Sazmining Podcast Episode 8: Rafael Cosman on Stablecoins and DeFi


In Episode 8 of The Sazmining Podcast, Will speaks with Rafael Cosman, CEO of TrustToken. They discuss the nature of stablecoin and DeFi markets, metrics that are crucial to understanding both, and more.

Will Szamosszegi (00:00:04):

Welcome to the SA mining podcast at SA mining, we are bringing you into conversations with today's industry leaders and blockchain and cryptocurrency. Our goal with this podcast is to improve the understanding and adoption of blockchain and cryptocurrency by giving you an insider's look at what's being built and inform predictions on what the future holds today's episode is sponsored by block by and cogent law group. Our listeners can visit block mining for an exclusive offer for cryptocurrency management and check out cogent law group for all your legal needs. Raphael Cosman is the CEO and co-founder of trust token makers of the world's first compliant independently, attested digital dollar T U S D and four other global Fiat backed stable coins prior to trust token Raphael helped build street code and has also worked at Google brain Palantir and Colonel. And in his free time, you'll find Raphael reading or surfing. Welcome Raphael.

Rafael Cosman (00:01:13):

Thanks for having me, William. It's good to be on the podcast.

Will Szamosszegi (00:01:15):

Yeah, I'm extremely excited to have you on and to talk with you today because you're actually the first person that we've had on the podcast who is deep within the stable coin world. So I'm sure we'll dive into that later on, but to start, could you just talk a little bit about your journey, uh, up until this point and what led you to what you're working on today?

Rafael Cosman (00:01:38):

Sure. Um, I got into, um, coding when I was young and studied CS at Stanford. And after I graduated, um, after spending, um, a little bit of time working, I decided I wanted to start a company and my friend and we, um, we started the company that ended up being trust token and the makers of true USD. And, um, when we started the company, it was originally an estate planning company. So we made software that makes wills and trusts. And then about a year into the company, we saw what was happening in crypto and decided, wow, there's we definitely need to be in a different business. And, um, we, we particularly saw the growth of tether and I think at that time, tether might have been passing. Maybe it was like a billion dollars or something like that. And now of course it's $10 billion, but we thought, wow, this is it's crazy that, that, you know, a product like tether can get so big and yet it's still pretty, has a pretty negative reputation.

Rafael Cosman (00:02:43):

Um, and isn't that compliant with international regulations. And so we thought, wow, there's okay. There's a big opportunity here. Clear demand for a product like tether, but you know, they left the door open to do it in a much more trustworthy way. So we launched free USD and, um, and the rest is history and USD's grown a lot. It's about 300 something million dollars in market cap right now. And we've got four other stable coins that have launched as well through Australian dollar Canadian dollar Hong Kong dollar and British pound. And we're now coming out with a product that we haven't talked about very much publicly yet, cuz um, it's still in the works, but it's probably gonna be launching in the next, uh, month or two and it's called true fi and it's a defi protocol for doing uncollateralized lending, which is a pretty novel thing because almost all of defi as you know, right now, whether it's Ave or a compound or maker, almost all these systems do over collateralized lending and that's how they can be trustless, but how to do uncollateralized lending in a trustless way or at least a low trust way.

Rafael Cosman (00:03:55):

That is, uh, very much an open problem. And yeah, I think we have a, we think we have at least part of the solution with Truk.

Will Szamosszegi (00:04:02):

Yeah, well that first off is quite the pivot that you made from what you were doing before and then, uh, like every great entrepreneur you, you saw the opportunity and uh, you know, dove right in. So that that's amazing. Uh, but I guess to lay the groundwork for a lot of the things that we are going to dive into today, I actually didn't know about that product launch that was coming up. So I definitely want to dive into that later on. Yeah. But just to start, could you talk a little bit about stable coins, what they are, why they're important and how you guys, uh, built your own stable coin?

Rafael Cosman (00:04:36):

Yeah, absolutely. So stable coins are price, stable cryptocurrencies and they're, they're very important for crypto. In fact, they now make a very significant chunk of total crypto market cap and trading volume and you know, tether or another stable coin is on one side of a very large fraction of all trades. And the reason that for that is because people wanna have their money in crypto for all the obvious reasons. You know, they wanna be able to send it around the world almost instantly. They wanna be able to hold it on all kinds of different apps, wallets, or exchanges. They want all the advantages of cryptocurrencies. They just don't want the volatility. And that has been a perennial problem and tether and our product for us D and S D C um, are three of the major Fiat back stable coins. So they achieve price stability by backing the token by us dollars.

Rafael Cosman (00:05:32):

There are other models and the, the best known one is maker with dye or dye is a stable coin that is pegged to a dollar, but it's not backed by actual us dollars. It's backed by over collateralized ether and other crypto assets. So you can lock up a dollar 50 of ether and then you can mint a dye. And that's how the system is always collateralized. And it's a, it's a bit more complex than just having, um, Fiat reserves the way that true USD does, but it also can be potentially more trustless because you can see everything that's going on directly on a smart contract. There aren't any banks that are operating off chain that you have to rely on. So those are, those are two of the big models right now. And, um, we think that there's a lot of potential, um, both in, under an uncollateralized lending on chain.

Rafael Cosman (00:06:25):

So there's a new product that we're developing there called Truk. And we also think that there's a lot of potential for stable coins that are not based on the us dollar right now almost the entire stable market is about the us dollar. And that makes sense because the us dollars, one of the most trusted finance products globally, and it is the coin of global trade, but there are a ton of crypto users that are coming from Australia, from Europe, from Asia, from south America that have local Fiat currencies that they want to be able to OnRamp easily into crypto. And they would love to be able to see, you know, when they're buying and selling Bitcoin or ether other assets, they would love to see those denominated in true Australian dollars rather than true USD. And so this we think is gonna be another major wave for stable coins think assets other than us dollars. And that's something that we're pioneering as well.

Will Szamosszegi (00:07:19):

Yeah. And that's one of the interesting things as well, how the most common one that everyone sees is how us, the stable point P the us dollar, there are multiple different types of stable coins. And at least for people who aren't fully within that realm of working on stable point projects or everything else, it's kind of difficult to assess one stable coin from another. So could you talk a little bit about what some of those differentiating factors are between, for example, your stable coin versus another stable coin, like tether or any other type of stable coin that's out there?

Rafael Cosman (00:07:55):

Absolutely. Um, the, the, the biggest thing that we've focused on, cause we were the first stable coin to launch after tether the first Fiat back stable coin. And the biggest thing we focused on is trust and transparency just to differentiate ourselves from some of the issues that tether I've been facing. And we do that in a couple of of ways. Um, one is that we're the only stable coin to have real time, 24 7 audits. And this is it's interesting technology. We partnered with an accounting firm, a top 50 us accounting firm to do that. And they connect directly to our banking partners and pulled the information about the us dollars that are backing through USD. And then they actually host on their website adapt.

Rafael Cosman (00:08:45):

So that's, that's one, one way that we try to differentiate ourselves of, you know, tether was having a lot of complaints for not being audited at all. And we went to the other extreme and said, let's set up a system for, or will be the first stable coin to ever be real time audited. And we're actually now working on a project with some of the chain link Oracles to be able to take that information about the collateralization of true us D and actually put it on chain. So that defi project and smart contracts can actually can know that true USD is collateralized and they, they can get a price feed or a data feed from an Oracle showing that that level of collateralization, and they could have certain kinds of stop losses or triggers if that collateralization level, level, wherever to default.

Will Szamosszegi (00:09:32):

Got it. And another question that I've, I've been wondering about recently is you hear a lot of different governments who are thinking about issuing their own digital currencies. Uh, China's been talking a lot about it, but there's also the potential that the us government might at some point go and try and create their own type of, uh, us dollar coin, uh, stable point, whatever it might be should be could. Yeah. And in that type of a world, what happens to projects such as yours or tether or any other, uh, any other project that's tied and pegged directly to the dollar?

Rafael Cosman (00:10:09):

Well, so it's, it certainly could, we certainly could see in the next couple of decades, some major government backable coins, you know, the us government is evaluating it, but it's very unlikely that anything would happen within the next couple of years, just cuz things like that move very, very slowly. You saw, even with Libra, just being a large company in the amount of, of back and forth that has to happen with regulators is massive. And so if the fed or, or the us treasury wanted to issue something similar, uh, a us dollar stable coin, it would be, it would be years and years and years of discussion and design before it happened. I do think the Chinese are gonna move more quickly and they are actively working on a, a renin B a Chinese wan stable coin. But I think that there will still be a place where companies such as ours, even in, even in a world where there are more government backed digital currencies because we're, we're focused on connecting assets to the blockchain.

Rafael Cosman (00:11:13):

You know, we've got five currencies. So far USD is just one of them. And down the road, we do think that blockchains are gonna be a place where hundreds of different different assets are traded. And a lot of the infrastructure that's being built today in defi, the best application of it will actually be when more real world assets are put into these protocols. Cuz if you even look at, if you even look at defi today, many people don't realize the extent to which stablecoin really are the killer use case for defi. And just, just as an example, the other day, I was looking at the numbers for compound and I I'm, I'm sure your viewers are, are familiar with compounds in Ave. They, they are, um, protocols for doing, uh, lending and borrowing on the blockchain and on compound they list nine different assets. And two of those assets that are both, both of them, stable coins, th those two assets, when I looked at the numbers just recently corresponded to 93% of the total amount of, of borrow to the total outstanding borrow from the compound protocol.

Rafael Cosman (00:12:22):

And it's not just compound. We looked at Ave as well, which is another one of the major, um, major lending and borrowing protocols on the blockchain. And, and it was very, very similar number it's about 92% of their total borrow was from stable coins. So that means every, all the other cryptocurrencies, all combined on Ava compound were making up seven or 8% of the borrow and stable coins were, were, you know, more than 10 X, everything else combined in terms of actual demand per borrowing. So that's, that's very indicative that these assets are, are some of the most interesting assets for crypto and for defi. Um, and you do need things like Ethereum would provide the basis for assets like tree USD and other stable coins to be traded. But when it actually comes to usage in defi for everyday people that wanna earn, you know, 3%, 5% on their stablecoin holdings, um, the, these non-volatile assets are actually much more interesting.

Will Szamosszegi (00:13:23):

Yeah. And I think that that's a, a good segue into the product that you were talking about earlier. Can you talk about how true fireworks <laugh> yeah, I like the term by the way.

Rafael Cosman (00:13:33):

<laugh> thank you. So Tru fi is a protocol for uncollateralized lending. So the way that a lot of these things like compound Ave work is that you can put up, let's say a dollar and 50 worth of ether, and then you can borrow a dollar of true USD. That's that's an example of how it works on Ave and that's over, CO's an over collateralized loan, cuz you're putting up a dollar 50 in collateral for a $1 lump. Now these, these products have gotten a lot of traction, a ton of interest. Many of them have upwards of a billion dollars. That's been deposited with them, which is very impressive. And that is part of what spurred so much interest in growth in defi recently and all the new projects that are coming up. But over collateralized lending is only a very small piece of the pie to be able to reach a much larger set of users and also to be able to offer higher interest rates to depositors.

Rafael Cosman (00:14:28):

We're gonna need to be able to have uncollateralized or at least under collateralized lending in defi. And that's what true five is meant to address. So the way that it works is you're gonna be able to put free USD or other true currencies into a pool. And then borrowers can apply to be able to borrow true USD from this pool at an interest rate. And there's gonna be a network of token holders that are holding a special token called trust tokens, which is gonna be able to, uh, approve or reject these loan applications. So you can think about it as a little bit like a decentralized loan officer where every holder of trust token is, is, you know, it's like one trust token in one vote and you, you can vote for or against these loans. And the trust token holders are incentivized to only vote on loans that they think are actually gonna do well.

Rafael Cosman (00:15:21):

So they are the ones that are acting as sort of a, a global decentralized loan officer assessing these applications in the future. We're gonna start with just one pool and it's gonna be designed to be fairly low risk in that we're gonna be only having a very limited number of borrowers, then be very reputable funds that we're we're working with that you know, are well known names in crypto have hundred hundred millions of hundreds of millions of dollars in our management, the very, very established players, but down the road, we're looking to open this up and have additional pools with different risk parameters. And some of them might be doing a larger number of smaller loans and some of those might be default, but you know, the other ones, if they have high interest rates could make up for that. So that's where we see it going down the line

Will Szamosszegi (00:16:05):

That is such a fascinating application of technology. I, I mean, that's, I'm, I'm piecing it all together, right? And so I guess my, my one question, I think it's really smart that you're starting with very reputable borrowers. I think that that, that this that's an incredible that this is an incredible, incredible product. Um, I guess what, what happens, let's say I'm a token holder, right? And I am part of the voting process of whether or not we should approve this loan. How is that voting process actually taking place in real time? If you're a token holder and you're part of that, I guess, underwriting decision, whether you're deciding voting. Yes. I want to give out this loan or no, I don't want to give out this loan.

Rafael Cosman (00:16:56):

Yeah. So there's, so a borrower is gonna submit an application saying, Hey, you know, we're a big, we're a big trading firm. We wanna get a 3 million loan, 11% APR for three months and they submit that application. Then there's gonna be a voting period of let's say seven days or 14 days when the trust token holder can vote yes or no on that loan. And to be able to pass, they have to be able, they have to, you know, exceed a certain threshold, a certain percentage of yes. Votes, but anyone that votes yes. On that loan, if the loan is approved, then their trust tokens are now gonna be staked on it. And if they do end up paying the loan back, then, then anyone who voted yes on it and staked on it is gonna get a bonus. So they'll get, let's say 5% or 10% boost on their trust, tokens as a way to reward them for voting in this loan, which ultimately helped everyone helps the help the pool and help the whole protocol.

Rafael Cosman (00:17:55):

But if that loan defaults, then they're gonna have some, or all their trust, tokens slashed, it's gonna be burned, um, similar to in proof of stake or other protocols. Uh, if you, you know, do something wrong and you know, I ended up harming the protocol, you're gonna have your trust, tokens burned. And what that does is that creates the right incentives where now yeah, if you, if someone is very legit, there's very legit fund, they're very likely to repay the loan. Then you're, you're economically incentivized a very large extent devote yes. On that loan. But if they're not legit, then voting yes is an extremely dangerous proposition. And this also serves to, in addition to creating those incentives, it also serves to weed out over time. Uh, any trust token holders that are repeatedly, repeatedly voting on bad loans, they're gonna lose their trust tokens. And they're gonna no longer be a part of this decentralized network for assessing these loans. And we're gonna be giving, you know, the protocol is gonna be automatically giving more trust, tokens to people that are voting in, in a way that ends up being correct. So, so over time that should shift the trust tokens, uh, to be distributed, you know, as well as possible to folks that are really adding value to the protocol.

Will Szamosszegi (00:19:12):

Yeah. Wow. So you've, you've even designed the incentives within that underwriting process to make sure that, uh, the right loans are getting approved over time. And it almost kind of the, the way that I could see this playing out over time is that you're going to get more and more, very knowledgeable people who would understand how to properly underwrite these loans, getting involved with your network because they're incentivized economically to really participate. And I can definitely see the snowballing to, uh, to just becoming something that, that becomes more robust and gets used by more and more people.

Rafael Cosman (00:19:47):

That's the idea. And we do think that if you create the right incentives, you'll get the right behavior. That's one of the core, that's one of the core good ideas that crypto really brought along into the world. You know, it's very much applied game theory. And also there are things that you can achieve when you have a decentralized network, like the all, all the trust token holders that we're gonna be having globally that you just, you can't do. If you're just one loan officer or a team of loan officers that are looking for these good loans to approve, you're gonna be able to find things that, that an individual lender would never be able to find when you have a global network that's distributed and is all working together.

Will Szamosszegi (00:20:32):

Yeah. And so when this launches, how are you building up, I guess, that that base, uh, the, the base token holders who are going to be participating right off the bat, is there like a strategy behind that? Or how are you getting, going to scale up the reach of those initial network effects?

Rafael Cosman (00:20:52):

Well, our goal is to distribute trust, tokens, quite widely. And this is a model that compound and many other folks have, have been using quite successfully in, in the, in the last few months, especially. So anyone that deposits anyone that provides liquidity into Tru fi that puts in true S D that Tru fi is gonna be lending out. They're gonna start earning trust tokens as soon as they put in true USD, and that's gonna help to bootstrap the liquidity of the protocol and get a lot of capital to come into Tru fi. But it's also importantly going to putting the, putting the, the power of which loans were, which loans the protocol's making in the hands of the users, giving, giving those trust tokens to Tru fi users, whoever they are, they could be, they could be individual traders putting in $10 or a hundred dollars, a thousand dollars.

Rafael Cosman (00:21:43):

They could be big funds that are coming in. Whoever's putting through USD in that's where we're gonna be distributing trust tokens. And then also we're likely gonna be incentivizing liquidity providers on other protocols as well. So like people that provide liquidity to our tokens on, uh, UN swap or on balancer or other protocols like that, um, giving them trust tokens as well. So all the folks that are participating in the ecosystem and, and are providing value are gonna ultimately be the trust token holders that are gonna be approving over rejecting loans and deciding where that capital goes.

Will Szamosszegi (00:22:18):

How did you bootstrap it, the project initially, to get to the volume that you have today, you said in about 300 million market cap, it just, is, it sounds kind of crazy to think, oh, well, you pivoted. And then all of a sudden you got that type of traction and had that many people buy into your stable coin. Can, can you talk about how you made that process happen and you took the company through that leap?

Rafael Cosman (00:22:45):

Yeah, I, well, it's, it's taking quite a while to get to this size. We've got 300 million in tree, us D tree USD's been around for something like two and a half years now. And it has been a long slow process to get to this size. I think the, the first, you know, I remember when we launched it and we were at 5 million and they'd be like, wow, there's 5 million in TruD. And they got a 10 million, 10 million <laugh> and a lot of our growth, a lot of our growth in the first year or so, like over the course of a lot of 2018 was from just listing on major centralized exchanges to TRUS D is now traded on a lot of the big names of finance and okay. X and many other big, uh, exchanges in the us and abroad. But then recently in, in 2020, most of our growth has come from, uh, being supported on D five protocols to things like curve fi, which is a protocol that actually supports trading between stable coins. So they, they have a pool that has SD C and dye and tether and true USSD altogether in one pool. And they provide liquidity between the stable coins. So that, that protocol actually has, has driven a lot of our growth recently and is holding, um, some very large chunk, maybe a hundred million, something like that, tree USD. And, uh, it's, it's, it's been the popularity of defi that has, has really, um, been the most valuable recently

Will Szamosszegi (00:24:22):

Looking at it from your perspective, what do you see as the next phase of, of stable coins and, and of this industry right now, there's a lot of buzz around defi and all these different protocols, lending, borrowing automation, but from your perspective, where do you think that this is all headed?

Rafael Cosman (00:24:41):

Good question. So, so I think that GFI is in a bit of a bubble right now, but that's okay. Cuz I do think Def I has a lot of value long term. And so even after this wave goes out, another wave will come in down the road. The fundamental idea of defi building blocks, small recomposable pieces that you can make more powerful financial products out of that is a fundamentally very powerful idea. And that is why I think that defi will win or at least will have a very valuable role to play in finance. Yeah, I think it will have a larger role play in the future. Um, because the idea of defi building blocks is a very powerful idea, small composable protocols that can be used together to create all kinds of different financial products. That is a fundamentally powerful idea. And conventional finance does not have anything that can really compete with that.

Rafael Cosman (00:25:44):

You can see that if you just look at even like, let's say something like UNAP, which is a decentralized exchange and something like Ave, which is a borrowing and lending protocol. So, so you can take, you can take, uh, something like true SD and ether and you can put them into UNAP and then you can get LP token liquidity provider tokens that represent your deposit into UNOP. And now, you know, people can trade with that liquidity that you've put in, but then you can take those LP tokens and you can go to a lending and borrowing protocol like Ave, which if it supports them, you can actually then loan out those LP tokens. And so just the way that you can, can take these protocols and combine them together to create new things is it's very powerful. So one trend that we're betting on is from, from over collateralized lending to under and uncollateralized lending that we think is gonna be a big one second trend that we're betting on is that a more diverse set of stable coins is going to power.

Rafael Cosman (00:26:43):

The next two years of defi and the, and, and most people are not, are not really realizing the extent to which defi today is, is overwhelmingly driven by the use of stablecoin. I think actually the 2020 explosion in defi that we're seeing could not have happened in 2017 because there weren't the stable coins that were necessary. There was basically only tether at the time and, and die was just getting started. But, uh, at that point, I think you could not have had the kind, the, the proliferation of Def I protocols that we're seeing today. You gotta have much, a much larger number of different stable coins to use. And we think it's gonna be, um, it's gonna go a lot beyond just USD and other currencies and other assets in the next few years,

Will Szamosszegi (00:27:32):

From the standpoint of someone who's, let's say they understand DFI. They understand not only the mechanics of it, but they actually think that it's a good idea. It's where the future's headed, but they are in the crypto space, but they're not actively participating in these different types of protocols. What would you say to them at this point in time if they're not actively participating, but they want to get involved?

Rafael Cosman (00:27:55):

I would say, I would say get your hands on some stable coin, like through USD <laugh> and, and put it in something like Ave, which is a very trusted protocol with something like a billion dollars of deposits already. And that's a great way to, to get some exposure to it. Um, try out defi, and you, and you don't have to be hopping on the latest DGen craze to be, you know, just earning, earning a good interest rate and, and getting some benefit from defi. But also I'd say to a large extent, we're still building stuff like it's gonna be like, it's gonna probably be a couple more years before we've got applications that are ready for the big leagues for having, you know, hundreds of millions or a billion plus users come in and start to take advantage of what we've built. And so, and so in some sense, everyone in crypto right now is still an early adopter.

Rafael Cosman (00:28:57):

And, and we're, you know, we're gonna get to the point at some point where crypto is like the internet. It's like T C P I P, where everyone's using it, but only 1% of the population or less really understands how the thing works. And that's okay in some sense as it should be. Right. You know, we all, a lot of us drive cars, you know, only a tiny fraction of people actually know how to fix one. That's fine. So crypto will get there. And, uh, and, and it's, it's gonna take several years, but what's gonna be big when it does.

Will Szamosszegi (00:29:33):

Yeah. I definitely share that, that type of a view where I think that if you really want to reach mass adoption, you want to build products that are so good and compelling for people to use, and they don't even need to know that there's a blockchain aspect to that product. They're just using it because it accomplishes or solves whatever problem that they're facing. And I think that the company out there that are able to build those products and find that product market fit and serve customers the best are really going to see the, the fruits of their labor later on. But right now they're all building.

Rafael Cosman (00:30:09):

Exactly. Yeah. And I think that, that we're gonna get to the point where, you know, see, so crypto is, you know, it's internet money. I think that's actually, it's a good way to think about it. It's internet money. And there aren't that many different things that one does with money, right? Like you invest it, you save and you earn an interest rate, you spend it, uh, you, you should be able to, you know, send it to other people and other businesses, you know, basically it like, you know, those are, those are pretty much the only things you do with money. That's if you, me, when they say money, money is commoditized, you know, it's just, it's just one investment product or another, or one interest rate or another, you know, the, these products aren't that unique. And so the, the way that crypto is going to win in the world of money is fairly simple.

Rafael Cosman (00:30:58):

It already can be sent to anyone anywhere in the world, 24, 7, almost instantly, and fairly cheaply. That's a big deal. That's a big level up compared to like sending an international bank wire. But I think that the thing that that defi is, is developing right now, that's gonna really make crypto more competitive, uh, in terms of getting, you know, becoming a part of, of, of more people's lives is being able to offer a higher interest rate. So there's gonna come a time when you're gonna open up your banking app, you're gonna open up Robin hood or PayPal or your chase app, whatever it is. And instead of earning, you know, 0.01%, like I am right now in my chase account, you're gonna be earning 2% or 3%. And if this is gonna be for everyday consumers, folks that have have little understanding or knowledge of crypto, but, but crypto's going to get to the point where these protocols are so established.

Rafael Cosman (00:31:57):

They're so trusted. They've been around for so many years and have not lost people's money. And, and you're gonna have something like Ave, something like maker, be involved in a conventional consumer finance app, like a PayPal or, uh, a square. And someone's gonna be, someone's gonna have their high yield high yield, uh, account in there earning 2% earning 3%. And it might have a little disclaimer saying like, Hey, you know, we use crypto when we use this, the following defi protocols to earn this interest rate and they may not really understand it, but there's a lot of things that banks do with people's minds that they don't understand. Anyway, the thing that matters is that it's actually low risk. Yeah. And we're, we're still, we're very far away from, from some established, you know, FinTech companies or established banks feeling comfortable with, um, with these types of, of crypto products for their consumers. But, um, we're gonna get there. And every day that goes by that, that stable coins, like your SD are still stable, still worth the dollar and protocols like Ave are still solvent, still. Hasn't lost anyone's money, you know, every day that goes by these things are earning trust and they're continuing to provide returns that systematically beat what you're making with conventional banks and conventional us dollars. And so that edge is, is what's going to ultimately win that's what's gonna ultimately increase crypto's total market share when it comes to global money.

Will Szamosszegi (00:33:32):

Well said <laugh>

Rafael Cosman (00:33:34):


Will Szamosszegi (00:33:34):

You. You need like the mic drop after that. <laugh> yeah, that's awesome. And so my question is how is the treasury management of very large public companies going to change over time recently read about how, uh, I think, I believe the name is micro strategy. They made it part of their treasury management plan to rather than holding us dollars. They just put, uh, they just bought a bunch of Bitcoin. And they're saying, this is how we're gonna protect some of our money. And I have a prediction that over time, we're going to see more and more institutions just have Bitcoin as part of their, uh, investment strategy, part of their reserves. And I think that really, when people are gonna look back and say, this accomplished what we saw saw that was possible and accomplished everything that everyone in crypto's been talking about is when every single country around the world has a part of their, uh, treasury held in Bitcoin. And at that point, I think that the value of one Bitcoin is going to be astronomically high compared to where it is today.

Rafael Cosman (00:34:40):

Yeah. I somewhat agree. Somewhat disagree. I think we are going to, at some point, see, very widespread use by governments and large corporations of crypto. I don't know if it's gonna be Bitcoin. I'm a lot more bullish about crypto in general than I am about Bitcoin specifically. And the reason for that is I think Bitcoin is likely always gonna be very volatile. And if we're trying to convince a big corporation or a government to put money into crypto, I think our strongest bet is gonna be, if we can say, look, we've got things like stable coins that have been around for years and have been completely stable and are fully backed and you can really trust them. They're rock solid. And we've got protocols in defi that have been, that have been around for years, and I've been holding billions of dollars and are very, very solid and are completely audited.

Rafael Cosman (00:35:46):

And you can earn on interest rate on these defi protocols that kicks the butt of whatever you're earning on normal us dollars that I think is going to be, I think that's a much more reliable sell for us as an industry. If our goal ultimately is to close corporations and governments and banks and convince them that they should be using crypto. And the two things we have to work on are reality and perception. And right now the reality is pretty decent. You know, if you look at the best, if you look at the best protocols and you look at very trustworthy, stable coins, you know, these things are reliable and they, they provide good interest rates that really are a lot better than what you get on the us dollar. And, um, the perception right now is still lacking behind that. And that makes complete sense, cuz it's still only been a handful of years that these things have been around.

Rafael Cosman (00:36:42):

Once we get to five years, 10 years, 20 years, then it's gonna be a lot harder to argue that these things are gonna, oh, they're gonna suddenly implode implode. Well, okay. Why did, if they suddenly gonna implode, why didn't they IODE anytime over the last two decades that they've been around, you know, that's where, you know, Bitcoin has established a track record of security, which is why people are very confident that the blockchain's not gonna get hacked, but it has, does not have a track record and it probably will never have a track record of stability. And that's what I think a lot of folks want. So yes, you'll might put, it might decide. Yeah. I wanna put a little bit of my portfolio into Bitcoin and take a flyer on it and I think it might go up, it might go down, but I don't think that that's gonna be a, I don't think that that's ever gonna be a reliable sell where we can, where we can say, look, we've got, we as an industry, have a set of products that are just better than whatever you've got right now and you should be using them.

Rafael Cosman (00:37:39):

And if you're not convinced, then give us another year, give us another two years giving us another five years. You'll be convinced because we're gonna keep performing at a level that you will not be able to deny.

Will Szamosszegi (00:37:50):

Yeah, that's interesting. I'm really glad we, we started diving down this rabbit hole cuz I never, I, I never included that part within that, that prediction as well. I wasn't thinking about how stable coins would also become part of it. I'm a little bit more disconnected from defi as I'm sure you are compared to you because you're building in it every single day. And I can definitely see, uh, that being part of the future, that's outlined in how this space continues to grow and we see government adoption. I mean the way that you laid it out, that makes, that definitely makes sense. I, the one other piece that I would add on top of both of the, that what you just outlined as well as what I just outlined is from a government's perspective, you're looking at at a couple of different, uh, variables for each of these.

Will Szamosszegi (00:38:38):

So you outlined a great reason why there would be a growth of stable coins and other types of protocols that they get involved with. Uh, I think that from the Bitcoin point in the view, one of the powerful aspects within that is the decentralization that is built with, into the protocol and the, the distribution of, of the hash power, for example. So just as what we saw recently happening with all, all the different, uh, central banks and printing of, of, uh, of dollars out of, out of thin air in a sense, yeah. Uh, that's something that you can't do with Bitcoin. For example, it's got the most transparent monetary supply of any currency in the sense that you know exactly how much is going to be mined. You know, when, uh, the next distributions are going to be made, you know, how that those distributions are determined, how much Bitcoin is being given out per block and how every number every 210,000 blocks that reward being paid out to the minors is cut in half. And I think that, uh, that's one of the reasons why I could see kind of combining both the, both what you just outlined in kind of what I thought previous to this conversation. I could see governments actually in the future getting exposure to both. Whereas you have one in Bitcoin where you have the decentralization aspect and then you have these protocols and these stables that are proving themselves over time to be reliable and another place where finance continues to evolve to.

Rafael Cosman (00:40:14):

Yeah, I, I think that Bitcoin and, and similar coins will have a role to play. And, and there's no question that that decentralization is valuable. And if we were in an apocalyptic scenario and the financial system was melting down and you know, people were, were, were riding in the streets and, and, you know, the us dollar was, was crashing, you know, in that situation, I think, I think Bitcoin would be crucial and it might be one of the, one of the best investments. One of the only forms of money that one could one could depend on or could use in a, truly a pocket, this scenario <laugh>. So I ideally Bitcoin has a tremendous amount of value there. And I think, I think we're gonna see, you know, the future of crypto. I think it's gonna be a mix of purely digital assets like Bitcoin and tokenized, real world assets, like true USD or true GDP.

Rafael Cosman (00:41:06):

But also if you look at what, what is actually getting traction and growing over the long term, you know, Bitcoin is right now trading at something like 10 K you know, some pretty significantly lower than it's peak in 2017. And it is, it is gonna continue to be driven by, you know, height phases, where it pumps up and then depressions where it crashes down. And it may over the long term continue to, to continue to go up from here. But I think it's, uh, I think it's, it's not clear which what, what the, what the long term future is going to hold, but as

Will Szamosszegi (00:41:45):

You compare that, I, I actually think it goes back to what you said earlier too, with like perception and reality. Right? And so, uh, just going off of what you're talking about with Bitcoin, the price now is, is obviously much lower than the highs at, at 20,000. And I think that like the perception is outlined in the price, right? I mean, that's, that's kind of, what's driving it. You have, it was 20,000 now it's 10,000. And then I think the, the reality aspect of it is by analyzing the hash power and what's been happening on the mining landscape. And what we've seen is an enormous increase in the amount of hash power on the network, not purely driven by the increase in sophistication of the mining hardware, where yes, we went from, uh, older generation miners to smaller nanometer chips, uh, where you just have more efficiencies, you can have greater hash power. But the reality is, is that there's a lot of MI there's a lot being built on the mining front. And I think that that's almost like a price floor that's helping drive baseline, um, baseline value to the network. Uh, people are still in investing in mind.

Rafael Cosman (00:42:55):

That's that is to a certain extent just following Moore's law in, in, in the long term. I mean, we, of course we move from CPUs to GPU, to Asics, but now that we're on Asics, isn't it basically just gonna follow Moore's law over time.

Will Szamosszegi (00:43:10):

Oh, with the increase

Will Szamosszegi (00:43:11):

I, I had Aion power. Yeah. This is actually very interesting that we ended up here cuz I had a conversation about this specific topic for like an hour and a half the other day with, with a few people who are in, in the semi, um yeah. In, in that industry. So they, we were talking about more as law and we were having, uh, two, two guys who are far more technical than myself. I was more of like a fly on the wall for this discussion, but they're talking about Moore's law and is it dead? And one of the participants in the conversation was talking about how it looks like Moore's law is dead when it comes to these types of equipment. And the other guy was talking about how, although it seems like that Moore's law has been consistent since, uh, I forget how many years probably like, like 50 years or something like that, like a while. And he ended up sending over a video, showing how Moore's law has stayed consistent over, um, over like the past 50 years, but recently in the PA in these, in the phase that we've been in, we haven't seen that next huge jump. But if you just assume that Moore's law is going to continue, then we're going to see another huge jump in that hardware. And so I guess going

Rafael Cosman (00:44:23):

The thing is so I, I, I, I, I agree with you that Moore's law specifically may not continue to hold cause we're getting close to some of the actual physical limits here with seven nanometer chips. I mean, it's really, really small. You can't get that much smaller <laugh> but, um, the Moore's law specifically was that number of transistors on a chip, but we're still seeing a lot of growth. It's just coming in other ways, like we're having more cores per CPU, more cores per GPU. And so the actual dollar per flop might be a, a better metric, like inflation adjusted dollar per flop. I think that's gonna continue to drop, even if Moore's lost specifically is not holding.

Will Szamosszegi (00:45:08):

Yeah. And I, I also think that that, that definitely makes sense. Um, it, because that's, it it's, it gets even like deeper than that too, when you're looking at just the overall pricing of like when you're going from a seven nanometer chip to a five nanometer chip and how, how high in demand is that five nanometer chip where if you're a manufacturer and you're thinking, okay, well, if I'm gonna manufacture this ASIC and I have to pay this much to build a five nanometer chip, then it wouldn't necessarily be worth it because the demand for that five nanometer is too high, which also from like a minor's point of view, we're, we're trying to figure out where the industry's going. And that's one of the things that is making it more difficult for there to be a, a huge leap in the next type of generation hardware that comes out that may be five nanometer.

Will Szamosszegi (00:45:57):

Um, I mean, it's really hard to say exactly what's gonna happen, or if there's going to be a generational, like an enormous leap in Moore's law with some other type of chip that might come out. I know that there are some companies that, um, some of which I'm, I'm in very close contact with that are working on very interesting technologies that, uh, that could have huge ramifications for compute tower. Uh, yeah. And that's where I'll, I'll leave that. Um, but it's really interesting to kind of see what's being built. And I guess no one really knows until you kind of get to that phase. But, um, I do, I do think that the future for Bitcoin is very strong and I think that just similar to how you've set up great incentives with your protocol, and I think it's going to be, um, a very great product. I mean, just after diving into it with you, I think that Bitcoin shares many of those characteristics and it has many, uh, incentives that work for it in the long run. But then again, you never know, I could easily be overlooking one or two variables, but, um, <laugh> the, the way I see it, I think that Bitcoin's got a very strong, very strong future.

Rafael Cosman (00:47:09):

Yeah. I think that, I think that Bitcoin's, Bitcoin's certainly can have a very strong future. Um, but I do think that that stable coins are gonna be an increasingly large share of overall what crypto's doing. Just looking, if you look at the numbers, you know, in 2017, you know, while, while crypto today looks somewhat like 2017, overall the growth of stable coins, stable coins are in a radically different situation in 2017, there's basically one stable coin. It was tether. And their market cap at the of 2017 was something like 15 million.

Will Szamosszegi (00:47:44):

Really. I actually did not know that

Rafael Cosman (00:47:47):

15 million <laugh>

Will Szamosszegi (00:47:49):

Beginning of 2017.

Rafael Cosman (00:47:51):

That's right. Wow. While, while of course, you know, crypto was at an all time high, you know, Bitcoin trading at, you know, 17,000, 19,000. And then they quickly grew into the hundreds of millions and now's the billions and that today they're about nine or $10 billion in, uh, tether. And you've got other stable coins, like U S D C like true S D that, that have very significant market caps in the hundreds of millions. So that is, that is just an unbelievable growth of the industry. And now people are looking both for equity, like products that could go up 10 X, but also looking for more like, you know, debt like products, which can go up 10%, but can be much lower risk. Um, I do think that, that the, the changes in computing are very interesting in that. Um, if we can successfully build, uh, you know, quantum computers, computers that use light instead of electrons, there's a lot of potential for what it could do to this industry. But I think even without changes in computing, that the amount they can be done just using, uh, smart contracts and blockchains as they're currently designed is still tremendous.

Will Szamosszegi (00:49:11):

Yeah, definitely. I mean, look at how big the financial, like the, in the industry of just finance as a whole, everything runs on finance, and this is a better way to, uh, really build out that system. And you're your company's part of that movement of the companies within defi and crypto that are really trying to build the system from the ground up. That just takes time.

Rafael Cosman (00:49:34):

It does. Yeah.

Will Szamosszegi (00:49:36):

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Will Szamosszegi (00:50:52):

Yeah. So I'm actually very curious for this next question. I'm gonna ask it's non crypto related. Okay. But what is your favorite book?

Rafael Cosman (00:51:01):


Will Szamosszegi (00:51:02):

Are you like a, are you a, are you a fiction guy or are you, what type of, what type of books do you read?

Rafael Cosman (00:51:09):

I read a combination of fiction and nonfiction. I like to balance it. I'd say, okay. My favorite nonfiction books are, um, I'll give you three. Okay. All right. One is the 15 conscious leaders, uh, the 15 commits, a conscious leadership, and it is a amazing book about how to lead and live. Um, another one is getting things done by David Allen. You might have heard of that one. Yep. That's just like, that is the Bible when it comes to productivity <laugh> and final one, most folks haven't heard of it's called good and real. And it is, I think, one of the best descriptions of how reality works at the deepest level, like what is likely going on at the very bottom of physics, if you drilled all the way down. Um, all three of those books are ones that have significantly changed how my, my perspective on the world in terms of fiction, um, when I was young, I really loved, uh, Andrew's game. I'm sure.

Will Szamosszegi (00:52:20):

Yeah. That book is that a lot great. <laugh>

Rafael Cosman (00:52:23):

It's a great book. Very inspiring.

Will Szamosszegi (00:52:24):

You're the first one that said it actually really? No, no one has said Andrew's game. We've got my brave new world. We've gotten like 1984. Yeah. Uh, yeah, catching MRI. We've gotten all

Rafael Cosman (00:52:35):

These high brow books folks. Aren't being honest with you. <laugh> um, but, but recently, um, my, my new favorite sci-fi author is a guy named Greg Egan. And if you're looking for something to start with, I'd recommend permutation city, but he writes some, like some very thoughtful. And also what I think are some of the most realistic visions for what the future of humanity can hold. And I actually, I think that most people severely underestimate even people in technology. I think oftentimes severely underestimate the amount of change that we're likely to see in our lifetimes, cuz you just extrapolate forward. You know, I'm 27. I grew up with using the sloppy discs when I was a kid. You know, we basically didn't have the internet back then. And just thinking about the fact that today we've got, you know, crypto and Uber and Snapchat and the gazillion different things. Um, what is the next, if I can reasonably expect to live for another 50 years as a, a fairly healthy American, you know, what am I likely to see in my lifetime? It's crazy. And I, I think that, um, that one, part of the purpose of sci-fi and Greg again, does this particularly well is to show us what that can look like if we build

Will Szamosszegi (00:53:53):

It. Yeah. I mean, I, I completely agree. I think that, uh, people far underestimate the, the rate of change within technology and just how quickly people will adapt new types of technology. I mean, yeah, just like going you, you laid it out right there. Just when you were younger. The internet was just like, I mean, yes, it was there technically, but it's not like it was used. I mean, today you couldn't, you couldn't operate without the internet. You couldn't operate without a smartphone. I mean, how quickly did that happen? How, how many years are smartphones been around? They've been around, um, like just over, uh, uh, is it like 10 or 20 years? 20 years, 10 years.

Rafael Cosman (00:54:45):

Something like that.

Will Szamosszegi (00:54:46):

Yeah. Very short period of time and something that every single person is completely relying on.

Rafael Cosman (00:54:51):

You can't imagine life without.

Will Szamosszegi (00:54:53):

Yeah. So sci-fi almost gives a map for the future. Like what people want to build. These are possibilities and then kind of just takes people to go out and try and make it happen.

Rafael Cosman (00:55:03):

Yeah, it is. I think also the, um, I, I think this, this is why I think it's it's technology is a good place to be. If folks are, you know, thinking about where to be career wise, technology is a great place. If you look at just, just what, right? What today are the most valuable companies in the world as, as you know, you and I, both folks that are building companies, you know, you just go down the list. It's tech companies, all the top mm-hmm <affirmative>, you know, and most of this is technology that just didn't exist. A lot of it just didn't exist when I was born, you know, or, or was invented within the last, in the last few decades. Many of it, you know, Microsoft, apple, Amazon alphabet slash Google, Facebook, Alibaba. These are the world's most valuable companies. And 50 years ago, you could not have imagined what these companies were doing, cuz the, the technology just didn't exist.

Rafael Cosman (00:55:57):

<laugh> so I think that the, that the same thing is likely going to be true of the future, that the, the techo, the products and technologies that are going to exist 20, 30 years from now and you and I are gonna live to see it. Uh, they're gonna be things that are difficult for us to even imagine today. And, and the companies that are gonna be the most valuable companies in the world might be ones that we've never heard of and that haven't even been founded yet. And they're gonna worth, you know, a trillion $2 trillion.

Will Szamosszegi (00:56:25):

Yeah. And that's really interesting. So going back to that, that third book. Yeah. Where do you wanna start? I haven't read it. So, uh, you can lay, lay the groundwork and we can, we can go back and forth on it.

Rafael Cosman (00:56:37):

Okay. So, okay. I'll, I'll give you the groundwork. You gotta read the book to, to really, to really get I'll give you enough to hopefully be enticing. So, um, the it's written by this guy, Gary Drescher and the title. Good. And real is like the two things he's trying to investigate in this book is really, um, good and real. What is, and what, what real, what is, and should and good, what it should be, what should be, and what is those are the two main things he try to investigate and what he, what he claims is that we can actually achieve a logical, even a mathematical foundation for both questions, which is a somewhat shocking claim because most people very shocking would not at all believe that morality or ethics could possibly have a mathematical basis that can, that could actually be discerned by humans.

Rafael Cosman (00:57:31):

That's, that's just a radical idea, but he thinks that the, and, and, and after reading his book and thinking about it a lot, I'm actually somewhat convinced that, um, that Western thought throughout, through, in the towel too soon on trying to really drill down to the very core of reality and the very core of morality in order to try to find a rational logical basis. And that is that's part of what that's part of what's wonderful at Western thought is, you know, the enlightenment and, and where the us comes from, and the idea that, that we can actually figure out ways to improve ourselves and improve our society and create, create things that are gonna be better for everyone, um, that, uh, that process, which science has been pushing along for centuries, um, he thinks is going to eventually be able to crack this code.

Will Szamosszegi (00:58:32):

Wow. All right. So I got some questions, I guess, like the initial question, and it might be too much to explain, uh, it might just be that I have to read the book. So I guess if you're getting down to the very crux of that jump, so on the, on the good part of, of this, uh, yep. The, on the good part, when he's talking about how you can mathematically make decisions on more, there's a mathematical basis within how you can tie morality to what decision should be made, how, how are you making the leap between, or how is he making the leap and arguing the leap that those are, those are tied, you know, the mathematics and then the morality and how you can derive morality from some sort of mathematics or basis in physics. I guess that's like, really what I'm, I'm wondering, how did that jump get made?

Rafael Cosman (00:59:25):

I, I agree. I, I know, and that's, that's we gotta read the book for, cause it's

Will Szamosszegi (00:59:28):

Not easy. Yeah. I guess I gotta read the book.

Rafael Cosman (00:59:30):

What I mean? Yeah. The core question is, is, um, why would you think that there could be a mathematical basis for morality? It's extremely not obvious, but I'll just give you a simple example. You're familiar the prisoner's dilemma.

Will Szamosszegi (00:59:45):


Rafael Cosman (00:59:46):

Okay. So you, you can

Will Szamosszegi (00:59:47):

Out outline it though, just in case someone hasn't heard of the prisoner's dilemma.

Rafael Cosman (00:59:51):

Okay. So yeah, the formulation of the prison's dilemma that I really like goes like this, it says, um, will you and I are gonna be in separate rooms? And each of us has to decide either we are gonna get $1 ourselves or we can have the other person get $2. So if both of us choose a selfish option, we're both gonna walk away with $1. If both of us decide to be nice and give the other person $2, we both walk away with $2. But if I defect and I keep $1 for myself and you were, were choosing to cooperate and you chose to give me $2, I'm gonna get three. You're gonna get nothing, right? So you cooperated, I affected you ended up screwed and I got three bucks. So that's the prison's dilemma. Now, the reason why this is interest in point game three standpoint is that you is that the, the dominant strategy is to defect, defecting dominates, cooperating, and that's a technical term.

Rafael Cosman (01:00:46):

What that means is, um, if, if I knew that you were going to defect and keep a dollar from yourself for yourself, then it's then my options. You know, if I defect and keep a dollar, then I get, I get $1. If I cooperate, I get nothing. Right. And you get three bucks. So I should clearly, it's better for me if I'd defect right now, if I knew you were gonna cooperate and give me the $2, then my two options, either I can defect and I end up with three or I cooperate and I end up with two. So it's still better for me to defect. So that logic would say, maybe I should just always defect. That's what, that's what it means for defecting to be a dominant strategy affecting do's cooperation. Is that, is that regardless of what the other person does, you, you know, if, if you, if you condition on, on what the other person does, regardless of, even if you say that we let's say, we know they're cooperating, we know they're defecting.

Rafael Cosman (01:01:34):

You know, you defecting will still be, will still end up with you getting more money. So it seems like, it seems like rational strategy in this game would be to always defect. But if everyone always affected, everyone gets $1. And if everyone did the quote unquote irrational thing and cooperated, then everyone would get $2. Right? So the technical, the technical term there is that the Nash equilibrium does not lie on the parade frontier. That is what makes this game interesting. Um, but you can get stuck in this situation where everyone's always affecting and that's, and to a certain extent, this is a model of what happens in the world, where everyone is, is fighting over shared resources as a tragedy of the commons, we're building up our nuclear arsenals. We're, we're, we're going toward with other countries, you know, and there's a lot of defecting happening. And if, if there could be more coordination in cooperating in the world, potentially everyone could win, but it's very difficult to actually make that happen. So here's an interesting twist on the prison's dilemma is imagine if you are playing prison's dilemma against your clone. So let's say I've got a clone in the other room, okay. This is an exact clone of you. This, this is a person who Adam for Adam is the same as you will. Now you have to decide if you're gonna cooperate with effect, what do you do?

Will Szamosszegi (01:02:52):

I would do whatever I was. Does the clone know that I'm the one in the other room,

Rafael Cosman (01:03:03):

The clone knows that he's also playing against his clump. Just like how you know that you're playing against your CLMP.

Will Szamosszegi (01:03:10):

Okay. In that case, I would give the money.

Rafael Cosman (01:03:15):

You give him the money, the two bucks.

Will Szamosszegi (01:03:17):


Rafael Cosman (01:03:17):

That's right. And why would you do that?

Will Szamosszegi (01:03:20):

Because I know that he's gonna gimme the money and I'm gonna give him the money. <laugh>

Rafael Cosman (01:03:26):

Right. Yeah. Because if that's your thought process, then if this person is actually Adam for Adam identical to you yeah. Then that's probably gonna be their thought process too. And then you'll cooperate.

Will Szamosszegi (01:03:35):

Yeah. That is so interesting. I've never, I've never had someone have, have me do that thought experiment.

Rafael Cosman (01:03:43):

Yeah. By the way. Um, we actually, I know, I know these twins and we actually did this with them and I think they ended up defecting. Um, <laugh> very, so both of them, you know, each one thought, oh, I'm gonna go trick the other one. Right. Yeah. People think that, um, but, um, so yeah, you cooperated the club. That makes complete sense. And so what's going on there is that, um, you know, you and your clone, you're, you're two, you're two different, you're two humans, but because you're clones, cuz I've, I've said that you're clones, you know, you are almost certainly going to think in exactly the same way. I've said you add Adam identical. So you're almost certainly gonna think exactly the same way. And so, and so you, you can pretty safely assume that if you cooperate that just as you are thinking in your own head, okay, I'm gonna, I'm gonna cooperate your clone is probably thinking in his head.

Rafael Cosman (01:04:35):

Exactly the same thing. Yeah. I'm gonna also cooperate, right? Yeah. And if you thought, oh, let me try to trick him because he's gonna think, he's gonna think that we're gonna cooperate. Cause then I'm gonna actually defect. Right. If you try that, he's probably thinking exactly the same thing. And then you're both gonna defect, right? Yeah. And to be a bad situation. So, so, so, so a way that this starts to lead you towards an ethical basis to morality is to see that, um, there's this perfect correlation between you and your clone, but let's say instead of playing against a clone, you were playing against another human like me, you and I are not clones, but we do have a lot in common. You know, we're both guys living in the west, some of the same, same interests in crypto and you know, clearly on the same wavelength on many things.

Rafael Cosman (01:05:30):

And so while the correlation between what you will play in the prison LA and what I will play, it's not, it's not a hundred percent. It's not one, it's not a correlation of one the way it is if you're playing against your clone, but it's also not zero, right? It's, it's not the same as if I said, you're playing against an alien and you have no understanding of the alien or you're planning against this computer algorithm. And I'm not telling you anything about the, the computer, what the computer albums gonna do, right. That they, the correlation might be zero. But if I said, okay, if I said, you're playing against a random human on planet earth, well, you have a little bit in common with a random human on planet earth, but not that much. But if you said you're playing against me, you've got a lot more in common with me.

Rafael Cosman (01:06:08):

And if I said, if you're playing against your, your non-identical twin brother, that would be a lot more correlation, but still not a hundred percent. Right? If I say, you're playing against your exact Adam for Adam clone, that's a hundred percent correlation. And so depending on what that correlation is, the same logic can also apply. We are, even if you're completely selfish and you don't care about helping me, you just wanna get the most thing for yourself, the most money for yourself. If you're playing against a clone, you can see how logically, even if you're completely selfish, you still should cooperate because you know that they're gonna do what you're gonna do. The same applies the same applies to a more limited extent. If you're planning against someone who you have some things in common with, like, even if you're just both humans, um, but are not clones with, there's still some correlation between what you will do and what I will do.

Rafael Cosman (01:06:57):

And so it really is the case that if you and I were play playing the, the prisoner's dilemma, and if you go in your room and you start thinking to yourself, well, I think I'm gonna trick him and he's gonna, he's gonna cooperate and I'm gonna defect. And he wanna see this coming right. There really is a decent probability that if that's what you're thinking, that I'm thinking exactly the same thing in my room, and that's gonna come out, we're both gonna defect, just like a, with your clone. You know, you do that in both effect. So that's just a little teaser to give you a sense of how you can get, how you can derive sort of game theoretical and mathematical basis to what seems like altruistic behavior between people, depending upon how much they have in common with each other.

Will Szamosszegi (01:07:40):

Yeah. Well, I, after hearing that, I'm definitely gonna have to check out the book. It's almost like we just ran like a sponsorship for that book. Cause I'm sure that anyone who was listening to that is going to want to go and read this book now. Cause that, that is fascinating. I've never, never thought about it that way. Um, yeah. True. I definitely it's

Rafael Cosman (01:07:57):

Truly an excellent book. I really recommend it. I'm not, I don't get paid by Gary Dre advertises book

Will Szamosszegi (01:08:02):

<laugh> yeah, yeah. There, I'm sure that we could dive in on this for, for much longer. And I do have some other questions about this, but um, just before we wrap up, can, are there any places online that anyone who's listening, they can connect with you or the company or any other, uh, places that you think that they should, uh, check out?

Rafael Cosman (01:08:23):

Yeah. Folks should follow. They can follow me on Twitter at rap Yel. Cosman R a F a E L C O S M a N. And also at trust token, our company. And we've got some exciting announcements coming out soon about FFI and other things that we're developing and would love to hear folks talk about 'em.

Will Szamosszegi (01:08:42):

Yeah, definitely. Well, man, this was a lot of fun. Uh, it was incredible. Incredible. Just hearing you talk through that prisoner's dilemma. Uh <laugh> it's almost like, like you had practiced it beforehand. That's how good it was. Like it was just laid out like step by step by step. That was awesome. Thanks again for coming on. We'll have to do this again sometime soon.

Rafael Cosman (01:09:01):

My pleasure. I'd love to thanks for having me out.

Will Szamosszegi (01:09:03):

Of course. Thank you for listening to this episode of the SAS mining podcast. Be sure to follow us on social media and YouTube for the latest updates and previews of upcoming episodes, full episodes and transcripts can be found on SA every Thursday. If you want to hear us interview a particular guest on a future episode, please reach out to

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