144 - Web3 Is Going Great!! with Molly White

we're still here welcome to bankless where we explore the Frontier internet money and internet Finance this is how to get started how to get better how to front run the opportunity this is Ryan Sean Adams I'm here with David Hoffman and we're here to help you become more Bagless guys crypto skeptic take today just some context for the episode you're about to hear we have Molly white on the episode the title of which is web 3 is going great David and I recorded this just over a month ago on October 7th with Molly it's been an RQ

to get out we've had a lot of podcasts in queue we had it targeted for release today the day that you are listening to it so November 14th I believe you'll be listening to this episode For the First Time Molly did not have the context of the FTX meltdown as we're going into this so as you are listening to this episode put yourself in the place of the crypto industry a month ago before the events unfolded for FTX I'm gonna get into some of the claims that Molly makes in this episode but David do you want to

give us some more context for uh where we've come since our original episode recording with Molly yeah certainly during this episode with Molly uh we met the person that can critique web3 the best and Molly is a is a software engineer engineer a very experienced one she's also a contributor towards Wikipedia and so there's some web 3 valence web3 ethos valence that she has like contributing to the open Commons of knowledge knows how to code and she's

somebody that knows the difference and I think I really appreciated Molly when she made claims that like critiquing the lack of scalability of these systems is like not the right critique or critiquing like the energy of Bitcoin is in isn't really the best critique uh but so her critiques of what she was talking about goes straight to the heart of web3 they are real criticisms and so this that is the frame of mind that we can go into this and like Ryan said we recorded this a month ago we've just been holding it in the pocket uh and then the FTX

debacle happened so we actually are re-recording the intro to this podcast that you are now listening to because we had to update it and I think just because of this FTX debacle it might just hit it's certainly hitting a little harder for me as to how this industry looks to the people that are not yet Believers and I think that is the frame of mind that it will be useful to go into this episode is like damn sometimes it's pretty hard to justify what we're up to in this industry and I think Molly comes and

shares that perspective well Molly had a lot of critical takes before the FTX before it actually just happened so you can imagine what she would she would add to this and overall I I do think she is a good skeptic and we need more of those in the crypto space of course uh so a few things we get into this episode Molly's Central claim why web3 is not going so great this was even prior to FTX number two why she thinks tokens actually make everything worse interesting point there

and why despite acknowledging some of the good in crypto and web 3 Molly believes crypto is a net negative for the world and probably will be in the near future thinker claims got a little bit stronger after the week's events of course David and I have a debrief after the episode which we've recorded on October 7th as well so you can hear our frame of mind then if you are a bankless premium subscriber you get access to that I can't even remember everything we said at this point in time David but

some high hot takes post this conversation that I actually want to uh listen to again I think and see how well they uh we've gone through the portal of this FTX debacle now like the frame of mind is just completely different and I think it is going to be interesting to see what we said back then a lifetime I'm so curious anyway if you want to access to the brief debrief episode of course it's on the bankless premium podcast you can upgrade to a premium membership there's a link in the show notes guys we are going to get right to our episode with Molly but before we do

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bankless Nation we are super excited to introduce you to Molly white today she's a crypto critic she's also an experienced software engineer she's been a long time Wikipedia editor we thank her for her Wikipedia service it's a website I use every day she also cares very deeply about free and open access to high quality information and things that we definitely value in crypto and at bankless and recently Molly has been doing a lot of critical speaking uh about crypto about this thing called web3 she covers this in her website it's

called web3 is going just great and at Chronicle Chronicles all the headlines of all the grift hacks toxicity going on in crypto uh marvelous website I enjoy it a lot Molly welcome to bankless thanks for having me uh so this is going to be a fun conversation I think and really we want to uh get out of our crypto Bubbles and and hear your perspective during this conversation Molly but let's start with this question so how great is web3 really going

fantastic you know when I first created the site I was trying to figure out what Webster even was and like what was what it was all about and every time I was looking for stuff I kept coming across things where I was like wow this doesn't seem like it's going so great so that's sort of where the title came from I I love it and uh so for for folks I can't see we're we're going to share this uh on YouTube but if you're listening to this the title is web3 is going just great and the subtitles and it's definitely not an enormous grip

that's pouring lighter fluid on an already smoldering planet that is the tone and I'm looking at a few of the more recent this is as of October 6 uh the headlines like Celsius they just exposed the names of all their customers and their recent transactions of course uh bankless listeners will be familiar with the celsius's shenanigans um also on October 6th the binance smart chain just halted uh we also have South Korea reportedly freezing 40 million from dokwan uh Z cash suffering attacks

it's kind of all of the bad news I would say in crypto Molly give us a sense for some of these headlines how you select them from an editorial perspective and what the website itself is is trying to accomplish so well I guess I'll start with what I'm trying to accomplish with the website which is when I created it back in the fall and winter of last year um you know crypto was really on a bull run prices were at almost all-time highs people were really buying into a lot of

the Mania and it felt like a lot of the headlines that I was seeing even in mainstream media but also in the crypto press were around people becoming you know overnight Millionaires and you know putting a ton of money into crypto and then becoming super wealthy and you know saving their families because of crypto and it felt like there was not all that much attention being given to where things were going really poorly and you know even when crypto was on a bull run there were a lot of examples of things

going really really badly where projects would get hacked or you know someone would get their their wallets would be compromised or you know some of them were just really bad ideas of projects that people were thinking up that they were like we're gonna do this but on the blockchain um and so I was kind of hoping to provide sort of the alternate perspective or at least just like a little bit of balance to some of the reporting to say that like hey not everyone is becoming a millionaire overnight and maybe if you put your retirement money into this it won't be there in a couple of months

um so that's really the goal is just to say that like You know despite some of the really you know the boosterism there's also a lot to be concerned about um as far as how I select you know articles for the site it mostly has to do with um I mean any example of something going really poorly any loss that's over like a hundred thousand dollars or so I usually will include but I also try to really highlight some of the examples where people as individuals are getting

hurt so you know even if a person isn't losing an amount of money that would be significant to like an institution I still will often put it in there you know if it's really significant to them just because I think that's also been a pretty big issue where you know people will put money that they really can't afford to lose into crypto and then something goes wrong did you ever think you'd have this much content Molly yeah I didn't uh expect it to be today

Molly there's a lot of people in crypto uh I think bankless would be a part of this group of people that are like perpetually optimistic and perpetually bullish like we can really only see the best of what crypto has to offer uh some might some might call us the people that are like you know handing out the Kool-Aid if if you will so this this effort is like the opposite it's like the anti-kool-aid it's like trying to say hey there's all these crypto like crypto Believers that are just like only are up only like Believers and they can't really see the negative side and

so you're trying to sober us up with this website is that kind of the goal I think so although you know I think with some of the True Believers you know the really idealistic folks there's only so much that can really be done on that um but you know I think I think it is important regardless of what technology you're interested in to sort of pay attention to the potential downsides where people can get hurt if they're using it um you know the risks that people are being exposed to and then you know I also try to reach some of the people who

are still kind of on the fence around crypto and they're trying to decide you know is this actually a good place to invest my money you know should I be taking big bets on crypto um are all of those really sparkling headlines actually true you know so I think it's kind of a multi-faceted approach so would you say that you are like anti-crypto or are you just saying seeing that there's an imbalance in the narrative space and you're trying to counterbalance it say that I am anti-crypto

um you know I for what it has been promising it has not lived up to a lot of those promises um and the promises have been really big lately um you know I mean crypto's been around for a while but the sort of web 3 hype and a lot of the talk you know around it becoming a really mainstream part of the financial system and even Society you know those are really big promises and so far the technology doesn't seem to have really lived up to that

um nor have a lot of the people who are building in the crypto space can we talk about some of those promises um high level Molly just to get kind of your framing of it so from your perspective what promises do you think crypto has made to the world what what checks has it written and um how many of those checks have been cashed uh which which ones are falling short well I mean like anything it really depends on who you talk to so there are some people out there who will say that you know crypto is really just for

speculation and you know that's it which I would probably say okay it has served well as a speculative asset for people who are interested in that type of thing um but when you start to look at some of the promises that are being made by really big names and the crypto Space by some of the VCS who've been jumping in it's stuff around like uh becoming a major part of the financial system in some cases even like replacing traditional Finance when you get to some of the more extremes um there's a lot of talk around banking

the unbanked and you know fixing uh the widespread inequality and the financial system providing services to people who have not had access to them um you know serving as a better store of value than some stores of value that we have today I mean the list kind of goes on depending on who you're talking to um becoming a pillar of the you know a web as we know it is a big one with web3 you know people talking about blockchains really underpinning every service you use online

um and so far I don't think any of those checks have been cached you know there have been instances where you could argue that you know Bitcoin or something like that has served as a store of value assuming that you're willing to you know take two specific points on the timeline and compare them rather than you know the the highs and the lows or you know depending on when someone actually needs that store of value um but besides that you know it's it's not replaced web technology is not banked the unbanked

what do you what would you give uh what would you say to the statement just like you know it's early like Bitcoin was created in 2009 but also Bitcoin didn't really open up many of the doors that created those narratives like replacing parts of the internet that was like more that came out for ethereum that was an ethereum brought that so ethereum brought that in like 2015. so like well we've got like seven years of ethereum history and most of ethereum's history and development has really happened in like the last four or five years so what would you say to the the response of just like yo we're still trying to

figure it out but the vision is still here like the foundation's still here yeah so that comes up a lot um I think in the tech world you know five or ten years is actually a pretty long time and things move faster in technology than they do in a lot of other Industries just because of you know you don't have to set up a manufacturing plant or something like that you know there isn't that sort of um upfront cost and so you know I still would have expected a little more by now

um as far as you know becoming a really stable part of technology is that people are using day to day that are actually deployed and like being used by real people um I also think that you know there hasn't been a great explanation of even how we will get to the point where crypto Banks the unbanked or you know underpins the whole web um you know there's a lot of people who will say things like well once we fix the scaling and the transaction costs and you know the privacy issues then

it'll you know be something that everyone uses every day but that's a big leap you know to say well when we just fix all of those problems it'll be perfect which like that's true of a lot of things you know once we fix all of the emissions problems with fossil fuels then we'll have no climate change problems but you know that's actually not possible right at least today we have no clear way of getting there so most people aren't saying things like that what would you say Molly to some of the success that maybe

um I'm sure you wouldn't argue that there haven't been some successes in crypto um but some of the successes maybe uh a few notable things of course the total crypto market cap is over a trillion dollars right and I know that's price but if you if you pick an asset like Bitcoin for example um for any like four or five year period that you've held Bitcoin has appreciated relative to the dollar and for you know a Bitcoin Advocate they are not um promising no volatility certainly right

hoddle has been an adage for for that Community for from the very beginning they they are promising that it will hold up um to the dollar which is going through kind of a debasing type of experience and Bitcoin is not so something like that but we could also take decentralized finance and we see a use case like stable coins which are like borderless dollars there's you know over 100 billion in stable coins out there the ethereum network itself did about

the value transfer of the Visa Network last year uniswap a smart contract protocol born what three four years ago did over a trillion in value kind of this permissionless open ecosystem what would you say to some of those successes do you just think that they're just kind of Niche and not significant compared to the the promises the checks that were written or uh do you think that there could be something

early that that might manifest later and you're still holding out hope um I mean I think a lot of the successes of crypto are um a little bit hard to measure I think you know things like market cap are really hard to measure in crypto where things can be double counted pretty easily and tokens are often being over inflated so I have a you know healthy amount of skepticism when it comes to things like market cap

um you know I think that there are people using crypto I think that's sort of hard to uh argue but as far as the use cases that are being promised and the you know the idea that stable coins are a better option in some cases or you know for for things other than trying to get into the crypto ecosystem I think that's a little bit hard to argue um I also don't know if stable coins on the whole or have been you know

purely successful there have been a lot of issues with stable coins and there are a lot of questions around a lot of remaining stable coins are you you're probably referring to uh to Luna and Tara as as one of those uh quote unquote stablecoin failures that happened earlier this year I'm curious from your perspective as you've watched a crypto more closely over the last you know year or two what are some of the most colossal failures that you've seen what's what's kind of the biggest evidence uh to support your points

well I think Tara Luna is a pretty good example not only the collapse of that specific coin but also all of the sort of Ripple effects that it had throughout crypto where other projects were you know using the anchor protocol or you know had exposure to Tara um you know I think the failures of some of the other institutions like Celsius that's been pretty spectacular um you know people having a lot of money

locked up in Celsius and who truly believed that it was like a safe place to put their money and it was better than banks in some situations so I think that's another really good example um and then you know some of the huge hacks that have been happening lately especially when it comes to crypto Bridges um you know I feel like every time I read something about a blockchain bridge it's because like 100 plus million dollars were just exploited um there have been a couple of those so yeah I think those are probably my top three I think we definitely as an industry

should take responsibility and ownership over why people in the outside part of the world are considering these things like D5 and web3 right uh Celsius in hindsight was a bank uh and this guy Alex machinski wore this like shirt that said like you know let's bring down the banks and it was like it had defy on the back end but it was like a centralized institution that took customers deposits and as an industry we kind of just like Let It Go on because nothing really bad

was happening but nothing bad does happen when prices go up right it's always when prices go down uh and then there's also like kind of the issue the definitional issue of all of these cross-train Bridges which are use multi-cigs which is kind of like a bank with some limitations but not enough limitations right so as an industry we do have this like definition problem where we don't actually know how to label these things because they are new they are like net new to the world and so as a result we get it it's labeled like crypto it's what crypto is it's what Defy is it's

what web3 is even though like these things have gotten like blurred and honestly like bastardized some of the pure crypto native products that are supposed to not do these things what do you think when you hear this well I would say that I I wouldn't call them a bank because I think that's actually what got a lot of people really drawn into Celsius is that they were told that Celsius was a bank and when they read that they were like great my money's safe you know if you put money into a bank in the United States and the

bank suddenly explodes you don't lose all your money right it's insured by the fdisd and I think people thought that they were getting those kinds of protections with Celsius and especially with voyager which had actually sort of implied that they were protected by the same fdisc Insurance um and so like when you say Bank people get a really specific idea in their head that is not what crypto you know what Celsius and Voyager and other sort of centralized exchanges are providing I think from from a terminology perspective when we talk about Bank on

Bank lists which is what the show is called like we're trying to go self-sovereign without banks what David was referring to is um there's kind of a when we say Bank we have sort of a negative connotation uh in it and and not applying this to outside of crypto although we do often apply it to you to financial institutions that are banks outside of crypto but crypto Banks themselves when David says Banks he means means that there is a hidden trust Vector there that is a siled institution that doesn't have transparency where you're actually

depending on a set of individuals in this case Alex machinski who you had to trust and so David was using it in a um well it turned out to be a bank in that a lot of people thought what they were doing was self-sovereign and I just deposit here and um you know I can you know um it's transparent it's fully open the way decentralized Finance is what it turned out is they were you know depositing funds into a closed uh bank that Alex machinski could like deploy

however he wanted with his group of Executives and withdraw funds to so it implies this trust Vector but I think I take your wider point that is a lot of these um and we've been critical of this as well a lot of these interest accounts whether it's an anchor or whether it's in Celsius are marketed as if they are risk-free um to retail in a the terminology of bank which people think of as oh FDIC insured this thing is completely safe

and they're certainly not those things yeah and I think there were sort of people in both camps in the Celsius uh instance you know I've read a lot of the letters that people sent to the judge in the bankruptcy case and there were some people who absolutely believed it was like a bank in the sense of like stability and you know you're not going to lose access to your funds there were also definitely people who thought it was more of a self-sovereign thing and there was one person I remember who wrote in and said that like because usdc

made all of these guarantees around being tradable one for one with a US dollar how is it possible that her money was locked up in something like Celsius and it's like she almost didn't realize there was an intermediary there that was you know controlling her money so I think it's yeah I think I think it maybe goes both ways do you think that that makes this more of an education problem than it is really a like a structural web3 crypto problem I think every I think there's always an education problem in finance and

Technology actually um you know crypto especially is really uh you can get in the weeds really fast and you know even with the project that I run you know I find people who follow the project and who are clearly like pretty interested in crypto either because they like it or they don't but you know who have a fairly decent knowledge of it who also sort of misunderstand things you know I've had I posted about the Celsius um uh disclosure of all their customer names the other day and and someone was

like wow so much for defy and it's like well no celsius isn't D5 you know but those are a lot of to a lot of people that's like they have no idea what that means can I just say can I just pause and say I I very much appreciate that you're getting to that level of detail even with the critiques because many um crypto critics uh do not do that I think um you know in addition to all of the grifters and scammers we see in the crypto Community I think there are many uh crypto critics who sort of um don't

actually take the time to understand what they're criticizing and I've read countless articles uh after the Celsius implosion about how uh this was an example of defy and look how broken Defy is and I just wanted to go to the reporter and say hey this is not defy at all like don't don't throw us in with those people like this is not what this industry is about in fact nothing was transparent or decentralized about this entire operation

um and so uh there's that element uh as well but I I definitely appreciate the work you're doing here I guess one high level common I'd say Molly is um I think you'll find that many people in crypto Dave and myself and I think a lot of bankless listeners included will look at all of the events that you just mentioned the scams the grifters the Celsius the irresponsibility of of block fi the three arrows Capital like margin uh craziness Shenanigans the Luna Terra dokwan

um you know daima style chains we can go down the list you'll find many of us have been calling these things out the entire time and uh also after the fact um also you know emphasize how this is does not rep present crypto values is not what our what our community and our industry stands for so we kind of stand uh I think um in support with you on that but one difference I think and I want to get some clarity is um as David

mentioned he called us Perma Bulls right at the outset of the show and that's because like we it doesn't mean that prices won't go down and think you can't you know it doesn't mean that you won't lose 90 percent in a certain cycle but we are bullish over the long run over the 5 to 10 to 20 year time cycle that this entire thing that is being built in crypto is not only uh going to appreciate in price that aside but it's actually going to be good for the world is going to be a net benefit it's going

to actually help Humanity in ways that are not the same but are similar to the level of the internet this is another wave of the internet if you will and so we are uh long term even though we see all the scams in the grift we think crypto is a net positive for the world not a net negative but I'm wondering if you disagree with that so we talked about like you know uh current state even some in crypto might argue that's been a net negative so far but they're still in crypto because and I would

argue that's still net positive so far but that aside some people would say it's net negative but they're still in crypto still building because they think we are building a brighter better future do you think that this possibility even exists or do you think are you kind of thinking that crypto is a net negative not only now in its current form but into the future is as well like it's never going to be worth more than all of the effort and all of the the grift and all of the the negative negative externalities that have been pushed out

by what are your thoughts on this yeah so I don't have strong hopes I guess for the future of crypto um but you know I I would say that anything is possible um and you know I've said this before that you know my goal with the work that I'm doing is not to be able to look back you know 10 or 15 years from now and be like ha I was right crypto had no purpose nobody's using it there are no blockchains in existence you know or whatever like say you know to to be able