I would rather see KyberNetwork and Uniswap (on-chain liquidity provider) take away these opportunities. Uniswap allows users to contribute to liquidity pools... so that anyone can participate and profits aren't funneled to a select few. see pools.fyi to get an idea of the assets being supported. Not only that, these liquidity networks don't shut down in times of high volatility... during price crashes... just when liquidity is needed the most. Lets be clear that HFT "socialize" the losses and privatize the gains to a handful of people, they are a tax on the growth of blockchain. The problem is that since HFTs are here to exclusively make a living they will be another significant source of selling pressure when they cash out. I am hoping that their appearance on the blockchain landscape in search of greener pastures won't stop blockchain from reaching critical mass...

Great interview. Loved it - as a trader this info is gold, especially for crypto where it is a bit dislocated compared to markets using an exchange. There would be more interesting stories from Haim I'm sure. Great guests, great interview Ash.

as a silicon valley investor, its refreshing to hear ex-wall 1980s wall st. vets stab at this topic. Its nice because they talk about the financial economics, but lacks the relevant substance around key current events. I don't believe the halving coming up on 5/12/2020 was even mentioned once; this is certainly the most fundamental event re: "the deep structure of crypto markets" a few notes that resonate: - growing crypto horizontally is necessary to get meaningful vertical price movement (170B market cap = 1/10th the size of Apple ... we need more players (i.e. institutional capital) -Price dislocation by venue is a real thing, and part of what makes trading crypro like the Wild West a follow up: Haim never answered: "how large is the cyrpto derivatives market in sum?" -- can we get that answer one day?

just an idea, if you asked participants to record the audio on their mobile phone, then send it to you after. It takes seconds to sync it up in premiere and you would get 5x better audio quality. I don't mind if people's faces are pixel-ed but it's hard to make out Haim at points

Ash, maybe a question for next time. I read that physical exchanges are becoming much smaller than the derivatives exchanges (only 10% of total volumes in aggregate). What effect does this have on pricing? What are the risks involved with this trend?

can you provide link to the quantlab article they reference?

OFF TOPIC: RV, it is hard to follow my previous comments and the replies of others. There has to be some notification like on FB or on YouTube! It would be great ! Thank you !

Well real vision has just become a haven for gold bugs and bitcoin “sigh”

Oh my god! How can you be involved in this to this degree and think that no more Bitcoin is going to be created in 2041?! It's 2140! A pretty significant difference.

Hi guys, this interview was great for the folks who have no exposure to cryptocurrencies. As far as deep structure it barely covered part of the fundementals and about a third was about equities market. You were also asking the wrong questions.

A few points I'd like to expound upon: 1.) "Bitcoin Maximalist" was coined by a Bitcoin competitor, Vitalik Buterin, after his request to increase the potential attack surface of Bitcoin scripts was roundly rejected by consensus. After that rejection, he launched his own token which has had the "achievements" of: a) Demonstrating the fact that implementing full "turing complete" languages has significant security risks -- The DAO "hack" wasn't one -- it was using the contract code exactly as specified which resulted in loss of $70 Million USD at the time. b) Showing how centralized decision making is full of moral hazard -- 13 Ethereum developers including Vitalik decided to "roll back" the chain, essentially exercising control over the entire network without consensus. Less than a few percent of users were aware they could weigh in on the options, and frankly the devs didn't really try to inform them, either. c) Showing that "smart" contracts on Ethereum have limited utility -- The most successful "Dapps" are trivial, most in the gaming/gamblling space. One popular collectible game "CryptoKitties" brought the Ethereum network to a standstill. Other Dapps are languishing because of ETH's lack of scalability. d) Initial Coin Offerings where then enabled by Ethereum, 99% of which were outright scams, with only a few achieving status of using the raised funds for their actual purposes. Most ICO's haven't done anything worth noting, however. Just another capital misallocation debacle. 2.) High Frequency Trading -- This is essentially legal front-running. The only reason that HFT firms are going into the crypto space is because of saturation in the Equities and Forex markets. Having picked the bone clean there, they're moving on like a merry band of locusts to exploit retail flows on smaller exchanges. Generally, I wouldn't have a problem with HFT if they had a level playing field -- much like IEX's latency "speed bump" that makes sure no single firm has an edge on the other. But in the crypto space, this isn't going to happen. I also worry about the lack of liquidity that HFT represents. When the May 6th Flash Crash happened in 2010, deep analysis from Nanex showed that most HFT firms, (if not all) pulled their bots when the market needed liquidity the most. That's the problem with HFT, its a mirage of liquidity that evaporates at the first sign of trouble, leaving the order book stressed and bid/asks blown out wider than they would've been. If HFT in crypto only focused on inter-market arbitrage, I probably wouldn't have a problem with that, but it won't stop there. 3.) "MarketCap" -- Please do some research. I implore anyone on RV to look into tools developed by Coinmetrics, and IntoTheBlock to understand why basic marketcap is a flawed metric for comparison in the crypto space. It takes nothing to create a token, pre-mine issuance to a few billions, and then list on a backwater exchange to claim a large marketcap. 3.) Finally, Proof-of-Stake and Delegated-Proof-of-Stake for passive income may sound like a cheap way to achieve some alpha, but there are inherent risks in staking and depending on networks that have security flaws by using such methods of network security. I'd write more, but then you'd have to pay me. Hope it helps someone.

Loved this interview. These guys are smart sharks playing in shallow waters with whales. A few points of agreement: 1. The digital asset space is highly fragmented lending itself to numerous chronological / market asymmetries that can be arbitraged, well spoken gentlemen. 2. The liquidity in digital asset markets is very low, relatively speaking, lending itself to mass manipulation and price coupling, but you gentlemen know this. Even though retail makes up 70% of the market, most is dormant or not actively traded, meaning the institutional gets the edge on all trades, especially in derivatives. Easy marks. 3. The touched on fungibility of products, what this is really leading up to are liquidity pairings in digital assets apart from a fiat settlement layer. INTEROPERABILITY is the future of digital assets without a doubt. Read more here: https://twitter.com/Santiag78758327/status/1244373373133688839?s=20 4. Sector diversification is the real gem. Everyone who knows little about digital assets talks about Bitcoin but miss the forest for the trees. DLT / blockchain will unleash the value of the world via tokenization, interoperability, and fungibility of value without a reserve currency. 5. The recent market selloffs was an excellent stress test of the various global digital asset exchanges to route order flows and should be promoted widely. Well show cased. 6. The STO market has the potential to be massive precisely because it offers the promise of disintermediating alot of middle men in the capital markets. On the clearing and settlement layer I'm confident that the DTCC will try and squash the space with regulations as soon it becomes or threat or try to "buy" out the biggest players, like Securitize / Templum. By then the international STO market will be uncontrollable and it will be too late. This is the long game, when capital becomes free! Some areas of disagreement: 1. Layer 2 solutions of Bitcoin are counter-cyclical to it's dominant brand narrative. How can it simultaneously be a an ossified Store of Value hedge against fiat (with security / scalibility tradeoffs) while hoping to grow up to be the dominant world settlement layer? Who would spend Bitcoin on relatively fixed value commodities or products in lieu of HODL for the promised land logarithmic growth? No one rational. Until we have full market maturity, with ample liquidity and settled price volatility, one of these concepts has to be wrong. Waiting until one of them is the right strategy isn't a strategy. It's a shame that the interview quickly steered away from the vulnerability that is mining incentives, which does a disservice to investors looking for a long term investment in digital assets. PoW is not the only way to solve the double-spend problem, and it certainly isn't the most energy efficient. It also doesn't solve the scalibility trilemma (security, decentralization, scalibility). 2. Bitcoin is not the only large volume / liquid digital asset. Some are making inroads in the massive multi-trillion dollar global remittance market on Layer 1 (read, no Lighting needed). In particular, Mexican / Philippine markets are exploding in daily trading volumes at exchanges like Coins.ph, Bitso, etc. It may only be in the millions at this point, but the stage is set to grow exponentially now that the PoC is out of the bag and will be set to become billions if not trillions. The global FX markets trades in the trillions daily, who will displace the $? Not bitcoin, nor any other digital asset. It will be an interoperable global standard that is currency agnostic, the level playing field you referred to as a philosophical sensibility in open and free markets. Gentlemen, my advice is that instead of chomping at the bits in differentials you need to start considering your role as market makers for the future. Investigate the role of connectors on the Interledger Protocol, a system of connecting micro-payments and payment systems (Paypal, RTGS, MasterCard, Bitcoin, etc.) It's a network of networks not a single dominant liquid layer. Look at projects like ILP, Hyperledger, Kava, Overledger, trade finance networks like R3, etc.. Value needs large routing hubs for interoperable global financial markets to function at low slippage, tight spreads, and competitive FX fees. We will need professionals to tie together CBDCs, STOs, crypto, ERCs, etc. and be part of a pathfinding, value routing table. I can tell you are forward looking individuals, the next trillion dollar companies will be built on an interopable layer and those that route the flow will become the new Oracle for the Internet of Value.

This was awesome. Will read more about crypto.

I would love to see more experienced market makers and HFT firms from the crypto space speak about the evolution of the markets. Firms like Amber, GSR, etc come to mind when thinking about the serious market makers on exchange. OTC desks that see flows serious flows like Cumberland, Kraken, and others would be very interesting to hear from as well. NOTE: RV guys keep mentioning "layer 2" for bitcoin as if it's going to happen and make the whole bitcoin scene explode. It felt that way in 2018. It's pretty clear to most people in the space that it's not happening - not this year, not next year, lucky if ever. There is less than $6.7M in funds locked on bitcoin's touted layer 2 lightning solution. Relative to Bitcoin's marketcap, I think that speaks for itself.

Bitcoin (BTC) is really the only "crypto" worth the time. Everything else is casino gambling and/or scams to suck investor and retail funds, grossly overpromising and delivering nothing (Ethereum, etc). 11.5 years of BTC. Still hanging tight even when everything is burning, even without circuit breakers and bailouts - if that's not bullish I don't know what would be.

Loved it Ash, thanks

Bitcoin is not a brand, company, product, etc.. the bitcoin network is the base protocol of a new economic system.

Fun (double) interview. Incidentally, I just found an old copy of automated trader mag. HFT is where some very real questions about price formation are asked, and they stay very much below most of our radars.

Great discussion Ash, thanks. Mommy taught should we choose to always make our powers for good such a beautiful world would come. You go, Chris & Haim!

We need more whistle blowers.

Last halving is at 2140 (not 2041). Not really a pressing issue imo.

Crypto technology is amazing and undoubtedly whatever happens those technologies will be a big part of how markets function in the future. Clearly we are in a moment too, where sovereign bonds / currency loose their value; creating a big opportunity for alternatives. Crypto simply has a massive PR problem because I primarily associate them with people who are gambling rather than investing and aggressive phishing emails. At the moment I see crypto as the Napster was: compared to Facebook now but clearly things have progressed a long way already. Really, I just want to see the proportion that is a bubble squeezed out before investing. I am waiting for one or two people I know to tell me; 'Bitcoin is over and I have lost too much money', then I am interested!