Speaker: Erik Voorhees

Compiled & edited by TechFlow

While Token2049 is being held in Asia, the West is also conveying its insights and thoughts to the Web3 industry.

On September 14, at Permissionless II, the world’s largest DeFi event co-hosted by Blockwork and Bankless, veteran industry OG and founder of ShapeShift, Erik Voorhees, gave an extremely wonderful speech.

In this speech, Erik explored in depth the future of finance, the comparison between code and human law, and the power and potential of decentralized finance. With his profound thinking and rich industry experience, he expressed his firm support for open, permissionless finance to the industry and made a profound criticism of the current financial regulation and traditional financial system.

Rather than a speech, it was more of a declaration of open finance’s challenge to the traditional financial system.

This is an insightful read for anyone interested in Web3, DeFi, or the future of finance, and was also ranked as the best crypto talk by industry insiders.

Shenchao compiled and organized the speech.

(Source: https://twitter.com/Permissionless/status/1702054516458156126?s=20)

Full speech

OK, ladies and gentlemen, I'm Erik Voorhees, libertarian, founder of ShapeShift. Some call me the doyen of crypto. My girlfriend likes to call me the old man of crypto. Sometimes I'm known as a hound, a chubby, curly-haired charlatan who overuses acronyms and donates a lot of money in Washington.

Someone asked me to talk about:

Why are we here at this event? Why are we in this industry? Why are we in the current state of the industry?

It's an honor to have this opportunity. But first, I want to get to know you, my audience.

Raise your hand if you came for the free coffee. Um..someone is lying.

Hands up if you came for the Lambos. Sadly you won't be getting one this year, but hold on (maybe some kind of live souvenir).

If you are here because you love banking, please raise your hand. No one raised their hand.

If you came here to have your eyeballs scanned by World Coin, please raise your hand.

Raise your hand if you are here to celebrate KYC or other mass surveillance of innocent people.

OK, if you're here to protest, raise your hands. OK, some of you have raised your hands. I'm here to protest. Peaceful, for sure, but revolutionary no less. As I was preparing this speech, I realized that the theme would match the name of the event.

Permissionless. I love this name. It’s one of the words that best captures the essence of our industry.

It's radical, it's rebellious, it's nonconformist. It's American. As an old-timer in crypto, let me remind you that it all started with the invention of Bitcoin about 15 years ago.

Why was that moment important? Why was it important then? Why is Bitcoin interesting? It’s interesting because it’s permissionless. Bitcoin invented permissionless money, and a few years later, with the invention of smart contracts on Ethereum, we have all the tools we need to build a completely permissionless financial system.

This property is revolutionary, and this property, more than any other, is the essence of cryptocurrency. This property is given to all good projects in the space, and if something is not permissionless, we should at least consider it a stepping stone to that goal.

But why is permissionlessness so new and so hard to achieve? In the world of money before cryptocurrencies, all movement of money required someone’s permission. You might say cash is permissionless, but not if you’re sending it across any distance. Try carrying $10,000 across a border and you’ll be quickly reminded that it doesn’t work. No, cash isn’t even permissionless, and despite its many virtues, it’s disappearing from society.

So we should be thankful that a permissionless form of digital money was invented, because it is just in time. Why does all this matter? Consider that almost all economic activity requires money. In a world where most people struggle to put food on the table, the economic sphere is literally the arbiter of life and death for billions of people. Most people don’t have the luxury of pursuing their passions. They work, they toil, they trade, because they need to live. Money is therefore essential to our human existence. Therefore, we should care about its quality, we should care about its nature, and we should care about who controls it.

Permission is often subtle, but it's everywhere. Every time you pay with a card, you're being granted permission. It may seem like permission is just whether you have enough money. But in reality, there's another, more insidious layer of approval going on.

Banks, financial institutions, governments, many parties along the way, all strangers to you, whom you will never meet, all bless your every transaction and you don’t notice because as long as you behave like a citizen, the permission is there. But if you need permission to spend money and transact, then you need permission to exist.

So why do we accept a world where you can trade freely only with the conditional approval of a stranger? This is certainly not freedom. It is slavery. That much is certain. Chains weigh lightly on us in most cases, but that should not make us forget that they exist. If they are tolerated, they become much heavier.

Let's admit that the laws and regulations that restrict our affairs have only increased. Consider the average person 100 years ago and the average person today. Who is more economically free? 120 years ago, there wasn't even an income tax. Things were so radical back then that you were actually allowed to keep the money you made. You could even cross borders without that lovely "stamp book" we call a passport. It's amazing that society could exist in that anarchy. Yet, without any income tax or immigration restrictions, the United States experienced the greatest period of growth the world has ever seen. Societies tend to grow fastest when labor and capital are unpermissioned.

But some people like to plunder. The money you earn and the permission to cross borders freely is gradually withdrawn, always in the guise of collectivist propaganda appeals, such as national interests. Today, for all the taxes you bear, half of your money is stolen by the state. But the state is just a group of strangers. So half of your money is stolen by a group of strangers.

What excuses do you tell yourself to deal with this embarrassment? Those who prey on you and tell you it is for your own good are withdrawing your permission to build your own life. So what is going to stop this trend from continuing? What is going to stop the people of tomorrow from being even more enslaved? What force is there to resist the growing presence of permission?

It's us.

You may not realize it, but what we are building is the economic defense of modern society against state plunder and restriction. We are saying "no" to the continued encroachment of permission. What will save us from this is not the so-called political process and the political circus, because it is what created this situation. Now, as free men and women, redemption is our own responsibility. All actions come from our heads, our hands, our decisions. We are doing this without permission.

Permission is what a kindergartener should get when he goes to the bathroom, not what a respected man should get in his financial affairs.

Because if I can only trade with you at the grace of someone who is watching me from above, then I feel more or less like a child than a man. But is a child an appropriate metaphor? Children are usually loved by their parents. Do you get the sense that the CIA loves you in the same way?

Farm animals might be a better metaphor. We allow ourselves to be treated like farm animals. In the pens, we graze, we produce, and we are harvested.

But we can vote. Yes, we can choose who will operate the scissors. We can vote whether we want red or blue to rob us. We argue endlessly about which color is better. To give up so much permission, we really have to respect leaders. We must aspire to the greatness of these overlords. They must be men of brilliant minds and noble qualities. They must inspire and guide us toward goals that would be impossible without them. Are these descriptions accurate descriptions of world leaders? Are they impeccable intellectuals? Are there really any reasons to submit to such paragons of virtue, such incredible specimens of humanity, as Donald Trump or Joe Biden? I look at the political class, those bureaucrats who suck on the milk of plundered wealth, all their authority embellished with grandeur, all their arrogance disguised as confidence, the unreality of their smiles matched only by the absurdity of their ideas. I find no reason to submit to the terms they set to try to restrict me.

To such men we owe nothing. But to humanity we owe much. That is why we are here. Crypto is our rebellion.  Crypto is our rebellion. It is our rebellion against a system that does not deserve its authority. It is our rebellion against coercion and slavery. It is our rebellion against economic, unending arrogance and moral impotence. Crypto is our rebellion against permission. This rebellion is nothing less than a sublime restoration of dignity and grace as free and sovereign individuals, in the service of peace and civilization. That is why we are here today.  But the fact is that we do not need permission to build great things from petty tyrants who cannot build them. That is the principle upon which America was founded.

The state’s permission is a sham, a scam that only those suffering from Stockholm syndrome can tolerate. It is a curtain placed before our eyes, and only because we have been too weak, too scared, too helpless, too distracted, and often too comfortable, have we not seen behind it.

Many of us in the industry have seen behind the curtain. We have seen that Washington is no more necessary to a good society today than King George and the British Parliament were 250 years ago. Cryptocurrency is a declaration of technological and financial independence for individual freedom. Cryptocurrency is the freedom to act in our own economic interests as free men and women in a just society, to trade, exchange, deal, build, and trade.

We should be optimistic about the future because we are living in an era that is the dawn of a peaceful revolution where any two people on the planet can exchange value without permission. Does this scare you?

Or it does. Yet, hubris affects us all. Are we sure we are not suffering from some kind of pain?

As good skeptics, we should first doubt ourselves and our own assumptions.

We should always ask ourselves, are we agents of good or chaos? How do we know?

Are we just rebellious teenagers who want a chaotic world without permission?

Are we nothing more than subversive degenerates, too immature and naive to see the value of order and to launch a violent attack on its existence?

How can we so irreverently denounce the necessity of compliance, the virtue of licensing, the many glorious wonders of central management? Don’t we care about society? If we succeed, won’t bad people thrive in society and society deteriorate?

These are the strongest charges against us. Yet they are easily defeated. They are defeated because what we are after is not actually a true freedom from permissions and rules, but simply a preference for objective and transparent rules over the subjective and opaque rules of the status quo. We like to say that code is law, but that is a misnomer. Code is better than law, and we are showing the world the fundamental difference between law based on people and law based on mathematics.

Compare a redundantly audited and formally verified smart contract to any embarrassing congressional legislation, which one is more scientifically based, which one is better demonstrated to be actually in order. One is a question of engineering, the other is a question of elections. Compare a smart contract, where every variable is mathematically defined, to the Securities Act of 1933, where there are thousand dollar lawyers arguing over how similar a picture of a cartoon ape is to a Florida orange grove.

The absurdity of most financial regulation is obvious, and we shouldn’t tolerate it. But we should all want orderly, objective, transparent markets. To all the regulators in the audience, before you send me another subpoena, consider this a position we all share.

We all want rules. We all want rules to be good.

This is the most important point I want to make today. The traditional financial system is based on human rules, not mathematical rules. Society can do better. Human rules are formed through a political process that everyone recognizes is fallible and often corrupt. Human rules rely on highly subjective human language and leave wide room for interpretation. When it comes to the enforcement of these already nebulous rules, no one can predict in advance which violations will actually be enforced.

Gary Gensler claims that all tokens are securities. Well, Gary, why doesn't the SEC enforce all tokens? The most generous explanation is that they don't have enough resources. OK, but that still proves the point that financial regulation as it exists today is subjective and partially enforced. If we care about orderly markets, how can we respect that? How can we respect that? Compare this to any smart contract, which executes 100% of the time, and we can tell how it executed.

The Uniswaps Enforcement Division will never lack for resources, and the rules it operates under are objective and transparent. We no longer have to suffer subjective rules in finance. But, instead of getting rid of rules, we should strive for better rules. This is our task, this is our mission, this is our revolution. This is why we are here. Do you want to call us agents of chaos? Do you want to see us as destructive anarchists? We are the only ones who have established 100% enforcement of the rules of finance. Code police are better than real police. We want strong rules for our markets, and any rules that can be easily broken are weak rules.

There is a law that says I cannot cross the border without declaring $10,000 in my pocket. Interesting. The ease with which I can break this law is an embarrassment, the exact definition of the word. The laws of physics, the laws of mathematics, the laws of code, these laws make sense. They are strong, consistent, and deserve respect.

Act. Human law, at best, is highly tolerant. Perhaps it was once necessary, just as we once needed the post office to send letters. Yet the post office and the SEC still exist, and they are redundant and embarrassing. So I am sure their budgets will increase next year. Now compare the subjective law of regulators or rebellious teenagers to the law of code. Compare the DOD Frank bill, which is 23 pages long and has a disgusting tone, to the AVE loan contract designed to achieve orderly markets, which spawned 400 new financial regulations in thousands of pages. Which one is more representative of an advanced civilization? Which one is clearly a product of 20th century technology and which one is a product of the 21st century? Compare the open source collaboration of cryptocurrencies to the backroom dealings of DC, which rule-making process is more noble and more ethical? We are not agents of chaos, but agents of order. While some may not approve of the system of order we are establishing, then again, no dinosaur would approve of an asteroid.

Do we care about society? Yes, of course. We care deeply about society. Many of us are here because we see widespread economic injustice in the world, and we want to help. We live in society. We benefit from it, and we owe it to ourselves to improve it.

But unlike any politician who forces others to conform to their views at gunpoint, we are here to build peacefully, we don't impose on anyone. So don't let the status quo tell you that you don't care about rules or society because you are building a superior technology for rules within society.

And they, the politicians, regulators, looters in Washington DC, should be praising you for your good work in the realm of order and rule-making, when they are the agents of chaos compared to what we are building. They are the ones who print billions and then pretend not to know where the inflation comes from. For them to claim moral or intellectual superiority on any economic issue is ridiculous. They should at least have the courtesy to get out of the way.

To be sure, our enemies are many. There are many who find the idea of ​​open, permissionless finance abhorrent because they are used to controlling things they did not build. Now, finally, they can’t. For the rest of us, for the activists who don’t impose their opinions on millions of innocent people by force, how optimistic we are, the light of opportunity shines for everyone who discovers this Promethean fire of permissionlessness. How much brilliant creative energy there is in this room.

Yes, we endure seemingly endless setbacks and struggles. Yes, scammers are everywhere. Yes, we are condemned by the systems we seek to replace. Some of us suffer persecution, and all of us suffer from time to time. Try to see through those struggles, friends. For every noble challenge you face in your work, be grateful that you are alive and your work matters. Be grateful for this opportunity before you.

Consider those who work in traditional finance, those cogs in the regulatory machinery, who go to work every day with dead eyes and weak hearts. Their souls know that they are not part of anything creative or beautiful. They are not part of anything wild or romantic. But many of you are. So embrace it, cherish it, build on it. Wild and romantic, these words still define cryptocurrency at its core. In a bureaucratic, oppressive, ridiculous world where society seems to be consuming itself, grinding into dust all those who dare to stand up as individuals against an archaic machine, this wild and romantic heart of cryptocurrency still beats between the blocks, full of relentless ambition.

Rise high and remember that you are neither a slave nor a serf. In America, the common man is noble. So act. Be men and women of energy, integrity, and pride. Be pioneering industrialists and reflect the nobility of that role. Build consciously and see through every low-level distraction, especially when it comes with a flag and asks for contributions. Any regulator can submit a pull request, and it makes sense that they don’t. The traditional realm of in-house legal finance has long been lost to the political circus. So now we enter a new realm where what we build is supra-legal and permissionless. In this new land, the old west, we recognize only deference to the noble power of moral virtue, mathematics, and open, composable, immutable code.

In our audacity, we built things, but didn’t impose them on anyone. We not only invented on a clean slate, but also got our hands dirty with real engineering, building the world’s first and only transparent, objective financial system for all of humanity. We didn’t pay a penny in taxes, and we built it without permission.

Consider what it means to oppose this development, to oppose an objective, transparent set of rules and voluntary unions between adults, and to demand obedience and submission from peaceful people at gunpoint. Examine those who do this, and you will see where the enemies of humanity lie so pitifully. They no longer ignore us. They certainly still laugh at us, and they have clearly begun to fight us.

But we will win. Ethical arguments aside, because man is a capitalist creature, capital flows where it is respected. Like water, it flows where it can. When the fiat money system’s permission restricts and stifles, our open, decentralized alternatives are ready to take it. Real innovation is messy, sometimes veers off in unhelpful directions, and then back again.

But capital will flow to orderly decentralized finance, just as water indelibly flows to the sea. Both will happen naturally, and neither requires permission. Thank you.