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The Agentic Economy: How AI Agents Will Transform the Financial System with Circle Co-Founder and CEO Jeremy Allaire
00:44:00
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Podcast Host
Foreign.
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Interviewer
We have Jeremy Allaire, the co founder and CEO of Circle. We'll be talking about cryptocurrency AI, agentic payments AI evolving on the blockchain and a variety of other topics. Great. Well, thank you so much for joining us today. It's a pleasure to have you.
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Jeremy Allaire
It's great to be here. Thank you.
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Interviewer
So maybe we can start with you just giving a quick overview of Circle, what you do, how you approach the world. Because I think we're going to be talking a lot about stablecoins, crypto AI and how all these things tie into sort of the agentic future. But I'd love to just start with sort of origins of the company, what you all are up to and we can go from there.
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Jeremy Allaire
Yeah, for sure. So yeah, Circle's been around for a while. I co founded the company over, yeah, 13 years ago or so 2013. And it really, at inception I was really excited about this idea that we could create a protocol for dollars on the Internet. And I had been really excited about what was happening with technologies like Bitcoin and had been, you know, working on kind of Internet infrastructure for a long time and got really excited. Like if we had like a protocol for dollars on the Internet that you know, potentially we could have a way to store and move value, you know, instantly, globally, frictionlessly, at no cost ultimately. The other idea that we were really excited about back then was this idea of programmable money and the idea that eventually these, these networks, blockchains would become like operating systems and you could actually have machines that intermediate economic activity and financial activity on the Internet, including like autonomous software machines. And back then we didn't have generative AI or anything like that, but this sort of idea of kind of commoditizing the kind of payment utility layer with like very safe digital dollar digital currencies and then having like programmability of that with machines that are kind of tamper resistant can run on the Internet. That's what kind of drove the founding of the company. And the view was like if we could do that, we could actually improve the financial system, make it safer, make it more accessible, make it more efficient and kind of derive new utility from money that we haven't had before. And so that was sort of where,
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Interviewer
why is the dollar aspect of that important? So if you look at a lot of the things that happened in cryptocurrency in the early days, it was really about creating things that were divorced from the traditional financial system if possible or were not dollar centric. So for example, Bitcoin was in part a response to the great financial crisis and the view that all sorts of weird bailouts happened there and therefore we needed some alternative sort of financial infrastructure for the world.
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Jeremy Allaire
Yeah, so I think, so I actually, it's what's very interesting is like I, I, I had, you know, I believe in kind of Austrian economic thought. I was, you know, studying Austrian economic thought like in the early 1990s for, for a very long time. And so I've been interested in sound money theory. And actually it was study impact of the global financial crisis that, that drew me into this because my view is like there has to be a way to build like a safer financial system. And the key issue there was I was interested in this idea of full reserve money. And in some ways Bitcoin is full reserve money because you, you, you know, you, you kind of, there is no way to fractionally lend Bitcoin per se.
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Interviewer
Full reserve money means currency that's backed by something hard behind it, some asset.
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Jeremy Allaire
Doesn't necessarily mean it's a hard, hard, hard back. Full reserve money is different than say fractional full reserve banking, I should say is different than fractional reserve banking. And so back in there was another major economic collapse which was the Great Depression, the run on all the banks and all that fun. And in the 1930s there was a really big debate about what's the right construct for the banking system and the financial system. And there was a proposal from a group of economists called the Chicago Plan. And the kind of ringleader was a Chicago economist. Actually it might have been a Yale economist or Princeton at the time. But Irving Fisher, who wrote a book called 100% money, and that idea was that full reserve money was essentially government obligation money. So it's still the obligation of the government, like the US Government in that instance, but that essentially you can have that and you can hold that, but you can't take that and then fractionally lend against it. So you have kind of a full reserve and you can only lend full reserve money. And so that was a big proposal for how to structure the way the financial system worked. And it was actually lobbied very, very hard against it by the banks. And the banks really liked fractional reserve. They liked to be able to have the inherent kind of leverage and risk taking and instead convince the government to establish, or they collectively, with the government's sanction, established an insurance company called the Federal Depository Insurance Company Corporation. And so that was a kind of corporate insurance model, but the risk taking still existed. And so we've continued to kind of face those issues. The great financial crisis was an example of 30x leverage, 12x leverage, 14x leverage against these sort of base layer. And so my philosophy has been, well, right now, in terms of general utility, our existing economic system, it does depend on really major reserve currencies like the dollar. And my view is like that's going to continue for a while, maybe 30, 40, 50 years. It'll continue for a while. But what we want to do is construct a system that is in fact safer. So a full reserve form of money. And that's what stablecoins are. That's what dollar stablecoins are. And in fact with the Genius act that passed last year, it's sort of codified in law. Like you can't do anything with this. It's like this very narrowly bound, narrow money kind of model. And so I think in some ways like that original vision we've now got established in laws around the world and now we have to do more with it. We have to make it extraordinarily useful. You can lend that form of money as well, but it's just that you can't do fractional reserve.
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Interviewer
So what are stablecoins currently backed by? My understanding is, for example, the stablecoin companies are big buyers of Treasuries or US Treasuries and other sort of instruments like that. Could you explain a bit more what tends to back these things?
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Jeremy Allaire
Yeah. So up until really the last couple of years, stablecoins like USDC had to be always one for one, redeemable against very safe liquid assets. And we couldn't take risk outside of what was permitted under the kind of payment system laws that regulated us. And so that was circle. There are other people who didn't take that approach and you know, but you know, sort of fiat stable coins in this way were back that way. Now laws have now come into play in major jurisdictions, whether it's in Europe or Japan or the US et cetera. And we've been following the whatever laws apply to us, you know, whenever they apply to us, obviously. But what that's really led to is an architecture which is basically what's now federal law, which is really holding only short duration US government Treasuries or treasury collateral that is overnight with, with like global banks. So that's, you know, very safe overnight treasury collateral for cash and then you know, some amount in cash that is for kind of immediate liquidity. But in that case it's sort of holding it in these sort of big custodial institutions like bank of New York that holds hundreds of trillions of dollars, et cetera, so of assets. And so um, that is essentially the architecture of usdc and we're very transparent. We have daily transparency onto most of it through a system we set up with BlackRock.
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Interviewer
But so USDC is like a crypto token that anybody can effectively purchase and in exchange for $1 you'd get one USDC. And the USDC continues to be backed by a government treasury like a short term T bill or some cash or some exchange.
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Jeremy Allaire
That's right. It's backed by Treasuries, repos and, and, and, and short duration T bills. The average duration tends to, of the T bills and that portfolio tends to be around like 13 days. So it's super, super liquid and kind of, it sort of allows it to be treated as like a cash instrument.
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Interviewer
What do people do with it? What are the main use cases of usdc?
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Jeremy Allaire
The, the conception of this obviously is like a general protocol for dollars on the Internet. And in fact the whole design is this is like a general purpose, general architecture money. And we actually see it used, you know, from at the very smallest end like someone who's paying you know, 25 cents for a digital object in a digital game that's built on a blockchain that would be like one end or even. Now we're starting to see and we'll come back to this topic I'm sure. You know, AI agents that are paying for the output of essentially the AI tokens of another AI agent and they're you know, spending again just you know, a dollar, 50 cents, 20 cents etc. So super tiny transactions at one end all the way to the largest electronic trading firms in the world that do huge amounts of, of capital markets activity who are, you know, settling multi hundred million dollar transactions. And the powerful thing is it's all the same. Just like you know, if I send you an email, you know, the, in my email's like hey, this is what I had for breakfast. The payload of that is the same as if I sent you an email that had like a CAA dossier attached to it. Like USDC doesn't care, you know, so as a, as a general architecture it can be used across a huge range of things. And we have everything from merchants in Stripe and Shopify that are using it to Visa actually using it themselves to actually move money on their own internal network instead of using the legacy banking system to lots of kind of neo banks, remittance companies that are using it as a way to move value you know, a great kind of B2B fintech ramp. Just yesterday launched, you know, USDC as like core to their treasury system. You can use it to pay invoices, pay anywhere.
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Interviewer
My sense of some of the reasons people do this is, number one, you can do it at any time. So for example, if I send a wire, I know a lot of crypto companies, for example, that when they raise money, they ask you to send usdc because instead of hitting a wiring deadline in the afternoon, you can wire the money on the weekend. You can send money anytime.
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Jeremy Allaire
It just works the way the Internet works, right? I mean, our expectation is like, I can pick up, you know, my WhatsApp or I can pick up my WeChat and I can just communicate in video with anyone, anywhere, and it just works, right? And my expectation is like, hey, if I make a piece of software, like, and I put it on the Internet, like billions of people can access it. I don't need to do something special. And I think that's, you know, basically this is just Internet native and it runs on Internet protocols. And so it behaves the way that any piece of data or content behaves on the Internet, which is what our expectations are. You know, most people's expectations are.
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Interviewer
Yeah, I was just trying to enumerate a little bit of like, what makes it a superior instrument for all sorts of purposes. And one is 247 accessibility to maybe some form of transaction fees relative to the volume. And then three is. My sense is it's also a way for people to participate in US Dollars who often would not have access directly. And so they use crypto as almost a proxy to.
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Jeremy Allaire
Yeah, for sure. I mean, I think store of value is a really big thing. And we see that. And in fact, like the law that was passed last year, the genius act like a big motivation for the administration. And this is something that we've been proposing and kind of pushing for a long time, is that this is a way to continue to export the dollar. And. And so we're now exporting digital dollars and we're doing that all around the world. And that's like strategically important to the United States from a geopolitical, geoeconomic perspective. But, you know, there's other things too, which is this comes from my own background as well, which is this is programmable money. There's never been programmable money like you actually have. Essentially, like our stablecoin network is just a public API on the public Internet that anyone can plug into and use. And so if I'm a developer and I want like Global Dollar settlement and I want to provide that as a capability to my users. I don't have to ask permission. I can just go connect to that Smart contract, connect to that public API and boom, I have now an application with Global Digital Dollar Utility. And so. And smart's really different. Yeah.
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Interviewer
And Smart Contracts is basically a way to write code that's wrapped around this money that allows you to effectively have a virtual contract online. So you can say under XYZ conditions, pay this out, we're going to generate a financial instrument off of this. And it's just kind of based on this other la that you can plug into effectively.
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Jeremy Allaire
Yeah, that is definitely the case. And I think the idea of programmable money was again this early idea that we had. And Smart Contracts was sort of the original expression. But when I looked at that 13 years ago, my view was that blockchain networks are operating systems. They're going to be operating systems. And so when we think about operating systems, we have lots of paradigms for that. We have mobile operating systems. The Web was itself kind of an operating system with a runtime and a language model and an object model. You know, clouds became kind of like these big virtual operating system environments. AI foundation models are now essentially operating systems that execute tasks and other things. Blockchains are operating systems and they have compute engines, they have virtual machines, and you can write Turing complete code, you can write software that runs on these. But there's some really key attributes that make them different. So the first is that the code is sort of tamper resistant. It, once it's published, it's sort of like out as like a machine that's tamper resistant. The second is it's perfectly auditable. You can audit every single input and output of that machine, of that code in real time because it's all on
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Interviewer
a public blockchain, so anybody in the
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Jeremy Allaire
world can look it up. So it's like all the compute is public accessible, it's open source by nature, and that's really powerful as well. And it also has these sort of essentially kind of transaction and compute integrity assurances. And this is really key. And it ties back to AI as well, which is like you want assurances that the machine is doing what it said it's going to do. And you want kind of the inputs and outputs to be provable and the state of the machine to be provable. And these are things that it was not easy to do in the past. And so these network computers, these operating systems now provide for that. And as we're moving into the AI driven economic system. Right. Having those mechanisms becomes even more important. It happened to be important for financial transactions where you know, integrity proof, audibility, verifiability are like intrinsic in a fiduciary apparatus. That was like really key. But now when we're dealing with, you know, kind of autonomous actions in the economy that also becomes extremely.
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Interviewer
It would be great to talk about that because you know, geez, probably seven, eight years ago me and my friends used to speculate that the most likely place maybe that AGI would emerge, which again I don't think is going to be the case in the future, would be off of the blockchain. Because you had these effectively agents, they're very simple agents, even running back then in some sense in terms of doing transactions on the blockchain. And you had these economic games that were multi turn economic games to some extent that these actors could play. And so we said isn't that a great place to basically evolve intelligence? Right. Because you have these multi turn games, you have economic incentives, you have game theory and learn all sorts of lessons off of that. Obviously there's a very different world now with sort of generative AI and foundation models. But I'd love to hear your view of where is, where, where are agentic payments going?
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Jeremy Allaire
Yeah.
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Interviewer
And is it going to be crypto? Is it going to be more just traditional banking systems? Is it a hybrid? Like what do you think are the drivers of that?
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Jeremy Allaire
I mean there's, there's a lot in there, there's a lot we could talk about. So, so maybe first, like, I think, you know, my own view is that, you know, we're going through a pretty steep kind of curve right now. We're like in, in the, you know, about three months into a pretty dramatic shift in kind of the fundamental capabilities of technology. Probably the most dramatic that I've ever seen in my own time in technology. And I think, you know, that shift is, is effectively going to mean that a couple things in my view. So the first is that more and more of the actual work that is done in the real economy, especially in, in, in, you know, kind of the, what we call the white collar economy, but, but in, in many, many areas of service and delivery and, and, and so on. Like so much of that is going to be conducted by AI agents. And so AI agents conducting the work, AI agents collaborating with each other, AI agents, you know, consuming services from each other and kind of, you know, purchasing effectively specialized intelligence or output, et cetera. Like this is, we're on a really interesting curve there. And so the kind of agentic economy is being born as we speak. And in that world we need a different infrastructure for the financial intermediation layer.
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Interviewer
Why?
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Jeremy Allaire
Well, we don't have an infrastructure that can support that. We don't have an infrastructure that can work globally, interoperably, instantly that can be programmed through software layers by arbitrary pieces of software that doesn't exist. We need an infrastructure where the agents themselves can dynamically create and spin up different kind of financial endpoints themselves. We need transactions that can scale potentially into the billions or trillions of transactions. We don't have that. Uh, we also need, we need the ability to kind of handle transactions at micro scale as well. So you know, for example, consuming a certain amount of intelligence might be $0.05 or $0.10 as it is with these. And so we need, we need that to work, we need that to work in real time again between any piece of hardware software anywhere in the world.
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Interviewer
Isn't it really all that though stuff that people have been talking about for a long time in terms of just crypto, like the benefits, it hasn't really
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Jeremy Allaire
become possible until really just the last couple of years. So you, it really took kind of third generation blockchains to actually deliver on this. So now today you actually can look at transaction volumes of usdc, which is by far the most transacted digital currency in the world, way more than anything else. And transaction volumes have grown incredibly and off of a monetary base it's also growing, but the transaction volumes are growing way faster. And that's because money velocity has picked up. The cost to transact is now subcent reliably. And so when you take out the cost you can do more transactions. And so with Ark, which we can come back to, we now have an infrastructure where we can conduct transactions for a millionth of a penny, which just was never feasible before.
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Interviewer
So yeah, tell us more about Ark, because I know that you fix, are rolling this out as your own blockchain, et cetera. I would just love to learn more about what it is, what are the use cases, what differentiates it.
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Jeremy Allaire
I would love to talk about that. I want to finish one other thought on this sort of agentic piece which is I think in addition to this sort of financial infrastructure that's needed in this world and the role that will play and it ties back to your actual kind of question and stuff that you were thinking about before is my own view is that agents, and seeing what happened with OpenClaw and Multbook and all this Stuff is all really interesting because it showed that you could actually see emergent forms of cooperation, of interaction, of engagement amongst AIs. And that's pretty powerful. And clearly we're at the front edge of that. There's going to be a lot more of that. And so if you have AI agents that are from around the world, they could be generated from lots of different models and LLMs and the like. And they need to kind of coordinate, they need a medium, a trustworthy medium where they can do that, where they can instantiate an entity, where they can store value in that entity, they can execute and arrange contracts that intermediate the work and the tasks, and that where all of it is real time, mathematically and computationally provable. And so blockchain infrastructure now actually gives us the building blocks for. When I say agentic economic activity, most people think, oh, that's E commerce or payment. It's not. Agentic economic activity is actually how does the organization of what we used to think of as labor and capital, but essentially how does this organization of compute work happen? And what kinds of corporate forms might emerge in that world to do that? So I'm actually quite interested in that. That does tie to ark, because that's a. A design surface that we care about, which is basically, we describe ARC as an economic operating system. And this goes back to a comment I made earlier, which is these networks are operating systems. And we're moving now from the kind of early adopter era, which you're very familiar with, which was mostly around speculation on different things. There were some interesting things like NFTs or whatever, but we're now moving very squarely because of stablecoins, into the real economic activity side of this. And I think my view is that as we go forward, the substance of what we think of as contracts, the substance of what we think of as corporations, are going to be software machines themselves. And so we're going to see this progression. And so ARC as an economic operating system is conceived of as a compute environment for laying down all of the building blocks of economic activity, whether that's storing value, moving money, or instantiating a corporate form, or manifesting and intermediating complex contracts. A lot of this stuff, which was conceptual a long time ago, is now real. And we have a legal basis for it. We have a regulatory clarity for it increasingly. And it's interesting is that the drivers of this machine economy are actually machines. And so our view is ARK is designed for this moment, which is a moment when machines are going to play a larger and larger role in all of the output of the economic system.
- [22:16]
Interviewer
So if I look at a lot of the blockchains that people have found exciting over the last few years, obviously there's bitcoin, which was almost purposefully designed in a certain way to make it a little bit less adaptable to all these new things that are happening now. Yeah, you know, Solana, Ethereum, et cetera, have been the, in the past, the traditional places that people have thought about ways to build smart contracts, to build a lot of the types of things that you just described. What do you think is the difference between some of these more traditional L1s or blockchains and sort of what you're doing at Ark?
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Jeremy Allaire
Yeah, so a few big things. I think the, the first is that, you know, as, as, as I think you were sharing or we were talking about before we started recording. But like, you know, I think a lot of the designs on blockchains from, from, let's call it the early adopter phase, a lot of it was sort of like, hey, we're going to build something that is completely, you know, censorship resistant or outside of the reach of governments. It's sort of like we're building an alternative universe. And, and that's like the goal. And, and I think, you know, decentralization is itself a good goal. But I think as we move from early adopter to sort of mainstream scaling where, you know, whether it's, you know, a major company like Walmart or, or it's, you know, a household that's thinking about like how they store their wealth, the, the, the intermediaries, and there will continue to be intermediaries. We're not all going to be your own bank. The intermediaries have obligations in terms of the, the, the, the kind of like robustness of the infrastructure that they have to run. And so ARK is actually set up with a number of features. One is that it's actually a known validator set. And so the, the infrastructure operators of ARK are major financial infrastructure companies. And so, and those are companies that are held to these very high standards for infosec compliance, reliability, availability.
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Interviewer
What are some examples of some of the validators on your network?
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Jeremy Allaire
So we haven't announced the validators yet, but that will come in due course. But you know, the model at a, at a high level is that you have financial companies, financial infrastructure companies, including possibly like large technology companies that are responsible for running the infrastructure. So it's a distributed infrastructure. But because of that we're able to provide assurances, we're able to Provide assurances that like the bad guys aren't running your transactions. And we can also run assurances that transactions actually have settlement finality. They can't be hard forked, they can't be reorged. And so you can get what's called deterministic settlement finality. And that's really important, whether it's a security or a piece of cash or whatever it is in essentially hundreds of milliseconds. And that's really important. The other piece is that it's sort of designed with real money as the foundation. So there's not like a volatile gas token. USDC is actually the default native token, which is now under the law, essentially like a legal form of electronic money. So you have real dollars as the way that people understand. And so to a company that's like doing this, it's like I pay AWS credits, I understand how to budget for that, my treasury, my operations, my compliance, et cetera. So this allows basically for like actual usage to be make sense both to the user, to the developer, to the corporations, the FIs that deal with this. So that's really important. And then I think the other is like we've been building in a lot of primitives that are important to the way that payment systems work, the way that capital markets work, the way that the privacy requirements that are needed in some of these cases, but still allowing for compliance to happen. So we've kind of purpose built this for a different kind of set of participants who need to run on it. And we've had the advantage as circle of working with many of the leading financial institutions that are getting into this space over the last couple years, whether it's the Visas or the blackrocks or the bank of New York Mellons or all these types of companies. So we've had, we've been able to work with them and we've been able to work with governments around the world to hear like, hey, like central bankers all over the world, like what's important as you think about like allowing this Internet infrastructure to run the financial system. And we're kind of trying to incorporate in a lot of the kind of requirements in the sense that they have. And so that's very different. I think it's a different design space and I think these new distributed network operating systems will need to support the real economy's activity, not a kind of shadow economy. And so that's just substantively different. There are a lot of other technical things I could talk about that are part of it, but those are I think, helpful Just in terms of framing
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Interviewer
this, what else do you think is interesting that's happening in the crypto world today outside of stablecoins and sort of related infrastructure? Because I know that there was a whole wave of things that people were doing on the infrastructure side. There was ZK rollups, there's a variety of approaches over the last few years. Besides stablecoins, is there anything that you think was especially interesting or that will be impactful or a lot of these things kind of infrastructure looking for solutions or. I'm sort of curious how you think about crypto at large right now.
- [27:24]
Jeremy Allaire
Yeah, I mean look, I think there's a lot of attention that has gone into kind of what I'll broadly call kind of scaling models. And so if you take as your kind of design center that these network computers and these network computers are really good at establishing record keeping that is kind of public and available to all and to perform computing on those records that's public and available to all as a general utility space that's like super, super interesting. And so a lot of this has been like, okay, well how do we make sure that that can scale? And so as an example, in a world of billions of AI agents that are swarming and doing other things, scaling this is actually extremely important. So ZK roll ups as an example or zero knowledge proofs more broadly as a way for proving compute, which allows you to do compute off chain and then prove it to the on chain, that's actually really important. So these sort of off chain or trusted execution environments and other things that provide cryptographic proofs of compute or other kind of assertions becomes really key. So that actually a lot of that research is now becoming extremely valuable. The same thing goes for a lot of that research and development is critical to enabling privacy. And so we want, you know, we want all the benefits of, of kind of open, interoperable, kind of permissionless infrastructure, but we also want to be able to have privacy. Like corporations don't want everyone to see what they do or we don't want to be doxxed and like all this kind of stuff. And so that's now coming into real production that was researchy for a long time. Arc Day 1 is shipping with built in privacy primitives which is again the result of a lot of work for a long time. And so those are important pieces. And then I think as kind of more large scale financial infrastructure comes over to this as we move where the New York Stock Exchange or the biggest derivatives clearinghouses are like yeah, we're going to move to an on chain world, the scaling stuff becomes really, really critical. And so I actually feel like now more than ever those big work streams are coming online. And if I use as a reference point, I spent a long time building on the early Internet and the early 90s and the early web and all this stuff all the way up until 2001. For me it was 10 years and it was still, it was like awful still. Like it just like you kept grinding and it was like, how do we make this useful? How do we make this useful? How do we make this useful? And then you had, you know, a whole bunch of things happen that were in the background, like, you know, wifi, broadband, you know, you finally got like usable other Internet connected devices and you could actually really start to do stuff. So you could actually, actually deliver software over the Internet, you could actually deliver media over the Internet. You could actually do communications, like real time communications over the Internet. But it was like 10 years in the desert or longer before you could even get there. And I kind of feel that way about the blockchain space. Like it's been a dozen years or so and, and now we're kind of having like the broadband moment and the demands of society and the financial system, the agentic economy, all of that is sort of coming together at a really interesting time.
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Interviewer
I guess one thing that people have been talking about for a long time in the crypto world is securitization of other assets on the blockchain.
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Jeremy Allaire
Yeah.
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Interviewer
And so that would be stock. So should you be able to buy fractions of Berkshire Hathaway.
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Jeremy Allaire
Yep.
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Interviewer
Using crypto.
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Jeremy Allaire
Yeah.
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Interviewer
And should that be globally available? Given the success of USDC and other stable coins, that's made it even more interesting in terms of a provable model. When do you think that stuff will happen and what approach do you think will be taken and how does that tie into the Zintic world?
- [31:12]
Jeremy Allaire
It's totally happening. There's a great site, if people are interested, called RWA xyz. Real World Assets is sort of what that refers to. RWA xyz. I'm very proud because there are tokenized stocks that are out there and the most active tokenized stock today is not Tesla. It's not the S and P index, it's actually circle. So that was cool to see.
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Interviewer
That's cool.
- [31:36]
Jeremy Allaire
We also have seen this growth in tokenized money markets. So basically on chain treasury bills we actually operate the largest tokenized treasury product called usyc, like US Yield Coin. That's grown quite fast as well, and we run the largest tokenized euro as well, eurc. And so we're definitely looking at this broadening out. I think there's a huge effort right now at every layer of the whole financial system stack to go into tokenization. So all the way down at the layer of the people that keep the records of the stock, which is if you're familiar, the computer shares of the world. Of the world up to like the, the layers that like are the depository clearing systems like the dtcc, which you know, most people don't know, but it's actually like the back plane of how all securities work. Like they're moving to tokenize and then the actual like brokers and exchanges want to take those and support those tokens and trading on those tokens and distribution of those tokens. So nasdaq, New York Stock Exchange, all of them, they're all doing this as we speak. And as we speak the SEC has been providing clear guidelines on how to do that. And so they actually issued guidance just about a month or so ago that basically said here's what you do in all these layers. Here's, you know, here's your obligations. And so we're at a point where like technology and then the market's desire is creating that. And right now the interesting thing about things like tokenized stocks is mostly it's interesting to enable people not in the US to access these. That's where a lot of the growth has happened because not everyone has access, you know, the other way.
- [33:17]
Interviewer
Right. There used to be Chinese stocks that were basically held in third party instruments that you could purchase.
- [33:22]
Jeremy Allaire
Yeah.
- [33:22]
Interviewer
On stock exchanges. So you could participate in some of the Chinese listed.
- [33:26]
Jeremy Allaire
Right? Yeah, no, there's, I mean that's definitely some of the packagers of like ETFs and funds and stuff have kind of mirroring for sure. But you know, I think like this is similar to like, you know when, when we went through like the web becoming available or broadband really hitting the scale. A lot of times people just think, oh, I have this existing product, I can now put it over here. Like here's the TV show, I'm going to put the TV show over here. I think what becomes a lot more interesting or here's the game. It's this game that used to be on a CD and now you can download it or whatever. I think the really interesting thing is what can you do that you couldn't do before? What kind of utility gets unlocked? Whether it's fractionalization or how you can borrow and lend on these things or how you could package them together in different ways and enable an AI. AI could play a pretty significant role in that as well.
- [34:17]
Interviewer
Seems like it could really tie into some of the prediction market stuff as well that's been happening because to some extent the world's biggest prediction markets are actually stock markets and so. Or financial markets, I should say, more broadly.
- [34:27]
Jeremy Allaire
Yeah. And prediction markets themselves are becoming kind of parallel infrastructure for people who participate in stock markets. Right. In fact, the biggest adopters, it seems, of the market makers of prediction markets are actually the people who are trying to figure out what is reality and, and what does that mean for companies and equity and stuff in the interplay or whatnot. And yeah, I mean, we're seeing that. I mean, USDC powers Polymarket for example. And so the same guys that are trading derivatives over here on oil or Bitcoin over here are also like, I'm moving my money quickly using USDC over here to figure out what's going to happen in some event.
- [35:09]
Interviewer
That's cool. The one other thing that I think has been happening a little bit recently is there's been a couple of papers that have been focused on basically tying proof of work into just generic inference work.
- [35:18]
Jeremy Allaire
Yes.
- [35:19]
Interviewer
In other words, can you tie those two things? So you're being very GPU efficient in terms of what you're doing, but also you can effectively generate incremental revenue through GPU usage while you're using it for inference for other purposes.
- [35:29]
Jeremy Allaire
I'm really interested in that. And I think again, a little conversation we were having before we recorded proof of work obviously was itself an innovation and sort of essentially the exhaust of the proof of work of Bitcoin is just the exhaust of energy consumption. And so it doesn't actually, in some ways it's waste, in a sense, the energy is waste. And so I think the idea of essentially inference compute as GPU inference compute as proof of work, and so the work itself is the inference and that as the underlying basis for proof of work. Cryptocurrency is pretty interesting and would be potentially something that could align with the kind of monetary principles of something like Bitcoin, but actually be productive proof of work. That's really interesting. And so my own view, and this is, I think goes back a long time, is like people have kind of axiomatically sort of assumed like, well, bitcoin is the thing, it got the network effects, it has all of this. And I've always said I don't know what we're going to be using in 10 years, we don't know. Now, Bitcoin has lasted a really long time, but I think the paradigm shift that we're seeing in energy infrastructure, in the performance of the conversion of energy into intelligence and the compute layers, and that it certainly opens up a new avenue to think about this that wasn't readily available 15 years ago.
- [37:12]
Interviewer
So if you were to give one piece of advice to agents, it would not be buy Bitcoin. I'm just joking. I have a better question. So in terms of, say we were to think out 10 years, what does that world look like in your mind? And obviously, we're going through a period of time, intense change.
- [37:29]
Jeremy Allaire
Yeah.
- [37:29]
Interviewer
I'm finding it incredibly hard to predict the future right now in terms of just what's going to happen in AI, much less AI plus crypto plus the global economic system, plus everything else. So, given all that aside.
- [37:41]
Jeremy Allaire
Yeah, exactly.
- [37:42]
Interviewer
What is your vision of the future?
- [37:44]
Jeremy Allaire
Yeah, well, I mean, a couple things I would say. The first is sort of the thing that everyone is debating right now is the pace of AI diffusion. Right. So what is the pace of AI diffusion and what does that then imply in terms of the kind of amount of change that we're going to have to deal with? And so that's all debatable. Right. You hear Dario debating that versus others and so on. But, like, it definitely feels like the diffusion limiters are, in some cases bureaucratic, in some cases legal, in some cases human risk or other things.
- [38:17]
Interviewer
Right.
- [38:17]
Jeremy Allaire
But we have these limiters that are there. But it does seem like the pace of diffusion is accelerating and will continue to accelerate, and that's pretty dramatic. And so I guess my own view, it's very rooted in my own political and economic philosophy, is that we have a real opportunity to create essentially new new social, political and economic organizational structures. And in many ways, we have to. There's a kind of. In these periods, whether it's the Enlightenment and the Industrial Revolution and other things, there's these periods where there's a new definition of the social contract. And that new definition of social contract is then in turn reflected in social, political and economic ordering and the mechanisms that we use for those things. And it feels like, to me, like we're going to be forced through that. And I think that's simultaneously terrifying and exciting, et cetera. And I am of the view that we are going to have a kind of lag effect between the disruption and the establishment of those new institutional forms. But at the same time, I actually believe new institutional forms are going to be emergent out of this. And so as I talked about earlier, like the formation of these kind of on chain organizations that have different forms of governance and contracting and, and a mixture of human and agentic actors like that seems like we're going to have a lot more of that. We're going to probably have huge proliferation of that. And it may be that those corporate forms are like the most productive corporate forms that we've ever seen in economic history. And then they'll need to be kind of like an overlay into the governance systems of political organizations and systems as well. My view is we're going to have simultaneously all around the world a renegotiation of the social contract and is going to require new systems of participation in economics and governance that we haven't had. That's like very high level mumbo jumbo. Y But it's also, you know, sort of how how I think about it at a high level.
- [40:44]
Interviewer
That's interesting. Have you ever read a book called Lady Amazes?
- [40:46]
Jeremy Allaire
No.
- [40:46]
Interviewer
It's like a sci fi book from, I don't know, 15 years ago about the post AGI world. And part of it is as a big enough block or demographic emerges in human society, an overlay AI agent that's observing everything spawns a specific agent that represents that viewpoint. That then is part of this sort of virtual sen. I see agents negotiating policies. So it's kind of this interesting view of how can you spontaneously spawn these sorts of systems from a governance perspective, which is kind of cool.
- [41:12]
Jeremy Allaire
I would love to read that.
- [41:13]
Interviewer
What is your prediction? So if you look at a lot of part ways of technology, their actual impact to GDP has been difficult to tease out. Right. So the productivity gains of the Internet versus actual GDP growth or things like that have been notorious and there's all sorts of reasons for that. It could be measurement, it could be deflationary aspects of some of these things. It could be a variety of things. How do you think about the GDP impact of AI? So if you think ahead five years and what do you think the global economy is? 10% bigger, 50% bigger, three times the size? Does that even matter as a metric anymore?
- [41:46]
Jeremy Allaire
Yeah, I mean I see this debated all the time and Cathie Wood's talking about we're going to have 10% GDP growth for the 2000-30s et cetera. I don't quite know what to think. I mean, I think it's quite plausible that the kind of giant leaps that we see in kind of productive output in a huge range of industrial to other commercial services, et cetera, really drives a very significant discontinuous jump in GDP at an absolute level. It'll have in many ways probably less meaning than we've historically had with gdp. And the kind of economic well being indexes that we think about like GDP will be the risk here is that GDP, effectively, like the GDP growth is a sort of capital capturing more capital at the expense of humans. That's the real risk. And so GDP growth generally has been a really great thing. And so the question is, will it remain a great thing? Do we have the new social contract to deal with that yet? But I guess my general view just sort of as a technologist talking about seeing what we see with diffusion and kind of other changes, it does feel like we have the potential for double digit GDP numbers in the 2000-30s. That seems not unrealistic to me. Not that that's going to be uniform all around the world, but certainly in large, large parts of the world. That seems very achievable based on what I see.
- [43:37]
Interviewer
Amazing. Thank you so much for joining us at no Priors. Super interesting conversation.
- [43:40]
Jeremy Allaire
Thank you.
- [43:43]
Podcast Host
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