20VC: Why Crypto is Software Eating Money, Why Crypto Firms Will Outcompete Traditional Venture Firms, How To Price Tokens and When To Have Them, DAOs: How Are They Structured and What Makes One Successful with Avichal Garg, Co-Founder @ Electric Capital

You could send money to this smart contract. You can send money to that wallet. And you don't own the money anymore. Now, a piece of code owns the money. And that, I think, is a very underappreciated breakthrough, because that piece of code is an entirely new entity; it's not a person; it's not a Delaware C corporation; it does not exist inside a jurisdiction; it's not in Delaware; it's not in India; it's not in China; it's not in Europe and the EU; it just lives in the cloud.

What's happening with crypto is that, at a 100,000-foot view, it's software eating money ... And if you believe that crypto is software eating money, then crypto is also going to eat capital markets, which is the deployment of money, or the deployment of capital. And if crypto is going to eat capital markets, it's going to eat venture capital.

At the market level, all of these DAOs will be created; you'll have millions and millions of DAOs created. Many of them will fail ... Some small percent, 10% of them, will wildly break our expectations about what's possible.

There's a fundamental human cognitive bias, which is we don't really understand large numbers. We don't really understand exponential growth, because we're just primates. Primates can understand 5; primates cannot understand a jar full of jelly beans—we don't know if that's 200 or 5,000. Our brains aren't wired to do that.

If you look at what is crypto and what is crypto investing, often what you're doing is you're building crypto networks that are token-powered and token-incentivized, and they're effectively markets that are trying to replace corporations. You're trying to take the corporation and replace it with some sort of marketplace.

The observation here is all these DAOs that are on-chain are starting to deploy capital. And I think the best venture firms are likely going to build communities around them. So, all the communities are becoming investors, and all the investors are trying to build communities.

That's always in the back of my head: Actually, our instinct is to extrapolate linearly when really we should be extrapolating exponentially.

Could Bitcoin actually be a reserve currency that central banks are purchasing that could be bigger than the Yuan or the Euro in central banks? I don't think that's crazy, actually.

That's the power of software: It destroys these local and regional monopolies and turns them into global markets.