hi this is Charles hoskinson broadcasting live from warm sunny Colorado always warm Always Sunny sometimes Colorado today is November 11th Veterans Day 11 11. it's very special day I it's a day that means a lot to my staff a lot to me and I figured I'd make a video before I go home to talk a little bit about the industry uh and also the FTX issues as many of you know uh FTX has collapsed it's declared bankruptcy and it's going to be unable to honor its obligations I went from a crypto Empire that spanned from Solana and polygon uh all the way to massari and everything in between to basically a existential threat to the stability of the cryptocurrency ecosystem in about 48 hours now uh in hindsight in in reflection there were enormous warning signs uh ranging from the talent that was at FTX to the governance of the company uh to the fiscal strategy that they followed how they invested their money where they chose to deploy it the statements that they made and reflection they don't look so solid and this is generally what happens when you have regulated businesses that are in a position of trust led by kids who have no experience you know uh it's okay to have young entrepreneurs and it's okay to have inexperienced people have great visions and dreams and pursue those things but the first thing that happens when you're a young entrepreneur because I'm still young and I was very young when I entered this industry is that once you're given money you have to bring together a diverse team of people and have that team of people work with you to build something great if you look at IO my CFO has over 35 years of experience on Wall Street he was Chief Operating as an officer at Mizzou he is personally responsible for hundreds of billions of dollars of various Commodities and other things at the trading desk he was on and the regulated financial institutions he was at it's fair experienced guy general counsel is a JD MBA a senior partner at a law firm when he uh when we hired him I and I went to Wharton went to many places he did the Overstock stock offering for crypto did a lot of stuff and it's one of the domain experts uh in the merger of traditional law and cryptocurrencies as well as the regulate regulatory intersection within our Circle we have advisors external internal and people that have lifetimes worth of experience on strategy marketing operations uh and everything in between who have been accountable for billions of dollars we're not a regulated business we're just a cryptocurrency protocol developer you need this plus plus if you look to things like a exchange or a trading desk or something where you have a fiduciary responsibility for other people's money it's axiomatic and it's the first thing you do as an entrepreneur now the absence of this doesn't necessarily mean uh that you're going to fail or not be able to survive you can certainly find ways to rise to occasion but it's definitely true that on average if you need surgery it's probably a pretty good idea to go to a qualified surgeon instead of somebody who stayed at a holiday in express and too much of this has happened in the industry whether we look at Celsius uh whether we look at Mount gox and the qualified people there or lack thereof we look at any of these institutions that have failed generally speaking when you look at it it's a people procedure and process problem as much as it is a flawed business idea standards regulation and oversight do tend to help from the perspective of forcing you either through soft power like sros and memberships and hard power through explicit regulation in getting at least to that statement of safety it is important to point out that this was not an unregulated business and there's been enormous amounts of discussion about well how should cryptocurrency react look at the unregulated cryptocurrency this is frankly a centralized business failing Bitcoin was not hacked ethereum was not hacked cardano was not hacked none of the big chains were hacked crypto didn't fail people failed people in positions of trust at the end of the day as much as we like to believe in the principles of cryptocurrency this had everything to do with people putting their money in centralized exchanges and organizations entrusting centralized businesses to do something on their behalf that's the very industry we're trying to get rid of with the cryptocurrency space unfortunately it's going to now be conflated and there's a very high possibility that the Fallout of this will be new legislation hopefully decent legislation but there's a strong possibility that it won't be as members of this industry we're just going to have to live with it and we're gonna have to figure out ways to integrate and deal with it but this is unfortunately the consequence when you have people who don't know what they're doing get into positions of power and trust and create cascading and catastrophic damage this is just the tip of the iceberg if you look at the financial relationships that FTX had as we go down the list it could create a Cascade of insolvencies and unfortunately crypto doesn't get a bailout our competitors do Trad fire lives with that every day they'd already be calling up their buddies in government saying how big of a check can we haggle over with crypto we don't get that we just get the privilege of cleaning up the mess and then being blamed for it and having to deal with the financial outcome ourselves now I do believe this is not going to kill cryptocurrency I do believe that our industry will be much stronger in the future and I do believe that our best days are still ahead of us this said I do believe that unlike Mount gox unlike Celsius unlike Luna and past events FTX does have the unique property that it could end up being the straw that breaks the camel's back and changes at least in the short to mid term how cryptocurrencies work in America in particular changes the appetite lawmakers have for giving the industry a pro-growth freedom mandate we could look at a world where non-custodial wallets are no longer permitted in the United States we could look at a world where every cryptocurrency except for Bitcoin is labeled as security and forced to comply with onerous regulations which will rob them of liquidity and not provide any consumer protections or investor protections if you believe that they do I will remind you that a huge amount of tech stocks are down 90 percent this year and I will remind you that Bernie Madoff ran a regulated entity so don't believe for a moment that additional regulation if blindly applied is going to solve any particular problem for the industry but now that is a possibility it is also a possibility that we could see a mass consolidation of the regulated infrastructure in this industry towards the hands of just a few players who will then form an oligarchy which is not possible to displace and will basically end the American cryptocurrency marketplaces we used to enjoy it now I'm not saying this will happen I'm saying that the probability of these types of things happening is now greater as a direct result of the failure of FTX the reason being is that unlike Celsius and Luna the principles that FTX had a direct relationship with many politicians in Washington D.C already on Twitter you may have noticed many pictures of politicians mostly on the left but some on the right uh and Sam Brinkman uh and his cohorts he made no uh small deal out of the fact that he was dumping millions of dollars into elections and into influence and lobbying to try to push through specific legislation that meant that there are a lot of politicians who now don't want to have that relationship and as a result we'll probably try to scrub it by becoming unnecessarily harsh on cryptocurrencies as a predictable reaction that's why the needles moved a lot in addition to the consumer losses that are going to occur uh the institutional losses that are going to occur and potentially the set of cascading failures that can occur this industry doesn't seem to have learned its lesson the YouTube podcaster class that mocked the cardanos of the world and talk about how stupid we are and how small our tvl is and these types of things they continue to be arrogant and petulant they continue to Pedal snake oil advice they continue to recommend people dump large sums of money and to completely unvetted programs and projects it is what it is I hope the audience is wise up and realize that maybe their advice has been horrifically bad this year and last year and so forth more projects continue to get funding uh without really that much due diligence and it's very clear that VCS continue to be quite interested in getting involved in these things I believe one of the investors in FTX was Sequoia it was supposed to be one of the smartest and best put together VCS in the entire business and they took a significant loss from their time at FTX celebrities have been impacted as well Tom Brady and Gisele Bundchen for example had a considerable amount of money in FTX as did others who will undoubtedly now become quite disenfranchised and potentially leverage their considerable networks to attack and criticize the industry at what point does the industry stand up and say we've had enough things need to change and we need to think of A New Path forward for our part the mission is unchanged the approach is unchanged because this is what we think everybody should be doing come the 18th in just seven days I'll be in Scotland there we're going to announce the Edinburgh decentralization index to begin measuring the decentralization of exchange of cryptocurrencies we do recommend that best practices for the operations of exchanges be set forward and people start following them we do recommend that also in defy we get a lot more honest about what can and cannot be done as an industry and start coming together on basic basic standards for this type of thing smart contract security standards and some ethical functionality standards I hope people begin to wise up I also hope that people understand that nothing is for free in life you cannot get massive returns and massive yields they have to come from somebody not too long ago last year I criticized the big surge of Doge not because I had anything against the founders of that project or the people participating in it because it's so perfectly epitomized the attitude of get rich quick every single person I knew who was purchasing that currency was doing so because they had a mistaken belief that they could double triple quadruple their money in a matter of days weeks or months and the vast majority of them lost it that is a mentality which will end the cryptocurrency space if it's preserved and maintained it has always been the goal to focus on on our side of the aisle use and utility and adoption and the fact that this really is an industry that can fundamentally transform and change things there is no other way if you get hurt at a place like Congo or Burundi or while skiing in Aspen and you live in Canada for your medical records to be seamlessly transmitted while you're unconscious to the doctors trying to take care of you there blockchain solved that problem there is no way that we will be able to rebuild the entire world Supply chains given that there are many nations many laws and such a large Global footprint to comply with ESG mandates that are being haggled on by World Nations there is no way that we can ever get to a point where every person is banked every person has an identity that they own themselves and has the ability to seamlessly move between One Financial system and another without blockchain technology and cryptocurrencies and you cannot separate the two if you have blockchains without cryptocurrencies you have companies big multinational companies like the microsofts and apples and Googles and transnational bodies like the bis I didn't sign up to build Apple's next product line they can do that themselves I signed up to build protocols that give everybody freedom and liberty to remove the token from blockchain technology is to just functionally hand those who already have the means to continue to have as opposed to doing something different protocol economies resource-based economies this idea of combining both of them together give everybody Freedom if it's done correctly the problem is that many people in this industry seem pathologically addicted to taking advantage of people's trust in a better future or desire for a better future in exchange for a quick exit and FTX is just yet another example of that I've heard unconfirmed rumors that they use client funds for their Ventures which is no better than what Bernie Madoff did we will see as the forensic accountants and government investigations begin tearing apart the legacy of that organization will get a better understanding very quickly about how bad it was and what they did this should prove the need for cryptocurrencies we don't need more leaders we don't need more companies we don't need better regulation we need to change the way the game works because human beings at the end of the rainbow are terrible in positions of trust at being able to maintain virtue no matter who they are eventually somehow some way through some mechanism whether it be money ideological concerns some sort of blackmail or compromise or just their own ego they will in some way some form become an agent for bad instead of good thus we must put our faith in things that cannot change and because natural law doesn't govern social systems we need blockchain technology in order to enforce that upon us we need to have an artificial law physics of social physics blockchain to help us through that's why I signed up for this industry that's why I'm here not to have all the blocks in a blockchain be of fact compliant not to have everything be permissioned not to have everybody have to go through kyc to do something that's somebody else's dream it's more in line with the people that want to feed you insects and say that you should own nothing I signed up to give people Liberty and freedom and our industry has to focus on that that has to be the point that has to be what we do and why we pursue what we pursue and if you're not aligned with that that's okay but I really would like you to take a moment and have some deep reflection of why do you pursue the things you pursue in life and what's the point of all of this being a very wealthy man myself I can assure you that if you ever do get to some mystical wealth that you seek it actually will not materially change your happiness it will not make your life that much better there will be a short-term Jubilation but then there'll be a hedonic Amnesia where all those good feelings fade away and you still realize that you're starved for meaning and purpose in life the truth of the matter is that people matter relationships matter friends matter Family Matter and ultimately ideas matter how we treat each other matter this world is falling apart it's led by unsustainable practices corrupt and broken institutions it's led by people who shouldn't lead us and it's reinforced again and again with cynicism and you're convinced to go along with it because you have a mistaken belief that if you get just get a little bit more money it'll all go away and get better for you not realizing that that's actually a lie it doesn't change the frustrations are exactly the same just ask the billionaires in China who offended G so when we look to the Future the power of cryptocurrencies is the first time in any of our Lives we've actually had the ability to make a difference to do things differently to think differently to change the way that the game works to change the way that we can achieve great things we can fundamentally transform everything from how we vote to the notion of our identity to take back our privacy and even change the whole models of how businesses work we can get rid of presidents and CEOs we can own a little bit of everything and we can all Prosper together I don't want to see that dream fade because the average of the few somehow derailed it and it put us into a very dystopian viewpoint the next six months the nine months are going to be pretty critical for this industry for all of us and we really have to dig deep and ask ourselves why we're here and why we're fighting and what we're fighting for and we have to really come to terms with the fact that this industry was born with an idea of Liberty and freedom and that's being rapidly lost and there's not many of those threads left as we look to all the projects out there the custodians and actors involved and how the industries materialized and matured anytime there's a crisis an event something bad that happens it's an opportunity for all of us to return to First principles or it's an opportunity for us just to Simply throw up our hands become cynical and give up I'm not going to give up I'm going to return to First principles because that's where I live and I'm most comfortable with tomorrow it's just another day Sundays just another day Monday is just another day and it's a reset it's an opportunity to try to do your best there's a lot of code to be written a lot of papers to be written and ultimately a lot of people to persuade that this way of doing things long term is the best way we will encumber as an ecosystem more criticism over the next six to nine months than we have ever received before from all The Usual Suspects the media politicians and many people in the mainstream who have very legitimate Clauses because many of them have lost money or know people who have lost money and they're filled with anger and they want to lash out in some cases they were defrauded and scammed it is important that we don't lose sight of that and have empathy and understanding it's important that we have to stop criticizing people we have to stop throwing hand grenades at each other we just recently had an election in America there was a lot of talk about how there was going to be a red wave didn't happen but enough happened to demonstrate one message that was very clear it was a dual rejection of the two political parties the incumbents were not rewarded with a monopoly on power but those who had the audacity to replace them were not rewarded with a clear mandate rather they were told give us something better and if we take that lesson to heart we can realize that there's a great degree of fatigue amongst everyday people about fighting we're all tired we're tired of hate retired of criticism retired of name-calling we're tired of labels we're tired of dealing with the constant War every single day we're tired of looking at people that we used to consider to be friends and neighbors and now view them as the other because they don't happen to believe in the same things we believe in cryptocurrency is not divorced from this it's made up of people at the end of the rainbow and so people do what they do and they've taken these politics of personal destruction into the cryptocurrency industry so we have to ask ourselves do we want to continue doing that as we return to First principles and we endure the criticism over the next six to nine months deserved and undeserved the only thing we can choose to do is continue to believe and personally each and every one of us be better conduct ourselves better fight harder and keep the faith you don't deserve a beautiful city upon a hill unless you're prepared to walk up the hill and in some cases you have to build the city and we don't deserve a great future unless we're willing to fight for it and believe in it and endure the hardships of the journey to get there there is a promised land and there is something magical on the horizon and I really honestly believe in the goodness of people you can either decide to be a cynic or an optimist takes the same amount of energy I'm optimistic we can get there if we have the right mentality and FTX is a waypoint it's a Crossroads this rolled up with all the things that have happened this year is a lesson of what not to do and we just have to ask ourselves how to do things differently at least with cardano we do have a path forward very shortly next week we'll be talking about the MBO and the governance of cardano the age of Voltaire two great events Scott Fest to open up a bunch of labs and celebrate our great collaboration with the University of Edinburgh and the Coronado foundation's cardano Summit we'll be at both and there it's an invitation for the community to work with us to build a substantially better governance layer than any cryptocurrency has ever enjoyed and harnessed the power of our community this will only work with the tireless participation of each and every one of you and the moral character for each and every one of you to rise to the occasion listen learn and assist each other and treat each other with some empathy we need to do that and we need to be better and only when we are a model for the rest of the industry do we have the right to lecture the industry on them being better and I think we can so let's look to 2023 as the year of Voltaire and the year to show the cryptocurrency industry what needs to be done and once we've won that fight to show the world how to do it Rick McCracken often says we're going for number one and I honestly do believe we have a shot at it and what going for number one means to me is that we become the world financial operating system and we give everyone economic identity and Bank all the unbacked and as a direct result of that work we change everything and we all play a fairer game I think we can do that but it's your decision as much as it is mine there's no one who's going to do this for you crypto is not a game of wait and see Buy and Hold and magically it'll happen it's a participatory sport you have to get dirty you have to get up off the bleachers get into the game you have to go for the ball and each and every one of you has a part to play something to do something to build something to learn because this is as much yours as it is mine or anyone else's and only together will we actually get there apart we won't it will fail and that is the lesson of Luna FTX Celsius and all the things that came before and unfortunately will come after I hope we can do this together and I believe we will thanks for listening everyone
