The Inside Story on Global Crypto Exchange, Kraken. Interview with Jonathan Miller, Managing Director (Aus) for Global Crypto Exchange, Kraken

Transcript

Nick Abrahams:
Ladies and gentlemen, welcome to our session today. I am delighted to have another luminary from the crypto world. Jonathan Miller, who is the managing director for Australia for Kraken. So Jonathan, thanks very much for your joining us today.

Jonathan Miller:
Thanks for having me. You’re too kind.

Nick Abrahams:
Not at all. Why don’t we just get straight into whether I was too kind? So you are, I think, Jonathan, one of the rare people in Australia who has been a believer in crypto through the dark times and obviously it’s had its better times recently. But can you give us a little bit of your background and how you’ve come to the position that you’re in now?

Jonathan Miller:
Yeah, absolutely. So, I was privileged enough to work with a bunch of people who got really excited about Bitcoin in 2013. It’s a while back.

Nick Abrahams:
It’s a long time ago in Bitcoin terms.

Jonathan Miller:
Yeah, that’s right. In the crypto world, it’s a while ago. So we took the approach to leverage our skillset. There was a group of five of us and I had a product management background so I did a fair bit of product consulting and got really excited about blockchain. I was a Venn diagram, really, of my interests with an academic interest in macroeconomics and practical experience as a product developer and a software engineer. So that Venn diagram, Bitcoin sat in the middle there for me as a non state issued programmable money. And so I got really excited about blockchain and then as the years progressed, we also realized it was super hard to get in Australia so we built a brokerage and that was called bit trade. Over the years, as they progressed, I ended up taking over the managing director role of that business. We explored a whole bunch of different opportunities in the space.

Jonathan Miller:
One very fortunate day, one of the other founders introduced Kraken to us and it made sense for them to take over this business. So we exited into subsidiary of Kraken and now I’m really proud to be representing Kraken in the market here in Australia.

Nick Abrahams:
So it’s just such a fantastic story. And I can remember bit trade when it came onto the scene and it was one of the key players in Australia. And for Kraken to come along and see the opportunity was just terrific. So maybe could you give us a bit more about what is Kraken?

Jonathan Miller:
Sure. Kraken’s a really interesting business. They’ve got a couple of products probably know, which are fundamentally a crypto exchange. But what they are interested in doing is building an integrated digital wealth platform that’s crypto native. So over the years, we’ve slowly progressed the product and its different guises and there’s a couple of different touchpoints. We’re iterating on that idea at the moment. So where Kraken began, actually earlier than bit trade. One of the really early exchanges out of the ashes of Mt. Gox, Jesse Cox, the founder of Kraken, he was I think would’ve been a client of Mt. Gox. And he realized…

Nick Abrahams:
Oh my. [crosstalk 00:03:32]

Jonathan Miller:
I don’t know about that. He definitely was involved in trying to help the team get funds back to people. He offered his expertise. He’d run his own marketplaces before, digital asset marketplaces, actually. He realized that that crypto exchanges needed to professionalize in order to grow and to provide the services, that I guess you’d call them more mainstream, our clients would expect. So that was his mission. That was the original mission of Kraken. We’re growing now into a business that’s really interested in ensuring that everyone can get access to crypto assets and understand them and leverage their opportunities they’re in. And there are a whole bunch so we can talk about that, but that’s an overview. Cryptocurrency exchange is a short answer.

Nick Abrahams:
Fantastic. Why don’t we get into what the opportunities are because I think crypto’s had a few winters where it’s fallen out of favor and then obviously recently it was a big run on the assets and they went to some pretty impressive valuations. I guess if we look at the crypto world, what excites you? Where do you think the opportunities are?

Jonathan Miller:
It’s a good question. There’s a lot of areas I think are still super innovative. Everyone knows Bitcoin, but there’s more than Bitcoin. It’s interesting to say that now because there was a time relatively recently when everyone didn’t know Bitcoin. So that’s part one. I think part two is the Altcoin space and that happened in 2017. And now part three, we’ve seen the evolution of some really interesting layers on top of these protocols and also an evolution of the protocols themselves. So something that Kraken’s really excited about, I’m excited about, I’m proud of what Kraken’s done with this, is the staking space. So for example, proof of stake networks, they allow people to become participant to the distributed consensus at the protocol level become a minor, so to speak, of the tokens, but to do so without setting up machines and running big warehouses full of CPUs, all those photos you see in China.

Jonathan Miller:
So proof of stake is an alternative to that proof of work and you can stake your coins into these proof of state networks via Kraken. That’s a really exciting, I think, evolution in the… Do you call it cloud mining? I don’t think so. It’s more decentralized participation through trusted third parties like Kraken. We administer people into these spaces and allow people to become a validator through us so they can stake their tokens and get rewarded for doing so, for voting really, on the block. So that’s a complex idea [crosstalk 00:06:37]

Nick Abrahams:
Can we [crosstalk 00:06:37] leave that complex idea? We might try to unpack that a little bit because probably some folks might not quite get the sense of proof of work and proof of stake and so forth. So maybe could you just explain briefly the proof of work concept and how proof of stake seeks to redress perhaps some of the issues associated with proof of work?

Jonathan Miller:
Yeah. So proof of work is a quite a fascinating mechanism. It’s a real innovation. It’s what made Bitcoin work. It’s a deployment some game theory into real world. And what is happening is, when you participate in the Bitcoin network as a minor, as a validator of transactions, you have to prove that you are a good actor by fulfilling a race condition. Now, what does that mean? It means you get a computer and you run a program and that program is the Bitcoin software, which is open source. And as part of that software, you solve a puzzle and the puzzle enforces the use of CPU time. So real hard electrons, I guess hard’s not the right word for electrons, but there are hard costs involved, that’s for sure. Power costs, the electricity costs to run those CPUs, to run the cooling of those CPUs, the build costs of the machines; all of the costs associated with running this puzzle.

Jonathan Miller:
So what that means is that the players that are participating in the network as validators have a sunk cost and a variable cost associated with that participation. There is actually a disincentive to be a bad actor as a result. So that’s a really cool mechanism. It’s got critics though because it consumes a lot of power, but that’s the genesis of it; it essentially means that if you are a validator, you have something to lose by being a validator because you’ve put cost on the line. You’ve got stake in the game, so to speak. Now, when you abstract that away then, and this was quite cleverly abstracted by some of the core developers in the Ethereum community and I remember seeing them speak some time ago on this, if you abstract that away and you think about it from that [inaudible 00:08:54] theoretical level, what is the difference between having stake, having something on the line?

Jonathan Miller:
Because remember, if you put out a ledger that’s wrong and you’ve spent all that money, you get no reward. So you have an opportunity cost. The same could be said for just putting tokens into a lockbox. That’s what proof of stake is. Instead of buying the computers, running these network operators in warehouses, you do it digitally. You put some skin in the game and you have something to lose by putting these tokens into a box. And if you, as a network validator, say that the network is one way where it actually is the other, when you don’t come to consensus over who’s got crypto, for example, if I said, “No, no, it’s all mine,” I would lose what I put on the line. So really, it’s just an alternative way of enforcing the same disincentive for bad actors on the network. I hope that gives you an idea of what the difference is between those two networks. One is power, one is value; a locked value.

Nick Abrahams:
It’s a hard asset that you’re putting up. And I think time and time again with crypto, the thing that brings me back to it that I feel like why it’s going to be part of the future, is it’s just the elegance of the solution. I mean, the original blockchain architecture was remarkable, that decentralized approach, and the way it validates and so forth. Similarly with proof of stake. So can you just talk a little bit about to… How does that work if someone is staking through Kraken… So what’s actually happening… So they put that crypto with you for staking. What’s the deal for them? What do they get?

Jonathan Miller:
Sure. What happens is, as a validator, if you were a Bitcoin miner, you would get Bitcoin and you would get that because the blockchain, as it’s produced, releases new coins over time, and also you get transaction fees from the network. So as people are using crypto, they’re spending fees to send from A to B./ If they’re using something like Ethereum, they’re spending from A to B, but also they’re spending to get the contract or the program that they’ve written that exists on the blockchain running. So there are fees associated with these networks, and as a validator you collect those fees. So there’s a reward for participating in these things. With the staking protocols, proof of protocols, you get those same rewards for being a validator, and what we’re doing at cracking is really interesting is we’re administering people onto these platforms.

Jonathan Miller:
So by that I mean helping them lock their funds up into the protocol. So there’s a technical role we’re playing, but the protocol level is the part that’s doing all the work. So this is very different to, say, for example, taking someone’s money and saying that you’re going to do something with it and give them a return. This his is not what that’s about. This is about plugging people into the native protocols of these proof of state networks and letting them become a validator without having to learn all those technical skills themselves. So that to me is an innovative step because there are barriers to entry when it comes to mining, and we’re trying to reduce those. And that’s really part of one of the themes of this business. And then you can go broader than that, and maybe we want to talk about this stuff, but the next evolution beyond that, that’s an example of a decentralized network where value is being… Not necessarily traded, but distributed between people almost automatically. There are other versions of that deployment, which are fashionably now known as DeFi or decentralized finance, and that’s another area.

Nick Abrahams:
Great. Just before we get off, because one of the question… I usually always preface these with a warning to people who are listening, but this is not financial advice. Because one of the problems with crypto is the minute you start talking about a lot of people get a bit excited and want to jump in. But in terms of what you are doing with the staking, which is obviously different to staking that we might talk about in DeFi, those staking transactions, is that… Because with Ethereum, we’re talking about Ethereum 2.0, proof of stake and so forth. What sort of applications are currently running the proof of stake solution you’re talking about?

Jonathan Miller:
Sure, absolutely. And I think it’s a good point you raise when it comes to the financial nature of these technologies. There is an interesting problem there because you moment you start talking about these technologies, you’re talking about money, digital money, but I would say, and I would preface everything that I say, with this, which is that these are experimental technologies. So if you are interested in getting involved with them, it’s really important to do your own research and not rely on other people’s points of view. But I’m really happy to talk about this stuff because it’s super interesting. I guess my take on the current state of play for proof of state networks are that they’re still very experimental, but some of those are doing some really interesting things, in particular DOT and Kusama.

Jonathan Miller:
Those two networks are… In a way they’re spinoffs from Ethereum. They’ve had similar core development teams that have been involved and they have similar use cases being designed for smart contracts, so to speak, or programs that run on a blockchain. And one of the protocol level differences that’s quite fascinating is the way that they manage token issuance. So one of the things that Ethereum does really well is produce other tokens. You might have heard of ERC-20 tokens, but these are the tokens that were used during ICOs. These are the tokens that are used to represent a lot of things, including NFTs, which you could talk about as well, but DOT and Kusama have a different model for issuing tokens on their network. Because one of the things about Ethereum is that it’s quite popular and it’s almost overloaded by the token use case.

Jonathan Miller:
What DOT and Kusama have developed is what they call a parachain approach. It’s a snazzy word, but what it means is that there’s a limited number of other tokens available for you to mint or produce on their network, and the way that they choose which people to create these other tokens you is via auction. So they create a another race, and they love races. They love marketplace. It’s one big neoliberal marketplace romp, the crypto world, but it’s great. It’s really fascinating, and super interesting. So the parachain mechanism is essentially an auction, and the auction winner slot, they’re allowed to then create their own token on that network. And what the auction requires is people to stake their coins. For example, if it’s the DOT network, and they haven’t gone live with that yet, by the way. Kusama has.

Jonathan Miller:
So Kusama, you stake your Kasam into the project that you… You back the project that you think is interesting, and those coins get locked into the network. And if that project is the winner in the auction, and this is all just… There’s no humans counting this, this is all programmatic. If that project is the winner based on the auction conditions, then the participants will receive their stake back, but they’ll get the reward of the coins that the project have produced. So that’s an interesting project and idea because it solves for a couple of things, and one of those is the scalability issue, because it limits, in way, the number of possible projects. Now is that the ultimate solution? Probably not. But it’s just a good example of how you can use decentralized systems to solve problems. There’s a bunch of other de decentralized tokens out there, but only a handful of them are really actively using proof of stake at this point, so I think there’s probably six or seven that we support on our platform for staking.

Nick Abrahams:
And just the final question on proof of steak, just because I think it’s important, is can we think of proof of stake as solving the proof of work energy consumption conundrum? Because Bitcoin, I mean, I assume you can’t reverse engineer Bitcoin, it’s going to be proof of work forever, is it? Does proof of stake solve our issue?

Jonathan Miller:
Its pitch does that, and there are critics on either side, that people that think that proof of stake will lead to more centralization. The question is to whether it’s more efficient or not. It definitely uses less power because it doesn’t require that proof of work, that race condition, the CPU cycles. So it exists in a lighter sense from a consumption point of view. But the goal and the intention behind these problems, or the puzzle in the proof of work design is to ensure that the networks are strong. So there is the potential that that proof of state networks could become too centralized, and therefore you might lose the resilience that you get from proof of work. That being said, because the proof of work protocol has been so industrialized, there’s only a limited number of players that can participate there as well.

Jonathan Miller:
I think that it’s a head to head argument and you can solve the consumption problems, the dirty consumption problem, that is, by plugging crypto into renewable energy. In fact, it’s the cheapest way to do it. And with China exiting the space, or enforcing the exit of the space for miners, you’re going to see more and more renewable energy mining coming online, because that’s the cheapest for energy outside of China. So yeah, it’s not a pure solve, because it’s still experimental, so people are yet to see proof of state networks, I guess, in full action. So they’re on the battlefield, but they haven’t been hardened like Bitcoin has. So I think proof of work is a really powerful and important part of blockchain at the moment.

Nick Abrahams:
Brilliant. Brilliant. So you mentioned it just before, decentralized finance, obviously pretty hot topic around the place. What’s your view on DFI? How does Kraken fit into the DeFi world?

Jonathan Miller:
Sure. So DeFi, decentralized finance, in a way Kraken is a centralized… We’re a centralized exchange. We’re a fully audited reserved exchange, and in that sense, we’re old school. Decentralized finance though, there are lots of different types of distributed consensus networks, and you can build platforms on top of them. And in Ethereum, there have been some builds of decentralized exchanges, but also more specific use cases, like for example, decentralized lending markets. So I think it’s a great example of what DeFi is, because most people know what lending is. And lending is a pretty cumbersome process, in the real world, there’s counterparty risk, it’s complicated, relying on traditional assets, and custodians, and attestations from third-parties, certificates of currency, legacy systems, to get a handle on people’s asset base, upon which you will then lend them. That’s quite an intensive process, and a costly one.

Jonathan Miller:
Whereas, lending based on someone’s kind of native crypto assets, which are verifiable on blockchains, for example, the Ethereum blockchain, or even the Bitcoin blockchain, you can see, and you can lock up these coins on the network, you can say, “These are there.” It kind of makes credit risk, in this certain sense, much easier to assess. It’s limited to people who already have those assets, but that might change over time as we see more and more tokenization of assets. But the point is, the blockchains, especially ones built on the current status quo blockchain for these kinds of things, which is Ethereum, it’s indulged in a system, so you can see the assets, you can lend into them, you can lend to that counterparty using a crypto asset, but perhaps it’s a stable coin, so something that’s not as fluctuant in value. And you can do that, and you can manage the interest rates, the liquidations of the collateral, you can kind of deal with the clearing and the settlement of this lending action online, programmatically.

Jonathan Miller:
So that’s why people get kind of interested, because, “Whoa, you can do that?” And there’s a lot of caveats there, as I mentioned, it’s limited to people dealing in that [inaudible 00:22:19] space, with those types of assets, but it is a really interesting development in the crypto world. And then there are other markets, so for example, there’s an Australian project, well, by Australian I mean one of the founders was Australian called Synthetix, which is a derivatives platform built on the blockchain, where the kind of… Well, firstly, the exchange itself is decentralized, the counterparties come and interact in a decentralized exchange, but the derivatives, the way the derivatives attract are on the blockchain, and they are kind of tokenized versions of the real world, supported by participants who essentially kind of support them with other digital assets underneath.

Jonathan Miller:
So you create liquidity on these networks, but with counterparties, that could be anywhere. It’s a really fascinating project that evolved out of stable coins actually. It’s an abstraction in a sense from a stable coin, because a stable coin, in a matter of speaking, is just an asset based on the value of another asset. So it’s a really interesting project, and the reason I bring it up is because there are people experimenting with all the kinds of platforms that exist today in kind of a centralized space, people are experimenting with those in a decentralized way. And I think that the DeFi spaces is, if anything, kind of one of the more explosively disruptive parts of the crypto world.

Nick Abrahams:
Okay. Well, everyone, welcome back. This was such a great, great interview that we decided to do it in two parts. And so welcome back, Jonathon. Just what I’d love to talk to you about now is really, how does DeFi impact traditional banking? And I had the opportunity to speak to the head of digital banking at one of the big global banks, and that person’s view was that DeFi was certainly interesting, and they are monitoring it quite clearly in a lot of detail. But their view was that they’ve been around for 200 plus years, and they are going to see where the opportunities for DeFi are for them, and ultimately will participate in DeFi where it makes sense for them, and so didn’t really see it as the end of banks as such. So how do you feel? What’s the intersection there between DeFi and the traditional banking system?

Jonathan Miller:
I’m not surprised that this entity has been looking at it, because banks follow the money. If you think about what is happening in the decentralized finance space at the moment, one of the functions is liquidity pooling, and banks have liquidity, so if they can get a return on their investment in one arena, they’ll go there. And so I don’t see why this is any different to other markets in that respect. Where it does become interesting though, is when it starts to who potentially disrupt other parts of the model. So as far as banks are deployers of capital, no, I think this is just another arena, I fully agree that it’s not necessarily disruptive in that sense. It might disrupt the way go about doing it, but as far as the function of leveraging capital reserves, and finding a return, that’s normal, that’s business as usual.

Jonathan Miller:
Where it becomes interesting, and potentially disruptive, is on the other side, so the people who are making use of their funds. At this point in the DeFi space, there’s a lot of trading, and a lot of the liquidity is there to provide trading liquidity in decentralized exchanges, and building other products on top of that, for example, decentralized derivative products, which are backed by these liquidity pools, and the liquidity pools are decentralized, so instead of having a derivative that requires a custodian to sit on all these funds, you can have a kind of programmatic view on that. A stable coin is that kind of thing as well, so there’s decentralized stable coins.

Jonathan Miller:
So those kind of use cases aren’t necessarily threatening, a little bit perhaps threatening to international flows. But then you have lending markets, so there are ways you can borrow money against digital collaterals, so you might have crypto in some form that might be say, Ethereum, and you might not want to sell that, but you might want to borrow against it, well, you could do that, but the people you’re borrowing from, the counterparty that is going to lend to you is actually a whole pool of people. And those counterparties might indeed be banks, but they could be anyone. So these decentralized marketplaces for liquidity do indeed, I think, come head-to-head with some of the other business models that banks, or I think, have dominated for some time. So I do see that as a potential disruptor.

Jonathan Miller:
The gap at the moment is that, in order to play in the arena, you need the crypto to begin with. So there’s a bit of an air-gap between the crypto world, crypto assets, and other assets that you might want to borrow against. So it’s very hard to borrow against your house in a decentralized finance platform, because the house is air-gapped from the crypto world. But there are people thinking about how you can bridge assets in and represent them digitally in a way that is enforceable. And I think property, there’s a long road before we get there, but there are lots of people thinking about how you can do that with other assets, how you can secure assets into custody, have them represented digitally, and then participate in marketplaces that are global and decentralized. And that’s why you’re seeing so much investment going into decentralized finance, because they can see the potential.

Nick Abrahams:
I agree, that concept of the tokenization of physical assets, and particularly assets that traditionally we’ve seen as been quite difficult to securitize, because it says if you want to do a securitization, generally speaking, it’s quite a big proposition, and you need a lot of people involved, and investment banks, and so forth. Whereas, we’ve been talking to folks about securitizing pieces of plant and equipment recently, big pieces of plant and equipment, but using tokens to do that, and of course, because it’s decentralized, your transaction costs are much lower. So I think it’s a lot of interesting things ahead on that front.

Jonathan Miller:
Yeah, at worst, it’s a marginal efficiency gain, but at best it completely upends the existing models.

Nick Abrahams:
Yeah, yeah, no, interesting times. Just changing tech slightly, so Australia’s got some good crypto businesses, and yours of course, was one of them, and Kraken and saw the opportunity there. How do you see Australia performing in, I guess the war for talent, it’s very difficult to get quality programmers who understand this stuff, particularly in the NFT space and so forth. How do you see that rolling out for Australia? Will we have a seat at the table, or will we be left behind?

Jonathan Miller:
I think Australia is an interesting place. I think the recent turn of events with us becoming more isolated is potentially, and has an impact, because we’ve attracted talent. Australia has attracted talent, because of lifestyle, and so we’ve got a lot of inbound talent to Australia. Businesses here can rely on that talent, and there’s some amazing, in the crypto space, some really interesting projects. I think I mentioned some already, even when I was talking about decentralized derivatives platforms, one of those happens to be… Well, kind of, I guess, seeded by and kind of managed by an Australian, so there’s a lot of talent here.

Jonathan Miller:
In terms of the idea, I guess, the limits to that, and I think this is true for any startup in Australia, is access to capital, to venture capital. That’s got a lot better, even when we started out, venture capital, in our particular industry was… Australia lagged, I think, relative to the U.S., so most of the big crypto… For example, Kraken. Well funded early. People take risks, right? Crypto, I think taking risks in Australia is happening now. Absolutely, so I’m not going to go out there and say people aren’t taking risks and there’s been an amazing amount of capital flowing into really interesting projects, but I think we were behind in terms of that. We generally have a smaller pool of capital available to startups in this market, so that’s why people go overseas, I think still.

Jonathan Miller:
In terms of the talent that’s available in Australia now, I mean, Kraken’s got a whole bunch of Australians behind the scenes working in its business, and some of them are doing some really important things for the platform. They’re in kind of important innovative roles, and so I think, globally, we’re recognized as having well educated and capable people, full stop. That goes all the way down to crypto engineers. I just look at the scene here and I’m pretty excited at what’s happening here.

Jonathan Miller:
The question is, can you scale as fast as others, and that then is the capital question? I think that’s where we need to do better.

Nick Abrahams:
Just finally, is there anything else that Australian needs to be doing to set the right levers for us to be successful in the crypto and the DeFi world?

Jonathan Miller:
I think so. Yes. Look, it’s slightly less sexy area to talk about, but the regulatory constraints in Australia are definitely visible, and some of that’s because of gray area. There’s a little bit of gray area, and some of that’s because of… I mean, there’s been a recent call for a restructuring of our regulatory bodies into a more kind of harmonized shape. Perhaps that’s a good thing. As long as however that new structure that is deployed is done in a way… It does so in a way that allows innovation, because the problem is we’ve dealt with it.

Jonathan Miller:
Prior to working at Kraken we did a fair bit of consulting for startups and people get scared. They get scared that they’re going to get in trouble in the future, and that was true for a couple of projects we worked on, and rightly so, because I think that sometimes we can bring in a regulator that has been a relatively conservative, but in the end, generally speaking, it’s hard to argue with consumer protection. We’ve got to strike a balance. We’re not calling here for a free-for-all, but I do think that any future regulatory changes, especially in the crypto space, should keep the space open, as open as possible.

Jonathan Miller:
There’s a lot of competition in the market at the moment. That’s a good thing. That’s fantastic. People who are building these decentralized finance models, if they suddenly have to become a bank to do that, I think we’re going to miss out, and the consumer will miss out on the upsides of innovation. It’s a careful balance that we have to strike, and the last thing I want to see is the kind of thing that’s happened in other markets.

Jonathan Miller:
We actually have a markets license in Japan, so Kraken holds a Tier 1 market license in Japan, but from my point of view, as an outsider, even though I’m part of this organization, it’s an onerous requirement. They had a catastrophic kind of first mover issue there with Mt. Gox losing a lot of money for a lot of different people, and so that was the reaction, and I can see why that has happened. However, I think if Australia went down that road, we would just see a complete and utter stifling of innovation in this space here. I think that’s been true of some other markets.

Jonathan Miller:
Even the U.S. has struggled a little bit with this, with the different regulatory zones from state to state has caused a lot of issue. Kraken has had to kind of weave its way through that. I think there’s a case for some clarity in general, around some of the things that… The financial services legislation doesn’t really understand crypto yet, so there’s definitely a case of clarity, but I don’t think we need to go heavy handed in licenses, because that’s one thing. That’s the kind of boring thing. In the sexy thing, I think is about culture change when it comes to risk taking from an investment point of view, and that, that’s a bigger question, because I think a lot of the culture in Australia around investment from where, I guess, the biggest sources of capital. They’ve had the luxury of property and that luxury continues today, but that’s a rational choice.

Jonathan Miller:
At the moment, the choice for capital is to look at returns, and look at quality and the risk associated with those returns. At the moment, you can look at the property market and you can compare that to investing in a startup. I think nine times out of 10, or maybe it’s 99 times out of a hundred, someone’s going to invest over there instead of here, so I think there’s a cultural issue. Some of that’s structural, some of that’s just legacy, so we need to get more… We need to take more risks, I think, as a class. It’d be nice to see more steps like the one that Reinventure took. More direct investment in some of these types of businesses, especially crypto businesses, because if you don’t get into these, then it’ll happen somewhere else. It just will.

Nick Abrahams:
Yeah. No, it’s a great. It’s a great point. The bit about property, it reminds me, I was speaking to a U.S. venture capitalist, I asked him the question, “Why is it that the U.S. has so many serial entrepreneurs and Australia doesn’t have a lot of serial entrepreneurs?” He said, “Well, the reason for that is actually three reasons, and that’s Byron Bay, Byron Bay, and Byron Bay.” He said, “The basic Aussie entrepreneur, when they make $50 million they head up to Byron Bay, they buy a bunch of properties, and it’s a great life.” That’s less relevant now. It was a few years ago that he said it, but it’s so true when you look at property returns on a relatively risk free basis compared to startups.

Jonathan Miller:
Yeah, but look, we’re seeing people buck the trend. Mike Cannon-Brookes-

Nick Abrahams:
Amazing.

Jonathan Miller:
… is doing a lot of really kind of groundbreaking stuff and he’s taking risks, big time risks, and we want to see more of that. I think he’s a great example of what the next generation of a successful startup kind of entrepreneurs exited on… Or he’s not exited, he’s still in, but he’s in a position to leverage his assets and deploy them into new ventures. We need more people like that.

Nick Abrahams:
I agree. It’s fantastic. Just on that regulatory point of view, I think, one of the things that… and obviously the Australian government has a review going on in relation to regulation of crypto, et cetera. But I think what’s really got to be top of mind is, this is a real risk issue for sovereigns, because they could completely lose control of their fiscal capabilities if they lose control of financial services market, which could potentially, if it goes all offline. I think there has to be that balance struck, as you say. It’ll be very interesting times.

Nick Abrahams:
Look, Jonathan, thank you very much. This has been a two parter, but really appreciate your time. Thank you for joining us. Best wishes with Kraken. I know it’s going fantastically and just the recent surge in crypto has been wonderful to watch, and we’ll continue to watch you and check in with you in a year or so’s time, and see how things are going.

Jonathan Miller:
Thanks for having me and yeah, absolutely happy to talk to you about anything crypto related in the future. It was great.

Nick Abrahams:
Fantastic. Thanks Jonathan.

Jonathan Miller:
Cheers. Bye.