For The Future Indicative, Ep 4 Part 1
Transcript
ALEX EFFGEN
Welcome back to The Future Indicative. I’m Alex Effgen, and in Part 2 we’re getting comfortable with Crypto.
STEVE ESTRADA
“Crypto is at a space now where you would’ve looked at e-commerce 25 years ago. The idea of putting your credit card onto the internet to buy something, there were plenty of people who would say, “There’s no way I’m ever going to do that.” And I think that when you look at crypto now, people go, “I don’t even know what that is.”
In a couple of years, whether they know what it is or not, the likelihood is a lot of their financial transactions are going to be built on crypto rails.”
ALEX EFFGEN
That was Steve Estrada, an attorney looking to build community with crypto and democratized finance on the digital ledger. This democracy is built on access and opportunity. Transparency and transaction speed. And while decentralized finance (or DeFi) is gaining traction in emerging markets, it is the traditional finance player (or TradFi ) who is jumping into crypto ETFs, digital asset treasuries, crypto-backed loans, and a number of other offerings that never would have been contemplated even a few years ago.
Back in 1993, kinda before the internet, Sly Stallone starred in an action movie called Demolition Man. It was set in Los Angeles, 2032. And they had this plot point where Taco Bell was the only restaurant to survive the Franchise Wars, and now all restaurants were Taco Bell. And it was played for laughs because Taco Bell was now fancy, with bougie food and fancy dress. They even had a piano player!
Less than two years later, a store called Amazon began to sell books online without a brick and mortar. Only books. And now the founder of that bookstore builds rocket ships, we have no more brick and mortar bookstores, and you know the rest. Taco Bell is now fancy.
But that’s not all? Before nationwide online gambling, DraftKings was a site for fantasy sports. And Netflix sent you scratched DVDs in the mail before completely changing the model of how entertainment gets distributed to your television, and recently buying Warner Brothers for as much as $83 billion. So maybe it’s not so far fetched for Steve to say:
STEVE ESTRADA
“I think that in a few years, call it maybe 2027, mainstream users are gonna look at crypto in 2025 the way that people looked at e-commerce in 2000. I think that there is a sense of inevitability.”
ALEX EFFGEN
But for that inevitability to happen this transparent, decentralized, digital currency needs to be SECURE.
Part 1 showcased what makes it special, and how it gets sold as a viable alternative to heritage finance. In Part 2, our security requires stability.
STEVE ESTRADA
“Stablecoins are tokens that are pegged to the US dollar or another fiat currency—the pound, the euro, what have you—or they’re pegged to another asset class. And by being pegged to something that is stable, or more stable, there’s far less value fluctuation. They’re far less volatile…They enable instant settlement, and cheaper cross border movement of value. And now that you’re starting to see legislation and clarity around how they’re going to be regulated with something like the GENIUS Act here in the US, the stable market has clear rules, which is accelerating that real world integration into payment structures and payment networks globally. So I don’t think there’s any surprise that the first crypto law to be signed into law in the US is focused on stablecoins.
There’s big players out there already: Circle and Tether, MasterCard, Visa–we have to get into stablecoins–JP Morgan, Stripe. Stripe just recently started accepting stablecoins for subscription payments.”
ALEX EFFGEN
Once you get big players to the table, the stakes become bigger. Your currency might be stable, but you still need to prevent market instability.
STEVE ESTRADA
“We’re talking about global finance. And we’re talking about a new interoperable way of handling global finance. And as finance becomes more digital, as everything is, we need to do our best to ensure that there isn’t another market crash, like 1929.
That crash was largely the product of opacity, excessive leverage, and a concentration of power.
When we talk about crypto regulation, it’s not the idea that there should be no regulation. It needs a different kind of regulation. A regulation that makes sense for the technology. There should be regulation that focuses on consumer protection, anti-money laundering, and market integrity. Those things still matter. Absolutely. But we need to embrace transparency where it improves market integrity, while building smart guardrails for a new system.
If regulations get it wrong and hamper this decentralized system, where people control their own assets, control the decisions that they make, if we hamper that, we just end up back in a scenario where control was concentrated in the hands of a few instead of the many.
And whether it’s finance or anything else, we’ve seen how that plays out over the course of history.”
ALEX EFFGEN
There’s another element of security we need to consider. In my Cybersecurity episode, Tom Clapper talked a bit about the “CIA triad” of cybersecurity. The first letter was C, for confidentiality.You don’t want people to see your legal documents, your medical records, etc. Well, that et cetera includes finance. If blockchain is a transparent open ledger, then do we need to expose our entire financial lives for this crypto democracy to exist? How will privacy be incorporated into a system that is transparent by nature?
STEVE ESTRADA
“Transparency has value but there has to be a layer of privacy to it. People aren’t going to be willing to put their whole life up on chain. And so how is privacy going to be built into this system?
The technology that is really driving it is something that’s known as zero-knowledge proofs or ZK proofs.
And what this technology does is it abstracts out a lot of the information and it allows you to prove something without revealing all the information behind it. And so, in a way, it can prove that you’re a citizen of this country without needing to reveal where you live, right? It validates information: the only piece of information that it needs to.
So if you’re going to scale privacy with features that satisfy compliance needs, that are needed for mainstream uses like retail, this idea of ZK proofs is really what’s going to be necessary for the whole industry to reach the level of mainstream adoption.”
ALEX EFFGEN
Steve, you’re moving from SECURE to SCALE already? Boy this industry really does move fast! But before we go, I want to pause on zero. That’s not the first time we’ve heard the word zero used for protection. Mr Tom Clapper mentioned:
TOM CLAPPER
“What zero trust says is if I exploit one single service or one single threat vector into your network, you then have to exploit the next one, the next one, the next one. You can’t just get in and then have unfettered access. You will have to do it over and over and over again.
And they do that by micro segmenting data and services. They’re all literally independent of themselves. So zero trust is coming. It’s very important because it makes it a lot harder to fully exploit something or somebody. And AI and machine learning will help make that a reality as well.”
ALEX EFFGEN
The power of zero! Tom said it was coming, and that AI and machine learning would help it along by removing the people from the processes. Steve has also noted the speed and savings of crypto lies in the removal of people from the processes. Seems like we’re missing a suspect from this interrogation. And its initials are A.I.
STEVE ESTRADA
“If you look at crypto and AI as these new ways of doing things, crypto adoption has been much slower than AI adoption.
And why is that? Crypto…You’re talking about people’s money. And people are a lot less willing to try something that they don’t fundamentally understand, or something that is new with their money.
And so because it feels much more conversational than transactional, that’s why you’re seeing things like ChatGPT and Agentic AI having this adoption curve that is much faster than you do with crypto.
Now, how do we ensure that those LLMs that are the foundation of this AI system, how do we make sure that we can audit it? That we know that these models are using true information?”
ALEX EFFGEN
Lord, between deep fakes and hallucinations and slop I have no idea. How do we keep AI and LLMs in check so we can keep human society in balance?
STEVE ESTRADA
“I think we need to look to blockchain for AI. The best way to ensure that the information that all these AI agents and all these systems are going to be built on top of these LLMs is true, and is transparent, and isn’t held by centralized gatekeepers who control our information and therefore in many ways can end up controlling our lives, is that it could run on blockchain.
And if we can run AI on blockchain as a public utility as opposed to a centralized economic model, I think that’s what allows AI to reach its full potential while giving us the best chance of de-risking all the potential negative applications. That’s how we avoid Skynet.”
ALEX EFFGEN
If we’re talking dystopia, then utopia must also be possible. In Part 1, Steve talked about scratching the surface of crypto adoption with a 10X increase in five years to 700 million digital asset owners. But how does crypto go from 700 million users to a billion users, to 5 billion users? Is it just privacy and ZK proofs that will help SCALE crypto?
STEVE ESTRADA
“You need that regulatory clarity. You need clear guidance for the builders, the software engineers, building this application layer, this composable application layer, that DeFi will run on. And you need consumer protection. You need stronger marketing. And you need a better UX, a UX that feels a greater level of comfort.
You’re starting to see that from the idea of a crypto wallet, which is a standalone application that you’ve downloaded to these smart wallets. You know you’re going to start to see entertainment products, financial products that people don’t even realize that they’re running on blockchain rails. And then you’re going to see a cross-border payment that was costing me $7 is now costing me $0.07.
So regulatory clarity, clear user experience, and a trusted privacy system that, again, most likely will be built on this ZK-proof technology. That’s how we get to expansion and mainstream use.”
ALEX EFFGEN
Regulation, UX, privacy…All that makes sense. Anything else we should know?
STEVE ESTRADA
“If you take some of the bigger, more well-known chains like Ethereum or Solana, how do we scale these systems? And in one way, it comes down to the concept of staking.
A lot of chains are built on this proof-of-stake concept. You have validators, right, people who have put up a stake, to run a validator node. And those validator nodes are how you prove the veracity of these transactions. And the more validators that you have in a network, the greater the network can be, the larger the network can be.
And so I’m going to stake my ETH, my SOL, my whatever the native token of that blockchain is, in order to prove that these transactions are correct. And if that is the case, you get rewards. You earn rewards for your efforts to validate.
Conversely, if you get it wrong, there’s a concept called slashing, where you lose your stake, right? So validators have a financial stake in getting this right.
Now, anyone can participate in this staking model. You can do so by having the computing power yourself to do it, or by delegating your stake. And so by staking my tokens, that leads to a larger, more secure, decentralized network. The overall community, the overall system, the overall ecosystem benefits from that.”
ALEX EFFGEN
We began this episode of Crypto talking about the significance and applications relevant to insurance in 2015. Ten years later and this normie’s head is spinning with staking, decentralized finance, prediction markets, ZK proofs, stablecoins, and digital asset treasuries. We stand still, and the world keeps turning. As it did for those who lived through the Industrial Revolution.
STEVE ESTRADA
“If we think about going back 150 years, the building of the railroads, laying telephone line, or running cable under the Atlantic for wire. We should understand that blockchain can be that digital infrastructure, and it can be done in a way where we all get to participate in it. It can become a public utility that we all have a say in.
I think one of the things that everyone’s concerned about is these massive AI data centers: the amount of energy, the amount of water that they are taking, the heat that they generate, and the cooling cost and what it means from an environmental perspective to run information systems in the way that the modern world is going to require.
It’s important to understand that you can distribute those energy needs across a decentralized infrastructure that everyone can participate and benefit from. It becomes a flywheel of creating the public infrastructure system that the digital world will run on, in this proof-of-stake system where you, the public, benefit from it. It is the democratization of information and utility in a way that hasn’t been available before.”
ALEX EFFGEN
Thank you for joining us on the Future Indicative, a podcast produced by me, Alex Effgen, and Indicate Marketing. Our mission is to show what great narratives accomplish for your industry. As mentioned before, the views expressed here are solely our own, but we share them for public benefit. You can find a growing number of them at IndicateMarketing.com. Let’s explore how our humanity can help drive your business growth and market positioning. We appreciate your patronage, and continued support.
