B2C0039: 2022 Outlook for Industry Transformations (w/ Rayne Steinberg)
In this week's episode of Between2Chains Rayne Steinberg joins our Host Peter Hans, talking about transformations in the digital asset industry in 2022. They discuss tradfi adoption of digitization, DAOs influence in the coming year, and more.
In this week's episode of Between2Chains Rayne Steinberg joins our Host Peter Hans, talking about transformations in the digital asset industry in 2022. They discuss tradfi adoption of digitization, DAOs influence in the coming year, and more.
IN THIS EPISODE:
NOTE: Following transcript is generated using AI. Minor errors might be present.
REAL VISION 00:00
Welcome to the real vision Podcast Network.
REAL VISION 00:08
Before we get going, we want to remind you that Jeff Dorman is the co founder and chief investment officer of ARCA funds and Peter Hans is ARCA funds managing director. The commentary and opinions expressed in this podcast are solely those of the podcast participants and do not necessarily reflect the opinions of our funds or its affiliates and are subject to change for any reason without notice. Any discussion of investments or investment strategies within this podcast are for informational purposes only, and not to be construed as a recommendation to buy or sell any particular investment security, digital asset or strategy. Investing in digital assets involves a high degree of risk and volatility including the risk of the total loss of principal and now enjoy the show with your host Peter Hans.
PETER HANS 00:51
Hi, this is Peter Hans. Welcome to our first episode of season two of between two chains, I am joined by the godfather of ARCA. Dr. Not really Dr. Mr. Rayne Steinberg, Rayne, how are you? Sir?
RAYNE STEINBERG 01:21
I did not go to evil doctor school to be called Mr. Sir. I'm doing well here happy to hear how you doing?
PETER HANS 01:28
Same do I am? I'm doing well. I'm doing well. So I've been having a number of different conversations, you know, really that started last the end of last year, you know, round predictions for the digital asset space in 2022. We talked about NFT's we talked about the overall investing ecosystem. And, you know, I'm excited to talk to you because it's, you know, looking at some of the topics and predictions that you have. There's a pretty wide range here. And, you know, and some interesting topics around DAO's ESG. You know, that that frankly, like, you know, I know a lot of people are interested in well beyond even the digital asset space. And we'd love to hear your take on these. I'm excited about it.
RAYNE STEINBERG 02:21
Sure, yeah. Great. Yeah, it's super exciting. I yeah, I, you know, my seat, I look at a lot of different areas. So my area was broad landscape. And we touched on things as related as ESG and DAO's. Let's talk about DAO's. A little bit, because as you know, we spend a lot of time looking at entities that, you know, were centralized that become DAO's, thinking about governments governance issues, and I really see that entity, very powerful, but still a lot of wood to chop, operationally, and the idea of getting governance, correct. So I really think that there's going to be a lot of activity from firms like ourselves, and others, where you're really going to start to see experiments in governance, and to see how we can get decentralization to really work and make decisions. And I think what we're doing in sushi, and the engagement of the community, you know, so working with insiders and management, and the community, and how that all happens in a very transparent and open way, is actually going to be the type of super transformative things that bring DAO's from kind of like a buzzword, which everybody talks about them and loves this idea of a decentralized autonomous organization until you actually try to run one or do something to a model that can actually accomplish things. So whatever that level of centralization is at the beginning, how you actually do achieve decentralization, how you do get good governance outcomes. So I think that that's going to be a really big trend this year.
PETER HANS 04:07
Yeah, let's, I've heard that from other people, too, you know, on Twitter talking about DAO's is Trent and, and I've never really dug deep to understand like, exactly what they mean by that. And you know, for the listeners, you know, a DAO and I know you I know, you define the acronym as a decentralized autonomous organization, but I'm like, not the technical definition. But like, what does that actually mean to you?
RAYNE STEINBERG 04:34
Sure. What that means is that it instead of a centralized organization with a defined management structure, and an ownership structure, that is quite well defined or known, making the decisions for the company, or the organization or entity or whatever it is. It's really leverages the power of blockchain, which is decentralization, polling organization, because sometimes pseudo anonymity or true anonymity are not necessarily, you know, somebody's identity, you know, drives their credentials or expertise or whatever that these are that this is actually the group that makes the decisions for an entity and makes important decisions like how to split up revenue, or what product to bring about. Right now, to this point, the centralization part has been necessary to drive good outcomes. And I can tell you, is a person that, that runs a company, and you sat in the seat to, it's hard to imagine how an organization could make truly good well, you know, well coordinated, thoughtful type of company like decisions with that type of decision making structure. But I think that they're, I think that that's coming, I think that there's going to be ways that as you know, the tools that we have, and how we communicate, and the voting mechanisms, and the way we interact are going to get more precise. Right now, things are running discords, and a bunch of people shouting, and until somebody like takes the reins, and puts out a proposal and really, really doesn't, it's a lot of chaos. And you've seen and you've seen it happen, really great projects that looked like they were unstoppable. You had some disruption from some key players, and then a lack of direction from the community. And then it seems like it all fall apart very, very quickly. So this is really this problem of our own philosophy, where we're kind of a society and people that are very centralized right now and used to this. And this technology really allows for much more fluid, decentralized decision making, I just don't think we're ready philosophically yet. And we don't have the structures to do it yet. But I think, through activity, like what we're doing in sushi, you know, these are very, like, very primary, early steps in this type of thing. But I think they're very important. And you can see that even small things when like, the organization falls apart, and are able to bring it back together, can have dramatic turnarounds on the price of something, the perception, how the community views it. So I think that those things are very important. They're going to seem very rudimentary early on, but I don't think you get to complex things, you know, just complexity just doesn't spring up. It takes these type of building blocks. So that's, that's what I say. So decentralized, autonomous organizations or organizations that make decisions in a decentralized way, there is no single entity there to either point liability or decision making. But that's part of the power but also part of the problem.
PETER HANS 07:48
Right, Interesting. So the the DAOel, right and well, let's separate the verse for a second the DAO verse kind of the decentralization of the organization, because I think, you know, like, one way to think about, you know, decentralization that people understand is like a mutual or a co-op, right, you know, if you're in a co-op, but but the difference is like a co-op has a co op board, you know, like the board of directors is supposed to represent all shareholders, it's supposed to represent the community. But, you know, I think one of the things you said at the very beginning was was you know, that DAO is made possible by blockchain. What it basically does is it alleviates the need for that Co-op board or for that board of directors, because every in essence, stakeholder has a say, which can be anonymized. And it is, I guess, depending on the structure can be or not pro rata to their participation or ownership in some capacity. So, so in terms of the, you know, I guess, adoption and evolution of DAO's you see this as something that's more adopted within the ecosystem already, which kind of already is being or, or more traditional type use cases adopting this blockchain ecosystem?
RAYNE STEINBERG 09:09
No, I see. I, it's been adopted to a certain extent, within the ecosystem, but the outcomes have not been great. And they're just not, you know, very bulletproof yet. And I don't think we've solved that kind of conundrum from that the either the centralization it takes to get a project off the ground, and also some money that's represented in the control of the Treasury or something like that, and then they move to true decentralization, where the community truly owns it makes those decisions and the whatever it is still remains vibrant, you know, appropriately directable all the things that you know, a company has to be to remain successful. It doesn't seem like we've really figured that out yet. So where I see This going is more practical adoption within the community. And that might not even be more decentralization that actually might be less decentralization that might be, hey, I'm not just this absolutely dogmatic commitment to central decentralization, just because that's a buzzword. And we say that maybe there's a period in adult life where it has to be centralized. And it's how you plan, you know, to get to that centralized, you know, totally representative ecosystem, and set it up like that. And that's what I see going on right now. So I don't think we're we're quite at a place where, and this is, you hear a lot of actually non blockchain people talking about dials, and I would like to do it out. And like, there's not really understanding of it. Honestly, it's kind of a buzzword. But I think what's going to happen in the ecosystem is there's going to be focused on making them more practical, and actually able to accomplish what they set out to do. So that's what I see happening here. And a lot of I think it will actually happen through a combination of like partnerships like what we do, partnering with thoughtful capital, partnering with thoughtful partners in a centralized way, it might be a more decentralized ecosystem of decision makers, then a company so a DAO might like have, you know, its capital markets partment department over here for experts in capital markets, development different over here, market ecosystem department over here that coordinate in kind of this loose way, it's not totally decentralized, but it's not this formal structure of a company. And that might be kind of like this proto doubt that we need, where we're, where we're not just all, you know, making perfectly great decentralized decisions. Yeah. So that's what I mean by that.
PETER HANS 11:51
Got it. Got it. And, you know, you mentioned I guess, what you said what we did with sushi, which obviously, you're referring to ARCA and and the proposal that Jeff and Alex and his team put forward and the corresponding vote that that that occurred. So, is that, in your mind a good representation of the potential of a DAO structure?
RAYNE STEINBERG 12:18
Yes, exactly. And the potential of what can happen when two parts of community which don't necessarily think that they're going to get along, you know, this is a very heavily, you know, native crypto community in the trading community, wary of, you know, what would be seen as institutional capital coming in and taking a large block in a decision making process. But through our actions of, you know, having interacted with the community, from before being users of the product, active participants in their governance process in the past, having a good outcome in the past that we have demonstrated in a very transparent way, our intent about sushi, our motives are profit, driven as we are in it to make money for our LPs. But that can align as well with the project sushi. And you know, it's not different than the way investing is done in the traditional world. But just the amount of transparency that you have here, that these aren't backroom deals that are cut, that every member of the community could see and participate and vote on our proposal and pretty much real time and other proposals and engage with us on our ideas, sometimes, positively, sometimes negatively. And I think we actually ended up getting better outcome informed by the community with better buy in, where I don't think it was seen as like so binary. And so you know, kind of backroom smoke filled closed deal that people didn't at least get to participate in. So I think that that's a great outcome for a project and people could disagree, you know, on, you know, what it outlooks and quibble about, you know, this aspect of our proposal or that, but that's, that's what makes markets and deals and interested, just more transparency and more participation. I was really very thrilled with the level of participation from the community on that.
PETER HANS 14:24
Yeah, there really isn't an element of transparency that that occurs in a in the execution of a dao vote, right. And I don't mean transparency, because like, you can be anonymous, right. But it's transparency in the sense that it's not rigged, you know, everyone can see the results in real time. There's no way to fake it. It was, you know, frankly, like looking at our last election in the US. I think it's a great example of where, you know, there's parallels right between a dammy we are essentially a DAO or theoretically Everyone who is a voting age is able to cast a single vote. And obviously there's more nuance to the way the process works. But then these votes go into wherever they go, and people count ballots. And, you know, they get reported, and there's, you know, claims of fraud. But, you know, instituting a color what you want, right, but this is just basically leveraging the technology of blockchain for real world use cases. Voting to me just seems so obvious. Now. I'm sure we're way aways from that actually occurring. But like, when you think about the DAO and the opportunity set? What what, you know, what do you think about more like, obviously, someone like Jeff would look at it as like, how can we leverage this to, you know, make money and investment, which is his job, but also you're improving, you know, communities and companies, but doing so. But then there's also like, you know, voting, you know, you mentioned like labor he argues union, like there's so many ways that you can institute a DAO and real world scenarios like what do you think about more in your seat? What like gets you more excited about the future?
RAYNE STEINBERG 16:12
Well, that's, I'm really glad you touched on that. And you touched on the election, Peter, because that also touches on other parts of my predictions, which which are really, I think it harps into two. Inflation is just really, degradation and trust of money, honestly, at a certain regarding the loss of control of it, and a degradation in trusted institutions. And so this is really what you're talking about. In a world where these things work correctly, where are elites and institutions who are given a place of trust to command either financial Trust, the trust over governance and voting, labor, unions, things like that. But if that trust, degrades, then the entire system breaks DAOn. And I think that that's what we're seeing on kind of mass scale. And that's what I see as interesting, truly about blockchain. And what's really going to drive adoption is this idea of transparency, and the fundamental idea of what's better than trusting a intermediary or elite, you know, institution, then not having to, and having total transparency, total control over these things. Alignment, really seeing where things are, it's incredibly powerful, along those. And that's where I really see this. And that's what I see driving this adoption Moore's, because you could have a very measured adoption for digital assets, and kind of DAOs and things that have decentralized authority and transparency, when the alternative is, is highly trusted, efficient working, the adoption of this other thing is going to be very slow, especially when you consider some of the operational challenges of coordinating in a decentralized manner. People not being familiar with the technology, it being early tech, and having bad UI and bad, you know, interfaces and all the things that go on with like early, that make it hard to adopt what's going on in the traditional world, in the legacy world, where you see it in our society. I mean, we're having a kind of a, a, I don't know, I don't know what you call this moment, for this pandemic, where people feel incredibly nervous. People of all political stripes have issues with trusting information. You know, this is going DAOn through a very fundamental place that across our society, people are suffering from a inability to find trusted sources, that is really the core of blockchain. It is a ultimate source of truth secured by code that everybody can check and agree upon. And I think that that is really what's going to drive it this year, the kind of breakDAOn in some of these more traditional systems, and then some of the clunkiness will be overlooked as the benefit of having a completely trusted system that is uncontrollable by other people comes through. So that's where I see it. I see it across society, I see it in voting. I see it in aligning even smaller and smaller, like projects, like we see what's going on in Miami. It's a very rudimentary thing. But the mayor of Miami is saying, I want to align people as a crypto capital, I want to create something called Miami coin, which is like a protocol in which instead of taxing people to you know, draw them to Miami with the benefits and have the benefits of Miami accrue to a coin. Now, this isn't very well thought out in the mechanics of how something like this work works. But it's an interesting concept that instead of saying, you know, creating a area that draws people through the Benefits and allows them to align on some of the things they do in a more. What's the word not coercive in their own choice type of way, like voting with your feet, and things like that. So I see using it as an alignment tool in many, many different ways.
PETER HANS 20:18
So you mentioned Miami go and actually had Jeff and I know Jeff talked about it a little bit on a previous episode. And, you know, something that, and I don't know, if it's been, you know, you mentioned is not well thought out, I don't know if it's been, there's been more kind of meat put on the bones there. But like, for the for the life of me, I don't understand what it does, or what the point of it is. But it seems like you're at least a little, from what I gather what you're saying, at least you what I hear from you is like there is more potential, at least you see around something like that. Because Jeff was like, oh, maybe you get discounts on bus fare like.
RAYNE STEINBERG 20:59
No, it's not. It's not it's not well thought out at all, in honesty, and we know the good people of Miami. So this is not about slandering them. This is more similar to the way even some really great projects in 2017. And what would you consider the ICO market where there was great intent, and the idea of aligning people around things and trying to capitalize on digital assets was done, but that the the devil in the detail, and we've seen this, this is really not a slight on my head or or at area, we've seen this in in well thought out teams, you know, in some of our projects, I won't name them that have run afoul that haven't gotten the governance or how it's going to work. Exactly right. So this is this is tough stuff. What I what I commend them for though, is this idea of seeing the power of digital assets, wanting to attract digital assets, companies and people that are going to be innovating this space to the area. And instead of offering things like there's there's tax breaks, and things like that, but this idea of we are going to make a municipality that is trying to embrace this at the highest level, that are thinking about it on things for revenue generation, and you know, in the idea of somehow interacting in the idea of a general revenue bond, and something like this. And so very, very proto anything, but it's it's more of the spark and the idea we've come from where, first of all, there was just Bitcoin, and whatever that meant, you know, a money and then to these other projects, but this was still not embraced by our governments not embraced by institutions. Certainly not you people, I remember our first year, when we're talking to some investors at large institutions, that would say, I need to get a piece of material that I can then put on somebody's desk, and pretend like they're acting asking me proactively, because it was considered almost a career risk to say, crypto or digital assets at this place you were seeing as an insane person. Now, that has changed completely in this year, as these use cases have mature. But when you think about how much has occurred, what is the size of digital assets, right now two and a half to $3 trillion in total market cap, which is nothing, nothing. In the grand scheme of things, you still had almost no adoption, in reality of anything meaningful when we're talking about institutional assets, or displacing bonds, or equities or anything like that drop of the bucket. But we are actually talking to people in a serious way that this is now being seen as a serious technology, that when Jeff talked about every company having a token, you know, three years ago, that was seen as you know, a pretty out there type of opinion. Now people especially people that are close to this space are like, I could see that I could see how every company could have a token and its capital stack. I mean, that's a lot to happen in this amount of time. So governments are some of the slowest actors to do things like this. I'm just pleased that there are places that are thinking about it in a competitive way. We want to draw digital assets, people here were the type of people that we want as corporate citizens and drivers of growth. So it's more about that it's more of an idea than anything Miami coin is doing it.
PETER HANS 24:37
Got it. Got it. Yeah, no, that that, that totally makes sense. And I could see why it's good to be a leader and, you know, innovation of at least the idea because you know, and maybe it's unrealistic to expect that the the execution of that idea may be so perfect at this time because it is it is very, very fluid, right? Yeah. Yeah, yeah. Interesting. You know, I would I would love to move on to ESG. Because I know that that's a topic that I mean, for years, people have been talking about it and for good reason. And, you know, one of the things that I always struggled with, with with ESG was just like, it means different things to different people, or like what someone considers important, you know, might not be important to someone else, you know, like, like, certain investors might consider, you know, Budweiser, and I mean other public anymore, what if they're who they're on by, but like to be to be a non ESG, because they, they make alcohol, whereas I don't care about that, but I might not want to invest in whatever, you know, you know, a good story is like, I used to own Monsanto stock. And, and my wife was like, why do we own this? Like, I don't, you know, she didn't feel comfortable with it. And I was, like, well, I'll sell it, like, I get that I get that, you know. So, you know, just, you know, I could see, some people might not want to invest in Pepsi, you know, because of the, you know, chips and cola and promotion of obesity, you know, so like, it's, it's all different. So how do you think about it?
RAYNE STEINBERG 26:10
Yeah, so we use ESG, which, you know, as you know, stands for environmental social and governance. And it's very much been a concept that's kind of been co opted by the investment world, as a way to signal some sort of, you know, social good aspect to an investing strategy. As you say, one of the difficulties of it is, this stuff means different things, you know, to different people. What is environmentally good, what is to a societal benefit. And the same on government. What I find interesting about blockchain, though, for people that are truly interested in ESG, investing, that there's actually parts of digital assets that really do touch on these things. When people talk about governance, as a goal in ESG, generally, they're talking about some sort of board diversity type of representation in typical investing. But if you think about that, in that governance sense, you often see some of the same people on many boards. And it's really just a way to, to often winDAO dress, some sort of representation and governance. So you can check an ESG box, when you think about blockchain. And what we were just talking about, on really decentralized decision making on the people that own a network, actually controlling its direction, that actually giant companies can bootstrap capital, and decide their own governance in a way that aligns with their community, that may be something completely different than we've ever seen. And that could actually work and energize something tremendous and bring all sorts of people into an ownership and decision making structure that never that never occurred before. I think that is one of the most exciting type of governance type of experiments that we've ever had. So in the G, part of, you know, governance as ESG, I think, you know, you can disagree or not, I don't think that there's a more exciting thing going on in governance. And same thing with a societal we have a lot of concerns about wealth inequality, access to capital access, you know, to financial services and developing countries, we are now seeing in real time, Blockchain, Bitcoin payments, access to banking services, and money transfers, changing with people that just have cell phones, and starting things like that a leveling of the playing field, and then you get to E, the environment. This is one of the most interesting ones, because I think it's probably the least directly in line with Blockchain. I think that there are industries that have much more impact on the environment. But it just goes to show you how powerful narrative is, you actually have the most talk about the environmental impact of Bitcoin mining and proof of work than any other aspect of the S and G component in digital assets. So there's something for people there too. You can disagree or agree or think that there's more environmentally friendly ways to do digital assets. So for people that are actually interested in environmental and social and governance issues in a very granular manner, where you can actually see change, and it's not packaged products that are being brought to you that are being told you this is ESG, whatever that means. That's why I think that this is an interesting space. And that's why I think that people that really do have those, those drives because it's very human interest that you would like the things that you invest in to align with your goals. This is this is Already, the problem is, like you say, when you throw it into an ESG fund, what are they really doing the actual in the weeds, nature of blockchain, that you can be a member of the community, you can be a part of the governance or start a DAO, you know, it's a much more straight line to your investments having real ESG impact and kind of the true sense of just societal benefit or impact, then just directing your money somewhere. So a much more active engagement that allows people to really much more connect with these types of goals than just passive allocation to some fund.
PETER HANS 30:38
Yeah, I mean, I think it's so tough because like, in some cases, you want to see almost like a standardization of what it means. But with something like this emotional to different people, the standardization is almost irrelevant. It's almost like, you know, you know, what to get you to one might not be as true to someone else, you know, I mean, there's this stuff, that's obvious, right? You know, but then there's stuff that's a little more gray.
RAYNE STEINBERG 31:09
Yeah, this is, I agree with you. And this is why this ESG, in my mind has really and the SEC actually came out on this, because it was really another kind of example of the financial service space, taking, not taking advantage, but seeing an opportunity to brand around, you know, a concept and be like, this is yesterday, and, and the SEC just recently came out and said, hey, you know, if you're going to say, your things are ESG, they didn't give you a guideline of what it had to mean. But it said you better be able to at least even define it. Nobody was even in a place of saying, Hey, this is ESG. Okay, what is your definition of ESG? That wasn't even a standard that was being lived up to even being able to define why you were saying this was ESG. So yeah, this is I think, one of those things where we're very marketing, centric, you know, type of world. And as soon as we can attach to something like that, even something as noble as societal benefit, the motive to monetize it, and commercialize it, you know, very quickly takes over. But that's why I think, in the true ESG, sends little E, little S,little G in this the desire to have impact on your stuff, this is a great place for people to do it, it's very direct, you can see what's going on, it's transparent. It doesn't have to fit into those boxes, you can decide at a very, very specific level, how you want to impact the world.
PETER HANS 32:41
So how do you how do you see this trend becoming coming more to the forefront this year? Do you know because obviously, there's a lot of narrative behind it. But but a lot of that I would argue.
RAYNE STEINBERG 32:52
This is where I see it large institutional investors that have mandates around ESG, starting to look at things that are going on in blockchain and starting to think about them in an outside the box manner, and start to think about outcomes that they wanted to affect. And I'll give you an example of like the type of thing I'm thinking about, when we think about governance and activist investing. We have like ideas about that now. But it really came out of shareholder activism and shareholder rights. When, you know, companies, large investors weren't thinking that as passive owners, that they were impacting or having a say, on corporate boards, and they were kind of seen as, without answer to shareholders, and there was an investigation in how aligning with our goals of, you know, increasing, you know, our investors money, but to, you know, get better corporate outcomes by actually engaging with boards and flexing our, you know, ownership as investors. And that's what really led to shareholder activism, and activist investing and things like that. And it was really driven out of large institutions who, until they started doing this, were kind of seen as very passive. So I think what's going to go on is in this search, for, as we have further problems in our traditional investments and in search for yield and in other places to park money, and put things to work in each in this space, that there's going to be a view that you can actually have very, if a institution has some ESG type of goals, they can pick some very specific things in this space and direct them in a much more serious way around those goals. Then, just in some nebulous, ESG type of way, and that I think that that will be a real benefit or real a real driver for getting involved in this space, outside of blockchain or crypto or love of digital assets in that way, seen as a lever for societal change, or things that align with stuff of their holders, like a defined benefit pension plan of a labor union might have some sort of labor promoting goals that they could get quite granular on and things like that.
PETER HANS 35:28
Interesting. Yeah. I mean, you know, it's very much like anything else. Right. You know, you're talking about institutions driving, how they define it. Right. You know, the, the the lack of a better phrase, like the money, the money talks, I guess, in some respects. Interesting. Interesting. Um, wow. And then the only the other thing I say, which, which, you know, was which I think, is it I would love to So, is you talking about paid to learn landscape? We'll change? You know, obviously, I've, we've talked about paid, paid or earn, right?
RAYNE STEINBERG 36:08
Play to earn
PETER HANS 36:09
Play to earn, I'm all confused. Yeah, what is paid to learn me? I don't even know what that means.
RAYNE STEINBERG 36:14
Sure. So right now, we have an educational model, where we pay quite a lot to go to an institution, we've it's generally here in this country have been debt funded, go to school, we're talking about college, and then you leave with quite a bit of debt, a degree of some sort of value. And there you are, what it turns out, especially in a world where we're much more decentralized, and you don't necessarily have to attend that the commodity is more the education. And we've had this already with things like massive online. You know, MOOC's massively online. I forget what the
PETER HANS 37:00
online, what else sorry?
RAYNE STEINBERG 37:02
Massive online courses, it's asynchronous courses. where things like MIT had put all of their courses online,
PETER HANS 37:11
like Coursera or something.
PETER HANS 37:13
Yeah. Like that. Exactly.
PETER HANS 37:14
Yeah I think So you said so
RAYNE STEINBERG 37:16
It is the acronym is MOOC. But I can't remember.
PETER HANS 37:21
That's like a term for someone from Long Island.
RAYNE STEINBERG 37:24
I believe that, MOOK. Yeah. If we're going to be unkind to our brother and from the Long Island, but yes. But the, the, the actual education, and its nature is, is we're overpaying for that. And in the same way, that this idea of playing a video game, and the person paying to play the video game is not correct that getting people to spend their time in your game, and compensate them there. And getting them more engaged, is the same way that we're talking about education. So you're trying to attract the best talent. But the best talent is often hard to find. And we also don't always have the same access to it. So right now we have in the US, so you could, you know, a weird testing system that people can study for. But it doesn't necessarily identify people that don't have the access to do all of that. So instead of that, you can actually start to set up asynchronous learning systems that teach people things like coding and stuff like that, and give them crypto rewards for solving puzzles, and stuff like that and bring them into your educational system, then you're recreating a network that people actually want to come to. That's kind of self reinforcing, like a game. So not having people pay, where that's it's not necessarily the people that are that can pay are the ones that you want there. So it's kind of flipping that idea on its head. So using digital assets, and decentralized asynchronous learning, to kind of change the education model, which I think you can all agree on the way debt is piling up, I guess that's like everywhere, that isn't, you know, isn't really sustainable. It's another one of our unsustainable debt fueled systems at the moment.
PETER HANS 39:18
And you think this is something that could start to materialize as soon as this year?
RAYNE STEINBERG 39:22
Yeah, we're already seeing it. I was listening to Balaji I always butcher his last name. Srinivasan, who was the Ex-CTO of Coinbase. Who was talking about these ideas. He's already started this something called the I think it's 1337. Where, which is a prime number. too smart for me on this part of what that number has to do with but it was a number that a unknown Indian math genius that was basically found in the wild of India and discovered and was one of the greatest mathematicians of all time. But his idea was to create a crypto funded where you pay people to solve puzzles to identify talent, and then pay them to attend. And then you're also working with them on solving problems and equations, and things like that, that you get value out in programming, while they learn while they learn how to program. So it's happening now, I don't know how widespread it it's going to be. But that's what I also think is interesting in this space, that the barriers to do things are so much lower, that you don't, if you have a great idea, like we saw with an Axie, right, really came out of nowhere. And this idea of incentivizing people to play this game, aligning with, you know, digital land than the accrual of value of NFT's. And catching that type of, you know, zeitgeist, you had tremendous value creation, and, you know, literally supporting 10s of 1000s, hundreds of 1000s of people in the Philippines like actually, for their livelihood. This is something that arose in a year, that incredibly, how could you even predict that I think you could have something similar. I think that there's gonna be more and more interest in programming, and coding and learning and that there's no real great areas to do it in blockchain, there's no set, you know, standard, it's changing, so much like a flexible type of system would probably be better. We're kind of in a decentralized world right now. You know, the college systems a mess with what's going on with the pandemic, it seems like the time when people might be very open to, you know, a disruption of that.
PETER HANS 41:52
Fascinating. Yeah, it's like, I mean, he's definitely some big, big ideas.
RAYNE STEINBERG 41:59
go bigger, go home.
PETER HANS 42:03
I like it. I like it. Interesting.
RAYNE STEINBERG 42:08
Do you have any of your ideas? I know you put pen to paper and a few things.
PETER HANS 42:11
I like flipping, flipping the script a little bit here. I do I do. I do have reactions as well.
RAYNE STEINBERG 42:21
Are they as grandiose and as unattainable as mine?
PETER HANS 42:24
I wouldn't say yours are unattainable. They remind me of, and I have no, I don't remember who, who said it. Frankly, where I heard it. I heard on a podcast, I don't remember which one. But it really struck me it was like, we tend to as humans, like, overestimate what we can accomplish in like, one year, and underestimate what we accomplish in 10 years, you know, so like, is there you know, deemed as impossible like, actually can happen, like ahead of schedule, but it's just like, if you think this is gonna happen next year, probably isn't. You know, for me, it's, it's, yeah, I talk about it all the time. But it's really like, you know, you, you know, we live in this space, you know, 24/7, but I think the the amount of of real capital that is starting to flow into, you know, the asset class, and by the asset class, I don't mean like, oh, people are gonna buy bitcoin, you know, as an inflation hedge, or because, you know, someone on Twitter tells him to, I think it's truly kind of like going, you know, after the technology and the innovation and all the different things you're talking about, the amount of institutional capital that will be flowing into this technology and asset class over the next year or two is just going to be so massive, that, you know, you will, you will just see, you know, certainly a continued rising tide, which we, which we've seen to an extent over the past couple of years, but I think we're going to see it even even more significantly. And then I think we will also continue to see a growing dichotomy between between the winners and the losers, you know, which again, this is no longer you know, a highly correlated, it, you know, inter correlated market, it's no longer like Bitcoin and alt coins. And I think that is only going to proliferate as you know, more money comes in, you know, more interesting projects and ideas get funded, more governments get involved. So, you know, to me, that's just kind of, that's kind of the big thing I'm focused on is just more like very near term kind of macro picture. And, you know, what I, you know, when I tell, you know, friends audience, anyone clients is just like, you know, get get involved because, I mean, they could say something like, generic and really unhelpful, like, this is the future but it's, uh, it's true, you know, it is it is it is very true. And we're still so early so you know, that's, to me, that's, that's really the big thing that I, everything kind of comes DAOn to that.
RAYNE STEINBERG 45:02
How is that message being received?
PETER HANS 45:04
Uh, you know, well, I guess like, no one no one sitting there arguing with me, you know, but but I don't know that that tells me anything. He, you know, he, there's probably a little bit of like a self selection bias and that like, you know, most of the people I talked to, like, at least professionally are kind of those people who are the large institutions who are coming into the space. So I think I think they all know and agree, like, I don't think it's any, it's all just like, empirical evidence.
RAYNE STEINBERG 45:32
PETER HANS 45:33
Talking to like, you know, another gad at my kids school or something about it. They're just kind of like, I don't understand that at all. And these are smart people, you know, like, surgeons, and, you know, people work at NASA. And, you know, people were like, big up in the oil and gas industry and like, stuff like that. They're just, like, don't get it at all. And they want to, the guy showed up a friend the other day, like, you know, Coinbase, like, Hey, here's how you can open up, you know, get DAOnload the app and do that, or, like, here's Metamask. And you can, like, get a wallet and like, and this is, like a very smart guy, you know, like, very successful, and it's just like, you know, this is indicative, I think of the majority of the population, like, we're just still so early. But people tend to gravitate towards price. And they're like, well, I could have bought Bitcoin at 5000. Or like, I could have bought ether or whatever, like, none of that shit matters, you know? Yeah. You know, I could have bought Amazon at a buck 80 at 2001 I didn't, you know, it doesn't matter. I could have bought it 3 million other times, between then and when I actually bought it, and I'm still up, you know, many multiple, so it's just like, you will get anchored to the wrong thing. But that's human nature.
RAYNE STEINBERG 46:49
Aggred. I've been pleasantly surprised with the conversation that I'm sure since you put in that kind of survivorship bias from the people I'm talking to. So take it with a grain of salt. But had there's been a real I think change in the way people are looking. Edit that way more people that I'm talking to talk to me less about just Bitcoin and not to pick on Bitcoin or anything with it's not important, but really are starting to talk about this as potentially transformative for many, many areas and starting to see that which I'm just surprised, honestly, it just seemed to happen very quickly, for those conversations are happening.
PETER HANS 47:31
Yeah, yeah, that's definitely true. Yeah, that's definitely true. Yeah, there's no other way to really put it, you know, like, it's just a very different use case. It's a very different and that's why I like the whole, like, there is no other use case for blockchain. It's just so be it's just so asinine. It's not even worth entertaining.
RAYNE STEINBERG 47:50
Who says that there's no other use for blockchain?
PETER HANS 47:53
Lot of people, you know, like, clowns on Twitter. I mean, read the Bitcoin standard, and pretty sure, like at the end of the book, like that's what they say.
RAYNE STEINBERG 48:01
PETER HANS 48:02
just because it was like, created for that use case doesn't mean, you know, it's the only thing that it can be used for. Right? Yeah. I don't want to digress too much. I harp on that stuff all the time. But uh, but yeah. Well, look, we're running up on on time here. But you know, as always, this was a great conversation. It's always great speaking with you get it. I'm glad we get to set some formal time aside to do it. And, you know, I know we just came on the season finale of Yellowstone. I appreciate you dressing up like Beth Dutton for this conversation. No one else can see rain because this is this is audio only but but he is indeed. Dressed as as, as Beth Dutton. Right now
RAYNE STEINBERG 48:46
Is this actually audio only is a podcast. Yeah. Okay, we're making sense if it was video, dude, first of all, you wish you had to go home? So Beth Dutton, obviously,
PETER HANS 48:59
It is not remotely like he's so far over the top now. Like this past season, especially where I'm just like, Okay, I get it. Like, she's just she's too much, you know,
RAYNE STEINBERG 49:09
too much for you. That's okay.
PETER HANS 49:11
And she's just like, killing people. And like, you know, ordering murders. It's like zero repercussions. You know, whatsoever. She held up a priest at gunpoint and kidnapped him and it was like, not the guys. You know, I got kidnapped like, repercussions whatsoever.
RAYNE STEINBERG 49:26
It's Bethie and Batman. Well, then, I'm glad you have said I dressed like a sociopathic consequent consequence free lunatic which you know, is my personal brand.
PETER HANS 49:43
I just thought was funny. He's not actually dressed like that. That. Yeah, that's true. Man Well, it was as always, it's great speaking with you and yeah, first episode of season two. Looking forward to a big one this year.
RAYNE STEINBERG 49:57
Congratulations on season two Peter I'm glad you got picked up in the new year.
PETER HANS 50:03
Thank you. I appreciate it. I appreciate it. Alright take care everybody.
REAL VISION 50:06
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