Slate Money: The Crypto Episode – August 21, 2021

Overview of the Episode

This episode of Slate Money, dubbed "The Crypto Episode," delivers a comprehensive tour through the world of cryptocurrency, blockchain technology, decentralized finance (DeFi), and the regulatory landscape. Host Felix Salmon (Axios) is joined by co-hosts Emily Peck (Fundrise) and Stacey Marie Ishmael, alongside chief guest and crypto expert Maya Sahavi (crypto investor, Tel Aviv), to demystify crypto's hype, practical realities, and future prospects.

The panel aims to move beyond the well-trodden ground of Bitcoin speculation, dissecting the foundational technology of blockchains, the ideological motivations, the rise of DeFi, stablecoins, privacy challenges, crime, and looming government involvement. Listeners unfamiliar with crypto will find jargon explained, examples offered, and difficult questions tackled, resulting in a candid and multifaceted exploration.

Key Discussion Points & Insights

1. What’s Crypto Really Good For? (00:44–05:08)

• Beyond Get-Rich-Quick: Maya Sahavi emphasizes that speculation is the least interesting aspect. “If you want to play that game... buy your Bitcoin or Ether and forget about it... consider yourselves as though you've already lost that money.” (02:43)
• Crypto’s Three Pillars:
  1. Hard-coded Monetary Policy: Choosing crypto as a political (libertarian) act.
  2. Programmable Money: The revolutionary ability to embed rules and automate financial transactions (e.g., interest payments, treasury allocations).
  3. Permissionless Networks: No single authority controls the system—anyone can participate or build, immune in practice from centralized shutdowns.
• “Fintech” versus Crypto: While fintech enables easy cash transfer (Venmo, Robinhood), crypto aspires to create fundamentally new infrastructures and markets.

Quote:
"The entire concept of having programmable money is a novelty that despite 10,000 years of human civilization, we have never managed to create." — Maya Sahavi (03:38)

2. Decentralized Finance (DeFi) and Smart Contracts (05:08–09:14)

• Uniswap as an Example: Permissionless, decentralized trading. Anyone can list assets, and no central authority can stop trades. However, opens doors to worthless assets and trading by anonymous actors (possible risks: money laundering, unvetted participants).

• Addressing Criminal Use: Maya pushes back on the “crypto = crime” narrative:

  Quote:
  “A very small sliver of the transactions are actually criminally related. The transparency allows enforcement agencies to trace back all those transactions and... have a lot more information.” (07:00)

• Law enforcement often finds blockchains help in tracking criminals, as transparency is high compared to cash.

3. Crypto as “Dissident Technology” and Privacy (09:41–14:03)

• Empowering the Marginalized: Crypto can support activism in authoritarian countries (e.g., Hong Kong) by enabling un-censorable organizing and “shadow economies.”

• Blockchain 101 for Beginners: Maya breaks down the difference between coins, currency, and the underlying blockchain. She links the technology to transparency and real-time consensus, recalling the 2008 crisis’s lack of transparency as a use case.

  Quote:
  “It's like a level of transparency in finance that hadn't existed before is possible with this technology.” — Emily Peck (13:50)

4. Real-World Applications and Limitations (15:46–24:09)

• Comparisons to the Internet: Parallels abound, but as Felix dryly notes, "You've been saying that for 10 years." Practical, world-changing uses are still limited.

• Stablecoins Explained: Currencies pegged to the dollar (e.g., USDC), essential for stabilizing crypto markets, enabling remittances and business operations where banks won’t serve crypto clients. There’s money to be made investing stablecoin collateral, but their main use is as reliable, digital rails for broader crypto activity.

  Quote:
  “If you said that you dealt with crypto, you wouldn't be allowed access into the banking system. So... startups... found themselves being unbanked because of that business.” — Maya Sahavi (19:04)

• Remittances—Promise & Peril: While sending USDC globally is easy, cashing out in fiat is still arduous due to regional banking limitations.

5. Regulation: Two Parallel Cryptoverses? (24:09–34:20)

• Split Worlds: One track (e.g., Circle, FTX) seeks U.S. regulatory approval; another (e.g., Binance) deliberately operates outside U.S. control. U.S. regulatory influence is still dominant globally.
• Stablecoins and National Security: The U.S. dollar’s dominance in crypto paradoxically strengthens its global position, but also raises issues of financial stability, prompting regulatory discussion.
• Facebook’s Libra Fiasco: An example of how quickly regulators can move now; large established players have trouble breaking in, and regulation arrives much faster than during the early Internet era.

6. Identity, Surveillance, and the Future of Power (32:27–46:55)

• Potential for New Gatekeepers: As the crypto space matures, new powerful gatekeepers may take the place of traditional financial institutions. There are risks of social and financial identity being too tightly linked, potentially fueling surveillance and privacy erosion.

• Privacy Technology: Blockchain’s greatest strength for dissidents might be evolving privacy-preserving tools (like zero-knowledge proofs) which could one day be mainstream, not just criminal.

  Quote:
  "We're basically creating our own surveillance apparatus and foregoing a lot of our liberal right." — Maya Sahavi (34:20)

• Regulatory Complexity: The mishmash of U.S. agencies (SEC, CFTC, OCC, state AGs, etc.) makes coherent policy unlikely in the short term.

7. Hacking, Technical Risks, and Crypto’s "Battle-Test" Culture (51:47–53:26)

• Case Study: Poly Network Hack ($611 Million)
  • Even crypto insiders hadn’t heard of Poly Network until its spectacular cross-chain hack. Yet, the system’s openness enables rapid communal response (e.g., blacklisting addresses, sometimes negotiating with the hacker for fund return).
  • Raw quote:
    "This is like the battle testing of money in crypto. Everyone has an incentive to attack..." — Maya Sahavi (52:56)

8. The Future – “Crypto Listicle” and Real-World Stakes (38:56–45:11)

• What Changes Will We See?
  • 10 years out: Crypto-enabled logins and micropayments, seamless identity and content access, creator economy tools beyond today's Patreon/Substack, more potent privacy tech.
  • Felix and Maya agree: traditional payments (buying coffee, etc.) are not a breakthrough use case—existing systems often work better—but programmable financial products, identity, and interoperability are key.
  • "Payments is the one area where crypto has gone absolutely nowhere... but are you with Ben [Horowitz] on this one?" — Felix Salmon (41:31). Maya is not; she expects payments to remain a weak use case except for microtransactions and programmable assets.

9. Unresolved Tension: Privacy vs. Surveillance

• Crypto for Freedom or for Control? Technology can be used either for dissident empowerment or for totalitarian oversight—the outcome hinges on regulatory and political choices still to be made.

  Quote:
  “I can very easily see it being used by some authoritarian regime in order to track everything and everyone. But on the other hand... privacy technology... could become a tool to better... obfuscate a lot of the transactions and our data in the real world.” — Maya Sahavi (46:55)

Notable Quotes & Memorable Moments

• On the speculative mania:
  "That's the least interesting part... Buy your Bitcoin... and consider yourselves as though you've already lost that money." — Maya Sahavi (02:43)
• On DeFi and anonymity:
  “Any one of the traders is unidentifiable... you don't know whether or not they could even pass a KYC designation.” (06:06)
• On transparency as a law enforcement asset:
  "Criminals are rather stupid... Bitcoin makes it easier for law enforcement to find them." — Maya Sahavi (08:06)
• On new financial infrastructure:
  “The wild west of crypto with all these tokens... managed to build a much more resilient infrastructure and innovate more effective tools and debt instruments than anything that happened in just blockchain and Bing.” — Maya Sahavi (15:46)
• On regulatory tension:
  “Every regulator on the face of the planet has an incentive to get involved in crypto because they're already thinking about their retirement plan. And... a lot of US regulators have put aside money for their kids college funds just... doing crypto.” — Maya Sahavi (36:23)
• On the potential for new surveillance:
  "One of the really brilliant things about our existing financial infrastructure system is that even without the blockchain, it's pretty distributed, meaning there is no one party that sees your entire historical financial data.... On Facebook, getting into the financial transactional data would have been detrimental for social scoring almost on a Chinese CCP scale." — Maya Sahavi (32:27)
• Best hope for users:
  “You might be able to use your crypto wallet behind the scenes and basically sign with a cryptographic signature... And by doing that, you would send a microtransaction to Slate Money specifically for this podcast and get access.” — Maya Sahavi (39:54)

Timestamps for Key Segments

• Intro & Guest Intros: 00:12–01:18
• Defining Crypto’s Utopian Vision: 01:18–05:08
• DeFi, Permissionless Systems, and Crime: 05:08–09:41
• Blockchain Technology Basics and Transparency: 09:41–14:03
• Stablecoins & Financial Applications: 15:46–24:09
• Global Regulatory Divide: 24:09–34:20
• Gatekeepers, Identity, & Surveillance: 32:27–46:55
• Major Hack Case Study: 51:47–53:26
• Buzzfeed 'Crypto Listicle' and Practical Future: 38:56–45:11

Style and Tone

The conversation is lively, skeptical yet open-minded, and deeply explanatory. The hosts frequently push for concrete examples and resist empty hype, while Maya delivers nuanced, technically sound, and occasionally wry commentary. There’s a clear mixture of healthy skepticism and genuine curiosity throughout.

For Listeners Who Missed It

This episode is essential listening for anyone seeking to grasp:

• What actually matters in crypto (hint: it's not the price of Dogecoin)
• Why crypto creates headaches and opportunities for regulators
• The real potential (and risks) in new financial infrastructure
• Where privacy, identity, and regulation might be heading in a digital world

Recommended for: Curious laypeople, finance professionals, crypto dabblers, and anyone trying to decode the blockchain buzz—without any needless jargon or breathless speculation.