# a16z Fund 5: Privacy, AI Agents, and Crypto Maturation

**Podcast:** The Milk Road Show
**Published:** 2026-05-06

## Transcript

I strongly believe that in the near future, we're going to have the majority of financial transactions in the world actually be driven by AI agents as opposed to humans.
And it's impossible to imagine that that's going to happen on ACH and wire transfers and SWIFT and like the traditional financial rails.
Whereas crypto, it has all of the properties that are perfect in order to enable AI agents to...
become economic actors.
VC Capital is coming back to crypto in a big way and privacy is coming with it.
But what exactly does that look like?
Which projects are trying to solve this?
And why should you care?
Hello and welcome to The Milk Road Show, the podcast that knows that privacy and crypto means a whole lot more than just trading meme coins in the bathroom.
I'm your host, John Gillen.
Today is Tuesday, May 5th.
And today we are joined by Ali Yahya.
Ali is a general partner at Andreessen Horowitz, A16Z, where he invests in crypto, Web3 technologies, and works closely with portfolio companies across the ecosystem.
Ali is going to share a lot of great alpha with us today, so if that sounds good to you, make sure you like and subscribe.
Share this episode with somebody who's going to enjoy it.
Today's episode is brought to you by CAPE, the privacy-first mobile carrier, and Pharos, the Layer 1 built for RealFi.
And without further ado, welcome to The Milk Road Show.
Ali, how are you?
I'm great.
It's great to be here.
Thank you for having me, John.
I'm really excited to talk to you today.
The big news out of A16Z just this morning, actually, is that A16Z has launched a fifth fund, a fifth crypto fund, Fund 5, and you're going to be bringing $2.2 billion into A16's total committed capital of now $9.8 billion across these five funds.
Talk to me about this fifth fund raise.
What's going on here?
What's the big takeaway from this?
Yes.
So two big things have happened in the past couple of years that have shifted the way that we think about crypto going forward.
The first one is that infrastructure has now finally matured to the point at which it can support millions of users, if not hundreds of millions and even billions of users.
We went from the 10 to 14 transactions per second of the Ethereum and Bitcoin era to now being able to send any amount of money from anywhere to anywhere in under a second for under a penny.
And also being able to support tens of thousands, if not hundreds of thousands of transactions per second.
That's the first.
The infrastructure has matured.
The second is on the regulatory front.
We've made significant inroads into getting regulatory clarity, both through things like the genius bill, which passed into law last year and provides a template and a legislative framework for how to think about stable coins.
as well as a lot of rulemaking from some of the agencies, the regulatory agencies, about how to think about the delineation between security tokens, tokens that are securities and tokens that are not securities and should be treated as commodities, which is also some of the underpinning work into Clarity, the bill that's currently in the Senate, that will do what Genius did for stablecoins for the rest of crypto.
So these two big shifts have happened.
That has led to enormous stablecoin adoption from having $300 billion in circulating stablecoin supply.
We have something like $1.5 trillion in monthly trading volume, which crucially has now decoupled from spot exchange volume, which is a strong sign that this is organic adoption and it's not just fueled by speculation.
And we also have major financial institutions entering the space.
We've got like BlackRock launching Biddle, the first.
tokenized money market fund.
We've got Fidelity doing the same with their own money market fund and testing its own stablecoin.
Visa is launching its own tokenized asset platform.
And then, of course, major fintech companies like Stripe have acquired Privy and Bridge and are launching their own layer one blockchain with Tempo, Robinhood.
allows that they're launching its own layer two blockchain and the list kind of goes on and on and i think that maybe the final very exciting trend is that we are beginning to see a very active intersection between crypto and ai with things like agentic commerce uh and uh and then using crypto as a technology for battling the problems of deep fakes that ai that ai brings and so all of this has made us very excited to to raise a new fund uh for this next era uh kind of the the goal and the objective behind This next fund is to help crypto graduate from the times when it existed in its cypherpunk niche into a mainstream technology that touches billions of people.
You touched on a lot of things there.
I want to come back to these as we get deeper into the interview.
But one thing that stood out to me in the announcement that you guys made itself is that the founders we're backing with this $2.2 billion fund are going to be working on the part of the cycle that gets less attention and produces more of the lasting value.
And as you said, crypto as an industry is maturing and growing up.
Talk to me about where that intersection is, the part that gets less attention, more lasting value.
As you see it, where is that right now?
Yeah, I mean, the paradoxical thing right now is that this is a time when the sentiment about crypto broadly is close to an all time low.
And at the same time, the fundamentals about the space that are at an all time high.
And again, all the evidence that I kind of cited as I as I was talking about why raising a fund now, there's never been a better time.
for the fundamentals in crypto, even though right now it feels like the sentiment is broadly negative.
It doesn't get nearly as much attention as it did, say, for example, in 2021.
Part of that is because AI is also sucking the air out of the room.
And that is a very exciting technology.
And rightly so, people should be excited.
But as a result, it's one of those quieter moments in crypto where builders are just focused on converting the technology into products that billions of people can use.
And that's exactly the kind of founder that we are.
that we're excited to have.
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Gotcha.
Okay.
So I want to talk about some more of these things.
And, you know, obviously we want to be careful about compliance.
So I won't make you name any specific names.
But Ali, one of the things I've heard you talking about as a hurdle to...
crypto's adoption is this notion of privacy and offering privacy as a solution to a lot of these institutional players, as you've said, who are now coming to digital assets.
And you've said that this is going to be a defining moat in crypto is the ability to offer privacy and bring solutions for that to market.
Walk us through this thesis.
Why is privacy becoming so important for this next phase of crypto adoption?
Yes.
Well, the first observation is that we're now at a point in the cycle where Block space is becoming a commodity and just launching a high performance blockchain is no longer really enough to be able to win in the competitive ecosystem of layer one blockchains.
It is no longer differentiated enough.
Block space is approximately the same everywhere.
And then also because of the fact that we now have extremely good cross chain interoperability protocols, it is very easy to migrate from one blockchain to another, making any one blockchain far less defensible.
So our thesis now is that in order for a layer one blockchain to succeed in this new era, it has to have one of three things.
It either has to have an unfair distribution advantage, and that could be because it already has a very broad ecosystem, like the Solanas and Ethereums of the world are already very well established and therefore have an unfair distribution advantage.
Or it could be because they have distribution through some other angle, like through maybe like a fintech company that's...
That's providing some of the distribution that the later one blockchain will need in its early days.
The second thing is, if you don't have an unfair distribution advantage, the second thing you could have is a vertically integrated killer application.
So it could be something like an exchange that is built into the blockchain and provides value from day one.
That could be another way that a blockchain becomes defensible.
The third one would be a 10x better developer.
experience along some dimension.
So it could be a better, it could be like maybe it's 10x better performance, but more likely it's some other feature that other blockchains do not have.
And I think the best example that I can think of this is privacy.
Privacy is a beautiful example of a feature that blockchains absolutely have to have in order for them to be adopted by the mainstream that most blockchains today don't have at all.
And it's really been an afterthought for most of the history of the space and only now have people really started to pay.
much more attention to privacy as a requirement.
So that's one of the reasons that privacy is essential.
We need it in order to bring the world's finance on chain.
It can be a very strong differentiator for a new blockchain.
Additionally, I also believe that privacy can provide a stronger source of defensibility for blockchains because of the fact that it's much harder to migrate between chains that are private.
As we were saying before, Private blockchains that are public are really easy to migrate out of because of the fact that everything is transparent.
Everyone can read the state.
Everyone can copy the state.
We have very good cross-chain interoperability solutions.
It's very easy to port one application from one chain to another.
When we talk about privacy chains, the state of an application and the state of a user's account to the user's balance is completely encrypted.
And therefore, in order to migrate it from one chain to another, you have to decrypt it and then re-encrypt it with the keys of some other privacy chain or in some other privacy zone.
And the process of doing that always risks leaking metadata that may undermine privacy.
So the switching costs are much higher.
It's less likely that people will be willing to switch once they pick a place, like a chain, on which they want their private activity to happen.
And as a result, privacy chains have a much stronger network effect than public blockchains, which provide them with additional defensibility.
And so this is why I think privacy will be an important and defining trend in this space and one of the biggest sources of defensibility for an infrastructure company in this space.
Okay, I'm curious to get your thoughts on some of the ways this, what this looks like, rather, in practical use cases in products and some of these anonymity features.
I thought a good way to ask this question, one of A16's...
portfolio companies, Aleo has a privacy stablecoin, USDCX, I believe it's called, which is now live.
And so I thought this might be like a good example you could use to sort of illustrate for our audience, like, what are some of these features that are so important?
What does this unlock?
And why do you see this as being like such an important thing to bring to crypto?
Yeah, it starts from the very basic.
Do people want every single transaction that they make to be visible to anyone who wishes to look?
The answer is probably no.
especially when it comes to sensitive transactions or transactions that involve maybe your salary, right, or the payroll of a company or the treasury of a large corporation, kind of the money that's moved between different accounts in B2B relationships.
All of these things are strictly confidential.
There's very good reasons for why it should be private.
It has been private for the entirety, like the history of the modern financial system.
that a world in which all of those things are fully public can possibly work.
It's inconceivable to imagine that the world's finance moves on chain if that's the state of the world, if everything is visible by everyone.
So that's why it's so important.
I think it's been an obvious feature that everyone has known is essential for a long time, but because there were other problems that had to be solved first.
It's just been a bit of an afterthought until now.
Okay, so let's talk about some of the things that are already in the landscape.
I think you've kind of made a case for why this is important, why these are going to be features and products that people are going to want to use naturally.
But there have been privacy projects in crypto for a while.
There's been Monero, Zcash has gotten a lot of attention recently, but then we've also seen the recent launch of the Midnight Sidechain and Aztec Network in Ethereum.
So just talk to me a little bit about the landscape of privacy solutions in crypto as you see it now and where you think there are still opportunities there.
Yeah, well, I think one interesting dimension to talk about is the kind of centralized versus decentralized access, where there's a broad spectrum of different approaches for privacy.
The most pragmatic and most centralized approach is one where you just trust a centralized party to sequence transactions, to keep them private and to then settle them on chain.
And you get some of the benefits.
of using a blockchain because ultimately transactions do get settled on a blockchain and they're not reversible after the fact.
But you still have the trust in a centralized party to both sequence those transactions and make sure that privacy is preserved.
So that's one approach.
There are many projects that are following that path.
It is pragmatic and it has the benefit that it's easy for those projects to satisfy the requirements of major institutions that need a little bit more control.
want to rely on a human organization to actually do what's needed for their own compliance requirements.
Maybe more in the middle of the spectrum are the approaches that rely on trusted hardware.
So processors, chip manufacturers like Intel usually embed into all of their chips what's known as a trusted execution environment, which is a kind of quarantined area of the chip where private computation can happen that is much harder to access by any other software that's running on that same machine and accessing it or breaking into it really actually requires physical access to the computer to the actual chip in order to be able to read the underlying data so that's a better security model that makes it harder for example for a rogue employee at a company to just decide that they want to read the database and exfiltrate some of the private data of the transactions that are happening on the on the chain with something like trusted execution environments that becomes much harder because that employee would have to then go and break into the data center and then rip the chip out and then be able to examine the chip physically with advanced tools to be able to extract the data uh you're still trusting a centralized party so this is why it's in the middle of this spectrum and then far off in the more decentralized permissionless side of the spectrum You have the cryptographic approaches that rely entirely on cryptography to maintain privacy of transactions.
And they use zero-knowledge cryptography, which is this kind of subfield of cryptography that's had very significant recent advances in the past decade or so, where really the only thing that you're trusting is the math.
It's just the fact that if the cryptography is implemented correctly, then you have a guarantee.
that things are private end to end.
Ali, you work with a lot of investors and builders in the space, portfolio companies, and a lot of them are asking questions about privacy and trying to navigate this, like you said, this spectrum of potential solutions.
How do you advise investors and builders in the space to think about their own approach to privacy solutions?
And just like, how do you guide people through evaluating where on that spectrum they want to fall?
And just like, yeah, how do you approach those conversations?
Yeah, I mean, I think it largely depends on what is the ultimate use case.
And I think that ultimately dictates the amount of flexibility that you need.
It also will influence the rate at which you can go to market.
You can have a product that's live that actually works.
It may not be a bad strategy to progressively move along the spectrum where you start with.
a few more assumptions, more trust assumptions initially.
And then as time goes on, you add a little bit, you layer on technology to reduce the trust in centralized parties.
And eventually maybe the goal is you're fully permissionless and censorship resistant.
I think one thing I believe strongly is that it is important for whatever privacy mechanism companies use to be fairly programmable and flexible because Every institution that wants to use a blockchain has bespoke requirements from compliance to just sort of their internal controls, their desire to control the infrastructure on which they run.
And they will want to express their own rules as to how privacy is managed and under what conditions privacy can be unveiled and be able to comply with, say, a subpoena from the government.
All of these things are things that they should be able to express in a rich programming language.
to be able to kind of satisfy all of the requirements.
And if the privacy model of the underlying chain is one size fits all and it's not really programmable, it's going to be much, much harder for institutions which have any requirements that are not the one size to really be able to adopt the technology.
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Trillions of dollars in real world assets are stuck off chain.
Real estate, commodities, private credit, all locked behind outdated systems that weren't built for a global 24-7 economy.
The fix?
Bring those assets on chain.
Problem is, most blockchains weren't designed for that either.
Okay, so...
programmability, composability, maintaining a lot of these features is important in whatever solution you pursue.
And the use case is going to dictate a lot of that.
Ali, I want to go back to something you mentioned earlier in your answer, which is that stable coins are no longer just being used as infrastructure for crypto markets, trading and speculation on digital assets.
They're becoming a globally accepted and integrated payment solution.
The genius bill you pointed to.
and the growth of stablecoins has been really, really strong here.
How do you see this growth of privacy solutions and need for privacy solutions as being an accelerant or a necessary part of that continued integration and adoption of stablecoins?
And what does that look like as that continues to accelerate here?
Yeah, I mean, I think that, again, I think privacy is the essential missing component in order for stablecoins to really become mainstream.
I think in a world where we do not have privacy, all stablecoin use is limited to the kinds of transactions that people don't really care about.
Because if they cared about them, they probably want some level of privacy on top of them.
I think it's also the case that without privacy, you end up relying much more on centralized parties to provide a pseudo form of privacy.
For example, whenever you send stablecoins to Coinbase, Coinbase actually mixes all of the stablecoins it receives from all of its users internally.
such that it becomes somewhat difficult to know which user each of those stablecoins corresponds to.
And that provides you a kind of faux privacy, but it relies heavily on the trust on Coinbase to do that work.
And it undermines the entire point of crypto.
You have to rely on such intermediaries to provide you with the privacy that you would otherwise need.
So I think that the privacy is kind of the essential component that actually allows the space to realize it's true.
OG cyberpunk potential by allowing you to actually hold currency that is yours directly, that you're not trusting some third party in order to believe that it actually is yours and that you could send it to anyone in the world whenever you want without having any kind of concern that someone is kind of looking over your shoulder as you do that.
Ali, something we've been focused on a lot here at Milk Road is this intersection of AI and crypto.
I know A16Z has been focused on this as well.
I'd love to get your thoughts on this, maybe just to set the table here, of what you see happening at this intersection and what you're excited about that's going on right now.
Yeah, I think it's becoming very clear as agents continue to evolve and as we continue on this relentless exponential curve that we're on in the AI world, that agents...
will at some point need to go from being just tools that humans use to becoming full, first-class members of the financial system and economic actors.
So there'll be some transformation that has to happen.
I strongly believe that in the near future, we're going to have the majority of financial transactions in the world actually be driven by AI agents as opposed to humans.
Impossible to imagine that that's going to happen on ACH and buyer transfers and SWIFT and like the traditional financial rails.
Whereas crypto, I mean, crypto is a global system that is instantly settled.
It's a financial system that's instantly settled.
That's global from day one.
That is internet native.
It's fully programmable.
It has all of the properties that are perfect in order to enable AI agents to become economic actors.
So we're very excited about that trend.
And there are countless portfolio, there are a few portfolio companies in our portfolio that are already working on that problem specifically.
And there are many companies out in the wild and the ecosystem that are kind of working in adjacent areas.
And it's something that we're excited to continue to invest in.
You specifically have been very vocal about the fact that this is happening at a much faster pace than most people were expecting.
And I'm curious to see, just to hear, what are some of these near-term breakthroughs or just rapid changes to adoption that you think is making this time horizon shrink to where, like you said, we get to this world where we have fully autonomous agents being economic actors in the financial ecosystem happening?
Why do you think this is accelerating so quickly, so suddenly?
Yeah.
Well, yeah, I actually, so I used to come from the AI world.
Before existing Z, I worked at Google Brain and was actually at Google Brain sitting right next to Dario and Ilya Siskiver and Chris Ola, some of the founders of OpenAI and Anthropic.
And even though I didn't work closely with them, I got to know them a little bit throughout that time.
And then in 2017, I made the decision that I wanted to spend the next decade of my life, at least, working on crypto.
And it's very interesting to see.
these two worlds now reconverge and start to intersect.
Part of the reason why I think this will happen more quickly than most people think is just the visceral experience of the exponential on which AI currently is.
I've been spending most of my nights and weekends using AI tools to write code.
And I'm absolutely baffled by how powerful these tools have become to the point that right now, As a full-time venture capitalist who only has something like maybe five hours a week to spend in my free time to Vibecode, I am more productive as an engineer than I was as a full-time software engineer at Google.
So that's insane.
And then also the rate of progress has been crazy.
The degree to which these tools have gotten better since last year is just completely mind-blowing.
So I think if this continues, it's very clear if you're kind of riding this wave and you're experiencing it viscerally, it's very clear that agents are going to be extremely powerful and in the short term are going to be much, much more capable than they are today.
So it's not hard to imagine a world where you have an agent.
that has a crypto wallet, that is able to pay for things, is able to get paid for things, potentially is able to raise money, maybe uses X402 endpoints to buy compute and buy data, and is a self-sustaining entity in the world that creates value and maintains itself, that stays alive through the value that it creates so that it can continue to fund its compute and its own survival.
So that idea, that's a very sci-fi idea, and it sounds impossible.
And I think if you were to hook Opus 4.7 or ChatGPT 5.5 into that setup today, it wouldn't work.
It would probably get prompt injected.
It would probably get attacked, or it would just run out of money, and it would essentially die.
But I think given this exponential, given two years, I don't think it's unrealistic that we will have extremely agentic entities out there that are driven by AI, that are essentially kind of like AI.
companies where the founder is an AI agent that are creating value in the world and that need some of the crypto infrastructure that we're building in order to be able to really participate in the economic environment.
Gotcha.
Okay, so this time horizon has shrunk to a matter of a couple of years as opposed to decades.
What does it look like as we start to shift towards blockchains as being the settlement layers for a lot of this economic activity?
And just talk to me about how you see some of the risks and opportunities that come from having a lot of AI agents adopting crypto all at once in just a couple of years here.
What does that look like for you?
Yeah, I mean, I think some of the important questions are how do our existing legal frameworks adapt to a world where some of the actors on the Internet are no longer human?
They're essentially agents that maybe in some cases are acting on behalf of humans, but perhaps fairly indirectly, maybe not.
They're not directly connected to any one human being in that world.
How do our legal frameworks adapt?
What does KYC mean?
in that world?
Is it still KYC?
Is it KYA?
Is it know your agent?
How does liability work?
What are the safeguards and breaker switches that we have in place in order to prevent bad things from happening?
All things that I think we can figure out and people are working on.
And I think that will be kind of the process of us adapting to this new era.
But I think that the power that crypto is able to provide an agent such that it can kind of take matters into its own hands.
to a far greater degree than when just doing the bidding of a human who is just prompting it in a much tighter loop.
It's just very exciting.
The realm of possibilities is huge.
Right.
And we're still figuring out what that looks like in this environment, right, where we have a lot of agents operating autonomously on chain, doing all these kinds of transactions, activity and whatever else they end up doing.
Investors are wondering, I think, a lot right now of where value accrues in that environment and where investors should be positioning now to sort of capture that upside as that starts to happen here.
How do you guys think about that from your perspective?
And what are some of the competing theses that might play out there?
That is, yeah, the million dollar, the billion dollar question.
Trillion dollar.
Trillions.
Yes.
It's, yeah, I mean, we have these debates internally all of the time.
And I think that there's always, you can make arguments that are fairly strong at every level of the stack.
You can continue to argue that the infrastructure layer will capture a lot of value because the infrastructure has strong network effects.
Especially, again, if you have things like privacy that provide you with additional sources of defensibility, you could imagine that.
layer one blockchain protocols capture a lot of value.
There are also protocols that run on top of blockchains, things like DeFi primitives that themselves also have their own level of network effects.
So you can think of lending protocols like Morpho or Aave, the fact that they have integrations into a bunch of other protocols and applications, and the fact that they have a liquidity network effect where those are the most liquid markets for borrow lend on chain.
Those things have defensibility as well and are able to charge a name on all lending that happens on their platforms, likely a good source of value capture as well.
I think that the application layer, historically in tech, having a direct relationship with the end user has always been a very powerful position to be in and also always has historically led to opportunities for value capture.
And I think that will likely to be...
will likely be true here as well.
So those building applications that actually touch the end user, whether the end user is an institution, you're building a product that an institution will adopt, perhaps it's a solution for a fintech company or for a bank or some other FI, or whether it's for a consumer, whether it's just for retail, both of those likely are in good positions to capture value as well.
So we believe there's kind of opportunities across the board, We're excited to invest at every level of the stack.
And we are not too opinionated about where all of the value will go because we were humble enough to know that that is a very difficult thing to predict.
And it's just very easy to be wrong.
So with this Fund 5, you just laid out, I think, very persuasive theses for investment at a lot of different levels here.
Where is Fund 5 focused or what niche, what theme, where are you focusing the capital from this specific raise?
Yeah, well, I think the two biggest trends that we see now where a lot of the founders are currently focusing are the intersection of crypto and fintech.
You can go as far as to say that...
that there will be no more fintech without crypto, that fintech is crypto now.
And that as a trend, I think, is really growing.
We've seen lots of founders who come from fintech companies from before, whether they're like successful former fintech founders or whether they come from fintech companies like Stripe or Robinhood and are leaving and now starting a company that's kind of crypto-centered.
So that's the first.
The second one is this intersection we've been talking about between crypto and AI.
and supporting this next era of financial activity that will be driven by agents as opposed to humans.
The other angle, by the way, and the crypto AI intersection is that crypto is a really good solution to some of the problems that AI introduces as a side effect.
Deep fakes, for example.
One of the best solutions for deep fakes is proof of humanity.
We have a company in that category world, which has built a technology that allows you to prove your humanity when you are online and interacting with other people online so that others know that you're a human and not a bot.
So that whole intersection is fairly interesting.
And those are the two big trends.
But we are also interested in some of the frontier ideas.
We usually will always invest in the best founders.
and are less opinionated about the specific category that they may be working on.
So, for example, if we were to meet a great founder who wants to build another decentralized social network, we'd be happy to invest and we'd be happy to back them in their journey because we believe that those ideas are likely still going to work.
And it's just that it was the wrong time when they were tried before.
And it may just be that the space needs to mature a little more.
before we get to those kinds of ideas.
And so we're still kind of open for business, for founders who want to explore those areas.
There's a great line in the big short that Michael Burry says, I might be early, but I'm not wrong.
But sometimes in investing, being early is the same thing as being wrong.
And it's really refreshing to me to hear this, that you just think some of these ideas were early, but they're not going to be wrong.
And I like the view that there's a lot of opportunity across all these different themes.
And I'm glad you guys are exploring all of that.
I want to ask about the Clarity Act.
You talked about how the genius bill becoming law unlocked a lot of things for stable coins and use cases there.
Clarity seems like it might become a law here in the near term future.
From where you sit, what are the things that this bill is going to unlock that you're most excited about?
Where's the big opportunity that comes after Clarity becomes law?
Yeah, in our view, Clarity will do for the rest of crypto what Genius did for stable coins.
And with stable coins being just, say, 5% of the market, Clarity is 20 times more important because it addresses the other kind of 19, sort of the other.
the other 95% of what crypto is.
And I think just to, for folks who don't know, what Clarity does is it provides a framework for how to think about whether a token, a network token in the space is a security or a commodity.
And that's kind of like the most important distinction from a regulatory standpoint.
If I launch a token, am I subject to securities laws?
This is a question that founders have had forever.
since the beginning of the space.
And Clarity will finally give a very conclusive answer that provides clear rules for the road for founders who are building in the space.
So we're still very optimistic that in the next month or so, or the next few months, Clarity will make it past.
We'll kind of get to the finish line.
And I think, yeah, that'll be hugely beneficial for the space.
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Okay, so we've talked about a lot of the things that you're looking forward to here.
I think a lot of people are still struggling with something you mentioned in one of the earliest answers you said in this interview, which is that sentiment.
right now is pretty terrible, but the fundamentals have never been stronger.
The institutional investment, the capital that's coming into crypto has never been stronger.
Where do you see these two things like realigning?
When do you think we're going to finally see some of the sentiments, some of the interests from retail, from other people in the market really kind of come back to crypto and recognize the value here?
Or do you think we stay in this bearish period for several more months or years?
What's your outlook on that?
It's always mysterious how markets work.
I think my theory is that the thing that we have to do as a space is to fix the broken culture.
And the culture became what it is largely because the previous administration and its hostile regulatory position against the space was destructive because it drove out a lot of the legitimate founders from the space and kind of pushed them out whilst empowering or simply allowing.
some of the scams and frauds that I think dominated the space for quite some time.
I mean, you can think about it as a thought experiment that you're a very smart person who's graduating from a top university or leaving a big tech company and you want to start a company and you have Gensler as the head of the SEC.
Do you risk it and spend potentially five years or more defending yourself against a hostile government who's trying to kill your company?
Or do you go into AI?
It's just a difficult choice to go into crypto if that is the landscape into which you're launching your company.
So that, I think, was very destructive for the space.
I think it led to just things.
The fact that they went after things like Coinbase and Uniswap but did not go after FTX was very destructive for the space and I think caused the only things that seemed to gain traction to be things like meme coins the casino side of crypto and really pushed out all of the more exciting use cases to the fringes uh so i think in order to get the sentiment to turn around i think that's one of the key things we need to fix we need to fix the culture a lot of that will stem will stem from regulation if we if we've got the clarity bill passed into law if that legitimizes the space in the eyes of many more people If through the adoption of stable coins by large financial institutions and by fintech companies, eventually we get to hundreds of millions of people, billions of people using stable coins on an everyday basis.
If it becomes very obvious that that is a real use case, that it's not just casinos, it's not just scams, it's not just frauds, then that I think will allow the culture to begin to turn.
It'll, I think, excite a whole new generation of founders to start new companies, new products, to maybe explore some of those other ideas that were too early and try them again.
And I think all of that will then feed back into the sentiment about the space and the market.
And I think this is the way that things come back.
I really appreciate you sharing that outlook and all of your thoughts on this.
I want to end with something that a lot of our audience is paying very close attention to right now, which is that Bitcoin has reclaimed 81K for the first time in months.
Are you bullish?
Are you bearish?
I know you don't get fixated on prices too much, and I don't want to get you in trouble giving a specific prediction, but are we going to break out or break down from here?
What's your outlook in the short term for Bitcoin here?
Super bullish.
Extremely bullish.
Yes.
I mean, I do think it is one of the most undervalued.
It is one of the most contrarian bets to make, given, again, the sentiment's low, fundamentals are strong.
I think it's an undervalued category of technology.
a16z a lot of great things going on thank you so much for being on the milk road show and sharing all this with us where can we send our audience to find more of you and your work online so we are at a16zcrypto.com uh and then we're all on twitter we have you have my handle on the screen uh all of our partners work kind of very actively on x uh so come find us there i've interviewed several of your partners you guys are doing great work i'm always happy to talk to you all i hope we can have you back again soon i'd love that Thank you all for joining us.
I hope you all learned something today.
Until next time, stay safe, stay educated, stay bullish, and we will see you all on the next episode of The Milk Road Show.
Thanks for joining us, everyone.
Bye.
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