William Quigley of Tether (Part 1)

Welcome to the Puck, Venture Capital and Beyond, a show that explores the evolving landscape of the venture capital world. We'll have candid conversations with today's VCs and entrepreneurs who are shaping those changes. I'm Jim Behr, managing partner at Behr, Negron, and Troff, and president of CMG Advisors. This podcast brings change makers to the table to discover the inner workings behind the decision making strategies and ultimately to how they got to where they are today. I believe that within maybe five years, most high net worth individuals will have a portion of their portfolios in crypto.

At a minimum, they should have 1% of their portfolios in crypto. And I think a lot of people will have more than, like, 5%. And the reason is because these cryptocurrencies, not just Bitcoin, but things like Ethereum, are the twenty first century Internet. We're here with William Quigley today, who is the managing director of Magnetic, and he's also the co founder of WAX and Tether. You were one of our first guests, and when we did this three years ago, and it's hard for me to believe it was three years ago, I think we joked around about a lot of stuff.

We talked about Blockchain. We talked about cryptocurrency. But I do think of you as the oracle of Blockchain and so forth. And when I went on the web today, I looked at the value of bit Bitcoin when you were on, and I looked at it today. Those people that listened to the interview and thought about it a little, it suffices to say that Bitcoin is up 500%.

So we may ask where you think it's gonna be in three more years. But in seriousness, can you tell us a little bit about WAX and how WAX works in your role as a founder? Yeah. So WAX is a blockchain that is custom built to handle something called NFTs, non fungible tokens. And NFTs are, like any other token, except each one is unique.

They happen to be very good for things like collectibles, like collectible merchandise. So a lot of people have made one of a kind artwork. Or on wax, there's the company that did baseball cards. It's, Topps. They're sort of famous for having created all the baseball cards.

You used to open those things up, get a stick of gum, that type of thing. There would be rare cards mixed with kind of ordinary cards. So Topps has a pack opening on WAX where you can buy a pack of their Topps cards. They started with a nineteen eighties brand called Garbage Pail Kids that a lot of people probably in their thirties and forties remember. They distributed hundreds of thousands of those cards on WAX, and they got bought up fast, and then they got traded in the secondary market.

So unlike traditional physical cards, which you can trade if you go on eBay or something like that, it's hard to trade those physical things in a digital environment. And a lot of people these days would rather trade physically rather than try to mail stuff through eBay. So my partners and I had been running video game virtual item marketplaces for about twenty years. We decided once blockchain technology was advanced enough, we thought, you know, let's see if we can run those marketplaces on a blockchain. And at the time, we had to build our blockchain because neither Bitcoin nor Ethereum would work for trading these types of things.

And there's a number of reasons why. Sure. There's a lot of things I do wanna cover, but let's start with the stable coins that China is trying to do. Yep. How does that relate, like, when you're comparing that to Bitcoin and where the world is going, how do you see stable coins playing into that?

I think stablecoins will be the most successful of all cryptocurrencies. And the reason is the stablecoin that my partners and I created, the world's first stablecoin, it's called Tether. Tether is the most traded cryptocurrency. It varies a lot, but it's on about a $12,000,000,000,000 annualized trading volume right now. That compared to like 10,000,000,000,000 annualized for Bitcoin.

Both of those are going up fast. Wow. And the reason is because everybody likes stablecoins. In fact, there's nothing not to like about stablecoins. A stablecoin is like Tether is linked to a dollar.

$1 equals one Tether. It will not move. It will be stable relative to a dollar. There are times when cryptocurrency traders would like to move out of the volatility where things can go up or down 10% or more in a day, and they'd like to hold their assets in a stable coin that doesn't move relative to the dollar. When we developed Tether, it was one of those things, and I've done a lot of stuff in venture capital, I started a lot of companies.

And almost always when you start something, you know the downside to it. Right? There's some positives and there's some negatives. There are no negatives to a stablecoin. It's only positive.

And every one of the advanced economic powers in the world will in five years have stablecoins. Fiat money, paper based money, purely digital money, I think will be eradicated within ten years. Whenever you see a new technology come along that is so vastly better in every single respect than the incumbent technology, you know that it will just wipe out the pre existing technology. It's sort of like in '95, '94, '95 when e commerce arrived. And if you were doing mail order shopping or even TV shopping, you knew that the sun was gonna set on that.

It just wasn't interesting anymore. Well, that's sort of like stablecoins and fiat money today. You can't counterfeit it. Think about that. You know, the most counterfeited currency on Earth is The US currency, $20 bills, $100 bills.

North Korea has an entire division just for counterfeiting US currency. They won't be able to ever counterfeit the blockchain based currency, you know, the stablecoins. It's too bad The US wasn't the first, but it's very obvious to me why China went out first because they've been evaluating very closely as a government blockchain. And in 2017, they started to clamp down a bit on it, but they never completely eradicated it. And most of the large mining operations are still in China for Bitcoin.

They were aware of it, and they know how much better it is to tokenize your currency versus digitizing your currency. Well, there's now maybe 200 stablecoins since Tether was launched. I think every country ultimately will have it, but certainly the major economies will have it within five years. So do you think that as you're talking about every country will have it within five years, the ability of The US to print unlimited money right now with no gold backing since Bretton Woods went away, and essentially there is no rule in terms of how much money it can print, does that also change as this evolves? Not at all.

Nothing changes from how the US government manages its monetary policy. I mean, we did it without the US government's permission. We just took a US dollar, put it in a bank account, and for every dollar in the bank account, we printed 1 Tether coin. So one Tether was linked to 1 US dollar. Now that's what the US government will do.

The Treasury Department and the Federal Reserve will expand the amount of currency in the world, US currency, and then it can be tokenized on a blockchain. To simplify it a bit, it's not terribly simple, but the notion of a blockchain based currency versus a digital currency, this became a pretty big debate when we created Tether because we said, look, we put a US dollar in this blockchain. And even the crypto people said to us, oh, you've digitized a dollar, but the dollar has been digitized for fifty years. The dollar can move digitally between point a and point b anywhere in the world. Right?

So what's the big deal with tokenizing it? That you had to have somewhat of an understanding of how global payment systems work today, but the shorthand version is you don't need a bank account to hold these digitized, tokenized dollars. So anyone in the world can hold US dollars. You, me, we can't hold Chinese RMB. We can't hold euros, even Mexican pesos.

We cannot hold those unless we got bank accounts in those countries. And you know what those countries really hate? US citizens with bank accounts in their countries. They can't stand it. They can't stand it because the US government has gone after those banks and those countries and said, we don't like our citizens having access to your currency.

Now you and I and anyone else who wants to, even today, because there are stablecoins that are euro based, that are yen based, that are US dollar based. So now you and I can hold a basket of currencies with no bank accounts. It's remarkable. So you kind of anticipated a question. I had answered it in that if a tether is tied to a dollar and another stablecoin is tied to the euro, as the dollar is deflated or inflated, there's more dollars printed, then Tether would should go up or down based on the value of the dollar.

Right? Exactly right. So it's a way to essentially own in plain currencies, essentially. That's exactly right. Or euro or yen or an RNB.

I mean, RNB, I really like. I'm gonna get those RNBs when they come out with the digital RNB. When you talk about these digital stablecoins, for instance, we've heard a lot about, obviously, Bitcoin. And whether or not it's a stablecoin or it's a cryptocurrency or it's a digital currency, there's probably a lot of misunderstandings. One of the questions I have for you is Elon Musk goes out and he says, I'm gonna buy a bunch of Bitcoin, and Bitcoin goes up 25%.

Using it as a currency, if I go out and I say, oh, I wanna buy a Tesla for a $100,000. Bitcoin's at $50,000 of Bitcoin. So I buy two of them, And then Bitcoin goes down in value. Now I gotta come up with more cash to buy that Tesla. Am I thinking about it right that I can think of Bitcoin as a currency, or should I be thinking about it some other way?

Yeah. I think it's the world's worst currency. There's probably none worse. Maybe Venezuelan currencies. I think I'd rather have Venezuelan currency if Bitcoin had to be used as a currency.

If you're a US passport holder, the IRS doesn't consider it a currency. They consider it property. So if you are spending Bitcoin as a currency, every time you spend it, you have to calculate either a short term or a long term capital gain. What a pain in the ass. Okay.

And as you just said, also, vis a vis the dollar, it moves a lot. You know, it's highly volatile. It's very difficult to use. Right? Most people don't accept it.

The fees for it are very high. It's 10 to $12.13 dollars a fee every time you send a Bitcoin. Well, what if you wanna buy, like, a $6 Subway sandwich? You're gonna pay $12 in fees for the $6 sandwich. Obviously, it's not a currency.

And it was thought of, I think, initially, Satoshi Nakamoto, the person or the group of people who, anonymously created Bitcoin. I think they thought of it as a money replacement, but it's not. It's an alternative store of value, alternative, let's say, gold. That was my next question, William. I'm dating myself a little, but I remember the last time we had a lot of inflationary worry.

Gold went from $200 an ounce to a thousand dollars an ounce, and silver went way up. Now is it a coincidence that with quantitative easing and the fact that we have printed trillions and trillions of dollars in the last ten years, is it a coincidence that Bitcoin is rising as quickly as it has? I like to think of things whenever the question evolves around cryptocurrency in general, I like to think of it as just being a coincidence because frankly, no one knows anything when it comes to cryptocurrency. Nothing. They're just charlatans, the people who tell you they know which direction it's going.

I feel very confident today that Bitcoin will be higher than it is today in three years. I also feel very confident today that Bitcoin will be lower than it is today during the next three years. How much lower? Don't know. Maybe 80% lower?

I do think it'll be much higher than it is today, but it's not very useful, is it, when you don't know how low it can go or how high it can go over what period of time. I believe in the long, long trend of if you hold it for multiple years, you will have an opportunity to sell it at a much higher price than the price today. That's the only assurance I can give people. And as far as how we think about Bitcoin as a store of value, I kinda liken it to digital gold. And that's been a useful way to think about it for probably at least the last eight or nine years.

Some of us have been thinking of it as sort of a substitute for gold, but a much, much, much better substitute for gold. I mean, gold has an endless supply, you could say. I don't know what the amount of new gold mined each year, but it's probably one to 2% of the total gold supply in the world is mined every year. Whereas with Bitcoin, there's a finite amount, 21,000,000 tokens. Practically speaking, about 4,000,000 tokens are probably lost from the early days, and people didn't really care about it because it wasn't worth anything.

So there's probably more like 17,000,000. People want to hold it for many reasons. One is what you talked about earlier as a hedge against inflation. And what I really saw in beginning in, like, September, October, November, December 2020 last year was on Wall Street. People were starting to say, wow, at some point, all of this monetary expansion is going to cause inflation to eat away at the value of the dollar.

What is a good hedge? Gold is one, but they started looking at Bitcoin too. I think of Bitcoin as sort of the twenty first century version of gold. For instance, the most basic of it, how does one identify a thing as gold? And how does one identify a thing as Bitcoin?

Well, gold, you go and get a specialist who you don't know more than likely because you've never had to do this. But if I said to you, I will buy your Tesla for a $100,000 worth of gold, and I pulled out some goldish looking rocks, what would you do? You'd say, well, it's kinda heavy. That's like a gold property and kinda soft, but it could be some other metal. Well, what would you do?

I guess you would go and get it tested. But where would you get it tested? And what if the testing company is in on a scam? What would you do? And it's expensive to test it.

Right? How many days does it take? Now with Bitcoin, it self identifies as genuine. If it's on the Bitcoin blockchain, it is Bitcoin. It's instant, and it's almost costless to establish that it's genuine.

Think about that. I'm not sure there's anything else in the world that is instantly verifiable at very little cost as genuine, which makes it incredibly fungible. It makes me willing to accept your Bitcoin no matter who you are, no matter where you're from. In fact, I don't even need to know who you are. If you send me one Bitcoin, I know at today's price, I will give you $45,000.

I already know it's a genuine thing. You can give me a bunch of $100 bills, who knows? You give me diamonds, who knows? You give me some autograph sports memorabilia, who knows if that's genuine? The property of Bitcoin and other cryptocurrencies, being that it is instantly verifiable as genuine, is an incredibly useful thing when you're trying to use it as a store value or even as a medium of exchange.

I don't think it works in the modern economies as a substitute for dollars, but it definitely works to settle maybe larger value transactions. I can understand it. And I also understand your idea of, again, as a store of value. But what I'm choking over still is in the old days when there was a gold standard and you were England, and you had a certain amount of gold, and France had a certain amount of gold, and you were fighting a war, you could finance it, but you'd actually, on ships, move the gold back and forth. There was an intrinsic value in that people used it to make jewelry or doing whatever they were doing it.

Just like there's an intrinsic value to diamonds and there's an intrinsic value to Picasso's to the extent people want Picasso's. Bitcoin, I understand, is much more verifiable than any of that. But what I'm having a hard time understanding is other than using it for store value, I don't see the intrinsic value. Like, when you were doing ops skins and you were training skins and doing all that stuff, I understand where there's an intrinsic value because you were creating this marketplace and you were selling goods and allowing people to exchange goods. But if I buy gold as a hedge, I theoretically, at least, can turn it back in and somebody will use it for some industrial purpose.

Whereas, if I hold Bitcoins as a store of value, but somebody comes along and comes up with a new Bitcoin, a new cryptocurrency as a store of value that becomes the flavor of the month, and it's just to secure. People like gold more than silver for whatever reason. There's a difference. But couldn't I create a new cryptocurrency and say there's a 120,000,000 units or whatever and have a better name associated with it or a better wallet? So so that if you forget your number, somehow, you know, I can give it to you?

Is there a risk to it because of that? No. And the reason is because collectively, a group of people in the world have decided that these puka shells or gold or Bitcoin has value. That's what we've decided. And, why is gold a value?

Water is a lot more precious for human life, but water is free. Water has no value, very little. You know, there's a lot of water, but there's not a lot of fresh water, but it's still cheap. So we've decided to assign a very high value to Bitcoin. Now there are some technical reasons that make it really valuable.

It's unbelievably expensive to produce. And the cost of making a counterfeit by buying enough computing power to maybe take over the Bitcoin mining network and change the rules of the Bitcoin blockchain so that there's not 21,000,000 tokens, there's 42,000,000 tokens. The cost to actually do that would exceed the value of the Bitcoin that you'd be creating, so it wouldn't make sense. It's a very clever concept, what the founders of Bitcoin did. They made the cost of creating it super expensive and therefore the cost of counterfeiting prohibitively expensive.

I would also say to you, I don't think gold has intrinsic value. In fact, I don't think Picassos have intrinsic value. I don't think anything has intrinsic value. You know, intrinsic value is value in itself. That's it.

You value it for what it is. I don't think that's even gold. You value gold because you can use it maybe for jewelry, because if you put it into a form of jewelry, you like how it looks in science. But that's not in it in itself. In fact, the only thing I can think of that has intrinsic value is maybe happiness.

Right? Happiness is probably valuable in and of itself. All these other things have instrumental value. They have value because you can do something with it to create something you do value. And I think Bitcoin, like all these other things, has instrumental value.

I understand why a lot of people struggle with this because their everyday lives don't involve things that would make it obvious why Bitcoin is valued. For instance, if you have money in a bank account, let's say an offshore bank account, that bank account can be seized by the government. The bank may fail because it's not well regulated. You lose all the money in your bank account. For the majority of the people in the world, bank accounts are scary things.

People in The US, they live in this bubble where bank accounts are like, great. In fact, a lot of people in The US think it's easy to get a bank account and keep a bank account. Well, try owning cryptocurrency and publicly talking about it and see how long your bank account stays open. The banks are at war with people who own cryptocurrencies, and they will shut down your bank account and deny you ability to use what should be open to everybody because it's regulated. Banks get a license, and that license should require them to provide everybody who wants with a bank account, but that's not the case.

Your bank money can be seized for many, many reasons. So now if you have a non US outlook about banks, they're scary, they're not to be trusted, and you're one of the six and a half billion people in the world who feel that way, you'll feel a lot better about Bitcoin. No one can ever seize it. You own and run the bank, if you will, that Bitcoin lives in a digital ledger, and only you have the username and password to access it. Think about that.

No one can ever get at it. To many people in the world, that in itself is a reason to hold it. And then when you add the fact that you can exchange that Bitcoin with anyone else in the world and they will never question its validity, that is unbelievable to me. I mean, I do a lot of cross border payments. And when I ran a marketplace that was trading video game virtual items, we redlined about 40% of the world where we could not accept customer payments to buy the digital items on our site, and we couldn't accept them because there was too much fraud, too much credit card fraud in those countries, what we call chargeback risk, the risk that we would take their credit card, but the credit card was stolen, and then we would lose it.

And when we offered those people crypto, it was hard for them because it's not an easy thing to use. But once they figured it out, they absolutely loved it, and we loved it. We didn't have to trust anybody, and that's a term you hear a lot, trustless. Bitcoin is trustless. The trust in itself is irrelevant.

You don't need to trust except in mathematics. If you understand the Bitcoin blockchain, then that's what you trust. But it doesn't matter who the other party is. You're a lawyer, Jim. You know people will send a payment, and then they'll sue to get it back.

And a court can literally go and freeze that money. Well, no court can freeze the Bitcoin blockchain because it exists outside of any jurisdiction. You know a thousand times more than I do and a thousand times more than our listeners, but I understand Tether and the idea of it being stable, and I understand the security issues you're talking about and the escrow function and the fact that it's you know, we can't reverse it. I get all of that. But if Bitcoin continues to be volatile, and I'm someone living in Brazil or somewhere else, and it's not a speculation, but I've got a thousand dollars in that currency, and it's my retirement.

And I wanna put it into Tether, and I understand that for sake of argument, I'm living and dying with the dollar. That I understand. But unless I'm doing it from a speculation perspective, and as you said, three years it's gonna be up. If I'm doing it with my retirement money until the volatility goes out and it settles in, how do I see it as a utility token when there is so much volatility? Well, would you like a stock, Jim, that never went up?

Would you find that appealing? But there's a difference, William. Because when I buy Amazon, I'm betting on the fact that people will continue to buy products from Amazon and that their volume will go up and that they will run a profitable business. And if I lose confidence in Amazon because a competitor comes out of the way, then I'm gonna sell that stock. If Bitcoin if I have a way of measuring it in terms of why it's going up and down, then I can see putting my retirement into it and saying, okay.

I can sleep at night because I know where this is gonna be in a few years or I know the risk I'm taking. You start out by saying no one understands it. How do you project what it's gonna be worth when you retire? Well, the same way you project what anything is gonna be worth. It's all based on people's willingness to buy.

You have a nice house in a nice area. Okay. But is it gonna stay a nice area? What happens if the major factories around your house shut down? Well, then your house will be worth a lot less.

You can't control that. You buy Amazon stock at a 90 price earnings multiple. Okay. What if it goes to 20? What if it goes back to the historical median of the S and P 500?

Then you've lost 80% of your money. Anything you're buying is based on a set of assumptions that either will continue or not. And with Bitcoin, I know people get hung up on the fact that it's not secured by some real world asset. But what if it was secured by a real world asset and the value of that real world asset plummeted? Then it would be worth less.

You hold dollars, but what if the reputation of the US government goes down because it can't control its spending? And so we get inflation, which erodes the value of the dollar. Well, then your retirement doesn't look so good. I look more at bitcoin as a highly predictable asset. Only so much can be printed.

And the utility for Bitcoin, while frankly very limited compared to, for instance, Ethereum, much more utility in Ethereum. But the utility, there's enough things you can do with Bitcoin that would justify, I don't know, a $5,000,000,000,000 to $10,000,000,000,000 valuation for Bitcoin. At a million dollars of Bitcoin, all Bitcoin would be worth collectively 21,000,000,000,000. And I think eventually Bitcoin will be worth a million dollars each. And why is that?

Where is the value? I don't know if you can fractionalize it, but if I'm not fractionalizing it and I've got a million dollars and I can either buy a beach house, you know, or small condo, I guess, in Maui, or I can buy 8 Bitcoin for a million dollars. And I know I can have my friends, or I can go stay in the condo in Maui. What are the uses of that million dollar Bitcoin? There are so many I couldn't even possibly tell you in this short period of time.

Here's one. Okay. A dollar you can break into a 100 pennies. It's kind of annoying because you get these pennies and you throw them away. Bitcoin you can break into 100,000,000 individual pieces.

So when Bitcoin is worth a million dollars, a Satoshi, one one hundred millionth of a bitcoin will be worth 1p. Bitcoin is highly, highly fractionalized, which really helps. For instance, when I started in the internet era, right, doing a lot of e commerce, we had this fantasy of micropayments. And then I invested in PayPal and I learned micropayments was impossible. You pay so much in fees to use the payment networks that there's no pay 10¢ to read this page or pay a quarter to listen to this video.

It's too expensive to use the network. The Bitcoin network does have a problem. It is very expensive, but other blockchains are like WAX are essentially free. And Bitcoin will eventually be much cheaper to use. So you have this fractionalization down to one one hundred millionth of a Bitcoin, which makes micro micro payments very easy.

And you also have the fact that there is no other way on earth today in 2021 to make a cross border transaction in the same day. People have this fantasy that you can send a payment. You know, you're in The United States and you wanna pay someone in Brazil. They have a fantasy that that money gets there, you know, instantly because maybe their bank account shows them having, you know, a $100,000 wire that's just left their bank and gone to a Brazilian bank. But no, it could take three days.

And the banks don't even know where the money is. They have to trace it. And it's hard to trace it because there is a 50 old network called SWIFT that allows them to try to trace it. So it's very hard to do cross border payments. And now imagine the biggest problem.

When you do a cross border payment because people in each country use different currencies and we're not allowed, you and I, to have a euro denominated bank account. Or if we are, it's gonna take a lot of money and time. So if we wanna pay somebody, they want euros, but we have dollars. What do we have to do? We have to convert the euro to a dollar.

Oh my God. When you do that, all these piranhas come out of the financial system and just strip your money bare because they wanna charge you massive fees for that. So think about this. In an $80,000,000,000,000 global economy, that's the GDP collectively of all countries on Earth. Every year, it's about 80,000,000,000,000 right now.

There's about $1,000,000,000,000 that all of us, consumers and businesses, pay in currency conversion costs, needless costs. What if there was a way to send somebody something either tokenized as a dollar so they never had to convert it to a euro. They could keep it in dollar form as like a tether, so there'd be no seven or 10% currency conversion cost or any other thing. I would like to be able to pay people with dollars in China, and there's a lot of Chinese who would like dollars or they would like Bitcoin. They don't have to ever convert it.

And so it's a massive, massive amount of money and there's a massive time delay in doing cross border payments. And so we were the largest, I believe, cross border consumer website at Hopkins for several years where people would, around the world, would deposit Bitcoin and buy digital items from us. And within ten minutes, there has to be a confirmation that they've deposited it, but it takes about ten minutes. Within ten minutes, we would know, oh, they gave us the Bitcoin. We can sell them a product.

A liar, two days, three days. So it's another thing where most people in The United States don't do a lot of cross border transactions. And as a result, they don't think about how hard it is for the average Joe and how expensive it is. And then alone, let me tell you this, there is no better collateral on earth than cryptocurrencies. You have me.

I get it. All the advantages of this. But what I hear you saying, and I don't wanna put words in your mouth. I'm hearing that's why I should go and buy Tether, not Bitcoin. Because I can do everything you just described with Tether and it's a stable currency, and it has lower transaction cost.

I mean, I don't know if you're using Bitcoin colloquial for a cryptocurrency because it seems to me at least, you've seen the the challenges with Bitcoin and you've created something that's got all the advantages of Bitcoin and then more. Yeah. Here's what I would say. Holding Tether is the equivalent of holding a US dollars on steroids. Right?

That you can send a dollar to someone who doesn't have a bank account. That's pretty cool. So that's useful if you wanna pay people, pay them in with Tether. That's a good thing to do. But if you would like to speculate on the growth and adoption of Bitcoin as a core holding among many of the world's wealthy, then you can't hold Tether.

Tether doesn't go up in value. I believe that within maybe five years, most high net worth individuals will have a portion of their portfolios in crypto. Right. At a minimum, they should have 1% of their portfolios in crypto. And I think a lot of people will have more than, like, 5%.

And the reason is because these cryptocurrencies, not just Bitcoin, but things like Ethereum, are the twenty first century Internet. They allow entrepreneurs to build fantastic businesses that exist on this thing called the blockchain. It's sort of like an Internet, but it can be programmed to do really anything that your imagination thinks. You've heard of prediction markets. These are where people come together and one guy says, this team is gonna win the Super Bowl, and the other guy says, no.

They're gonna lose. You can sometimes place those bets or make those predictions on a non blockchain based systems, but there's always a middleman. And the middleman will take a cut. And the middleman also may reverse the transaction. We call that counterparty risk.

And during the financial crisis, that term counterparty risk became quite well understood. The reason why Bitcoin was created right after the financial crisis, because suddenly you had to worry about the counterparty. What are they gonna do? In blockchains, it's a piece of software that's the counterparty. The software is programmed to do something.

And you know what's really beautiful? It's open source software. You don't have to guess what it's gonna do. How many people read the terms of service when they use a site? Usually, they read it when they're denied something or when something bad happens.

And they say, no. We're allowed to do that. Read their terms of service. And somewhere buried there is some awful term that they have agreed to by clicking I accept. The beautiful thing about blockchain and smart contracts written on blockchains is that the software, precisely how it works, is visible to everybody.

So you don't have to worry about them doing some little trick like a bank charging you extra fees, but not really disclosing it clearly. It's literally written in the software. It's another reason why I like smart contracts. And those are really only possible at scale to do on a blockchain. And if the current flow of entrepreneurs onto blockchains, Ethereum and EOS and Bitcoin and others, If the current flow of the entrepreneurs is any sign, I would say this is gonna be, like, Internet esque in the sense of how many hundreds of thousands and then millions of entrepreneurs will be building businesses that cut out middlemen, cut out a lot of extraneous costs, that do cross border transactions with no real problem.

And as we move to a digital commerce world, lot more of our GDP is digital in nature, whether that's music or software licensing rights or people providing online services. Anything in the digital realm will benefit from being affiliated with the blockchain. Blockchain is like the great mediator. Since it can't be copied, it's always correct. There's just many advantages of it.

It's not as simple to understand as the Internet, which is why I think it's gonna take a little bit longer for most people to get it. But once they get that, oh, I can't be censored. So imagine a social network where some schlub working at Twitter says, oh, I don't like what you said about this political candidate, so I'm gonna censor you. Interesting. You know, blockchain won't be able to do that.

It'll be uncensorable. I like that. Imagine you're a woman in Tehran, and you actually believe that woman shouldn't be stoned to death or some other radical idea like that. Probably not safe for you to post that on Twitter, but you can post that on many different blockchains that are anonymous, and that can never be taken down. So communication is much more free flowing on a blockchain because no one controls it.

As you said before, I could talk to you about this forever, William. Please join us next time when we continue our fascinating conversation with William Quigley on all things blockchain, including NFTs and the future of augmented reality.