The World According to Punk 6529: A Conversation with Raoul Pal (Notes)

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"The World According to Punk 6529" with @RaoulGMI & @punk6529 on @RealVision I took some notes and put them in a 🧵 👇 (Part 1/2) [1/x]

I've only heard a little over half of it so far, but this is probably one of the best crypto / NFT podcasts I've heard in a long time. Huge shoutout to @RaoulGMI & @RealVision for creating such awesome content for free - adds massive value to the space. realvision.com/shows/raoul-pal-adventures-in-crypto/videos/the-world-according-to-punk-6529-mXg5?source_collection=b8bd9d62c77143f7a39513e85d310b11

@punk6529 is a giga-🧠 and has spent the last decade thinking about this space. His depth of knowledge and clarity of thought shows in the way he speaks about it. I STRONGLY recommend listening to the original podcast. But in the mean time, some notes 👇

@punk6529's Background & Intro to Crypto • 6529 first heard of Bitcoin in 2011, but only took it seriously in summer 2013. • His background is in Software Development + TradFi + Big Corporate. • He read the Bitcoin whitepaper, and realized it was a very big deal.

• Solving the Byzantine General’s problem is a huge deal in Computer Science • Byzantine General’s problem - how can a bunch of people who don’t know each other can trust each other.

• Our life is organized by 1000s of databases - Bank Accounts, Email, Uber, Airbnb, Messages, Twitter, Hotel Bookings, National Identity • These centralized systems work mostly fine, but we are finding ourselves increasingly reliant on Trusted Third Parties (TTPs )

• Was able to send $20 from NY to a friend in Europe on a Saturday within minutes. • Wire transfer would have reached on Wednesday, and cost $30 in fees alone.

On NFTs and mainstream adoption: • NFTs are crypto's mainstream adoption moment. • Normal people don’t care about decentralization, and consensus mechanisms, but they get NFTs.

• @punk6529 saw Dolce and Gabanna was at an NFT conference. • You don’t see brands like that at ETH / decentralization conferences.

• NFTs will take this industry mainstream. • Brands will airdrop offers to customers, universities will do the same for alumni, sports teams for fans, etc • Average NFT in your wallet 5-10 years out might be a chipotle coupon card, instead of a digital art piece.

On NFTs and the Art World • @punk6529 Bought an Andy Warhol Campbell soup can for $140k. • No proof that it was actually part of Andy Warhol’s exhibit • There’s an unverifiable signature, and a certificate by the gallery printed in real time.

• NFTs are internet native art. This is the internet moment for art. • Struggling artists are a bug, not a feature. They solve distribution and empower artists. • Why sell through a retail gallery, which on average has very little traffic on a given day.

• Damien Hirst (@hirst_official) - a famous artist- launched an NFT collection • 10,000 pieces sold out in 5 minutes. • Wouldn’t be possible to do that in traditional art world even with 5 top galleries working on it together.

• For up and coming artists, sales are much more difficult. • They don’t have marketing or distribution engine, and they don’t have access to global customers.

• Example: @punk6529 bought some NFT art from some Indian Photographers. • Chances of that happening without NFTs are virtually 0. How would he even find them?

• Damien Hirst might have a marketing advantage but he no longer has a distribution advantage • Distribution advantage was being in the galleries. Now, they're all on the same ERC token distribution rails. • @punk6529 uses Twitter as a discoverability engine not OpenSea.

On NFTs & Intangibles • NFTs can turn intangibles into tangibles. • NFTs are a transport technology for societal intangibles • Kind of like when people figured out how to make classes of financial instruments

• Can hold + own + compose + transport intangibles = will make these societal intangibles more valuable • @RaoulGMI adds that there are $63T of intangibles of institutional balance sheets. Those are just the ones that are countable. • Memes have intangible value as well.

• Brand slogans like “Just do it” have huge intangible value. • Nike can sell shoes at their prices because of their swoosh. The swoosh has huge intangible value. • Campaign slogans like “Yes, we can”, and "Make America Great Again" made presidents - huge intangible value.

On NFTs and Gaming • 2-3 years away from next generation of gaming • Every PFP collection with 10k NFTs with plans to make a half baked game is not going to work out. • Most NFT projects with short-term gaming roadmaps are going to fail.

• Building good games is like making a movie. • Requires a lot of time, money, good team, etc • Orders of magnitude more complicated than making an NFT project

• Eventually, you will be able to own your in-game assets. • Take rate of gaming companies should drop from 100% to 3%.

On Metaverse • Deeply misunderstood by most people • Metaverse is not a Second-Life type thing where everyone is walking around with VR goggles.

• The Metaverse is just the internet with 2 key differences: • Visualization layer will get better (as it has been) • We will now have composable cross-application digital objects

• web2 digital objects (like Twitter status, IG photo, etc) are only in DB of the web2 application. • To access web2 digital objects elsewhere, you need to get am API key, follow the Terms of Service and write custom code to integrate with another application

• web3 digital objects (NFTs) can be dropped it in a gallery or a game or a lending platform or any of 1000s of applications. • web2 companies like Meta, Unreal, etc likely have a different vision of the metaverse, which relies on more information living on their servers.

On Centralized Power • Email is a standardized protocol (SMTP) - can use gmail, or outlook, or anything else • Global short messaging is controlled by Twitter, media messaging by Facebook • Twitter employees can make a business decision to ban someone from their platform.

• That’s legally fine because they are a private company, but because of the scale, it means they have the power to cut someone off from an entire mode of communication

• Everything is getting more centralized. • The US is building a global censorable digital money system + an oligopolistic services infrastructure • Flip a switch on Uber, and you can block someone from accessing taxi transportation. Similarly for Airbnb, Banks, flights, ...

• China is building some kind of social credit system • US is building that as well, but by accident. • Very dangerous if the wrong person is in power.

• Some aspiring totalitarian could get a hold of CBDC node and his / her political opponents won’t be able to buy as much as a tomato. • Asset seizures by govt. are not uncommon. Canada froze bank accounts of Freedom Convoy truckers; Russian oligarchs assets were seized, …

--- END OF PART 1 --- I look forward to finishing the video and making notes for the rest of it too. I highly recommend listening to the original podcast - listening to gigabrains like @punk6529 and @RaoulGMI speak about this will give you a lot more than condensed notes.