Welcome to the bankers summit, a series of talks from speakers all around the syrian ecosystem, which were all presented at a one day event hosted the day after dev con called the bank of summer. We are releasing some of these talks on the podcast all throughout this week and next, and the rest are available on the bank. Less premium feed you're got to hear argent paton's, the C.
E, O, have ever clear, formally connects to gave, well, I think might have been the crowd favorite talk at the summer this year. Argent takes us back to our cyp du anarchist roots and gives a Stellar account of what that means to all be in crypto. I had goose bombs the entire time.
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Hello um hi, i'm origin. If you don't know who I am, I have been in this space for quite a while. I've been involved in building things on top of the thera since two thousand sixteen.
I helped with a lot of like early alter research. Actually, you were here for IT means talk earlier. He talked about building the first felt on a theoria for spin chain.
I also helped build that and and then also was involved deeply in a lot of like early thinking around downs and most recently, interpret ability. This talk is called why are we here? IT is not a technical talk, which is unusual for me. It's a much more kind of like systems and economics and political and philosopher or into talk.
And my hope is that people in this audience, people who are watching recordings of this talk at some point in the future, can use this as a way to kind of reflect on the core ideas behind why this space needs to exist in the first place. Because we're in this like very, very special place where we where kind of IT looks like we might cross the casm into the mainstream for the first time ever. And and if we do that, I hope that we don't kind of like forget some of the core reasons for why block chains should be around in the first place.
We live, in a word, time um over the course of the last, I would say, like hundred years or so, the world has kind of gotten increasingly authoritarian. Part of this is propelled by technology. Part of IT is propelled by where we are in the life cycle of the the american hegemony and empire.
Um this is a graph that shows just the like the the level of democracy that exists in the world. And you can see that it's really decreasing very significantly over time. Um this is a trend that has been going on for some time and it's also mirrored by like similar trends in in corporations as well.
Um there is a there is this like strong centralizing effect where more and more organizations are consolidating to become these large super monopoly, uh super governments that uh that unfortunately can wield like pretty much unchecked power. And at the same time, we have this like secondary thing that's happening, which is seeing an increase in the number of negative externalities associated with these systems that we live in, right? There's something very broken about the world that we're in right now.
This is global emissions of co two. This is deforest location. You could really pull up like a lot of other charts that look like this. These are just two examples. But um IT seems like there is something in the way that human beings are Operating right now that is leading to us not effectively thinking about the long term uh like outcome for humanity versus the short term benefit of a few stakeholders.
What I want to do is try to understand a little a bit more about like why we're here? Why did we end up in this place, right? What is what is so broken about systems today that leads us to continually fall into this cycle? Because this isn't the first time that this happened. If you look at throughout history, I was trying to fit a good graph this, but I was able to find this last night.
Throughout history you see this like continuous cycle of, like rise of empires of a long period fine, followed by a crash follow by rise of epos of a long period time, followed by a and every time that happens, who suffers its people? So what is the fundamental to these systems? That is a little bit broken.
Who here knows what the tragedy? The comments is cool, okay, good. That is most people for anybody that doesn't the tragedy the commons is an allegory that kind of talks about the failures of human ordination. Um there's a lot of similar allegory.
In fact, I if you were familiar with moloch and the moloch dough, we talked about this extensively back in the day um in the the allegory kind of goes like, well, if you have a pasture that has a Carrying capacity of like ten sheep and there are ten farmers each with one sheep on this pasture, that is a sustainable system, however, without any kind of external policing, there's no incentive for a farmer to only have one sheep in that system, right? Because if you add another sheep, IT increases your output, your output of all or whatever by one hundred percent. And the cost is not actually borne by you.
It's shared among st everybody else. So like the kind of benefit that you get is under percent, the cost that you pay is only ten percent. And then obviously this leads to this like death spiral where over time everybody just gets more and more sheep and then the pastor gets overgrazed.
And then you have like environ vironment tal impacts throughout the world for all sorts of things like youtube. Um there's a really, really interesting person named alert astra who's a noble prize winning economist. SHE actually doesn't get enough credit for a lot of work that he does. Um elenor spent the majority of her life actually working on understanding the tragedy, the comments, and basically how you can actually sustainably govern common systems, where he called common port resources. And osterman research found three possible ways to do this um the first is centralization, right?
You have some state come and just like take otherness of the system, this is sort of like how communism works um you the state just poses imposes rules on how many sheep everybody can have and how they can Grace and when they can Grace and that's basically IT but of course, you trust this state unilaterally, right? The state is telling you one hundred percent of what is okay. And if the state, besides a cheap, there's not really anything that stops that.
So you have this who watches the watchmen problem that kind of exists in in any kind of system where you have this like god like rule option were two is private zone. This is kind of where we're headed right now with the us. Economy and where usually as as fast as this like the solution to centralization risk um in a lot of cases. But unfortunately private zone also has a lot of flaws.
So one is so very unclear to how you define property rights in general, who owned these things in the first place, right? What if you don't necessarily know who owns the land? And then similarly, you have the secondary problem of, like, well, how do you enforce these property rites? How do you enforce the privatization? How do you scale that enforcement? Ultimately, you have the same problem as option number one, which is who watches the watchmen? And then there's option number three.
And this this was australia of kind of concluding, was like, you actually can beat the tragedy of the comments. And in fact, there is lots and lots of examples where human beings have done this. There are tones and tones of cases where human beings have coordinated around a shared resource for hundreds, sometimes thousands of years, and done so effectively and sustainably.
However, and there's one very, very important caaba to this IT doesn't scale, right? You can enforce these things on a peer to peer basis by, like within your community, who of everybody that you know the name of you can convince them to not do things wrong, and if they do things wrong, you can publicly shame them um but how do you do this in even in in an ecosystem of thousands of people, right? How do you do this in in q system, billions of people? How do you solve some of the biggest worlds problems when the world's biggest problems, when you you can't do this thing, where you can solve this problem of social scalability? And how do you enforce rules on a global basis in a way that is ideally pair appear? Now, unfortunately, until somewhat recently, the answer was you can right? And so the natural conclusion of all this was the very, very unfortunate realization that institutions don't scale.
As I thought experiment, I would like you to spend some time thinking about this interesting question that I have actually asked a lot of people at the last couple of years. Can you think of a single instance in history where a large scale institution has effectively represented its constituent for a long period of time without getting corrupted? I've never actually gotten anyone that has given me a real answer that's really bleak, right? There's something inherent to IT to humanity.
There's in something inherent to the human condition that leads us to continually get to this output, which is every single time we try to build an institution, IT breaks. And when we rely on these institutions to create goods for us, right, any sort of, and he sort of output that we need to need in order to survive as a species, those goods themselves broken. Why does that happen? So there's this really interesting notion in in economics, that is, that talks about the way that goods are developed.
And so goods, and this, by this, I mean, really like any kind of product and any kind of innovation, follows a fairly predictable life cycle going from being breakthrough innovation and then over time, over the course of like innovation, over the course of competition, getting to the point where they are just complete public goods, right? Effectively utilities. Um you can map out most innovations in this kind of a chart today, right? So although we in the end you have fusion reactors, which are this really, really highly custom thing today, we don't have fusion reactors in our home.
You can't buy a fusion reactor. And amazon god, I hope you can never do that. And then all the way on the other in the picture um you have things like electricity in the internet.
The internet is is a public good. It's effectively open to anybody. And as long as you have electricity and as long as you have a computer and as long as you have a few other dependencies, IT is something that is fundamentally public.
It's not owned by anybody and then everything else kind of falls in between. You have things like computer storage, but AWS where it's aggressively commoditize, but it's not a public utility yet. Payments are kind of in that category.
AI is just now breaking through into becoming something that's productive, zed, but not yet commoditized. And you can also plot a lot of sovereign goods in this chart to the kind of behave in a very similar way, right? Although we on one into the spectrum, you have combat drones, right?
Obviously the U. S. Government, obviously comet drone should not be commoditized.
The U. S. Government has these as like fairly custom things. We also have things like voting systems. voting.
Voting systems are not actually very easily and widely available because as we talk about earlier, they require enforcement. And then on all the way and the other end, you have things like roads. Anybody can use roads.
So how do how do innovations move through this through this system? Let's talk about payments. For instance, payments, for example, of VISA um R A R A innovation that have especially digit payment.
There are an innovation that and for some time they really should be commoditized right VISA charges like anywhere between thirty basis points to like several percent on making transactions. That's that's a period that is honestly way too high for the world that we live in today doesn't really make any sense. But they stay there, they don't move towards becoming a utility.
And this is somewhat intentional because one of the things that's actually really critical to this pattern, to this, to this lifecycle of goods is that when companies are creating goods, when governments are creating goods, they don't necessarily want these goods to become utilities um they don't want every good to become a utility and they want to limit the ability for their good to become effectively get disrupted as a result of moving further along in this timeline. So for payments, that means you know working with governments to regulate the way who has access to payments um requiring kc things like that, basically making IT impossible for new entrance to come into the market to disrupt es and mastercard. This is a strategy that you see everywhere, right?
Health insurance in the U. S. Is a really great example. This health insurance should be commoditized.
IT doesn't really make sense that it's not but in the U S, A is not a commodity good. It's a product um and you pay for IT like a product. IT is much more expensive than many, many other parts, the world.
And the evidence that is a product is just you can kind of see the distribution of health insurance providers, right? This is not this is not what a commodity good looks like. A commodity good is way more fragmented, and that's a good thing. That's how you drive Prices down and that's how you actually create competition. There is not competition here.
Why isn't their competition? Honestly, because of a broken system? You have this you have this unfortunate thing that happens over over and where like corporate monopoly will work together with the governments to effectively to basically keep themselves in power, usually at the cost of users.
There's there's a fly wheel that kind of represents ts, how this happens like you have a uh in comment, corporations will fund politicians. Uh those politicians will be elected and they'll go in a past policy and the policy that they pass will protect the donors that funded them. Once they pass that policy, those corporations will solidify their monopoly w revenue and become basically super, super dominant and then theyll partner back with the governments to give them technology dominance rates.
The governments will then leverage the exact same technology example, twitter, to control people's opinions, to control the way that they think, and to then fund more politicians. And kind of go around in this in this cycle where of course, unfortunately, you are the one that's losing. We talk so much about incentives in the space um and and it's such a core part of the way that we think about, about block chains, about building building infrastructure.
But there is also a similar kind of like system of incentives that exists around governance right now around policy. And regardless of whether you fall into the economic right or right or left um the system of incentives unfortunately continues to drive us upwards, which is no matter what happens every single cycle, we get more and more authoritarian right? Even if you even I mean, we'll see kind of what happens with this present cy, but even when you when you have net reduction and complexity of legal systems, we have not yet seen a net reduction in authority, an ism.
They've only seen the slow and gradual reduction in civil liberties over time and in history. The only instances where that's change is when you have a revolution. So hopefully we don't have to hit that point.
What we do need is ideally something that is not a revolution, but something that pulled this strongly in the other direction towards anarchism. Now i'm sure the word anarchism makes people a little uncomfy IT makes me a little and coffee, right? There's a lot of brainwashing around anarchist m where like the first thing I think of when someone's as anarchists, m is like cars on fire.
Right, like that. That is the first mental image that you have. That's not actually what anarchism at is at all. It's just like the association that has been drawn, which you're just like, okay, it's a person in all black that is like throwing a molotov cocktail but it's it's not that it's this much more simple notion that actually when you go and talk to anybody, regardless of where they from, regardless of the political of backgrounds, when you go and you talk to anybody about this idea and you talk about, hey, what do you feel about trying to dismantle some of the problematic systems that that kind of govern the world that we live in today?
I have yet to meet anybody that's like, no, I think that's a bad idea and that this is what's kind of important, right? It's like anarchism is not this notion of like no rules. It's this notion of no rule lers.
It's not a state, it's a methodology. And crypto o anarchism pe group to energy m is an extension of that methodology. Now this is an exact of definition, but this is my definition, and it's my talks. I can give a definition. My definition of cyp.
Yan archaism is this notion of working to this mental, oppressive systems of power and replace them with technology where enforcement can happen, appear, appear, right? Technology that we now know exist that lets us fix things like the tragedy, the comments, and lets us build these socially scalable systems that have never existed before um where no one needs to police them, where we don't have watchmen, right where the watchmen are every person that is running in the theory um node, which is a completely different paradigms, the first time in human history that we've ever had the ability to create these kinds of systems where the cost of policing them, the cost of Operating them is near zero and when where they're fundamentally untempting able. So if we if we all share this belief that you know, we can we can use scriptores phy, we can use technology, we can use incentives to build these kinds of systems, that that means you are also probably a crypto anarchist.
You should cheer. Yeah, absolutely. Because honestly, when IT comes down to IT, desensitization is an archaism, right? But that's what that means.
You you're taking away power from a bunch of centralized tiles. You're breaking up monopoly. You're breaking up these like oppressive systems that is decentralized. Gypt an archaism breaks this spiral that we have been locked into. And IT does IT in this.
In this is honestly in a way that is effectively political protest, even though we may not think about IT that way, even though we are all to an extent also working to build like businesses or something that kind of looks like businesses. Effectively, what we're doing by disrupting these organizations, by kind of resisting against these existing systems is protest, right? It's it's a form of a rebellion against this like cycle that we have been trapped in really for all of human history.
And the way that this happens is instead of elective governments, uh, you know, stopping there from being any competition, we just build protocols that are not stoppable and we compete anyway. And in addition to that, we also accelerate the transition of goods into being utilities. There's something really interesting that happens.
This is one of the things that maybe sometimes a little of chAllenging in this space. Things are so incredibly competitive that you have someone goes and creates a breakthrough innovation, right? And and they go and they talk about IT on twitter.
They raise around in approximately two weeks, there are fifteen hundred competitors and all of the sun. You have this thing that's like this very, very custom system that was built for a very custom use case that everybody super excited about. And now everyone and their mother is running a bridge.
And all of a sudden bridges become utilities. All of a mistaking becomes the utility. All the sudden altus become utilities.
And that's a good thing, right? And that's effectively what we end up doing to the rest of the world, to the rest of a lot of these like a lot of the kinds of innovations that are out there, especially digital innovations, like voting systems. As we take them, we puked them out of being these custom systems and put them into being utilities.
And we descript things like payments. We disrupt all of these different ways in which institutions kind of resist being disrupted. Obviously, they don't like this IT shouldn't need to be said.
I mean, talked about this advanced chers, like what happens when a lot of the assumption that we hold true about this space today, like, you know, the U. S. Government likes what's going on.
A bunch of other governments like what's going on. USD. c. Is not actively being used as a tool for censorship. When what happens when those those assumptions break down, I don't think are really thinking about that deeply enough.
And in fact, this is the time to really, really think about them deeply because, as I mentioned earlier, we are crossing the chasm, right? And because we're crossing the cousin, we're starting to experience what IT looks like to actually have products that appeal to the mass market and that also step on people's toes. One of the big mistakes that I think a lot of people make this is um this is chain from Polly market.
Um if you don't know Polly market obvious ly blow up. But a few days later, sales shame's house was raided and then his electronic for peace. This is obviously like bizarre behavior, right? There's no there's no point to this at all that doesn't really make any sense legally. But this just goes to highlight that like we think about governments as is like a maginness blob, but that's not what actually exist in practice.
Even within the united tes comments, there are different factions, some of whom will not agree with you and will not agree with the technology that you're building, let alone all of the many other governments that live in the world, in the rest of the world, that are often times opposed to the us. Government regulations and views, right? Maybe maybe you are partnering really closely with the us.
Government to build your protocol. And you're fine. You're boni fied within within, like the U. S. economy.
But what happens in russia, what happens when you travel in all of a sudden, uh, you are now the focus of a bunch of, uh, you get arrested, another country because you actually violated their laws, even though you didn't violate anything. The nine states, this will happen. Policies between countries are actually not unified and in many cases, conflicting.
This is why, fundamentally, if you think about IT, right, if we went and we built the internet today, I would not look like IT does today because everybody would try to regulate IT and you would not actually have an outcome where the the like output makes any sense at all. You have to build the internet. You have to build technology in the space in a way that is fundamentally neutral and in a way that is undammed tally unstoppable.
And this maybe brings me to one of my last points, which is that decentish zone is not just the ends. IT is the means. What that means is that no, oh attended.
What that means is that we we need to actually build technology that can be stopped. We can just talk about building technology that can be stopped, right? Releases are extremely sensible right now um that is a problem.
We need to fix that problem as soon as possible. If we scale in the way that we expect to scale. By the way, i'm the biggest like bull of all of this stuff. I have been saying for years that we need to move towards the world with like hundreds of roll ups. I've been saying for years that there is a benefit to organizations having sovereign around building their own execution environment and maintaining their own execution regiment.
However, if we end up in a world where every single application running on block changes is running on top of our love today and then we hit mass scale, we are so score. And that that should keep you up at night. IT keeps me up at night.
And so we're kind of at this precipice, right where we're like in the next twelve to twenty four months, we are going to hit this very, very interesting period. And I think in the next to twenty four months, we are going to lock ourselves into one of these three outcomes, which is terrifying. I come number one, IT is really the worst outcome that I can possible imagine, which is we don't just fail in our mission to reduce the scope of systems of power.
We actively make them so much worse because we build the perfect tool to control every single aspect of our lives forever. We are currently on this path. IT would be really nice to get out of that path and head towards one of the other two options.
Option number two being, we fail and just end up in the same spot again, right? Eventually, all of these organizations, all the organza that we're building, don't successfully resist government control, don't successfully resist capture, don't actually become the central, and then just get folded under the exact same regular ory framework that exists. Now ideally, what we want is the third option.
And at least that's why I got into this space. That's what I am personally fighting for, and that's what I will continue to fight for, is this notion that we actually can fix humanity, coordination failures, right? The whole goal of this talk, if we can do that in the farthest is in the space, is correct, then that means we can actually get past this place that humanity has been stuck in for the last ten thousand years where we failed to actually like coal, less around what we all want to do together.
And we can work towards the world where we can. We can actually imagine if we were all like rowing in the same direction for the first time ever, IT would be crazy. We would get so much done. We are entering the end game. I think that this is really where things kind of get decided.
And it's I think it's up to like every person that's in this room, every person that listens to this talk to think about where they fit into this into this story and think about where they want this story to end up. And so i'd like you to do that like this. This is really this is the last night of the talk.
I think I might have a minute for questions after this. But um I would like you to do this after this talk and when you go home, think about where you want this industry to end up and think about what I would take to get there because I currently am not super happy and super stopped about the direction that we're headed and you probably shouldn't be too. Thank you so much.
Wow, that was amazing. Oh, my god, one more round of a plus that was really.
Real quick questions, real quick questions. You break up this interesting point about the movement of, say, products to utilities like bridges. But can you comment on the consolidate the capitals tendency to consolidate around one or a few things? Yeah um I mean capitals tendency to consolidate around one a few things, usually something that is like okay, so like in in competitive free markets, you don't have one up, you just don't monopoly are an indication that like your capital m is breaking down effectively.
There's some cases where that on the case, right, when you have like massive economies of scale associated with giving a certain good or service, but that's usually again an instance where like you have created inefficient system because h some underlying means of production is being monopolized. So for example, with like facebook, there is an underlying social graph that they are effectively monopolizing, right? They're selling other people with google.
It's like a search graph with amazon is like tons of warehouses with twitter. I don't know, musk guess. And you know the right answer is over time to actually just like desensitize, that means of production, that's how you actually get from these things being like products, commodities into becoming utilities.
Is that like the means of production, something that then anyone can do or at least or at least like is is widespread enough like with electricity, that like people, it's like an an open system, and anyone can participate in IT. The best real example of this is the internet, where like, nobody owns the internet, nobody owns the network itself, nobody owns the underlying, like newark, effects of the newark and anyone can participate in IT. IT might be harder in some places than others, but anyone can participate in IT.
Um that I think is is how you break through exactly what you're sandwich is like the the centric effects of being at a certain point in this flow. Does that help? sorry. And I guess i'm kind of worried about the in the context of blocks in and and desensitization.
You know you see say the base is awesome, but IT is taking up of the my chair yeah um yeah I mean, I think yeah it's going to be interesting to see how this market plays out. Um I think there are certainly places in which there are organizations that have retained monopoly over certain kinds of things. But at the moment, I would say crypto in an interesting place where every single bounder, even if you are in a position in the market where you're winning and absolutely dominating, every single founder is terrified about like competition and be being disrupted.
Because really IT seems like the main thing that matters here is mature and attention, right? And actually that's actually how you know that these are commodity goods, right? Like tooth based. There's no real difference between types of toothpaste, but you know the big brands because they win all the machine attention. And and I think the same kind of thing exists with dex is or lending protocols where it's like ultimately, you know there are some network affects associated with like know unis sx liquid, different instance, right? But the differential and Price is actually so small fundamentally that for the most part, most users probably lt even know if you were to finish to something else.
But why does he just went well? Because they are everywhere, right? Like you, literally, for the longest time, we would all be like, okay, what is the what is an example of a quintin al application built on top of blocks? And we could all think about and like, talk about IT.
Was you just about and like they're not just like the decentish exchange. There are the APP, which is crazy. Um I think that that is those are all like indicators that like we are kind of on the right track even if IT might be kind of bleak to be a founder in that situation as a founder that is currently in that situation.
One more.
one more all the way with air.
You got IT.
No, excuse me. What do you believe are the biggest centralization problems we need to fix right now, which are the biggest, more scary things in a theory or in general, general privacy? One hundred percent 第二 版。
One more round of the applause for urgent, urgent.
Thank you so much. Thank so much. everybody.
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