Welcome to the Chopping Block. Every couple weeks, the now five of us get together and give the industry insiders' perspective on the crypto topics of the day. So, quick intros. First, we got Tom, the DeFi maven and master of memes.
Next, we got Tarun, the gigabrain and grand poobah at Gauntlet.
And joining us again, a Token 2049 tradition, we've got Arthur Hayes, the arbiter of alpha at Maelstrom.
And then, of course, we've got Balaji, the Bitcoin brainiac. And I'm a seed bad man at Dragonfly. We're early-stage investors in crypto, but I want to caveat that nothing we say here is investment advice, legal advice, or even life advice. Please see choppingblock.xyz for more disclosures. So, we are here at Token 2049 in Singapore. It is, I think at this point, the biggest crypto conference in the world. It's one of the only places where I think you still feel this kind of energy. And it's sort of like the US conferences have gotten very institutional, a lot of suits. This is like the one retail mega conference that still gets the juices flowing. How have you guys felt about Token 2049?
You [__] come to my city and traffic is insane for like, you know, a whole week.
It's not just us. It's like, it's everything happening at the same time, you know. There's like five conferences happening. There's like Milken, there's obviously F1 happening this weekend. So, it's not just us. Also, the air here is insanely bad for some reason.
It's like Delhi. It's bad.
Yeah, that's what I've heard, that fires in Indonesia.
I feel like the institutional shift, you also feel it here. This is like the first year where there's been no like wrapped Lambo out front, and it's like just everyone is growing up a little bit, which makes me a little bit sad. I kind of was looking forward to more kind of jubilation, I guess.
They don't have enough money. Everyone's broke.
There's one more day. You could make your dream happen still.
That's true. That's true. Lambos are tomorrow.
By the way, which is I think crypto is sort of M&A-ing Western institutions, but Eastern institutions are more functional, so they will survive. The Western institutions, financial institutions won't. Anything that's holding a lot of 10-year, 20-year, 30-year Treasuries, I'm sure Arthur has some opinions on that. They're wrecked.
Fair enough. Well, I wanted to start with this story. So, speaking of fires in Southeast Asia, The Network State has recently pulled the plug on its headquarters in Southeast Asia and is now moving to Kazakhstan.
Well, so yeah, so we actually already moved to Kazakhstan.
Already moved to Kazakhstan. Tell us the story of how this all played out.
So, actually, we actually still have, you know, an office in Singapore, and we're actually going to open up something else in Southeast Asia, so stay tuned on that. But, basically, Kazakhstan, just to talk about Kazakhstan, Kazakhstan is going to be the next El Salvador, the next UAE, the next Singapore. And the reason is, so, first, why was it off the radar, right? Well, there's a Borat movie, which really misled everybody about what Kazakhstan is. It's not, you know, you see a movie and you think, 'Okay, it's like a caricature of reality, but it's like in the ballpark, you know, like Jurassic Park, you know, you ballpark approximated like the DNA in Jurassic Park.' But, it's actually totally not. And really what Kazakhstan is, is it's land Asia. And you're all familiar with like coastal Asia because, you know, the way Americans or Westerners learn geography is America fights wars there. So, like Vietnam, Korea, Japan, Americans know those countries exist, right? And they're on the coast, right? China also, you know, was a part of the Korean War, right? Singapore recently, Crazy Rich Asians, there's a movie, they know Singapore exists. But, they're all on coast. And Kazakhstan is so far inland, and it's adjacent to Russia and China, and speaks Russian, so it doesn't post in English, right? So, for all these reasons, Americans don't really have a reason to go there. Plus, Borat made it seem like it's not a great place. And so, because of that, it's like this encased in amber, absolutely amazing country, which is I'd call it Singapore, but with space to build. So, it has all of the quality of governance of a UAE or Singapore with really high IQ people and government. Like they're number one in the physics Olympiads, tying with China and India, which is pretty legit as a country, right? Yeah.
Yeah. With 21 million people, they're tying countries that are 70x...
With 21 million people in Kazakhstan?
Because it is an enormous land mass.
Exactly. So, they're 3,000 times the size of Singapore, but only 3x the size population-wise. So, Kazakhstan is the place that if you want 10,000 acres for Arthur Hayes' city...
We can do that.
Oh, we should have a fight club on every corner.
Yeah, you can get it and they'll want you there, okay? And the people will love it. They want to build startup cities. They want to build crypto cities. In fact, if you come to Network State conference on Friday, you're going to see a delegation from Kazakhstan. Many senior ministers have come down. This is Kazakhstan's sort of big thing on the world stage. Binance is now opening an office there. Solana, you know, last year had a special economic zone. Shervin Pishevar just is setting up there. Olaf is coming up there. There's going to be a lot of things happening there because it has all the digital stuff that we know. It's got actually a really, really good crypto law. If you want to build data centers, they've got the space. Texas is now banning them, you know, or stopping them. Kazakhstan has the lowest energy and building costs in Asia because it's got like enormous amounts of... It's like 40% of the world's uranium. So, it's got all the digital and all the physical. See, Singapore's an amazing, amazing place, but it doesn't have any land, right? Or there's countries that have land, but they don't have great governments. It's very unusual to have both.
So, when you left Southeast Asia, I remember you were sort of looking at many different jurisdictions to go to next. And I think you might be one of the only people in the world who has done this kind of jurisdiction shopping under duress in the way that things played out. What was that like?
So, great question. So, the thing is, first of all, you know, 10 different countries bid for Network State School, okay? More than 10, in fact. And we're going to open up nodes all around the world. We've clearly got something where we can print out Silicon Valley in a new place, especially all the visas being cut off to the US. There's this flow of talent that wants to go somewhere, and now it will go everywhere, right? And it'll decentralize just like crypto itself. Just like our community here is whatever, you know, 50 passports in this room. That's something just like cryptocurrency doesn't map to legacy currencies. Crypto identity doesn't map to legacy identities. Right? That's the next big step for us, you know, get out of your currency, then get out of your legacy identity, get a new passport, you know? Second passport is much more important than the first home. So, many of these countries that... Go ahead.
No, no, no. I mean, that's a perfect...
I think I'm more curious, what does like horse trading look like when you're shopping for a new jurisdiction? Like, who's coming after you? What are the leverage you can pull?
What do they offer? Like, what do the offers look like?
Yeah, yeah, yeah. So, without kissing and telling, so to speak, okay? It's actually a lot like... I'll give you a...
Bit. I think they'll like it. They'll like it.
It's like, it's a lot like enterprise sales, you know? It's like, basically, as you ascend from retail to SMB to enterprise to small governments to large governments, small governments are actually a lot like enterprises. See, the thing is, this is one of the secrets, ready? Most countries are small countries. Okay? Most people have not actually made this graph. Take the 193 UN members, let's use that as an operational definition of what a country is, okay? There's exceptions and so on, but let's use that. And you make a histogram of their populations, and you'll find that half of them have less than 10 million people, and like 20% have less than 1 million people, right? Only a small fraction of countries by number are the 100 million-plus countries like Russia, China, India, America. Most sovereigns are small. Like, Cayman Islands, you know the population of Cayman Islands? Who knows the population? 60,000? Yeah, 70,000. Yeah, exactly. What's BVI? BVI is like 30k, okay? That's smaller than Palo Alto. So, the number one asset that they have is a flag, okay? And so, the complementarity between what we do, we've got these gigantic crypto networks, social networks, we're gigantic international networks, but we have no physicality. They are small states, they have physicality, they have legitimacy, but they don't have anywhere near the capital or connections in many sense of the term that we have. That's a really great deal to be done, right? A billion dollars goes a long way in a country with 100,000 people or a million people. It's like $1,000 a head, $10,000 a head, right? So, you have a lot more leverage than you think, and the key is to... Now, here's the tricky part. You actually have to go to these places. And the reason you have to go to them is you have to just assume that Hollywood is wrong, but you don't know what is right. You can't ballpark. Do you see what I'm saying?
And here's why Hollywood is actually deeply wrong. Essentially, Hollywood doesn't show... I'm going to give the ball to you guys. I don't want to monopolize. But, Hollywood does not show movies of prosperous non-Western countries. With the exception of Crazy Rich Asians, that's like, you know, even Squid Game is showing all the South Koreans killing each other or whatever, right? And the reason is it's depressing for Americans to see other people doing well. So, even if you post a video of like Chinese glowing cities, they'll be like, 'Oh my god, they just put LEDs on their cities, right?' They don't understand. You'll see this, you know, complete cope on social media. And it neglects the fact that Shenzhen basically didn't exist in its current form 40 years ago. It's like, not that they put LEDs on the cities, they built the cities, right? So, point is that without travel, you can't calibrate as to... Some countries really are bad, and you have the whole two by two, right? You think it's bad, it is bad. You think it's bad, it is good. You think it's good, it is bad. You think it's good, it is good. Literally, the whole 2x2 of this there.
And you saw all of those when you were evaluating jurisdictions.
That's right. So, and that just means you just have to put a lot of miles and you actually have to see it on the ground.
Who are the folks who were, you think it's good and is good, and who are the folks you thought it was bad and they were good?
Well, you know, who's bad, I'll say who do people think is good and is bad is Western countries.
They were Western countries also.
They actually did on your network site today, what?
No, no, no. What I mean is like they are in a bizarre... You know what it is? The terms first world and third world are obsolete. I just think about it in terms of descending world and ascending world. Right? So, the quote first world is like the failed son who's like inherited something that they couldn't build, right? The Brooklyn woke, you know, and they're like...
But you were really trying to pry a list of countries out of you and you are not...
Who did you sing KTV with? How much body...
Zero KTV. Absolutely, I have to, you know. But...
It's not that much like an enterprise sale.
Yeah. What I'll say is countries under 10 million people, which is like 100 countries, really like, you know, a billion dollars goes a long way, right? And so, I mean, one of the things... Here's another way to calibrate it, okay? Take your Twitter following, you know, Arthur, your Twitter following. Make a histogram and just, you know, AI can do this for you in a day. Take any country, take its legislature, its president and so on, and compare how many followers they have to how many followers you have, right? Your visit to that jurisdiction will be the number one news event of their year. Okay. I reckon realize even for congressmen and senators in America, tech guys actually have much more distribution than you think. If you just took a liking to a certain politician and just wanted to retweet everything they did, like, I mean, obviously you have to like... there's no... it's something where you actually believe in it, right? But, you would be a very important constituent for them. You know, you should live in the jurisdiction and so on and so forth, right? So, basically, we radically underestimate our leverage is the short version.
So, we have, given us an experiment, we have to go look at who's retweeting him to figure out the list of countries.
He won't say what the country is, but the data is...
I didn't make it that easy for you.
By this time next year, we're each buying a politician.
Yeah, yeah, yeah. It's some random place.
No, it's not very clear. You're not buying a politician. Very...
No, no, no, no. I got you. Yeah.
What you're doing is you're actually making a capital investment in the country, right? So, that's the thing is the ascending world countries are ascending world because they actually have a... many of them are post-communist or they're like in Latin America, they're post... I don't know what you'd call it, post-drugs, you know, right? Like what Cali is, right? Post-inflation in the case of Argentina, right?
It's like everyone in the US keeps making post-economic memes given some of the recent events. You know what I mean? And now we're talking about the post-drug economy.
I don't know if we're at the post-drug economy.
Okay, it's actually interesting. It's like post-economic normally means, you know, okay, you're wealthy enough you don't have to worry about things, right? These guys are like sort of post-anti-economic. Whatever communism was or whatever Keynesianism is is like anti-economics. So, the great thing about them is they have immunity, they have antibodies to all the communist Keynesian stuff. I love it so much. I don't have to explain it from scratch and we don't have to debate about whether, you know, effort leads to results or whatever. So, that whole part of the world, all those people, they're ready to do business. And here's the thing, you know the best part? You go to these countries and there's multiple of them. They have murals of Elon. Okay? They have murals of all the tech guys. They're not like trying to shoot at them or say the... you know, there's a saying, a prophet is without honor in his own home, okay? They love tech. Okay? Arthur, they'll build you a statue. Okay? I'm serious, they really will. If you find a country and you basically adopt it, right? I mean, you have to actually commit. That's the whole thing.
So, are you moving to Kazakhstan?
I already, I've already set up there. We set up there months ago.
Do you have... Is there a statue of you in Kazakhstan yet?
I never asked for a statue of me. I'm kind of like...
Statues... You're going to ask...
The crowd-sourced question.
I think he's got to be on a horse.
Statues... Arthur will have a great statue. It'll be like a Greek god kind of statue. So, that's why I recommend...
Holding a longbow. I could see that.
Yeah, something like that. That's right. But you know, I just mean there's a figure of speech. The point being they will welcome you as opposed to throw Molotov cocktails at Sam Bankman-Fried's house, which they're doing in San Francisco, right? So, like, and to be very clear about this...
Some countries will welcome you depending on who you are.
Yeah, look, there's a bunch of blue states that think billionaires should not exist, okay? And there's a bunch of small states that want those tech billionaires there. And so, they're both going to get what they want kind of, which is blue billionaires will not exist. Okay, you will not be able to be a billionaire in a blue state because they'll pass these taxes and so on and so forth. That's why Larry Page is out. That's why Sergey Brin is out. That's why Zuck is out. That's why Larry Ellison is out. That's why Elon is out. Thiel is out. Bezos is out, right? Ken Griffin is out. All them out of blue states, right? So, those all just go to zero and lose their tax base and lose their billionaires and lose their centimillionaires and so on. And where do they go? Okay, they can go within America, but actually the world's a lot bigger than that.
He also mentioned Thiel, so Uruguay, right? Paraguay and Uruguay. That has to be on the list.
Okay, so Latin America, very interesting.
Did you have Latin American bidders?
Were there any bidders who were from Latin America?
I can't really comment on that. You know, you can't...
Let's say it's potentially.
Okay. Okay. We're not getting any...
