20VC Crypto Roundtable How Will US Elections Impact Crypto Why Will Trump Lean Into Crypto in 2024 Should FTX Investors Have Known About SBF Will Opensea Ever Be Worth $13BN Again Will NFTs Come Back with Kyle Samani and Nick Tomaino

In a dynamic episode of 20 VC with host Harry Stebbings, Kyle Samani, co-founder of Multicoin Capital, and Nick Tomaino, founder of 1confirmation, delve into the intricate relationship between politics and the cryptocurrency industry. They discuss the influence of crony capitalism and political donations on regulatory actions, highlighting the case of Sam Bankman-Fried's significant contributions to Joe Biden and subsequent SEC scrutiny of companies like Coinbase and Kraken. The conversation also explores the potential impact of presidential candidates on crypto, with a focus on Trump's shifting stance and the importance of reducing the power of the administrative state for the industry's growth. They debate the authenticity and market strategies of crypto firms, the future of NFTs, and the role of on-chain messaging. Kyle and Nick share insights on the lessons learned from the FTX collapse, driven by a 'vibe check' and the dangers of counter signals. They end with predictions for crypto's evolution, emphasizing the need for new use cases beyond speculation and the potential of stablecoin payment rails to revolutionize financial transactions globally.

• Crony capitalism is perceived as highly prevalent and underestimated by the public.
• The political donations from individuals in the crypto space, like Sam Bankman-Fried, to political figures such as Joe Biden are highlighted.
• The potential influence of Donald Trump on the crypto market is discussed, with predictions that he will embrace crypto significantly in 2024.

"Crony capitalism is real, right? I don't think the public recognizes how insane it is. The second largest donor to Joe Biden was Sam Bankman Freed."

• This quote emphasizes the speaker's view that crony capitalism is rampant and not fully recognized by the public, using the example of Sam Bankman-Fried's political donations to illustrate the point.

"If you think about Trump, we know he loves attention. He's going to be leaning into crypto in a big way in 24 24."

• The speaker predicts that Donald Trump's affinity for attention will lead him to support and possibly influence the crypto market in the future.

• Five candidates are identified as potentially beneficial for the crypto industry: Trump, DeSantis, Vivek from the Republican Party, Dean Phillips from the Democratic Party, and RFK as an independent.
• The assumption that Trump will be in jail before the election is expressed by one of the speakers.

"There's five candidates right now that would be good for crypto Trump, DeSantis, Vivek in the Republican Party. There's Dean Phillips in the Democratic Party, and there's RFK as an independent."

• The speaker lists political figures who are considered to be supportive of the crypto industry, suggesting that their potential election could be favorable for the space.

"My assumption is he will be in jail before the election."

• This quote expresses skepticism about Trump's future political involvement, with the speaker assuming legal challenges may prevent his participation in the election.

• The 20 VC podcast is hosted by Harry Stebbings and features discussions on crypto-related topics.
• The podcast episode in question was inspired by a Twitter debate between two prominent crypto investors.
• Kyle Samani and Nick Tomaino are introduced as the guests, both known for their significant investments in the crypto space.

"Welcome back to 20 VC with me, Harry Stebbings. Now, this show was spot by a Twitter debate between two of the crypto OG investors..."

• Harry Stebbings introduces the podcast episode, explaining its origin in a Twitter debate between two well-known crypto investors.

"So crypto OG number one is Kyle Somani, cofounder and managing partner at Multicoin Capital... Next up, we have Nick Tamino, founder and general partner at one confirmation..."

• This quote introduces the guests, Kyle Samani and Nick Tomaino, highlighting their roles and achievements in the crypto industry.

• The podcast discusses whether crypto will evolve beyond speculation to more substantial applications.
• The potential for DeFi (Decentralized Finance) to become a mainstream economic activity is debated.
• The empowerment of disenfranchised individuals through permissionless speculation in crypto is highlighted.
• The negative consequences of excessive speculation and its role in major industry blowups are acknowledged.

"The speculation can be channeled productively... Deepen is really the kind of torchbearer... where you can keep the collective hive mind of people doing stuff in the real world and funding that collectively and produce real economic output that's tangible and measurable."

• The speaker suggests that speculation can be used productively, with the example of Deepen, which harnesses collective efforts for real-world economic output.

"Speculation is a very good thing for the world, and it's actually really empowering a lot of people that have been held back by kind of the existing power structures."

• This quote presents the view that speculation within the crypto space can be empowering, especially for those marginalized by traditional economic systems.

"Excessive speculation can clearly be bad, right? And we've seen a lot of bad things happen in the past ten years by excessive speculation."

• The speaker acknowledges the potential for harm due to excessive speculation in the crypto industry, emphasizing the need for balance.

• The distinction between shilling (promotion) and speculation (investment) is clarified.
• The influence of tribalism in crypto and its potential to reduce physical conflict is discussed.
• The negative impact of excessive shilling by influencers, particularly during bull markets, is criticized.

"Shilling is human nature. Shilling is not new to crypto. Whatever tribe humans are in, they shill for that."

• The speaker reflects on the inherent nature of humans to promote their affiliations, drawing parallels between crypto and other forms of tribalism.

"I think excessive shilling is bad, and especially in bull markets, when everyone is looking at the space."

• This quote highlights the speaker's concern about the harmful effects of excessive shilling, particularly when it misleads new entrants to the crypto market during periods of market optimism.

• The discussion shifts to the contributions of different crypto platforms such as Ethereum, Cosmos, and Solana.
• The unique social visions of Ethereum and Cosmos are contrasted with Solana's approach as a faster and cheaper alternative to Ethereum.
• The criticism of Solana is attributed to its lack of unique social contributions compared to Ethereum and Cosmos.

"Solana is just a cheaper, faster Ethereum, at least so far, and that's how it's been marketed."

• The speaker expresses the view that Solana's current value proposition is primarily as an improved version of Ethereum in terms of cost and speed, without significant social innovation.

"Cosmos has a very unique kind of social vision, which is sovereign chains... Solana, especially relative to Ethereum and Cosmos. Solana is not really anything new from a social perspective and is not really enabling anything new."

• This quote compares the social visions of different blockchain platforms, suggesting that Solana has not yet offered a novel contribution to the space in the same way that Ethereum and Cosmos have.

• Different core ideologies exist between Ethereum and Solana communities.
• Ethereum focuses on public goods funding and general welfare.
• Solana has a more traditional capitalist approach, with aggressive product feature development.
• The Ethereum Foundation is hands-off, while the Solana Foundation actively develops and spins out projects like Metaplex and Solana Pay.
• People drawn to Ethereum often seek distance from traditional capitalism, whereas Solana's overt capitalism can be off-putting to some.

"Ethereum is very focused on public goods funding, very focused on kind of general welfare. And Solana is like very directly capitalist in kind of the more traditional sense of the word."

This quote highlights the fundamental differences in ethos between Ethereum and Solana, with Ethereum's community-oriented approach versus Solana's capitalist-driven development.

• Centralization is often conflated with a capitalist approach, but it's not solely about control.
• Ethereum's hands-off approach contrasts with Solana's more involved foundation.
• Solana Foundation's active role is not necessarily indicative of overall ecosystem centralization.
• The number of active participants in the ecosystem is more reflective of decentralization than foundation activity alone.
• Solana's structure and partnerships, like with Visa, demonstrate a more centralized organizational approach compared to Ethereum.

"You can say that that makes the system more centralized, that I kind of take a little bit of issue with, just because the central does more stuff."

This quote explains that the activity of Solana's central foundation doesn't automatically equate to a more centralized ecosystem, emphasizing the importance of community participation.

• Critique within the crypto community, especially on social media, is common and can be a source of motivation.
• Kyle expresses enjoyment of the criticism and debate that comes with his involvement in the crypto space.

"I fucking love it. It's great. It energizes me."

Kyle's enthusiasm for criticism demonstrates his passion for engaging with the community and driving the crypto conversation forward.

• Solana aims to enable decentralized finance with features like centralized limit order books for efficient price discovery.
• NFTs on Solana benefit from advancements like compressed NFTs, allowing for scalability.
• Decentralized physical infrastructure networks (DePINs) are a novel form of capital formation on Solana.
• Solana's ecosystem includes projects like Hive Mapper and Helium, which provide real-world services and data.

"I believe if you are a finance purist, you understand that you need to have essential order books. That is absolutely paramount."

This quote stresses the importance of Solana's focus on financial infrastructure, specifically the need for a decentralized Nasdaq-equivalent to improve capital market efficiency.

• Bitcoin is viewed as a strictly financial construct with no productive value.
• Deepen networks provide economically useful services, different from Bitcoin's ledger.
• Helium, as an example, offers a decentralized network for cell phone service, contrasting with Bitcoin's function.

"Helium provides a service you can get your cell phone through. Those are economically useful services."

This quote differentiates between Bitcoin's role as a financial asset and Deepen networks like Helium that provide tangible services to consumers.

• Talent in the crypto space fluctuates with market cycles, with some leaving during bear markets.
• The focus for some funds is on founders with deep, long-term crypto knowledge rather than traditional credentials.
• Talent migration is also influenced by other tech sectors like AI, but dedicated crypto talent remains.

"We'd rather give money to a founder that doesn't maybe look good on paper, doesn't have credentials, but has been studying crypto deeply since 2013 when they brought their first bitcoin or something like that."

This quote reflects a preference for supporting founders with genuine and deep understanding of crypto over those with traditional tech credentials or transient interest.

• The term "crypto purist" is used to describe participants with a particular ideological lens.
• A crypto maximalist, on the other hand, seeks to see crypto adopted broadly for its benefits to sovereignty and freedom.
• The distinction between purists and maximalists can influence strategies and approaches within the crypto space.

"I'm like a crypto maximalist. I want crypto to be everywhere. I think it's very important for sovereignty and freedom."

Kyle identifies as a crypto maximalist, indicating his desire for widespread crypto adoption and its implications for personal sovereignty and freedom.

• Authenticity is crucial in the crypto space, particularly with open-source projects that are prone to being copied.
• The long-term success of a project or company is believed to be tied to its authenticity.
• Marketing strategies can sometimes overshadow the importance of being authentic, leading to a focus on attention rather than substance.
• Authenticity is not only relevant to crypto but also in broader discussions, such as the perceived authenticity of celebrities like Taylor Swift.
• The concept of authenticity is expected to gain importance, especially with the rise of AI and the challenge of discerning genuine human interaction.

"Authenticity absolutely matters."

This quote emphasizes the fundamental importance of authenticity in the crypto industry and beyond, suggesting that genuine projects and companies are likely to be more successful in the long run.

"I believe in the long term, and you have to take a long term perspective that actually it does matter a lot."

Nick Tomaino expresses his belief that despite short-term challenges, authenticity ultimately leads to greater rewards, reinforcing the idea that staying true to oneself is beneficial in the long run.

"To me, being authentic means like, being true to yourself and sticking to what's unique about you and not being too concerned with what other people think."

Nick Tomaino defines authenticity as staying true to one's unique qualities and values, rather than being swayed by the opinions of others or the pursuit of attention.

• The original skepticism about FTX's operational model due to the lack of separation between Alameda Research and FTX was initially dismissed but later reconsidered.
• The fraud at FTX was well-concealed, with only a few insiders being aware of the illicit activities.
• Authenticity, or rather the lack of it, was a key factor in the skepticism around Sam Bankman-Fried and FTX.
• The concept of "countersignals" is introduced, where overt signaling of legitimacy or virtue can sometimes indicate the opposite.
• The role of social media and community insights in identifying red flags in the crypto space is acknowledged.

"Sam and FTX. And the whole thing just from the very beginning, felt very inauthentic."

Nick Tomaino describes his initial impression of Sam Bankman-Fried and FTX as inauthentic, which raised suspicions about the legitimacy of their operations.

"The most common term that's used politically is like virtue signaling, right? Which I think is an example of a. You know, the person that signals that they're virtuous, that they give away a lot of money or something. They're focusing on perception when the reality is probably different than what perception is."

Nick Tomaino discusses the concept of "virtue signaling" and how it can be a form of countersignaling, where the projected image may not align with reality, which was relevant to the perception of Sam Bankman-Fried.

• Marketing does not inherently imply inauthenticity; authentic entities can also engage in aggressive marketing.
• The distinction between authentic marketing and inauthentic marketing is highlighted by comparing Coinbase's Super Bowl ad to FTX's celebrity-driven approach.
• The importance of staying true to one's brand and values in marketing efforts is emphasized.

"You can market well and be authentic."

Kyle Samani notes that marketing, even when loud and aggressive, does not necessarily mean a company is inauthentic, suggesting that genuine companies can still engage in strong marketing initiatives.

"The FTX Super Bowl ad felt very inauthentic to me."

Nick Tomaino contrasts Coinbase's authentic marketing approach with FTX's celebrity-laden Super Bowl ad, which he perceived as inauthentic and overly concerned with attracting attention.

• The SEC's actions against Coinbase and Kraken are seen as unfair, targeting companies that have generally been good actors in the crypto space.
• Coinbase's strategy of initially cooperating with regulators before becoming more confrontational is considered the right approach.
• Concerns about "crony capitalism" and the influence of political donations on regulatory actions are raised.
• The potential for SEC Chairman Gary Gensler to step down is discussed in light of recent events and statements.

"Crony capitalism is real, right?"

Nick Tomaino criticizes the current regulatory environment, suggesting that political connections and donations have had undue influence on regulatory actions, particularly regarding the SEC's treatment of Coinbase and Kraken.

"The SEC is going after Coinbase saying that it's an unregistered securities exchange, and then Coinbase is actually suing SEC saying that it didn't do its duty, basically, in creating clear laws around crypto."

Nick Tomaino outlines the legal battle between Coinbase and the SEC, highlighting the lack of regulatory clarity in the crypto space and the challenges this presents for companies trying to comply with the law.

• The U.S. elections have a significant impact on crypto markets due to changes in leadership at regulatory bodies like the SEC.
• A Republican victory is likely to result in a chair more aligned with former chair Clayton's free-market approach, as opposed to Chair Gensler's aggressive regulatory stance.
• Regardless of the administration, innovation in crypto is expected to continue, though U.S. participation might decrease under a less favorable government.

"If a Republican is elected, safe to assume that the new chair of the SEC that the president will appoint is much more likely to be closer to chair Clayton in ethos than chair Gensler."

This quote emphasizes the potential shift in regulatory philosophy depending on the outcome of the election, suggesting a more laissez-faire approach under a Republican chair similar to Clayton.

"Even in a scenario where there's like an antagonistic administration to crypto, crypto is still going to move forward."

Despite the regulatory environment, this quote suggests that the crypto industry's innovation and progress are somewhat resilient to political changes.

• Five candidates across parties are seen as favorable for crypto due to their stance on reducing the power of the administrative state.
• Candidates include Trump, DeSantis, Vivek (Republican), Dean Phillips (Democrat), and RFK (Independent).
• The administrative state's influence is a broader issue that overlaps with the crypto sector.

"All five of those... recognize a problem in the country is this unelected class of bureaucrats that are acting in their own self interest and one way or another talked about reducing the power of the administrative state."

The quote identifies a commonality among the candidates, which is the aim to diminish the influence of unelected bureaucrats, which indirectly affects the crypto industry.

• Trump's past negative comments on cryptocurrencies contrast with recent actions, such as releasing an NFT collection.
• His affinity for attention and memes might lead to a more favorable stance on crypto in the future.

"He tweeted in 2018 cryptocurrencies are bad... I personally think he's going to be leaning into crypto in a big way in 2024."

This quote highlights the uncertainty surrounding Trump's stance on crypto and predicts a potential pivot due to his character traits and recent activities.

• There is speculation about upcoming IPOs for crypto companies like Circle and Kraken, potentially in 2024.
• The timing of these IPOs is uncertain and depends on market conditions.

"Rumors are suggesting that circle will ipo in 2024."

This quote indicates circulating rumors about Circle's IPO, reflecting the market's anticipation for crypto companies going public.

• NFTs are predicted to have a significant comeback and possibly surpass cryptocurrencies in mainstream adoption.
• The intersection of culture and finance through NFTs creates a unique business model for creators.

"I think NFTs are going to come back in a big way... I think still NFTs have a good chance to be bigger than cryptocurrencies in terms of mainstream adoption."

This quote expresses a strong belief in the potential growth and impact of NFTs, especially due to their cultural relevance.

• Some top crypto assets are viewed skeptically by sophisticated market participants.
• Despite high trade volumes, the substance behind certain assets like XRP and Litecoin is questioned.

"There's a lot of assets in the top ten that most people who are sophisticated retail market participants view as garbage."

This quote reflects the skepticism within the crypto community regarding the value and substance of certain popular crypto assets.

• Concerns include the ruling class's resistance to the empowering nature of crypto.
• Excitements revolve around the potential of stablecoin payment rails and the global access to U.S. dollars they provide.

"I think it is true that there is kind of a ruling class in the US and around the world that has the power and crypto... is still not fully appreciated how empowering crypto is to people."

This quote underscores the concern that the traditional power structures may resist the democratizing force of crypto.

"Payments. Stablecoin payment rails... enable billions of people to acquire dollars and use dollars."

The excitement for stablecoin payment rails is highlighted, emphasizing their potential to democratize access to the U.S. dollar globally.

• Perspectives on crypto can shift with new experiences, such as the potential of on-chain messaging.
• Painful lessons in crypto investment emphasize the importance of holding onto a thesis until it's invalidated.

"I didn't really get it until this year when I used a messaging product within Coinbase wallet."

This quote reveals how personal experience with new crypto applications can change previously held beliefs about their potential.

"Until your thesis is invalidated, keep holding on and keep trying to make more bets in that thesis."

The quote conveys the lesson of staying committed to an investment thesis in the volatile crypto market until there is a clear reason to abandon it.

• There is hope for new, non-speculative use cases for crypto like prediction markets, decentralized social media, and stablecoins.
• The ideal future includes widespread use of secure private keys for financial transactions on any application.

"We need to get beyond just a shitcoin casino, which is, I think, how a lot of the outside world still perceives crypto."

This quote calls for the development of practical applications for crypto beyond mere speculation to change public perception.

"I want everyone in the world to have a private key built into their phone that is secure and that they can use for arbitrary financial movements."

The quote envisions a future where secure financial transactions are universally accessible through personal devices, highlighting the goal of financial empowerment.