On this episode of Yahoo Finance Presents, Solana Labs Co-Founder Anatoly Yakovenko sat down with Yahoo Finance's David Hollerith to discuss the Solana blockchain and cryptocurrency. He discusses blockchain competition, Solana network speed, crypto regulation in the U.S., the metaverse, and what blockchain technology holds for the future.
ZACK GUZMAN: Yahoo Finance's crypto class of 2021 is out, and Solana has been crowned one of the top contenders for next year as its token is the fifth-largest cryptocurrency by market cap. In the last 12 months, of course, it's been hard to overlook the surge we've seen for Solana, up more than 13,000% on the year.
And joining us now to discuss is senior crypto reporter David Hollerith. And, David, you talked with Solana Labs co-founder Anatoly Yakovenko last week about what has it up so much in 2021 and what to look forward to next year.
DAVID HOLLERITH: Yeah, hey, Zack. Obviously it's no secret that the cryptocurrency market is growing by, you know, $1 or $2 trillion, depending on the week, in the last year. And, you know, a big trend that we've seen, aside from obviously the top cryptocurrencies like Ethereum and Bitcoin seeing large rises and then meme coins also getting, you know, percentage gains in the thousands. We're seeing a sort of investment in these layer one blockchains that are specifically sort of angled to enable smart contracts as sort of a larger investing trend. And obviously this plays into, you know, the narrative of Web 3.0 and also the metaverse and all these larger, long-term ideas.
Now, one project out of all those that has really stood out in terms of ecosystem development as well as price appreciation has been Solana. Now Solana, you know, it's seen more than a 13% rise in its token, its native token Sol since a year ago when, you know, very few people heard of it.
But anyway, I spoke with, you know, the author of the Solana white paper and co-founder of Solana Labs Anatoly Yakovenko to sort of learn more, and he can sort of explain it and talk about it afterwards. But here's the interview.
ANATOLY YAKOVENKO: So people should probably know, like, as the one takeaway that they have about Solana is that it's ridiculously cheap and fast. So that was our number-one goal and kind of primary goal from the genesis of building the network.
And, you know, myself and most of the founding team were ex-Qualcomm engineers. If you've never heard of Qualcomm, they're the folks that build, you know, 4G, 5G CDMA. Every cell phone in the world has a piece of Qualcomm tech in it. So we always thought that these systems are communications networks, and we should design it as such and make it as cheap and as fast as possible.
So I think, like, if you want to connect it to why we had such a, you know, crazy year in terms of adoption, it's because it was live. It was cheap. It's cheap and fast, and it's a new developer platform. So it's not based on Ethereum in any way. And that gives developers a new set of tools to build things that they just couldn't build anywhere else.
DAVID HOLLERITH: So yeah, I mean, Bitcoin has something like-- does something like seven transactions per second. Ethereum does up to 30. Solana does in the thousands, and, you know, it's much larger than anything a financial institution can do.
But I'm sort of more curious about, like, if we think of a blockchain as like a network, sort of what do you think are the most important sort of incentives to drive users to use your blockchain as opposed to another blockchain?
ANATOLY YAKOVENKO: Yeah, that's the tricky part is that users-- like, you know, why would my mom care if she's using Solana or not, right? She'll probably never know. But developers, people building products, they want to take advantage of these new tools that cryptography offers you. This idea that users will self-custody keys, can now operate on these trustless systems, that's kind of the new magic sauce that developers have, and they definitely care if the network is slow or expensive. So, you know, our primary customer isn't so much the end user, but it's the devs, the engineers, the app developers that are trying to build this next generation of applications.
DAVID HOLLERITH: Yeah, so how does Solana, at this point, navigate the sort of regulation situation in the US?
ANATOLY YAKOVENKO: So, you know, like if you follow a lot of the-- what's been happening in Congress, you know, it seems like the folks mostly have their head screwed on right. Like when they talk about layer ones and validation, they don't always get the language right, but they do understand that there's a difference between layer one like the network itself just providing a service for processing data and a business that runs on top of it that takes custody of somebody's assets and promises them something in return.
So that difference, it feels like people are getting it, even though they may not get the language right every time. So we see a lot of progress in the US going in the right direction.
DAVID HOLLERITH: Yeah, and I had sort of read something you said at a concert-- or a conference about the metaverse. I thought it was pretty interesting. Like, what are your ideas of the metaverse? How does something like a Solana fit into, you know, the metaverse long term?
ANATOLY YAKOVENKO: Yeah, you know, the metaverse means a lot of things. The way I look at it is that, you know, over the last 20, 30 years that the web has been around, there's been basically one business model, and its ads. And even when you have subscriptions, it's really there-- a subscription is only there because you're threatening your users with ads until they pay you a subscription. So the advertisement is the core of how Web 2.0 monetizes digital content.
Web 3.0 is a whole different way to monetize digital content that's just never been done before. So it's based on, you know, users being able to transfer digital content between themselves without any bottlenecks, without an intermediary. And the networks where those users do that are able to, you know, have self-sustaining business models by simply, you know, like in case of NFTs, charging a small percentage in the secondary sales.
So that programmability of financial rewards kind of rewards that is attached to digital content, that's a whole new business model, and this is what I think of Web 3.0. You know, it's not a-- it's not a single device. It's not AR or VR. It's just a different way to start making money on the web.
And it's really important because it quite literally excludes the standard Facebook, Google monetization techniques. You don't need to steal anyone's data. You don't need to sell anybody's data to an advertiser. None of those things exist anymore, right? You can actually build very rich social experiences that are totally private and just really maximize user interactions.
So what I hope to see is that we'll start seeing a shift from the typical Web 2.0 style of let's steal everyone's data and sell it to let's make the experience of using these platforms, these networks much more entertaining and richer for the user.
DAVID HOLLERITH: Yeah, and I know that Solana has a ton of DeFi and NFT activity too. And on the NFT side, Melania Trump just launched a project on Solana, and there's a Decrypt article I'd read about how sort of Solana Labs had said basically that it was not-- you were not responsible for her choice to use the platform. And I was just curious, what does that imply sort of about how, like, Solana should be thought of in terms of censorship?
ANATOLY YAKOVENKO: So there's like censorship from a mechanical-engineering perspective is this idea that when you send a transaction that it arrives to everybody in the world. It's not a form of, like, political freedoms or anything like that. So political censorship is a whole different game, and there's no way a blockchain will ever solve that problem, so don't even-- don't even try to frame the two. That's a people problem, and that's a hard one.
From our perspective, Solana's for everyone. It doesn't really matter who launches the NFTs, and we're happy. You know, I think her team made the obvious choice that Solana is the best place to launch NFTs in general, so happy about that.
DAVID HOLLERITH: So what about like, you know, sort of that hypothetical extreme example of, like, something like, you know-- if, you know, let's say, like, terrorists put something on Solana, like, how does-- is that-- can anybody take that down? Does any-- what do you think of that?
ANATOLY YAKOVENKO: So just like the data, that validation processing is really no different as AT&T packet switches. You can even think of them as AT&T packet switches. They just also do a cryptographic check.
So it's a very, very dumb process. Like, you can-- I imagine a future where there's like a Solana box that plugs in next to the Cisco switch, and it's just handling packet switching that also have cryptography alongside them with them.
So what does AT&T do when that happens, right? You try to figure out who's actually promoting it on a platform, and you go take down the DNS and all this other stuff. But that's a problem that is at a much higher layer.
DAVID HOLLERITH: Yeah, and so just what's the roadmap going forward, like thinking about 2022? You've had an incredible year so far, and obviously there's tons of more room to grow.
ANATOLY YAKOVENKO: Yeah, you know, like, we've never-- as engineers, we always hated roadmaps that were more than, like, four weeks long because you just-- as soon as something takes more than four weeks to build, it just might as well take 10 years. You just don't think about it.
So we've always been like very much what's the next step? And for us, it's more optimizations, making the network faster and better for devs to use.
DAVID HOLLERITH: Yeah, and just to cap it all off, like, what do you like about working in the crypto sector so much?
ANATOLY YAKOVENKO: I've always been, like, a true fan of, you know, open source. It's been just awesome to see these technologies, like, and this ethos applied to a whole new industry. And like, you know, when I was really, like, much-- when I was growing up as an engineer kind of coming to, you know, maturity as an engineer, I was really into Linux and open-source development. But, you know, what we were hoping for was an open platform that's available for everybody to build and tinker with. What you ended up was Android, which is quite the opposite of that.
And it really feels like there's an opportunity to remake the web into a much more open environment that really doesn't depend on how Google and Facebook make money. So that, to me, is the exciting part.
DAVID HOLLERITH: Yeah, Zack, back to the Melania Trump question that I had asked him. So the Solana Labs didn't give an endorsement to the project or an antiendorsement to the project, a rep had told us, but it sort of goes back to this question of how these blockchain layer ones are supposed to deal with, you know, censorship, you know, in light of something like, you know, a Twitter or a Facebook which has had to sort of make those judgment calls.
So just to give a little more context too, Solana is still technically in beta. So they have had sort of runtime issues and temporary shutdowns in the past, but they're technically not live yet.
ZACK GUZMAN: Yeah, and I mean, it's one of those interesting ones to watch too. As we noted, obviously gotten a lot of attention from FTX founder Sam Bankman-Fried and getting a lot of attention from a lot of people. It's not-- it's not like you can surge 13,000% in a year and not catch some eyeballs or second glances. But interesting to see how all of these competing L1s are trying to attract not just users but developers and also trying to show that a lot of builders are using their technology to roll out their decentralized apps.
But David Hollerith bringing us the latest there. The very interesting interview with Solana--