#172: Blockchain, Law & Money
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Confused by the crypto craze? Wondering about the legality of Bitcoin and other digital currencies? In this episode of The Richer Geek Podcast, we sit down with Dr. Tonya Evans, a law professor and expert on intellectual property.
She offers insights for curious investors interested in getting started with crypto safely and provides valuable resources for further education. Dr. Evans also discusses her book, "Digital Money Demystified," which aims to separate fact from fiction in the world of crypto and empower investors to make informed decisions.
In this episode, we discuss...
Understanding the basics of cryptocurrency and blockchain technology
Exploring safe strategies for crypto investment
Gaining insights into the legal and regulatory landscape of digital assets
Discovering valuable resources for crypto research and education
Learning how intellectual property (IP) intersects with the world of digital money
Resources from Dr. Evans
LinkedIn | Digital Money Demystified |Cryptokitties, Cryptography, and Copyright
Resources from Mike and Nichole
+ Read the transcript
Mike Stohler
Hey everybody. Welcome back to another episode of The Richer Geek Podcast. Today we have Dr. Tonya Evans. a law professor at Penn State. Go Big Ten! And the author of the upcoming book "Digital Money Demystified". She's a keynote speaker she sought after for her expertise in intellectual property. We're going to talk about some of the new technologies crypto, she's testified before the House Financial Services Committee. I hope that worked somehow. And the Copyright Office USPTO to advise on intellectual property law issues, we'll get into that, because I'm sure that Washington just kind of scratched their heads and said, Okay, how can I regulate? How can I tax? How can I control? Anyway, Dr. Tonya Evans, welcome to the podcast.
Tonya Evans
Thank you so much. And I must say that I love even just the title of this pod. So you had me at Richer Geek, because somehow I feel like I'm in both of those lanes. So I get that for sure.
Mike Stohler
We are, well, most of us are geeks. And I love hanging out more with geeks than I do the other type of people because they're the most interesting characters.
Tonya Evans
Understood.
Mike Stohler
Before we dive in, give us a little bit of background about yourself and how you went from where you were, to all of a sudden, the digital assets, all of that.
Tonya Evans
Yeah, nobody's more surprised than I am, in some sense. As a lawyer, I practiced in big law. And then with my mother was a patent attorney for about 10 years until I pivoted into academia. I'm trained to I spot issues, solve problems, mitigate risks. And so everything about my training and my focus is seem to be the antithesis of doing anything that was outside of my risk comfort zone. When I think about my own personal investing. And I went to Northwestern on scholarship athletes, I play tennis, I have fun fact having nothing to do with what we're talking about today. But I played tennis professionally for four years before I went to law school, traded that in after I think losing first round is the first seed and a small tournament. In Puerto Vallarta, I've met my best friend there, we drank a lot of tequila and I said, I think I'm gonna get myself back to law school.
My parents agree and the rest is history. With a Howard Law School, checked all the boxes of all the things that one should do to have a very conservative practice. At first, actually, I was in the trust in the state's Department of two major firms to do sophisticated planning for high net worth individuals. I wasn't a high net worth individual at the time, I was a high income earner. But what I've learned over the years is I do not intend to spend the rest of my life trading my time for money. Even though father's a doctor mother's a lawyer, my father's parents, neither one of them graduated from high school. So this is relatively new. And you think about conversations that you have around the kitchen table that form our relationship with money, and wealth. And what that means I had a lot of unlearning to do just at the time that I started learning about crypto in 2017. And when I heard about this, and I'm an intellectual property lawyer now by training, and most of my courses are at the intersection of copyright or trademark and new technologies. So I was you know, my entry point really was at the intersection of my existing expertise IP, and this new version, evidently of the internet that was coming in to be fully distributed and decentralized. The first use case of this timestamped decentralized method of managing and securing data was for financial transactions. And then hearing about this magic internet money. It didn't quite understand what that was in 2017. And it was also at the time when there were some issues not unlike 2022, we had kind of the sandbagging freetds that were enough issues going on in the ecosystem at the time, that people were basically saying blockchain, not Bitcoin. And interestingly, I do think that even though financial innovation was the first use case for blockchain technology is probably not going to be the most interesting. It'll be important but kind of ubiquitous, and they'll be so many other things. I'm interested only in like supply chain and the redundancy of systems and natural disasters that can up end things, and identity. Those are some of the really interesting things that you can do with the underlying technology.
But I quickly learned after having my own rabbit hole experience and I think staying in my pajamas for two weeks coming out of my room and saying, "Oh Dear god, this is going to change the world", I must tell everyone that I had to learn enough, even as a non technologist and not someone who focused on finances to understand the possibilities of the democratization, little d not from a political point of view. But in terms of access and opportunity, kind of being my own boss, being my own bank and making my own decisions as a matter of financial privacy and autonomy. So I had to learn enough about crypto even without being a technologist in order to understand the whole point of it all. And then to understand prospectively, kind of normatively, what could or should be in the future.
Mike Stohler
You said something that really hits home, I talked to so many people that make a lot of money, but they still feel like they're still working for someone else. They're still working for a boss. It's crazy. And they make four or 500,000 plus and they're not happy. They're like going how is that I can transfer that and wake up or go to bed when I want. Take the dogs for a walk when I want I'm not tied down to something. And you know, a lot of people see this crypto or these different ways to diversify their wealth to kind of get out from underneath at least have some type of resemblance of life, even though they make all this money. So number one intellectual property, you touched on a couple times the definition of it for our listeners, what is that?
Tonya Evans
Intellectual property involves kind of the big three that people have heard about copyright, trademark and patent. It could also think of right of publicity, although that's at the state level. The first three that I've mentioned, are regulated and legislated at the federal level. And copyright focuses on exclusive rights to literary or artistic creativity, trademarks, protect brand names or logos, symbols devices, it could even be a sound like the NBC chimes or the MGM lion's roar, for example. And then you focus on patents, which focus on inventions. And so that could be something physical could be something chemical, my mom's a chemical engineer, for example, and worked for for a number of years. So that's kind of how you divide up the big three of intellectual property and then right to publicity, you know, we're in the middle of March Madness now. So we think about the NIL deals, all that good stuff, monetizing your name, image or likeness at the right of publicity level. And so I focused mostly my time on copyrights, and to some extent, trademarks, as well. And I was really, in fact, the first thing I wrote the first law review article that I wrote in this area is titled, "Cryptokitties, Cryptography, and Copyright". And I wanted to see that, you know, at the time in like 2018, CryptoKitties was all the rage. I'm using air quotes, if anyone's just listening and watching, and it wasn't so much about trading these cute little curious digital cats, but the underlying technology, particularly with smart contracts, and non fungible tokens, what were the opportunities to use that same technology for real world assets and what that meant for intellectual property, which is actually the way that I recommend that everybody start to, you know, with their intellectual curiosity, see what's going on at the intersection of what you already do in love, and how it's being disintermediated or maybe transformed, or impacted in some way by new technologies. So that's the IP in what I do.
Mike Stohler
Yeah, I've had some guests on podcast that do the NFT's and they do these things. And they're like, it just makes my head spin. It's like, yeah, we're buying this intellectual property. And then they NFT(d).
They sell and they get with these movie stars and get these things. And it's like, yeah, record collections and likeness and things like that. But it's just crazy. Ever since the Sam Bankman-Fried ordeal, you would think that crypto, it kind of took a dip, but now it's back raging, you know, we're doing well. I know, Washington's heads are spinning, because they don't want another SBF. They don't want you know, mansion full of 20 year olds running around amok.
Tonya Evans
Sure, right.
Mike Stohler
Even offshore, especially. What are you seeing within this space, the current legal and regulatory issues around this type of asset class?
Tonya Evans
It's really interesting what's happening in 2024. And I do want to talk about SBF to give some context to that and also distinguish the majority of the industry and that is not to say that what he did was not horrific. It absolutely is. But it also wasn't a failure of crypto, it was scammers going to scam. It's very much like Lehman Brothers like Bernie Madoff and actually, Sam was brought to justice. Far more quickly because of the transparency of the ecosystem, in comparison, the opaqueness of our current financial system, the opaqueness of our traditional finance system is the reason that we need so many laws and regulations for disclosures and accredited investors, etc. As I continue to testify before Congress, that was actually the last time was March 9, actually, of 2023. And it was one year to the day after President Biden had signed an executive order for all administrative agencies to take a closer look, the impact of crypto assets across the agency bureaus, etc, both those in the cabinet, and also independent agencies like the Securities and Exchange Commission, commodity futures, Trade Commission, the SEC and CFTC, Treasury, FinCEN, etc. And it's so fascinating to me, because there's, I feel like this shouldn't be a partisan issue. And yet, unfortunately, it is falling along lines where there's so many reasons on the democratic side to lean in, I understand politics and understand that on the DEM side, they tend to push the narrative around protecting consumers and investors get that we should do that. I also get the narrative on the GOP side of protecting business and innovation, full support, I totally get that. And the fact that so many, and there have been some really great bipartisan efforts, in order to get some greater clarity. It's not that we don't have rules. This is something that I talk about in Digital Money Demystified. One of the myths is that it's completely the Wild Wild West, there are no laws, we are a nation of laws, more or less, we have laws and the laws about the laws, we have laws. In effect, we just enforce those to be pretty, very pleased, right.
But the idea that because of the nature of digital assets, taxed as property, so something that appreciates in terms of capital gains, you get notional and actual gains and losses, so more akin in that respect to stocks, for example, but also can be used as a medium of exchange as a unit of account. So that's where we get the currency and cryptocurrency, although it's a bit of a misnomer, because it doesn't go as far as it should, as well. And I think that throws people sometimes. And to your point about the concerns of the government, they're very concerned, we're using the same technology, the all of the technologies involved in blockchain, for example, have been around for at least decades, we have peer to peer technology, or people used it now. And IP lawyers, I have to put air quotes around file sharing a lot of that was copyright infringement. But that's an episode for another day, right. But we're using P2P technology, consensus protocols, the internet, cryptography, most of your audience will already know what that means, obviously, but encryption of messaging even before technological times, I mean, that is millennia old when you're trying to get a message from point A to point B without being intercepted. It was this novel combination of all of those that gave birth to not just a digital asset, because we had digital assets before Bitcoin, which was first launched in January of 2009. But Satoshi, whoever he shared, they are solved for the rewrite the double spend problem, like it's not a good idea for me to have a perfect digital copy of some value, but be able to send it to everyone else, without exhausting my own was the true flex and the true brilliance of what's in the Satoshi white paper that really ushered in this new wave. And so the government now has a customer service issue, when it was just you know, cypherpunks and tech bros and finance, whoever's on the fringes talking about it. It just wasn't an issue, as crypto comes continually into the stream of conscious of the masses, when you have huge companies that are making huge and inroads when you have the SEC being forced by a federal court in order to approve the 10 exchange traded funds and the one conversion of greyscale from a trust into an ETF with the underlying spot, Bitcoin trades. And in the spirit of full disclosure, I'm on the board of Digital Currency Group, which owns Grayscale. And so that happened in January, Gary Gensler didn't want to do it. But a court forced him and forced the SEC to do so. So we're looking at now in 2024, the maturation which happens for every successful asset class, it always starts out volatile. It always starts out unruly, it always starts by pushing the boundaries of law and our understanding of our relationship to each other, and to government systems into private business. This is literally just how it happens. So we're really witnessing the maturation and it's really causing some costs donation on the hill to be sure
Mike Stohler
It is. And so I go and type in into Google or wherever I'm going to buy some crypto. How do I know? I'm curious about it? What is safe? What is really my clicking on something that is legitimate? What are you seeing around keeping us safe? As curious, I'm buying my very first token or crypto. How can I do that safely?
Tonya Evans
This is one of my most my greatest concerns, particularly for traditional investors who have done everything but know that that's not going to be enough for the next 30,40,50 years that we're on the planet. And also the idea of really catching up. So oftentimes, people are driven by some aspect of fear. I mentioned that you talk about that a lot on the show as well either fear of missing out, right FOMO gets a lot of people. I'm calling it FOGI. It might be FOGI, I don't know, but fear of getting it.
Right, this idea that we are have such fear about doing the wrong thing, we do nothing. And that is not a sound investment strategy. And I know that we fear what we don't understand. That's exactly where I began. And so looking for reliable resources and tools that are trying to sell you something but really supporting you in education. And there's just so many more opportunities for that now than there was when I got in. And even before it was really rough going. It was trying to cobble together a list of podcasts and YouTube videos, and etc. And as far as I would get that there'd be 10 other questions and concerns about, I'm turning over my information, my personal identifiable information. In some cases, if you're depending upon the exchange you're onboarding to, and I don't know where they are. And I don't know who they are. And I don't know what this is, it's unbelievably frightening. So I've found some reliable resources where you can start to just do the research, coin market cap, I'm not sponsored by them or anything, but it's something that I use in advantage Evans Academy, which is kind of what I do privately, in addition to my full time teaching, is really to work with investors to get them from point A to point B and go from from cash to crypto in what you said safely, legally and confidently. coinmarketcap.com is fantastic. Because it's an aggregator of every data point in the crypto ecosystem, it shows you all the historical data, I would actually not search a project with a search engine or any type of browser, I would go to coin market cap.com And use the links that they have vetted. And because there are 10s, and 10s and 10s, of 1000s of coins and tokens, we could literally in the span of time that we'll talk create our own, it'd be you and me and our family members that hold it ain't going to have a lot of value. But we could do that, because it's all generated with software. So I'm more interested in community because all of this, you know, in the same way that the dollar is backed not by gold, not by a hard commodity at the at this point. But by this story that we all tell ourselves, we all buy into the full faith and credit of the government. And it's the same government that last year, we had bank failures that nobody wants to talk about. It's the same. And I'm not marching in the streets, I love the almighty dollar, I'm not burning them up. But I also know that other countries are starting to reduce their dependency on the dollar. I know that we still come up against government created crises that are making the rest of the world very nervous. And every great empire has a moment, and you want to be able to hedge your bets. So that it's not an either or but a both. And if you are a prudent investor, it just makes sense to if you're going to have 5% of bonds, where it's ultimately reliable, you see the interest rate etc. Then what about emerging markets, this is an emerging market. So whatever you might otherwise devote to emerging markets in your portfolio, this is something you need to learn this language of the future of money and wealth is important. And starting with coin market cap.com coin desk.com is also one of the premier news portals in the space. I would not rely I you know, I like Yahoo Finance. I watched them all because I'm an investor across the board. But when I want to get specific news about this industry that is not biased, other than being wholly focused on the crypto ecosystem. I'm looking at CoinDesk. I'm listening to podcasts that let me know what's going on. So I have less fear because I'm more informed.
Mike Stohler
Listen to everybody. It's like, this is an expert go to hurt those sites that she's recommending. Don't just do what I would do just Google and not being informed, You know, something that is making the rounds. I don't know if Elon was the first to say it's this administration to want you know, every cars, they're going towards a lot to get like work stuff, if I read it right understand, right? The blockchain and crypto, it's highly, you need a lot of electricity to mine and things like that. And he's saying it's like we need to do something about the grid. Because if we're going to be doing all these things, and plus having nothing but electric cars, we don't have the electricity to do it within the nation. Are you hearing about any of that stuff? And are there concerns around crypto, it's like, okay, there's some cities or states out there that are starting to kind of regulate the amount of electricity that these miners can use?
Tonya Evans
Yeah, that's interesting, because they're different ways for blockchains to reach a consensus about the state of the transactional data at any given time. And what Bitcoin uses and what is the general concern around the environment is a proof of work protocol, where you are devoting at one time you could do it with a CPU, you can't do that anymore. You need ASIC chips and a dedicated computer to mine, it's getting increasingly more difficult if I was worried about the centralization. In a decentralized space, it might be around the centralization of computers that can readily compete for a block reward, which essentially is the way that new bitcoins come into circulation happens roughly every 10 minutes. And it uses a significant amount of computational power in order to solve for this equation. And the successful technology is the one that is the computer that wins, quote, unquote, they get the newly minted Bitcoins. In fact, this year's the most recent time, when the amount of Bitcoins for the reward is reduced by half, it happens roughly every four years. And that's why 2024 is a really great time not legal or financial advice. Historically, a past is prologue, it's gonna be a hell of a year, not only do we have ETFs coming, you know, they came in January, but we have the having event that only happens once every four years. And historically, there's been a huge pump. For all those reasons. That's probably why we're seeing the major pump right now in anticipation of the reduction. But back to your question about proof of work, there are other types of consensus mechanisms or methods in order to achieve consensus. So recently, the Ethereum virtual machine switched to proof of stake where you have to have a sufficient amount of eath in order to make decisions that also you know, this the blessing and maybe some I'd have the concern about centralization, like it starts to mimic the traditional system where the haves haves and the have nots don't don't get a vote. But that's a story for another day as well. It is far more eco friendly. And in the book I talk about right sides in the conversation. Bitcoin is an is a global network of computers all around the world, who if they choose to devote their system in to maintaining transactional data that happens all around the world. So when I see statistics about Bitcoin using the same electricity as a small country, yeah, okay, but it's not using it for the entire world. And if we're going to compare apples to apples, we need to compare it to the existing financial system, that every ATM, every bank, every Brink's truck, every person that has to commute, every computer that is used on the I mean, you get it right, we have to have the right size, the conversation, that doesn't mean that that we don't want to press these builders, and it's not really the devs. But folks who are focused on what would be in the best interest from a project point of view for the world.
For that, let's right size the conversation because otherwise, we're not dealing in the facts necessary to get us to the solution.
Mike Stohler
Yeah. And that's why we love having someone like you on again, everyone's Dr. Tonya Evans, it because I open it up, I read an article. And I don't know who knows, you have to find that, you have to see whose point of view and what their end game is on whether or not you know something is right. So let's get on switch a little bit to Digital Money Demystified. And we'll spend a few times to talk to us about your upcoming book.
Tonya Evans
And so it's actually out now, wherever books are sold. And I spend so much time in teaching mode. And I realized quickly that I can't be everywhere. My dean would like me to actually be in Carlisle sometimes. And so the idea of having to be everywhere and repeat the information as a matter of frequently asked questions and also just, you know, aligning with what we were talking about earlier my frustration with the headlines. There's so much lazy reporting sometimes you know, I was judgmental about "Gosh, this is lazy. This is easy to find out." This can be very challenging, right in the same way that my supercomputer of the car I don't know what's underneath that hood, but I know it gets me from point A to point B. And then when I need to know more than I'll find out or pay someone to do it, right? But I realized the barrier is it was easy to dismiss before off of a headline that was sensationalized in many respects to get clicks that had a story that people needed to know. But there wasn't the other side of this can be dangerous if that that in the same way that it was dangerous with the first use case of the internet, electronic mail, when someone from some country said I would gladly pay you Tuesday for a hamburger today. I don't know, right? It happens on my phone every day, it happens in my email everyday, we're not throwing out electronic mail, although sometimes we want to this idea of moving into a space and separating fact from fiction, so that we, as investors can be more informed about the decisions we're making with our money as a tool, right? Not that I want everything that I touch in this house and going forth to actually work harder than me. In order for me to do that, I have to understand the point of it, why it's here, my relationship to it, the energy and the lifecycle of it, which is why it's so important to understand historically how assets move, the same charting that I can do when I'm in swing trading with stocks, in a rough sense, you can also do with crypto, although, I will say because crypto is a 24/7, 365 global industry, that you go to sleep one day in Bitcoin 74. And then you wake up the next day, it's 62. This is not for the faint of heart. And you should not be investing with something that you need tomorrow.
A lot of people got wrecked in the last run up. So it's just about wanting people you know, it's the educator in me, sharing my own experience of my own rabbit hole experience all of my fears my misgivings, having to challenge my own assumptions, unlearn some things and then learn I learned so much about finance, governance, investing the point of money, the monetary system, I learned more in the last seven years, and I did for my entire life. And that's somebody who has the privilege of education and all these other things. So really, I had to unlearn the role that what I was taught around the table, get a good education that can't take that away from you get a good government job or whatever that the equivalent of that is yet to house, some insurance, a little picket fence and and write it out. That is no longer sufficient. Right? The American dream is, in my humble estimation is no longer house white picket fence in a job with a gold watch at the end. Its freedom.
Its freedom, and what does freedom mean? You know, freedom of time, freedom of assets, the freedom for me, one year ago, I was on paid leave. When I was writing my book, I took an unpaid leave, they said you can do whatever you want with the little book, but we're going to need you to teach blockchain crypto law because we can't find anybody else to do that. I'm doing that right now. But I had the freedom to step away from a great paying job for a year to travel to sleep, to figure life out to be still that is freedom, and then make decisions on the other side of it. So that's why I want people you know, I feel like oftentimes, our intellectual curiosity stops at the last time we were in some type of formal education. And that's assuming that you enjoy that experience. But we live so much longer and there's so much more to be done. And so that's why I wrote the book to make sure people have the right information to make good choices.
Mike Stohler
That's very good. And everybody I think this is why people listen to these episodes is, I have it above my desk. It says "Build a life that you don't need a vacation from." And for me, it's you can have money you can have but there's only so much time I'm going to die at some point, mice will be happy and hopefully build enough funds or a cushion to where I can enjoy it a little bit.
Mike Stohler
Dr. Tonya, we appreciate you coming on The Richer Geek and like to say in wrap up that today's episode is brought to you by REI words. Your go-to SEO company, for increasing traffic to your website. Check it out at reiwords.com. Dr. Tonya Evans, thank you so much for coming on The Richer Geek podcast.
Tonya Evans
Thank you for having me.
The information, statements, comments, views, and opinions (collectively, “Information”) provided in this podcast are not intended to be and should not be construed as financial, economic, legal, accounting, tax or other advice. For our full disclosure, click here.
ABOUT TONYA EVANS
Dr. Tonya Evans, a law professor at Penn State, is an expert in intellectual property, new technologies, and cryptocurrency. She is the author of the upcoming book "Digital Money Demystified" and a highly sought-after keynote speaker. Dr. Evans has recently testified before the House Financial Services Committee and advised the Copyright Office and USPTO on intellectual property issues related to NFTs and blockchain.
Committed to demystifying cryptocurrency, blockchain, and Web3, Dr. Evans aims to educate and reduce misinformation, helping traditional investors, entrepreneurs, and the public understand and embrace these technologies. She can discuss topics such as the current legal and regulatory landscape of crypto, onboarding safely, empowering diverse entrepreneurs, and debunking common cryptocurrency myths.Dr. Evans has been featured on MSNBC, CoinDesk, PBS, Bloomberg TV, and Forbes 50 Over 50, and has spoken at South by Southwest multiple times.