This transcript is generated with the help of AI and is lightly edited for clarity.
REID:
I am Reid Hoffman.
ARIA:
And I’m Aria Finger.
REID:
We want to know what happens if, in the future, everything breaks humanity’s way.
ARIA:
Typically, we ask our guests for their outlook on the best possible future, but now every other week, I get to ask Reid for his take.
REID:
This is Possible.
REID:
I am Reid Hoffman,
ARIA:
Hey Reid, we are going to dive into crypto today, and one of the reasons I want to talk about crypto is it is a polarizing topic. There are some people who are all in. It has changed their life for the better. There are imagining so many use cases for blockchain, crypto, et cetera. There are other people who see it as useless. And so really wanted to get your take. On the Financial Times Podcast earlier this year, you voiced support for bipartisan efforts to create a more rational regulatory framework for digital assets. And while I am not the hugest crypto fan, I am super in favor of creating a playing field that people understand so that there are not grifts, and there are not people getting insider information, et cetera. And so since then, the GENIUS Act has passed the Senate—it’s on its way to becoming the first piece of US legislation that really defines a pathway for stablecoins and tokenized commodities. So you’ve been vocal about the need for pro-innovation regulation. So, how do you see the GENIUS Act—if it passes the House—shifting the trajectory for crypto startups, investors, and the entire community?
REID:
Well, exactly as you’re saying, I think one of the really important things is to have it be relatively well understood. I think that the crypto side of what was going on in the Biden administration was exactly the kind of things that the Democrats have been doing to generally alienate a lot of the tech community. Anything from large companies, hence all the comments about Lena Khan—who thinks she’s in defense of startups and doesn’t understand that she’s actually in fact hurting startups in terms of what she was doing. Or similarly, okay, this crypto stuff has a bunch of questions to it. Like is it being used for illegal activity? Is it being used for extra financial stuff that might be endangering your average citizen? Or might be used for corrupt practices in various ways. I mean, even members of the tech community have spoken out against crypto as being primarily a form of illegal economic flow for cybercrime and a bunch of other things.
ARIA:
Do you think that’s true? Do you think crypto is mostly used currently for cybercrimes, et cetera?
REID:
Well, certainly a lot of it’s used. I mean, there’s certainly a major use case there—percentage, I don’t know, but there’s a major use case. And it’s, it’s for example, when the North Koreans, generally speaking, take over hospital systems and threaten all the lives of people there, they want payment and Bitcoin. Those are serious problems. And so the people who are critical are right. But the problem is—and this is kind of a microcosm, I think it’s one of the reasons why it’s a good subject— it’s a microcosm of what they generally—call it a stupid, foolish, negative view approach to technology is—which is, “Oh my God, look, Bitcoin’s being used to do this bad thing of North Korean extortion of hospital systems. Let’s nuke the entire Bitcoin establishment for doing this.”
REID:
And it’s like, “Well, but you know, cars are used for driving into groups of peaceful demonstrators. Let’s get rid of all cars,” et cetera, et cetera. And obviously, that has a lot of positive use cases. And the crypto people say, “Well, what are the positive use cases?” And action vector? There are a set of positive use cases, even today. Whether it’s the general flow of electronic payments that’s happening in a lot of emerging market countries—stablecoins, other kinds of things, ways of doing it. Places where the high-cost Western banking system is way too expensive for the burden of these economies. There’s a whole stack of things where it is actually useful. That doesn’t mean that this is—like North Korean Bitcoin cyber crime—doesn’t mean that that isn’t a serious problem that we need to do something about.
REID:
Now, the challenge is, what you want to do is you want to say, “Hey, what’s the solution here?” It’s how we evolve the technology. It’s not go hit technology per se with a big stick. It’s the, how does this get shaped in terms of what does it do to have more positive use cases, and have less negative use cases. And also less, in the negative use cases, less systematically bad. I mean, I’m using the hospital example because this threatens people’s lives literally in terms of how it operates. And so a framework for it. And a framework to understand, not saying, “Hey, we’re not going to come after you,” but, “Hey, we’re going to come after these kinds of things and we’re not going to come after these kinds of things.” And so you can imagine questions around, “Well, you have to have know your customer stuff more.”
REID:
You must have questions around when Bitcoin is being used to, say, for example, pay North Korean hacker groups. There’s something you’re trying to do on that vector now that may actually be more nation-state kinds of things. And part of that nation-state is we live in a universe of cyber war that unfortunately, we should get the countries to work together to get us out of that set of cyber war. It’s a huge tax on societies, and industry, and everything else. And I think it’s just because your average citizen doesn’t see it except in movies about evil phishing groups, stealing grandmother’s life savings, they don’t understand that this is in fact a general problem.
REID:
And that’s the general technology thing. And so I think the GENIUS Act is a great thing to say, “Hey, let’s try to actually in fact have a question of here’s where stablecoins can be really useful. Here’s where they can play a good role within the financial system, within the global community.” You know, “Here’s where tokenized commodities play in terms of how they’re operating.” And it doesn’t mean it’s the end, but it’s a very good beginning, and it’s the way that you should be trying to shape what is our iteration of technology to better futures. And it’s taking something that’s high contention—the crypto universe—because part of the thing that the banking industry would like to see.
REID:
And you’re also like, “No, no, all financial ecosystem is entirely within the current banking regulatory system.” And the answer is, “Well, that’s not necessarily the case that every financial thing should be there.” All the major ones and the things that play to the functioning society, the functioning of global societies—those should have monitoring controls, touch points. But part of the reason why we see a lot less innovation, generally speaking, in FinTech is because when you implement this regulatory regime, their thing is no failure, not better improvement in success. And that tends to be anti-innovation.
ARIA:
And so do you see—I feel like in 2021, 2022, it was this gold rush. It was like you saw so many NFT startups, you saw so many crypto platforms. Investors were investing heavily in this space. Do you think we’re going to see that again, or are we already seeing it again with this sort of pro-crypto government?
REID:
I think we will see it. And we are already seeing it some, I think we’ll see a bunch more. I think part of the thing, generally speaking, one of the reasons why the U.S. and China tend to lead the world in this tech stuff, is it tends to be the ask for forgiveness versus ask for permission. So go iterate and try things, and then we’ll shift it around, including in difficult ways. And people say, “Well, but sometimes it’s very difficult to shift.” It’s like, well, frequently when it’s difficult to shift is because—not always there are challenges there—but frequently it’s difficult to shift because it actually met some scale position within society, within the economy, et cetera. And so the fact that there are a lot of people who want to engage in crypto, that’s a market signal demand. And so the question is, well, how do we shift the market signal demand in a way that is iteratively more and more positive to creating financial ecosystem things that allows broader communities—not just, call it, wealthy Western communities—to participate in? How does it allow innovation in doing that? And I think that’s the primary question we should be asking. While of course, we deal with some of the threats and challenges that also come with the crypto ecosystem.
ARIA:
So I want to dig deep into—you had mentioned stablecoins, and you also talked about creating prosperity for not just Western communities. So one of the reasons that I’m skeptical about crypto is—as you said—you always weigh what are the positives, what are the negatives. In AI, I see the negatives, but I see enormous more positives. In capitalism, I see the negatives, but I see enormous more positives to that system. And so in crypto, I see the negatives and I’m always trying to figure out what are the real positives to outweigh them? And one of those places that I got really excited was thinking about stablecoins. You have these stablecoins pegged to the U.S. dollar in countries that don’t have stable currencies, where bad things can happen in the financial system. But you have actually this dollarization, which could lead both to more stable economies, but also more power for the U.S. Do you think that that is an upside that we could look at? How do you think about stablecoins?
REID:
Well, I think actually you just sketched—not surprisingly given your own economics and intelligent background— exactly a very positive case. Which is the stablecoins with the dollar. I think there’s also others—the GENIUS Act tends to be positive on the dollar, stablecoins, and less positive on the algorithmic. I actually think algorithmic is also an interesting area to explore. But I think the dollar coins are good. A, for the world. B, for economies that are having challenges and financial systems that are having challenges. And C, for the U.S. in terms of the reserve world currency—all exactly as you sketch. And I do think that crypto, it’s like, for example, part of the reason why we started doing the Reid AI stuff is when you look at deepfake stuff, it’s all kinds of problems, deepfakes, but actually in fact, as you begin to think about it, you realize there’s a bunch more positives. And we just need to iterate and deploy to do that.
REID:
Even if you start with the first uses tend to be the things that are way outside the current economic, social acceptable norms and so forth. I mean, it’s kind of like the early internet—what was the Avenue Q musical song, “The Internet Is for Porn”. And yeah, it was intensely that, and it iterated well past that. And I think that even in cases where the initial cases might have a disproportionate balance to some really negative challenges, that’s just a question of how do we iterate towards a positive. And that’s what I generally think of as crypto. I think the stablecoins are good. Matter of fact, I actually think even diversity of different assets, I think it’ll have things where actually we play into identity ecosystems. I mean, there’s the whole Worldcoin—are you human in the age of AI?
REID:
I think that there are questions around, like most people don’t realize how much we already have digital assets. Like the deed to your house and your car, those are digital assets. The different ways that these records might be kept in a way that they’re not in solo hackable institutions. I think that’s all very positive. And I think it’s the question of, look, how do we iterate towards it? And people say, “Well, but right now I see a lot of criminal payment, and I see a lot of random speculation that doesn’t seem to be anything other than economic speculation.” And you’re like, “Yep, these things can start messy.” And the question is, how do we refine them to iteratively better, and then get rid of the really bad ones. So like, I’m much more worried about North Korean hacking of hospitals than I am of people having random meme coin X.
ARIA:
Absolutely. Well, so we started the conversation by talking about how the GENIUS Act and adding, again, pro-innovation regulation could be a good thing, but when you think about these administrations flipping back and forth, it’s hard to build a community. It’s hard to build a company. It’s hard to build an ecosystem when the future of crypto policy just hinges on which party controls Congress and the White House. So, you’ve talked about how tech regulation is shaped not just by the laws on paper, but by the character and incentives of the political actors themselves. I think that’s especially relevant now. On one side, we’re seeing reports of lawmakers personally holding tokens that they’re helping to regulate, which I don’t love. But on the other side, you also see the Democrats just reactively having anti-crypto messaging, just to be against the other side. And that is not positive either. I don’t think it’s positive for the future of the Democratic Party. And it’s also obviously not positive for the future of crypto. So, how should we think about the long-term viability of this ecosystem when potentially the rules of the game change every four years?
REID:
I actually think there’s a more general thing about, part of the reason why I think the U.S. has been, over the last number of decades, so much the tech leader, has been actually a paradoxically stable environment because of the ask for forgiveness versus ask for permission. Look, generally speaking, we allow a lot to be created, and we may go back and fix it. And then say, “And here’s what we do from here on out.” And maybe, random player X, Y, or Z, made a whole bunch of money that they really didn’t deserve in doing it this way. But what really matters is the future generations of the system, and we get to the right place. And so the problem with the swings is that then quells business innovation generally. And so swings on crypto can do that, swings on AI can do that, swings on internet policy can do that.
REID:
And so it’s the notion of stable, allow innovation, allow risk taking, allow failure and footfalls. And people say, “Well, are you endorsing Theranos?” And you’re like, “No, I’m not endorsing lying about blood tests that affect people’s lives.” But you know, if you want to go try a new set of NFTs, I might have had arguments with close friends of mine. Like Rory Stewart is like, “NFTs, that’s not art. That’s just crap.” You know, “Why would someone buy this Bored Ape thing?” And we specifically had an argument about Bored Apes. And the thing is actually in fact, “No, no, it’s not just what it is now. It’s what it can become.” And you know, you’ve got Refik Anadol doing great things with NFTs about AI-iterated art from the Amazon and then supporting the education and communities, a bunch of Amazon communities in so doing. So it’s like, look, let’s have more of the good, and less of the bad. And I’m obviously not an anti-Bored Ape person. I’m a believer in experimentation and online communities, and heading into the future.
ARIA:
People can have that, right? They don’t think it’s art, that’s so fantastic. You probably shouldn’t buy it then. You know? I think that’s great. That’s what’s great about our world. And as we innovate new things, some will take it up and some won’t. I mean, one of the things actually that I worry about is I do think some of the negatives of social media have negatively polarized people against all tech. So it’s like, “Oh, I hate tech. Do you see what Facebook did to our kids?” We’re like, “Oh, I hate tech. Do you see X, it’s a hellscape,” and that’s all people can think about. And they don’t think of the truly dozens, thousands, millions of other things that technology has done. Do you worry that crypto could become the catalyst for policymakers to become even more anti-tech? Does that take the place of social media, or is that an overblown concern?
REID:
It’s possible it does. Although, since social media occupies that position with such vigor and strength. And it’s one of the things that I think most non-Silicon Valley people are surprised to hear—that a bunch of Silicon Valley people are also concerned about social media when it comes to children. They tend to be much more like, “No, no, actually, in fact, for adults, we should generally be permissive of adult choice,” and so forth. And even then, there can be, I think, reasonable arguments about, well, what are you doing to increase overall agitation, or division, or hatred, or name-calling in society? And if you want to see a poster child of that, just go browse Twitter—or X—for that.
REID:
And the thing is, say “No, actually, in fact, I think civil discourse is important. I think learning ecosystems is important.” But more importantly, part of the reason why we have a whole set of laws that create children as a special class is because it’s the iterative pattern about what you learn before you become an adult. And you can decide that you can do something stupid, right? We say, “Well, when you’re an adult, you can go do that.” So I think there’s an ongoing social media thing where I think anyone who is broadening the discussion to everything should really just focus on, look, what should we think about children here? Let’s start there. Now if you said, “Well, what should crypto do?” It’s like, well, children should not be at risk from crypto, right? And so there’s a whole bunch of different things there. And I do think that people will try to grandstand around on crypto, they’ll try to grandstand on AI, they’ll try to grandstand a number of things to say, “Hey, I’m really important because I’m trying to stop this evil technology.” And that’s just the luds trying to stop the loom.
ARIA:
Absolutely. It’s coming for us. Well, I mean, actually, one of the things that people worry about for AI is that like most technologies, it is inherently centralizing. And some people in the crypto space see that AI centralization as on the path toward authoritarianism, and they see that blockchains are one of the best ways to decentralize power. And you can expand access to world-changing technologies like AI, digital ID payments, et cetera, by combining the centralization powers of AI with the decentralizing hopes of crypto. And so do you see meaningful synergies between AI and crypto, and/or red flags when the two of those are coming to fruition at the same time?
REID:
Well, it’s funny, some number of years back—this might even be five, six, seven years—Peter Thiel and I were doing an event at the Hoover Institution, moderated by Neil Ferguson. And Peter said, “Crypto is libertarian and AI is communist.” And I was like, “Well, I like both technologies, but obviously the changes in the world that we can get with AI, that’s one of the things I’m quite willing to bet on.” Now, part of the reason I didn’t divert us into that discussion and in-depth is because ultimately all technology is inherently centralizing, including AI—including, by the way, crypto. Ultimately, the thing that makes some technology patterns work is because we as a society enable that distributed ecosystem. So let’s take as a parallel the fact that we use encrypted signals on our cell phones, and encrypted data stores, and so forth, on them.
REID:
Well, you could just as easily as society say, “We’re gonna send a drone to go arrest or assault anyone who’s using encrypted radio channel.” You could say, “If you’re caught with an encrypted hard drive, just the fact that it’s encrypted is the equivalent of a ten-year felony.” But what we do, and part of being in better societies, is we create more decentralized technologies. We enable that kind of decentralization. We enable the encryption on the mobile phone. It’s one of the reasons why every so often, someone at the FBI comes along and says, “There should be a master key to all encryption.” And that’s a bad idea, right? Because it weakens the entire ecosystem, and it’s better for our society. And yes, that puts an increased burden on how we chase down criminals, and criminal gangs, and so forth.
REID:
And we should increase our ability to do that, but not by creating a master key. And so that’s one of the things I like about crypto, is crypto is enabling that distribution. So I don’t tend to worry about the pure centralizing of technologies. For example, it’s very common—especially amongst lefties—but very common to say, “Facial surveillance technology is bad.” And then they’ll cite studies from East Germany about how the Stasi created a system of oppression. And of course, if that technology is being used against you to oppress you, then you have a serious problem—kind of like what’s going on with the Uyghurs in China and all the rest of that stuff. But on the other hand, one of the cities in the world that has had broad-based surveillance for many decades is London.
REID:
And London actually, in fact, uses that because the citizenry goes, “Oh, this is generally for us, not against us.” It’s, you see an emergency, a medical emergency, respond to it. Generally speaking, if you see violent crime, you respond to it. And it’s not used for other things, for this. And that governance of it is the thing that essentially really matters. And I think that’s part of the reason why I actually think that deploying in American cities, facial surveillance technology, is generally speaking good, AMBER Alerts for children, all the rest—you just got to make sure it’s not used for bad. And of course, then that’s where the real rubber hits the road because people say, “Well, government always turns bad at some point.” And so you’re like, “Well, but I actually think the energy is trying to keep government good,” for example, accountable to a judiciary, which I think we are having some challenges on.
ARIA:
I was about to say, right now, you’re going to have trouble finding some people to sign on.
REID:
More skeptics in 2025. But it’s one of the reasons why a healthy judiciary is such an important part of a well-governed society. And it’s why we say, “Hey, you have to go get a warrant for that because the enforcement branch has to go talk to the judicial branch and make a case that a record is kept of and can be reviewed to see if a crime was created in doing that.” And that’s the way these things should operate. And I think you want technology to be operating within that framework, and it will be inherently centralizing. So now, I think we will see places where AI and crypto will come together. And it was one of the things that I sketched when I first saw Bitcoin back in 2014, is I said, “Hey, for those people who want to create immortality, you create an agent—this was even before generative AI—that funds itself with crypto, and it can sing the Aria praises for as long as the crypto doesn’t run out.” And we have the ongoing stories, or at least the continued existence and persistence, even decades and centuries into the future, potentially.
ARIA:
Alright. Reid, appreciate the deep dive on crypto. I promise I will keep an open mind going forward to all the positive use cases we can come up with. And appreciate your time.
REID:
I’ll go see if I can make an NFT of this conversation. [Laugh]
ARIA:
Sounds great.
REID:
Possible is produced by Wonder Media Network. It’s hosted by Aria Finger and me, Reid Hoffman. Our showrunner is Shaun Young. Possible is produced by Katie Sanders, Edie Allard, Thanasi Dilos, Sara Schleede, Vanessa Handy, Alyia Yates, Paloma Moreno Jimenez, and Melia Agudelo. Jenny Kaplan is our executive producer and editor.
ARIA:
Special thanks to Surya Yalamanchili, Saida Sapieva, Ian Alas, Greg Beato, Parth Patil, and Ben Relles.