amazing thing for like even platforms like Spotify right now. I think They give probably 80-90% of their revenue to the record labels. Like if they could instead give that to artists. Spotify would be a lot happier to to give it directly to artists as opposed to the record labels. Um but why does the fan care? We don't know yet right? Like I think

but the point being is do they need to know the idea is the it doesn't necessarily have to be the fan caring about owning the piece of music like an N. F. T. Right? We're anchored on this N. F. T. Idea of ownership. But maybe the Blockchain rails itself is the best way of giving up the money amongst the industry in a more equitable fair and faster way.

But that's there's a really hard cold start problem there. Like the Mcafee's law problem right? Like how do you get that initial network from 0 to 1? Right?

Because somebody like Spotify is going to do it because they have to, It's like the reason people like Meta are working on Web three is they know they have to because in theory would suggest that the pie is too big for them not to be attacked. It's the same for Spotify.

I would hope so. So um I hope things like that like really transform our like how artists make money. Like we already see just for digital art. It's been like life changing for a lot of these folks. Um There's a girl from high school that made a beluga whale N. F. T. Collection that sold for $1.4 million. And a bunch of that money went to the conservation of beluga whales. I think that was the biggest check that nonprofit ever got. But that changed your life right now. She's probably going to be an artist right?

Like like she knows how this, how this stuff works. Um And I think the long tail of artists on crypto actually do pretty well. There's a lot of, and if teammates that are not the million dollar mints you hear about but a lot of them do 20 $30,000 and that's um massive


artists that are especially like doing this part time, right? Just for fun. That's uh that's life changing. Um

what's the idea behind hardware and the phone? Because obviously people think you're crazy doing that.

Um Yeah, so probably if I didn't spend a carrick welcome. This wouldn't happen. Half of the salon a team wasn't exc welcome folks. This would have never happened. Um and if I had not met Jason who was the founder of awesome privacy, which is the company that the O. E. M. That's building the phone, this would have never happened either. Um and he, he was the architect of the ipad pro. So he was an awesome hardware engineer can build just magical things. He like worked on crazy things like James Cameron submarine door. The thing that withstood the Mariana trench pressure.

So he worked out that uh did special projects for like johnny Ive and stuff. Um he built this company to build an amazing phone and when I met him, I just kind of mind meld with him that privacy and web three just are super intricately related. You know what three developer takes a user name and password they want to know who you are they want to know is like how do you connect your wallet? Right. And what they care about is your signing securely like is your because your setup correct and like they want to know less about the human and more about giving a great experience like and that's actually privacy first and has no there's no web three business model that depends on stealing people's data and shoving the mats. So it's just kind of inherently transforms how things or monetized on the web. And for privacy to really take hold you need to have a business model that depends on it. Right. Otherwise it's gonna be like the privacy that google and apple sell you right. So I think it just kind of makes sense that if if we get to uh an age where there is there are 100 million people that are actively signing things in crypto I think that has to be on mobile because that's the device that most people use and it has to be secure and all the hardware to make it secure and easy. Is already there secure elements have been in devices since biometrics. So so I've been trust on execution like when you face idea fingerprint scan, it's using the same exact pieces of hardware.

So all we're doing is you know we have like we don't have a 30 person team working on this phone awesome, awesome. The O. E. M. Does we have about five folks working on the software layer changes that we need to make and it's adding tip 39 which is you know most folks that have used ledgers remember entering those passwords. It's basically the kind of style password uh C. C. Creation and recovery. Um that's going directly to the hardware wallet connector. So when web three app loads, you don't know if it doesn't ask you which of these 50 wallets you support and then another one ask you which of these different $50 do you support? It just automatically happens because it knows the operating system has your seed. Obviously that means a web three depth store right to support these applications and payments where we want that experience to make payments to be as delightful as using Apple Pay.

There's no, you know the context switching through like an app link or going into you know fandom as awesome as they are. The experience of using the web view for the mobile applications. Still pretty gnarly, right? There's all these transitions and links. All that stuff goes away and becomes I think as magical as you know using Apple Pay like that. That's kind of my my gold standard. Um And I think we can do a victory lap if there's an application that's built for this device. That is so good that somebody goes and acquires a device. It means that crypto is some real world use case that people value. Right? And the value that you asked for it and that would be awesome. I think that would be like an early sign that we are heading to a world where there's you know billions of people using crypto on a day to day.


it doesn't sound like you have high expectations for the phone. You want to put it out there, see what happens

and um

in terms of quality of the phone but in terms of the sales and the adoption, I

worked on the amazon fire and the Windows phone and a whole bunch of other ones. All those things

failed death is what you're telling me

Their target was they needed to sell millions of devices a year. Like out of the gate. We actually don't. This is the cool thing is that we had to like 25 50,000 sales. Um that's a better distribution channel for three doves to have direct access to to like active web. Three users on mobile without any restrictions without 30% fees and N. F. D. Sales, right? That's a better distribution channel than going through the big app stores and jumping through all these hoops.

So when you when you give it out for free

free is the worst price. Right? Like I think I

get it. But something


something that scales fast.

It is priced, it's a high end device. Typically this device with the specs would cost 1400 bucks from Samsung. It's 1000 and as soon as we get this thing out to market and it works and all the software like all the bugs are out. I think we want to do a low end device that is as close to the cheapest price that we can make and then scale it out and there's potentially

right if you've got enough people on it, it's a bit of a chicken and egg. But if you get enough people then it becomes as you said, a very good place to build an app.

Exactly. But like our goal is not is not to go to general consumer yet because crypto is not there yet. It's to build an awesome device for crypto folks and then build an awesome application store for doves right? And when that kind of network effects like those that the wheel starts starts flowing and we see really good applications that are mobile first drive adoption. I think this is really the moment to go consumer. Right. That's when we buy the Super Bowl ad or whatever.


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So what get to you personally excited? What do you think that's coming in this space, whether Salon is involved in it or not, but what gets you excited? What do you think this is gonna be huge or this is gonna be cool, whatever it is, whatever your benchmark is,

I was really like, uh like really taken aback how quickly capital can form and how quickly users can coordinate that capital

constitution dow was amazing.

Yeah, exactly. So that was maybe 2010, people that raised $40 million dollars to do something kind of silly by the constitution. Um imagine if we had 100 million people with crypto native crypto users, they're active users could, they coordinate to like buy every coal plant in the world and shut it down. Like once that ability is there, right? Once the execution is clear and you have you as an end user have a direct meaningful impact to make it go. It's a really, really powerful thing, right? You're not like you're not like, you know, sending a letter to your representative to go talk to Congress three months later, nothing happens. This is literally like press now, this happens like, you know, like now, right? That that's a really, really powerful tool to, for action. So that I think to me is both a scary thing and like the really exciting thing about crypto enables is that really, I think eliminates a lot of the bottlenecks that we have and decision making and financing things in the world.

The, I mean I spoke to you know him as well, Kimbal musk on real vision, don't interviews out yet but about this because I think the philanthropy angle is massive for, for, you know, Blockchain technology in crypto overall because it's a way of organizing people with sort of accountability in a way that doesn't exist in, in in large charitable organizations. Think of something like the world Wildlife Fund. I mean who the funk knows where the money goes, but it's not where you want it to go, but you can coalesce capital super fast on super specific things with a set of rules.

My, my cow, I kind of look at it is that like facebook gave us a social graph. You're always going through some intermediary and crypto is giving us a super connected graph. Everyone is directly connected to everyone else like that. And that's a kind of insane thing to think about that you're in the same chat room like with everyone else. Talking

of chat rooms that feels like another thing that needs to get solved a bit better than discord you have you guys thought about that kind of application as well because it's it's a bad experience so far. Right?

Um I personally like discord, I think it's uh

When you've got more than you know 1000 people it's utter

chaos. Yeah. It's really hard to scale groups to hundreds of thousands right? Like and moderation and all this tooling is always a little crafty but the fact that it can handle that much load it's pretty awesome.

It's fast and efficient but it's just not great

where stuff like this. I think I think in a lot of ways you don't need like crypto native apps there's an opportunity for your founder and you believe in like this is your thing. You love communication. There's an opportunity to go build crypto native versions of these things and potentially be the next discord or the next twitter. I think that clearly exists but I think it's not may not be necessary because I think users that are using these networks, they are grouping themselves based on N. F. T. S. Or governance or how they participate in crypto that's their kind of the social graph and then they communicate over twitter or discord or anything right? Um There's an opportunity to build tools that cater to those folks, make it easier the better ux like reducing fraud by verifying that like when I post my you know N. F. T.

That is actually mine and it's not a scam version of it like there's a bunch of awesome ux and awesome security features that these companies could add. But I think what's cool is that in some ways they're relevant right? Like I I'm in if I'm in the monkey dow I don't it's not like I'm in a yahoo group or a discord group, I'm in the monkey tao and it's kind of doesn't matter where the monkey dow hangs out right?

No that's right. And you know I love to see the fact that community doesn't take place in one place anymore. It just takes place all over the place.


And you know I think we need to make that experience a bit better at some point you know tying together what's being talked about on Twitter and what's being talked about in your in your discord group because and what's being talked about in your telegram group or whatever if you can put that somewhere to keep on top of the ship without having 15 apps open would be nice. Yeah.

Yeah. I don't think that's ever going to happen until we have like a G. I basically that does it for you.

So anything else on the road map that you're excited about. The one thing I want to talk to you about another. Another thing I've noticed is your hacker houses. I think that's really interesting. What are you doing there?

So this was after Breakpoint Breakpoint was the first conference it was the first conference after we've all been locked down on Covid and had this kind of amazing year and the energy that everyone felt when we got to break on was just like insane. You know, I want I didn't expect that many people to show up and the people that showed up were just awesome and a bunch of the depths they started a hacker house where they were building applications or prizes and stuff and we wanted to continue it and um we basically organized these events, Different different place in the, in the world, different city, we get a house or whatever venue together and people show up and I think we had like over 9002, there's something like that developers go through these over the last year.

So you've created a developer community.


I mean they're meeting each other getting together

and like Singapore Seoul like Prague like London san Francisco like Miami like basically everywhere that anywhere that we we thought that might might hang out and What I think that translates, I hope is that our hackathons that are actually I think a bit more formal had get way more traction and despite this massive market downturn, this hackathon that just happened had the most registrations like 14,000 twice as many as the previous one And more teams submitted a project. 700 teams, the previous record was 550. So despite like all the markets, you know, being in the shitter debs are still interested in like getting into crypto starting companies and that's been awesome. The biggest kind of thing. That I know that the reason why I know it's real is because when you look at funding, um, the blog published like Salon a funding stats and you look at the amount of funding that's happening like month over month or quarter recorder, it's still rising. It's been over a billion dollars in funding to teams that's, you can't fake that, right? You can't, that's real money. That's venture capital is investing into sea level teams. And those teams are now like on the hook to grind for product market fit, figure out how to get users to use crypto, right? And that's really the driving engine. So

Yeah, I found that massively encouraging through in this cycle and I've been in this space since 2013 this time, it's different. There's so many people building. I think the VC cycle came at the right point. So everybody's got capital and they're all working, everyone's busy working now as opposed to feeling miserable and shitty about what the market's doing. So


think that that has been a really different thing. We've lost less participants in the network over this period of time. Sure, they become less active, but we've lost less participants, which again, shows something, how have you as a final question, how have you dealt with the fact you launched 2020 you all feel like heroes? It all goes up in a straight line and then comes down 87% and you're like, really? How do you, how do you deal with the psychology of that? Because it's, well

for us it's at least not the first rodeo. Like we literally joined, You know, started building salon of the company at the tail end of the last bull market and just saw each dropped 70% in front of me and like while we were trying to raise money. So and then having two years of like nothing, right? And like just

Had you raised, did you raise any money? So you like one of the companies now who's who's raised the money and you're just building through the winter, did you raise money back in 2018, 17

Basically right? We raised money in April 2018 which was already, it had dropped from its high by about 40%. But there was still a lot of um, what that bull market created is a lot of folks that invested in the F. I. C. O. They were smart engineers, they weren't funds yet. And that bull market for ethereum, a lot of those literally ethereum folks funded solana despite what many people think it wasn't like some shadowy cabal of venture capital, it was a bunch of like engineers who thought that what we were building was kind of crazy and kind of cool. Um, so that was, that was really, I think what the theory and created

You. So you raised the money in April 2018 starting to become a difficult market. You launch in what March 2020?

Yeah, right. In the in the worst possible what we thought the worst possible time but ended up being the best possible time because that literally marked the bottom that like horror. But Covid and the stock market crashing at Bitcoin was literally like, I think we couldn't have timed it better I guess.

And did you find that building over that 2018 19 period was good because it was less distraction about the tokens, you know, or indifferent

was hard. It was hard. We were working a lot under resourced. Always stressed about runway. Um, and you can never, you were never sure if this was gonna work or not. It was, it was a lot more stressful. It's a stress is important, right? It's not, it's you as a founder is coming into the space right now is a really good time to come in despite the stress. Right? Like I think the problem with the bull market is that you may raise a lot of money but you will not get signal that you have product market fit and you're building something right? And when the bull market crashes, a lot of those companies may be dead or underwater and not fungible because all they did was raise a bunch of capital but not create growth or PMF. And what really drives the next round is growth.

Not not how much you raised in the previous round and not your valuation in the previous round.

No, it's all about adoption in the end. I mean without it you've got nothing. It's you might have the best track in the world if you don't get adoption, you've not got anything. You know, we've seen, we've seen this over and over again.

The great thing in the bear market, your adoption is relative to everyone else. If you're the only company that has like the users right? Even if it's small number that may actually be enough to get to like raise enough capital to stretch things out until like things really pick

up. And so look fascinating to talk to, really appreciate your time. And let's try and get through this bear market and let's see what comes out the other side of it.

For sure. Thank you so


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