Transcript
0:03 welcome everyone we're very happy to have Don Wilson here Don Wilson is a founder and CEO of drw a principal trading firm with more than 800 employees headquartered of course in Chicago best place to be and offices around the world he started in the industry in 1989 when did you graduate from college what year December of 1988 I should have graduated in 1990 but yes and so you start at your firm where suppose to be a junior correct yes okay
0:36 he's a influential leader in the financial futures industry in 2010 found at the FI a principal traders group he's co-founder and board member of eros exchange designated contract market which trades an interest swap futures contract is a co-inventor of the eros exchange intellectual property he's also co-founder and board member of the digital asset Holdings a company which leverages distributed ledger technology to improve the settlement of financial instruments he's a member of the BFI
1:07 advisory council and as you've surmised a graduate degree of Chicago he's on the ball and he's a member of the board of trustees and also a competitive sailor which maybe we'll have time to talk about so when I was preparing for this last night I did several things but one was of course I down the first his firm was a trading firm and so I typed into Google should I become a trader and what came back from investopedia about
1:39 whether or not you should become a trader is make no mistake this is really about brokers versus traders make no mistake though both brokers and traders tend to have high energy levels there and they're usually proficient at multitasking and can cope with a fast-paced high-pressure environment especially between the hours of 9:30 a.m. and 4:00 p.m. Eastern Standard Time when the markets are open so how does one decide to become a trader and was that googling at all accurate and what
2:08 prompted you to do that well when I when I came to university of chicago the I really had no idea what I wanted to do but but the thing that I enjoyed was using math to solve problems and so at first I was I was more interested in hard sciences and but as I I spent a little bit of time at university Chicago actually somebody I met I actually sailed with was working on their post
2:40 doctorate in physics John Grunsfeld who later became an astronaut but but he was using his you know models that he built to trade foreign currency markets and his brother-in-law stood on the floor of the Chicago Mercantile Exchange and I thought you know that's really cool that you could build a model and then get immediate feedback about whether it works and that's such a huge difference
3:12 between you know maybe building a model writing a paper going to some academic conferences discussing the paper you know and then and at the end there being really dumb earth at the end I mean you know maybe you come away convinced that you're right and and maybe it's still unsure but this is just a much more you know immediate feedback loop which I thought was pretty cool so when you what do you look for in a market when you're
3:41 considering to beginning your firm to be in trading there and I should mention his background one of the reasons that Donna Sears this firm is one of the largest cryptocurrency traders in the world and I guess I'm interested in broadly and what you look in but specifically what you saw with respect to Bitcoin and cryptocurrencies and block chains and what attracted you yeah so so the first market that I traded in was the euro dollar option pit on the
4:09 Chicago Mercantile Exchange so that's options on futures which are based on three months LIBOR so interest rates that's where the way it was physical training right you were I was standing standing in the pit which was which was quite funny because I wasn't you know I mean I was pretty geeky guy I still am but but I was you know I was at the of the kind of distribution of U of C undergraduates at the time which were even geekier than
4:39 they are now I was at the geekier and the distribution so so for me to go into the Eurodollar option pit on the floor was was you know wasn't necessarily what most people would have expected oh and what and what draws you to particular markets I mean so you know in that case you know I was the things available to trade were in Chicago in the pits were you know options on stocks and then options on currencies and options on
5:09 interest rates and I just thought options on interest rates were a lot more interesting because you know the u.s. being the largest economy in the world surely trading derivatives on that on the short-term benchmark interest rate product of the largest economy in the world is a lot more interesting than trading you know options on IBM stock for instance so that's how I got involved there now I mean as far as now how do we think about what markets to go
5:35 into well I mean I mean at this point drw you know we're getting close to a thousand people we trade pretty much all the markets and you know or any market that's liquid and so the reason that we were interested in in crypto currencies was in part because it was a it was a new market and it was really volatile and and we're always interested in new markets and we're always interested in
6:05 markets where there's volatility but but I think the other thing was that I viewed it as something that was potentially really disruptive and and and so so you know it's kind of that combination of things that that made us interested in it can you talk a little bit more about what you saw in it that would be particularly disruptive so you know the the ability to transfer something of value from one person to
6:35 another without any kind of a without any trusted intermediary is certainly a novel of course you know you can do that if you're you know standing next to somebody and you have cash in your pocket but but if you want to do it you know sending money to somebody that's not immediately next to somebody next to you and you don't want to carry around large amounts of cash then you know that's that capability is quite
7:07 interesting it starts trying to think about this last night how when you started how big did you think the market could have been or it could be so how much do we lose from the intermediaries and I understand its many different settings and but you must have had some idea in your head about how big this opportunity could possibly be yeah so we so we started Cumberland which is a wholly owned subsidiary of D or W that which which
7:36 trades crypto currencies and makes OTC markets at the beginning of 2014 so the time I think the price of Bitcoin was probably $300 I don't remember and and and you know when I look at it it's it's not just you know that's not the only opportunity but but I think it's an opportunity in and I didn't really all I knew was it could be a lot bigger than it is now yeah can you you start to do
8:08 this little bit can you talk a little bit about your kind of the full extent of your involvement in the crypto ecosystem yeah so my mother was obviously part of that right so Cumberland you know was set up with the goal of making OTC markets we also you know purchased some of the crypto currencies that we've thought were interesting we had this debate about you know what's you know is it blockchain that's really game-changing or is it
8:39 public you know crypto currencies that's really game-changing and we kind of we concluded that they're really both important and of course you can solve interesting problems using permissions blockchains but you can solve different problems using public box chains so we also found the company called digital asset Holdings which is based in New York that's that's focused on using generally permissioned blockchains to make the settlement of often traditional financial instruments more efficient and
9:11 what's an example so you know even just settling stocks and bonds I mean you know stocks it's kind of crazy it's you know multi-day process to settle a simple stock transaction so right now there were your eyes and but you have you lose course you probably paid money to Chicago title & Trust Company are we gonna be able to get rid of them yeah you know there are certainly some opportunities for efficiency there and and I mean that's not something that
9:41 digital asset is focused on but there are a lot of companies that are focused on on making that more efficient obviously and then and then another thing that we've done is actually you mentioned Eris and the introduction Eris is a futures exchange that we started to trade interest rate swap futures but we've actually split the company in two and we're now repurposing the the futures exchange to launch what we're calling Eris X which is a crypto
10:05 currency exchange that trades both spot cryptocurrencies as well as crypto currency derivatives that that's something that was hasn't started yet but it was announced a month ago or so and I guess we'll turn to it but I was gonna turn to it later but I just want to probe a little bit right now is I think some level the crypto currencies were kind of a libertarian fantasy for at least for some people and have you thought about the policy side of that at
10:36 all or yeah so there are a lot of lot of people especially early believers in the cryptocurrency space that that really you know we're all about the libertarian aspects out them and any kind of regulation or any kind of you know expectation that people would perform kind of kyc AML was viewed very negatively by them I always thought that that was pretty silly and so yeah I
11:09 think that right elation is important and you know preventing bad people from doing bad things you know like terrorists funding terrorist activity is really important and so you know yeah I have a different outlook yeah I know you think of tokens in kind of four categories I wondered if you could talk about that and probably lots of cover there but particularly with some examples it might yeah so so
11:41 you know for a lot of people who are just kind of just learning about the space you know they hear about Bitcoin and you know I often kind of say okay well that's silly I mean we don't really need that it's not all that useful and then move on but the reality is that that there are much broader or applications of of this technology even when it comes to public blockchains and and so so you know there's you know
12:14 Bitcoin and other examples of other competitors to Bitcoin which are merely focused on being a store value or something that you can very efficiently transfer from one person to another but then there are there are tokens that are really much more narrowly focused that are trying to solve a very particular problem and and are trying to create economic incentives within a much more
12:45 narrow ecosystem so one that that just recently has has gone up in price a lot and and has had some broader discussion is the bat token b8e which is which is used in the bat browser and they envision a different way of interacting with information in the world so rather than being bombarded with advertisements when you go on the internet using the bat token you there's a mechanism where you actually get paid
13:17 to see advertisements and you select the types of advertisements you want to see and so you know the advertisers have to buy the bat tokens and then send them to you and you know you could envision then kind of people who are content providers getting paid with bat tokens and so their winds up being just a very different way of operating and and there are you know hundreds of examples of people a project trying to attack
13:47 different different different things that that's just you know that's just one example it's just I can't pick up on the hundreds when I thought the app craze was getting a little out of hand and like everyone was starting to nap the one I heard about was the one that would tell you and I actually I think my wife cuts on our phone but when there's a park where there's a parking space available on this tree I said okay now
14:13 we've kind of jumped the shark is that are we anywhere near that with you know so here I would say we're we're nowhere near it not because there are not very many of them but because none of them have actually produced something that's really usable and I mean this is really really early stuff the generally the user experiences are pretty challenging and just a lot more time needs to develop but but yes just like apps there
14:43 will be tons of these things and and most of them won't work and some of them will so that that's a second category then then the third category is tokens that represent something more traditional and these could be tokens Momoko n--'s on top of the etherium protocol which are known as ERC 20 tokens and and so an ERC 20 token might
15:14 represent a dollar it might represent and and you know just in the light in the last couple months there's been a massive wave of launches of competing so-called stable coins where you buy you buy an e rc 20 token that's issued by and they kind of promised that when you buy that token their dollars are gonna be sitting in a in a traditional bank account and but the interesting thing is
15:46 that then you can transfer that ERC 20 token just like you can a Bitcoin but unlike in the case of Bitcoin you don't have the problems with volatility and so then there are projects that are doing gold tokens and oil tokens and all sorts of things you know some of which I think are a little silly because you could just buy a GLD ETF or you know an oil ETF or whatever but it's a different mechanism in in some cases you can you
16:12 can you have more transparency certainly the settlement mechanism is quite a bit more efficient than equities you can settle them a lot faster and you don't have to deal with the trusted intermediary so then the fourth category of total yeah and have any seen real take-up yet it seemed so you know is that and are people thinking are they thinking about creating them right now or are they actually thinking about getting people to use them there are
16:38 lots of companies that are that are in the business of creating these and and then there are some people that find them useful and are using them they're you know they actually I mean one that's the highly controversial but but is I think undeniably the most successful example of this is tether now tether is not an c20 token it's it's on top of a different blockchain technology and you know nobody really knows if the dollars are there to back
17:10 up tether but but but you know minor details but but the fact is that tethers are very very widely used and by you know all almost almost you know by a lot of the highest volume crypto currency exchanges so then then the fourth category is tokens that represent you know like my minority interests in
17:42 companies in private companies or LP interests and the equity funds or perhaps minority interest in a building and and the the thing about those tokens and what you know why are why are they useful why why do we care it's because you know if you own an LP interest at a private equity fund and you want to sell it to somebody else that process right now is very cumbersome you it's it's likely that only certain types of people can own
18:12 those so maybe only accredited investors maybe only Americans you know they probably and and I might be the second transaction usually take I mean you know once you once you find the person and you agree on the price and that in and of itself is problematic but you know it will take weeks and it will cost money and you'll have to have lawyers and and whereas if in in an c20 token using
18:43 smart contract technology you can you know you can potentially limit how those tokens are transferred so the only people who are eligible to purchase them are actually can actually buy them and then you can and then you can transfer them in a in a really efficient manner okay and again I'll just kind of the same question as any of that started in practice yeah we're just seeing the early early days of it yeah there are couple buildings that have been
19:12 tokenized you know too soon to tell when you and I first talked about this maybe a year ago you gave me an example of someone in a low-income country they'll never ever have an experienced a ting and they'll basically as impossible as I'm get along and so one thing I've always connected to with this is not just the possibility that transactions that occur today would be more efficient but there might be a whole world of transactions that could take place that
19:43 are effectively not happening right now yeah I mean absolutely I mean I mean for people who are unbanked the you know this creates an immediate opportunity to to access you know a different type of financial system and you know there's so much some of these countries I was actually just talking to somebody yesterday about about you know the Starbucks and the way that they buy coffee beans so for every dollar that Starbucks spends on coffee
20:15 beans only about one and a half cents actually goes to the coffee producer and the reason for that is there are a bunch of middlemen in a lot of the countries where coffee has grown don't have real banking systems there's a lot of corruption there's a lot of coercion and these coffee growers are kind of you know they're obviously providing something a very high value that's really important to you know everybody here but they're they're basically
20:46 getting ripped off and and so you know there's a lot of thought Milione right now about you know how could you make those people better off by paying them directly using some type of cryptocurrency and and kind of circumvent all of this graft and and inefficiency now I I love to think about the world changing and a world being different but then sometimes I'm reminded of one of Woody Allen's movies he has a line that change equals death
21:14 and there probably are groups lawyers will call them or banks banks or other people who are probably not like coming here to this conference to think wow this is a great idea how do can we make it actually happen so are there is this on people's radar screen yet or they turn is there resistance to change yes so there's huge there's huge resistance this is obviously a really controversial space a lot of people just say you know
21:44 this is the this is a tool that's used by criminals and and that's about it you know there's but it would be the strategy to overcome that resistance like lots of good ideas never really be come to fruition well I mean you just have to go to any academic seminar and the person talking will tell you about how their good idea has not had some examples of good ideas that happen you or in that category of so you know some
22:17 of some of the Cumberland team were just at the etherion aetherium Devcon in Prague and the report back from the etherium dev comm is was there are just hundreds and you know thousands and tens of thousands of people around the world who are really smart who are programming who are building things on top of this stuff and you know it really doesn't
22:49 matter that you know the price of aetherium was $1300 and now it's $200 I mean these people are excited they have visions and they're building stuff and so I don't think there's any holding it back I mean it's it's gonna happen useful stuff is gonna be built a lot of its gonna fail but some really revolutionary stuff is going to come out excellent what now if we could just return to the degree you want to talk about this what
23:18 are their policies or regulations that would help facilitate the adoption of some of these technologies and maybe remove some of people's concerns yeah for sure right and you know what we're seeing is there are some countries that view this as a big opportunity to increase economic development and wealth in their countries and and so Switzerland and Singapore are two examples of countries that are really you know out in front trying to create a ton of clarity one of the things they're
23:49 doing and so in Switzerland if you have a project where you want to issue a token you can actually go to the Swiss regulator and ask them for clarity on how the tokens going to be regulated is this going to be a cryptocurrency is this gonna be utility token is this going to be a security token I think those are three categories and and they'll they'll give you a letter saying you know this is this is what it's going
24:17 to be and so you compare that you contrast that to what's happening here where the the you know the SEC the chairman of the SEC gives speeches and he says things like you know I haven't I haven't seen an ICO yet that I didn't think was a security and you know it's very it's very difficult and very risky for companies that are trying to leverage this technology to operate in the United
24:49 States in that environment which is you know which is a problem for the you know assuming I'm right that this technology is revolutionary that's a bad thing for this country you know okay but does there need to be like global rules or could we have the u.s. have one set of rules and switch to another and you know the I mean they're never gonna be global rules on this stuff you know different countries are gonna make their own way
25:14 UN yeah I don't think so popular idea right now but but you know I think that the US and how things are regulated in the u.s. is something that the entire world looks at and so even though these other countries are trying to lead by you know and create competitive advantages for themselves by creating greater clarity at the same time everybody's kind of holding their breath to see how things are regulated here
25:46 does at the staff level in the kind of US regulatory apparatus has they start to absorb do you think there's beginning to absorb what these might be and part of the staff I mean I mean the enforcement arm or the you know or the policymaking arms I mean I think there are different things going on and there is I think some evidence that that there's some you know policy by
26:20 enforcement going on at the SEC they just announced a fine against iudex so-called you know a non centralized exchange the other day and and I mean which wasn't you know a shock to I think most people put yeah yeah so it depends on who you talk to there okay now there's a lot of demand to ask a questions and a lot of demand for me to ask fewer questions so I'll close it's irresistible question I'm sure you've had it before but it's
26:51 very quick so as the midnight last night Bitcoin was trading at six thousand four hundred dollars where will be in one year five years in ten years so you know I noticed that that we started off by talking about you know how I started which was in the euro dollar option pit not in the futures pit and the nice thing about trading options is you don't have to make forecasts on price all you have all you try to do is make forecasts on
27:18 volatility or maybe not even that so I'm not really in the price forecasting business I do this angel River cancer I do believe that there will be a ton of innovation in this space and and whether bitcoin is becomes irrelevant in five years or is dramatically higher in price is not really something that I spend a lot of time worrying about very good okay so look we already have questions lined up Carl
28:35 I mean I you know the answer is yes you know it's it's I mean I think that I think that they're they're experiments going on in all of these spaces and I just think it's too soon to tell which which of these areas are going to be more useful and and more productive but I actually think that there will be useful innovations that will come out of all of those areas some of them will be more useful for developing countries and
29:07 and some of them will be more useful for developed countries but I think there's a question over here are you today I have a question a person is for me with corn options they were here in corn options off with the futures if Bitcoin went down what would you hand him off again against if bitcoins were traded on options what would she hide them off against with the futures contract so so
29:39 so Bitcoin options do exist and if you were trading Bitcoin options then you could hedge them with Bitcoin futures you know the Bitcoin futures market is pretty undeveloped but there are a couple couple contracts so yeah I think that's I have one more question and what they're doing on a trading the V out of the VIX index they doing a lot of hedging with options against the VI VIX index could you do the same thing
30:11 with the Bitcoin options or the options can you trade it against the VI VIX index well the VIX index a specific you know instrument that's based on the based on the implied volatility of S&P options but but you could I suppose create a similar instrument for a Bitcoin once that options markets developed that question yeah so yeah when you talked about
30:42 regulation it seems like that key thing you're emphasizing was some type of clarity that would try to nurture the development your new applications of blockchain technologies and the like there's a other notion of regulation that's shown up since the financial crisis it comes under the heading of so called systemic risk I'm not sure what that is I'm not gonna tell you what it is but somehow there's some overall system-wide vulnerability and and and there and and we ought to be on the
31:09 lookout for that is there any notion that this is any threat threat to the financial system and there has to be that type of oversight or is it something where we could lit if failure happens it happens because of course the threat of failure is a part of the important marketing you know market discipline device I mean I think it a you know aggregate market value of 200 billion dollars I think it's really irrelevant and the scheme of
31:34 things if all crypto currencies went to zero right now I mean some people would be sad but I I don't think that it would have any far-reaching consequences I I would argue that actually you know there are a lot of applications of blockchain whether permission blockchain or public box chains that actually reduce systemic risk by increasing transparency by reducing settlement periods and so I'm
32:04 optimistic that those things will be able to reduce systemic risk in the long run I done I have a question in regards to enterprise utilization of cryptocurrency or the transfer of value and I'd love to hear your opinion along those lines specifically around maybe a ripple use case for cross-border transactions so that's sort of my first opinion are questions second is at your organization besides trading do you use
32:35 cryptocurrency for transferring a value in any degree yeah so so you know ripple has done a really good job of promoting promoting its use or I don't know marketing that there's a valid use case to use ripple as a more efficient mechanism for transferring money internationally and doing FX
33:06 transactions or you know it's part of you know if you want to move I don't know you know money from illiquid you know from a country that's difficult to access to the United States then use ripple as a bridge I'm a little bit skeptical of that use case because generally the volatility of ripple or any cryptocurrency as a pair with any fiat currency is very high and so the
33:38 conversion costs going from a fiat currency to ripple or some other cryptocurrency and then to a different fiat currency your bid-ask spreads are gonna be pretty large unless of course the volatility comes down dramatically but you know as far as using using efficient block chains to transfer value internationally I yes I'm a firm believer that as far as do we are we
34:13 using them internally you know crypto currencies internally to move value other than trading the answer is not really I mean I mean we do tons of real transactions where somebody calls up and wants to you know buy ten million dollars of Bitcoin and we agree on a price and then they wire us the money and we send them the Bitcoin so I mean that's a real transaction but we're not using it as a mechanism for I don't know
34:41 you know settling traditional instruments but but I actually think that's that's gonna change really quickly you know as some of these you know real estate tokens start to become real and actively traded I mean there will be instances were trading in ERC 20 token representing a an interest in real estate instrument with versus maybe a stable coin that's also an e rc 20 token potentially easy even as an atomic
35:12 transaction there's a question here hi so I was in a conference earlier this week where we were talking about regulations and the space specifically and there was people there from the seat as he's seen in the sea CFTC and somebody from the Treasury said a really interesting quote I thought which said that they regulate entities not technologies now if you look at the space of blockchain a lot of these these different coin offerings are focused on
35:41 technology specific applications so I'm a monopoly or I'm the owner of this coin so it's really decentralized in the way that the original vision was so it's even though it's a TLT or blockchain it really is a centralized issuer and it seems to me that perhaps the regulation the lack of clarity and regulations is pushing this market to a more decentralized version then I think we are aware of because even if you look at the exchanges or that the trading market
36:08 is becoming very centralized is that your sense as well I'm not sure that the regulation is pushing things to more centralization I think that I mean I find it really ironic that there is so much centralization in this space that's supposed to be a decentralized space I find it really ironic that you know all of this successful exchanges are centralized and not only that if you want to trade on them you have to you know keep your keep your coins there to
36:40 be able to trade I know I don't think it's the regulation forcing that though Eric food-ish I share your excitement about the technology in particular I have an intellectual admiration for the decentralised anonymous trust that bitcoins blockchain other related block trans create but with that also comes a vulnerability to a majority attack and I
37:10 wonder if that keeps you up at night so Bitcoin gold there was a twenty million dollar majority attack Bitcoin would be expensive to majority attack like you could probably afford to do it and I don't mean you literally but it's it's it's attacking Bitcoin will be expensive I can't do it but it's much cheaper than attacking the Federal Reserve or attacking Fort Knox there's no rule of law that would make it illegal to attack Bitcoin I want it's wonder if majority
37:38 attack keeps you up at night because decentralized anonymous trust is the ingenious computer science innovation but it also speaks to a big vulnerability aspect for public blockchains in particular not this is not a comment about permission blockchains or other block chains that are grabbing on to rule of law and traditional forms of trust in some way yeah so first of all I mean I want to disagree with one thing you said which is that there's no rule of law that
38:04 would prevent it I think that if somebody based in the United States you know marshaled a bunch of resources and then attacked the Bitcoin network in order to you know steal a bunch of money in transactions that they would be committing a crime and and would be because they're in the United States they could would be prosecuted now obviously somebody could be in you know some random place that's difficult to access and and could could do it
38:42 well if if it's for the purpose of stealing other people's property or manipulating you know the transaction mechanism I think that's pretty clear I think our current laws would cover that the you know one thing that's really interesting is like you know the Bitcoin gold 51% attack that took place the price of Bitcoin gold didn't go down like like I you know we heard Bitcoin
39:15 gold has been 51% attacked and I thought okay well I mean this chain must be worthless though right I mean who would want to own Bitcoin gold if it's so easy to attack and yet nobody really cared so and and of course one reason for that is that it's not that people a 51% attack doesn't enable somebody to go in and you know take your coins it what it does it it is and it enables somebody to go and
39:42 redirect coins that are already in you know kind of being sent you know where maybe I sent you some Bitcoin gold to your wallet and somebody could look at that and say I'm gonna take that transaction for myself so so I thought that I mean that's just a really interesting phenomenon I I agree it's it's a risk I think that the the resources needed would be for somebody who just wants to all they care about is
40:13 let's say Bitcoin and they want to accumulate a bunch of Bitcoin by doing a 51% attack I don't think that this would be an economically viable strategy because ultimately if they're really successful and they just keep on attacking and they're able to maintain that that ability ultimately the thing that they're getting that they're stealing for everybody is going to be worthless like worthless so I don't think that people would have an economic incentive who are just concerned about that chain
40:46 you know that's right so too you could envision somebody who's cares about one chain and you know views it as it you know let's say the Bitcoin cash people I mean right now there's this crazy you know thing going on in Bitcoin cash where there's a fork coming up on November 14th and the you know they're fighting with one another and I mean you could envision something crazy going on there or or maybe a government actor
41:09 that just doesn't want this stuff to be you know to be around but but it does require massive resources I mean not just money but you know hash power and and and energy and and you know to do this stuff so it's certainly a risk for that number but certainly large if
41:40 Bitcoin became what it's what some people fantasize about presumably the amount of hash power behind securing it would have to grow up would have to grow as well by some arguments would have to grow up pretty linearly with how useful Bitcoin is so the amount of energy is could get really scary really fast what do you what do you make yes so first of all I mean I mean one of the things you know there's a lot of energy in the
42:11 world that otherwise just wouldn't be used right so you know hydro solar I mean these are you know these are free energy sources and of course you know Bitcoin is is energy is such a important part of the you know the cost of mining Bitcoin that that people are putting these Bitcoin mining facilities next to renewable energy sources so so I think it's you know it and and if you have some you know energy in the middle of
42:39 nowhere where there's you know no population and it was just gonna not be used and now it's used for this I don't think it has any impact whatsoever the but but you know I think that this I to think that ultimately bitcoin is going to be the solution I put a pretty low probability on that there are all these other you know consensus mechanisms using proof of stake or some combination of proof of work and proof of stake or you know and
43:10 and they're just there's a ton of new innovation going on in the space so I think there will be other other solutions that will be you know less energy that will take less energy use okay I think there's a question here this is really great I have two questions can you give some insight into the market makers in the Monaro lisk
43:41 kind of category of untraceable real crypto currencies like Zeke has kind of in that in-between space and because I always think in the world there's more illegal money floating around in the world than there is actually money that is being accounted for and when I'm looking at monaro Lissie cash as market makers in the future that's a really developing world space that will be huge how do you look at
44:13 that as the first question yes so privacy coins are an interesting topic this goes back to this debate between kind of libertarians and and you know people who say oh this should be totally unregulated and and then you know people like me who are you know who think that regulation is a good thing in the space and and I think that you know but but one argument that one of the problems with Bitcoin is that you know if
44:45 somebody sends me a Bitcoin and then I send them to you know I send them to you but and it turns out that the guy that sent me the Bitcoin was I don't know an Isis number then the bitcoins that I just sent you are now tainted and and you know your potential risk and there are all sorts of bad things that could happen maybe you're know else wants to buy those Bitcoin now and so you wind up with this situation where
45:17 bitcoins are not fungible unless of course the United States government seizes them like from Silk Road and then auctions them off at which point they're clean again but which is kind of ironic to me but but anyway so so but you know on the other hand if you know if you ended up with a $10 bill that you know Isis had possessed two hops before you I mean nobody knows and nobody cares and and that $10 bill is fungible so so
45:50 there's an argument to be made that for a crypto currencies to actually be useful there should be you know privacy shields available and and that's where monaro comes in z cash is really interesting because there are optional privacy shields there and you know then there are other solutions where they purposely like mix the coins which we think is inherently not AML compliant and so we don't touch those coins but yeah it's an interesting debate question
46:21 I have for you and it's a real quick one it's as I listened to you it kind of sounds that bitcoin is not the buy anymore really sounds too like right now you already refused to answer my question yeah see 20 tokens which are a theory of network tokens oates means to play that you're going for the question then because standards are changing between a
46:53 RC 20 and c 226 tokens ultimately the network effect will slow down as the standard switches from c 22 c 226 for developers are you worried about the assumption that ether may be the right tech play for the long haul in comparison to Bitcoin which is I mean you've got them after from the
47:24 government at great price so you never lose so you're gonna keep that as a part of your portfolio but if you're looking long-term are you saying as aetherium are you saying it as e-cash yeah you know I think it's it there's a ton of innovation going on in the theorem and and you know and then there also a ton of interesting new competing blockchain so I think it's hard to say where this goes I think that you know and then
47:54 there are a ton of people who think that bitcoin is the you know Millennials new gold and and if you ascribe any reasonable probability to that happening then bitcoins really cheap so so I I don't it's it's pretty hard to handicap all this stuff but I think it's fair to say a lot of these things are going to zero and and some of them will go up dramatically in price and then there are there are gonna be a bunch of new things
48:19 that don't even exist yet that are gonna be really relevant so okay weird one last question I have I have a question for you when you started Cumberland and you had to build out a new M system was it similar to what you implemented it drw or were there a whole host of new wrists that kept you up at night yeah so the all the support functions for Cumberland were really painful and a lot of people at drw said you know really
48:53 are we really doing this because this is really you know the back office that I mean cuz this is just taking up a tremendous amount of time and I said yes we're really doing this -huh but but yeah I mean it's required to build out a totally new build out of a lot of the infrastructure what keeps you up at night about it well one of the biggest risks of these things is that they can easily be taken
49:21 and so if you're not storing them efficiently or you know in a thoughtful manner then that's a huge problem so we've devoted a lot of a lot of resources to being really thoughtful about how you know how transfers are done and how they're stored and all this kind of stuff and so I mean that's just still keeps you up at night but it's I feel a lot better about it now than I did a year ago
49:45 okay please join me in thanking Don