EVERYTHING You Need to Know About the Next Technology REVOLUTION | Tom Bilyeu

What is up, everybody? Welcome to another episode of Impact Theory. Today, we're going to be talking all about one of my favorite topics, and that is Web3. We're going to be talking about how to understand it, what it is, how to get involved, how to leverage it. It is, I truly believe, the future. This is going to be massive. This is a tectonic foundational shift that is going to impact society as dramatically as the internet did. And I'm going to be answering your questions all about it. All right, question number one. What, to your best ability, is a simple and brief definition of Web3? Okay, this is a definition. I didn't think of this. I've heard it said many times. I don't know who coined it. But, Web1 was read-only. So, you would go to a webpage, there would be content there, and you could, um, read it, and take it in. Web2 was read and write. So, you could go to a site like Facebook, and not only could you read content, but you could actually post your own content. Web3 is a whole new thing that introduces ownership and participation. So, you've got Web1, read-only, Web2, read and write, and Web3, not only do you have read, write, but you have own and participate. So, this is where things really begin to get interesting is now you're going through a period where kids are being raised in playing games like Minecraft and Roblox. And quite frankly, the ability to create inside of a video game has existed for a long time. I remember remember back in the '80s, Excitebike from Nintendo had a track creator, and you could go in and create your own track, and it was a lot of fun. Your friends could play it. And so, gaming has been playing around with this idea for a long time. And as those games have gotten more popular, as the technology has built up, you get people spending a lot of their time in these games creating things. Now, the missing component of this, if you're going to spend that kind of time and energy, then you want to be able to own the things that you're creating in that space. And so, the ability to have the blockchain technology, which is really what has allowed Web3 to thrive, is now a digital item can be verified as owned by a given person. Now, that is incredibly important, and that idea was the missing link. And so, now that we have the blockchain technology and digital items can no longer just be right-click saved, which is the joke in the Web3 community is that people are like, "Well, you just paid, you know, half a million dollars for that JPEG, but I can just go right-click save it, and now I own it, too." And the thing that they don't understand is hiding within that JPEG, or the real one, is matrix code. And so, based on that matrix code, I can actually read whether that's the real one or not, and I can tell whether you have a fake one or not. And based on whether you have the real one or not, I can give you advantages. It could be access to a video game. It could be access to certain levels in a video game. It could be wearing that shirt or having that weapon in that game. It could be taking that avatar into the metaverse. It could be showing up to a live show, and me scanning that and knowing that you have the real NFT and either letting you into the show or not. It could be as more infrastructure is built, like Twitter is going to be verifying that people have the authentic NFT in their profile picture, for instance. And as that kind of infrastructure gets built out, now that ownership really matters, and it begins to play out not only in the ability to flex and say I own it, kind of like leaning up against the Lamborghini is very different than actually having the Lamborghini, owning it, being able to drive it, do things, take it home, park it in your garage, um go racing down the road, whatever it is that you want to do with it. When you actually own it, you can do. And the divergence between a right-click save version of an NFT and an NFT that you own and has that matrix code in it that can be verified all over the place is only getting wider and wider and wider and wider. So, as more places also verify the real one versus the fakes, then even just the pure status symbol of it all is going to carry across because you won't be able to, like now you can get a fake Fendi bag or a fake Rolex, but eventually the ones that are real are going to be verified in all the different places that you would flex it. So, you know, whether that's OpenSea right now, which I'm sure many people don't know what that is, uh but it's a website that shows the different things you own, you know, whether it's that or whether it's Twitter or I'm sure Instagram will follow suit, TikTok, all of them uh will ultimately do this. Video games, the same. Uh it will be obvious whose things are real and whose things are fake. So, that uh even just again on that flexing side is going to become a thing, but the utility is where the real play is. All right, so that is the synopsis of Web 1, 2, and 3. This episode is sponsored by Athletic Greens. Get a free 1-year supply of vitamin D and five free travel packs with your first purchase. Simply visit athleticgreens.com/impacttheory. Now, enjoy the episode. All right, the next question. The term Web 3 was coined in 2014. Why is interest in Web 3 spiking now? The reason for that is the blockchain didn't exist um you know, a long time ago. And then, even as it came into existence, oh god, I forget the exact year, 2009, I want to say. Um even back then, the adoption rate on that was very low. And so, a technology like the blockchain requires what's called Metcalfe's law, which is about network adoption. So, if you have a phone, but you're the only one with a phone, the phone is not very useful. If you have a phone and your friend has a phone, boom, now we've got something that's usable. If your friends' friends all have phones, even more useful. And then, as we see this goes on, and when the whole world has phones, they become incredibly powerful. The same is true of the internet. If one website exists on the internet, not so great. If a thousand websites exist and I can connect to all of those, amazing. If a million, a hundred million, a billion, then all of a sudden it gets very, very interesting, very fast, and the utility skyrockets. And so, as adoption has happened in Web3, so has the value increased. And so, that's why we're seeing this explosion in interest now. And by the way, I'm saying this January 10th, 2022. Mark my words when this feels like the distant past, that Web3, what's going to happen in the next 3 years. So, by January 10th, 2025, we'll have to replay this clip, things are going to be almost unrecognizable from where they are now. And the access that I've been getting to people that are building things that haven't yet been announced, it's incredibly what's being built. And I've heard it said before, follow the developers. And if you look at all the developer energy pouring into the Web3 space and the incredible things that you can create when you're able to verify ownership in something, whoo, it's incredible. Because you can verify ownership, not only can somebody own, but that means you create something that people want to buy. You can sell, you can generate revenue. As you can generate revenue, now you have incentive to create this stuff. And so, because of the financial incentives, people are pouring and creating this incredible creative stuff on the back of this amazing technology. And man, when I look at some of the infrastructure stuff that's being put in place now, and I project out where we're going to be in 3 years, it is going to be absolutely incredible. A deep integration with so many different aspects of your life. Gaming, obviously collectibles, art, this stuff has already happened. But as you get deeper down in that rabbit hole and as things begin to get regulated and people really understand where this is going, integration into banking, into real estate, into um all manner of things, physical goods, digi-physical merging, medical records. It is going to get insane. There are going to be so many applications that are born out of this because you now have this global reach with your I mean, take collectibles. This is part of why the NFT market is exploding. Collectibles has always been something that had to be physically traded, right? There was a lot of trust. If I was going to buy a card and you were going to send me that baseball card and I was going to pay you $20,000 for that card, yikes. Like the amount of trust that has to be worked into there and getting brokers or being physically together at a show, things like that. All of that goes away. When this is digital, it's verified on the blockchain, I can have a transaction with anybody anywhere in the world and I can do it instantaneously. Now all of a sudden it's a global market. It becomes huge. It becomes much easier to trade this stuff. And so because of that, you get the financial incentives, you get more people paying attention, you get that network adoption which makes the value go up even more, which makes more energy pour in, which makes cooler and cooler things happen. And as those network effects take effect, you get more people building the infrastructure which gives you things like Twitter verifying your NFT which makes your NFT more valuable. It makes more companies look at, "How do I sell my physical clothing through an NFT?" Or if I'm a band, "How do I make that ticket matter and become a collectible that changes over time or has other utility over time?" It's crazy. You are literally only limited by your imagination and the power of computers and the internet. It is utterly astonishing what's happening. So, as the technology gets better, more people pour in, and it just so happens that we've recently hit a tipping point. So, that's why it's popping off now. Next question. What are five good sources of information, any kind of information, that you would consider essential to gain an understanding of Web3? Okay. So, Twitter and Discord, those are going to be two of the most important things. Now, this is one that I think is going to change over time, so this is probably not going to be an evergreen answer, but certainly as of today, those are great places to start. You want to go and find people that are giving good information, and please find people that are kind and uplifting. It is so much more fun, and I absolutely am not only is it boring to be around people that are negative, but it really, I think, is a bad look for the space. So, find people that are wonderful, joyful, that are uplifting, um that are trying to make this a better place to be, that want to see you succeed and do well. But, find those people on Twitter. I promise they are there. They are wonderful. They have a ton of information. Uh you can look and see who I follow, uh so you can follow me on Twitter @tombilyeu, um and check out who I follow. That would be a simple place to start. And then from there, look at the people that you really like, who are they following? Follow hashtags. You can certainly follow #web3. You can follow #nft, NFTs. Um there's a few simple things. Start following those. You'll see who's putting out good information, who's doing it in a positive and encouraging way. Um and then from there, Discords of different projects that you like, that is where a lot of this is going on. And then, if you find people that are really in the space, I found that there are a lot of WhatsApp and Telegram groups. If you find like-minded individuals, I find the smaller groups are better, but people sharing ideas and information, whether it's a group of builders, or whether it's a group of collectors, or whether it's a group of traders, but finding people that are approaching it the way that you're approaching it, that are excited about things you're excited about. That's a great place. And then, most importantly, get involved. So, whether that's on OpenSea, which is Ethereum's main website secondary market, or if Solana continues to gain attraction, finding a place where you can go and pick up actual NFTs that you're excited about. And I highly encourage you to buy NFTs that you want because you want to hold them, not because you think they're going to skyrocket in value. Some do, but the vast majority of them do not. So, you want to make sure that you're buying things, one, uh only spending money that you can afford to lose. And then, two, buying things you're actually legitimately excited about. And so, whether that's excited about the team, what they stand for, what they're building, the art, whatever. But just find something that you're excited to have. NFTs is technology, and technology takes time. And so, when people are getting in with a gold rush mentality, I find, A, they usually lose money, and B, they're often very frustrated. But if you take a longer approach and treat it like you would a collectible around a movie or a TV show that you absolutely love. And so, even when the TV show goes off the air, you still have the relationship with that story, with those characters. And so, having that collectible item, having that connection to it, still gives you that emotional resonance. So, that is very much where I would start. So, yeah, that to me is the place to begin. That was four. And then, the fifth, of course, if you haven't already subscribed to my YouTube channel, make sure that you do that. I'm hyperactive in the space and trying to put out a ton of content that people can use. So, there's five good sources of information. Let's talk about Athletic Greens, my friends. The all-in-one daily drink to support better health and peak performance. To help each of us be at our best, AG1 by Athletic Greens simplifies the path to better nutrition by giving you the one thing with all the best things. One tasty scoop of AG1 contains 75 vitamins, minerals, and whole food-sourced ingredients, including a multivitamin, multimineral, probiotic, greens superfood blend, and more in one convenient daily serving. And right now, Athletic Greens is doubling down on supporting your immune system. They're offering our audience a free 1-year supply of vitamin D and five free travel packs with your first purchase. Simply visit athleticgreens.com/impacttheory. That's athleticgreens.com/impacttheory and get your free 1-year supply of vitamin D and five free travel packs today. athleticgreens.com/impacttheory. All right, guys. Take care and be legendary. All right, next. Will Web3 contribute towards a more balanced society? All right. Boy, do I wish you were in the room so I could ask you what you mean by a balanced society. But, I'm going to take this answer to somewhere a little dark that I don't know that people are expecting. Ray Dalio, the largest hedge fund manager in the world, somebody who is really attuned to macro trends, has written a book. I haven't read it yet, but this is at the absolute top of my reading list because I'm familiar with the ideas about how world orders change. And the decline of one superpower, the rise of another superpower. And how countries, even within themselves, can begin to fracture. And Ray Dalio has pegged the odds of some type of civil war, whether it's outright war or it's a cold civil war, I believe he put it at 30%. And I don't think he's crazy. And the reason is when you see inequality reach the levels that it's reached now, historically, the only thing that has ever been able to distribute wealth effectively enough is war or revolution. And my hope is that Web3 is the bloodless revolution that we need to redistribute wealth. And if you look at the people that moved early in crypto, that was already just a huge redistribution of wealth. If you look at some of the successful people in NFTs, there's been huge wins. Don't get me wrong, it's a wildly volatile asset class. And so I don't necessarily even encourage people to look at it as an asset class, but certainly that's been a way uh for people to generate a lot of money as builders, for way for people, again, that are successful to generate a lot of money as um traders. So, my hope is that the blockchain is really ushering in a whole new way for the fast movers, the builders, the creatives to come in and build a whole new way of doing things that is sidestepping the traditional systems and some of the brokenness of the traditional system and hopefully making things such that we all have an equal playing field, that we all have the same starting line. And once part of what makes Web3 work is decentralization, which I'm sure there are some people that are mortified that in my definition of Web3 I did not talk about decentralization. So, let me address that now. I don't know that it's going to be a critical component of the Web3 future. Um I know that people some people are going to have a seizure over that. And the reason is this is a game of psychology. Let me explain decentralization. Right now, part of the problem is everything belongs to centralized organizations. So, take the censorship problem in social media. Because a small number of companies own these massive distribution platforms for communication, if they don't like what you're saying, they can shut you down. And if they shut you down, you've got no recourse. There's nobody else with that kind of reach. There's just no platform that you can be on that will um match the reach that they have. So, decentralization makes it such that no one person has that kind of control. And they call it censorship resistant or censorship free. So, take the Ethereum blockchain for instance. I don't know how many nodes there are. I think once I said there was a lot and I think I said a lot more than there really are. Uh so, I won't uh hazard a guess again, but it's a lot. Thousands, maybe even tens of thousands of nodes and they're all running the blockchain. And so, in running that or sorry, um in in running the different nodes and having the um the entire record of everything that's happened on the blockchain leading up to that moment, you get this thing where you would need 51% of those nodes to be um hacked, taken over in order for them to all agree with something that is false. And by doing that, you make it such that nobody could kill it off. Even if one government tried to kill it off, it would just spring up in another country somewhere. If one person tried to kill it off, it wouldn't matter cuz there are so many nodes, nobody knows who everybody is, and so it'd be very, very difficult, even with a lot, like governmental money. It would be very, very difficult to hack enough of those computers uh in order to get it to report something that was false. And so, because of that, you get this really interesting effect, which is good and bad because it can be once something happens on the blockchain, it's immutable. So, there have been many people who have been tricked into giving someone else what's called their seed phrase to their wallet. We're we're getting into deep waters here, but you store NFTs in a wallet, you can store your cryptocurrency in a wallet, and then if somebody manages to socially engineer you into giving up your seed phrase, then they can take over your wallet, and even though your assets are plain to see on the blockchain, you know exactly who has them. You can't forcibly take them back. And so, if you had that kind of um decentralized distribution of something like a social media platform where no one person could shut it down, now all of a sudden you can't censor somebody. And so, it becomes very interesting when you think about money that becomes very hard to capture, very hard to seize, so the government can't just come in and seize it. Like, I don't know if you guys know what happened in Cyprus, like what, 10 or 11 years ago, where they went in and just said, "All right, everybody, we're taking, I forget how much your money. Let's call it 3%. Hey, everybody, uh everybody's bank account is now less 3% because." And that would be, needless to say, pretty offensive. Um and when you have something that's decentralized, people can't go in and do that. And so, even if a government were to come and physically accost you, if you don't they could take your freedom, but they couldn't necessarily take your NFTs or your Bitcoin or your Ethereum or whatever you have stored in the blockchain. You would have to give them that access if you have it on a decentralized exchange or a decentralized uh wallet. So, it really is pretty interesting. So, in a Web3 world, there are a couple of things that make me very optimistic. One, it's just this totally new paradigm that allows us to to sidestep the traditional systems. It may allow us to sidestep the centralized nature, although again, I'm not so sure that decentralized will win for the masses. I think it will always be there for the people that want it, but I think some people prefer convenience, prefer safety, prefer insurance. But maybe infrastructure will be built that will take care of that and preserve decentralization, which I think would be magically delicious. But that that sort of will play out over time. We'll see where that goes. But it's a new paradigm, a new technology that's allowing new creators to come into the space and people that have traditionally been iced out now have an opportunity. It's the blockchain is really the first time, especially cryptocurrency, is the first time where the individual can front-run the institutions. And that doesn't mean the institutions aren't going to use their savvy to soak up as much of this as humanly possible, but there are many things that now, depending on how this ends up getting regulated, where if you're supporting a product or a company and you buy something, you now can capture some of that long-tail economic value. So take the Impact Theory Founder's Key. That was me saying, "Okay, as a company, Impact Theory is making all this IP. We have all these cool things from our university to ad-free content. And we want to create an umbrella project that allows a very limited number of people to have all different kinds of access to things that other people can't get access to." So we created the Founder's Key. And now, in theory, I mean, of course it could go to nothing, it could go to zero, who knows. But if we execute well, it could also continue to deliver utility value. And even if that's all we ever do, owners of those keys will get a tremendous amount of value. If on the other hand, by giving the value to those key holders and keeping the number limited or even beginning to shrink it over time, the value of those keys may go up. Again, there's no guarantee, but that certainly makes sense if we're executing well over time and we keep that supply limited and we're putting enough cool utility where more and more people want it than there are number of keys. Now, it's the community that gets to reap 90% of that long-tail economic value. We keep 10% to support it in an ongoing fashion, but 90% of that is for the community. And so to me, that is really extraordinary and that's why I say that Web3 is going to be marked by ownership and participation. And even looking more at that participation element, which I think is really important, is now, because I can prove who owns uh an Impact Theory Founder's Key for instance, one of the things that we have with our legendary tier is something called the right to partner. So, as we build out this intellectual property, our first project being um a um brand called Mary Mods. And Mary Mods is a Christmas-related project. It's a story, it's got characters, and all this really cool stuff. And we if you have a legendary key, you could for instance, and somebody actually did this, you could build a Christmas tree ornament company using our IP. And so now, for people that historically wouldn't have been able to build a company because they don't have the brand behind them that that would give them a leg forward, a leg up, uh they just never started anything. And so now, I think more companies are going to create sandboxes in which people can create. So, whether that's you as a writer being able to make fan fiction of something like uh Neon Future or Mary Mods or one of our other All Systems Go, all the different projects that we're working on, we're creating these sandboxes where people can come in and create and then take advantage of if you can build an audience off of that that you would be able to then um do things within that community that either push you forward, grow your audience, or you can monetize them depending on what you're doing. So, it's really that participation, that ability to participate. And there's actually something a project, really cool project. I do own some of these, but I'm in no way involved behind the scenes, but called Critters. And that was somebody that took a Minecraft server and created basically land ownership that you could earn by buying these Critters, staking them. That's outside of the scope of this conversation. And the that staking your Critters, which is basically people playing with those characters inside the game, Minecraft, the game people are already playing, that you earn this reward called blocks. And the blocks you could use to buy land, and then the land generated um money, items, whatever. I actually haven't played it yet, so I don't know. But in doing that, in renting out your Critters and having the land, you could earn these rewards, and those rewards have an economy that you can actually sell for real money. And so, it becomes utterly fascinating when you look at the fact that people are taking these in-game economies and turning them into real-life money. And so, there's this whole genre called play-to-earn. And as you play the game, you're actually earning money. And so, or I should say earn things that you can then turn into money. Absolutely fascinating, and we're in such the early innings of what is going to be a very long game. It'll be incredible to see where this goes over the long run. So, my hope is that all of those different and creative ways for people to get engaged and sidestep the traditional institutions that have historically kept certain people out, that we will have in that way a more balanced society. All right. What are the best first steps to taking advantage of the opportunities that Web3 has to offer after educating myself? This is where you want to get involved. So, again, don't spend any money that you can't afford to lose. You never know, this stuff could all go to zero. But the only way to really learn something is to take action, to get involved with it. And so, as you begin to explore, find those projects that you really like, find those Discords you want to be in, find those ecosystems where people have created a sandbox for people that are, let's say, a key holder or holder of that NFT. It certainly does not need to be keys, but holder of that NFT that can go in and either create or take the Bored Ape Yacht Club, which give you certain rights to the actual ape that you own. And so, you've had people launch coffee companies using their Bored Ape. Um there have, I think, already been commercials, if not, I think you will see that in the future, using the Bored Apes. So, there are going to be many, many ways that people can take the NFTs that they own and create from them. And so, by getting a hold of ones that give you access to a community that you resonate with, that allow you to go in and create and experiment with this stuff, you'll really begin to see how this stuff understands or how it works, so that you can understand it better. And there's also something, and this is like its own conversation, uh but something called DAOs, uh decentralized autonomous organizations. And what they let people do is basically come together as a loose collective that, um often times, has a treasury. In fact, one of the most interesting one is the Nouns DAO, and every day the Nouns DAO releases uh a single Noun. It's uh an 8-bit graphic. It basically looks like something Nintendo would have made back in the '80s, and people bid on it, and they pay whatever they want to pay for that day's Noun. There's one created a day forever, and uh the money that goes to each auction goes into the treasury of the Nouns DAO. And then, every member that buys one is on the governance committee of the Nouns DAO, and they can decide what they want to do with the money. And so, you see how these things end up creating companies. And to give you an idea, the first noun, so day one, sold for 1.8 million dollars. So, right away, you've got a company that generated in a single day almost 2 million dollars. And I forget how much they've been selling for, but they've been selling for a lot, six figures each one every day. So, it's really pretty extraordinary when you think about how much wealth they're accumulating into that treasury, and then we'll see over time what they end up doing with it. But, it's really pretty extraordinary the number of different opportunities that Web3 is creating, and this is why I'm so bullish on this. Long term, I really think that this creates a foundational shift. We are so early in this space, and the the amount of creativity, the amount of mind-blowing things that are happening is extraordinary. Just go look at the VV community, another one where the they're VV is a company that does basically film-related and comic-related collectibles. And even with that simple of a thesis, go look at the creativity that's being displayed in these VV vaults. It's bananas. It is bananas. And that kind of self-reinforcing community of creating and being celebrated by other community members gets excitement around these projects, which pours more people into them getting more network effects, pouring more money into the systems, creating more network effects, and so on and so forth it goes. And it's really the way that Web3 is proving to unlock creativity that most exciting. All right. Don't let it pass you by. Do the research. If you walk away and say that this doesn't make any sense, you think I'm crazy, I totally get it. I could be wrong, absolutely. I come from the Ray Dalio school of thought. I think I'm right, but how do I know I'm right? So, do your own research. Put in a good 25 hours of looking into this stuff. I think 25 leads to 100, I think 100 leads to 500, and in that you'll really begin to see the opportunities here. It will spark your own creativity. You'll find that you either want to engage or you want to build or both. I've never seen more energy pour into something than this. The number of people that are saying this is like the early internet. I was focused on something totally different back then, so I can't say. Uh but in 20-plus years of business, I've never witnessed anything like this ever in my life. So, I'm highly encouraging you guys to get involved. Go do the research. Go do the research. See if this sparks your creativity. See if you see opportunities in this. I really think that there are going to be huge winners that come out of the blockchain space. I think that this is forever. Knowing the things that I've seen that are being developed underground that haven't even broken the surface. As they say, it takes 5 years for bamboo to build its root system, but then once the root system is complete in whatever, like 3 weeks, it can grow 60 ft tall or some outrageous it really is close to that outrageous number. That's what I feel like has been going on below the surface. So, like you said, Web3 was coined back in 2014, but now all of a sudden, boom, things are just growing up so fast. And the amount of stuff that's being developed that hasn't been talked about yet, it hasn't been released yet. I'm just telling you right now, it is going to be huge. It is so awe-inspiring. Do the research. I could be crazy, but I don't think so. All right. Speaking of things that you should do, if you haven't already, be sure to subscribe. And until next time, my friends, be legendary. Take care. Peace.