The Role of Decentralization, China/US Break Down and More | Balaji Srinivasan on All-In Podcast with Chamath Palihapitiya, Jason Calacanis, David Sacks, and David Friedberg

Key Takeaways

  • The entire 20th-century regulatory apparatus is confronting something new and unfamiliar with the growth of cryptocurrency
  • China is apparently abandoning market-based capitalism (something they borrowed from the United States)
    • In the last 30 years, China leveraged the world to finance their ability to have complete control over many critical resources like ships and rare-earth metals – that is their strategic genius
    • China desires modernization, not westernization;  they don’t desire western culture
  • Balaji gathers and validates information from multiple sources – information triangulation
  • We need to disrupt the outmoded way of thinking of corporate journalism with on-chain fact-checking
    • When we can establish a global truth over a byte, then you can generalize that to establish global truth on any other financial instruments (tokens, loans…)
    • We can generalize it further to establish proof of location, or identity
  • With blockchain, we can share the database information among many people, have group decision-making
    • This is the power of decentralization; the power that changes the information economy that engineers the world

Books Mentioned

Intro

  • Balaji Srinivasan (@balajis) is an angel investor, serial entrepreneur, and the former CTO of Coinbase
  • This is a discussion between “bestie guestie” Balaji Srinivasan, Chamath Palihapitiya, Jason Calacanis, David Sacks, and David Friedberg on the All-In Podcast. They talk about blockchain technology, decentralization, politics, and corporate journalism
  • Hosts – Chamath Palihapitiya (@chamath), Jason Calacanis (@Jason), David Sacks (@DavidSacks), David Friedberg (@friedberg)

How did Balaji Become a Polymath?

  • Balaji always tries to learn something from everybody
  • Instead of going out to nightclubs, he reads books about mathematics, science, and history
    • There is nothing wrong with going to clubs, but this is his way of fun
    • “I just read a lot, and remember a moderate amount, so I cite that. It’s nothing more complicated than that,” – Balaji Srinivasan
  • He also enjoys going for walks and working out
  • Balaji is fundamentally an academic (mathematics), he got into the technology business later in life
    • He was the CTEO of Coinbase (cryptocurrency exchange platform)

Balaji’s Opinion on SEC’s Threat to Sue Coinbase

  • The SEC (The U.S. Securities and Exchange Commission) threat represents the beginnings of a new era for cryptocurrency
  • SEC is not prepared to go after millions of crypto holders and developers
    • In the same way that the FDA is not prepared to go after millions of biohackers
  • The problem is not Coinbase per se; or any specific cryptocurrency platform, the problem is that the technology is shifting
    • The entire 20th-century regulatory apparatus is confronting something new and unfamiliar with the growth of cryptocurrency
  • There are many more individuals to deal with, instead of companies
  • Possibility of sanctuary status of states for cryptocurrency, international entities like El Salvador or Switzerland

Comparing Cryptocurrency With the Napster Era

  • Napster led to Kazaa Media Desktop (“Kazaa“), LimeWire, and similar peer-to-peer file-sharing software
    • This forced record companies to the negotiating table
    • The music industry realized that they needed a contractional framework to compete with the invention of new technology
  • The results were creating on-demand music streaming services like iTunes and Spotify
  • Cryptocurrency is currently in a similar position, at an intersection of individual desires and outdated regulatory framework
  • SEC still needs to answer a lot of important questions about cryptocurrency

United States and China’s Future Outlook Comparison

  • China Declares Cryptocurrency Transaction Illegal
    • Virtual currency-related activities are now illegal
    • What is the position of the United States?
  • People talk about China copying the United States, but Balaji believes it is the other way around
    • The United States is copying China but is doing so unsuccessfully, e.g. lockdown during coronavirus
  • China is apparently abandoning market-based capitalism (something they borrowed from the United States)
    • Is state capitalism a momentary phase to help China’s economy catch up to the West before being replaced by socialism?
  • David Sacks looks back on the state of China in 1580, during the rule of the Ming dynasty:
    • China was more advanced than Europe in terms of technology and standard of living
    • Chinese Emperor restricted China’s shipbuilding industry; the exploration stopped, and they turned inward
    • European states explored and colonized the New World, and experienced a growth of wealth and innovation
    • Western Europe ended up conquering and dominating the modern world
  • Could Xi Jinping’s return to socialism be like the emperor restricting shipbuilding in the past?
  • Balaji prefers the term nationalist socialism: In many ways, China resembles Nazi Germany, and the United States is Soviet Russia

China: Game-Changing Growth

  • China’s growth completely changed the game, according to Chamath Palihapitiya
    • He compares it with China playing The Settlers of Catan (multiplayer board game where the goal is hoarding resources)
    • In the last 30 years, China leveraged the world to finance their ability to have complete control over many critical resources like ships and rare-earth metals – that is their strategic genius
    • They improved on United States’ capital
  • David Sacks references Samuel P. Huntington and Francis Fukuyama to prove a point about China and the persistence of cultural differences:
    • China will learn and assimilate everything they can from the United States about technology
    • They will not become like the United States. They will not accept democratic capitalism
    • China desires modernization, not westernization
  • Why did everyone get this wrong?
    • Political differences are not public in China, but they are very real
    • There was an obvious leadership transition, and many people failed to see Xi Jinping’s ambition
  • How the United States views every other country:
    • Countries that are similar to the United States- their friends
    • Countries that the United States attempts to save or deal with via “wokeism”
    • Countries that the United States dominates
    • The problem is: “The entire world reordered themselves with completely different incentives and they did it in front of us,” – Chamath Palihapitiya
  • They changed in the following steps:
    • Domination
    • Assimilation (learning, taking technology),
    • Reassertion (the dominated country reasserts its traditional culture)
    • That surprised United States
  • 30-40 years ago Deng Xiaoping organized a plan for China:
    • Hide their true strength
    • They reformed their economic system, copied the United States, but did not give up any political control and by 2012 they caught up
  • David Sacks believes that Xi’s role is reassertion. They got to a point of strength where they are ready for someone to reassert their ethnic nationalism – that person is Xi Jinping

Is China on the Brink of Revolution?

  • Calacanis is worried about the revolution happening in China because of too many restrictions:
    • People can’t publish what they want
    • It is difficult to start companies
    • Restriction about time spent playing video games and social media
    • Lack of financial control
  • David Friedberg does not see this happening due to diversity of experience in China and their overall progress
  • Balaji warns about the revolution prognostication being a western mindset
  • Chamath believes that the principal reason people rebel is the economics, and China is economically sound
  • United States’ perception of the Chinese government might seem uncomfortable and foreign, but perhaps it brings safety and security to Chinese people (house, food, medicine, doing the things you want to do with some limits)
  • Security at a cost might be more valuable than freedom, according to Friedberg

The End of Corporate Journalism

  • Balaji gathers and validates information from multiple sources – information triangulation
    • Rather than taking our information from only one source, we should use a lot of different sources
  • Corporate journalists are employees of companies; companies have owners, and owners have personal agendas and ideologies
    • They portray themselves as the shepherds of truth, but this is not correct
    • We should strive for citizen journalism, where citizens play an active role in creating news
  • On this subject, Balaji recommends The Gray Lady Winked by Ashley Rindsberg
    • The New York Times calls itself the truth and the first draft of history
    • “You have this random rich white guy in New York who literally tries to determine what is true for the entire world,” – Balaji Srinivasan
    • Balaji does not believe this kind of model is effective anymore; the truth is mathematical truth, cryptographic truth, the truth that one can check for oneself rather than an argument from authority.
  • We need to disrupt the outmoded way of thinking of corporate journalism with:
    • On-chain fact-checking
    • Voices from overseas
    • Voices that are not corrupted
    • People that are experts in their respective field

What is On-Chain Fact-Checking?

  • The breakthrough of bitcoin provided the use of computation to establish mutually agreed upon facts; e.g. who owns what on the bitcoin blockchain
  • When we can establish a global truth over a byte, then you can generalize that to establish global truth on any other financial instruments (tokens, loans…)
    • We can generalize it further to establish proof of location, or identity
    • We can accumulate a log of facts that we can refer to in need
  • Just like someone links a tweet to prove that something happened, people would link an on-chain record to prove the same
    • However, Twitter does tinker with content. It’s not that good of a record anymore due to deleting the content and suspending the voices
    • The historical archive of what happened is sometimes not available anymore (e.g. Trump tweets)
  • Blockchain does not provide everything, but it can give proof of who, when, and what
  • For easier explanation, we can compare blockchain to database
    • In the past, databases were on private servers and whoever owned those servers controlled the information in the database (what’s allowed to go in, and go out)
    • With blockchain, we can share the database information among many people, have group decision-making
    • This is the power of decentralization; the power that changes the information economy that engineers the world

Facebook’s Worst Month

  • Balaji does not believe that the federal government solves Facebook problems
    • The solution is decentralized social networking, where people have control over their data
  • What is the economic relationship with people that we spend time with?
    • With friends, there is no economic relationship because that relationship is based on friendship
    • When we spend time with applications, there is a subtle economic relationship that is hidden from us
    • We believe we are getting value for free, but actually, we are giving a lot of information we are not aware of
  • Decentralization is shining a light on how people make money and it offers us a chance to regain our autonomy
All-In Podcast : , , , , , , , , , , , , , , , , , , , , ,
Notes By Dario

More Notes on these topics

Top Insights and Tactics From

31 Best Podcasts of All Time

FREE when you join over 12,000 subscribers to the
Podcast Notes newsletter

No Thanks