The Startup Voyage - Web3 Business Growth
The Startup Journey podcast is dedicated to spotlighting the journeys and insights of Web2 and Web3 tech founders and investors.
Guests of The Startup Voyage podcast join a world of industry leaders, startup visionaries, and seasoned investors who share valuable lessons, stories, and advice to inspire and empower a global community of tech founders.
We take a journalistic / reality show concept to ignite conversations that empower the next generation of disruptors.
Join us as we dive deep into the dynamic world of technology, unraveling success stories, industry trends, and game-changing innovations.
The Startup Voyage - Web3 Business Growth
The Ugly Truths About Cyrpto
Step off the beaten path and into the gritty underbelly of the Web3 revolution with us, as Andrew Key, the brainchild behind Web3 Research, pulls back the curtain on the challenges that are rarely spoken about. We tackle the thorny issues of interoperability among blockchain platforms, unraveling the intricate web that developers and entrepreneurs must navigate. Plus, immerse yourself in the real-life anecdotes of financial losses in the crypto world, a subject often masked by the industry's shimmering veneer.
Experience the wild ride of Web3 marketing and token projects through the personal tales from the trenches of traditional digital marketing and the front lines of a Web3 firm. Our conversation traverses the fine line between ethical promotion and market manipulation, shedding light on the murky waters of influencer marketing and its impacts. Meanwhile, NFTs come under the microscope as we explore their role beyond digital art, considering their potential to redefine experiences and personal identity in the digital age.
Securing the future of Web3 and crypto investments poses its own set of complex questions, with DeFi hacks placing a spotlight on the urgent need for enhanced security measures. Here, the crucial roles of third-party audits, the emerging synergy of insurance and regulation, and the vision for a more equitable financial system come into focus. Join us and gain an unfiltered perspective on the evolution of Web3, its intersection with traditional finance, and strategies for navigating its promising yet unpredictable waters.
The Startup Voyage Podcast is ranked top #15 Web3 podcast show compared to 45 others per Feedspot (https://podcasts.feedspot.com/web3_podcasts)
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The Startup Journey podcast is dedicated to spotlighting the journeys and insights of tech founders and investors shaping Web3. Guests of The Startup Voyage podcast join a world of industry leaders, startup visionaries, and seasoned investors who share valuable lessons, stories, and advice to inspire and empower a global community of tech founders.
We take a journalistic / reality show concept to ignite conversations that empower the next generation of disruptors. Join us as we dive deep into the dynamic world of technology, unraveling success stories, industry trends, and game-changing innovations.
Welcome to the Startup Voyage, and in this episode we take a critical look at the less discussed aspects of Web3. In this episode, I've labeled it Web3 the Unveiled the ugly truth behind this tech revolution. Now we'll explore some key topics that shed light on some of the challenges, the controversies and the complexities that are now existing in Web3. And today we have our guest. Andrew Kaye brings his extensive experience in the industry to provide a nuanced understanding of these issues. He is the founder of Web3 Research, an innovative company that's making Web3 more accessible to everyone, and his journey in the crypto world is nothing short of remarkable, with the background that intertwines technology and business.
Speaker 2:Andrew has been at the forefront of the Web3 for over a decade. He's not only been one of the youngest managers at Berkshire and Hathaway, their R&D division, but he's also led his own D5 projects and run a successful Web3 marketing agency, which I have lots of questions around that your experience around that. But what's truly exciting is his current venture, web3 Research, a beacon in the Hong Kong Science Park, currently developing a crypto influencer report, which is a tool that promises to guide crypto enthusiasts in navigating the complex waters of market trends, avoiding scams and enhancing the research. Andrew is here to offer his unique perspective on the crypto space, drawing from his extensive knowledge and experiences. From his gritty technical aspects of Web3 to the broader social and ethical implications of crypto, he's ready to tackle it all on this show.
Speaker 2:But that's not all. Andrew will share his personal journey in the Web3 world, his own challenges and failures and the successes that have shaped his path. He's not just an expert, he's an enthusiast who shares our values of honesty, integrity and innovation in Web3. So, andrew, I'd like to welcome you to the show. It's an absolute pleasure to have you here with us today.
Speaker 1:Thanks for having me. I think one of the things you neglected to mention about my history is I've also lost a lot of money and time navigating this Web3 space as well, and I think that's also important. That's one of the reasons why we're having the conversation today, but thanks so much for having me on. It's a pleasure to be here.
Speaker 2:Yeah, sure, well, I think it's one of those things I mean for sure. It's one of the things I was going to get to. People right now in this space are probably pretty happy making some money with a lot of these old coins and Solano blockchain doing really well and a lot of more, I guess, more speculation that's happening, what's going to happen next year. But the funny thing I always have to say is like no one ever talks about when they lose money, right? So when you're on the chat, people are saying, hey, look at my portfolio, and they're showing the charts and seeing how everything jumps, given this assumption that I just like whatever, like just loaded up on some coin, but no one talks about when things are lost. But we'll get into that.
Speaker 2:But I think where I want to kick off as a core topic and I think it's important, going into 2024, in the past, look, ever since the crypto winter, we all know that everyone has been purely focused on building, building something real sustainable.
Speaker 2:The idea of raising through token sales yes, it's still happening, but it's not as popular. People are actually really building stuff. But with that said, I think, still what Web3 and blockchain? It's still early days and one of the challenges has been interoperability and it's we think Web3 is supposed to be the seamless integration, but we know from history that it takes a while for diverse platforms to work together to really benefit from a fully functional decentralized internet. And it's going to be a challenge and everyone's fighting for to be the L1 that will kind of take over everyone else. There's a lot of L2s coming back on board and I think the real world example is just basically the difficulty in achieving cross chain compatibility among different blockchain platforms, with each blockchain operating its own set of rules and protocols. So it makes it pretty hard. So I like to just kind of start there. In your experience, I'd like you to kind of share what you do at Web3 Research and how you've approached this chaotic space in building in Web3.
Speaker 1:Yeah, right now, I mean, it's just a great question. I think right now it's the Wild West and everybody's making anything, and it's not even the technical aspects of it. But just looking at it, we're talking about the next generation of adoption. What is an L1? What is an L2? I even work with a company that claims they're a layer 0.5. There's a lot of this infrastructure level, compatibility issues, consensus mechanisms and dealing with bridges, and every single bridge, at least to my knowledge, has been hacked in some way or another because, you have to deal with this thing that essentially gets pulled off chain, or there's some centralization thing, and these are points of attack and they're not really Web3.
Speaker 1:There's a lot of Web3 that's not Web3. There's a couple of ways that it can get solved. Like, I know, polkadots trying to do some things, cosmos is trying to do this, so there's this layer protocol oriented solution that's trying to get solved. I work with a company called Oort. They got rebranded from CCN. It's a Stanford professor, actually, who came up with it, and that's another infrastructure layer. They're the 0.5 solution. There's also you could do it, I guess, not to use the layer. You could do it sort of a stratosphere up and at a wallet level. If you're talking about interoperability of my Ethereum chain link and my Solana chain link, how that works, you could do it at the wallet level.
Speaker 1:I think the most important thing here, though, isn't necessarily the tech. That's for the builders to figure it out, but the end user? They don't care. They don't care what chain it's on, they just want it to work, and so I think the real problem to solve is how can you create this frictionless experience, because if I have to worry about going through these other. If I'm trying to go over to Polygon from Ethereum and I have to go through these extra steps, or I have to switch wallets, or I have to deal with these bridges that have inherent security issues, you're starting to turn off a large population of people who are trying to use this technology. So I think there's a lot of security vulnerability issues, there's fundamental infrastructure issues that need to be resolved, but I think, fundamentally, what builders need to be focusing on is, hey, the end users. They're not really going to care what chain that this thing is on. They're not purists like the rest of us.
Speaker 1:A lot of builders come into this space with this mentality like I'm EVM only or I'm Bitcoin purist or I'm whatever it is, but a lot of people they cannot be expected to understand what these things are. So they're going to go towards a centralized exchange, because that puts all these things into one little basket in the centralized exchange. I'm not advocating necessarily for centralized exchanges, but what they're doing is essentially solving some of these issues by having this, by dealing with all the things in the background.
Speaker 2:I think that makes sense If you even think about well. First of all, a lot of trust has been broken in this space through a lot of scams and hacks. Yeah, there's a lot of peers still in the space. Even for myself, I remember the first time thinking about receiving actually some monies into my Metamask wallet and then deciding, okay, which chain should I use because I want to save money? So then you kind of have to figure it out, right, what's going to be cheaper? So I moved over to BSC because it was fast and it was cheap, right, and yeah, you're right to that point that the users don't want to think about that.
Speaker 2:But on the other side of things, you hear about the issues with ledger and what they're having right now. That in itself is sort of like ledger is a huge, reputable name in the industry when it comes to cold wallet storage, and you hear about these hacks that happen. And how do you address that? I mean, at the end of the day, like that's what you're saying, you got to build a user experience that's very simple and almost as if maybe it's what people are used to today. People don't want to see anything that's different, right.
Speaker 1:Yeah, I mean, and that was one of the mistakes I made early on so there's a branding and language component to this as well. Because so I kept all my Bitcoin on Mt Gox back in the day because I was like this is just like Bank of America.
Speaker 1:It's just like city and I keep it here and this is a central authority that's going to take care of it for me. Obviously, I was very wrong. This is one of many times where I didn't understand custody or some of these fundamental mechanisms that are important in the Web 3 space, and I took a haircut on that. So I think that there is another component to this as well, which is you as an end user. How much risk are you willing to take on board?
Speaker 1:There's a spectrum of people who are like I'll keep everything on a central exchange because it's easy, I'm lazy and I trust CZ, and the other side is like well, no, not your keys, not your coins, and so I feel like there's a comfort level that you need to be aware of, because it's not a I don't think it's a one size fits all solution at the end as well, because everybody can have a ledger cold wallet. There's a lot of friction there, tapping all the buttons and then plugging it in, and then USB doesn't work. So it's like how much friction are you willing to deal with? How much risk are you willing to take on? Because if I have my entire bank account just carrying around in my pocket, it's a little sketchy for me, so maybe there is a centralized component to this that people need to ease their way into or on ramp into as well.
Speaker 2:Right. I mean, look, you got two sides of everything. And I think the majority of the population is still used to, very used to banking the way it is today and they're not shouting like, oh, you can't trust banks, right? They're not shouting that, right, but do you still see? I mean, with that level of risk, that's the one thing I could never understand. Okay, if you had maybe 5000 USD or USDC on your person, right, you might feel okay about it, but when you start getting more and more I mean 10,000, 20,000, 25,000, it's no different than, in a way maybe not exactly, but if I'm stashing stacks of cash, paper, paper, currency in my house or in a safe, it kind of feels like the same thing, except that it's a little bit more. Um, worry some, because you got this little device right, that maybe one day there would be a uh, some, you know, some, you know some hiccup on that little device. Maybe it doesn't work, maybe it doesn't read, I don't know. So I think it's a kind of crazy, uh kind of thinking about that.
Speaker 1:Yeah, and well, another component to this which isn't as frequent but does happen I know people that this has happened to is is IRL events.
Speaker 1:There's people that have been kidnapped, or you know a lot of a lot of crypto influencers and people go around, they're flashing, they're on their Twitter, it's just like oh, it's like 20,000, you know, like percent return on invested capital, um, and that leaves you open to, you know, potentially, uh, you know, a physically threatening situation, um, and that's not something that we, we, you know, we want to really be a part of. So it is, uh, it is difficult to navigate, and then you know what, if you forget your C phrase, or you lose the thing, or there's, there's a lot of these layers to it that, um, that, I think a lot of people, at least. My estimation is that this next generation of adopt, of, of, of uh, of Web 3 adoption, um, will be people who are a little bit more comfortable, at least at the beginning, with a slightly more centralized solution and I'm.
Speaker 1:I'm okay with that. I trust centralized solutions. All the time Everybody's like oh, I'm Web 3 native. I'm like well, what's your website hosted on? Well, there's only a small fraction of what you're doing. That is actually truly Web 3. So I think there can be um these sort of uh inter uh intermediary solutions, and I I do know that there are some um interesting, you know, multi-factor authentication uh deals that are going on.
Speaker 1:There's a lot of clever people out there who are working to solve these, these problems, so it is an accessible problem. It's just challenging to overcome.
Speaker 2:Yeah, yeah, I think I think one of my experiences of multi-factor authentication was, uh, you know, to move any sort of money, I didn't care how much it was, I would go through the same process, right? So you've got your face, then you've got SMS and you've got email, and then you've got you know, a password, right, you've got all these things. You can add as many as you want on the some platforms, um, but then it's so cumbersome. I just couldn't, um, I just wish it was a lot easier, to be honest, to move in and out, right, um, but it was. It was interesting to kind of, uh, go through that experience. But, um, you know, you said you've run a Web3 marketing agency. Do you still do that now? Is that one?
Speaker 1:Well, so I ran operations at a digital marketing agency and we service more traditional clients.
Speaker 2:Right.
Speaker 1:My brother runs a Web3 marketing agency.
Speaker 2:Okay.
Speaker 1:And so I've had a. I've had a lot of exposure, and you know we also did the majority of marketing for some of the Web3 projects that I've worked on as well, so not exactly run my own. Web3 marketing agency, but I have a lot of experience in traditional marketing agencies and my brother's obviously pretty heavily involved in the space as well, right, right, okay.
Speaker 2:So then I guess, when it comes to that, uh, I guess, what is your perception of what is a Web3 marketing agency, then? What does it mean? Or to be a Web3 company, you? Know I mean, I say I'm a Web3 podcaster, I talk about Web3 technologies and founders, but when you're looking at marketing, what does that really mean? Right, Okay.
Speaker 1:So I'm going to be a little harsh here, because it's um, it's an unregulated space and this is one of the problems where we're trying to solve, you know, with the influence report, which is, you know, part of more like an AI Web3 solution, is there's almost a paint by numbers, at least in this last, in this last cycle and the cycle before that, when they're figuring it out in 2017, the ICO boom. It's um, oh, hey, we're doing a token, because token is a very easy um fundraising mechanism and you know it's fairly unregulated. So you know, you incorporate a Panama company or BVI company and you sort of you know you sort of offshore liability, and so it doesn't come back onto you. And then, as a marketer, your job is, hey, this project it doesn't have something that's live yet, um, but you can buy the token which, for whatever reason, the token's available on the, on the on the Web3 stock market, and then you can speculate on that, even though the token doesn't really serve a value. I mean, the purpose of the token is it has to have a utility, otherwise it's a security, and everybody tries to justify utility through these various, through these various like oh, it does this or that.
Speaker 1:Um and Web3 marketers. A lot of them not all of them, right, a lot of them. They exist out there to essentially pump the token price, and you know what I mean. And it's it's it's not necessarily legal. So I think that, um, it's a difficult line to walk, especially with regulation going in the in what I feel is a positive direction. I think that there does need to be some regulation in the industry because people are like losing their houses over this Um.
Speaker 1:I feel like a lot of Web3 marketers again, not all of them, they, they, they go out, they'll do it's a pay-by-numbers community management. We'll plug you into some other VCs. We'll we'll run AirJoc competitions for you. We'll put out articles. We'll do these things and it's not necessarily the marketers fall Like. The marketers are getting hired on to, to to help this company generate awareness, and a byproduct or focus of that awareness is to get people to buy the token. People buy the token. It raises the price of the token, so other people can sell the token and it's like playing hot potato.
Speaker 1:So I think that it, this next full market, this next cycle that we run into um, that we're running into uh, will hopefully produce uh, a different kind of marketer that isn't our influencer, I guess as well, because influencers are, you know. All of a sudden, they have marketing studios as well. Um, we, we literally paid $2,000 for a tweet one time and like it was like one ETH when 2000, when ETH was at 2000, like the last cycle or whatever. And, um, I was like, why are we doing this? But, based off of the engagement and response that we got, it was kind of worth it. You know what I mean.
Speaker 1:So, uh, I I do think that this next generation of marketers and the marketing environment will hopefully be improved because, as you touched on earlier, there's less of these token oriented projects. There's more tech oriented projects. Um, but that is still a concern that I think we're going to need to deal with collectively, because the the losers are not the VCs or the companies. The losers are the new people who are trying to get into the space, and those are the ones we want to keep in there. Right, and it only takes one bad you know. Warren Buffett says you know, you spend a lifetime building a reputation. It only takes one incident to ruin the entire thing, and I think that's what what some of these bad situations have done to a lot of people. It's just totally turned them off to Web 3 technology.
Speaker 2:Right, right, yeah, I mean, I think, um, if we, if we look at the, what you just mentioned as Web 3 marketing, I guess to me that's what people are considering is native right, because they're intent, even though they don't say it right away. Um, when people come to me, essentially they want you to shill the project because they're going to have a TGE and they want to basically get some money out of it. Now, understanding that it's not regulated and um, liquidity is expensive and it's not a lot out there for for a new project. And if they can't get traditional VC money, then they try to do a token raise because it's much easier, right, get up the masses. Um, if you can still do that now through some listing on some exchange, like you know what Binance had that ball, it's insane, right, and I just kind of feel like it's the um. It's maybe the last cycle that this will happen, because regulators around the world in different jurisdictions are still putting things in place.
Speaker 1:Yeah, I totally agree. I mean and that's not to say that there aren't token projects that don't have true utility, but I would say it's just a guesstimation, I'm just some guy right, it's like 95% don't actually have the true utility that's required to be like hey, yeah, you should have a token because we're going to use these tokens for a very specific utility instead of you're using the tokens to raise capital against. So I mean, this is hopefully, I think, the last cycle that we'll have to deal with this sort of craze, because you know, I see, I saw that bank token I know people that have made like a lot of money on not a lot of money.
Speaker 2:And.
Speaker 1:I'm like man, it'd be cool if I had a couple of these meme coins right now. So I get it and it almost markets itself when you start seeing returns like that because people look into that and this sort of greedy human nature that I admit. I saw that bank token I was like oh wow.
Speaker 1:I should have listened to some of my friends who are like you should buy this. You know, you can't help some of these natural inclinations, I think, as this industry matures, because it's like, you know, it was a baby. And we're like, oh, bitcoin, you know whatever. And then you have the Dogecoin, which is on, like the R was like a spin off from the subreddit because they were bored at the price action of Bitcoin. Now that's like a legitimate thing, you know. You see all these things. And then the ICO craze, and you know, I think we are we think ahead.
Speaker 1:So I remember 2017, everyone's like, oh, smart contracts, this can do so many things. But then no one was really writing any smart contracts. They were just like here's a token and here's the idea of our contract and that's what that bus was. And then you started seeing some things defy summer. And so we're. You know, I think we're always going to be thinking a little bit ahead. We're always going to be like a little optimistic about the technology that's going to drive some of the speculation, but I do imagine that this will probably be one of the last times that we're going to be dealing with some of this overhype around things.
Speaker 2:Right? Well, let's look at NFTs. Right, let's look at the dark side of NFTs Now. You know, these non-fungible tokens. They created a lot of buzz, you know, at one time before defy summer, I believe and but they've been plagued with scams. Even the board-aid yacht club guys, you know, some of their tokens were taken hostage, I guess, but they were returned. And you know there's a lot of intellectual property issues of whether a digital format of something that's physical does it really, you know, tie them together. And there's a lot of market volatility. Where do you think NFTs will go? Because there's still a lot of arguments on? Oh, but you know it has. If you have true utility, it can really happen.
Speaker 1:Yeah, so I am not a huge fan of the way NFT technology has been branded and distributed, because a lot of the criticisms I feel like hold a lot of water, like oh hey, it's just a like a digital thing. I think there's some exceptions, I think people who have been following for a long time I also make 3D art for fun and he's just this guy who's every single day I'm going to put something out, every single. He's so methodical, he's got, he perseveres through all this stuff. I think there are some people like that, that there is this the idea of the value is going to stay there, but the majority of them are not, because people are overhyping the profile pick but they're not understanding the underlying, the value of the underlying technology.
Speaker 2:Right.
Speaker 1:So the underlying technology is tremendous, but it's not in this speculative sort of way, If you're talking about art, it's provenance, self-sovereign identity, concert tickets, like there's a lot of these things and you know it can tie there's self-sovereign identity, it can tie into being like an accessory. So there's a. There's a project that I worked on that didn't actually end up taking off because COVID had and all this stuff, but it was using, you know, items on your phone in a real space. It was like my buddy was a. He ran a bunch of nightclubs and it was a promoter for a lot of electronic artists in New England and he had this idea for this space that was covered in like LED lights and you know it's connected to your phone and, depending on your ticket, the LED lights around you would light up a certain color, that sort of thing.
Speaker 1:Right, and if you think about the value of fashion, like an Hermes belt costs around $600. It's not worth that at cost, right, but people will wear it because it's a status thing. So I do think that there's a lot of value that NFT can bring to your own identity and I don't think there's necessarily a ceiling there. So I think that there is a lot of potential value in NFTs. I think they need to be rebranded.
Speaker 2:Right.
Speaker 1:Because if you hear NFTs, you know you get clearly two reactions. There's no like neutral, like I don't think that you know. You're like, how I love NFTs, or it's just like it's a scam, right? So I think if we could rebrand that acronym into something else and if people are using it and not knowing that it's an NFT, I think you know it's a concert, it's a digital concert ticket that gets to my Apple wallet when I'm going somewhere, so you're not dealing with scams or whatever it is Like. I know that's kind of like a rudimentary example but, I don't know, it's an NFT.
Speaker 1:I think that there's a lot more value in that than being like here's my picture of an ape or whatever it is, yeah. And then you have a lot of people that do like wash trading and things like that too, and then who ends up footing the bill? It's retail, it's all these new people. It's a similar sort of story to tokens, so yeah.
Speaker 2:Yeah. So how much wash trading or the fairest activity do you think happened in an NFT space? How much of it was real or was like half the trades being pushed left and right for other purposes?
Speaker 1:So you can look at on-chain data and I didn't get too deep into watching on-chain NFT data because I never really speculated on NFTs. I bought a couple because they're my friends like projects, where I got them for free. I actually at East Denver a couple of years ago, if you got the Buffy Corn NFT, you were able to get into a bunch of private events and Vitalik was at one of them. I got this free like cat shirt that shooting the Ethereum out of it.
Speaker 1:I was like I got my money's worth out of this NFT. But I do know that there are quite a few of these where it was a combination of things like hey, we got this third party, this market maker or market maker there's a lot, that's a pretty loosely thrown around term. You have to be a market maker that would go and do wash trading. For those of you who don't know what wash trading is, you just buy a bunch of them yourself to artificially raise up the value of them and especially if you have a smaller collection and you don't really care or you're assuming people are looking at on chain data, you can start to really raise that value, and so it's a lot of fake trades. And then you start getting some people involved. You get a market involved, like, look at the floor price of this Floor price is the absolute bottom price for the cheapest NFT.
Speaker 1:Look at the floor prices raised by an entire Ethereum in the last like two weeks. It's really really hot. And I see this again and again and again. And then retail starts buying it and they hit a certain threshold because all they're doing is they're paying gas fees and they're paying themselves, so the wash trading they're not really losing a tremendous amount of value, and especially on a network like Solana, where transaction fees are really low. And then retail starts investing and then retail hypes it up and then someone at some points is like well, I made my money, I'm going to cash out, and then you see this thing again. You see these little like the patterns again and again, and again, and they're big red bars down. So, in terms of percentage, I couldn't tell you an exact number, but it was significant. It wasn't like oh, one or two bad outcomes.
Speaker 2:It was significant.
Speaker 2:Well, that was the one thing that always was a. You know, if you think about it, a lot of the stuff can be seen, the activity that can be seen, if it's all in chain, people are looking at it. I guess because you don't know exactly who owns those wallets, you can't really call them out right, unless you have some indication of you know the wallet and suspecting who the owners are right. You know, I actually had a brief introduction to a company called Tres Finance or Tres Finance, and they were telling me about their platform in which they just need access to your public wallet and APIs into all these different read-only data that you feed into their system so they can be information that comes from a traditional bank account money's going in flows and out flows, it could be from your environment for your wallet, right inflows and outflows and what it's essentially trying to do is give you a holistic view of your actual financial health, of all of your accounting, of everything, like whether it be C-fi, d-fi, t-fi, it doesn't really matter. It tries to capture everything.
Speaker 2:And I think it's pretty amazing because in many cases, like you think about some of these D-fi projects, I always wonder their TVL when they say, oh yeah, we've got, you know, $50 million. And then if you really look at it, if anyone's really smart, they say, okay, well, it looked like you know millions of dollars were just pushed in, right. And you can say, oh, it was a market maker or it was maybe a fund manager or something like that. You can create some story, like you know, they pulled in all these retail guys in, but in reality it's just one guy scratching the other person's back to make it look like they're getting all this TVL.
Speaker 1:Yeah, 100%. And that's like another thing with central exchanges. They require a certain amount of volume, a certain amount of liquidity, and that's why these market makers come in. There's even like automated tools that people use and it does paint. If you don't have the wherewithal or the time or the effort to go into all of the details, you can be like, oh, this looks great. All of these top-level indicators of how healthy this project is look fantastic. But if you get one level deep, you're like, oh okay, so this is all coming from these same two addresses and things like that. And I know that there are some fantastic on-chain projects that are trying to address this. One of them is called Arkham. It's a really cool visualizer of what other wallets this thing has touched and influenced and outflows. I think that's also a pretty cool tool. We're also working on one similar to the influencer report. We've also worked on this wallet trust factor, which just shows how trustworthy is this wallet.
Speaker 1:Originally, we're thinking from the copy trading standpoint, but I'm thinking just from an information standpoint. If you input a wallet, how often are they trading the news? Are they profitable? Is it just shuffling money in and out? All of these things are really important to understand.
Speaker 1:We start running into a problem pretty quickly, which is the next 100 million users are not going to be native. They don't want to have the time or the effort to go in and do all this research, do all this due diligence. It's just like, well, you should do your due diligence and you're going to put money into something. There is a large group of people who are very interested, who have day jobs, who want to involve themselves in the ecosystem, and they're not going to. If you present them one of these tools, it's just like all right, set up a wallet.
Speaker 1:How do I do that? You get to step one and it's already. You're losing a percentage of people who are coming on board. I think the next generation I'll have a lot of the tools. We have a lot of the infrastructure. The next generation has to be this thing that sits on top of everything and, I guess, adjusts to your comfort level, your experience level and your risk level. There's a lot of these variables that you need to take into play. I think those are going to be some of the big winners this next cycle.
Speaker 2:You mentioned this next cycle having more regulatory guardrails in place and you think it's good. How do you think that will impact the industry in where it started? It's decentralized, no central authority. Everyone's getting really excited about this Bitcoin ETF and institutions coming in, but institutions they love regulations. They need it to be regulated in order to operate pretty much their whole business. How's that going to impact the whole vision of this?
Speaker 1:Where it's going to. Yeah, that's a really good point. I think when it's BlackRock, when it's Larry who's doing things, I'm inherently like no, I don't like it. I don't. I don't think a company with over $9 trillion underactive management should. I don't think they care about people. It's an entity that's done very well. I don't think it really cares about people. So I'm very hesitant when I hear things like that. I think regulation's not going to be able to stop a lot of the decentralized nature of things, and that's something that I really like. What I do want regulation to step in and do is hey, you're a central exchange, get the right licensing, KYC, do what you've got to do on that side. When there is something like FTX or whatever, the right people are held accountable. I think also, regulation from hey, your token project will get a license.
Speaker 2:You know what I mean.
Speaker 1:I think it's like an in-between case. Fully regulation means oh, in order to have a metamask, you got a KYC, in order to do anything on chain, you got to let the government know. I'm not for that. What I am for is how do we help people not bet their entire house on an NFT project that is a rug pole a few days later? And how do we get on the building side, on the people who are, if you think about, oh, I'm a token project or I'm an NFT project. I just started this company. I am essentially a central authority, theoretically, even though the tokens are distributed in a decentralized manner. I created them. If you are a central point of authority, then there should be some accountability that's put there so that people are less inclined to do these rug pole things. We're starting to see some justice After the Tarar Luna.
Speaker 1:I was like oh man, this is awful. You got extradited to I think it's South Korea or the US. They both want them, but you have SBF. It's crazy. Sbf has just kept the Ponzi scheme up a couple more months. It is Bitcoin portfolio. They're able to cover those losses. Cz started to pay these fines and will likely see some jail time for essentially laundering money, for cartels and things like that. I think these are good things. I don't like seeing people go to prison or whatever, but even worse than that, I hate to see people lose their house or lose a lot of money or lose their savings because they were duped by good branding and copy into buying into something that ended up not working out.
Speaker 2:Right, you ever hear that one analysis where they talked about looking at the largest players in the world, such as BlackRock, and you've got Vanguard Group and State Street, all these guys. They have the amount of money that they control and they are essentially the largest shareholders and pretty much every major vertical. You can say hospitality, you can say airlines, you can say who owns the oil? Their money is everywhere when they were saying, well, who actually controls everything? It's not the president, it's not the government, it's the CEO BlackRock that decides what happens. What's your thoughts on that? You believe that?
Speaker 1:Well, they all own a piece of each other as well. That, to me, is very deeply concerning when they are seeing a future where everybody rents everything, nobody owns anything, and they also own lobby groups. They own media groups. They own the narrative that most people are paying attention to. I'm not saying they're evil, I'm not saying it's the Death Star, but I'm saying that if they want something done, it's their decision and not yours. To me, that is deeply concerning. Like I said, I don't trust anything that comes out of them or the things that they own, which is why I think Web3 technology is needed, because it gives more people a voice. We can talk about dows and how that could possibly be a future of government or at least replace some of the lack of these tribal communities that we've gotten away from.
Speaker 1:I am concerned about the sheer amount of wealth that these organizations have. They own each other and they own more than most countries in the world combined. You see the income disparity across the globe is widening, and widening as well. I think the top 1% owns as much as the bottom 50% in the United States. The United States, like GDP is supposed to be great. It's like okay, there's a lot of these things that don't really add up. I do see Web3 as being a potential solution. I see the ETF being beneficial and not beneficial because like, oh what if they buy up everything like they're doing with housing, but they're also spreading awareness and they're making it more of a normal household name as well? There's a double edged sword there. I definitely don't trust them. They don't have my best of a direction.
Speaker 2:If you don't trust, okay. So let me ask you have you followed that guy, andrew Tate?
Speaker 1:Andrew Tate yeah.
Speaker 2:Do you believe in his whole moving towards a lifestyle to remove yourself from the matrix, the matrix being the government basically wanting the majority of the people to keep on working, to take on more debt, so they keep on working to produce the money that the government needs to run its wars and to do whatever it wants to do?
Speaker 1:So, yes and no, I mean, the military industrial complex does detain a lot of how I think we perceive the world, because they also own a lot of the media companies. Sure, they're also owned by State Street, Vanguard and BlackRock. Andrew Tate's dad was a CIA agent, though, as well. So it's like how much of this do I believe? How much of it is misinformation? I do find it really troubling that we continue like here's something every country in the world's a debt.
Speaker 2:To who. You know what I mean.
Speaker 1:Just like, and put some of this stuff out To oversimplify things. It's like we're borrowing against our children and our children's children and so on and so forth, and it's just like, well, someone's got to foot the bill.
Speaker 1:It's like you, taxed out a credit card and instead of paying it off, you're like, hey, give me a higher limit here. But I think that's also pretty concerning. So I agree and I disagree. There is this sort of matrix. There is the, the status quo that they you know, not the conspiratorial they want you to adhere to. But you know, I'm not sure if Andrew Tate's lifestyle of women in cars and smoking cigars is really the way out of it. I don't disagree entirely with him, but it's also like, well, take it with a grain of salt, as that was a CIA agent, you know what I mean. And it's just like you get a lot of these guys you try and throw in my opinion, you try and throw like distraction in there Alex Jones as well. Alex Jones, he was right about the frogs, but he's an intelligence officer as well, right, so you know. So there's some truth in there, but there's also some distraction as well, I think.
Speaker 2:Right. Well, the reason why I bring that up? Because I think one of the messages like I follow Andrew Tate and I think a lot of his core messages they have some meaning. I mean, there's something behind it, right, and I believe that a lot of things that he does is purely for entertainment purposes and to draw attraction and, to you know, have that voice which you kind of need to do in this day and age. But one of the things that he always talks about and you know, not following the matrix, not following the herd, is how I read it but it is finding your financial independence, which has been a huge message in the US for many years, self-made millionaires, and then you start looking at crypto and essentially there's all these kids, right, or you know, you can say, influencers, crypto guys, whatever. All these guys are now much younger.
Speaker 2:More millionaires are being made in the US than ever before and there's this drive to get into Web 3 and crypto because they think, you know, this could turn their life around. And this is not only the US, this is in underdeveloped countries. You know Africa, philippines, vietnam, a lot of crypto activity coming out from those places because to them, if they invested, like even a dollar, let's say the bond coin, and they came out ahead at 20 bucks, whatever, right, that's amazing for them. This is like it's really kind of like a changer so not their life completely, but it changes their situation quite a bit. Now, whether they lose it, that's a different story. But, like, do you think that will continue Like Web 3 space encouraging? Like I'm gonna start up this coin, I'm gonna be rich, I don't care about the project, I wanna raise money so I can do whatever I want in life, right? I mean, do you think it'll continue like that?
Speaker 1:Couple of. There's a couple of things here. I think that Web 3 technology is here to stay. When I talk to a TreadFly people about it, they're like, oh, d5 versus TreadFly? I think they can both exist and they will both exist in the same space. For example, if HSBC uses Web 3 technology to resolve a contract two days faster because of the logic that's put in place and the security that exists there, you can multiply those two days over however many times a year that contract needs to get resolved and you can see a quantifiable impact to the bottom line.
Speaker 1:So I think that there's a ton of opportunity like that one, which isn't as sexy as the bond coin, that you can create this value, I think also when you do take the risk on yourself, because right now, when I go to the bank and I deposit money at Citi or Chase or whatever, they take that money and they lend it out to other people and they make interest on that and my money just sits there and my interest is not keeping up with inflation, especially these days is not keeping up with inflation. So I feel like another, slightly less sexy route that's gonna serve people more than it is currently is if you go and you take your stable coins. They're a very safe. I'm using safe nothing, not financial advice. Right, I'm not a financial advisor, but there are safer methods in which you can lend that out with low risk or lower risk and get higher returns than you are currently by having your money in the bank because you're taking on that risk, and with some of these DeFi mechanisms, you can make your money work harder for you. I always say that DeFi. Usually they don't care what money, what chain their money's on, they just want their money to work harder for them and I think that's a fundamental imperative. That's global, that transcends cultural bounds, regardless of where you're at, and especially countries that are developing are really seeing that the advantages there.
Speaker 1:I know for a fact that there's gonna be a lot of people who make a ton of money speculating and doing TA. My brother does a lot of day trading and stuff and you can get really deep into the charts and I'm not saying that doesn't exist. But I think that there are some of these other areas that are slightly less sexy but have longer legs, because if you're just trying to make money really quickly, well, there's a bull market potentially on the horizon. Good luck, take $1,000, see what you can do with it, like 2019, 2020,. I did like 7X just doing that, just speculating that, like I've been on that side of things and I've also been on the other side where I've lost like hundreds of thousands of dollars just in the wrong places or getting scammed or whatever have you, and it hurts it hurts a lot. So, yeah, I think there is this wonderful opportunity that's available to us that can level the playing field.
Speaker 1:I think that we need to be mindful of the kinds of playing fields that we are on and mindful of where we're getting the advice from and what, fundamentally, we're trying to do. Like, if you're trying to go and play the speculation game it's like when I go to a casino, like I like going to the slot machines in Vegas and then you get free drinks and you just watch the color screen I never bet any more than I know I'm gonna lose. I'm gonna walk away from the casino with no money, but I'm going with my friends. A couple free drinks, it's fine. That's what I would treat that as. But if you really wanna make long-term generational wealth or you wanna change your situation fundamentally, I think there's some of these other less sexy avenues that you can really be successful at, that aren't being attacked right now because everyone's like oh, bonk token, or this NFT thing over here, it made me a thousand X in three days. If you're willing to extend your time horizon a little bit and be more sustainable, you'll get less headache, right you?
Speaker 1:won't have to deal with the scammers, you won't have to deal with the hype and long-term you'll be in a much better mental, physical, financial shape.
Speaker 2:Yeah, well, I like that point and I think that's one of the key shifts that I see. I mean, first, look, even in the trade-fight market, there's still speculators. That's always gonna be there, right? So that's a type of investor that you're looking at, which I think is very important to understand. What is the type of investor? If you go mainstream? Who's gonna come on board? Now? They're probably the ones, in my opinion, that will have a longer time horizon, and what that means is, if you look at the world today in Litsa we're both from the US.
Speaker 2:We look at the US market there's probably a ton of people who have not done enough effort into saving money, right, but they always say you don't have to be that day trader, right, you don't have to go after the fast money. If you're willing to put your money and let's say it with the S&P right, it has proven time and time again after seven years or so, you'll probably double your money, right? There's kind of like some rule there and it's been proven right. And even if you just fight it through the bear market, leave your money, let it sit, it'll go up. And this is kind of in a way like if you're able to participate and you have your own assets and coins that you stake and it gives you a much higher percentage than what the S&P has been. I think they're like around 10%. Right, let's say you can get 15%, 20%. It just accelerates your time to your financial independence or like greater financial stability in the future.
Speaker 2:And I think that's the exciting part actually for me is you. I mean you're taking them on the risk. Therefore, you should get more. If you don't want to take on the risk, then go into I don't know. I mean they have bank account deposits now that are earning what? Four and a half percent. So it's changed a little bit, because before I remembered as a time it was like a quarter percent. You couldn't get anything.
Speaker 2:Now you're getting something significant but, to your point, all they're doing is they're taking that money because they're putting it somewhere else and they're still making money off your own money, right, and so I think that's the most exciting part that I'm seeing, not so much the get rich short-term horizon stuff. Yeah, all right. So let's see we talked about, let's see what else can we cover. I did want to talk about maybe some of the security of vulnerabilities in general. So we thought I mean there's a lot of hacks, if you look in total volume, just still millions of dollars being hacked left and right from different projects, from different DeFi platforms, and we all know that.
Speaker 2:In order for things to go then mainstream on the security front, what needs to happen? Because it's not happening from the, maybe some people are getting hijacked in real life or whatever the case may be, or even online, like I've heard these instances where some girl comes online, talks to the guy, try to act all friendly and oh, can you teach me about crypto? And basically they scan the guy in security. So there's all these stories. But yeah, for the large hacks that are happening, what needs to happen? What needs to change?
Speaker 1:Well, fortunately that sort of thing is only going to get worse with AI and deepfakes, that this is not just in Web3, like across the board. I think this is something that we need to educate ourselves on. Like everybody, I told my mom everybody, you've got to watch out for some of those things.
Speaker 1:I think on the actual tech side, one of the problems that I've seen there's two sides to it. One of the problems I see it is you've got to get your code audited and you need a good auditor. A lot of people don't want to pay the price because I won't say their name, but a very, very high-end auditor I got a quote from, and it was $40,000 a month as a retainer or it was $40,000 per contract, something along those lines.
Speaker 1:There's an astronomical amount of money. Also, there's no guarantees If you do get hacked they're off the hook.
Speaker 1:The two sides are okay, I'm trying to get the thing to market very quickly and I have investors, or I'm trying to get investors, so I'm trying to have an MVP out. The other side is you have these auditors that are like well, everybody's got so much of this VC money, we'll get as much of this as possible and we don't bear any liability. I think this is one of the ways that we need to adjust the relationship between auditors and builders. It would be great to have it internally, but honestly, it makes a lot of sense to have a third party come in Instead of just having an internal security person.
Speaker 1:Having a third party, an objective outside set of eyes look at what you're doing is so important Across the board, creative endeavors. If you're writing something, if you're publishing something, you want to have a third party. Look at this. I think having good auditors that aren't going to charge you an arm and a leg, that maybe do take some of the liability if they do charge an arm and a leg, I think that's one of the easiest, lowest hanging fruits to resolve some of the tech issues.
Speaker 1:It's difficult when you get beyond this because some people are like well, we'll just put in an emergency stop feature or put in some of these admin features under the smart contract, well then it's not really Web 3 anymore. You know what I mean. Then you can have the hack from inside. There's been a lot of that as well. You get these disgruntled developers and things like that. Again more reason to have a third party look at these things. A lot of it's really just human error or human negligence or ego or whatever. That comes into a lot of the security vulnerabilities, which is unfortunate, right.
Speaker 2:Right, I do believe insurance has a play in that. For example, I went through a process in one of my jobs where we looked at acquiring this insurance for a certain amount of assets in cold and hot wallets. Part of that process in order for you to acquire that license, they had to do their due diligence. At that point, in a way, it was like an audit how it was done. This was some years back. A lot of it was done by humans. They called it the four eyes approach. You always got two people, different passwords sharing, getting into a vault and all those different things, which still happens. Even if you have got you put your keys on different areas around the earth, you still have to find a way to audit that all that stuff.
Speaker 2:Right, you don't know how assets are moved in and out of hot to cold, but it's also the code itself, right. Basically, there's no back doors. That's why I always wondered when I heard, when I was reading, all these things about FTX. After FTX, they locked them down, but money was still being moved left and right because certain people had access. You just didn't know who had access, right, I guess at a point do you think insurance could play? Insurance that requires an audit to happen. Maybe the cost might come down a little bit. I don't know.
Speaker 1:Yes, I know that there were some insurance web three specific insurance protocols. I think Morpheus was one of them. This is back in the day, I don't know if they're still around. There's a lot of these projects that aren't around anymore because they weren't able to find the right product market fit, but maybe this next cycle. I do think insurance would be really, really helpful. How it goes about getting implemented I would be curious, because it's a very dynamic ongoing situation and there's so many variables to account for. But insurance isn't a new thing. It's not going to be a whole lot more complicated than where insurance is implemented elsewhere. I think ideally what you would get is a company that has done insurance or a group of people that were part of other insurance companies before, and you get a couple of web hardware store the hardware side of it. I think that could be potentially really successful. That would bring the cost down. It would still cost, though, sure.
Speaker 1:Sure People would have to opt into it. Maybe that's where some of the regulatory benefits would come in. It's just like hey, if you want to get this license for X, Y and Z, you have to have insurance. You have to be able to protect your end users here. It's like FDIC or whatever. Have you? I know people as soon as they are like, oh, it's like a government control body or whatever, they get turned off immediately. But I think, for sake of example, I think something like that could be very beneficial, especially in DeFi, especially in these spaces where you're handling a lot of money, You're handling a lot of people's livelihoods at some point you know what I mean or their kids' college tuition or something.
Speaker 2:Let's go back and maybe we'll finalize everything around this topic. We talked about security, we talked about auditing, we talked about insurance, we talked about the matrix and the government. Do you believe that there could be a Dow, whether it be one or two, or basically you can call them? They become the oracles or basically the overseers of what happens in these environments, not just for a country, but obviously within, like hey, let's say everything that has to do with code. A Dow that controls that? I know a Dow has had a lot of scrutiny recently because money was being mismanaged and so on and so forth. What's your take on that?
Speaker 1:I think Dow's are amazing. I think that there is the opportunity for a form of a Dow to have some governance control. That would be beneficial To your point. There are some issues with Dow, not just the mismanagement of money. I think that, from what I've seen, there's a critical mass. Once you get over a certain threshold, you lose the community and people stop engaging. There's only a small percentage of people that are actually engaging. I think that at certain sizes, dow's are fantastic.
Speaker 1:Maybe you have multifaceted like a Dow made up of other Dow's or something like that. It turns into this sort of multi-layered government system that trickles down to the lowest end users and maybe you I'm like oh, I trust it. You're similar to voting. I trust this person for my Dow district and that person is able to cast a vote here or something along those lines. We vote on it with our wallet or the Dow token or something like that. We would need to have some clear guidelines around that, because I've seen a lot of these communities. They do so well for six months or whatever it is. They do so well until they reach 5,000 people.
Speaker 1:Then a single person over that, it all starts to fall apart or people get bored. I feel like the attention span in Web 3 is also narrower and narrower, but I do think, I really do believe, that the next generation of Dow's are the future of governments, governance, not just within Web 3, but beyond that. Imagine you're a politician. Because there's so many politicians that lie. It's just like oh a lot of politicians, of course, that are like oh, if I get elected, this amount of money is allocated towards education. They get elected. They're like well, that's what I said before.
Speaker 1:Things are more difficult now, but imagine having those things written into a smart contract as soon as they are elected, it's fed into an oracle and then the oracle provides the smart contract, the information like hey, this person won, and then that money is automatically distributed. If actions are taken on chain, I think there's a lot more accountability there. Having things on chain is really important for accountability and it can bring truts back to communities at large, because I think that's an issue we're dealing with right now, especially in places like the US. There's this political divide. People don't trust each other, they don't trust what they're seeing on TV, they don't trust and there's no accountability. So I do think Dow's can help this space. Fundamentally, I just think that we need to be mindful of some of the limitations and how we could effectively deal with those limitations as well.
Speaker 2:Okay, well, hey, I think we're going to wrap up the show. I want to thank you, angie, for joining. I think we can talk on for another hour, but a lot of different stuff.
Speaker 2:I didn't even go through all my questions, but there was definitely a lot of good stuff here and I think the main thing I think for 2024, change will be happening and I guess for sure speculators will. That's one of the things I've accepted. It will always be there and it's not particularly a bad thing. One of the ones when I say they that interest actually helps to make the market in many ways. So you can argue a lot of scammers, a lot of hackers, but that's how we learn.
Speaker 2:If that didn't happen, then I'd rather have it happen now rather than there later when everyone is involved. So I think, yeah, we'll see how it is. So I guess I'll ask you one last thing In Web 3 in itself, what is like, who are the, I guess, the top three people you follow that you believe will really make a huge change in this space?
Speaker 1:Yeah, oh, that's a good question. That's a really good question. I think I mean Vitalik. Obviously I like him. I've seen him talk a couple of times. He's really awkward and he's never wearing flashy things. I just by the way he dresses and the way he carries himself and he's always like trying to bet on like the cheapest hotel. Gavin Wood from Polkadot. I like him. I mean him and Vitalik are. You know, they're longtime buddies and in terms of and I'll throw an influencer in there, not a builder Chico Crypto. I like Chico. I think he's been really brutal about things for a very long time and I like that. Even in the bull markets he's pretty brutal and I appreciate that. You know there's some people out there who are always just like, oh, fomo, fomo, fomo, and he's always like, hey, be cautious. There's a long-term project that I'm very interested in, you know. And yeah, I appreciate honesty at that level. Yeah.
Speaker 2:Cool, all right, thanks for that and thanks for joining the show and happy to catch up with you again sometime in 2024.
Speaker 1:Oh yeah, absolutely yeah. Thanks, art, have a good day.
Speaker 2:Hey, so that concludes this episode of the Start Up Voyage Podcast. I would like to thank all of you for listening to this episode, and I'd really appreciate it if you leave any type of comments that you'd like to share, because it helps to feedback on how I deliver these podcasts.
