Katie Haun on the Dark Web, Gangs, Investigating Bitcoin, and The New Magic of “Nifties” (NFTs) (#499) | The Tim Ferriss Show

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Key Takeaways

  • What’s next in Blockchain
    • Mobile Payments (Venmo for the Rest of the World)
      • Transferring value is a basic human need
      • CELO just launched an app called Valora to allow easy, instant worldwide payments
    • Content creators issuing their own tokens
      • Rally is a project working on this
    • More countries will start creating their cryptocurrencies 
      • Because of the network effects involved, it is really important that the US government start thinking about this
  • The fear of the potential consequences of going against criminal organizations never deterred Katie Haun from doing her job
    • “I knew that in those moments, there was something really wrong going on, and someone had to step in and do something about it” Katie Haun
    • It’s critical for our systems to work that people act despite the fear
  • Katie’s advice to listeners
    • Take some time to learn about Crypto
  • Recommended resources to start learning about Blockchain

Books Mentioned

Intro

  • Katie Haun (@katie_haun) is a general partner at Andreessen Horowitz. She spent a decade with the US DOJ focusing on fraud, crypto, and corporate crime. Katie also created the government’s first cryptocurrency task force 
  • Host: Tim Ferriss (@tferriss)
  • In this chat, Katie discusses her experience as a Federal Prosecutor working on Bitcoin, Future Trends in Crypto, and more

What Is Blockchain Technology?

  • The blockchain is a ledger that keeps track of who owns what
    • Instead of a central entity, decentralized nodes keep track of transactions
      • The nodes are called “miners”
      • Miners perform computing work to secure the system
  • The blockchain is immutable
    • No one can change past records
    • This feature was critical to catch the corrupt undercover agents investigating the SilkRoad marketplace
      • These agents were able to get banks and financial institutions to destroy records
      • But no record could be destroyed in the blockchain
  • Blockchain is not just about currency, it brings together different elements of society
    • Examples domains: economics, computer science, law, technology, art

What are NFTs?

  • NFT stands for Non-Fungible Tokens
    • Non-Fungible means unique
  • These are unique tokens that live on a blockchain and track something
    • It could represent an image, a piece of music, art that cannot be replicated
  • Unique NFTs create digital scarcity
    • Previously, you could replicate any digital image
    • NFTs could be seen as the digital version of collectible cards
    • The creator of an NFT automatically gets a cut of all future transactions
  • We still don’t know what the possible use cases of NFTs will be

What Katie Sees Emerging in the Next 5 Years in Blockchain

  • Mobile Payments (Venmo for the Rest of the World)
    • Transferring value is a basic human need
      • More than 3B people in the World are unbanked but have smartphones
      • They have to rely on institutions charging high fees
    • CELO just launched an app called Valora to allow easy, instant worldwide payments
      • They use a currency pegged to the dollar (Stablecoin)
      • You don’t need a bank account to use it, you only need a mobile phone
      • There is no central authority that can freeze your account
  • Content creators issuing their own tokens
    • Fans buying the tokens get a share of the potential economic upside
    • They will be incentivized to spread the word
    • Rally is a project working on this
  • More countries will start creating their cryptocurrencies 
    • People in countries experiencing hyperinflation are already adopting crypto or common transactions
    • “Digital” Governments like Estonia are also embracing crypto
    • Because of the network effects involved, it is really important that the US government start thinking about this
  • There’s a risk that Blockchain entrepreneurs will offshore activities outside of the US
    • This would be a threat to national security
      • China is already looking to export its national cryptocurrency to South America and Africa
      • If US consumers can’t access a good or service in the US, they could use a VPN to access it from abroad, which could expose them to many risks
    • These development depend on how the government decides to regulate or not regulate the industry

Katie On Some of Her Favorite Books

Crypto Advice to Listeners

  • Take some time to explore Crypto
    • There are a lot of exciting things happening in the space
  • Don’t get intimidated by it
    • Some people think they need to study deeply to start understanding it and they’d never have the time
    • “There’s no Ph.D. in Crypto and if there were, it would be outdated after a year” Katie Haun
  • Recommended resources to start learning about Blockchain

The Job of a Federal Prosecutor

  • A Federal Prosecutor is the equivalent of a District Attorney but on a larger scale
    • Federal Prosecutors take cases that cross state lines or that involved federal crimes
    • Prosecutors go to court, develop evidence, meet with witnesses, and much more
  • Part of this role is identifying the most critical cases to work on for justice to be served
    • There are a lot more criminals than there are resources to prosecute
  • In her career as a Federal Prosecutor, Katie never lost a case
    • “She stood up to murderous motorcycle gangs and cartels, shut down organized crime, nailed RICO murderers, uncovered the largest money laundering and cybercrime rings, and stopped white-collar crime and public corruption” Ben Horowitz
    • Katie saw that often defendants would not plead guilty because they lacked information about the prosecutor’s evidence
      • Reverse Proffer (meeting with defendants) was often successful in getting defendants to plead guilty before going to trial
    • She focused on developing rapport, not only with defendants but also with witnesses
  • Katie attributes part of her success to her mentor, Assistant US Attorney Wil Frentzen
    • She admired him for his total focus on “doing the right thing”, his fearlessness, and egolessness
      • He didn’t care about what others thought of him or his next job
      • He was not afraid to go against anyone for the sake of justice
  • The fear of the potential consequences of going against criminal organizations never deterred Katie from doing her job
    • “I knew that in those moments, there was something really wrong going on and someone had to step in and do something about it” Katie Haun
    • It’s critical for our systems to work that people act despite the fear
    • Even when criminals are in prison, they have huge power to act outside
      • Often they don’t even fear going to prison
      • It becomes really hard to deter crime in these situations

Working as a Prosecutor on Bitcoin

  • In 2012, Katie was assigned with prosecuting and “stopping” Bitcoin
    • As she learned about it, she saw that it wasn’t possible or desirable to prosecute Bitcoin
    • She shifted her focus on prosecuting nefarious uses of Bitcoin
    • Katie also realized that there were many positive use cases that people were working on
  • She focused on building collaborative relationships with good actors in the space
  • Some players, like Coinbase, collaborated with the Government to stop criminal activity
    • They realized that criminal activity in their platform was not good for their business
  • The government also benefits tremendously from keeping good relationships with players in the space
    • Blockchain technology is evolving so fast, it’s impossible for anyone to keep track of everything on their own

SilkRoad Investigation, Corrupt Agents, and Bitcoin

  • Silkroad was a darknet marketplace brokering transactions involving drugs, weapons, and other illegal assets
    • The founder, Ross Ulbricht, was caught in 2015 
  • Two undercover federal agents investigating on the Silkroad were corrupted
    • They took advantage of their position to illegally obtain hundreds of thousands of dollars of Bitcoin
  • Eventually, they were caught thanks to Bitcoin’s trackability and immutability
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Notes By Giorgio Parlato

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