#140: Stories From the Blockchain-Based Web3 World
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Today we have Matthew Leising. He's the co-founder of decentral, it's a media company, committed to telling the stories of the founders, builders and visionaries who are creating a decentralized economy and Internet experience. It should be extremely interesting to talk to Matt.
He's been a reporter for 17 years, he worked for Bloomberg News. And he's been covering crypto and all that stuff since 2015 as one of the first mainstream journalists to understand what the breakthrough of blockchain technology could mean for finance, culture and industry in general. Matt has recently released a special edition of his book, Out of the Ether: The Amazing Story of Ethereum and the $55 Million Heist that Almost Destroyed It All. Out of the Ether has been optioned and is in the process of being turned into a documentary series.
In this episode we’re discussing…
[1:31] How did he get started in the industry?
[3:25] Over-the-counter derivatives and bitcoin
[6:24] Decentralizing the financial industry
[11:43] The power of crypto and the Fx
[13:49] Do you need an exchange to buy crypto?
[15:53] Regulations and regulations
[21:51] What is Web3?
[24:15] How did the idea of a decentralized autonomous organization come about?
[26:34] Etherium’s black eye
[27:43] Where can people get your book, if they’re interested?
Resources from Matt
DeCential | LinkedIn | Twitter | DeCential Twitter
+ Read the transcript
Mike Stohler
What if you could be doing something smarter with your money that creates income. Now, if you're wanting to get ahead financially, and enjoy greater freedom of choice, if you want a comfortable retirement, and you know you'll have more choices, if you can do more with your money. Now, if you've wondered who else is creating ways to make their money work for them, and you want actionable ideas, with honest pros and cons, and no fluff. Welcome to the Richard geek podcast. Where you here helping people find creative ways to build wealth and financial freedom. I'm Mike Stohler, and in this podcast, you'll hear from others who are already doing these things, and learn how you can too.
Everybody, welcome back to another episode of the richer geek Podcast. Today we have Matthew Leising. He's the co-founder of decentral. It's a media company, committed to telling the stories of the founders, builders and visionaries who are creating a decentralized economy and internet experience. It should be extremely interesting to talk to Matt. He's been a reporter for 17 years, he worked for Bloomberg News. And he's been covering crypto and all that stuff since 2015. How you doing, Matt?
Matt Leising
Great, Michael, thank you for having me. How are you? Good.
Mike Stohler
Doing well, trying to state it's freezing today. Here in Scottsdale, it's 50 degrees. So I'm
Matt Leising
yeah, we're not too far behind you in Los Angeles. It's been raining and cold here. It was 32 degrees when I got up this morning in LA. So
Mike Stohler
So yeah, there it is. Yeah. So you know, there's a lot that we could get on about all this crypto stuff, you know, whether or not there's just a lot of headlines. You know, for our listeners, we're recording this on December 13, of 2022. So, let's start at the beginning. How you got started, you know, you're a reporter, and you just decide to get into it.
Matt Leising
Yeah. So when I moved to New York, in 2004, I was out of journalism school for a couple years, I'd worked at like a local paper in Oakland, California, but wanted to go to New York and kind of just landed there. Without a job without an apartment. My wife and I and I just applied everywhere around the city. And Bloomberg News was pretty much the only place that was hiring that even though it was a few years after the.com bubble burst, the you know, the news industry was still kind of in bad shape. So Bloomberg hired me. And I started kind of covering energy and some some derivative stuff. And then kind of worked my way into a beat where I was writing about markets and market structure. And how markets work or don't work are how they're getting regulated, scams that are happening, you know, what's going on in Congress, all that kind of stuff. The poster child for that was leading up to the financial crisis in 2008, when a lot of things went wrong, but one of the things that kind of added fuel to the fire was the over the counter derivatives market that like, really, it was unregulated. And it just made a mess of Wall Street because nobody knew who where the risk was, and what trades like Goldman had on with Morgan Stanley versus Lehman Brothers and all that stuff. It was just this really opaque mess.
So the Dodd Frank ACTA kind of went about sort of hoping to clear up a lot of that I covered that really intensely. So fast forward a couple years and like, you know, I had known about Bitcoin for a while. But by 2015 I think I kind of had a light bulb moment after I read a piece in The Economist that explained what the blockchain technology was behind bitcoin and what made it work. And I realized, oh, it's it's a network of computers. It's a global network. It's a peer to peer. It's unstoppable in terms of like governments or corporations, you know, you can't basically the only way you can shut this thing down is to shut down the internet. And I realized that the parallel there was like Wall Street was a big network as well. And if you could kind of take this same principle and put its all its customers and its other counterparties that other banks on the same network, now you're avoiding all the silos that you get, which is why it takes a cheque to clear three days to clear right, because it has to go from my bank, to your bank, they have to reconcile their Ledger's and it's a you know, kind of an inefficient process. If on the other hand, you were all kind of flat in the same network, and you could do that instantaneously, I realized, Oh, that would save Wall Street, you know, hundreds of millions of dollars a year. And so Wall Street was already starting to experiment with that kind of stuff at that point. So it wasn't like I was ahead of the curve or anything, but I realized, it could have some pretty profound implications. And so I started covering it. And then pretty soon, it kind of took over my whole beat, because crypto just really kind of exploded in 2017, when Bitcoin hit $20,000, and then, you know, it all crashed. And so, and then from there on, it just sort of like, became all consuming. And I also, I had been introduced to Aetherium at that point, which is the blockchain the most important blockchain that came after Bitcoin. And Aetherium allows you to do like a million things in a blockchain environment. Whereas Bitcoin allows you to do one thing, and that's like move value from person A to person B. So Aetherium was much more interesting to me. And I started writing about it, I actually wrote a book on the early history of a theory on the italic beater, and the guy who invented it, and all the kind of made you cast to characters that he gathered around him to make it reality. And that was a lot of fun. So I just been kind of, you know, really diving into it ever since then.
Mike Stohler
Now it tell us a little bit about, you know, your media company. And, and then second part, what do you really mean, and what people I've heard this term, about, you know, decentralizing the financial industry in the economy, the internet, you know, what do you mean by like, decentralizing the economy? And where does your company fit into that?
Matt Leising
Sure. Yeah. So I started decentral. Last year with my partner, Neil Berkeley, he's a documentary filmmaker. So I'm on the editorial side, he's on the filmmaking side. And what we're doing is focusing on the people that are making like defy reality and the web three kind of world, something that's real. We both thought that there weren't, there wasn't enough attention put on the actual people. And we wanted to kind of humanize the industry. And what we have found by you know, like, doing work in this area is that pretty much everyone you meet in, in the blockchain space is really interesting, they're probably pretty weird. They're probably very smart. And they probably come from all different walks of life, as this is attracting people with these possibilities for kind of new ways of remaking things that we already know, like banking, or art, or the financial world or commerce in general. So that's what that's what we've been doing.
We just turned a year old couple months ago. And, you know, so we're really trying to tell people, the stories about the people and humanize them and bring new people in that way. Because I feel like if I can tell you a story about an interesting person, you know, maybe I can explain to you what an NF T is at the same time, and you won't even realize it, it's like, you know, stuffing the vitamins into some candidate or something. So that's the essential. And then what we mean by decentralized finance, or decentralized economy or internet is, it's really simple. You take out the middleman, you know, you take out the central kind of gatekeeper, who in for the most part probably owns the data that you're giving to them, they can sell it and repurpose it back to you in terms of like targeted advertising and other things that are kind of nefarious, and not something that I necessarily want. They can also kick you off their platform, they can charge, you know, high fees. So good examples, like the Apple, Apple's App Store, they take 30% of everything that is sold through the App Store. So another good example is Twitter, where, you know, we've seen a lot of changes with Elon Musk coming in. Before that, you know, high profile, people were getting kicked off the platform. There's that central actor there that is kind of the intermediary, and a lot of times, it's just kind of taking rent. So the idea of for a decentralized version of all those things is that there is no intermediary, it's a peer to peer network, a peer to peer system, where, for example, if I want to trade cryptocurrencies on a decentralized exchange, I go and find someone else. And I'm interacting with a smart contract, which is a piece of code. So it's not a centralized market, like the New York Stock Exchange, where there's brokers and executives, it's all based on code. And I put in my order and then it matches me up and we We trade, peer to peer. So there's other things, you know, in the works of like, decentralized video streaming services where YouTube, you know, would be the main example there. People in the crypto world know that YouTube has some pretty strict rules about content that it wants to put on its platform. It's it's cryptocurrency related, and a lot of people have had their, their content kind of banned, or you know, it's not an option for them to use YouTube. So a decentralized version of a video streaming service, you wouldn't have that possibility or, you know, have that conflict. So it's really about taking the middleman out of the equation as much as possible.
Mike Stohler
And do you think that is something that must, might be trying to do by saying, Look, I'm just going to bring in this time, you know, is it? Is he trying to decentralize a resume?
Matt Leising
No, I think he very much likes to be the middleman, you know, he likes, it seems to me anyway, from what he's doing recently, that he enjoys pulling the levers of power at Twitter, and being able to say, you know, now I'm going to charge you for a blue checkmark, or this person can participate on my platform, and this person can't. So in a decentralized version of that social media application, you wouldn't have that option, you know, there would be no one in there to say, you know, you're, you're kicked out. So, you know, it's not all great like that could potentially, of course, it's not hard to imagine that could lead to a platform that's full of, you know, anti semitism or hate speech, or all sorts of things if there's no one there to police it. So it's a lot of questions still remain, it's just that it's an alternative to the systems that are already out there right now. And that's what I try to tell people about why I think crypto and web three are powerful is because they're reimagining the systems that we already have, but in a different way. And they're giving you an alternative. If you want an alternative. Here it is we're working on it. If you don't, that's fine. You can stay with Facebook, you can stay with JP Morgan, whatever, you know, but for other people who want something different. That's, that's what's being created.
Mike Stohler
How do you? Yeah, there's a lot going on in crypto right now. Yeah. You know, Sam bacon fried fried. The FTX founder, how do you tell our listeners is like, look, you know, crypto still there, you know, I'm seeing articles now, you know, 10 years of smoke and mirrors, you know, that's all Kryptos bend. There's a lot of negativity right now. What do you say to our listeners that, look, you know, maybe we need more regulations for people like, Sam, you know, with the FTX. You know, what do you say to tell people just like, look, you know, the crypto is gonna be okay.
Matt Leising
Well, did Bernie Madoff, bring down Wall Street? Did Enron bring down the, you know, energy sector? You know, what did Worldcom bring down? You know, lending. There are frauds, and there are scammers everywhere and unfortunately, crypto is no exception. think Sam Eggman. Fried like you just you know, he just got arrested yesterday in the Bahamas, there's an indictment out against him. The US is coming after him. The Securities and Exchange Commission is coming after him as well. I think the thing about crypto and what I would what I tell people is the power of crypto, like I've been trying to say is the power here is that it's decentralizing things it's taking, like an FTX is a prime example of what that is not. It's a centralized exchange, where it, there was no transparency into it, people did not know, you know, until it came out that the balance sheet was so fully stocked with these FTT tokens which you know, then dropped in value and led to the whole cascading effect of the bankruptcy. So if you're in crypto and you're like, relying on centralized platforms or services like FTX, you know, I think you're kind of doing it wrong, to be honest.
Of course, you need an exchange to buy and to sell things to change dollars into crypto or you know, into Bitcoin or ether or whatever and, and to get it out. But other than that, I don't think you should be leaving any money on an exchange in any situation because it just, it kind of sets you up for this kind of fraud. If you have your money in your own digital wallet that you control, and you have the keys to, that's the way to do it here. And so, you know, scammers are going to scam. Unfortunately, people that are are interested in this market need to be smart enough and savvy enough to do as as much as they possibly can to not allow them to not to open themselves up to these, these frauds and scams, and that means controlling your own currencies, you know, your own NF Ts, do it yourself, don't trust other people, because we've seen too many times in this space that exchanges are not trustworthy. If it's not a fraud, they might be, you know, their security might be lacks, and they might be hackable, you know, and that's happened to so I just the infrastructure is young, and it's still being built. And so I just really, the thing about it is, it's tricky right now, and it's doesn't have the best user experience in the world. But if you want to get into it, you know, you need to kind of overcome that stuff and figure out how to custody your own your own assets, so that you have control over them, and you don't, you know, lose $10 million on FTX, like, from Shark Tank did
Mike Stohler
so. Yeah. And do you think that this will be a good thing or a bad thing? Yeah. Because I'm seeing with Washington, that they're gonna want more regulations around this?
Matt Leising
Yeah, you know, for at the Central, we're doing a year end round up, where we're talking to a whole bunch of people we like in the space, we're asking them, you know, what was good about 2022? What was bad, and a few, quite a few people have said, they really hope that this is the FTX disaster kind of spurs regulation, and that it starts like actually, something happens, you know, in the regulatory front, because the SEC, so far has just been regulated through enforcement actions where they'll sue a specific company or maybe at some traders, and say, you've done this wrong, you know, this is illegal, this is an unregistered security. We're suing you. And the SEC relies on the rest of the industry seeing that and saying, you know, are we doing the same thing, maybe we need to change our behavior. So it's not a good way to regulate. I hope that Congress gets involved now. And that legislation is written that can help people in this industry know where the lines are, you know, because they don't know that right now. And it's not fair to them. If you're a good company, and you're trying to do the right thing in the United States, you need to know what the rules are. And I think that the SEC, and Congress is doing a disservice to this industry right now by not giving them those rules.
Mike Stohler
Yeah, and I think there's a lot of emotions right now. You look at what's happening to board eight. Yeah, a lot of people lost a lot of money. A lot of people lost money, and what are they doing? They're going after the celebrities who endorsed it, you know, and that, that's a whole other thing. That if, you know, and I think that's a slippery slope that, wow, just because someone endorsed it, and this company loses money, is it celebrities fault?
Matt Leising
No fans, you know, some of those folks have been given the coins, you know, ahead of time. And so, you know, if if they're out there endorsing a coin or something, or a certain NFT collection, where they're not disclosing that they have a large personal stake in the thing that they're trying to sell you. I think that's a conflict of interest. And I think you get into trouble for that. Especially if the SEC thinks what you're shilling is an unregistered security, which, you know, then you've got that to worry about as well. If you're just being paid as you know, a spokesperson or, you know, you're endorsing it, but you don't own the actual thing or haven't been given a bunch of the coins or whatever. I think that's, you know, that's where I would say, yeah, that's, that's too much. It's an overreach. But I think it comes down to that kind of like, whether, is there some sort of other way that you're making money from this deal? That doesn't seem obvious?
Mike Stohler
Yeah, it's. Yeah, it's just interesting, because it is so new and and you get the older generations to say, Well, wait a minute, you know, these? You know, how do you trade money on code? And they're like, they, they want to see the green, they want to see the money in the bank, they want to see all this sort of stuff. You know, what do you think the banking industry? are? They're going to take a step back in because they've been kind of hesitant?
Matt Leising
I think, no, I think they're actually recent signs, at least point to the fact that I think a lot of big banks and corporations view the underlying technology as something that's, you know, interesting and worth exploring. Goldman Sachs just said last week, that they are looking to buy a bunch of web three companies that have come down in value quite a bit since the FTX. You know, there's FTX, just to kind of the, the air out of the room, right. And so, the valuations in terms of what Goldman is saying are more much more interesting to them right now. You've got Starbucks that just is testing a new way of doing its rewards program. and uses NF Ts and the polygon Sidechain. That works with Aetherium. So think about the millions of people who have a Starbucks card and rack up those points for free coffee. You know, Reddit is doing a similar thing where it's issuing digital wallets to some of its users, I think it's more than 4 million have been issued on again, on the polygon side chain. So a lot of these Nike is in there, too. You know, like, there's a lot of luxury brands that are doing a lot of stuff with digital goods that you were in the metaverse. So I think those companies are not, you know, they're pretty conservative. You know, you think Goldman Sachs is not, it's not a maverick. And I think, you know, so I think that that kind of shows you that this technology and the way that people are thinking about it isn't going away, a person I like to speak to a lot in the space is like you think about Disney should really have some some sort of digital coin, where if you own the coin, you can get into Disneyland a little bit ahead of everybody else, or you get, you know, a fast pass, or you get to get Disney content before everyone else. And it's got it can unlock all of these perks, that today is really not that possible to do. And so I think that's what's getting people's attention in boardrooms. And on Wall Street, that there are a ton of new ways to think about how customers engage with you. And then, you know, ticket to the other. Or another thing is, how artists and their fans can engage whether you're a musician or you're a painter, or you know, you're, you know, you're in Hollywood. And so the, it's just unlocking a lot of new potential ways of going about things. So I think that's what's really interesting about it.
Mike Stohler
Yeah, and I'm starting to see Bitcoin ATMs. In places I was like, on how does that work? You know, it's all interesting. You mentioned a couple of times web three. What does that mean?
Matt Leising
Yeah, so web one was the early internet, where everything was, you know, finally, computers were connected around the world. And, you know, you could be in a chat group or, you know, online forum. But there wasn't a lot of infrastructure built on top of it. Web two is when that infrastructure came into place. So the Netscape browser kind of unleashed this version of web two. And then on top of that, you know, you've you've got them the.com, boom, came along, and you've got pets.com, and you've got Amazon, and all sorts of things Facebook, and Twitter. And, but those are all centralized, you know, entities and corporations. Now, web three, is where you take that same idea, but you are building decentralized organizations and services on top of a blockchain. So it's, it's taking, like, it's what I was talking about before, where you might want to have, you know, you might want to have a social media service that you but you want to be in more control of it. And you don't want it to be centralized and have an Elon Musk be able to come in one day and buy it, and change all the rules on you. So web three is really all about creating these new versions of things that we already have. But they're just decentralized and more peer to peer
Mike Stohler
in your book, which is called out of the ether, the amazing story of Aetherium. And you talked about what's the what is the $55 million heist that almost destroyed it all? You know, tell us a little bit about the book and what what was this heist?
Matt Leising
Yeah, sure. The host. So, Ethereum went live in 2015 in the summer, and it it didn't have a lot of you know, it was quite early. And it's it's obviously it's early. So what you know, having a blockchain is great, but what you need is you need to apps on top of it that people want to use. So there wasn't a lot of that. And, and but there were a lot of people who wanted to create apps for it and businesses and startups that would run on the Ethereum blockchain. So instead of like everyone going out to like venture capitalists, firms and private, or raising money on their own, the idea was, let's all pull our, like, pool our money, and people can apply to this pool of money. And if they get voted on for their idea for their startup, then they'll get some of that money to go away and build their project. So it's, it's quite similar to like a venture capital fund. It's just like in a digital version. should not have it. And so this this big pool of money was called the Dow, that stands for decentralized autonomous organization, which is, you know, a terrible term that was made up by coders. But what happened was so the idea, you would send your money to this dow which is a smart contracts and you'd get some Dao tokens in return.
And with those Dao tokens, you would then vote on the projects that were trying to come and get funding to create their company. So the people who started the Dow thought maybe we'd get five or $10 million, you know, in this big pool of money that we would then allocate to folks. It turns out, by the time that it was over, they had raised $150 million in ether, which is the cryptocurrency on the Ethereum blockchain a couple of weeks later, the price of ether kept going up. So the value inside the Dow kept going up. And by the time it was hacked, it held $250 million. So a quarter of a billion dollars was sitting in this smart contract on the Ethereum blockchain. That wasn't even a year old. And it showed its age where this is the Dow the smart contract on top of the Ethereum blockchain had a bug in it. And the hacker was able to get in there and steal $55 million. Well, people just had a look on because once you deploy a smart contract onto a blockchain, it's very hard to change it. It takes a lot and takes a lot of time. And so folks had to just sit there and watch their money gets siphoned off by this hacker. So it obviously was a huge black eye. And it really kind of made the community, the Etherium community kind of really had to do some soul searching. There's never been really like good relations between people who like Bitcoin and people who like Aetherium. So the Bitcoin people were all laughing at the Aetherium people and saying, Look what you know, you guys are so stupid. Look, what you're doing with your smart contracts. And so it set off this whole chain of events that was really kind of fascinating and complicated. And that's, that was the seed of the book that I wrote, because I it's one of the most fascinating stories I've ever come across. And I realized, I could tell that big story in different chapters throughout the book. And then in other chapters, write about Vitalik butor, and to write about the people who were making this thing, where Aetherium came from. And so that was kind of the genesis of it. And it was the most fun I've ever had in my career. And we're working on turning it into a documentary series. So it's been optioned, and hopefully, someday soon, you guys will be able to see it, you know, maybe on Netflix, or Amazon or something like that.
Mike Stohler
And where can they get the book if they're interested?
Matt Leising
anywhere online, Amazon has got it Wiley is my publisher wiley.com. If you're adventurous, and you'd like to get the NFT version of the book, you can go to out of the ether dotnet. And check that out there. So you get the physical book, and then you can you register on a blockchain and you get an NFT version of the book as well. So it's just a little fun thing. But yeah, pretty much anywhere online that you'd find books, you could you can find out of the ether.
Mike Stohler
Very cool. Matthew, I appreciate you coming on. We've kind of opened our minds and our eyes on all the different decentralization is Ethereum. And it's been a pleasure. And where else can people get a hold of you if they're interested in? Yeah, learning more?
Matt Leising
Yeah. What so nice. The central is at DCENT aol.io. That's the website. We're on Twitter at decentral media. I'm on Twitter as well at Matt lysing. And, yeah, you can definitely find me there if you guys are interested.
Mike Stohler
Sounds good. Everybody, again, it's Matthew lysing. co founder decentral media and longtime author, Matt, I appreciate you coming on the richer geek and have a beautiful rest of your day goes well. Thanks for tuning in to the richer geek podcast, where we're helping others find creative ways to build wealth, and financial freedom. For today's show notes, including all the links and resources from our show, and more information about our guests, visit us at www. V. Richard kake.com/podcast. And don't forget to jump over to Apple podcasts, Google Play Stitcher, or wherever you get your podcasts and hit the subscribe button. Share with others who can benefit from listening and leave a rating and review to get the podcast in front of your eyes. I appreciate Hey thanks for listening
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ABOUT MATT LEISING
Matthew Leising has been a reporter since 2001, and for 17 years worked for Bloomberg News. He began covering crypto in 2015 as one of the first mainstream journalists to understand what the breakthrough of blockchain technology could mean for finance, culture and industry in general. His expertise lies in the Ethereum blockchain world, where he has immersed himself in stories of the people who invented and then built the world’s most-used blockchain. He published the definitive history of Ethereum in 2020, Out of the Ether. The book has been optioned and is in the process of being made into a documentary series. Out of his book came DeCential, a media company he co-founded in 2021 that’s dedicated to telling the stories of the founders, builders and visionaries who are creating a new decentralized economy and Internet experience.
Matt has written extensively on the intersection of Wall Street and decentralized finance and how new peer-to-peer systems can change the way the current Internet works. He’s one of the foremost experts on the DAO, the early and ill- fated defi experiment in Ethereum that was hacked to the tune of $55 million in 2016. This all culminated in his 2020 book Out of the Ether, the Amazing Story of Ethereum and the $55 Million Heist That Almost Destroyed It All.