Today’s episode is from a 2017 conversation with Benjamin Roberts, co-founder of Citizen Hex, an Ethereum liquidity company. We discuss how he got involved with fintech and why he’s focused on providing liquidity to the Ethereum ecosystem. For the full conversation, check out Flippening episode 5.
Links Relevant To This Episode
- Nomics on Twitter
- Clay Collins
- Nomics API
- Nomics’ Fully Customizable Daily Crypto Newsletter
- Benjamin Roberts
- Citizen Hex
- Ethereum (ETH)
Clay: Welcome to Daily Wisdom from the Flippening Podcast. These episodes feature short, to-the-point clips from our full-length interviews. We talk to the men and women behind the trades, crypto exchanges, and regulations with the goal of helping you become a better, more informed investor.
Michael: Hi, I’m Michael Kaplan, editor of the Flippening Podcast. Today’s episode is from a 2017 conversation with Benjamin Roberts, co-founder of Citizen Hex, an Ethereum liquidity company. We discussed how he got involved with fintech and why he’s focused on providing liquidity to the Ethereum ecosystem. For the full conversation, check out [00:00:30] Flippening episode five.
Now, without further ado, our conversation with Benjamin Roberts, co-founder of Citizen Hex. Enjoy.
Clay: Do you think that you would be heavily involved in fintech in the way that you are if it weren’t for cryptocurrencies, or would you be doing some SaaS startup, or something else? In other words, did the advent of this new potential financial [00:01:00] world bring you in a way that the traditional finance world would not have been able to?
Benjamin: Yes, absolutely. I’ve often had this conversation with another friend who’s also very heavily into crypto. Neither of us really knows what we would be doing if it weren’t for this. It almost felt like there was no purpose before cryptocurrency, and now there is.
In very real terms, I was locked out of the old financial system, because I had an arts undergrad. You needed an MBA, [00:01:30] and maybe like an Ivy League school. You needed all of these prerequisites to enter that old space. You don’t need any of that to work in this space. The platform is open. All of the tools for interacting with it are open-source. I mean, both in terms of the purpose and morality of operating in crypto, but also, in the very real sense of the logistics that allow you to operate in it. It’s much more inviting, and it’s [00:02:00] much more possible to participate in it. It really gives you a much stronger sense of purpose and much more power to make a difference
Clay: I think it’s really cool to see people native to crypto getting involved, and building financial services businesses or financial businesses. What is it that you do right now with Citizen Hex? Can you tell us a little bit about what it means to be a liquidity provider in the first place?
Benjamin: Let me [00:02:30] maybe rewind a bit more, and frame why I think this kind of business needs to exist. We’re very early in actually trying to build it, and we don’t really know the final form that it’s going to take. I can tell you why I think these kinds of businesses should exist. I can tell you what we’re doing right now. I don’t know if that’s what we’re going to eventually be doing.
I think the main reason that we’re doing this business is because we realize something fundamental about the economics of Ethereum, which is when you democratize financial [00:03:00] engineering, people are going to do a lot of financial engineering, right? When you let people kind of program and whip up any kind of financial contract with almost no overhead, people are just going to do a lot of that. There are going to be a lot, a lot, a lot of assets.
An analogy I use sometimes is, look at how many tweets there are relative to how many newspaper articles there were. Look at how many YouTube videos there are relative to how many TV programs there were. There are [00:03:30] orders of magnitude increase in the number of these things that you get when you just let anyone create one. I think we’re going to see the same thing. We are seeing the same thing happen on Ethereum, or the same thing will happen on any platform like Ethereum, which is when you make it very cheap and very accessible to do this stuff, people are going to do a lot of it.
So, we’re going to see this many orders of magnitude increase in the number of assets that exist, from a world today of maybe tens of thousands of liquid securities globally to a world of [00:04:00] potentially tens of millions or hundreds of millions of securities.
I think the problem is that when you go to a world that has tens or hundreds of millions of securities in it, it becomes very challenging to make all of those liquid enough simultaneously that people can interact with them. I think it’s also the case that in this world, there’s a much more frequent need to switch between assets, right?
If you think that these utility tokens are going to proliferate, and you’re going to actually need to [00:04:30] own these tokens to interact with applications, you may have a need to use multiple currencies—maybe even dozens of currencies—daily to interact with all the things that you interact with. So, you have both this growth in the number of assets that exist, and then also the number of times people have to switch between them, and you have this real exponential growth in demand for liquidity and liquidity providers.
Clay: When did you first detect that liquidity was a [00:05:00] problem? When did it occur to you that this problem needed a solution?
Benjamin: It’s kind of theoretical. This is the first principle analysis of Ethereum, which is it’s cheap to make stuff, people are going to make a lot of stuff, people are going to have to switch between those things that they make. Who’s going to facilitate that? How is it going to happen? I just anticipate that it will become more and more of a problem as there are more and more of these assets that are being created.
I think we’re kind of right in the knee of the curve right now in terms of going [00:05:30] from maybe 10 tokens that people know about to 100 tokens that people are aware of to thousands or hundreds of thousands of tokens.
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