Podcast #21:Tech solves Blockchain Scale and Usability Challenges

Hi there, this is Ed Maguire, Insights Partner with Momenta Partners. Welcome to the Momenta Intelligent Edge Podcast Series, where we feature leading practitioners and thinkers across connected industry, and the broader technology landscape. 

Good day everyone, today we have with us Fred Krueger who is the CEO of Workcoin, a start-up that’s employing blockchain technologies to address the transforming nature of part-time work.  

Fred has had an illustrious career in a number of different industries, and also he’s one of the most thoughtful people that I interact with on social media. He’s been constantly looking to explore the shortcomings, the opportunities, and the potential of blockchain in distributed ledger technology, since I’ve got to know him over the past several months. In this podcast we’re going to look to explore some of the background of the work that he’s done and get into some of the topics where he’s one of the most insightful thinkers around, in any capacity. Fred, it’s great to have you join us. 

Great, thanks for having me here. 

Fred could you share a little bit of your background, and what initially got you into technology, and the technology business? 

I’m an old-timer, I have a math background, I went to Stanford for a PhD in Applied Maths, Computer Science, and Stats. Then I went to work on Wall Street, I was one of the first quants, I was at Saul and Brothers and was a prop trader for six years in the early nineties and have been building tech companies now since 1992. So, I’ve seen many iterations of the stuff, I’ve built shrink-wrap software, I’ve built a server-side software Java, enterprise software. I built the largest game site on the internet in the late nineties/early 2000s called I Win. We had 30 million players on our site, and the site still exists. I got into ad networks, I built four of them, the most successful was a company called Adconion, which we sold for quarter of a billion dollars four years ago to Singapore Telecom.  

So, I’ve been watching technology for a long time, trying to follow trends and be in front of the trends. I really decided to throw my hat into blockchain in September of last year, that’s when I really felt I had an idea for an application that could make a difference, and that was the idea of getting into the freelance work, gig economy where payment is facilitated by blockchain. That was about 9 months ago at this point. So, that’s my background, alongside a serial entrepreneur, I’m still learning new things every day. This is I think, second to the internet only, the biggest thing I’ve ever seen in my life. I would say second to the internet, the internet was the biggest thing, but this is number two. 

You dove-in almost a year ago, can you talk initially about your original exposure to blockchain, and what have been some of the realizations over time that have made you realize the absolute extent of the opportunity? What convinced you this was a really big deal? 

Well, I’d been involved with a small investor in bitcoin since basically 2013, we were always very skeptical of it because there wasn’t really blockchain before bitcoin, the concept comes from bitcoin, but when it was just a bitcoin-only world I was really skeptical of the argument that bitcoin had; was going to dominate the blockchain world because it was first, they had this brand value of bitcoin. It was open-source, so why don’t you just make bitcoin-2? Why is the bitcoin coin worth so much than the bitcoin-2 coin?  

So, I just couldn’t get my head around that at all, and then the thing that kind of jarred me into thinking that this thing could become more than just a speculation vehicle, really was Ethereum, that here you have something that can be used as a platform for other things, and  it really felt to me that that was something different than just this collectable Beanie Baby type phenomenon.  It felt like a new type of platform. I invested a little bit in Ethereum of 18 dollars per ether a year and a half ago, and just watched the ether eco-system grow, got very interested in it, but I also saw a lot of problems with it. 

I dove in, in September, and I kind of realized that not everything was kosher in the world of Ethereum. It’s certainly the type around the ether ecosystem, did not correspond in any way to the usability of the ether ecosystem. 

There’s a lot of promise that’s been articulated by many, many of the projects that are expected to run on ether or run on Ethereum using the ERC20 token. Are there any killer apps that you see for blockchain technologies which have really convinced you to jump in with both feet? 

There’s an amazing site called Gap Radar, so everything is kind of out there on the blockchain; they’ve actually tabulated the amount of daily active users of the ether blockchain. The highest-ranking site is IDEX which is a decentralized exchange right now, as of today there are 2,000 users on IDEX, and another one on the game site Promo 3D with 3,700 users. Basically, there’s a couple of thousand users per day on the top 10 sites, that’s nothing.  

So, one of the things that should tell you, is that there are no killer apps right now on ether, and in fact I would say, there are very few examples of an app that is running in any way associated with ether, that you would have your wife/mother/grandmother look at and understand. I think it fails the mom test completely, you can’t take any one of these apps, let’s say CryptoKitties as an example, and sit your mom down in front of the CryptoKitties screen and expect her to buy a cat. It’s just not going to happen.  

So, there’s some inherent problems with the entire ecosystem that is around ether and there’s a couple of reasons why… 

1. It’s very difficult to buy ether in general because you have to buy it from a company like Coinbase, get an account, getting through your KYC, figuring out how to send the ether etc. to another account. All that takes days for the average person.
2.  You have to get an ether wallet, like MyEtherWallet (MEW), and the experience there is really difficult. `
3. Then if you want to interact with an app, you’re going to need something like MetaMask, that’s a Chrome plugin, and you have to figure out what a Chrome plugin is. You have to use Chrome because you might be using Edge or some other browser. You have to then create what’s known in MetaMask as a vault which is a wallet within MetaMask, you have to transfer your Coinbase to the vault. 

That’s just to open an account. The reality is at that point you’ve lost 99.99 percent of the users who ever want to do it. Then when you do this you find that every single interaction with the Ethereum blockchain takes two to three minutes, as opposed to two to three seconds. It’s not really surprising that there really is no usage for such a system. 

So, a lot of these ideas are really good, like Augur, it’s a good idea making bets, betting on prediction markets based on world events and stuff like that, people do like to bet, whether its legal or not, that’s a different question, but at least the used case is out there. Trading is a good use case, but the implementation of these things where every little thing takes three minutes, it’s just not going to fly, people are not going to go back to the dark ages. Once they’ve flown on airplanes they’re not going to take the horses. 

No, doubt. Of course, we’ve seen this around the end of last year, we had this crypto mania, crypto asset and token mania, and we saw valuations go through your classic psychological market bubble.  

As you look at layering that dimension of tradeable tokens, or digital assets onto this technology, what’s your view of how that dimension of the story has impacted the evolution of the technology; because it is very different from AI, or the internet itself where we do have this evolution of this new type of asset that in theory is convertible back to money. But this has been a really classic market psychology playing out with brand new technology, and it’s a combination we hadn’t seen before. I’m just wondering what your view is on how constructive it may have been, or maybe an obstacle to the technology being taken seriously? 

I think it was phase one, some people say bitcoin was phase one, Ethereum was phase two. Neither of those have been mass-market phases, and the fact that there are 21 million maximum bitcoins, does that mean that bitcoin is worth a trillion-dollars. There’re very rare things that are not worth anything, there’s some rare snowflakes or something! There’s a rare game that’s for sale on eBay, but it doesn’t mean its valuable just because its rare. I think these things need to have a usage, and there was a classic bubble about bitcoin, but it doesn’t matter because the real question is, can blockchain achieve mass market usage? And in what form can it attain mass market usage? 

I’m now completely convinced that it will, and it will in the next 12-months, I just don’t think it will under ether. So, I think with EOS there’s a conversion of stuff that’s happening which is going to make EOS become the first mass market platform for crypto. It’s like saying the internet is bad when all you have is AOL, and then all of a sudden you have really fast pipes, you have Google, then you have Amazon, Facebook, you know what I mean? So, I would say don’t judge it too quickly based on a bunch of ITOs, ether, and where we are right now. 

I’m interested to tie that into your own experience as an entrepreneur creating technology, based on the technologies that are out there, I’d love to get some perspective on… 

We tried with ether, we took a very-very serious look at what could we do with ether. We’re starting at the point of, can we build an app for a number, a million users? I would say my answer is, it is not possible to do that on ether today, it is not, and the fact that the IOS app has 4,000 daily users on ether after three years, and 250,000 ether developers, tells me that there are major roadblocks right now with that platform. I think the combination of having to pay gas fees, the combination of these long cash ether aggressors, and the combination of the transaction times make it an unusual platform for the masses. That’s my opinion.  

Now, are they going to fix this? Probably. It will probably get fixed over the next 12-24 months, That’s a good thing, the competition is great, but I don’t think this platform works, that’s my view. So, we’re just iterating, how can we get the promise of blockchain which is, with super-fast payments from one person to another person which are recorded permanently on the blockchain, how can we get that to work?  

So, our first attempt was, let’s just do this centrally, send us ether, we’ll record this stuff, and then we’ll send you back ether; that was our proof of concept #1. We knew that was not going to work in general, and it just doesn’t work because sending us ether takes forever, getting your ether back is like standing in line to get your ether back. It centralizes, it has all kinds of bad things, even if the user interface can be made really great. 

Secondly, great now we want to do a wallet-to-wallet. Okay, will that work with an ether wallet? It won’t, because if every time I want to buy a service, I have to wait three minutes before the ether gets even confirmed, and that by the way could be about an hour depending on how many confirmations you need. That’s not going to work either, so we basically said the ether thing looks great, is it really great? Let’s take a really serious look at it. 

So, we started building on EOS and realized that EOS from the inside is even better than it looks on the outside. It really is super-fast, it’s just magical. But then we realized, how are we going to interact with the EOS blockchain as an app? Are we going to use a similar type of thing with MetaMask? Well there is one called Scatter, it’s a Chrome plugin, but again that’s moving your money over to Scatter, then selling a Chrome plugin, having it not work on mobile; we just felt with all those things it just wasn’t going to work from a consumer point of view, if we did that.  

So, we basically said we’re going to have to build a wallet into WorkCoin, and we’re going to have WorkCoin have its own wallet, so let’s figure out what a great wallet looks like on EOS. So, that’s what we did, we built an actual wallet, standalone wallet on EOS which is really the first consumer level EOS wallet out there right now. 

That looks really exciting, I’ve been following your developments there. 

It’s something to look at, but I’ve got to tell you Ed, when you send somebody some crypto and it takes one second; you have to have 12 characters, say EdMaguire123, I put your name, I put the amount I’m going to send you, I can put a memo, I hit send. I do my face-recognition, and one second afterwards you have the crypto, it’s such a magical moment. It’s feels unlike anything you’ve ever seen in crypto, everything you’ve else you’ve seen in crypto doesn’t happen that fast.  

That’s really the promise right? The vision is that the idea being able to send money over IP as it were, as Miko Matsumura likes to say, that really is this profound thing. 

Once you experience that digital money, the next kind of thing is, I’m not sending you EOS, but I’m sending you $56.23, because I owe you $56.23, I don’t owe you six EOS. That will be the moment when people go, ‘Wow, that’s digital money now’. I can send anybody in the world this money, I can send it in any amount, I can send a million dollars to you this way. That is doable now, with this wallet and EOS you can do that, like stablecoin it will be doable. So, once people realize that, and then they realize that can be integrated into a whole number of apps where now if you have this kind of digital Dollar, digital Yen, or digital Euro that can be integrated into any number of apps, its instantaneous and cost-free, I think we’re going to see Instagram level adoption.  

So, we’re going to go away from nobody’s using this stuff, to, everybody’s using this stuff. That’s what I think, we’re going to see that, and to your earlier question of how do you redeem this stuff, well if you look at some of these stablecoins, they’re now working with banks. IBM was the stablecoin of building, they were working at least with one bank called Signature Bank which, if you want cash out, go there, cash your stablecoin and its on your debit card.  

So, now you have a complete on-ramp and off-ramp to crypto with the bank, and they’re doing the AML KYC, your accounts have been verified, and you’ve got a purely electronic version of the dollar. That has a lot of value to me. 

For the listeners who may not be familiar with the term, a stablecoin is a coin which is pegged to a specific benchmark or valuation, it might be pegged to the US dollar. The idea is that it’s not a commodity where the price fluctuates based on supply and demand, there’s an anchor of sorts. There are a number of approaches right now, I know of course Tether was an initial shot at creating essentially a coin that in theory was backed by one-to-one deposits of US dollars, and there’s certainly been some debate about how closely they hued to that original vision. 

You’ve been doing a lot of work on stablecoin, could you talk a bit about the evolution of some of the options right now, and some of the interesting developments as you see them for stablecoins? 

Basically, there’s three approaches to it, the first is what you said, Tether, which is bad. You’re issuing 100 dollars, well, there’s 100 dollars in some bank account that is one-for-one with the 100 dollars that you’re circulating. Tether did this and they definitely have bank accounts, except the problem is they’re revealing to the world what their bank accounts are, for various reasons, and that’s sort of a problem because one can’t be assured that they have all the $2-billion that they claim they have. So, there’s some kind of main afference that they’re in fact not being completely honest about it, and they have some of the money only, there may be a hole there. 

On the other hand, you now have things like TrustToken through USD which is backed by reputable people, they’re transparent about where they’re keeping their money etc. Circle which is backed by Goldman Sachs, is taking another very transparent approach to this stuff saying your money is good. So that’s approach number one. 

Approach number two is, just say we’re collateralizing this stuff with crypto and we’re going to adjust the collateral dynamically, and the stuff is always overcollateralized. There’re approaches like that, and one of the coins there is Maker Dai, which you can buy on air swap so you can just take Ether and swap it out for Maker Dai and you set stablecoin.  

The third approach is more complex, this is more like a federal reserve model where basically you’re paying the stuff to the dollar, increasing supply and lending, and it’s very complicated. An example of that is a company called Basis that’s doing that.  

So, there’s a number of approaches. The one I like the most is the simple approach of, ‘I’ve got money in this bank account, and you can withdraw the money!’ 

One of the things I’ve set as a challenge is, the thing must pass what they call the Krueger Test, which is, ‘I’m a consumer, I have $1,000 in stablecoins, I’d like a mechanism to get $1,000 wired to my bank account with my $1,000 of stablecoins’. Once these coins pass that test, I think they go completely mainstream. 

That, in respect, is a huge barrier to broader adoption, mainstream adoption of digital assets, or crypto assets as it were, as you see it. 

It is, but look, it really all boils down to other banks cooperating. Do they see an opportunity here, or is this just a challenge? I think the banks are going to cooperate, it’s a big opportunity for the banks because the banks aren’t in the business of taking in bitcoin, or trading bitcoin, this is not something a bank knows anything about. But a bank is absolutely in the business of, ‘You give me money, and I give you a certificate for taking this money, saying that you’re owed this money’, and if the certificate is in a form of a coin, that’s really core to the bank’s business and they’re going to earn the float on that money. 

So, it’s a natural for banks, they can earn a lot of money just like they would a checking account, it’s a virtual checking account, they can earn float on it, and its great. So, why wouldn’t a bank do it? The answer is, it’s an existential threat to their system long-term, because if everybody is using stablecoins to pay for their rent, all their goods and services, well checking accounts become a little less needed. Cash becomes a little less needed, we have this electronic thing, ATMs are less needed, I don’t need to go to an ATM. I need to pay my accountant, I’ll pay with some stablecoins, I can pay my landlord with stablecoins, I need to do payroll, well I’ll just put these guys on a payroll app with stablecoins.  

That’s the potential economy, and it could be coming a lot faster than people thing, because all we need for that is… 

• The infrastructure to do it really fast, which is now in place with EOS. 

• Stablecoins, which are coming, they’re already out there in terms of Ether, but they’re coming to EOS.  

• Apps to be written to use these stablecoins and move these stablecoins around like the one we’re building in WorkCoin. 

We see that as moving stablecoins because a freelancer ideally wants to be paid in something that resembles a Dollar, a Euro, or a Yen; that’s what they want, and they want to be able to redeem it, they want to be able to take that coin, go to the bank and get money for it. They don’t want to have to be speculating in some coin, whether it’s WorkCoin, or even a more established coin like EOS. Ideally they don’t necessarily want to be forced into being a speculator, they want to pay their rent.  

I really believe that we’re going to see with the stablecoins and EOS combo, and apps, we could see just a complete change in the market. It may be a world in which adoption goes up way-up, and at the same time bitcoin goes down, because in that world do I really need bitcoin anymore? Not really, do you know what I mean? 

Yes, then you get into the arguments about whether its appropriate as a store of value, or as a means of transaction, and certainly there’s been quite a bit of ongoing debate about this. 

People have had this debate, its all-academic right now, but once you can actually move money around like in one second, the debate changes color. So, I’d love to see the people who are defending bitcoin and the whole store value and everything else, I’d love to see them defend that in a world where it’s so easy to move money around with some other system, whether its EOS or a seller maybe, but there’ll be alternatives to EOS, I don’t think it’s a one-person wins. But I do think that the future is a world where you’re going to be able to move stuff around on a stable basis, instantly, for very-very low fees. I’m just not sure what the value of bitcoin is in that world. 

The new metric in a year from now will start to become how many active users do you have, it will be like apps and anything else like it was in the past, it will be how engaged, how active is your community, and ultimately how much money are you making from that community? But if you go to the app store, it looks amazing how engaged… how many people have Spotify or Uber, Facebook or Instagram, these apps are being used by hundreds of millions and billions of people. So, I expect we’re going to see the same kind of thing with blockchain, I think we’re going to see apps that use blockchain, that are in the app store, and somehow uses blockchain whether it’s to record things, to pass information, to transmit part of information in a chain. I think they’re going to be very consumer-popular.  

So that’s what I’m really looking forward to, I’m looking forward to the consumerization of the blockchain space. I know it seems like a complete longshot right now when you look into the apps or DApps radar, and you see all these non-used apps. But I do think we’re at the precipice of something that’s going to be crazily high-usage, because EOS enables that. 

You’ve committed your entrepreneurial energies to building out an application and networks based on these new technologies. I’d love to hear a bit about the background of the opportunity around WorkCoin, and how you have seen this unique technology addressing these secular changes in the workforce that are ahead of us. 

Freelancing is the friend of the next 10-years, we’re all going to become freelancers. If you look at the macro trend, all except 46 percent of the US workforce is now doing some form of freelancing, that’s going to exceed 50 percent in about 8 years. So most of us are going to be freelancers, and then the question is, how do all these freelancers find work, and how do you find the right freelancer? Currently when you think of a freelancer, you think of a web-designer, or a developer, but there’s a lot of other kinds of freelancing, and one thing that is going to be really big is just advice… 

• I need some legal advice. 

• I need some accounting advice. 
• I need some business advice. 
• I need to talk to a guy like Ed Maguire who has a background that I could checkout, whom I can hire by the hour. Maybe hire for a few hours for a specific question, so I can reference that person. 

So, this for me is like an unsolved problem right now, how do you find these freelancers, and how do you book them, how do you pay them? 

So, that’s the scope of the opportunity, and it really boils down to how big is the freelance work opportunity right now which is unaddressed? I think its enormous. So, what is it going to take to crack that, and to get all these people online on some system where it’s like a search engine for freelancers? I think it’s going to take a very streamline payment system, and that’s the thing, if it’s just, ‘Give me your credit card, let me charge the service on the credit card’, like with Upwork or Fiverr; the fees start getting really big, really quick, because you have 3 percent transaction fees both ways, you have chargebacks, you have fraud, there’s just no way to do this stuff instantly, electronically, and irreversibly, unless you’re dealing with blockchain.  

The minute I heard about blockchain I was like, ‘Oh my God, this is going to be perfect for freelancing’. Then I realized it’s actually a lot more complex than I thought, because if you’re doing it based on ether then how are you going to pay for this thing? Well, you’re going to have to have ether. Okay, well that’s roadblock #1, how do you buy ether as the buyer? That’s a problem. 

Roadblock #2, as a seller who has finished the job, how are they going to sell their ether? That’s a problem. Then you have the time delays, and then you have all the fees associated with blockchain, like coin-based fees and so on. So, there’s a lot of intermediaries and a lot of reasons why it may not work.  

Now, with EOS a lot of that stuff gets changed, so all of a sudden you have EOS, you have stablecoins, there’s a zero friction between sending you a stablecoin when the job is complete, and there’s zero time that you need to get that stablecoin, and all of a sudden now you have something that’s completely different. It’s literally going to be a case of, ‘I’m looking for a guy who can help me out in this very specific deal’, ‘This guy was great’, ‘Let me put in $200 of stablecoin to pre-pay for the job, for lets say three hours of work’. Now the work starts, the work’s finished, I rate the guy, immediately I’m saying that the guy did a 4-star job, the guy gets the $200. I’m not going to take him to the bank. 

So, the quickness of payment could completely change the way people get paid, and that I am now completely convinced will happen with EOS. The first time we get all these pieces together, it’s just going to be magic, just like when you play with this Lynx app, you’ll see it’s just magic. The feeling you get is like I’ve never seen anything like this before in my life, and you’re going to get that exact feeling when you book a job, and you’ve got some stablecoins in your account one second later. You’re going to be like, ‘Holy cow! This is great, I’ve just got paid for doing work, I didn’t have to wait two-weeks, I didn’t have to send a request to this employment company to do this. I just got paid, its in my account, its stable, its great, and I can work from anywhere’.  

That is going to be the case, I think we are building that system. It’s extremely exciting that its possible now with blockchain, and it wasn’t possible three-months ago. 

That’s what’s so remarkable about the evolution of the technology, it’s happening so quickly. 

It is, and here’s the thing, I really think that once people see that blockchain can be used for really fast apps, I honestly think this Lynx app is the first one. It’s just a wallet, but it is the first app that is for blockchain, that you can use where things happen within one-second, it’s the first one. If I want to demo blockchain to somebody, I can’t demo it, but with Lynx you can see it. Obviously, the heavy lifting comes with EOS, not with Lynx, but it’s an all-in-one solution that just works, and its fast. I think that is going to be the experience that once people see that and are like, ‘Oh, my God!’ then you’ll have a million people try to do the same in their area. And it’s doable. 

One of the things that I love saying is, there’s this great show called The Men Who Built America, with Andrew Carnegie, they built the first building in Chicago using steel, I forget the year they built it. The next year they built 100,000 buildings, it was steel. So, it’s like once you have the proof of concept, once you know it can be done, you’re going to see a lot of them. There’re two-million apps in the apps store right now, but I think you’re going to see 100,000 apps on EOS that use the EOS blockchain. It’s just getting those first ones to prove how it’s done, that’s the thing; you’ve got to show people how it’s done, what can be done, and then everybody else will start building some great stuff. 

We are now technologically at the point where you’re going to start seeing this next wave of super-useful, super-consumer-useful blockchain, and that to me is the exciting thing, that’s why I’m now much more excited than I was before, and it honestly has nothing to do with the price of bitcoin, in fact it could be negatively correlated. I want to see, can these apps be built where I can get, right now there’s 250,000 on EOS, period. This app alone could get a million people, I know, iWin has 30-million people, it wasn’t as useful as this, it was a game. But just like a game app could get 30 million people easily, so all it will take is something like HQ Trivia running on EOS and I could have a million people on it, very quickly. So, I now think we’ve got the infrastructure, and we’re heading into the next phase of blockchain. 

What happened last year was interesting, it doesn’t really matter, it’s like the new stuff is going to be built on the new technology. Start over, rethink what you’re doing, because the old way of doing it just kind of didn’t work, and it doesn’t matter it was a learning experience. I really think blockchain is going to take off, and it will take off in a consumer way, and this is not something that people are expecting. Facebook is looking at this seriously, Facebook with Telegram, these are consumer level apps that are going to get involved in this stuff. I think we’re 1994, we’re right before it hit, 2019 is the year it hits. That’s the year where it’s not people just investing in bitcoin or crypto, it’s the year where people are building on crypto. 

And just like any technology that starts to hit those inflection points, it becomes incredibly more powerful once you have networks of users. Certainly, as we’ve seen, I know there are a number of folks that have done work on the accelerating adoption curves of innovations. Ray Kurzweil had a chart he put together, I thought it was interesting and I’ve used it in a couple of my writings to show the amount of time that it takes for a new innovation to reach saturation as it were, 50 percent of the US population have declined from 75 years in the case of the telephone, to just a few years in the case of social media, it just accelerates. I think you’re right, once we hit that inflection. 

If you look at Snapchat, WhatsApp, or Instagram, these things in a billion years are close to it very quickly. I think we’re going to be there, the EOS thing has all the right elements, I don’t think it’s perfect, but it has all the right elements. The next version of EOS, or the next blockchain that competes with EOS is going to have… blockchain is going mainstream, that’s what I think.  

Also, from my perspective as an investor, and as a user, I kind of feel I’m at the app store right before the apps have opened up. If you remember, that was exactly the time when Uber started, there was all these great apps, and even Facebook, Facebook really blew-up with the mobile. I think a consumer-level blockchain is going to enable a whole rush of consumer apps that use this blockchain or other blockchains. EOS has an amazing shot at being the app store for the world for blockchain. So, I would like to see apps that I can use, that I can take out, use it, and go ‘Wow, that was great’, and have that same experience when I used Shazam for the first time, or Spotify or something, Facebook or Instagram. So, the question is, what can we do now, what can we develop on the blockchain that’s genuinely useful, even with small network numbers? Then as you say, throw in a network effect and boom!  

I can’t imagine looking at an app like WorkCoin, yes, just starting out there won’t be many people, but you’ll be able to transact. But they eventually it should be the case where I just type in Stanford Economics, and I can see four people who are on the graduate programme on Economics at Stanford who want to do work. How great would that be! Two of them are online, and they’re available for 100-bucks an hour, I click and hire them, I give them some work, they do the work and they get the coin. 

There have been some regulatory uncertainties in the US that have slowed down some of the fundraising around token raisers in ICOs, do you see that having an impact on the evolution of the technology itself, or the willingness of none-investors to adopt applications? 

Well, here’s the thing, we’re probably going to change from the ICO model of funding, to more of a traditional equity model of funding. So, if my vision is correct and people are going to be building these kind of blockchain-enabled apps, oh, guess what, these people are going to invest in these blockchain-enabled apps, just like they invest in all the other apps, whether its consumer, or business. So, probably we’ll move more towards an equity model of funding, and our tokens are going to be used on blockchain, are they going to be bought and sold? Probably. 

ICOs could be under more regulation, I don’t think it will impact the amount of funding that goes into the blockchain at all. So, I’m not particularly concerned about that, I’m more concerned about for example for us, two-years from now if we deliver on what we’re doing I think we’ll get traditional equity finance. Even if ICOs are impossible and you can’t sell tokens through what they currently call a token generation event, it doesn’t matter. But the more interesting question is, how is the government going to regulate when tokens become a mainstream method of payment? What happens there? I don’t think they’ve thought through that one at all. 

Agreed, a lot of very smart people are trying to work some of these issues out, and even companies that are funding themselves by selling off some of their digital assets; I have a friend who is a CFO at a very large distributed ledger company that funds themselves by selling off a few million of the token that’s held in their foundation. How you account for that, their auditors still haven’t figured out how to address this, so we’re very much at the cusp of a lot of unresolved challenges, but it is incredibly exciting. 

I think where this is probably likely to go is this, in the same way that you are required as a US citizen right now to disclose any foreign bank accounts that you have, the privacy requirement to disclose any crypto accounts that you have, these are very much like a foreign bank account, its sort of that same thing, they’re international, they can be used for various purposes potentially, and the government should know about them, and if you don’t it’s a major offence. I think that is likely to happen and it’s a good thing, if you have an account then disclose it, you’re not supposed to be hiding stuff from the tax authorities. 

That’s the first thing I would do. I wouldn’t go to the point of every single transaction between people has to be between accredited investors, I think that is insane. So, that would be a very big negative if they said… and I’m very happy that they decided that Ethereum for example is not a security, stablecoins should not be securities, if I transmit a stablecoin between A and B, its not a security, I’m not buying it for the purpose of making money, I’m buying it for the purpose of using it within a network. 

So, these things need to get regulated, but over-regulation of this stuff would be bad. There’re clearly some huge advantages to being able to move around stablecoins and so-on very easily. 

The last question I had was, any resources you might recommend for people interested in gathering a bit more insight, either into the space, or any books that you’d like to recommend? 

Not so much a book, but I would recommend the Netflix show, ‘Banking on Bitcoin’. I think that is exceptionally well done, there’s a bunch of interviews with some of the early members behind the bitcoin. I really liked that series on Netflix, I thought it was excellent, if you’re new to the space I would recommend that as a way to understand the history of where we went, at least. 

Great. That’s a great recommendation, and with that I think we’ll wrap up Fred. It’s been enormously illuminating, I really appreciate your insights, fascinating as always, and of course exciting at being the nexus of all of these evolving, emerging, and explosively transformative technologies.  

With that everyone, this has been Fred Krueger, CEO of WorkCoin. I’m Ed Maguire and thank you again for listening. We’ll have show notes up, and as always if you have any comments or questions please send them our way.  

Thanks again Fred. 

Thank you.