RAOUL PAL: It’s talking about Libra, because
you're closer to that world than I am.
I thought it was super interesting.
Then what you think the central banks are
up to with digital currencies.
BILL TAI: Wow, big thing.
RAOUL PAL: How does that all fit into this
framework?
Because a lot of people are looking at it
and say, well, the central bank set up digital
currencies, that makes Bitcoin worthless.
My view is this is creating on ramps and off
ramps and digital economy that we've been
talking about, you and I, that it's exploding
and June 1st , 2020 - www.realvision.com 17
The Interview: The Electrodollar: Venture
Capitalism, Technology, and Silicon Valley
there's no way of stopping this digital economy.
Libra was something amazing because it gives
a global currency, but anyway, if you can
give any thoughts on this, it will be amazing.
BILL TAI: Yeah.
Back to this concept of a bunch of people
getting on and off a boat, stepping on the
land in North America, every little community,
or big community can have its own currency,
whether it's a military protected nation state,
or a virtual community like Facebook.
If you have members of a community, however
you got them, you have the ability to introduce
something that becomes the digital representation
of value of exchange.
It's obvious, when you think about what's
happened in China with WeChat, and QQ and
the other kinds of digital value transfer
that occur there, I'm surprised it took Facebook
so long to try to step into it.
I'm really pleased that they decided to do
it on blockchain because in my mind, that's
the best way to do it.
Because you can't hack it.
You can't fake it.
If you're running servers in WeChat, you can
probably print your own and just make yourself
a billionaire if you want.
RAOUL PAL: The Libra thing is a bunch of stable
coins and loads of currencies all put together
in one basket or something like that.
BILL TAI: Yes, it is.
There's a reference they're trying there.
I think Facebook is in an interesting position
because they're so big and have such broad
reach, they are the subject of regulatory
controversy.
I think it's hard for them as a company to
try to go in the face of governments because
the governments will attack them hard.
I think the decisions they made are trying
to thread that needle of how do we build something
that is useful as a reference standard, a
global reference standard amongst our community
that's both on Facebook and WhatsApp and on
Instagram and which is billions of people?
How do we also make it usable to merchants
around the world?
Which that the announcement recently was Shopify,
if you caught that, Shopify has been on a
tear as a stock and Facebook announced the
ability for anyone to set up a store on Instagram,
or there are other sites and have it powered
by Shopify.
Now, they have a currency system to transact.
It's this whole world of how do you get community
and commerce and the payment method.
RAOUL PAL: Once you have your own currency,
you basically create ultra-loyalty within
your community because they now have something
of value.
If they leave the community, it now has no
value or less.
Potentially less value in the outside world.
BILL TAI: Yes, it's a transaction mechanism.
It makes it stickier for people to stay on,
you can tax it with commissions.
It's another monetization method.
I think the cost of delivering that is going
to be lower than other methods at scale because
of the size of their audience and because
of the blockchain element, and I think it's
an amazing thing that might happen.
RAOUL PAL: Also, I've been very interested
because the US dollar is part of the basket
that they propose.
Basically, the denominator, there's no denominator,
so therefore, they could denominate by global
money supply or something that's less volatile.
If I'm trying to buy something from you, and
you're a Facebook merchant, and I'm an individual,
and I'm in Ethiopia, and you're in Taiwan,
well, we'll have this currency, June 1st , 2020
- www.realvision.com 18 The Interview: The
Electrodollar: Venture Capitalism, Technology,
and Silicon Valley it doesn't move a lot.
I'm likely to store it now, as well, because
I'm in Ethiopia, and I'm more worried about
my currency.
I might use that currency as my bet.
It's an extraordinary thing.
BILL TAI: It really is.
I'm going to abstract this conversation before
we get to central banks again but think about
what is a store of value in general if you
take two commodities that have become important
to our lives, oil, and electronics.
You hear the term petrodollar for forever.
RAOUL PAL: Electrodollar?
BILL TAI: Yes, because the petrodollar has
been an ephemeral period based on this industrial
move.
The third Industrial Revolution fueled machines
with oil, so oil had value because it was
the grease that ran the system.
The reference standard for the US dollar became
that, it broke away from gold because you
could store productivity.
What is currency?
Currency is stored productivity in a way.
As a nation, you could store your future by
buying a lot of oil or having the means to
buy a lot of oil in something that could be
swapped, a petrodollar, for barrels of oil.
The US dollar in a way was an ICO tokenization
of oil.
Today, if I said, Raoul, you're sitting there,
you're having fun every day, I have this switch,
and it can only go one direction.
Either I cut off your oil, or I cut off your
electricity.
What do you want me to cut off?
You're going to choose oil.
All of our future productivity, most of our
productivity already today is not based on
oil.
It's based on electrons.
We're already, we've already moved into the
world where everything about our lives-- RAOUL
PAL: I've never thought about it that way
but you're dead right, and oil, it's just
one of the means of generating the electrons,
but there are many.
BILL TAI: There are.
You probably have solar because you're in
the Cayman.
I think we're now in the process of transitioning,
and it's already happened where our lives
are more dependent, every unit of our productivity
happens through a computer or smartphone or
some device, where, yeah, we care about oil,
but we really care about the electricity.
RAOUL PAL: Bitcoin mining is essentially the
conversion of electricity into a Bitcoin.
BILL TAI: It is.
All of these things, whether it's a Libra
thing, or whatever they are, they're basically
the tokenization of forms of electricity that
you can use.
It is the Electrodollar, I don't know, maybe
it's called Libra, maybe it's called something
else.
Maybe because electricity is so fluid.
RAOUL PAL: We just invented something today,
the Electrodollar.
This conversation created something new.
BILL TAI: Yeah.
It's a lot more fluid.
I think back to this idea of oil and heavy
machinery created physical assets that nations
had to protect and create armies to protect
your productivity, it's now dissolving into
ones and zeros on screens.
How do you store that value?
How do you transact in that value?
June 1st , 2020 - www.realvision.com 19 The
Interview: The Electrodollar: Venture Capitalism,
Technology, and Silicon Valley RAOUL PAL:
You're even seeing warfare goes to cyber,
the battle over the electrons.
BILL TAI: Yes.
Nation states are a little different now,
like, is Facebook a nation state?
Hard to know, but it can influence an election
of a physical state.
We're totally entering this new era where--
and so back to this last question about digital
currency, you got these governments and banks
trying to catch up.
The wave has been unleashed and now they,
I think, are looking at it where I think even
just 24 months ago, they were trying to crush
it.
They were like, stop it.
We're going to regulate it out of existence,
and then they realized we can't, and the public
might get upset and we're voted into office.
Well, maybe we got to play ball a little bit
here.
Now, it's how do we make a digital currency?
We need to have a digital currency.
Let's make one.
It's a little bit of a backwards look and
I guess there's an assumption there that they'll
be able to hang on to their community, or
their nation state, which maybe they can from
a physical sense, but is that going to stop
me from moving my assets to other digital
things?
No.
RAOUL PAL: No, but they can track your money.
It makes it harder for the transfer if they
don't want it to happen.
That's one thing.
The other thing is they're desperate to get
away from the dollar standard.
The reason they're trying to get together
with digital currencies is not that necessarily,
the digitization aspect means anything to
them, but it does because we're in a digitized
world, and it gets them out of the SWIFT system
for stuff.
BILL TAI: Yes, a very expensive [?]. RAOUL
PAL: They have all sorts of problems and then
China can create a regional currency basket
very easily and its currencies and then weight
it, it just becomes a much easier way to globally
transact business.
BILL TAI: Totally agree.
Lower friction, lower cost, easier to scale.
Lots of ways for water to seek its own level.
It makes it much more fluid.
RAOUL PAL: Without having to go through the
US that's omnipotence in their dollar standard.
Right now, 79.5% of every single transaction
on earth is in US dollars.
The US is only 25% of the global GDP.
It's so screwed up.
That has to change, and that's what Mark Carney
from the Bank of England talked about, and
the ECB have talked about is like, we need
to move away from this because it just doesn't
function anymore.
BILL TAI: It's not fair.
It's only what, the US must be 6%, 7% of the
world population.
Maybe.
Yeah, and 79% of the transactions in US dollars.
Amazing.
