Moving into Prime Time

Episode Transcript

• Moving Into Prime Time

  Narrator: Welcome to Blockchain Explained, the podcast about opportunities, challenges, and trends in blockchain technology. Whether you're a beginner or an expert, a developer, or just crypto-curious, this podcast is for you. It features industry leaders and government officials discussing the world of distributed ledgers, cryptocurrencies, and the metaverse. And now, here are your hosts, Alan Rechtschaffen and Kellee Wicker.   

  Kellee Wicker: Welcome back to Blockchain Explained. I'm really excited for today's episode. As always I'm joined by my co-host, Alan Rechtschaffen, Wilson Center trustee and chair of the Digital Assets Forum. I'm Kellee Wicker and I direct the Science and Technology Innovation Program at the Wilson Center. Today we're joined by Jared Ronis, who is a digital assets analyst and researcher and a longtime crypto investor and enthusiast himself. And we're going to talk a little bit about just trends we're seeing this year and what we're excited about. So Alan, I'll hand it over to you.  

  Alan Rechtschaffen: Thank you, Kelly. It's been our tradition that early on in the year that we have somebody who's really in touch with the pulse of what's going on in the industry across blockchain, cryptocurrency, all the exciting stuff. Last year we had Laura Shin. This year we're excited to have Jared with us, and I was hoping that we could open it up. You know, our first episode of the year, we talked with somebody from AWS, and we were talking about tokenization, and he really saw tokenization and artificial intelligence as the big things, as the themes of 2024. And just to start our conversation, you know, maybe you tell a little bit about your background, and if you could tell us what you think the big themes of 2024, if you were going to label 2024, what would it look like?   

  Jared Ronis: Yeah, thanks for having me. So yeah, I've been in, you know, in the blockchain space since, which feels like an eternity in blockchain time, but you know, we're talking, around 2020 towards the end of DeFi summer, something, I've always been broadly interested in two things, people and technology, and we're kind of at that confluence and crypto and blockchain at large was always something on my radar early, you know, I had friends who are mining Bitcoin early. And all of that jazz, but I was like guys, let me know when it does something like, you know. It was like we were talking, and you know, but the tech behind it, impressive, don't get me wrong. And really exciting, but, you know, we're in this like conceptual vaporware phase for so long. And coming to 2020, I was, I come, I spent, about five years in a large ad agencies working at, we worked at, Fortune 500 companies across the ramp, the gamut from, you know, direct to consumer B2B, all that a lot of like, high tech, digital advertising campaigns, so you really get to see a lot of the inner workings and I was, researching, and something popped on my radar, brave web browser that, had a privacy focused, advertising model, which, you know, was pretty much, really the opposite of how, most digital advertising works. And I saw that they had a token element to it. And I was like, ah, interesting. And as I started doing research into that and in the periphery, you know, this is when D5 was really starting to, pop off, that I was like, oh, I think, or are we exiting the vaporware stage now? And it, it seems like we were and went deep down the rabbit hole. Anytime I find something interesting, I just. Research it until I can be subject matter expert on it. And I was really excited about it. And as I was talking to my friends in tech and, you know, journalists, I have some friends on the Hill, uh, I was like, guys, crypto is happening. Do you look at all of these things? And there was either people who weren't aware, didn't care, but overwhelmingly a very negative connotation to it. And I was like, oh gosh, this is exciting. But then as I got deeper into the crypto world, I was like, oh.  Okay, there's the casino elements and all of that, but we're at a stage now, I think this year, if I had to, if I had to quantify where we are in 2024 is that we've, we're exiting adolescence and we're kind of ready for prime time. A lot of tokenization is definitely something I think that is really exciting, to centralize physical infrastructure as well. AI is huge. There's a, I think we can spend a lot of time on that. But we're at the point now that a lot of these were conceptual ideas. It's really analogous, I think, to, you know, the dot com era where there was a lot of froth, you know, early on, you know, I think at the, at the peak, what we're at, like 6 trillion, the NASDAQ at the time, it was like 6 trillion in March of 2000 before everything, um crashed and fast forward 2002, 78 percent of that market cap was gone, and I think that's kind of what we've gone through with crypto, but what, uh, I think the analogs that we can draw here is that that's when Amazon, you know, Google, all of those, like those kind of key infrastructure things and really that, that capitalization is what brought broadband, you know, in 2000, it doesn't feel like that long ago and I'll date myself here, but, you know, we're dialing up on the internet, letting the phone lines screech at us. And we had 56K and it was the most exciting thing. And people said, what could we do with broadband? Who needs that bandwidth? And then you couldn’t have had YouTube, or any of the things we have now, so that all to say, I think that's, we're at the point now that we're scaling. And I think AI, if that's okay with you, well, we can spend some time there, if you guys like, I think there's a lot of crossover we have.  

  Kellee Wicker: So, actually, our last episode, our 1st episode focused on kind of this intersection of and blockchain, like how. AI is empowering some developments in blockchain, but also vice versa. So, I'd love to hear your take on what are the things in blockchain that are going to be key to solving some of these big questions in AI that we're facing right now.  

  Jared Ronis: Yeah, and there's a couple, there's a couple pillars here. I think there's the verification pillar. Where we talk about deep fakes, there's verification of data sets, you know, how do we know these training models, you know, have good data? Are they using, are they biased, you know, but also how do we have that kind of like openness and collaboration, but still respect IP rights and all of that. So I think to tackle the first pillar here, verification is going to be huge. I mean, deep fakes. I think we're all aware at this point of deep fakes and the problems and challenges that they – provide isn’t the word --- result in and it's only going to get worse, right? That cat's out of the bag. There's no amount of legislation. That's going to get rid of that. But where I think blockchains come into play here is that, yeah, being able to cryptographically sign a piece of media is going to be huge, because we are already approaching the point where it's hard to tell, is that, you know, is that a real video of, you know, of President Trump or President Obama saying whatever, you know, or Biden, you know, insert any person of consequence in there. It's becoming more and more difficult, you know, where we are now to say like, oh, that's really Biden or that's not Biden. And it's only going to get worse. Being able to have, the beauty of the block chain is that you have these public ledgers and you're able to sign and see that not only the provenance, but like the kind of like chain of custody of where it goes. So having systems to where pieces of media have a cryptographic signature. So, you know that it's coming from a trusted source, you know, say this is like a direct White House press briefing and it's, you know, only signed by, you know, the president of the office or say that's from Congress and take that, you know, take that down to corporation levels as well. You know, you can have market moving news that could be fake, but, you know, if I know this comes from, you know, actually from Jensen at NVIDIA. You know, and I can see that's cryptographically signed. Then that becomes less of a, you don't have to worry about being able to tell because there's that kind of underlying framework that, that allows for that. So that's that I think is one of the no brainer kind of pieces there. And that's something that we were going to desperately need. Because, that could go that could go awry. We all know that bad news travels fast. So I think any kind of questions there before we move on to some of the other pieces? 

   Alan Rechtstaffen: Yeah, I mean, I think you're talking about all the, the, the things that people have sort of been dreaming of, with the, the utility of the blockchain, you know, being able to trust things again. That's what it was all about. Originally, when the, when Bitcoin was invented, you know, the first white paper was all about creating a trust system that didn't require a third party. I'm curious how and maybe I, maybe I should ask you the question as opposed to making a statement. My understanding has always been that the reason this hasn't happened is not because the technology wasn't there, but it's the technology to do exactly what you're describing was there five years ago. But the reason that it hasn't been implemented is it's a societal, cultural, educational thing where, um, People are just not ready for the transition to a blockchain oriented identification system, economy, which seems like a natural for identification for passports, you know, to prevent identity theft. And I'm curious, what will it take? And first of all, there's a premise of my question, which is what I just said, that it's a societal acceptance of blockchain technology. But, so I'd like your comment on that, but I'd also like to understand, if that is correct, what will transition mainstream society, mainstream corporations, government to a place where they will use blockchain in the way you just described.  

  Jared Ronis: I love it. Thanks for asking the easy questions, Alan. I appreciate that. So I think there's, if there are answers to that, but there's not, there's not one, I think, single factor here. I think from a technical standpoint, you are, I think you're correct. I think I would even say that the actual, concepts that underpin what we're talking about, just say digital identity even predate, you know, five years ago, uh, day, um, which is something I was researching recently. Zero knowledge proofs is a concept and,  and that you'll see often in crypto, which essentially in the barest of basis terms is like being able to prove that something is true or not true without actually revealing any information. Like they're say, I think the analog would be when you buy, say you go to a store and you go buy alcohol, you show them your ID, which tells them whether or not you're 21 or not. But also tells you full name, your address, you know, whether you're organ donor, all this superfluous information that they don't actually need. When really all they really need to know is that, is this a government ID? Yes or no? Are you 21 or older? Yes or no? Which and, and the math that makes that work, well beyond my scope, but, that was proposed in 1985 and, but the problem is, and it's like, and, and when I like found that out, I was like, oh, you know, I had the similar kind of a vein of thinking of you. I was like, why haven't we been using this the entire time? So there's two things I think that have been holding it back that no longer are. One is the computational power to able to do that to do that was just not available. You know, that's a very math intense,  computationally intensive kind of thing for to be able to make that work. But good news is that that, that exists now. And also you need, you need the kind of, you need the database for that to live on, you know, where you know, kind of like a trustless kind of party, there, which I think blockchains now provide, but I think, which takes us to our next kind of thing. It's like, all right, well, I think, broadly to your point, like the broad, like, kind of like crypto is not new at this point. But what has been hindering adoption? One is scale scalability. I mean, we are just now entering the point where there are there are blockchain networks with that can process transactions that in the thousands, in a cheap manner, because based on a theoretical like Bitcoin, you know, we're talking about, in the low double digits, you know, they can process anywhere between 7 and 15 transactions per second. And that gets expensive. The more demand there is to it. So to build these kind of like large systems where we need at scale to be able to prove identity. It's not feasible. You know, when it costs. Sometimes 30 dollars, 50 dollars. It's not even feasible if it costs 1 dollar, and there, and we had been largely, you know, what had been a kind of feature for a long time, you know, especially for Bitcoin, becomes a hindrance to, adoption. But we're at the phase now, which I think we're kind of at this, like, turning point here with the advent of, you know, layer 2, blockchains built on Ethereum, which allow for the scaling to get, you know, like, when we have, like, optimistic roll ups, like Optimism, Arbitrum, you know, that can process into thousands, then those kind of things become feasible or Solana, which is a separate layer one, which can process, you know, up to over 100, 000, you know, and we're starting to get into the territory where Visa can only, you know, depending on who you ask, is somewhere around 60, 000 transactions per second. So we're getting to the point now where we're able to have the scale where they can process the demand. But also the cost is important, you know, so that has been, I think, the biggest hindrance for a long time, you can't build these large kind of systems that when, you know, Ethereum costs you, you know, can depends on the demand, 1 dollar, 20 dollars, 40 dollars, 50 dollars, you know, that's not the kind of variable costs that anybody's going to accept there. So that has been a big hindrance there. From a societal standpoint, I think, crypto has a bad rap. And I think a lot of it is like, if we're being, I think, in the industry, if we're being honest, you know, intellectually honest, a lot of it is deserved. You know, where we've had, there's been this, you know, the, I think Chris Dixon, um, really, uh, lays it out well of like the computer versus the casino, where we're talking about the computer being, you know, having these underlying systems that can do identity and like think cool things with finance. And then there's the casino, you know, where you have your like Doge Coin, you have FTX, you know, all of these, you know, kind of speculative things. And I'm not to say, but I think what it, where it does get an unfair rap is that it feels like that's like a, you know, an unprecedented kind of thing, but all big technology, like shifts when you're in them, have the speculative, you know, the tulip mania, if you will. And I think we're just in a -- what's new about now is that we're in this hyper kind of, online kind of like sensationalized environment, but it doesn't matter what end of political spectrum you are and who you, you know, who you are, like, there are just these news cycles are short and if it, if it bleeds, it leads, they say, and I think there's been a lot of, a lot of focus on, the bad where I think we've kind of hitting the, we've hit critical mass where there's not only are we able to, like, have the foundation to do a lot of these things, there are, there are things that are already happening that I think a lot of people aren't aware of, you know, like the decentralized physical infrastructure, decentralized social, like, these are things you can go use today. And that wasn't true,  you know, really 6 months ago, a year ago, you know, this is moving, very quickly, but, it's a lot of bad PR if I wanted to wrap, wrap it up. We've had a lot of, um, the froth for many years. And we're now we're we, there's like this kind of hump we have to get over to narratively to really say like, Hey guys, everything we've been talking about for many years is actually possible now. 

  Kellee Wicker: I want to jump in on just a couple of things that you raised there. You know, like this, like this concept of like, we're waiting for this sea change. Like almost like, getting to the use cases where blockchain actually makes sense, getting past the froth, but then like, and coming at this with my Wilson hat on, we're always thinking about how are policy makers are thinking about this technology. It seems like there's either been, because of the focus on risk, there's either been a lot of interest in, like, banning things without necessarily understanding what we're saying no to long term, or there's an interest in just doing nothing and waiting it out to see what happens next. And so, my feeling is that some of, and the reason we're doing this is, because we think if people understood the technology better, if they understood the use cases better, they would be ready to make some kind of decision. But, you know,  we've talked a lot about the regulatory climate, but I'd love to hear your thoughts on how is the regulatory climate affecting in terms of the use cases we can implement. Is it hindering the industry or are we, what are we doing?   

  Jared Ronis: Yeah. I think we're hindering, you know, in, in some respects, you know, on the current trajectory, if we're talking about in innovation based specifically in the U.S. We’re, you know, we're hindering at best, you know, on the way to crippling, at, at worst, I think. Not to draw another, you know, parallel to like the Internet Age in the nineties, but these things work in cycles and, you know, it doesn't, history doesn't repeat, but it does rhyme, you know, where we had the, I think legislators had the foresight in the Internet Era to have kind of light touch regulation that provided a framework, you know, yeah, section 230, you know, I know now there's all kinds of, you know, that's a, that's a hot topic. But, you know, if we fast forward, section 230 in the nineties, in the Internet Era was a good kind of like, you know, middle ground kind of thing, you know. Nobody was trying to regulate a lot of like what we have. And crypto from a foundational standpoint, you know, we're talking about these base blockchain layers that everything's built on. It's like TCIP. It's like domain service. It's like all of these kinds, they're the new primitives for the kind of, internet here, and you know, it's like, if you imagine if we went back to the nineties, we try to regulate, you know, like, you know, you can do this with T. C. I. P. You know, that would do it. We've never would have had the Internet that we have today. And I think where we get kind of where it gets kind of messy, I think, is that, you know, I think 1 of the counter arguments is like, well, there's the financial aspect, but I think that honestly, it's not a bug, it's a feature because if you think about, some of these open protocols that you're like, well, why can't we just do this with a nonprofit? Right? You know, I don't know if you, are you guys familiar with RSS?  

  Alan Rechtstaffen: Yeah, why don’t you just explain a little bit for us?  

  Jared Ronis: Yeah. Yeah. So, RSS does still technically exist today. And essentially it was a decentralized kind of like standard before decentralized standards were a cool kind of thing, but essentially it's like a feed that you can publish, that was just a public feed and you can get. Like any podcast, non-Spotify podcast player, that's published on RSS. Most websites and blogs, you can pull a RSS feed and then pull that into a feed. Google Reader was a popular, you know, tool to access RSS and there was a lot of stuff that was built on RSS, but, RSS was a nonprofit. It had, you know, volunteers keeping it together, and nobody had really developed it and. And for a long time, there was, in the early 2000s in the kind of blog era, there was a lot, there was speculation. People were like, well, is it going to be these social networks? Or is it going to be RSS? And RSS you know, was doing well, but what killed it, there's two death strokes. One was the, the advent of mobile and that we start getting these closed ecosystems, and the inability for it to store data, which is where it changes from a blockchain because the founder of Wired was actually, building, they put a lot of time and effort into building a kind of like decentralized alternative to Facebook and Twitter and all of that, but what they what they ultimately ran into, the wall is that there's no way to store a username or information of that. And there was no capital behind it to kind of develop that. And ultimately it died. And then we start to get to these closed ecosystems here. So I think that all to that all to say, not to get too far from your question, Kellee, I think, there's a bit of a middle ground. We need some level of kind of like, common-sense framework here, in the U. S. because there’s just companies. I mean, there's just companies who are not founding here anymore because the regulatory environment is too uncertain. It's like, I don't know if I'm going to be deemed a security, so why would I take that risk? You know, we're trying to apply rules from like the 1930s and I think the crypto industry wants some kind of framework here in the U.S. but we really have a real brain drain here that would, a lot of these new protocols are just founding. You know, in Singapore or Japan, even the EU has better, you know, more clear regulations than we do right now, which, you know, generally, you know, you don't find that the EU is ahead of us on innovation here, but we're really getting, I think, getting in our own ways here by you know, the kind of like, the ambiguity is really I think what's killing us here. But, I think to your point though, if we're being fair, I think a lot of the use cases and information hasn't been articulated well. So, you know, that's like, not to say it's like, you know, we can, I think at the crypto industry we like say like, why not rule? Like, why don’t you understand us? And I'm like, well, I don't think anybody's really kind of made the, you know, the, you know, honest efforts here. Which is honestly, you know, one of my kind of key missions. I've lived on both sides. I'm trying to bridge it. 

  Alan Rechtstaffen: Yeah, Jared. I want to follow up on what you just said about bridging that, because, you know, a part of our, our initial initiative of, of setting up the digital assets forum and lab was to educate people, was to really bring people on board to, to help society as it was, to understand that blockchain technology is not equal to cryptocurrency casino, and we've done that very successfully. We built out a series of education programs for Congress, you know, on the hill. We did it for the executive branch. We've had a number of initiatives with government officials, with the mayor of Miami. We've done a lot to try to bring people to level set, this understanding of what blockchain technology is and what it can actually accomplish this technology that existed five years ago that people should start implementing today. You know, one of our initiatives and you've been great with this, is that we've been working with you on the, on the blockchain briefs is trying to get people up to speed to understand what's going on and what's actually possible. I would love to hear for, for our viewers, for our listeners, for the Wilson Center, what you think an individual who has, who has the ability to frame a corporation, you know, the framework for what they're going to do a year from now, two years from now, six months from now, and also government officials, what they are thinking about in terms of regulation, how, what is the best way to get up to speed, to a place where they can really understand how to make the right decisions. And I'm not being self-serving, and I know a part of that is listening to these podcasts and the blockchain briefs, but what else is there that is out there that can really get people into the flow of what's going on so they don't just hear the headlines, but they also understand what's actually going on in the backbone of the industry? 

  Jared Ronis: Yeah, yeah, that's fair. I mean, I think you, you know, not to not to talk the own book here, but I think, you know, obviously resources, resources like this are really important. You mentioned, you know, I know you've had Laura Shin on here previously, but that's honestly an excellent source. You know, she's another one who comes from the non-crypto world, but, you know, is curious by the crypto world here. You know, I wish there was an easy answer of like, there being a central place that, you know, that is, I think, I think you need to kind of build these to, build these things together, but finding the, the founders, I think of the key protocols are good people to kind of like follow. You know, the more like the Vitalik Buterins of the world, Anatoly Yakovenko, who, you know, obviously are going to be pro-crypto, but, you know, aren't, the casino version of crypto, here. So those are good resources. Not to, you know, this is my alma mater, but, you know, they were my alma mater for a reason, but I think, um, research firms like, Masari is a really good source for that. You know, they're kind of an analog if you think about, they don't, they don't necessarily love this, but it's accurate, but it's kind of like, the Bloomberg of crypto. I think, also just be going out there and reading the, you know, if you're of the technical variety, read the white papers and see what they're, um, see what they're saying there. You can get a lot from it. You know, they say that, code is law. I think, you know, you kind of have to get a bit of everything. There's not a universal source, you know, you kind of have to get, you know, the kind of pro crypto people and some of like the anti crypto people to like, and kind of see and kind of get yourself, get yourself in the middle there. I wish there was, you know, an easy source that, you know, and it's kind of, it's one of the. And I mean, it's obviously, I think the top reason that I work with, like, with, you guys here that, you know, I'm squarely a nonpartisan, like, by definition, I'm a pragmatist, which is why, you know, long time listener, first time caller here, you know, for Wilson Center work, so I think a lot of what we're doing here. I would actually use this as a call for those who are interested in space and do have the capacity to start putting out better, you know, digestible information. We're in desperate need.   

  Alan Rechtstaffen: I want to add one thing to what you suggested. I think reading the white paper is great. That's really interesting because that's how I first got into the cryptocurrency blockchain space. And another thing that I would suggest, just to add on to all the things that you listed is I taught myself how to program. I'm not a programmer by nature. That's not my background. I'm a financial policy guy. But I taught myself how to program on blockchains. And I did that by watching YouTube videos. And it gets, and it gets demystified. And maybe we should have a, a blockchain explained where we show somebody how to create a cryptocurrency or how to create an NFT because it's really not so hard.  

  Jared Ronis: You're going to get the SEC on us, Alan.  

  Alan Rechtstaffen: Well, I believe that there is a very specific statement that nothing in here is investment advice or anything that you should listen to for any advice, to do anything except for the fact that I think people do need to become educated. And I think that diving in is the best way, as you described, Jared. Thank you so much for being here and for all you're doing for Wilson.   

  Jared Ronis: Yeah, no, absolute pleasure.  

  Kellee Wicker: Thank you so much, Jared. Alan, as always for joining me for a great conversation. And we will keep our eyes peeled when the, when this episode airs, we should have the latest blockchain brief up on zero knowledge proofs, which Jared talked about a little earlier and it is a topic that I think people will really find fascinating for how much it makes these identity questions and verification questions work. So, thank you again. We hope our listeners will join us for the next episode after this. And we'll see you soon.   

  Jared Ronis: Thanks so much. Take care.  

  Narrator: Thanks for listening to another episode of Blockchain Explained. Please note, nothing in this podcast should be construed as investment advice.  Want more clear-eyed analysis of this exciting technology? Search for Digital Assets Forum at the Wilson Center for research, event recordings, and more. Want to ask our hosts a question? Write to STIP, S-T-I-P, at wilsoncenter.org with your thoughts. Thanks again, and we'll see you next time on Blockchain Explained.