Web3 present and future – interview with Dave Lockie

Join the conversation between Maciej and Dave Lockie, expert in WordPress and crypto, as they delve into the origins and evolution of Web3, crypto and NFTs. Whether you’re new to the subject of Web3 and crypto or a seasoned speculator, this discussion has something for everyone.

Maciej: Hello everyone. My name is Maciej Nowak, and welcome to Osom to Know podcast where we discuss all things WordPress. My today’s guest is Dave Lockie, who brings in 15 years of experience in WordPress and five years in crypto. Dave joined earlier this year as Web3 lead in Automattic. This conversation will be a little bit different from the previous ones because we center our discussion with Dave around Web3 concepts and fundamentals and what that means for broader audience. We will also discuss wearing this picture automatic and what to expect in the space in the future. Without further ado, please enjoy my conversation with Dave Lockie.

Intro: Hey, everyone, it’s good to have you here. We’re glad you decided to tune in for this episode of the Osom To Know podcast.

Maciej: Thank you very much for the interview, Dave. And you know, you mentioned you are into crypto already five years and I wanted to ask how crypto Web3 found you? So how, how come you are into this already for five years?

Dave: So the story is that one morning I got to work. Um, so I used to run a WordPress agency and uh, I think probably at the time we were 20 or 30 people, something like this. I came into the office pretty early one morning and there was already a developer there, a guy called Nick, and he was looking at a chart on his screen, uh, and it looked a bit like New Relic. Um, I dunno if you’ve seen like that or similar application performance monitoring software where they show you. Uh, like what’s the overall performance of your system and what’s database, what’s, um, application, et cetera. Um, and I was like, oh, cool. Is that one of our sites, like one of the sites that we’re looking after? He is like, oh no, that’s my ETH miner. I was like, you are what? Uh, and he was mining Ethereum and I had heard of Bitcoin before of cryptocurrency, but I hadn’t really ever paid much attention to it. It was only when it was sort of put right in front of me like this, that I, I guess I made the connection between what we do with the internet all day and the fact that this was like money and I could sort of sub, I suddenly just like perceived that this was, um, this was a thing that was not going away. I mean, this was like a pretty sophisticated bit of, you know, remote control equipment to mine, uh, the cryptocurrency. And I was like, wow. I mean, this is like, you know, this is not a fringe thing anymore. This is here and now. And on thinking about it more, it just made so much sense. Having seen how the internet is disrupted, everything about what came, you know, human civilization and institutions that came before just made sense that it would eventually drop to money as well. Um, and it really went from there. I just became pretty obsessed with it for like 18 months. Uh, then I sort of, I was busy doing other stuff, especially around covid and uh, everything like that. And then my attention returned to it with a vengeance, I guess towards the end of 2020. Um, and yeah, I just really haven’t looked back since.

Maciej: All right. And so let’s unpack this concept of Web3 a little bit more for our listeners who maybe are not and not yet familiar. Familiar, because it’s a very vast, you know, space. So many things going on. Someone like, like, uh, pillars on which, uh, Web3, uh, sitting. So can you unpack, uh, uh, unpack this concept for us a bit?

Dave: Yeah. And I’ll start off by saying that I don’t think Web3. Is well defined. Um, if anything, it’s a successful rebrand of what is well used to awkwardly be called kind of blockchain and crypto stuff. Uh, now we’ve got this sort of somewhat more awkward basket of Web3, blockchain and crypto. Um, and I actually have a slightly different take on what Web3 is about than the common use case, but let’s talk to how, I think it’s generally used when talking to crypto technology. So we can imagine that, um, cryptocurrency and blockchain is the foundational technology, and Web3 is the set of use cases and applications and functionality that it enables. Um, so this is everything from, uh, smart contracts and decentralized applications to decentralized identity, uh, to decentralized finance, to, um, like yeah, the portability of personal data, the composability of, uh, data across different applications. It’s, it expanded to become like quite a wide set of things and as much something, I think it’s a vision for a post Web2, uh, paradigm of the web. So Chris Dixon from Anderson Horowitz defines it as the Web1 one was read only. Web2 is read plus, write? Web3 three is read plus write plus own. So it’s, I think at its core about being able to contribute and participate in both the underlying protocols and the applications from a, user and an ownership perspective, uh, without permission. So it’s breaking down the silos of tech giants and into the, uh, giving us a different option to collaborate, to coordinate, and to build value together where that is done. Very much along the principles of open source.

Maciej:Mm-hmm. .

Dave: So web three, I guess, adds to open source the concept of open state, which is that public blockchains always, uh, by necessity show the state of the chain at any given point in time as well. So it’s like if open source is the recipe for cake, uh, but we all download the recipe, we all make the cake, and, um, you know, we end up with slightly different versions of the cake. Um, open state is watching the cake being built. You know, we end up with one cake and it’s the same cake at the end of the day. And I guess we can kind of think, maybe a better analogy is, uh, like WordPress or other open source software, so you can download, uh, into different environments and it might behave slightly differently. You, you know, you might need this module turned on in, uh, this web server or this, uh, module turned on in a different web server. So there is sort of, a slightly different result of that software being downloaded with Web3. It runs on chain and it runs not only in a singular way, but in a way that everyone can see, can verify, and can interact with. So it’s like a shared run time for the for the web, which is obviously not useful for all applications, but definitely seems interesting for quite few.

Maciej:Yeah. And this started to have blockchain. So this was like the first building piece that enabled technology, uh, and this ownership and then Web3 was built on top of it. I think the, the, the thermos coining roughly around 2015 and more and more concepts are joining Web3. So it’s not only like currency ownership, uh, enabled by technology, but also there’s art and ownership of a different sort, like for example, tokens, uh, that can be treated as, um, like, uh, limited access to human resources.

Dave: Yeah. Scarcity or uniqueness can be sort of verified, um, in a decentralized way.

Maciej: Yeah and. I see this as so many like building blocks where pre as as a movement, let’s say as a like, um, like a gathering of different concepts and technology, so that if you want to grasp the concept, it’s so difficult because there are to, to really understand it. Uh, you know, it’s like it’s parallel world where in order to understand this, you not only need to understand the basics, but to see the whole picture and what are those building blocks and, um, because otherwise it’s like, uh, like, like a cross section that is only like a very small piece of, um, of this world. So, um, again, for our listeners, um, what are, you know, because you, you laid out the fundamentals, right? So this is, right now, it’s not only consuming and creating content, but also owning it. Mm-hmm  through, you know, technology enabled means. So what are the other building blocks? Like, if you can lay out, you know, the whole pie of, of, of the pieces.

Dave: Uh, well that’s a, that’s a pretty big job. Um, you’ve got, starting with the basics, you’ve got the, uh, concept of an identity, uh, being tied to an address on chain. So this is all sort of a cryptographic network and for it to be a public permissionless system, um, to anyone that has an address is opted into the rules of the chain. You can’t break the rules of the chain. Uh, and if you are operating on that chain, then you can participate in an open commissioner way and that addressed can be controlled by a person or by some software, and it can interact in, uh, ways that are concordant with the rules of the network. Uh, so with some chains, that’s pretty much limited to sending and receiving, um, amounts. So changing the ledger, um, the shared ledger to reflect a change in balances. Uh, associated with a particular account on chain. Then you’ve got, uh, the idea of transactions between those parties. So that’s a, uh, an interaction between those identities. And then you’ve got a, like that. So that was essentially Bitcoin, right? Is being able to send and receive across a public missioner system to transact value this arbitrary value. Ethereum extended that version that, sorry, that concept to include a more, like a fuller version of, um, forget the third now to be programmable. Essentially, uh, chewing complete, I think is the term that I’m looking for. Yeah. So a far more chewing, complete compute platform, and the founders of Ethereum saw that we could take these same concepts and, uh, use them to also run shared programs. Uh, that in turn just enables a whole bunch of different use cases. So you can write once, you can write a program and run it in a shared runtime in, uh, ways that are in accordance with blockchain’s characteristic, which are immutable, you know, public open record, um, publicly verifiable, immutable, all of these things. Then you create particular characteristics which are used programs. So for example, uh, Smart contracts can let you min your own token. So on top of the Ethereum network, you can create your own coin, um, that has a particular utility or security value. Um, it’s useful in different ways. Those can be fundable tokens, so they could be like a type of currency, a type of money or they could be an, could be a non fundable token, which is more like, uh, a piece of art or a. the representation of something that is unique or scarce, uh, on chain. So if I have an NFT that represents ownership of a particular piece of art, I can send that to you and it doesn’t need to go through an art broker or, uh, any other third party. That’s pretty cool. But we also ended up with, uh, taking a look at the traditional finance system and saying, are there ways that we could do this without having to have a centralized third party in the way? So if I want to, uh, exchange one currency for another currency, or I want to borrow money, or I want to lend money, are there ways to do that without market makers, uh, that sit in the middle? And that was, I guess, the fuel for the most recent market cycle in crypto, which was. Defi and all of the things that that then enabled. Uh, so yeah, the idea that you can get onto a network in a commissioner way, and you can then use that. address that wallet, uh, that identity to interact with different programs. So you can use it to, uh, sign that you own that wallet and that serves as then some sort of identity. You can store data in there, whether that’s a ledger balance of a currency asset or a, like a non fundable asset, or even just storing data on that address. That’s all within your direct control. And you can’t get your account suspended by, um, you know, an anonymous corporation, uh mm-hmm , that, that’s out of your control. So yeah. Sorry, that a bit of a rambling answer, but this, uh, that was a pretty, pretty hard question.

Maciej: Yeah okay. I, admit this that this is not, uh, not easy answer, easy question to answer because you know of the vastness of this place. Um, but thank you very much for this, um, like, uh, historical, um, overlook because this is you know, I’m asking this question because Web3 is very, uh, complex concept and the learning curve is very steep because it’s like, uh, like parallel world where you have so many like building blocks you can get interested with where every, like financial instrument is onboarding in Defi or in any other like, uh, financial platforms that if you want to learn about, you know, what’s Web3 are so many concepts that are thrown at you that you don’t know where to start. And in like, uh, let’s say not real world, but you know, this traditional world we live you’re not interested how bonds are working unless you have a, a need or how loans are working unless you have a loan, because you don’t need to end in Web3. The, whole package is like thrown at you with everything that’s already possible there. So this is very, very complex. Uh, but thank you very much for, for laying down the, the fundamentals and you know, with this bit of a background, you know, I wanted to ask you. What, because you are web, Web3 lead at Automattic, right. And I wonder, um, how did it start for you and what are you trying to build or change or, you know, um, achieve with this, with this role at Automattic?

Dave: Sure. Do you mind if we just reflect on, uh, what you just said and then we’ll move on to, uh, what I’m doing Automattic? Is that okay?

Maciej: Sure.

Dave: So, I definitely agree. Web3 can be a rabbit hole. Um, and it kind of goes as deep as you want to follow it down. I’m not sure that actually any different from the internet. Generally, though, I think the, the key thing to remember is that the, the internet and the web and crypto are all built on open protocols and open standard. And they are technically, socially, even philosophically, complex issues and nobody understands it all. Like it’s in the internet is an artifact so complex that no one can understand that. It just is this crazy fractally complex thing. Uh, and you can look at it from any particular angles and really like nerd out. uh, and, and follow the rabbit hole. And indeed, like much of our economy is oriented to towards doing that, you know, to understanding, uh, the social impact of, um, the internet, you know, social media, marketing, data collection, all the technical parts. You know, how do we make the, uh, internet faster or like, what are the security risks and how do we mitigate them? You know, these, these are questions which. Employ many of the world’s smart people today. Um, and it’s the same with crypto. You can go extremely deep if you want to, um, or you can just use the applications. And so most people would not go to a command line, would not use that to send an email. Um, and so over time, corporations created easy ways for people to do this, right? So Webmail is like really the explosion of email because suddenly people outside of a business, you know, outside of a business that could employ somebody who is like an IT administrator who understood these fundamentals and could provision accounts, anyone could sign up for Webmail, anyone could start using it. Did they understand POP3 and SMTP and like email protocols? Did they even have a concept that there were protocols that were open that underlied underplay these systems? No, they just had a, a way to communicate that was real time, had a perfect memory, was shared like all these characteristics. So it’s the, the features of benefits that drove adoption. Right now, crypto Web3 is in a kind of, in a transitioning phase where we see signs of projects and companies taking the raw underlying technology and just building it into, uh, seamless user experiences. So a good example of that is, uh, Reddit, who recently, uh, launched their own NFT collection. And that is, you know, that is proper crypto. They are NFTs on a, on the polygon chain. It might be their own side chain, I’m not totally sure. Um, but they didn’t tell people these were NFTs, they’re digital collective rules and they made the user experience very easy. Like you didn’t have to , uh, you know, they took you through the process of setting up your digital wallet. And they’re not talking about cryptocurrency accounts, they’re talking about digital wallets. And so we’re starting to see the successful abstraction of all the complexity that lies below. And the majority of people will never need to understand what happens below. But there still needs to be this layer of people who do understand and who do fight for, um, the preservation of the open protocols and standards and the networks that sit beneath. So yes, I totally agree. Web3 is a wormhole. Uh, definitely in mind Worm, I’ve, I don’t think I’ve ever found anything that has been so, sort of comprehensively brain melting. Um, but most people won’t interact with it at that later. They will just interact with the projects or the experiences which offer them features and benefits, which are different to in compliment to or unavailable anywhere else.

Maciej: Uh, I love the, this analogy of email account or you know, email client sending, receiving emails because this is like an abstraction layer of user experience to do this seamlessly and uh, in a convenient way. Yeah, and this is also interesting on another level because. I mean security level, because with crypto you own, like most of the time you, you own something, right? So whether it’s a token, a crypto, you know, digital money, right?

Dave: Yep.

Maciej: And you have to protect it. And if you are not, you know, uh, yeah, I think there was some kind of a lack. So, um, I like this concept because of second aspect of it, not only a user experience, but also from the like security perspective. Because if you are, uh, on a blockchain, you own something most of the time, whether, whether is a crypto or an ft. in email, you own your emails. So there is that centralized space, uh, on blockchain. This is your wallet and wallet address. You have to protect it. And in your example, there is that mailbox you have to protect, uh mm-hmm against, you know, attacks. And in both examples you have to be, um, aware of what’s going on, not to open your, you know, emails from, like phishing emails or, uh, or friend of an attacks. More and more. It’s protected automatically with spa filters and so on, security. But this is no, I like this concept. People tend take it for granted that you have to protect your email, and there is a huge discussion about, okay, but this is so insecure, like not secure concept. You have to protect your, your, your money. Whereas in the bank you don’t have to, whereas you still have to protect your, like a card or debit card or credit card. Right?

Dave: Yeah. Yeah. And I mean, this is something that I’ve been thinking about a fair bit and wanted to talk. Today, which is this idea of, uh, self sovereignty or sovereignty online. Um, and you know, we are talking as Twitter seems to be melting down. Um, maybe, maybe Elon will figure out a way to keep it all running. But I had a, an interview recently where somebody who was very senior at Twitter, basically said that nobody understands how to like reboot Twitter now. It’s got so complex that if it went down, like it might just be irrecoverable. Um, and so that’s another example of like a system that’s so complex that like no one person can understand it. Um, and I don’t think what we’ve experie. Yeah, so, so there’s this like explosion of the internet, right, where people figured out how to take, um, extremely complex technology and abstract it to user experiences that made sense for people. And the only way that that was possible for the majority of the people, the majority of the time was for people to seed control to the gigs. Like, you know, we trust Google, we trust Microsoft, we trust, um, whomever to provide our email, but that wasn’t the end of it. Like over time, that trust has snowballed into, actually we trust them with our identity online. So, and you can see this at the have edges sometimes, like they, these companies have to deal with so many. so much that occasionally you get like false positive. So you get the guy that gets locked out of his Gmail account for sending a picture of his charged skin condition to his doctor, which gets flagged as, uh, CSAM and his Google account gets locked. But of course, these days your Google account isn’t just Gmail. It’s potentially like all your documents. It’s your logins to other services, you know, at that point , you realize the importance of sovereignty. You know, if you are relying on a third party, uh, you know, a faceless corporation to be responsible for your identity online, then that’s a heck of a lot of trust. And I’m not saying that these companies don’t deserve that trust. Most of them invest an incredible amount of money and effort and genuine care in earning that trust every day, every microsecond. Uh, but I don’t think we’ve yet seen the, the swing the other way. You know, let’s say Twitter fails and suddenly people’s social networks and information sources have fallen apart. Let’s say, uh, something else bad happens to a centralized service provider that actually undermines trust. You know, we, we saw a little bit of that stuff with, what Snowden’s revelations could have been, you know, like the nation state surveillance. Um, and so I, I do believe there’s gonna be a swing back to where people want to take or at least want to have like a solid option to, we gain sovereignty at some degree for their online presence and identity. And I’m not saying that has to be crypto based, but I do think whether it’s through the domain name, whether it’s through a different system, there is value to individuals who want to be able to move to change, to be flexible and not to get locked out. You know, critical services or information to be able to do so. And there are, there are businesses that are set up to do that. You know, I’m thinking like, uh, you know, Proton is a privacy centric business. There are privacy centric businesses set up, but businesses always have to be located with a nation state, and they always have to be subject to the laws of that nation.The 21st century has shown us how volatile politics can be and how fast things can change. Um, and one thing that compels me around crypto and web three is the idea that actually we can build systems which transcend, uh, nation states that are, uh, verifiably, um, open and accessible. Uh, so yeah, I think, it is important to acknowledge how much trust and how much ignorance we have accepted in return for convenience and ease. Um, and perhaps it’s, you know, I think for a lot of people, whether it’s in the US or the UK or whether it’s Vietnam or Angola, the option to opt out, but still be a citizen on the internet. Still do the things that you need to do to communicate, to collaborate, to earn a living, to control your finances. Having a different system is just a perhaps necessary for some people in some situations and be a good way to. Uh, check to, to create space for more options, for more people. And I think that naturally serves as a bit of a check and a balance towards this sort of centralization of power in a handful of like insanely complex, important, uh, businesses.

Maciej: Yeah. the identity, like being sure or rather no, uh, a part of impersonal impersonation , I think I got this wrong, but what I wanted to, to, to, to give an as an example and yeah. Uh, very recent one is, you know, um, that the revolution that’s happening at Twitter where you can buy for $8, you know, uh, blue bluebird and, you know, all of those, you know, meme accounts created, impersonating, um, big corporations, uh, stating, you know, dumb stuff like, you know, uh, free medicine or not like lock marketing, for example, not selling to the, uh, United States unless this, and this and this and, you know, this affected the, the stock price immensely and there were like, uh, I think billion in dollars of. Lost value in those, in those corporations. So a meme account, uh, like troll account just for fan created. And, uh, it has a huge impact on people who don’t, for example, double check or, um, you know, research the, news, right? Like it’s crazy. With, you know, technology enables this kind of, um, behaviors and this only shows how much power like a central, business has, which is a news like news platform and maybe not even a news platform, but, um, a space impacting millions and of people, and we can see how, how much of an impact can it make on, on huge businesses.mIt’s not like, you know, small business. It’s huge, huge business. So this concept of being able to, um, say that you are who you are, prove it.

Dave: And, and and density trust verification, the ability to do exactly that stuff independently, even if most people do it, don’t do it. The fact that some people will always value it and want to do it and be able to use that to shine a light on truth, I think is just a fantastically important idea. Uh, I’m gonna give like my Automattic teammates a shout out here for. So over at Tumblr you can also spend $8 a month and you get two check marks.

Maciej: Uh, I saw this action , I saw this.

Dave: They similarly do nothing useful. So, uh, and Tumblr’s a nicer company, so? Uh, yes. You should, you should come and pay Tumblr at $8 a month.

Maciej:, two in price of, of one. Yeah. But speaking of, yeah, yeah.

Dave: I’m gonna jump back in and, continue this cause I think you’re just putting on a really interesting thread here, which is, uh, around trust and verification and identity. And to my earlier point, I see Web3 is slightly different as it’s not just like adding crypto into Web2. For me. Web3 is more about what happens. So I think of Web1 as like desktop, computer Web2 as smartphone and web three I think is gonna be, we’ll know when we’re Web3, when it’s more off screen, right? You can still access and contribute to the web without staring at your phone, uh, screan, you know, walking down the road. Maybe it’s like augmented reality glasses or earphones, maybe it’s like, um, you know, VR for gaming and learning and work, whatever it is. I think it’s that more ambient expression of the web, and that’s really where I think the environment changes. So we can look at historic presidents for this. So with eBay, People suddenly realized that they needed a payment platform that was fit for purpose for the internet, and that’s what gave PayPals, uh, massively. Suddenly you could like pay for something straight away rather than having to send a check through the mail, wait them to cash and et cetera. Um, and I think we have seen the impact of, uh, mobile phones on both payments through things like Apple Bay, but also social networks like Facebook and Twitter, and I think augmented reality, virtual reality, ambient internet Web3, that definition opens up is the opportunity for co-creation on a scale that co-creation within the digital realm that will take what we have now to a different level because it will be so visual, uh, and so immediate around us. So at the moment, Sure you can like sell a an NFT, which represents a pair of cool sneakers, but like what utility does it actually have outside of like a Metaverse, whether a five people? Um, I think when you are walking down a high street or at a club and everyone is sort of has augmentation of like the natural sensor, so that has this overlay. Then suddenly, like that pair of sneakers is uh, visible to people and it changes the emphasis and the importance of digital goods. And in turn, I think that makes more of the economy accessible to crypto, um, because crypto is really good when you stay within the digital realm. It gets really messy when you try and connect it with real world stuff. It’s definitely possible and there’s value there, but it generally means that you need to move out of like the trustless public permission space and into. realms where there are interfaces with the real world. And inevitably those then mean connections with people and corporations. And we can see through, uh, like the history of humanity and even the, the recent, um, FTX Starer that as soon as you start introducing people and corporations and the opportunity for opacity into the mix, then you. Sometimes the worst of people’s behavior emerges. In fact, it’s very predictable that it does, sadly. So I think. Where things really change. I think there’s gonna be lots of kind of iterative evolution from where we are now. Uh, even before like, you know, we’re all wearing Apple glasses and Apple even richer. Um, but I think when that internet does roll around, then it changes a lot. Um, so yeah, it’s important I think when considering you cutting edge technologies or tech trends to escape to where the pack is gonna be, not where the, where the pack is right now.

Maciej: So I, would like to take this opportunity and change gears a little bit.

Dave: Sure.

Maciej: I know. Speaking about, um, talking about, um, technology. What’s like Automattic place in this whole, puzzle.

Dave: Fine. So I work within the payments team at WooCommerce is a business unit at the Automattic, and we are starting from the perspective that we always do, which is like, what are merchants using, w trying to do? Like what are their needs? What are their challenges? How can we help them succeed? That’s ultimately what it comes down to. Even before I joined. I could go to wordpress.org, I could search for crypto, and I could see that there were crypto payment processing solutions available on the.org repo. So the publicly available, uh, open source repo, and they come with numbers of active installations and there are at least a few there that have thousands of active installations. So these are merchants using WooCommerce that are actively. Uh, or at least have that, that payment, crypto payment solution, uh, enabled. Uh, it’s like an active install, right? So it’s not just that they tried it, it’s that last time the data was checked, like it’s still activated and presumably kind of placed up checkout. So from that, we can, um, because you know, one of the challenges with the WordPress system, is that because it’s open source, uh , there isn’t the level of granularity and comprehensiveness of data collection that you would see in a platform like, uh, a square space or a Shopify. That’s sort of one of the trade-offs of being an open source ecosystem. You’d, you have to treat data, um, as signal rather than canonical, and you have to understand. Why it may not rep, you know, the map might not represent the, the terrain. Um, so even looking at that kind of map of activity, we could tell that there were tens of thousands of merchants using crypto on their stores. And at that point it feels like much like if it was shipping or it was a tax solution or it was a multi-channel solution, there’s an opportunity for Woo to partner with the people that have created those plugins and to help both them and merchants succeed. Um, so that’s where we’ve started off pretty simply. The base use case for crypto is payment. And that’s our first foray into the Web3 crypto blockchain ecosystem is to find, uh, crypto payment processing partners who have solutions with active use demands by merchants and helping both merchants and partners succeed. So, pretty straightforward actually, like distilling all of the stuff that we’ve talked about down to let’s help merchants, uh, take payments from people that want to pay with crypto.

Maciej: So it starts with the basics, right? Because this started, uh, you know, it’s, I mean the space is so young that, you know, the stuff that was invented at the very beginning, it’s already mature, right? . So the payments, uh, yeah. And like money or value transfer is button tested, uh, like for 10 years, more or less, let’s say a dec decade. And you can start with it and wait for, is it like, maybe this is my question, like, is it, um, this is the first step and see how it goes. And then along the time all of the other things will mature and the, the ecosystem will, uh, settle a little bit and you can see what, what could be the next step

Dave: Yeah, I mean, one, definitely one of the reasons that we wanted to offer crypto payment processing solutions is learning through participation, right? We can watch from afar or we can partner and get involved and deal with, um, inbound merchant support tickets. We can look at the real data that, uh, we can see when we partner, um, and figure out what is the ground truth of what. Next best help on management. So perhaps it’s gonna be helping them to sell NFTs or use NFTs to Token Gate stores to prevent Botting. Um, maybe it’s gonna be, uh, introducing wallet Connects so that people can log in stores u using Web3 wallets. Maybe it’s gonna be, you know, there’s a whole bunch of things that uh, could end being really useful to we merchants. And the way that we evaluate that is through looking at what merchants are asking for, um, I guess automatics and we commented less in the business of, um, market making and king making are more in the, in the business of helping people that are finding success to build on that success further, you know, remember we’re responsible for, you know, directly and indirectly through our support the WordPress ecosystem through our direct customers on wordpress.com and Tumblr and WooCommerce amongst more we have a heavy responsibility. Uh, and so we always need to balance innovation with that responsibility in the potential disruption that comes from it. So, uh, yeah, there’s, there’s a watch and a weight and a learn and a participation angle to this. Um, that’s not to say that innovation doesn’t play a role and there wouldn’t be some more cutting edge things that we decided to do. Um, but a, those are things that I wouldn’t talk about on a public podcast. And B uh, I think what you’re interested in right now, , what’s our approach to participating in this space? Like, why did we choose to enter and how we, how are we doing that? Um, I think it’s also very important to draw a clear distinction between Automattic and WebPress org. Uh, they often get conflated and at least by the news media. What we’re talking about here is Automattic, the business commerce, the business unit, helping our direct customers on woocommerce.com. Crypto payment processing education and partners to help them grow. This is a million miles away from some of the hype ideas, like a WordPress coin or a WordPress dial, anything like that, you know?

Okay. So there, there,

Maciej: there were like those kind of ideas, uh, because I have never heard about them.

Dave: yeah. Yeah. Yeah. I mean, I had. I’ve heard talk of those sorts of ideas for years, even before I joined Automattic. So this isn’t like, these aren’t Automattic ideas, these are like ecosystem ideas and it’s kind of, it’s kind of natural, um, that people are gonna be thinking about how crypto and Web3 impacts large existing tech companies. Um, so yeah, I just wanted to be clear about that distinction between like the open source project where, um, that’s up to the community to figure out what to do. An Automattic, where we take a business perspective on how, how to operate.

Maciej: Mm-hmm. True. Yeah, because automatic, the business spans Mm. It’s, it’s like a, like a consult team, right?

So there, there are a couple of business units, not only, um, commerce, but Tumblr and other companies and is there. Mm. Because I, I want to, I want to understand, cause this is, from my understanding, this is new for Automattic to engage in Web3. It, it’s already there for a couple of years, but, uh, do I get this right that, uh, you, you were the, like the, the, the. The person who started to saying like first said, let’s do something about this in this space. It’s like missed opportunity.

Dave: No, no, definitely not. Um, and in fact, I found a very old blog post talking about how you can pay for your wordpress.com services with Bitcoin and I think that was like 2015 or something. So this is years and years ago. Um, I’m pretty sure it’s safe to say that I’m the first dedicated resource in automatic to look at this, uh, space. But there are some of the smartest people I’ve ever met at work at Automattic. You know, I didn’t walk into a room and go, Hey, have you guys heard of crypto? And everyone’s like,

Maciej: oh no, no, never.

Dave: Um, so, you know, but what I do think it’s changed is the. Uh, the organic demand that we see, uh, the, and the organic adoption by Woo merchants to go and do something with this. And yeah, of course, my hope is that Web3 Automattic becomes a broader church. Um, but to some extent those decisions are also outside of my control. As I say, we’re, you know, we are reacting to what our merchants want, and of course we’ve got like ideas and views and hopes and plans, uh, about how that could evolve. But some of the challenges with crypto are, are real and, you know, very difficult to solve for. Like, you know, the fact that if you hold crypto in a non custodial wallet, like you own the private keys, you lose the private keys like, You know, your wealth and your identity lost forever. Um, you know, that’s a, that’s a really big problem. A lot of the user experience stuff is problematic. A lot of the trust and privacy and security stuff is problematic for most users. So there are challenges, an opportunities that are broader than anything we are able to influence. And what we want to do is to.Identify where there is demand and where we can add value. Try to offer guidance and education, help people understand like the opportunities, the challenges, make sure that they’re walking into what they’re doing with eyes open. Cuz as we’ve talked about there is like, uh, a layer of understanding what, what you’re doing that has to be backfilled when you compare to just signing up for PayPal or signing up for Stripe. You know, there are potentially deeper implications. Um, so yeah, there are, I’ve got so many ideas, so many hopes, uh, and I expect that we’ll see more things. Make it onto woocommerce.com in G-Course. It’s, you know, as we’ve seen from the last couple of weeks with totally unexpected things happening, you know, it’s still an industry that has, um, significant challenges to overcome and the broader adoption of crypto and the techno, like the subtrends within that, that emerged are outside of our.

Maciej: Yeah. And, uh, regarding the events, you’re talking about, we, we’ll dig into them in a couple of means, but I still wanted to ask you

Dave: Sure.

Maciej: Because, um, I was thinking, um, if Automattic is engaging inWe3b, Hard to say movement, but, you know, uh, into, onto the, this journey, I was thinking, is there anything else Automattic is doing, um, perhaps apart from the, uh, from this like payment, uh, approach? Because I’m thinking nothing,

Dave: nothing at this time Maciek.

Maciej: Okay. Okay. Yeah, because I, I was thinking maybe the philosophical approach of, you know, open source, you know, the platform that’s, um, you know, Millions of users to, um, build stuff on, on the internet. Uh, it’s like philosophically, uh, aligned with Web3, let’s say ideals. I see there is a little bit of a, of a synergy here, whereas I don’t see many crypto or blockchain companies using WordPress as their first choice technology because, you know, the applications are, you know, written backend, you know, this is different and for the marketing website, I see some, but it’s not like, you know, I , it’s not like a first choice technology, whereas, you know, it’s a great CMS system. And I would be expecting more, uh, crypto companies picking WordPress as, the first choice tool.

Dave: Okay, so there’s a couple of, there’s a couple of bits there. I think from a values and admission perspective, there is a lot of synergy and a lot of resonance. Um, you know, freedom to publish, freedom to transact, um, open source communities, all of these things are very much in line, uh, and to some extent, crypto is the na… I see it as the natural evolution of open source to include open state, and like how do we take everything that’s made the WordPress community so successful and powerful and good, like just a wholesome, positive, constructive value creating? How do we take those principles and those ideas and expand them beyond a content management system? Um, so, yes, there are absolutely philosophical harmonies, um, both with WordPress and I think with Automattic as a whole. Um, you know, we’re a remote business, we’re global. Um, we have responsibility for really important things online. You know, there’s, there’s a lot of, uh, rhyming. Those don’t necessarily translate into actions however, you know, you can, it’s perfectly possible for those things to remain true and for there not to actually be any, uh, commercial opportunities or involvement overlap. Um, so that’s important to remember that whilst it seems an obvious fit, we always need to take a merchant first approach and look at things skeptically and somewhat conservatively because the responsibility that I’ve talked about previously, you know, we don’t, we don’t want to be at the cutting edge. And then it turns out the cutting edge was like cutting in the wrong direction and true. Now there’s a lot of drama. Um, your the second point. was around, sorry, I’ve, I went down that rabbit hole too far. Uh, it’s.

Maciej: like, for me, it’s a natural choice, uh, to, to use WordPress in, in blockchain. Right,

Dave: right, right. So the use of WordPress by crypto and work through businesses. Yeah, I mean, I do see a lot of it, frankly. Um, and more and more we are seeing in the org marketplace things like web wallet connectors and, you know, NFT blocks and all sorts of different tools. There’s a lot of like crypto price ticker plugins, for example.

Maciej:Mm-hmm.

Dave: So I don’t, I don’t have any data or any guess as to like what the percentage difference or change is for crypto companies using or not using WordPress compared to any other, uh, I guess I would say it’s probably not too far away, although there are a couple of trends which are kind of interesting. One is that you see a lot of crypto websites that use, like, is it GitBook or something for documentation? Oh yeah. So Bec because like. Crypto projects rather than crypto companies. Crypto projects tend to be, you know, programmatic and protocol and technical. Then a lot of their website is actually focused on, like, the technical documentation model is like marketing, uh, content. So GitBook I think is probably a benefit for some of those use cases. Um, I think where you’ve. application, the application side of things. So you know, even just talking about like Web2 businesses, you often see that you’ve got like the www.domain and you’ve got like the app.domain and

Maciej:Exactly.

Dave: You run different tech stacks. And I think that if we looked at the, the instances where there was like a separate dub, dub dub and a separate app dub dot, you’d probably see a pretty comparable percentage of uses. Um, but of course, crypto companies are also highly technical businesses and you know, developers love using the latest shiniest stuff.

Maciej:Exactly. Yeah.

Dave: So maybe they’re using some fancy framework or like, uh, the CMS at the moment. Maybe they’re also just building out headless WordPress because of course we can’t always tell that we can Rarely tell, uh, if we’re looking at a headless WordPress instance or like a flat, um, job script run site, or even a flat HTML site. So, um, yeah, I’m not totally convinced that, well, I just don’t have the data to suggest whether there is like a, a trend or a differential there. Um, yeah, but it’s an interesting question for sure. And uh, obviously we hope that lots of crypto. Related businesses will continue to choose, uh, WordPress and commerce.

Maciej: Yeah. Yeah. Let, let, let’s hope for it. Um, uh, so would, would you like to, uh, tackle on, on the FTX collapse?

Dave: Well, I think, you know, we are, we are recording this, um, within the first couple of weeks after all of the insanity started, and exactly

Maciej: a week after of filling chapter 11 by FTX

Dave: So I, I think I wanted to talk about this because we’re launching crypto payment processes on woocommerce.com, just as like all of this ford and crime, uh, is unwinding and lots of people have lost money. Um, and I wanted to mention it because I think not doing so would’ve been insensitive. Um, there is, there are a couple of interesting narratives that emerge, however, from this, like great unwinding, which really started with like the, the lunar, uh, attack and deeping, um, much earlier in the year. So it’s been, it’s been a pretty, like 2021 was a pretty amazing year to be in crypto 2022 Like unless you were very careful, it could have been a pretty disastrous year to be in crypto. Um, but there are some important things, even like at this early stage that we can take that, that we can learn, excuse me, learnings that we can take away. So the first is, The underlying that like the actual crypto protocols weren’t affected by these things. They operated as designed, they’re functional. Nobody’s been unable to withdraw their assets from Defi platforms. Nobody’s been that enable to send Bitcoin to each other. So the pure crypto side of things, like it stands up and it works and it is undamaged by , uh, the, like these, these unwaning, like even Luna, um, like the cryptocurrency, like the smart contract stuff. It did what it was meant to do. It’s just that the way that it was designed turned out to be like a massive positive. Um, but that was there for people to see and people did see it and they call it out. Um, FTX. As a business was what I’d call like Web 2.5. Um, it was a centralized corporation governed by regulation in a nation state, and it was operated by grim criminals, allegedly was what seems likely to be, uh, you know, people that blundered or perhaps who wandered. Into crime in the public perception that’s always gonna be tangled up with, uh, you know, cryptos all fraudulent and a scam. But actually what happened here, like it used some of the, um, tools and, uh, opportunities that crypto, uh, allows for, but, it was the misuse of that by people in a corporation subject to regulations. That was the problem. It was not the underlying crypto protocols and what most of the crypto industry is building for that were at fault. So I think that’s important to differentiate. Uh, it’s interesting to observe, even amongst this great unwind, uh, there are businesses that seem to be unaffected by contagion. You know, that followed regulation that were under intense scrutiny that suffered, uh, competitively against businesses like FTX because they couldn’t offer the sorts of products that FTX were because they governed under US regulation under that scrutiny. But the flip of that coin is that during troubled times, the work that they’ve put in to be compliant stands up and it’s protected their customers and their customers deposits. So centralized businesses rather than defying pure crypto and also. Good actors versus bad actors. They’re both very important things to understand rather than just seeing it as a blanket, you know, quick load scam issue. Um, and so that’s why we chose to proceed with launching category anyway, because our partners, we did two diligence to the best that we can tell. They’re all, um, unaffected by contagion so far. And I think that is sort of testament to working with partners that see the world in the same way and to, you know, ground through thing, um, what’s on the marketing materials and that it’s more important than ever that people, you know, merchants who are looking to start accepting crypto, understand all of the questions that they should be asking, uh, if they chose to do so.

Maciej: Yeah, I think it’s, uh, You just to jump in. I think this is a very tough moment for you to launch products, uh, in this kind of environment because during this just weeks or, you know, I, I’m not sure when, when you will launch, but it’ll be weeks after FTX and the Iman, like, like the hugeness of, of the collapse, you know, uh, uh, for, for our listeners to have a like perspective, you know, from 32 billion into zero under 48 hours. We haven’t heard about anything like this ever before. It’s the biggest collapse of a corporation ever. And, um, the problem with this is that it’s, it’s shining, you know, light into the whole sector. And, uh, there is a lot of, there’s a lot of discussion about. people think, uh, you know, the founder Sam Bankman-Fried as a, uh, like, like, like a, how do you call it? English? Like

Dave: Yeah. Like a, you know, a genius or,

Maciej: exactly. Exactly. And the, uh, like the red flags were perceived as, great example of, uh, like genius behavior like pitching in front of Sequoia while playing um, league Legends.

Dave:League of Legends.

Maciej: Yeah. Yeah. So, so everyone was seeing this, but the interpretation was different, you know, if it wasn’t in a different, if it wasn’t in for different sector, it could be, you know, not even the case of rising funds that enabled, you know, building the campaign. So my take on it is that, people were like blinded by, um, by the need or by the urge to, to believe in this as a business and, and positive think instead of what was, what, what it was, uh, from the very beginning.

Dave: Yeah. Yeah. I mean, look, I think there’s a couple of, a couple things. The first is to emphasize these aren’t Automattic products, these arm products that we’ve built and we’re launching there, uh, extensions that exist in the ecosystem anyway, merchants are choosing to use already. Um, it’s definitely awkward timing. Um, by then the principles still stand up and the Thomas that we’ve selected and the way that we’ve chosen to approach making people aware of the opportunity and challenges and the questions that they should ask and be aware of are like Important to do. And this is a multi-year, long-term, um, technology trend. So the micro, it might feel a little bit like to, to do it with this backdrop. Um, but as I said, I think it, it just makes it more important ever than ever that we are doing our best to help educate merchants who are already gonna be using tools to make the right decisions and to be aware of the implications. I think, I don’t want to give too much air time to like individuals, but this is far from the first time that massive financial fraud has been perpetrated un highly regulated environment. Um, you, the Bernie Madoff Ponzi scheme was like 50 billion or something. So even bigger than FTX, and this is like a long time ago. Um, I do agree that everyone seems to have fallen under a spell with SPF. Um, and you know, without getting political, it does definitely feel like a bit of a failure of regulation that, um, for example, when Coinbase Tried, uh, launched the same products or equivalent products as FTX. They were blocked by doing so from US regulators, those same regulators were extremely weak at enforcing any action against FTX, so, mm-hmm. You know, these are products that consumers wanted. They were accessible through a very well known corporation. You know, just a short flight away from the. Um, with the founder, it operating in the open and yet no action was taken to protect us retail. No real action. So, I dunno, that regulation is always the answer. Um, because again, like regulation is always subject to politics and people, uh and yeah, I mean it like it does in retrospect. I mean, I can’t, I can’t believe he managed to pull it all off. I mean, it’s just like.

Maciej: Exactly.

Dave: It’s incredible. I mean, I Do you, do you ever read, uh, the author Michael Lewis, he wrote Moneyball and Flash Boys and Liars Poker?

Maciej: I’ve read Flash Boys. I’m talking about, uh, like every time I have a chance. Yeah, because this is, this is for, for those who didn’t, who didn’t read it, uh, it’s a history of, um,

Dave: high, high, high frequency trading

Maciej: Exactly And front running orders and the, you know, the whole, uh, US market of, uh, stock exchanges were affected by this.

Dave: Yeah.

Maciej: And the stock exchanges were providing, um, like, um, procedures, uh, like especially design procedures to enable high frequency traders to benefit from, uh, knowing about the incoming trades and making profit or not off profit. It like, Fractions of a percent, but very, very, on very, very, very high frequency. It was building huge wealth without, uh, the frequency, high frequency traders owning any stock at the end of the trading day. So they started with zero and ended with zero, making millions on this hyper trading. And to give you perspective, there were like some exchanges were, um, providing 70 to 80 cause. So not only sell by, you know, stock loss and so on, you can think of but 70, like very complicated and sophisticated logical arguments. If this and this under this time, amount of time, uh, do this. And this was designed to those who were benefiting from, from this. I can, uh, ramble on about this for a day, So, cause…

Dave: Well you should definitely, definitely read all those other books. You know, The big short was filmed with Christian Bale

Maciej: Yeah, I read it too,

Dave: He, it turns out like he, apparently he was following, uh, SPF around for the last six months. So like, I’m just holding on for this book cause it’s gonna be, No. Right. You know, this story is not over yet and um, I think it’s gonna be a bit of a wild ride of a story as well. But, you know, let’s just bear in mind this is financial crime. It’s whatever it is. It’s not what the crypto industry is about. You know, it’s how people are, view the crypto industry. And there are definitely challenges within the crypto industry, which have, uh, made it easier for him to get away with doing this stuff or in get away with doing this stuff. Um, but it’s not the vision, it’s not the goals. And in fact, exactly, if only underlines the importance of not trusting people and corporations and regulators or at least not being forced to. Uh, but yeah, I mean, how he managed to beguile investors like almost everyone into. Thinking that what was going on was and was like totally fine, uh, is just, it’s just absolutely bonkers. Um, but it’s also, you know, it’s adjacent to crypto. It’s not, it’s not crypto.

Maciej: Yes, exactly. Yeah. Yeah. We have to remember, this is not crypto per se. It’s like you said, web 2.5, which is. Taking crypto, but running this as an old-fashioned business with all of the problems of, uh, person going croak, um, running the company. Yeah. Thank you very much. I hope we could end this on a more positive note, but let, ..

Dave: I think we can, you know

Maciej: exactly.

Dave: This is, um, This sort of washout and these sorts of lessons. Alright, so like, my, my take on this is, and people often ridicule crypto for like, relearning the lessons of traditional finance, um, you know, lessons that were learned a hundred years ago and, and the example of FTX, like not running. proprietary trading shop and an exchange, you know, that’s just a massive conflict of interest structurally. Um, and that was regulated against in the US in the twenties, like the 1920s. So, you know, these are, these are old lessons that, uh, the industry seems to be relearning, but the point is that we are relearning them, uh, in the open together and implementing, uh, open, transparent solutions to those. So we are designing in the open, and that keeps, I think, if you believe in open source, and you have to believe that that is the way to build resilient systems. Um, so running a WordPress agency for years, I often used to hear like, oh, you know, WordPress is insecure, or It’s got loads of bugs, or whatever. But A, that became untrue pretty quickly. And B, it’s easy to find fault in what’s laid open, uh, but it’s impossible to do the same thing for proprietary code and proprietary platforms. That doesn’t mean that those same vulnerabilities or issues don’t exist, it’s just that like nobody has found them yet. Or at least like the fact that they are present is not widely known. Um, You know, there are significant challenges with, within the traditional finance industry as well, you know, they have massive cybersecurity challenges. There are, there’s card skimming, there is hacking, there is all sorts of financial, uh, like challenges there too. Um, and so the way that I look at some of these very difficult lessons that we are learning, In crypto is the same as like waking up in your WordPress site attack. You know, it is bad, but you learn, you fixed and you move on and over time the system gets more resilient. Um, and I think that’s, you know, that’s the optimistic and positive and constructive way to look at this stuff. Not taking things for granted and understanding that this is, you know, it’s a wildly difficult undertaking to build an alternative financial system. Um, but that it’s also critically important, uh, for many people around the world that it does happen because often commentators are leaking from the security of the EU or the US and they don’t experience the same challenges around capital controls or, uh, currently devaluation or inflation that people in other countries do and so they don’t have the same pressure on them to find alternative ways to preserve their wealth and preserve their ability to transact and ultimately, I believe that trade is what helped humans go beyond being hunter gatherers, right? It’s, it was essential that I could trade you a deer today and you would give me some fish next month, and that’s where money and, um, money came from. It’s, you know, at least one of the theories is that it’s, uh, you know, a store value over time or a way to transact and as we enter this like exponential new age, like we didn’t even touch on ai, right? Like, so how people can trust each other now is problematic. How they can trust each other when AI technology has really come online. That’s a whole new catfish challenge. Yeah. Yeah. In, in this increasingly technological and exponential age, the need for a financial system uh, which is resilient and open and transparent and composable with the rest of our lives just seems like a really important mission to go after, to preserve that freedom, to transact, to build connections between people regardless of location or time or, uh, political belief or, or regulation. Just seemly.

Maciej: Exactly. Thank you very much, for your take and if our listeners would like to help you or Automattic on this mission is there anything you are looking for? Like any help? You have two minutes to pitch for something Dave.

Dave: Yeah, you can find me just contact me dave.lockie@automattic.com please to hear from you if you hate everything that I’ve said, if you love everything that I’ve said. You’ve got a project you think that we should be paying attention to for the future. You’ve got a project that you think we should be paying attention to right now. I definitely don’t want anyone listening to come away the impression that I think I know everything about this space. I’m just trying to keep my mind open, learn and share what I learn as I go along. It’s a very complex, very fast moving space, and I think it’s important. So if you share that view, then, you know, let’s talk.

Maciej: Thank you very much Dave. It was pleasure to have this talk with you and see you next time maybe.

Dave: Yeah! Thanks to the opportunity Maciej.

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