What is Ethereum and Why Should We Care? w/ Chris Chauvin

**Speaker A:** Hello and welcome to the first episode of the Strange Water podcast. I'm your host, Rex, but you might know me as Haim Salomon from Twitter Discord or anywhere else this community congregates. I'm super excited to have you here as we figure out how to create a podcast together and we'll have some very exciting ideas for this show. I don't want to give away too much yet, so let me say this. Strangewater will be a platform that elevates the voices of all the people that are building and building on top of the world computer. And really for anybody that wants to learn more about Ethereum, in this first episode, I wanted to go back to basics. What is Ethereum and why should we care? And so I called an old friend from my pre crypto days and asked him if I could explain. One final note. Please don't take financial advice from this or any podcast. Ethereum will change the world, but you can easily lose all your money in the process. And with that, once again, just wanted to thank you for joining us and I hope you enjoy the episode. I want to try to crypto pill or ethereum pill someone. And for this experience I've brought one of my very close friends from actually even before I started my professional career, Chris. And you know, instead of giving my long winded speech about all the things that we've done together, Chris, why don't you just jump in, introduce yourself and let the community know who you are. **Speaker B:** Yeah, thanks. Happy to be here. My name is Chris Chauvin and yeah, I think Rex are our first encounter was probably 2013, maybe 2012. Right. So I was, at the time I was with Anheuser Busch, roughly my second year with the company joined the innovation team and I was out in the Bay Area working at the beer garage. So their little incubator that's out there and went to the Stanford information session and you and I crossed paths. I think we were, you know, you were interested in their training program and I had just come out of that program and so yeah, I think, I think at the time we were kind of, you know, probably didn't realize how much we were going to work together and you know, how good of friends we were going to become. But yeah, you know, you fortunately for us, joined the company and I think we, our paths came back together again when we were both in St. Louis and then yet again when we were in New York. So we're just kind of following each other here across the country. **Speaker A:** Yeah, man, it's, it's pretty wild, like the way the world turns out for. For everyone listening at home. If you are like, familiar with Sriram Kannan in Eigenlayer, he was a. He came from University of Illinois, Champaign. And like, my biggest, like, crazy moment talking to Sriram was realizing that, like the University of Illinois, Champaign, which is like, so instrumental in so much of this, like, technology and like this like really hard science stuff is where I spent like what, three or four times a year, like coming out to hang out with Chris while he was in charge of like, what did we call the BUDD Lab? Bud Lab at University of Illinois, Champaign. **Speaker B:** So yet another one. Incubation centers. **Speaker A:** Yeah, yeah, yeah, man, it's. It's so crazy. And you know, I think just like real briefly, because this is not the point of this conversation, but like, do you want to just like talk to the folks at home? Like, why, like people like you and me were working for this like, super old industry, like, trying to figure out what we can do in Palo Alto, what we can do at research parks. **Speaker B:** Yeah, I mean, go back to 2010 when I first joined Anheuser Busch, and they were very much sort of a behemoth, but a legacy company in the CPG space. So they had a lot of traditional ways of working across the board at the time. The CEO, Carlos Brito, I think he was quite visionary and he, having come out of Stanford, had a lot of great relationships there. And I think he recognized the value of innovation. He was following a lot of Jim Collins content and Too big to fail and so on. And he was trying to really apply that thinking to Anheuser. And so he made that initial investment to go and put the beer garage and this sort of innovation center in the Valley. And then it sort of expanded from there. And fast forward a couple of years and we've started to realize the opportunity that some of these startups or bleeding edge companies could bring to a big traditional company. Think of last mile logistics and the Ubers of the world and so on. How do you apply that 10, 15 years ago to a company that is almost entirely anchored and rooted in distribution? And so, yeah, eventually then the next big thing was data. Data is the new oil. And so there was a big bet that they made at the University of Illinois and they created the BUDD lab, which was the data center. So I got to go and run that for a couple of years. And it was the same thing, right? It was, how do we not only leverage big data or just the vast wealth of information that we had at our Fingertips, but it was also through the lens of innovation. So it's all about net new capabilities. How do we reduce our dependency on some of these outside companies that are helping us do demand forecasting and so on. And how do you in house it? And then again, the leadership at the time, they were very forward looking and thinking and they were also looking for monetization opportunities. And so, you know, I think at the time you're sort of trying to piece it all together and figure out, you know, what, what am I going to do? How is this going to really impact the company? But I think now if you look at where Anheuser Busch is and you know, where they are in terms of D2C and B2B and there's a lot of sort of AI and big database capabilities that are part of the core business model. So, yeah, kudos to them. They were bleeding edge. **Speaker A:** Yeah, no, and so just like to kind of wrap that up in a bow, like, sorry, I'm cheating because I had the same job as you here. But like, basically you would say that like it was our job to like go figure out how technology was changing, right? And figure out what transformational things that were happening out in Silicon Valley or at Urbana Champaign or wherever and like figure out how that was going to transform this like 150 year old beer company that was like literally still using magnetic tape. Right, right. **Speaker B:** Yeah, that's right. **Speaker A:** And, and so. Okay, cool. Yeah, I mean, so like that was our job. And that's like how Chris and I know each other. And so like that. And like, for those of you following along at home, right, we, the, the era that we're talking about is specifically, let's say 2010 to 2020, right. Which for all of us on the crypto side of the line, like recognize that as like some of like the era in which crypto like transformed into this niche Internet project into something that like could have applications outside of, you know, speculation. And so I guess, like, my question to you is like, during this time or like in the time after, like, do you feel like crypto was something that was like even relevant to, you know, like Anheuser Busch or the companies that you worked for after, in terms of like, like a technology that could help with these kinds of problems or like, from your perspective, was this just like something super out of left field that would show up in the news every time, like Mount Cox was hacked or whatever? **Speaker B:** Yeah, exactly. Yeah. I mean, I would say the, the first memory that I have of, let's say, Bitcoin being referenced with, with Anheuser and some of the professional opportunities there, you know, a colleague of ours was putting that forward as, you know, an alternative to sales reps going account by account collecting cash. There were safety benefits, there were benefits tied to avoiding transaction fees and so on. So I think at the time we didn't recognize the potential, we didn't recognize the opportunity. And it felt maybe too small, too early at the time. I think later this is probably less functional and more PR and consumer friendly. But I know, you know, the value of blockchain and sort of understanding end to end the procurement of raw materials and kind of where those ingredients and your Budweiser came from. And it was fun for storytelling. But yeah, I mean, I would say really limited potential was our early take on this thing. **Speaker A:** Yeah. **Speaker B:** So. And I think even now, you know, it certainly feels like maybe it's embedded and services that, that either Anhyzer uses or, you know, now that I'm at Keurig, that we use. But yeah, I still think there's a lot of like, what do we do with this thing? **Speaker A:** Yeah, no, so, I mean, I guess, like, do you, what do you think when you hear like, either Bitcoin or Ethereum, right? Like, what in your head, like, is this like, even a concrete, like, idea that has applications that aren't there yet? Or like, do you even have an understanding of what this is? **Speaker B:** Yeah, there's a lot that I don't understand. Admittedly. I think the first thing that pops into my mind is like, investing asset. Right. It's an investment vehicle. You know, if you were in at the right time, if you are an early adopter, life is looking pretty good right now for you. But yeah, you know, I think. And then again, there's probably some of those stereotypical like, classical functional use cases that we were talking about, you know, with, with the sort of smart contract aspect of it. But, you know, I would say, by and large, I don't have a deep and full understanding of it. And I certainly, you know, I've dabbled in some of it, personally speaking, but I've never really gone deep. **Speaker A:** Cool. Very cool. Very good place to start. Let's let me just like, start by saying, like, I think there's like two ways you can understand crypto. Like, one is from, like, the very traditional sense of like, there's something about like, scarcity and digital store value and gold and economics and like hard money. Something, something, something like Bitcoin. Right. And then like, there's another approach to looking at it. Which is like through the lens of computer science. And like, what I'll say is like almost though everybody talks about it through this like economic lens. And like, I think everyone doesn't understand it because of that. So like, let's, let's like rewind to you know, 2009, right? Like when Bitcoin is like first getting started. And like think at the super basic level, like, what really is Bitcoin? Like, all it is, is a super simple application that has like balances names and like all the application can do is like transfer from this balance to this balance, right? Super simple list of names, list of balances. And like this ability to add or subtract. It's like essentially like kind of a bad calculator, but with memory. The cool thing about Bitcoin is that like there is one instance of like the Bitcoin record, right? Whether it's like the software is running on my computer, on your computer, on like some guy in China's computer, all of the records will match exactly the same. And like the Bitcoin software and what proof of work is, is like the ability for all of these different computers to update their program like completely synchronously, but without like trusting each other. So does that make sense? **Speaker B:** It does, Yep. They're all validating each other, right? **Speaker A:** Well, it's not even, yeah, like they're all validating each other, but more so it's like there's no, there's no central source, source of truth that is like the Bitcoin state. It is like the Bitcoin state exists within the actual computer that's running Bitcoin and it's an exact copy of every other Bitcoin state. Like there's only one Bitcoin state. And like what proof of work is, is the ability for all of these different computers to sync their state like trustlessly. **Speaker B:** Got it. **Speaker A:** And so we can like, we'll talk later about what like trustlessly means. But like the most important thing to realize is that like Bitcoin is just simply a computer program that is like run synchronously across thousands and thousands of computers. Trustlessly. Clear? **Speaker B:** Clear. Let me ask, and then let me ask maybe a silly question, right? So you're mentioning this idea of decentralized makes sense. How do you reconcile that with like the linear pathway, right? So it originates somewhere and then there's sort of a progression from one to the next to get through that verification or validation process. How do you reconcile that linear relationship with the fact that it is decentralized. **Speaker A:** Just So I understand your question. What you're saying is that yes, if you take it for granted that it's decentralized, that makes sense. But the fact is it has to start with like a single like computer using it and therefore like the original sin is centralization. **Speaker B:** Exactly. **Speaker A:** Yeah. I mean, wow. Let's see. This is like why I really wanted to talk to someone outside of our world. Because I don't think I've ever heard somebody ask that before. But I think like, I. So to quickly answer your question, it. What it really comes down to is like, how we define this word trustlessness. And like, what trustlessness really comes down to is that like, you know what's going to happen based on computer code. You don't have to trust that like different actors in the system are going to do things that are like, according to the rules. And so like when bitcoin was originally mined. Yes. Like the first bitcoin had to go to someone. Or like the first set of the first bitcoin network was just a very small centralized group of people. But like, we in this industry are okay with like the idea that one thing is happening. If it's happening in a way that is like auditable by like everyone independently and then like rabbit trail for later. But like, that opens up this whole question where it's like, okay, if everything is verifiable by like by checking the code. Like, the problem is that nobody knows how to check code. And so then you're like, re relying on trust and that like you're saying like, okay, these developers who say they're not associated say that it's trustworthy and I trust them. So. But we'll deal with that later. Yeah, so, but bottom line is like, where, where we start, is that like where. Man, this is such a good question, such an important question because like the, the story of bitcoin. I don't know if you know this, but do you know when the bitcoin white paper was released? **Speaker B:** I don't. **Speaker A:** It was in 2008, like during the financial crisis while all of the like, banks and AIG and everyone was being bailed out. **Speaker B:** Interesting. **Speaker A:** And so the like, one of like the most important insights of like this, the bitcoin or the crypto industry is, is if there is a system that is manipulatable by someone, like, there is going to become a moment of crisis that that person is in a dire straits where they're going to abuse the system to like, save it. And like, we can have like, you know, moral conversations about if saving the. The system is good or bad. But, like, the reality is, is that, like, if this power exists, it will be used. And so Bitcoin, what Bitcoin is saying is not only can we have this calculator that has one set of data across every single computer, but, like, we know that, like, no person has, like, control over it. Is that. Yeah, I've already lost you in the. **Speaker B:** No, you haven't. You haven't. It makes sense. And I'm also, I'm like, very functional in my think because again, I've got a very simplified view and understanding of it. And I'm thinking, you know, if I'm someone and I want to, I want to start a contract, right? I want to. So let's, let's go back to the traceability thing, right, which is probably one of the more common use cases for a lot of these, like, traditional, like, CPG companies, right? **Speaker A:** Yeah, for sure, for sure. **Speaker B:** Right. So, you know, from the moment. So in the beer world, right, I'm sourcing my grain. You know, I don't know where it would start in the process, but let's just say at, you know, some, some part in the, in the sourcing there, someone's going to say, right, this came from this farm in Northern Idaho, right? And like, so it's a, there's a, there's a point of origination that then has to get sort of shared down. So, yeah, it makes sense. And that's sort of what I was. That's in my mind, where I was going is like, you know, when you're, when you're using this thing functionally, there's sort of like a starting point and an ending point. And yet the whole thing, reconciling that with decentralization is still pretty far out there for me. **Speaker A:** One of like, the. I'll kind of get to this, like, punchline a little bit later, but like, one of the best ways to understand, like, what crypto is is just like part of the very, like, clear linear development of the Internet, right? Or more specifically, like the clear linear development of like, mass communications technology. And like, we can go all the way back to like the 1400s and talk about Gutenberg. But, like, just for the sake of all of our sanity is like, you know, like, we'll go like radio to, like, TV to like, being able to share, like, over the Internet, like, just, just to think that, like, we basically made it to Facebook and then innovation stopped and after that it was like, better and better UX and not even better, right? But like, that's obviously like, not how things work. Like, the next thing that happens after we share like, first video, audio, like, information is like, we need to be able to share property across the Internet. And so, like, why I bring up like, the analogy to the Internet is because, like, when you think about the Internet as a whole, like, it is decentralized. Like, imagine if you could get every president in the room together and like, convince them that like, we need to shut off the Internet. The Internet, right? Like, it actually physically isn't possible because, like, even if you, like, go after all, like the big backbone nodes, like, all these computers are so interconnected in a way that like, the people that want to get on the Internet will still always have a path to get there. **Speaker B:** Yeah. **Speaker A:** And so, like, that is kind of like the model of these, like, crypto systems where, like the whole point, whether it first is Bitcoin, then Ethereum, is to build this, like, credit. The big word is credibly neutral, right? This credibly neutral infrastructure that like, does what it does. Like North Korea can use it just the same as Mother Teresa can use it. But like, the point is, is that like, it's there to be used in a way that like, can't be abused. Right? So let's like, continue on. We'll get back to like, why all this is important in a second. Right? But so we have Bitcoin, right? Decentralized network of calculator, calculator with accounts, right? And so like, the next obvious question is if our decentralized computer can add and subtract, can't we just make it a general purpose computer? Right? Like, and this concept is, is a concept called Turing Complete, named after Alan Turing from. I'm sure at any point somebody like Imitation Game is a movie about him. But the, the point of a Turing machine is that you can mathematically prove that anything that a Turing machine can, can execute any other Turing machine can execute. So if you're able to like, build a system and show that it's a Turing machine, then you can show that any program that you could conceivably imagine can be run on that machine. And so we can talk about why Bitcoin didn't just directly evolve into this as it should have. Let me be clear, Bitcoin Maxis, you fucked up. Like, Bitcoin is just like the proof of concept that we can have decentralized computing as like, addition and subtraction. Ethereum is that transition to generalized computing. Does that make sense? **Speaker B:** Yeah. No. I mean, I'm trying Following and yeah, and I think the, again, outsider view, not as close to all of the nuances of this, but it's interesting, right. As we think about or as you explain sort of the evolution from Bitcoin as proof of concept, basic calculator, moving now into Ethereum, there's much more potential, much more upside going away from maybe a basic use case which is store of value. And yet at least from my perspective, most of the conversation, most of the, of the context. Right. Is still value based. **Speaker A:** Yeah, yeah. Well, I think the problem is there are maybe like 400 people that are working on building out the infrastructure layer of Ethereum and those are the people that understand why we're doing this and what this can kind of enable. And like before we get to the end of the pod, like I really want to like paint that picture for you, but I think that like outside of this world and even within this world it's just like it's so dense and it's so opaque and like 99.9 of the people in this space are actually trying to scam you that like, you know, it's just like it's totally lost and you know, like I would love for a different time to just hear like your experience of like what 2022 was for crypto and just like, as you like we all know that like our just chaos and like ridiculousness like leaked out into the normal world. But like I, I just can't even imagine trying to interpret what's going on here without even like having basic understanding of like why we would bother with this technology in the first place. **Speaker B:** Right, right, exactly. Yeah, yeah, it's, yeah, it's, you know, I think you and I talked about this a little bit before that, you know, I, again I've got a basic view of it for me, you know, until I can tangibly, you know, apply an alternative use case. I mean, NFTS is interesting, right? It's still for me feels very trendy and buzzy and you know, at the time, to your point, it's like you're buying and you're selling art. I'm sure there's inherent value there. And I'm actually having the nft, but it's like, okay, I can go and I can create my own copy and it's like unless I'm going to turn around and actually sell the thing or make a transaction, then it's like the copy's fine. So, so there's for me I, you know, looked beyond all of that. But yeah, from, you know, from A financial perspective. Right. Looking for alternative asset classes and so on. I certainly played in it. I saw the volatility, I got nervous. Right, because you get fomo, right? You know, I want to be a crypto billionaire. Pretty please. Wouldn't we all? And yeah, so I played with it and, you know, my parents are asking me about it, should we get in? And, you know, I'm just like, no, don't. But yeah, but, you know, and then I jumped out and, you know, I'm always sort of on the. On the outside looking in casually, you know, trying to better understand this thing and how I use it in my everyday, you know, how is it helping me? **Speaker A:** Like, everything that's going on in crypto is about, like, technology infrastructure. And like, when I think of, like, what the closest analogy for Ethereum will be is, like, HTTP, I think that's what we're building. And I think that, like all of the company. The thing I love to say, all the companies that we see today, it's like, imagine if it was 2003, you were at Harvard and I walked up to you and I was like, chris, this is the pitch deck for Facebook. Here's a billion dollars. And that kid over there, Mark Zuckerberg, he's gonna work for you. Here's the only problem. HTTP, it's not done yet. All we have for HTTP is that you can send one emoji at a time. That's the only way to communicate over the Internet. Good luck. How are you gonna build it? Yeah, you know, and so like, that, that is like, very much like the world we're in right now. And, like, some people are doing some interesting things that like, may or may not have staying power. But, like, I encourage you to think about, like, the looking at what's going on in crypto and thinking like, okay, this is literally the same thing that was going on, like, when, when GeoCities was being created and everything there was like, all, like, crazy and, like, kind of racist and, like, maybe there's some Nazi things, but, like, that kind of like spawned the thing that led to MySpace and this and this. And, like, that's like the chaos that we're in. The difference between what happened last time and this time is that, like, because of what crypto is, you can start to own ownership in these, like, protocol layers. And, like, you know, you can gain some financial upside on that or you can, like, lose a bunch of money in that. **Speaker B:** Yeah. And I'm going to say something again, not, not fully informed, but I think from my basic Understanding. I think one of the interesting things about Ethereum is it is not the asset class in and of itself. It's not the store of value like a Bitcoin, but rather it's a platform enabling other things, which potentially brings much more upside and much more potential. I say that without having full appreciation for it, but I do have that basic understanding that it is, it's an enabler of other things. It's not the thing in and of itself. **Speaker A:** Exactly. Wait, so let's talk about that. Right, so what you're referring to is what I was referring to as like, Ethereum is Turing complete, right? Is a platform that enables like basically anyone to deploy their own, like, computer program onto it to run and like, that can like, hopefully generate more value. Like value that is like, not only specific to that application, but will also feed back to Ethereum. Right? And so, like, let's like talk about what that actually means. Right, so what Ethereum is, is I literally have a computer running in my fiance's closet that is like running the piece of software that is an Ethereum client. And so within that Ethereum client, it is like the internal part of that is like, literally it's just a computer. All it is is a computer that has like the same thing as your MacBook, just like architected in a different way, but is capable of doing everything as your MacBook. And then on top of it, there's a second piece of software. It's called a consensus client. And what this does is coordinates with every other Ethereum node to make sure that your Ethereum computer is synced with every other one. And so that's how it works. The consensus client is the thing that runs proof of stake. And so we can talk about what proof of stake is, but essentially proof of stake is just what's coordinating these things. And so the way that Ethereum works is like, I'll be the node operator, I have the node in here. Like, Chris, let's say that you want to send me some money. What you do is you create essentially like an instruction to the world computer that says, my, this is Chris, I want to send one eth to Rex and this is my signature. And then you're going to send it to any of the, any of the Ethereum nodes. You could send it to mine, you could send it to like, anyone's. And the first thing that'll happen was, is all the Ethereum nodes will socialize your request so everyone sees the request. Then it'll be like one Ethereum node turn to progress the computer, and that's called a block proposal. And like the whole thing with blocks and blockchain is a block is just like one unit of these transactions or these like, instructions for the world computer to execute. And so sorry, this is getting long winded, but there's a point to this. So when you. So you, Chris, will send your instruction to the world computer, and then in order for the world computer to actually execute your instructions, like, you need to send some gas. And what gas is, is like, gas is this fictitious unit of account that all it does is like, measure the computational effort of like, the transaction that you sent. So like, let's say like sending eth. Super, super simple. Let's say like doing like a complex, like loan and then flat, like all this, like, derivative stuff. Very, very complicated. **Speaker B:** Like, so would you say it's like a transaction fee that is proportionate to the amount of work required? **Speaker A:** Yeah, the computational work. **Speaker B:** The computational. Yeah. Okay. **Speaker A:** Yeah. And so. And yes, exactly, exactly. And so like, the whole purpose of this apparatus is that like, by limiting the amount of gas available per block, you are like, setting the minimum require, like the amount of computation that a computer needs to run Ethereum. **Speaker B:** Okay, now let me ask you another newbie question. So if that, if the gas is the transaction fee in quotes, proportionate to the computational effort you were describing. Right. The fact that it's decentralized and it's going to sort of go through the network, is there inherent inefficiency in that? **Speaker A:** What you're asking is basically, is it inefficient to first send the transaction to one node, have it distribute it, and then like, so. So that's. That is inefficient, but that is like, inherent in decentralization. Because the problem is like, let's say that you sent your transaction directly to me and I didn't have to socialize it. If I'm like, oh, like, let's say it's not you. Let's say it's like the. An Iranian and I'm the US Government and I might see, like, oh, an Iranian just tried to send money. Not interested. And I might choose not to, like, move on your transaction. Okay, so the Ethereum system, like, forces the nodes to like, communicate all of the pending transactions before, like, you go into this execution phase. **Speaker B:** Okay, got it. So it's less efficient, but it's the nature of the beast in that there's inherent value in being decentralized. **Speaker A:** Yeah. And actually, like, that is the. That is the most important equation of crypto, which is like inherently the less efficient something is, the more decentralized something is. And like the easiest way to understand this is like, so again we're saying that gas is like the amount of computation that is like available per block. Right. Per unit of time. If you increase the amount of gas per block, what that means is your computer needs to be more and more powerful to be able to execute that whole thing within that amount of time. And it, the, the more powerful you make it, the more like, the less likely like hobbyists like myself are going to be able to participate and the more likely it's literally just going to be Amazon, Facebook, Google, governments. **Speaker B:** Got it. **Speaker A:** And so like you're, you're completely right to recognize that like a lot of the things that we're talking about don't seem like they're like execution focused systems. And like that's because they're not. The thing that they're optimizing for is like making sure that like literally people using Raspberry PIs in Africa can participate in the system. Because like. Yeah. And we can. Yeah. So the, so hopefully that's clear. **Speaker B:** Yeah, it's clear. And again there's like, there's a whole nother tangent we can go down where you know, I think you were saying proof of work on Bitcoin and I know that because of the computational workload there's a big environmental play. Right. And so I think, you know, the proof of work and now it's proof of stake or proof of. Is it proof of stake or proof of value as the alternative stake? **Speaker A:** Yeah, there's lots of like different offshoots. So. So yeah, we'll get to proof of stake in one second. But the important thing is like, okay, so gas is. Yeah, so, so gas is like this measure of like computation and like the, by like capping gas at a relatively low amount, that is like how we ensure that Ethereum remains decentralized. And then you can kind of now see how this whole system works. Whereas like in order to participate, like users like you and me have to send both like the thing that we want to get done, plus like the fee that we're willing to pay to get it done. And so like that is the system ultimately, like there is this like decentralized, credibly neutral like property layer that exists in the background. If you want to use it, you pay to use it. And it's that simple. Now the problem, the problem is that if you want to use it, you pay to use it. If lots of people want to use it, the Prices like, adjust to reflect that and go up. And so like, the net result is like, the more popular that Ethereum and Bitcoin, but the more popular that Ethereum gets, like, the more expensive it is to use it. And like, it kind of like breaks down the whole purpose. And like, the best example of this is like, there are times when it can become like 3 or $400 just to send Etherium or like send a stablecoin from one person to another. And like, if we're talking about like an alternate to the, like the current financial system, which, you know, like Western Union will charge you $40 to send cash across the country, but our system costs you 200 or $300. Like, what, what are we even talking about here? **Speaker B:** Right, right, right. **Speaker A:** So like, that is like kind of the problem of ethereum in like 2018, 2019. And like, that is what created like, all of this, like, explosion of different blockchains like Solana, like Avalanche, all these other things that you probably heard of, they that like, are not that are like smaller but seem like trendy and hype are essentially, they are looking at Ethereum and saying, this is a good idea, but it's just like way, way too slow. Let's re implement this on supercomputers. **Speaker B:** Got it. **Speaker A:** And so like Avalanche, Solana, all of these, they're basically doing the exact same thing that Ethereum is doing, but they're running on between one and 20 computers that are like, owned by the companies that founded them. And the problem with that is, no. **Speaker B:** Just, again, sorry, silly question. But for these, these alternatives that are sort of based on Ethereum, are they actually fundamentally different in any way, or is it just like almost like a white labeling of an existing thing? **Speaker A:** Okay, so if you were to ask like, people as part of those communities, like, if they're different and if they like, are really doing something in a way that will like, displace Ethereum, like, they have answers for that. Like, my personal opinion is like, it's pretty hard to look at anything that we in our industry called an alternative L1 or an Alto one and see it as anything other than like a cash grab by like, people that understand that everyone watched Ethereum like 2000X, the 20000X, and like, want to want to kind of capitalize on all the people that have like, FOMO and are looking for the next one. So, like, I'm super bearish and like, super, super skeptical of like, basically anything that's not Ethereum. **Speaker B:** Got it. **Speaker A:** So, yeah, and basically, yeah, again, the way that These other companies have like decided to like address the Ethereum scaling problem is like all right, fuck it, we're just going to make the computers operate like modern computers and then we'll figure out decentralization on the back end. The way that Ethereum is dealing with decentralization is by just totally, totally embracing or sorry is dealing with scaling is by totally embracing the, the trade off that we talked about earlier where the slower something is, the more decentralized something is. And so what Ethereum is doing is saying the Ethereum base chain like eth that will always be super, super slow, like super slow and super expensive. The idea is like that will become like the background layer that like most people will never even see. Like that's not even HTTP, that's like TCP IP or like the udp, that's like something that like no one has ever even heard of before. And then on top of Ethereum we have these things called layer twos or roll ups and essentially what they do is provide like super, super high execution environments like very centralized like one or six computers that are like doing all the transactions on the Ethereum is capable of and then saving a copy of those transactions to like the main slow Ethereum chain. And so like what this construction does is allows like all of the computation and all of like that the action to happen in these like super high performance environments that are super cheap. But like the, the net result of what happened will always be like saved back to the base layer which is like uncorruptible, immutable, like not up like doesn't have any of the centralization risks that are like normally associated with you know, this execution. **Speaker B:** It's interesting. This is probably, yeah this is probably like not a correct analogy but just like as you're, as you're describing that the visual that I'm getting in my mind is kind of like Docker containers almost right? Or you have like this host machine and then you've got these like purpose built things that are going and you know, instead of asking the core machine to do everything you can containerize it all. I don't know. **Speaker A:** That is so incredibly right. Like, so one of like what basically how Ethereum exists today two years ago was that like everything that was happening was happening in Ethereum like base chain and like these smart contracts which Smart contracts, terrible, terrible name because like people they, sorry, this is an aside that's worth having. Whoever picked the name Smart contracts was wrong because like when you hear smart contract you start your head immediately goes into this like kind of like legal frame with agreements and like there's two parties and you know, maybe like this smart contract can like do this thing that we both agree to Forget all of that. Like, the way to think of what a smart contract is is to first understand Ethereum as the world computer. As like, yes, each Ethereum client is like running on an individual computer, but every client is exactly synced. And so therefore looking into one is looking into any or is looking into all. And that's the, the world computer. And a smart contract is simply an application that runs on the world computer. That's it. Right. In the same way that like I'm looking at my computer, I have discord, right? Discord is an application that runs on my MacBook. A smart contract is an application that runs on the world computer. **Speaker B:** Nice. That's. Yeah, it's, it's interesting. I mean, I think as you say it, it totally makes sense. Never would have pieced that together, going back to this idea that like, Ethereum as the platform enabling other things. Yeah, it's more clear to me than it was. Yeah, for sure. **Speaker A:** Yeah. Okay, so, okay, two things I want to hit before we, we head out. So one, I want to talk to you about, like, why, like, really why? Like, one, anyone would care, but like, specifically, like, why I care so much about having like this system that is decentralized and like, doesn't have this like, key man risk. Right. And then the other is like, okay, once Ethereum is like, once, once we've upgraded our HTTP from one emoji to like the full suite, like, what type of world are we looking at? Right? So first let's talk about why. So you know the classic story of like bitcoin is like in the Ashes of 2008. And it's like the reason this happened is because, like, the people in control of money were like, basically like up until 2008, giving like money and power to all the people that were just doing like, incredibly risky stuff. And then when they broke the system, the people with the money came and bailed them out. Right. And so like, what, what a lot of people think about Bitcoin is like, especially after, you know, 2020 and now this like, new banking crisis that we're experiencing right now, it's like, okay, this is going to keep happening. They're cheap, going to keep picking winners and losers. Like, I don't want to be part of this system because, like, I'm probably going to be a loser. And I think, like, that's honestly, like, totally, totally Valid for me, it's like more personal. I have like two stories that just like make me like an ethereum zealot. So back in 2015 I took like two weeks off work and it was early in spring. Obama was signing the nuclear deal with Iran, and that week I was in Budapest. With me, it was my mom and my grandmother. And when he signed it, we were on the first train of Americans to go into Iran and spend about a week there. It was one of the most incredible things I've seen in my life. And you know, that really like opened my eyes to the like, the devastating consequences of like, the way that we talk about other people in other cultures. And so, you know, normal, like privileged kid. Like I promptly forgot about it for five or eight years until the last year in February when the Russia Ukraine war started. And so without getting into any politics or anything, my fiance's family is like Russian and they like still live in Moscow. And like, I'm not here to speak for them, you know, they, everyone is like struggling through this. But let me just say, like, nobody is happy about what's going on in the war. Bottom line is like, I, over the last year have experienced firsthand, like what it means to be on the wrong side of American or like reserve currency power sanctions and like how devastating that can be to individual families, lives who have no, no ability to affect the war, don't want to be in a war, have no ability to stop it, to start it, to do anything at all, but just now need to deal with this. And then my other story was also last year, for things that are totally unrelated to crypto, I got locked out of my bank accounts from May until September. And the net result of that was I was totally unprepared. I didn't have any liquidity available. I ended up having to like first putting all my credit cards on minimum payments and then taking like a five figure loan from my mom and then finally missing a mortgage payment before this whole thing was resolved. And like that for me was like the radicalizing moment. Like the moment where I realized that like, not only do I like, not have control over my money, but like, nobody cares and nobody has any sympathy. And if like something goes wrong and somebody and I need money to fix it, like you need to have access to it. And so like what crypto is, is like an answer to that. **Speaker B:** Yeah, I mean it's, it's, it's interesting to hear like those personal experiences and stories. And I, I think, you know, from day one, as you were saying, Right. Again, let's go back to Bitcoin. But just the fact that it's the. I'll call it the safe haven. I don't know if that's the right word, but it's something other than everything else. And I think, like, fast forward and as this thing has really grown in popularity and awareness, you know, you hear a lot more about, you know, pending regulation and so on, I guess. What are your thoughts? **Speaker A:** I think that. I think that we got this far with zero regulation because this industry, one, is just. It's very uncoordinated, decentralized. But two, I think it's because, like, we looked at the lessons of Mark Zuckerberg and, like, the tech 2.0 bubble, and we saw, like, hey, look, like they didn't get regulated and they grew to take over the world, like, and they got so big to the point where, like, regulation just doesn't even, like, conceptually make sense anymore. Like, that's how technology works. That's the path we want to follow. And I think that that was, like, the absolute wrong lesson to learn. Like, the right lesson to learn. And, like, this is something that you Understand more than 99.99% of people in this industry is that, like, the rules get changed by, like, people hustling behind the scenes. You know, like. Like, I forget what position you were in in 2017, but, like, Anheuser Busch played, like, a major role in, like, the tax changes in 2017. And, like, it wasn't just because, like, we were sitting on the side and, like, writing thought pieces about, like, why regulation needed to do this X, Y and Z it. Like, we had boots on the ground. Like, we had people in Washington. We had, like, factories in states like, that were, like, putting out communications about real people with real jobs. And, like, regulation gets shaped by, like, by industries. And, like, crypto has been completely absent up until, like, we experienced an existential threat. And so I think, like, we're in a pretty dire situation right now. It's not good. And I think that, like, even if we were able to, like, go and find all of the senators and, like, convince all the senators who think the wrong things and convince them about what grid regulation is and get the perfect bill drafted, like, the reality of our government right now is, like, I do not believe we can pass a new law. And I don't know when that's going to change again. And so, like, I. I think that, like, again, I. I'm more worried about things in our society, like, falling apart than I am for crypto you know, and like, like bottom line, you can go back to like some of my older podcasts, but I say this all the time. Like I fully believe in a world where Washington just like makes it illegal to hold crypto, that that totally could happen. In fact, like it might even be likely to happen. And like my response to that is like, well I'm moving to Singapore or I'm moving to Dubai or I'm moving to like I'm moving to Moscow. You know, Like I like what is being built here is inevitable. Like I made a website called Inevitable Ethereum, which is a quick plug little wiki style website of like all my writings that like essentially boil down to my thesis that like again this is just the natural evolution of the Internet. Like we had to figure out a way to like move property through this space and like while I'm like looking around and watching like, like governments don't work anymore, negotiations don't work anymore, like coordinating doesn't work anymore. Like I'm in Los Angeles, I live like near Venice beach right now. Somehow like in the most expensive part of the country is also like the biggest homeless camps of the country. Like when I see Ethereum it is like just like science and humanity and people just not relying on these big systems that aren't working anymore and coming together and figuring out how to make this work. **Speaker B:** And for me, and let's say anyone else, not as much in the know, I guess. For those looking to drive regulation, what are the, what, what are the top two or three things that they are anchoring in on? Right? I mean certainly when you see how much adoption is driving up the inherent price and value of this thing and then you see people that are financially gaining and benefiting from that, there's an opportunity there for them to go and jump in. But let's say above and beyond that, are there other core pillars to their, you know, advocacy for regulation? **Speaker A:** I mean so like really where regulation is right now is like super, super combative. Like there's not really, I mean I'm sure there's people that would take offense to what I'm about to say, but it's like not really like an industry group that's like coming and advocating and like trying to like get Congress to do good legislation. Instead it's more like reactionary. People in Congress watching things like ftx, like watching things like SVB bank and Signature. SVB bank is the wrong example, but Signature bank, like do some like things that like whether or not are actually okay, like look really, really Sketch. And so, like, the dynamic that's going on is like, the SEC and like, some congresspeople are like, basically saying, like, we need to just, like, burn it all down, get rid of this. And then you have, like, kind of the crypto community, like, coming out, like, with weapons ready to defend. And. And so, like, it's just. It's very chaotic. I'd say, like, the big, like, pillars that are being argued around are. One, is like Ethereum and Bitcoin and coins, are they commodities or securities? Two, is, like, really around, like, the, like, what it means to be a stable coin. And, like, do you need to have reserves? Do you need to, like, be able to convert to, like, a. A real dollar as opposed to, like, other kinds of stable coins, like, those kinds of things. And then there's like a. So much stuff around privacy and know your customer kind of stuff. So, you know, like, honestly, it's like, really, really boring financial stuff. And like, when people always, like, kind of get worked up about. About regulation, like, my opinion on it is, like, look, there's like, bad regulation. There's stuff that can make, like, it harder to start companies and to build stuff. And like, ultimately, like, there's regulation that would mean, like, the real zealots like myself are leaving the country. But 99.9% of regulation is just, like, straight up good. And, like, the reason that it's good is because it, like, provides the permission structure for, like, real businesses to enter the space and, like, actually build things with concrete value and not just, like, speculative value. And so, you know, it's like, it's just. It's really frustrating to, like, talk about regulation in this space because a lot of people just, like, don't really understand how regulation works and. And what we should be hoping for. But. Yeah, I don't know. I mean, I hope that answers your question. **Speaker B:** Yeah, yeah, no, it's. I think it's good. It's good to get your stance on it. Right, because I agree. I think regulation can be good so long as it doesn't overstep. And that's. That's the balance. **Speaker A:** Yeah, well, and I mean, it's just like, the way the world works. And so, like, by not having it, it doesn't, like, create a more conducive environment. It creates, like, a more shadowy environment. And. And, like, the result of that. **Speaker B:** Yeah, I would say it gives it credibility, right? **Speaker A:** Yeah, for sure. **Speaker B:** In some ways it could support growth for. **Speaker A:** No, I mean, it definitely will. It's. It's like. Let me put it this way, right? Like, great example. And this is like, without spilling any company secrets, but, like, the thing that we always used to talk about, like, especially in the 2013-18 era at Anheuser Busch, was like, oh, are we going to like, buy a weed company? Right? And it was always like, I mean, maybe, like, it's interesting, like, obviously, like, share of people's leisure time is going to be eaten up, but, like, we're not even going to entertain this conversation until, like, there's regulation that makes this not a federal crime. **Speaker B:** And so, like, social stigma and stuff like that. **Speaker A:** Yeah. And like, again, like, Anheuser Busch, right? Like, as someone who is responsible for essentially transferring money between Belgium and us, like six times a day, like, crypto today could like, change the game. But, like, they're not going to go, like, drop a billy on like, Ethereum when, like, next week, like, the SEC could be like, okay, if you own Ethereum, that puts you, like, in concert with North Korea, you know, like, and so, like, regulation, I like, very much believe is, like, bullish and, like, is the key to growth, at least in the United States. **Speaker B:** Yeah. I mean, again, I. I'm. You and I are friends, no bullshit. But like, yeah, I mean, this is something where I recognize the potential for this thing, but I didn't understand enough about the thing itself to act on it, right? And so I've always been passive, outside looking. And you can't be blind to this thing. I mean, every time I open up, you know, any news app, right, there's always something. There's always something going on. So it's there, it's in your face more than it's ever been. And yet it's, in a lot of ways, feels more out of reach than ever because again, the oversimplified price and sort of financial gain feels like that's come and gone. And so now in a lot of ways, it's like, more inaccessible than ever because you don't know what else there is on the surface behind these things. So, yeah, I mean, I know I'm coming out of this, you know, having a better understanding for it. And I think your. Your passion for it is certainly contagious. It's a fun, funny anecdote, right? Like, like, I just remember this is probably like 2012 maybe so still fairly young, fairly new in our career. And I realized I'm like, you know what? I got to start investing. I don't know if you remember this, right? It's like, I got to start investing. So who I do I call Rex. Rex, do you do any investing? Yeah, yeah, yeah, I do investing. All right. What do you use? I use E trade. Yeah, whatever. So what do I do? I go home and like, that night, I'm like, in E trade buying at the time. Probably Apple, Amazon. Some of these things still have it to this day. And then I remember, fast forward a couple of months, you know, hey, hey, Rex, this E trade thing's going great. If you had to do it all over again, what would you do? The next thing out of Rex's mind. Oh, you know, there's this. There's this new thing, betterment. It's kind of cool. Went home, I opened a betterment account. I went all in on betterment. Right. The thing bought our house. Right. So Rex is. You're my go to guru. **Speaker A:** The total opposite direction because, like, all I can do is lose my own money. So I'm glad it's working out for you. **Speaker B:** I think it's just timing. I think it's just timing. Yeah, I got it. And then I got rid of it before everything happened. Happened because we bought the house. So I don't know, maybe that's not a complete win. **Speaker A:** No, man, that's. No, I think, Yeah, I think the wrong way to look at investing is like, number go up, and it's always about, like, what kind of life are you trying to live? And it's like, at the end of the day, like, my dumb, uneducated comment, like, bought you a house. Like, I mean, literally, what more can you ask for? So, yeah, yeah, so here, man, like, what. Here's what I'll say about crypto. And, like, I didn't enter this conversation, like, hoping that you join our little cult, but I would, like, love if that's the end result. But back in 2018, when I was, like, like, really thinking hard about leaving Anheuser Busch, and like, when I ultimately did, like, I'll never forget, I said to one person that the head of the beer garden in St. Louis. And I said to her, I was like, look, I just feel like everything that I've done at this company has been, like, managing something that's falling apart. And, like, everything is on its way down and, like, it's just, like, filling holes and disaster crisis. And, like, I just, like, I really want to, like, work on something where I feel like I'm building something and I'm growing something, and, like, I'm trying to achieve something. And, like, what she said to me was, rex, this might not be the right company for you. And, like, for Me, like, that blew my mind because like, this is like a super senior person at the company who like, I couldn't believe could ever say something not positive about the company that they work for. But like, well, what I've like taken away from that was like I spent like the next however long like looking for a job and like trying to find something that like would not have that problem, you know, and that like, I would like really be enthusiastic about like going to work. Like, not because like I cared about the people or anything, but because like, I like needed that company to succeed. And like, you know my story. You know, how many like different like jobs and like different places I looked at. Like, the first time I like really felt excited each day to like get closer to the future was like when I found Ethereum. And so again, like for me, I like, I'm such a tumor these days. Like I really live in this world that's like falling apart and like, whether it's because of like the war in Europe or like our own domestic problems or like this, like, you know, like World War III that's like looming over Taiwan or like literally anything. Anything. I didn't even mention the pandemic because like, I feel like that we're over that. Right. But like, like Ethereum is like what you know, is, is us still moving forward. And like, that's not, it's not the only place where that exists. But like, I do think it's the only place where like it exists and like you are not only welcome but encouraged to like walk up to the group and like, help in whatever way you can. **Speaker B:** Yeah, and I think, you know, and I think thanks for sharing the personal story there. And frankly, I left Anheuser for the same reason. Right. I think I was looking for the opportunity to get back to building. So we sort of both came in through the innovation track and then we both found ourselves in different parts of the company and eventually most of the company doesn't. They're not thinking in net new capabilities and building. It's either status quo, maybe you're optimizing more often than not, you're fixing and it's such a dream. And I left for the same reasons. And that's why I went to a startup, because there was a lot of excitement there. It was new to the world in a lot of ways. It was a new place, a new city, a new everything. And yeah, just the excitement to build was totally there. And so same thing for Ethereum. I understand the excitement of building something and then just the Undertones of this being potentially so good for the world is also something, at least for me, that's become increasingly important. Right. Because it's like, of all the things I can go to work and do every single day, why am I doing the thing I'm doing? Is it just for me? Is it just for financial gain? Is there something more to it? I haven't found the something more yet. Right. I'm getting there and I'm caring more and more. But just my point being, I think your message totally resonates with me because I think that's the same excitement that I'm looking for. **Speaker A:** Yeah. No, yeah, man. And I think. I think, like, I think that's part of at least the American condition and might be more broad than that. But, like, the word that I used with. With that executive was, like, my job has, since I started here, has always been managing the decline. And, like, I think that's what it means to, like, largely live in our society. And, like, with Ethereum, I feel like that, like, that is so far off the table. Like, what to climb? Like, we're not. We haven't even started yet. And so for anyone, yourself included, that's looking for that kind of, like, spark to life. Like, the great part about Ethereum is like, you can start getting involved without quitting your job. So with that, what I'll say is, Chris, thank you so much. It was such an honor, and I really appreciate you just letting me lecture you about the cult that I found. And I hope you enjoyed your time. **Speaker B:** Yeah, it was a pleasure being here. And thank. Thanks for putting up with my, I don't know, lack of knowledge here. **Speaker A:** No, please, you're perfect. You're perfect. All right, man. Thank you so much. I'll talk to you soon. **Speaker B:** All right. It.