What's Next for Crypto Regulation and Innovation?

Our next guest is Abra founder and CEO Bill Bar. He, he was on the main stage earlier today with other industry veterans to reflect on the last decade as an OG in the space Bill. Welcome to the set. Thanks for having me. Thanks for being here. Now, 10th annual consensus we just heard from Tom Emmer uh during our break, curious to hear your thoughts on the state of regulation here in the US. Yeah, look, I mean, like basically getting the sec guidance on uh banks and being able to custody last week. That was a big, that was huge, huge win something we didn't expect to happen. F 21 I think we kind of expected it to get to get through the house in some form. I think the Senate is unlikely to take it up anytime soon. But the fact that, you know, we're now seeing kind of a sea shift in bipartisan sentiment about around certain crypto issues I think is really, really exciting. Now, Bill, you are truly an OG in this space, Abra has been around for 10 years. I don't think many people can say that ever. What in your opinion are some of the most crucial events that have shaped the industry over the past 10 years. Oh, wow. I mean, you know, we, when we started a, it was, there was just Bitcoin. Uh you didn't say you were a crypto company, you were a Bitcoin company, right? I mean, what's this Bitcoin thing? Smart contracts changed everything again because we had programmability which gave us tokens which gave us then IC OS which gave us meme coins, et cetera, et cetera, right? So they gave us dos and so the smart on tracks was kind of the second pivotal event. And now we've had just kind of a range of things like over the years and obviously the the whole regulatory landscape which everyone focuses on is kind of its own track. You know, it's very us centric track. Everything else I was describing is kind of a global phenomenon. But yeah, I mean, it's just you knew every everybody in this space 10 years ago right now I look around, it's like I don't, I don't recognize anyone. It's crazy how many people are still here that you've met 10 years ago. Everyone, once you get sucked into the vortex, it's very, very hard to get out. And the deeper in the rabbit hole you go, the more of a believer you become, there's very few people that I've gotten to know along the years have just disappeared from the space. Really. Almost none. Bill what do you think it is about the space that just sucks people in and keeps us here forever? I mean, I'm definitely one of those people. I can't ever see myself reporting on another industry and it's kind of wild to think about that. I think it's this idea of decentralization, which is what Bitcoin represents at its core that we don't have to put trust in centralized monolithic institutions where we've kind of lost the narrative a little bit around checks and balances. This represents actually giving the power directly to the people that created this this new monetary network in the first place. And that's what Bitcoin represents. It represents an entirely new sound monetary system and resonates, it resonates with libertarians, it resonates with entrepreneurs, it represents with internet developers have always believed we should have internet native money and, and so you come at it from a different perspective depending upon, you know, your your background and the context, but we all kind of get to the same place eventually, which is this new financial system is changing everything. And now it feels like it's starting to all the promise and the hype is starting to like live up to that promise. Now, of course, crypto is revolutionizing the financial system. But you know, I would assume we had a few developments over the past 10 years that were maybe, you know, a little cringy what a lot, a lot of developments that were cringing. I guess so. I guess so. I try to be positive, you know, what, what, what was the, the cies for you? I mean, some of the IC Os died. Boom. Like that was pretty cringey to me in the earliest days when you're like, they're raising money for what and from whom? And I, and I probably would have said the same thing even if there was no kind of token involved if they were doing what they were doing. But that was pretty cringey. I would say the whole kind of, it's, it's, it's the Blockchain and not Bitcoin movement which created this kind of enterprise Blockchain moment for about 10 months. That made me completely insane. Uh I said, no, it's, it's, it's, it's not the Blockchain, it's the entire network and it's the fact that we've solved the double spend problem, whatever that means. But, but it wasn't about the enterprise Blockchain. So that was another cringe worthy kind of moment for me. Um, it, luckily it's mostly kind of gone away. We don't hear about that anymore. Uh There are more is more but those, those are probably the ones that stand out, like at the top of my, you know, pet peeves, Bill's pet Peeve lists for. Yeah, I tell you, associate that with consensus because there's always like some theme going on, right. You know, like Real World Assets, which is a big theme this year. I can get behind that because it represents kind of smart contracts correctly. Some of the other stuff I'm like, oh, you know, D pen, can you get behind D pen? Ok. Ok. So just with your experience, I mean, 10 years, I think you have enough information to kind of spot out the, the cringy things, the things that are not gonna be around decentralization. Why do we have a Blockchain in Bitcoin? It's because we can't achieve transactional through a normal database because as soon as you have a single database, you're trusting someone by definition. And so what are the applications of decentralization that makes sense? Decentralization is very, very expensive. Bitcoin is very inefficient. It's still inefficient 10 years later, it's just as inefficient as it ever was. It's supposed to be, that's the cost of decentralization. What needs that? Well, you talked about deep in their real world assets. There are other examples. Well, I guess I got to get your perspective on the approval of the spot Bitcoin and E ETF S then because those really centralized things, right? And so curious to hear um if, if those were such a such a cat list for you and if you think that they are positive for the industry, that's a great question. I actually see it in two ways. I see, I see the spot ETF S as kind of a marketing catalyst which is fantastic. It creates awareness, it kind of for some investors who don't understand what the decentralization movement means supporting this new asset class via a securities and exchange commission backed offering is compelling because they don't understand the nuance. But for people who understand the nuance, they, I like it because it's marketing for the space, but they would never buy it because they don't believe in the tenets of letting somebody else manage my assets in a decentralized network. It doesn't make sense. And so that's like what my company Abra does, we offer ways that are closer to holding Bitcoin and crypto right to the way crypto was intended to be used in the first place where you have kind of self sovereign uh title over your assets at all times. Right. Now, would you say the advantage of left the ETF s outweigh the negative effects of it on the industry then? Or I don't look at it that way. I mean, look, people are entitled to do, I'm a libertarian. So let people do what they wanna do and if, and if you don't know enough or trust anything enough to hold Bitcoin any other way, do it, it's fine. Uh But you're also probably holding dollars that way anyway, at which point I give it a choice between who you holding dollars that way and Bitcoin that way, I'll choose Bitcoin. But, but other than that, I mean, people should be allowed within reason to do what they wanna do. Fair enough. Um So a had quite the back and forth with the Texas State Security Bureau last year and then you settled that lawsuit earlier this year. Looking back at it, was that a positive development for you as a company? And then for the regulatory landscape in general, did you, did you learn from it and make things better or was it's positive? And so far that it's, it's all been put to rest and, you know, we're fine and we're moving forward and we're, you know, growing the business, I think that, you know, certain regulatory actions can be a distraction. But as a company in the financial services, fintech world, whether it's crypto or something else, you know, there's a kind of cost of doing business now in the United States where we are somewhat overregulated to put a fine point on it and you have to lawyer up as a result. And so that's kind of the modus operandi for every fin tech company in the US. Now is you recognize that there's kind of a legal cost of business. You try to capture that back in terms of getting a mode or a competitive advantage. Once you've done the heavy lifting, we don't want to have to do it in certain cases, certain cases, it makes sense. But regardless once you've done it, you have that moat, you try to take advantage of it to put like a more positive spin on it, I guess. Yeah, certainly, I'm sure it was a lot easier to operate 10 years ago. Yeah, I mean, look, Wild West is the wild West, by definition and, you know, financial services is not really meant in, in the United States to be the wild west. And, and so I get that, um, and, and so what we want is we want to operate within the checks and balances of how the government was intended to work. We don't agree. There's a, there's an adjudication process, things like that. Right. We're ok with like reasonable regulation that, you know, operates within the intent of past laws with a checks and balances where the courts and Congress and the executive branch have equal say bill. Are we in a bull market? Oh, absolutely. We're in a bull market. Absolutely. All right. And what's the next catalyst you're looking out for? I mean, you know, I don't, I'm not really here to give investment advice, but my pers personal perspective is, is that the government cannot afford the interest rates where they are. Uh, it represents a systemic risk to the banking system. Uh It represents a systemic risk to the government as a whole because we can't afford the interest on the debt. So they will look for any and all means possible to get the cost of servicing that debt down, which by definition means pumping more money into the US economy, which usually means risk on assets, get the big benefit of that historically, stocks and real estate. Now, of course, crypto stocks and real estate. And this time, I think it's gonna be an even bigger kind of game on scenario because of the amount of debt that we took on over the last four years, which has to be reset now. It it simply has to be right. If you work, if you do look at every scenario, not resetting the cost of the interest on the debt is a disaster bill, we are gonna have to leave it there. Thank you so much for joining us here at consensus 2024. Great to see you joining us now is not CEO and co-founder, Mica Beli. Hello. Hi, nice to meet you. Good to meet you too. How's your day been so far? How was your trip to Austin? The trip was a bit chaotic with the storm, but we are here and I think it's going to be a great event. A lot of people from the industry, a lot of friends so great to be here. How does this consensus differ from the past consensus that we have been to? How are conversations looking different now? I think there is a lot of excitement probably around also the regulation that seems to become more clear in the US. And I think it's a big step that happened with the votes at the House of Representatives. So I think everyone is uh is ready for a big uh coming uh year and uh for crypto and I mean, I think it's amazing. Have you walked the conference floor? What's it looking like out there? Well, I, I didn't have the time yet. I landed at 4 a.m. So, but I'm gonna do that right. You're tired. All right, I'm good. Let's talk about Nod. What is it? So, nod is a decentralized infrastructure of smartphones and it is growing rapidly. It is adding 3 to 4000 people a day. Any of you can participate. All you need is a smartphone and to install the Nod app. But we are here mainly to demo and to show a new application built on top of the Nod network, which is called the click app. And we think it's very timely. It's a great application on Blockchain as well. It enables anyone to prove reality by authenticating photos and videos they take with their smartphone and share it anywhere on any social and any messaging and sharing the proof with it. So to prove it is real, how does the authentication process work? So when you take a photo or a video with the click app, we take all the metadata that we capture from the phone and we add that metadata to the media content, we sign it, we send it on the decentralized internet and then we make a record on the no chain with the proof of authenticity. And now you can share that content anywhere and people will be able to verify that he was taken at a certain time. Thanks to the proof of time with the chain and proving the location as well. And that's what we can do very well with the other network because we have a lot of notes on smartphones and we can help with what we call digital witnesses prove the location of where a photo or video was taken. I want to know how the digital witnesses work. But before we get there, let's say I am looking at a photo of the Mona Lisa and I open up the click app and I take a photo of the Mona Lisa. How do you prove that? That picture is not the real Mona Lisa. So when it comes to authenticating media content, there are a few things that are very important. So proof of time and the chain does as well. The proof of location is key and then there is all the provenance information. And because we have this secure environment that we created on the phone, we can make sure that the signal of any sensor on the phone like the camera or the GPS are not hacked and then prove that basically this is authentic and original. Now this is a very niche focus that you have here. How did you get interested in that? How did, how did, how did your journey in crypto start? So the II I think it's a, it's a maybe just niche for now. Uh But when you look at the A I and generative A IA I generated the equivalent of 150 years of photography in just a year and a half. So we, if we don't do anything, if all of us don't actually start to authenticate content and push authenticated content online, we're going to end up in the matrix. Helene thinks it's niche. I don't think it's niche. I think this is a problem that is solved. And I'm curious how the network effect works. Is it like a network of verifier? What does the authentication network do? So just to address the market first, so it's no more. We just signed a big enterprise customer called Hayden and this is going to go mainstream for authentication of content in the US. Then when you look globally, you have 50 countries going on their election this year, that's 2 billion people going to the polls to vote. So we are going to need a tool to fight misinformation, disinformation. So the click app is perfect for that and about the network. So the more users join the network with the click app or the no app and participate in the network, the more nodes you have that can basically help prove the location and authenticate content. We can't wait to have millions of people on this app and then have maybe hundreds of millions of content authenticated. And now you have a source of user generated content that you can trust the beauty of it is that you have 7 billion smartphones on the planet. And with this technology now you can trust any of the 7 billion people for the photos and videos they take. So imagine the revolution especially in your industry and media. This is huge. I like that. I see your point now, Jen. Yeah. Right. Are you thinking about an integration with a mainstream app like Instagram? Uh And the reason I ask you that is for this to work, people need to use it, right? And it's so easy to open the camera app on your phone. It's easy to open Instagram and snap a pic. What's incentivizing people to open the click app? Take a photo, get that photo authenticated and then share it on one of these other platforms that they would use otherwise. So great question. So today you need to use the app to take a photo or a video to authenticate it pretty soon when we add the identity element because it's your reputation that is at play, you will be able to authenticate almost any content you produce. We are doing tests now for documents as well with a big media group in Europe and to come back to your point on Instagram or any social. When you share the click link to your media content, it creates a preview and you can share it on any messaging any social platform. Instagram is more close than others. We hope that at some point, there will be bridges to push content on Instagram or thread. But we had a month ago, a great VC I mean, Fred Wilson who is kind of a visionary, especially when it comes to Blockchain and decentralized network who posted on forecast his first click and all he needed is just share the link and then people could see the preview of the photo and then eventually go to the click page and verify the authenticity of the photo that was taken. I know that you like to talk about A I and the intersection of A I and Blockchain and one issue or one concern with A I is that it could contain bias and misinformation because of the the data that it is trained on essentially and Blockchain can help with that ex explain to me how that will work. So in the case of the app, once you reach a very large amount of media content that has been authenticated, eventually, an A I system or a model that wants to train on authenticated content to avoid to have actually fake images or videos taken into the model. They can leverage the user base from the Q app. And because there is Blockchain behind every photos and videos now you can trace ownership so you can clear the rights with all these people automatically. Why do we need to use DPN here? Why do we need to use D I think so it stands for decentralized physical infrastructure. It's a jargon that was created by the industry to define the category we are in a who is a Dein player. Actually said Noel today is the largest dein because we have almost 780,000 participating smartphones into the network. So it's growing pretty fast now. And I think it's just to give a category to the industry for any kind of decentralized infrastructure. I also think it's going to become more and more important because when you decentralize an infrastructure, whether it's an infrastructure of smartphones for doing applications like we do with the click app or it's an infrastructure of I would say wireless nodes, for example, or storage, it makes the infrastructure more resilient. So Mia you are a serial entrepreneur, you are the CEO of Noel, you had a company before and now you are already building a new company as we said here. Where do you see opportunities in the space for new companies? Well, I think uh anyone especially in the dip in space, anyone who sees any big application already deployed in the web two space, there is a chance that this application can now be rebuilt with a more decentralized way of building an infrastructure. And the great thing is everyone who participates also gets some benefit from participating. People get paid like the no network distributes every month, $300,000 to people participating in the network for sharing access to their smartphone resources. So I think it's the new way of building a very, very big technological infrastructure and avoid the problems of what we are living today with a few big incumbents who are kind of close to monopolies and are blocking all start ups and initiatives from other companies to enter the space. So it's time to really revolutionize this. And I think, I think the regulation comes right in time and we're gonna see, I mean, the next 10 years are gonna be mind blowing and going to be. What do you think needs to happen for web three to actually solve that problem? I think we understand the problem. There are a few big centralized players that are locking out creators that are, that are taking all of the value that's created for themselves. I think that problem is understood, but all of these solutions haven't really been able to break that yet. What do you think needs to happen for people to really understand that problem and start changing their behavior and using some of these other apps started interacting with start ups and taking their eyeballs and money away from those centralized players. I think up until recently, there was a big problem of user experience. People are not going to switch to a web free solution if their user experience is much harder than what they used to experience with traditional apps and applications in the web two world. But today, I think at no. And with a quick we do a pretty good job. We abstract all the complexity for joining. So I think that was the first big barrier to cross this user experience. I think once people realize that now I can do the same thing that I used to do with the web two app in the web three world. And now I own the content. I produce, I own my data. And if it is used, I get paid for it. Once people start to realize that I think it's going to go like wildfire. So when, when it's a win win, I look forward to the day. I also think that that would be a great future, but I don't know what needs to happen. It's user experience, user experience and sharing the benefits of the infrastructure. I have a very good use case. We work in Africa with a company leveraging the network for locating motorbikes, the Bo Bo in Uganda. They needed to build basically an infrastructure to locate these motorbikes in less than a month. They spread out the Noel library on their phones. People heard it was the Noel library used to the app. They started to download the app and now we have the whole country of Uganda is lighted up in a month and people who are renting or paying for these motorbikes and doing the taxi job of hailing people. Basically they they can be located. Thanks to that network Mike. I look forward to following your journey. Thank you so much for joining us. Thank you, Jim.