Yahoo Finance Presents: Lane Rettig, Ethereum Core Developer

On this episode of Yahoo Finance Presents, Ethereum Core Developer Lane Rettig sat down with Yahoo Finance's Jennifer Schonberger to talk about the long term outlook of cryptocurrency, the rise of the Ethereum blockchain, NFTs, and what the future holds for the crypto space.

Video Transcript

JENNIFER SCHONBERGER: This is "Yahoo Finance Presents." I'm Jennifer Schonberger. Bitcoin has been at the center of conversation for cryptocurrencies, but the real story of the year may be Ethereum. The second-largest cryptocurrency has had a monster run, outpacing Bitcoin.

More projects are now being developed on the Ethereum blockchain. Here to weigh in on the future of crypto, Ethereum, and what may be the next generation of Ethereum is one of the core former developers of the Ethereum cryptocurrency, Lane Rettig. Lane, welcome to Yahoo Finance. It's so great to have you on the program.

LANE RETTIG: Hi, Jennifer. Thanks so much for having me. Very excited to be here and always excited to talk about this important, exciting topic.

JENNIFER SCHONBERGER: Well, it's so great to have you. As I mentioned, crypto has had a huge run this year, not just in terms of price run-up, right? We're starting to see more applications, more adoption. How do you see cryptocurrencies changing the future? What is your outlook for the long-term?

LANE RETTIG: Yeah, I think my outlook for the long term is extremely positive. I think it has been that way for certainly the four-ish years that I've been in the space. I think, if anything, it's gotten a little bit faster. It's been more accelerated and sort of begun this process of mass adoption a bit faster than we thought.

You know, I think it's really a very transformative set of ideas and technologies that are going to change the ways we conduct business, the ways we transact, and, in particular, the ways that people come together, coordinate, start businesses, you know, on a small scale and a large scale.

JENNIFER SCHONBERGER: So where are we with crypto right now? How early in the innings are we? And how much of this could be really integrated into our daily lives as far as mass adoption, right? Right now, we're starting to see debit cards, credit cards that are linked to crypto.

LANE RETTIG: I think it's super early. I think, you know, some folks might say we're somewhere in the third or the fourth inning. If you ask me, it's kind of like top of the second, bottom of the second inning So it's really, really early days.

Another metaphor I like to use is where somewhere like where personal computing was in the mid to late-'70s, right? So, like, kind of the Apple Macintosh computer hasn't come out yet, which is to say that the usability is not quite there, but we're getting there very rapidly. And yeah, I mean, you mentioned debit cards, applications like that-- I'm finding myself doing more and more of my day-to-day life either entirely in crypto or partially in crypto in the sense that we have large companies that are acting as bridges now that allow us to transact in the dollar world using crypto assets, things like that.

I don't think that there's any area of our lives that it's not going to touch. And I think, you know, may be a little bit late for us, but I think that our children are going to grow up in a world where they don't have traditional bank accounts, they have crypto accounts.

JENNIFER SCHONBERGER: All right, well, let's talk about that a little bit more, because Ethereum is certainly gaining ground-- the majority of projects now being built on the Ethereum blockchain. Certainly, NFTs, most of them use Ethereum. What do you see as the best use cases for Ethereum as we go forward from here?

LANE RETTIG: Yeah, that's an excellent question. I think it's also a very good time to have this conversation, because a lot of this has developed very rapidly over the past year. Like, I'm not sure I would have had a really good answer to your question a year or two ago. Now, I'd like to talk about the big three. And I think these are three incontrovertible, indisputable value positive use cases for Ethereum-- and other smart contract platforms, but primarily Ethereum.

The first is stablecoins, which are these cryptographic tokens that are not volatile. They don't swing wildly the way that assets like Bitcoin and Ether do. The second is NFTs. I think a lot of your listeners will be familiar with NFTs. We're seeing digitization of art and a lot of other types of assets.

And the third case is DAOs, which are a little bit harder to explain, but this idea of these decentralized autonomous organizations-- groups of people who might live in the same place or they might be spread out around the world coming together and creating these almost, like, company-like structures where they can share assets, and build interesting kind of governance systems, and use these to build products and services.

JENNIFER SCHONBERGER: And you also think that this could sort of change the way that companies are formed, right?

LANE RETTIG: Yeah, absolutely. I think that there's this idea of virtualization in computing, right? And this made it much cheaper and much easier to create a tech startup in, let's say, the 2000s than it was in the '90s, right? In the '90s, you needed a million dollars of capital, you needed a physical room hosting a bunch of physical servers to build anything. And then cloud computing came along and made it much easier, faster, cheaper to spin up a startup and set up an infrastructure for an application. I think that DAOs are going to have the same impact on business, and ventures, and collaboration in the sense that whereas it's a very slow, complicated process to kind of raise funds in traditional channels and hire lawyers, a DAO can be spun up in a matter of minutes or seconds very, very cheaply.

JENNIFER SCHONBERGER: Let's talk about NFTs. We're starting to see them applied in the music industry, movies, gaming, sports, and it's certainly creating new forms of revenue streams for those industries. How do you see the application of NFTs evolving? Do you think we could see it being translated to records-- for instance, like, deeds for homes, passports? I just heard that MIT is offering diplomas in the form of NFTs.

LANE RETTIG: Yeah, I think this is one of the most exciting developments in this space in the past couple of years and one of the most exciting trends. I think the really short answer to your question is that I see all things being digitized. And I think that to the extent that we're moving into a digitally native metaverse world, it kind of makes sense, because things need a digital representation to be able to exist in a metaverse.

You know, just to use one concrete example here-- one of my favorite examples of where NFTs can move the needle is let's talk about music and records, right? I can't tell you how often I'm browsing music on a platform like Spotify or YouTube, and I find an artist that I haven't heard before, and I'm really into their music. And I want to follow that artist, but I want to do more.

I want to kind of invest in that artist. And maybe even in an NFT world, I can sort of own a stake in the future revenue stream associated with a particular song, which I think is very exciting. That's something that can't happen without this sort of technology.

JENNIFER SCHONBERGER: Yeah. I feel you. Because on the side, I'm a singer-songwriter, so I fully support this.

LANE RETTIG: I would totally invest in you via NFT. So you should [INAUDIBLE].

JENNIFER SCHONBERGER: Well, thank you, Lane. I appreciate that. So tell me, why is Ethereum the blockchain of choice for so many of these applications, and particularly NFTs?

LANE RETTIG: Yeah, I think it's a great question. I think, obviously, many folks-- all of your readers and listeners-- will be familiar with Bitcoin, which came first. Bitcoin is a really powerful, important tool around the world financially, socially, economically. But it's designed in such a way that it does precisely one thing really, really well and really securely.

And that one thing is that it's this ledger system. It allows people to buy and trade-- transfer stakes in this digital asset called Bitcoin. Now, Ethereum emerged a few years later as a generalization of the idea of Bitcoin. So a good metaphor here is if Bitcoin is kind of like a pocket calculator, it kind of does this one thing very, very well, Ethereum is a general purpose tool. You can think of it a bit like an iPhone or a smartphone that has, like, an app store associated with it that lets you build and deploy all sorts of applications on it.

It's very general purpose. And so I think the answer to your question is that, you know, there's demand. There's clearly-- this is what of the past year or two has really demonstrated is that there's clear market demand for many, many different types of applications, not just the larger application-- NFTs being a good example of that. So I think Bitcoin-- sorry, I think Ethereum is a tool that's good enough.

It's not perfect, by any means. There's lots of attempts to kind of build improved versions of it. But it's good enough, and it was the right time, right place, and just a generalization of the ideas that Bitcoin pioneered.

JENNIFER SCHONBERGER: Now, you left the Ethereum platform and you're working on a new blockchain called SpaceMesh. But it's more eco-friendly and you say it could be the next generation of Ethereum?

LANE RETTIG: Possibly. Yeah, who knows? I mean, you know, the future is very difficult to predict. It's one of the reasons this is such an exciting time to be alive. But yeah, I think, you know, SpaceMesh is-- that's correct. Two years ago, I kind of changed gears and helped launch the SpaceMesh project.

It has two key differentiators-- the first, as you alluded to a second ago, is that it's greener than Bitcoin or Ethereum mining in the sense that instead of using proof of work mining, which obviously requires-- its very energy-intensive, right-- we use an alternative form of mining called proof of space time, which involves committing a certain amount to free hard drive space.

So anyone, any device, anywhere in the world who has, say, 100 gigabytes free on their laptop or their computer can plug that into the SpaceMesh protocol and immediately begin mining and earning coins. So it's greener, because there's little to no electricity required to do this. And the second attribute, as I said a second ago, is that anyone anywhere can do this without needing expertise and without needing access to special hardware. That's a really key differentiator. Bitcoin and Ethereum, for a long time now, it has not been possible to mine them from home.

JENNIFER SCHONBERGER: What's your outlook for the price of Ethereum? Do you think that it eventually could overtake Bitcoin in terms of market capitalization and become the dominant cryptocurrency?

LANE RETTIG: This is a very difficult question. You know, I think that it's very difficult to compare Ethereum and Bitcoin-- or I should be specific, I should say Ether, which, of course, is the digital-- the native asset of the Ethereum blockchain with Bitcoin. It's not really an apples to apples comparison. Bitcoin has different monetary characteristics than Ethereum does.

And in particular, when we look at Ether, it's a bit harder to reason about it because it also-- it primarily serves as what's called gas. So every time you run an application on the Ethereum blockchain, you need to hold this Ether coin to pay for the gas. So it exhibits monetary characteristics. It also exhibits these characteristics of commodities like fuel.

So long story short, my forecast will be that these two will continue to vie for quite some time for the top spot. I think that Ethereum has a bright future. I think that Bitcoin also has a very bright future. And I encourage friends and colleagues to take a long, hard look at both of them and consider investing in both.

JENNIFER SCHONBERGER: And I've got to ask you about the volatility, right? Crypto is so volatile. And that raises the question of, how could it be a payment when it is so volatile? Do you expect that, perhaps, there is going to be enough adoption, enough investment that that could smooth over the volatility? Or should we be looking at this as less of a payment and more in terms of the underlying blockchain technology?

LANE RETTIG: Yeah, I do think that the volatility will come down over time, will trend down over time. And I think that we actually have an empirical example of this. If you look at gold, which, in many ways, is kind of the thing that Bitcoin seeks to replace as a sort of better form of digital gold-- when gold first began trading on kind of global, modern financial markets in the '70s, it was extremely volatile. In fact, the volatility was not far from what Bitcoin's volatility looked like in the beginning.

But over time, as the market's matured and as more investors entered, especially institutional investors, and as liquidity increased, the markets got deeper and more mature, the volatility trended downward. And I think that if you look at Bitcoin over the past 12 years, there's a similar phenomenon playing out there. So I think the volatility will probably trend down over time. Bitcoin has been less volatile this year, for sure, than it was in the past.

But I think it's also worth pointing out that we now have these new stable assets, like the stablecoins I mentioned a moment ago. So for folks who want to live in the crypto metaverse but don't want to expose themselves to the volatility, they have other options today.

JENNIFER SCHONBERGER: Well, Lane, thank you so much for all of the insight. Unfortunately, we are out of time. I know we could talk about this all day long. Thanks so much for your insight.

LANE RETTIG: Thanks for having me, Jennifer. This is a great conversation.

JENNIFER SCHONBERGER: Lane Rettig, the former core developer of Ethereum.