Untold Stories: Amber Baldet From J.P. Morgan to Clovyr

Fortune Magazine named Amber Baldet a top 40 under 40 for leading JP Morgan’s blockchain program, founding Clovyr and being a leading thinker in the space. Listen in as she and Charlie cover topics like:

  • Her thoughts about ZCash and the ZCash Foundation

  • Understanding the spectrum of total centralization to total decentralization

  • How blind faith leads to blind spots

  • Why permissioned blockchains don’t compete with permissionless blockchain

  • Using blockchain for a coordination layer rather than data storage

  • Why the crypto space is bad at recruiting engineers

  • The failings of the cypherpunk movement

  • What will drive adoption of crypto

  • ZCash and its move toward greater decentralization

  • How crypto is crowded with social misfits and where that’s going

Untold Stories Ep 20 Blog Graphic.png

Charlie Shrem
It's very interesting because on this show, we have a lot of people that... I feel like I always preface my show by talking about this. But we have people on this show that really are hustlers and do some crazy shit. And when you read their bios... I do the research before the show. And I'm reading a little bit about my guest and I'm like, "No way. I need to ask about this," like the first question I'm going to ask.

But let me give you a little bit of a brief background of my guest, Amber Baldet, just her bio. She was formerly the Blockchain Program Leader at JPMorgan Chase. Now she founded a company called Clovyr. She left the Wall Street, huge career that your friend who works at Fidelity branch down the road wishes he had this job. She left this job. Not only that, but she was on the team and led the team at Quorum which is JPMorgan's blockchain project, to start her own company in my hometown of Brooklyn.

She was on Fortune's 40 under 40 list. And just recently, she was appointed to the board of the Zcash Foundation which governs, as we all know, Zcash, which is completely different from what she was doing at JPMorgan. Amber, welcome to the show.

Amber Baldet
Hi. Great to be here.

Charlie Shrem
This is what threw me off a little bit. You were interviewing at JPMorgan and you were about to give birth the next day.

Amber Baldet
Yeah. Well, actually, I already worked at JPMorgan. I was there for almost eight years, I guess. I started as a consultant after the financial collapse in 2008. I was a consultant there. It was really the only way to get a job, and then transitioned full-time. But all of my favorite engineers were moving to this cool, new product development group. And so I was interviewing to transition internally to that group and had heard the manager was kind of a hard ass. So I didn't want to miss the interview. I thought it was a test. It turned out he did not know I was pregnant. He was 28, and horrified. But I guess it worked out in the end.

Charlie Shrem
It did work out. I guess it was too early. That wasn't the blockchain group. What type of group was that?

Amber Baldet
It was. Well, it was the new product development group, and they covered machine learning, cloud strategy, blockchain, cognitive learning, all that kind of stuff. So initially I went into the machine learning team because blockchain was like two or three people. Then they didn't really have a product organization yet. It was really just a couple developers playing around. Then as it became more formalized, I ended up pulling that team together and building it out into a larger organization.

Charlie Shrem
In 2012, I think it was 2012, 2012, my cousin who's also like... she was my babysitter and everything and grew up in the same community in New York, she was the vice president, maybe still is, at JPMorgan. I one time went there to the office and I was this kid. I was just graduating high school. I was in the first year in college. I walk up to the building right near Grand Central, this big behemoth of a building. I show up and going like to the 800th floor. And I go to her office and we're talking about bitcoin, and I feel like we were whispering because here I am in like the dragon's den talking about this bitcoin thing that at the time, bitcoin was... we were all like an eco capitalist, libertarian type people.

Here I am. She's a vice president at JPMorgan and we were talking about bitcoin and she ended up making some presentations about it. But it was so interesting and I was really nervous because I felt like I didn't belong there.

Amber Baldet
Yeah. I guess I never really quite fit in, but those organizations are collections of people.

Charlie Shrem
They're like pods.

Amber Baldet
Yeah, right. A lot of them are there just to collect a pay check and fill in their spreadsheet and go home, and it's not a philosophical kind of thing. Most people there, at any large organization, they don't wake up and think, "How can I screw the little guy today?" They're just performing one function in a much larger organism.

I had never really attempted to go into banking. I was always a technologist. I studied economics and political science, and I guess the joke was always, if you want to make money, study finance. If you want to know why other people are making money, study economics. So I was never in the sales and front-office trading. I was doing support and building tooling. The people in those positions are really very different. There's also a lot of H1B workers that are working on sending remittances back home.

I remember being in Chase Manhattan Plaza during Occupy Wall Street and my entire team looking out, of developers looking out as it was very first assembling and they're asking, "What's going on? Why are these people protesting? I don't understand," because it just wasn't even part of their culture. And really, people should have been protesting in Midtown, not down town where tech and ops was.

Charlie Shrem
But that's a very good point and I'm happy you made that point. We talk about the big bad banks and the big bad government, and the big bad wolf. But most of the time, 99% of it, and that's a perfect example, they were protesting in the wrong place. Most of the time, they're just people that go to work every day and have no involvement. They're cogs and machines, they have no involvement in these decisions. No one's pushing a button and saying, "Oh, here. Let me push this button and screw over a million little people. Oh, let's go to a meeting today and evict 100,000 people from their homes in Michigan." It's not like that.

Amber Baldet
Yeah. I'm not a banking apologist in any way. I mean, obviously, the-

Charlie Shrem
I never heard that term before.

Amber Baldet
Yeah.

Charlie Shrem
What is that term?

Amber Baldet
Well, an apologist for anything. I'm not saying we didn't really know what is going on.

Charlie Shrem
Banking apologist.

Amber Baldet
Yeah. But no one raindrop believes that it is responsible for the flood. And when you get this significantly large enough institutions, yeah, they're highly centralized in that there is a centralized strategy. But ironically, it has a very decentralized way of functioning. There's not really communication between different groups, and that obfuscation, it creates information asymmetries even within an organization. You don't necessarily know the full scope of what's going on. And I'm not really sure if anyone does. And so, you get outcomes that were not necessarily what you intended.

I'm sure a lot of those are negative. I knew what banking was when I went into it. But I was interested in the power structures and the stuff really works, and what's going on in the world. I didn't think, at the time, that going to work at a startup and being on the other side of the world was really going to help me actually be disruptive or understand anything.

Charlie Shrem
You studied economics, right?

Amber Baldet
I did.

Charlie Shrem
And you're working now. Are you looking at... because I also studied economics. You've probably heard my prison stories and everything, how I was in there watching these markets emerge while in there. Do you do the same thing? Do you study and watch from an economics point of view, more of like socioeconomics and how people are acting and reacting, and handling things like money in markets?

Amber Baldet
Sure. I think I notice markets that are not just financial, I guess. There is a lot to be said for social capital and intellectual capital, and information arbitrage. The first place I worked at actually in South Florida was in a research boutique that-

Charlie Shrem
What's a research boutique?

Amber Baldet
Well, I won't go super deep on the history of the financial markets. But there was some regulation passed in the late '90s that was meant to separate research departments from trading departments, in that the research was simply selling the book of the prop trading, proprietary trading groups, and so it was completely biased. There was supposed to be this independence there.

This was a kind of startup research company that was meant to have completely independent research. We covered biotech, tech in pharma, and some special situations. And that meant we would make relationships with doctors and then find out whether or not peer review had actually been done on drugs going through the FDA review process, for example. Or you would go to retail stores and sit on the floor and confirm whether or not the data in this company reports was accurate. So there was a lot of cell recommendations which turns into basically shorting activity in the market. And it was about being a countercheck on this irrational exuberance of research reports that always say, "Bye, bye, bye," because...

Charlie Shrem
You were like the control rods in a nuclear reactor.

Amber Baldet
Yeah. Well, we were the... I guess.

Charlie Shrem
I just watched Turnover last night.

Amber Baldet
Great show, yeah.

Charlie Shrem
By the way it was amazing.

Amber Baldet
Yeah. It was about finding counterintuitive results, right? I remember, as a little intern, helping the senior analyst put together a PowerPoint on why you should short countrywide in 2004, which was going into the largest mortgage boom in history, probably the worst time to tell your customers to short something, which is when I learned that it's more than being right. You have to be right at the right time.

Charlie Shrem
Really?

Amber Baldet
And you're right. It-

Charlie Shrem
So this is 2004 and you were calling some issues in the real estate markets?

Amber Baldet
It was obvious that this trenching stuff was absolutely the CLOs and all... it was a mess.

Charlie Shrem
But a lot of people tell me that.

Amber Baldet
Yeah.

Charlie Shrem
A lot of people tell me that. Then why was nothing done?

Amber Baldet
Because the voices saying this is wrong were small. That's kind of the entire plot of that movie, The Big Short.

Charlie Shrem
Great movie.

Amber Baldet
But that's how it was. So that was my first exposure to financial markets though, beyond just watching CNBC I guess. Learning to, not necessarily mistrust, but to be skeptical of what else is going on in the room, and to see, to your point, about seeing these economics marketplaces to see where there are not counterchecks, where do we have all these accumulations of capital, where does everybody think the same thing, because that means that there's something that's not being investigated.

Charlie Shrem
It's almost like you want to be ahead of the pack. But it's not just that. It's not like in the startup world. If you're in an eco chamber and everyone is agreeing with you and everyone's... if everyone's on the same team, then that's a problem in and of itself. Why?

Amber Baldet
Well, I mean, it's not necessarily a problem if you're looking for arbitrage opportunities, right? Because it probably means that there is value captured up there. But, I mean, that's a reasonable argument for why people look to increase diversity on their teams, right? You get blind spots and it makes you susceptible to single points of failure and you're thinking if you had had a more broad view, you would have caught things earlier.

Charlie Shrem
Isn't that the whole point of blockchains, is not having that single point of failure?

Amber Baldet
Sure. I mean, it gets a little complicated once we start talking about this super complex marketplace we have now of thousands of different groups that all believe they're right about different things. But yeah, it's an interesting time to be here. Sure.

Charlie Shrem
I'm launching a new coin called Bitcoin, Charlie's Vision.

Amber Baldet
I have no comment on that.

Charlie Shrem
I have talked to a bunch of people about it and they all tell me it's a really bad idea. But I would do it as a joke to showcase how stupid the idea of a vision is. I grew up in a very religious Orthodox Jewish community. And although I have a lot of friends and respect people who have faith, whatever that faith may be, it wasn't for me. But what I learned is that vision... or you can't follow or do something based on blind faith because someone said that. So the whole concept of following Satoshi's vision is stupid in and of itself. Those are my thoughts. You don't have to comment on that. But that's just what I think in my vision. So I'm going to launch a coin called Charlie's Vision. And Charlie's Vision is basically do whatever you want.

Amber Baldet
Yeah. Go for it. I think Vlad Zamfir this morning had tweeted something like, "You don't need someone in authority to tell you what to think." I had kind of joked when he replied, "You'll pay good money to know what you think," which is a quote from a relatively obscure Robert Anton Wilson publication. But I think I had a similar but different kind of experience in that I was around people that thought a lot of different things growing up, I guess.

But I think being exposed to people who strongly believe something that you also see people strongly believe something else, again, leads you to be skeptical. And that undermines the idea of the singular vision, and I think that's a good thing.

Charlie Shrem
That's a good point. I'm going to tell you a good story. This is supposed to be untold stories of Amber. But you reminded me of a really good story.

Amber Baldet
Okay.

Charlie Shrem
And you studied economics, and you work in economics. I don't really speak to many people who have done that or do that. Although in crypto, everyone says that they're an economist.

Amber Baldet
Yeah. I would not say I'm an economist any more than I would say I'm a cryptographer. But I do a little bit of everything I guess.

Charlie Shrem
I feel like economics is a hobby, more of it is. Like it's fun.

Amber Baldet
Is it a pseudoscience?

Charlie Shrem
Okay. This is my take on economics, and I think... This is all from personal experience, all from 100% personal experience. Economics is more human behavior than it is math. And you look at the math and it can explain things. And I'll tell you a story of why and you're going to really like this. But essentially, I believe that economics is more human behavior. I think that the term economics should always be coupled with socioeconomics, and I'll give you a story.

I always explain things through the... so the prison marketplace, think of it as North Korea or Cuba where you have a centrally controlled economy and you have a completely centrally controlled system that you can't leave and you have no say in how the financial markets work.

In prison, you basically have your family and friends can send you money. What that means is they can go to Western Union or they can go to the Bureau of Prisons website and they can send you a Western Union and it hits your account. You can have as much money on your account as you want, but you can only spend at commissary up to $140 a week, and you only go to commissary once a week. Basically, no matter if you're a billionaire on the outside or if your family has two pennies to pinch together, everyone's the same. You have the same amount of money that you can spend every week. You can't spend more than that amount.

Amber Baldet
It's like a universal basic income?

Charlie Shrem
Yes. Kind of like that.

Amber Baldet
The…

Charlie Shrem
Yeah. And you have a job in jail and you make anywhere from 80 to a few hundred bucks a week anyway. So it's kind of like the same thing. You earn money so you even don't have to rely on people to send you money on the outside. You earn. So everyone's the same. Billionaires and low-level drug dealers or whatever, we're all the same. Everyone's the same in prison.

So you have a commissary, and the commissary's basically like this big, long sheet of paper and it has a list of a few hundred items that you can buy in commissary. The night before it's your commissary day, and your commissary day is either Tuesday or Wednesday, the night before your commissary day, everyone would make a thing of it. You'd sit around and you'd fill out your commissary sheet. You'd go through whatever's in your locker, whatever you have, and you say, "Oh, I need more tuna packets. I need more packets of mackerel. I need more jars of peanut butter or some ramen soup. I need more soap. I need more shoes. I need more spices. I need more Gatorade," whatever you want to buy. It's all shelf-stable stuff. Obviously, there's no refrigeration. And you fill out your commissary sheet.

The next day, you'd go up in the morning. You wait on line. You'd have like a big net laundry bag, and you hand them the sheet. You'd put your laundry bag below. It's like a little funnel thing, and your stuff would start sliding out of this funnel thing. It was literally like communism. That's how it was. That was where you got all your stuff. Centrally controlled economy, centrally controlled markets, and that's how it was.

Why am I telling the story? You know better than I do, of course what happens when you have a centrally controlled economy. There will be a flourishing black market. Same thing like in all these economies, Venezuela, North Korea, Cuba, anywhere where there's a very, very tightly controlled market, you're going to have a black market, and you're going to have a flourishing black market.

How does a black market work in the absence of money? We have no money. We have no dollars. We can't transact with other inmates because if you transact with the inmates, there's no physical cash to do that. The money that you have is in a computer somewhere, so how do you do that? There's no cigarettes. There is nothing to transact with.

The inmate population over the course of time developed mackerel. Why mackerel? What is mackerel? You're familiar with these tuna packets you can buy at the supermarket?

Amber Baldet
I'm unfamiliar with mackerel as a fish.

Charlie Shrem
Yeah. So mackerel's a fish and you can buy these packets of mackerel in soybean oil. It's like you can buy single packets of tuna fish in the supermarket. And I don't know why inmates chose, or the market chose mackerel over tuna. But mackerel was more of a currency. I think personally I like mackerel better than tuna because mackerel's more meaty and it's not this chopped up mush. It's got texture to it and it's kind of a mackerel fillet. I don't know. Whatever. It doesn't matter. People would transact with mackerel.

If you wanted a haircut, you'd go to the barber, and you say, "Hey, I want a haircut." And he'd say, "All right. That's two macks." And people would transact with mackerels. There was this whole economy around mackerel, and this was developed on the market. And then you'd see literally credit markets show up. What would happen is you'd have these inmates who ran these stores, and they're basically inmates who had a lot of extra stuff.

For example, if you wanted peanut butter but it was Saturday, or you wanted a packet of cheese and grits crackers to make something, to cook a pizza in the microwave, and you didn't have any cheese left or whatever, you can go to one of these inmates and you can essentially buy that from him. And he would charge like double the price or a dollar higher than whatever commissary would charge. Then you can pay him in mackerel.

But over time, mackerel became inefficient because who wants to pay cash for every single transaction, right? It's the same thing with a credit card. You want at some point to have a credit limit, then at the end of the month you pay your credit card and it makes things a lot easier. So what these inmate stores would do is they would have these credit markets. So you could essentially build up a credit and no one's going to not repay the store because you can imagine what would happen if you didn't pay the guy.

Then every Tuesday whenever your commissary day would come up, the way you paid the inmate back who ran the store, was he'd give you a list of things for you to buy for him on your commissary sheet.

Amber Baldet
Makes sense.

Charlie Shrem
You'd have this whole market show up, right? That's all the preface to the story. That's not even the story yet. One day I go to the guy who sells cold sodas and I was like, "Hey, man. Can I get a cold soda?" And he said, "Sure. That's going to be one mack or it will be two money macks." And I'm like, "What the hell's a money mack?" He says, "Well, a money mack is basically this." He hands me a packet of mackerel that's three years expired and you can't eat it. It's expired and it's gooey and disgusting.

Here, all of a sudden, you have this mackerel fish which had utility. They had value because you can eat them. They're good sources of protein. Other inmates accepted them. But now you have this other currency that's accepted as a currency within the prison population, that had no value whatsoever. It was expired mackerel packets. It was literally aluminum packets that had expired, and old, gooey, disgusting fish that you cannot eat. It felt like feeling an airbed. It was disgusting. But this had value. You could literally buy anything you wanted there. There was an exchange rate and then there were people that would literally operate like currency exchangers. And that was the craziest thing.

When I asked you about, did you study economics, do you watch people, I'm watching this from a economics perspective. I'm watching this play out from someone who had studied economics in college. This is what I'm studying and I'm seeing this happen.

Amber Baldet
I mean, that's super interesting. It's very microeconomics, trying to achieve some goals of macroeconomics because you have a very small cosmos in which you're operating. So you get a confluence of these things bumping up against each other from household budgeting through macro demand. Yeah. Super interesting.

Charlie Shrem
Then so one day, one inmate got... I don't know what happened to him. No one knows what happened to him. He had a whole collection of these money macks, a huge amount. He disappeared, and the prison guards, they didn't know that these things had value. What they did was they left one of those big Mel bins of money macks, hundreds of them, sitting around in a hallway for anyone to take. Instantly, they debased the whole money mack currency. And people stopped accepting it. People stopped using it as a currency because they flooded it. They debased the currency. It was crazy. I saw people's life savings get wiped out.

Amber Baldet
Well, you needed a demurrage system where you could credibly recover and then dispose of them.

Charlie Shrem
It was an insane thing. I wasn't sure if they did it on purpose or what they were doing.

Amber Baldet
See, that's more interesting. Or not more interesting, but I am curious if perhaps they were aware that this was the secondary money system, and so intentionally would do something to debase it. I mean, that would be interesting to know.

Charlie Shrem
We'll never know, but it's a fun thought to think about. They weren't stupid. They knew what was going on. I think they said, "Hey, instead of us throwing it away, what if we just left it there and gave it away and basically render these things completely worthless?"

Amber Baldet
Yeah. Well, if you're losing authority, you need to do something to fix that.

Charlie Shrem
It's a good point. To totally switch gears here for a second, you worked on permissioned blockchains. I've been a very vocal opponent of permissioned blockchains.

Amber Baldet
Why do you hate databases?

Charlie Shrem
Sorry?

Amber Baldet
I'm just kidding. I said, why do you hate databases?

Charlie Shrem
I love databases, but we shouldn't call databases blockchains.

Amber Baldet
Well, it depends. I mean, we can argue about that. But there are plenty of projects that are not using something that is a blockchain data structure, and I know it probably shouldn't be called that. There are some that are using that structure, so technically it is. But the consensus participants may or may not be known. It's a different type of trusted environment. It's solving different problems. It's a whole different thing. So I don't really think that they're comparable.

Charlie Shrem
Is it the whole point of bitcoin, the concept of not having one single party have power over another party?

Amber Baldet
Yep.

Charlie Shrem
So when you have these permissioned blockchains, like Facebook's Libra coin, for example, I don't even think it should be called a blockchain.

Amber Baldet
Well, I don't think they actually call that a blockchain themselves, and it's not. It's got a different structure happening underneath and a consensus mechanism I think called HotStuff. But they're solving different things. I think that the Libra thing is an extra layer of conflation simply because they are saying that that's supposed to be a publicly available digital currency. I wouldn't call it a crypto currency, in that it is not actually truly publicly usable without some sort of intervention by their system.

But that's going to really confuse people. If you looked at a lot of the enterprise blockchain projects that are happening, they're not aimed at replacing retail cash. They're aimed at facilitating corporate settlement which happens in money systems you would never see these days right now, and it just happens to be inefficient. Or it's about making sure we can track and trace derivatives, settlement processes, or proxy voting, or stuff that happens right now, but it's just distributed systems engineering has been around for 30 years and it's complicated.

It relies on having a single, central operator and then getting the same information in near real-time to many places so that you can act on it. And managing the authentication and access to that information while having a single, central party that controls that is actually a problem for business because they all operate like their own little sovereign countries. So being able to do something where what-

Charlie Shrem
For a reason. They don't want to share data with other people.

Amber Baldet
Yeah. Decentralization, to them, it's not really a consumer problem. They're trying to have control and privacy over their stuff, and not having to surrender authority to others. That's the way those systems are made. It's not really solving same problem as a public…

Charlie Shrem
I see your point. I see your point. What I don't understand is isn't a blockchain pretty inefficient database though when operated that way?

Amber Baldet
As a database and an information store, enterprises are mostly not storing actual data on the blockchain, or I have really suggested that they do not do that for a number of privacy reason.

Charlie Shrem
They're just using it to transfer information?

Amber Baldet
It's a coordination layer and immutable log. You don't necessarily need a blockchain. I think something that looks closer to certificate transparency would probably solve a lot of their problems. But it's hard enough to go in and start using some technical terms around these folks that have been handed a Mackenzie white paper that says, "You need a blockchain." So in order to solve the business problems that they have, you say, "Here's your blockchain. You asked for blockchain. Here you go." But what it really is under the hood is a whole bunch of different components that draw from some distributed systems engineering, some cryptographic assurance systems.

Like sometimes now they're messing with tokens. They weren't necessarily previously. But you can put those things together when you're talking about a different sort of trust environment. You can mess around with it in ways that you could not in a public system like bitcoin. So the systems, they look different. It's just the hype and media and everything that has put these against each other.

Charlie Shrem
eToro is crypto trading made easy. It's one of the largest and smartest trading platforms in the world with extraordinarily low and transparent fees. Join myself and 11 million other traders and create an account at etoro.com. Links on the show notes, and build your crypto portfolio the smart way.

As a mining equipment broker, Scott Offord wants to make sure his clients are well informed in making databack business decisions. Scott created the only free online tool for calculating profitability and ROI for miners. It's a better way to compare the efficiency of various models of ASIC miners and to see how the price of the miner and the efficiency impacts your mining profitability. So check it out at cryptomining.tools and find Scott on Telegram and Twitter at O-F-F-O-R-D S-C-O-T-T. That's O-F-F-O-R-D S-C-O-T-T.

How do you tell the difference from a Long Island Iced ea saying that they're doing blockchain, to a company that's actually... I mean-

Amber Baldet
I mean, what people…

Charlie Shrem
Wouldn't they know they would run a foul for doing that?

Amber Baldet
I don't know. Probably. I mean, I have no idea what happened at their managerial level there, or who's in charge of their Twitter feed. I don't know. But the problem comes not from enterprises exploring some technology that may or may not be useful for enterprises doing B2B stuff. The problem comes when you start talking about saying something like, "We're going to implement "decentralized identity", but now we are the arbitrators of that identity. And our customer base is going to need to ask us for access to that as opposed to, say, letting humans maintain their attestations or the pieces of their identity themselves.

It's a bleed of power away from even government sources of identity. We do, for better or worse, however you want to think about it right now, your identity and reputation is kind of decentralized mostly because it's just not connected. It's just all over the place. We see that as this problem because you can't use your reputation in one place to solve a problem at another place. But once you connect those things together, you lose your ability to probably be anonymous. We lose our ability to circumvent different types of censorship.

You see a lot of these identity projects now focusing on, say, refugee populations who are already vulnerable, and now they're being experimented on, which is kind of identity stuff where a consultancy has a backup of their private keys, right, in case your phone goes missing at the boarder.

So looking at those types pilots and what they're trying to solve, and the power systems that they're playing with, I think that's much more useful than just saying, "Oh, why didn't you just use a database for your prostrate settlements?

Charlie Shrem
These all fall under the category of, let's just say, enterprise blockchain. What you're trying to say is they're are good uses, and I think I agree with you. There are good uses of what these enterprise blockchains. The analogy someone once explained to me that, for example, you take supply chain management, doll bananas. You have a banana in the supermarket. You don't know where that banana came from. And essentially, if we have the way to track the chain from when the banana was grown, to how it ended up in the supermarket, then something like a blockchain would enable us to have that ability to track that.

Amber Baldet
Having a record of a chain of providence sounds very benign. But it's not about the record. It's about who has access to different points in that record.

Charlie Shrem
That's my point.

Amber Baldet
Yeah. And I really don't want... I don't know how many hops away it is before I'm comfortable with someone knowing how many bananas I have in my fridge. But I'd prefer my health insurer not to know whether or not I'm buying five servings of fruits or vegetables.

Charlie Shrem
I think it's more of like when I buy a banana at the supermarket, I don't know where that banana's been. I want to know where that banana's been. I wanted to know-

Amber Baldet
Mostly these two things are cross purposes, right? So are you going to surrender-

Charlie Shrem
Exactly.

Amber Baldet
... letting your health insurer know if you're eating vegetables, to find out if your banana came from unsustainable…

Charlie Shrem
Why is it a tit for tat? Why does my health insurance have to get involved? Why can't I just walk in and scan a bar code on the... what do you call a bunch of bananas together?

Amber Baldet
I believe it's called a bunch of bananas.

Charlie Shrem
No, it's not. Really?

Amber Baldet
It's just a bunch. Yeah.

Charlie Shrem
No, there's got to be a term for it, like there's a pod or like a...

Amber Baldet
Like a murder of bananas?

Charlie Shrem
Yeah, like a murder of bananas. Murder is for something, like a pot... I was in Africa at my friend's game reserve and we literally sat and he told me like, "Multiple zebras is this."

Amber Baldet
It's called a zeal.

Charlie Shrem
I forgot them all.

Amber Baldet
I know that because that is the mascot of the Zcash Foundation, is now a-

Charlie Shrem
What? Zeal of zebras?

Amber Baldet
It's a zeal, a collection of zebras.

Charlie Shrem
I'm going to google multiple bananas. We just completely went off on a tangent here but now I really want to know. And my editors can completely like-

Amber Baldet
Oh no. You have to leave this part in. It's very important.

Charlie Shrem
No, it is. It's a bunch of bananas. You're right.

Amber Baldet
Yes, I know I'm right.

Charlie Shrem
It's technically called a... okay. A bunch of bananas all exist under the enterprise blockchain thing. So I agree with you. I think-

Amber Baldet
It's not that the keys could not be made to make this stuff segmented. There is no reason that you need to have third-party data resale. It is not mandated from some machine learning god on high. It's simply how the systems are being built. The idea that corporations are altruistically going to create some sort of take-back-your-data kind of system because people have mentioned it in a number of blogposts is misguided. It's simply not what's being built.

Charlie Shrem
Censorship resistance, bitcoin, right, those two go together. How do you feel about that?

Amber Baldet
I think that a great measure of how any of these variety of networks that you have right now achieve that goal is what the applicability to consensual sex work traders.

Charlie Shrem
So you believe in that goal?

Amber Baldet
Yeah.

Charlie Shrem
Okay. I'll tell you why I'm asking. I believe, and tell me if you agree with me. And feel free, if I ever say anything stupid, just call me out on it.

Amber Baldet
I already mentioned the bananas thing. I think we're good.

Charlie Shrem
Okay. Thank you. I feel like all blockchains, not including enterprise blockchains because those are private. They're their own thing. We discussed that already. I'm moving on from that. Bitcoin, Ethereum, Zcash, Litecoin, Ripple... I don't even consider Ripple a blockchain but I'm going to get the Ripple army against me right now. But they all exist on a spectrum. And you have the spectrum where on one end you have complete decentralization, and you have on one end of the spectrum complete centralization. They're constantly moving targets. Even bitcoin is not fully decentralized. Bitcoin is on-

Amber Baldet
I don't think decentralization is really that kind of binary spectrum kind of a thing.

Charlie Shrem
No, it's not.

Amber Baldet
It's at least an XYZ axis.

Charlie Shrem
Well, don't forget Y equals MX plus B.

Amber Baldet
I understand. We're doing basic algebra. No, I mean like when you... this is why there is the table. Are we decentralized yet, right? I actually gave a talk at DevCon with my co-founder, Patrick Nielsen, last year about what the heck should we be thinking about of…

Charlie Shrem
It's like a path to decentralization, right?

Amber Baldet
Yeah. Well, throughout the software development life cycle, there are these points of soft... again, it's about soft power aggregation and these bottlenecks. And it's not just about network topology, although that's probably most measurable and visible. But as we all say, do privacy research and then you get a single company that makes a single hardware chip that says it will deliver privacy easily and gives a bunch of grants for that and a bunch of systems implemented. Does that undermine "decentralization" holistically?

And there's a lot of different pieces to think about up and down the stack technically, but also in your community, who's involved in your BIP or EIP or ZIP process. Do you only use GitHub which has now been acquired by Microsoft, who has maintained our access? Do you only publish documentation in a small number of languages? We could think a lot more holistically about these things.

Charlie Shrem
What's a better way to describe it than a spectrum? I'm looking like a rainbow spectrum.

Amber Baldet
Well, it is pride month. Well, I do say spectrum, but when I'm talking about the kind of linear spectrum between a distributed system with a central point of coordination, and a decentralized kind of peer-to-peer network with certain types of properties, and there's trade-offs between lifeness and privacy and all these different things, that gets a little technical. But most-

Charlie Shrem
You have trade-offs between user experience and privacy. It's like a lever system. Going back to the nuclear reactor, one lever goes up, the other lever goes down.

Amber Baldet
Yeah. Well, that's kind of an emerging thing of what the system ends up looking like. But yeah, decentralization is complicated. I believe that's probably the easiest way to say it. But even like when we were talking about identity earlier, you get a similar trade-off. You cannot have a system... This is why we should not be doing voting, certainly not national voting systems on blockchain networks because it is incredibly difficult to have a single individual to retain a single vote and prevent all kind of sockpuppetry unless everyone has a single kind of one-off identity and you really cannot control these things. It's like an unsolved computer science problem.

Charlie Shrem
No you're right. Anything that starts with centralized distribution is already doomed to fail.

Amber Baldet
Yeah. We're preventing Sybil attacks in these types of decentralized networks because you do not have known entities transacting and you don't know who owns them. It's very different when you talk about enterprise networks where you say, "Oh, this IP range is coming from a specific corporation," and you can manage these things differently. It's a different type of trust environment.

Charlie Shrem
How do we say that... like in Buddhism, you have enlightenment. But you never actually reach enlightenment. It's always like, "Are you on the path to enlightenment?" And your whole life, as long as you're on the path to enlightenment, it's like what Gandhi says, it's not about the destination. It's about the journey. So that's why I say that. These blockchains, as long as they're on the path to decentralization, then that's good enough, or that's good for me. You have to try to get there.

But there are some of them that have no intention of ever fixing or ever wanting to be there or have started off with such centralized mechanisms that they can never actually be decentralized no matter what they do. And therefore, they failed as these experiments.

Let's not forget. This whole industry is just one big socioeconomic experiment. We're not even in version one yet.

Amber Baldet
Yeah. Well, there'll probably be securities and then there'll be part of securities products and they'll have achieved something else. It's just there are a lot of different problems in the world to solve, and a lot of different people that need to do different things. So bitcoin will continue to do what bitcoin does. Other things are not going to be able to necessarily emulate that. But it doesn't mean that some other projects won't have value in other ways.

Charlie Shrem
Why did you leave JPMorgan to start Clovyr, and what is Clovyr?

Amber Baldet
Well, at the time, I had just achieved a lot more than I was really expecting to be able to.

Charlie Shrem
That's a good thing, right?

Amber Baldet
Yeah. It was great. I mean, who knew we'd be able to publish the very first open source code on GitHub for JPMorgan Apple. That was really exciting. I was uncovering, at the time, that a lot of the work that needs to be done to make these systems really usable at production scale, you can't really do that from inside a financial institution because, I mean, they're a publicly traded company. Their mandate is to increase value for shareholders, right? And being able to assure people of a return on investment from an extremely R&D type technical project is low.

I wanted to go work on some more technical stuff. And so, at Clovyr, we're working on creating infrastructure and coordination kind of tooling, developer tooling, really ways not just for... it's not just about enterprise. It's kind of a single solution, a single thing you can use, whether you want to run a node that connects to a public network or 100 nodes that connect to a public network, or whether you're creating an enterprise consortium of 100 nodes that only ever connect to each other. Tooling wise, you should really be using the same thing.

It is a little weird that a lot of the people in this blockchain space, they're either newer to development or we've done a really bad job of being interesting too in recruiting really-

Charlie Shrem
That's an understatement.

Amber Baldet
... good engineers from other fields.

Charlie Shrem
Really? I didn't know that.

Amber Baldet
Yeah. Yeah, because they're like-

Charlie Shrem
I'm being sarcastic.

Amber Baldet
These blocks of people are crazy. Yeah. Yeah, right? Every time blockchain is mentioned on Hacker News, there's just this string of comments of people being like, "These people are bananas." So building tools that draw from that experience and don't throw away what we know about software engineering, and that use commonly known paradigms, and that can integrate to your CI/CD pipeline and this other stuff.

It doesn't sound very sexy, but it's really critical to solve some of the lower-level usability challenges. When I say lower level usability, I mean like developers, people that know what they're doing. It's not solving this interface for this wallet is not clear.

Charlie Shrem
Isn't low level just helping people buy bitcoin?

Amber Baldet
Maybe. I meant like closer than a middle.

Charlie Shrem
So you're like low level but enterprise low level.

Amber Baldet
Well, right now it isn't more about putting tools in developers' hands. But personally, I care a lot about making things more accessible that are considered too technical for non-developers. And so, we can do a lot to make things that... right now you need to have some familiarity with a command line usually, or know how to spin up your own instance, or know something about a cloud or whatever, to participate in a lot of these networks. I think we could do a lot better job of making it accessible to everybody, and that would help adoption.

Charlie Shrem
I miss the days when the best way, and the most stable way to work with bitcoin is through the command line wallet and through bitcoind.

Amber Baldet
Well, that sounds super cypherpunk but it really is at odds with getting regular people to participate, right?

Charlie Shrem
Right. You're right. And so, I think the idea was, back then, if you don't have time to take the time, if you can't take the time to learn how to use this, then you shouldn't be an early adopter. I mean, even there's a funny Satoshi quote to Dan Larimer. Most people don't know that it was Satoshi talking to Dan Larimer. This is what he said. He said, "I don't have time to explain it to you if you don't understand it," like, "I'm busy," or whatever. It's not verbatim. But he basically said, "If you don't understand it, I don't have time to explain it to you. Have a nice day."

Amber Baldet
Yep. And that' the failing of the cypherpunk movement from the beginning, right, like saying everyone should use PGP. Nobody does that. Everybody I talk to, journalists or whomever, people just use Signal now because it's usable.

Charlie Shrem
Or Mailvelope. Yeah.

Amber Baldet
You publish your PGP key but then you can't-

Charlie Shrem
I like Mailvelope.

Amber Baldet
... tag someone else's signal. Sure.

Charlie Shrem
But you're right. Goes back to what I said earlier. The user experience, as it goes down, the security goes up. But if you want better security and privacy, the user experience goes down.

Amber Baldet
Yeah. I do not think it's fair to tax people on their time, who have three jobs and are struggling to make ends meet to sit down and read white papers or understand these sorts of things. It's not fair to them any more than we wire our own houses with copper wiring, like ourselves.

Like now it's considered cool. It's like going to a Makerspace and figuring how to solder stuff. Not only is that a vocation that millions of people do as their job and they know more about electric wiring than you do. But when you need to fix something, they don't call you up and say, "Well, if you really cared about your lights, you'd figure it out."

Charlie Shrem
My electrician tells me that actually. He does.

Amber Baldet
Well, there you go. Do it yourself.

Charlie Shrem
No, he doesn't. Speaking of which, I got an email from my college economics professor the other day. And the email went like this. He said, "Hey, Charlie. I hope you're doing well. I've seen you in the news. I want to work in the blockchain space. What can I do?" I responded back, and I don't know why I said this. But I was like, "Write something that can read white papers for me."

Amber Baldet
Well, we already have the natural language processing thing that will spit them out, right? They're just garbles together, all of the papers and creates new ones as a farce. So this can't be far behind.

Charlie Shrem
He invented the technology that he ended up selling to Duolingo and these translation companies where he wrote the software and patented it many year ago, like in late '90s and early 2000s, that basically... this is from what he told me, that can take a foreign language document and translate it in context based on how many times different words were used, or words that were used together, and things like that, better than a Google translate. But Google translate didn't exist at the time. So that's why I said that. I said, "Write something that can read white papers for me."

Amber Baldet
Yeah. That will be great. Otherwise we just employ an army of interns that do that.

Charlie Shrem
And they don't even end up reading them.

Amber Baldet
The just scheme them for word proximity, for sure.

Charlie Shrem
True. Zcash. Do you think Zcash is on the spectrum towards decentralization?

Amber Baldet
I mean, network-wise, it's certainly decentralized, and then a number of different actors run nodes. I think they also are subject to having a small number of mining pools that are overweight contributors. I think what people talk about when they talk about decentralization of Zcash is the overweight contribution of the Electric Coin Company. Is that what you're getting at?

Charlie Shrem
No. I want to start picking your brain, throwing out random coins and tokens and see what you think about them.

Amber Baldet
Oh, I have no opinions of pretty much any of that. I really try not to-

Charlie Shrem
What about Ripple? You don't want the Ripple army going after you?

Amber Baldet
I do not. I mean, I am on the board of the Zcash foundation. I'm happy to talk about their principles, what it looks like, and all that. We just got back from Zcon1 where a lot of proposals about changes to governance and contribution. This year they proposed an official Zcash improvement process which is somewhat similar to the BIP process but a little different, to make sure that the company is not the sole maintainer of the network upgrade process.

The Zcash Foundation actually released the first implementation of Zcash that is not the one maintained by ECC.

Charlie Shrem
Congratulations.

Amber Baldet
Yeah. So the Electric Coin Company, which used to be called Zcash Co. until recently, they have zcashd, similar to bitcoind. The foundation has created, in conjunction with Parity, what's now called zebrad, and it's a Rust implementation of the Zcash protocol.

So there are two now, and that's pat of the attempt to decentralize. I realize there's just two, but split the governance and create some checks and balances, and create a more robust process and community.

Charlie Shrem
Can a project that started more centralized eventually seek centralization or seek enlightenment?

Amber Baldet
Yeah, sure. I mean, even Bitcoin was amongst a small number of participants early on. It's just a process, and when these things started-

Charlie Shrem
Be careful. The Bitcoin maximalists listen to this show.

Amber Baldet
I understand that.

Charlie Shrem
No, I'm just joking-

Amber Baldet
But I mean, at some point it was a very small mailing list, right?

Charlie Shrem
It was. It was dozens of people and you can mine under MacBook.

Amber Baldet
Yeah.

Charlie Shrem
I miss those days.

Amber Baldet
Yeah. My co-founder received that initial mail and promptly deleted as being like, "What's this guy talking about?"

Charlie Shrem
Oh, the Satoshi mailing list email?

Amber Baldet
Yeah. Yeah. Good times.

Charlie Shrem
There was good times. What brought you to New York? You're from Florida?

Amber Baldet
I am. Well, I always wanted to get out Florida, first and foremost. But-

Charlie Shrem
Why? Dare you.

Amber Baldet
I mean, New York, it's almost like its own country. It's like this cultural bastion, financial bastion you can really do anything and find anybody who's interested in anything up here. Florida is certainly not like that. It's a much, I don't know, smaller kind of mindset there.

Charlie Shrem
I love it here.

Amber Baldet
Yeah.

Charlie Shrem
You can do the whole decentralization world, but it's a fantastic place to live. But I do kind of miss New York sometimes. But the talent pool's really hard here to get.

Amber Baldet
Yeah. Definitely. I mean, I was on the East Coast and a year on the West Coast and it was... between Palm Beach and Miami, there is a lot going on. And now that I am further on in my career probably, I do know a number of companies that are doing some cool things down there. But just coming fresh out of college as far as what the opportunity set was then, which was 15 years ago, or 10 years ago or whatever, because I worked a couple years down there before I moved up, there were just very few opportunities in what I wanted to do, and New York was full of them.

Charlie Shrem
Yeah. There are not the most opportunities. In Clovyr, do you work with larger institutions who are building out these enterprise chains?

Amber Baldet
Yeah. We work with, yeah, people all over the place, because we're really working on getting all these different kind of components together. So yeah, from a user standpoint, the corporate early access program has very large Fortune 100 types in it. Yeah.

Charlie Shrem
The question I wanted to ask you was, you had a quote here. I was doing some research earlier. I'm going to read you the quote which said, "We tell women don't talk about money, don't talk about your promotions. When you're good enough, someone will tap on your shoulder and escort you the next level. But it's not how it's going to happen." What do you think of that in the Crypto space?

Amber Baldet
Well, the crypto space is a little interesting since there is very flat authority models here. I was speaking a little bit more about these bureaucracies where there's more of rigid promotional process.

Charlie Shrem
I've always felt that the Crypto space is a lot more inclusive.

Amber Baldet
I mean, inclusive is a super loaded word. I think there are a lot of opportunities and a lot of great... people are doing a lot of great things. That said, it is kind of at the nexus of a number of other subcultures that previously existed who have historically been not super inclusive, and so the first movers into the area were representative of those initial subcultures.

We started with that kind of a problem. I think that there has been a lot of work to undo that early. But yeah, I mean, I don't think that the "Crypto/Blockchain space" has very much of a different problem than the rest of tech in general. It's like just a 20%/80% issue.

Charlie Shrem
Well, you've said something interesting, that all of us who got involved in crypto early were people who really didn't fit in other industries or in other social norms really well. And I feel like that's true. We didn't exist and we all... a joke that the social score of all crypto people is extremely low. We didn't really focus on social norms and communication and things like that. So that's the way it was started of. We're very abrasive and assertive and spoke our mind. Didn't really beat around the bush, and some people didn't like that.

Amber Baldet
I don't think that that's dissuasive to having... if you're specifically speaking about women, I don't think that that's necessarily dissuasive. I think I'm pretty assertive. I've been on Usenet's forums back in the '90s. I'm plenty familiar with the communication standards. I think when we were just talking about how you move forward, it's simply there is a feeling that your work should be recognized. I guess we're kind of encultured, and the many underrepresented minorities feel that if they do a good enough job, if their star shines bright enough, people will just recognize that. Whereas other folks tend to say, "Hey, did you notice how great I am, and I'm going to go get this," or, "I'm going to ask about this thing."

It's sort of more proactive, and I don't know why necessarily it is that way. But in practice, it certainly has been, and so just simply telling people, "Don't be so afraid to be a little more self-promotive than you are comfortable with, because if you're not speaking up in your voice, that silence is going to be filled with somebody else who's more mediocre than you, taking that spot.

Charlie Shrem
Sure.

Amber Baldet
So just crash it. Go for it.

Charlie Shrem
I feel like in the crypto space, the ability to do that and to speak up for yourself, and to be assertive, it's a lot better, and it's a lot easier to do that in the space, versus in other industries or in tech industries or whatever, because the people that got involved really early and shaped our space didn't care for these social norms.

Amber Baldet
I mean, it's a little tricky to say that one is better than the other. I don't think it's necessarily appropriate to say that just being able to be abrasive all the time because that's the way one subset feels comfortable means that that should be the default and it's better. Hopefully, there's some kind of coming together towards the middle where... there are certainly people who could learn to listen a little more, or could learn to present nuance a little better, and that would probably serve them well in their daily life, as well as on the internet.

Charlie Shrem
Not Crypto Twitter.

Amber Baldet
No. Crypto Twitter is perfect as it is, of course…

Charlie Shrem
Are you being sarcastic? I've been out of New York for a while.

Amber Baldet
No. I don't think it's fair to tell people... and this is the counter points I'm going to argue against myself. But the counter point is telling people you need to stand up and go get it for yourself. That's unfortunately what you have to do right now. But I don't think it's fair to say that that kind of default, if you don't grab it, you don't deserve it, is the way that society should be. And so maybe we could be working to be make it available for people to not have to act that way and still succeed.

Charlie Shrem
As they say, from your mouth to God's ears. I really hope that happens and we become more inclusive of that and allow people to say whatever they want, but at the same time do it polite way or whatever. I don't really know.

Amber Baldet
Well, it's not necessarily being polite. But, I mean, I know some of the best cryptographers and hackers and stuff in the world, and almost uniformly across the board, the people that are the most talented, the most skilled, the most intelligent-

Charlie Shrem
They have no communication skills.

Amber Baldet
No, not that, but they do tend to be quieter. The people that are at the top of their field in many situations are some of the most gentle communicators, the people who will listen to you the most and the people who do not discount new entrants or force them to prove themselves, and the quickest to say when something is not their area of domain expertise. So being loud does not always equate with being the most talented.

Charlie Shrem
No. I agree with you and I feel like on Crypto Twitter especially in other places, you have this super minority that basically comes and is so loud and vocal. We assume that that's representing of bitcoin or of crypto where we had... I had a guest yesterday who literally has... he was a director of customer support and he personally has answered over 100,000 tickets for one of the largest companies in the crypto space. He said that 99% of people that use crypto, that love crypto, aren't even on Twitter.

Amber Baldet
Oh, true. Yeah, sure.

Charlie Shrem
Where do you see the future of the co-operation between... because this is a big... one of the institutions coming. And you're on the front lines of that. You're talking to them. Where do you see the co-operation of the crypto spaces and... not versus. The crypto space and the big tech, are we going to see more Facebook Libra types, or we going to see more cooperation between bitcoin and the libertarian-esque types?

Amber Baldet
I think that a lot of that is just dependent... I mean, you're speaking, I assume, in a bit of a US-centric way. So we're talking about... in the US, it's really dependent on where this kind of regulation is going. If it stays incredibly unclear here, and larger institutions are not able to do anything for fear of business and legal risk, then other countries with different regulatory climates will probably step up and provide those services. The question then will be whether or not people in the US will be able to participate and access those services, because it's really the on and off ramps, those kind of gateways back out to fiat cash where there's the largest risk.

Two people who want to do that... I'm sure you have plenty of listeners who feel like you should just transact entirely in crypto you're whole life. But for many people, that's their risk, is they're concerned that if they put something in, they won't ever be able to get it out. And that really is dependent on these very isolated kind of gateways that we have, and how they're regulated and what compliance requirements are put on them.

Charlie Shrem
Amber, thank you so much for coming on the show.

Amber Baldet
Thanks for having me.

Charlie Shrem
How can people follow you?

Amber Baldet
I'm on Twitter @amberbaldet, which is B-A-L-D-E-T. That's probably easiest.

Charlie Shrem
Excellent. Thank you so much for coming on the show and have a good weekend.

Amber Baldet
Thanks.