How AI Agents Will Transform the Financial System with Circle Co-Founder and CEO Jeremy Allaire

1. 0:00 – 0:05

   Cold Open

   1. SPSpeaker0:00

      [upbeat music]

2. 0:05 – 0:21

   Jeremy Allaire Introduction

   1. SPSpeaker0:05

      Today on No Priors, we have Jeremy Allaire, the co-founder and CEO of Circle. We'll be talking about cryptocurrency, AI, agentic payments, AI evolving on the blockchain, and a variety of other topics. Great. Well, thank you so much for joining us today. It's a pleasure to have you.

   2. JAJeremy Allaire0:19

      It's great to be here. Thank you.

3. 0:21 – 2:11

   Origin Story of Circle

   1. SPSpeaker0:21

      So maybe we can start with you just giving a quick overview of Circle, what you do, how you approach the world, because I think we're gonna be talking a lot about stablecoins, crypto, AI, and how all these things tie into sort of the agentic future. But I'd love to just start with sort of origins of the company, what you all are up to, and we can go from there.

   2. JAJeremy Allaire0:36

      Yeah, for sure. So, um, yeah, Circle's been around for a while. W-- Uh, I co-founded the company, uh, over th- yeah, thirteen years ago or so, two thousand thirteen. And, um, it really at, at inception, I was really excited about this idea that we could create a protocol for dollars on the Internet. And I had been really excited about, uh, what was happening with technologies like Bitcoin, um, and, uh, had been, you know, working on kind of Internet infrastructure for a long time and got really excited, like, if we had, like, a protocol for dollars on the Internet, um, that, you know, potentially we could have a way to store and move value, you know, instantly, globally, frictionlessly, at, at no cost ultimately. Um, the other idea that we were really excited about back then was this idea of programmable money and the idea that, um, eventually these, these networks, blockchains, would become like operating systems, and you could actually have machines that intermediate economic activity and financial activity on the Internet, in-in-including, like, autonomous software machines. And, um, back then, we didn't have generative AI or anything like that, but this sort of idea of kind of commoditizing the kind of payment utility layer, um, with, like, very safe digital dollar digital currencies and then having, like, programmability of that with machines that are kind of tamper-resistant, can run on the Internet, that's what kind of drove the founding of the company. And, and the view was, like, if we could do that, like, we could actually improve the financial system, make it safer, make it more accessible, um, make it more efficient, um, and, and kinda derive new utility from money that we haven't had before. And so that was sort of where,

4. 2:11 – 5:26

   Rethinking the Financial System

   1. JAJeremy Allaire2:11

      where we started.

   2. SPSpeaker2:11

      Why is the dollar aspect of that important? So if you look at a lot of the things that happened in cryptocurrency in the early days, it was really about creating things that were divorced from the traditional financial system, if possible, or were not dollar-centric. So for example, Bitcoin was in part a response to the great financial crisis-

   3. JAJeremy Allaire2:25

      Yeah

   4. SPSpeaker2:25

      ... and the view that all sorts of weird bailouts happened there, and therefore we needed some alternative sort of financial infrastructure for the world.

   5. JAJeremy Allaire2:31

      Yeah, so I, I think, um... So I actually, it's, what's very interesting is, like, I, I, I had, you know, I believe in kind of Austrian economic thought. Uh, I was, you know, studying, uh, Austrian economic thought, like, in the early nineteen-nineties, uh, for, for a very long time. Um, and so I've been interested in sound money theory. And actually it was studying the, the kind of impact of the global financial crisis that, that drew me into this because my view is, like, there has to be a way to build, like, a safer-

   6. SPSpeaker2:59

      Mm-hmm

   7. JAJeremy Allaire2:59

      ... uh, financial system. And the key issue there was, um, I was interested in this idea of full reserve money. And in some ways, Bitcoin is full reserve money 'cause you, you, you know, you, you kind of... There is no way to fractionally lend Bitcoin per se.

   8. SPSpeaker3:12

      So full reserve money means currency that's backed by something hard behind it, some asset.

   9. JAJeremy Allaire3:17

      Doesn't necessarily mean it's a hard, hard, hard back. Full, full reserve money is different than, say, fractional... Full reserve banking, I should say, is different than fractional reserve banking.

   10. SPSpeaker3:25

       Mm-hmm.

   11. JAJeremy Allaire3:25

       And so, um, you know, back in, in, there was another, uh, major, uh, economic collapse, which was the Great Depression, the run on all the banks and all that fun. And in the nineteen thirties, there was a really big debate about, like, what's the right construct for the banking system and the financial system. And, um, there was a, a proposal from a group of economists, uh, called the Chicago Plan. And, uh, the kind of ringleader was a Chicago economist. Actually, it might have been a Yale economist or Princeton at the time. But, uh, Irving Fisher, who wrote a, a book called 100% Money.

   12. SPSpeaker3:58

       Mm-hmm.

   13. JAJeremy Allaire3:58

       And that idea was that full reserve money was essentially, um, you know, government obligation money. It's, so it's still the obligation of the government, like the U.S. government in that instance. Um, but that essentially, um, you can have that and you can hold that, but you can't take that and then, um, uh, fractionally lend against it. So you have kind of a full reserve, and you can only lend full reserve money. And so that, um, was a, a big proposal for how to structure the, the way the financial system worked. And it was actually, um, lobbied very, very hard, uh, against it by the banks. And the banks really liked fractional reserve. They liked to be able to have the inherent kind of leverage and risk-taking, and instead convinced the government to establish, or they collectively with the government's sanction, uh, established a, a insurance company, uh, called the Federal Depository Insurance Company Corporation. Um, and so that was a kind of corporate, uh, insurance model, but the risk-taking still existed. And so we've continued to kind of face those issues. The great financial crisis was an example of thirty x leverage, twelve x leverage, fourteen x leverage against, against these sort of base layer. And so m-my philosophy has been, well, um, right now, in terms of general utility, um, our, our existing, uh, economic system, like it de- it does depend on, um, really m-major reserve currencies like the dollar. And my view is, like, that's gonna continue for a while, uh, maybe thirty, forty, fifty years. It, it'll continue for a while.

5. 5:26 – 9:52

   The Role of Stablecoins

   1. JAJeremy Allaire5:26

      But what we wanna do is construct a system that is in fact safer, so a full reserve form of money, and that's what stablecoins are. That's what dollar stablecoins are. And in fact, with the Genius Act that passed last year, it's sort of codified in law. Like, you can't do anything with this. It's like this very narrowly bound, narrow money kind of model. And so I think in some ways, like that original vision, we've now got established in laws around the world, um, and, and now we have to do more with it. We have to make it extraordinarily useful. We n- you can l- you can lend that form of money as well, but it's just that you can't do fractional reserve.

   2. SPSpeaker5:58

      Sure. So what, what, what, what are stablecoins, uh, currently backed by? My understanding is, for example, they're, uh, the stablecoin companies are big buyers of treasuries, uh, or U.S. Treasuries and other sort of instruments like that. Could you explain a bit more-

   3. JAJeremy Allaire6:09

      Yeah

   4. SPSpeaker6:09

      ... sort of what tends to back these things?

   5. JAJeremy Allaire6:11

      Yeah. So, um, up, up until really the last couple of years, um, you know, sta-stablecoins like USDC were, were, um, had to be always one-for-one redeemable against, um, you know, very safe liquid assets. Uh, and we couldn't take risk outside of what was permitted under the kind of payment system laws that regulated us. And so that was Circle. There are other people who didn't take that approach. Uh, um, and, you know-But, you know, sort of fiat stablecoins in this way were backed that way. Now, laws have now come into play in major jurisdictions, whether it's in Europe or Japan or the US, um, et cetera. And we've been following the-- whatever laws apply to us, uh, you know, whenever they apply to us, obviously. But, um, what that's really led to is a, an architecture, which is basically what's now federal law, which is, um, really holding only short duration US government treasuries, um, or, uh, treasury collateral that is overnight with, with, like, global banks.

   6. SPSpeaker7:11

      Mm-hmm.

   7. JAJeremy Allaire7:12

      Uh, so that's, you know, v-very safe overnight treasury collateral for cash. Uh, and then, you know, some amount in cash that is for kind of immediate liquidity. Um, but in that case, it's sort of holding it in these sort of big custodial institutions like Bank of New York that holds hundreds of trillions of dollars, et cetera, so, of assets. And so, um, that is essentially the architecture of USDC.

   8. SPSpeaker7:35

      Mm-hmm.

   9. JAJeremy Allaire7:35

      And, and we're, we're very transparent. We have daily transparency onto most of it through a, a system we set up with BlackRock. But, um, so yeah, it is-

   10. SPSpeaker7:42

       USDC is, like, a crypto token that anybody can effectively purchase, and in exchange for one dollar, you'd get one USDC, and that USDC continues to be backed by a government treasury, like a short-term T-bill or-

   11. JAJeremy Allaire7:55

       Yeah. It's, it's-

   12. SPSpeaker7:55

       ... some cash or some equivalent.

   13. JAJeremy Allaire7:56

       That's right. It's backed by treasuries, repos, and, and, and, and short duration T-bills. The average duration tends to be of, like, the, of the T-bills, uh, and, and that portfolio tends to be around, like, thirteen days. So it's super, super liquid and kind of d- it sort of allows it to be treated as, like, a cash instrument.

   14. SPSpeaker8:14

       What do people do with it? What are the main use cases of USDC?

   15. JAJeremy Allaire8:17

       The, the conception of this obviously is, like, a general protocol for dollars on the internet, and in fact, the whole design is this is, like, a general purpose, general architecture money. And we actually see it used, you know, from at the very smallest end, like someone who's paying, you know, twenty-five cents for a digital object in a digital game that's built on a blockchain. That would be, like, one end. Or even now we're starting to see, and we'll come back to this topic, I'm sure, you know, AI agents that are paying for, uh, the output of essentially the AI tokens of another AI agent, and they're, you know, spending, again, just, you know, uh, a dollar, fifty cents, twenty cents, et cetera. So super tiny transactions at one end, all the way to the largest electronic trading firms in the world that do huge amounts of, of capital markets activity who are, you know, settling multi-hundred million dollar transactions. And the powerful thing is it's all the same. Just like, you know, if I send you an email, uh, you know, the... and my email's like, "Hey, this is what I had for breakfast," the payload of that is the same as if I sent you an email that had, like, a CIA dossier attached to it. Like, USDC doesn't care. You know, so as a, as a general architecture, it can be used across a huge range of things, and we have everything from merchants in Stripe and Shopify that are using it to Visa actually using it themselves to actually move money on their own internal network instead of using the legacy banking system to lots and, uh, lots of kind of neobanks, remittance companies that are using it as a way to move value. You know, a great, uh, uh, kind of B2B, uh, uh, fintech, uh, ramp just yesterday launched, you know, USDC

6. 9:52 – 11:30

   Use Cases for USDC

   1. JAJeremy Allaire9:52

      as, like, core to their treasury system. You can use it to pay invoices, pay anywhere in the world.

   2. SPSpeaker9:55

      So my sense is some of the reasons people do this is, number one, um, you can do it at any time. So for example, if I send a wire, I know a lot of crypto companies, for example, that when they raise money, they ask you to send USDC because instead of hitting a wiring deadline in the afternoon, you can wire the money on the weekend. You can send money anytime.

   3. JAJeremy Allaire10:10

      Yeah. It just works the way the internet works, right?

   4. SPSpeaker10:11

      Yeah.

   5. JAJeremy Allaire10:11

      I mean, our expectation is, like, I can pick up, you know, my WhatsApp, or I can pick up my WeChat, and I can just communicate and video with anyone, anywhere, and it just works, right? And my expectation is, like, hey, if I make a piece of software, like, and I put it on the internet, like, billions of people can access it. I don't need to do something special. And, and, and I think that's, you know, basically this is just internet native, and it runs on internet protocols, and so it behaves the way that any piece of data or content or, or behaves on the internet, which is what our expectations are, m- you know, most people's expectations are.

   6. SPSpeaker10:41

      Yeah, I was just trying to, uh, enumerate a little bit of, like, what makes it a superior instrument for all sorts of purposes.

   7. JAJeremy Allaire10:46

      Yeah.

   8. SPSpeaker10:46

      And one is-

   9. JAJeremy Allaire10:46

      Yeah

   10. SPSpeaker10:46

       ... twenty-four seven accessibility. Two, maybe some form of transaction fees relative to the volume. And then three is, um, my sense is it's also a way for people to participate in US dollars who often would not have access directly, and so they use crypto as almost a proxy to-

   11. JAJeremy Allaire11:00

       Yeah. For sure. I mean, I, I think, um, store value is a really big thing, and we see that. And, and in fact, like, the, the law that was passed last year, the Genius Act, like, a big motivation for the administration, and this is something that we've been proposing and, and kind of pushing for a long time, is that this is a way to, um, continue to export the dollar. And so we're now exporting digital dollars, and we're doing that all around the world, and that's, like, strategically important, uh, to the United States and, and from a geopolitical, geoeconomic perspective.

7. 11:30 – 12:25

   Programmable Money

   1. JAJeremy Allaire11:30

      Um, but you know, there's other things too, which is, this comes from my own background, uh, as well, which is these are... this is programmable money. Um, there's never been programmable money. Like, you actually have, uh, essentially, like, our stablecoin network is just a public API on the public internet that anyone can plug into and use. And so if I'm a developer and I want, like, global d- dollar settlement, and I wanna provide that as a capability to my users, I don't have to ask permission. I can just go connect to that smart contract, connect to that, uh, public API, and boom, I have now an application with global digital dollar utility.

   2. SPSpeaker12:05

      Mm-hmm.

   3. JAJeremy Allaire12:05

      And so-

   4. SPSpeaker12:05

      And, and smart-

   5. JAJeremy Allaire12:05

      ... that's really different.

   6. SPSpeaker12:06

      Mm-hmm. Yeah, and smart contracts is basically a way to write code that's wrapped around this money that allows you to effectively have a virtual contract online. So you can say, under XYZ conditions, pay this out, or I'm gonna generate a financial instrument off of this, and it's just kinda based on this other layer that you can-

   7. JAJeremy Allaire12:22

      Yeah

   8. SPSpeaker12:22

      ... plug into effectively.

   9. JAJeremy Allaire12:23

      Yeah. Th-that is definitely the case.

8. 12:25 – 14:37

   Blockchain as Operating System

   1. JAJeremy Allaire12:25

      And I think, like, um,Yeah, you know, the, the idea of programmable money was like, again, this early idea that we had, and smart contracts, um, was sort of the or-original expression. But when I looked at that thirteen years ago, m-my view was that blockchain networks are operating systems. They're going to be operating systems. And so when we think about operating systems, we have lots of paradigms for that. We have mobile operating systems. The web was itself kind of an operating system with a runtime and a language model and an object model, and, you know, clouds became kinda like these big virtual operating system environments. AI foundation models are now essentially operating systems that execute tasks and, and other things. Blockchains are operating systems, and they have compute engines, they have virtual machines, and you can write Turing-complete code, you can write software that runs on these. But there's some really key attributes that make them different. So the, the first is that the code is, is sort of tamper-resistant. It... Once it's published, it's sort of like out as like a machine that's tamper-resistant. The second is it's perfectly auditable. You can audit every single input and output of that machine, of that code in real time.

   2. SPSpeaker13:29

      'Cause it's all on a public blockchain, so anybody in the world can look it up.

   3. JAJeremy Allaire13:31

      That's right.

   4. SPSpeaker13:31

      Yeah.

   5. JAJeremy Allaire13:32

      So it's like all the compute is public, accessible, it's open source by nature, and, um, and, and that's really powerful as well. And, um, and, you know, it, it also has these sort of, um, uh, essentially, um, kind of transaction and compute integrity assurances. And this is really key, and it ties back to AI as well, which is like you want assurances that the machine is doing what it said it's gonna do, and you want kind of the inputs and outputs to be provable to, and the state of the machine to be provable, and these are, these, these are things that, um, it w- it was not easy to do, uh, in the past. And so these, these network computers, um, these operating systems now provide for that. And as we're moving into the AI-driven economic system, right, having those mechanisms becomes even more important. It happened to be important for financial transactions where y- you know, integrity, proof, audibility, verifiability are like intrinsic in a fiduciary apparatus. That was like really key. But now, when we're dealing with, uh, you know, kind of autonomous, uh, actions, uh, in the economy, that also becomes

9. 14:37 – 17:45

   The Agentic Economy

   1. JAJeremy Allaire14:37

      extremely important.

   2. SPSpeaker14:37

      Yeah. It would be great to talk about that 'cause, you know, uh, geez, probably seven, eight years ago, me and my friends used to speculate that the most likely place maybe that AGI would emerge, which again I don't think is gonna be the case in the future, would be off of the blockchain because you had these effectively ag- uh, agents or very simple agents even running back then in some sense in terms of doing transactions on the blockchain, and you had these economic games that were multi-turn economic games to some extent that these actors could play. And so we said, "Isn't that a great place to basically evolve intelligence," right? Because you have these multi-turn games, you have economic incentives, you have game theory. You learn all sorts of lessons [chuckles] off of that. Obviously, there's a very different world now with sort of generative AI and foundation models. But I'd love to hear your view of where is, uh, where, where are agentic payments going?

   3. JAJeremy Allaire15:20

      Yeah.

   4. SPSpeaker15:21

      And is it gonna be crypto? Is it gonna be more just traditional banking systems? Is it a hybrid? Like, what do you think are the drivers of that?

   5. JAJeremy Allaire15:27

      I mean, there's a, there's a lot in there. There's a lot we could talk about. Um, so, so maybe first, like, I think, um, you know, m-my, my own view is that, uh, you know, we're going, we're going through a, a pretty steep kind of curve right now. We're like in, in the, you know, a-about three months into a pretty dramatic, uh, shift-

   6. SPSpeaker15:46

      Mm-hmm

   7. JAJeremy Allaire15:46

      ... in kind of the fundamental capabilities of technology, um, probably the most dramatic that I've ever seen in my own time in, in technology. And I think, um, you know, that shift is, is ef-effectively going to mean that, um, a couple things in my view. So the first is that, um, m-more and more of the actual work that is done in the real economy, um, especially in, uh, in, in, you know, kind of the, what we call the white collar economy, but, uh, but in, in many, many areas of service and delivery and, and, and so on, like so much of that is gonna be conducted by AI agents. And so AI agents conducting the work, AI agents collaborating with each other, AI agents, you know, consuming services from each other and, and kind of, you know, purchasing effectively specialized intelligence or output, et cetera. Like this is... We're on a really interesting curve there, and so the kind of agentic economy is being born as we speak.

   8. SPSpeaker16:43

      Mm-hmm.

   9. JAJeremy Allaire16:44

      And in that world, um, we need a different infrastructure for the financial intermediation layer.

   10. SPSpeaker16:50

       Why?

   11. JAJeremy Allaire16:51

       Um, well, we don't have a, an infrastructure that can support that. We don't have an infrastructure that can, um, work globally, interoperably, instantly, that can be, uh, uh, programmed, uh, through software layers by, uh, arbitrary pieces of software. That doesn't exist. We need an infrastructure where the agents themselves can, uh, dynamically create and spin up, uh, different kind of, uh, uh, f-financial endpoints themselves. We need transactions that can scale potentially into the, you know, you know, billions or trillions of transactions. We don't have that. Uh, we also need, um, we need the ability to kind of, um, handle transactions at micro scale as well. So, uh, you know, for example, consuming, uh, a, a certain amount of intelligence might be five cents or ten cents as it is with these, and so we need, we need that to work. We need that to work in real time, again, between any piece of hardware, software anywhere in the world.

   12. SPSpeaker17:42

       Sure. Isn't Arc able to get all that, though, stuff that people have been talking about for

10. 17:45 – 27:00

    Arc Blockchain Use Cases

    1. SPSpeaker17:45

       a long time in terms of just crypto? Like the benefits of crypto or-

    2. JAJeremy Allaire17:47

       But it hasn't, it hasn't really-

    3. SPSpeaker17:48

       Yeah

    4. JAJeremy Allaire17:48

       ... become possible until really just the last couple of years. So you... It really took kind of third generation blockchains to actually deliver on this. So now today, like, um, y- you know, you, you actually can look at like transaction volumes of USDC, which is by far the most transacted digital currency in the world, way more than anything else. And, um, transaction volumes have grown incredibly, and, um, off of like a, a, a monetary base that's also growing, but the transaction volumes are growing way faster, and that's because money velocity's picked up. The, the cost to transact is now sub-cent, uh, re-reliably. And so when you take out the cost, you can do more transactions. And so with Arc, which we can come back to, you know, we, we now have an infrastructure where we can conduct transactions for a millionth of a penny, uh, which just was never feasible before.

    5. SPSpeaker18:38

       Sure.

    6. JAJeremy Allaire18:38

       So-

    7. SPSpeaker18:38

       Yeah, tell us more about Arc because I know-

    8. JAJeremy Allaire18:39

       Yeah

    9. SPSpeaker18:40

       ... that you folks are rolling this out as your own blockchain, et cetera.

    10. JAJeremy Allaire18:42

        Yeah.

    11. SPSpeaker18:42

        I would just love to learn more about what it is, what are the use cases-

    12. JAJeremy Allaire18:45

        Yeah

    13. SPSpeaker18:45

        ... what blockchain it's at.

    14. JAJeremy Allaire18:46

        Um, I, I would lo- I would love to talk about that. I wanna finish one other thought on this sort of, uh, the, the sort of, uh, agentic piece, which is I think, um-Uh, i-in addition to this sort of, like, financial infrastructure that's needed in, in this world and, and, and the role that will play, and it ties back to your, your actual kind of question and stuff that you were thinking about before is, um, my own view is that, uh, you know, a-agents, um, and, and, you know, seeing what happened with OpenClaw and Multbook and all this stuff is all really interesting because it showed that you could actually see emergent forms of, of cooperation, of, of interaction, of, of, uh, of, of engagement amongst AIs. Uh, and that's pretty powerful, and clearly, like, we're at the front edge of that. Like, there's gonna be a lot more of that. And so, um, if you have AI agents that are from around the world, they could be generated from lots of different models and LLMs and the like, um, and, and they need to kind of coordinate. They need a medium, a trust- a trust- a trustworthy medium where they can do that, where they can instantiate an entity, where they can store value in that entity. They can execute and arrange contracts, uh, that intermediate the work and the tasks and that where all of it is real-time mathematically, uh, and computationally provable. And so blockchain infrastructure now actually gives us the building blocks for... When I say agentic economic activity, most people think, "Oh, that's e-commerce or payment." It's not. Agentic economic activity is actually how does the organization of, of what we used to ta- think of as labor and capital, but essentially, like, kind of how does this organization of kind of compute work, uh, happen, and, and what kinds of kind of corporate forms might emerge, uh, i-in that world to do that? So I'm, I'm actually quite interested in that. That does tie to Arc 'cause that's a, a design surface that we care about, which is basically, um, we, we describe Arc as an economic operating system. And this goes back to a comment I made earlier, which is these networks are operating systems. And, um, we're, we're moving now from the kind of like early adopter era, which you're very familiar with, which was mostly around, like, you know, speculation on different things. There were some interesting things like NFTs or whatever, but, like, w-we're now moving very squarely because of stablecoins into, like, the real economic activity side of this. And, um, and, and I think my view is that, um, as we go forward, the, the, the substance of what we think of as contracts, the substance of what we think of as corporations are gonna be software machines themselves, and so we're gonna, we're gonna see this progression. And so Arc, as an economic operating system, is conceived of as a compute environment for laying down all of the building blocks of economic activity, whether that's storing value, moving money, uh, or instantiating a corporate form, or manifesting and intermediating complex contracts. Like, a lot of this stuff, which was conceptual a long time ago-

    15. SPSpeaker21:46

        Sure

    16. JAJeremy Allaire21:46

        ... is now, like, real. And we have a legal basis for it. We have a regulatory clarity for it increasingly. Uh, and it's interesting is, is that the drivers of this machine economy are actually machines. Uh, and so, you know, our, our view is, um, uh, you know, Arc is designed for this moment, which is a, a moment when machines are gonna play a larger and larger role in all of the output of, of, of, of, uh, of the economic system.

    17. SPSpeaker22:16

        So if I look at a lot of the blockchains that, um, have-- people have found exciting over the last few years, um, obviously there's Bitcoin, which, you know, is almost purposefully designed in a certain way to make it a little bit less adaptable to all these new things that are happening now.

    18. JAJeremy Allaire22:29

        Yeah.

    19. SPSpeaker22:29

        Uh, you know, Solana, Ethereum, et cetera, have been the, in the past, the traditional places that people have thought about ways to build smart contracts, to build a lot of the types of things you just described. What do you think is the difference between some of these more traditional L1s or blockchains-

    20. JAJeremy Allaire22:42

        Yeah

    21. SPSpeaker22:42

        ... and sort of what you're doing at Arc?

    22. JAJeremy Allaire22:44

        Yeah. So a f- a, a few big things. I think the, the first is that, um, you know, u-uh, as, as, as I think you were sharing, or we were talking about before we started recording, but, like, um, you know, I think a lot of the designs on blockchains, um, from, from let's call it the early adopter phase, a, a lot of it was sort of like, "Hey, we're gonna build something that is completely, um, you know, censorship resistant or outside of the reach of governments." It's sort of like we're building an alternative universe.

    23. SPSpeaker23:12

        Uh-huh.

    24. JAJeremy Allaire23:12

        And, um, and that's, like, the goal. Um, and, and I think, you know, decentralization is itself a good goal, but I think as we move from early adopter to sort of mainstream scaling, where, you know, whether it's, you know, a major company like Walmart or, or it's, you know, a household that's thinking about, like, how they store their wealth, the, the, the intermediaries, and there will continue to be intermediaries, we're not all gonna be your own bank, um, the intermediaries, um, have obligations in terms of the, the, the, the kind of like robustness of the infrastructure that they have to run. And so Arc is actually set up with a number of features. One is that it's actually a known validator set. And so, um, the, the infrastructure operators of Arc are major financial infrastructure companies. And so-- and, and those are companies that are held to these very high standards for infosec compliance, reliability, availability, et cetera.

    25. SPSpeaker24:08

        What are some examples of some of the validators on your network?

    26. JAJeremy Allaire24:11

        So we haven't announced, uh, the validators yet, um, uh, but that will come in, in due course. Um, but, um, you know, the, the, the, the model, uh, at a, at a high level is that you have financial companies, uh, financial infrastructure companies, in-including possibly, like, large technology companies, that are responsible for running the infrastructure. So it's a distributed infrastructure. But because of that, we're able to provide assurances. We're able to provide assurances that, like, the bad guys aren't running your transactions, um, and we can also run assurances that transactions actually have settlement finality.

    27. SPSpeaker24:46

        Mm-hmm.

    28. JAJeremy Allaire24:47

        Like, they can't be hard forked, they can't be reorg-ed, um, and so you can get what's called deterministic settlement finality, and that's really important, whether it's a security or a piece of cash or whatever it is, in, you know, in essentially hundreds of milliseconds, and that's really important. The, the other piece is that it's sort of designed with real money, uh, as the foundation, so there's not, like, a volatile gas token. USDC is actually the default native token, which is now, under the law, essentially like a legal form of electronic money.

    29. SPSpeaker25:15

        Uh-huh.

    30. JAJeremy Allaire25:15

        So you have real dollars as the way that people understand, and so to a company that's, like, doing this, it's like, I pay AWS credits. Uh, I understand how to budget for that, my treasury, my operations, my compliance, et cetera. So this allows basically for, like-Actual usage to be, make sense both to the user, to the developer, to the corporations, the FIs that, that deal with this. So, so that's really important. And then I think the other is, like, um, we've been building in a lot of, of, uh, primitives that are important to, like, the way that payment systems work, the way that capital markets work, uh, the way that, you know, the, the privacy requirements that are needed in some of these cases, but still allowing for, like, compliance to happen. So we've kind of purpose-built this for a different, uh, kind of set of participants who need to run on it, and we've had the advantage as Circle of working with many of the leading financial institutions that are getting into this space over the last couple years, whether it's the Visas or the BlackRocks or the Bank of New York Melons or all these types of companies. So we've had-- We've been able to work with them, and we've been able to work with governments around the world to hear, like, "Hey," like central bankers all over the world. Like, what's important as you think about, like, allowing this internet infrastructure to run the financial system, and we're kind of trying to incorporate in a lot of the kind of requirements in the sense that they have. And so that's, that's very different. I think it's a different design space. And I think, um, you know, these new distributed network operating systems will, will need to support, like, the real economy's activity, not a kind of shadow economy. And so that's just, uh, substantively different. There are a lot of other technical things I could talk about which, um, that, that are part of it, but those are, I think, helpful just in terms of framing

11. 27:00 – 30:45

    Scaling Models and Privacy Tech

    1. JAJeremy Allaire27:00

       this.

    2. SPSpeaker27:01

       What else do you think is interesting that's happening in the crypto world today outside of stablecoins and sort of related infrastructure? 'Cause I know that there was a whole wave of things that people were doing, um, on the infrastructure side. There was ZK-rollups. There was a variety of approaches over the last few years. Besides stablecoins, is there anything that you think was especially, um, interesting or that will be impactful, or are a lot of these things kind of infrastructure looking for solutions? I'm sort of curious how you think about crypto writ large right now.

    3. JAJeremy Allaire27:24

       Yeah, I mean, look, I think, um, um, there's a lot of attention that has gone into kind of, um, what I'll broadly call kind of scaling models. And so if you, if you take as your, as your, uh, kind of design center that these are network computers, and these network computers are really good at establishing, uh, record keeping that is kind of public and available to all and to perform computing on those records that's public and available to all, that's a-- as a, as a general utility space, that's like super, super interesting.

    4. SPSpeaker27:55

       Uh-huh.

    5. JAJeremy Allaire27:55

       Um, and so a lot of the... A lot of this has been like, okay, well, how do we make sure that that can scale? And so as an example, right, in a, in a world of, like, billions of AI agents that are swarming-

    6. SPSpeaker28:07

       Uh-huh.

    7. JAJeremy Allaire28:07

       And doing other things, like, scaling this is actually extremely important. So ZK, you know, rollups as an example, or zero-knowledge proofs more broadly as a way for, um, proving compute, which allows you to do compute off, off-chain and then prove it to the on-chain, that's actually really important. So you-- these sort of off-chain or trusted execution environments and other things that provide cryptographic proofs of compute or, or, or, uh, other kinda, uh, assertions becomes really key. So that actually, a lot of that research is now becoming extremely valuable. Um, the same thing goes for a lot of that research, um, and development is critical to, um, enabling privacy. And so we want w- you know, we want all the benefits of, of kind of open, interoperable, kind of permissionless infrastructure, but we also wanna be able to have privacy. Um, like corporations don't want everyone to see what they do, or we don't wanna be doxxed and, like, all this kind of stuff. And so the, that's now coming into, into, uh, real production. That was, like, research-y for a long time. Like, Arc day one is shipping with, like, built-in privacy primitives, uh, which is, which is, again, the result of a lot of work for a long time. Um, and so those are, those are important pieces. And then, um, you know, I think a-as kind of more large scale financial infrastructure comes over to this, as we move, you know, where the New York Stock Exchange or the, the biggest derivatives clearing houses are like, "Yeah, we're gonna move to an on-chain world," like, the scaling stuff becomes really, really critical. And so, um, I, I actually feel like now more than ever, like, those big work streams, uh, are, are, are coming online. And, you know, if I use as a reference point, like, you know, I spent a long time building on the early internet in the early nineties and the early web and, like, all this stuff all the way up until, like, two thousand and one for, like, you know, for me, it was like ten years.

    8. SPSpeaker29:58

       Mm-hmm.

    9. JAJeremy Allaire29:59

       And it was still... It was, like, awful still. Like, it just like-

    10. SPSpeaker30:01

        Sure.

    11. JAJeremy Allaire30:01

        You kept grinding, and it was like, "How do we make this useful? How do we make this useful? How do we make this useful?" And then you had, you know, a whole bunch of things happen that were in the background, like, you know, Wi-Fi, broadband, you know, uh, you finally got, like, usable, um, other internet connected devices, and you could actually really start to do stuff. So you could actually, actually deliver software over the internet. You could actually deliver media over the internet. You could actually do communications, like real-time communications over the internet. But it was like ten years in the desert or longer before you could even get there, and I kind of feel that way about the blockchain space. Like, it's been a dozen years or so, and, and now we're kind of having, like, the broadband moment and the demands of society and the financial system, the agentic economy, all of that is sort of coming together at a really interesting time.

12. 30:45 – 34:16

    Securitization of Other Assets Under the Blockchain

    1. SPSpeaker30:45

       I guess one thing that people have been talking about for a long time in the crypto world is securitization of other assets onto the blockchain.

    2. JAJeremy Allaire30:50

       Yeah.

    3. SPSpeaker30:51

       And so that would be stocks.

    4. JAJeremy Allaire30:52

       Yep.

    5. SPSpeaker30:52

       So should you be able to buy fractions of Berkshire Hathaway-

    6. JAJeremy Allaire30:55

       Yep.

    7. SPSpeaker30:55

       Um, using crypto?

    8. JAJeremy Allaire30:57

       Yeah.

    9. SPSpeaker30:57

       Uh, and should that be globally available? Given the success of USDC and other stablecoins, that's made it even more interesting-

    10. JAJeremy Allaire31:04

        Yeah.

    11. SPSpeaker31:04

        In terms of a provable model. When do you think that stuff will happen, and what approach do you think will be taken?

    12. JAJeremy Allaire31:10

        Yeah.

    13. SPSpeaker31:10

        And how does that tie into the agentic world?

    14. JAJeremy Allaire31:12

        It's happening. It's totally happening.

    15. SPSpeaker31:13

        Mm-hmm.

    16. JAJeremy Allaire31:13

        Um, there's a great site if people are interested called rwa.xyz. Real world assets is sort of what that refers to, RWA.xyz. I'm very proud because, uh, like, there are, there are tokenized, uh, stocks that are out there, and the most, uh, uh, active tokenized stock today is not Tesla, it's, it's not the S&P index, it's actually Circle.

    17. SPSpeaker31:33

        Hmm.

    18. JAJeremy Allaire31:34

        Um, so that was cool to see.

    19. SPSpeaker31:35

        That's cool.

    20. JAJeremy Allaire31:35

        Um, we also, uh, you know, have seen this growth in, like, tokenized money markets, so basically, like, on-chain Treasury bills. We actually operate the largest tokenized Treasury, uh, product called USYC, like US Yield Coin. Um, that's, uh, that's grown quite fast as well. Um, and we, we run the largest tokenized euro as well, uh, EURC. And so we're, we're definitely, like, looking at this, this broadening out. I think, um, uh-There's a huge effort right now at every layer of the whole financial system stack to go into tokenization. So all the way down at the layer of, like, the people that keep the records of the stock, which is like, you know, if, if you're familiar, like, the Computer Shares of the world-

    21. SPSpeaker32:16

        Uh-huh

    22. JAJeremy Allaire32:16

        ... Equities of the world, up to, like, the, the layers that, like, are the depository clearing systems like the DTCC, which, you know, most people don't know, but it's actually, like, the back plane of-

    23. SPSpeaker32:26

        Uh-huh

    24. JAJeremy Allaire32:26

        ... how all-

    25. SPSpeaker32:26

        Sure

    26. JAJeremy Allaire32:27

        ... securities work. Like, they're moving to tokenize, and then the actual, like, brokers and exchanges wanna take those and support those tokens and, and trading on those tokens, and distribution of those tokens, so NASDAQ, New York Stock Exchange, all of them, they're all doing this as we speak. And as we speak, the SEC has been providing clear guidelines on how to do that. And so they actually issued guidance just about a month or so ago that basically said, "Here's what you do in all these layers. Here's, you know, here's your obligations." And so we're at a point where, like, technology and then the market's desire is creating that. And right now, the interesting thing about things like tokenized stocks is, um, mostly it's interesting to enable people not in the US to access these. Um, that's where a lot of the growth has happened 'cause not everyone has access.

    27. SPSpeaker33:15

        Mm-hmm.

    28. JAJeremy Allaire33:15

        Uh, you know, if you're-

    29. SPSpeaker33:15

        It used to go the, the other way, right? There used to be Chinese stocks that were basically held in, uh, third-party instruments that you could purchase-

    30. JAJeremy Allaire33:21

        Yeah
13. 34:16 – 35:09

    Prediction Markets

    1. JAJeremy Allaire34:16

       as well.

    2. SPSpeaker34:16

       Sure.

    3. JAJeremy Allaire34:16

       Yeah.

    4. SPSpeaker34:16

       Seems like it could really tie into some of the prediction market stuff as well that's been happening because to some extent the world's biggest prediction markets are actually stock markets, and so... Or financial markets, I should say-

    5. JAJeremy Allaire34:25

       Yeah

    6. SPSpeaker34:25

       ... more broadly. Um-

    7. JAJeremy Allaire34:26

       Yeah. And, and, and prediction markets themselves are becoming kind of, um, a kind of parallel infrastructure for people who participate in stock markets, right? In fact, the biggest adopters, it seems, of the market makers of prediction markets are actually the people who are trying to figure out the w- what is reality, and what does that mean for companies and equities-

    8. SPSpeaker34:45

       Sure

    9. JAJeremy Allaire34:45

       ... and stuff-

    10. SPSpeaker34:45

        Yeah

    11. JAJeremy Allaire34:46

        ... and the interplay or, or, or, or whatnot. Um, and, uh, yeah, I mean, we- we're, we're seeing that. I mean, USDC powers Polymarket, for example. Um, and, uh, and, and so the same guys that are, you know, trading derivatives over here on, on, you know, oil or Bitcoin over here are also like, "I'm moving my money quickly using USDC over here to, like, figure out what's gonna happen in some, uh, event."

    12. SPSpeaker35:08

        Let's call.

14. 35:09 – 37:19

    Incremental Revenue Through GPU Usage

    1. SPSpeaker35:09

       The one other thing that I think has been happening a little bit recently is there's been a couple papers that have been focused on, um, basically tying proof of work into just generic inference work.

    2. JAJeremy Allaire35:18

       Yes.

    3. SPSpeaker35:18

       In other words, can you tie those two things-

    4. JAJeremy Allaire35:20

       Right

    5. SPSpeaker35:20

       ... so you're being very, um, GPU efficient-

    6. JAJeremy Allaire35:22

       Yeah

    7. SPSpeaker35:22

       ... in terms of what you're doing, but also you can effectively generate-

    8. JAJeremy Allaire35:25

       Yes

    9. SPSpeaker35:25

       ... incremental revenue through GPU usage while you're using it for inference or other purposes.

    10. JAJeremy Allaire35:28

        Yeah. I'm really interested in that. Uh, and, and, and I think, um, again, a little conversation we were having before we recorded, like, you know, proof of work obviously, um, it was itself an innovation.

    11. SPSpeaker35:39

        Mm-hmm.

    12. JAJeremy Allaire35:39

        And, and sort of, um, essentially, like, the exhaust of the proof of work of Bitcoin is, is just, like, the exhaust of energy consumption. And so it doesn't actually... It, it, in some ways it's waste in, in a sense. The, the energy i- is, is waste. And, and so I think the idea of, uh, essentially, like, inference compute, uh, uh, as GPU, uh, inference compute as proof of work, and so the work itself is the inference, and, uh, that as the underlying basis for proof of work, uh, cryptocurrency is pretty interesting. Um, and, uh, would, would be, you know, potentially something that could align with the kind of monetary principles of something like Bitcoin-

    13. SPSpeaker36:21

        Yeah

    14. JAJeremy Allaire36:21

        ... but actually, uh, be productive, uh, productive proof of work. That's really interesting. And so, you know, I, I... My, my, my own view, and this is like, you know, I think goes back a long time, is like the, you know, people have kind of axiomatically sort of assumed, like, well, Bitcoin is the, uh, the, the, the, the thing, it got the network effects, it has all of this. Um, and I've always said, like, I don't know what we're gonna be using in 10 years. Like, we don't know. Now, um, Bitcoin has lasted a really long time. Um, but I think, like, the paradigm shift that we're seeing in, in, um, in energy infrastructure, in the performance of, of, you know, the conversion of energy into an intelligence and the compute layers and that, it certainly opens up a new avenue to think about this that wasn't readily available, you know, 15 years ago.

    15. SPSpeaker37:11

        So if you were to give one piece of advice to agents, it would not be buy Bitcoin.

    16. JAJeremy Allaire37:16

        [laughs]

    17. SPSpeaker37:17

        [laughs] I'm just joking.

    18. JAJeremy Allaire37:18

        Uh, I, I-

    19. SPSpeaker37:18

        I have

15. 37:19 – 41:12

    Jeremy’s 10 Year Future Vision

    1. SPSpeaker37:19

       a better question.

    2. JAJeremy Allaire37:19

       Yeah.

    3. SPSpeaker37:19

       Um, so in terms of, [laughs] um, say we were to think out 10 years, um, what does that world look like in your mind? And obviously we're going through a period of intense change.

    4. JAJeremy Allaire37:29

       Yeah.

    5. SPSpeaker37:29

       I'm finding it incredibly hard to predict the future right now in terms of just what's gonna happen in AI, much less AI plus crypto plus-

    6. JAJeremy Allaire37:34

       Yeah

    7. SPSpeaker37:35

       ... the global economic system-

    8. JAJeremy Allaire37:36

       Yeah

    9. SPSpeaker37:36

       ... plus everything else. So given all that-

    10. JAJeremy Allaire37:39

        Big Bang Theory

    11. SPSpeaker37:40

        ... and putting that aside... Yeah, exactly.

    12. JAJeremy Allaire37:41

        [laughs]

    13. SPSpeaker37:41

        Um, what is your vision of the future?

    14. JAJeremy Allaire37:44

        Yeah. Well-I, I mean, a couple things I, I would say. Uh, the, the, the first is, is sort of the, the thing that everyone is debating right now is the pace of AI diffusion, right? So what is the pace of AI diffusion? And, and what does that then imply in terms of the, the kind of amount of change that we're gonna have to deal with? And so that's all debatable, right? You, you hear Dario debating that versus others and, and so on. But, like, it definitely feels like, you know, the diffusion limiters are, are, um, in, in, in so- in some cases bureaucratic, in some cases legal, in some cases human risk or other things, right? But we have, we have these limiters that are there. Um, but it does seem like, um, the, the pace of diffusion is accelerating and will continue to accelerate and, um, and, and that's pretty dramatic. A-and so I guess, like, m-m-my own view, um, it's, it's r- very rooted in my own, like, political and economic philosophy is, is that, um, we, we have a real opportunity to, uh, create, um, essentially new, new social, political, and economic organizational structures. Um, and w- and in, in many ways, like, we have to. There's a, a, a kind of, um, you know, in these periods, whether it's the, the Enlightenment and, and the Industrial Revolution and other things, like, there's these periods where, um, there's like a, a, a new definition of the social contract and, and that new definition of the social contract is then in turn reflected in social, political, and economic ordering and the mechanisms that we use for those things. And I... It feels like to me like we're gonna be, we're gonna be forced through that. And, um, and I think, you know, that's simultaneously, like, terrifying, exciting, et cetera. And, and, and I am of the view that we are going to have a, a, uh, a kinda lag effect between the disruption and the establishment of those new institutional forms. Um, but at the same time, I actually believe, like, new institutional forms are gonna be em- emergent out of this. And so, as I talked about earlier, like, the formation of these kind of on-chain organizations that have different forms of, of governance and contracting and, uh, and, and a mixture of human and, and agentic, uh, actors, like, that seems like we're gonna have a lot more of that. We're gonna probably have huge proliferation of that. And it may be that those corporate forms, um, are, like, the most productive corporate forms that we've ever seen in economic history. And a- and then, you know, the- they'll, they'll need to be kind of like an overlay into the governance systems of, of, uh, p- you know, political, uh, or- organizations and, and systems as well. And it, um, yeah, so I, you know, like m- my view is, uh, [scoffs] we're going to have simultaneously all around the world, um, a renegotiation of the social contract, and it's gonna be, uh... I-I-It is gonna require, um, new systems of participation in economics and governance that we haven't had. Um, that's like very high level mumbo jumbo-y, but it's also, um, you know, sort of how, how I think about it at a high level.

    15. SPSpeaker40:43

        That's super interesting. Have you ever read a book called Lady of Mazes?

    16. JAJeremy Allaire40:46

        No.

    17. SPSpeaker40:46

        It's like a sci-fi book from, I don't know, 15 years ago about the post-AGI world, and part of it is, um, as a big enough block or demographic emerges in human society, uh, an overlay AI agent that's observing everything spawns a specific agent that represents that viewpoint that then is part of this sort of virtual senate-

    18. JAJeremy Allaire41:03

        I see

    19. SPSpeaker41:03

        ... of agents negotiating policy. So it's kind of this interesting view of how can you spontaneously spawn these sorts of systems from a governance perspective, which is kinda cool.

    20. JAJeremy Allaire41:11

        Oh, I, I would love

16. 41:12 – 44:00

    AI and GDP

    1. JAJeremy Allaire41:12

       to read that.

    2. SPSpeaker41:12

       Um, what is your prediction, um... And so if you look at a lot of prior waves of technology, their actual impact to GDP has been difficult to tease out.

    3. JAJeremy Allaire41:21

       Mm.

    4. SPSpeaker41:22

       Right? So the productivity gains of the internet versus actual GDP growth or things like that have been-

    5. JAJeremy Allaire41:25

       Yeah

    6. SPSpeaker41:25

       ... notorious, and there's all sorts of reasons for that. It could be measurement. It could be deflationary aspects of some of these things. It could be a variety of things. How do you think about the GDP impact of AI? So if you think ahead-

    7. JAJeremy Allaire41:35

       Mm

    8. SPSpeaker41:35

       ... five years-

    9. JAJeremy Allaire41:36

       Yeah

    10. SPSpeaker41:37

        ... and, you know, what, what do you think the global economy is?

    11. JAJeremy Allaire41:40

        Yeah.

    12. SPSpeaker41:41

        10% bigger, 50% bigger, three times the size? Does that even matter as a metric anymore? Like...

    13. JAJeremy Allaire41:46

        Yeah, I mean, um, like the, I, I, I see this debated all the time, and Cathie Wood's talking about, you know, we're gonna have 10% GDP growth for the 2030s-

    14. SPSpeaker41:54

        Yeah, sure

    15. JAJeremy Allaire41:55

        ... and, you know, you know, et cetera. Um, I, I, I don't quite know what to think. I mean, I think, um, you know, it, it's qu- it's quite plausible that the, um, the, the kind of giant leaps that we see in kind of productive output in a huge range of, of industrial to o- other commercial services, uh, et cetera, like, really drives a very significant discontinuous jump in, in, in, in, in GDP at an absolute level. It'll have, in many ways, probably less meaning than we've historically had with GDP. Um, and, you know, the kind of, uh, economic wellbeing indexes that we think about, like GDP, uh, will be... Y- you know, the, the risk here is that GDP, uh, effectively, like the GDP growth is a sort of capital capturing more capital-

    16. SPSpeaker42:46

        Mm-hmm

    17. JAJeremy Allaire42:46

        ... uh, at the, at the expense of, of humans. Like, that's the real risk. Um, and so, like GDP growth generally has been like a really great thing. Um, uh, and, and so the, the question is, is like is, will it remain a great thing? Do we have the new social contract, uh, to, to, to deal with that yet? Um, but m- I guess my, my general view just sort of as a technologist talking about, you know, seeing what we see with diffusion and, and kind of o- other, other changes, like, um, it does, it does feel like w- uh, we have the potential for double-digit GDP numbers in the 2030s. Like, that's, that seems not unrealistic to me, not that that's gonna be uniform all around the world, but certainly, um, in large, large parts of the world, that seems very, uh, you know, achievable, uh, based on what I see.

    18. SPSpeaker43:36

        Mm-hmm. Amazing. Thank you so much for joining us today on No Priors. Super interesting conversation.

    19. JAJeremy Allaire43:39

        Thank you. [upbeat music]

    20. SPSpeaker43:43

        Find us on Twitter at NoPriorsPod. Subscribe to our YouTube channel if you wanna see our faces. Follow the show on Apple Podcasts, Spotify, or wherever you listen. That way, you get a new episode every week. And sign up for emails or find transcripts for every episode at no-priors.com.

Episode duration: 44:00