Nick Szabo and Naval Ravikant on the Tim Ferriss Podcast – Recap

A few days ago Tim Ferris did a great interview with Naval Ravikant and Nick Szabo. You can find the full 2 ½ hour interview here... or you can check out my recap below.

For those unfamiliar Tim Ferriss is probably best known for his best sell The 4-Hour Wookweek. In addition to being an author he’s also an entrepreneur and public speaker. He describes himself as a “human guinea pig” and basically likes to learn about everything. Today he does a regular podcast, The Tim Ferriss Show and interviews a wide range of people. You can find past podcasts from the link above.

Naval Ravikant is the CEO and co-founder of AngelList, the site that matches startups with talent and investors. Before that he co-founded Epinions and Vast.com. And he’s also worked in the venture capital space. He’s been involved in over 100 venture capital investments including a few from the blockchain space like Blockstack, Numerai, and Filecoin.

Nick Szabo has a truly unique background. He’s a computer scientist and cryptographer first. Then he went on to get his law degree. And the big reason for that is his work in digital contracts and digital currencies. He basically invented the concept of the smart contract. In 1998 he designed a decentralized digital currency he called bit gold. It was never implemented but is considered a precursor to bitcoin. In fact, some claim Nick is Satoshi Nakamoto.

Here’s a recap of some key discussions from the interview (mostly in the same time order):

Nick Szabo (NS): Talking about early cryptography, he said merkle trees and one way hash functions (see here and here were important inventions for the bitcoin blockchain as it makes it nearly impossible to go backwards.
When asked why do we need cryptocurrency? So we no longer need a trusted third party. But it goes beyond that, it’s the dawn of trusted computing.

Asked what makes bitcoin valuable? It’s scarce and can be easily sent and store. (Naval commented that a person could memorize their private key and literally go around the world with billions in their head.)

Asked about his fascination for cryptography and bitcoin NS said property and contract laws are the building blocks of society. His passion is figuring out how to do that in cyberspace.

Naval Ravikant (NR): He likened the bitcoin blockchain to a fly in amber. You know how long the fly has been there based on the amount of amber that surrounds it. And the more amber, the more secure the fly. Likewise, each block added to the bitcoin blockchain is like another layer of amber around the fly.

Next Naval talked about the concept of fat protocols. It’s a pretty important concept, especially if you are investing in cryptocurrencies. The original article on fat protocols came from Joel Monegro of Union Square Ventures. And NR and 21.co CEO Balaji Srinivasan wrote a piece called Thoughts on Tokens that talks about the concept of fat protocols as well.

NS – Trusted third parties are security holes. Proof of work (PoW) is important to security.

NR - Bankers are the miners of the last generation. Most of their jobs, especially investment banking, will be automated over the next 20 years.

NS – Ethereum has big potential, but is riskier due to its larger attack vector and the fact it has a much bigger market capitalization than when bitcoin was the same age.

What projects is NS excited about? Ethereum (ETH), Ethereum Classic (ETC) and Rootstock (RSK).

According to NS the opportunity now is to marry the blockchain with existing traditional finance. There’s is a cultural disconnect. It’s a profit opportunity for whoever can figure it out.

In talking about the blocksize debate NR asked NS, in theory, would he rather see bigger blocks or a second layer. NS said definitely a second layer. It’s needed for transaction growth. The lower value transaction will happen on the second layer and periodically settle on the blockchain.