Bryce convinces Ren about the future of the internet, Web3

Bryce: [00:00:15] Welcome to another episode of Equity Mates, a podcast that follows our journey of investing, whether you're an absolute beginner or approaching Warren Buffett status. Our aim is to help break down your barriers from beginning to dividend. My name is Bryce, and as always, I'm joined by my equity buddy Ren. How are you going? 

Alec: [00:00:30] I am excited. Bryce. I am excited for this episode. We've said before we got on Mike, this episode is either going to be epic or it's going to be a spectacular failure because you say whether you're an absolute beginner or approaching Warren Buffett status. And when we talk about this topic, there's probably one or two people in the world that are at Warren Buffett status. Yeah. One, Vitalik. Yes. The other an unnamed Satoshi Nakamoto. That's probably about it. 

Bryce: [00:01:05] Chris Dixon is also up there. Chris Dixon. He works for Andreessen Horowitz. 

Alec: [00:01:09] I think he would be a level below Vitalik. He's not building the thing. No. No. Yeah. Yeah. But in this episode, you're going to convince me about the promise and the opportunity in Web three. 

Bryce: [00:01:21] I don't think there's. Well, yeah, you're right, Ren. And we speak about this podcast being one that follows our journey of investing. So whilst we are certainly following the equity markets and everything that's going on in there, it is hard not to not to see what is going on out in the in the Twitter community at the moment and that stuff around Web three. 

Alec: [00:01:46] So this is this will affect Equity Mates 100 percent. I mean, in some ways it already has unit trust Dow, which people will understand what that is by the end of this episode have basically used the Ethereum blockchain and code to remove the need for market makers. 

Bryce: [00:02:03] Yeah, amazing. Yeah, yeah. Before we get into it all, we are going to be having a chat about Web3. I don't know how much convincing I'm going to do if you Ren, but I just really want to have a chat about what's going on. Some of the things that I understand about it, I want you to sell. 

Alec: [00:02:21] I want I want to feel the excitement coming from your side of the table. That's what I want from this episode. Like, you were pumped up about this. 

Bryce: [00:02:28] So I'm pumped up about understanding more about it because I do want to say that there is there is plenty more to understand. I'm not even in Web3 at the moment, but come next week, I'm hoping to hoping to be in a DAO, which we'll talk about. That would be cool. And so we're going to go right back and have a look at what we've. Was the progression through the Web3. We're going to talk about why Web3 is starting to make a lot of noise and is appealing to various people in the community and some of the use cases of Web3 at the moment in some of the crazy stuff that's going on, including a group trying to buy the US constitution. So there's plenty of stuff happening before we do, though Ren a bit of housekeeping Equity Mates awards where in the current stage of taking nominations for the inaugural Equity Mates Awards for 2021, we're looking to our community, to you guys out there to nominate and to help us highlight some of the amazing things that have happened this year at Equity Mates Media. We want you to shout out some of the amazing experts and business leaders we've had, as well as some of the awesome platforms and products that are coming to market. So there's going to be a link in our show notes for you to head across to the nominations page. We're looking for five key categories for you to nominate best expert investor from someone who's come on the show across all of our podcasts, we're looking for business leaders say of the year. We're looking for community member of the year. We're looking for ETF of the year and platform of the year. So it'd be great if you could shoot across there and and nominate and then we'll be doing an awards ceremony on socials later in December. So let's let's get cracking, shall we? 

Alec: [00:04:16] Let's do it. Well, this is a Bryce episode. So hit 

Bryce: [00:04:19] me well. I just want to start by saying if if you want to get excited about this, I saw a quote from someone who is pretty versed in this topic at the moment. And they said that learning Web3 today is like buying bitcoin at $10. 

Alec: [00:04:36] I hate that quite so much. Honestly, I hate it so much. Learning Web3 today is like learning hypertext transfer protocol in 1990.

Bryce: [00:04:45] I hate that quite so much. That's a 

Alec: [00:04:48] boring card. Yeah, but it is it. It's just in the same way that HTP is like was the building blocks of the original internet Web3. If you are to be believed in this episode, well, I think it's going to be true. It will be the building blocks of the next. What will become the next internet. 

Bryce: [00:05:06] In other words, this is an amazing opportunity to start understanding and getting in on the next phase of internet that. A lot of people believe he's going to be an incredible wealth creating opportunity for for many people, so what's not to get excited about? So shall we start with a definition? 

Alec: [00:05:28] Yeah. And I think we should say it has already been an incredible wealth creating opportunity for some people and it would just it's likely to keep growing. But yeah, let's start with some definitions. You want to start by setting up the problem as well. We've got some audio clips from some people smarter than us. 

Bryce: [00:05:45] So let's let's start with. Well, I don't know if it is a problem. A lot of people say it as a problem. Some people don't, some people unaware that it is a problem. But I guess what is going on with our current internet? If you think about how we currently are engaged with the internet, we're sort of relying on third parties who build the code, they create the code, they own the data. When we engage with the internet, they own the platform and all the economic benefits that go along with that. So, you know, for example, Twitter, they own the code, they own the platform. We engage with that. We put our tweet out there, Spotify, they own the code that in the platform, we load everything up onto that. But we don't really benefit a whole lot from what we do and how we engage on those platforms. A whole lot of the the value goes back to Facebook. A whole lot of the value of it goes back to Spotify. And so the owners of these companies, even the shareholders, you know, they are the ones who spoil more than and get rich from owning the companies in the code than the creators actually do. This is what has sort of spawned the idea of a Web3 and why a lot of people are finding it quite appealing. 

Alec: [00:06:54] Yeah, the internet is incredibly centralised now, and we know the names. There's like five five names that are trillion dollar companies that control X percentage of the traffic on the internet, but that percentage is high. Decentralising the internet has always been technically possible, like there's been. There's been ways to do it, but there's been, I guess, both computer science and game theory problems that needed to be solved to actually implement it properly. You know, there's been decentralised networks in the past when Bryce used to Limewire stuff for, you know, torrent stuff like that was a decentralised network. You know, it was using computing powers from a whole bunch of different computers around the world to upload stuff and download stuff. But one of the key problems that was really hard to solve was the Byzantine generals problem, which was How do you trust other parties in a decentralised network and how do you arrive at consensus in a decentralised network when you don't know anyone else in the network that you have to? So you don't know anyone, you can't identify them or verify their identity, but you have to trust and collectively agree on outcomes. And that's where blockchain technology allows that decentralised trust to happen, and that is one of the key problems as a few other problems. But that was a key problem that has now allowed this idea of Web3 to emerge. 

Bryce: [00:08:26] Yeah. No longer. No longer do we need these centralised platforms or companies to yet make that trust and make decisions 

Alec: [00:08:36] to verify identities? All of those? 

Bryce: [00:08:38] Yeah. Yeah, it's a pretty amazing development and one that offers plenty of opportunity. But rather than just try and give a definition here, let's take a step back and understand Web one, Web two and Web three. We've got a clip here from a guy called Chris Dixon, and he works for the fund a16z or Andreessen Horowitz. 

Alec: [00:09:00] Yeah, Andreessen Horowitz 

Bryce: [00:09:01] Yeah, so he's he's been one of the really early adopters and investors in this space and is considered someone to turn to to understand this. So over the next sort of seven minutes, he's really going to explain the progression. 

Alec: [00:09:12] We should probably cite this as from the Tim Ferriss podcast. 

Bryce: [00:09:16] Well, yeah, from the Tim Ferriss podcast, definitely go and listen to the episode if you'd like a real Deep Dive on this. 

Alec: [00:09:22] And if Chris's team is listening and are annoyed that we've clipped it in the same podcast, Narvel talks about sharing ideas freely so true 

Bryce: [00:09:29] and not paying for anything, and Farriss team is listening. 

Alec: [00:09:33] Hello. Hello. 

Bryce: [00:09:36] So here's seven minutes. Stick with it. It's fascinating. They're going to discuss how we've gone from Web one to Web three and how you can conceptualise this whole thing. 

Chris Dixon: [00:09:44] So way I think about it is Web one. The internet, of course, existed before the 90s, but the web sort of this this killer app on top of the internet was created in 1990. And so I sort of think of Web one, as it's called in 1990 to 2005. The key thing with Web one is it was dominated by open protocol. So the web has a protocol called HTP. Email has a protocol called SMTP. These are the platforms you were building on then. So if you were Larry and Sergei and you were building Google, you were building it on top of http, on top of the web and the web was open, which means no one controlled it. What that means from Larry and Sergey is point of view. If they knew if they built a successful product, a successful search engine, they would own it and they would control it. And you couldn't have somebody come along and say, I'm going to take 50 percent or I'm going to shut you down. It's the web. It was open and similar to, let's say, in economics. If you talk to an entrepreneur or an investor, they'll say they like to invest in countries with predictable rule of law. They don't like countries where the government seises the assets and things like it's the same thing happens with start-ups and entrepreneurs. They want to build on a platform that they know they can trust. And so that was what was so great about that first year of the web and why you had so much incredible innovation and investment. And it was, I think most people would agree today. That was sort of a golden period of innovation. But the products were limited in the sense that tended to be called skeuomorphic, where people were taking things from the offline world like magazines and putting them on the internet. You go back and look at the 90s web. It was very much experience like a magazine didn't have things like social networks and user generated content, nearly the same degree that started to really kind of percolating this year. People call web to, let's call it, around 2005. And at that time, you had sort of two competing models like Let's just take Twitter. There was an open protocol called RSS that was the obvious thing to compete with Twitter, and it's still around, but it's not nearly as popular as Twitter and Facebook and everything else. And so there were sort of open ways to build social networks in the 2000s, and then there were close ways to build. And for a variety of reasons, I won't go into all the details the close away one. And it's a lot of it had to do with the ease of use. The way I think about it is web to the open protocols were just limited in what they could do. So if you want to set up a website in 2008, let's say, and you wanted to have sort of simulate the functionality of Twitter, you'd have to go get like a web hosting provider, buy a domain name and do a whole bunch of other things. Everyone tried to kind of reuse domain names, essentially domain names in the earlier in the pre blockchain world. They're the one thing you can really own on the internet is your domain. You control it. And so the open side kept trying to kind of use the domain name again and again, but it costs eight Dollars. You have to go set it up in very technical. Meanwhile, you go to Twitter and it's like three clicks and you choose your name and you're in and your friends are there. And then mobile phones came along and the whole thing accelerated. And here we are now with five plus companies that kind of control the internet. So Web three is coming along. And so Web3 is my definition is it's an internet owned by users and builders orchestrated with tokens. So this new concept of a token is the kind of the key concept of Web3. This comes historically from the movement that started with Bitcoin, although I think it's sort of a different branch of the genealogy or something. And a lot of the stuff is actually built on a different crypto network called Ethereum. And then there are other kind of alternatives to it. The big kind of innovation with Ethereum was its fully programmable. It's a computer. It's funny. This is the most controversial thing I've said on Twitter. I got this huge when I said blockchains are computer, their computers, and literally, if you go look at Alan Turing's computer building paper, a computer or von Neumann or any of the great computer scientists, a computer or something, you write code and it can store things a theory, massive, almost Turing complete programming language and can store information. It's a virtual computer computer that runs on a network of physical computers, which I think what's kind of trips people up. But it's a computer. It's a very powerful computer that has new properties of prior kinds of computers didn't have. And one of the things you can do on these is you can create these things called smart contracts, which are code that will continue to run in a certain way. And you can also create these things called tokens and tokens can be fungible like kind of cryptocurrencies are or it can be nonfungible NFTs, and they can be something like which I think some people have heard about now, which are things that can be represented by a piece of media. For example, you're buying this collectable basketball card or this collectable work of art, things like that's why tokens are so important as they now provide a mechanism by which value and control can be given to users and builders, as opposed to simply to centralised companies so you can build today. There are two things. One is remember before I said the functionality wasn't quite there for for the open side and web two, it's now there. You can now build something that looks and feels like Facebook or Twitter, using open protocols and using this new kind of philosophy where the value and control accrues to the users of the network, not to a company because there is no company and you're going to see more and more things products launched like this where there is initially there will be some kind of R&D organisation that helps create these protocols. But over time they go away in the same way that there is no bitcoin company and the Ethereum as a non-profit foundation that supports R&D. But there is no other company. And this is how I believe the most important internet products will be created in the future is through this kind of new means. And why will it be done this way? One is it's better, because wouldn't it be better if the drivers on the Uber network owned Uber and got to participate more in the value creation and also in the control and governance of that system? I think that's clearly a better thing for society. And I also think it's it's just going to be a winning product. If you look at people in these web, three communities, no web, three company, no crypto company has ever spent a dollar on marketing, including Coinbase. I was on the board for years. No marketing. Why? Because tokens are self marketing. When somebody owns something and feels skin in the game, they want to go talk about it. They want to evangelise. I think Web 3.0. Better for the world, but it's also going to beat Web, too, because it's going to be more popular because the people get really excited when they actually get to participate. 

Bryce: [00:15:23] So, Ren, let's kind of summarise that together we have one we can classify as the raid. It's the magazine style traditional way of. You go on, there's information, you read it, you use it as if it were. They've taken the magazine, they've taken the newspaper and they've just put it online.

Alec: [00:15:43] I'm going to let you summarise because I actually have a different conceptualisation. I really like I listen to this. I don't think it's wrong, but I I think it can be thought of differently. So you summarise it and then I'll ask Coca-Cola. 

Bryce: [00:15:57] So then we move to a web to which you could think of as that sort of read and write. And so there's there's more centralisation through large companies. We know Apple, Google, we've spoken about the Facebooks. You don't get to own anything. I mean, if you do, you own a domain name, but that's probably really about it all. Everything else is sort of centralised around these large companies. You don't really have many rights on there and you can get kicked off all these platforms at any time. Like, for example, Trump gone all the power. All the decision making sits with these large companies, and then Web3 is now giving ownership back to back to the communities, back to the creators. It's internet owned by users. And the big thing here is the introduction of crypto and tokens and the concept of essentially owning property rights online. You don't think so. 

Alec: [00:16:50] Look so the Web3 narrative and look, the technology is revolutionary. The there's already serious runs on the board. This is going to change a lot of things in a lot of industries and we need to be across it and there's an opportunity to invest early. That is all true. That conceptualisation of Web one, Web two, Web three, and I'm going to say where it goes next. I have a problem with because for me, Web one wasn't reading web too wasn't reading and writing, and Web three isn't reading and writing and owning. You could write on Web one. You just had to be writing code. It was just you just had to be technical. Let me, I know you want to jump in, but let me finish web one between like 1990 and like the mid 2000s, was for people who were technical and then web too was like mass market internet. And though the companies that won, they didn't win because they somehow, like grabbed a whole bunch of resources and, you know, made like claimed big swaths of the internet. They did it by accumulating huge numbers of users, by making the internet accessible to everyone, making the ability to read and write and do things online and use the power of the internet. They made it a mass market. And so the evolution from Web one web to I don't think can be conceptualised as raid to write, to write. 

Bryce: [00:18:17] I think that framing this from the user, not the builder. 

Alec: [00:18:20] I'm saying from the user, like, you could run it on web one. 

Bryce: [00:18:24] Yeah, but like the like, there 

Alec: [00:18:25] were chat rooms, there were forums. There was a whole bunch of stuff, but it was just incredibly technical and a lot of it you had to be able to code. But the internet was always two ways. 

Bryce: [00:18:36] Yeah, I think in what, what, what they're really saying is for the majority of people, the first initial concept of the internet unless you were incredibly technical and could code. 

Alec: [00:18:45] So this is so if you let me finish because this is where I'm going with it. Yeah. Well, the evolution from Web one to Web two was from the technical side to the mass market, and these big companies sprung up because they made it accessible to the mass market people are talking about. Web three is like the end state as like the truly decentralised internet. Where I think we're going is we're going through a massive technological leap forward, but it's going to be incredibly technical and there will be companies that will be built on top of it that make a lot of these Web3 innovations and developments accessible to the mass market. And there will be other Facebooks and apples and Microsofts that take this, condense it and make it easy to use. And, you know, allow you to manage tokens and vote in Dallas and manage NAFTA's and manage portability between platforms. Integrating the Metaverse, all that stuff. There'll be platforms that facilitate that for like your parents or people just who are non-technical don't mean to call out your parents. But you know, I'm just saying like. I think it moves in cycles. I think the technology technological development happens, there are early adopters who are technical and then companies emerge that make it mass market and then the next technological leap forward happens. 

Bryce: [00:19:58] Yeah, I think the difference, though, is that these new companies that do emerge that are emerging, that are in existence now, you will be part of like you like. There will be the Facebook of the Web3, but I will have a say in how that how that runs. I will be at a main. I will be able to 

Alec: [00:20:16] say that's I'm not convinced that that's one way it will go. But it could be in the same way that where shareholders of Facebook or Microsoft or Apple now, unlike your actual ability to influence outcomes, might not actually be that powerful, because in the like, you could equitably issue tokens or you could create the company, issue yourself 50 percent of all tokens in existence, 

Bryce: [00:20:40] and that is how some of it plays out. Yeah, yeah, yeah. 

Alec: [00:20:42] So I just I think like I agree that there are worlds where this can be like truly democratic, other worlds where this technology can create a world that is very similar to the world today. 

Bryce: [00:20:52] Yeah, I'm not as cynical as you. I don't think. 

Alec: [00:20:54] Yeah, I actually don't think that's a bad outcome as well. 

Bryce: [00:20:58] I do. Well, it's just I think that if that's the case, then it's completely against the reason that a lot of people are sitting and getting involved in this. 

Alec: [00:21:06] Yeah. Now this is this is something that I want to stress and I don't want to come in as negative Nancy Super early in the episode. But when I was listening to this and I've been like, I've been keeping my finger on the Web3 Pulse, I would love to do an episode where I just pull out headlines from late 80s early 90s publications and compare it to headlines of today. And because if you go back to that time and you look at how people were talking about the first iteration of the internet at that time, it was decentralised, it was utopian, it was disrupting corporate power, it was changing the world. The the rhetoric is similar in both cases. And that's because the technology has the ability to do that. I think that's it. But I think like human nature and psychology and all of that stuff comes into play. I reckon you could just side by side, early 90s and early 2020s, and you would say a lot of similar rhetoric, similar rhetoric. 

Bryce: [00:22:03] But the ability to do that now is completely different. Like now you can have like back then they could say all that stuff. But in terms of the maths behind it actually having something that is decentralised and shares ownership now they have the tech to do that. Do you know what I mean? Like rhetoric the same?

Alec: [00:22:23] No, I know. You mean, like, there's definitely been a technological improvement, 

Bryce: [00:22:27] the ability for that to actually happen and for it just to be unequivocally 

Alec: [00:22:32] true. But again, like you could be decentralised in the 90s, there were decentralised things in the 90s. It's just that then corporate power consolidated them on platforms that got older users. But like, you could have built decentralised networks, but 

Bryce: [00:22:49] was a truly decentralised, I guess, is where the fundamentalists would come in here and say. Say that, like the audit trail of the blockchain now really gives it that there's no way you can deny. 

Alec: [00:23:00] Yeah, we're getting to the limits of our technical knowledge. But yeah, I would. I look at like torrent clients, all like Limewire or Aerys and those things I would say they were truly decentralised because it was like a company that managed them. But in this case, there are also not for profits or companies that manage it. It's just that everyone has voting power on the blockchain. But, you know, like there's an a there's a Ethereum, not for profit that makes decisions about Ethereum. 

Bryce: [00:23:29] Yeah, yeah. I don't know if they are truly were on the I don't I don't know enough about the technology to say, I'm sure there's someone out there who would be like this, that Limewire is not truly decent. 

Alec: [00:23:39] Yeah, yeah. There's people that are tearing their hair out of this episode, but I think I think we have to recognise that for the people that are tearing their hair out, there are also people that are truly confused at this point. 

Bryce: [00:23:49] Yeah, yeah. Look, stick with us because there's it's it's an exciting thing to try and understand. So I look, there's no doubt that it's appealing and making a lot of noise because of this decentralisation thing. And and you know, it's allowing people to get excited about not having to rely on the Facebooks to make the decision it can be. You can now engage with communities and be part of communities and companies that are self-governed. And you know, there's that whole part of society that really get on that bandwagon of no longer the other corporates going to be wielding the power. 

Alec: [00:24:21] So let's just talk because we've probably haven't given enough detail. And obviously the clip spoke about it. But like, let's just really establish in Wimp 2 Warrior, there are companies that have shareholders and the companies are sending make the central decisions and Web3. There are Dow's decentralised autonomous organisations. They own that the users have tokens and the ownership of those tokens and their identity and their right to own those tokens exist on the blockchain. Let's not get into like proof of stake the proof of work, but so it's on the blockchain. They own it. They can prove that they have that stake and then they can vote in making decisions about what the company should do. Yeah. An example of that would be in web to Uber. The company creates a ride sharing app and people sign up and drivers drive. But Uber makes the decisions. In Web3, there would be an Uber app where the Uber drivers are the ones making the decisions. They all have tokens and they can all make decisions. So that's kind of the the chain.

Bryce: [00:25:31] Yeah, and the spoils of all of that is shared amongst all of those with token value of the tokens change. 

Alec: [00:25:39] So they very they are very much like shareholders. Yeah, except they're generally like workers that become shareholders. Yeah. Now to give you a practical example of this, if you're still confused, there's a DAO decentralised organisation. Think of DAO as the analogy to company web to just the A's. It's it's called unit trust. They have been incredibly successful, automating a process that market makers had to do in web too. But they have $3 billion in in their Treasury, basically on their balance sheet. You can apply for grants. They have a grant programme if you can help them build out their product or, you know, do some some stuff for them. If you can do work for them, they're offering grants. But rather than the company unit trust, having a CEO that decides who gets the grant, people will apply for a grant and then everyone who is involved in the Dow will vote on whether that grant should be offered. So that's the difference it decentralised is the decision making power in those organisations. That's the big change. And imagine that across the internet, imagine if Google's product decisions were voted on by its users. Imagine if Facebook moderate content moderation decisions weren't decided by Zuckerberg's secretive internal court, but were by it were decided on by its users. Like that? Think of all of these internet companies and imagine that rather than centralised authority, there was decentralised authority. That's the 

Bryce: [00:27:15] change. Yeah, it's pretty crazy. There's 1.3 million DAO members globally, which if you think about it, is pretty small, like it's tiny. It's not a lot of people. So if you can kind of get in, they say that to really experience what we're talking about here and and Web3 Dao is obviously the way to do it, because through DAO, you then get an exposure and access to. And if I was going to 

Alec: [00:27:39] say we haven't even spoken to 

Bryce: [00:27:42] NAFTA's DeFi, there are a whole bunch of elements of the blockchain and crypto that exist. And being a member of a DAO is the way to do it. Know 1.3 DAO members globally. And they manage a total of 14 billion in assets. So it's pretty including 

Alec: [00:27:59] including Constitution Dow that is trying to buy the US Constitution. 

Bryce: [00:28:02] Yeah, well, let's talk about that because for the first time in 33 years, one of 13 surviving copies of the official edition from the Constitutional Convention over in the States will be publicly auctioned by Sotheby's. It is one of two copies that are still owned by private collectors, and so this is going to auction. And so this DAO has got together and they're trying to raise, I think about 11. 

Alec: [00:28:29] They've raised eleven. I think they're trying to get to 20, 

Bryce: [00:28:32] 20 million, 

Alec: [00:28:33] which honestly, I feel like is cheap for one of 13 surviving copies of this incredibly important document. Surely these American billionaires that would pay more than 20? Yeah. 

Bryce: [00:28:42] Yeah, maybe it's kind of. Yeah. Anyway, so you can join this Dow and buy the tokens. And then, if successful at auction, this constitution will be part of the Dow managed been owned by the down of which you will be part owner, given that you're a shareholder at, well, shareholder, so to speak in this in this day are through through the tokens. So yeah, there's some pretty amazing examples of how these deals are starting to play out. There's venture capital funds where you also collectively vote on what the investments are going to be made. What's the investment process? 

Alec: [00:29:14] Yeah, you could say you could. You could say like funds management moving into this process. So that's dals. I think we've we've Covid them, but that's really only the start of this revolution because we still have to cover NFTs. We still have to cover how much easier it will be to build software and the whole like open source very closed. And then we got to talk about use cases. So let's take a quick break. Let's catch our breath and then let's keep going. So, Bryce, this episode is all about you convincing me about Web3. We've started that conversation, and I think it's important to stress start because, well, half an hour into this episode and we've just scratched the surface, know it's crazy. This won't be the last episode we do on Web3 my way. But where do you want to take me from here? 

Bryce: [00:30:08] Well, let's talk about open code and how it's different to building on Web3 than it is building on web too, because that's how this thing is going to blow up. I think

Alec: [00:30:19] hit me. 

Bryce: [00:30:20] So, you know, web to at the moment, there's a lot of closed code. You don't get access to Facebook's code, you don't get access to all these companies codes. You might have APIs and be able to plug in and utilise through your own website. Some of the features that they offer, but you really don't get to take Facebook and make it better. Build your own business around Facebook. One of the biggest challenges with Web three is that everything that is built, built on the blockchain is open, and that means that if you think about it conceptually as Lego blocks Ren, you might solve a problem or build a product or an app, and it's completely open and available in Web three that I can come along and say, Awesome. Will Ren, you've sold one solve one problem that I that I want to do, and I'm going to build an additional element to that that's going to help solve a second problem of mine. And it's like Lego blocks that are slowly being clipped together. But they're all able to be clipped together because everything is open and shared, and you don't need to reiterate and try and solve things over and over again because if, if you solve, solve it once. Bang. 

Alec: [00:31:29] So my two questions that come out of that are, firstly, there's value in solving really hard computing problems. Mm-Hmm. And if someone if you can solve it and then someone can just take it and build upon Earth, like is that is that undervaluing that the solving of that problem? And then what does that mean in terms of incentivising people to work on these really hard problems? So that's one. My second question is we already have open source software like GitHub exists. 

Bryce: [00:31:59] Yeah, yeah, no doubt. But like that doesn't. I'm not saying that we've never had open source before, but I think that it's not as prolific as Web three is kind of like. Yeah, yeah. Well, everything in Web3 is going to be

Alec: [00:32:13] to my to my first question, and I'm sure there are ways that you can like, tokenised your work. And if people want to build upon it, they have to like, pay you in their tokens. But I think, you know, like a lot of the hard problems we've seen solved in the last 15 years of Web 2.0 is because venture capitalists and people have realised and you know, smart people have started companies. Venture capitalists have invested in companies because they see a big economic return in keeping that software closed, solving those problems. How do you how do you replicate that incentive structure? 

Bryce: [00:32:48] Good question. I mean, venture capitalists are still pouring money into this. Yeah, yeah. So that's not an answer that I have right now. Yeah, I would imagine that it would be still to do with the tokenization of things. Or there'd be some smart contracts written at some point within the code that allow the value to still be transferred where where necessary.

Alec: [00:33:09] Yeah, because it like it is a really cool concept to think of that, you know, unit trust DAO have solved this market. Make a problem. Equity Mates could take what they've done, plug it into El Web3 development and then add and like an ETF functionality on top of that. And they've done all the hard work to solve the market maker problem, so we don't need to do that again. Hmm. 

Bryce: [00:33:30] Great. 

Alec: [00:33:30] Awesome. Now we can be an ETF provider in Web3. Yeah, look at all we need to do is be a fund man like to, you know, do that part of the problem? Yeah. But I just don't understand, like how it all hangs together. But I also don't like I say that knowing that unit trust has three billion dollars on their balance sheet in that treasury, so they're obviously making money somehow. Yeah, I 

Bryce: [00:33:54] think that yeah, I think, yeah. Anyway, let's take that as a as an action point for the next time we speak about it 

Alec: [00:34:00] or people slide into our dams. 

Bryce: [00:34:03] Yeah, get us. Yeah, we should probably move on to some of the use cases in some of the examples. 

Alec: [00:34:09] You haven't spoken about how NFTs fit into this. 

Bryce: [00:34:12] Well, I was just about to talk about one of the use cases for all of this is monetisation where NFTs come into the whole thing. So let's talk about it. One of the reasons that I really, really love this is that Web3 and the blockchain and crypto now really allow for authors, musicians, you know, digital creators to be much more financially rewarded for the for the work that they do. And this is where NFTs come into play. So, for example, at the moment, you're firstly, you can't go past NFTs. There's they've been in the news 13 year olds are making squillions of dollars from it that they're making, they're making millions. But one of the advantages of of Web3 at the moment is the NFT. And let's say you're a painter, and for so long you have to go through the middleman to sell your paintings. And it might not happen until you've passed away and you don't get to see the value of your work transpire. Well, one of the beauties of NFTs at the moment, nonfungible tokens, is that you can now digitise and monetise your your creations through the blockchain and and be rewarded for that through smart contracts as time goes on. So traditionally, if authors, musicians, the model was royalties, you'd make the work, you'd you'd sell it. And every time it was sold on, you'd get a small, tiny pittance of of a royalties. But mainly you were paid in upfront and that was kind of the model. However, now through NFTs and the blockchain and smart contracts, instead of there being a ton of a ton of middlemen who are taking lion's share of profits and whatnot, you can start to actually benefit from it straight away. Yes. So, yeah, to give a classic. To give an example of that, I create an artwork. I have a smart contract that says every time this is resold, I'm going to take a percentage of that sale price and that's going to happen for infinity. 

Alec: [00:36:17] Now, you know how I was talking about a whole new generation of middlemen coming on? Yeah, I think when we talk about NFTs, this is the classic example of where that is the case because you've just done a very convincing job telling me that the creative industries are problematic because in the music industry, there's record labels, there's Spotify, there's Apple Music. Everyone takes that clip and the credit gets not much. And in the world of NFTs, that all of those middlemen are erased. And that's right.

Bryce: [00:36:48] Not all. 

Alec: [00:36:49] Well. Sorry. Like so yeah, my record labels probably will still be there if it's music. But yeah, well, maybe not, actually. But like a lot of those traditional middlemen are arised. My point is that that is not the end state. My point is that there are new middlemen, middlemen like now open seas where you sell it is takes a 2.5 percent clip. Mm-Hmm. I agree with you that the technology could be truly decentralised, but to get to a mass market, there needs to be. There will be platforms that make it easy to access, like open seas. They'll take a clip. 

Bryce: [00:37:21] But I don't think that the argument here is the I don't think the main argument is the middleman argument. I think this is, yes, getting rid of a lot of middlemen. Of course, there's going to be exchanges that facilitate the transaction marketplaces. There's always going to be that. Not always, but there are going to be still be middlemen. The main argument here is that you can develop these contracts for sale. Essentially these smart contracts that because you can order the price, you can order it right back to the very original creator, the person who created it from the start. No matter what happens to that NFT for eternity, that original creator is always going to have some skin in the game and be and be rewarded for it. 

Alec: [00:38:01] Yeah, yeah, that's that is the big deal. That is revolution. 

Bryce: [00:38:04] That's like the Picasso still getting paid to this day every time his artwork is sold. 

Alec: [00:38:09] Yeah, yeah, yeah. Yeah, that that is a step change. 

Bryce: [00:38:12] Yeah. And so I think that's where people get excited about it and we can tell it brings up a whole big question around IP and and that sort of stuff. And we can have a chat about that in a second. But yeah, is anything more you wanted to add to the NFT stuff? 

Alec: [00:38:26] Have you seen the Wu-Tang Clan stuff? 

Bryce: [00:38:29] I know they originally. Is this the sale of the album? 

Alec: [00:38:31] Yeah. Yeah, it's a million. Yeah, no. For, yeah, 

Bryce: [00:38:34] whatever it was. 

Alec: [00:38:35] So we're Tang. Clan created an album Once Upon a Time in Shaolin, and they only. Created one copy of the album, and then it sold to Martin Shkreli, remember him? Yeah, the pharma, bro. Yeah, yeah, yeah. So then Martin Shkreli went to jail and the US government seised a whole bunch of his assets, including this album, this one record that was ever produced. Then the US government's sell everything at an auction, and they sold this and it was a Dow. I'm pretty sure that bought it. But someone involved in crypto pretty confident it was a Dow who are now negotiating with the Wu-Tang to make it into an NFT and then like, tokenised so more people can listen to it because right now, the only people that have listened to it is much it 

Bryce: [00:39:22] can condition on it that they can't know and comply it 

Alec: [00:39:25] or. Well, no, there's only one copy in existence like 

Bryce: [00:39:27] the Dow guys could. Yeah, OK, without putting it on YouTube or whatever doing dodgy stuff.

Alec: [00:39:32] If I did that, I mean, like that? Yeah, yeah, yeah. Yeah, yeah. But if if the whole concept is like valuing the creator more and then they're like, we were ripping and just putting it on YouTube, on Spotify. 

Bryce: [00:39:47] And so what if we tank said 

Alec: [00:39:49] they're in negotiations? OK, yeah. Yeah, yeah, 

Bryce: [00:39:51] surely you give Wu-Tang a whole bunch of the tokens? 

Alec: [00:39:54] No, I don't think we would need the money. I think like this was a piece of art, like the first album where those only one in existence. Yeah, yeah, yeah, yeah. But that's the kind of stuff that is going on at the moment. Like, there's there's a lot in the NFT space, but I think at its core, what NFTs do is solve a problem of the internet, which is that digital assets were infinitely replicable and ownership was impossible to verify. You know, like the reason that torrent sites and all of that existed is because one movie file could be replicated thousands of times and there was no way to establish ownership. And, you know, same with music and same with everything. And you know, we had old school copyright lawyers trying to sue people who were illegally downloading music. But like the the internet, you could just create more and more and more. And you know, photographers are a classic example of a type of creative that just got decimated by the internet because there was no way to prove who owned that photo and verify that it was the original, rather than people just copying and pasting it or screenshot it and then using it as they wish. And so that NFTs solve that replication problem, they basically established property rights for digital goods. And right now, it's, you know, there's a lot of talk about it being a bubble and stuff like that, but that underlying the fact that they're non-fungible, the fact that ownership and can be verified on the blockchain. Sure, you can screenshot it, but you'll never own in the same way that the original person owns it. Yeah, that's the technological change. That's a step forward. Yeah, massive. I Bryce we are running short on time, so we haven't spoken about gaming. Yeah, mass and gaming is where they're on the forefront of a lot of these Web3 innovations, NFTs, Dollars, all of that. So I want you to give me a bit of a spill and convince me. And then I've got one question I want to ask you about this whole area. 

Bryce: [00:42:03] All right. Well, plenty of other things that I'll keep in the back pocket for next time. We talk about this, but gaming? Yeah, massive. It's pretty incredible. So there's the concept is play to earn. It's essentially where you make actual money based on how much 

Alec: [00:42:17] time people are going to look up at you as saying actual money. Well, you make 

Bryce: [00:42:21] crypto, you make crypto, which you can convert, you convert fiat. And so, yeah, yeah. So through the flow of playing through the flow of playing and earning crypto, you can make money based on how much time and sort of effort you put into playing these games in the in the world of Web3. And there's no bigger example than a game called Axie Infinity. Surprisingly, I was talking about this in the office yesterday, and Dorsey, our crypto expert in at Equity Mates, is like, Oh yeah, I've got a couple of axes, so we'll have to pick his brains about that and get him on the show. But essentially, Axie Infinity players of the game acquire unique digital assets called Axies, and they battle other teams. 

Alec: [00:43:04] It's like Modern-Day Pokemon. 

Bryce: [00:43:06] Yeah, yeah. So how it works is axes of the NFTs, and they're created and sold using the games in-game currency, which is called P. I can't remember what it stands for something love. Something which 

Alec: [00:43:18] smooth love post 

Bryce: [00:43:19] smooth love potion. Yeah. And then the Zlp Smooth Love Potion can be traded for traditional currency at some, at whenever you sort of want to cash out. But it's phenomenal over in Taiwan and the Philippines,

Alec: [00:43:33] Philippines, its mass massive 

Bryce: [00:43:34] to the point where people are. So it's really expensive to set up and. Stop playing, and so people are giving loans to players so that they can get started and the loans will be paid back off the success of themselves in the game and Philippines. Some of the Filipinos are now full time Axie Infinity. They've got sponsorships from businesses who essentially pay them, or Dollars will pay them to play and then earn money. So yeah, it's pretty amazing what's going on in the space.

Alec: [00:44:08] Yeah, I was listening to an a16z podcast episode with one of the founders or like one of the leaders of the company that runs ACSI, and they were talking about how the whole token started. Like, it was coincidental in some ways. They were like issuing tokens. And then all of a sudden they found the players created like liquidity in the market for tokens. And then they were like, Oh, there's something here. And then they basically calculated the value of gameplay. What that meant? And through it, like through that and through looking at like the liquidity in the market and stuff like that, they basically figured out what salary they could play players to play. They could pay players to play. Then they were like, OK, we can invent a concept of play to earn where we pay you to play this. Yeah, which is just unbelievable to think about. It also makes me think like, what is the end state of this? I've no idea. You know, like if if people are literally investing in other people to play games to earn money and the economics of this work because they add enough value to the game like. Are we all just going to be gamers? Yeah, right. But that's not sustainable. Well, that's 

Bryce: [00:45:29] not Metaverse, Web3. We're going to be living in a digital world. It's going to be weird and crazy and probably ultimately terrifying and social and isolating and all sorts of. 

Alec: [00:45:41] I kind of like it, though. So I was thinking this morning I was listening to a couple of other podcasts and thinking about this in preparation for this episode, and every generation has that technology that scares them, at least for me. And I would assume for you, like most of the technology that we've grown up with, is really exciting, you know, like self-driving cars and all this stuff. But the technology has never made us feel uncomfortable. But like, you know, we look at our parents, our grandparents generation, and at some point there's some technology that makes them feel uncomfortable with these smartphones. I'm too old, like, this is beyond me. Yeah, yeah. This might be that technology for us. And the only way that you get it. You have to be excited by that. You have to be excited by how uncomfortable and confused and how unsettling it is because it just throws out all these norms of what you thought. But that's the only way you keep up. You can't shy away from the notion that it's that it's new and unsettling. 

Bryce: [00:46:39] I think we're better at adapting to change than our parents' generation because the speed of change we've seen in our lifetime is not so like if you don't care.

Alec: [00:46:47] I disagree with this IRA because I've had this conversation with my parents before. If you look on, if you put people's lives on a timeline and you talk about the change that has happened for a lot of our lifetimes, it's been a pretty narrow band of change. It's been telecommunications. Honestly, it's been telecommunications, internet. Well, that's telecommunications. Yeah, yeah. Telecommunications and computing. If you if you want to broaden it. But like, you know, if you look at like our grandparents generation, it was air travel and telephones and a whole bunch of medical breakthroughs. And like the life was transformed, life transforming. 

Bryce: [00:47:25] Now, very, we're about to live in a digital world. 

Alec: [00:47:27] Well, yeah, yeah. But we're not there yet.

Bryce: [00:47:29] I'm sorry. Less than 30 years, we've gone from essentially not even engaging with the internet to now living in the internet. It's pretty nuts. Right? 

Alec: [00:47:39] Yeah. Sorry, sorry. But what I'm saying is you could take us back to where we were born and right now to back to where we were born. Like, life hasn't fundamentally changed. We've just got to hate more devices were online more. But like, you could live.

Bryce: [00:47:53] I get what you're saying. 

Alec: [00:47:53] Yeah, whereas like in past generations, like, I think life changed more.

Bryce: [00:48:00] I mean, for our parents' generation, not my TV grandparents.

Alec: [00:48:04] Yeah, yeah, our parents. So. Yeah. 

Bryce: [00:48:06] Anyway, let's close this out because we're hitting about 50. So any closing thoughts? 

Alec: [00:48:11] Yeah, one big one for me. So a lot of the conversation around DAOs and Web3 takes decentralisation as a good like. They take that as a given. And I think in theory, decentralisation is inherently better, like removing gatekeepers, removing control from one or two people or one or two organisations. I think that's fundamentally good. My big question around Dollars is psychological, because right now you have 1.3 million people involved in Dollars who are incredibly invested in the space and want to make decisions and want to use their tokens and want to vote. But I think generally, if you expand it from 1.3 million to 1.3 billion, the majority of people are inherently lazy and they don't want to be voting on every decision that every organisation or every platform, that every organisation they're involved in or every platform they use makes the whole idea of decentralising power has been tried before in other fields. There's been a number of political parties that have sprung up that have tried to decentralise decision-making, and there was one in Australia that like built an app and they were like, Vote for us, elect us. But rather than having a local member make decisions, everyone will get to vote on the decisions. And then that just really failed or didn't didn't pan out. When we look at financial markets, shareholders have votes, but so many of them don't exercise it. And so my I guess my question around the psychology of Dollars is as this scales, are people really going to want to be that active in everything they use? Or do people just want to cede decision-making to organisations and people that they trust? 

Bryce: [00:49:59] Yeah, I think that's what it'll come to. People would just be giving proxy votes. 

Alec: [00:50:03] But then again, it's like, how do how different is 

Bryce: [00:50:06] the difference, I think comes down to the value. The big change is that you're going to still be able to benefit much more, much more from the value creation of the organisation you're part of than than you are right now. I agree with that, that it sort of moves away from the idea of true decentralisation. If people. Look, giving their vote to someone else because they can't be bothered. 

Alec: [00:50:26] Yeah, yeah. Or it just creates this whole other layer of middlemen. Yeah. But yeah, look, I know I was negative Nancy in this episode, but I felt I felt like I had to play devil's advocate for some things. I think this is only going to accelerate more. And the fact that people listen to this episode now and have got through this episode means that.

Bryce: [00:50:46] Yeah, absolutely. So stick with us. We'll try and continue to unpack it as as time goes on. You know, it's pretty given that we are in the media, in the creation game as well. It seems reasonably and we're in communities and all sorts of things 

Alec: [00:51:01] that I would like to see us make Australia's first hedge fund, DAO, where everyone in the Equity Mates community can contribute. And then we all make decisions as a collective about what stocks to invest in, and we use our tokens to vote on the blockchain about it. 

Bryce: [00:51:17] Well, the tools are there, the resources that we 

Alec: [00:51:19] just we just need to be able to do it. 

Bryce: [00:51:22] We need someone who can do it. So if you can code in a theorem or anything like that, let us know. So Twitter follower Chris Dixon follower and evolve. And then just go through or even just hit up Web3 in the search function on Twitter. There's some amazing people in there. Some podcasts that I've recently listened to. The Tim Ferriss podcast with Chris Dixon in Nevada is great. There's a publisher called Colossus. Head to their website. They have it's the Patrick O'Shaughnessy podcast business. They have a podcast now called Web3 Breakdowns that specifically look at businesses that are engaged in Web3 and break them down. Pretty amazing. We can share some of our research links in this show notes as well, but just be curious. 

Alec: [00:52:06] Discord, Twitter and Reddit. 

Bryce: [00:52:08] Discord True. Haven't been on it and they get on it. Yeah, Reddit. Twitter is massive. Yeah, yeah. I think for us, this is just keep going down the rabbit hole because there's going to be so much stuff coming from this, but we get back to equities next week. 

Alec: [00:52:22] Yeah, maybe, maybe one spinoff taste. 

Bryce: [00:52:25] We should own some NFTs, but Ren always good to chat about our investing journey and about what's exciting us and keeping us interested. So we'll pick it up on Thursday, where we have another amazing interview from an h m one sign Hearts and Minds conference presenter Ian Lee, our over in New York. But he's Australian born, so it's epic. We loved the interview. If you liked the Bennett interview, then you're going to love this one, so stick around for it.