Alright, good morning, good afternoon, good evening, I hope wherever you are in the world
you're having a good day.
Welcome to Multi-Chain Mondays.
This is a space for us just to come and explore what can happen within our industry when you
can access multiple blockchains within a single app.
Today we're going to have an awesome guest.
We're going to talk about some different topics than we've talked about in the past.
We're going down a pathway of privacy, we're going to talk about CBDCs, talk about DeFi,
and so give a quick share of the space.
Let's get the word out if you're interested in those topics.
Let me introduce our guest for today, Vanessa are you with us?
I hear you just fine, how's your day going?
So far so good, it's beautiful and sunny here in Texas.
You know it's funny with our topic on privacy, I was going to try to protect your privacy
and not give that much information about you but you've already docked your state.
No, I'm a very proud Texan, so I appreciate that.
Is there any other type of Texan?
I'm not sure actually, I think they all leave if they're not proud Texans.
For our international listeners Texas is a special place in the United States that Texans
are more Texans than they are Americans, I think would probably be a fair way to say
Well Vanessa, thank you so much for joining us, you gave me the privilege of coming on
your show Just Crypto, I guess what was it, probably a month or two ago.
I wanted to return the favor and bring you on to our show and just have a dialogue on
what interests you and go down the pathway.
What I particularly appreciate is these topics we're going to go down are not ones that we
talk a lot about within the ICP community, so I think or at least not on these spaces.
I think this will be a pretty interesting space.
Before we jump in though, do you mind just again on the privacy thing, I'll do a light
intro and let you determine how much you want to say about yourself, but whatever you feel
comfortable saying on your background, do you mind giving everyone kind of a TDLR?
Yeah, sure, so I've spent most of my former career in big tech leading product, so a decade
at Microsoft, a decade at Google, and then I got caught by the Web3 bug, and for the
last couple of years I've been leading product in a number of different Web3 startups.
But what really brings me joy is being able to learn something new and share it with folks,
and so that was the genesis of the YouTube channel that I started Just Crypto, where
we bring founders and builders and the ecosystem on, and it's an opportunity, I mean I'm actually
pretty spoiled, I get to learn from awesome folks who are building cool things and just
have great discussions, so I'm kind of enjoying that life now, but yeah my background is very
technical, I was a product lead at big tech companies for a while, and very passionate
I first discovered crypto before the blockchain back in 2001 when I was doing some research
on anonymous digital cash, obviously the space has come a long way since then, and I wish
I could say I jumped into Bitcoin when it was born, but you know we all have our things
that we've missed and that's okay, so yeah very passionate about privacy, if you look
at my little bio in Twitter it says separate money from states, separate banking from bankers,
so today I'm going to talk about both of those things.
This is going to be such a fun conversation, everyone if you're not following Vanessa you
definitely need to, but before we jump into privacy, your big tech experience leading
to Web3, I got asked like what's the story there, is there, was there a specific event,
is there a general mood or vibe that kind of led you toward Web3, or was there like
a specific issue you saw with big tech and that Web3 solves?
Yeah, so it's interesting, I left around the start of some of the lockdowns that were happening
here in the United States, and you know we had a lot of time on our hands because we
weren't commuting, so obviously I had some chance to dive in a little bit deeper to crypto,
you know really get deep into the DeFi space, but more than anything it was impressed upon
me the outsized power that governments have over our lives, I think you know having it
come into focus especially when the government's telling you hey you can't go here and these
stores are closed and you have to do this, I'm a very avid yoga practitioner and so it
was hard to have all my yoga studios forcibly closed by the government, and that was definitely
part of my leaning into crypto, is to bring a world to bear that is decentralized, where
people and communities have control, and we don't have sort of centralized authorities
that are telling us what to do, and so I think for me that was almost an awakening of like
oh this is more important than just number go up, there's something deeper behind here,
it's the ability to preserve freedom.
Yeah, the classic Bitcoin mantra of you come for the profits, you stay for the principles.
So I guess would you kind of like describe your journey into crypto more as like an
anti-government perspective or did your big tech experience also kind of lead your interest into
Yeah, so a couple things there, I mean I think you know I may come across as very
anti-government, and I think it's largely because government has grown and become more powerful,
generally people want to do good things and help folks, so you know I think that's where everything
starts but it goes astray as it gains power, but as far as you know big tech, I'll admit that I
got a bit frustrated with the pace of innovation that was happening in big tech, and you know while
I was at Google I remember I was doing a very strong push to increase the velocity of what we
were building, and trying to get folks to move a little faster and maybe not move fast and break
things, but at least you know don't be slow and thoughtful and never launch anything, and so you
know I felt like crypto was the opposite, people were going very fast, yes mistakes were made,
but stuff was getting built.
I love, I actually really love that answer because I think most of the time when I talk to people
they're, and what's the word, their concern over big tech is more over
maybe the power they have or the privacy issues, typically around that, I think what you're kind
of talking about is innovation, and how big tech has really slowed in the innovation cycle,
and that's at least for myself that's how I view crypto is it brings decentralization,
it brings cheap and fast financial rails, it brings the ability to have digital ownership,
and so you can build things on blockchain rails that you can't build in big tech or web 2 standard,
and that's I think that's a bigger potential market for our industry rather than you know saying hey
don't trust Google rather you know use these apps that can't be built on Google Cloud kind of a
thing, so hopefully I didn't misrepresent what your what your stance is. Yeah no I mean I think
that that's perfect, and I think also you know one thing to share like everyone's aware of what's
happening with Gemini and people are concerned about Google, I was fortunate to be at Google
when Don't Be Evil was actually a thing most of the people still believed, and you know I know
Google's no longer there and it has its own set of challenges, but maybe that's why I wasn't so
you know strongly focused on you know the demon that is big tech because I've experienced Google
being really really awesome to its users and and that still has some holdover for me.
Yeah that's I had almost forgotten the Don't Be Evil that's that's a great point. Well let's
jump into privacy because this is this is I think a really interesting conversation and one in which
I struggle with having with my family and my you know what I would call my normie friends,
but so if we just start at like high level like what is the importance of privacy
in in relationship to like your currency or your financial transactions?
Yeah so I mean I think there's a couple places to start from here, the first question is privacy
from whom? I think most of us today in our financial transactions experience privacy from
other people but not privacy from institutions and governments and largely I mean that's generally
okay to the degree that you have trust in those institutions and those governments.
If you're coming from the Bitcoin world you're coming from a fully transparent chain so you
don't have privacy from pretty much anyone. Anyone can look at the blockchain and can see the
transactions that are happening and you know there's a couple scenarios where that absolutely
breaks down if you would like to use bitcoin as a medium of exchange. If you go to the grocery
store and you buy some groceries the store will now know not just what you spent but they will
also get access to understand how much bitcoin you have in total and we've already seen you know
kidnappings and all sorts of terrible things happen because people have realized someone has
a very large bitcoin wallet they've got a lot of bitcoin and so they'll use the five dollar range
attack on them and get access to some of that bitcoin. So there's privacy you know even in the
blockchain perspective where we have the ability to be permissionless and censorship resistant
still you know privacy if you don't have that creates safety concerns for you.
Sorry Carl you're gonna you're gonna say something. Oh no no no I'm listening intently.
Okay great so you know that's one aspect of privacy is you know being private from other people
enhances your sort of physical safety. The second aspect is you think about governments and
institutions over time the the laws can change what's legal what's not legal can change
even just what's you know socially acceptable can or can't change and so if if governments
have access to what you're purchasing they could potentially use that to bring you know some amount
of consequences on you. Now you know you can see this in various different ways where the
the legal system has been used and is used you know fairly selectively against certain people
based on beliefs they may have or who they may be and if you have all of your transactions fully
transparent to the government it makes it a lot easier for them to effectively find anyone else
who might be like you and to crack down. Now we don't see this as much in the US but if you look
to China they definitely have more stringent controls they even have social credit systems
built on top of that so if you do things that the government doesn't like maybe you can't buy
a train ticket or a plane ticket or you can't travel or you know various allowances are taken
away from you and so as the power of government grows the need for privacy increases. In the
United States we have something called the fourth amendment which prevents the government from doing
illegal search and seizure. Now unfortunately in our history 9-11 was an event that happened that
caused congress to pass something called the Patriot Act which effectively allows the government
to do a lot more searching and seizing than they would have otherwise been allowed to do. Now we
can argue whether that's constitutional or not that's a little bit beyond me I'm not a law scholar
but very much the government is looking into citizens. I'll use you know another example that
was a little bit scary to me and it's not necessarily just one side from a political
perspective or the other you can think about how this can be abused in both ways.
But the FBI was looking into people who had purchased firearms and who were also in the area
of Washington DC around January 6th. Now one might say oh there's just good policing but if you look
at the net of people that were caught in it there's a lot of very innocent people who had nothing to
do with that that were then being sort of surveilled and so I think privacy is as important
as the government grows in the level of surveillance that they're trying to attach to every individual
citizen. Yeah so I think those are you know a couple aspects of privacy. There's a third thing
that's worth talking about which is often people will say well if you've got nothing to hide why
do you need privacy? And I think you know everyone has experienced this where certain things
are difficult to say or you get blowback for saying things or you get you know cancelled I
guess is the word that we have today. You tend not to say those things as much and so privacy
is important because it allows you to freely express your own thoughts in contexts that aren't
public. You know I live a lot of my life in public here on Twitter and on YouTube and you know I've
definitely exercised the muscle of saying more of what I think in public but a lot of people
you know having everything public is very is very difficult because you can say thoughts that
maybe you disagree with even the next day but you're working through that particular thought
and without having privacy you don't get the opportunity to think. So I think
privacy is actually critical not just for you know some of the reasons we talked about before
around you know safety and the ability to be sovereign from the government but also just the
ability to think. Yeah that's a that's such a phenomenal answer and you touched on if I ever
talk about privacy with again like I said my family members or my normie friends that's
that's essentially the the conversation revolves around well don't you really only need privacy if
you're a criminal or you're planning something that you know that you don't want you know like
kind of like untoward and I mean the safety aspect of it like you said in the first one
is is incredibly important the the ability to operate outside of the government if need be
is especially something we probably take for granted here in the United States and so that's
a great point and then again like you said just just to be self-sovereign. In terms of so you
mentioned Bitcoin obviously we have you know here in the United States you have like senators like
Senator Warren basically attacking Bitcoin and cryptocurrency by association as like terrorists
and money laundering activities but you mentioned that Bitcoin is a not a very good use for that
because it's a public ledger and therefore you can basically just track money as it as it flows.
Is there are there better solutions within crypto than Bitcoin? Yeah so I mean I guess first I want
to address the claims that crypto is somehow this haven for criminals if you look at the fines that
banks have had for doing nefarious activity just the amount of fines alone over the last couple
decades is almost the entire market cap of Bitcoin so if anyone's getting on their high horse saying
crypto is nefarious no actually the existing banking system is the one that's that's nefarious
and you know I think it's also worth addressing some of the arguments that Bitcoiners will have
will say well you know I didn't KYC therefore I'm pseudonymous therefore I have privacy.
It's very very very difficult to maintain your privacy on Bitcoin. There are I'm going to say
maybe there's a handful of people in the entire world who could do it and stand up against true
scrutiny. So I'll just give you you know one example to consider if you didn't KYC so you've got your
Bitcoin without giving your information but you interact with you know certain places maybe you
using it as a medium of exchange and those tend to be in the same geographic area
well that's some metadata that the government can use because not everyone's going to be
you know KYC free as it were or if you interact with certain accounts or certain times of the day
and perhaps those same times the day tend to line up with where your ISP is seeing you access certain
you know Bitcoin websites. I can go on and on but basically you know be very very careful if you're
expecting Bitcoin to give you privacy and you probably don't know enough to be fully private.
I'm going to admit I don't know enough. So there are privacy solutions and actually if you look
back you know one of the first things how funny who's one of the you know early creators of of
Bitcoin was talking about was wanting to add privacy into Bitcoin itself as kind of the next
step. I guess they never quite got there but there are some chains that have picked up the
mantle and taken that and so the one I talk a lot about is Monero. Monero is a privacy coin.
It's fully private so the addresses that you're sending to the amount of the transaction is private.
There is no way to unshield those transactions unless the person who did the transaction
offers up what's called a view key where someone can look at that transaction. So I think Monero
is special. One for the reason that it is kind of fully private and was built as a privacy coin.
Two because of proof of work and I have you know we can talk a bit about proof of work versus proof
of stake but I think when you're wanting to be resilient against nation-state actors I think
that's something that's important. And then as we look at decentralization there's a lot of tools
that Monero has built to allow for that decentralization so that supports censorship resistance
within the privacy right. You can't just have privacy if a government can turn off the computer
it doesn't really matter. And then as you look at Monero something else to consider is this idea
that the government would very much like to break their privacy and they've had very many opportunities
where they've posted grants and they've posted prizes for people who can actually break it and
so far no one has broken it. Most of the stories you hear in the news where someone has used Monero
and they were caught by the you know the police or whoever the reason is because they deposited
their Monero into an exchange in which they'd KYC or they'd you know transferred it into some other
chain where the government was able to track them. I'm not aware of a single case where someone has
fully tracked Monero itself. Now there are other privacy projects out there you know my list
basically goes if you're proof of stake I'm a little bit more concerned about you as far
as resilience. If you allow unshielded transactions there's also that concern about it and also if you
have unshielded transactions there's this concept called anonymity set and how many of the
transactions on that particular chain are actually anonymous like how big is the forest in which you
can hide as it were. I'm sorry that's kind of a long introduction to Monero but happy to go deeper
into any area as well. Yeah actually I love that last statement you said about how big is the forest
in which you intend to hide and you know so obviously with Bitcoin one of the things that
makes it so such an infestible asset is the fact that you can that most of the major wallets are
pretty well known at this point in terms of you know is it an exchange is it micro strategy is it
you know Satoshi's wallet those are those are pretty well established so that forest has gotten
smaller and smaller in which you could you know in terms of the in terms of the Bitcoin circulating
supply with with like a Monero so you mentioned the on-ramp and off-ramp as as perhaps the the
point of attack if you if you wanted to circumvent the privacy you know obviously you know unless
you're using Monero to or even Bitcoin to purchase goods and services you you need to off-ramp into
fiat are there any are there any like good solutions for that for for for leveraging the
cryptocurrency you know as an off-ramp or yeah so I mean a couple things there let's talk about
on-ramps first because I think on-ramps are important most of us here in the US and I think
most people have some sort of KYC on-ramp and that's generally okay the way I view that is it's
equivalent to going to the bank and withdrawing cash from the ATM the bank knows that you have
the cash but whatever you do with it from there they don't know and so that's where your privacy
is preserved now in Monero there's other ways to on-ramp so local Monero is one that I you know
enjoy sharing with folks because it's a way for you to basically exchange cash for Monero and so
it's a p2p decentralized marketplace in that sense there's obviously other ways to get Monero
there's decentralized exchanges where you could swap Bitcoin there's atomic swaps in the work
works as well certain wallets have that like samurai wallet where you can directly atomic
swap a Bitcoin for Monero without any third-party custody that's that's required with no effectively
no smart contracts that are governing it so you reduce that particular risk so there's lots of
ways to on-ramp some of them can protect your privacy a little bit more than perhaps coming
through an exchange but I do think it's okay to come through an exchange because the property of
Monero is as soon as it's in the Monero ecosystem as long as you don't go right back out to an
exchange you've got your privacy protected an area the community is focused very hard on is
creating this parallel economy basically where you can spend your Monero for goods and services just
like you could cash and that's how you solve the off-ramp challenge of needing to bring it back
into cash and having to you know get back into the traditional financial system and there's
there's actually a couple really interesting projects Monozone is one of them an on-shop
is another where basically you can use Monero to purchase things from Amazon and there's a group
of folks sort of a decentralized network of folks who will buy it for you and then can ship it to a
Dropbox or you know something that you have and so it maintains your privacy even for purchasing
online goods which I think is just fantastic obviously you know if you have rent that you
need to pay there's various different ways to take your Monero to turn it into gift cards within
Cake Wallet which is one of the wallets that the Monero community uses a lot and then you know
once you have it in a gift card obviously you can go and go ahead and spend it anywhere so it's sort
of a KYC free way to get out back into to cash as it were but I think the ultimate thing is
growing the set of goods and services that you can actually spend your Monero on and I know there's
a lot of farmers that accept it there's a lot of places that are I think there's a there's a website
off getmonero.org which lists you know just a ton of places where you can spend your Monero it's
very focused being a medium of exchange less so a store of value which is where bitcoin has focused
primarily yeah and obviously that medium of exchange is exactly that that use case of privacy
I couldn't imagine if you're a store of value if your purpose is store of value that privacy matters
as much or as at least the value of it so then in terms of geography are there I don't know if
you know this or not are there certain areas of the world that are more focused on you know using
either Monero or really any privacy coin or is it is it pretty broad yeah so I don't have statistics
on this so I can't speak with certainty but I can point out a couple things you know where the
government tends to have too much power privacy becomes more important and so I would very much
not want my money in bitcoin if I was in China or one of those other places it also becomes something
where if you have a fiat currency which is very quickly debasing and you don't have as easy access
to bitcoin then something like Monero becomes interesting if you can do some of those peer-to-peer
trades for it we see a lot in kind of Latin America it's very popular a lot of the conferences
for Monero are held down there as well and so I think there's just generally an appreciation for
the the level of kind of self-custody that's required to defend yourself against a lot of
what's happening in society if your society isn't as cushy as ours I mean we're very blessed so I
think that the need for Monero is more intellectual than than practical in terms of I think I know
where you're going to stand on this I'm going to go out on a limb and say CBDCs you're probably
against let's let everyone know what a CBDC is so we can kind of frame that so central bank digital
currency is a currency that's issued by a central bank so perhaps the european central bank or the
federal reserve or whoever it is a digital currency that's programmable and that the government has
full information on who's using it what they're using it for so there's a ton of problems with
this problem one is surveillance right now the surveillance governments have to put put in is
really a patchwork of working with different banks and you know when cash comes out of the system
then they have to find a way to surveil that if someone's doing something that they think is
nefarious and so there's lots of opportunities let me walk that back it makes it more difficult
for government to surveil things a central bank digital currency is effectively just a database of
what everyone has and what everyone's spending on so it takes what's a difficult surveillance state
and makes it very easy to surveil everyone all the time but that's not even the biggest problem
with the central bank digital currency the biggest problem is that because it's programmable
the government can decide what you can spend your money on they can decide if your money expires or
not to force you to spend it and so effectively they have entire control over your financial life
and that's very very scary even you know if you live in the united states or let's take canada as
an example there was a protest where truckers were protesting some political thing and the
government decided not only to shut off the bank accounts for all those those truckers but anyone
who donated to them also had their bank account shut off imagine a cbdc where a government wouldn't
even have to call up the bank to shut off your money they could just press a button and now you
have zero absolutely terrifying one it's 100 i think your your um uh your example of money expiring
is actually a great um uh you know basically something right up the middle between the the
extreme of well then they they can fully censor your ability to transact and they can basically
set your bank account to zero but then you're saying well if that's too extreme for you i mean
just think about the fact of an expiration as being just something to nudge you to do a behavior
that you wouldn't have before i guess you know an economist might argue hey this is could be a tool
for solving recessions you could always just uh you know airdrop tokens you know airdrop money and
and put an expiration on it uh as a um stimulus and then i think though you know the the what you're
explaining is well actually that's still you're trying to encourage behavior from the citizens
and in a direction that they would otherwise have not have gone in yeah i'm kind of laughing at
you you're mentioning economists because they are both the creator of and solver of recessions
and i wonder if we have fewer of them if they want so many economists running around
well if if i've learned anything in my 40 years of life it's um it's far better to be in business
of solving the problems you create than solving other people's problems that's fair that's fair
i also want to give you know an example we've given a lot of examples of how you know perhaps
people who are more conservative or right leaning might have issues with cbdcs i want to give an
example from the other side so people can just appreciate um the government could decide that
any purchases at abortion clinics are now no longer something you can spend your money on
and i think a lot of people would have issue with that if in particular if you're on the left in the
united states so you know just as we talk about this it's not a left versus right thing it's a
freedom versus totalitarianism axes well let me let me ask this and this might be this might um
show some ignorance in this question but i i don't understand what the what problems cbdcs are
solving because um essential banks already control the supply of money um they they you know and
essentially you're just trading a database for uh you know a decentralized ledger that that's
totally centralized i i'm kind of confused as to why um central banks are even interested in this
yes i think there's a couple layers i'm definitely not an expert on the pro side so you'd have to
find someone else who can talk about that a bit more but one version of it is i think what the
the fed is trying to do in the united states which is just to ease interbank settlement
and to have some currency that you can that you can use that's effectively on the blockchain with
a distributed ledger that allows banks to settle much faster than the current swift system would
allow them to do and so that is kind of an institution to institution capability seems
completely reasonable to me i was having a conversation with jean hoffman from the the
chia network and he was talking about this model where effectively you have institutional
settlements on a cbdc but then you withdraw it to a consumer experience that is kind of fully
private think of like an l2 on top of that which which may be an interesting model that kind of
mirrors the level of privacy guarantees that we currently have today i'm fairly confident that
that's not what they're trying to build uh in general especially in the european union or in
china and some of these other places but that could be a model where it's less bad than it could
otherwise be you could also see an amount of efficiency in the way commerce transacts you know
the blockchain can bring tremendous efficiencies to commerce and so you could see well maybe that's
going to take away the inefficiencies of techs or reduce the amount of fraud so there could be
aspects to the economy which are improved by just being digital and being on the blockchain in
general whether or not it's cbdc yeah i guess as i even say that i'm thinking back to a couple
weeks ago i wanted to make a trade um on my robin hood account and i missed the i missed the
window of opportunity as i waited the five days for my funds to clear and that would obviously be
a use case where cbdcs could come in is there um let me ask this is there a i think maybe i'll
phrase it as um a statement but i mean it more as a question is is there seems to be if if if we say
the fed or really any any central bank adopted cbdcs that seems like an existential risk from
the perspective of that technology would instantly tap into the most widely adopted distribution
channels in finance right you would assume all major banks would would adopt it on day one or
shortly thereafter and and from that that standpoint then you probably have a system that
that reaches a network effect much quicker than cryptocurrency is reaching network effects is that
and almost even as an attack vector if government wanted to attack let's say either bitcoin or any
other um cryptocurrency with that that might even seem like an easier way to go about it is you just
basically swap you know you have a tsunami of distribution for this this token everyone starts
using it and uh um and and then it's hard to get market share from there i think that's an
absolutely realistic concern i mean if you think about uh what if the government said in order to
get your stimulus check you need to download this app and it will come over as cbdc instead of you
know dollars in your bank account i'm willing to bet a decent number of folks would do it just
because it's free money right um and so they have that distribution channel they also have you know
obviously the ability to strong arm financial institutions um in order to adopt it there's
there's a lot of shenanigans going on i don't know if you've been following anything that's
happening with custodia bank uh where kaitlin's been trying to get a fully backed crypto fully
dollar backed crypto bank and they've been denying her the various licenses and i suspect it's
entirely because it's crypto and the government doesn't like crypto and so it's very concerning
banks aren't sovereign entities they are beholden to the government for all their licenses
yeah yeah and not and not to mention um you know there's always been the statement of the closer
you are to a central bank the more profitable like you basically first stibs on on all new
money created so uh you wouldn't want to ruin that status um you know through through adopting you
know uh things that aren't supported by by the fed or or or even um legislation within the united
states the um is there before i want to move on into defi at some point but before that i i feel
like we we touched on privacy and and cbdcs was there anything else you wanted to touch on those
i mean there's a whole world of topics but uh one thing i would encourage everyone to do is
just to understand uh the privacy characteristics of whichever blockchain you're using uh right now
it's still so early and the winners are still being sorted out in various different places
but i very much hope that we can get to a world where at least one of the winners is a privacy
coin right now manero is the top pick for that they have the broadest ecosystem they have the
most adoption as a medium of exchange um so i'd encourage folks you know if you're curious
a cake wallet is probably the easiest way you can download it in the app store
and just to give it a try out and see what you think it's it's very different from icp
in construction so a lot of folks here may not um kind of be thinking just in that model of oh
it's just a you know a currency you can use the privacy so it might help folks to learn a bit more
and broaden perspective is um is the way it it seems like there's um what's the best way to say
this it definitely seems like there should be because money has such a network effect that you
almost have to have it's not enough just to have the option for a technology right like if you say
like manero is it's not enough just for to kind of sit there and wait for there to be a need for it
but rather it still has to it has to always be um you know be have activity in order for that
when somebody that needs needs that privacy they can go and tap into an already existing ecosystem
right absolutely hundred percent i mean if you just think of the ecosystem what is the ecosystem
you've got consumers who might purchase goods from from merchants why would a merchant offer
to accept a currency if no one's using it so if you're using it in the system then you grow the
number of merchants and it's a positive feedback loop the more merchants the more things you can
do with the currency the more incentivized consumers are to get the currency and etc etc
so definitely using it and being part of the system is an important aspect to ensuring that
if we ever do need it not our hope to god we never we don't like we don't get to that point
but if we do then it's there for us to fall back on yeah i wonder um you know we have within at
least within difinity we we've talked um and we've we've mentioned this a little bit publicly as well
one of the nice things about the way we integrate with blockchains is that the private keys are
stored um you know on on the nodes of the internet computer and not on your hardware which makes it so
that um you can you basically you you can you can have a situation where for example somebody
could access their wallet using chrome incognito and then basically once they close that browser
there's no trace that they have a even they that they even have a cryptocurrency wallet um i'm not
sure we haven't really quite established whether there's a use case for that or not but exactly
what you're saying though is uh you you would certainly need for privacy you would need not only
for the the blockchain itself to to have um uh account uh what would you call it like uh
obsticate the account information but you would also need the hardware to to not leave a trace so
that somebody couldn't be penalized or punished for having let's say um a certain app downloaded
on their phone yeah i guess it depends how dystopian you go if someone knows you have crypto
is is that bad enough for you to get prosecuted maybe in some jurisdictions um i would caution
about um the marriage of privacy coins and icp uh the reason is because even though you have
those private keys sitting on different nodes uh all of those node providers are effectively ky seed
so there is a door for someone to come and knock on and um you know i'm not sure that icp would be
censorship resistant if there was uh private transactions happening say with north korea doing
something i think pretty soon that subnet would get shut down yeah that would be an interesting
use case um you know and uh um well anyways let's move on to uh defects i i'm tempted to go too far
down an icp route that's not the point i want to talk about uh what's going on i we're not trying
to do some navel gazing on uh on this space so um moving moving to defy is um like what we're
um we're like i guess where what interests you and defy uh that that um i know you post on twitter
a lot and so just kind of like what are what are your like main thesis what do you enjoy using it
for is there specific um applications that that you find interesting yeah absolutely so you know
as we start to talk about defy this gets to the second half of my thing of a separate banking from
bankers uh whether we like it or not whether the bitcoin backs maxis like it or not uh there is a
use for money that's beyond just stacking sats um that you know money has value in a lot of different
contexts whether it's uh lending and borrowing whether it's using it in other ways to to earn
money from it and so that's where for me defy comes in it's starting to build a financial system
on top of the permissionless decentralized censorship resistant rails that crypto has created
and so that's what's exciting for me at a very high level is um taking banks out of the equation
taking that custodial risk out of the equation if you've ever gone to a bank to try and withdraw a
large amount of money you'll notice that they give you a lot of questions behind that and how
much of it is actually your money if you have to pass a test in order to get access to it so for
me defy solves the custodial part of of banking and it's we're still in the infancy of providing
services so i'll give you you know a couple example of of defy services the most obvious one is the
ability to lend out your dollars even as a stablecoin and i'm going to talk in a bit about kajira
because i think kajira has done this better than any other ecosystem that i've seen uh but basically
the idea that you can earn yield um and at least in kajira it's anywhere from 20 to 50 percent on a
regular basis on your stablecoins without incurring custodial risk is is tremendous because
maybe you don't want to exposure to the volatility of the crypto market you don't want to hold bitcoin
that goes up and down you just want to save in a fiat currency or you know representation of the
fiat currency on the blockchain and we've we've seen you know probably one of the most broadly
adopted consumer apps was an app called alice app back in the terror days now it was doing uh
some of the funding of the um yield was coming from not real yield it was coming from people
throwing marketing dollars into it and that's never sustainable it was built on the platform
where the stablecoin wasn't sustainable so there was lots of bad things about it but the killer app
of i'd like to deposit my money have it be us dollars and earn a rate that's better than the
point one percent that chase is going to pay me for my checking i think that's a real use case that
that is a broad for a from a consumer perspective um now you get into other types of use cases for
defi you know defi a lot of the applications are just around swapping tokens one to another and
i think there's many of those kind of defi experiences as well on icp uh which requires
some amount of liquidity to be added to them typically in the form of um liquidity pools
for automated market makers uh it makes it a little bit easier to do decentralized swaps
with an automated market maker but some of the best tools actually go all the way to build
order books uh what are order books and why are they important you know one is it allows people to
be able to place a limit order and have the trade execute at that order um it prevents a lot of the
shenanigans that happen around uh rev attacks where people are using bots to get in front of
your order and shave pennies off of what you could otherwise have gotten it's very very profitable
especially in the ethereum ecosystem to conduct some of those move attacks so having an order
book that prevents may have effectively because you can place limit orders is important as well
to it and now you start to look at the entire system of well how do you use your crypto in that
context and so the ability to have crypto as collateral to borrow against and then use that
money however you choose so for example maybe you have a bunch of bitcoin you'd like to not incur a
taxable event and sell it you'd like to keep exposure to the price of the asset but you'd
also like to you know maybe pay your taxes or put a gun payment on a car or a house that's where
using your crypto as collateral and borrowing from that can be very beneficial for you now maybe you
know you're paying a rate that's perhaps a little higher than you could get if you went and you
pledged collateral you pledged your car to a bank but also you are very much in control so you can
pay it off whenever you want you can take out a larger loan whenever you want without talking to
a bank account or having to sign more forms with some institution something there's lots of places
where the types of activities we do today kind of lending and borrowing using a collateral that
we have become a lot more streamlined and there's more opportunities because the rates that you're
able to earn are closer to the market rates that other people are willing to pay so it removes this
sort of cancel on effect where the large banks and the people who are really really wealthy
are able to get a higher return on their their stables than just the regular folks like you and me
would it um going back so going back to the banks i guess is there is there a reason why we do need
to separate our money from the banks or our banking from the banks um kind of touch on
what uh what what troubles we have with um our current banking model and and perhaps like
incentives uh within within that model yeah so uh you know this is perhaps more dire if you look to
turkey and some of those other places i was reading a few stories where people were robbing a bank to
get their own money out of a bank clearly that doesn't happen at least not at the moment in the
united states even through bank failure so we've saw we've seen silicon bank uh failed it was a very
large bank for uh corporations in silicon valley and the reason it failed was because it was doing
you know treasury things and then the uh federal reserve jacked up the rate uh the interest rate
and so now those treasury treasury bonds are worth less so they're actually investing in the safest
asset you can imagine and they still uh went bankrupt effectively and or insolvent at least
and weren't able to pay back all the money to the people who put the money in the bank
and so one of the problems in general with banks is that they have this fractional reserve system
but currently a bank has to hold zero percent of the money its customers deposit in that
which is just mind-blowing to me so the bank has none of your money it's all lending it out doing
whatever it's doing with it and if you go and want your money back that's where we talk about bank
and only a couple people can get the money back before the bank goes insolvent and it can no
longer give the money back in the united states we have a system called the fdic which is uh
ostensibly insurance on bank runs there's not enough money in the fdic to pay back everyone
who wants to take their money out its primary purpose is really just about trust and knowing
that if a couple banks fail the fdic will step in and if you have less than i think it's a quarter
million dollars you'll be made whole uh restores trust in the system even though if we were ever
stress tested to the point that you know people are actually withdrawing all the money the fdic
would very quickly fall over and so it's a little bit of a trust game that's being played there
so i think you know banks are good for certain things but if you believe in this world of
self-custody if you believe in censorship resistance and you want to actually have control
of your money without an intermediary getting in the way then bringing your banking onto the
blockchain is the way to do that yeah definitely definitely agree i you know one of the things
that has been really helpful for me is just understanding banks are a middleman right so
you know if kyle's looking for money but and vanessa has money there's certainly no nothing
to stop you from lending me money under whatever terms we agree to but the bank banks tend to be
just a clearinghouse for all that activity but somehow we've gotten into into the situation
where the banks are as middlemen they they actually control control the market more than
we we would like to admit i think um and and then you have these weird things such as um you know
if you look at like bank of america or any of the major banks in the united states a lot of their
profit come from things like uh bank fees on overdrafts and and um you know interest charges
on credit cards and things like that that you're like well that predominantly affects the people
who are at least capable of paying those types of fees which which seems to be a problem that that
we're not addressing yet and defies a way to obviously solve that because it removes that
middleman um in terms of you're mentioning so uh kudjira and and some of the returns that they'll
offer you for for essentially um bringing collateral onto the network is that where do
how do they generate those types of returns is it mostly lending on the other side or are there
other mechanisms they use to to generate um to generate funds i love that question because
whenever you see yield the first question you should ask is where is the yield coming from
and if you don't know the answer you are the yield and you're going to get wrecked i'm speaking
also from experience so don't don't think i'm haughty here i've been wrecked i've been on the
other side uh kudjira in particular it's a it's a fairly um young ecosystem and all of the yield
is real yield it comes from people borrowing it on the other side now you might ask well why is
someone going to borrow a dollars at a 50 rate say that's three uh well maybe they have an
impression about where the market's going to go in the short term or the long term so if you're
borrowing to leverage up then you have uh you know if your assets going to go up 100 but you only
pay 50 you can profit from that so if you're a trader that's one example uh you might be uh
borrowing to bootstrap uh an online uh you know adapt on the blockchain maybe you're trying to
bootstrap liquidity for a swap engine or you're needing that liquidity for some other reason in
the real world where it's okay to pay that amount for a short term because you have an opportunity
to either earn more or to resolve an issue you know for example here in the u.s unfortunately
hospital bills are a big thing that comes comes around we pay far too too much for them if you
have a hospital bill that you really definitely need to pay to save your life it doesn't matter
you will you'll pay whatever interest rate to continue with that so it's all coming from
borrowers there are many many legit reasons why people would choose to borrow at a rate that's
higher um and as the ecosystem grows what i would expect is that as the tvl total value locked
grows from i think it's 130 or 140 million right now to a billion to two billion those rates will
start to normalize with the rest of the crypto ecosystem and ultimately with the rest of society
because there are arbitrage opportunities there i think the rates on curve for example are a lot
lower um but it's also a lot more expensive to get in and out and there's fewer things that you can
do cheaply on curve because of the ethereum gas fees yeah in terms of you you brought up this
idea of vertical integration within defi can you kind of give a background of what vertical
integration would look like or will look like yeah so you know if anyone's wanting to play with
vertical integration i encourage you to download sonar wallet which is still in beta i'm from kajira
and the reason this is so magical for me is often if you're you know let's let's talk about some of
the things you'd want to do in defi you've got lending and borrowing you've got liquidity and
providing liquidity and earning yield of liquidity pairs you've got being able to liquidate markets
and so being able to you know for people who have maybe borrowed too much to liquidate their
positions and take a profit on that so see about those three things in most other ecosystems
there's completely different tools from completely different developers that you'd have to go to
to get access to them which is fine but what it means is that you have to keep learning a new
language every time you go to a different place and that there's fewer deeply integrated composable
pieces into it and i'll give you an example of a piece in kajira that's that's integrated
kajira offers the ability to do leverage LPs which allows you to build liquidity and do do so
in a leveraged way it uses the lending and borrowing so the money market in order to
accomplish that so it's plugged in directly to that so if you're in your project you can use your token
that you have you can very easily stand up a liquidity pool of you know hundreds of thousands
of dollars without necessarily having to sell any of your token and so that's something that's
a true value for people building on the ecosystem that comes because you have this more vertical
integration of different composable pieces together the second thing you get from vertical
integration is that ease of experience for users and you know having that single visual language
across all the applications a single place single app that you can come to is an experience that i
think we need if we want to compete with you know coinbase or Binance or even your bank account
which you know right now you can deposit a check or you can transfer money or you can do the bank
account functions all from a single application you don't have to bounce to different applications
although some of that's starting to break as we look at zell and some of those other things the
banks are trying to put on them as well so there's a couple reasons i think vertical integration is
and yeah that's awesome i know we're coming to the end of the hour so i definitely wanted to
give you some time um just basically like open mic if there was anything that you wanted to close on
but before i do that actually let me um in terms of plugging your youtube channel uh just crypto
um and uh is that actually if you find it on youtube by just searching just crypto
yeah youtube.com slash just crypto and you'll find me um awesome definitely uh subscribe there
you're going to want to follow the message just put down a lot of great content um and really
just the diversity of the content is is extremely impressive and um the the honesty that you bring
into it is is incredible in terms of like what's coming up in the next few weeks is there anything
um uh anything you want to highlight yeah so this this week we've got a lot of conversations
with folks in the salahana ecosystem um we're talking to star atlas about gaming we've got uh
ethafuse which is doing bonds on salahana and we're also chatting with uh someone from the
traditional finance world on thursday who's bringing a lens on why he's in kajira from a
you know crowdfire type perspective an analyst in in the ecosystem so that might be interesting
whether or not you you care about kajira but to look at the way he breaks down opportunities and
does the analysis of is this something that's good to invest in or not we do regularly have
icp folks on as well i think um just looking through the schedule i don't see someone coming
up uh short term but yeah we we're also uh definitely open to having conversations with
folks in the icp ecosystem we've got seb talking about the motoka boot camp on the 7th of march so
that's the earliest one i see for icp awesome sub's a good guy too so i i look forward to to
catching that um in terms of the topics so privacy cbdc defi any anything you want to close on um
any calls to action you want uh you want from the listeners yeah so i mean i think as far as
getting experience here cake wallet for manero is a great place to start sono wallet for kajira
is a great place to start i'm always available here on twitter so if you have questions i'm happy
but generally uh you know one thing i like to say on my show is that uh we should learn more and we
should fomo less so i've talked about a couple projects today my intention isn't to get you to
buy any of them my intention is to stoke your curiosity and perhaps you go on a learning journey
and learn more about why these projects are important and interesting and then make your
own decisions about whether or not you're going to invest money i talk about and learn about a lot
of projects that i don't have money invested in because i'm curious and i encourage you to take
that curiosity as well i love that and um that's such a perfect way to end right it's it's our
industry was founded on principles and um i mean right into genesis block bitcoin it kind of set
the tone for uh the purpose for uh blockchain technology and so just going back to that getting
rid of our tribalism and our fomo nature and getting back to kind of the core basics of
of what we're doing and what we're trying to accomplish i think is is a wonderful way to end
everyone listening make sure you're following vanessa and um vanessa i definitely want to thank
you for your time thank you for your service and the content you're producing out um into the into
the crypto verse and um yeah i don't know it looks forward hopefully we can do this again
in the near future yeah thanks kal thanks for inviting me i had a fantastic time
yeah it's the pleasure was all mine vanessa um well everyone this was another edition of
multi-chain monday and again follow vanessa uh make sure you're uh subscribed to the just crypto
youtube channel and i look forward to seeing you guys next monday goodbye cheers