16 - What's an Etherean | Nic Carter

welcome to bankless where we explore the frontier of internet money and internet finance this is how to get started how to get better and how to front run the opportunity this is ryan sean adams i am here with david hoffman and we're here to help you become more bankless david this is an incredible episode we've been waiting a long time for this we are talking with nick carter today what did we cover so much so much nick carter is always a valuable person to get on any podcast particularly in the way that

nick clearly thinks and thinks differently from most people in this space that get caught up in the tribalism caught up in the maxi warfare something that i would definitely say i do from from time to time so so getting nick's perspective on here and making sure that when we make comparisons when we make claims that they are grounded in something that is useful outside of crypto rather than just comparing you know cryptosystem a to crypto system b nick's perspective really makes sure that we are anchoring these things in

time in relation to the systems that have come before crypto and using the lessons of of historical financial mechanisms to compare and contrast mechanisms that we find today in in the crypto land yeah and i i think nick would definitely consider himself a bitcoiner but he'd probably put an asterisk by that and uh i i don't think nick would consider himself at all a bitcoin maximalist he's he's very open in terms of um ideas one of the first questions we asked him was whether he

identified with the etherean community and with the d5 movement and his answer to that was really interesting and then we talked some more about stable coins which has been a topic i've wanted to pick nick's brain on for a while weather particularly staple coins on ethereum and there's over 8 billion now uh dollars worth of stable coins on ethereum whether those are good or bad for ethereum getting his take on that was super interesting and then of course we got

into settlement assurances really i feel like this episode tied a lot of other episodes together so if if you're just listening to bankless you haven't caught up on the archive go check the archive out episode two we talked about a monetary policy monetary theory that relates to this episode seven we talked about ether's value mechanism so we talked about eip 1559 so that comes in here when we're talking about stable coins episode 12 we talked about the protocol

sync thesis nick has some really interesting perspectives on how to apply that lens of things to ethereum transactions so overall this is an episode that puts a lot of the previous episodes together and they all kind of feed into this conversation with nick carter it was it was great he's he's he's always good and then we finish off the conversation with two topics that bitcoiners and ethereans always butt heads about and that is kind of the the juxtaposition between a defy

world and a crypto bank's world uh nick calls this movement free banking uh it's like the banking 2.0 but instead of gold it's bitcoin and without all the limitations of gold there are all the benefits of bitcoin uh and and nick believes that the competition the free market competition for banking services with minimal regulations uh from the government uh is is a interesting thing that is unfolding and where the regulations from the government break down the rules and regulations from the bitcoin blockchain

come up to replace them you know the 21 million hard cap the easy to verify etc so that's always that's always an interesting perspective that nix particularly thinks a lot about and then we go into one of my favorite subjects which is also going to be the subject of my next article coming out in bank list next week is the progress of these nations that have that human civilizations have moved through throughout time so these different organizational schemes such as religion and then the nation state and now bitcoin and ethereum these

all represent very similar constructs that humans organize and and stitch themselves together through uh and so we kind of talk about the commonalities found in each one of these different uh nations civilization schemes that enable humans to coordinate and and transact with each other uh and so that's that's where we finish off the episode uh and i'm really excited to release that article next week in bankless yeah and by the time you guys listen to this it's coming out on a monday it'll probably be the wednesday so it'll be like this week

your time when you're listening to this that you'll be able to catch david's article on bankless david let's get to the big picture but before we do want to talk about some incredible bankless tools from our sponsors our first sponsor is monolith if you guys have your assets inside of ethereum but you also want to live your life monolith for our european customers might be the product for you they have their defy card which is a visa card connected to a smart contract wallet on

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speaking of the the riots the protest and the police brutality that has flooded the nation in almost every single major city on seattle me my sister and my brother-in-law went down to downtown seattle to to protest uh extremely peacefully and i worked my way up to the front of a front of the crowd just to be there just to experience it all spent about 10 minutes there before the police started marching forward and indiscriminately pepper spraying which i got a face full of

then i went home to shower and clean off because pepper spray is not fun and then i watch the news and i watch the news about the protests and i watch the news give a police report account of what happened which was from my perspective a total fabrication and everyone else i talked to at the the march was a total fabrication and then we watched i watched on twitter how this played out in basically every single major u.s city and so i fee i felt and i still feel

very radicalized about this i i feel that the police are not the police but they are instead a police militia i feel like they are over equipped with thousands and thousands of dollars of of gear bulletproof vests bulletproof helmets fade like hard face masks uh you know heavy batons uh riot shields the the full works and their civilians the civilians of the of the city are are people in jeans and running shoes and that's it and it doesn't feel like they are the police they are they are a tool

of the state and that's some people have been always saying that that's what the state is the state always has this stance towards the people because the people are the one thing that can remove the power of the state especially in in america where the american government and every state government the federal government is a protocol that allows for the people to change the protocol and so the current instantiation of the people in power are always at the whim of the people who hope that they can remove them from

power if they so choose and so i've just become extremely cognizant of this stance again from the state towards the people that does not always have the best interests of the of the people and that and i've been focusing on that especially as it relates to how cryptosystems work at large where cryptosystems are inherently neutral and cannot have a stance towards people they just are tools they just are protocols for us to use and leverage and this is something that i've just been thinking a

lot about lately well i want to get back to that some more but i i've gotta ask just like practically i've never had pepper spray in the face before what is that like what does that feel like how do you get it off pepper spray is oil based it's oily and sticky and it shoots out like a super soaker and so when you get it on your skin it doesn't you don't wipe it off it's not like a liquid it is like a paste and when they were aiming for the eyes and i got it right in the eyes it felt like bee stings in my eyes like

everywhere i was immediately disoriented and discombobulated i could not see two seconds later and i had to people were around me and i just had to ask for help because i needed because they were the police officers were advancing right without warning by the way they just told all the police officers that were they're going to start advancing and they started taking steps forward and the pepper spray was brought out two seconds later two full steps into the crowd uh and so i had to turn around blinded uh and i had i had my video on on my camera on instagram

live and so you you guys can see this video in person if you and and be with me if you guys want to experience that um but i had to ask for help i had to say like hey i need help i can't see anything and so people people put their arm around me and and walked me back from from the police officers as they advanced uh i i was immediately disoriented i think it's important to listen to people's experiences because everyone has experienced what's going on in the us in a different way but you were talking about the the protocol of

of the united states david and written in the first amendment of that protocol is the freedom to peaceably assemble and when that starts to get taken away to the extent that that it is uh it's a breach of our political um that the u.s constitution the amendments are essentially america's settlement layer uh that's what preserves law and order that's what we that's our social contract uh and so i certainly get alarmed when that is

um looking like it is being breached and uh i can understand from your experience how how like you felt like that was being breached you know here you guys are assembling peaceably and uh you're just broken up for seemingly no reason i i do think that a lot of the media wants to paint this as a right versus left thing and i would say that you know bankless is not a commentary on nation state politics but it does have a political position

the bankless platform is absolutely it's not a right versus left thing but it is absolutely an anti-authoritarian movement authoritarians of course want to control they want to dominate they want to take over and the bankless movement is about self-sovereignty it's about freedom so whether you're right on the political spectrum or or left on the political spectrum if you're listening to what we're talking about if you're involved in crypto and involved in defy

chances are you believe those things too you believe in the self-sovereignty of individuals and are against authoritarian estates that would try to strip those things away protocols not kings is our mantra wouldn't you say absolutely absolutely every single protocol on ethereum in ethereum itself and bitcoin itself is a protocol that used to be in the responsibility of this state that the protocol is now can now assume so you know the state and the irs and

taxes and reporting and auditing all of these things that companies and individuals and businesses have to do is give the irs and give the state give the powers that be like a report of where all the value is and it's really the tool that the united the united states system at large uses to understand where all the value is in the world and because the world is on the dollar system the united states government gets to see like in a panopticon type of way

where all the money is and because they control the protocol of the us dollar they control the auditing of the us dollar and so getting getting back home i immediately understood much better why ethereum nodes need to be able to run through tor why we need to be able to run an ethereum node with or without the state's permission in whatever capacity that we want because if ethereum can run through tor there's nothing that they can do uh if if the united states got hyper authoritarian and they banned ethereum nodes and bitcoin nodes that

would make these systems a little weaker a little more fragile but putting putting these systems through the tor network so that everything can be hidden from the state is really important and this maybe seems like something radical that only a radical person might do but we've seen people get arrested for the things that they have put on twitter even in the last three days uh things that that people put on instagram the the state is watching social media and they're arresting people from what they have been posting um granted what they were

posting was illegal but this that's where it starts right like it's first it starts from just the illegal stuff and then it and then it moves forward into maybe more subjective stuff uh and so i'm immediately cognizant of how incredibly exposed i am because of my uh the exposure i have towards being such a pro crypto person on twitter on instagram talking about how this removes the power from the state and puts it into the hands of the people uh that that i have left a trail of that sort of

behavior and so in in china i would have been arrested absolutely uh and so i i'm now cognizant of privacy and the ability to run ethereum through tor in a private manner so i can have my freedoms yeah absolutely and this is not about doing anything you know illegal in the in the current system or legal with respect to the constitution but authoritarians could crack down for whatever reason that they want to and bankless and crypto is really a hedge

against the rise of authoritarianism i i want to maybe leave this kind of our big picture with uh with one one thought uh and that's the the focus of this movement is also not burning down the the existing system you know the response to this can be uh we're frustrated let's burn everything down i think you know that's that's one response it's not necessarily the response that we want to take uh the response we want to take is build

it up so what we're doing in crypto is we are building from the ground up an entirely new monetary system that enshrines self-sovereignty at its core it enshrines algorithmic issuance uh non-state interference at its core at the base layer and then builds up from there and i think that is something in these increasingly authoritarian times that is worth spending time on okay before we get to the nick carter interview wanna talk about our sponsors ave is a defy

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check it out all right guys let's just go ahead and get right into the interview with nick carter david and i are here with nick carter nick carter is a writer he is the co-founder of castle island which is a venture capital company he's also the co-founder of coin metrics which i use on a weekly basis

nick we've been waiting a long time to have you on bankless and we are really excited to dig in today happy to be here thanks for the invitation guys nick you know what i think there's a lot we could cover today we want to keep this conversation dynamic and casual like we've been very influenced by a lot of the things you've you've written in the past but i i'm just going to dig in with with sort of a an initial question to get us started here which is are you an etherean is there any part of you that is an ethereum we know you're a bitcoiner what about and you can be both

by the way david and i would both consider ourselves both what's your take on that man you guys are throwing me right into the deep end first that's how we do it feels like a trap so like maybe we should define what that means you know ethereum bitcoiner so like my preferred definition of bitcoiner is like someone that just believes or kind of effectively endorses the like the values in heron and bitcoin so um you know a acknowledges that it's

important that there's like monetary commodities that exist outside the state and then b like you know is is pretty interested in property rights and uh and then see you know like the other kind of like assorted values that like underscore bitcoin um so i think you don't you know you don't have to like own bitcoin to be a bitcoiner you just have to kind of agree with the um with the kind of the thrust of the philosophy um for ethereum like i would say the valleys are like

slightly more diffuse like they're not as well codified like there aren't uh totems to rally around like 21 million units um it's more like uh commitment to like rapid iteration and more expressivity um but i would say it's like probably slightly harder to define what the the core values in ethereum are um the other thing is probably just owning ethereum makes you

an etherean right so i mean i own some like i've made ethereum transactions so in that sense yes in terms of the values like um i would want to see them like codified so that i can evaluate them well so let me ask this nick what's your impression of the etherean value system today just raw impression i think it's it's like still fairly

malleable um for better for worse you know it was interesting to see the uh the prague power debate um develop because that was something that was like kind of stipulated the asic resistance was stipulated in the in the yellow paper i think and then there was like a constitutional debate almost and it was like well you know like these stipulations don't matter like um the world has moved on we've learned a

lot it's kind of like how in the second amendment debate it's like well the you know the founding fathers didn't envision not to like make this super topical or anything the founding fathers didn't envision you know machine guns or you know really consumer grade like you know technology that would give civilians lots of killing power uh so like you have to read the text in context kind of thing yeah it was

reminiscent of that in in that like there was a rejection of like a constitutional stipulation and you know an embrace of like modernity so to speak um i don't know if that answers the question but yeah i'd say fairly malleable however it seems to be getting more like bitcoin like over time i don't know if you guys have noticed 100 um 100 like a the governance process has become more difficult as like more stakeholders have emerged and

they are heterogeneous in their like objectives um the pace has slowed down the pace of change which is necessary to focus on ether as a financial and like in monetary commodity has intensified um so in a sense like there's been a convergence of sorts in terms of the like values and the other thing is um

i would say there's been much more of a focus on like how does ether itself monetize which is maybe the focus of this conversation um as opposed to in in the very earliest days like from what i remember of the discourse it was more like well you know it'll just happen and the monetization is just kind of a contingent function of the system's growth and like we don't know exactly how it's going to happen but it probably will if we build something important valuable now i would

say there's a much more deliberate focus on well how do we ensure that ether is valuable um you know how like how do we retain the the monetary premium that's developing which like is like reminiscent of of like bitcoin philosophy i would say i really want to emphasize the my beliefs of an agreement that uh ethereum is trending towards a lot of the same values that uphold bitcoin and i think that we would see this and it's not ethereum dependent or bitcoin dependent i think all crypto

systems that would have emerged that were like crypto systems that were predicted to emerge back in the 90s right before crypto was even a real thing we could have in hindsight this is more obvious now but some of these uh values are required for these things to to work right and so the praguepow debate was this uh debate about removing politics and and governance from the system saying that praguepow is a system that benefits one group of people over another and for that reason it should not be included and we saw that also

with the the vehement rejection of on-chain block reward funding for developers that was that was a very contentious uh proposal that got swiftly struck down because of the political nature and the the inherent acceptance of the need to have a neutral protocol on ethereum and then also as as you said the the um the monetization the financialization of the l1 blockchain where uh the the value of the block space needs to be scarce and

needs to be in demand and perhaps only is really suited for financial activity i see all of these things that that uh maybe perhaps on accident i don't think a lot of ethereans would say like they that they agree with bitcoinerism but at the same time all these values are emerging regardless and i think it's it's not and they're not bitcoiners values right they're not bitcoin values they're just the correct values that match uh what needs to be involved in creating a successful

crypto system yeah that's very well put actually um and i think there's a few things where you can say definitely ethereum has uh become more approximate to bitcoin valley wise as you say uh the the monetary primacy of the system you know although you know there's still non-monetary uses of ether but i think the monetary ones are kind of outweighing them um the layered approach to scaling i mean you know tbd i guess but like certainly

there's been much more of an embrace of layered approaches as like it's become clear that like there are real constraints in terms of the data overhead that a system can tolerate um and what was the other one oh yeah so this thing that you you mentioned like a rejection of protocol derived financing that's like a very important thing in my opinion um because it that kind of thing leads to capture in my opinion it like kind of really

dramatically raises the stakes and turns engineering debates into political debates and it yeah i think that would have been a recipe for disaster and you know that's certainly something that like bitcoin prides is uh not converting ownership of units of the currency into like political power which can then turn into you know a positive feedback loop so nick you've um you've written quite extensively about sort of how these networks uh change over time

specifically their narratives and we'll include one of your articles on this in the in the show notes here um you know bitcoin in its early days was many things but store of value digital gold was a smaller portion of it than it is today there was a contingent that wanted to make bitcoin a peer-to-peer cash system that contingent ultimately left they forked out they created their own uh community ecosystem network bitcoin cash right um do you see a similar sort of thing