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- [00:00]
Ryan Reynolds
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- [01:03]
Host
Welcome to this special edition. Markets daily from consensus 2025. All right, let's get to our next guest who is best known for his bold ideas, deep technical vision and outspoken takes on the future of finance. He is the CEO of and founder of Input Output, the force behind Cardano and a co founder of Ethereum, Charles Voskinson. Welcome to the show.
- [01:34]
Interviewer
Charles, I had the pleasure of hearing you speak before and something we're working on together and you mentioned something to me which I thought, well in the conversation about the idea of sort of these archaic middlemen in the finance world and how we need to change that relationship, especially with kind of the new folks who are coming into crypto who need to respect privacy and money in a different way. And I would just love for you to give us your thoughts right now on the state of the market with crypto because we are seeing I think so many more people come in and you've just been there for so long. What, what should people know about spending time in crypto and especially around their own sort of like privacy and self sovereignty relationship with their information?
- [02:13]
Charles Hoskinson
Well, you know there's an expectation of a boom, expectation of a bull, but we as an industry are trying to do everything in our power to get rid of the bull market. But it's still, it's coming whether we like it or not, you know, every four years we run into this. I remember the first one I experienced was 2013, and that was a wild year because, you know, we had the Cypriot crisis and bitcoin went from $4 to $2.50, went all the way up to then down to $80 and then all the way up to 1200 during the Mount Gox burn up. And then it was a dark, terrible time for, for years and years, bitcoin sat at $250 and it was very deflated. Then in 2017, we had another bull market followed by another one in 2021. So every four years it seems to happen with, with the having. And so this time around too, the US Government is really pro crypto, which is just still jarring because I remember the Gensler years and going through every exchange, being sued and all the negative news. So having the US Government say, hey, we're going to have a strategic reserve, or hey, we're going to pass pro crypto laws or the US Government may choose to procure crypto for its operations, that's a, that's a good thing. And it's opening up the conversation globally. So the Middle east is becoming a lot more friendly. They were already pretty good, but now more so the same for Europe, kind of, hey, maybe Mika doesn't need to be as restrictive as it needs to be in Japan and so forth. So overall the state of affairs is bullish. It's just we're not quite where we need to be yet. There are probably two, three more months of heartburn from macroeconomics like the tariff issues and these types of things before we start seeing that cycle happen. And they usually last about six to.
- [03:42]
Host
12 months, you know, at this. Yesterday we've talked a lot about stablecoin legislation. And just because we're talking about the US Government having a more friendly outlook on crypto, I'd love to get your reaction to the Genius act, the stablecoin legislation that everyone was so optimistic about handling that first Senate vote.
- [04:00]
Charles Hoskinson
Yeah, well, we've been working pretty closely with certain key lawmakers. We work much more closely with the legislative branch than the executive. But we do talk to both sides and there were some recommendations that we've put into the gsac, like getting nist, for example, to work on international standardization. Because thing is like not just stablecoins in the United States, it's how, well, how do those coins work with Europe? How do those coins work with the Middle East? How do they work with Japan and other places that just have so much money flowing through them. So that was a big component. But we expected that there would be some friction, especially given that politics are so violently partisan. But the reality is that when you look at the postmortem of the 2024 election, one of the contributing factors to Harris losing was being anti crypto. 55 million Americans own crypto, use crypto, know about crypto, and the majority of them are young and left leaning. So why would you as a politician go and burn down 10, 20 million people of your own base? It doesn't make any sense. So part of the postmortem that Democrats did in December and beyond was let's try to figure out a way not necessarily to be pro crypto, but at least neutral to crypto. So one area of compromise that had been since 202022 under Senator Toomey, when he first proposed stablecoin legislation was stablecoin seemed to be an easy to regulate, easy to understand and easy to handle subset of the cryptocurrency industry. There's $243 billion worth of stablecoins minted, mostly tokenized treasuries and about 120 million transactions per month. So it's a huge sector. It's the very first real world assets, just tokenized treasuries floating around. And it's something where well understood regulated financial vehicles handle it like banking or trusts or other things. So I think we'll get it done. Probably another month or two of squabbling, it'll get signed. The big one's going to be the market structure bill that will come in the second half of the year. And that bill is the security commodity that, that bills the taxes, potentially memorialization of the reserve and law. And there's no clear, concise opinion on that. There's a very wide variety of things to discuss. And there's kind of a third initiative that we've been pushing for, which is we need to update, modernize our securities laws in general. See, everybody's scared of being a security because being a security kills all innovation. And securities are not global instruments that trade 24 hours a day, seven days a week. They tend to be bounded to a jurisdiction to an exchange. And that was the view we had in 1933, 92 years ago. But what if we had like lightweight securities where they, they can trade globally and it's okay to be one of them, then that would open up the real world asset space. So tokenized real estate changes to how we sell equities, fixed income securities, and these things would be much better suited on token markets than traditional exchanges. So that's one conversation that the stablecoin debate has already sparked as coinbase. When they came in with the stablecoin debates, they said hey, we want to, you know, like find a way to get interest bearing stable points. And that was kind of dead in the water with that bill. But more broadly, what if we could open up securities regulation a little bit and it's easy then to turn a stablecoin into an interest bearing instrument and trade it globally without owners registration regime.
- [07:06]
Interviewer
So Charles, the project that we're doing together at Consensus is around privacy.
- [07:13]
Charles Hoskinson
You know, when I look at, even.
- [07:14]
Interviewer
When I look at stablecoins I kind of look that this is the future of Internet money, right? AI agents transferring little bit back and forth. And we're going to need some way to protect ourselves in that. How does Midnight specifically, which I know is a product that you're very proud of and put a lot of your own effort and money into, how does it help solve the challenge as we move into this new Internet age, especially with AI?
- [07:37]
Charles Hoskinson
So the big challenge with the crypto industry in general, I'd say there are three demons we have to slay for mainstream adoption. And the number one demon is this concept of privacy. So the issue is that we did a really great job as an industry building public ledgers. And that's awesome. And everything you put in it, it's immutable, it's time stamped, it's irreversible. What Satoshi wanted we got and we overdid it. So the problem is there's all classes of assets and activities that you probably don't want the entire world knowing for the rest of time what you did. For example, would everybody want their Amazon transaction history being publicly known or every Google search or your medical records or things like that. So it's kind of obvious. But look at the stablecoin space right now. All these tether transactions, all these circle transactions, that 120 million, they're all public and trackable. That's basically a panopticon of financial surveillance. So you need to build a private side to the system in addition to having the public side. And the issue with that private side is then it invites all these second, third, fourth order conversations about well, how do you regulate that, how do you build selective disclosure, how do you identify people, what level of proof is required to know that this is compliant. But it's a necessary thing for real world assets. So Midnight as a program has been going on for about six years at input output, and then we spun out the engineering side into a subsidiary called Shielded. And then just recently, the Midnight foundation got started under Fahmi Syed, wonderful friend of mine. And it now allows us to kind of centralize a lot of the bootstrapping of the ecosystem in one place. But the goal here is to solve the second problem in addition to the first rational, probably privacy, with what are called cooperative economics. So because it's not good enough just to have a privacy framework and it's not good enough just to have identity, you also have to have a situation where you acknowledge that network effects are network effects. No matter how much money Microsoft spends, they don't seem to be able to break up that Google search monopoly. And similarly, if you look at all the dapps on Solana, Ethereum, if you look at the network effect of Bitcoin, it's very unlikely that a cryptocurrency, especially a new one's going to come along and in a few years time be able to steal all those users, all that volume. And that's the wrong thinking. It's adversarial. Instead, what you got to do is say, well, how do we be cooperative? How do we enter a new realm of cooperative economics? So one of the hallmarks of Midnight is it works with most of the major smart contract systems. So it talks to Solana, it talks to Ethereum, it talks to Avalanche, talks to Cardano, talks to BNB and XRP and so forth. And the idea is that developers there could extend their infrastructure and pay transaction fees with their underlying currency. So if you're an Ether user, ether holder, you're ether developer, you can spend Ether for that transaction. And the same for Solana with Sol and Bitcoin and so forth. And the magic of that is then people stop viewing this as separate stuff. They view it much more like a developer in the AI space would view OpenAI. Let's say you're building like spelling book for, you know, lawyers, and you want to build the ultimate thing for law firms to use to read contracts. Are you going to go and build your own large language model like Elon Musk and start a $100 billion data center and all this stuff? Probably not. What you're going to do is you're going to call OpenAI over an API, it's going to do all this intelligence stuff, and then you'll have whatever stuff makes your business model work on your side. Similarly, do you really want to create your own stark system and your own privacy layer and your own disclosure system? It's a lot of complicated mathematics. I'd rather as a developer just pay a transaction fee and call it through an API. And that's what we've been trying to do with Midnight.
- [11:04]
And I think we've made enormous progress there. And the last thing is, how do you do a distribution where you get rid of the Ponzonomics? I was at Ryan Selkis conference, Massari's years ago and I coined that term on stage with them. And they say, why don't people like Cardano? I said, because we don't have the Ponzonomics. We didn't do a VC raise or anything. So nobody had any ownership of it. So I said, you know what, instead of doing an ICO or venture capital, I'll just spend my own money, build it, release it, finish, and do an airdrop to these eight different chains. So the distribution, 37 million people. And so the odds are people listening to this probably already hold it once the airdrop happens. So if you like it, great. If you don't like it, well, put it in a bucket or something. I don't know, it's your decision. But I think those things solve the big problem. The rational privacy, this cooperative economics, you know, getting rid of the Ponzonomics and pulling those pieces together, it's going to change the industry because suddenly we can now have a role of assets, we can have supply chain, we can have secure voting systems, you know, we can have health care record systems, we can have financial systems which are much more nuanced, where you, your accountant, your cfo, your organization gets to see one set of books, but then the world sees another. But you preserve everything that makes cryptocurrency special. The auditability, the, the verifiability, the provability of things. So once I give you the record, you know, it's never been tampered with. You know, it actually is real, it's time stamped, these types of things. So it's really exciting.
- [12:24]
Host
You mentioned a lot of different ecosystems there working together. I'm just curious to get into your head and hear about how you're thinking of the future of this industry. Do you imagine some sort of consolidation will all of these ecosystems that you know are featuring here, that we're about talking, talking about here at this desk exist in 10 years from now?
- [12:43]
Charles Hoskinson
Well, 1.4 million cryptocurrencies have been launched since I've joined the industry and 94% of them are dead. So obviously there is a Cambrian explosion, a Cambrian extinction event that happens. But you know, to be useful, you have to have good governance. To be useful, you have to be adaptable as like a complex adaptive system and resilient and grow. And ultimately you have to have a community. You have to have people there. That's why Doge will never die, Bitcoin will never die, because there's an extremely strong community and they're able to, generation by generation, keep that ethos going. So what we thought a lot about is how do you bring people together and give people strong incentives to work together and how do you build communities that are self replicating and self reinforcing? Some people crack it like Ethereum did and Cardano did and they have a durability and purpose that you just don't normally see with most projects that launch and you can't astroturf it. You can't go and just open up your checkbook and pay people a lot of money and somehow they love you. That's a transactional relationship. They'll be there until they're not and then they'll look for the next big thing. So really, community building is the core of it. The other is philosophy. You have to have something to believe in. People when they talk about Cardano, they say, hey, we love the economic, political and social systems of the world being subject to change. We love the idea. We have a constitution, we have a vote, we have an on chain governance system. We actually have a say. We have on chain treasury and we get to decide year by year what the roadmap's going to be, what the budget's going to be. We love the fact that the people involved legitimately want to change the world and actually try to find everyday businesses and governments to adopt that. It inspires people, it keeps them going around, especially in the bear market where everything's really sad and depressed. Oh, bad news, bad news. This guy got sued, this thing happened. Bull market's easy to keep people excited because there's an economic incentive. But over the long run, you only survive if you have good philosophy and good community.
- [14:35]
Host
Charles, thanks so much for joining us at the desk. It was such a pleasure having you here and we'll see you around.
- [14:40]
Charles Hoskinson
Absolutely. Thank you so much.
- [14:42]
Thank you, Charles.
- [14:43]
Host
That was Input Output CEO and founder Charles Hoskins.
- [14:57]
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