Ether: First of A Kind Asset

Published on
December 28th, 2020
Duration
33 minutes


Ether: First of A Kind Asset

The Interview - Crypto ·
Featuring David Hoffman and Alex Saunders

Published on: December 28th, 2020 • Duration: 33 minutes

David Hoffman, chief of operations at RealT, joins Alex Saunders, founder & CEO of Nuggets News, to discuss Eth’s unique properties for value accrual, proof of stake, and the proposal to burn transaction fees on Ethereum. Hoffman explains Ethereum’s changing narratives and the impacts this has on people's perception of the asset. He describes the impact of switching to proof of stake and the benefits this has over proof of work as well as how the more valuable a crypto asset is, the more secure the network can be. He states that it is important that value accrual is baked into the economic model of crypto systems. Filmed on July 23, 2020. Key Learnings: Eth was designed to accrue value. There is a proposal to burn transaction fees, and this would remove Eth from the circulating supply and could drive the value up. The transition to proof of stake will turn Eth into a yield bearing asset.

Comments

Transcript

  • JH
    Joseph H.
    10 January 2021 @ 04:03
    What happens if an asset is tokenized into many tokens and someone tries to claim on a few of those tokens? What happens to the underlying asset? For example If I tokenize my car into 1000 tokens then use those 1000 tokens as collateral across 10 trades (100 token/trade) and one of those trades goes against me. Then someone comes to claim 10% of my car? How does that work? Do they take the rare wheels and axle and leave the other 90% of the car?
  • JG
    Jory G.
    29 December 2020 @ 19:18
    Interesting discussion. Recently I had to go 9 days with out electricity and it makes me wonder what happens to the crypto world if the lights go out and stay out for a while?
    • TS
      Thomas S.
      29 December 2020 @ 21:48
      That's sort of the point of decentralization. There are tens of thousands of computers running different blockchain nodes (think Bitcoin, Ethereum or any other decentralized blockchain). If your power goes out, it has no effect on Ethereum's blockchain or the Ether you may own. The other 10,000+ nodes will continue to operate. Ether is switching to something called Proof of Stake over the next few years, but the same principles will apply. (There is a nuance for Ethereum if you lose power and are staking your Ether in this new Proof of Stake system.) Now, if the whole world's power goes out, then we may have some issues. But, my hunch is that there will be more pressing problems than lack of access to blockchains if that were to occur.
    • JH
      Joseph H.
      10 January 2021 @ 03:44
      Idk where you live but if you expect that could be a common issue then there is off grid solar with battery backup options and satellite internet. We have the technology.
  • DD
    David D.
    5 January 2021 @ 10:04
    I really like Alex's work.
  • AL
    Aaron L.
    28 December 2020 @ 23:45
    Alex could you or Ash please interview someone regarding China's dominance of BTC mining, the risk of a China/CCP 51% attack and how the network can adapt. I see this as the no.1 risk to BTC and it seems no one is doing a deep dive on this issue. Cheers
    • NC
      NATHAN C.
      29 December 2020 @ 02:10
      I absolutely agree. This is my #1 concern after US regulation.
    • AF
      Andre F.
      29 December 2020 @ 06:45
      What is a 51% attack? What is it that gets attacked and how is the attack done?
    • DH
      David H.
      29 December 2020 @ 08:11
      Right, someone needs to really dig in to how we can measure the level of decentralization in these networks. Increasingly I find the real differentiating value is the maturity, size, and genuine decentralization in the network. So, what’s the revealing quant metric?
    • TP
      Timothy P.
      29 December 2020 @ 17:41
      The people breathlessly "concerned" about 51% attacks and China based miners don't understand what really drives mining -- electricity prices. When power surpluses diminish, even China miners shut their rigs down. They had a stunning wet season, all hydro plants were maxed out. This has since diminished, and they've reduced capacity. Meanwhile, the nordic countries have the lowest electricity prices, which encourages mining to continue apace in those countries. There are also new mining centers being built in the USA if they're not online already. But yet again, its the no-coiner naysayers that love bringing it up -- in addition to the debunked "Proof of Work wastes electricity" claim. Another day, another bit of FUD from the people who don't understand BTC.
    • MJ
      Marius J.
      30 December 2020 @ 06:28
      Yes please!
    • DD
      David D.
      5 January 2021 @ 10:00
      good proposal
  • MM
    Michael M.
    4 January 2021 @ 02:40
    My overall issue is that none of the Real Vision hosts punch holes in any assertions by their guests. They should be helping us by asking hard questions, not just going through “the deck” of the guest.
  • TP
    Timothy P.
    28 December 2020 @ 18:33
    I had a good laugh with this one. Pros: Didn't mention "Bitcoin Maximalist" once. Bravo, RV, you're making some headway at last. Cons: "Tribalism", "Marketcap", and the Neu-Speak 2020 buzzword "privilege" But lets brush aside the excited lisping and get to brass tacks, shall we? For instance, this word salad from Mr Hoffman: "...you need your native currency to be valuable, because that's where you get/you generate the protective walls around every single crypto platform, you get it from the value of the native asset. The higher the marketcap, the better!" Oh I see, so my "protective walls" are so much better if I made TimCoin and pre-mined 1 trillion units? My god, I had no idea it was that easy! Please, continue! "Bitcoin is very synthetic asset" As opposed to what, "natural" Bitcoin? What is this garbage? "(PoS) Security costs are very little..." Oh it most certainly does not, those costs are just externalized to other things, like bandwidth, storage and sitting on a proper peering point in a datacenter somewhere -- because you can't possibly run a full node at home effectively. If this guy really believes that you get a free lunch for not paying for security -- he's in for a rude awakening. PoS has been gamed and its a matter of time before ETH's pivot to it is, too. "...we pay validators not with revenue but we pay them with issuance since their electricity costs are low, since we have proof-of-stake" The lack of self-awareness in this sentence had me laughing pretty hard. Also the EIP suggestion to "burn fees" to somehow make ETH "more valuable" is a bit like the Fed promising not to print -- they can, but super-pinky-swear they won't. It won't matter how much you burn when the token is designed to allow a centralized body of devs to issue it however they want. This is just scratching the surface. I feel sorry for anyone that gets taken in by the rapid-fire VC deck presentation skills of Mr Hoffman, as its obvious he has some fundamental logical flaws brewing under his starry-sky ETH logo shirt optimism.
    • JD
      John D.
      29 December 2020 @ 14:46
      Yep, not everybody gets it. By the number of down votes it seems like real vision is shitcoin 💩 shilling website. I'm wondering if they would talk about bitconnect if it were still around. 🤔😂
    • TP
      Timothy P.
      29 December 2020 @ 17:45
      @Michal B - Its tough to be a truth speaker here when you have Raoul diving into ETH at 20% of his portfolio, and lauding XRP (prior to the SEC lawsuit). We keep warning them, they keep making the same n00b crypto mistakes. Its fine, I'm sure the sting from XRP plunging to record lows and Coinbase (among others) about to delist it is rebuke enough. I tried -- but they keep on piling in until they get burned.
    • PC
      Paul C.
      1 January 2021 @ 12:58
      Timothy P. You seem to have a lot of knowledge to share, perhaps you could put a video up on the Exchange covering off your top Crypto bug-bears. It would be a useful piece to address some Crypto misconceptions.. Passion and knowledge meets opportunity...just a thought fella.
  • GC
    Gavin C.
    31 December 2020 @ 11:58
    I got quite excited by the concept offered by Alex of interest rate arbitrage on real vs tokenisation e.g. the house example used. That lasted about 10 seconds until I wondered how your mortgage company is going to act when they find out you sold the house without its permission. If anything its the mortgage company that would be tokenising your obligation not the other way round. It was a nice idea though and Im sure there are other examples where it would work. On another note Im not sure I was convinced of the answer to the question of: if you get hacked do the hackers own your home now? Vaguely comical idea and maybe the theme for a short movie but still a head-scratcher. Loving the series as Im totally new to the world of ETH.
  • TS
    Thomas S.
    29 December 2020 @ 22:23
    I'll probably get pushback for this but, for me, Ethereum is starting to fulfill much of the initial promise ascribed to Bitcoin. Way back when it first started, many in the Bitcoin community believed it would become an alternative currency. Even before Bitcoin there was much talk about smart contracts. Most of that promise has now transferred to Ethereum. Very few developers are still left on Bitcoin. Virtually all have migrated (or started fresh) on Ethereum. It is where most of the "action" is happening, aside from price appreciation. Even some Bitcoiners are moving their Bitcoin to Ethereum in the form of "wrapped" Bitcoin (wBTC) so they can participate in DeFi. https://news.bitcoin.com/side-chaining-3-billion-tokenized-bitcoins-ethereum/ Bitcoin still has the "digital gold" narrative and that probably will never be dislodged, certainly not by Ethereum. That's incredibly important. But, most of the rest of the excitement has migrated to Ethereum, and development efforts there will be exponential in the next few years.
    • TP
      Timothy P.
      30 December 2020 @ 16:47
      Nice series of lies there. I don't care if you prefer ETH, but to say "virtually all have migrated to" Ethereum is just an outright fabrication. This is why Bitcoiners have disdain for ETH promoters. You guys just keep spewing this garbage. You know what? Just establish an actual use-case for your coin, thanks. That is, if it won't seize up like last time -- what was it? Oh yeah, "CryptoKitties". That was a laugh, a simple collectibles game totally killed your network. "Wrapped" bitcoin doesn't bother me, as I know the capacity of the ETH network is nowhere near where it claims to be. And most likely that BTC will be lost, (Because lets face it, when hasn't some contract failed on ETH) which only increases the worth of the remaining Bitcoin.
    • TS
      Thomas S.
      31 December 2020 @ 00:26
      Not interested in flame wars. Here's some data: Ethereum Far Outpaces Bitcoin in Developer Activity in 2020: Electric Capital Report https://www.coindesk.com/ethereum-outpaces-bitcoin-developer-activity-2020-electric-capital-report
  • GA
    Gerald A.
    30 December 2020 @ 04:02
    I thoroughly enjoyed this interview, in the same way I am amused by a tag team of car salesmen attempting to sell me a used car. One learns from what they say, and even more from what they do not say. And those jazz hands.
  • SB
    Scott B.
    29 December 2020 @ 22:34
    Looking forward to more conversations like these, they are helpful. When listened to closely all the hand waving becomes evident leading to a clear conclusion and it is this: Ethereum has the smallest probability of success in the long term.
    • GA
      Gerald A.
      30 December 2020 @ 03:49
      There was literal hand-waving! -).
  • pp
    pakorn p.
    29 December 2020 @ 23:28
    I find it surpring the bitcoin maialists are so sour about the Ethereum taking over Bitcoin market cap. The two currencies can go haad in hand and the reason bitcoin retraced in value against Ether is because Bitcoin cannot scale with 5 TPS and transaction fee on Bitcoin is way too high. You guys just need to accept the fact that Bitcoin is lack of improvement and you guys are still linger around same narrative over and over like arrested development people. All technology has replacement and we could share spaces or we can even move on to better tech
  • BS
    Bart S.
    29 December 2020 @ 11:26
    Bitcoin is the boring safe bet everyone and their mom is in. It has a great narrative, it is relatively easy to understand but that trade is crowded - especially now. The hate for Ethereum from Bitcoin bugs is music to my contrarian ears. The innovation is done on the Ethereum network. It is akin to criticizing FANG stocks as a gold bug. It makes no sense.
    • TP
      Timothy P.
      29 December 2020 @ 18:44
      You imply that the Ethereum trade isn't "crowded" by your statements. I've yet to see any real pushback on this forum about ETH, everyone is too busy ignoring the shifting sands of the PoS pivot to really care. That kind of ignorance is what screams to me "n00b trade". No one has criticisms, everyone LOVES it. Bitcoin has been through the crucible, declared "dead" over 350+ times, been attacked by sovereign states through bans, and yet it persists. What you call "crowded" in BTC I call "proven". You know what isn't proven? ETH. It has yet to have a consistent application that it can run without falling over like an obese man running on a treadmill. PoS won't save them. The very fact that the ETH devs are willing to throw out all their PoW code and transition to an unproven method of network security says volumes -- to me it reeks of desperation. ETH's users want performance, because after all, ETH and its devs have been guilty of promoting "flippening" memes -- assuming they'd overtake Bitcoin -- which also implies they'll have orders of magnitude tx's on their network. Yet, this hasn't happened. Even with the DeFi craze -- and the majority reason ETH spiked is because of the YAM token failure -- that has been cooling off and ETH is reverting to its usual doldrums. You may not "get it", but the market is a great arbiter of what works and what doesn't. ETH's order-of-magnitude lower token price is evidence of this.
    • AP
      Antonio P.
      29 December 2020 @ 19:31
      I agree. Bitcoin maximalism will provide a great opportunity of investing in ether... And, no, Timothy, on a relative basis, ether is not as crowded as bitcoin... I have both...
    • AP
      Antonio P.
      29 December 2020 @ 19:36
      Just seeing the extreme passion with which Timothy P answers, you realize the bitcoin trade is way more overcrowded... This does not mean I do not like bitcoin, on the contrary, I like it, but it has soared too fast. By the way, just reading twitter and how many times Pompliano have been bragging about bitcoin in twitter, you realize it is becoming a bit off...
    • TP
      Timothy P.
      29 December 2020 @ 21:10
      @Antonio - If my "passion" for telling the truth gets to you, its because your own position is precarious. But go ahead, rationalize that is just the Bitcoiners, eh? Whatever allows you to misallocate the maximum amount of capital. I find that kind of failure usually makes sufficient impact to prevent future ones. So by all means, double down.
  • DH
    David H.
    29 December 2020 @ 08:07
    Bravo and thanks David. U guys moving us forward every day. Great supplement to Bankless. So glad u didn’t go to business or law school. There is hope for the world. Boomer.
  • cm
    carlos m.
    29 December 2020 @ 04:36
    Sounds like he's welcoming oracle attacks already. Someone introduce this guy to Sergey Nazarov. If it ain't powered by chainlink, stay away.
  • DW
    Dean W.
    29 December 2020 @ 00:46
    Really enjoyed the interview. I'm not a particular Ethereum bull although I own some, since I believe that 3rd generation cryptocurrencies like DOT are more likely to take market share from it but the tokenized real estate part is interesting. I checked out RealT's website and while I'm not inclined to invest in Detroit property, I like the idea and could see investing in, say, Florida beachfront real estate if that ever became a thing.
  • OL
    Olandis L.
    28 December 2020 @ 22:32
    At 21:00 you made perfect since! I was in the Silver Bug Tribe for the last 10 years! Passed on BTC in 2015 for that reason. Stuff happens, and the goal should be to find common ground!
  • pt
    popejumpingjohnpaul t.
    28 December 2020 @ 22:22
    one dude is like an incel steve mnuchin in his gaming chair with his m and m teddy, lol, incel vibes
  • JC
    Jason C.
    28 December 2020 @ 20:29
    I want an interview with someone who can flesh out why Ethereum is a shitcoin who would otherwise be an ETH bull. In the top 5-10 coins I tend to only look at the asymmetric upside, so I have a hard time giving the “ETH scam” argument any credibility. Seems pretty obvious it’ll do well in the next bull run, but I’d like to know if it has long-term staying power.
  • LK
    L K.
    28 December 2020 @ 11:29
    https://twitter.com/LynAldenContact/status/1343248735208411146
    • TP
      Timothy P.
      28 December 2020 @ 16:15
      Excellent points Ms Alden makes. Also, you have people replying in that thread saying ridiculous things like -- "The (BTC) 21 million cap is untenable" and suggesting that ETH's inflationary monetary policy is the correct way to go. What an utter load of garbage. Here's a challenge, anyone figure out how many ETH there are? I can tell you the answer for BTC in a few seconds, but apparently in ETH-land its all hand-waving and approximate amounts. Great little ambiguous token you have there. I'm sure your emulation of the legacy financial system won't bite you in the ass.
    • CM
      Carl M.
      28 December 2020 @ 18:27
      ETH's growth metrics are smoking BTC if you are being intellectually honest. It already settles more value, has way more developers, has a way higher marketcap then BTC did this far into its lifespan.
    • CM
      Carl M.
      28 December 2020 @ 18:30
      BTC only has 2x more active addresses despite being 5x the marketcap....the fees being generated on ETH are higher....ETHs raw # of TXs are way all right here. higher....https://coinmetrics.io/charts/#assets=btc,eth_left=TxCnt_zoom=1279411200000,1609027200000
    • CM
      Carl M.
      28 December 2020 @ 18:32
      o, and the foolishness of just looking at charts lol. Using ETH, I have received a free airdrops totaling ~10k, and that wasn't dependent on how much I spent...just using the uniswap, 1inch, sushi, and other applications entitled me to free give away. ETH life is the best, come on in.
    • TP
      Timothy P.
      28 December 2020 @ 18:40
      Carl M - yes, we know, you have ETH bags and you need to talk your book. Great, well here's the problem. There was the ICO spike and there was the DeFi spike. After both of these manias faded, ETH just goes all the way back to what it is - a badly designed turing-complete nightmare. The metrics you are quoting are at the height of the DeFi craze, which has cooled considerably -- most likely due to all the hundreds of millions that were hacked/extorted from bad contract code -- so I wouldn't be tooting my horn just yet. ETH has yet to find consistency in its application, and by extension, the metrics you are so breathlessly promoting.
  • RM
    Rosa M.
    28 December 2020 @ 17:14
    Make sure the figures you communicate are accurate. It impacts the credibility of the show. Thanks
    • CM
      Carl M.
      28 December 2020 @ 18:32
      maybe you should give an example?