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bankless_DEBRIEF_-_Why_Facebooks_Stablecoin_Failed

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Speaker A: Hey, bankless citizens, welcome to our episode. After the episode with David Marcus on why Facebook's stablecoin failed. All right. That was the main thing I really wanted to get out of this episode. I did. Also was curious why he's building on Lightning, but David, let's get it out. Okay, everything you didn't want to say during the conversation, because going long and to be like, I guess, respectful of our guest and not to turn it into, like, a 60 minutes debate, you could say those things. Now, what do you want to say?

Speaker B: I don't want to say. I've said it so many times. It's like, this is, this is when we started bankless. It was me coming out of pov crypto, which was 18 months straight, of arguing with bitcoiners about bitcoiner things. And so, like, finally, finally we started bankless. I'm like, oh, thank God I can talk about Ethereum with an Ethereum co host, like, I'm done talking about. And so, like, then you get the bitcoiner on and they go and give you their spiel of, like, you know, the immaculate conception. No centralized ownership, proof of stake is on chain governance. And I'm like, ah, this again. I have heard this so many times.

Speaker A: Yeah, I kind of felt that too. You know, once in a while, it's interesting to ask not just why a laser eyed maximalist is saying these things, but why an entrepreneur who's actually chosen.

Speaker B: To build a rational human being is saying these things.

Speaker A: Is saying these things. And David Marcus is more toward the rational human being side.

Speaker B: Right?

Speaker A: And so it was worth surfacing that conversation toward the end just to see if there were any new points.

Speaker B: The man said, I am not a laser eyed maxi. And I'm like, I bet you are on the inside, though. I bet you really want to be.

Speaker A: I just didn't hear any, I don't know, non religious points is sort of my take, I guess. Time will tell. So it was the three points of Vitalik is the leader, so it's centralized, staking is a centralizing force, and bitcoin is more liquid than ethereum. Okay, so what I would have said if this turned into a debate is, no, Vitalik isn't the leader. He doesn't have any more authority than someone who owns some bitcoin over the bitcoin network. Vitalik's eips don't even go through. He doesn't control the network any more than Michael Saylor does. Vitalik is not the leader. We could fork without Vitalik. If Vitalik went away. He was blasted off into, I don't know, Mars or something. Ethereum would be completely fine. I feel like that points disproven. Do you have anything more on that?

Speaker B: Actually, I can take the other half of that argument, to be honest. Yeah. So, yes, it's like on a technical level, does Vitalik have any undue control over ethereum? No, but he is incredibly influential and if he wants to push Ethereum in a particular direction, it'll probably go that way. Why? Because of merit. Because he's earned it. Because his ideas are good. And so why is Vitalik so influential? And yeah, Vitalik is really influential. If he wanted to beat the drum about something, he could probably get it done. But the reason why the Ethereum community trusts him and he is that influential is because he's earned it, because his suggestions and ideas are all really, really good. So it's not like Vitalik is some dictator and there's risk about his decisions, because the only time Vitalik is going to voice a decision is when it's the right one. And that's why he's influential in the first place. So I will, I don't think the risk is there. So David Marcus's point that there's risk there I don't think is valid. But to say that Vitalik doesn't have influence over Ethereum, I also think is not.

Speaker A: It's soft powers, it's social influence. It's not like, you know, I control the EIP process or I control the Ethereum foundation which operates like a centralized company that is shareholder run or I have a certain amount of tokens and therefore I get to decide or whatever I say, it goes to say you're.

Speaker B: Not building on Ethereum because of italic is a cop out, right?

Speaker A: I mean, so George Washington was a general, he was president, first president of America. He resigns from his position, he decides no longer to run. He's still going to have some social influence outside of his presidential office. Right? Why? Because he's a respected leader of the american revolution. I mean, this has similar analogs, I think also like certain religious leaders, you might say, you know, in like Protestantism or something, I mean, they don't control Protestantism, they don't control the entire religion of Christianity, but they have some level of social influence, right? Dalai Lama has some sort of level of social influence, right? I mean, that is more comparable to, I think, Ethereum. So that's why I think unless you get into those specifics than just saying Vitalik is. But I will say, okay, there are some people who believe, David, that because Ethereum has a founder who is an actual real person that detracts from its moneyness property, versus Satoshi who is pseudo anonymous, is much more kind of an idea, has kind of disappeared, birthed the idea and let it go. That is kind of the immaculate conception type of argument. And I think that you score some points towards moneyness for that. Like, I don't think it's a completely barren.

Speaker B: Some points. Yeah, sure.

Speaker A: Yeah, you score some points. It's just I don't, I personally don't think it's nearly enough, but I think there are some things you can see.

Speaker B: Longer before ETH is money, not after ETH is money. And ETH is definitely in its post money era.

Speaker A: Yeah, it is money. You think so? I think David Marcus wasn't ready to concede that point, but the second point he makes is that staking is centralized. And this to me is just, it's not.

Speaker B: This has been, this has been technically answered. They just haven't listened to the Ethereum foundation folks.

Speaker A: So stake does not grant you a token vote and any influence over Ethereum governance. If you own one ether, you're not getting one ether worth of vote over the future of Ethereum's roadmap. So it's not like a shareholder vote. So that's one piece of it. And then the idea that proof of stake centralization is somehow more centralized proof.

Speaker B: Of work.

Speaker A: We'Ve been through that before. And then the last point is that bitcoin is more liquid right now.

Speaker B: That's the dumbest point.

Speaker A: That's a fact. It's just a fact.

Speaker B: It's not a point.

Speaker A: It's only more liquid until it's not.

Speaker B: Dollar is more liquid than bitcoin. So I don't think that gold's more liquid than bitcoin. Oil is more liquid than bitcoin.

Speaker A: The other point I would make is it's more liquid. Yes. For now, Ethereum, like ether, is catching up, number one, and has been since inception. Number two, ether, the asset, is more liquid in more places that matter to me, which is bankless money systems outside of exchanges, outside of kind of fiat rails. Bitcoin is more liquid on centralized exchanges.

Speaker B: Banks liquid in banks.

Speaker A: Ether is more liquid in EFI. Anyway. You got bankless listers. No, we didn't obviously say these things because then it would turn into, we.

Speaker B: Get a lot of pushback. Okay, so we give pushback. We get pushback from like the Solana folks, like, oh, you guys aren't articulating SOLANA well, but then we also get pushback from Ethereum, people who are saying like, you guys gave your guests so much room, like, you guys didn't push letting people talk. It's like, we don't, we don't. It's, we're in a rock and a hard place. We're like, what are we going to do? Articulate our vision and our thesis for Ethereum for the 10,000th time just because we have a new guest? Like, no, you have to let the guests talk.

Speaker A: Most people who say those things would be shitty podcast dude.

Speaker B: Most critiques of bankless are so never mind bad.

Speaker A: Yeah. Anyway, I mean, we try obviously to give kind of like fair take in treatment. And you know what I was most interested in is like, are these new points, are there any new points as to why an entrepreneur, why a builder raise money and decides to build on lightning? And those three points at least were nothing new. And it does seem like David is having to wrestle with the clunkiness of state channels and that state channels enlightening, which is two layers of clunkiness. First of all, I feel like the more condescending take would be like, oh, cute. Ethereum went through its state channels phase two, but it never took off. Even when you had a smart contract programmable base layer, it didn't take off.

Speaker B: We had a porn as an incentive and it still didn't take off.

Speaker A: You're talking about spank chain.

Speaker B: Yeah.

Speaker A: Yeah. I mean, not even close. And it's been basically abandoned. And yet bitcoin is still going with the lightning based approach. And I actually do think it's, if you do it well, if you do it right, it can be like the state channel approach can be reasonably like, can be very decentralized. The problem with it is it's not capital efficient at all. It's like such a bear to set up these channels. You're not like pooling liquidity at all. I mean, there's a lot of reasons why it hasn't worked.

Speaker B: Yeah.

Speaker A: So I don't know, maybe he has other reasons for. But I hope they're not just religious reasons for building on bitcoin because I.

Speaker B: Guess I don't know how they can't be. One of my favorite lines from Nick Carter is that all bitcoin founders immediately become bitcoin moderates because the market humbles them out of their maximalism. And so, like, all, like the only the bitcoin laser eyed Maxis out there, they're not ever going to build something because they can't be pressured by the market, because they need to live inside of their bubble. And so that's why David Marcus isn't. I'm not a laser eyed Maxi. I'm going to. I'm a normal human who says normal words. Yeah, that's because the market's about to humble you, brother.

Speaker A: I mean, it's not my bet. It's not the bet I would make. I do wish him luck in kind of the, you know, to whatever extent there's a shared endeavor here. But, you know, which I think is if he's really going to be able to bring permissionless open payment systems. Yeah. It's just not. I mean, what has been the adoption of lightning? Have you. Have you followed it at all?

Speaker B: No, dude, I don't waste my time.

Speaker A: I haven't thought about it since.

Speaker B: Who's the guy that I got into a fight with on Coindesk's thing?

Speaker A: Is this the miner? He's big in the mining community.

Speaker B: No, he's big in the light. He's a big lightning guy. He got El Salvador to accept Lightning or whatever.

Speaker A: Oh, I know who you're talking about. Are you talking about. This guy is basically a bitcoin religious.

Speaker B: Why can't I think of his name?

Speaker A: Big bitcoin Lightning. El Salvador. I better find it. El Salvador.

Speaker B: What's the company? God, I've forgotten all of these things.

Speaker A: Lightning, El Salvador. Speaker one.

Speaker B: He's like the bitcoin Lightning influencer.

Speaker A: Lightning.

Speaker B: He wants you to think that there are real deals going on, and there's real decentralization with Lightning, but everything just runs through his custodial lightning application.

Speaker A: These are some names company. Pierre Richard.

Speaker B: No, Pierre.

Speaker A: I haven't heard that name in a long time.

Speaker B: It's a piece of work, bro. I haven't heard of that name in forever. Biggest.

Speaker A: Lightning devs.

Speaker B: Lightning, I think, is his app.

Speaker A: Bankless listeners are like, guys, we. You know, they're saying his name.

Speaker B: They know, move on. I need to find this guy.

Speaker A: Why can't we find him? Just. Just look at the bitcoin Miami speaker circuit.

Speaker B: Yeah, bitcoin 22. Lightning speaker. Jack Mahlers. Jack Mahlers. Fucking Jack Mahlers.

Speaker A: Okay, so you actually talked to him?

Speaker B: It was him, me and a few other people on a coindesk virtual conference during COVID David Hoffman, Zach Mahler's coindesk. I actually don't even remember who. Oh, Scooby trooples from Alchemyx was there. And I think one more person who I can't remember?

Speaker A: But that's a funny panel.

Speaker B: It was so, like, they didn't care panel, correct incorrectly. But, yeah, so, like, it was all about Defi. And then they play Zack Mahler's on this, and Zack is just silent for the whole thing because he has nothing to say. And then, like, the moderator turns to him and is like, zack, what do you think about Defi? And he basically goes, oh, they're all scams. You should build on bitcoin and Lightning network. I'm like, get the fuck out of here, bro. This panel's about Defi.

Speaker A: So, did you. Did you pick up that debate baton and throw it back at him?

Speaker B: What did I do? I just got fired up because of how just, like, poor his response and engagement was. And so I went and I did the same panel under the same title, and we did it as a show on bankless. And it was finally the conversation that I wanted to have. This is, like, in early mid 2020 or something. Yeah, it just fired me up. And then. And then now I just, like, now I just see all these, like, laser eyed bitcoiners and Zack Mahlers and all these people and sailor.

Speaker A: You think it's an influencer play? I actually.

Speaker B: Yeah, it's an influencer play. And everyone's like, oh, if Zack Mahlers is changing the world, he's getting El Salvador onto Lightning Network, and blah, blah, blah, blah. He's just. No, he's like a lightning influencer, and he's also a fucking kid.

Speaker A: I just like the idea of lightning. I think it's just never actually progressed.

Speaker B: Beyond, like, as an idea. As a concept. Sure.

Speaker A: As a concept, yeah. And that's kind of like the implementation.

Speaker B: I like Solana as a concept.

Speaker A: Well, I mean. Yeah.

Speaker B: So homogenous shared state at the speed of light.

Speaker A: The thing is. The thing is, it works itself out in the end. Right. If David Marcus is right and bitcoin and the lightning network take off. Right, then that will be obvious. That will be evident. That will be reflected in the price of bitcoin. That will be reflected in the adoption of the amount of bitcoin held in lightning.

Speaker B: It won't be reflected in the price of bitcoin. It will be reflected in the revenue of bitcoin miners. They still have to plug that hole.

Speaker A: Well, you know. So bitcoin still hasn't gotten through its mev phase either.

Speaker B: Right.

Speaker A: And that's going to be a major.

Speaker B: Growing up to do, despite being the elder sibling.

Speaker A: That's what I feel like. That's why, anyway, I mean, this is.

Speaker B: Why, like, anytime, like, hey, like, we're going to talk to a bitcoiner.

Speaker A: I know you weren't excited about this episode because of that, right?

Speaker B: Going into this, it just wasn't inspiring to me. It's like, we've done. We've done this before, and I know what this is going to. I know how this is going to go. And we had to spend, like two thirds of the episode talking about actually interesting things, which, which is like, in Libra and super apps and payments and stuff like that, before we finally concluded the inevitable outcome, which is like. And bitcoin. I'm like, no, we've done that series.

Speaker A: Let's talk about that other part. From white paper to in front of Congress in three weeks. What do you think is going on there? Why did that happen?

Speaker B: If I remember correctly, the very introduction of diem at the time was its own unit of account with a basket of fiat currencies. Like, it was a new Bancor model.

Speaker A: They started there, I believe so, in.

Speaker B: First, and then they had to get walked back because of regulatory pressure into actually a us dollar stablecoin.

Speaker A: I remember when the. So this was 2019. So this was in, you know, I guess in the doldrums in the, you know, the crypto bear market, which was, you know, a sad time. And this is definitely ethereum was kind of dead. And then Libra comes out with Facebook, comes out with this white paper, and I think it was called Libra at the time. And you're right, what they proposed was a stable basket of fiat backed currencies.

Speaker B: Yeah. It was like, United States dollar, the euro, japanese yen.

Speaker A: Not a win for the us government in this model. Right. It's certainly not a win for us banks because Libra was intending to, like, mostly bypass them, create, like, this loose consortium where they could be members of, but basically bypass all of them and bypass the us government. And they were going to do because.

Speaker B: Like, Facebook is the world's largest country. Bye. Number of people inside of it. And so if they have their own unit of account and currency, like, that's why I was saying it's like, oh, yeah, it starts to infiltrate into government business.

Speaker A: So the us government straight freaked out. Like, freaked out. I mean, that's what that is when you go, they completely freaked out. But so did crypto at the time, if you remember. Like, there was a.

Speaker B: Reactions were crazy.

Speaker A: What were the reactions that you recall?

Speaker B: So the one, the. I remember the Ethereum community reacted in one particular way. I'll let you. Let you talk about that one. But the bitcoiner reactions I thought were super interesting because you had two different reactions. You had, some of the dumb bitcoiners are like, ha ha, this is just going to totally replace Ethereum. Now. Why do we need Ethereum? We'll just go with the centralized Facebook led one and Ethereum is going to have his lunch eaten. Ha, ha, ha. And then the rational reason bitcoiners are like, this is a, this is like a, I'm forgetting the word. But just like this is a threat to freedom. We can't have payments model. Yeah, yeah, exactly. Like this is not, this is not what we want, blah, blah, blah, blah. Which is closer to what the Ethereum community was saying.