GamesBeat: The people who still fear it or believe it’s a scam, who believe that somehow it all has to come to an end, what’s your best argument against them?
Pierce: I tend not to argue with them. You’re welcome to your opinion. I need to understand that specific individual, why they feel that way. Nine times out of 10, they’re not informed. They haven’t done the work to have an informed opinion. Normally, it’s people that heard a bit about it thinking they understand it but not having done enough work to understand it. Then, they form an opinion, and they can’t even describe what money is, nine times out of 10. Or 99 out of 100. They don’t know what money really is, where it comes from, how it works. You’re dealing with a lack for knowledge most of the time.
What happens, then, is that they passed. All of a sudden, the price went up, and now, they feel emotional. They’re emotionally tied to it in part because — I hated on it before, and now, I have to keep hating because I wish I’d made a lot of money. It becomes this thing that festers. But you have to know why someone thinks that. There’s 100 reasons that someone might think it’s bad. There’s 100 reasons I can tell you why they might be wrong. But you need to understand the specifics.
People would come up to me and say that Bitcoin is a scam. “Why should I want Bitcoin?” And I’d say, “You shouldn’t. It’s not for you.” If you have a bank account, if you have a piece of plastic in your pocket that lets you conveniently pay for things, and you have faith in the system and rule of law that’s here to protect you, and of the 200 currencies in the world, you’ve got one that everyone wants more of, this is not going to change your life. You don’t need it. It might save you one or two percent, or if you’re a speculator, you make some money, but based on what you said, you’re not going to be speculating long, and I certainly wouldn’t advise you to speculate short.
But it’s not going to change your life. It’s immaterial to you. You’re blessed. You’re one of the people that live in a place where you have these wonderful tools. It’s not going to make most Americans’ lives better. You have 3 billion people on the planet that don’t have any financial services whatsoever and another 2 billion people with limited access to financial services. Two-thirds of the population of the planet do not have those financial tools you take for granted.
It’s south of the border. It’s Africa. It’s Southeast Asia. In the same way that Africa leapfrogged wired communications and went straight to wireless, these are the people who stand to benefit. The most advanced payment market in the world is Kenya because the need is greatest. This is going to change their lives by an order of magnitude. If you were remaking Maslow’s hierarchy of needs today, Internet and financial tools are probably basic human rights at this point. Without those, you can’t live a prosperous life.
GamesBeat: Is the mortgage proposition a convincing one? Can you explain that again?
Pierce: What you end up with is peer-to-peer financing over time, more and more. Banks, you give them a lot of money, and then, they leverage that money. They loan it out to people. It’s not their money. They’re taking your money and printing a bunch more to loan it out to people. We can start doing peer-to-peer loans. Institutional family offices can start doing these things directly. When you have tools that automate this process and allow for fractionalized ownership, I don’t see how it can end any other way, unless government legislates it out of possibility.
GamesBeat: And fractionalized ownership leads to much higher prices than you can get for your property?
Pierce: Yeah because it creates liquidity. Once you have more liquidity, once people can buy and sell a share in your house, or a share in that shopping mall, or a share in a casino, or you can buy blocks of zip codes — you can say, “I want to buy all commercial in downtown Vegas. I want to buy only residential in this zip code. I only want to buy at this price.”
When you start to create a really efficient market by putting in place the best tools possible, it’s going deliver incredible efficiency. With that efficiency comes liquidity. With more liquidity, you always get higher prices. And then, independently of that, fiat money is going to continue to have problems. We’re looking at a recession, maybe even something worse than a great depression around the corner. What’s going to happen is you’ll see a flight to hard assets. People will be buying more real estate, buying more gold. Crypto isn’t big enough. Gold has been around for 5,000 years. If the world runs into a problem, it’s going to be a rush for gold and real estate. Crypto is still too new and not yet proven.
GamesBeat: This is just one disruption of many that will happen, do you think?
Pierce: The Internet is broken. When the Internet was originally being designed, it was known how to secure it, what cryptography was needed, but we didn’t have the computer processing power at the time to do so, and they didn’t want it to be secure. They wanted it to have a back door. The reason we have so many security problems all over the Internet is because the Internet has been built on sand. It’s been built on a faulty foundation.
The blockchain is going to add the security layer. Everything on the Internet today is going away. Every single thing that’s there is going away. It’s all going to be rebuilt using a new stack, of which blockchain is likely to be the security layer that enables us to have money there, to have assets there, to have voting there, to do all the things you need a highly secure, impenetrable, immutable system for. But I believe the entire Internet is going to be replaced and upgraded.
That doesn’t mean Google won’t be a survivor. It’s like businesses pre-Internet and post-Internet, pre-mobile and post-mobile. We go through these cycles. Everybody has to be part of those waves or you find yourself extinct. I truly believe that’s how big a deal this is. I believe the impact this technology is going to have on the world is 10 times more than the Internet had. The Internet was just information. It democratized the movement of information. We’re now talking about democratizing all value.
GamesBeat: And venture capitalists could be extinct because of what, again?
Pierce: You’re already seeing that. VCs aren’t even VCs anymore. Most of them are wannabes, pretenders, fakes. They’ve become financial engineers. Most of them have never worked in a startup. They’ve just gone to an Ivy League school, learned how banking works, and become financial engineers. They’re not VCs as I like to think of them. I think of venture capitalists as people that actually help startups and entrepreneurs. That’s a dying breed today. There are still some but fewer and fewer as the financial engineers from Wall Street continue to take over the industry, which has been happening for the last 15 [to] 20 years.
Right now, if you’re a startup and you have a great company, do you raise money from VCs or do you raise money in a token sale? I can tell you what people are doing. They’re not taking VC anymore. Our sector is already four times bigger than VC. I don’t know many smart entrepreneurs that are taking VC anymore. Most people are already making a movement in this direction, which brings liquidity. It’s better terms for the entrepreneur. It’s liquidity for everybody involved. It’s democratized.
Basically, venture capital had a stranglehold over startups. They were the only ones with the capital. If you wanted to build startups, you had to talk to VCs. There was no alternative. Now that there’s an alternative, that’s going to be very disruptive. And not just an alternative but a vastly superior alternative.
GamesBeat: I’ve seen Andreessen Horowitz buying a bunch of tokens.
Pierce: They’re in the space. But I’m not saying they’re all going out of business. They’re going to become more like hedge funds. The world is changing. I’m not saying the VCs are all going to be gone. It’s no longer going to exist in the way it exists today. It’ll be something different. It may still be called VC, but it’s going to be disrupted by the democratization of access.
It’s not just special people that are friends with Marc Andreessen that are going to have access to venture. Everybody’s going to be getting access over time. There’s going to be liquidity. There’s going to be greater access to capital. You’ll have to be very competitive. Historically, VCs sit around and say, “Come to me,” and everybody has to come to them. They’ll have to go chase down the hottest entrepreneurs in the world. It’ll be a very different game. I think most of the VCs of today won’t want to work that hard.
The VCs of tomorrow, the people that finance innovation, will be much hungrier, much more aggressive. They won’t need a fund. You can invest your own money. It’s more like what you see on Angel List. But it’ll be much bigger.
GamesBeat: If you really did give away a billion dollars, is there something you’d want to accomplish before that? Is there something you look at and say, “I have to get this done with this capital to fulfill a dream?”
Pierce: No, because my lifestyle hasn’t changed in all the time you’ve known me. Same dude. I care less about what I wear, I guess? But other than that, I have consistent access to capital. I can keep doing things. Money is like energy. Energy likes to flow, like Bruce Lee said about water. I don’t really need much. I’m going to keep innovating. I’m just getting started. I don’t need to amass a ton of wealth for myself.
I love this organization, Charity Water. I don’t know if you’re familiar with them. They’ve given away about $350 million to build wells in places like Africa, so they have clean drinking water. It’s a guy who could be a product manager at Facebook or Google, or a rock star entrepreneur. People say, “Why don’t you do a startup and make a bunch of money, and once you have that money, you could do this.” He says, “I’ve given away $350 million. Why do I have to go do something I don’t want to do to make money to give away in the way that I want to? I can already do that.”
When you start to get world-class [entrepreneurs], world-class executives building startups with social impact, you start to see this sort of stuff. You don’t have to make your money to make a difference. You can do it all at once by trying to solve problems in ways that nobody else has. Charities and philanthropic work, that’s one of the areas that needs some upgrading. It’s not known for its efficacy. It’s not known for efficient use of capital. It’s more akin to government than to startups.
GamesBeat: Anything else you want to talk about today?
Pierce: The only thing is if I were a game developer right now, I would be looking at building something on EOS. I almost don’t want to be telling people because this is literally like when Facebook opened up their APIs. This is Zynga all over again. It’s one of the greatest opportunities I’m aware of in my space, one of the greatest opportunities I’m aware of in the world.
As a guy that’s done social gaming, mobile gaming, all those things — I’ve been telling people for the last five years. They come to me and say, “Should I do something in gaming?” I’ve said no because there was nothing to do yet. For five years, I’ve told people, “Nope, not ready.” My opinion has now changed. The systems weren’t there to do it. You can talk about building games on blockchain, but it’s not going to work. It’s a cool theoretical idea, but you can’t do it. But now it’s possible. You can build stuff on EOS today, and there will be other chains in the future.
GamesBeat: And that’s because?
Pierce: It scales. You can build just about anything, and the payment rails are so much better than Facebook or mobile. It’s like Facebook or mobile in the heyday. I’ll wager on that. I’ll wager that a year from now, we’ll have seen something insane happen exactly there and for this industry. Now is the time. I’m happy to help and educate the industry.
GamesBeat: Not CryptoKitties but something more.
Pierce: CryptoKitties is one of those very important first movers. The problem is the Ethereum network doesn’t work well enough yet. It breaks. But that’s the beginning. You’re seeing these little games. Now, it’s there. Now, you can build everything from FarmVille to Bingo Madness. You can do all these things now with higher LTVs, better conversation, better play rates, all the stats. I already have the data. It’s good.