Yat Siu: How Animoca Brands Is Making Everyone a Capitalist Through Tokenization

What is the property that is important and it is no longer the property of our hands. It is the property of our minds.

Thanks for having me. Great pleasure to be here.

Well, certainly when we started talking about digital property rights back in the early days with CryptoKitties and Sandbox land and the metaverse, we certainly didn't think it would be looking the way that it does right now. But it's not to say that it's a bad thing. It's just as you know, when it comes to an entrepreneurial journey or just building anything, it never ends up building and developing in quite the way that you imagined. But it's still sort of big and beautiful in its own particular ways. So a couple of things, right? One of the things that we were certainly expecting is that at this point in 2025, there would be a lot more consumer adoption into the entire digital asset space around digital property rights in particular and that there would be a stronger understanding more broadly as to the meaning of what ownership really means. And I think those theses still hold true, but I think the pace of adoption hasn't been quite as big as we'd like it to be in the retail consumer side of things. And I think that's somewhat related to the fact that users don't have a true understanding what property rights are, whether they're digital or analog. That's kind of one issue as to why do I hold this property? Why does the government or the legal system work in this function? Many of them don't even think about it. Often we still have conversations with people who think that the fact that there's a house that's physical is why property rights work, which is not at all why it works, but it's something that you can touch and feel. It's like my car. I own it. I can drive it. And therefore, you feel like it is your property. But of course, the security of the property comes from the fact that there's a government that gives you the legal rights attached to this. And so that stretch is the one thing that I think a lot of people aren't fully understanding. But I would say the area of adoption that happened very much more rapidly and especially when you consider what's happened in the past is around the institutional adoption. So the institutional adoption of digital assets and crypto broadly has been particularly this year and really starting in '24 with the BlackRock ETF really sort of accelerated in a big way. And so I would say that the last year and a half to two years has been very much an institutional adoption and the recognition of the security of property rights from the institution has become much more vital in their thinking. Basically, Bitcoin is a hedge to the financial market for instance or they look at ways in which you have an asset that can't be easily diluted, particularly when it comes to protecting against QE as an example. So it's become kind of a digital gold as you will. And while Bitcoin in particular does move according to the markets as of late precisely because of its institutional adoption meaning that it is much more affected by institutional sentiment than it was because of the holdings of institutions of this asset, it is also clear that institutions understand it better. They look at it and say, 'Okay, this is my property or this is a property right of some sort that has meaning in some ways, whether this is another commodity or another real estate or different type of sort of assets that you could have.' And so it's reached that level of understanding. So I think right now we've got institutional growth. We've been flat on retail for the time being. And I think '26 and hopefully '27 there'll be much more growth in retail because what the institutions do when they enter into a market is they bring a certain level of stability and predictability. And I think that's important because this asset being so new as it was is volatile. Which means that like with any segment that's volatile, people get a little bit worried or scared because they don't understand it. Even though volatility is all over and everywhere around us, especially this year. It doesn't have to be related to crypto and it doesn't have to be related to the stock market just generally life has been volatile in one form or the other but people have difficulty sort of measuring it and equating it that way. So institutions understand much better and they have mechanisms in which they can hedge themselves which retail doesn't understand. So there are a lot of topics there but generally speaking I would give it an 8 out of 10 for institution and I'd give it a 5 out of 10 for sort of retail adoption which to me though is the opportunity, because retail is really what we want here.

Yeah. So maybe taking going back to the lens of sort of the origins of property rights and why that functions. So first when you think about us when we used to be hunter-gatherer societies we were typically if you look at Dunbar's number I think it's like 150 but generally speaking most societies were sort of below 150 people because of the fact that you had oversight you could manage the society without a leader. It's the other thing many of those hunter-gatherer societies didn't have tribal leaders. There wasn't like a king of that particular tribe. It was generally quite decentralized and it worked because the society was small enough that everyone knew what everyone had. So if you had a cow, everyone knew it was your cow. There was not generally a dispute as to whose cow it was because of the 150 people, 140 knew it was your cow. And so it's okay. But when you start reaching to say 100,000 people or even 10,000 people, the fact is that the people in one side of the city have no idea whether it's your cow. They don't know how to do that. So you needed some form of centralized control to be able to augment and say this is your cow or this is your property or this is your house. And so you had to do this recordkeeping and this recordkeeping really advanced when we had the written word. When we're able to write things down, we could then have a record and that record would then be enforced by some power. And that power tends to be centralized which typically was held in the hands of a king who could enforce that power. And on and on it went. And why it was important is because through this capital asset, because it's your property, you now have the ability to transfer it, to trade it, to do commerce. And that's really really important because society basically functions on this trade and commerce. To me, trade and really money has been the biggest form of social communications from a growth in innovation standpoint. If it wasn't for the invention of money, we would not have societies come together. If it wasn't for the Silk Road, we wouldn't have cultures transcend to each other and communicate and trade. And if you didn't have the World Trade Organization and Global Trade, we wouldn't be here today, we wouldn't be communicating the way that we are. Despite the fact that a lot of people are maybe anti-globalization, the reality is that we still trade with each other. Trade is a universal social language, I would argue, in some form or another. So, but to do that trade with one another, you must first own the property in question to trade. It doesn't matter what it is. It could be a house, it could be a car, it could be a cow, it could be items of any good. But if I don't have that property, if it's not mine, then it's not mine to begin with to trade, to begin with, to engage with. I don't have rights to it. And if I don't have rights to it, then I don't own nothing. And if I want to go even a bit more philosophical, what is the very first thing that we get to own as a property? It is our name. So when you think of our history of our identity, most of us were slaves, we were not anointed by kings and we were not sort of of God as it were. So that means that many of us don't actually ever, if you look at your genealogy, why do so many have the same last name? Like I think in China we have maybe like 20 or 30 last names. I'm not sure about India, but you go to Korea sometimes we joke and say, I think your last name is Kim. And you know, I grew up in Europe, and the names of the last names of families are based on either the town they were from or the profession they used to be. Like you were the butcher or you dealt with flowers or you were given the last names of areas around you because you didn't have a last name because we were actually the property of someone else like we were slaves we were serfs. And then when we started having last names we actually owned the very first thing we owned ourselves as a start. And I think this is where when you talk about John Locke when he says basically the work of our hands what he really means is that the sort of labor with the work of our hands is ultimately ours. That if I pluck the apple, the fruits of the labor of owning the apple is now my property because I garnered it but of course I need to own the land in which that sort of apple can grow. So this activity basically gives me the property to then trade and sell. That's obviously a 16th, 17th centuries construction of property right but today what is the property that is important and it is no longer the property of our hands. It is the property of our minds. If you think about the sort of creators, musicians, artists, in fact, the fastest growing asset class today, larger than gold is intellectual property. If you think about the biggest companies in the world, it's all IP. It's about an $80 trillion market compared to gold's $27 trillion market. That doesn't even include the companies involved. Just the value of the IP, intellectual property, patent rights, trade secrets, all that type of stuff. And all of this comes from our mind, things that we invented. We created arguably out of nothing but obviously created huge huge value as a result and so that is a property we need to protect and I think a lot of people take that for granted. So if you're an inventor and you own a patent, good for you. But if you don't own the inventions of your creations even for a limited period, then you don't have the ability to benefit from that. And I think that's the point why digital property rights is important because today we spend so much more time digitally than we spend it in the analog world. And all of the value and this is the big point that we keep trying to make is all of the value you make online actually is digital value to which you owe no property. So for instance, all the attention that you're generating on your Instagram post and your social media is creating a lot of value for Facebook and TikTok and Google. And how much do you get paid for it? Nothing. Because it's not yours. You just ended up creating value for their property because it is their land as it were that you're developing. It is their data that you're enhancing. Data is the new asset class of which network effects form which then become highly valuable. So our point is that you need to basically own a slice of that value. Of course by itself it doesn't mean anything but you're generating that value. If every user stopped using Instagram what's the value of Instagram? Zero. So therefore it stands to reason that Instagram users should receive a share in the value it's receiving. That value is in the form of digital advertising. And digital advertising today is about $800 billion a year which is massive. And yet nobody gets to own a claim in it even those who make the content although it is the platform that makes that benefit. But I want to just before we close on this the one important other aspect of this is most people can understand it more simply in terms of creators. So I talked about content as creation for like even social media posts but we understand music, we understand film, we understand art. These are three more let's call it authors, these are three more sort of older versions of I guess creator economies and the reason why they work and they grew and created more wealth is because they had property rights. So there in the I think 17th century there was one of the very first copyright acts that came out called the Statute of Anne and the Statute of Anne was basically giving rights to authors as opposed to publishers saying hey you wrote the book that's actually your authorship and that gave the author for a limited period of time the right to essentially commercialize his work and then that's when you had the explosion not only of some authors but actually scientific writers, philosophers they all emerged because now there was money to be made. If I'm a scientist, I can sort of write something and I could make money from this book and if it's popular or true, then more people would want it, but they'd have to pay me a fee. So, the discovery itself became that and that's what we do today with IP and trademarks, if you didn't have music rights, there would be no Michael Jackson, there would be no Taylor Swift, there would be no Beatles because there was no commercial rights attached to it. So that's basically what it means when I talk about property rights and the extension of that digital property rights is because all of our time is digital we need to own those rights and I think once people understand that then there's no going back.

Yeah. I mean I think you're talking about our experience with Apple, right?

So first just sharing the experience in 2012 we were one of the biggest app store developers in the world at the time. So it's early days of course and we had like hundreds of apps on the app store and in early 2012 Apple deplatformed us and removed every single one of our apps. They never gave us an official explanation. They just took it off. And we suspect it's because we figured out a way how to growth hack the app store. But of course, they said it was a breach of rules, but they didn't tell us why or how to whatever. And the point isn't why they deplatformed us because they never gave us a full reason. The point is that they were able to do so. And basically theoretically if this was a rule of law and we were owning a property in a house let's say somewhere in the world then they effectively evicted us. And so if someone evicts you you have good reason and normally in society you have the court of law hey you kicked me out of my home let's go talk about this in court or you infringed on my property rights or my contractual rights well let's talk about it but right now the terms of service of all these agreements are such that you own nothing. So when you launch an app on the app store, you take a platform risk. And that story is everywhere. If you think about Zynga almost lost its entire business because Facebook decided, 'Ooh, you guys are growing too fast. Don't like that.' And they changed the rules on Zynga and suddenly Zynga had no business on Facebook anymore when it was in fact something like 70 or 80 or maybe 90% of the business at the time. So you have all these sorts of decisions that are really really you can't essentially be beholden to the power of a despot which is the next point I'm making. Why do these property rights and these rules have to be separated? I want to share a story around the music industry around ASCAP. So ASCAP was designed in sort of the middle 20th century as a way to protect against music theft in terms of people just literally on radio and stuff like that stealing other people's music and just broadcasting it on their shows because back in the 50s and 60s radio was everywhere right like everyone just literally came up with a radio channel and they would just take music from some famous artist and they said wait hold on like everyone's ripping off my music it wasn't like the ripping off MP3s it was literally airwave piracy as you might call it. And then they organized the musical sort of the songwriters association all those guys came together and started a thing called ASCAP and ASCAP's role was really to go and basically enforce royalties to everyone which they did very effectively and there was a little bit of a golden age where musicians and artists were all getting paid because they went to every one of those stations and said hey you got to pay us and so they did they paid them but then ASCAP got too powerful and because they centralized all the royalty rights suddenly they started to dictate musicians what they should be doing until they were broken up through anti-monopolistic practices as essentially a charity organization you can not but an NGO right I mean that's basically what happens when you centralize power. And today we have this in the case of Spotify while it's not a NGO Spotify is effectively the artists' agent of the world in some form or fashion. And there's not a single musician in the world that actually really makes a living through selling music on Spotify. So Spotify has become a promotion and distribution platform, but yet Spotify basically makes billions and billions of dollars of revenues off the work of others. And so it goes back to this old adage basically absolute power corrupts absolutely and that always seems to be the case. So that's the argument as to why you don't want centralized control of anything and especially when it comes to your property. There is a reason why property in a true democracy has a premium and a property in a full let's call it kleptocracy or dictatorship has often a discount. And the reason why is because someone higher up can decide I changed my mind you shouldn't have it. So there's a risk discount. Whereas if you have a property in somewhere in Europe or somewhere in America or in Hong Kong or whatever it is around the world where property rights are sort of almost god-given and sacrosanct then you can have the assurance that okay I buy this property I can give it I know that it's mine and I'm willing to pay essentially 20 or 30 years forward for that because of the fact that I know that me or my children can use it all that kind of stuff. So property rights are very very important in order to do that. And the other part for society before we even go as to what it means in other areas is that if you don't have property rights then it's very hard for individuals especially in the capitalist framework to invest long term. Imagine if I want to develop a business and I knew that I only had 6 months before the rules changed or 1 year what happens you start thinking 6 month or 1 year or 3 months you're not thinking about investing into something that might have a framework that might be 10 years or 20 years. You can't think long term anymore because it's not yours to think long term. If you don't have long term, you won't have research. You won't have development cycles. You won't have any of that type of stuff. If you knew that the work you're doing basically wouldn't be protected in one form or fashion. So, it's actually quite quite important for intellectual property protection and for essentially the development of nations, I would argue. Your idea spaces and so forth. So there is that part. So the decentralization of that assures that this the final point I would say when you think about the future when you trade these assets and these items because they're intellectual property of some form you want to be able to do it in a way in which there is no centralized power that can change the rules and I think of this is even more certain in areas when you look at it like AI agents so AI agents are the ones who going to be sort of handling essentially tokenized assets because it's essentially the native asset class of AI. Would you rather AI have API access to basically sort of close systems and transact or do you want to have the assurance that whatever is transacted with actually is truly theirs at the time of transaction. And if you're an AI actually you'd want to rather choose the decentralized asset than the centralized asset. And you can very much imagine this just in the form of Bitcoin versus basically sort of using money trading that's sitting inside some centralized outfit. The centralized outfit could deplatform you. But if it's your bitcoin and you can trade with it, then essentially it's in your custody and you can use it and you can do stuff with it on chain and nobody cares and you can take it away from you and you have that assurance and it's okay when you're transacting $100, $500, maybe even tens of thousands of dollars. But if you're doing $100 million, or tens of millions of dollars, do you really want to entrust that future into something private? And this is why regulation has come in. So regulation has come in in governments to say okay you as a private corporation have become too powerful so we're going to go in and create rules that you can't abuse that power but what if we told you there was a way in which power couldn't be abused anyway that's decentralization right blockchain technology then essentially you scale that and you don't need the government overhang in the same way not that you don't need regulation but you don't need that type of regulation anymore because the blockchain takes care of that for you already. So you know, I would also say that you then have much more participation as well. It's kind of what we saw with open source. So, broadly speaking, decentralization is always better than centralization when it comes to more mature stages. But there is of course a benefit to be centralized in the beginning because it helps you coordinate better. You get more speed, you get more efficiency. And my point is that they're not mutually exclusive. People often look at China and they say, 'Oh, it's centralized. That's why it works so well.' The economy is completely decentralized. When people do business over there, it's not like the government approves anything per se. So there is a level where you do need to have some control, but there's another level where you keep it decentralized and then essentially the ecosystem flourish. If it wasn't for decentralization, we wouldn't have half the growth that we're seeing in the world today.

Mhm.

No, I mean it's much broader than that. We started with gaming obviously because gaming is also a reputation stack. But really it comes down to what is the most important property that you care about. It's probably your reputation. At the end of the day reputation is something that stacks. You build it over time.

So people do a lot to try to protect it. And it's not just in relation to honor. It's in relation to sort of business or opportunities or in your society, in your work, with your friendships, in your relationships. Reputation actually means everything. And whereas you could argue that even transactions in and of themselves like buying a property or doing something is only a measure to build up your reputation. And while there are people obviously who think of money as a way to transact to do let's say something that might hurt their reputation but they want to benefit they end up spending a lot of money later on to recover that reputation. So anyway, it's basically to say that I think most people care about reputation and reputation is essentially our most important property that we take within all of our life and perhaps even beyond. As we get older, what do we talk about? We talk about our legacy. Oh, what is your legacy? It's your reputation that you've done, what you've done for society that you want to pass on in eternity, so to speak. So again, it's much more valuable than say the piece of house that you can no longer live in after you're gone. So but moving away a little bit from the philosophical, it's around essentially creating more trust in the ecosystem. And how do you create more trust in the ecosystem? And not just in crypto, but basically in society. It's basically your reputation. The reason I can walk into a bookstore and read at books and browse it and then go to the store and buy it afterwards after browsing and experiencing it. It's because we live in a high trust society. That high trust society knows that people entering my bookstore have at least enough reputation that they're not going to steal the books. And then when you go to a store, unfortunately in San Francisco or in Los Angeles, go to a local CVS and you see everything's locked up that is of a certain value, that's a low trust society where people are like, 'Okay, they're going to steal something and I can't stop that. So I have to basically do that.' Where would you rather live? And what environment is more conducive for growth of business and opportunity? Clearly high trust societies do better. That's also something that is proven at least in terms of research and analysis that the more trust exists in society interpersonal trust the higher the GDPs are because you can trade and do business with each other in a much more safer way. So what does crypto need is it needs high trust because we've had a little bit of a conflation of privacy versus anonymity and we've conflated them but we've conflated them intentionally depending on who you talk to. Right. So if you're basically someone who benefits from essentially sort of really being I would argue somewhat negative to the ecosystem because you're extractive, you want anonymity. Privacy is not really what you want. You want anonymity. But you call it privacy because it sounds better. I wanted to keep my stuff private and whatever. But it's not that we care about anonymity in society. We care about privacy. We don't care about anonymity. In fact, we don't want anonymity. If it's pure anonymity, that essentially means like you're doing business with a stranger every single day. You have no idea who that person is. Can you imagine going to the, you're a baker or you're a restaurant and every guest that goes in is a new person that you just simply never saw before ever. Or you're going around in your local community and you know nobody ever because everyone's anonymous all the time. That's not it. You want to know this person, you just don't need to know everything about him. That's how society functions. That's how we have trust. And we need the same framing in crypto. We need privacy. So I don't know everything about you. I don't need to know how much money you have or where you live. But I know that I can trust you because you've been to the store many times or you've been a good paying customer or that kind of stuff. And so how do you scale that trust? This is where zero knowledge proofs and blockchain technology is awesome because now you can scale that trust. Right now, how do we get trust for credit? We go to a credit agency and they basically get data from third parties to say, 'Hey, this guy, you can give him a loan.' That's one way of doing this. But it's not available for everyone to see. And it's not reasonable for me to go into a bakery and then the bakery has to analyze my credit rating to see whether I should be able to buy bread. However, imagine if this data without knowing the credit rating just enough to say, 'Hey, this guy's a good customer. You don't need to know that he's paid his debt for the last 20 years. You just need to know that he's got a high score. That's all you got to know.' And then you go and say I can do business with him. In fact, he might buy the bread now and pay me later because I trust you for instance. Or I can begin to engage with you more specifically because I know that you have something to lose in society as well. So we need that in crypto. Digital identity solves that and it can preserve your privacy but essentially take away I would argue in some way this sort of dark shadow of anonymity. I'm not saying being anonymous is not a good thing in certain circumstances, but I think we've taken anonymity to the wrong extreme and it's given crypto a bad name because everyone's like, 'Oh, he's anonymous. You don't know who he is, so he could be a thief or he could be from some one of those hackers in North Korea.' And that's not what we're about. That's not what society is about.

Exactly. And I think when you have a reputation system with Mocaverse ID, we basically focused on building essentially this reputation score over time basically that becomes an asset in itself. In the same way that if you have an Amazon seller or buyer rating that is an asset. If you have a...

Uber rating that is an asset, right? If you were able to move that score in other areas of your business or your work life, but that is certified, that's valuable, right? It's not just valuable because customers might do business with you. It's also valuable for your reputation. For instance, if you have a high gaming score in Steam, why shouldn't you be able to move that gaming score into another game and credits for that? Because then they know, oh, okay, you're a committed player or you're good at that skill or that kind of stuff, right? It functions in all aspects of life, right? Right now, when we are in the digital space, this is the other thing about sort of I guess borders or lack of borders, right? Typically, when we go to a new country, we start from scratch, right? Classic immigrant story. But that's normal because you know all the ties, all those credit scores, all the reputation you built up, which is by the way the reason why people often don't leave the countries despite being at the brink of war and disaster because they're like, 'Well, I'm giving everything up.' You lose your house, but I'm giving everything up. You're giving up your reputation, your friends, your network. That seems so valuable. It is, right? And you go somewhere else and you start from scratch. Right now, we're asking everyone in digital world to do this every single time you go to a new platform. That's ridiculous, right? You should be able to share that score around. But the thing is that the platforms have figured out that owning your rating, owning your identity is how I make sure you never leave, right? So this is why you need decentralized digital identity as a way to reclaim that so that it is now your identity. It is your score. It is your reputation that you can take everywhere in the world as you wish and please.