Lessons - Breaking Away From Institutional Financial Systems | Miko Matsumura - $500M Crypto VC Fund Partner

In this lessons episode, explore how blockchain challenges traditional institutions by creating financial choice and accountability. Discover how decentralized systems compete for consent and keep structures honest, understand why responsible risk-taking and diversification matter in crypto, and uncover how curiosity and caution enable smarter participation in the digital economy. But even blockchain is an attempt at freedom from ingrained and trenched institutional systems, right? That's what it is. And the thing that's fascinating is that the existing systems aren't able to offer the freedom. They're not able to. And the reason why I assert they're not able to is even if you like it there, you still don't have a choice. You don't have an alternative financial system where you can basically choose to go. But now you do, right? So what has emerged out of blockchain technologies is this alternative financial system. And the thing that it does is it does two things, right? The first thing it does is it competes for consent. So you know what that means is is that it's trying to serve you the best, right? And if you don't like it, you don't, you shouldn't, you shouldn't come over, right? So it in essence, but the other thing that it's doing other than providing an alternative is it does what all alternatives do, which is it keeps the competition honest, right? So it actually now says, I'm going to compete for your consent. So the existing system must also compete for your consent, right? And if you like me better, then you'll come over here. And if you don't like it, then you'll stay, right? Which is like what a nice thing, right? So it helps everyone. And what I mean by it helps everyone is is, you know, let's say there's a safe place where you can escape. Like let's say it's a safe home, right? And let's say it's in a neighborhood that's a lot like where you live, right? So like the existence of that is great for people that need a safe place to go, right? They need to go somewhere. So they're going to go and that gives them freedom, right? If you like where you are, then you should stay, right? But I want what I'm suggesting to you is it gives you freedom too. Even if you don't go over there, the existence of that gives you the ability to withdraw consent. So if suddenly you find yourself in a situation where you're like, okay, the system was working beautifully for me. And now it's not. So now I have a place to go, right? And even if you don't ever go there, it's still going to keep the system you're in, honest, right? Because, you know, because of that competition. So, you know, that's that's really kind of the mindset that, you know, I'm excited about because, you know, when we talk about this kind of blockchain tech, like Satoshi Nakamoto created this entire paradigm around fork it and go, right? That's what he created. And so in a sense, like, you know, that means we're, you know, I'm not like a Bitcoin maximalist because like the whole point of it is, is anyone can fork it at any time. And if they don't like anything, they can just change it, right? And so a lot of people are like, oh, I don't like this feature. I don't like that feature. Like, great, fork it and go. Like, you know, if it's better, everyone will go with your version. Everyone will leave if it's better. So the issue, the issue with the evolution of this environment is that you have these highly technical individuals that adopt and subscribe to that mindset. But for the rest of the world that is just trying to keep up and understand, because of the ability to fork it and go and to just create new and to create business and to create, you know, alternative blockchains and to create different applications and whatnot, it's very hard to keep up and to figure out what's good and what's not, which is really, right? That's the, that's the issue. You're in it. You see what's good. You see, you can, you can, besides being a venture capitalist, you understand the Azure technology, but then you also work with these, you know, these founders and developers day in day out. So the people behind certain other projects, obviously not Bitcoin, but other projects like some of the ones that you've invested in, some of the ones that I'm sure that, you know, you work with every single day, you have an idea of what works and what doesn't and why it would work or why it doesn't make any sense. But you're, you're deep. Like, you're in the weeds. So that's the issue that everybody's running into, right? I think that is very, very legitimate, right? Which is that it is like this revenge of the nerds type of a universe. And the thing that I think is so important is this, right? Which is, I think to me, if I were to give any single advice to people who are new in this area is I would say, like, don't be in a big hurry, right? Like, like, just go in, don't invest like a huge amount. Like, just, just see what happens, right? Because the point is is like, there's some games where you can set not call them games, right? I'm talking about a system of rules that you can send to operate under, right? So this could include a country where there are laws or it can include a monetary system like a Bitcoin or it can include open source software. It can include a literal kind of a video game, right? Like, all of these systems have rules that you can set to agree to. So the thing is is that oftentimes the rule sets are complex, right? It could even, it could even be like a cult that you want to join, right? It's like, oh, I don't want to join this cult, right? So, so there's all these weird rules and you're kind of like, okay, I don't, I consent to these rules until I don't, right? And so, so there's this process that I call that that's called mechanism discovery, right? So mechanism discovery is, is you play, right? You play around and you're like, you know, it's just like going to a new country or a new place, you just, you're at first, you're a little bit like, I don't know what the deal is here, you know? And, and you know, you can immediately be like, I don't like the way people are acting, you know? But maybe if you have curiosity and maybe if you're like, these seem like okay people, like, you know, then maybe you kind of are like, well, why do they keep doing that or why do they keep saying that? After a while you might discover that there's some pretty cool stuff behind that, right? You might discover like, oh, wow, like, I get why they're acting like that. That's so different, right? And then you kind of grow as a human, right? So or, or, or, it's a cult. And you show up there and after a little while, you're like, wow, like this whole freaking deal is rigged against me. Like they're, they're trying to like mess with me and like take over and, you know, steal my house. I don't know what they're doing. But like my point is, is that, um, that's why the ability to withdraw consent is so important for any reason at any time or for no reason at all, right? Like if you just are like, I'm done here, like boom, you should be able to get out. Now the thing that's a little unfortunate is that there are systems in blockchain and in the Bitcoin area where you can't leave. Right? Like, like, for example, in some cases where there's like a scam, like you deposit a bunch of money and then you go over to the withdrawal section. I'm like, okay, I'm ready to withdraw. I'm kind of sick of this place. And you click withdraw. And then it just, there's some, oh, it's a, it's a software bug. Like, you know, you can't get your things out ever, right? So like, and how many times have you, you see that in the news every month, right? I think there was just one in South Africa. It was like three billion to, uh, it was just just like last week, but it happens all day. It's a, it's a little unclear. Uh, one of the really funny things about that is there was reporting about it that had their website and a past version of their website, fairly recent, actually, was bragging about how they have like a hundred million in assets. Right? And so like, it's unclear that it says biggest 3.6 billion. That is definitely what was reported. Uh, you know, if so, it's the largest, uh, so-called hack in Bitcoin history. But, you know, I think that, um, but you're absolutely right. Like that, that's an example, right? That's an example where it's like, oh, you can deposit, but you can't withdraw. Um, that's a problem, right? Like, so, so, you know, and obviously that's, um, you know, that's the opposite of freedom, right? Because you can't leave, right? You know, your assets can't leave, right? And so part, and part of part of part, I love this, by the way, I actually love the philosophical, the way that you, you first went into this, I appreciate that a lot because that really helps frame it for somebody who is trying to understand the nuance of what Bitcoin, blockchain, crypto, DeFi is. So, um, one, one thing that I would also point out is, and I just, I was watching one of your pizzas you did like the surviving the Wild West of DeFi. And I think there's a lot of great lessons in that for people that are seeing DeFi and trying to figure out what the hell it is and even people that understood blockchain and Bitcoin before. And then what's DeFi? So, um, one thing that is important, though, is sometimes it's not the system that's, like you said, it's not always assisted. Of course, the system, if they scam you, they scam you and the system doesn't let you leave. But also it's your own personality. It's your own, um, it's your own perhaps over indexing on, on a system and over trusting on a system before you fully understand it, which has led to issues. And you spoke about that a lot. That is absolutely core, right? Which is, I think to me, people don't have a really good sense of like risk management, right? So, if you watch professional asset managers like venture capital, right? One of the key principles is diversification, right? Because, you know, the thing that's really important to ask yourself is like, do I know what I'm doing, right? And the, by the way, the definition, so if you read the book zero to one by Peter Thiel, right? He effectively defines an investor as someone who doesn't know what to do, right? And the reason he defines it that way is, is an entrepreneur is someone who is basically, quote, unquote, knows what to do because they're just doing the thing, right? They're, you know, so for example, if you take, you know, his most famous investment Facebook, right? Like if you're Mark Zuckerberg, you're not diversifying, you're just going to go 1000 million percent into Facebook, because that's the thing, right? And so the thing that, so by investing, you're immediately someone who doesn't know what to do, right? Because you're diversifying, you know, and so the diversification is a very fundamental pattern of dealing with risk, right? So, so in a sense, like, if you think about it, like, you know, one approach is play, right? So when I describe play, right? The idea becomes that, you know, play has to be based on a loosable amount, right? So I kind of call this like grand canyon money. Imagine you're at the lip of the grand canyon and you're throwing an amount of money into the grand canyon, right? Like, so whatever that amount is for you, like that's probably your first kind of Bitcoin purchase amount, you know? So if it's $5 or if that's too much, maybe it's like a buck 50 or whatever you can imagine throwing into the grand canyon, right? Because, you know, and obviously, like, you know, if you're picturing throwing your life savings into the grand canyon, like, you know, like good luck. But, you know, I think broadly speaking, like that's that's that's the first thing, right? Play. And then I think as you start to kind of get your feet wet, then diversification, right? Where you basically take the number of grand canyon units and you maybe multiply that by like three or four and then you try three or four different things, you know? And each time you're kind of learning more and more about these games, you know? And as you learn more, you have a better and better chance of like, deriving your own opinion. Because that's the thing that I think is unfortunate is, you know, the existence of influencers in crypto is like just human weakness. Like it, it's really, it's been, you know, it's been a toxic effect because, you know, most of this so-called influencers are, you know, their self-interested parties, right? They're they're basically predatory. So, you know, that's so just just blindly following what other people tell you to buy on the internet is just provably bad. Thanks for tuning in. If you found this valuable, don't forget to hit that subscribe button so you never miss an episode. And if you want to dive deeper into this conversation, check out the links in the description to watch the full episode. See you in the next one.