that kind of rode up during the
NFT increase, have cratered, and the minting on their chain
testis has actually thrived, and it has more usage of the network
than then 2021, which is incredible.
Where's the demand coming from?
Mostly the art world. So basically, you know, crypto, one
of the main criticisms of it is that it's a solution in search
of a problem for digital artists that actually does solve a
problem. And what you see is like we're going to communities,
people sort of rallying together and mentioning their art on the
blockchain. And then they're able to trade it so on and so
forth. But that's been one of the few sources of organic
growth in the industry writ large. And in particular, on
tezos. It's
interesting conversation, because it takes us away from
just trading crypto, making money losing money, it's about a
use case here for crypto, so just flesh out how your crypto
is different to the likes of Bitcoin and Ethereum.
Yeah, um, so Tasos is a smart contract platform. So at first
blush, it looks very similar to Aetherium. One main difference,
though, is that tezos allows for token holders to vote on and
ratify upgrades to the protocol, which are then instantiated in a
decentralized fashion, meaning, like, basically, someone can
propose a new bit of code. And then a supermajority of people
who own the token have to come together, say like, yes, we want
this, in order for it to take hold. This sounds like kind of
clunky, but it's actually happened 11 times. Whereas
Aetherium, made a big splash and made a big marketing campaign
out of doing it once. We do that every few months, has like
almost no fanfare, because it's just in programmatic. So there
use cases where this is potentially viable for a lot of
are
financial contracts you mentioned that have teased
before, the energy efficient side is quite key. Just talk us
through how this is quite special to what you have in the
Yeah, so I mean, a lot of a lot of what makes headlines in
marketplace.
cryptocurrency land is problems. You know, you have a hack, you
have some sort of, you know, awful design of something. And
that's really what gets headlines. tezos almost
anticlimactic, because it's, it just beats those problems. So
for example, even though usage of the network went up tenfold.
In 2021, the amount of gas consumed actually went down,
meaning the fees that you paid like basically, do compute on
the network went down. And that's because there are
upgrades that basically it just repeated, increased usage. And
we're like, Okay, well, we'll make x y Zed more efficient, so
that fewer gas fees are rendered. So it's like almost,
you know, we anticipate the problems, and then it's solved
before it's even an issue.
Can you comment on the crypto winter? I mean, it keeps on
going on and on. And we're not seeing any bounce off some of
the price lows, what's the impact? What do you think?
Oh, I think it's only gonna get worse. A lot of this is inflated
on cheap money. And a lot of this was backed by basically
like VCs trying to pump like, everyone's trying to find yield,
right. But there's a lot of easy money going into the system. And
I think it was artificially artificially stoking a number of
different things, namely valuations of these companies.
You saw, like, I think opensea $300 million in sales in
September 2021 $9 million in sales in September 2022. So
like, clearly, there was a phenomenon that is kind of
questioned and gone away and a lot of these markets, but like,
meanwhile, they're saddled with a $13 billion valuation. So I
think there's a lot of like, there's a lot of cheap money
that went in. Valuations when super sky high, you had people
scrambling to like, make those valuations justified in some
form, usually through like cheap tactics, like yield farming. And
now that the easy money is gone away, like all that's left is
organic communities, I hope. And yeah, that's that's been the
There's been a lot of cover, though, for the industry there
arc.
excuse that, well, tax credit as well. So you've seen volatility
there. So there's no surprise you'd see it and
cryptocurrencies. But that's risk off for investors. But once
we get a Fed pause, potentially, some are saying that you could
see a rally in crypto along with other risk on assets. But what
if that doesn't materialize?
Well, I think the smart person way of talking about it that
I've seen that I've been convinced by is like basically
tech, you know, obviously written in lowest interest rate
environment, what you're placing it is not like who's actually
using the tech, but it's like, you know, sort of anticipatory
benefits, right. And then that kind of cratered, you know, that
is down like 70 percentage I just saw on your on your screen.
And it comes it's coming down to like actual user growth. And I
think, you know, crypto hasn't been evaluated by that metric.
And neither has technology and like, last 10 years that we've
had low interest rates, so it remains to be seen, but
basically, like, I think, I think what you'll find is like
the things that are useful are going to thrive. But you know,
that's the small minority of crypto applications, whether
people want to admit it or not.
A lot of business models have been built on the high volume of
transactions in crypto that we've seen to date. Yeah,
clearly, that's flipped lower and the transactions are down
because we've seen less compelling evidence that the
price is going to go up. So how does that impact the growth of
the sector when you've seen some volume based activity?
Yeah, I mean, I don't think I think a lot of that stuff was
was basically predicated on extremely cheap tactics for
getting people in the door in the first place. So I mean, what
was easy? Come easy go. Right. So I don't know. I mean, I think
I think cryptocurrency solve a really intractable problem that
we've been trying to solve for hundreds of years, which is how
to exchange value with someone who's very far away without the
use of, or risk of an intermediary. Whether or not
that is sort of weird, the monopoly of things that that has
been proposed to do, like, you know, cure cancer, like get rid
of, you know, plastic in the ocean, is completely bizarre.
And it's been really, like super easy for people to market
themselves on this for the last like, five years or so. I think
you're just gonna find a bit of revisionism and a bit of new
history coming out of this.
Can we talk about the competition, because we've seen
the winner takes all approach in various different sectors or
immobility, social media search, I gather you have a view that it
may be that type of scenario, too, when it comes to your
industry. But what about some of the other traditional players,
the banks, they all have very large teams now working on
crypto exchanges have a lot of crypto experts as well. Do you
get up into disrupted by some of the traditional players?
Oh, it's absolutely possible. There's a ton of really smart
people, you know, working on this industry, and you know,
even even the adjacent spaces, it's hyper competitive. I think
there's some there's the spirit of this, this, the origin story
of cryptocurrencies is a bit more cheeky than, like, what's
going to come out of a bank. And so you saw like, I mean, at some
point, Mehta had a budget of around $2 billion for their
cryptocurrency initiative, which they don't talk about anymore,
obviously. But you know, $2 billion is a pretty big war
chest by any account. But like, what problem are you actually
solving? I think you have to be a little bit of Reverend in
order to make an impact in the space. And that's a reference is
not going to come out of a bank. And that's okay.
What's the role of crypto in the Super App World? Everybody's
talking about Super apps from Elon Musk to Google and beyond?
So what's the role of crypto?
Yeah, so I mean, like, what, so a lot of people have justified
like the lack of traction in cryptocurrencies by saying, Oh,
well, we haven't found the killer app yet. And so it's been
it's been revised is like, oh, with three, that's it. Web three
doesn't actually mean anything yet. It's mostly a knee jerk
reaction to the ad baseball, the web, so called Web two. And you
think it'd be players like meta, you think it'd be players like
Google. And those guys have had bad PR over the last like five
or six years. So it's been easy to wall up on them and blame
them for like the downfall of democracy or whatever people
want to, you know, cast, you know, castigate them for. But I
think the fact of the matter is, you know, we don't exactly know
what a sort of decentralized version of anything looks like,
because the bias has been towards a centralized model. And
even if you look at, there was a crypto exchanges, so called
decentralized exchange that went down a few months ago, because
there was an AWS server in Virginia that went down. And so
I'm like, Well, you know, that's not really decentralized, is it
then it's all predicated on AWS anyhow,
so the big spending programs from metta by Mark Zuckerberg,
is that just a step in the dark?
I don't know. I mean, I feel it's weird because I think meta
is by and large, an extraordinarily well run
company, like very few companies do major acquisitions. Well, and
Instagram, obviously folding into meta was fabulous. They
have 3 billion users, you know, a month like that's, that's
crazy. That's a wild portion of the world. You don't get that by
being bad at shipping and bad. Engineering. I, I wonder the
extent to which she did Sheryl Sandberg, obviously left earlier
this year. And it always kind of thought that she was the adults
in the room when I looked at sort of the corporate governance
model of meta. So I don't know if this is just a Mark
Zuckerberg skunkworks project. But it is kind of appalling to
see the amount of money that's been spent on the so called
metaverse. Yeah, that company.
Just finally, can I ask you about hubs for crypto? Because
you have a great lay of the land with your business? Where is the
natural hubbers? The likes of Singapore, London, now Hong
Kong? Of course, all go after being number one in this space?
Yeah, there's, there's definitely. So I mean, there's
talent everywhere, like, you know, talent is equally, equally
distributed opportunity isn't. I think there are hubs where
governments have been much more, I guess, much more deliberate
about coding talent. So Dubai is making like tons of effort to
doing that. And I think they're doing it in a smart way.
Singapore obviously has a system for that, like they CT
industries, like very systematically, and my sense is
that they're trying to be more open to crypto than they were in
the past. But I think you know, if you're just looking at like
rah rah engineering talent and things like this, it's hard to
beat Silicon Valley and that's got a Massive foothold, it's got
obviously a fantastic educational system that helps
integrate engineering culture. And then you're wondering where
I'm based, like, I also think is absolutely fabulous. And for the
longest time, it's been sort of a magnet for talent from all
across the EU, I hope with Brexit and all of the different,
you know, constraints around that they continue to find a way
to do that they're making efforts by obviously giving sort
of Safe, safe haven status to graduates to top schools and
things like this, and that'll move the needle a little bit,
but like, I think, you know, museums curate country
shouldn't.
So talent is more important than regulation, then.
Yeah, I mean, I think regulation is it's always been like this
very amorphous. There's no clear guidance. And unfortunately,
like, you know, people see this as as basically a political
discussion rather than anything else. And until there's like
clear legislation, I think it's just going to be something that
you know, politicians speak about, but the new pm of the UK
has paid a lot of lip service to, you know, crypto as an
industry. So I hope that that comes to the fore but they're
sensible policies, and then they're sensible policies.