Latest / The Paul Barron Crypto Show / Bitcoin Quantum Threat Accelerates!🚨Charles Hoskinson INTERVIEW🔥Cardano + Midnight

Transcript

Bitcoin Quantum Threat Accelerates!🚨Charles Hoskinson INTERVIEW🔥Cardano + Midnight · The Paul Barron Crypto Show

• 0:00
  Speaker 1: The quantum threat is real, and it's coming much faster
• 0:02
  Speaker 1: than everybody is anticipating. I'm going to have Charles Hoskinson
• 0:06
  Speaker 1: on today. It's going to be a good one. I
• 0:08
  Speaker 1: do want to kind of start off with this right here,
• 0:11
  Speaker 1: and that is Google's quantum warning. Could Bitcoin really be
• 0:14
  Speaker 1: hacked in nine minutes? This is kind of the breakdown
• 0:17
  Speaker 1: and also the narrative that has been pushing for about
• 0:20
  Speaker 1: the last six months, and the acceleration of this has
• 0:23
  Speaker 1: even surprised me, someone who's been in tech for a
• 0:26
  Speaker 1: long time. I kind of question whether or not this
• 0:29
  Speaker 1: could be done. And we've had several people on before
• 0:34
  Speaker 1: talking about this very issue. Justin Drake was on not
• 0:37
  Speaker 1: too long ago, and even then he wasn't really mentioning that.
• 0:42
  Speaker 1: But I want to play a clip for you before
• 0:43
  Speaker 1: we bring on our guests. Take a look.
• 0:45
  Speaker 2: Most recently, I heard you say you think QDA would
• 0:47
  Speaker 2: be roughly around twenty thirty twos.
• 0:49
  Speaker 3: Is that still kind of your timeline.
• 0:51
  Speaker 4: The specific number that I put for publicly is that
• 0:54
  Speaker 4: there's at least a ten percent chance that will have
• 0:57
  Speaker 4: one of these crocs by twenty fifty two, and a chance,
• 1:00
  Speaker 4: you know, for etheroreum is enormous, right, we can't take
• 1:03
  Speaker 4: this chance now. Over the last three weeks, basically, I've
• 1:08
  Speaker 4: been obsessed with these neutral atoms and I you know,
• 1:12
  Speaker 4: I'm not ready to make a final prognostication. But my
• 1:19
  Speaker 4: Q day is going to come forward, so it's likely
• 1:22
  Speaker 4: not going to be twenty thirty two anymore, is going
• 1:25
  Speaker 4: to be you know, a smaller number.
• 1:28
  Speaker 1: All right. So that is one of the lead devs
• 1:31
  Speaker 1: over there with Ethereum. Of course, we've talked to him
• 1:34
  Speaker 1: at length about this, and now we're starting to see
• 1:37
  Speaker 1: much more alarm in the community. One of the people
• 1:40
  Speaker 1: that is bringing the alarm signal up has been Charles Hoskinson.
• 1:45
  Speaker 1: YouTube took down as BP three sixty one proposal and
• 1:49
  Speaker 1: we're going to talk to Charles about that today and
• 1:51
  Speaker 1: we wanted to bring him on the show and welcome
• 1:53
  Speaker 1: him in to PBN. How's it going, Charles, Hey, Paul,
• 1:57
  Speaker 1: thanks for having me on. All right, So you saw
• 1:59
  Speaker 1: some of the line up there. You saw justin talk
• 2:02
  Speaker 1: about moving forward their plan. Quantum threat is real. You
• 2:06
  Speaker 1: see this as a major issue right now when you
• 2:10
  Speaker 1: look at the current state of where we are. How
• 2:15
  Speaker 1: dire is this.
• 2:16
  Speaker 2: Really well, what you do if you want to have
• 2:19
  Speaker 2: some degree of objectivity and transparency to the process, as
• 2:22
  Speaker 2: you kind of widen the aperture, and you say, who
• 2:24
  Speaker 2: has the strongest incentive to care about the problem? So
• 2:27
  Speaker 2: the US government does, the US military does, the intelligence
• 2:30
  Speaker 2: agencies do because it's life or death for them. So
• 2:32
  Speaker 2: the thing I look at is DARPAS QBI, the Quantum
• 2:36
  Speaker 2: Benchmarking Initiative. So it's an open project. Eleven major companies
• 2:40
  Speaker 2: from IBM to Quantinum, we're participating in it. And basically
• 2:43
  Speaker 2: what DARPA did is they brought together all the physicists
• 2:46
  Speaker 2: and engineers and they're through a three stage process trying
• 2:48
  Speaker 2: to figure out are we going to have a working
• 2:50
  Speaker 2: quantum computer by twenty thirty three, and if so, what
• 2:53
  Speaker 2: can that computer do? Can it break encryption? Can it
• 2:56
  Speaker 2: do quantum chemistry? And all this other stuff. So eleven
• 2:59
  Speaker 2: of those companies have passed through the first gate gate one,
• 3:02
  Speaker 2: and there's two more, and so we'll probably know within
• 3:05
  Speaker 2: the next twelve to twenty four months. Is this a
• 3:07
  Speaker 2: near horizon problem or is this a problem that's longer
• 3:10
  Speaker 2: horizon like the twenty forties or twenty fifties, as Adam
• 3:13
  Speaker 2: Back believes. So regardless you look at where the standards
• 3:17
  Speaker 2: are at, do we have countermeasures to defeat quantum computers?
• 3:20
  Speaker 2: And the entity you look at for that is nissed
• 3:24
  Speaker 2: whether you agree with them or not. They control the
• 3:26
  Speaker 2: Department of Commerce's opinion and all US government procurement and
• 3:30
  Speaker 2: thus all hardware in the United States, So they do
• 3:32
  Speaker 2: what are called phipps, and phipps are standards that the
• 3:35
  Speaker 2: US government adopts for cryptography. So PHIPS two three, two
• 3:39
  Speaker 2: four to two five and two six are the post
• 3:41
  Speaker 2: quantum standards, and they have both on the hash and
• 3:43
  Speaker 2: lattice side, a variety of good options. And so we
• 3:46
  Speaker 2: have countermeasures, and we have basically a group of people
• 3:50
  Speaker 2: that are waking up every day telling us when QDA
• 3:52
  Speaker 2: is going to occur, if it's going to occur. So
• 3:54
  Speaker 2: does the natural question asked, why hasn't the space just
• 3:56
  Speaker 2: adopted this stuff proactively, like what's the harm? And the
• 4:00
  Speaker 2: problem is post quantum stuff is much less efficient and
• 4:04
  Speaker 2: much bigger in signature size than quantum than elliptic curve.
• 4:09
  Speaker 2: Excuse me, lyptic curbs are awesome. You know, you have
• 4:12
  Speaker 2: lots of lots of optimizations, and they run really quickly,
• 4:15
  Speaker 2: and they're very small signature sizes. If you look at
• 4:17
  Speaker 2: a Stark for example, you're talking about a forty to
• 4:20
  Speaker 2: two hundred kilobyte signature, and when you look at a
• 4:23
  Speaker 2: comparable elliptic curb, you're talking about like half a kilobyte
• 4:26
  Speaker 2: or smaller. And when you look at lattice based, it's smaller,
• 4:29
  Speaker 2: but it's still in the kilobyte range. So nobody wants
• 4:32
  Speaker 2: to be the guy to say, hey, let's go adopt
• 4:34
  Speaker 2: this thing for this thing we don't know is going
• 4:36
  Speaker 2: to happen, that we're going to take a ten to
• 4:38
  Speaker 2: one hundred x performance hit in terms of TPS for
• 4:41
  Speaker 2: our blockchain. For let's do this a little bit more slowly,
• 4:44
  Speaker 2: And that's why we've seen a resistance to wholesale adoption.
• 4:48
  Speaker 2: But some blockchains have been leading, like al Grand for example,
• 4:51
  Speaker 2: with the Falcon signature scheme and other ones. That's their
• 4:54
  Speaker 2: entire resindetra, which gives us pretty good data and practice
• 4:58
  Speaker 2: what these things look like at scale and what they
• 5:00
  Speaker 2: can and cannot do. Ethereum has also been a pretty
• 5:03
  Speaker 2: big leader with the Stark side, and they've been very
• 5:05
  Speaker 2: aggressively pushing towards post quantum, so it's you know, it's
• 5:08
  Speaker 2: it's nice to have those data points. But Bitcoin in
• 5:10
  Speaker 2: particular has some hard decisions to make hard decisions.
• 5:14
  Speaker 1: Who would you say is closest right now? Of the
• 5:16
  Speaker 1: blockchains that are currently out there that are somewhat active around,
• 5:21
  Speaker 1: who would you say as leading the back.
• 5:24
  Speaker 2: Well, some are easier to secure and faster the secure.
• 5:28
  Speaker 2: Other ones are much more complicated. Anything in the proof
• 5:30
  Speaker 2: of stake space a lot of work has to be done.
• 5:33
  Speaker 2: Anybody in the zero knowledge space even more work has
• 5:36
  Speaker 2: to be done. If you're a proof of work.
• 5:38
  Speaker 3: You don't have to do too much.
• 5:39
  Speaker 2: You just have to secure your signature scheme and be
• 5:41
  Speaker 2: comfortable with your hash size for your puzzles because of
• 5:45
  Speaker 2: Grover's algorithm. So Bitcoin has further behind, but they easily
• 5:51
  Speaker 2: could add a post quantum scheme, things like ethereum or
• 5:53
  Speaker 2: cardono or otherwise. You have to think about your VRF
• 5:56
  Speaker 2: or your vdfs. You have to think about user an
• 5:58
  Speaker 2: old strategy. So there's just a lot more work to do,
• 6:00
  Speaker 2: which is why they're more involved. We have the algorithms,
• 6:04
  Speaker 2: we have the quantum analysis. We wrote a paper in
• 6:06
  Speaker 2: twenty nineteen on bitcoin, specifically if there was a quantum adversary,
• 6:10
  Speaker 2: explaining what's a problem and what's not a problem.
• 6:13
  Speaker 3: So you know, we've been thinking.
• 6:13
  Speaker 2: About it for seven years, so i'd say, you know,
• 6:16
  Speaker 2: if you look at Cardino, Midnight, algorand or ethereum, or
• 6:19
  Speaker 2: any of these things, we're going to be okay in
• 6:21
  Speaker 2: the twenty four to forty eight month time horizon. On
• 6:23
  Speaker 2: the Midnight side, we have a project based on work
• 6:25
  Speaker 2: from Stanford and Microsoft called Nightstream that we're doing with
• 6:29
  Speaker 2: the Linux Foundation the LFDT, and that's going to give
• 6:33
  Speaker 2: us a post quantum foundation. And on the Cardinal side,
• 6:35
  Speaker 2: we have a lot of things that we're starting to
• 6:37
  Speaker 2: pull into Cardinal in the next twelve to twenty four
• 6:39
  Speaker 2: months to do that. But what we're slated for is
• 6:41
  Speaker 2: it's got to get all tied up with a bow
• 6:43
  Speaker 2: tie before the end of the decade. And I think
• 6:45
  Speaker 2: that gives us a comfortable marchin for this coming fast.
• 6:49
  Speaker 1: For sure. We've had Paul Stork on before. He's a
• 6:52
  Speaker 1: long time bitcoin developer. You may know him out there
• 6:54
  Speaker 1: in the community. Now he's proposing a fork that would
• 6:57
  Speaker 1: reassign part of Satoshi Kamoto is one point one million tokens.
• 7:02
  Speaker 1: The plan is to copy bitcoin into a new chain
• 7:05
  Speaker 1: called e cash. I think it's actually doing a countdown
• 7:09
  Speaker 1: right now, one hundred and fifteen days out. What do
• 7:10
  Speaker 1: you make of this one in terms of possibility?
• 7:13
  Speaker 3: When's the crowd sale?
• 7:15
  Speaker 1: Yeah, okay, I get you. So, I mean, is there
• 7:20
  Speaker 1: any other solutions out there besides what you're proposing?
• 7:23
  Speaker 4: Yeah?
• 7:23
  Speaker 3: I want to be fair to Paul. So the problem.
• 7:26
  Speaker 2: The problem is that there's no good solution right now
• 7:28
  Speaker 2: for bitcoin because it requires interaction. I ran into this
• 7:31
  Speaker 2: with the Ata sale where there were vouchers sold for
• 7:34
  Speaker 2: Cardono twenty fifteen and about ninety nine point seven percent
• 7:38
  Speaker 2: of them redeemed and they're now out there. But then
• 7:41
  Speaker 2: there's a small group of people. They do nothing, and
• 7:43
  Speaker 2: if they end up falling into insecure addresses, what do
• 7:46
  Speaker 2: you do? You have to develop some sort of custodial system.
• 7:49
  Speaker 2: So in our case, we had KYC data, so we
• 7:51
  Speaker 2: could create an off chain process for that. The problem
• 7:54
  Speaker 2: with bitcoin is they don't have ownership associated with the
• 7:57
  Speaker 2: initial distribution, and so when you have kind of three options,
• 8:01
  Speaker 2: you can do nothing, in which case about six point
• 8:03
  Speaker 2: eight million coins are vulnerable at rest, and then all
• 8:06
  Speaker 2: future spending is problematic, so that's not good. You can
• 8:09
  Speaker 2: do what bit three sixty proposes, which is use what's
• 8:13
  Speaker 2: called paidamrcle route, and you had a post quantum signature,
• 8:16
  Speaker 2: and then people can migrate of their own accord and
• 8:18
  Speaker 2: the people who don't migrate their funds are effectively going
• 8:21
  Speaker 2: to get stolen for the legacy addresses. Or you can
• 8:24
  Speaker 2: do what Paul is advocating, or what bit three sixty
• 8:27
  Speaker 2: one is advocating, and instead of just adding the signature scheme,
• 8:31
  Speaker 2: you also freeze the legacy accounts and you create a
• 8:34
  Speaker 2: migration path. So in the case of bit three sixty one,
• 8:38
  Speaker 2: what they're saying is, we're going to create a zero
• 8:39
  Speaker 2: knowledge proof and if you can prove that you own
• 8:43
  Speaker 2: the bit thirty nine keywords, you can redeem and that
• 8:45
  Speaker 2: would be post quantum awesome. But there's still one point
• 8:49
  Speaker 2: seven million coins that you can't do that because that
• 8:51
  Speaker 2: standard didn't exist until twenty thirteen. Bitcoin was created in
• 8:55
  Speaker 2: two thousand and nine. So Paul is like, well, what
• 8:57
  Speaker 2: do I do with those four years of history? You
• 9:01
  Speaker 2: can create another chain and migrate that over and then
• 9:05
  Speaker 2: you know, use that as an off chain redemption mechanism.
• 9:07
  Speaker 2: But the problem without a hard fork, bitcoin won't really
• 9:10
  Speaker 2: understand how to reconcile that accounting, and those coins will
• 9:13
  Speaker 2: be stolen and put into circulation. So unless you're willing
• 9:16
  Speaker 2: to admit a hard fork, then you're not going to
• 9:19
  Speaker 2: resolve the theft consideration. And if you do do a
• 9:22
  Speaker 2: hard fork, under what legal authority do you have to
• 9:25
  Speaker 2: seize other people's property? Yeah, there's no achievement process, you know.
• 9:29
  Speaker 2: And this is the problem with not having on chain governance.
• 9:31
  Speaker 2: There's no terms of service to seize people's assets. It's illegal.
• 9:36
  Speaker 1: Yeah, this is a this is a major challenge. I mean,
• 9:39
  Speaker 1: you look at the probability of what would get done here,
• 9:43
  Speaker 1: where would you put it in the camp of what's
• 9:46
  Speaker 1: most likely to occur? Because this is going to have
• 9:49
  Speaker 1: to get addressed. It it's not an if, it's a win.
• 9:52
  Speaker 2: So the most likely outcome is the adoption of something
• 9:55
  Speaker 2: like BIP three sixty where they add a post quantum
• 9:58
  Speaker 2: signature scheme using the tap root construc diruction and they
• 10:01
  Speaker 2: allow the coins to be stolen. And the argument for
• 10:03
  Speaker 2: that is, look, we survive Silk Road, we survive Mount Gox,
• 10:07
  Speaker 2: we survive bigger events. It's okay for a temporary cycling
• 10:10
  Speaker 2: of ten or twenty percent of the supply, and exchanges
• 10:13
  Speaker 2: and off chain processes can probably be used to somewhat
• 10:17
  Speaker 2: resolve that. And also people knew the risk they were
• 10:20
  Speaker 2: given in formed consent. They said, hey, you know, you
• 10:23
  Speaker 2: don't move.
• 10:23
  Speaker 1: It is what it is.
• 10:25
  Speaker 2: The challenge is that people like black Rock and these
• 10:28
  Speaker 2: other large scaleholders who have a massive influence now over bitcoin,
• 10:32
  Speaker 2: they're not going to be super comfortable with this concept
• 10:34
  Speaker 2: that magically twenty percent of the supply is going to
• 10:38
  Speaker 2: be seized by North Korea dumped on the open market.
• 10:40
  Speaker 2: It's just a regulatory, logistical, and value nightmare. They have
• 10:43
  Speaker 2: produci your obligation to their shareholders for their structured financial products,
• 10:47
  Speaker 2: so they have to advocate for avoiding the theft, which
• 10:51
  Speaker 2: means they have to advocate for hard work to prevent
• 10:54
  Speaker 2: that from a current Because it's easier for them to
• 10:56
  Speaker 2: just take those coins out of circulation kind of makes
• 10:58
  Speaker 2: their individual coins more valuable and they don't have to
• 11:02
  Speaker 2: deal with the theft and the dump. So that's where
• 11:06
  Speaker 2: you're going to have a big cultural clash, and it
• 11:08
  Speaker 2: may actually break bitcoin or not. It's we've never had
• 11:11
  Speaker 2: a situation where a company with over ten trillion dollars
• 11:15
  Speaker 2: in assets is on one side and you know, the
• 11:17
  Speaker 2: philosophical bitcoin people are on the other side, and they're
• 11:20
  Speaker 2: gonna they're inevitably going to reach a conflict.
• 11:23
  Speaker 1: Yeah, this is listen. It's been all brewing for quite
• 11:27
  Speaker 1: some time. So here we are right in the in
• 11:29
  Speaker 1: kind of the midst of this. Right now, what about
• 11:31
  Speaker 1: Midnight and Cardonal What what would you say you could
• 11:34
  Speaker 1: enable for bitcoin security right now or in the near future.
• 11:40
  Speaker 2: Well, you know, we do the quantum research and we
• 11:42
  Speaker 2: worked with amongst others, because we have one of the
• 11:45
  Speaker 2: largest research groups in the world. We have one hundred
• 11:47
  Speaker 2: and sixty eight scientists that we work with in probably
• 11:49
  Speaker 2: a dozen institutions.
• 11:50
  Speaker 3: We published about two.
• 11:50
  Speaker 2: Hundred and fifty papers, so we have a lot of
• 11:53
  Speaker 2: academic stuff, and we were actually the first to prove
• 11:56
  Speaker 2: bitcoin was secure. It was the GKL fifteen paper, which
• 11:59
  Speaker 2: is one of the most cited papers in the industry.
• 12:02
  Speaker 2: So we have a lot of academic stuff about things
• 12:04
  Speaker 2: they can do, and we've written BIPs in the past
• 12:07
  Speaker 2: and they've never been adopted, but you know, they can
• 12:09
  Speaker 2: certainly cite and gain inspiration from that, and then obviously
• 12:13
  Speaker 2: we're a utxosystem.
• 12:14
  Speaker 3: They're a utxosystem.
• 12:15
  Speaker 2: So if they're considering it like the real life implications
• 12:18
  Speaker 2: of a post quantum signature scheme, they can look to
• 12:20
  Speaker 2: Cardono as a case study of what impact does that
• 12:23
  Speaker 2: have on a system like theirs. So there's some analogies
• 12:27
  Speaker 2: that one can draw there, but ultimately there's not much
• 12:30
  Speaker 2: we can do because there's no good answers here. They
• 12:33
  Speaker 2: don't have a governance system or a constitution we do.
• 12:38
  Speaker 2: So when these things come up, we take a vote,
• 12:40
  Speaker 2: decisions made, we move on. And it's not really a
• 12:43
  Speaker 2: problem with bitcoin. There's no means to take a vote,
• 12:46
  Speaker 2: so no matter what happens, you'll basically have some form
• 12:49
  Speaker 2: of fragmentation and Bitcoin Classic and other things. And it's
• 12:54
  Speaker 2: an unavoidable thing because it's an avissarial capability. It's like
• 12:57
  Speaker 2: a group of pirates are sailing in. Your house is
• 13:00
  Speaker 2: unlocked and the vault is unlocked, and who knows if
• 13:03
  Speaker 2: they come in five years or ten years. But you're
• 13:06
  Speaker 2: making a decision do we just leave the gold in
• 13:08
  Speaker 2: the vault or do we take it? So bit three
• 13:10
  Speaker 2: sixty one is take the gold and move it somewhere else,
• 13:13
  Speaker 2: or maybe just destroy it because we can't do anything
• 13:15
  Speaker 2: with it. And Bit three sixty is give people the
• 13:18
  Speaker 2: option to move their gold and anything that's left behind
• 13:21
  Speaker 2: the pirates are going to steal. There's not much Cardano
• 13:23
  Speaker 2: or any other ecosystem can functionally do for that. That's
• 13:26
  Speaker 2: a Bitcoin specific concern.
• 13:28
  Speaker 1: Yeah, for sure. I want to move over to Midnight.
• 13:31
  Speaker 1: I'm looking at the Midnight Passport teaser here and I'm
• 13:35
  Speaker 1: noticing a couple of things here. One I wanted to
• 13:37
  Speaker 1: notice was the accredited investor verification there. Why go that
• 13:41
  Speaker 1: route in terms of adding accredited investments into something like
• 13:46
  Speaker 1: a midnight platform?
• 13:49
  Speaker 2: Well, I mean, the real world asset space is the
• 13:51
  Speaker 2: fastest growing vertical.
• 13:52
  Speaker 3: We already have some of them.
• 13:53
  Speaker 2: They're called stable coins, and they trade trillions of dollars
• 13:56
  Speaker 2: every year, and they're effectively under the hood tokenized treasury bills.
• 14:00
  Speaker 2: So our WA's are here to stay, and a lot
• 14:03
  Speaker 2: of people like Securitize and dozens of others have tried
• 14:06
  Speaker 2: for years to create standards and bring them about. The
• 14:09
  Speaker 2: challenge is to play with these types of things, you
• 14:12
  Speaker 2: have to have some blending of identity and wallets to
• 14:16
  Speaker 2: do the KYC, the mL, the suitability guidelines to restrict
• 14:19
  Speaker 2: certain jurisdictions, and other things like that. That's really hard
• 14:21
  Speaker 2: to do unless you have a privacy system because if
• 14:24
  Speaker 2: you do it in just a native blockchain way, your
• 14:25
  Speaker 2: PII goes onto the blockchain.
• 14:27
  Speaker 3: Everybody can see it forever.
• 14:28
  Speaker 2: Bad news though with Midnight because we can cover this
• 14:32
  Speaker 2: use case, we can cover it not just for ourselves
• 14:34
  Speaker 2: but for every blockchain like Ethereum and Bitcoin and Cardano
• 14:37
  Speaker 2: as kind of a natural extension, and people can.
• 14:39
  Speaker 3: Pay a fee.
• 14:40
  Speaker 2: What makes us different from other systems is the self
• 14:44
  Speaker 2: sovereign concept. So other systems, a central authority owns your
• 14:48
  Speaker 2: identity or some federation of them, and basically they control
• 14:52
  Speaker 2: as a gatekeeper whether you can use your identity or not.
• 14:55
  Speaker 2: What we do is we have DIDs and it's self
• 14:57
  Speaker 2: sovereign identity. You own that, and then you basically go
• 15:00
  Speaker 2: and verify what you choose and choose how to do that,
• 15:03
  Speaker 2: and then you use selective disclosure through zero knowledge disclosures
• 15:06
  Speaker 2: to prove properties of things. So one of the most
• 15:08
  Speaker 2: common patterns is actually blacklisting the United States, so you
• 15:12
  Speaker 2: have yield bearing stable coins not really legal in the
• 15:14
  Speaker 2: United States, so a lot of people say, well, if
• 15:16
  Speaker 2: you're a US resident, you can't participate. Even the president's
• 15:18
  Speaker 2: children did this with World Liberty Finance, so pretty much
• 15:22
  Speaker 2: from the top down, Okay, well, how do you prove
• 15:24
  Speaker 2: you're not under US jurisdiction? The naive way would be
• 15:27
  Speaker 2: for you to give me your address and I say, oh, well,
• 15:30
  Speaker 2: you're in Gibraltar and you're not a US citizen. Okay,
• 15:33
  Speaker 2: so you're probably outside of jurisdiction. But what if you
• 15:35
  Speaker 2: had an ability to do a zero knowledge proof that
• 15:38
  Speaker 2: proved you're not under an American IP address and you're
• 15:40
  Speaker 2: not under American jurisdiction, but you don't actually tell me
• 15:43
  Speaker 2: where you're.
• 15:43
  Speaker 3: At and who you are. So that's the space that Midnight.
• 15:46
  Speaker 2: Operates in, is to build a collection of partnerships and
• 15:50
  Speaker 2: capabilities and technologies and in that at the DAPT level,
• 15:53
  Speaker 2: not the protocol level, the DAPT level, on a case
• 15:55
  Speaker 2: by case basis, people can build this in and kind
• 15:58
  Speaker 2: of put it into their wallet and they control the
• 16:00
  Speaker 2: credentials and the assets, and some are more restrictive, like
• 16:04
  Speaker 2: a government ID system would be, a voting system would
• 16:07
  Speaker 2: be a clearance system would be like the CACK card
• 16:09
  Speaker 2: system for the military, for example, and others are much
• 16:13
  Speaker 2: more open and voluntary and they're based on open standards
• 16:17
  Speaker 2: and things like that. And what we did is we
• 16:19
  Speaker 2: built the technology for both to coexist in the system.
• 16:22
  Speaker 2: And it's not at the protocol level. It's at the
• 16:24
  Speaker 2: DAPT level, so there's no s gro keys or back
• 16:26
  Speaker 2: doors or things like that, and the operators of the
• 16:29
  Speaker 2: system don't see or care they're beneath that.
• 16:33
  Speaker 1: So this is a I mean, this is kind of
• 16:35
  Speaker 1: one of the things that we've talked with Canton about,
• 16:37
  Speaker 1: which is the privacy side of thing. But why would
• 16:40
  Speaker 1: CANTON need to exist if you have this more advanced
• 16:44
  Speaker 1: layer of privacy and now you're doing midnight works with
• 16:47
  Speaker 1: banks already, so why would you not Why would you
• 16:50
  Speaker 1: need Canton if this exists out there?
• 16:53
  Speaker 2: Yeah, this was kind of you're old enough to remember,
• 16:55
  Speaker 2: and I'm on enough remember because we've been in the
• 16:56
  Speaker 2: industry a while, like the big fight between the consortium
• 16:59
  Speaker 2: chains and the open systems, so you had like Fabric
• 17:02
  Speaker 2: and R three and all these other things. It's all
• 17:04
  Speaker 2: these permission blockchains are just going to rule the roost
• 17:07
  Speaker 2: and then everybody started picking like Solana and Ethereum and
• 17:09
  Speaker 2: other things. So it's much the same like what is
• 17:12
  Speaker 2: the home of what we call Web two point five?
• 17:15
  Speaker 2: So when you look at things like Circle or Binance
• 17:18
  Speaker 2: or Tether, they're not quite Web two, they're not quite
• 17:20
  Speaker 2: Web three. So they have a token, they have an asset,
• 17:23
  Speaker 2: they have an ecosystem, and it's trading on cryptocurrency rails.
• 17:27
  Speaker 2: But usually there's some form of regulated financial business with
• 17:30
  Speaker 2: owners and licenses and it's in a jurisdiction.
• 17:33
  Speaker 3: On the other side. So that's your Web two. You
• 17:35
  Speaker 3: put them together. So there's a question of what should
• 17:38
  Speaker 3: the home be for that.
• 17:39
  Speaker 2: Should people build their own chains like Circle is doing
• 17:41
  Speaker 2: with arc and Binance did with B and B and
• 17:44
  Speaker 2: now you have Canton where it's kind of a consortium
• 17:46
  Speaker 2: of things, or should you build open infrastructure where everybody
• 17:50
  Speaker 2: can no matter what their Web two point five business is,
• 17:53
  Speaker 2: can come and they can do both things comfortably. So
• 17:56
  Speaker 2: Monument Bank, for example, is chosen to come and bet
• 17:59
  Speaker 2: on that paradigm like men people before bet on ethereum,
• 18:01
  Speaker 2: and we'll see what the market decides. There's advantages in
• 18:04
  Speaker 2: a federation. Typically they're faster and cheaper, and maybe they
• 18:07
  Speaker 2: have some more vertical integration. The disadvantages is a club
• 18:12
  Speaker 2: and you have to be invited into that club, and
• 18:14
  Speaker 2: so if you don't meet their suitability guidelines, basically you're
• 18:17
  Speaker 2: shut out. So open networks, there's no club. Anybody can
• 18:20
  Speaker 2: come and join, Anybody can come and do anything. And
• 18:23
  Speaker 2: I think our industry has preferred open gardens over walled
• 18:26
  Speaker 2: gardens throughout its history. So that's what we're doing, and
• 18:30
  Speaker 2: we'll see in the court of public opinion which side runs.
• 18:34
  Speaker 2: We think the privacy tech and the standards that we're
• 18:36
  Speaker 2: betting are pretty good. The other thing is where do
• 18:38
  Speaker 2: the agents live. That's the single biggest user growth in
• 18:41
  Speaker 2: cryptocurrency in the next five or ten years. It's not
• 18:43
  Speaker 2: going to be people, it's going to be AI. Because
• 18:45
  Speaker 2: what we want to do is we want to delegate
• 18:47
  Speaker 2: authority to an agent and have them just do a
• 18:49
  Speaker 2: bunch of stuff.
• 18:50
  Speaker 3: Because cryptos hard. I don't want to really know how.
• 18:52
  Speaker 2: Ethereum works or Canton works or all this other stuff.
• 18:55
  Speaker 2: I just want to buy stuff and make sure that
• 18:57
  Speaker 2: people don't steal from me. So what I'm going to
• 18:59
  Speaker 2: do is get smarters delegate to them through standards like
• 19:02
  Speaker 2: the open wallet standard or and they'll talk to each
• 19:05
  Speaker 2: other through X four, O two and these other things.
• 19:08
  Speaker 2: So where does that live. If you have a closed system,
• 19:10
  Speaker 2: those people gate keep what the agents can and can't do.
• 19:13
  Speaker 2: If you have an open system, your agents can do
• 19:16
  Speaker 2: whatever they want to do with any chain, any open system.
• 19:19
  Speaker 2: So that's another reason why I think long term the
• 19:21
  Speaker 2: open systems are going to win over the closed systems.
• 19:23
  Speaker 2: And you know, everything we've done has always been open.
• 19:26
  Speaker 2: Sometimes people disagree with it, but it's very clear we
• 19:29
  Speaker 2: have a strong commitment to decentralization, even when it's cost
• 19:32
  Speaker 2: us to adoption in the in the past. So we're
• 19:34
  Speaker 2: just carrying those principles forward into into midnight.
• 19:37
  Speaker 1: You look at the midnight Monument program. Why not? Okay,
• 19:41
  Speaker 1: so why not just listen to it like an on RWA.
• 19:44
  Speaker 1: If this was equated out there, if you look at
• 19:48
  Speaker 1: represented right now, this would end up falling. You'd end
• 19:51
  Speaker 1: up somewhere probably in the top three, maybe top four.
• 19:55
  Speaker 2: Well it's probably gonna happen. Yes, you know, it's not
• 20:00
  Speaker 2: just tokenized deposits. It's like the whole stack. It's like
• 20:03
  Speaker 2: asking the question, what would a bank of the future
• 20:05
  Speaker 2: look like because it's going to change. We now have
• 20:08
  Speaker 2: a payment system and all this other stuff and the
• 20:10
  Speaker 2: protocols doing. It's not the legacy system. So how do
• 20:13
  Speaker 2: banks compete and what do they do? And this is
• 20:15
  Speaker 2: kind of the conversation with it. So you start somewhere
• 20:17
  Speaker 2: tokenized deposits, but then you're really having a deeper conversation
• 20:20
  Speaker 2: vertically and horizontally. So vertically is what other services could
• 20:24
  Speaker 2: be added in, like insurance products or structured financial products
• 20:28
  Speaker 2: or what have you. And then how do you create
• 20:29
  Speaker 2: this spoke experiences for high net worth individuals and these things.
• 20:32
  Speaker 2: And the horizontal is how to get more banks in
• 20:35
  Speaker 2: And you kind of create a whole network within a
• 20:37
  Speaker 2: network and they can have reciprocity and bypass the legacy
• 20:41
  Speaker 2: financial system entirely. And the advantage they have is they
• 20:43
  Speaker 2: get to set much more fair rules, better rules, and ultimately,
• 20:47
  Speaker 2: you know, have cheaper operating costs. If you look at
• 20:50
  Speaker 2: a bank, compliance is often the most expensive components b
• 20:54
  Speaker 2: third of their budget and their people, and it's horrendous.
• 20:57
  Speaker 2: You could buy Tokyo every year for every three years
• 21:01
  Speaker 2: for the global cost of compliance, it's about five hundred
• 21:03
  Speaker 2: billion dollars a year, and you look at like compliance failures.
• 21:07
  Speaker 2: JP Morgan Chase I think has nineteen twenty billion dollars
• 21:10
  Speaker 2: in fines over the last twenty years. And so if
• 21:12
  Speaker 2: the largest bank of the world is getting like eleven
• 21:14
  Speaker 2: figure fines for not following the rules, what the hell
• 21:18
  Speaker 2: chance does anybody have in a global economy where everything
• 21:21
  Speaker 2: changes every six months or twelve months. So what they
• 21:24
  Speaker 2: want to do is just create synthetic networks that are
• 21:27
  Speaker 2: above jurisdictions and they have zero knowledge, proofs and predictability
• 21:31
  Speaker 2: because if they do that, massively easy to automate, massively
• 21:34
  Speaker 2: easy to optimize, and you see like an order of
• 21:36
  Speaker 2: magnitude reduction in the operational costs. So these smaller banks,
• 21:40
  Speaker 2: it's extremely appealing to them because they don't have a
• 21:43
  Speaker 2: balance sheet with two trillion dollars on they need to compete,
• 21:46
  Speaker 2: but they're still big. They're like twenty five billion dollars
• 21:49
  Speaker 2: fifty billion dollars one institution. The Ethereum's entire TVL I
• 21:53
  Speaker 2: think is around one hundred billion dollars. So if you
• 21:56
  Speaker 2: get to your point, like three or four of these
• 21:57
  Speaker 2: guys in you could leave frog and basically be number
• 22:00
  Speaker 2: one on the chart, and that money could be brought
• 22:02
  Speaker 2: to bear and put into bitcoin, DeFi and all kinds
• 22:05
  Speaker 2: of different things and actually enter the Web three space.
• 22:07
  Speaker 2: So it's really exciting to be at the nexus of that.
• 22:10
  Speaker 1: Well. I think the institutional capital also looks at the
• 22:14
  Speaker 1: growth of RWA as a major pin of what the
• 22:18
  Speaker 1: next generation of finance is going to be. If you're
• 22:20
  Speaker 1: floating around the top five, you're going to just buy
• 22:24
  Speaker 1: you know, pure attrition. You're going to be able to
• 22:26
  Speaker 1: garner quite a bit of investment going into those you know,
• 22:29
  Speaker 1: those particular programs for sure. So I would agree with
• 22:32
  Speaker 1: you big move there. I want to move over to
• 22:34
  Speaker 1: Clarity before we get into our lightning round with you.
• 22:38
  Speaker 1: You have big issues going on right now. Of course,
• 22:42
  Speaker 1: one of the things was getting away from the situation
• 22:46
  Speaker 1: with the FED chair. That appears to be off the
• 22:49
  Speaker 1: table now and now we're moving on to Clarity. But
• 22:51
  Speaker 1: you've got Tom Tillis coming in here saying indicating that
• 22:54
  Speaker 1: ethics language is now the new redline for him with
• 22:58
  Speaker 1: the Clarity Act, and we all know what that means.
• 23:00
  Speaker 1: That means the Trump family. So what do you think
• 23:03
  Speaker 1: in terms of odds of getting clarity through now with
• 23:07
  Speaker 1: what Tom Tillis is saying, well, the fundamental problem is, first,
• 23:11
  Speaker 1: ye have hearnessy. I've worked on things like clarity since
• 23:14
  Speaker 1: twenty twenty two. I worked won the original legislation during
• 23:17
  Speaker 1: the Biden administration with Senator Lumbus and jillibrand the FIA
• 23:21
  Speaker 1: and the Senate, and there we wrote this big bill
• 23:23
  Speaker 1: and it was very modular and it was meant to
• 23:24
  Speaker 1: be passed in pieces, not as an omnibus. And then
• 23:27
  Speaker 1: I testified before Congress at the House Agricultural.
• 23:30
  Speaker 3: Committee in twenty twenty two.
• 23:31
  Speaker 2: So you know, it's like, this is something that we've
• 23:33
  Speaker 2: talked about for a really long time, and you have
• 23:36
  Speaker 2: to separate concerns here. And what's created a lot of
• 23:40
  Speaker 2: heartburn with clarity is kind of two domains. So the
• 23:43
  Speaker 2: first one is the one you've already mentioned, which is
• 23:45
  Speaker 2: the President of the United States and his family should
• 23:47
  Speaker 2: probably not be actors within the markets while they have power,
• 23:51
  Speaker 2: because they have an unfair competitive advantage over the rest
• 23:54
  Speaker 2: of US. I don't have the power to start a
• 23:57
  Speaker 2: war he does. I don't have the power to show
• 24:00
  Speaker 2: off trade in a certain area or increased the price
• 24:02
  Speaker 2: of a commodity or decreased the price of commodity. The
• 24:04
  Speaker 2: president actually does so if he's allowed to make market
• 24:07
  Speaker 2: bets or share those with other people, that's about as
• 24:10
  Speaker 2: insider trading as you can get. It's a big ethics concern,
• 24:14
  Speaker 2: and historically presidents have traditionally recused themselves through disclosures and
• 24:20
  Speaker 2: blind trusts. This is the first family where they've gone
• 24:23
  Speaker 2: front and center and said there's no problem at all,
• 24:25
  Speaker 2: and it created a lot of heartburn.
• 24:26
  Speaker 3: Trump Coin. We went from a bipartisan concern.
• 24:29
  Speaker 2: To cryptoequals Trump equals bat. So that's already one area
• 24:32
  Speaker 2: that's very problematic and it's hard to get through because
• 24:35
  Speaker 2: it's like billions of dollars to the president's family and himself.
• 24:38
  Speaker 2: The other area that has a lot of heartburn with
• 24:41
  Speaker 2: this is the definition of a security. So when we
• 24:45
  Speaker 2: first started this process, I sat down with a lot
• 24:47
  Speaker 2: of people, from Senator Scott to other senators to other congressman.
• 24:51
  Speaker 2: I had a lot of dinners, I got a little
• 24:53
  Speaker 2: fat hating at the Capitol grill there in DC, and
• 24:57
  Speaker 2: we talked a lot.
• 24:58
  Speaker 3: About well, one of the biggest issues is no one
• 25:00
  Speaker 3: wants to be.
• 25:01
  Speaker 2: A security but you have a lot of things that
• 25:03
  Speaker 2: kind of look like a security, and yield bearing stable
• 25:06
  Speaker 2: coins and these other things, these Web two point five businesses,
• 25:08
  Speaker 2: they're kind of securities. So we got to update and
• 25:12
  Speaker 2: modernize the Securities Exchange Act of nineteen thirty three to
• 25:16
  Speaker 2: address these new digital securities and make the compliance burden
• 25:20
  Speaker 2: substantially lower by allowing automated regulation in the blockchain as
• 25:23
  Speaker 2: a vehicle of disclosure instead of a company. We do this,
• 25:26
  Speaker 2: then Brad wouldn't really care too much and Brian Armstrong
• 25:31
  Speaker 2: wouldn't really care too much about the particular text and
• 25:33
  Speaker 2: the Clarity Act, because they would just.
• 25:34
  Speaker 3: Have a dual asset.
• 25:36
  Speaker 2: You'd have your stable coin under genius, and then you
• 25:38
  Speaker 2: would have this additional token that's a digital security, but
• 25:41
  Speaker 2: it still has the same liquidity bitcoin has, and it's
• 25:43
  Speaker 2: easy to disclose and there's no boogeyman sec behind it,
• 25:47
  Speaker 2: so it wouldn't be a barrier to the thing passing.
• 25:49
  Speaker 3: But instead what they did is they said, you know,
• 25:52
  Speaker 3: we're not even going to touch that definition.
• 25:54
  Speaker 2: We're just going to try to make everything a commodity,
• 25:56
  Speaker 2: even security like stuff, and it creates just a room
• 25:59
  Speaker 2: making nightmare. And the other problem is there's no money
• 26:01
  Speaker 2: at the CFTC to do this, so effectively, what they
• 26:04
  Speaker 2: have to do is create a miniature securities Exchange Commission
• 26:08
  Speaker 2: at the Commodity's Futures Training Commission. They don't have the money,
• 26:11
  Speaker 2: they don't have the people, they have the time, so
• 26:13
  Speaker 2: it's going to take them, even if it passes years
• 26:15
  Speaker 2: and years and years, like the CFPB to write rules
• 26:19
  Speaker 2: for it.
• 26:19
  Speaker 3: And it's not clear if those are going to be
• 26:21
  Speaker 3: durable or not.
• 26:22
  Speaker 2: Because the minute Democrats get elected, they through rulemaking can
• 26:24
  Speaker 2: reverse everything because it's not statutory, so it really needs
• 26:28
  Speaker 2: to be scrapped, and they need to go smaller. Deal
• 26:31
  Speaker 2: with the security problem head on, clean that up. Once
• 26:34
  Speaker 2: we're okay with it as an industry, which by the way,
• 26:36
  Speaker 2: the cat is it creates the real world asset industry.
• 26:39
  Speaker 2: We get ten trillion dollars worth of securities to trade globally.
• 26:42
  Speaker 2: Then once that's done, the other stuff inside the Clarity
• 26:45
  Speaker 2: Act is a lot less innocuous, and frankly, Trump is ephemeral.
• 26:48
  Speaker 2: You know, he's not going to be president in a
• 26:50
  Speaker 2: few years, and so these ethics concerns there will receive
• 26:53
  Speaker 2: and reasonable people would put things in like the president
• 26:56
  Speaker 2: should recuse himself and not issue a cryptocurrency and trade
• 26:59
  Speaker 2: it and let foreign parties buy it while he's in office.
• 27:03
  Speaker 3: Wait until of office.
• 27:05
  Speaker 1: Okay, So, so odds are right now at least you
• 27:08
  Speaker 1: think and I'm actually I'm going to that'll lead us
• 27:10
  Speaker 1: into our lightning round with you and let's just go
• 27:14
  Speaker 1: on it right here. So you and I we would
• 27:17
  Speaker 1: endorse the Clarity Act without even reading it. I'm assuming
• 27:20
  Speaker 1: that's an absolute no for you. No, yeah, okay, all right,
• 27:24
  Speaker 1: So my only position on this would be if we
• 27:28
  Speaker 1: were to get clarity, and I do I understand your
• 27:31
  Speaker 1: argument about that. And it's it's possible that the Democrats
• 27:35
  Speaker 1: could take the White House in the next the next
• 27:38
  Speaker 1: presidential run. It's possible, but at the same time, at
• 27:43
  Speaker 1: least having some kind of framework, at least at this state.
• 27:46
  Speaker 1: And do you not think that's important enough from a
• 27:50
  Speaker 1: global position of what's happening everywhere else around us, whether
• 27:54
  Speaker 1: it's in Asia, Europe with Meka, et cetera. Do you
• 27:57
  Speaker 1: not think that's enough to just say, Okay, maybe we
• 28:00
  Speaker 1: need to pull this through and then we get changes
• 28:02
  Speaker 1: as we go.
• 28:03
  Speaker 2: Yeah, So what you do is you run a retroactive text.
• 28:07
  Speaker 2: You's called retrodiction. So you say, if this law was
• 28:09
  Speaker 2: in place in two thousand and nine, you know what
• 28:12
  Speaker 2: would happen Ethereum would be a security, XRP would be
• 28:16
  Speaker 2: a security. ADA would have been a security. And there's
• 28:18
  Speaker 2: no path for them to really meaningfully escape it. And
• 28:21
  Speaker 2: there's no court that's going to decide because the law
• 28:24
  Speaker 2: is now on the side of the SEC. During the
• 28:25
  Speaker 2: time of the XORP litigation, the law was ambiguous and
• 28:29
  Speaker 2: so they were able to kind of split the baby
• 28:31
  Speaker 2: in the primary sales for security, but the secondary market wasn't.
• 28:34
  Speaker 2: So that's one dimension of it. The other dimensions of
• 28:36
  Speaker 2: the SEC has already issued guidance under the new chairman,
• 28:39
  Speaker 2: and they physically declared what is a security, what's not
• 28:42
  Speaker 2: a security, and that is sufficient. If we allow that
• 28:46
  Speaker 2: the grow and foster for a lot of the ambiguity
• 28:48
  Speaker 2: in the space to go away. It's going to be
• 28:50
  Speaker 2: very difficult after two or three years for future administration
• 28:53
  Speaker 2: to go in and overrule the prior SEC guidance and say, hey,
• 28:56
  Speaker 2: we just didn't like that, so we're going to do
• 28:58
  Speaker 2: our own thing. So if you're going to pass a law, law,
• 29:00
  Speaker 2: you have to pass a law that actually accomplishes something
• 29:03
  Speaker 2: and also it has checks and balances and how the
• 29:05
  Speaker 2: law is going to be administered. In a video I did,
• 29:08
  Speaker 2: which I highly recommend you check out, I found four
• 29:11
  Speaker 2: separate attack vectors in the current bill as written that.
• 29:14
  Speaker 3: A adversarial SEC could use to make.
• 29:17
  Speaker 2: Something a security forever and never allow it to become
• 29:20
  Speaker 2: a commodity. When you have those structural problems in the law,
• 29:24
  Speaker 2: you don't really want to pass it as it is
• 29:26
  Speaker 2: because you already know how to weaponize it.
• 29:28
  Speaker 3: So it's better to.
• 29:29
  Speaker 2: Actually have the ambiguity because at least then I can
• 29:31
  Speaker 2: roll the dice with the courts. Otherwise, what the SEC
• 29:34
  Speaker 2: will do is just simply cite clarity and say there's
• 29:36
  Speaker 2: clarity and we're good to go. And will end up
• 29:39
  Speaker 2: happening is there will be a wealth transfer from new
• 29:41
  Speaker 2: projects to old projects. Why Brad is so for this
• 29:44
  Speaker 2: is XRP and ADA and other things.
• 29:46
  Speaker 3: We're exempt.
• 29:47
  Speaker 2: We're going to be commodities no matter what happens. We're
• 29:49
  Speaker 2: not securities, but new projects they're always going to be securities.
• 29:52
  Speaker 2: And what they could do is lobby future administrations to
• 29:55
  Speaker 2: make those projects securities so that they.
• 29:58
  Speaker 3: Never have to compete with them.
• 29:59
  Speaker 1: Yeah.
• 29:59
  Speaker 3: Yeah, that's my problem with it.
• 30:01
  Speaker 1: Okay, all right, all right, we're gonna try to speed
• 30:04
  Speaker 1: up here because I got a lot of good, I
• 30:05
  Speaker 1: think good questions for you. And one is this one
• 30:07
  Speaker 1: right here. What's actually more of a danger right now,
• 30:11
  Speaker 1: lazaruth and Ai or quantum thread?
• 30:14
  Speaker 3: Well, right now, Lazarus and Ai.
• 30:16
  Speaker 1: Absolutely I'm in agreement with you on that one. For sure,
• 30:20
  Speaker 1: bitcoiners will successfully hard fork Bitcoin by calling it a
• 30:24
  Speaker 1: soft fork, and nobody will care.
• 30:28
  Speaker 3: No, they can't escape that.
• 30:30
  Speaker 2: If they're going to hard fork, everybody's going to know
• 30:32
  Speaker 2: it because a node won't work, and then that guy's
• 30:35
  Speaker 2: going to be just every day be the most miserable
• 30:37
  Speaker 2: bastard and.
• 30:37
  Speaker 3: Complain about it on the way to escape that.
• 30:40
  Speaker 1: Okay, conspiracy theory here. Layer two. Bitcoin is actually micro strategy,
• 30:46
  Speaker 1: hence the push back to upgrade Bitcoin because of all
• 30:49
  Speaker 1: their new products and services they've got.
• 30:51
  Speaker 2: Yeah, no, no, no offense to Mike Sailor. But I've
• 30:55
  Speaker 2: met Mike Sailor. I don't think he's playing forty chess.
• 30:58
  Speaker 2: All right, so that's impossible.
• 31:00
  Speaker 3: All right, let's go with this.
• 31:02
  Speaker 1: When kelp dal hack destroyed all bridge sentiment and trust
• 31:06
  Speaker 1: for the foreseeable future. Do you think that is true?
• 31:09
  Speaker 2: It's like the meme man, like the guy with the
• 31:11
  Speaker 2: new surround as deck. He's like, first time, uh, you know,
• 31:13
  Speaker 2: I was like, we have bridge hacks every week. We
• 31:15
  Speaker 2: don't give a shit anymore.
• 31:16
  Speaker 3: I don't think it's contritted ejeeuz.
• 31:18
  Speaker 1: Okay, I'm gonna say it's it. I'm a little bit
• 31:21
  Speaker 1: scared of bridges, and I feel like I'm pretty advanced
• 31:24
  Speaker 1: out there. But then again, sometimes for new people coming
• 31:27
  Speaker 1: into crypto, it's it's not even what they don't know
• 31:31
  Speaker 1: that matters, because they wouldn't even really understand this, you know.
• 31:33
  Speaker 1: So it'll be interesting to see how this really is
• 31:37
  Speaker 1: affecting the market. How do banks respond if Clarity Act passes?
• 31:41
  Speaker 1: Will they accept it start innovating or do they continue
• 31:43
  Speaker 1: fighting and try to undo benefits for DeFi.
• 31:47
  Speaker 2: Oh, they'll accept it and dump a ton of money
• 31:49
  Speaker 2: into crypto, and then they'll begin immediate litigation to destroy
• 31:52
  Speaker 2: all the non bank cryptos using the Clarity Act as
• 31:55
  Speaker 2: a weapon.
• 31:56
  Speaker 1: Wow, that's a that's a dystopian future.
• 32:00
  Speaker 3: That's what they've always done, you know.
• 32:02
  Speaker 2: When Sarbaines Oxley was passed, or the Consumer Financial Protection
• 32:05
  Speaker 2: or any things. And that's what the banks keep getting
• 32:07
  Speaker 2: bigger and the small guys get wiped out, you get smaller.
• 32:10
  Speaker 1: Yeah. Yeah, If Clarity Act passes, what will Ripple do
• 32:13
  Speaker 1: about the XRP token utility? Do you think it'll be nothing?
• 32:17
  Speaker 1: Or would they enable buybacks and revenue share its taking? Oh?
• 32:21
  Speaker 3: I don't think they're enabled any buyback.
• 32:22
  Speaker 2: They're going to keep dumping XRP and making billions of
• 32:25
  Speaker 2: dollars and then buy hard assets with a company that's
• 32:28
  Speaker 2: disconnected and XRP holders will have no ownership of those that.
• 32:32
  Speaker 2: You know, you don't get the prime broker, you don't
• 32:33
  Speaker 2: get any of that good stuff they own real USD
• 32:36
  Speaker 2: that's been their MO for ten plus years.
• 32:38
  Speaker 1: Let's argue this for a second. They are putting money
• 32:42
  Speaker 1: when they sell tokens back into the XRP ledger ecosystem,
• 32:45
  Speaker 1: So that would not be at least an investment in
• 32:49
  Speaker 1: that ecosystem. Would you not agree?
• 32:52
  Speaker 2: Well, what they should do is find some way to
• 32:55
  Speaker 2: connect their business model to XRP buybacks directly. I mean,
• 32:58
  Speaker 2: it's what Hyperliqui's doing. These other use the system. They
• 33:01
  Speaker 2: buy stuff back. There's a reason they've gone from number
• 33:04
  Speaker 2: thirty into the top ten displaced data. Those buybacks are
• 33:07
  Speaker 2: real nice, and so if their business model they say
• 33:09
  Speaker 2: twenty thirty percent of what we get goes into x
• 33:12
  Speaker 2: orp buybacks, that'd be awesome and it would make Xcorp
• 33:16
  Speaker 2: a very attractive relationship. But right now they have no
• 33:19
  Speaker 2: financial incentive to share the wealth and no statutory incentive.
• 33:22
  Speaker 2: And I'm cynical because I saw Block one, remember back
• 33:25
  Speaker 2: in the day, when they raised four billion dollars for
• 33:28
  Speaker 2: EOS and then they immediately said, we have no fiduciary
• 33:30
  Speaker 2: obligation to the EOS token and Block one ran away
• 33:33
  Speaker 2: with all the money.
• 33:34
  Speaker 3: Yeah, it'd be It's hard bad. That would be bad.
• 33:38
  Speaker 1: That's a civil war waiting to happen. When I make
• 33:41
  Speaker 1: civil wars meant because the XRP community is very passionate
• 33:44
  Speaker 1: and powerful about that. Yeah, Canton will successfully sell privacy
• 33:48
  Speaker 1: and permissionless features to institutions until the incentives dry up.
• 33:54
  Speaker 3: Yeah, on hundred percent. It's the same old crowd.
• 33:56
  Speaker 2: They're cut from the same cloth of the people that
• 33:58
  Speaker 2: destroyed the market in two thousand and eight.
• 34:00
  Speaker 3: You know, it is what it is. I don't even
• 34:03
  Speaker 3: worry about them.
• 34:03
  Speaker 1: To be honest, Okay, all right, let's move here. Proof
• 34:06
  Speaker 1: of steak will become the favored plan over proof of
• 34:10
  Speaker 1: work by whoever the next administration is.
• 34:14
  Speaker 3: Yeah, one hundred percent.
• 34:16
  Speaker 2: It's environmentally friendly, and the token holders typically have rights,
• 34:19
  Speaker 2: whereas proof of work they don't, so it's easier to
• 34:22
  Speaker 2: work with that.
• 34:22
  Speaker 3: Within any statutory friend you would you.
• 34:24
  Speaker 1: Not argue though that, or at least make a case
• 34:27
  Speaker 1: that there's enough investment by defense, government and the global
• 34:33
  Speaker 1: stage on proof of work in bitcoin that that that
• 34:37
  Speaker 1: would maybe be at least agreed to by the new administration.
• 34:42
  Speaker 3: Sure, I don't think there's going to be a statutory
• 34:44
  Speaker 3: prom where they ban it. The EPA may have some
• 34:46
  Speaker 3: issues that.
• 34:47
  Speaker 1: You think they'll favor. You think they'll favor the proof
• 34:50
  Speaker 1: of stat.
• 34:51
  Speaker 2: Because there's just so much more you can do with it,
• 34:53
  Speaker 2: like you can vote on forks and all this other stuff,
• 34:55
  Speaker 2: And when you're a politician, you're like, well, more dimensions
• 34:58
  Speaker 2: of governance, flexibility means better outcomes for the investors.
• 35:03
  Speaker 1: What's more likely to get banned in the US before
• 35:05
  Speaker 1: midterms polymarket or x poly market. I'm on the same boat.
• 35:11
  Speaker 1: I think polymarket gets gets that if there is a possibility,
• 35:16
  Speaker 1: you know, you think about just the way it leads
• 35:18
  Speaker 1: right now, especially on the political side. I saw the
• 35:21
  Speaker 1: chart just a little bit ago. When you take sports
• 35:23
  Speaker 1: out of the equation, poly market is leafs and bounds
• 35:27
  Speaker 1: ahead of Calshi in terms of penetration. When will someone
• 35:31
  Speaker 1: be able to send USDC from coinbase directly to a
• 35:34
  Speaker 1: cardonal wallet, Well.
• 35:36
  Speaker 2: They can already do it, so auto converts. Yeah, yeah,
• 35:40
  Speaker 2: but it auto converts when they send it through it.
• 35:42
  Speaker 2: There's never going to be directly into USDC yep.
• 35:46
  Speaker 3: Yeah.
• 35:46
  Speaker 2: So there's a bridge that does that, and it's real time.
• 35:48
  Speaker 2: You can use it today right now, you send it through.
• 35:51
  Speaker 1: You're scaring me here because I don't like bridges, you know,
• 35:54
  Speaker 1: I'm a very concernive.
• 35:55
  Speaker 2: But the bridge is facilitated by Circle itself, I mean,
• 35:58
  Speaker 2: and the root of trust is they're asked set and
• 36:00
  Speaker 2: there's chang network. Yeah, and so so you trust circles,
• 36:04
  Speaker 2: So you trust Circle. There's you can't be like, well,
• 36:06
  Speaker 2: I don't trust them here, but I don't trust them
• 36:08
  Speaker 2: over here.
• 36:09
  Speaker 1: Again, I don't trust the government.
• 36:11
  Speaker 2: So yeah, you got to understand circle. What USDC has
• 36:14
  Speaker 2: become is the EVM circle and the non EVM circle
• 36:18
  Speaker 2: is really usdc X. And so when you look at Canton,
• 36:21
  Speaker 2: a Lao and all these other projects a bitcoin itself,
• 36:24
  Speaker 2: the intention is to grow the usdc X side of
• 36:26
  Speaker 2: the house. So convertibility between the two it has to
• 36:28
  Speaker 2: be trustless and seamless, and that's what we've been working
• 36:31
  Speaker 2: on with them, and it's it's seamless.
• 36:33
  Speaker 3: From a user experience.
• 36:34
  Speaker 2: Right now, you can go straight from a Cardinal wallet
• 36:36
  Speaker 2: to coinbase or finance into USDC. Straight from USDC to
• 36:40
  Speaker 2: Cardinal and back. It's a one to one for it.
• 36:43
  Speaker 1: Here's one for you. Snack goes cross chain the Soul
• 36:48
  Speaker 1: and eath via Midnight. Could that happen?
• 36:52
  Speaker 3: I could. I don't think it's a problem.
• 36:54
  Speaker 2: But they're very loyal to the Cardinal ecosystem and they
• 36:57
  Speaker 2: love the they love the ecosystem.
• 36:58
  Speaker 3: We love them. But you know it's a great community.
• 37:01
  Speaker 1: I'm going to put you in the middle on that one.
• 37:03
  Speaker 3: Okay, Yeah, it's hard.
• 37:04
  Speaker 2: It's hard to say because because crosschain can mean a
• 37:07
  Speaker 2: lot of things. Right, they can cross list the asset,
• 37:10
  Speaker 2: but will the krack and listing move from Cardono to
• 37:14
  Speaker 2: like finance smart chain or something like that. I don't
• 37:16
  Speaker 2: think that'll I don't think that'll ever happen.
• 37:19
  Speaker 1: Onto and STA and X stocks token is stocks become
• 37:22
  Speaker 1: tradable on Cardno.
• 37:25
  Speaker 3: Oh, that's a good question.
• 37:27
  Speaker 2: There's a lot more work we have to do to
• 37:28
  Speaker 2: make that seamless and easy, like with the usdc X side.
• 37:31
  Speaker 2: But I can see a world where that happens in
• 37:33
  Speaker 2: twenty twenty six, twenty twenty seven, somewhere in that timeframe on.
• 37:36
  Speaker 1: Slightly Yes, not all the way in on that one
• 37:40
  Speaker 1: uh USD one flips Cardno in market cap before Trump
• 37:44
  Speaker 1: ends his turn, Yes, griff continues or no at deep eggs.
• 37:49
  Speaker 3: I don't.
• 37:49
  Speaker 2: I don't think that's going to continue to grow. I
• 37:52
  Speaker 2: think the maximal extraction has occurred.
• 37:55
  Speaker 1: Maskall MeV has occurred. Right, Why has no blockchain focused
• 38:01
  Speaker 1: on its efforts on point of sale zero percent merchant fees?
• 38:06
  Speaker 1: Why have they done that? I mean, I feel like
• 38:07
  Speaker 1: I argue this a lot, and then I realize, well,
• 38:10
  Speaker 1: institutional is where the money is.
• 38:13
  Speaker 3: Yeah, well we have that with Midnight.
• 38:15
  Speaker 2: When you look at the dual tokenomics with Night and Dust,
• 38:17
  Speaker 2: you can have provider pay or user pay. So anybody
• 38:21
  Speaker 2: who has Knight can subsidize the dust cost of the transaction,
• 38:24
  Speaker 2: So you can create worlds where merchants and users have
• 38:27
  Speaker 2: feeless transactions with Midnight and just leave it up to
• 38:30
  Speaker 2: that model. That's the advantage of a dual tokenomic system
• 38:33
  Speaker 2: is that you can separate the speculative side and governance
• 38:35
  Speaker 2: and control side from the consumptive side, and then the
• 38:38
  Speaker 2: consumptive side can be further segregated between who pays.
• 38:42
  Speaker 3: Because you're right, this question is really smart.
• 38:45
  Speaker 2: When I go to Google dot com, I don't put
• 38:48
  Speaker 2: a token in to make a search, so it's free, right,
• 38:51
  Speaker 2: So the vast majority of consumers expect free transactions and
• 38:55
  Speaker 2: free utilization the system and some subsidies somewhere else like
• 38:58
  Speaker 2: advertising to cover that. So you have to have a
• 39:01
  Speaker 2: token system that can facilitate it, and a dual token
• 39:04
  Speaker 2: model lets you do that. So Midnight's one of the
• 39:06
  Speaker 2: first cryptocurrencies to have that capability.
• 39:09
  Speaker 1: But the issue is, right now, you'd still have to
• 39:12
  Speaker 1: fight Visa and the marching clearing houses, all of the
• 39:15
  Speaker 1: basically the institutions that have pretty much propped up point
• 39:19
  Speaker 1: of sale forever, versus going the route of saying institutional
• 39:23
  Speaker 1: business is just easier to get to profit wise.
• 39:26
  Speaker 2: Yeah, the first step is the network itself has to
• 39:28
  Speaker 2: have provider payer user pay, and then the next step
• 39:31
  Speaker 2: is how do you bridge the legacy component of it?
• 39:33
  Speaker 2: And that requires some breaking into that system and some
• 39:37
  Speaker 2: use of standards, which is the good news is it's
• 39:39
  Speaker 2: not impossible. And actually having banks like Monument that can
• 39:44
  Speaker 2: be one of those verticals that you look at. But
• 39:46
  Speaker 2: it's certainly a lot of work and we've poked some
• 39:49
  Speaker 2: holes in that cup. As an industry, there's a lot
• 39:51
  Speaker 2: of cryptocurrency debit cards and other things like that we
• 39:54
  Speaker 2: haven't been able to We haven't been able to get
• 39:56
  Speaker 2: completely there.
• 39:57
  Speaker 3: But I think in five to ten years it's going
• 39:59
  Speaker 3: to be a solve problem well.
• 40:01
  Speaker 1: And you know, listen, it's going to be a domino effect,
• 40:03
  Speaker 1: I think, because the first few that fall will start
• 40:06
  Speaker 1: to accelerate in the industry and then you're going to
• 40:07
  Speaker 1: see the winners, you know, that come out of it.
• 40:10
  Speaker 1: If if Canton got hacked, there would be no DeFi
• 40:15
  Speaker 1: United Fund donations to help save it, like ave.
• 40:19
  Speaker 3: That's true, Live by the Federation, die by it.
• 40:23
  Speaker 1: Yeah, I'm on that boat as well, which is great.
• 40:25
  Speaker 1: I mean I'm loving to see what's going on out
• 40:28
  Speaker 1: there with the DeFi United Fund. We just covered that today,
• 40:30
  Speaker 1: so listen. Charles Hoskins and it has been great having
• 40:33
  Speaker 1: you on the show. Thank you so much for being
• 40:35
  Speaker 1: straight up with us on the Lightning Round. We love
• 40:39
  Speaker 1: that and we'll definitely get you back in. Thanks for
• 40:40
  Speaker 1: coming in.
• 40:41
  Speaker 3: There's been a lot of fun. Thanks Paul.
• 40:50
  Speaker 1: If you like this video, like and subscribe, drop a
• 40:52
  Speaker 1: comment down below, and also join our free private member group.
• 40:56
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