Alex Tapscott on the Promise of Digital Disruption

Living a life in full is a conversation you always wanted to have with that person who gave an amazing TED Talk or the author of one of your favorite books, or that inspirational Olympian you always wanted to know more about. It's graduate level conversations with those making a difference in the world and in the lives of others. This show brings you new ideas and approaches so that you can live a life in full. I'm your host, Dr. Chris Stout and I hope you enjoy this episode. This episode is brought to you by the nonprofit I founded, the center for Global Initiatives. The center is an all volunteer organization so there are no salaries and thus all tax deductible donations can go to the work. While our key country partner is in Tanzania, our work is global and generally focused in the areas of education and healthcare. We also help others to get their nonprofits started or augment others project based initiatives. It's our goal to open source humanitarian intervention and to help make it easier for others to do more good in the world. We are proud to have been ranked a great nonprofit every year since 2011 and to have achieved a Platinum level rating by Guidestar Links. In this episode's show, notes will take you to published articles on our outcomes, a number of helpful tools, and downloadable resources which are all free always. Please Visit us at CenterForGlobalInitiatives.org and be sure to watch our video at Patreon.com DrChrisStout to learn more. Thanks. Welcome to another episode of Living a Life in Full. I'm your host, Dr. Chris Stout. When you think of modern technologies that aren't gadgets and gizmos, you probably think of the web and with it the Internet. If so, you aren't really thinking of modern technologies. We are entering a new age. We've moved from the read only Web, which had little functionality for interacting with content, to the Read Write Web, which offered seemingly endless collaborative opportunities, from sharing things with friends and family to shopping at your favorite brands. But the profusion of cyber attacks, data hacks and online profiling have left many of us to view digital life as a Faustian bargain in need of a major rethink. That rethink is Web three, the Read Write Own Web, A decentralized Internet where individuals own their own identities and can securely trade assets like money, securities, intellectual property and art. Peer to peer, made possible by blockchains, the foundational technology of Bitcoin, Web3 promises the biggest shakeup of business since the invention of double entry bookkeeping in the Middle Ages. It is the Internet's new frontier. It brings with it a new lexicon and vocabulary for concepts and tools like the blockchains, the metaverse, NFTs, DAOs, decentralized finance, and Self Sovereign Identity. In this episode, Alex Tapscott will serve as our guide and interpreter to this brave new world. Alex is the author of the Wall Street Journal and the Globe and mail bestseller Web3 charting the Internet's next economic and cultural frontier. He's also an entrepreneur and a seasoned capital markets professional focused on the impact of emerging technologies such as Web3, AI, VR and AR, the Metaverse, Blockchain and cryptocurrencies on business, digital, government, and society. Alex is the Managing Director of the Digital assets Group at Ninepoint Partners, one of Canada's leading investment firms with more than $8 billion in assets under management. Ninepoint launched the world's first carbon neutral Bitcoin ETF and recently the Ninepoint Web3 Innovators ETF. Alex is also co author of the critically acclaimed bestseller Blockchain Revolution with Don Tab Scott, which has been translated into more than 19 languages and sold more than 500,000 copies worldwide. He's also written two other modern classics, Financial Services Revolution in 2020 and Digital Asset Revolution in 2022. Alex is sought after worldwide for his expertise by business and government audiences. He has delivered well over 200 lectures and executive briefings to business audiences at firms like Goldman Sachs, Go alliance, IBM, Microsoft and Accenture, to name just a few. He's constantly ranked a top influencer in the blockchain industry. His TED Talk Blockchain is Eating Wall street has been viewed over 820,000 times and his writing has been featured in the New York Times, Harvard Business Review, the Globe and Mail, the Financial Post, Time, Fortune, and many other publications. And he's the co host of the podcast Defi Decoded with Andrew Young. In 2017, Alex Co founded the Blockchain Research Institute, a global think tank investigating blockchain strategies, opportunities and use cases. Alex is a graduate of Amherst College cum laude and is a CFA Charter holder. Alex, welcome to the show.

Delighted to be here. Chris, thank you for that wonderful, generous introduction.

Well, sure. I think it really speaks to your bona fides in terms of the topic and the expertise that you brought to bear in your book. I know your father Don, who first and very fittingly cyber introduced us. Maybe you could start off with a little background of a bit of your family history between those years and now.

Certainly. Well, it was never a dull moment at the dinner table. When I was a kid growing up, I Can imagine. We didn't talk about the weather. Yeah. So, well, where to begin? So I was born in Toronto, Canada. Born and raised. And as you mentioned, I went to university in the US at Amherst College. And after graduating from Amherst with a degree in what is unique to Amherst, it's called law, jurisprudence and social thought. You can think of it sort of as a hybrid between political science, pre law and philosophy. I naturally took that degree and entered the world of investment banking, even though I didn't know an asset from a hole in the ground, as they say. But I thought that could be an interesting thing to do. And this, I'll add, was September of 2008, which many will recall.

Oh, boy.

Period in the global economy. So I was grateful for any job and any opportunity to start a career somewhere. And actually I took to it. I loved the business. And eventually I moved into capital markets role where my job was to really to provide investment advice and ideas to institutional investors. So rather than individual people, these would be, you know, pension funds, hedge funds, mutual funds, you know, managers running in collectively billions and billions of dollars. And it was actually while I was in that role that I first learned about this new thing called bitcoin. And this, well before the word blockchain and Certainly the word web3 entered the vernacular, there was this one asset. And a lot of people were frankly confused about it, and some were curious. And I sort of fell into both camps. I was both confused and curious. I wanted to understand what it was, how it worked, and what role, if any, it had in the financial markets where I was working. You know, we at the time were starting to get some interest from certain companies in the space that were looking to us to maybe raise money for them and provide you advice on mergers and acquisitions and so forth. And we didn't really have anyone in the firm who knew anything about it. So after reading the White paper and a few blog posts, I basically became the resident expert on all things Bitcoin because no one had really done anything, anything else up to this point.

Right.

And it was actually a few months later when I was on a ski trip with my dad in Mont Tremblant in Quebec, that he asked me, how's work? What are you looking at? Is there anything new and exciting that you're interested in? I said, you wouldn't believe it, but I've kind of become the resident bitcoin person at my firm because there's no one else who really knows anything about it. And I decided to become a bit more about the subject and he said, wow, that's really interesting because I'm actually running this big research project at the University of Toronto. You mentioned him in your introduction just for. For the benefit of your audience. My dad, Don TapScott, has written 16 books on the impact of business, impact of technology on business, culture, society, government, civil society. And so he is someone including some major bestsellers like Paradigm Shift, Wikonomics and others. And he at the time was running this research project at U of T, the University of Toronto, looking at how technology was enabling new forms of global problem solving. And he wanted to know, or the project was interested in, is Bitcoin one of these new kinds of networks or new kinds of technologies that could maybe address global problems or solve problems that existing technology solutions could not? And it was a very fascinating way of framing the thesis because for me, I was interested in, hey, this is an asset. It's going up in value. Maybe you can make money on it. But the deeper that I looked into it, the more convinced I became that bitcoin was something very different. Bitcoin, for all the hoopla, is really just a digital medium for value. It's a way for two individuals to use the Internet as a way to move money peer to peer, without a middleman. And that hadn't existed in the decades where the web had scaled and had become so meaningful and impactful. It wasn't for a lack of trying. Just to go on a bit of a side tangent here, Marc Andreessen says that the fact that the web didn't have a transaction layer was its original sin. And Bill Gates in 1955 said in his major book that every person should have a wallet with a way of spending digital cash. And Even Elon Musk's X.com, the original one that predated PayPal, was started off as a digital cash project. So everyone, I think, from an early age thought, you know, it would be a good idea if it was just as easy to move money over the web as it was to send an email. That's a really good idea, right? And of course, everyone kind of sees that intuitively. But where a lot of these efforts failed was in solving this thing known as the double spend problem. How do you ensure that when you move something of value, peer to peer, that you don't still have a copy, basically, that you can't spend the same dollar twice? Because, Chris, if I send you an email and I send the same email to someone else, and I attach a PDF of, I don't know, research report I've written, that's actually a feature of the web that means I have a printing press for information, but if I send you an email with a PDF that's supposed to represent 50 bucks, it's really important that I can't send the same $50 to someone else.

Right, right.

And so this is the center, this is the central issue, which is how do you ensure that when you use the web to move value, that you can't send the same thing twice? And so bitcoin, what was remarkable about it is that it actually worked in solving this problem. And it did so through this ingenious invention, this thing known as a blockchain. And I'm happy to explain in greater detail, but let's go back to the original story. So my dad was asking me, you know, bitcoin, what do you know about it? Could you write a research report? And I was at an interesting sort of stage in my career where I was looking to broaden my horizons. I was loving the business that I was in and the work that I was doing, but I wanted to do something else for a time, see what else was out there. And so I agreed to do this, and I did it while I was still working full time in investment banking. And the research report that I published is called the Bitcoin Governance Network. And it was basically about how in order for Bitcoin to reach its potential, it needed to have a multi stakeholder approach that included input from private sector, from technologists, from government, and from different entities in society. And that work that we did together led to other work and eventually led to a book proposal. So my dad's agent came to him and said, you know, this work that you're doing with Alex on blockchain is really fascinating, and I think that it could make for a good book. Do you think there's enough meat on the bone here for a book proposal? And he said, oh, and by the way, this idea of father and son, we think is a feature. We think that's a really cool thing and will make the book really attractive to publishers. My dad came to me, kind of like, to paraphrase the Godfather, an offer I couldn't. But a good one.

Yeah, yeah.

Not like the one in the film, right?

Better outcome.

Better outcomes. Good outcomes either way. But basically, do you want to put this proposal together? We'll see how it goes. So we put the proposal together, and to our delight, Portfolio, which is an imprint of Penguin, bought the rights, paid us a decent advance, and three months later, I resigned to write a book, having never written A book to work up with. My dad having never really done that in a professional sense, like I had a whole career as a financial professional before, but. And with no clear idea really of what was going to happen afterwards. But I figured basically that worst case, that this was the start of something big potentially. Right. Worst case scenario, it wouldn't work out and I could go back to what I was doing before. Best case scenario, I was being offered a seat on a rocket ship. And. And when you're offered a seat on a rocket ship, you don't ask which seat, you just get on.

I like that. Yeah, absolutely.

You asked for the story. This is that, this is the story.

That's great. Well, a quick aside with that. What was it like to, to do this with your dad? I mean, first time author for you and you know, was, was it a kick to do it or was it you guys were at each other's throats or who edited who or what was that process like?

I would say that we both got lucky with the choice of co author. And I certainly can say that for myself. I mean, as a first time author, being able to collaborate with someone who has done it a dozen or more times before so successfully was the greatest gift I could possibly imagine. And the fact that it was my dad made a that much more special say that we often disagreed on certain things, but the relationship, the working relationship was always great. And frankly, you know, if you're going to collaborate with someone, you want to disagree on some things, if everyone agrees, if both parties agree on everything, then one of them is unnecessary.

Right, right.

What's the point of the other person?

Exactly, yeah.

And so we collaborated really well and I was very fortunate to have him as a mentor on the project. He would say that he got lucky with his choice of co founder because quite frankly, the subject of blockchain and bitcoin and all this stuff is focused on how the web can be used as a medium for value and assets. Right. So the first era of the Internet, the web was the Internet was a way to move information. And with this new web, it's a way to move value. When it comes to value and assets, you're dealing with a lot of financial concepts. And I was someone who was actually trained in that area and I'm a CFA charter holder. I had seven years of work experience in capital markets and so I brought a sort of practical knowledge of finance that I think was really helpful in the project. And so together the collaboration was incredibly seamless and fun and very fruitful.

That's great well, and a benefit to us all and and immensely successful and popular as it should be. So let's take that as a segue and let's shift into your newest book, Web3 Charting the Internet's Next Economic and Cultural Frontier, published by Harper Business. But before we do, I want to read some of what some other folks have had to say about it. Larry Summers, former United States Secretary of the treasury, said Web3 is a breathtaking innovation that holds great promise but also peril for those who dismiss the future. Tapscott has written a book we need as we enter a new epoch for computing and for society. Steve Wozniak, co founder of Apple, said, With Web3, Tapscott has captured the zeitgeist. We are on the brink of an extraordinary new era where technology can reimagine everything with clarity of thought and deep insights. This book explores Web3's immense potential. Dan Shulman, CEO of PayPal, said Web3 will have a profound impact on the global economy and our society. Alex Tapscot again stepped up with a timely and essential guide to help us navigate the tremendous change underway and the challenges and opportunities ahead. And Klaus Schwab, chairperson of the World Economic Forum and actually a friend of mine, he very kindly co authored the forward to three of my books. Said with the rise of generative AI, the metaverse, and the next generation of blockchain, Web3 is now a breakthrough platform for innovators to rebuild the world of business, business and the global economy for a new era of prosperity. This extraordinary book shows how and Alex, honestly, well deserved high praise from some pretty heavy hitters. Congratulations.

Well, thank you. And it's humbling, honestly.

Well, gosh, and these are guys folks that know what they're talking about too. You know, this is no easy crew. So not necessarily does everyone in our audience as we talked off Mike before, it's a fairly heterogeneous group. But not everyone may have the experience and expertise that those reviewers had and that that you've shared in the book. But maybe you've kind of teed it up for us a little bit. But could we start off with maybe some basic 101 and training wheels are still on if that's okay. Maybe like what are the most significant differences between the web3 like the transaction transactional things you're talking about and the current Internet infrastructure that morph folks are familiar with?

Absolutely, Chris. And yeah, I did tease it a little bit with the discussion around Bitcoin, but let's walk it back a little bit. So the Internet and The Web are slightly different things, and I think that people often conflate the two. The Internet was actually founded as a project by darpa in the US government in the 1960s and 70s. And it was basically built as a communicating protocol that would allow the Defense Department to continue to send nuclear launch codes in the event of an attack. The idea was that at the time, everything was highly centralized, so if a nuke were to go off in New York City, the entire telecommunications infrastructure would go down and wanted a network where you could have different points talking to each other without a central point of failure. And that was the origin of the Internet. And for 20 years or so, the Internet basically was a tool that grew steadily, but was used more or less by people in government and academia and by hardcore technologists. It wasn't until 1989, where a British computer scientist named Tim Berners Leaves created this thing called the World Wide Web. A few years later, where it was commercialized with a thing known as a Web browser, that the Internet and the Web became a tool that was widely used for the first time as a tool for business, for culture, and for communication. The lead up to this first era of the Web was, was quite long. And I think the Internet, like all technologies, was an overnight success story that was actually many decades in the making. So let's start off with the first era of the web. So the book is called Web 3. And so without understanding Web 1 or Web 2, it's not really super useful as a term. So one, and I think a period where a lot of people remember it more clearly as the dot com era of the 90s was basically a way to view static information on websites using desktop computers. So in the 90s, you'd log onto the web, type in a URL, and information would pop up. And a lot of the early examples of Internet services and websites resembled things that had come before because people were trying to figure out, well, this is a medium for information, a way to present information. So what can we present on this new device? Well, we can present newspapers and classifieds and encyclopedias and the sports scores and the weather and all the stuff that people used to get from magazines and newspapers and other traditional sources of information, we're now being put on the Web. So the Web of Web one was pretty primitive by today's standards, but it nevertheless did something really important, which is that it democratized access to information regardless of who you were or where you were in the world. So if you were a person living in Toronto or in Peru or in the United Kingdom or wherever. If you typed a URL into a web browser, you could get the same information. And that was something that wasn't possible before. Information was localized. It was not something that was global. And so the Web in that respect was a huge innovation. As the Web progressed, some new technologies helped to basically change It from the Web 1 era to the Web 2 era. In the Web 2 era, the Web was not just a way to present information. It was a way for individuals to share their own information, to upload content, to share words, images, video and other content. And so the Web very much became a collaborative medium, a communication medium, a way for people to connect and to build communities online. And Web two, I think, is characterized by two big technology innovations. Number one is the introduction of smartphones and the App Store. And number two is social media. Now, what happened in Web two was that all this information that people were uploading data essentially became the most important asset class of the digital age. Except the individuals who created it didn't own it and they didn't control it, and they couldn't monetize it. All of the control and all of the upside went to large Internet platforms who became really the digital conglomerates of the economy. The biggest sort of companies in the world. And these were companies like Apple, Google, Amazon, Facebook and so on and so forth. Now, Web2 created a lot of value in the world, and there's lots of positive parts of it, right? So let's think about it. So that period saw many people become Internet users for the first time. It improved the breadth of services available online. And it gave people a platform to share their thoughts and their opinions with a global audience. And that was something that had never existed before. But the downsides were significant. The downsides were that a lot of big companies became monopolies in certain areas, like in certain, for example, or in social media, or even in the operating system world. Apple, Google Advertising became the big revenue model. And so platforms focused on keeping users hooked on platforms with content that was highly engaging, but maybe not all that healthy. And these big companies became choke points for government surveillance. And that's been especially true in places like China. So the centralization of the web into these large digital conglomerates, I think prevented the Internet from reaching its full potential. So now the Web and with it, the Internet are entering this new era known as web3. So if web1 was the read Web, a way to read content to access information, and Web2 was the read write Web, a way to read content, but also upload your own information, and communicate. Then web3 is the read, write, own web. It is a platform that allows us to access content and share our own thoughts, but also to be owners of the Internet for the first time, really ever. And what that means is to be owners of our data and our digital identities, to be owners of our digital creations and of the efforts we put in, and also to be able to move and store and manage things of value using the Internet. And that can be art and collectibles and in game assets and so forth, but it can also be money, stocks and bonds, titles and deeds to property. Anything that has value can now be expressed using the Web. And the reason for that is because of this very important innovation known as a blockchain. For the same reason that blockchains solve the double spend problem for Bitcoin. They allow us to be able to move a digital asset peer to peer without worrying that another version exists. The same technology can be applied to any asset in the economy. So in Web one and Web two, people were Internet users. In Web three, people become Internet owners.

Wow. Okay, so are there. I forget who it was. It said that the future's here. It's just not evenly distributed. I guess William Gibson maybe said that. But are there current examples right now that you can point people to, to say, this is a great Web3 technology, albeit maybe nascent in its infancy? Or is it something that's 15 minutes in the future?

Well, no, it's something that's happening today. So the biggest. So the way that I organized the book is basically in topics starting with what I view as sort of the most core or elemental idea, and then from going into, like, bigger and bigger concepts. So the core idea of web3 is a concept known as a token, or what people probably know a bit better as a digital asset. Now, a lot of people will say, well, how is that any different from a cryptocurrency? And a lot of times they'll say, you know, crypto itself sounds kind of cryptic and a little bit sketchy. And why do we need all these cryptocurrencies anyway? We have this system today where we have dozens of currencies issued by governments, and that doesn't seem to work all that well. You know, friction and these currencies don't often hold their value, and so on and so forth. And the response to that is that you're. Those people are correct. We don't need thousands more currencies. But the way to think about this technology is that really a token is nothing more than a container for Value in the same way that a shipping container can contain furniture, clothing, automobiles, canned goods, computer parts, whatever. A token can be programmed to represent anything of value. So it can contain money, but it can also contain securities like stocks or bonds. It can contain the title to property. It can contain a vote. A vote is a lot like an asset. You spend it. When you spend it, it's important. You can't spend it again. And it's important also that you can verify after the fact that it's been spent for the right purpose. Right. So all of these things that have value can be programmed into tokens. And the value of tokens in the world, not crypto, but tokens, has grown from zero 15 years ago to about $2.5 trillion in value now. Some of these tokens are things like Bitcoin, but some of them are also very, very different. So one example is a thing known as a stablecoin. A stablecoin is a token that is backed by US Dollars. It's basically a way for anyone anywhere in the world to have a US dollar bank account. If they have access to the web, they can store and move dollars. Now, someone living in the United States, you might think, well, so what? You know, I have my Chase account or my Wells Fargo account, and that gives me a way to move dollars. But the fact of the matter is, 6 billion people in the world don't have an easy way to access the US Financial system or US Dollars. And a lot of them live in parts of the world where the local currency is inflationary, where the government be corrupt, where the banking system doesn't serve the communities well. And so the ability to have a way to store and move value using dollars is a superpower. This is an example of a token being used for something other than crypto. And stablecoins today have a value of over $150 billion. And to give you some more context on how meaningful that is, last year the biggest stablecoins did more transaction volume than the Visa network, for example.

Wow.

Yeah. And they're being widely used as ways to buy and sell digital assets, but also increasingly as a way to move and store value using dollars. I mean, I'm someone who, along with many other people, uses stablecoins along with other financial tools as a way to do sort of basic banking. And that's true, I think, for increasingly a large part of the Web3 community. So that's one example. Another example is how tokens are being used for digital art or collectibles. So I think a lot of people on the show maybe have heard about a thing called an NFT. NFTs stand for non fungible tokens. The Web3 community is great at coming up with terrible names for things, but basically an NFT is a digital good that is completely unique. So unlike, say, let's say you have a dollar bill and I have a dollar bill, if you give me your dollar bill and I give you my dollar bill, we both still have a dollar, right? Those assets are considered fungible. Money is fungible. Stocks are pretty fungible. Art and collectibles are not fungible. You know, if you've got one, let's say you and I are very rich people. You've got one Renoir and I have another Renoir. They both might be very valuable, but they're not the same thing. They're both different. Now that's true for actually most assets in the economy. You know, your home and my home might be in the same subdivision and might look nearly identical, but they're not the same house and they have different values, right? So most assets in the economy are non fungible. And NFTs are a way, a token, a container that allows you to express something that is unique using software. Now, today they're mostly used for art and for collectibles. And what's really interesting to me about NFTs is how they can help creators to earn more from the work that they create. I'll give you a really good example. If you were a painter and you a struggling starving artist, and you sold your first painting for $500, and then 10 years later you become a super successful painter and that painting that you painted, that first work, ends up selling for 100,000 or a million dollars, you, as the creator, don't get to participate in the upside right into the. It's the person who bought it from you who gets to sell it. And that's unfortunate, right, because you're the ultimate owner of that ip, but you've given it away. So nft, because it's just software, you can program the asset so that every time it's sold and resold, it creates a royalty that's paid automatically to the original creator. And that's something that you can program into anything creative. Could be music, could be painting, or other forms of graphic art, you name it. And what's so remarkable to me is that already today there are over 100 art projects, mostly from collectives and from organizations, created at least a million dollars of royalty revenue for the creators. Meaning that the payment, not just from the original sale of the artwork, but from the secondary and the tertiary sale created a payment stream. Now, there's no way to get around. This is something that's programmed into the code of the asset itself, and that's a way to ensure that creators can get paid fairly using this new toolkit. And that's something that's especially important for graphic designers and visual artists. And especially with the rise of generative AI, the ability for artists to prove the provenance of their work and to ensure that human creators get paid fairly is a very important thing. And this is something. We already have examples, hundreds of examples in the web3world of this working.

You give a very good example of that of the little boy in the Philippines who is an artist and how he's been able to take advantage of that or be beneficial to his life and his situation. How does it work with generative AI if something is out there crawling the web for images that look like bananas, wearing a sombrero or something? What. How is it. If an artist does have something out that's an nft, is it sort of barbed, wired against the generative AI, finding it and using it? Or it can find it, but it's got to pay a toll? Or how. How does. How does that work under the hood?

Well, it's a brilliant question, Chris. And the answer is that there is no way to stop AI from using the data in an image or in any piece of ip, for that matter, to train a model. And that is actually one of the major issues with AI today, right. Which is that for, you know, an AI is. Is a technology that is as important as blockchain is to the future of the world. And my view is that actually AI, blockchain and other technologies like extended reality are converging together to create a new digital age. A new digital age that's very different from the one that came before. And I think that the question around AI is an important one. So large language models like what ChatGPT is trained on by OpenAI, basically scrape the web for all available data. You know, every image, every literary work, tweets, Reddit posts, you name it. And it uses that data to. To train the model to create outcomes that are useful for people. So in my deck that I use from time to time when I'm presenting these ideas, I describe how technologies are overnight success stories, many decades in the making. And I talk about AI and the inventor of AI, Alan Turing, who is a computer scientist who also invented the computer and helped to win the war against the Nazis in the 1940s and there's no available. There's nothing. There's only one photo of Alan Turing on the web that's under a Creative Commons license, meaning it's for. It's free use. Right. So if I'm putting a deck and I want to put an image of him, I want to use this Creative Commons version and it's a pretty crappy photo. So instead what I did, and this is more to make a point than anything else, is I went into ChatGPT and I said, create an image of Alan Turing holding an Enigma machine in black and white and make it slightly faded as if it's an old photograph.

Wow.

And ChatGPT creates this perfect image, the kind of image that is ideal for my deck and I don't know what data that was trained in order to create this image. All I know is that it's certainly different from the only free one on the web. So clearly the ChatGPT has been using every available image of Alan Turing, maybe stuff that's protected under copyright, to create a perfect likeness of him that actually has all these other things that make the image even better. Right. So this is a central challenge of AI, which is that AI is really important and done correctly, I think can lead to huge gains in productivity and human flourishing and help us to bring about a new and better era. I'm an optimist by nature, so that's just my inclination. Who's used these tools knows that they're very cool and fun and powerful. On the other hand, we can't let them completely destroy the regime that we have in place for protecting creative works and for protecting IP. So something's got to give. NFTs are certainly an interesting way to approach this problem, but I don't think that there's the solution yet. The way that this could work is that every time an AI model uses an image where the image has a clear ownership and provenance, like where there's a creator who this thing or a person who owns this thing, it would create a payment stream that would compensate that person automatically. In the same way that those NFT projects that sell and resell those assets can create a payment stream back to the original creator, but there's nothing stopping the models from just not doing that. Right. Like you, I think that if you then this is where a lot of the challenge is multifaceted in nature. It's not. Technology is not some elixir that can solve all the problems. Like you need to have a regime in place that requires companies to pay creators and this way to do it really easily and instantly and digitally and seamlessly. So that's where it comes into play. Right. But it's not in and of itself the only solution. The story of Sevy, the boy in the Philippines. I'd love to share that story as well, but I know you probably have a question.

No, I was just going to say in this context, it does seem like the interesting parallel of these two technologies, maybe not necessarily growing up simultaneously, but certainly becoming to the general public's awareness sort of simultaneously. And that one may offer a sort of solution to the problem that the other one caused or something. I think it's just a fascinating kind of thing to noodle on. And I also just want to call out, I do want to get to Sevy's story. I loved Alex, how you wrote chapter two about this AI issue that you brought in an expert on ChatGPT. So could you say, mention that and then also then get to Sevy's story?

Well, admittedly, when I was doing the research for this project, you know, this was not AI, was not something that, that I was deeply knowledgeable, though I tried to become knowledgeable over time. But yeah, what I wrote, what I wrote in the book, and I just want to pull it up for a second. I said Web3 is converging with artificial intelligence and they're combining in important ways. I'm not an expert in AI, so I asked someone trained in this field. So then the expert I brought in goes on to describe how machine learning is a method of teaching computers to learn from data rather than just explicitly programming them. And then I asked, and then goes on and on. Then I asked it to explain how Web3 might help with scaling AI in a sort of transparent and responsible way. And my expert told me, well, Web two data silos limit the amount and type of data available for training AI systems. And this lack of diversity can hinder the development of more advanced and sophisticated models. With Web3, different stakeholders can collaborate and share more data. Not only that, blockchain and peer to peer networks can serve as a secure and transparent infrastructure for storing and sharing data. And this goes on and on and on and on. It's like, it's not. It's like one and a half pages long. And then I conclude with, did you find this explanation helpful? I hope so. After all, ChatGPT3 by OpenAI wrote it.

I love that.

Then the lesson is, if you couldn't tell that a human being didn't generate that material, then how can you ensure that AI didn't author this manuscript or anything else you might read. Or for that matter, as I was pointing out, and I'm now put the book away. Any image or any video or any piece of content that's been trained on someone else's data and someone else's work. It is interesting how these things are emerging at the same time. What I say, what I've said more recently is, and I've been thinking about this too, is that I actually don't Even think of AI and Web3 as intersecting per se. I actually think of it slightly differently, which is that every so often a new technology bursts onto the scene that transforms the economic power grid and changes the old order of human affairs. And the Internet is an example of that. Before that we had the computer and the radio and the telegraph and so forth. And what's really unique about the current moment, to your point, Chris, is that there's not one technology, but several, maybe three or four, all emerging at the same time. And those technologies include blockchains. Blockchains are the first digital medium for value that enable people and businesses to move assets over the web peer to peer. And that's massive AI, which is computing that can think and reason. That's massive extended reality, which is turning our web from a two dimensional medium we see on smartphones and PCs, into a spatial Internet that's integrated into our natural world. That's massive. And then you got the rise of connected devices and robotics. You know, devices that are autonomous, that can think, can do transactions like that is also very, very significant. And this is all happening at the same time now. It's not like they all sort of like came out of nowhere. You know, every one of those things is a, is a technology that has decades of work and R and D that's gone into it, but they're all hitting an inflection point at the same time. And my view basically is that the technologies of this new era are not separate, they are related. And in the same way that the Internet went from describing just a few networking technologies to describing today whole industries and whole business models and companies and technologies and so forth, I actually think the term Web3 is going to become common use as a way to basically capture this sort of next era that we're entering into, where these technologies and the convergence of these technologies playing the central role.

Gotcha. Okay, that's good. So, you know, it almost seems as you're saying this too, I mean, this is just a throwaway, but there's sort of like this odd meta aspect that if something created by ChatGPT conceivably could say, well, this is my creation. And now anybody that iterates off that owes me a, you know, a toll charge, you know, owes me a royalty. You know, it just. It seems like, you know, there's sort of like the hall of Mirrors kind of thing, you know, where. Where does it stop? Is it. Is it an infinite kind of thing? Is it an issue of. I'm an author, I sold a book, someone bought a copy of my book, I get a royalty if that person then sells it to somebody else. I don't get, you know, any piece of that, you know, sort of like, where are the curb stops? Where do these things kind of end? So I don't have any answers. It's not really a question, but it's just sort of an observation. I think these will be fascinating things for us to kind of suss out. And I think the practicality of it, when you bring in economics to it, I think then people take it very much, not being a thought experiment solely, but also, how do we solve this? And one of the things I don't want to get into it right this second, but to put on hold for a second is where does regulatory bodies and governments come into this? But I still want to get back to our Philippine artist and if you could share his story.

Well, I think that Sevy's story helps to capture how this technology is having an impact in the world, and that makes it worth telling. So in the research for the book, I talk to a lot of founders of big companies and venture capitalists that are putting millions of dollars to work in this industry. But I also talk to a lot of developers, technologists and creators, people who are harnessing this new toolkit, this way to express ownership online as a way to create new business models for creators and as a way to create new avenues for artists to get compensated. And this led me on a journey to this one kid living in Manila. His name is sevy, and he's 9 years old. He's maybe 10 years old today. He was 8 when I spoke to him, spoke to him for the research for the book. And I was put in touch by a local founder there who said, you know, there's a really interesting story in Manila. Maybe you should talk to these guys. And so I got on a call with Sevy and his mom, April. Who are these? April's a lovely, lovely person. April and her work in Manila. They're professionals. So, you know, they're part of Manila's professional class. These Are, you know, people who are upwardly mobile, part of the Philippines, sort of growing economy, and they have several children. And one of their kids, Sebi, like millions of other people in the world, was born with autism. And in the Philippines, as in a lot of other places, the government doesn't cover health coverage for autism treatment. So all of it is more or less elective. The aggregados, fortunately, had resources to start Sebi off in a few of these different kinds of programming. So they helped him with art therapy, with sports therapy, with gymnastics. But over time, they're juggling multiple kids, professional lives, other expenses they couldn't afford, all these different things. And so basically asked Sebi, if you could choose one thing to keep keep going on, what would it be? And Sevy chose art. And so Sevy works with an instructor, an art therapist, to create these works of art, and it's part of the therapy that he does for his autism. Now, April, like everyone else, you know, has access to the web and uses Facebook. And so she started to share images of Sevi's work online. You know, look at my son, what he's done. I'm very proud of him. Like, any parent anywhere in the world might do something that I probably for my kids. And much to her surprise, some friends and family said, wow, we really like this stuff. Could we buy some of this art? You know, she didn't share stuff on the web for that reason. She just figured she wanted to share what he was doing. And the only problem was that part of the therapy sort of requires or strongly suggests that actually, you know, you want to keep the art. You don't want to give it away. This is sort of part of the therapy. So she said, you know, we're not really selling this. It's not really a commercial thing. Like, it's part of his treatment. We'd rather just sort of like, keep the work itself. He wants to give it to his sister and keep it in the house, and that was that. And then one who works in the industry in the web3world basically said, you know, there might be a way to do both. Have you heard of a thing called NFTs? And April tells me, she's like, no, what's an NFT? I've never heard of.

Sure.

And she said, well, it's a way to basically create kind of like a digital print, like a signature of authenticity for a work of art that you can sell on the web. And she said, maybe if you created a digital version of this artwork and then created a one of One, you know, using this digital signature that someone might buy it. One of these people, you know, who are interested in Sevy's work. So April, you know, with the help of this person, basically minted NFTs, that's the term they used for creating one of these works of art, and put it onto a platform called OpenSea, not really expecting much to happen. And once again, to her surprise, a couple people bought works of Sevy's. And we're talking like $200, you know, $100 things. And you know, she's like, she tells this to Seve and to her husband. And, you know, Sevy, are you comfortable with this? He's just a kid and he's like, yeah, I don't know, sure, whatever. And so they start putting more of his stuff online. And again, they start to get more and more traction, not just in the local community, but from art collectors and from technology people in the web3world. Like, whoa, this is a cool story, you know, I mean, it's a pretty cool story in the web3world that there's this kid who's selling his work and you can support it and own a copy of it for a couple hundred dollars. Like, why wouldn't you do that? And fast forward a few months and Sevy's sold a dozen or more of his works and he's been invited to NFT New York, which is the big art fair, local art fair for nft for digital work. And his face and his work is on a 100 foot billboard in Times Square. He's the CNN local affiliate, Philippines. And he's doing interviews. And all of a sudden his work has become something that people want to own. Now, there's a couple of lessons here. Here the lesson is not every kid who picks up a paintbrush is going to be a commercial artist. That is not the lesson. Right, but the lesson is it doesn't matter who you are or where you are in the world, if you're a creator, you can tap into this global marketplace because you have access to this toolkit that didn't exist before, right? So, like, if the Web one version of Sevy's story, if there even is one, is that he puts an image on the web and people can go to a website and look at it. The web2 version is he uploads it to a platform like Facebook. People can comment, they can share it, they can communicate, they can provide their thoughts, whatever, but he can't commercialize it. Maybe he can market it or build an audience, but it's Not a means for creating payments or transactions. Now with Web3, you've got this way to create a asset of the creation and to be able to sell it to a global audience. And what that tells me is that any creator anywhere in the world can do this. You know, Thomas Friedman once said that the world is flat, right? There was a book, the World is Flat. And I think what he meant by that, well, what he didn't mean by that in the book is that the forces of globalization, the spread of capitalism and technology and so forth are flattening the playing field, leveling the playing field, making it easier for people to compete, for businesses in other countries to form and so on. And I've always thought that was sort of aspirational more than anything else. And you know, I think today that the world is still a deeply unequal place. And not suggesting that technology alone can solve big problems in the world, but if it's true that the spread of technology makes the world flatter, then I think Stevie's story demonstrates that Web3 is going to be a steamroller. It's going to flatten the world in ways that we haven't really anticipated. Because what it does is it gives people a way to move, store and earn value digitally in a way that was not possible before. And that more than anything else, could be its greatest impact.

Yeah, I agree. And it's also just nice too. His art gets to stay there at home and be with his sister. So this may be, is a good segue into what you also wrote in the book. You said that you predict that Web3 will be the greatest transformation to financial services since the invention of double entry bookkeeping, as I mentioned in the intro. Can you maybe unpack that a bit for us? And maybe again back to the 101s of like, what's, what's the difference? I'm sure people have heard a lot about fintech. How does fintech differ from DeFi? And can you talk about that?

Certainly. So what's remarkable to me about the rise of the first era of the Internet, Web1 and Web2, is how little impact it had on financial services. I mean, there are industries that are unrecognizable today to how they looked before the rise of the Web. The magazine or the TV business, for example, or the newspaper business. Right. These industries have been utterly reorganized, reconfigured by the web. You know, it hasn't. Banking. Banks today look pretty similar to what they did 30 years ago. Sure, you can log on to your banking using the web or, you know, maybe some mobile application. But fundamentally, the underlying technology, the business model and the structure of the industry are identical to what it was 30 years ago. Now people will say, well, what about fintech? You know, there's been lots of innovation in financial services, hasn't there? I mean, look at companies like PayPal and Stripe and Robinhood and Buy Now Pay later companies and credit cards and MasterCard, all this stuff. My answer to that is, yeah, that's interesting to be sure. And I think it's made financial services a little easier to access, a little less cumbersome. I don't have to go into a branch, I can use the web. But fundamentally, most of that innovation is just digital wallpaper. It is, it is effectively a like a fresh coat of paint, a new sort of shiny surface for an old industry that hasn't changed in a long, long, long time. And that's fine. You know, having a way to access things a little more easily is good. But if the underlying architecture of the house, if we want to extend the metaphor, is old and creaking and leaking and, you know, falling apart, then that's a problem. So what's interesting to me about the rise of blockchains and web3 is that for the first time in human history, we have a way for two people to transact and do business peer to peer on the web, without an intermediary. And that is a really powerful tool. What it means is that it reduces or even eliminates the need for a trusted intermediary in most transactions. So people ask, you know, well, what is that? Can't be that simple, you know, what about that? Well, I think it's helpful to just sort of think about what does the actual. What does the financial industry actually do? Right. In order to understand how technology could impact it. Well, I've done a lot of work on this subject. My view basically is that the financial industry does nine things and it does them decently. Well, the first thing it does is. Well, yeah, the first thing it does is it basically gives people a way to move value. The CEO of one of the biggest banks in the world once told me, you know, people think our business is complicated, but it's not. Fundamentally what we do is we move value. And because we move value, we get to store value. And because we store value, we get to lend value. And lending is basically our business. Right. You know, this was a big commercial, you know, by bank. So those three functions are the core of finance. Moving value, storing value, lending value. In addition to that, there's other Functions, connecting entrepreneurs with sources of capital, exchanging assets in a marketplace, ensuring against risk, organizing financial information, doing accounting, identity, you know, proving who is what in a transaction. These are all functions of what the financial industry does. And my view is that in the same way that the web, the first era of the web, replaced many information industries with software blockchains and the rise of Web3 will replace value based industries like finance with software. There's no reason why you can't program into software, into code, a way to move and store value as a way to connect buyers and sellers, marketplaces and so forth. Like there are so many examples of this. We talk about the market for cross border payments, right? And if you just look at one segment of that market, remittances, people send 6, 700 billion dollars a year from the places where they live to their ancestral lands, to the family they leave behind or they have back home. And that's a huge market. The average fees for those transactions are like 9%. So there's 60, $70 billion that's being made in the remittance market as one example. So we talk about this market for cross border payments. When was the last time, Chris, you ever sent a cross border email, right, or cross border WhatsApp message? I mean you do it all the time, but you don't, no one's getting paid. Information flows over the web like water instantly, peer to peer in a second. But anytime we want to do it with assets or value, oh my God, you know, it's got 10 different intermediaries and it's going to cost you like 5 to 10%, right? And this is true in many other forms of finance, right? Like, you know, and I think people in the States, because it's such a huge common market and because they deal mostly with local, local people have a really myopic view of this. They're like, well, I can just use Venmo to move money. It's like, you know what you can't do? You can't send me a Venmo, Chris, because I live in Canada, I'm on the other side of a border, I live 50 miles from the U.S. you can't send me a Venmo. You know, so there's this whole big market out there where there's all this friction and all these barriers that exist due to either technology limitations or because of incumbent business models or because of regulations or some other friction point. And what defi enables decentralized finance, which is a word that sort of describes the idea of using software to definance is the ability to just kind of like push all that aside and allow people to connect peer to peer. So just some examples. Within finance, one of the big functions of finance is lending money, right? So in Defi, there are these lending pools where you can go and get a loan if you have collateral. So let's say you own some stable coins, you put that up as collateral, you can get a loan against that, and then you can use that loan to, I don't know, buy a car or something like that. And if the value of your collateral drops below a certain level, then you're going to get what is this equivalent of a margin call, right, where you'll have to post more collateral or your position will get liquidated. But instead of having a bank and a person making a call and posting a margin notice on a website, it all just happens automatically using a thing called a smart contract. The smart contract is basically just code with a bank account. It's self executing software that can move value. That category of the market is worth tens of billions of dollars of money that's being lent out in this way. Another function of the industry is how we exchange value. So connecting buyers and sellers in a marketplace, there is a project called Uniswap, which is a peer to peer exchange that allows people to buy and sell, swap, in essence basically any asset that can be represented with code. They have way more assets than Coinbase does, for example, which is a more traditional centralized exchange. But on some days Uniswap will do more dollar volume, so more daily transaction value than Coinbase might. Now there's one more benefit to this, which is I mentioned in my opening kind of comments that Web3 allows Internet users to become owners. What's unique about Uniswap and every other DEFI protocol and indeed every other project in Web3, is that the users of the platform and the ones who are the first to use it and who use it the most often can become its biggest economic owners and have the most say in how those platforms are run. So Uniswap is an exchange and exchanges become useful the more that people trade on them. If you want to go buy shares of Apple and there's no liquidity, nobody those shares, then it's not a very useful platform. The more liquidity there is, the better the platform runs. So what Uniswap does is all programmed into code, is that the more you trade, the more liquidity you provide, the bigger, the more of the underlying ownership of the platform you can earn over time. So Uniswap is the biggest platform in Web3, but it's also entirely owned by its users. It is a user owned network. And I haven't looked at it in the last couple of days, but I can just look at it right now. The value of this platform that is owned by its users is $11.2 billion in size. So this is a platform that anybody could have started to use and earned a share and uses today as this highly productive platform. So my point is only that of those nine functions in finance, every single one of those, There's a dozen Web3 projects that's trying to shake the windows and rattle the walls.

How would it work? Like, here's a personal use case situation. So I have a nonprofit that I run in the US And I have a key partner in Tanzania. And one of the things we do is fundraise and whatnot here to be able to support a couple of hospitals and children's kindergarten. So we'll send, I'll send funds over in US Dollars that then can get converted into Tanzanian shillings. And I pay, as you mentioned, an exorbitant, you know, fee to be able to do that. The only odd thing to me it seems, is that it does seem to happen quickly, which is nice. I mean, used to I would kind of wait a week and now I can kind of, you know, get a ping back from JP Morgan and say that, you know, yes, it's gone through and blah, blah, but how would I go about myself here in the States and my colleague in Tanzania to set up something like that where there's going to be an automatic conversion of dollars to shillings? There's going to be this, you know, again, very rapid, I presume, but also less friction and less cost associated with that. How would someone, because you do say, I'm going to skip to the end of the book just real quick to make this point. You do recommend that we as users and readers of this book, you know, go out and try and start to do these kinds of things. So how would I, in, in that use case, how would I or someone similar in this situation go about doing something like that today?

Well, there's several steps you could take. So number one, if you're, if you're raising money for a not for profit, you know, one of the things you can do is raise money using digital assets, using token, right? So wallet address, that's the wallet address for the, for the organization. And anyone can send you money. There's a lot of great examples of this. When the Ukraine war began in 2022, there was this organization set up called Ukraine DAO that DAO stands for decentralized autonomous Organization. Basically it's sort of like an Internet based organization that has a token instead of, you know, equity is ownership and this. And this organization was able to raise millions of dollars from donations made in every single possible asset you can possibly imagine. So people were sending, you know, US dollars in the form of stablecoins, they were sending ether, bitcoin, all these different kinds of assets and raised millions of dollars. Now what they found was that a, it was easier for people all around the world to donate easily to this charity. They couldn't actually set up banking in the US because a lot of the funds were going to the Ukrainian military. And basically the local payment gateway in the US said we can't be launching a not for profit to buy weaponry.

Right, right.

Yeah, there's a different story there about rules and regulations and so forth, but basically it was sort of a permissionless way to raise money from anyone to support a good cause and they were able to raise a lot of money. They also found that on the ground in Ukraine, the military itself preferred to get paid in digital assets and tokens rather than dollars because they were worried that if they put money in a bank and the Russian tanks roll in, then the enemy can sort of take the money. Right. So that was an example of raising money. Now that's something you could do. Another thing though is using this as a payment tool to just get money to and from people around the world. So what you described, there's two issues here. Number one is the on ramp and then the off ramp into this ecosystem. So if your goal, let's say you raised money from someone using US$USDC, which is a stable coin. So like I have like, let's just say for example, me, so I want to thousand dollars for charity. I could send this to your wallet address, you'd have something that's equivalent to dollars. There would be relatively little friction or cost associated with that. Now you want to get it to Tanzania, no problem. You can send that money directly to Tanzania and it'll settle in seconds or minutes and it will cost very little. And that'll all be done on a blockchain. But then the final part of the equation that you described is getting the money from dollars into Tanzanian shillings. And that is still a source of friction. So the way that that would work is you'd have to have a local on ramp, basically a bank or other financial company that would be willing to do an exchange of the stablecoin for Tanzanian shillings. So in some countries in the world, this infrastructure already exists. I'll give you an example. Like in Nigeria, a lot of multinational firms that operate in Nigeria earning money in the local currency use stablecoins as a way to repatriate dollars back to their US bank accounts because it's cheaper and faster than using the banking system. But that's because there's a robust on off ramp in Nigeria. If there isn't one in Tanzania, then that becomes a source of friction. Right. So maybe this is an example of how for so many steps of the chain there's a web three or a digital solution. But ultimately if you need shillings, especially cash in a local economy, there's going to be some friction that's associated with.

Gotcha.

One thing I will add just because it's. I know we're probably over time, but I'm just saying we're good.

No, no, no, no, no time limits.

It's an interesting sort of story that ties into this. I was on a panel in, in Saudi Arabia actually, with the economist Nouriel roubini and the governor.

Mr. Doom and Gloom, right?

Yes. Mr. Doom and Gloomy. Yes. Well, I mean, if you're negative on things for long enough, eventually.

Eventually you're right. Yeah.

But anyway, he's actually, he's got a kind of sort of abrasive public Persona, but he's actually a bit of a sweetheart.

I bet. Yeah.

Anyway, so, but it was me, him and the governor of the bank of Pakistan and the government of the bank of Pakistan was describing why he's concerned about Web3 and about tokens, and he didn't use those words because he wasn't that sophisticated. But he basically said, you know, we are worried about these things because maybe they're used by terrorists as a way to fund crime, which is a concern that's largely unfounded, by the way. But he said, but the much bigger reason is something that he's worried about called dollarization. And basically dollarization is what happens all the time. And today in developing markets where people substitute the local currency with US Dollars because US dollars are viewed as a better store of value and many cases are often a better way to pay for stuff. And the more that people use dollars in an economy, the less power the government has to control its own currency and the less power it has politically as well. So he was saying basically, if you're telling me that there's a way to move value peer to peer without having to interact with the banking sector or the governments in the government in Pakistan, then this could be the biggest accelerant of dollarization in the world. And that's something that really worries me. So this is sort of like saying the quiet part out loud. It's like, oh, I. So you're worried about this undermining your power. Like, this is a paradigm shift. You're a leader of the old paradigm, and you're fighting against change. But I think in a lot of ways, it's a legitimate concern because these countries are weak politically, and a lot of places are, and their currency is one thing that they can control. So if they lose that, then it could create instability in the world. So this is something that I think about a lot of people. You know, it's maybe one of the great ironies of the world of Web3, because Web3 began with the first use case for blockchain, which was bitcoin. Now, anybody who knows anything about bitcoin will probably think of it as some sort of thing that you can use to move money without a bank, and maybe that sort of stores value better than the dollar, and maybe it weakens the dollar. Some people think that I personally don't, because, in fact, the opposite is actually true. What's happened is that the underlying technology of blockchains has several killer apps. But one of the first killer apps has been to export a digital dollar all around the world, and in doing so, has actually made the US Dollar even more important and more powerful than it was before. So this technology that in a way was designed to disintermediate dollars has actually helped to strengthen. And that. That's a reminder, in a way, the unintended consequences of technology, but also how darn hard it is to predict stuff, you know, because, you know, you might think one thing, but the opposite ends up happening.

Right. Well, and two, to your point, you know, I think it is like one of those unintended consequences and side effects. And, you know, I. From reading your book and other sources too, like thinking about the aspect of nefarious uses of cryptocurrencies and, you know, like, well, you know, people. You watch a heist movie or something, and people try to, you know, they're using bearer bonds instead of dollars because they're easier to carry, or they're using diamonds instead of, you know, bricks of cash or something. But I just. I clipped this for our talk today. Last Tuesday's paper. There is a, you know, front page above the fold in the Wall Street Journal about tether and tether being, you know, A stablecoin. And, you know, just a. And the. According their article, the most traded cryptocurrency with as much as $120 billion in tether changing hands a day, which was just kind of, you know, blew me away. It's probably you're familiar with those kinds of things better than I am, but I just thought, my God, goodness. But then the thing that kind of caught my eye because, I mean, anybody can use anything, you know, to. To do something nefarious, but that. Let's see, where is it? The article talked about that, that Tether had begun a voluntary policy to freeze digital wallets used to transfer its tokens that were connected to entities under sanction. And my naive brain said, well, how would they know? You know, how you know, if there's the. The certain level of anonymity with these kinds of things that I would presume would go on in certain levels. How is that even possible? Can you speak to that? Is that something that you have an awareness of how Tether could do something like that?

Absolutely. So Tether is an example of a US dollar stablecoin. And in fact, it's the biggest. There are a couple quite large. It is the largest and it is the most popular stablecoin outside of the United States. And there are some concerns about Tether that, you know, maybe it's being used for activities that are hard to regulate because they're happening outside of the regulated market. Right. It's like someone had a briefcase full of cash and handed it from one person to another somewhere in the Middle East. How would you track it? It's a little tricky, so it has that knock against it. But ultimately the data suggests that crypto assets, including like tokens, including stablecoins, while they are used from time to time for illicit activity, they're used less often than cash. Cash is the ultimate asset for crime because it is actually anonymous. It's a barely where you have it. If I give you money, you have it and I don't have it. And obviously some dollar bills have serial numbers on them and so forth. But in general, they can be laundered more easily than something like a token. And the reason for that is that all transactions in digital assets, tokens like Tether, are recorded to a blockchain. A blockchain is a decentralized ledger that shows who owns what, who owes what, and so forth. And it's that trusted ledger of transactions that replaces the need for an intermediary like a bank, so anyone can go and see who owns what. Now, what they can't do necessarily Chris, is know exactly who that person is. Unless of course, the group that's doing all the work is the U.S. treasury Department or the FBI or the state CIA. Because what they do basically is they combine blockchain forensics with conventional intelligence, intelligence sort of practices and law enforcement practices to narrow down wallet addresses that could potentially belong to saying on their transaction history based on the size of the things that, that they own and all the rest of it. Like there's a lot that goes into it. So while blockchains are private and pseudo anonymous and useful for transactions, for law abiding peoples, for crime, they're actually not that useful because they are a record of transactions which combined with some good intelligence work can actually help you to identify potential bad actors who are using it. And you don't have to take my word for it. Like politicians are occasionally saying, well, you know, Hamas uses crypto or something. Or the Russian oligarchs are using crypto to move money around sanctions. And oftentimes when the politician says this, the Treasury Department comes out and corrects them and says, while it's true that there are certain instances, our research has found that most often or the vast majority of time they prefer to use cash. Part of that, it's like, sure, yeah, okay, in some instances people use these tools as a way to move money around, but use other conventional tools more frequently. And by the way, just because a tool is used for something that is illicit or horrible doesn't make the tool in and of itself very evil. Right. It gets a lot easier to rob a bank with a getaway car. That doesn't mean General Motors is to blame for bankruptcy.

Yeah, I get it.

Like there's so many examples of that. So while it's not, I'm not trying to trivialize or downplay this, and I think there are things we can do to reduce the use of technology by criminals. I think it's a thing that's overstated and also something that ignores the fact that they say exponential times lead to exponential crimes. Right. And it's often criminals and ne' er do wells who are the first adopters of technology.

Classic early adopters, right?

Yeah, I mean, it's like, you know, what was the first use case for the printing press? People think it was for Martin Luther's 99 Theses, but actually for smutty, like pornographic,

bigger market.

This is a story, this is a tale as old as time.

That's good. Well, and maybe this is a good segue then into talking about like how you had written that the United States is in the pole position regulation wise, and that maybe Singapore is ahead of us, Dubai is ahead of us. You know, in 2022, the White House released a long awaited executive order on Digital assets and web 3. Do you have anything, any comments on that?

I do. This is an interesting time for all these technologies to be maturing because the world is very different today than it was even 20 or 30 years ago. You know, when the web's first frontier was being forged. In the 1990s, most of the Internet connections and most of the computers and most of the venture capital industry and most of the government R and D and most of the big universities with computer labs were located in the States. And like that's massively oversimplifying things. Like I live in Canada. That was true also in Toronto, maybe in Switzerland and England and a few other places. But the majority of the world didn't have access to these tools. And this time is different. You know, technology, tools, access to capital, talent and so forth. It's just much more available to people around the world than they were back then. Now, I mean, look, Silicon Valley is still the epicenter of innovation in business. And that much is obvious just from the data. Like, the US produces 15% 15 of all AI researcher PhDs, but 50% 5 0% of all of those people live in the United States. So basically that means that like the US remains a beacon. But my point is that that's true, but at the same time it's also true that this is all happening everywhere, all at once. So in a way, like Silicon Valley is no longer the tech Galapagos that it used to be. You know, this place where the special unique species that was well adapted grew and succeeded. These kinds of species can succeed elsewhere. And I think that means that it's the US's opportunity to lose in some of these areas. Now I'm actually more, I would say that when it comes to most technologies, there seems to be a concern where technology can do no right. After a long stretch where people were of the view that technology could do no wrong. And I think that that's manifesting itself in so many different areas. It's manifesting itself in this moral panic over AI. It's manifesting itself in the concerns about blockchains and how they might be used for illicit activity and so forth. It's appearing as well in the discussion, the discourse around technology, platforms and the power. Now some of these concerns are very valid. In fact, the latter one I think is a big one. You know, people are now talking about how we should be regulating the usage of computing and social media for kids because of the potential downsides it's having on their brain development. I'm pretty sympathetic to that point of view as a parent of two young children. But the question is, do you regulate the technology or do you regulate the use case? Even in that case, regulating a Facebook or TikTok, requiring them to to meet certain standards, that's regulating the use case. We're not saying the problem is the web and smartphones itself. So the same can be true for like AI and blockchains. We might say, you know what, if you use a token that has value to pay for drugs or a murder for hire, that's illegal. Like it doesn't matter what tool you're using, right? That is still something that's illegal. So we're going to regulate the use case. The use case meaning the crime. So we're going to still continue to prosecute that vigorously, but we're not going to say the technology tools to blame with AI, the question is, should we regulate the model? Should we be limiting what the model can do or should we be regulating the use case? From the work I've done, I'm sympathetic to this idea that while regulation is important, we should be focused on the use case and otherwise we should be allowing technology developers and software engineers to write code and to innovate because that's how good things happen in the technology industry. Now in terms of where it's all happening around the world today, I would say that the center of gravity for web3 and blockchains in particular is definitely shifting eastward to Asia. I think that there's a business community and a population that is less entrenched in its beliefs and less beholden to the old way of doing things. And I think has proven to be a lot more dynamic. And I also think in large respects, because the technology is frankly more useful today for people living in emerging economies, that you see just a much higher level of know how and sophistication in those places. Like if I go to Mexico or to Turkey, which I've been to both places recently, I'm blown away by how knowledgeable not just the average person is, but how knowledgeable the CEOs of banks are, ministers in government, you know, people in the business community, they understand on an intuitive level why this is important. And I think that that's something that should cause some concern here in North America, where I think we have become complacent and, you know, the only constant in this industry and in the world, in fact, is change. And my view is that the world in 20 years is going to be virtually unrecognizable to the one we have today. And it's everyone's kind of personal choice opportunity to try and be part of that future.

Oh, that's good. Well, maybe that's a good place to wrap up today. Alex, we've covered a lot of territory. Is there anything that we've missed that you would just like to add as we wrap up up?

Well, don't get me started on any other topic.

Okay. I do have to do a round two. I have a number of other things I'd like to pick your brain on, but this has just been lovely.

Well, if your audience enjoyed this, then if I'm back by popular demand.

Okay, great. So what's next for you?

Well, you know, I do a lot of different things, so I'm, as you pointed out in your intro, I'm a portfolio manager. I run an ETF called the Web3innovators fund, which if people would like to learn more, they can visit the website ninepoint. Com. And I'm also someone who continues to write and talk and try and be influential and change minds and push this whole industry forward. So to that end, this will be before people hear this, but in a few days, I'm off to Tokyo to keynote a big event, and then to Vancouver and then Estonia, and it'll just keep going like that. I get this unique vantage point where I do actually get to see how the world is embracing or not these technologies and the differences between different countries and nations and industries I find endlessly fascinating.

I think it's very generous of you, with all this kind of exposure, then, to take it and make it sort of package it in a way that the rest of us can understand it. I mean, through your books and through your writing and through your talks is just really kind of a gift and a treasure to the rest of us. And, Alex, I want to thank you for taking time out of this crazy hectic calendar that you have to be able to have this conversation. I've really enjoyed it and I've learned a great deal.

Well, thanks, Chris. It's been a real pleasure, and I hope to do it again soon.

All right, I look forward to it. Thank you, Alex.

Take care.

Living a Life in Full is a production of Stout Media, a subsidiary of Gordian Knot, LLC. Assistant producer Gracie Wong Music Dan O' Brien executive producer and host Dr. Chris Stout to learn more, stop by our website A Life in Full for show notes and please recommend this to your friends and subscribe on your favorite platform. And as for the obligatory disclaimer, this podcast is for general information uses only and does not constitute the practice of psychology, medicine, nutrition or other professional health care services, including the giving of medical or psychological advice. No doctor patient relationship is formed. Lastly, and perhaps most importantly, I take conflicts of interest seriously. For all of my disclosures as well as show notes, please see livingalifeinfull.org podcast and my LinkedIn profile. Thanks and until next time.