HNS, Namebase & A Censorship-Resistant Internet w/ Tieshun Roquerre

This post was last updated on April 23rd, 2020 at 07:24 pm

Handshake Network, Namebase & A Censorship-Resistant Internet w/ Tieshun Roquerre

Subscribe: iTunes | Stitcher | Google Play | Overcast

Quotes

"When I came across @HNS, it was eye-opening because it has a chance of making the internet more secure, censorship-resistant, seizure-resistant. It just makes the infrastructure better for everyone." ~@TieshunR, CEO @NamebaseHQ Click To Tweet "The core innovation of @HNS is its improvement upon the security of the internet in a step-function way. It's literally 10x better. That's what gave us conviction about Handshake." ~@TieshunR, CEO @NamebaseHQ Click To Tweet "We created @NamebaseHQ so that anyone can buy @HNS, use that HNS to register their Handshake TLDs & use those TLDs in one smooth experience. And that would enable mass adoption for Handshake." ~@TieshunR, Namebase CEO Click To Tweet

Table Of Contents

Quotes
Description
Topics Discussed In These Episodes
Links Relevant To These Episodes
Part 1 Transcript
Part 2 Transcript

Description

Welcome to this two-part conversation with Tieshun Roquerre, co-founder and CEO of Namebase, an exchange and registrar for Handshake (HNS) domain names. Handshake domains can be used for websites, apps, or crypto wallet addresses. Namebase facilitates their auction and registration on blockchain, where they are resistant to censorship and other forms of tampering.

The conversation is split into 5 chapters:

Chapter 1: The origins of Handshake and Namebase
Chapter 2: Handshake’s ecosystem, its relationship with Namebase, and differences with other protocols
Chapter 3: Handshake from an investor’s perspective
Chapter 4: How to acquire a Handshake domain
Chapter 5: Namebase’s future

Part 1 covers Chapters 1 & 2. Part 2 covers Chapters 3, 4 & 5.

Topics Discussed In These Episodes

Tieshun’s career before Namebase & why he co-founded the company
Handshake’s origin story
How Handshake provides a step-function improvement in internet security
The Handshake ecosystem & blockchain
How resolvers work
The relationship between top-level domains (TLDs) and second-level domains
How TLDs make money
How Namebase makes money (now and in the future)
The importance of backward compatibility
Differences between Handshake, Ethereum Name Service & others
The deflationary effect of burning HNS spent on domains
How HNS is like an index fund & buying domains is like picking stocks
The difference between speculating on domain names & buying Beanie Babies
What happens if no one wants Handshake second-level domains
How a registrar like GoDaddy could offer Handshake subdomains
How Handshake enables full-stack decentralized applications
The domain renewal process
How to buy a Handshake domain
Surprising strategies that bidders have employed to win name auctions
Why Namebase surfaces mempool information
How lockups work: the bid & the blind
What’s next for Namebase

Part 1 Transcript

Clay: Welcome to Flippening, the first and original podcast for full-time, professional, and institutional crypto investors. I’m your host, Clay Collins. Each week, we discuss the cryptocurrency economy, new investment strategies for maximizing returns, and stories from the frontlines of financial disruption. Go to flippening.com to join our newsletter for cryptocurrency investors and find out just why this podcast is called Flippening.

Clay Collins is the CEO of Nomics. All opinions expressed by Clay and podcast guests are solely their own opinion and do not reflect the opinion of Nomics or any other company. [00:00:30] This podcast is for informational and entertainment purposes only and should not be relied upon as the basis for investment decisions.

Clay: Welcome to part one of this two-part conversation with Tieshun Roquerre, founder and CEO of Namebase, an exchange and registrar for Handshake domain names.

Handshake is a blockchain-based protocol that enables the decentralized ownership of top-level domains or TLDs. Examples of top-level domains are .com and .org.

These domains can be used for websites, [00:01:00] apps, or crypto wallet addresses. Anyone with HNS, the native Handshake token, can bid on names. Tieshun’s company, Namebase, facilitates the auctions among other things.

Our conversation is broken up into five chapters. In chapter one, we discuss the origins of Handshake and Namebase. Chapter two is an overview of the Handshake ecosystem, its relationship with Namebase, and [00:01:30] differences with other protocols. For Chapter Three, we look at Handshake and HNS from an investor’s perspective. Chapter four is a how-to guide for acquiring a Handshake top-level domain. Finally, in chapter five, we consider Namebase’s and Handshake’s future.

In this episode, we’ll cover chapters one and two. In part two we’ll cover chapters three, four, and five. Please note that the transcript and show notes for this episode are [00:02:00] available at flippening.com/namebase.

We’ll get to you this episode in just a second. Before we get started, I’d like to pause for a moment to tell you that this episode is brought to you by the good folks at CryptoTrader.tax.

Here’s four things you should know about them. Number one, CryptoTrader.Tax automates the entire crypto tax reporting process and has partnered with the TurboTax team to bring cryptocurrency tax reporting to the mainstream. Number two, CryptoTrader.Tax offers a complete Tax Loss Harvesting module to help investors figure out their greatest tax savings opportunities to reduce their taxable income. Number [00:02:30] three, CryptoTrader.Tax supports all FIAT currencies, meaning users from all over the world can use the platform to calculate their gains and losses in their home FIAT currency. Finally, number four, CryptoTrader.Tax offers a suite for Tax Professionals to help manage their cryptocurrency clients.

While I’m not a CPA and I’m not qualified to provide tax advice, I should note that I personally advise my family to never just hand over their exchange history to a CPA. Instead, I encourage them to let CryptoTrader.Tax analyze their trade histories, find the tax calculation method that’s best optimized to save them money, and then submit summary documents to their accountant. This [00:03:00] saves you from having to pay your accountant to do the tedious work of generating form 8949 and other similar forms.

Creating an account and importing your historical data is completely free! You only pay when you want to download your tax report for the year. Just tell them that Clay from the Flippening Podcast sent you to get a discount on your tax reports. Go to CryptoTrader.tax today and sign up. Again, let them know that Clay from the Flippening Podcast sent you so that they know that these ads are working.

This episode is also brought to you by the good folks at Nexo.io. Here’s a word from them. Nexo is the only lender offering instant crypto credit lines, [00:03:30] which let you use digital assets as collateral to get cash in 45 fiat currencies and stable coins.

You might remember Nexo from Episode 64 where we spoke with their co-founder, Antoni Trenchev. If you haven’t heard it, I highly recommend checking it out, as it’s one of our most popular episodes to date.

Nexo has a big announcement related to credit lines. Their annual interest rates for credit lines are now starting at just 5.9%, which may very well be the lowest borrowing rate [00:04:00] in the entire industry.

Nexo is also a strategic partner of exchanges, OTC desks, and crypto funds through its portfolio of structured financial products. Institutional counterparties can earn up to 8% annually on their idle stable coins, enter into asset swap agreements, or directly borrow crypto.

Individuals can also park their cash and stable coins at Nexo’s Interest-Earning account to get an annual return of 8%. What’s more, interest is paid out daily and you can add or withdraw funds at literally any time. [00:04:30] If you are looking to borrow, lend, or swap digital assets, Nexo is your go-to partner. Definitely explore nexo.io. If you’re an institution, reach out to them at institutions@nexo.io

Finally, this episode is also brought to you by the Nomics API and CSV Data Export Service.

If you need an enterprise-grade crypto market data API for your fund, smart contract, or app, or if you need historical CSV dumps of trading data or crypto market cap data from top exchanges—or even obscure ones—then consider trying out the Nomics API or our historical data export service. Our cryptocurrency [00:05:00] API enables programmatic access to clean, normalized, and gapless primary source trade data across a number of cryptocurrency exchanges. Instead of having to integrate with multiple exchange APIs of varying quality, you can get everything through one screaming fast fire hose. If you’d like to order historical cryptocurrency market data as CSV exports from top exchanges, then email us at sales@nomics.com.

Okay, back to [00:05:30] our regularly scheduled program. Here’s part one of my conversation with Tieshun Roquerre, CEO of Namebase. Enjoy.

Clay: Let’s begin with chapter one. We want to hear how Handshake and Namebase got started, but first, what’s your background? How did you get into crypto? What were you working [00:06:00] on before crypto?

Tieshun: Before Namebase, I was studying math and computer science at MIT. I think it’s probably a better perspective to just share what I did before then. I was originally working out in Silicon Valley when I was at a company called Teespring. They sold tee shirts, which sounds really boring, but when I was there, they were selling a million dollars’ worth of tee shirts every day. Half the people in the U.S. bought a Teespring tee shirt at some point or something. It’s some ridiculous number. I was working there full time when I was. I moved from Boston. [00:06:30] After a year there, I left to start my own company called StrongIntro.

We were a recruiting startup. We helped tech companies for their engineering team through employee referrals. We ended up going through Y Combinator, which is a startup accelerator. They funded Reddit, Stripe, Airbnb, and a bunch of other companies. We ended up going through them. I did that for a year before going to MIT. That’s my history of the past five, six years in a nutshell.

Clay: Very cool, did you finish at MIT or did you drop out to do something, to start a startup?

Tieshun: Yeah. Actually, I dropped out. [00:07:00] I left high school after two years and then I left MIT after two years. So, I have this two-year cadence with school. I think that’s probably the max that I can do at a time. I was fortunate enough to get the Thiel fellowship when I left MIT. Peter Thiel has this fund where he basically just gives people money when they drop out. I don’t fully get why, but they do it. I was able to do that, which is very fortunate.

Clay: Lust briefly, what happened with [00:07:30] StrongIntro?

Tieshun: We were building a recruiting startup. We basically found that every tech company in Silicon Valley is struggling to hire engineers. Every company wants to hire engineers. They have a really hard time doing it. One of the best ways to actually build a team is through employee referrals. Stripe is a $40 billion company. They’re probably one of the best tech companies in Silicon Valley. They are famous [00:08:00] for recruiting referrals, 90 of their first 100 employees came through referrals. We realized that most tech companies are really bad at this. We basically built software to help automate it. What we found after a year was that it’s actually really hard to automate recruiting. You can automate some of the sourcing aspects. There are companies that do that.

The thing that you want to do is you want to actually make sure that the company is able to hire those engineers. That just takes [00:08:30] a lot of manual labor. You need a lot of face time with people. It’s building relationships. It’s not something that you can automate. After doing that for a year, we realized, “Okay, this is not a business that is going to scale on the way that a tech company scales and probably can’t make the impact that we want to make.” So that’s when I left to go and attend MIT. My family is from Boston, I just wanted to be closer to home because I had left home at an earlier age.

Clay: I have a similar story. I left home when I was 15 to start a software company. It’s been a fun journey. [00:09:00] When you left MIT, was that because of a specific opportunity? Or more just knew that was the max you would do and then you worked with the Thiel fellowship?

Tieshun: Yeah, that was actually specifically to start Namebase. I can share a little bit more about that and what made me excited. Before Namebase, I actually wasn’t super involved with crypto. I had always known about it. Of course, anytime you’re in SF during that time period, 2017, everyone’s around lunch talking about the prices and all that. It wasn’t something that I was super invested in. [00:09:30] The reason I got excited about Namebase was specifically because of Handshake.

One of the first few semesters that I was at MIT, I had the opportunity to go to Turkey, which is a beautiful country. I love it actually. One of my roommates in SF was Turkish, which is why I got to travel with him. It was an amazing experience because I had this realization when I was in Turkey. I tried to visit a pretty common website. I forget which one, but it was Twitter or Facebook or Google or something that. Maybe it was Wikipedia at the time. I was trying to visit it and I couldn’t. You get this blue [00:10:00] screen. This website was seized by the Turkish government or whatever.

That was eye-opening to me because in the U.S. for now at least, it’s still pretty easy to get access to any website that you want on the internet. We have really strong freedom of speech laws and that’s a core tenant of this country. It’s not something that I was ever exposed to. When I was in Turkey, I realized these people don’t have access to these basic websites. That’s really [00:10:30] critical because for me, I started learning how to program on YouTube. Without that resource, I never would have gotten anywhere close to where I have been able to get. Figuring out that all these people in this country don’t have access to a resource that was really shocking.

To be honest, I didn’t do anything then. I just continued my trip because the thinking was “I’m a single person. Going back to the U.S., [00:11:00] this isn’t a problem that would affect me.” I didn’t really want to deal with it. To be honest, I didn’t do anything about it. I went back to school. It sat with me and it didn’t really feel right. I just left it at that. What happened over the next two years was basically you started to see a lot more stuff happen on the internet that’s very concerning, to put it abruptly. There are countries, Spain. They censored the Catalonian government’s .cat TLD.

When they were trying to hold a referendum for independence, they were basically censoring a bunch of those websites. There’s a lot of stuff that’s been happening in the last few years around Iran, where they censored Facebook, Twitter, [00:11:30] etcetera, before shutting off the internet. India is censoring a lot of areas with the internet right now because there’s this Citizenship Amendment Act. That is basically making it very difficult for Muslims living in India to gain the same rights as others. Obviously, all the stuff that China is doing.

What I saw over the next two years was that the internet is getting [00:12:00] worse and worse over time. When I came across Handshake, I was like, “Oh my God. This technology actually has the potential to fix at least a certain segment of the internet infrastructure.” That made me really excited. I saw that there was potential here. Again, I wasn’t really super into crypto before, but after seeing Handshake and saw it coming from a developer background where you have a sense of how DNS works, it was an [00:12:30] immediately clear use case. I saw the potential there. That made me really excited about it. That’s why I left MIT to start Namebase to support Handshake.

Clay: How did you come to learn about Handshake?

Tieshun: They had just announced their public test night. It was August 2018, I think. We were looking at some ideas. It was actually Eric Meltzer on Twitter, who was like, “You guys should check out this [00:13:00] project because it’s really cool.” When we read it, we basically just became super excited. That’s when we wanted to build Namebase because Handshake, the protocol, while it creates primitives for building a more secure domain name system, in terms of actually using, it’s hard. You have to go into the CLI, have to submit a lot of different transactions and whatnot. It’s very technical.

DNS is something that needs to be not technical to use because it’s something that literally every user on the internet everyday uses. Every time you enter in a URL and hit enter, you’re using the Domain Name System. So, it affects everyone. It needs to be something [00:13:30] approachable. That’s when we were thinking, “Okay, we should make an infrastructure that can basically make Handshake very easy to use for the masses. That would also help speed adoption.”

Clay: Were you friends with Eric, or were you just following him from a distance on Twitter at the time?

Tieshun: We were friends because he’s also in Boston. I think he’s actually from SF originally, but we had gotten introduced. Given my background, it was just a good fit to get to know each other.

Clay: Let’s delve into Handshake’s origin story. Can you speak a little bit to the origin of the Handshake Network? Who were some of the [00:14:00] founders or founding team members? I know it’s not officially a team anymore, it’s certainly not a company. Can you speak to how that project came together?

Tieshun: Exactly right there. I’ll caveat this in that there are no official “founders” or creators of the Handshake protocol. Actually, all the original people who were involved at the start—basically across multiple different organizations, companies, and also different individuals—had a little bit of a part to play. [00:14:30] Basically, the inception of the idea came from Andrew Lee from Private Internet Access, which is a very popular privacy-focused VPN per-site IO, which is a crypto-based marketplace. Also, Joseph Poon, who had done some of the architecture for the Lightning Network. I think those are some of the people who had the initial seed of the idea. [00:15:00]

To be honest, the exact timeline of things is not super clear. All I know is that a lot of the developers behind bcoin, which is a Javascript full node for Bitcoin. It’s actually the only JavaScript full node that’s ever mined to block in Bitcoin actually. They created this because it’s just a lot more accessible than another implementation. It basically realized that this DNS block-chain solution would be an incredibly useful, valuable technology for the world. That was the inception of the idea.

From there, [00:15:30] the Handshake Foundation was created which was basically just a legal entity meant to raise the money for Handshake. There’s $10.2 million raised from Andreessen Horowitz, Founders Fund, Sequoia Capital, Greylock. These are the funds that have invested in Facebook, and Pinterest, and Reddit, pretty much all the top tech companies of today. They raised all that money, and then they actually donated all of it away. They give it away to the Free Software Foundation, Ginu, Open Source Projects, Apogee, EFF, etcetera. Literally, the only point of this non-profit was to raise the money, give it away, and [00:16:00] that also to give the point price. The non-profit is effectively dissolving now that the protocol is launched and it’s very decentralized.

Clay: So, they didn’t use any of the money to fund the development of the protocol or cover living expenses or compensate people for their work? It was purely for the purpose of making donations?

Tieshun: Yeah, I thought that was weird too, because at the very least, just make payroll with that. It’s not that much. No, they donated all of it. If you look at the protocol implementation, there was an allocation of the coins for the original project contributors. I think it’s 7.5% [00:16:30] of the Genesis, which works out to about 3-4% of all the coins. It’s actually a very small allocation, but they used that to pay a few of the early contributors and also to shove it to people who are supporters of the crypto ecosystem. I think there were some people who didn’t even do anything with Handshake who got coins. The development of it was all funded separately, not with any of the money that was [00:17:00] raised.

Clay: Got it. The investors who invested obviously weren’t buying equity in the company, were they getting HNS in return?

Tieshun: Yeah, exactly. They got the HNS in return and there’s a lot of them. I think the list is still up somewhere. I’d have to find it. There are 30 or 40 different individuals and institutions involved. No one actually got that much of an allocation. [00:17:30]

Even the big funds of that $10.2 million got a very small allocation, because there’s a certain allocation. Those funds, their business model, they never sell those coins. They just hold onto them forever. It was really interesting how they ended up doing that.

Clay: Let’s move onto Namebase’s origin story. [00:18:00] You were at MIT, you left MIT, probably just because who wants to be at MIT for more than a couple years? You left MIT to start Namebase. At that point, did you move away from Boston to Silicon Valley? Did you physically move at the time?

Tieshun: We pretty much physically moved immediately as soon as my co-founder graduated. So, my co-founder was also studying CS and cybersecurity as well. He graduated a year early. As soon as he was ready that summer, we just moved out to San Francisco to start the company.

Clay: Was [00:18:30] he also a co-founder at StrongIntro? Did you work with him in the past, or did you just become friends through the MIT community?

Tieshun: We had actually become friends through the MIT community. Anthony, my co-founder, he was very involved with the hackathon space. He helped run Hack MIT, which is one of the biggest college hackathons in the world. He had also led a bunch of teams at TechX and had done some UAV work. I had just known him [00:19:00] through the school. We had worked on some projects together and got to know each other through that.

Clay: You guys decide, maybe you’re having conversations over beer, over dinner, or wherever you are. You’re talking about Namebase, then he graduates, you both move to the Valley to start the company. Did anyone else join you at the founding Namebase?

Tieshun: It was [00:19:30] Anthony and I primarily who got started. Fortunately, enough, my sister was also involved. She was at Squarespace at the time. They’re a website editor. You’ve probably seen their ads on Instagram if you use Instagram.

Clay: Wix, Weebly, Squarespace, yup.

Tieshun: Exactly, yeah. She was there too. She was immensely helpful because basically, we’re just two engineers. We’re trying to make this thing that any end-user can use really simply. We need some design help. She was there on day one. She was amazingly helpful. At one point, we needed something designed within a day, and then she came from New York. She drove up from New York to meet with us, and then she helped with the design. She was also there, and she’s contributed a lot.

Clay: Do you have a remote [00:20:00] distributed team or is everyone concentrated there?

Tieshun: Yeah, we’re remote. We’re distributed primarily between New York and SF. I think we’re probably going to have to expand outside the U.S. too now because as we’ve launched, we found that…

I mean we already knew this before, but now it’s truly internalized, crypto is very worldwide. U.S. customers don’t even make up the majority of our customers. We have a lot of people all around the world. That means they’re awake at, at 4:00 AM, at night, at 5:00 AM, at night. That’s when there’s a lot of activity. So that’s contributing to a few [00:20:30] sleepless nights most recently. Hopefully we can hire some engineers maybe in Europe or somewhere else. So that we can have 24-hour coverage.

Clay: I’m sure it’s anxiety-provoking to wake up in the morning and the telegram room has blown up. People are complaining about something and you got to get ahead of the narrative and all that. It’s probably nerve-racking.

Tieshun: Yeah, it’s partly nerve-racking, but also just very exciting. [00:21:00] It’s great to have the problem of people talking about your company, or even complaining about it, because that means that people care about Handshake. It’s really amazing to see the community rally around that.

Clay: It’s kind of given where all of this is heading around the censorship-resistant web. I imagine that at some point, governments could get involved, [00:21:30] state actors, etcetera. So, the logical conclusions of this technology lead you to domicile your company somewhere outside the United States or are you the standard Silicon Valley Bank, Delaware, C Corp, et cetera?

Tieshun: Yeah, we actually are the standard Delaware C Corps. We are based in the U.S. The reason why for that is honestly because we’re in the U.S. and that’s easier to do. Especially if you’re trying to make Handshake easy for end [00:22:00] users to use. We want to make sure that we could allow U.S. customers to use Handshake and buy Handshake with USC and all that. It’s pretty hard to approach a bank and be like, “Hey, I’m domiciled in the Cayman Islands. Come and bank us.” It’s a pretty tricky thing. Being a crypto company and getting banked in the first place is super fucking hard. Doing that, sets a disadvantage.

Also, if you look at what country is most likely to try to attack Handshake after the longest period of time? What country is least likely? The U.S. is the [00:22:30] least likely on that. If you look at where internet censorship happens around the world, pretty much everywhere outside of the U.S. and Canada, it’s really bad. Actually, if you talk to people about this problem, people in the U.S. are like, “Oh yeah, I guess this is a problem.” If you talk to someone from anywhere else, they’re like, “Oh yeah, I get it. This is a thing that literally affects everyone in my family.” Being in the U.S. actually gives us a certain level of protection for that, in enabling that vision.

Clay: At the end of the day, the protocol can’t be stopped. That’s probably where people should be focusing rather than the UX that allows people to [00:23:00] buy and sell HNS domain names.

Tieshun: Yeah, totally. They can shut us down, the protocol moves lives on, right? So that’s the beauty of crypto. That’s also why we have conviction around it. If Namebase shutting down was going to kill Handshake, then they would be like, “Okay, then what’s the point of this?”

Clay: How big is the team right now?

Tieshun: We’re still small. We’re less than 10.

Chapter : Let’s transition now to chapter two, which is [00:23:30] the 20,000-foot view. Let’s talk about your thesis while creating Namebase. When was it apparent to you that this solution needed to exist? When you were pitching investors, what was the case you were making for this type of solution?

Tieshun: I had gotten exposure to this problem, because of my travels abroad. I came back, and it didn’t sit well with me that this was something that was happening with the world. It didn’t really feel there was anything I could do. When I came across Handshake, it was [00:24:00] eye-opening because this technology has a chance. It has a chance of actually making the internet more secure, truly owned by people, private, censorship-resistant, seizure resistant. It just makes this infrastructure ultimately better for everyone.

Once I saw that I was like, “Okay, this is something that’s worth working on. This is something that we should try to make happen because there is a world in which it does succeed.” If we can make that any more likely, then that’s something that’s worth working on. My thesis around Handshake, because that’s really ultimately what it is. First you understand Handshake and its potential, and then it’s interesting to [00:24:30] talk about Namebase. It’s really not interesting to talk about Namebase until Handshake. Handshake was fascinating to me because it solved a problem that as an engineer, I can understand and care about, and can see why it’s valuable.

One of the core reasons why Handshake was created is actually not increasing the namespace or putting names on blockchain or whatever. It’s actually for security. [00:25:00] If you look at handshake.org, it says “Decentralized certificate authority and naming system.” The decentralized certificate authority is something that’s not talked a lot about within the crypto community.

The most important thing for Handshake, which is that Handshake can actually provide a set function improvement in terms of how security on the internet works today. Basically, when you go and enter in any URL on the browser, right? Go to [00:25:30] https.google.com, there’s a difference between http and https. Http is unencrypted, and then https is a secure socket layer. It’s encrypted. That’s a core aspect of internet security, is that a lot of websites now are using https.

The way that that encryption works is it basically delegates authority to this system of trusted third parties called certificate authorities. [00:26:00] They basically help ensure that communication between your browser and the website you’re trying to visit is secure. That intermediaries, even if they can try to see your traffic, they can’t actually spy on it. They can’t actually decrypt it, and you’re safe. That is how the internet works today, but the issue is that the security model actually relies on these certificate authorities to be safe, and they aren’t.

If you look at your computer, there’s a few hundred root certificate authorities that are installed by default on your CA. Each of those certificate authorities, they can delegate trust to [00:26:30] any number of intermediates. Any of those intermediates can end up delegating trust to any more intermediates. What ends up happening is that in order to have a secure browsing experience, you need all of those thousands of third parties to be safe, trustable, and not compromised.

Actually, the case of the internet is that it’s incredibly easy to compromise UCA’s. A lot of them don’t even have that great security. You just need to compromise one certificate authority in order to compromise someone’s traffic. This is just how security on the internet works today. There isn’t really much of a better solution with existing technology than this system. It’s just incredibly [00:27:00] broken.

Where Handshake comes into play is basically shifting the root of trust of this system from the certificate authority-based system, which is one of many failure models—if one CA of many thousand CA’s gets compromised, then your security is compromised—to this blockchain-based solution, where it’s many of many models. Basically, all these distributed nodes are compromised, you need this blockchain to be compromised in order for your security to be compromised. That’s significantly harder than the CA-based system. That is the core [00:27:30] innovation of Handshake. It’s improving upon the security of the internet in a set function way. It’s literally 10x better, and because it is x better, that’s what gave us conviction around Handshake. There have been alternative root zones attempted in the past.

Alternative root zones are basically these alternate naming systems that let you have new TLDs. We have .com, .ao, .net, .org, and people were like, “Oh, let’s just create new ones and we’ll create our own system.” [00:28:00] That’s not enough of value to actually get people to switch. In this case, having better security is something that most people don’t even think about on their day to day, like security engineers and researchers. These are people who ultimately, you need to win them over in order to create this new internet system. This is something that they recognize as valuable.

We’ve had the fortune of being able to speak with a lot of people who are involved in the security of the internet, head of security at Google Cloud. Even Vint Cerf, [00:28:30] the creator, he’s known as the father of the internet. We got to speak with him about this. They recognized the merits which is an amazing conversation to have.

Clay: In terms of Namebase, it does seem there’s precedent for this and non-fungibles. You’re in some sense a traditional exchange. Also, there’s this non-fungible aspect of what you’re doing. In the same way that CryptoKitty portals allow you to sell CryptoKitties, these non-fungible assets, there’s a futile element of what you’re doing [00:29:00] that isn’t about HNS, but it’s about ownership and custody of these individual domain names. In terms of the design of what you’re doing or thinking about how to create an exchange for non-fungible assets, were you able to draw inspiration from other non-fungible exchanges?

Tieshun: I’m really actually happy that you brought up crypto kitties because it was a direct inspiration for Namebase. I heard about CryptoKitties in the past. When I tried to first use it, it was like, “Okay, here’s this cool thing. Let’s see how I can use it.” It was like, “Okay, you’re excited about CryptoKitties. Here are the ten steps that you need to do to use CryptoKitties.”

That is not a good experience. Who wants to do that? That was the experience of CryptoKitties, CryptoKitties, [00:29:30] at the time, was one of the most exciting companies and experiences in the space. They were lauded for how good the user experience and UI was. That was shocking to me, because there’s an incredible friction there. I mean if you’ve built products you just know anytime there’s user friction, you have drop off.

I realized that in order for people to use these Handshake names, that friction cannot exist because you need [00:30:00] people to be able to use them very quickly. The people who most need Handshake names are the people who are probably not technical enough to figure out how to use the protocol on their own, or at the very least figure out how to go through ten different exchanges to go from your local currency to bitcoin to some random sketchy exchange into your HNS, and then to figuring out how to use it, to bid on these names. That’s why we [00:30:30] vertically integrated Namebase, so that any user can come onto Namebase. Buy HNS. Use that HNS to register their Handshake TLDs, and then use those TLDs all in one product, and in one really smooth experience. That would enable mass adoption for Handshake.

Clay: I know there’s exchanges, like you guys there’s. There are miners. There are domain owners and HNS [00:31:00] holders, who else? Who else is involved in this space? What are the first-class citizens of this ecosystem?

Tieshun: Yeah, something that’s amazing to me is the diversity of the participants in this, not only in terms of the people working on the protocol or working on infrastructure for the protocol, but also the end-users. Just to start off with the people working on the protocol or around the protocol, there’s a ready bank community contributed by block explorers. People have made these block explorers. There’s obviously the developer community as a very community-driven project. There’s no official [00:31:30] implementation or official leaders in the space. Even the HSD reference implementation is just that, it’s a reference implementation. It’s written in JavaScript actually. People are already incentivized to make a different client because a lot of people don’t use JavaScript.

You have those developers, and then you also have traditional players. You have miners but also within the domain space, you have people who are going in and building tools on top of domains. You obviously have the [00:32:00] domain owners when they’re just registering these names and using them. There’s also private internet access which is a VPN. They support Handshake as well. You have the traditional speculators and investors. There’s good reason for them to be excited about this. Of course, finally, the end-users, who are actually using these domain names. We should also probably just draw a map of this, just make it really easy to digest.

It’s a really rich ecosystem. [00:32:30] This is one of the reasons why I was personally excited about Handshake. All these different participants are different organizations or individuals or free open-source software developers. None of this is from the “Handshake team” or the original Handshake team. That’s something that was very deliberate.

If you go on to a handshake.org website and you go into the community section, you’ll see that there’s a statement that says, “Everyone is a director of Handshake.” If you see a business card with someone saying they’re the director at Handshake, it’s true, because everyone is, and you can be too. It’s amazing because one of the [00:33:00] mistakes that happen in [inaudible 00:33:01] is you have one team that’s trying to own the entire sect, the entire ecosystem.

Clay: Hey! I wanted to pause for a second to let you know that this episode of the Flippening podcast is brought to you by our longtime and trusted partner, Nexo. As someone who personally uses Nexo, I wanted to point out a few things that I especially like about their crypto-backed loans.

First, when the price of your collateral grows, so does your credit line. Let’s say you borrow against your Bitcoin when each is worth $5,000, but over the course of your loan, the price grows to $10,000 for Bitcoin. This means that the size of your credit line just doubled [00:33:30] as well. I personally haven’t seen anyone else doing this.

A second thing I really about Nexo is that you only pay interest on the amount you borrow. I’ve seen Nexo competitors require you to take out loans and force you to withdraw the entire amount. With Nexo, you get a credit line and can borrow only the funds you need, pay them back whenever you want with interest assessed daily. Again, this just isn’t something I’ve seen other providers do.

The final aspect of Nexo I’d like to highlight is that they give you the ability to borrow against a basket of crypto assets. [00:34:00] For example, if you post BTC, ETH, and BNB as collateral to your Nexo account, the Nexo oracle calculates the real-time market value of those assets and adjusts your credit line accordingly. Again, to my knowledge, other providers in this space only allow you to borrow against one asset per loan.

This episode is also brought to you by CryptoTrader.tax. Without them, we wouldn’t be able to provide this content free of charge. [00:34:30] CryptoTrader.tax makes the excruciating task of reporting your cryptocurrency gains and losses a breeze.

All you have to do is connect your exchanges and import your trade history into the platform. CryptoTrader.Tax will do all of the number-crunching and spit out your auto-filled tax reports with the click of a button. Simply give these generated tax forms to your accountant or even import them into your preferred tax filing software, like TurboTax or TaxAct.

You can join more than 10,000 cryptocurrency investors who are automating their crypto tax reporting with CryptoTrader.Tax today. Creating an account and importing your historical data is completely free! You only pay when you want to download your tax report for the year.

Just tell them that Clay from the Flippening Podcast sent you that lets them know that this advertising is [00:35:30] working, and it also gets you a discount on your tax reports.

Finally, this episode is brought to you by the startup that produces it, Nomics.com

Nomics is a crypto market cap website and aggregator, going head to head with CoinMarketCap. We stand as a transparent alternative to many of the sketchy market cap websites out there. We won’t name names, but I think you know who we’re referring to.

Anyway, if you haven’t been to Nomics.com in a while, I encourage you to visit our website. We offer transparent volume statistics for nearly every cryptocurrency and crypto exchange in the space. I believe we have the only credible crypto exchange index in the space as of the time of this recording.

If you’re sick of scammy ads, bad design, and manipulated data provided by companies whose founders hide from public view, then check us out at Nomics.com. Okay, back to Tieshun.

Tieshun: [00:36:00] People who would potentially be interested in this to come in and build on top of it and actually grow the ecosystem. There’s no potential for that protocol to become a platform. That’s a belief that I hold very strongly. Handshake, in this case, was very deliberate about not having a clear leader so that the community can come forth and step forward. Basically, everyone can go and participate. We’re already seeing that. That’s really [00:36:30] what gives me conviction about Handshake.

Clay: If we break down the participants in this ecosystem, I imagine there’s even more but just the primary players. There are protocol developers. There are token holders. There’s TLD top-level domain owners. There are sub-domain owners. I don’t know if they’re [00:37:00] qualitatively different. There are exchanges. There are resolvers. There are miners. Anyone else, do you think? Obviously, there’s blockchains. There’s other software that’s sort of building on this, but in terms of first-class citizens?

Tieshun: There’s the registrar’s, which is where Namebase sits in, right? Where a domain registrar exchanged for Handshake. You can think of us as GoDaddy plus Coinbase effectively. Of course, importantly, [00:37:30] you have the end-users. My conviction is that a year from now, the majority of people using Handshake won’t even realize that they’re using a blockchain-based product. They’ll just be using a resolver. They’ll be in one of these jurisdictions where they don’t have free access to the internet. These kinds of things actually spread in these communities insanely quickly. It’s shocking how fast they spread.

Basically, they just know, it’s like, “Oh okay. If I follow these instructions in 10 seconds, I can now access US websites that I couldn’t access before.” The experience is incredibly fast. That’s all they’re going to know. They’re not even going to understand that there’s this entire ecosystem. They’re not going to understand that [00:38:00] there’s a coin backing it because you don’t need to have the coin to resolve the names. You just search your DNS resolver, and then you’re done. I think that’s what we’re going to end up seeing with Handshake.

Clay: For everyone listening who doesn’t know what a resolver is, a resolver is what translates an IP address to a domain name. Is that essentially correct?

Tieshun: That is correct. That’s exactly correct. It sounds such a niche thing, right? You have to be like, “Okay, how many people actually do this?” [00:38:30]

Your computer actually comes installed by default with some resolvers. It’s usually based on your ISP, your internet service provider. Most people don’t think about this, right? So, you’re probably okay this is a niche thing, how is this going to get mass adoption? Actually, if you look at the two most popular third-party resolvers, Cloudflare is 1.1 and Google is 8.8. They’re mainly popular outside the United States. They literally have hundreds of millions of users. I think it’s close to a billion users. There’s [00:39:00] close to a billion people who have literally gone into their settings and changed their DNS settings to one of these resolvers.

One because of speed and privacy, and then also because in many markets, it gives them access to websites that they normally can’t get. It doesn’t give them access to every website, because since these are centralized resolvers, they have to play by the local rules otherwise you get censored pretty easily. They’ll be just as vulnerable as everyone else but they’re able to skirt the line a little bit. They get a lot of adoption because of that.

Whereas with Handshake, you can just get full access to all these names. That’s really where we see the potential. It’s okay, all these people go in and use it. There’s already a use case that people are using these resolvers for. There’s already a [00:39:30] user behavior that Handshake can plug into, and then it provides a set function improvement in the experience, which is where all the adoption’s going to happen.

Clay: I really didn’t think about this much about resolvers until I decided that I wanted a privacy [00:40:00] centric resolver. I found one with no logging. I just assumed the government, I could be wrong about this, has established back doors into Google and Cloudflare and other folks.

Tieshun: Yeah, no question about it.

Clay: I wanted to do something privacy-centric and quickly found out that a lot of these privacy-centric resolvers would not resolve many domain names, that they would come up as being nonexistent sites. I needed to put back-ups in place. I’ve got this as the primary resolver, and then there’s fallbacks in case the primary resolver is unable to resolve the domain name.

Hopefully, we’ll see a day when Handshake domain names are resolved by the big guns. In the meantime, I imagine if someone’s using their Handshake, URL, it’s [00:40:30] probably not a good idea to use that for email just yet because you want to make sure your emails are getting through. Or is that misinformed?

Tieshun: No, no, that’s actually a good point. Handshake for email is doable. It would just be integration within the email client, because the email clients have their own resolution, but it’s totally doable. I mean that’s really the cool [00:41:00] thing about Handshake is that again, I believe for a lot of these new protocols to succeed they effectively need to become a platform. If you take the platform model as what is actually by definition a platform, it’s usually when the ecosystem that the platform enables [00:41:30] makes more money than the platform is able to capture itself.

Microsoft is obviously a classic platform. So many trillions of dollars have been built on top of Windows and then Windows obviously captured value there, but it was more value created than captured. Shopify is another great example where they actually create more values for their sellers. Their sellers make more money communally than Shopify. Same thing with Handshake, there’s a lot of incredible products that you can build on top of Handshake that people will be able to monetize. You can create a people client that supports Handshake and that’ll be a really cool thing when someone does that.

By default, the easiest way to use Handshake for the DNS resolution that’ll work quickly is the email resolver someone would need to create.

Clay: Maybe while we’re mapping out some of the players in the Handshake ecosystem, [00:42:00] it would be helpful to talk about the relationship between owners of top-level domains and traditional domain owners. For folks who don’t know what top-level domain is, it’s like .com, .net, .org, .co. Apparently, there’s a million of these now. There’s about to be even more with Handshake. [00:42:30] You have owners of the top-level domain, so it’s possible to own .com. There are people who own sort of traditional domains, are they called second-level domains? We have nomics.com. What is that called?

Tieshun: The official term for that is actually second-level domain. Although I’ve seen a lot of people refer to them as sub-domains.

Clay: What’s the relationship between second-level domain name owners and top-level domain name owners in Handshake? Can the TLD owners censor or prevent second-level domain owners from renewing? Can they cut them off? Is it an auction-based process for buying? Does every TLD [00:43:00] owner basically need to become its own registrar and is there software for that? Can you describe a little bit like what the relationship is between TLD owners and second-level domain owners on Handshake? I know the second level domain stuff hasn’t happened yet because it doesn’t seem many people own the TLDs yet. What’s the relationship like?

Tieshun: That’s actually because the first auctions, they ended… We can go into the auction details later. Basically, there was a bidding period, and then a reveal period. The first auction has already ended but the reveal [00:43:30] period is still going on. No one can actually use these names yet until a week from today.

Clay: Hey, this is Clay cutting in from the editor’s booth. We recorded this interview when the first top-level auction was taking place during the reveal period, but that’s now over. The winning bidders officially own their top-level domains now. See for yourself at namebase.io/domains.

Okay, back to [00:44:00] the show.

Tieshun: Basically, the relationship is first, it’s easy to just share context with the existing systems, just to establish things. So, you own nomics.com, right? Actually, you don’t own nomics.com, you can only rent it. You can only lease it. That can get taken away from you at any time. It’s fascinating, even google.com was once taken away from Google. [00:44:30] One of the engineers at Google basically noticed that the domain had expired. This is when they had billions of users. No one at Google had remembered to renew it. They were able to register it and they took it away from Google.

Luckily the engineer was a good actor. He was like, “Hey, just pay me some money. Whatever money you pay me, I’ll donate to this non-profit or whatever.” Google’s domain was literally taken away from them, which is pretty amazing that that happened. Everyone who buys a domain name today is renting their domain name from a TLD operator. The [00:45:00] TLD operator, in the case of .com, can be a for-profit company. So, Verisign basically sued ICANN to be able to own .com. So, they just have a monopoly on that.

Clay: Hey, it’s Clay cutting in again. In case you don’t know, ICANN is the corporation responsible for managing the root zone, which is where top-level domains are stored. This gives ICANN control over which top-level domains are available and who has rights to them. Handshake aims to replace the root zone with a blockchain-based system that is uncensorable and permissionless.

Back to Tieshun.

Tieshun: .org is owned by another organization. There’s actually been a lot of controversy around that [00:45:30] recently because ICANN tried to let .org be sold to a private equity fund that was created by the ex ICANN CEO. There’s just a lot of controversy and corruption there. There is also country level TLD, so the two-letter TLDs, like .io and .nl. Those are actually operated-

Clay: .tv, .co, yeah.

Tieshun: Exactly, so those are operated by. Those are cTLDs, country TLDs. There’s a whole range of them. Fascinatingly one has their own practices. You would think that there’s just this standard for registering but some of these country-level TLDs, they require [00:46:00] that you’re a citizen of that country or something. What these registrars will do is they’ll have an employee on the ground who lives there, and register’s these names for them, because they’re not able to do it without that.

There’s a lot of nuance but that’s the existing relationship. There’s the TLD operators, and then there’s the domain renters. Normal people can’t own their own TLD. ICANN created this TLD registration process where [00:46:30] people could go and try to register their own TLD’s. It’s a $2,000 application fee. That’s before the auction process where you have to-

Clay: Wow.

Tieshun: Yeah, it’s insane. They basically-

Clay: That’s the application fee.

Tieshun: Just the application. They literally made over a million dollars just on the application fee. Trust me it does not take a hundred million dollars to run that process. [00:47:00]That is the traditional case. Again, each TLD operator, they have their own rules. They can take names away from you at any point in time. At the very least, you’re basically at their whim. You’re just renting from them. It’s shocking because even the small TLD’s that you wouldn’t even think about. .nl, for example, I think that’s the Netherlands. They bring in $70 million a year just for running a few servers.

That’s the traditional [00:47:30] landscape.

Clay: I guess with that context, let’s say you go to Namebase, you buy a TLD, and you are interested in the business opportunity that exists for you now that you own this TLD. What can you do? Can you sell second-level domains? What do you control? What do you not control?

Tieshun: When you own a TLD on Handshake, you are the owner. You can be the TLD operator. You can sell. You can basically come up with whatever scheme you want because you’re effectively Verisign. You’re effectively the [00:48:00] Netherlands government. You can register any of these web domains for whatever you want. You can create an auction system around the sub-domains. You can issue them for a flat fee. The amazing thing is if you look at how domains are used today, it’s limited. It’s artificially limited because it’s actually a pretty high cost. It’s $10,000 for what is effectively an entry into a database.

If you look at the cost of the TLD, it costs you $2,000 minimum to [00:48:30] go and register one. What that does is that drastically limits the use cases for this TLD. It drastically limits what TLDs are registered. It drastically limits what you’re going to use it for. If you buy an interesting TLD on Handshake for just a few dollars, you can monetize that in any number of ways. If you are to sell 100 of these domains for a dollar each, you’ve already made your money back. That just opens up a world of [00:49:00] possibilities because you can now use these TLDs for things that never could have been done before.

One example that is a little bit nerdy is if you use git, which is a file system for programming projects. Each time you make a change, you get a git commit, which is a hash of your changes. Something that you could do with Handshake is you can register .git commit TLD or something that, and then you can have programmatic domains. For every change you make to your website, you’d get a deploy at that hash .git commit and now you can go and visit that website for every deploy. Which is an amazing user experience [00:49:30]improvement for developers.

You can imagine developers; they get their company to just integrate that and then they pay a cent per commit. The companies will make hundreds of commits per day across all the companies. That can actually just bring in a lot of revenue by itself. That’s just one idea if you want to steal that. That’s what you can do. The monetization potential is really immense. It’s really just limited by your imagination effectively.

Clay: In terms of control, can a TLD owner censor, cut off, restrict second level [00:50:00] domain owners? What does that relationship look like? Is the second level domain owner essentially renting from the TLD owner? Is the ownership a bit harder coded and censorship-resistant?

Tieshun: It’s actually nuanced. The early stages, it’s effectively the same relationships that you have with Verisign. You’re basically a customer of Verisign and you do that. The difference though is that with normal TLDs, you don’t actually have that many options. There are 15,000 TLDs out there but not all of them are that good. [00:50:30] Again, as I mentioned it’s pretty limited which ones get registered because they need this amazing monetization potential to be able to get the money back that they invested in it.

You don’t actually have that many great names to choose from. When you’re using Handshake, if someone, who’s running or operating this Handshake TLD, is being a bad actor, you can literally just go and register any other TLD you want. The supply has just drastically [00:51:00] increased. People who monetize they’re incentivized to basically provide exceptional customer service because the supply is literally multiple orders of magnitude greater than the existing system. Usually, if you look at industry dynamics, which industries are the suppliers in control, and then which industries are the buyers in control. This is one of the core dynamics. There are a few suppliers and many, many [00:51:30] buyers. The suppliers obviously have more control.

In this case, there are many buyers still, but there are many, many more suppliers in the traditional system. That’ll just fundamentally change the dynamic

Clay: The TLD owners do fully control the sub-domains. It’s a lot like the traditional system, but that maybe can change in the future. So, there’s no requirements that sub-domains are purchased in HNS or anything like that. [00:52:00] They can charge whatever they want. That could change down the road, is that your understanding?

Tieshun: That can actually change down the road because one interesting thing that you can do is… These TLD’s are on the blockchain. It’s a UTXO based blockchain, the way that you update the TLD’s is you use a key that can basically submit all these transactions and change the settings. The amazing thing is that you can have different keys for different actions.

For example, you can have one key that controls ownership and you can have another key that controls the settings. When you have keys, that means to have programmability. [00:52:30] When you have programmability that means that you can do something on a blockchain to work with it. There needs to be infrastructure to build, to enable this, but you can have a Handshake TLD that’s completely or managed by a Dow effectively. The Dow can have contracts that basically enforce. You can create a mini Handshake system for a TLD.

The TLD’s sub-domains are issued through a blockchain-based system. They’re issued through these contracts and then when you own it, it’s enforced through the contract so no one can take it down. That’s all stuff that you can actually build on top of Handshake. I think that thing will take time, just because it’s a lot of infrastructure [00:53:00] that you have to create but that is possible. That also gives me an incredible amount of excitement. I think whoever does that is going to see a lot of interest from end-users for that. It’s just going to be an amazing potential project.

Clay: One of the things that Namebase allows you to do is change settings around your domain, like a traditional DNS after it’s been purchased. Do you foresee allowing owners of these TLDs giving them a mechanism [00:53:30] to charge for subdomains and manage that whole process? I imagine there’s a potentially huge business to be had around allowing TLD owners to monetize their domains.

Tieshun: Yeah, you’re exactly right on that. That is actually ultimately our business. So right now, what we have is the [00:54:00] exchange. We have the on-ramp. We have the domain registrar, and then we also have DNS management. Once you register these names, we actually provide the interface for you to go and change the settings and use your name. Our business is we ultimately go deeper into the Handshake functionality. The next up is allowing you to go and monetize your domain names to create different schemes and use that. We’ll have an API so that developers can build on top of that. That also means we’re able to offer other aspects of our business for free.

For example, bidding on Namebase, normally with Handshake to bid you have to send [00:54:30] multiple transactions over a period of time. If you mess that up like, you lose your money. It’s really, really scary. We’re able to offer seamless bidding completely for free. There’s the mining transaction fee of course but we don’t take any cut of that. We are able to do that for free, even our pro exchange—where people trade the coin on—has the lowest fees of any exchange.

It’s zero bip maker fee and bip taker fee. Normally if you go on an exchange, you’ll have to be trading $50 million dollars’ worth to get that low of a fee. Actually, [00:55:00] it’s not even that, it’s $100 million or more. We’re able to offer that because ultimately, we’re going deeper into the Handshake ecosystem and trying to build infrastructures for people to actually go and use their names.

Clay: You do have the exchange fees; it looks you’re not making any money off the bidding. Is it purely from people exchanging bitcoin for HNS right now?

Tieshun: Yeah, right now, it’s basically that. It’s [00:55:30] just the traditional exchange fees. Pretty much coming next is that we have the marketplace for the names. We enable the secondary marketplace and that’s super cool because now we can build out the payment rails.

You can go, and buy these names for dollars, or bitcoin, or whatever, right? You don’t need to just pay in HNS. That’s going to be launching very soon. So, then we’ll, basically just do a marketplace fee for that. That’s where long-time I think the opportunity for Namebase is, is that we just provide this primitive for the ecosystem and then we’re out to build a business around that. That ultimately funds us to increase our [00:56:00] efforts to spread Handshake, partnering with people to integrate Handshake.

If you look at all the stuff that we discuss, it’s not Namebase that’s interesting. It’s really Handshake that’s interesting. That’s what everyone’s passionate about. We’re just continuing to work on Handshake and trying to make it as useful, popular, and valuable as possible.

Clay: I know one of the things that has created friction around developing or building out exchanges for exchange operators in the past is how to get fiat on-ramps in place. Back in the day it was really hard to do. [00:56:30] It seems like it’s becoming easier and easier over time. Are there any services or things that you guys are going to implement to make the fiat on-ramp piece of this easier? Can you just use Stripe or Wire? Do you have to go through the traditional grueling process because you are a crypto company?

Tieshun: I wish we could have used Stripe. That would’ve been phenomenal. I have friends who work at Stripe. I was trying to get them, but [00:57:00] that is not something that they’re going to offer because they’re ultimately at the whims of their partner banks. The partner banks aren’t about it.

It’s like the weed industry. It’s just hard. Fortunately, we’ve been able to work through that. We’re actually launching our fiat on-ramp in about weeks. That’s really exciting.

There aren’t any shortcuts really. There’s one in which you have to be an above the board [00:57:30] company. We’re not domicile. If you play games with these banks, banks are really, really used to fraud.

They’re really used to dealing with bad actors. Anytime you have a lot of money moving around, you have people who come very quickly. It’s actually shocking how quickly the scammers and the fraudsters come and the hackers. They come really quickly, so it’s really hard to mislead these institutions. You just have to go through the traditional process. You have to deal with the regulations.

Each state has different regulations. You have to deal with the right partner banks. You have to convince some that you’re [00:58:00] effectively a legitimate operation. It just takes time.

Clay: Let’s talk a little bit more about some of the foundational technology behind Handshake. What is Handshake based off of? Is it proof of work versus proof of stake? What were the inspirations for the blockchain component of this, the SSL component of this, and then finally the DNS component of this?

Tieshun: Yeah, totally. That’s a great question. Handshake is a proof of work UTSO based blockchain. It’s actually very similar to Bitcoin in terms of how the [00:58:30] protocol works. They just created effectively a convenience to some that allows you to have these name options on-chain and some other goodies, but you basically think about it like the high levels, it’s like Bitcoin with names on it.

It’s funny I was actually speaking with the Park.io guys about this because they were surprising Bitcoin goals. I was “Well, okay. That’s interesting. It’s funny you know because people in the domain name industry, they’re pretty experienced with digital assets that have a lot of value. The most expensive domain names have sold for $50 million, I think, was the most expensive one. Voice.com was sold for $30 million just last year. When Crypto [00:59:00] came around a lot of these domainers actually got in early because they saw the value of it. I was speaking with this guy and he was like, “Yeah, I’ve wanted it for the longest time domain names on Bitcoin.” That’s effectively what Handshake is.

The reason why you can’t do it on Bitcoin is because you actually can’t really script in that accessibility to be able to do those name auctions and the management. The other thing that’s really important is that [00:59:30] with Bitcoin you’re using these… It only has eight transactions for a second, or something that, or around that number. You have a limited number of transactions per second. For payments, that’s going to hit a wall pretty quickly, and then if everyone’s using Bitcoin for payments and you layer on Domain names on top of that, it’s not actually going to scale.

With Handshake, it’s actually amazing, using this existing prior [01:00:00] protocol architecture with the same guarantees. Eight transactions per second, you can fully support the DNS use case. Domain names aren’t updated that frequently. They’re updated frequently but not obviously as frequently as sending payments to your friends.

For the purposes of using proof-of-work-based blockchain for DNS, it’s actually perfect. It’s phenomenal. It’s exactly what you need to use the domain name use case. That’s also [01:00:30] why Handshake wasn’t built on Ethereum or some other chain; because on Ethereum, you’re competing with all these other applications that are building on top of Ethereum.

It actually would not be able to scale to handle DNS for the entire world. Whereas Handshake’s blockchain is able to scale to fit the DNS use case for the entire world. That’s not to say that Handshake is more scalable than Ethereum. It’s just because for the DNS use case itself, that is the level of scale that you need, and the existing technology can support it.

Clay: So, is it mostly from scratch created protocol? Did they start with a fork [01:01:00] of Bitcoin and then sort of iterate from there?

Tieshun: Yeah. It’s actually a fork. I hesitate to say fork because it’s not a chain fork. It’s a code fork. It was a fork over at ecoin which is the JavaScript Bitcoin. They use that and they create some of the other goodies. Because they did that, they are able to create a lite client resolver that can resolve the Handshake names. That’s really important because Handshake is the only name in the chain that has [01:01:30] this type of lite client. They’re able to do this. It’s effectively the client that only takes megabytes of memory to run and virtually zero CPU.

You can embed it anywhere. You can put it into your app. You can put it into your browser. You can put it into an embedded system even if you want to. It can trust c resolve these names. That’s critical, because you can’t have a naming system that needs a resolver that takes a hundred gigabytes or whatever, a lot of memory to run. [01:02:00] That’s not feasible for that to ever get into option.

Clay: In terms of the DNS component, it sounds very similar to traditional systems that they didn’t try and innovate there just for backward compatibility.

Tieshun: Yeah, exactly. Handshake is backward compatible with the existing DNS system. Once you appoint your DNS to a Handshake resolver—.com, .ao, .net, .org, etc.—all these normal DNS, they resolve as normal. You don’t lose anything, especially to Handshake. You just get access to the full set of Handshake names on top of that. It’s a purely value add experience. [01:02:30] That’s critical because if you go in and you’re trying to replace the existing system, the existing system already has network effects. It has path dependency. Every company in the world is built on top of the existing domain name system.

So, if you go in and you’re saying “Okay, we’re going to create an entirely alternative system.” I don’t want to say it’s impossible, there might be a role, there might be a specific use case, or there might be certain dimensions along which that can succeed. I don’t have conviction that it is something that could work. I do have conviction that the way Handshake did it, which is where it’s the same participants can incrementally adopt Handshake. You have no reason to switch back.

That is something that can take over the entire world. Even if it grows at a small pace, I mean it’s already growing [01:03:00] pretty fast which is cool, but in […], it grows very slowly. It’s fine because it can keep on growing and there’s no reason for it to stop growing. There’s no reason for there to be churn, because you get access to this new free internet while still maintaining compatibility with the existing internet.

Clay: Let’s talk a little bit about differences between other attempts at creating censorship, resisting naming systems. There’s ENS, there’s Unstoppable Domains, which I understand to be a fork of ENS, which is open source, sort of controlled by a foundation. [01:03:30] How does Handshake differ from some of those pre-existing solutions?

Tieshun: ENS is actually really interesting. I really like that team. Actually, they’re pretty cool guys.

Clay: Yeah, I do too. We’ve had them on the podcast. It’s a fascinating project.

Tieshun: They’re philosophically very different from Handshake. One is you register only a second-level domain. You’re registering the .e names.

[01:04:00] Obviously, it’s a little bit different in the issuance. With Handshake, the issuance is completely essential. It’s a completely essential auction process that anyone can participate in. Whereas with ENS, it’s managed via the six group key holders of the ENS foundation. The issuance is a very different process there but also philosophically, ENS is actually more focused on the wallet use case. This came from my conversations with [01:04:30] Grant Lee, where it’s pretty clear that wallet use cases are their bread and butter.

I think they’re actually really good for that. I haven’t tried it myself yet but I think they’re pretty strong with that. DNS is not their primary focus, but within DNS, their philosophy is that they want to work within the existing system, with ICANN, which is the organization that manages the TLD’s today.

They want to work within the existing governance system to replace the DNS infrastructure with a blockchain-based [01:05:00] system. Their position from my understanding is that they want to replace the technology, but not the governance. Whereas with Handshake, it’s a very different philosophical position. It’s saying, it’s going to replace the governance. That’s what I personally believe is the most important thing. You need to replace the technology and the governance together, because just doing one of two, I don’t actually think gets you much.

With Handshake, it’s a fully decentralized auction system, and then obviously the technology itself, it’s backed by a blockchain. It gives you the security benefits that I had described earlier. There’s no way to revoke the names. Whereas with ENS, [01:05:30] their view is in an ideal world in which ENS is adopted by ICANN. ICANN will still have the ability to revoke names. They will still have the ability to control who gets what name. It’s pretty different philosophically.

One of the things that also gave us conviction about Handshake is that it’s learnt from previous naming attempts—not just ENS and Namecoin, but throughout the history of the internet, there have been numerous alternative route zones as they’re called that have been attempted. The reason why Handshake built what it did and made the mechanics that it did, is because they learnt from some of these predecessors.

For example, with Namecoin, [01:06:00] you can register any name, at any time and for a flat fee, for a base cost. I actually think that the names went down in cost over time. What ends up happening then is that the whales and the earlier adopters would just be able to spot all the good names. That is something disastrous for a naming chain because it’s not like bitcoin, where everything is fungible. If they lock up all those bitcoins and they don’t spend it, that’s actually not that bad, because the [01:06:30] demand for bitcoin stays the same. The supply goes down, so then the price should rise.

With names, if people lock up all those good names, then that means that you don’t have those good names that you want to use available. For a naming chain, that is in its nascency, if all the good names are gone… If you came in and started using Handshake six months from now—and all the good names are gone, and Handshake didn’t already take over the world, effectively—[01:07:00] there would be zero reason for you to invest in this chain, because you have no up sight from that.

That would just kill it. The few things that Handshake did to prevent this outcome is one, the names are registered through an auction-based system. So that means that the names are sold for whatever the market determines—which is infinitely better than a flat fee—because then a whale has a harder time just bidding on everything.

To give you a sense of how [01:07:30] difficult that might be .coin was one of the first auctions that ended. It’s sold for 200,000 HNS. At the market price at the time, that was about $25,000. You can imagine trying to register all the good TLD’s .coin. If you’re competing with other people, you’re going to need a significant amount of capital to be able to do that versus, if it was a flat fee, .coin can be registered for you know $10. They could’ve registered another 250,000 great names raising this case or just [01:08:00] another 2,000, whatever. There’s that aspect.

The other aspect is that you want to prevent the earlier adopters from being able to script and go on to register a significant number of the good names. In order to prevent this, Handshake created a mechanism, where the names are basically rolled out over the period of 52 weeks. Any name that you can think of, imaginable, can be registered after 52 weeks. Within that 52-week period, each week a new set of names becomes available.

Without getting too much into the list, it’s basically a hash of your name to a number, and then you mod-52 that number [01:08:30] to get a week that is available for bidding on. What this enables is basically someone who comes onto Handshake six months from now, and there’ll be a lot of people who are just discovering Handshake six months from now, they’ll still have access to a majority of the good names. The market price for those names will be fairer because the earlier adopters didn’t just have an advantage and be able to have less competition on the name.

Clay: I think also another factor that will help adoption is the fact that they look like top 100 websites by Elixir ranking are [01:09:00] sort of set aside for those domain owners. It’s unlikely that Google and Microsoft and other top players are going to buy into this new sort of this alternative route namespace. I think you said if someone else is already squatting on the domain names for the biggest brands on the internet right now. That seems a smart move. How do you create an [01:09:30] Oracle for ensuring that you are handing off Google, for example, to the business entity that is Google?

Tieshun: It’s actually really fascinating. Some of the technology that was created to enable this stuff on Handshake. There’s this technology called DNSSEC, which basically gives you a private-public key for a domain name. The protocol itself has a mechanism to validate DNSSEC. [01:10:00] What it enables is those pre-reserved names, those Elixir top 100k domain owners to basically generate a DNSSEC proof that they own that key, and then they’re able to claim their name completely decentralized.

Clay: Oh, nice. So, in other words, they’re creating a DNS record that only the controller of the domain name could create, and then you know maybe embedded in that is a wallet address or something.

Tieshun: Exactly, exactly.

Those organizations have four years to do this process. We’ll help people with that process as well. [01:10:30] If you look at how quickly things happen at the internet, especially how things spread today, Ethereum only launched five years ago in 2015. Within those four years, I’m pretty confident that all of those domain owners will go and register their Handshake TLD because they don’t want to be taken away.

[01:11:00]

Clay: That concludes part one of my conversation with Tieshun Roquerre from Namebase. I hope you enjoyed it.

Before you go, I want to invite you to subscribe to our newsletter called Popular Crypto. With the Popular Crypto newsletter, we don’t cover token hype or announcements of announcements. Instead, the Popular Crypto Newsletter focuses on the mainstream products and services taking crypto to the masses.

To subscribe to the Popular Crypto Newsletter, go to Popularcrypto.news. Enter your email address and subscribe. Again, that’s popularcrypto.news

Alright, that wraps up things for [01:11:30] this week. Stay tuned for next week’s episode. Until then, take care.

That’s it for this week. To sign-up for our free crypto investing newsletter, listen to other episodes, or get the show notes from this episode, please visit flippening.com. I also invite you to check out the startup that funds this podcast, Nomics at nomics.com. Finally, if you got value from the show, the biggest thing you can do to help us out is to leave a five-star review with some comments and feedback on iTunes, Stitcher, or wherever you listen to podcasts. Thanks for listening and see you next week.

Part 2 Transcript

Clay Collins is the CEO of Nomics. All opinions expressed by Clay and podcast guests are solely their own opinion and do not reflect the opinion of Nomics or any other company. This [00:00:30] podcast is for informational and entertainment purposes only and should not be relied upon as the basis for investment decisions.

Clay: Welcome to part two of this conversation with Tieshun Roquerre, founder and CEO of Namebase, an exchange and registrar for Handshake domain names.

For some context, Handshake is a blockchain-based protocol that enables the decentralized ownership of top-level domains or [00:01:00] TLD’s. .com and .org. are examples of top-level domains. These domains can be used for websites, apps, or crypto wallet addresses. Anyone with HNS, which is the native Handshake token, can bid on names. Tieshun’s company, Namebase, facilitates the auctions and does a lot more.

Our conversation is split up into five chapters. In chapter one, we discussed the origins of Handshake and Namebase. Chapter two was an overview of the Handshake ecosystem, its relationship with Namebase, and differences with other protocols. For Chapter Three, we look at Handshake and HNS [00:01:30] from an investor’s perspective. Chapter four is a how-to guide for acquiring a Handshake top-level domain. Finally, in chapter five, we consider Namebase’s and Handshake’s future.

In part one, we covered chapters one and two. In this episode, we’ll cover Chapters three, four, and five. The transcript and show notes for this episode are available at flippening.com/namebase.

We’ll get to this episode in just a second, but before we get started, I’d like to pause for a moment to tell you that this episode is brought to you by some great sponsors, the first of which is Manscaped.

To be honest, I had reservations about doing this ad because I was worried that it was off-brand for our audience. In fact, I’m going to ignore their ad copy and not talk about bleep, bleep or bleep. So the truth is that I use this product and like it, and my wife is not complaining either.

So here’s the deal, with so many people staying at home with significant others due to COVID-19, there’s a lot more need for this kind of product. You might not have been able to get a haircut for a while, but the rest of you doesn’t have to look all crazy. Because of Manscaped. And Manscaped is gonna let you do a below-the-waist haircut by yourself.

Here’s the deal. Manscaped is the only men’s brand dedicated to below-the-waist grooming and hygiene. Manscaped is forever changing the grooming game with their Perfect Package 3.0 Essentials Kit.

The Perfect Package 3.0 Kit comes with the new, improved Lawn Mower 3.0 waterproof, a cordless body trimmer, and a ton of other liquid formulations to round out your manscaping routine. This 3rd generation trimmer features a cutting edge ceramic blade to prevent manscaping accidents. And of course, let’s not forget about the Crop Preserver, an anti-chafing bleep deodorant and moisturizer. You already put deodorant on your armpits, right? So why aren’t you putting deodorant on other important parts of your body? For a limited time, subscribers get not one but two free gifts: The Shed travel bag, which is a $39 value add, and the patented high-performance, anti-chafing Manscaped boxer briefs.

Finally, get 20% Off and Free Shipping with the code FLIP at Manscaped.com/flip. That’s 20% off with free shipping, and remember to use the code FLIP so that they know that I sent you. Your partner, your body, and whoever’s stuck with you all day during quarantine will thank you.

Also, this episode is brought to you by the good folks at Nexo. Here’s a word from them. Nexo is the only lender offering instant crypto credit lines, which let you use digital assets as collateral to get cash in 45 fiat currencies and stablecoins.

You might remember Nexo from Episode 64 where we spoke with their co-founder, Antoni Trenchev. If you haven’t heard that episode, I highly recommend checking it out, as it’s one of our most popular episodes to date.

Nexo has a big announcement related to credit lines. Their annual [00:02:30] interest rates for credit lines are now starting at just 5.9%, which may very well be the lowest borrowing rate in the entire industry.

Individuals can also park their cash and stable coins at Nexo’s Interest-Earning account to get an annual return of 8%. What’s [00:03:00.00] more, interest is paid out daily and you can add or withdraw funds at literally any time. If you are looking to borrow, lend, or swap digital assets, Nexo is your go-to partner. Definitely explore nexo.io. If you’re an institution, reach out to them at institutions@nexo.io

This episode is also brought to you by the good folks at CryptoTrader.tax.

Here’s four things you should know about them. Number one, CryptoTrader.Tax automates the entire crypto tax reporting process and has partnered with the TurboTax team to bring [00:03:30] cryptocurrency tax reporting to the mainstream. Number two, CryptoTrader.Tax offers a complete Tax Loss Harvesting module to help investors figure out their greatest tax savings opportunities to reduce their taxable income. Number three, CryptoTrader.Tax supports all FIAT currencies, meaning users from all over the world can use the platform to calculate their gains and losses in their home FIAT currency. Finally, number four, CryptoTrader.Tax offers a suite for Tax Professionals to help manage their cryptocurrency clients.

While I’m not a CPA and not qualified to provide tax advice, I should note that I [00:04:00] personally advise my family to never just hand over their exchange history to a CPA. Instead, I encourage them to let CryptoTrader. Tax analyze their trade histories, find the tax calculation method that’s best optimized to save them money, and then submit summary documents to their accountant. This also saves you from having to pay your accountant to do the tedious work of generating form 8949 and other similar forms.

Creating an account and importing your historical data is completely free! You [00:04:30] only pay when you want to download your tax report for the year. Just tell them that Clay from the Flippening Podcast sent you. This does two things for you. First of all, it gets you a discount. Second, it lets CryptoTrader.tax knows that these ads are working. Go to CryptoTrader.tax now and sign up today.

Okay, back to our regularly scheduled program. Here’s part two of my conversation with Tieshun Roquerre, CEO of Namebase. Enjoy.

Clay: Let’s pick up with chapter three and explore the opportunity that exists for investors—both with the HNS token and in owning Handshake top-level domains.

What do you think about the opportunity around [00:06:00] being an HNS token holder? What do you think of the economics around the upside of holding HNS versus buying domain names? Using that HNS to buy domain names and selling those later. Not everyone’s a good picker of stocks, not everyone’s a good picker of domain names, it’s always hard to know that’s going to be valuable down the road. Also, it’s pretty time consuming to bid on these things, to stay up late, seeing if you need [00:06:30] to put in a higher bid. For the average person, would you advise them to… Obviously, this is for entertainment purposes only, all the disclaimers. Do you think you’re statistically more likely to experience more upside holding HNS versus investing in domain names themselves?

Tieshun: There’s a few interesting aspects that I first need to explain that helped frame this. Handshake gets a proof of work basecoin.

There’s a cap of all the coins. They have to get mined like bitcoin. [00:07:00] I mentioned earlier that .coin was sold for 200,000 HNS. Where did that money go? Where did that HNS go? Actually, that HNS gets burned. When you win a name, the HNS doesn’t go to any organization, entity, or individuals. It actually gets burned on the network. Not only does that make sure that the winner pays a fair amount of [00:07:30] market price for that name; but it also means that each name registration decreases the total supply. It’s actually a very deflationary effect, which will be interesting to see how that affects… Theoretically, the coins would trend towards zero. I think in practice, it’s not going to actually happen. I think it’ll probably transport some amount of coins. Basically, the number of coins will go down over time as they’re being used for the domain name use case.

There’s that aspect. The question is, should I [00:08:00] hold HNS or should I register a few domains? I would say one, it’s you’re probably better off just doing both, but to give you more a nuanced answer like the comparisons of each. I- the way I think about it is holding HNS, is like you’re getting exposure to the growth of this new internet, overall. That’s like an index fund. Holding HNS gives you exposure on the entire market as an index fund.

If you hold a domain name, you might perform worse than that [00:08:30] index fund. If you get a good one, you perform wildly better than that index fund. Netflix for the past 10 years has performed phenomenally. If you just invested in Netflix, instead of an index fund, you would’ve done way better than everyone else. If you’re an average person, maybe just putting your money into an index fund and not thinking about it, it’s better. That’s the distinction.

[00:09:00] For you who have an idea or sense of what could be interesting for people, maybe not even to monetize the domain name itself, maybe you just want to sell it in the secondary marketplace. You register it, then you promote it to people who might find it useful. They just buy it. That could actually bring you phenomenal returns. If you’re not sure, then the easiest way is to get some index fund exposure.

Clay: How else should you know [00:09:30] someone new to Handshake—which is almost everyone—think about some of the game theory and the game mechanics around Handshake and Handshake value? It seems like one component of it is the fact that no one is actually making money from these auctions, they’re being burned and it’s deflationary. Also, there’s these investment opportunities around being a TLD owner, is there anything else that’s notable from a [00:10:00] game mechanics or game theory perspective around how Handshake works?

Tieshun: I think something that’s really important to point out is you have to look at what is providing the underlying value here. There will always be speculative activity. You have speculation around anything, but the thing that ultimately is going to drive value and enable that speculation to continue and persist in the [00:10:30.00] future is that they’re used by every company in the world. There’s real underlying value and that drives speculation. That is ultimately what you need in any market, for it to continue. Otherwise, you just get this massive bull run, followed by this huge crash because there’s no underlying value.

There’s like a difference between domain names and Beanie Babies. Beanie Babies at a certain point were an incredible investment. People were able to pay off their kids’ college bills [00:11:00] with just flipping Beanie Babies, but effectively that ultimately crashed because people realized like there’s no underlying value to these things. Whereas with domain names, not only were they an amazing investment when they first got started decades ago, they’re still an investment today.

I was just at this conference, NamesCon. It’s the biggest domain name conference in the world. It’s amazing, there’s conferences for everything. There is still an entire industry of people who are basically speculators. They just monetize the domain names themselves. [00:11:30]The reason why that trend was able to persist for literally decades is because there’s underlying value to these domain names; and because they’re scarce, domain names continue to become more valuable every year. People are registering more domain names every year. Right now, there’s around 400 million domain names registered in the world. Just that 400 million brings in $4 billion of revenue every year. That’s not even including the secondary market, which is obviously even larger.

The thing that ultimately [00:12:00] gives Handshake the real value is people using Handshake for its use case. That’s largely because, if you look at history, there’s an amazing precedent, which is we already know that domain names are valuable. We already know that the system is something that people use.

There are a lot of developers that are excited about Handshake, which is something that as a developer myself, the most exciting thing. This speculation in itself is really fun and cool, but you need that precedent to be there. There are developers that I know that aren’t even interested in crypto. [00:12:30] They despise it honestly. They just don’t like it in general, but they are interested in Handshake because they’re excited about it. They see the potential. They’re excited to use it on their weekend projects.

There’s an amazing article by Chris Dixon who’s an investor at a16z, talking about the toys that developers play around with on their weekends become the technology that the entire world uses within years. That’s what we’re going to start seeing happening with Handshake and that’s what I’m really excited about.

Clay: I do want to talk about a scenario that I think could potentially [00:13:00] play out, which is that second-level domains really don’t become a thing. In other words, you, you’ve got a limitless universe of top-level domains that exist. I’ve heard you talk about someone who bought .coin for a healthy sum of money. Mostly, I don’t see people adding that dot there for .coin. It’s just they bought coins. Do you think there’s a real scenario where second level domain ownership doesn’t become [00:13:30] a big thing for anyone other than the TLD that wants to have a second-level domain under their TLD?

Tieshun: Actually, my perspective is the flip side of that. I think the market for second-level domains will thrive in the early period and the long term is where I have uncertainty. So long term, you’re right. I don’t know whether people are going to be paying for these [00:14:00] second-level domains, or if they’re just going to be registering the TLDs themselves. I expect that regardless the secondary name market might still exist, but I think the value of each individual domain would cost less over time. Obviously, if I make it up to scale, that’s still fine. I don’t have a question in my mind that that’s going to be a market in and of itself because when you think about the technology adoption cycle of markets, it’s never like [00:14:30] flipping a switch and you’re done. That never happens.

The way that technology usually gets adopted is that you have the initial true believers, then earlier adopters, then the early majority, the late majority and finally the laggards. These are people who will use your technology, but they’re kicking and screaming the entire way. They use it because they have to, and everyone’s moved to it.

Clay: This is the crossing the chasm framework, right?

Tieshun: Exactly, yes. That’s the cross in the chasm framework. If you think about that from that perspective, [00:15:00] the majority of people using Handshake, they’re still going to be thinking in the existing paradigm. They’re not going to be thinking about using the TLDs as the domains themselves, and they probably won’t want to. I think in that initial period, people will still like to use second-level names. The market for that will be the case. I think what ends up happening is that maybe long-term, you’re not able to charge $10 per .coin name. Maybe it’s actually $1. Maybe that’s fine. Maybe you have like 100,000 people paying $1 a year. That’s actually an amazing business, [00:15:30] but it’s no longer .com which generates $1 billion per year. That’s effectively what we’ll see. There’s going to be a market and the cost will probably go down over time. The thing with the names is that they are so scarce.

Yes, you have coins and maybe someone else can register Bitcoin, but then maybe a lot of coin names are registered. Someone just wants to go and register that .coin name. [00:16:00] Aesthetically, it’s still pretty pleasing rather than a Bitcoin stash. I think that’s what we’ll end up seeing.

Clay: One of the things that have made TLD so valuable in the traditional domain name ecosystem is that the infrastructure currently in place allows registrars to offer .com, .net, .org, and then hundreds of others from one server. If you go to, iwantmyname.com, they’ve got like hundreds of TLDs available. A lot of people [00:16:30] are less interested in “Can I get my name .com?” They’re more interested in “Can I get my name . something that doesn’t seem terrible?” Something that’s sort of okay with them. If it’s .co, .io—as long as it’s not spammy TLD, like .us or .biz—they seem to be fine with it. They’re starting with their name first. Because these websites are able to do a lot of aggregation [00:17:00] —both on the supply and the demand side—it works with Handshake. Can a single registrar offer the ability for users to purchase second-level domains across all the TLDs on Handshake? Is that even possible?

Tieshun: Clay, it’s funny you asked that. I think that’s actually the best question you could have asked given the context of what we were just discussing. It’s not only possible, but it’s also the most likely [00:17:30]. There’s actually a specific format and protocol that TLD operators use today to let registrars register second-level domains. That is what every registrar uses, and the existing paradigm is basically, you only register the second-level domain for second-level domains. You don’t register TLDs and cells. The registrars are actually only geared towards this existing paradigm.

With Handshake [00:18:00] you can do the same thing. For each TLD, you can create the infrastructure. This is something that we’ll be working on. Basically, you can create the infrastructure to sell the register’s second-level domains with that existing protocol, and then all the existing registrars can just plug into that because they’re already used to adding new TLDs to their offerings. The easiest way for people to go and register these names will probably be through these registrars, like integrating it. Those registrars already have all of the existing domain buyers buying names through them. [00:18:30] That’s another reason why the second level name market will continue to exist even as Handshake TLDs become widely registered because with the existing infrastructure, there’s path dependency. The existing infrastructure is geared towards enabling that purchase process.

Clay: Let’s say you’re GoDaddy and you decide that you want to offer Handshake second-level domains. There’s a lot of people going there already. Once they’ve done the work, do they have to white label TLDs or can they just enable [00:19:00] searching across every single one of them—even though there might be millions of Handshake TLDs?

Tieshun: They can enable searching across all of them. That’s definitely something that’s feasible.

Clay: Wow. Do they have to have agreements in place with every single TLD? If you own the TLD, [00:19:31] you essentially get to control what happens at a layer below that. Oh, but you’re saying there’s existing protocols in place that enable this, and Handshake is compatible with them. They would just plug into whatever the existing system is for doing this.

Tieshun: Totally. You can imagine that maybe the registrars will want to make sure that there’s an agreement in place so that their customers are going and registering the Handshake domains. [00:20:01] They have some assurances that the TLD owners are not just going to yank it out from them. That’s actually something that we’ll do. A lot of this stuff is not only the technology, but it’s also the legal infrastructure. What we’re going to do is we’ll allow people to BBC TLD operators. We’ll set up these agreements, so it’s basically copy and paste. They can go and do this very easily. We can actually standardize that format.

Anyone can obviously just go and do this on their own if they want, but there’s a lot of efficiencies that can be gained by just making something standard. For the registrars, [00:20:31] that already exist. They can just plug into it. It’s like you support one, you support a million. You have the same guarantees. You don’t have to do a spoke of agreement with each one so that you can actually enable adoption much more quickly doing that.

Clay: Not to get too much in the weeds, but I do want to dig into this a little bit. Let’s say you’re GoDaddy and you don’t want to incur risk that would ensue if they sell a domain name. [00:21:00] Let’s say its name .crypto, but whoever owns .crypto is just a really flaky person. They decide that they want to screw over everyone who bought a second-level domain, including the owner of name.crypto. Let’s say they do have an agreement in place with GoDaddy. What would prevent them from breaking that agreement? Are there ways to cryptographically ensure that that can’t happen? Or delegate [00:21:30] some control over that TLD to some third party in a way that gives GoDaddy the assurances they need to be able to sell second-level domains? How would that practically work?

Tieshun: I think there’s an easy answer and then there’s a nuance, more technically interesting answer. So, the easy answer is you can do it the same way that you do contracts today, which is you have a legal contract. You can imagine maybe this existing registrar—GoDaddy, NameCheap or whatever—they’re not going to list some random TLD that [00:22:00] they have no way of contacting. Maybe it’s an actual business that’s gone and registered a bunch of these TLDs. They literally just have an agreement in place with them, so they have like legal recourse. That’s probably the easiest way because again, that’s literally how all these existing TLDs operate. It’s through these legal agreements. That’s pretty much it. That is what you can do and plug in. That’s very straight forward.

Clay: Hey! I wanted to pause for a second to let you know that this episode of the Flippening podcast is brought to you by our friends at CryptoTrader.tax, which makes the excruciating task of reporting your cryptocurrency gains and losses a breeze. [00:22:30]

Indeed, sorting through transaction records from your exchanges and reporting each trade in US Dollar terms is not how most crypto investors want to spend a weekend. CryptoTrader.Tax is a software platform that automates the entire cryptocurrency tax reporting process. It’s basically like TurboTax for cryptocurrency investors. All you have to do is connect your exchanges and import your trade history into the platform. CryptoTrader.Tax will do all of the number-crunching and spit out your auto-filled tax reports [00:23:00] with the click of a button. Simply give these generated tax forms to your accountant or even import them into your preferred tax filing software like TurboTax or TaxAct.

Just tell them that Clay from the Flippening Podcast sent you to get a discount on your tax reports.

This episode is also brought to you by [00:23:30] our longtime and trusted partner, Nexo. As someone who personally uses Nexo, I wanted to point out a few things that I especially like about their crypto-backed loans.

First, when the price of your collateral grows, so does your credit line. Let’s say that you borrow against your Bitcoin when each is worth $5,000, but over the course of your loan, the price grows to $10,000 per Bitcoin. This means the size of your credit line just doubled as well. I personally haven’t seen anyone else doing this.

A second thing [00:24:00] I really like about Nexo is that you only pay interest on the amount you borrow. I’ve seen Nexo competitors require you to take out loans and borrow force you to borrow the entire amount. With Nexo, you get a credit line, and can borrow only the funds you need, and pay them back whenever you want with interest assessed daily. Again, this just isn’t something I’ve seen other providers do.

The final aspect of Nexo I’d like to highlight is that they give you the ability to borrow against a basket of crypto assets. For example, if you post BTC, ETH, [00:24:30.00] and BNB as collateral to your Nexo account, the Nexo oracle calculates the real-time market value of those assets and adjusts your credit line accordingly. To my knowledge, other providers in this space only allow you to borrow against one asset per loan.

Finally, this episode is brought to you by Manscaped.com.

Okay, back to Tieshun.

Tieshun: What’s interesting is that you can do a lot of neat stuff on top of that. As I mentioned, you have keys that can send different types of transactions. You can imagine maybe there’s one key where there’s a world in which you have [00:25:30] the key for the ownership, but then to be able to update the records for that TLD it’s control that you give to GoDaddy. It’s like a key that can do that for five years. You have a key that is like timestamped, time-locked. I can do that for about five years. That’s the scope of the agreement. For those five years, GoDaddy is able to make sure that those records are pointed towards GoDaddy’s name servers or whatever.

Now they have a guarantee, they literally control the key to it. That’s something that is feasible with Handshake. So those scripting possibilities are to me personally very interesting. [00:26:00] I think that’s what you’ll see happen eventually. Initially, it’s going to be enforced through legal contracts; and then people will realize that those new contracts generally work, but they have failure cases. It will move to the contracts through code, which will be obviously much more robust.

Clay: Let’s say you just go into the traditional legal system, how is identity handled? [00:26:30] You have some HNS, you bought it through “OTC markets”—from some dude you met on Telegram—there’s no KYC/AML on you, and then you use a command-line interface. You don’t use a name base to buy the domain name, but you buy a domain name. How would GoDaddy know that you actually have custody of [00:27:00] domain? Would they request that you publish something to your DNS records or something like that? Is that how it works?

Tieshun: Well, right now on a name base, you need to first buy the coins, then register the names. The next generation completely abstract that away. You can just go and register the names directly with any currency. For that, we actually can do that completely anonymously. You can actually just go on the name base, take advantage of that, and just register a name. Take it on a name base. Keep it on whatever you want. [00:27:30] That’d be a really cool thing. They won’t have to go through the entire process of a tour and all that. In that case, it’s basically the same as proving ownership of a wallet. You can go and create a signature. Maybe you spend your name into another address that is jointly owned with GoDaddy and you. Maybe it’s like a multi-state thing and a third-party escrow. There’s a lot of ways to do it where [00:28:00] even if this person is completely anonymous, we are actually completely okay because we have the keys that are making sure that this is still secure and safe.

Clay: Getting to use cases, the question that popped up is can you use Handshake names for resolving wallet addresses? Does that use case apply here or not?

Tieshun: That’s an interesting question. It is definitely doable. You can definitely associate because with Handshake you can store two types of records at the root—which is stored on the blockchain. You can store name server records, NS records, [00:28:30] and TFC records. I think there’s one more obscure record type, IDS record, but basically, you can store name server record and a TFC record. The TFC record can store any arbitrary data. One interesting thing that I’m interested in seeing is SIA, a coin they just launched. I think it’s called Skynet or something like that. It’s amazing. David Fork is an incredibly intelligent person. He’s one of the most mission-driven people that I’ve ever seen, which has been amazingly refreshing to see. [00:29:00] They just released this amazing technology for streaming data and files through a decentralized network. I’m really interested in seeing you storing the SIA, the Skynet address on the TFC record on your Handshake name.

Now you have a completely full-stack decentralized application that you can go and access. That’s super cool. I’m really excited to see. I think the first developers will probably get a lot of recognition because that’ll be probably one of the [00:29:30] first times that you have something that’s so easy to use and so powerful. The other thing that you can do is that the TFC record can be a wall address. You can do that. The reason why I hesitate to talk about that as much is because I think that you have DNS in our software. They’re working on those use cases. For the purpose of wallet naming, they’re probably actually sufficient. I haven’t personally tried them, but it seems to be good. The thing that it really requires is a lot of BD work. You need a lot of partnership work to get all these wallet developers and companies onboard in using the same standard. [00:30:00] They’re making a lot of focus on that.

Again, with Handshake, it’s really focused on the DNS use case. That’s why I have conviction around it. Handshake was split between two. I would have much less confidence in Handshake succeeding. The main thing that Handshake has is your system’s focus around DNS. I think the opportunity to actually make the world significantly better and make the internet exceptionally better for people is there.

There are [00:30:30] other parties working on the wallet use case. Now, I’m not an oracle. The community is able to develop a very compelling wallet naming system on top of Handshake. I think there’s a non-zero chance that happens, but I’m personally, more excited about Handshake DNS.

Clay: Can you speak to how renewal works? Is there a possibility of losing your name upon renewal? Are you guaranteed that if you pay the renewal fees—probably an HNS—within a given timeframe that you can keep your TLD in perpetuity? How does renewal work?

Tieshun: [00:31:00] Basically you need to renew your name every two years. The reason why you need to do that is if someone loses their key, it’s not just gone forever. There’s no renewal fee actually. You just need to submit a transaction that proves that you own that name. That transaction fee is effectively zero in the early days. Interestingly though, it’s not necessarily always going to be very cheap to renew. [00:31:30] The reason is if you look at the scalability of Handshake, it can basically scale to 50 million names. You can register 50 million TLDs on Handshake, which might seem a lot; but if you’d look at domain names today, there’s 400 million domain names that have been registered.

So, 50 million TLDs is pretty feasible to get there. Those 50 million TLDs, once you get past that—you can still register more than 50 million TLDs—but there’s a limit to how many renewals can happen each year. There are actually only 50 million names that can get renewed each year [00:32:00] or during every two-year period. What that means is that 50 million TLD that gets renewed, they need to pay a higher transaction fee than the 50 million and the one name. What ends up happening is that renewal fee becomes as valuable as the 50 million most valuable Handshake name.

Obviously, every name above that will also pay a renewal fee at least that much, and they’ll probably pay more. [00:32:30] If you think about someone who has a really compelling name or they have a really popular name, they don’t want to lose it. They’re definitely going to pay more to make sure that it gets mined. That’s another thing. Mining is going to be very lucrative for a long time because these fees will eventually add up. You can’t really just squat on every name. Even after this one-year period is over, you can’t just squat on every name because only the top 50 million names will be able to be renewed.

Clay: You don’t have to renew in HNS. You just have to post a transaction that [00:33:00] proves that you’re still alive. You haven’t been hit by a bus or whatever.

Tieshun: Exactly. That’s also something that we do for the Namebase customers. We submit those renewals for people automatically so that there’s no chance of you losing your name. If you forget to do it—for some reason, you don’t do it—you just lost that name. Someone else can keep that and bid on it because it goes back into the name pool.

Clay: It can support an infinite number of second-level domains. [00:33:30] Is that correct?

Tieshun: That is correct. Yeah, because that is through the traditional DNS architecture. There’s like name servers that do that. You put your name on-chain, your name to a name server, and then through the name servers, you can set up the second-level domains. Again, you can eventually have that be a sidechain if you want to. There’s a lot of interesting things there. You can basically plug into the existing DNS architecture. There are 50 million names, and then an effectively infinite number of second-level names.

Clay: Let’s transition to chapter four, which is about the step-by-step process for acquiring a Handshake TLD [00:34:00] presently. The easiest path is the Namebase path. In a nutshell, at least presently, you need to have some Bitcoin. You need to go to Namebase and exchange that. There are other ways to do this, but this is, I think, the least friction-laden path. You need to exchange the Bitcoin or deposit the Bitcoin to Namebase to get HNS, which is the token that powers the protocol. Obviously, you need to get a Namebase account in order to do all of this. [00:34:30]

Once you’re in Namebase, you need to set up a watchlist, potentially, for the domains you’re interested in because it’s probably unlikely that whatever you’re most interested in that it’s available right now. That’s probably statistically improbable. So, you’d set up a watchlist for tracking when the domain name you’re interested in goes live. Once the auction process does begin, it’s a Vickrey-style auction. [00:35:00] Can you speak to the Vickrey auction, how it works, and some of the strategies that exist around this auction type?

Tieshun: Let me describe the high-level abstract process, and then I’ll go into the actual weeds of the steps. Basically, all you need is the names. The name auctions on Handshake are paid in Handshake coins, HNS. You need the coins, and then you just submit transactions to participate in the auction. That’s what you can do. You can do that in a wallet, [you’re solving – 00:35:28] through the CLI, [00:35:30] et cetera. There’s a number of ways to acquire names, as you mentioned, like the OTC method, [organic – 00:35:37] exchange like Namebase, et cetera. Then you go through that process. In the weeds, a step-by-step practical method is exactly as you mentioned. Right now, Namebase supports buying HNS with BTC. Within three, four weeks, it’ll support buying HNS with USD as well.

Mike: Hey, this is Mike, editor of the Flippening podcast, cutting in from the editor’s [00:36:00] booth. We recorded this interview shortly after Handshake launched, during the first TLD auctions. At that time, Namebase didn’t take US Dollars. By now, they may. See for yourself at namebase.io. Back to the show.

Tieshun: Basically, you just go on to Namebase. You can buy your HNS with your BTC. If you have a Coinbase account, or wallet, or whatever, you just send it in, and then you get credited with HNS. You can go choose whatever names you want to bid on. If it’s available now, you can bid on it. We’re in the first week of auctions, 51 out of 52 [00:36:30] in terms of the percentage of the names are still not yet released. You can just add it to your watchlist. You’ll be notified when it is released, and then just go, choose a number, and place your bid. It’s a second-priced Vickrey auction. If you bid 1000 HNS on a name, and someone else bid 500 HNS on a name, you would win it, and you would pay 500 HNS.

As I mentioned before, that gets burned. What we’re seeing is [00:37:00] interesting behavior that was non-intuitive to me. I was like, “Okay, this Vickrey auction basically incentivizes you to submit your highest bid first,” because whatever you’re willing to pay, you should just submit that bid because you just end up paying whatever the second-highest bidder bids.

However, what we’ve seen is that people really care about submitting the bid at the very end. [00:37:30] The reason is because of the existing set of bids, it basically informs the price. I think what it is, is that people don’t necessarily have a sense of what the name is worth yet as they go into the bid. The market is slowly discovering that over the course of that five-day bidding period. That’s what happened with .coin. It was the highest bid at the very end, [00:37:50] 100 HNS, and then someone at the last minute put it in and put in a 2000 HNS order. It’s actually really interesting dynamics.

What we’ve done at Namebase is we are [00:38:00] doing our best to basically make sure that no one has any information advantage based on their sophistication. For example, one thing that you can do is if you wanted to, you could look at the mempool and you can see that there are some bids there that haven’t gotten mined yet. You can imagine a sophisticated bidder would be able to set up that infrastructure to monitor the mempool, and then submit their bid in the last one or two blocks. Maybe not the last block because that’s a little bit risky, but then [00:38:30] you do that, and then you know you beat everyone.

What we’re doing on Namebase is we surface all of that information so that no sophisticated actor is going to be able to get the jump on you. You can see what’s in the mempool just as everyone else can so we surface that, and then now you can make a hard decision. Yeah, so that’s really the game mechanics behind it.

Clay: Is that a recent thing, where you added exposure to the mempool bet?

Tieshun: Yeah, we learned that. It should be out either today or this weekend. .coin was very competitive. We learned this from the first auction. We were like, “Oh! Okay, so this is how people [00:39:00] are playing in this market.” Now we just want to make sure that it is a fair market so that people who are sophisticated and really know the technology, they don’t get an advantage over a normal person who wants to go and participate.

Clay: That was definitely something in the back of my mind when I was bidding for a couple names. I think another aspect of this that’s interesting is the fact that you can’t update your bid or [00:39:30] you can’t get your funds back. If you bid 1000 HNS for a domain name, and the auction takes off, you can’t submit a 2000 HNS bid with the funds that are locked up from the previous bid. If it’s a really expensive domain name, and the auction is going really high, or if you just have a limited amount of funds, in order to participate, you really do need to wait until the end. That might be another [00:40:00] reason people are taking a while.

Tieshun: Yeah, exactly. As you pointed out, when you make a bid, those coins are locked up [00:40:30] for the duration of the auction. If you lose the auction, those coins are returned for you. You need some minute transaction for that, but Namebase handles that automatically for you. If you do that, then you can’t use those coins on other auctions during that time. That’s a very important aspect because-

Clay: Or even that auction, right?

Tieshun: Yeah, exactly. You can submit another bid, but it has to be other coins. You can spend over 1000 HNS and then 2000 thousand HNS bid, but you need to… If someone else pays 15,000 HNS bidding, you increase it up to 2000, you can do that, but that will lock up 3000 coins for the duration of the auction. That’s critical because you don’t want people to just be submitting bids that don’t have any weight for them. You submit a 1000 HNS bid. Someone else puts another one, and then you just like to retract it and keep on doing that. You really don’t want that to happen. You also don’t want whales to be able to just go and bid up all these names.

While they’re doing that, they can just keep on spending their money to bid on names. This is what gave me conviction [00:41:00] around Handshake. They put in a lot of effort to mitigate that scenario. If you’re a whale, and you want to win a very valuable name, I expect that there will be a lot of HNS locked off in the crypto auction, which is happening right now.

If you’re a whale and you do that, you’re not going to be able to bid that much on all the other names because you necessarily locked out your name that bid for that auction. That’s going to be an amazing dynamic because that means normal people who aren’t whales are going to be able to register a lot of the good names. If you really care about a name, the most desirable auction [00:41:30] a whale can register, they’re not going to be able to register that other name that you like. You’re going to be able to go and get that.

Clay: Let’s also talk about the two components of the lockup, which is the bid and the blind amount. This is something that confused me a little bit. I didn’t know that the blind didn’t count. Can you [00:42:00] summarize those two variables, and how they affect the bidding process?

Tieshun: There’s two components. There’s a bid and a blind, and they add up to your total lockup. The reason there’s a blind is because only the bid amount counts towards your actual bid. That’s why it determines the winner. If you bid 100 HNS and a blind of 0, your total lockup is 100. If someone else bid 10 HNS and a lockup of 1000, their total lockup is 1000, but you won because your bid of 100 is greater than 10. You only go and pay 10 HNS. The [00:42:30] reason they want to do this is because you kind of troll whales. You can also hide the true value of your bid.

Basically, you can go on any name. You can bid on like one HNS, and then a blind of a million HNS if you wanted to. Whales are now dis-incentivized because they don’t know what the actual bid is. [00:43:00] They have to go and just bid their true amount that they’re willing to pay. They have less of an advantage. The other nice aspect of it is, because you paid a second-highest price, if every bid had no blind, then you can imagine a grieving attack where everyone bids just one under that bid amount. Now that winner has to go and pay that every time versus paying the true amount of the true market value of that name, which is the second-highest price.

If you look at the auctions, this is a dynamic that’s already happening. People are using these blinds. Some of the highest lockups on [00:43:30] .coin, they’re actually blinds. The second highest one was actually a hundred thousand, that was conceived. A lot of them, before then were blinds and just people basically spoofing that. It’s a really good dynamic because it makes the market a much better market than it would otherwise be.

Clay: So, just thinking about auction strategy. If you were an HNS whale, and you had a ton of HNS, you could go into [00:44:00] auctions and just post small or medium-sized bid amounts; but huge blind amounts just to intimidate the entire market of people that could potentially be interested because they’d look at the lockup amounts and assume that it’s not really possible for them to get those domain names.

The conclusion I’ve come to for my own personal strategy is that I generally want to have 100% [00:44:30] of what I put down be the actual bid, because if I put a high blind amount, that’s likely to drive up the price in a way that I’m not interested in. If you really want to make sure you get a domain name, you’ll look at the highest lockup and assume that in order to ensure that you win, you need to beat that. I’m not a huge fan of using the blind component, because I [00:45:00] don’t want to drive up the price. There are so many different ways that this could end up playing out, I really haven’t thought of most of them. What are some of the other strategies that someone could deploy blinds with the style of auction?

Tieshun: We’re still seeing the market develop. A lot of this is emergent behavior. I’ve been thinking about this stuff for two years. [00:45:30] I didn’t really expect that people would be trying to do this [inaudible 00:45:32] behavior; and then now, like, “Oh, I guess it does make sense that people do that.” Now we have to create tooling to help people avoid that situation. A lot of it is emergent. I think the two main use cases now are, one, to basically troll whales; two, to hide the true amount so that it’s difficult for someone to increase your cost basis without them being an honest actor.

The third one is, actually, I don’t know yet. We’ll have to see what some of the use cases of the blinds are. It’s pretty interesting to think about [00:46:00] what’s going to happen.

What I’ve learned in all this is that there are a lot of participants in each auction. There are thousands of people getting involved. Never underestimate the masses. Never underestimate emergent behavior, because so many things I did not predict are happening. I’m like, “Okay, that’s like really cool that it’s actually happening.” We’ll get to see, it’s still really early days.

Clay: The other details are there’s a five-day auction period. [00:46:30] At the end of that, there’s a reveal period. How many times is the reveal period?

Tieshun: It’s about 10 days. Just to clarify, that’s when people reveal the true amounts, then you reveal your true bid and your true blind amount. So, then the auction winner can be determined.

Clay: Got it. If you did not win the auction, are your HNS coins returned during the reveal period or at the end of the reveal period?

Tieshun: At the end.

Clay: Let’s say you end up winning, and you have a domain name. There’s going to be [00:47:00] a number of people here in a few days that are for the very first time going to have possession of an HNS domain name. At that point, is it just business as usual? They’ll go into Namebase and they’ll have the traditional DNS settings. Is that how it works?

Tieshun: Yeah, exactly. It’s like pretty much the exact same interface as you would expect on GoDaddy, or Namecheap, or Cloudflare—which is probably one of the better interfaces—but you just set the records. You actually normally need to run name servers, which is like an obscure [00:47:30] piece of software that is annoying to set up.

We’re basically doing that automatically for people so that the name servers are automatically provisioned, then you can just go in and set your DNS records like you would normally, and then you’re good to go. You just point your DNS to Handshake resolver, and you can go visit those websites in your browser, which is super cool. We’re also partnering with… It’s actually a really cool company, but I think [00:48:00] it’s going to come and announce in like two or three weeks. We’re partnering with an existing company within the deployment space so that all of those customers and all those developers who are using it, you can just go and deploy your server, and very easily associate your Handshake name with that service.

Now, developers have an incredibly easy way to deploy web sites to their Handshake sites. Between the resolver, which gives end users an easy way to resolve the names, and then between the deployment, which gives developers an incredibly easy way to develop web sites for [00:48:30] Handshake names, you have the full picture here.

With that, let’s move on to Chapter 5: what’s next for Namebase?

We’ve got the first batch of people with main net, domain names taking possession of them. A lot of them are probably just going to sit on them. Some people are going to actually set them up. We’ll see what happens. What types of things are coming online in the short term here? You talked about [00:49:00] resolvers. We don’t have a resolver yet but sounds like there’s services for allowing TLD owners to sell second-level domains. Maybe there’ll be white-label solutions for that thing. In terms of infrastructure, what do you see popping up in the next one to three months?

Tieshun: Within the next month, it’s the resolvers coming online, the deployments coming online. USC payments are coming online. That just gives a lot more access to people, because it’s easy to buy it with Bitcoin, but it’s still [00:49:30] not as easy as just being able to buy with your existing bank account. First that, then you have the marketplace for the top-level domains. You write just the names themselves. That gives you some good market discovery, and it allows an ecosystem to develop for Handshake names. It also allows people to go and buy these names instantly, because normally you need to register a name, it takes two weeks.

Whereas if someone’s selling it on the marketplace, they just put a “buy now” price, and then you just send in Bitcoin to match that, [00:50:00] and then you get it. It’s yours now. It’s actually a significantly easier secondary market domain-selling process than the traditional system, where it can actually take a month to resolve. You have to deal with like brokers and all this other stuff. First there’s that, and then after that is the second-level domain. Basically, you have infrastructure for selling that. I think that’s going to be probably not within the next month and a half, but immediately after that. If [00:50:30] you’re registering the name, the first thing you do is start using it, and then you can also go and monetize it within a relatively short period of time.

Clay: The resolver, are you guys fronting that first resolver or is that a third party?

Tieshun: It’s like a privacy-focused resolver that’s a competitor to Cloudflare’s 1.1 and Google’s 8.8. They basically have a network all across the world. That means that you have really fast resolution, anywhere. Of course, the other alternative, which you can always do, is you can run a lite client, and just point [00:51:00] your DNS to your own lite-client resolver, and then that’s just happening all on your machine. For people who want a dead simple solution that’s just as easy as the existing solutions that give you access to Handshake, you can do that. For people who want to go a step further, they can just go and run it on your phone. It’s actually easier than to run it on a phone, because it’s like a really lightweight piece of software. You can just run that on your computer, point your resolver to it, and then you’re good to go.

Clay: [00:51:30] We could talk forever about the long-term implications. I think it’s pretty obvious here that DNS is only the beginning. All of those more speculative, long-term use cases that might develop that aren’t the bread-and-butter DNS, what’s most interesting to you?

Tieshun: I think it’s definitely the eventual integration between DNS and the other layers of the stack. So, you have [Sike – 00:51:57], I personally think [00:52:00] the world is sleeping on that project, just from the technical ability of that team that I’ve observed. They’re very dedicated.

They’re very low-key. Integrating that project with Handshake, now a lot of the stack is really decentralized. It’s just as usable as the existing internet. I think that’s the thing that’s missing, are you ever trying to use some of these other technologies? It’s honestly really painful. It’s confusing, and it’s painful. [00:52:30] Those are the kinds of things that are limiting adoption. Ultimately, you want them to gain adoption because, if you look at the trend, this is the reason why I became reluctant to enter the blockchain space. When I discovered Handshake, it’s like, “Okay, this thing can actually go and change the internet.”

When you look at realizing the full vision, right now what’s happening with the internet is that the internet is getting worse. We used to think of it as this global democratic internet that you could access from anywhere in the world, turns out that countries can actually start putting borders around the internet. You started seeing that happen with China, Russia, [00:53:00]and pretty much every other country around the world is moving this direction.

What’s happening is that the internet is no longer becoming free. It’s becoming very authoritarian. The trend 10 years from now is that the internet is going to be much worse than it is today. This is not just me having this estimate. It’s from speaking with people, the head of security at Google Cloud, people who have been involved in DNS, who have been involved with developer infrastructure for a long time. They see what’s happening, and they’re very concerned [00:53:30] about it. This technology is something that can actually change that trend. People who are coming in on day one, they are the people who are going to start and spread that technology to the rest of the world.

There’s an amazing quote, I forget which author it was. “The future is already here; it’s just not evenly distributed.” That’s exactly the case with Handshake. I think Handshake is going to be the future, it’s just not evenly distributed. As it grows and as we see these other technologies fill out the other part of the sack, we’re going to be able to create an internet that the entire world is going to end up using, and it’s going to be better for it.

[00:54:00]

Clay: That concludes my two-part conversation with Tieshun Roquerre from Namebase. I hope you enjoyed it.

Before you go, I want to invite you to subscribe to our newsletter called Popular Crypto. With the Popular Crypto newsletter, we don’t cover token hype or announcements of announcements. [00:54:30] Instead, the Popular Crypto Newsletter focuses on the mainstream products and services taking crypto to the masses.

To subscribe to the Popular Crypto Newsletter, go to Popularcrypto.news enter your email address and subscribe. Again, that’s popularcrypto.news.

Alright, that wraps up things for this week. Stay tuned for next week’s episode. Until then, take care.

That’s it for this week. To sign-up for our free crypto investing newsletter, listen to other episodes, or get the show notes from this episode, please visit flippening.com. I also invite you to check out the startup that funds this podcast, Nomics at nomics.com. [00:55:00]Finally, if you got value from the show, the biggest thing you can do to help us out is to leave a five-star review with some comments and feedback on iTunes, Stitcher, or wherever you listen to podcasts. Thanks for listening and see you next week.

Quotes

Description

Topics Discussed In These Episodes

Links Relevant To These Episodes

Part 1 Transcript

Part 2 Transcript

Clay Collins