[00:00:00] Luke: From privacy concerns to limitless

[00:00:04] Preston: potential, AI is

[00:00:05] Luke: rapidly impacting our evolving society. In this new season of the Brave

[00:00:09] Preston: Technologist podcast, we’re demystifying artificial intelligence,

[00:00:13] Luke: challenging the status quo, and empowering everyday people to embrace the digital revolution. I’m your host, Luke Malks, VP

[00:00:19] Preston: of Business Operations at Brave Software, makers of the privacy respecting Brave browser and search engine, now powering AI with the

[00:00:26] Luke: Brave Search API.

[00:00:29] You’re listening to a new episode of The Brave Technologist, and this one features Preston Byrne, who’s a lawyer with the law firm of Brown Rudnick LLP. There, Preston advises cutting edge technology startups in crypto, AI, and consumer internet sectors. In this episode, we discuss the role that crypto and AI could play in the upcoming elections.

[00:00:47] Challenges in regulating cryptocurrency and blockchain technology. The benefit of using public private keys as a solution to authenticate communication to avoid scams and fraud. And now for this week’s episode of the brave [00:01:00] technologist, Preston welcome to the brave technologist podcast. How are you doing today?

[00:01:08] Yeah.

[00:01:08] Preston: All right. Good to see you, Luke.

[00:01:10] Luke: Awesome. Yeah. Well, just to get stuff started, can you give us a little bit of background of like how you ended up getting into looking at law and crypto and a little bit of your background in this space?

[00:01:20] Preston: Yeah, sure. I mean, so there’s a long story and a short story.

[00:01:23] The short story is I’m a lawyer, right? And so I advise crypto companies in the space. The longer story is I used to be a banking lawyer and I was extremely jaded about banking law. I was working in London in the wake of the financial crisis 2009 to 2013. And at the time there were a lot of people out there who were quite critical of the banking industry.

[00:01:42] And I being a junior associate in a very large law firm, who was very bored, was very attracted to that criticism. And I found my way to Bitcoin later Ethereum. And I think within six months of discovering Ethereum, I had my own startup and was building prototypes for banks and all that sort of stuff.

[00:01:57] After doing that for a little while until about [00:02:00] 2017. I was a lawyer in England, of course, I decided to come home to the U. S., became a lawyer here, opened my own practice in 2018, and I’ve been practicing law and advising interesting technology entrepreneurs ever since.

[00:02:13] Luke: Obviously, blockchain technology and crypto is pretty disruptive to a lot of areas.

[00:02:17] Do you see banking is kind of that big area that’s the most ripe for disruption? Where do you see this kind of playing out as far as areas where it’s going to be disrupting existing technology the most from

[00:02:27] Preston: your point of view? Yeah. Banking’s kind of, they’ve been asking to be disrupted for the better part of a decade, decade and a half.

[00:02:33] They have really good technology in banking, right? If you’re in England, for example, they’ve got a thing called faster payments. You can send a payment from one bank account in England to another bank account in England at two completely different banks and it settles instantaneously. Right. That’s super.

[00:02:47] They still haven’t cracked that problem cross border. They still haven’t cracked that problem in the United States. And crypto has had that problem cracked for a very, very long time. So people open their phones If you want to move some tether from a to B, you can do that [00:03:00] instantaneously with practically no fees or very low fees compared to ACH or wire transfer.

[00:03:05] So banking is just not competitive. But I think ultimately that’s the first step on the one hand. Yes, you could say this is going to be a cross border payment solution. On the other hand, you then have other types of intermediary relationships, right? So like what you guys work on at Brave, which is that you have large centralized advertising monopolies, essentially, which hog right entire markets.

[00:03:26] You’ve got something like Google and I’ll navigate through Google all day. I’ll use their products. I’ll use YouTube and the only people who really benefit from that it. Our creators in some cases where there’s revenue share, right? But that’s not a huge amount of money or websites that are hosting Google ads, but at the end of the day, it’s a really bad deal for the websites and it’s a really bad deal for content creators and it’s a really great deal for Google.

[00:03:46] So we have the tech to do interesting things. Of course, shilling for brave is one of my favorite things

[00:03:50] Luke: to

[00:03:54] Preston: do. So, but you know, there are other [00:04:00] projects out there that try to achieve similar things in other domains, right? So helium is a good one where they’ve got a distributed wide area network, which they think is going to be useful for controlling IOT devices.

[00:04:11] That’s been remarkably successful at distributing infrastructure, which is owned by the people who are running it, not in a formal legal sense. But in a practical sense, because they have the control over the protocol, they’re benefiting from the protocol and their first class citizens participating in the protocol, you also have other things like file coin, for example, which is trying to do that with storage space or chia, which is trying to do that with proof stored on server racks.

[00:04:33] So you’ve got all these different approaches. To decentralizing intermediaries and allowing people to use consumer grade hardware in their own homes. So I could see maybe there’s another project. I think it’s called Morpheus. It’s being started by David Johnston and Eric Voorhees. I could have gotten the name wrong.

[00:04:48] So guys, excuse me if I screwed it up. They’ve got an AI startup where you’re going to be doing AI large language model training, using the hardware on your desktop, kind of like in the same manner as SETI at home, instead of. [00:05:00] Outsourcing that to large compute clusters that are run by Sam Altman or Microsoft or Google or Facebook or, you know, all the traditional tech majors with everything in crypto, the theme has always been right.

[00:05:10] Bitcoin was be your own bank. That’s really not the case. You’re not your own bank. What you are is just kind of a co owner in a system which performs a bank like function. And sometimes people will build in incentives into that system, which incentivize you to provide certain types of infrastructure that operate the system.

[00:05:26] And so mining was the original one. And now of course, you’ve got infinite variations on mining, staking, proof of this, proof of that, that people are experimenting with to see which one sticks. What is interesting to me is the idea that you can disaggregate, you know, we’ve all got, I’m talking to you on a Mac book M1 Compute 50 years ago would have been unthinkable that kind of computer on a home desktop.

[00:05:47] Just like it would have been more computing power than every cluster in the world combined. Just sitting on a desktop in front of me with that plus with, you know, now the potential to run. AI language models, which you can run, there are only a couple hundred [00:06:00] gigs in size so that people can run on their own laptops.

[00:06:03] You can run all kinds of infrastructure by yourself as long as you’ve got a way to talk to people. And so the potential is that you’re going to have a lot of different intermediaries and all kinds of different domains getting disintermediated because people want to own the rails on which those communications, transactions, or whatever else it is that they wish to impart or receive are sent.

[00:06:21] That’s what turns me on about crypto.

[00:06:24] Luke: Yeah, I know. I think you did a really great job of like kind of setting the table of like the pros there. Is there something about crypto and blockchain technology that just makes it inherently more difficult to regulate than what existing laws were set up for, or is it something we can kind of put into a box?

[00:06:40] Preston: Yeah. It depends on what you mean by regulate. Yeah. That’s the typical lawyer answer is it depends. Right, right. I’m sure you’ve heard lots of Weasley lawyers saying it depends over the years when you deal with the complicated novel technology because they don’t want to get pinned down on anything. If you’re talking about easy to regulate in terms of easy to suppress, the answer is no, it’s not very easy to suppress [00:07:00] because the decentralized nature of it means that in order to turn the system off, you need to get every single node or really like Every single note, except one, you need to get all of them.

[00:07:09] You need to take them all down. It’s a cross border system, which operates everywhere in the world. There’s no regulatory harmonization between the different nation states where these systems are being run. The prospect that there’s going to be any regulatory harmonization, maybe in like the mid nineties.

[00:07:25] There was a world, a possible future where the United States could have imposed its regulatory regime on the rest of the world when it was at the absolute apex of its hyper power status. But I think that those days are behind us. So the question is, can you get Russia, China, the U. S. And, you know, the various European member states.

[00:07:41] And now, of course, West Africa, which is becoming an absolute giant in the crypto space and South America, too. Can you get all those countries to agree on something? And the answer is no, because they’re gonna say, Well, we can get a comparative advantage against all these other countries by force.

[00:07:54] Liberalizing this stuff and allowing people to develop it. That’s one element of it. Is it possible to suppress? No. Is it [00:08:00] possible to create a sensible regulatory regime, which will capture 85 or 90 percent of the crypto projects out there and improve consumer protection? Probably. I think the UK has done something very similar to that with its new financial promotion rules, which basically they haven’t taken crypto and tried to shoehorn it into a securities box like the United States has.

[00:08:19] At the same time, there are some onerous aspects to that regime. Like you can’t sell to accredited investors, which you can in the United States. You can’t sell tokens to accredited investors in the UK unless you’ve had the offering documents approved by an FCA authorized entity. Right. And so I’m admitted in England and the U S so comparing the two jurisdictions is something of a hobby of mine.

[00:08:37] You might say I get out a lot. I’m real fun at parties, but so essentially though, like it is possible to do that. I think in the U S there hasn’t been the political will to do it because I think that fundamentally there are two political parties. One of them is insane. And the other one is also, the other one is also insane and it wants to control the internet as well.

[00:08:58] And so the one that wants to [00:09:00] control the internet is not particularly keen that people should have self custodied crypto self operating software systems because ultimately they want it to be subject to state control. And so that’s why we haven’t got a regulatory regime, which makes sense in the U S yeah.

[00:09:14] Yeah, well, and it seems

[00:09:15] Luke: like which regulators, right? Because the SEC gets a lot of coverage, but then you also see like CFTC and then the FCC, all these different areas where you’re talking about internet technology, but you’re also talking about banking and finance, and you’re also talking about all of these different just blob of things, right?

[00:09:29] And that’s what makes it difficult for us to sometimes, because everything we’re doing isn’t neatly in a box. And I know you’ve talked about like library, like in the past as like one of those projects where it’s gotten hit hard by regulation, but it’s a really promising kind of technology, right? Like, I don’t want to put words

[00:09:44] Preston: in your mouth.

[00:09:44] That’s absolutely right. The problem we have in the US is that the closest and most analogous regime, regulatory regime to what most people are doing in crypto is the securities regime. Right under the Securities Act, the problem is that the government has had 14 years or 13 years to say, [00:10:00] Okay, well, we can recognize that crypto is this sui generis, you know, unique asset, which really doesn’t do or perform the same function as the security, if you really dust it off, it doesn’t do that.

[00:10:11] However, there’s a really overbroad common law test. Which has been applied to various cryptocurrency issuers and the SEC has sought to enforce against those issuers, most prominently Ripple Labs, and the problem is they’re losing because they’re going to the courts and you know, initially, if you, if you looked at this 10 years ago, you might have been like, okay, I think it’s kind of a, you know, it’s a dead cert.

[00:10:31] It’s the, the SEC is going to win and the other side is going to lose, but the technology has advanced so much that now judges are beginning to say, well, hold on a minute. Is this really the appropriate regime? Is this really a proper test? You know, the space has a character all its own, and that character doesn’t really neatly align with what the securities laws were intended to regulate.

[00:10:48] And so the SEC is being, you know, they’ve got some victories in the case of library. They’ve got some defeats on the case of ripple labs and where we’re left is that like, okay, let’s look at a country like England, which never had this problem. Right. [00:11:00] Because they had a list of, they said, what’s the security while it’s on this list or it’s not, if it’s not on this list, it’s something else.

[00:11:04] Right. And it’s governed by, you know, traditional common law principles around contracts and fraud and that sort of thing. Ah, well, it’s a crypto asset. Ah, well, it has its own characteristics. Well, let’s come up with our own regulatory regime, which is specific to this thing. Which both allows it to continue to exist in its current form and protects consumers by imposing certain disclosure requirements and transaction requirements on service providers, issuers, and intermediaries.

[00:11:28] What about that? And that way it can continue more or less uninterrupted as it has been before, but we’ve created its own little regulatory corral where it can live and happily do whatever it’s going to do. The U. S. just hasn’t done that. And like they’ve had every opportunity in the world to do it, but for some reason the government just can’t pull it together.

[00:11:45] Are you optimistic

[00:11:46] Luke: about the potential for them to pull that together? Do you see any signs that there might be something bright in the future around some kind of common sense regulatory regime around this, or is it still too early to call, I guess?

[00:11:58] Preston: Without offering a political opinion either [00:12:00] way, I think if Joe Biden wins, it’s not going to happen for at least another four years because the executive doesn’t want it to happen and the people who are support the executive don’t want it to happen.

[00:12:08] I think if Donald Trump wins, I think the likelihood is higher, but we haven’t heard any noises from the Trump campaign as yet that are pro crypto. Right. And the last time they were in power, they had Steve Mnuchin as the treasury secretary and Donald Trump and Steve Mnuchin were both very, very anti crypto and anti Bitcoin really, I think, based on a misunderstanding of how the market worked what it does.

[00:12:28] So I think there’s an opportunity to move the Overton window here. There are early indications that the Trump campaign might be interested in doing that, but nothing concrete as yet. I think there is one. Little ray of hope, which is that the U S might actually pass a stable coin bill and it might actually do it.

[00:12:43] This Congress, the rumor is that there, that things are moving forward on that front because Europe has one. So Europe passed this thing called Mika, which allows people to issue Fiat or commodity backed stable coins. And the U S is looking at that and they’re looking at the digital Yuan. And they’re saying, hold on a second.

[00:12:58] If Europe and the Chinese have [00:13:00] these instant cross border transfer systems, which anyone anywhere can access. We’re gonna lose and the dollar is going to lose we’re stuck with all of these inferior cross border value transfer systems, banks, ACH and wire transfer and swift and all that nonsense.

[00:13:14] So there may be some impetus in the US Congress to try to cement the dollar, to defend the dollar by basically allowing the Private stable coin issuers to serve as this offshore business, as long as they patrol the on ramps and the off ramps to the system, like Circle would do. As yet, it’s currently unclear whether Congress is going to be able to make sense out of anything in an election year, much less this.

[00:13:34] But, you know, the rumor is there’s some bipartisan support behind that, and it’s just a matter of time before they do something. Kind

[00:13:39] Luke: of switch gears a little bit. One thing that’s been surprising to me is your odds are so stacked against your survival rate as a startup to begin with, let alone having to navigate all of this, have you seen it being an impediment to startup and innovation, having to kind of have this uncertainty overhead or what’s your general take on how that’s impacted [00:14:00] startups from your

[00:14:00] point

[00:14:00] Preston: of view?

[00:14:01] Big time. There are a lot of layer one startups that should be in the United States are in or exchanges or other types of crypto businesses are opening up shop in Abu Dhabi. They’re opening up shop in London. They’re opening up shop in Canada. They’re not opening up shop in the United States. Europe generally isn’t the big winner because it’s just a pain in the neck to do business there.

[00:14:19] London at least You don’t have to, like in Germany, if you’re going to set up a company, you have to capitalize it with 50, 000 euros. It’s just crazy. So in London, you just submit a form, you pay 20 bucks and you got yourself a little company. Hey, Presto. So it’s, it’s a lot easier. So yeah, I think things have definitely moved offshore.

[00:14:36] I’ve seen a lot more businesses that particularly L ones that new L ones have said, you know what, we don’t want anything to do with the United States. We’re going to run the thing out of Switzerland. We’re not going to have any staff in the U S and it’s costing us money and jobs. And as an American and English corporate lawyer, you know, it’s having an impact on my practice, which is really annoying.

[00:14:54] So I’m very, very unhappy with Gary Gensler about that. They need to interact with the U S so usually [00:15:00] we pick them up that way or they have employees here or a labs entity here or something, but most of the token issuance, which. Absolutely. If we had a sensible regulatory regime, the U S would be doing tens of billions of dollars of token issuance business a year within a regulated framework, investor protections, all that nonsense.

[00:15:17] And the government’s losing out on all that work because it refuses to give us a regulatory regime, which makes sense.

[00:15:24] Luke: One thing I’ve seen you talk a lot about, and I’d love to kind of get a little bit more context from you on it, is kind of this concept of, for developers that have been building out there, this local first client side kind of approach that, that I’ve seen you talk about a little bit, you know, separating that from a lot of server side stuff.

[00:15:39] And maybe you can kind of frame up a little bit about what you mean by that, just so folks who are building might get a sense of a reasonable direction or, why that might be important.

[00:15:48] Preston: Yeah. So I call it First Amendment compliant software design. We’ll hold that in escrow, if you will, right over here.

[00:15:54] We’ll just hold on to that thought for a second. Now, if you’re building something in the United States, the question [00:16:00] is, how is it regulated? If you’re building, for example, a commodities trading application, and you have a front end, but the back ends of protocol, that’s going to be captured by certain aspects of the Commodity Exchange Act.

[00:16:10] If you open a DEX, and you’re hosting a front end, but the back end is a smart contract on Ethereum, The facilitation of those transactions via your front end or the taking of fees, that’s going to be something which the SEC potentially moves in and regulated, regulates. They haven’t done it so far.

[00:16:26] Uniswap, as far as I’m aware, hasn’t been sued yet, but it’s an open question whether they will. And the general thinking among lawyers in this space is that we’re kind of surprised it hasn’t happened yet, but TBD. With that as our background, the question becomes, is the tech good enough in certain applications to just totally obviate the need for any of the centralized infrastructure?

[00:16:47] Can you build something which runs entirely on the client side, entirely locally, where everything, including the matching engine, is going to be run by the user? And so therefore, they’re just running software, which is First Amendment protected activity, you’re just [00:17:00] publishing software, which is First Amendment protected activity, and people are just trading with each other peer to peer.

[00:17:04] Which is not, as far as I’m aware, illegal under any law of the United States. I mean, the answer is yes, you probably can. So, where people get into trouble is when they overbuild, and they then start re imposing the intermediaries who are designed to be regulated by existing law. There are a couple of different protocols that have done this.

[00:17:20] People say I’m a Chia shill, and they’re absolutely right. Because Chia, Chia I’ll show them, I’ll show them. I’m friends with Gene Hoffman and Bram and Ryan Singer who were all involved in the project in the past. Chia, when they did their ERC 20 equivalent, or the CAT standard Chia asset token, the first one that they made is MarmotCoin.

[00:17:40] And anyone who follows me on Twitter will immediately know why I was enthusiastic about that. They made Marmot coin real for me and we had a lot of fun with it. I was going to ask you

[00:17:48] Luke: about that. Yeah, yeah,

[00:17:49] Preston: yeah. So that was fun. What they’ve done is they’ve, the protocol has some opinions about the transactions that users perform and it allows them essentiallyto create offers and trades.[00:18:00]

[00:18:00] At natively at the L1 layer, and then the wallet software understands what they’re doing, is able to interpret that and is able to facilitate decentralized transfer. And then there are services like Dexi or whatever that don’t actually facilitate the exchange, but just list the markets and show what’s going on token to token.

[00:18:16] So what you’ve done is you’ve separated out the services, right? You’ve created. A information service, right? A host, which just tells you what the market’s doing and gives you the ability to access these files. And then the execution has been separated and put into the wallet so that the website, you know, usually you go to an exchange, if it’s a centralized exchange.

[00:18:33] And what you do is you log in, all of this stuff is on their ledger. All of the coins are held in their wallets. They bring together the buyers and sellers of the exchange. They’re the ones who effectuate the exchange in this model. That doesn’t happen anymore. And what some of them have actually done, including Dexy is they’ve said, okay, well, instead of not only are we going to do this where we just have the information service and we don’t facilitate the transaction, we are also going to use an IPFS like system called Chia data layer, which.

[00:18:59] Will allow [00:19:00] people to look at the U. I. And look at the order book and get up to date information, which is being supplied by all of the participants of the network at any given time. And then they’ll be able to effectuate those transactions locally while seeing in real time some other application, which is being served in a wholly decentralized fashion.

[00:19:17] So that is your as your environment like any block chain can do this. There are some people who are working on it for a theory, although it’s a little harder. Because it’s really difficult to run an Ethereum full node, et cetera, et cetera. But there are people who are working on this who are trying to say, okay, let’s get all of the centralization out 100 percent of it.

[00:19:33] And then essentially with the SEC or any other regulator would need to do in order to shut it down, they wouldn’t be able to go after in principle, the writer of the software, as long as all they’re doing is publishing code, because that’s protected speech for Bernstein versus United States. And what are they going to do?

[00:19:48] Find every node who’s running the software and close it down. Good question. So it’s expensive, but it’s expensive. It’s impractical. It relies on law, which they don’t yet have. And so it’s [00:20:00] basically you’re increasing the threshold of difficulty to such a level. And you’re so removing any concept of an intermediary from the decentralized system that basically the only way you can shut it down is by going after every single note again.

[00:20:11] So it’s a very Bitcoin like way of trying to deliver it. Financial services. So that’s the idea is that by essentially giving the Bitcoin treatment, Bitcoin solves the double spending problem and it’s got mining. So everyone’s a friend. Everyone running a note is a validator. And that is the nature of the relationship.

[00:20:28] There’s no reason why you couldn’t layer on additional functionality, stuff it into the L1 and then make sure that the system is automatically solving Those more complex puzzles that you’ve authorized or written into the system and by doing that you’re essentially providing the exact same functionality that we have with this defy ecosystem that’s been in the United States at least virtually regulated out of existence but you’ve done so in such a way where the transaction participants the software publisher and the user.

[00:20:55] Are completely separate, which means that they’re not essentially engaging in either one of them [00:21:00] is not engaging in regulated activity, at least in principle. So if you then decided you’re running a single node, I can hear Steve Pally, you know, my law partner listening to this podcast and be like, no, no, no, no, no, don’t say that.

[00:21:10] Of course, there are exceptions and this and that. And of course there are, right? So like, it shouldn’t be so certain because someone’s going to hang on to what you just said. And then they’re going to say, well, Preston Burns said I could. I could do this and I wouldn’t get in trouble and blah, blah, blah, blah.

[00:21:23] Obviously, if you then re centralized things again, right? So you say, great, cool. I’m doing this. I’m going to fund a hundred million dollars worth of orders, and I’m basically going to run a business where I’m in the middle of all these other transactions and taking transaction fees and trading and whatever else, that’s something where yes, you could have rebuilt yourself.

[00:21:38] Up into a centralized participant in this decentralized system, which might have attracted some regulatory liability associated with it, but the little users, the, you know, the little guys, the people at home who just have a couple of coins and are trading here and they’re not doing too much. They will have access to the facility and the utility.

[00:21:56] Without really having to worry too much about regulation. So that’s the theory [00:22:00] is that you split out transaction execution from information provision, put the transaction execution piece entirely locally client side and then the information provision, maybe that’s something which is provided on a centralized server.

[00:22:10] But in either case, the information provision is pure speech and the transaction execution is really private activity, which doesn’t fit very neatly in the existing regulations around cryptocurrency and commodities trading. Build locally, people,

[00:22:24] Luke: I mean, it’s super fascinating stuff. I mean, so much of this just resonates with like the original kind of ethos of all of this anyway, right?

[00:22:30] Where it’s like, decentralize everything is if this wasn’t messy enough, let’s throw AI into the mix, you know, like has been hyped up. What’s your take how these things converge in the next couple of years?

[00:22:39] Preston: Yeah. AI is a disaster. it’s a complete disaster. And by that, I mean, it’s obviously really interesting.

[00:22:48] The technology is immensely powerful. I think that it will wind up leading to, you know, levels of human flourishing that, we’ve never seen before. The transition is going to be very, very difficult. We’ve seen that this year already, I Where [00:23:00] there was an incident in China or Hong Kong, actually, where a member of an accounting team at a company was on put on a zoom call with who he thought were his superiors in the CFO of the company, telling him to send a 25 million wire to a bunch of scammers, which he promptly did, and it turned out that the entire thing was just a deep fake.

[00:23:18] So which is crazy. There was an incident in New Hampshire about three weeks ago where someone pretending to be Joe Biden told people to stay home from the polls and not vote because it would help Donald Trump. So it was a very amateurish deep fake, but it is what it is. That was, you know, election interference.

[00:23:33] That’s a felony. What AI has done is it is basically driven to zero the cost of carrying out all kinds of crazy criminal shit, scams, you name it. Yeah. The cost is, basically zero to do that. And what we’re going to see is we’re going to see lots of attack vectors opening up in companies. And personally, there was a story in New York magazine about how a woman had been convinced that a bunch of callers were CIA agents and they were trying to protect her identity.

[00:23:57] And she gave him 50, 000 in a shoe [00:24:00] box in cash. So that’s the kind of thing which so far has been rate limited because the scammers need to be people. There’s no rate limit on that anymore. The AI can do it. I’d infinitum and for effectively zero cost because an LLM will do it with a parrot with a voice generator, a parrot with a video, whatever else.

[00:24:17] And the scammers don’t need to have 100 percent hit rate to get it right, right? If they’re one or 2 percent and their cost is way, way lower than that, then they’re golden. They’re all set. So I suspect we’re going to see a lot of AI stuff really breaking. And like, there was another thing the other day, it was a fake ID generator, which can generate both a fake picture of your face, a fake ID, and then a picture of you holding that ID.

[00:24:37] which you could use, of course. what can you use that for? If you’re in America, you can use that to get access to foreign cryptocurrency exchanges, which are currently barred from because currently their entire KYC is based on the picture, the photograph of the identity document. And there’s no amount of like additional.

[00:24:53] Photographic proof that you could ask for that someone isn’t going to be able to generate a I for I say, Oh, we want a video call [00:25:00] with you. Sure. Okay. I’ll deep fake it. Oh, we want to. We want a bank statement. Okay, cool. I can provide that too. We want your home address. We want a utility statement. Sure. No problem.

[00:25:08] All of that stuff can be faked. So what can’t be faked? What is the one thing in this world in crypto that can’t be faked? Private key. You can’t fake a digital signature. At least not yet. At least not convincingly. Unless you’re Gavin Andreessen and Craig Wright, but that’s, that’s another time. But like you can’t, you can’t convincingly fake a private key.

[00:25:27] So what I see is that like we’ve got crypto is this, so where they interact. Crypto is this, is this massive distributed PKI system, which millions and millions and millions of people are using. If you wanted to build something which introduced cryptographic authentication into virtually every communication that we enter into this podcast should have it a phone call with your bank should have it phone call with your mother should have it.

[00:25:54] Everyone should be trading their public private keys with one another and you should have a service like Twitter or X as it’s now called or [00:26:00] key base, providing some kind of public PKI register that you can say, okay, this is someone I want to talk to. There’s absolutely no reason why. We couldn’t use ethereum or any other cryptocurrency system as the backbone for all of our communications, which would then immediately make it apparent if a communication came from an address we didn’t know or if it had been falsified.

[00:26:19] So if I had all my contacts in my address book and I did like with signal, we traded our security numbers or whatever else it was, but we had that be a persistent identity which followed us around in the world. You don’t need the blockchain to record those transactions or to sign those transactions.

[00:26:33] The blockchain is there as the public registry of who you are. And maybe people can transact with it if you really need them to do that. That is the solution to the breakage of the world that AI is causing. And it’s the only thing that’s going to work. And it won’t be perfect. Obviously, someone signs a message with a private key.

[00:26:51] If they get your private keys, right, you’re borked. That’s it. Like they can pretend that they’re you, but it increases the threshold of difficulty to such an extent that [00:27:00] maybe we’re back in the world of like the 1960s or the 1970s where identity fraud is pretty hard to carry out. Not impossible. Not a lot of people do it requires a lot of effort.

[00:27:09] By human beings to actually socially engineer and obtain the stuff they need to obtain in order to carry it out. So that’s the universe that we want to get back to if we can. And I think the only way we can get there is crypto. so that’s the view is that AI and crypto are these polar opposites.

[00:27:22] AI takes human like features and it drives the cost. It’s this ultimate abundance app. And as a result of that, it breaks the world. Crypto is this ultimate scarcity app. And as a result of that, it patches it back up and says, AI, listen, you can come up with all the abundance you want. If you ain’t got the keys, you’re not getting through.

[00:27:40] And that’s, I think, what a huge area for development. It’s going to become very apparent over the course of this year. What role cryptocurrency is going to play in that. That’s awesome. I can’t

[00:27:48] Luke: think of a better note to end this on than that one. Is there anything you want to get out there? Where can people follow you?

[00:27:53] I know you write too. Any, anything you want to end on?

[00:27:55] Preston: Yeah, I mean, I got a blog. It’s at Preston Byrne. That’s P R E S T O N B [00:28:00] Y R N E dot com. I’m Preston J. Byrne on Twitter and PJB on Farcaster. Follow on social if you want, want to get a hold of me. There’s a contact form on my website. You know, just Google me and you’ll find my firm email and phone number and all that jazz.

[00:28:12] But yeah, anyone who wants to Give me a call. Happy to talk about it.

[00:28:17] Luke: Awesome. Thanks Preston. Really appreciate you making the time out today. We’ll be sure to, maybe we’ll follow back up as things get more scary in the year to come, but really appreciate your time and yeah, folks, go give them a follow and we’ll talk soon.

[00:28:27] Thanks.

[00:28:27] Preston: Looking forward to it. Take care. Thanks

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