WBD007 Audio Transcription
Becoming a Crypto Journalist with Laura Shin
Interview date: Thursday 8th March
Note: the following is a transcription of my interview with Laura Shin. I have reviewed the transcription but if you find any mistakes, please feel free to email me. You can listen to the original recording here.
In this podcast, I chat with crypto journalist Laura Shin, producer of the Unchained and Unconfirmed podcasts. In this interview, we talk about how Laura came to be a crypto journalist, why she chose to leave Forbes and various issues within Crypto.
Interview Transcription
Peter McCormack: Hi Laura, thank you for agreeing to do this interview with me. I feel a little bit like a young Skywalker with Obi-Wan Kenobi. I've been listening to your podcasts for a while. I really wanted to come and meet you and talk to you because you've met so many people and you appear to have quite a broad knowledge in crypto. So, thank you.
You've left Forbes now and you're going out on your own. Can you tell me about that? What's happened?
Laura Shin: Yeah, so I was freelancing for Forbes for quite a long time, for more than four years and about, gosh when was it, I think it was two years into that is when I fell down the crypto rabbit hole and only wanted to write about that, but I had been covering personal finance for them which is super, super boring. Once you learn about it, there's not much else new to learn. And so, this was back in 2015 when that just wasn't a popular topic, nobody was interested. Blockchain was just starting to be a thing at the banks, but the Bitcoin price was super low and it just was not anywhere near that kind of space that it is now, where there's a ton of traction.
So, I kept bugging them about it and they were happy to let me pursue my passion, within certain bounds, but they're a publication, they want eyeballs on their stories. So, definitely there was for a little while more a hesitation around letting me write about this in a big way. But then last year, when it really started taking off, a whole bunch of things happened. I had all these offers too and I think that was when they woke up and they were, "Oh…"
Peter McCormack: We don't want to lose you.
Laura Shin: Yeah. So, I joined full time, but the space moves super, super fast and at some point in January, everything happened in a very short -- it was literally within a 24-, 36-hour period where a couple of things happened that really opened my eyes to the fact that now I suddenly had a lot, lot more competition in the space as a journalist. A bunch of writers that had never written about this before were writing about it in a much bigger way and I felt like, "I have this advantage now, I have this head start, but it's very quickly going to be eroded", and for various reasons, I actually didn't feel like I was going to be able to maintain that advantage if I stayed in the job.
During the same 24- or 36-hour period -- so I own my original podcast, Unchained, and I began to realise with the way the downloads had gone through the roof that that could be a way for me to support myself, and then use some of the extra time to get ahead on my career. So, I made this plan and I have a plan A and a plan B for my career. It's so new right now, so I don't want to talk too much about what those plans are, and also I spend a lot of the time -- it's only been two weeks since I left Forbes, or two and a half weeks.
So, I've launched a new podcast and I've been hiring some people to help me in the background for various reasons. Obviously now, I'm selling a lot more sponsorships and so I've got someone just in the last couple of days actually to do that for me. So, there's been a lot of activity and I've only made a little bit of headway on some of my bigger goals and around my writing, but I do think eventually I will have a lot more time for that. So, very excited to do that.
Peter McCormack: You intend to keep writing as well?
Laura Shin: Definitely, definitely. Now, people think of me as a podcaster, which is a little bit weird, because I have only done 40-some podcasts in my life, but I've done probably at least 1,000 articles, if not more than that. And writing is my favourite thing. When I do the podcasts, I am kind of nervous and I just don't feel like I'm in my element; but when I write, I just get in the zone, I can get lost in that.
Peter McCormack: Is that because when you're writing, you're on your own, you can pause, you can take time over it; whereas, when you're doing a podcast, you're interviewing somebody and you have to keep that rapport going?
Laura Shin: Maybe. I think it's more that with the writing, you can be somewhat perfectionistic and if you realise that there's a fact you didn't find out that you need, you can always go back and get it. There are so many times now when I listen to the podcast where I'm, "Oh shoot, I forgot to ask them that question" or, "Oh man, they said that one thing and I wish I had followed up on that in that moment". You cannot make it perfect; that's the thing.
Maybe if I were doing a different style of podcast I could, but I'm doing these Q&A style interviews, so the way that I do them is just prep as much as I can beforehand. There are a few where, especially even now, I realise that we're doing them weekly and like I said, if you forget to ask something, you can't go back.
Peter McCormack: It's like you said before we started recording, that you have a bunch of questions, but you're trying to manage listening and replying to the responses, but also keep track of where they are. I'm already looking at mine thinking, "Well, you've jumped into some bits I was going to ask later already".
Laura Shin: Yeah.
Peter McCormack: For example, I started having a look, because I was trying to understand your journey. I looked at your LinkedIn and I saw your degree at Stanford and then I saw you did journalism at Columbus?
Laura Shin: Columbia.
Peter McCormack: Sorry, Columbia, and then you started writing about finance. I started to think, "Okay, well that was a natural move, finance and tech into crypto". But it wasn't until I think your first crypto article in March 2014, the Newly Revealed, Could Satoshi Nakamoto, Worth $400M In Bitcoin, Be In Danger?
Laura Shin: Maybe.
Peter McCormack: That was the first one I could find.
Laura Shin: That was the first one from Forbes.
Peter McCormack: Yes, yeah.
Laura Shin: There was another one I'd written on a site that's now defunct, I think.
Peter McCormack: How did that article come about amongst the finance articles, because that was a change from what you were writing about?
Laura Shin: That one, even though technically my beat was personal finance, like what I said before we started recording, but I don't like writing about stuff that I already know or stuff I've already written about. I only really like writing about something if it's something where I'm learning or it's something new.
So, I think what I did back then, yeah, I remember this; even though I was supposed to technically write about personal finance, I basically used to write about anything regarding money whatsoever. I wrote about minimum wage, I guess that is personal finance, I wrote about Occupy Wall Street, literally just anything that had to do with money whatsoever, I would try to write about in some way. And Bitcoin is money, obviously, and so when Newsweek thought it had revealed who Satoshi Nakamoto was, I was, "Oh, that's money-related. How could I spin this in a way where I can write about it?" So, I think I wrote an article on whether or not he really could be in physical danger, as people were saying. I literally wrote that article in an hour or two.
Peter McCormack: Really?
Laura Shin: Yeah, I had somehow come across Jerry Brito before, I don't remember where, and I knew that he was a knowledgeable person in the space. So I was, "Okay, he's a good source. He's going to be someone who's going to say something smart". So, I remember I interviewed him. I don't remember if I quoted anybody else, but I just did enough research to write something and just catch the news wave and write something that people who might be googling about Satoshi Nakamoto might want to read.
Peter McCormack: Interestingly, the article says he could be worth $400 million. I looked this morning and now it's $19.4 billion!
Laura Shin: Did you hear about the lawsuit yesterday?
Peter McCormack: With fake Satoshi, Craig Wright.
Laura Shin: Yeah, well it depends on how you want to describe him, but Craig Wright and Dave Kleiman, yes.
Peter McCormack: Yeah, I don't feel it's going to be very good for Craig. I think ever since he's come out with this, I've never been convinced in any way that he is Satoshi. But do you have a thought on that?
Laura Shin: I don't know, because apparently there was emails that he was sending before the whitepaper came out. I've never looked myself at them, but I wonder, "Is that something that could be doctored?" It's not something I've looked into closely at all.
Peter McCormack: No.
Laura Shin: But just knowing that he was writing about Bitcoin before then makes me wonder, because he was calling it -- he was trying out names.
Peter McCormack: He had multiple names for it, didn't he?
Laura Shin: Yeah.
Peter McCormack: He was trying different things. I think it'll be interesting to see how it pans out.
Laura Shin: Oh yeah, definitely. So, I fell asleep reading the lawsuit and then this morning, I properly finished it when I woke up.
Peter McCormack: Moving back to your move into crypto, I noticed it seemed to be the tipping point was around September 2015. So, I went through the archive of Forbes and there was suddenly a whole bunch of articles about Bitcoin.
Laura Shin: Right.
Peter McCormack: There seemed to be some transition. That month there was maybe five and then, I've looked and that's when the transition seemed to happen. What was it that hooked you with crypto yourself?
Laura Shin: Actually, the transition happened earlier, but when you write a magazine article, there's a long time between when you're working on it and when it actually comes out. That article was actually supposed to come out in the August issue, but it got held for various reasons. Then during that time period of three weeks between the two issues, Nathaniel Popper wrote an article in The New York Times on the same topic and I was, "Argh".
Peter McCormack: No!
Laura Shin: But his wasn't anywhere near as in-depth as my magazine story was, so we were all, "Okay, okay". But then they were, "Okay, we need to do it now". So anyway, I'd been working on that since I think June or something. Basically what happens is, if it's going to come out in the August issue, then you need to finish it by sometime in July. So, I started it in June, and I really started falling down the rabbit hole in May 2015.
The reason for that was when I had mentioned to my editors that I was bored covering personal finance, that was in the summer of 2014. They told me I could not switch topics and I was super bummed out and didn't know what to do with myself. Then that winter, they were, "Well, we had this idea to do a Forbes Fintech 50 list; would you want to be one of the lead reporters on it?" So, this other reporter and I divvied up the list and we each took a category and I took the category of digital currencies.
It was from that point that I just have been completely obsessed and never wanted to write anything about anything else ever again. So, I have been doing that as much as I can. Then, like I said, last summer I finally managed to convince Forbes to let me do it full time.
Peter McCormack: Was there something specific about it that gripped you though?
Laura Shin: Just the ability to change the world and just understanding that this was a way to upend all the various methods we have for building societal trust. It's very profound and using technology of all things to do that, it's just something your mind keeps trying to understand all of it. I feel like every time I think about it a lot and I think about the different applications, it's almost like my mind is literally travelling.
You know when you go to a foreign country and you travel and you don't have an agenda, but you just wander the streets; it's a little bit like that, but you're doing that on an intellectual level, and it's really fun and you can just do it forever and there's no…
We'll see how it plays out. Maybe ten years from now when the first chapter of all this is written, I'm going to be, "Oh, now we know how it's going to play out, I'm not interested anymore". I don't know, but for now there are so many questions about, "How should we do it?" and, "What are the effects of those things?" There are 5 million scenarios a day you could just think of by trying to figure out where this is all going to go.
Peter McCormack: It seems like a lot of people are looking at it from two specific lenses, which is finance and tech. But also, there is a movement of people looking at it more in terms of societal change. You've mentioned there, and I've seen before you talk about the blockchain has the potential to destabilise governments. Are you seeing this beyond finance and tech, and as a way to achieve some kind of changes in society?
Laura Shin: I wouldn't phrase it in that way where it sounds like that's a goal, but I think it's definitely possible. You're already seeing IRS is making these moves where they're a little bit more concerned about people not paying taxes on this new form of money. We've also obviously seen regulators in places like China that have cracked down in a big way. They must see it as a threat to their government, right, or at least to their control over the money flows in their country.
So, I certainly think that just on a basic level, it definitely threatens governments. But on a more fundamental level, and this is only once the tech is really built out, people are talking about it already; you can use blockchains for things like land titles and for birth certificates and for identity and for voting systems. These are all governmental functions, right. I had a really far-out conversation with this guy at Coinbase who's a lawyer and a coder, and at some point he said something like, "Hundreds of years from now, people may rule themselves by blockchains".
That's I think then we get to the full-on video-gamification of our lives, because I feel like that is one effect of blockchains; if they manifest the way some people are talking about, you can be incentivised for doing certain things the way like in a game, you can get to the next level. I don't play video games, so I don't know how they all function, but it's that thing where you can earn points for doing certain things or whatever. We were talking about this on a basic level with things like Filecoin, or what's another one; Golem, or you offer a service and then you earn these tokens. So, I think once these systems manage more aspects of our lives, especially the governmental ones that I mentioned, who knows? It could be something that is destabilising to governments now, I don't know.
But on the flip side, what I will say is that obviously one concern that we're seeing now is that cryptocurrencies are empowering bad actor governments, like Venezuela or North Korea or Iran. So, who knows? It could be the opposite. Maybe we're all idealistic and we're, "Oh, some day all our governments will be transparent and there will be no ruler and we'll be decentralised", etc. Maybe it will strengthen dictatorships or something; I have no idea.
Peter McCormack: What did you make of the Venezuelan petro, crypto dollar?
Laura Shin: I think the big lesson learned from that is -- I should caveat this, because I was about to say that decentralisation is an important feature to people. But then it's funny, because on Twitter the other day, Jill Carlson and Meltem Demirors, Jill Carlson is a blockchain consultant, she used to work at Chain and she does stuff with tezos and such.
Peter McCormack: Is this where Fluffypony called her the Highlander?
Laura Shin: No, I don't know that part. But they were making fun of terms that people in this space bandy about. She wrote, "These terms grind my gears" and one of them was decentralisation and I was, "What?" I think decentralisation is a thing and is important. What were some of the ones that Meltem…? It was this funny thing and I was like, "Wait, what's wrong with that?" They both were against crypto economics and I was, "No, that's a thing. That is a thing".
Peter McCormack: You can't be against that. My last two podcasts have been discussing that.
Laura Shin: No, well Jill was, "It's just economics" and I was, "No, no". When I mentioned to you about this video game aspect, I think when you create this mini economy with a token, that to my mind is crypto economics.
Peter McCormack: My last interview was with Jamie Burke from Outlier Ventures. I know you're connected with him on LinkedIn, but I don't know if you know him.
Laura Shin: I've never met him in person, but I've interviewed him.
Peter McCormack: So, you know him. They have a head of crypto economics within their fund. What he's saying is that a lot of these utility tokens will have zero value, because nobody has built these companies on any kind of economic reality and this is something they've been focusing on. So, I don't know how you could not consider crypto economics something.
Laura Shin: I think it's so important, because people only want to buy tokens that will appreciate in value. If you create one that doesn't function properly, then you know people are going to be angry and they're going to want to leave your network, so I think it's actually incredibly important to think about. But what's interesting is that right now, there's so many different ways for evaluating these and for coming up with models for them. Chris Burniske came on my podcast and talked about using MV = PQ to determine what the price of a token should be and already this week, I've seen a couple of other posts responding to that.
So, all of this is not set in stone by any means. But if you like, there's a lot of smart thinking going into it about, should you try and incentivise a certain percentage of people in your economy to stake tokens to keep the price up; but how do you also foster enough velocity so people aren't just hodling all the time and it doesn't move? Yeah, these are real questions and anybody who can design a system that really works and really does get a lot of traction, kudos to them because I'm just, "Whoa, that seems so hard. I'm glad it's not my job".
Peter McCormack: I've read his book and when I started reading the bit about crypto valuation, I honestly got lost. I found it myself really hard to understand, but I also think in the industry there's a lot of people who really don't understand what they're investing in. Just before I came in, I sat in my car and there was a tweet from an account that has 70,000 followers. They were saying that they see tokens, utility tokens, as similar to owning a share within a company, which is obviously completely wrong.
Laura Shin: If you get the decentralisation aspect, that should be wrong.
Peter McCormack: Yeah, it should be wrong. I just want to go back to the petrodollar part as well, because last week we've also had Iran announce a potential cryptocurrency, we've also had Turkey. Realistically, any crypto state, nation state crypto can't exist in isolation, because the finance comes from other crypto. Do you see nation state crypto as potentially a good thing to help the industry to grow, or not?
Laura Shin: I don't know if I think it will affect the industry that much. Here's the thing. I don't know if you listened to my episode with Kathryn Haun of DoJ, it's a super old one, so maybe you didn't, but she is a former prosecutor at the Department of Justice and now is a board member of Coinbase. She's all in on crypto and blockchain; she loves it. Of course, she's seen what criminals do with it and I'm sure she knows that there are a lot of different types of bad actors who will do things with it. But she thinks the power of this technology to revolutionise, to prevent fraud, as I mentioned, with birth certificates or land titling or whatever, just because she's seen what people can do with it that is bad, it doesn't make her any less bullish on the technology.
In that regard, I feel most likely those cryptocurrencies aren't going to take off and, if anything, maybe they will only highlight what the pitfalls are of having this more centralised version of a cryptocurrency. I just came out with an episode on stablecoins and one of the questions I asked Rune Christensen of MakerDAO, they're trying to do a stablecoin, I said, "Oh, if a fiat version of a cryptocurrency comes out, like a cryptodollar basically, then isn't that going to render your project moot?" He was, "Oh no, actually because that's not decentralised. It's still a single point of failure, they could debase the currency, they could do all these things; but with MakerDAO, it's not centralised".
I was, "Oh, interesting point, right, I hadn't thought of that", because I thought his goal was to peg it to the dollar; but it's not really. He was, "We could change the value to base it on the cost of consumer goods or something like that". So, I think it will be a similar thing where, maybe as time goes on, people start to realise the value in a decentralised crypto something or other where the people control it and not some central actor like a government.
Peter McCormack: There is some disparity between how different governments have reacted to crypto. The US is quite pro at the moment; I think we all quite enjoyed the Senate testimony hearing. Is it Christopher Giancarlo's our new hero?
Laura Shin: Yeah, yeah.
Peter McCormack: At the same time, China's gone the opposite way and been pretty much banning crypto. Do you see that China will have to change and become part of this? Do you have any opinions on that?
Laura Shin: Oh, gosh.
Peter McCormack: It feels like they're cutting themselves out to a whole asset class and a whole part of the global economy.
Laura Shin: I don't know. Apparently if you go to China, you cannot google things and you can't access The New York Times or Facebook. So, the country is big enough that maybe it won't matter if they cut themselves off from this brand-new crypto economy sprouting up; but in China, all the Apple phones are sold out immediately and so, there's still demand for American things. So, maybe there'll just be pent-up demand for these crypto assets within China as well, I really don't know; this is a little bit out of my wheelhouse.
But I will say that, like I just said, even though they've banned all these other things that have become huge, the country functions just fine. Yet at the same time we saw that after they closed the crypto exchanges, then Binance got super, super popular really, really fast; or apparently in Korea, those exchanges are seeing a lot of demand from Chinese people.
Peter McCormack: They're finding a way.
Laura Shin: I think they are, so who knows? Maybe people in China will get angry enough that they're against the restrictions that something happens; I have no idea.
Peter McCormack: I really enjoyed the Senate testimony hearing and it felt like it was something that was needed in that we had a phase of growth through speculation and then we had a phase of growth through institutional money coming in. I felt like everyone was starting to get nervous, especially with ICOs, what would happen in terms of regulation. But it feels like the US approach has been to support innovation within a regulatory framework. How do you feel about the testimony; did you watch it?
Laura Shin: Yeah, yeah. I think that they've been pretty smart and cautious, somewhat measured. You definitely get the sense that they are grappling with the real issue here which is, how do they fulfil their mission of protecting consumers at the same time, or protecting investors, or in the case of the CFD consumers, I think, or that's FTC, but whatever? I think that you see that they're grappling with these missions to protect Americans and then at the same time, foster innovation. They want to make sure they get the bad actors, but not do, for instance, what the New York state regulators did with their BitLicense, where now all these companies have left New York.
Peter McCormack: Didn't the guy who set that up then set up a company to help people apply for their licence?
Laura Shin: Yes.
Peter McCormack: I can't remember his name.
Laura Shin: Ben Lawsky. Let's "no comment" on that one! I definitely don't envy the regulators their job in the US. I have mentioned this before on other podcasts. No, it was actually a seminar I did for journalism when I covered cryptocurrency, but the first couple of years when I covered this, it was really a lot of learning about cool technology and just thinking about the future and how our lives could change. Then last year, it was a lot of investigating shady people doing shady things. That was a much less fun type of thing to do, but it was important for what I was doing as a journalist.
But the point is that I definitely can see, just even from my little point of view, where the regulators would be somewhat alarmed by what's going on, especially in the ICO space. But I know that they've been educated by Coin Center and Chamber of Digital Commerce and these other groups that deal with regulators. I think they really understand the technology, as we saw in that testimony; and so, I think they're keenly well aware that whatever they do can have an impact either way and so they want to be thoughtful about the way they're approaching it.
I think, as we saw with the DAO report, it's a pretty sensible line of thinking, at least so far, and it's one where they're using existing laws and they're not going out and doing things like the BitLicense and coming up with new stuff; they're using the way the law has been applied for the last seven years around these issues to bring them to bear on this space as well.
Peter McCormack: If we rewind back to 2015 when you were writing, we were essentially in a post-Mt. Gox bear market, a very tiny global market cap, to today having a $0.5 trillion, we nearly made $1 trillion. What was it like writing back in 2015; what kind of things were you covering which you aren't really covering today?
Laura Shin: Now that I just do the podcast, at least for now, I'm really out of the news cycle. But back then, it was a lot more enterprise blockchain stuff. I remember one of my first articles, I wrote about Vinny Lingham's company Gyft and how they were putting their gift cards on the blockchain and how there was so much fraud in gift cards and how they were losing all this money and how blockchains could resolve that problem. Then, you know that big magazine article that was about Chain, which ended up partnering with Visa and Citi and Nasdaq?
What's funny is that made such headlines at the time but now, nobody cares about any of the enterprise blockchains; they're basically pretty boring. I don't know if I'd say maybe that was a little bit extreme. I definitely think for instance, some of the enterprise blockchain stuff, I don't know if excited is the word, but where people can really see the value of it is where a lot of Chinese consumers are concerned about the provenance of their food, like baby milk. That was an issue, that tainted baby milk sometime in the last five or ten years.
So, I know that there's enterprise blockchain pilots working on stuff like that. It's not sexy, but it is something where it would have a real impact on people and they will probably really appreciate that technology, or even be interested to learn about it. But yeah, by and large most people are, "Bitcoin, Ethereum, zcash, Monero"; I think those are the ones that are some of the more quality projects that people talk about. Then, of course, you have all the other ones where they're talking about the crap coins; I know you're so excited about this!
Peter McCormack: Did you buy crypto early on?
Laura Shin: I bought a little bit of Bitcoin and little bit of Ether. At Forbes, they let you do that as long as you disclose that you own. But now that I'm freelance, I realised I would probably need to sell it if I want to write for other allocations, and actually that opportunity has come up faster than I expected, so I'm actually selling or donating or something. I'm going to give them away.
Peter McCormack: You won't actually be a crypto owner?
Laura Shin: No.
Peter McCormack: You'll be a no-coiner.
Laura Shin: What I'll probably have to end up doing is, for reporting purposes, my business maybe will buy just some amount that I can use for checking out new products and whatever. But yeah, I won't be able to just buy and hold for use for my own personal use later.
Peter McCormack: Can you remember how much Bitcoin was when you first bought it?
Laura Shin: I don't want to reveal.
Peter McCormack: Okay. Then obviously things started to change about 2016. We all know last year went crazy but when did you start to notice a tipping point changing everything?
Laura Shin: In the summer of 2016, everybody started talking about app tokens. Sorry, no, AppCoins they were calling it, AppCoins. They were calling them things like WallStreet 2.0. It was funny, just all the nomenclature has all changed.
Peter McCormack: Looking back at the last 12 to 18 months, it's obviously been absolutely crazy. Have you got any perspective on what's happened? Can you actually take a step back and look down? What do you think's going on? What are the things that really stand out for you in the industry and where do you think we're heading?
Laura Shin: One thing I would definitely say is that when I started in 2015, even I didn't really understand the power of Bitcoin. I understood the technology, I understood how powerful it was that you could send money, that it would make its way across the globe in ten minutes and that you would pay almost nothing in fees, and that you would software to do it. I understood that on a very basic level. But I think I remember just thinking to myself, "Well, that's all really cool, but when I'm using my credit card I feel like it's instantaneous and I don't notice the fees, so why should I use this?" I could get why maybe people in developing countries would use it, but I just was like, "I don't know if it's going to take off here".
I even remember interviewing somebody at Coinbase and when I said, "Oh, how is this going to take off? How are we going to get people to use it?" they were, "Oh well, we're setting up these merchants and since they're paying less in fees to the credit cards, they can give a discount of 1% to their customers". I was, "Nobody is going to use this". It was just, what kind of rationale is that? I just thought, "That's the most compelling thing they can tell me?" Okay, forget this. This probably isn't going to go anywhere. And because I saw that Visa and Citi and Nasdaq were getting on it, I was, "Oh, maybe what's going to happen is that the banks are going to use it to offer new products and services. Maybe that's the way things will go".
But then, yeah, once I realised that all my sources were talking about AppCoins and that they were grappling with these questions of, are they securities, how do they shake out in terms of the law, I began to realise that this is going to be a big thing and this is like a total shift in business models. Traditionally, you have a start-up, you have shares in it, you offer equity to your different investors, but that model itself has even been changing already for a long time in the sense that companies stay private for ever.
It's only really the private investors, the already wealthy investors, who are benefiting from the growth in these companies. Whereas, you have Uber now and Airbnb, they're these massive companies and they're not going public, so there is a lot of pent-up demand, I think, in the market from non-accredited investors to be able to partake in the fruits of these new companies.
So, here was a way where you can do it, not with the company, but with essentially almost like offering a public utility; it's a really interesting concept. The foundation model, it remains to be seen if that's going to be a good thing. Obviously, it's I think worked at least -- yeah, I was going to say it's worked well for Ethereum, but even then I don't know if you could go that far, because there have definitely been issues with the Ethereum Foundation and the way that that's run. So, I don't know, maybe that's going a little --
Peter McCormack: In that it's arguably centralised around Vitalik, is that what you mean?
Laura Shin: Yeah, I think it started with four or five members and then it was just down to Ming and Vitalik for a while, but it was not clear and the website wasn't even very forthcoming on all the details. You just after a while noticed that some of the board members had left. The governance seemed sort of opaque and then they randomly announced she was leaving and then they brought in Aya. But it doesn't appear that there was a super transparent process about how that shift occurred and how they chose Aya and questions like that.
It appears to have been a smooth transition but for, like I said, a public utility it just feels like, "Oh, here we have coming online this year Tezos and Dfinity" and I think there's some others. People keep tweeting at me to check out Decred and I'm sorry, Decred people, I have not checked out Decred yet! But yeah, these are blockchains where people can use their tokens to have a vote on how it's run and that will obviously be a lot more transparent. I actually can't even remember what the original question was!
Peter McCormack: I was asking you about, with everything that's happened over the last 12 to 18 months, if you could stand above and just look at everything that's happened, what do you make from it all?
It's interesting myself, because I agree with you when you say about spending, it is so much easier to buy something on your card than it is with crypto; crypto's a bit of a pain. The exception to that is I'm a miner as well, so I have a mining rig in Washington and I bought $240,000 of equipment from Bitmain. It was a ten-minute transaction with a $3 fee. So, for me the use case for that was outstanding, because trying to do that with the banks…
Laura Shin: Wait. Did you do that with Bitcoin Cash because it only takes in Bitcoin Cash now?
Peter McCormack: They've started to take credit cards for certain things.
Laura Shin: Interesting.
Peter McCormack: But in terms of a transaction, trying to do that through the banks would have been really, really difficult. The space I came to realise where I saw the power with Bitcoin and Ethereum is that, with the tokenised economy, actually Bitcoin and Ethereum almost act as providing the liquidity and the settlement layer to these, which is where I saw the big opportunity was, which isn't something I saw in 2013 when it was just like, "This is another currency".
So, I was wondering from your perspective, how do you see the crypto economy as a whole; what's the role of Bitcoin within there from where you've been?
Laura Shin: Gosh.
Peter McCormack: Big question.
Laura Shin: Well, this actually maybe goes back to finishing up the answer about how things changed in 2017. I think part of that big wave was just really seeing that people were really starting to grasp the capabilities of Ethereum and this concept of AppCoins that people started talking about in 2016. I think that was where they started understanding, "Oh, here's what you can do with this worldwide computer and it's different from just sending a payment".
I don't know if you're read Fred Ehrsam's blogpost where he said that Bitcoin is the equivalent of a four-function calculator and Ethereum's the equivalent of a computer. I don't remember the exact analogy, but he was basically saying there's so many more things you can do, but it took people a little while to figure that out.
But last summer when we looked at the ICOs, there were so many ideas and obviously so many of them are probably just not going to work out, because it's too early for them. I imagine some of those ideas will be like Webvan versus Instacart. Maybe 20 years from now, we will see something like some of these AppCoin projects, they weren't even called AppCoins by the time of 2017; I guess they were called App tokens. It's the ICOs that were more consumer facing.
Yeah, I feel like that flourishing that happened maybe was people starting to understand the capabilities of Ethereum, or this concept of creating a mini economy around some service or function. When you ask me now what I think of the total crypto landscape, I would say that a lot of the tokens that have done well or that appear to be on the more established level are the ones that are functioning as pure money: Bitcoin, Bitcoin Cash, Litecoin, Dash, Monero, zcash. The ones that are just more in a straight-up money realm maybe have a little bit more traction right now, because that's the first step.
I'm not a developer, but apparently a lot of developers tell me that Ethereum's very easy to program on or to build stuff on. So, that's why we're seeing things like the DAO and CryptoKitties just take off so fast on that platform, just like all the ICOs of course; or even like that super thing that happened a few weeks ago, the Crypto All Stars. I feel that on that particular platform things happen super fast.
But one thing that's interesting to me about that is, from what I understand of the programming language, I think it's one of those ones where you can build something quickly; but can you build something that's safe for a financial system? That's that question where, in terms of security and just being certain that the smart contract will perform in the way that you want it to, all those things are a little bit more up in the air about Ethereum.
Peter McCormack: I think I heard an interview with Ari Paul and whether he was saying the same, and actually, I could be wrong here, maybe it was somebody else; but was questioned whether Turing complete is actually good for financial systems. Was it with Olaf Carlson where you were discussing the smart contracts that essentially deleted hundreds of millions in funds?
Laura Shin: Yeah.
Peter McCormack: Could we realistically see any financial institution putting that kind of risk within their operations?
Laura Shin: You mean like an enterprise?
Peter McCormack: Yeah.
Laura Shin: I mean, they're all working on it. The financial institutions, I think, see the writing on the wall. I went to this dinner and I was seated next to this woman who was at JPMorgan Chase. I don't know if she knew what my position was in the ecosystem, it was a Women in Blockchain-type of thing, but she was telling me, "Oh well, when we really looked into the technology we were, 'Oh man, this technology completely replaces us; it gives us nothing to do, like what are we going to do?'" So, she literally full-on admitted that to me and was saying that they needed to figure out a way to retain their role but use the technology.
Peter McCormack: When was that and how close to that was Jamie?
Laura Shin: That was in November, I think.
Peter McCormack: Was that when Jamie Dimon turned 360 and said it was okay now?
Laura Shin: No, he said that later, I think in the winter; this was more like November. But I think what she was describing was conversations back in 2015 or 2014 when they first started learning about the technology.
Peter McCormack: Wow.
Laura Shin: It was just a funny moment. I don't know, I shouldn't be so dismissive of the enterprise blockchains, because maybe they'll come up with something really cool, I don't know. But right now, I feel nobody cares about those; everybody's excited about the public stuff.
Peter McCormack: What did you make of, it seemed like Olaf was struggling with what the right decision was for creating a hard fork to recover funds in that none of it was stolen; it was just deleted. I saw both sides of the argument. What was your position on that; do you have a position on that?
Laura Shin: Yeah, I don't know. So, for a lot of these things, I don't really have a position, but I can see it both ways. The argument on the side of the people who want to release the funds is that this was a mistake and it would be relatively easy to fix. I think on the flipside, what the argument is, and forgive me because I actually don't know all the details around the proposal, but I think at least part of the proposal, if not the whole proposal, is to create a function that allows anybody to do this for any mistake or something like that.
Peter McCormack: But blockchains should be immutable.
Laura Shin: Right, exactly. I don't know, I could see it either way ,because if you want to unfreeze it, then that stands as a little bit more the way that our penal system works, where juveniles don't face the same penalty as adults, you know what I mean? So, you could say this was clearly a new system, we're still working out the kinks, we're not going to let this devolve into some slippery slope where no one can trust the platform; but this is such a huge sum of money and it was an honest mistake, let's serve our set.
But then I could see other people saying, "No, we already learned that mistake with the DAO". That was when a bigger percentage of the full funds of the Ethereum ecosystem were at risk. This is a much smaller percentage, this isn't worth doing this over and we need to make people serious about trading this like a true financial system and not making these blockchains seem reversible. And also, if you do that, then --
Peter McCormack: What about the next one?
Laura Shin: Yeah, but also maybe the regulators will be, "Hey, so-and-so got wronged by this transaction, can you undo it?" So, if you set some sort of precedent like that, that's dangerous. I can see it both ways.
Peter McCormack: It's interesting. I split the crypto assets down into sub-assets. I see currencies, which I see the use case for, and they've been used as currencies, whether you call it store of wealth or medium exchange, I just group it together. I see the protocols, which sit above them the tokens and the securities. It feels like the currency, essentially the case is proven in that you can spend it and people are giving value to it.
With the protocols and the tokens, there are beyond CryptoKitties and Crypto All Stars very few examples of mass scale usage. Do you think there's a risk that there won't be a requirement for these systems, or do you think it's just a time issue?
Laura Shin: I'm sorry, that there won't be a need for what systems?
Peter McCormack: Will these protocols ever be able to deliver mass scale decentralised systems that can scale and work and be used? Do you see it as inevitable they will?
Laura Shin: Yeah. I'm not worried about that.
Peter McCormack: You're not worried about that at all?
Laura Shin: I don't know. If you look back at the early days or not, people were, "How can this scale?" and it did. I feel like the technical issues like that don't worry me as much as the stickier issues or things like governance. Obviously, I'm sure there's going to be interesting challenges when it comes to scaling, but it's not something I spend a ton of time thinking about, other than as an aspect of the different horse races that are going on between the various currencies and protocols.
One thing I would amend in your statement is, I feel like Ethereum is something we can say has taken off. If you look at the ICO craze from last year, the DAO the year before, the CryptoKitties at the end of 2017, some of the major stuff going on in the ecosystem, it's all come out of Ethereum and every single time it's come out super, super fast. I think that just shows, when you do have this worldwide platform that anybody anywhere can build on, people are going to do that. The people who are going to engage with that, they're also worldwide. So, the speed at which these things can take off and the ways in which they can get people all over the globe, I think is pretty powerful.
Peter McCormack: I guess the challenge I found is that CryptoKitties highlighted scaling issues with Ethereum as a single application. Once we have hundreds of global applications being used, we don't know how or if they can achieve the scaling. It's kind of an unknown, right, and that's one of the things that worried me. Also, with the ICOs, you mentioned the ICOs, the ICO model has proven as a really great way to raise money; but you're not a fan, right?
Laura Shin: I think everybody's tired of ICOs, right? I wouldn't say that I'm not a fan.
Peter McCormack: You're not a fan of the scams.
Laura Shin: I'm not a fan of the scams, I'm not a fan of poorly-designed ICOs, I'm not a fan of ICOs where there's only a small number of buyers, I'm not a fan of the pre-sales. I think if you're going to use this technology, then take advantage of the unique benefits that it offers where you can really democratise things.
Instead, I feel oftentimes people are using it to just give really extreme discounts to already wealthy people. Well why? They're already wealthy, they don't need more money and you have this technology that can make it fair for everyone and so everyone who participates gets the same price. Then you're really seeding a network. There are certain sales where they did try their best to even prevent Sybil attacks and make sure there really was only one account per person. So, every single person that participated got the same number of tokens and things like that. I really applaud those projects. I know that it was a lot of work for them to try to prevent people from gaming their system.
Yeah, it's interesting, because you can never design just one standard sale that will always prevent people from gaming the system, because once they figure out what the rules are for that, then they will figure out how to game it! Yeah, I think in general what I would say about the ICOs is that, it's something where it's so easy to just make money from everyday mom and pop people. So, what I don't like is the fact that it is as easy as that, then you've got the unscrupulous people who don't care about taking money from everyday people and just like spending it to buy Lamborghinis or whatever, rushing into that system.
For the people who really want to build something, I think definitely, depending on what they're trying to build, it can be the right model for them to raise money. I don't begrudge them that opportunity and especially as my sister's an entrepreneur, I know how hard it is for female entrepreneurs to raise money from venture capitalists. So, I applaud anything where it might give people like that, who don't necessarily look like the typical entrepreneur, a chance to say, "Hey, I've got a really good product here. Do you want to pitch in?" I like the idea of that model, but then as we let it play out in real life, I don't know if I'm a big fan.
Peter McCormack: It seems that we're moving to a stage where the pre-sales are going mainly to institutional money now and that the retail investors are being edged out. Have you noticed this?
Laura Shin: Yeah, so I'm just going to argue against what I just said for a little bit, because I can see it both ways.
Peter McCormack: It de-risks it?
Laura Shin: Yeah, I don't know if you've read Marco Santori and Protocol Labs' whitepaper about the SAFT. But they talk about how basically when you're funding something in the very early stages, much more similar to seed investing or angel investing, and how that level of risk where something may really not pan out and you might just lose a bunch of money, that risk really should be borne by people who are already wealthy and who have the money to lose.
I can totally see that perspective and I understand why those projects are maybe going that route and, for that reason, I can also applaud the way that they're doing that to say, "Hey, in case this doesn't pan out, at least we haven't lost the money of everyday mom and pop investors". The other reason why I applaud that is because then they're less likely to run up against regulatory issues that could also put the projects or the money of their investors at risk.
However, it's weird because it's just like when you put the word ICO on something, then suddenly it's like the VCs lose their minds! How could you do "pre-sale" for $815 million and it's 27 investors? I don't even know what the numbers were.
Peter McCormack: Are you talking about Telegram?
Laura Shin: Yeah.
Peter McCormack: They're looking to raise $1.7 billion in total?
Laura Shin: Yeah, then they were doing another round and it just makes no sense. I did not look into it closely; maybe if I really did a deep dive, I'd be, "Okay, this is the reasoning".
Peter McCormack: I saw the same argument with EOS though, why are they running a year-long ICO and raising $1 billion. But I also saw a counterargument that said, once the platform's ready, they're going to have a significant war chest to pay developers to come and develop with on their platform.
Laura Shin: Yeah. It's almost difficult for me to criticise things, because I can think of the criticism, but then I can think of the way that you were defending the criticism. It really just depends on what your priorities are. Obviously, you can find sources who will take some particular rationale and tear it to pieces, and then I can find others who I also think are smart who will be, "Oh, well actually if you have this other set of priorities, then actually the way they're going about it is good".
Yeah, it's one of those things where obviously, nobody knows what they're doing and everyone is just making it up as they go along! When they do that, then whatever they decide to do or try to justify, that's the situation we're in and it's only after a few years from now where we will see what all the pitfalls were, the different methods and which ended up being the one where the trade-offs were ones that were acceptable to the most people.
Peter McCormack: I see your seed round argument. I guess the difference being is when you're investing in a seed round, you don't have a market to trade your seed round shares on immediately from 20X.
Laura Shin: Right, and dump them on everyday people.
Peter McCormack: And people want to get in early, because that's where the significant growth is. By the time these products start hitting the market, which could be next year when we start seeing a wave of products come in, the valuations could drop heavily. So, it feels like Wall Street can get in early and make the big returns while we're in the speculation phase. So, I see your argument on that.
Laura Shin: Yeah.
Peter McCormack: Also, there is I think one big issue we have in crypto, and it isn't just the scams but it is the hacks. There's a lot of shady sides to crypto, which mainstream media seems to pick on and use to attack. Actually, that's a separate point, but I was going to ask this earlier. Have you noticed a lack of understanding in mainstream media, your CNBCs? I'm not sure if you want to answer that!
Laura Shin: What I'll say is, my criticism of some of the media in this space is that sometimes I watch the coverage or read or whatever and I just worry to myself, "Oh my God, is this outlet singlehandedly trying to create the bubble?" I get a little bit freaked out; some of them don't have the level of nuance that I would like to see, or they stoke this FOMO feeling and so, "Oh my God, the price of such and such has risen", etc.
Peter McCormack: Okay, I'm conscious of the time and so I'm going to wrap it up. Just talk a bit about the future. I'm going to ask a bit about the crypto future, but I also just want to focus a little bit on you, because thank you for giving your time. So, where do you think we go over the next year with crypto; and do you have any kind of picture where we may be in five years' time?
Laura Shin: Gosh, that's a tough question.
Peter McCormack: Yeah.
Laura Shin: This year is probably a little bit easier of an answer to give. I think there's so much talk about decentralised exchanges and we're already seeing that there's some activity in that regard. Then also, stablecoins I think are a big topic this year. So, those are two trends that I feel will become probably bigger as the year goes on. I'm not sure what the full implications of that will be. Frankly, I'm actually supposed to do an interview on decentralised exchanges in the next few days and I haven't finished my research on that, so I don't have a super big opinion on it at the moment.
Peter McCormack: I worry about liquidity with them.
Laura Shin: I also. I'm wondering about the regulatory issues; that's an interesting thing. Yeah, so we'll see what happens with both of those. In that episode I just released on stablecoins, I really started to grasp just how powerful they could be. So, if one of them takes off, that might be a really interesting experiment to watch, especially because so many predict that certain ones structured certain ways will definitely fail. Yeah, there could be some fantastic stories in there.
But then for five years, I would say maybe we'll have gone through probably a -- so we're in a bubble, but I think it hasn't really burst yet.
Peter McCormack: Do you think bubbles are a bad thing, in that I've seen the counterargument that bubbles drive innovation?
Laura Shin: Yeah, exactly. It's like everything in life there's an upside and a downside. Out of the speculation, we get capital being brought in to drive this innovation, but of course when a bubble pops, there will be people who will be hurt. It's just one of those things that's not black and white.
What I was going to say about five years from now, I think we'll have been through a boom-and-bust cycle and there will be a lot more regulatory clarity. I think certain of these more infrastructure-based economies might really be thriving, but they might be like more in the background-type things. So, things like the Filecoin-type or just any of these storage tokens, or something like Golem where you're renting out computer cycles, mainly stuff like that where it might be more like small companies that are doing it; it could be everyday people too. But I wonder if maybe that stuff will be a little bit more solidified.
Then I do expect that we will see certain smart contract platforms really emerge as the winners and it might be more than one. Obviously, Ethereum has a big lead start, but there are a lot of issues around the security, the governance. So, Ethereum may not be the ultimate winner and so that's why some of the other smart contract platforms are coming out, like Tezos and Dfinity, that have a lot of buzz. I'm definitely keeping an eye on those, because I really think no matter what, we are going to see a major, major smart contract platform, potentially more than one, just take the lead and really dominate and have a ton of stuff built on it. So, I would imagine maybe within five years, we might get a sense of which one or ones that might be.
Peter McCormack: Then what about the future for you? You obviously have your new podcast out and you've done two episodes?
Laura Shin: Yeah.
Peter McCormack: What's the future for you that you can reveal?
Laura Shin: The major thing I would just say is that I am emphasising the podcast, at least for now more. The writing that I'm doing is stuff I don't want to talk about too much, but I am continuing to write and I want people to know that you are not going to completely not see me write at all anymore. There definitely will be new material; it's just not certain exactly what format it will take or where it will go. There's already a couple of freelance articles I'm working on. Those are the ones I have to sell my coins for, so those will be coming up. I don't know when you're publishing this, but it won't be until at least six weeks from now, I think.
Peter McCormack: If people want to reach out to you, how should they get in touch?
Laura Shin: You can find me on Twitter which is @LauraShin.
Peter McCormack: Do you use earn.com?
Laura Shin: Earn.com? Oh yeah, I do, but not really. I used to keep my Twitter DMs open, but I just get an insane number of messages all the time; it's out of control. Now that I'm not doing everyday news, I was, "Oh man, this is taking so much time away from everything else that I'm trying to do". So, I set up an earn.com page, but I never check it. Every once in a while I check it and it'll be, "Oh my god, there's so many people that want me to respond to these messages".
Peter McCormack: You've got $20 waiting from me!
Laura Shin: Really?
Peter McCormack: Yeah!
Laura Shin: I'm sorry.
Peter McCormack: It's okay. I went there, then LinkedIn!
Laura Shin: I check LinkedIn a little bit more actually. Shoot, I shouldn't have said that, but anyway. No, I mean yeah, so people find me on LinkedIn, sometimes they get my personal email address. Yeah, I get too many messages, so I'm sorry if you messaged me because I cannot respond to every single message; I just cannot. I will never get anything done if I do that.
Peter McCormack: I've just started to experience that. I'm probably on a much smaller scale than you; just started to get a lot of DMs on Twitter, some really strange ones. I understand that. Okay, I want to say just a big thank you for this and just a big thank you for everything you've done for blockchain and crypto.
Laura Shin: Thanks.
Peter McCormack: This was a really challenging interview for me in that I feel like I'm a book on a crypto and you're an encyclopaedia.
Laura Shin: No, I would not say that at all. No way. I'm still learning every single day.
Peter McCormack: That's one of the challenges that I run. You step in the rabbit hole and there's just layers upon layers of things to learn and that could be a whole other conversation. But I just want to say thank you from me and just thank you for everything you've done for blockchain and crypto.
Laura Shin: Thanks.
Peter McCormack: Hopefully we'll do this again one day.
Laura Shin: Yeah, that was fun. Thanks.
