#4 - The Winklevoss Twins and Balaji

Winklevoss twins 0:00

I'm 65 220. And there's two of me

Balaji 0:04

I'm here in Sunny Asia with the Winklevoss twins. And they have just embarked on a world tour. And this is one of the hops on that World Tour, where you guys been where you're going?

Tyler

So we'll try and remember...

Cameron 0:17

We started in Miami at the Bitcoin Conference, Bitcoin 2023, the first world stop was in London, and then we went to Ireland, then Switzerland, then Dubai, Abu Dhabi. And here we are in Singapore. And next stop is Hong Kong.

Balaji 0:36

And then back to the US back to the US. And how many countries? I mean, Gemini is a global operation. Now, how many countries? Are you guys in?

Cameron 0:43

About 70 countries.

Balaji 0:45

1. Okay, and so and we're like, mostly user base is now outside the US most of business is moving outside. Is that right? So

Tyler 0:53

right now, the US is our biggest market. But we believe that there's going to be a flipping and that actually APAC region, and MENA region will actually become our largest because of the current state of Regulatory Affairs. In the US, it's just the environments hostile and you just can't get anything done. And so we're on this tour, to figure out where we want to invest more in the future for Gemini and for crypto. And we often say that crypto is global, and so is Gemini. And so if the US is not ready, Will, we're not going to wait around in the industry is not going to wait around.

Balaji 1:34

Absolutely. I mean, I've heard good things about VARA. In particular, like the Dubai, you know, the regulator, I'd love to hear your guys thoughts like what are the top jurisdictions, you know, best best for crypto that you've seen?

Cameron 1:44

Yeah, so VARA very forward thinking they're embracing crypto, there's ADGM Abu Dhabi global markets. Hong Kong recently released a framework in June 1, I believe. So that's super encouraging. We're gonna go visit Hong Kong. Of course, Singapore is licensing entities through NAS, and then we hold the license through the FCA in London, as well as the central bank in Ireland. But MiCA the EU framework, which will I think, go into effect this summer. That's also super encouraging. And believe it or not, Europe beat the United States.

Balaji 2:20

I know. Yeah. It's actually like actually going to talk about that. Go ahead. Yeah, it's

Cameron 2:24

Just staggering that a bunch of countries in Europe could get their, you know, get it together to create a first principles framework for crypto. And the US is still infighting. And there's all this dissonance. So if you look at the US,

Tyler

we should talk about the benefits of getting that one license, so hold them all, so to speak, right? So in the US right now to to operate a crypto company that like, like an exchange or custodian like, like Gemini, you need to get Trust Company license. So let's say, in certain states, you need to get MTL licenses and other states everywhere. So you need to basically go through 50 licensing processes. And so and then when you're done, you can have the Federal Government say, Wait, that's not enough.

Balaji 3:13

I need to get like fingerprinted like people understand what a pain it is to get even an MTL.

Tyler 3:17

Totally and we're all willing to do the work but but think about the cost, what's the barrier to entry to get into the market, right. And so in, we know, the the origin stories and the creation stories of our best companies, they come out of garages, right? Or they come out of dorm rooms, they're oftentimes college dropouts that build these companies that become the FANG companies in Facebook, Amazon, Netflix, Google, Microsoft, and they become the biggest drivers of the US economy. And so the barrier to entry in those companies was for those companies much lower in crypto, you have to raise something like $10 million. Just yeah, hire an army of of lawyers just to get license to then start to see if you have product market fit. And so such a high barrier to entry. It makes it impossible for a lot of founders to innovate and build in crypto. And so it's bad for competition, that for innovation, and ultimately, it's bad for for consumers, because it just doesn't ship as much value to them. So having a clear, streamlined licensing pathway for for companies to comply, who want to do the right thing is is invaluable to the free market economy that that creates all this prosperity and wealth.

Cameron

And so the trajectory is garage, dorm room and now law firm. Yeah. And you're sitting around a table with your lawyers trying to figure out like

Balaji

I started it in my law firms garage. Yeah, exactly. Yeah.

Cameron

Not how to build your product, right, but basically how to stay out of the crosshairs of the regulators.

Tyler

Yeah, I mean, everyone's becoming part time lawyers. Yeah, and policymakers and, and, and whatnot. And we're spending all our time dealing with this because there's so much confusion. And there's so much chaos. And I know you're about to say this, Kevin earlier about, specifically an example of this confusion in the Yeah, so the current CFTC calls ether a commodity, the New York ag Attorney General calls ether a security, the previous SEC said that ether was a commodity. And the current chair of the SEC, when asked under oath, a question of whether ethers a security or commodity refuses to answer the question. Yeah, that's the state of play in the US regulatory establishment,

Camerons 5:44

is it an is ether a commodity, or security? And again, it depends on the facts and the law. And if there's a group of unmasking about the facts and the law sitting in your seat, and the judgment you're making. And so, Mr. Chair, I think you would not want me to pre judge because you have pre judged on this. You've taken you've taken 50 enforcement actions, we're finding out as we go as you file suit, as people get WELS notices on what is a security in your view.

Tyler 6:13

And just imagine if there was that kind of confusion around what a share of Apple stock was, you'd have no Apple, you'd have no Silicon Valley, because you can't have capital formation. No one's going to invest in the startups if they're not sure if they're allowed to or not. And so all of these major drivers of the US and the prosperity story, and creating and generating generational wealth doesn't happen.

Balaji 6:41

Right? And it's, you know, the thing is, it's actually, it's not even in your guy's interest. I mean, some people say Asha, put up regulatory moats, and barriers and so on. But you want competition, I think, I mean, we want free markets. We want entrepreneurship. We want founders. Yeah,

Tyler 6:53

we don't know when, because you have more money to get more licenses, right? You know, that's the wrong type of friction, exactly. We want to build, that's where we want to compete and let the best company that innovates the most the quickest win.

Balaji 7:08

And you know, the thing about this is, there's signs of light, I totally agree with you at the federal level in the US. So there is the McHenry bill, that that looks decent, that it's a little bit of a try to steal force crypto into the SEC CFTC framework, but get under the constraints, it's certainly better than the alternative. Right? And there's also at the state level, there's definitely pro freedom, you know, Wyoming is doing good stuff with the Dow law and Texas as right told Bitcoin shall not be infringed. And there's a minor Protection Act and anti CBD. There's some good stuff that's happening at the state level. And some, you know, I'm not sure if they'll be successful, but at least efforts at the federal level. And there's guys like, you know, on both sides, I always like ROH Khanna or widen or like pretty good on Bitcoin. And, of course, you know, there's folks on their side, like, you know, DeSantis, or were Ted Cruz, have been pretty positive. But I agree with you, in general, the regulatory state is just fighting crypto tooth and nail, but not elsewhere, because much of the rest of the world doesn't take it for granted. Right? Yeah. Yeah, there's

Tyler 8:07

a lot of good efforts. But right now, the SEC and other regulators are just taking a regulation through enforcement. Yep. strategy or attitude to this. So they won't tell you what you need to do to comply. They won't tell you this. These are the roads are paved, there's a speed limit. If you go above, you're speeding. If you go below, you're good. And there isn't that that path for people who want to comply and do things the right way. But there is a stick? Yes. And it's all stick in your your inbounds until you're out of bounds.

Balaji 8:42

And you know, they do this thing where it's totally fake. Or they'll say, oh, you know, just, you know, to the public and say, Oh, this guy's had us come in and register. And that's just completely fake. You know, but once you tell people how fake that is, because it's really important that that get out there.

Cameron 8:56

Yeah, we had an application with the CFTC for three years, and we just pulled it, it was going no nowhere for derivatives. And it's just simply not true.

Balaji 9:07

You guys have in fact, like the Bitcoin ETF, that's now 10 years old, if I'm not mistaken,

Tyler 9:13

like I think we filed in July of 2013. So it's a decade old, we certainly don't have an application pending. But there's a lot of other efforts doing that. And that just doesn't make any sense. The fact that the we don't have clarity on ether, and it's been out for almost a decade, it's just like, and just to sort of break this down for for folks who are newer to crypto. There's this concept in the US and I think in a lot of jurisdictions around the world have a commodity or a security and they're regulated very different but in short, a commodity is much looser, looser, loosely regulated. And so with with cryptos there's this concept where, where a crypto can start off as Security, but over time might become a commodity, more decentralized, because it's sufficiently decentralized, right? And so there seems to be the only thing that that US regulators seem to agree on is that Bitcoin is a commodity, but they won't agree on any other crypto. And so the question is, you know, with ether, even if it did start off as a security, not saying that it did, but let's say it did. And then 10 years later, is it still the same? Ether? Right, same Ethereum? Is it still the same project when it was launched? And so there should be a framework or guidance or criteria around when a token starts as a security perhaps, and when it becomes a commodity, and the only thing we have to look towards is actually an enforcement action, and what that judgment might be with ripple. So the SEC sued ripple, it said, it's a security. And the world still doesn't know the answer to that question, because it's being adjudicated right now. And a US court, and that judgment may come down, and it may say that it's a security, but it very well may say it's a commodity. Yeah. And so there's total confusion and if ripples a commodity, than Ethereum, most certainly is as well, and maybe others fall in there as well. So this idea of, of come in and comply comply to what Right, right. It'd be one thing if you enforced or litigated an existing rulebook, and you said, Okay, these are the rules, and you didn't play by the rules, but there's no rulebook? Yes. So they're spending hundreds of millions of dollars litigating companies that are trying to do the right thing and working within the spirit of the existing laws that don't fit crypto, it's square peg round hole. It's a colossal waste of taxpayer and government resources. It makes no sense. There's no vibrant market with regulation through enforcement. Yes. And just to put another point on that the the tests that adjudicate or that will we use sort of the acid test of what is a security what's a commodity? Are are 80 some odd years old. Yes. And they revolve around an orange grove. The Howey Test is around an orange grove. And they they predate the internet, they certainly predate crypto, right? And like Cameron said, it's it's round peg, square hole or square peg round hole. Right? And why are we trying to fit the it's like it's like fitting 100 year old laws to the internet, something that's totally new. Yep. We should be sitting around and understanding like, what this is and taking a first principles approach. And it would be amazing if the regulator's who taxpayers pay to be the experts at this could just get into a room over a long weekend and hammer this out.

Balaji 13:05

Well, it's funny because basically, you made the point that you know, they're regulated by enforcement, which is like a policeman. The laws aren't published but they just shoot people at random if across line like the penalty they won't even tell you it's the street isn't marked with a just bland, bland, bland that you have to figure out where the lines are that way. Moreover, it Hinman actually said Ethereum was decentralized years ago. Yes. And so they've actually re-injected uncertainty into this whole

Tyler 13:29

thing. Well, and there's also videos of of Gary Gensler, the current chair says, There's during a lecture, he was a professor, lecturer at MIT, saying that there's 1000s of cryptos. And met most of them are not securities.

Balaji 13:44

It's so funny, you know that what what changed? You know, they just went after you know, an exchange, they published a quote, and you could just quote Gensler against himself, you know, like back and forth like this. And it's literally something where I think he's in power now and he just wants to try to make a name for himself by attacking people. Right?

Cameron 14:01

Imagine if the head of the FBI couldn't tell you what constituted a crime. Right? That's wouldn't answer the question. Yeah. Like, it's, it's so unAmerican. You see this in the movies, you read the books? Yeah, it's when did our country become so anti innovation?

Balaji 14:17

It's, you know, it's what's interesting about this is, I do think we're gonna win this battle overall. And the reason I think we're gonna win is 10 years ago, the SEC, the regulatory state wouldn't have even had to fight, we wouldn't have had the distribution to have this conversation to get it onto the internet to have people see, like, they were just one by default, because they pointed a company in a dies. Now they're making an unwise decision of attacking everybody at once, right? They're going after everybody in the entire space. And so nobody, you know, everybody knows that there's, if everybody's a criminal, nobody's a criminal. You know, it's and moreover, actually, you know, they did miss I shouldn't say that. They didn't go after everybody because they didn't go after FTX. Right, right. Like all the ones that went by First SEC was nowhere to be found.

Tyler 15:02

They did sue Floyd Mayweather. Oh, that's true. Oh, that's a huge consumer protection Kim Kardashian getting sued by the SEC used to mean you probably did something wrong. And now it means you probably did something, right.

Balaji 15:14

It's becoming an inverted, like, it's like the Soviet Union, right, where there were laws on the books. But, you know, the the good guys are the ones that laws are enforced against. It's like this inversion of you know, like a Soviet kind of bureaucracy.

Tyler 15:28

Yeah. And it's become, it's become a rites of passage.

Cameron

Yeah. And it's, they've diluted their brand so heavily, because there's just no signal anymore. What is it? What does it mean, the markets shrugged off all of it, in fact, Bitcoins, the best performing asset this year. So I think that it's a damaging approach. I mean, look at look at the companies who have been sued or about to be sued Gemini, Kraken Coinbase. And look at the ones that weren't sued. Yeah. FTX Terra, Luna, what? What other blow ups Celsius? Celsius, right.

Balaji 16:07

And so they have 100% false positive and false negative rate. It's perfect score. They're perfect, except in the wrong direction. Right.

Tyler 16:17

It's it. Again, it does not feel like America, it feels like third world. It feels like Venezuela. You know, America, we were a land of of laws, the Constitution. And there's guidelines and there's clarity, and there's habeas corpus. And there's Miranda rights. There's due process, and there's all these protections. But if you build in crypto, it's a different country.

Balaji 16:45

Right. Now. It's I mean, part of it is if we go to like, first principles on this is a collision between the network and the sea. There's something you know, I talked about in the network said book, right? Like, essentially, are we going to be having a global uniform rule of law through the internet, where anybody from any country gets the same smart contract? And anybody from any country can access the same capital markets and their same terms, which is, in my view, the sort of freedom and equality that like are part of the American ideal, right? Or is it going to be a bureaucrat that just determines who he likes and doesn't like and you know, I'm not even sure he does like besides Sam Bankman-Fried, okay. Besides SPF, I'm not sure we

Cameron 17:29

get Yeah, if you go by the the amount of times that they met, then he would be Yeah, the number one guy, right guy. Yeah. So in the campaign contributions,

Balaji 17:39

the campaign contributions. So I mean, that's the thing is, it's it's really based on how much you give

Tyler 17:44

me how much of this is is air cover? Because, yeah, because we just talked about this crypto bro fraudster bank rolled an election. Exactly. And then oh, is this good cya. air cover? Right. So now go beat down on in, we should unpack the magnitude I think it was 100 million plus for at least SPF and maybe his number two did 70 million. I mean, we're talking hundreds of millions of dollars. So a lot being donated to the Democratic Party put them up as the the biggest mega donors in the entire I think there's a number two but yeah, so it's, yeah, 100 million dollars. Portrait number two, it's not their one of 100. Yeah,

Balaji 18:26

these are these are huge. And I think it's something where the I think you're right, the overcorrection is to, like, cover up the fact that they were basically on sides with the bad guy in this, you know, sort of feels like, but you know, it's funny, because, you know, as bad as that is, a lot of other countries are really good, like Palau has rolled out it's like a RNs ID. I mean, even China has better crypto regulations, potentially, at least in Hong Kong, which is incredible. Dubai, El Salvador, I mean, where places the spots of light, because you just did this world tour. You're in the middle of those two.

Cameron 19:03

Yeah. So I think that Dubai, the UAE is definitely a bright spot. I think Singapore is as well. And we have a we have a team here. We've actually had a team here for a couple of years now about 25 people looking to scale that up and continue to invest in Singapore. And this region as a whole. I think MENA is going to be a big part of the next growth. And then also Hong Kong with their new regulatory framework. And then mica in Europe is encouraging. So those are the key areas that we've been visiting. And we think that are good for building and crypto. And this the month Japan,

Balaji 19:39

I've heard good things about Japan recently. There's a lady there who's working on this waka has been working. Yeah,

Tyler 19:44

we haven't done research on that. It's yeah, but now that you said, look into

Balaji 19:50

it. Yeah, Dave. They are. They've done some very smart stuff with AI regulation evidently recently where they said copyrighted material can be used for AI for AI training, right? There's trying to take a tech they want to get out there last decade they want to bring innovation back, you know, in Japan used to have Sony and all this stuff right before the, you know, the iPhone or

Tyler 20:07

basically disrupted all the US. Yeah. Is there any US television makers anymore? I know I think Zenith was the last one standing at one keep saying you know that industry better than but. But the Japanese electronics they use lately disrupt dominated Yeah,

Balaji 20:23

these will be amazing market. Yeah. And I think I think they want to kind of bring innovation back to Japan in a sense. And so I know for sure they're thinking about opening up crypto banking and stuff like that. So that's just something to right. So

Tyler 20:36

if you think of the technologies, if you want to be a home for the future, what are those technologies? It's definitely crypto. Yep. It's definitely AI. And there's definitely other ones but the the human capital that you attract, that you attract. It's it's PhD students. Yeah. They're brilliant. Engineers. These are these are people you want you want in your economy. Yep. contributing to it, and building in creating wealth and plowing it back in. And I think there is a no, I believe that I worry that there's this huge complacency in the US. It's been the top dog for so long. And so much happened on US soil, the semiconductor industry, the internet companies, web one, web two. But we live in a different world today. Yep. And and in crypto and web three, are up for grabs. There's nothing sacrosanct about the soil in Silicon Valley. And people are more mobile than ever, especially post COVID. We prove to ourselves that we can be productive anywhere, we can hire people from anywhere. And our companies now are in the cloud, and our workforces are in the cloud. So the the the idea that this will be the same story is is not accurate. I agree. Yeah. And the the, I mean, one of the challenges is the the ruling classes that gerontocracy, right, yeah, they they do they can they work computers, right?

Balaji 22:14

It's funny, the younger people like Bill Kelly is like 40 something and he he gets Bitcoin Macron. Actually, I've heard like France has reasonably good crypto regulations. He's also like a younger guy may get it? Of course, there's some older people don't get it. And you know, for sure. But, but I do think that that's a part of it is the system that they've grown up with is the fiat system, it must always be the offense system. Anything against that is totally bad. You must be evil.

Unknown 22:39

I mean, a lot of them were alive during when the Marshall Plan was being Yeah.

Balaji 22:45

Like, this is like, you know, as much as I respect, for example, Buffett or Charlie Munger, they're still in this headspace where it's like, you know, oh, they just don't get something that could not be done by the US government, like

Tyler 22:59

the US government will settle trade with its navy, and it will be in US dollars, right? And the year is 1945. Yes, exactly. But the year today is 2023. And the rest of the world has moved on. And they they weren't a part of this, too. They weren't a part of the future. And because the US won the past, does not mean it's going to win the future. And we had a rowing coach who said that gold medals if you if you bring them with you, the ones you've won in the past with you to the next race, they get really heavy.

Balaji 23:36

Oh, that's such a great, especially from you guys. That's a great line, because you just can't rest on your laurels. You can't

Cameron 23:43

Yeah, you can and it's moving so fast. And I think that if you don't support crypto, then then you're short crypto. And you're really short the future. And that's just a very dangerous place to be. And it's moving so fast. And I think a lot of countries that we visited understand that and nobody wants to be left behind. And there is a real risk. I think the US misses this as Tyler was mentioning that web one and two were one, you know, in the US largely huge innovation drivers. But web three is is up for grabs. And it's just not a given at all. And look at Hong Kong has changed their position. I came on to speak because they recognize, oh my gosh, this is an amazing opportunity because the US regulators and leaders are fighting like a high school cafeteria.

Balaji 24:35

That's right. And I think another big part of it is crypto is it's obviously innovations, all things struggle. It's also freedom, like all of these Chinese liberals, all of these folks, you know, I mean, many people in China like this huge country, if you have different opinions, a lot of the people who are pro freedom, there are pro crypto,

Tyler 24:53

what about the the cognitive dissonance of the folks who who dislike crypto out in the States, who say they stand for Financial Inclusion, for access. So Elizabeth Warren would be a great example of someone who says they stand for the things that crypto actually can deliver, right. But she's taking the position of, of the bankers and the establishment,

Balaji 25:19

you can be assured right there, you don't actually have some financial inclusion if you're not allowing somebody to effectively be their own bank. Right, right. You're you're fundamentally setting up a two tier system of those who have banking licenses, which are very, very hard to get nowadays, and those who don't. And these guys have administrative privileges, and then the average Joe does it. Whereas we haven't flat you know,

Tyler 25:39

yeah, if you if you think of banking is a pyramid, at the bottom of the pyramid, is the deposit. dispossess the unbanked? Yeah, and that's majority of the world. I don't know what the exact numbers are. But it's billions of people not only don't actually have a bank, they can go to and get a bank account. And then you go up the ladder, and there's the underbanked. So folks who get some amount of banking services, but not really a full fledged bank account. And then you go a little bit higher in the pyramid. And you get folks who can be banked, but that's the top of the pyramid. And even inside the the top of the pyramid of the larger pyramid. It's a pyramid. And so if you show up to JP Morgan, with $500, you get a certain bank account, with a certain amount of access and privileges. If you show up with a million dollars, they might invite you to join their private wealth bank, right. And so you get a whole other suite of services and some services. And then if you show up, and you're called, you're deemed high net worth right at that point. And then if you show up with $100 million, you get a whole other set of access and privileges because you're deemed ultra high net worth. So even in the current system of being banked. It's a complete pyramid, right. And pyramids are inherently unfair, and they're unstable. And the only thing that can flatten that pyramid down and level the playing field and put everyone on the same plane is crypto. Yep. Because, yeah, go ahead. No. And if the bankers could have figured this out, they would have figured it out. They've got knows they've had enough time.

Balaji 27:30

So you know, an important demographic for you on this is probably going to be India over time. You guys are going there.

Unknown 27:36

You have this you're actually building an office there right now. And we'll probably have 50 plus people by the end of the year,

Balaji 27:43

or maybe we'll put up the link Gemini that conferences shops.

Cameron 27:46

Yeah. Current careers. I think Korea. Okay, great hiring. Yeah. Great.

Balaji 27:50

So, um, so tell me about you know, you're obviously I think a lot about India. I'd love to hear your guys. Thoughts on India. Yeah. So we

Tyler 27:57

are we're building an office there of technologists and engineers, a lot of people know this slide. People don't. But India's Got an incredible culture of technology and engineering. And most of Silicon Valley's actually been, it's been Indians for for many decades. And so we're building development center there. But we also think that it's a really important market to provide services and products to so we'll be working much

Balaji 28:26

of Silicon Valley has been Indians much, but not most, but a large percentage.

Tyler 28:29

Yeah, I'm getting wrong. But a large percentage. Yeah. So we're, we're going back to the source. Sure. Mother Lode. But, yeah, it's a really exciting growing market. We're gonna look to find ways to open up there and operate

Balaji 28:49

this great. Yeah, I think also India has a constituency that it is it is a market, it's definitely a market. But it's also in a sense of political constituency for shifting the world order. Because, you know, a lot of Indians are the underbanked that you talked about, right? There folks who don't have access to, you know, JPMC and Chase and whatnot, but they have an internet connection. So they've got a smartphone. So they've got access to the blockchain on the same terms as you and I, and we wouldn't have it any other way. Right. And that is actually pretty novel. Now, yes, India's domestic payment systems have improved a lot. I give a lot of credit to India's infrastructure that sort of like domestic phone calls and foreign phone calls, right? You have like domestic Line International, and like domestic payments, and then crypto for international, is actually pretty advantageous to a lot of Indians. So I think that's an important, like, just political demographic for the world, in terms of reforming the system from the outside with a lot of English speakers that I think can legitimately say, Look, we don't have a seat at the table and we should.

Cameron 29:50

Yeah, and similar to telcos, there's countries that when when things went cellular, they didn't lay copper lines, they leapfrog that and I think right India It could be a great great example of leapfrogging traditional financial infrastructure and going straight to crypto in the cloud and banking the unbanked with with a smartphone. I mean, it's insane when you walk around a town in the US, and you see all these brick and mortar banks. Yeah, it's such expensive infrastructures. Really? Why do you why do you need that?

Balaji 30:24

I mean, the only thing about it is it does have in person verification, that part is only thing where, you know, some kind of proof of human or somewhere like that, but that's about it. Everything else should be done

Tyler 30:34

to push back on that. Go ahead, say we can we can KYC and understand people better online remotely. And okay. Okay. That's it in 90 seconds or less? Yeah,

Balaji 30:44

I think it's going to be interesting, because that's an important area of predator prey because of AI. Right. So that's going to make it easier to fake the online stuff. That's why you're seeing projects like world coin proof of humanity and whatnot, I think you're going to need a bunch of signals to prove that somebody is human. And that's going to become an important how we do that is going to be an important thing for the whole world. But that's like the digital passport to online services. And I think it's something to keep on your radar. I'd love your thoughts.

Cameron 31:12

Yeah, we actually talked about this. Yes, we had to on the idea of crypto being able to authenticate and ferret out something that's real, right that day versus a video. That's a deep fake. Right. And so that, that seems like a really important piece of the future to be part of. Yeah, and I think one of the earliest ideas around that would be something like the spam coin or Hashcash, right? Where to send, like a fraction of a penny with an email, it sort of verifies that the person's real because it becomes cost prohibitive. If you're sending billions of spam emails, that becomes expensive. So by requiring a fraction of some token or crypto, you can eradicate spam and create sort of verifiability or authenticity around that.

Balaji 32:04

Yes, or a costs are likely to pass deposit or something like

Tyler 32:08

that. Yeah. And yeah, the simple way is you create if the internet gave us abundance, crypto gives us scarcity. Yep. And value. And so it's expensive to send that email. And you could toggle that up or down. But like Kevin said, if if someone's spamming out a billion emails a day, which I'm sure they probably hit those numbers, then if you charge a quarter or 50 cents, or $1, that's a billion dollars to abuse the system.

Balaji 32:33

And that was actually one of Satoshis first thoughts about what Bitcoin can be used for.

Cameron 32:37

Right? So AI could make spam and phishing so effective that we finally shift to a standard where you have to send attach some value to email, otherwise, it just gets out of control. Yeah, I think that that could happen could finally tip things over

Balaji 32:55

into Yeah, just have to get alternatives. I mean, it's already something where how much of your email or like, corporate messages and so on most of your true inboxes, your, you know, signal, your whatsapp, your DM your this and that those are like the lower spam inboxes. Right. Versus email, especially, like, you know, your Slack is within your corporation, right? discord within your community. And then email is becoming more and more just like password resets and phishing. Actually, you know, I wanted to ask you guys like, okay, so, obviously, we think about crypto a lot. What do you what do you think comes after crypto?

Cameron

After, in what sense? Well, like

Balaji 33:36

growing out of like, in the sense of, you know, web to lead to web three, web three uses aspects of web two, like what what other things are you interested in? You know, like, adjacent things, etc.

Cameron 33:47

Yeah, I mean, so we spent a lot of time I guess the last two years have been dominated a lot by defy rearchitecting traditional financial services in a decentralized permissionless trustless manner. And then nfts creating assets around digital art and collectibles. I think that is just getting started. Obviously, NF T's have cooled off quite a bit. But I think they're still here to say, and we're going to see everybody. We've collected and created art since the beginning of time. And to create that in the metaverse and web three, you're going to want NF T's that's just a human need want desire. So I think that we're going to see more of that the intersection of gaming and crypto could be pretty interesting. We've talked a lot about interoperability like can you carry those game shields with you to another game or sell them or trade them or store them rather than the walled garden approach? So I think that intersection will be cool. I think that the intersection of crypto and AI is fast approaching and machines are not going to get bank accounts at JPMorgan right machines talk to protocols like Ethereum in Bitcoin and you could argue that crypto is really built for them. And so, you know, the crypto is is the internet of money the first internet 1.0 didn't have money on it. I mean, PayPal really skinned the current banking system on it. But crypto is purpose built money for the internet. And so we talked about it being the internet of money, greatest social network of all time. And that's pretty important. Imagine I'm in an economy without money, then you have a system of barter. And we know the short comings there and so AI is gonna want money and you're gonna want AI to use money, interact and be part of commerce and trade in the financial system. And crypto is the way to do

Balaji 35:45

that. I should probably we should flashback to a clip. I don't know if you remember, I think we did a TechCrunch Disrupt all the way back into a Yeah, and I think we were talking about using Bitcoins, like me, you novel, we were talking about using Bitcoin for self driving cars to like pay them like yes, that is going to happen. It's kind of already having been trading bots, right? The headless version, right? Because those are those are trading back and forth and just be physically embodied.

Winklevoss twins 36:08

Actually had found Bitcoin, totally unexpectedly, we were on vacation two summers ago, Ibiza, and ran into a guy of all places, right?

Balaji 36:18

Just add to what the ball was saying about programmable money. Here's like a couple of applications that you could envision so fast forward five years or something. And there's the Uber Google Tesla merger of dispatching and automatic cars, and you know, the, it's built into Tesla cars, and you've got them running on the freeway, and one car, you know, you want to accelerate and you pay in Bitcoin automatically to the cars in front of you a passing price, right? She can just boom like this and just go through the fast lane. They just gotta be anonymous. They gotta be cash, because if you did credit, you could charge back as soon as you pass them. Right. I'm so so

Tyler 36:52

deep blue. Finally beat Kasparov in the third match in

Balaji 36:56

Yeah, I don't know how many matches it was, but it did take a while is 97 I think it

Tyler 37:00

okay. 97. So, so AI computer is the best chess player in the world. How long before AI is the best investor in the world and much better orders that are much better than a Warren Buffett?

Balaji 37:14

Yeah, I mean, well, it's interesting, because in theory, you could have an investor, have an AI that is slurping up all the same information. They are right, and then trained on all the trades they're making. Yep. Right. That is as feasible to do I mean, leaving all the SY reading all the news, parsing errors, yeah. And it stores it all locally. It's just parsing your screen, your computer screen, of course, you have to figure out the security on this. It's very private kind of stuff, right? But that's actually where crypto comes in. Also, because you have decentralized storage, everything is stored locally.

Tyler 37:46

Right? And so let's talk about Yeah, the so I don't, I don't see this a lot being talked about yet. But the current state of AI is going to look like the current state of the web, web 2.0, which is basically it's centralized. It's five data cartels, you log into the internet today, you're logging into five companies, right? Facebook, Instagram, Amazon, it's not the open, decentralized web that Tim Berners Lee envisioned. And so AI is that heading down the same path, right, of this centralized? Few companies where you gotta run your data, they have it, the privacy, the security, those issues, and it's controlled by a few. And so do we want that world? Or do we want the decentralized role where there's decentralized AI? And you can fund with crypto and control your data, and whatnot. So we should talk about on the bat, how crypto enables a better

Balaji 38:44

AI world? Absolutely. I mean, the way I kind of think about it, you know, some people will say, Oh, it's buzzword bingo to talk about like AI and crypto and so on. Again, acknowledging that it can sound like that. I think I distinguish AI actually, in the never said book, I talked about this a bit. I'm writing more on this, but I think AI crypto and social are actually particular kinds of technologies that are different from let's say, electric cars and spaceships as awesome as those things and the differences that the electric car or the spaceship, you know, the those kinds of things are. They're like tools, right? Whereas crypto is how humans you know, do money and contract socialist how they communicate. And I actually often replaces the human themselves, right? So these are like three sort of governance slash social tools, and they're like tools trade structure, a political system, a social system, and so on. Whereas I feel like electric cars, spaceships, stuff like that are awesome, but they're more on the outside and more like devices as opposed to like the brand the operation, right?

Tyler 39:46

It's like it's hardware that gets you from A to B versus software language.

Balaji 39:52

Yes. How people communicate how they transact how the computer think, right? It's like thinking transaction.

Tyler 39:59

I don't know talking He's like, it's almost the tribe. Yeah, this is you by yourself. There we

Balaji 40:04

go. Exactly. That's right. And, and the reason I think that's interesting is if you take that triangle of like AI, social crypto, um, you can actually have both decentralized and centralized versions of each, like, you know, like teal talked about AI centralizing, cryptos decentralized, I think that's true to first order. And second order, you can have centralized AI, like you guys were just talking about centralized crypto, like cbdc. And then centralized social, which is, of course, you know, like the original social networks. Now, you can have decentralized crypto, of course, the original, you know, kind of what we'll hopefully stand for. You have decentralized AI, which is like stable diffusion or llama, where all the weights are out there in public and anybody, you know, not your weights, not your model, right. Unfortunately, that's got a lot of traction. There's a Google memo a little while ago that said, Google is losing to Google and opening are both losing to the decentralized version, right? To be clear, I have massive respect for everything that they've built at Google and ended open AI respect, Sam respects of the SE respect. So in that respect all of them, but I do want the decentralized version of AI. And we also, of course, want decentralized social, and so it's good that Jack is doing Nostr. It's good that Dan Rivera is doing forecaster, it's good that Elon is decentralized Twitter to a greater extent than it was before. It's like more free speech, you know. So we kind of have like, decentralized and centralized versions of each I'd love your you know, I don't know if you guys have any thoughts on that.

Cameron 41:22

Our view is that decentralized versions will win in the long term. If you look at meta, they're building a centralized Metaverse, I think that some people might enjoy that. And then there could be pros to that approach. But I think that the decentralized one will ultimately win out that's where the, the builders and developers want to build because it's it's open trustless permissionless, you're not going to get robbed. And I think that's the it's really the ethos of the value accrues to the users and not five companies and five CEOs.

Balaji 41:56

It's interesting, because, you know, we're talking like the day after Apple launched its its new headset. And on that topic, I actually think it's possible that Facebook, Zack has talked about open Metaverse, right. And Apple generally tries to do things closed. So it's possible that Apple versus Facebook looks like Apple versus Google that say Apple did iOS closed. And then Android was kind of like the more open smartphone version. And so it's possible that Apple's headset is like the more closed version. And Facebook may lean into openness simply as the same kind of strategy because often you have that, you know, Apple versus Android, Apple versus Microsoft. You're

Tyler 42:39

a Pepsi coke. Yes. Rolled or Hertz Avis.

Balaji 42:42

Exactly. That's right. So centralized, decentralized, almost like the decentralized one is polished. But it's also like enclosed, and you can do anything within your own right. And the decentralization is messier, but it's what the hackers want, the builders want, you know, and so on. And so you have this constant tension between the two. I hope that the decentralized world, I think you're right that a quote wins, but doesn't have to win to 100% to win, you just need to have a sustainable share of the market. So that freedom continues to exist. That's at least how I see.

Tyler 43:12

Yeah, I think it's gonna be really hard for a centralized company to go decentralized. Because it's it's cultural, it's cultural, it's changing your DNA, it's it's changing, you know, a zebra changing its stripes. It's just really hard to do, and you have to disrupt and cannibalize yourself. So I think the decentralized options are probably going to come from startups to novo. Yeah, new new efforts. I'm sure Apple will build an incredible experience, as they always do. The question is, are people going to want to pay 30% tax VAT to them every time I purchase something, right. And so the right now, I don't think the App Store allows any app that sells at FTS unless Apple gets 30%. And so the experience is gonna have to be so much better for people to pay.

Balaji 44:10

I hadn't thought of that. So let me let me ask you guys. So here's, here's what I think is an extra part of what's next. You know, just like you start a startup company with a small amount of capital, I think we can now start startup communities with a small amount of political capital. Okay, so just like someone to save some money, and they can start a company or they get some venture investment. You've built up some following on Twitter or somewhere else. And now you can actually start bootstrapping in person communities, meetups and things like that. This is something I'm interested in. This is what I've written the network's yet about. It's basically you can start a small community, you build it larger, you get 100 and 1000 paying members. Now you can actually start crowdfunding even a small town or something like that, right? And maybe you start by crowdfunding brunch and you move on to crowdfunding buildings, okay? The kinds of stuff that you can do here. Of course, you can have like a crypto city, right or a crypto town, right? And you know, you could have I don't know, the, the, I wouldn't call it the Gemini garage. If there's a word for talons, it started with G. So I'd love to know, the kinds of things that you know, we talk about and never say book is, if you could build a small town a small city, would you build. And you know, just to motivate that, for example, there's culdesac.com. And that is a startup city that a seed investor in in Arizona, which is like a car free zone, right? Then there's Kift, and it's a total opposite. It's like Van life. Rather than living without cars. You literally live in a van, but you save so much money, and you've got these base stations, you can drive around the whole Midwest, right, right. And there's like Prospera, which is, then there's like, Prospera, and like South America, that's like a free city in South America, like English speaking. There's cabin in Austin, which is like, almost like a college town trying to rebuild that. So people are trying to build different visions of the good. Right, you know, so what would the you know, like Romulus and Remus, you know, founding Rome, okay, right. Like, what is the Gemini? What does the Winklevoss town, you know, look

Tyler 46:02

like? That's a good question. So one that is that is for innovation. Yes, one that is a city where builders can can build. And if there has to be laws. Laws should be hard to create an easy to repeal? Yes, in the US currently, it's inverted, right? They're kind of easy to create, and they stay on the books forever. That's how you have these crazy laws in some municipalities where if you steal someone's lobster, pot trap, they can shoot you, right? It's really hard to block off the book. So small government government says out of people's lives as much as possible, and it's very much you read a great article about the inverse of Amish. Yes, that's right. And so I think a lot of those those principles and values have a place where people can innovate and create really cool stuff, and do meaningful work, and build the future and deliver as Founders Fund says, you know, you've promised us flying cars, and we've got 140 characters, a place where someone can build flying cars.

Balaji 47:21

That's great. That's awesome. Yeah, I

Cameron 47:23

would say that the, the US I guess, in large part because people had to work to get there, you had to show proof of work to, to show up in the in the US. It attracted a certain psychographic, right, among people who really believed in that manifest destiny, and the rags to riches stories, and the pursuit of those different things. And I think the framers got it really right. But somehow, we seem to have lost our way, and people aren't focused on the future, and building a better future, and the growth and we're focused on all these other things. And I think hopefully, it swings back, but I think you could take the Constitution, I mean, it's the code of America and it's worked pretty well for a while and then maybe iterated on that. But I think it's, it's still a pretty darn good starting point. So,

Balaji 48:23

right, so we are kind of like the pro freedom movement that is allowing exit from this, you know, system, we are like the equivalent of Jackson Vanik and the USA is or the federal government, we should become like the new USSR. Like that's actually like a really, that's why I mean, of course, I believe in innovation and so on. But there's, it's amazing how important it's what we're doing. Like

Tyler 48:47

and so in so as, as a consumer your ability to Okay, I'm gonna try this city state for a while Oh, it's not going the right direction, or I'm value Miss line. I'm gonna move pick up and move to another one. Exactly. So we're very passionate about this. And this is what we think crypto does is give people more choice, independence and opportunity. And that's why Gemini exists is to usher in crypto because it provides that it unlocks the next era era of personal financial and creative freedom. And so I think a situation where you can the right to exit is super important. I'd love to see that more globally, because people get stuck they get stuck with the currency, the current currency, the current laws, the current government and whatnot, and I think the world would be a better place if you could just go go more easily

Balaji 49:48

guess from the two party system to the N city system, you should be able to choose between. Great guys, thanks for coming.

Winklevoss twins

Thank you.