Transcript
00:00:00 The following is a conversation with Sergei Nazarov,
00:00:03 CEO of Chainlink, which is a decentralized Oracle network
00:00:07 that provides data to smart contracts.
00:00:10 He and his team have done seminal research
00:00:12 and engineering in the space of smart contracts.
00:00:15 Check out the Chainlink 2.0 white paper
00:00:17 that I found to be a great overview
00:00:19 of their technology and vision.
00:00:21 It’s 136 pages, but very accessible.
00:00:24 Quick mention of our sponsors.
00:00:26 Wine Access, Athletic Greens, Magic Spoon, Indeed,
00:00:30 and BetterHelp.
00:00:32 Check them out in the description
00:00:33 to support this podcast.
00:00:35 As a side note, let me say that
00:00:37 externally connected smart contracts
00:00:39 that combine the ocean of data out there
00:00:42 with the security of the blockchain are fascinating to me,
00:00:45 both technically and philosophically.
00:00:48 Data is knowledge, and knowledge is power.
00:00:51 I think the more reliable data sources we integrate
00:00:55 into our decision making,
00:00:57 especially when those decisions are executed by programs,
00:01:00 the more efficient and productive our decisions become.
00:01:04 There are interactions between humans
00:01:07 that should not be formalized digitally,
00:01:10 like love, for example, but for all the others,
00:01:13 there’s no reason for smart contracts
00:01:15 not to automate away the menial parts of life,
00:01:18 making more room for good conversation over brisket
00:01:22 and maybe some vodka with old and new friends.
00:01:26 This is the Lex Friedman podcast,
00:01:28 and here is my conversation with Sergey Nazarov.
00:01:33 Is that Jozsik there?
00:01:35 So I gave away everything I own a few times in my life,
00:01:38 and he accidentally survived,
00:01:41 and I don’t like stuffed animals.
00:01:42 What I really liked about, I got him in a thrift store.
00:01:44 What I liked about him is,
00:01:45 because I’d never seen a stuffed animal
00:01:48 that looks pissed off at life.
00:01:50 Like they’re usually smiling in the dumbest of ways,
00:01:53 and this guy was just pissed.
00:01:56 Yeah, I gotta tell you, that’s actually pretty funny.
00:01:58 I like this guy.
00:01:59 If you had to live only in the digital world
00:02:02 or the physical world, which would you choose?
00:02:06 So I think this is actually a question
00:02:08 more about what the fidelity of the digital world would be
00:02:11 versus the physical world.
00:02:13 I think this type of question,
00:02:15 this whole simulation thing actually comes from papers
00:02:18 about 20, 30 years ago in the philosophical world
00:02:21 where people tried to make this thought experiment
00:02:23 of would you be comfortable
00:02:25 if everything that was happening to you
00:02:27 happened in a simulation?
00:02:28 What they were trying to do
00:02:29 is they were intuitively trying to understand
00:02:32 is there some kind of intuitive personal connection
00:02:36 we have to something being the real world, right?
00:02:40 And then the Matrix movie actually came out of these papers,
00:02:43 and then these ideas made their way
00:02:45 into the public consciousness.
00:02:47 I personally think that if I had the choice
00:02:50 to be in the digital world at the same fidelity
00:02:53 as the real world with immortality,
00:02:56 I would absolutely go with the digital.
00:02:57 Wait, wait, wait, wait, wait.
00:02:58 How’d you add the immortality part?
00:03:00 That’s a, you don’t get immortality.
00:03:02 If you think about how we would go
00:03:03 into the digital world, right?
00:03:04 Our brain patterns would be mapped
00:03:07 onto some kind of probably virtual machine, right?
00:03:10 And that would mean immortality, right?
00:03:13 Because the virtual machine has no limit
00:03:15 to how long it can exist.
00:03:16 So don’t you think there’ll be like a versioning system?
00:03:18 Like there’ll be, this is a soft fork
00:03:22 versus hard fork question.
00:03:23 Whether Sergei version 2.0 would be different
00:03:27 from Sergei version 1.0, there’ll be an upgrade.
00:03:30 So that’s a mortality.
00:03:32 Sergei 1.0 would die in the digital world.
00:03:34 And you get like a software update, and then that’s it.
00:03:38 Well, yeah, when people go into the Star Trek transporter,
00:03:41 are they killed or are they transported?
00:03:43 I don’t really know.
00:03:45 I haven’t written any papers on this.
00:03:46 I haven’t really thought about it too much.
00:03:48 There’s no white paper on the transporter.
00:03:50 Not at this point, so.
00:03:51 Well, what does fidelity mean exactly to you?
00:03:53 Is it like strictly, so the fidelity of the physics world,
00:03:58 the physical world is maybe now questions of physics,
00:04:01 quantum mechanics, what is at the bottom of it all?
00:04:05 Or do you mean the fidelity of the actual experience?
00:04:07 Like the original state? It’s just perception.
00:04:09 It’s just perception.
00:04:11 But that’s limited by human cognitive capabilities.
00:04:14 It is, but I don’t really have anything else, right?
00:04:16 I think all of these papers
00:04:17 that brought up these questions of assimilation,
00:04:19 they were like in epistemology and metaphysics.
00:04:21 And what they were trying to do, I think,
00:04:23 was they were trying to put people
00:04:25 through a thought experiment
00:04:26 where they would come out on the other end
00:04:28 and say the reality of life is really worth something.
00:04:33 And I don’t, you know, ignorance isn’t bliss,
00:04:36 which is that consistent statement in the matrix, right?
00:04:38 Ignorance is bliss is that that’s what one of the guys says
00:04:40 when he’s like, you know, doing something wrong
00:04:42 and trying to get back into the matrix.
00:04:44 And the question is, is ignorance bliss?
00:04:47 And it’s like a different version of that.
00:04:49 I think from a perceptual point of view,
00:04:52 if my perceptions aren’t in any way different,
00:04:55 so fidelity is very good, it doesn’t matter.
00:04:59 I don’t know, right?
00:05:00 So if I don’t know something, it doesn’t really exist.
00:05:04 And if it doesn’t exist in my perception
00:05:07 or my consciousness, then it doesn’t exist,
00:05:09 period, for me, at least.
00:05:11 And then whether it exists in some, you know,
00:05:13 more metaphysical version of things,
00:05:16 I personally never really got into the metaphysics stuff
00:05:18 because I could never really,
00:05:21 I couldn’t understand what the point of it was, right?
00:05:24 It’s one of these things where I couldn’t really get
00:05:27 what the practical application of it was.
00:05:32 And this is from those realm of questions, right?
00:05:34 Like if there was something about the world,
00:05:37 but you didn’t have a capacity to perceive it,
00:05:39 would it matter to you?
00:05:41 To me, it wouldn’t matter.
00:05:43 Right, to me, by the way, the simulation thing
00:05:45 is a really interesting engineering question,
00:05:47 which is how difficult is it to engineer a virtual reality,
00:05:53 a digital world that is sufficiently of high fidelity
00:05:57 where you would want to live in it?
00:05:59 I think that’s a really testable
00:06:01 and a fascinating engineering question.
00:06:03 So my intuition says like,
00:06:04 it’s not as difficult as we think.
00:06:06 It’s not nearly as difficult as having to create
00:06:10 a quantum mechanical simulation that’s large enough
00:06:12 to capture the full human experience.
00:06:14 Like it might be just as simple
00:06:15 as just a really nice quake game,
00:06:19 like with a nice engine,
00:06:20 with just creating all the basic visual elements
00:06:24 that trick our cognitive, our visual cortex
00:06:28 into believing that we’re actually
00:06:29 in the physical environment.
00:06:31 And I think that if that’s true,
00:06:34 then that’s quite a high fidelity digital world
00:06:38 is actually achievable within a century.
00:06:42 And that changes things.
00:06:44 Yeah, yeah, maybe in our lifetime.
00:06:47 I’m really hoping for that.
00:06:47 I’m hoping somebody can copy my brainwaves
00:06:49 onto a virtual machine and allow that consciousness
00:06:54 to continue to exist.
00:06:55 Whether that’s death or not, I don’t know.
00:06:59 But I think it’s actually gonna require some serious leaps.
00:07:03 Like even the VR headsets, right?
00:07:05 They don’t work if they go below 90 frame rates, right?
00:07:09 People start getting freaked out.
00:07:11 So you have to go from one gaming screen
00:07:13 of 60 frames per second
00:07:16 to two screens of 90 frames per second.
00:07:19 And so people’s hardware today can’t even handle that.
00:07:22 And that’s for these two little screens by your eyeballs.
00:07:26 What it’s gonna take to completely trick my consciousness
00:07:30 into not knowing the difference
00:07:31 in terms of like all the sensory inputs.
00:07:36 I’m keeping my fingers crossed.
00:07:37 Whoever does that and is close to doing that,
00:07:41 they should contact me.
00:07:42 I want to have my brainwaves turned into a virtual machine.
00:07:46 Would you in that context, if Morpheus came to you,
00:07:50 would you take the blue pill or the red pill?
00:07:53 Meaning, would you be happy just living in that world
00:07:58 and not knowing that you’re living inside that virtual world
00:08:02 that’s running a computer?
00:08:03 Or would you want to know the truth of it?
00:08:06 Well, actually I think that’s a very different question,
00:08:08 right?
00:08:09 There’s a actually moral ethical question there
00:08:12 about whether you should allow a bunch of people
00:08:15 to get manipulated and killed and slaved,
00:08:17 because in the matrix they’re all enslaved
00:08:20 as like a AAA battery
00:08:23 to turn a human being into the battery, right?
00:08:25 So I think the moral and ethical question of that,
00:08:31 fascinating enough, isn’t actually different
00:08:33 than the moral and ethical questions we face today
00:08:35 in modern daily life.
00:08:36 But I probably have given the choice
00:08:39 of just completely going along or going against it.
00:08:43 I would probably go against it
00:08:45 if I had to make this kind of binary choice.
00:08:48 Because going along with it,
00:08:50 I think at that scale of scary stuff happening to people
00:08:56 is probably something really, really, really difficult.
00:09:00 But for your individual life,
00:09:01 it’s way more fun to go along with it.
00:09:03 So you’re saying you value the opposing a system
00:09:09 that includes the suffering of others
00:09:11 versus just for yourself enjoying the ride.
00:09:15 I mean, if there is such a binary choice,
00:09:19 why choose to oppose the system?
00:09:21 I think it’s the nature of kind of the ethical dilemma
00:09:24 that you face in that situation.
00:09:26 There’s kind of some,
00:09:27 this is obviously not something that’s happening now, right?
00:09:29 We don’t know this, right?
00:09:31 No, we don’t know this.
00:09:33 At the end of the day,
00:09:34 at that scale of something like that happening,
00:09:38 yeah, that scale of people being manipulated and harmed,
00:09:43 then I think pretty much almost all people
00:09:45 have an obligation to go against it.
00:09:49 Probably that’s what that looks like in my opinion.
00:09:53 So you’ve talked about the concept of definitive truth.
00:09:57 What is it?
00:09:58 And in general, what is the nature of truth
00:10:00 in human civilization?
00:10:01 And just talking about the digital age,
00:10:05 the nature of truth in the digital age.
00:10:09 So the interesting thing about definitive truth
00:10:11 is that it actually exists on this,
00:10:14 at least in my mind on this spectrum
00:10:16 between objective truth and just somebody made something up
00:10:21 and nobody else agrees.
00:10:22 So what I think definitive truth is,
00:10:25 is it’s somewhere in the middle on that spectrum
00:10:27 where if you and me define what truth is, right?
00:10:31 Like if you and me have an agreement of some kind
00:10:34 and we say, as long as the weather is sunny
00:10:38 or the weather isn’t, there is no rain on that day,
00:10:41 then there’ll be an insurance policy that results
00:10:44 and you and me both agree that as long as three sensors,
00:10:47 three weather monitoring stations all say that,
00:10:51 then the definitive truth for us and for that agreement
00:10:54 is the result of those systems coming to consensus
00:10:59 about what happened out in the real world.
00:11:01 I think the objective truth definition
00:11:06 from kind of the philosophical world
00:11:08 is really, really stringent and very, very hard to attain.
00:11:12 And that’s not what this is.
00:11:14 And that’s actually not what commerce
00:11:16 or the ability for people to interact about contracts needs.
00:11:20 What I think the world of commerce needs is an upgrade
00:11:23 from someone can unilaterally decide what the truth is
00:11:28 to there can be a pre agreed set of conditions
00:11:34 where we define what the truth is under those conditions.
00:11:37 And then you and me basically say,
00:11:40 if these 20 nodes or of these 30 data sources
00:11:43 come to consensus within this method of consensus
00:11:46 with this threshold of agreement,
00:11:48 then definitive truth has been achieved for you and me
00:11:51 in our relationship for this specific agreement
00:11:54 and the specificity and our shared agreement
00:11:58 to that kind of truth or that definitive truth
00:12:01 being acceptable to both of us is probably
00:12:05 what’s kind of necessary and sufficient
00:12:08 for everything to move forward in a better way.
00:12:10 In any case, much better than,
00:12:12 I’m a bank or an insurance company,
00:12:14 I’m gonna unilaterally decide what happens.
00:12:16 It’s definitely an upgrade from that.
00:12:18 Do you think it’s possible to define formally in this way,
00:12:21 a definitive truth for many things in this world?
00:12:24 Like you talked about weather,
00:12:26 basically defining that if three sensors of weather agree,
00:12:30 then that we’re going to agree that that is a definitive,
00:12:33 useful truth for us to operate under.
00:12:36 So how many things in this world
00:12:39 can be formalized in this way, do you think?
00:12:41 A huge amount.
00:12:43 So there’s actually two things going on here.
00:12:48 One thing is the amount of data that already exists
00:12:51 and the pieces of data coming off of markets,
00:12:55 IOT, shipment of goods, any number of other things.
00:12:59 Like even your YouTube channel has a certain amount
00:13:01 of likes or a certain amount of clicks
00:13:03 or a certain amount of views
00:13:05 and even that’s quantifiable.
00:13:06 So even to a certain degree, what we do here today,
00:13:08 you and me right now can be quantified
00:13:11 as far as the amount of views, the amount of clicks,
00:13:13 the amount of any number of other things.
00:13:14 Yeah, you, the viewer, have power of data in your hands
00:13:18 by clicking like or dislike right now
00:13:20 or the subscribe button or the unsubscribe button,
00:13:23 which I encourage you to do.
00:13:24 Anyway, okay, so there’s data flowing
00:13:27 into all interactions in this world, there’s data.
00:13:30 There’s more and more data, right?
00:13:31 More and more data.
00:13:32 More and more data.
00:13:33 That data is more and more accessible to everybody
00:13:36 and that accessibility and the fact that there’s more of it
00:13:39 means we can form more definitive truth proofs.
00:13:42 We can form more and more proofs
00:13:44 and as we form those proofs, well, we can provide them
00:13:47 to these blockchains and smart contract systems
00:13:49 that consume them and then they’re tamper proof, right?
00:13:52 So they can’t be manipulated.
00:13:54 And so now we’ve combined a system that can prove things
00:13:57 with a system that guarantees a certain outcomes
00:14:00 and we have a better system of contracts,
00:14:02 which is actually an unbelievably powerful tool
00:14:06 that has never existed before.
00:14:08 Can we talk about the world of commerce and finance,
00:14:11 decentralized finance?
00:14:13 What is it, what’s its promise
00:14:16 from both the philosophical and technical perspective?
00:14:20 If we just zoom in on that particular space
00:14:22 of the digital world.
00:14:24 Sure, so the decentralized finance is the instantiation
00:14:28 of a specific type of smart contract, right?
00:14:31 Or what I call hybrid smart contracts,
00:14:33 which are these contracts that combine the on chain code
00:14:36 together with the off chain proofs that something happened.
00:14:40 They’re called a hybrid
00:14:41 because they basically use both of these systems, right?
00:14:43 The blockchain and the proofs about what happened.
00:14:47 And what DeFi is, is one specific type
00:14:51 of hybrid smart contract that is taking
00:14:53 on the contractual agreements you traditionally find
00:14:57 in the global financial system, right?
00:15:01 And that’s basically the world of lending,
00:15:04 the world of yield generation
00:15:05 for people giving me or giving whoever their money
00:15:08 and somebody giving back them yield back to them,
00:15:11 which is what bonds do and what treasuries do
00:15:13 and what a lot of the global financial markets do,
00:15:16 as well as the ability to gain exposure and protection
00:15:20 from different types of events and risks.
00:15:23 That’s a lot of what derivatives do, right?
00:15:24 Derivatives allow us to say, hey, something’s gonna happen.
00:15:27 And I’m either gonna protect myself
00:15:29 by getting paid if it happens,
00:15:31 or I’m going to benefit from it happening
00:15:33 by basically saying it’s gonna happen,
00:15:34 putting money down on that,
00:15:36 and that prediction will get me a return.
00:15:38 Now, that’s a very large part
00:15:41 of the global financial system,
00:15:43 excluding all the stuff for global trade
00:15:45 and letters of credit and all the stuff
00:15:46 that facilitates international trade.
00:15:48 So excluding that at least for now.
00:15:50 So if we look at what decentralized finance does,
00:15:53 it takes all of those agreements
00:15:55 about generating yield, lending,
00:15:57 and all of these types of things you find in global finance
00:15:59 and the world of derivatives
00:16:01 and a few other types of financial products.
00:16:04 And it basically puts them into a different format, right?
00:16:07 So the format you have for centralized financial agreements
00:16:11 is that you go to a bank,
00:16:13 even if you’re a hedge fund,
00:16:14 even if you’re like the richest people,
00:16:15 you go to a bank, they make a product for you,
00:16:18 and you hope that they honor
00:16:20 the product that they made for you.
00:16:21 Or you do a deal with another hedge fund
00:16:23 or whoever, some counterparty,
00:16:25 and you hope that that deal is honored.
00:16:28 Yep.
00:16:29 And then a number of very freaky things start to take place.
00:16:32 One of them is people don’t have clarity
00:16:36 about what the agreement is, right?
00:16:38 So a lot of people don’t know exactly
00:16:41 what the agreement is between those parties
00:16:44 because they can’t actually see it.
00:16:46 Sometimes agreements are kept very private
00:16:48 or parts of them are kept private.
00:16:50 And that keeps other counterparties,
00:16:53 other people in the system
00:16:53 from understanding what’s going on.
00:16:55 This is actually partly what happened
00:16:56 with the mortgage crisis.
00:16:58 The mortgage crisis in 2008 was basically,
00:17:00 there were a lot of agreements, there were a lot of assets,
00:17:02 but because the centralized financial system
00:17:05 worked in such an opaque way,
00:17:07 it was so unbelievably difficult
00:17:08 to understand what was going on, right?
00:17:11 And so that lack of understanding
00:17:12 for the global financial system
00:17:13 basically led to a big boom,
00:17:15 and then correspondingly, very, very big bust,
00:17:18 which amazingly enough had a huge impact on everybody,
00:17:21 even though they didn’t participate
00:17:22 in the boom part of the equation.
00:17:25 In any case, what decentralized finance does
00:17:28 is it takes these financial contracts
00:17:31 that power the global financial system,
00:17:33 it puts them in this new blockchain based format
00:17:36 that basically at this point
00:17:37 provides three very powerful things.
00:17:39 The first thing that it provides is complete transparency
00:17:42 over what’s going on with your financial product.
00:17:45 So this means when you use a financial product
00:17:47 in the DeFi format, you, and you as a technical person
00:17:50 actually can drill down very, very, very deeply,
00:17:53 and you can understand where the collateral is,
00:17:56 you can understand how much collateral there is,
00:17:57 you can understand what format it’s in,
00:17:59 you can understand how it’s changing,
00:18:00 you can understand this on a second to second
00:18:03 or block to block basis, right?
00:18:05 So you have complete transparency
00:18:07 into what’s going on in the financial protocol
00:18:11 that you have your assets in,
00:18:12 which is because blockchains and the infrastructure,
00:18:15 all of these things are built on, force that transparency.
00:18:19 Whereas the centralized financial system
00:18:21 is very, very good at hiding it.
00:18:23 It’s very good at hiding it
00:18:24 and packaging things in a glossy wrapper,
00:18:27 creating a boom, then a bust.
00:18:30 The centralized finance is built on infrastructure
00:18:32 that forces transparency such that everyone can understand
00:18:35 what the financial product does from day one.
00:18:38 And in fact, escaping that property is practically impossible
00:18:41 or if someone tries to escape it,
00:18:43 it becomes immediately obvious
00:18:44 and people don’t use their financial product.
00:18:46 So that’s number one.
00:18:48 Number two is control.
00:18:50 So if you look at what happened with Robinhood,
00:18:53 everybody thought the system worked a certain way, right?
00:18:55 Everybody thought I have a brokerage account,
00:18:57 I can trade things under a certain set of market conditions.
00:19:02 And then the market conditions changed
00:19:05 within the band of what people thought they could do.
00:19:08 And everybody was fascinated to find out that,
00:19:10 oh my God, I thought my band of market conditions
00:19:13 in which I can control my assets is X,
00:19:15 but it is actually Y,
00:19:17 is actually much, much smaller band.
00:19:20 And the reason it is a much, much smaller
00:19:22 group of market conditions
00:19:24 is that the system doesn’t work
00:19:26 the way people think it works.
00:19:28 The system was wrapped up in a nice glossy wrapper
00:19:30 and given to them to get them to participate in the system
00:19:32 because the system requires and needs their participation.
00:19:35 But if you actually look at how the system works underneath,
00:19:39 you will see that it does not work
00:19:41 the way people think that it works.
00:19:43 And this is actually another reason that DeFi is so powerful
00:19:45 because DeFi actually, and these blockchain contracts,
00:19:49 give people the version of the world
00:19:52 they think they already have,
00:19:54 which is why they don’t beg for it, right?
00:19:56 So everybody thinks they’re in a certain version
00:19:58 of the world that works in this reliable way,
00:20:00 transparent way, they’re not.
00:20:02 They don’t realize it.
00:20:04 And so they’re confused when you tell them,
00:20:05 I’m gonna make the world work this way
00:20:07 because they think they’re already in that world.
00:20:09 But then things like Robinhood make it immediately,
00:20:12 painfully clear that that’s not how the world works
00:20:14 so that the second real property of DeFi is control,
00:20:17 which means that you control your assets,
00:20:20 not a bank, not a broker, not a third party, you.
00:20:23 You control your Bitcoins,
00:20:25 you control your tokens in the finance protocol.
00:20:27 If you don’t like how something’s going in that protocol,
00:20:30 you can remove it, you can send it to another protocol,
00:20:32 or you can use a feature of the protocol
00:20:34 to do something it’s supposed to do.
00:20:36 And guess what?
00:20:36 Nobody can just say, oops, that feature,
00:20:38 that isn’t so good for my friends over here.
00:20:41 That feature is actually,
00:20:42 we’re just gonna pause that feature in the critical moment
00:20:45 when you need it to execute your strategy,
00:20:49 which is why you took all the risks to begin with.
00:20:52 And then the final reason, the final thing to know about DeFi
00:20:56 is that DeFi is inherently global,
00:20:59 and actually right now provides better yield globally.
00:21:02 So if you go to a bank right now with the US dollar,
00:21:05 you get 1% or less.
00:21:07 If you go to DeFi with the US dollar, you get 7% or 8%.
00:21:12 So if we think about that in a world
00:21:16 where there’s a lot of inflation coming down the road,
00:21:19 and we think about, well, a lot more systems
00:21:24 might be failing soon,
00:21:25 and they might be highlighting these types of problems
00:21:28 that were there for, or as a result of the type of control
00:21:32 that you see in Robinhood,
00:21:34 and people are more and more concerned
00:21:37 about both transparency and control,
00:21:39 and they’re looking for yield to combat inflation.
00:21:43 I think that’s what DeFi is about in a practical sense.
00:21:46 It is this clarity about your risk.
00:21:48 It is control over your assets.
00:21:51 And amazingly, at the same time
00:21:53 as having those two unbelievably useful properties,
00:21:56 it is actually superior yield,
00:21:59 which just leads me to the very obvious conclusion
00:22:03 that the only reason DeFi is more used
00:22:05 is because more people don’t know about it.
00:22:08 And by virtue of this long kind of explanation
00:22:12 here and elsewhere, more people will know about it.
00:22:14 And it’s just such an obviously superior solution
00:22:17 that I haven’t heard a single explanation as to why.
00:22:20 No, no, don’t earn 8% and take less risk
00:22:24 and have more transparency with your assets.
00:22:27 Earn 7% less, take more risk,
00:22:29 and give people the ability to change the rules on you
00:22:32 at their discretion, go do that.
00:22:36 Who’s gonna do that?
00:22:37 And in general, on the first two of transparency and control,
00:22:40 first of all, I do think, maybe you can correct me,
00:22:43 but from my perspective, they’re deeply tied together
00:22:47 in the sense that transparency gives control.
00:22:50 Transparency creates accountability,
00:22:52 and there’s this kind of game being played,
00:22:55 game theoretic game, where if I know,
00:22:58 if you know I’m gonna discover your deviation,
00:23:00 you’re not gonna deviate.
00:23:02 Yes, this could be a whole nother conversation,
00:23:04 but just as a small aside,
00:23:06 on the social network side of things,
00:23:08 which I’ve been thinking deeply about in the past year or so,
00:23:13 of how to do it right there, how to fix our social media.
00:23:18 And I tend to believe that human beings,
00:23:22 if they’re given clear transparency
00:23:25 about which data is being stored, how it’s being used,
00:23:28 where it’s being moved about,
00:23:29 just all a clear, simple transparency
00:23:32 of how their data is being used,
00:23:36 and them having the control at the very minimal level
00:23:40 of being able to participate or to walk away,
00:23:43 and walk away means delete everything
00:23:45 you’ve ever known about me.
00:23:48 That will create a much, much better world.
00:23:51 That currently there’s a complete lack of transparency
00:23:54 on social media, how the data is being used
00:23:56 for your own protection.
00:23:57 I mean, there’s a lot of parallels
00:23:58 to the central bank situation,
00:24:00 and there’s not a control element
00:24:02 of being able to walk away.
00:24:04 Like being able to delete all your data,
00:24:06 delete your account on Facebook is very difficult.
00:24:09 It doesn’t take a single click,
00:24:11 which I think is what it should take.
00:24:12 There should be a big red button that says,
00:24:15 delete everything you’ve ever known about me,
00:24:17 or like forget me.
00:24:19 So I think that coupled together can create
00:24:21 a very different kind of world and create
00:24:24 an incentivization that will lead to like progress
00:24:29 and innovation and just like a much better social network
00:24:32 and a really good business for the future social networks.
00:24:37 But so I tend to see like control as naturally
00:24:43 being a sort of an outgrowth from the transparency.
00:24:47 It should all start at the transparency,
00:24:49 which is why the smart contract formulation is fascinating.
00:24:54 Because like you’re formalizing in a simple, clear way,
00:24:59 any agreements that you’re participating in.
00:25:01 And as a side comment also, what’s really inspiring to me
00:25:05 is that I think there’s a greater,
00:25:07 I don’t know if this is always the case,
00:25:09 but it seems like from having talked to people
00:25:12 on the psychological element,
00:25:14 there’s a hunger amongst people for transparency
00:25:21 and for control.
00:25:23 Like transparency, another word for that is authenticity.
00:25:26 If you look at the kind of stuff that people hunger for now,
00:25:29 they want to know the reality of who you are
00:25:32 as an individual.
00:25:33 So that means you can create businesses,
00:25:35 you can create tools that are built on authenticity,
00:25:39 a transparency.
00:25:41 And then the same, I’m inspired by the intelligence
00:25:45 of people, if you give them control,
00:25:48 if you give them power, that they would make good choices.
00:25:52 That’s really exciting.
00:25:54 Of course, not everybody, but that means that
00:25:56 decentralized power can create effective systems.
00:26:01 So couple that, there’s a hunger for transparency
00:26:03 so we can move to a world where everyone’s being
00:26:06 just like real, conveying their genuine human nature.
00:26:10 And people are sufficiently intelligent
00:26:14 that if they’re given power
00:26:16 in a distributed mass scale sense,
00:26:18 that we’re going to build a better world through that,
00:26:21 as opposed to centralized supervised control
00:26:24 or only a small percent of the population
00:26:26 know what the hell they’re doing.
00:26:27 Everybody else is clueless sheep.
00:26:30 So those two coupled together is really to me inspiring.
00:26:35 Just to really quickly comment on this stuff
00:26:36 that you just said, which I think is super,
00:26:38 super, super fascinating.
00:26:40 I think that’s all exactly right.
00:26:42 I think everything that you said is right.
00:26:44 And I think it’s actually going to be the same
00:26:46 for social media and banking and every other type
00:26:47 of contract, is that all of those systems
00:26:51 that house people’s value for them
00:26:53 and take control of either their social media value
00:26:56 or their financial value or whatever for them,
00:27:00 all of that is going to be made available to people
00:27:02 in like this autonomous piece of code
00:27:05 that does the same thing
00:27:06 that the centralized entity used to do.
00:27:08 So they get all the features,
00:27:10 but the autonomous piece of code gives them the ability
00:27:14 to have control while getting all the features, right?
00:27:17 So banks give you features,
00:27:19 social media sites give you features,
00:27:22 whatever other system that you use online
00:27:24 gives you features, and then it takes your data
00:27:27 and it takes control of your assets from you
00:27:29 in return for those features, right?
00:27:32 I think the whole big difference here,
00:27:34 partly in line with the definition of smart contracts
00:27:37 and its evolution is that there’s this,
00:27:39 now there’s this autonomous piece of code
00:27:41 that’s giving you all those features
00:27:44 without requiring the ownership and lock in and control
00:27:49 and unilateral kind of ownership of your data
00:27:54 or your value or whatever it is that you’re giving it, right?
00:27:58 And I think what this will lead to fundamentally
00:28:02 is just more of a free market dynamic
00:28:04 among how people make,
00:28:07 I think with the social media folks,
00:28:08 you should just make some kind of law or something
00:28:11 where you can just export all your data from them,
00:28:14 everyone should be able to get their data exported
00:28:16 by another application,
00:28:18 and then the network effect of all these social media sites
00:28:21 will kind of crumble
00:28:22 because people will just combine your Twitter data
00:28:24 with your Facebook data, with everything else
00:28:27 into an application that you control,
00:28:29 and there’ll just be thousands of different interfaces
00:28:31 competing for how to consume all the social media data
00:28:34 because it isn’t locked in
00:28:35 in one centralized actor’s control.
00:28:38 And so this is just the recurring pattern
00:28:40 of what I think all of this will do
00:28:42 is it’ll give people, it gives people a better deal, right?
00:28:46 It gives them features without ownership of data,
00:28:49 without ownership of value,
00:28:50 and that’s really the difference.
00:28:53 So I think this is a good place
00:28:54 to talk about smart contracts then.
00:28:56 Can you tell me the history of smart contracts
00:28:58 and the basic sort of definitions of what is it?
00:29:02 Sure, so I think smart contracts as a definition
00:29:05 has actually gone through some kind of changes
00:29:08 or small evolution.
00:29:10 Initially, I think it was actually a conception
00:29:12 of a digital agreement that was tamper proof
00:29:14 and could know things about the world, right?
00:29:17 So it could get proof
00:29:18 and it could define that something happened
00:29:20 and it could conclude an outcome
00:29:22 and release payment or do something else.
00:29:24 That’s actually the definition of smart contracts
00:29:26 that I began working in this industry with
00:29:28 seven or eight years ago
00:29:29 when I started making smart contracts.
00:29:31 That is the conception that I had of a smart contract.
00:29:34 Then what happened was that was really hard to do, right?
00:29:38 Building that type of tamper proof digital agreement
00:29:41 that could also know things about the real world
00:29:43 and release payments back to people about those events
00:29:47 that were codified in this tamper proof format
00:29:49 was actually a very tall order.
00:29:51 Turns out it’s consistent of three parts.
00:29:53 It’s consisting of the contract,
00:29:54 the proof about what happened
00:29:55 and the release of value.
00:29:58 The way things have evolved so far
00:30:00 is that the definition has now come to mean on chain code.
00:30:05 So it’s come to mean the codification
00:30:08 of contractual agreement on a blockchain, right?
00:30:11 So there’s some code somewhere on some blockchain
00:30:14 that defines what the agreement is.
00:30:17 Now that eliminates the part of the definition
00:30:20 that’s related to knowing things about the world
00:30:23 and it partly eliminates the definition about payments
00:30:26 and stuff like that.
00:30:26 But basically it’s on chain code, right?
00:30:30 We in our recent work on a second white paper
00:30:34 have actually put out a different definition
00:30:36 that we call hybrid smart contracts
00:30:38 that actually tries to go back to the initial definition
00:30:41 that I started with seven or eight years ago,
00:30:43 which basically says that there’s some proof somewhere
00:30:47 that’s proven to the contract
00:30:48 and the contract can know that
00:30:49 and the contract can gain proof.
00:30:51 Then it can use that proof to settle the agreement
00:30:55 that’s codified on a blockchain.
00:30:57 So you both need a mechanism to provide proof.
00:31:00 You need a mechanism to codify the contract
00:31:02 in a tamper proof way on something like a blockchain.
00:31:05 And then as with all contracts,
00:31:06 there’s a presumption that there’s
00:31:07 some kind of release of value.
00:31:09 So I think a smart contract in our industry right now
00:31:13 means on chain code,
00:31:15 which limits it to whatever can be done on chain only.
00:31:19 And then in our internal definition for us
00:31:22 and for us at Chainlink and for me,
00:31:24 it’s hybrid smart contracts,
00:31:26 which is actually the original definition.
00:31:28 It’s the idea that a contract can both know what happened
00:31:32 and automatically resolve to the proper outcome
00:31:36 based on what happened.
00:31:38 So you’re referring to the Chainlink 2.0 white paper,
00:31:41 which is a paper that I recommend people look.
00:31:45 It’s a very easy read and very well structured
00:31:48 and very thorough.
00:31:49 So I really enjoyed it.
00:31:50 Very recently released, I guess.
00:31:53 Can you dig in deeper?
00:31:53 What is a hybrid smart contract?
00:31:57 You mentioned sort of this idea of data
00:32:00 or knowing about the world and on chain and off chain.
00:32:05 So what are the different roles in this?
00:32:07 So hybrid, by the way, refers to the fact
00:32:10 that it’s on chain and off chain contracts.
00:32:14 So maybe digging deeper of what the heck is it
00:32:18 and what does it mean to know stuff about the world?
00:32:21 Like how do you actually achieve that?
00:32:23 Yeah, absolutely.
00:32:26 So the on chain part is where the agreement itself is.
00:32:30 That’s the smart contract itself.
00:32:32 And that’s where you codify certain conditions,
00:32:35 such as the conditions under which an interest payment
00:32:38 is made or the conditions under which the contract pays out
00:32:41 the full amount that it holds to someone based
00:32:44 on a derivative outcome or something like that.
00:32:47 Now, what the on chain code is very good at
00:32:49 is creating transparency about what the core conditions
00:32:52 of the contract are.
00:32:53 It’s very good at taking in money from other private keys
00:32:57 that send it tokens and send it value to hold.
00:33:00 And then it’s also very good at returning money
00:33:03 or returning value back to other addresses
00:33:06 or other private keys.
00:33:08 It can also be involved in governance.
00:33:09 It can be involved in a few other private key signature
00:33:11 based operations.
00:33:14 But primarily the on chain part of a hybrid smart contract,
00:33:18 from what I’ve seen so far, defines the agreement,
00:33:21 takes in value and returns value based upon the conditions
00:33:24 codified in the agreement on a blockchain.
00:33:27 The second and equally important off chain part
00:33:30 is where the term oracle and an oracle comes in
00:33:33 or an oracle mechanism or a decentralized oracle network
00:33:36 as we describe it in the paper.
00:33:38 And this is another decentralized computational system
00:33:43 that has a different goal, right?
00:33:45 So blockchains have the goal of packaging transactions
00:33:48 into blocks and connecting them
00:33:50 in a cryptographically unique way to create security
00:33:54 and assurance about that chain of transactions.
00:33:57 Oracles and decentralized oracle networks
00:34:01 achieve consensus and they achieve decentralization
00:34:06 about the topic of what happened, right?
00:34:09 So blockchains structure transactions.
00:34:11 Some of those transactions might be the state changes
00:34:14 in different pieces of on chain code.
00:34:16 And then those on chain pieces of code require input.
00:34:23 I think the thing that people get kind of a little bit
00:34:25 thrown by is despite being called smart contracts,
00:34:29 the on chain code on a blockchain
00:34:32 cannot actually speak to any other system.
00:34:35 So blockchains are valuable and useful
00:34:38 as far as they’re tamper proof and secure.
00:34:40 And to be tamper proof and secure,
00:34:42 they’re made this kind of walled garden
00:34:44 that is able to know and interact
00:34:46 only with the highly reliable information
00:34:49 that’s within that system,
00:34:51 which is basically tokens and private key signatures.
00:34:56 All the other world’s information is not available
00:34:59 in a blockchain inherently.
00:35:01 And a smart contract or a piece of on chain code
00:35:04 can’t just say, hey, I’m gonna go get some data
00:35:06 from over here because the API they would get it from
00:35:09 creates a whole bunch of security concerns
00:35:11 for the blockchain itself
00:35:13 and a whole bunch of consensus issues
00:35:14 about how to agree on what that API said
00:35:17 or what the truth of the world is, right?
00:35:19 Because it’s not even agreeing on what one API said,
00:35:22 it’s more so creating a reliable
00:35:25 form of decentralized computation
00:35:27 that can give you a definitive proof of what happened
00:35:30 and not just what one API said.
00:35:31 So for example, some of our most widely used networks
00:35:34 have well over 30 nodes and well over 10 data sources
00:35:37 that are all providing information
00:35:38 about the same type of data.
00:35:40 And then there’s consensus on that one piece of data,
00:35:43 which is then written in and essentially given back
00:35:46 into the on chain code to tell it what happened
00:35:49 because you can’t really make an agreement
00:35:52 unless you know what happened, right?
00:35:54 If you and me were to make an agreement
00:35:55 and set some contractual conditions,
00:35:57 but our agreement could never know what happened,
00:35:59 it would be completely useless.
00:36:02 However, if you and me made an agreement
00:36:04 and there was another system called an Oracle mechanism
00:36:06 or decentralized Oracle network
00:36:08 that proved what happened definitively
00:36:10 and you and me pre agreed
00:36:12 that whatever this mechanism says is what happened,
00:36:15 then we can achieve an entirely new level of automation.
00:36:18 We can suddenly say, there’s this piece of on chain code
00:36:22 that’s highly reliable.
00:36:23 We can give it millions, billions,
00:36:25 eventually trillions of dollars in value.
00:36:27 And it is controlled by this other system over here
00:36:30 that’s also highly reliable
00:36:32 under this configurable set of definitive truth
00:36:35 and decentralization conditions,
00:36:36 which we all agree are sufficiently stringent
00:36:39 to control that much value.
00:36:41 And therefore the combination
00:36:42 of this tamper proof on chain representation of a contract
00:36:46 and this mutually agreed upon definition
00:36:50 of a trigger or a proof system combined
00:36:54 is a hybrid smart contract,
00:36:56 which as you can see probably already
00:36:59 does a lot more than just a contract on chain, right?
00:37:03 Can you talk about this consensus mechanism,
00:37:05 which by the way is just fascinating.
00:37:07 So there’s the on chain consensus mechanism
00:37:11 of proof of work and proof of stake.
00:37:14 And then there is this Oracle network consensus mechanism
00:37:20 of what is true.
00:37:23 So how do you, can you compare the two?
00:37:26 Like how do you achieve that kind of consensus?
00:37:28 How do you achieve security
00:37:30 in integrating data about the world
00:37:35 in a way that’s definitively true
00:37:39 in a way that is usefully true,
00:37:41 such that we can rely on it in making major agreements
00:37:44 that as you said, involve billions of trillions of dollars.
00:37:49 Right, so this is the challenging,
00:37:50 this is the challenging question, right?
00:37:51 This is the challenging problem that Oracle networks,
00:37:56 Oracles, we at Chainlink that we work on
00:37:59 in order to create this definitive truth
00:38:01 to trigger and create hyper automation
00:38:04 in this more advanced form,
00:38:06 more advanced form of hybrid smart contracts.
00:38:09 The reality I think of this problem
00:38:12 is that it is very specific to each use case.
00:38:16 And it, and this is actually how we’ve architected our system
00:38:20 is in a very flexible way.
00:38:22 So for example, you need an ability for an Oracle network
00:38:27 to grow in the amount of nodes that it has
00:38:30 relative to the value it secures, right?
00:38:33 So if you have an Oracle network
00:38:34 that secures a hundred thousand dollars
00:38:37 in like a beta of a financial product,
00:38:40 maybe it can be fine with only seven nodes
00:38:42 and only two or three data sources, right?
00:38:44 Because the risk to that Oracle network
00:38:47 is relatively low based on the value it secures.
00:38:50 So the first question is actually
00:38:53 how do you scale security relative to value
00:38:57 secured by that Oracle network?
00:38:59 Because it wouldn’t be very efficient
00:39:00 to have a thousand nodes securing $100,000 worth of value.
00:39:05 So one of the first questions is how do we properly scale
00:39:08 and how do we compose ensembles of nodes
00:39:12 in a decentralized way where we can know that,
00:39:14 okay, we’re going from seven nodes in a network
00:39:17 to 15, to 31, to 57, to 105, to a thousand, right?
00:39:23 So that’s one dimension of the problem.
00:39:25 So you have to be scaling the number of nodes
00:39:27 relative to the value that’s derived
00:39:31 from the truth integrated into those nodes.
00:39:34 Well, that’s not the only problem, right?
00:39:36 The other side of this is that you’re trying to create
00:39:38 a deterministic result, a deterministic output
00:39:42 from a set of non deterministic disparate systems,
00:39:44 data sources, or places that prove things.
00:39:47 Can you also, just as an aside, what is an Oracle node?
00:39:51 What is the role of an Oracle node?
00:39:53 Sure, so an Oracle node essentially exists in both places,
00:39:58 it exists in both worlds.
00:40:00 It exists as an on chain contract
00:40:02 that represents either an Oracle network or an Oracle node.
00:40:07 So there’s an on chain interface in the form of a contract
00:40:10 that says, I exist to give you this list of inputs.
00:40:15 You can request weather data from me,
00:40:16 you can request price data from me,
00:40:18 you can ask me to send a payment somewhere.
00:40:20 So it’s like an API, so it’s a pointer to a API
00:40:24 that provides truth about this world.
00:40:28 It’s an interface, so just like an API
00:40:31 is an interface for Web 2.0 engineers,
00:40:35 Oracle networks and the contracts that represent them
00:40:39 or individual nodes are the interface
00:40:42 of Web 3.0’s use of services.
00:40:45 And services includes all services,
00:40:48 data, payment systems, messaging systems,
00:40:52 whatever Web 2.0 or any kind of computing service
00:40:56 that you can conceptualize,
00:40:58 needs an interface on chain in the form of a contract
00:41:01 that says, here are the services I can provide for you,
00:41:04 here are the transactions you need to send me
00:41:07 to get back this data or that computation or this result.
00:41:11 And then what you actually see
00:41:12 is that decentralized Oracle networks,
00:41:14 because they’re uniquely capable of generating
00:41:16 their own computations in a decentralized way
00:41:19 around the data that they have access to,
00:41:22 you actually see decentralized Oracle networks
00:41:24 generating a lot of these services.
00:41:26 So for example, we have a randomness service,
00:41:29 a verifiable randomness function service
00:41:32 that basically provides randomness on chain
00:41:35 and that randomness is then used in lotteries
00:41:38 and various other contracts that need randomness.
00:41:40 But that randomness, it’s not a piece of data
00:41:42 that comes from somewhere else.
00:41:43 We don’t go to another data source and get it.
00:41:46 We generate it within an Oracle node
00:41:49 that then provides it over into Oracle node
00:41:52 or Oracle nodes that provide it
00:41:53 into the contracts themselves.
00:41:55 So why do you say Oracle nodes are non deterministic?
00:41:58 Well, they are as far as they come to consensus,
00:42:01 but there’s this kind of different problem here, right?
00:42:05 The blockchains are very focused
00:42:08 on generating blocks of transactions
00:42:10 within a smaller universe of transaction types,
00:42:13 a certain block size and a certain set of conditions.
00:42:16 And then they have a economic system that says,
00:42:20 I will perpetually generate blocks of this size
00:42:23 with these transaction types in this kind of limited set
00:42:26 of transaction types, whether those are UTXO transactions
00:42:29 or scripted solidity or whatever it is.
00:42:32 Oracles and Oracle networks,
00:42:35 we don’t have a blockchain, for example.
00:42:36 There is no chain link blockchain.
00:42:38 Our goal is not to generate a certain set
00:42:41 of very clearly predetermined transaction types
00:42:45 into a set of transactions that are put into blocks
00:42:48 and it will infinitely be done that way.
00:42:50 Our goal is actually to create what we call a Meta layer,
00:42:54 a decentralized Meta layer between the non deterministic,
00:42:58 highly unreliable world
00:43:01 and the highly hyper reliable world of blockchains
00:43:05 so that the unreliable world can be passed
00:43:08 through this decentralized Meta layer.
00:43:10 And it can coexist with a reliable on chain world.
00:43:13 Exactly, it can coexist and in some cases,
00:43:15 the Meta layer might generate it.
00:43:17 So the problem in giving you this straight answer
00:43:20 is that there’s just such a wide array of services.
00:43:24 If you were to say,
00:43:25 well, Sergey, how do we generate randomness
00:43:27 from a data source?
00:43:28 Well, we don’t use a data source to generate the randomness.
00:43:31 That’s the type of service that can be generated
00:43:33 in an Oracle network itself.
00:43:35 And so there’ll be certain computations
00:43:37 that Oracle networks themselves generate themselves
00:43:40 to augment and improve blockchains.
00:43:43 And it is actually the goal of Oracles
00:43:44 to consistently do that.
00:43:45 So if you were to think about the stack
00:43:48 in a very generic high level,
00:43:50 you would see blockchains or databases.
00:43:52 They’re basically the data structures
00:43:53 that retain a lot of information
00:43:55 in this transparent, highly reliable form.
00:43:58 Smart contract code is the application logic.
00:44:01 It is the logic under which all of this
00:44:04 kind of activity occurs,
00:44:06 storing data in the data structure in the blockchain
00:44:09 as a database in a certain conceptualization of it.
00:44:13 And then Oracles and Oracle networks
00:44:15 are all the services that are used by the application code.
00:44:20 So, you know, by analogy, let’s take Uber.
00:44:23 Uber initially, some core code goes and gets the GPS API
00:44:27 from Google Maps about the user’s location,
00:44:30 sends a message to the user through Twilio,
00:44:32 pays the driver through Stripe.
00:44:34 If those services weren’t available
00:44:36 to the people who made Uber,
00:44:38 they wouldn’t have made Uber, right?
00:44:39 Because they would have written their core code
00:44:41 on some database,
00:44:42 and then they would have had to make a geolocation company,
00:44:44 a telecom messaging company,
00:44:46 and the global payments company.
00:44:48 And they wouldn’t have done that because it’s too hard.
00:44:50 And that’s the weird scenario
00:44:52 that a lot of people in our industry are in.
00:44:54 And that’s the problem that Oracles and Oracle networks fix
00:44:57 is they provide these decentralized services
00:45:00 to take this developer ecosystem,
00:45:03 the blockchain and smart contract developer ecosystem
00:45:06 from, hey, I can have a database
00:45:09 and write some application logic
00:45:11 about tokenization and voting and private key signing,
00:45:14 all of which is super useful and is a critical foundation.
00:45:17 But now, if you just layer on all the world’s services,
00:45:20 whether that’s market data, weather data, randomness,
00:45:23 suddenly people can build DeFi, fraud proof gaming,
00:45:26 fraud proof global trade, fraud proof ad networks.
00:45:30 And that’s why this world of decentralized services
00:45:33 and decentralized Oracle networks
00:45:35 is particularly, in my opinion, important to our industry.
00:45:38 Yeah, it’s funny.
00:45:39 And you talk about the currents of a decentralized world,
00:45:42 decentralized world, DeFi,
00:45:44 but decentralized services world is primarily just tokens.
00:45:48 And it’s basically just financial transactions.
00:45:51 And the kind of thing, the reason why it’s super exciting,
00:45:55 the kind of thing you do with Chainlink and Oracle networks
00:45:58 is that you can basically open up
00:46:00 the whole world of services
00:46:02 to this kind of decentralized smart contract world.
00:46:07 I mean, you’re talking about just orders of magnitude
00:46:14 greater impact financially
00:46:16 and just socially and philosophically.
00:46:21 Are there interesting near term
00:46:23 and long term applications that excite you?
00:46:26 Yeah, there’s a lot that excites me.
00:46:27 And that is how I think about it,
00:46:28 that it’s not just about
00:46:29 we made a decentralized Oracle network.
00:46:31 It’s about we made a decentralized service
00:46:34 or collection of services
00:46:35 that’s going from hundreds to thousands.
00:46:37 And then people are able to build
00:46:39 the hybrid smart contracts,
00:46:40 which I think will redefine what our industry is about.
00:46:43 Because for example, for the people
00:46:44 that only learned about blockchains
00:46:45 through the lens of NFTs,
00:46:48 they understand blockchains through NFTs,
00:46:50 not through speculative tokens or Bitcoins, right?
00:46:53 And I think that will continue.
00:46:55 I think the use cases that excite me,
00:46:58 they vary between the developed market,
00:47:01 the developed world’s economies and emerging markets.
00:47:04 I think in the developed world,
00:47:06 what you will see is that transparency,
00:47:09 creating a new level of information
00:47:12 for how markets work and the risk that is in markets
00:47:16 and kind of the dynamics that put
00:47:19 the global financial system
00:47:20 at systemic financial risk like 2008.
00:47:23 And my hope is that all of this infrastructure
00:47:25 will soften the boom and bust cycles
00:47:29 by making information immediately available
00:47:32 to all market participants,
00:47:34 which is by the way, what all market participants want,
00:47:36 except for the very, very, very small minority
00:47:39 that are able to game the system and their benefit
00:47:41 and benefit from booms but avoid busts
00:47:43 because of their asymmetric access to information,
00:47:46 which really everybody should have
00:47:47 and which this technically solves.
00:47:49 I think in the process of doing that
00:47:51 and which is happening, I think right about now,
00:47:54 you see a polishing of the technology
00:47:56 such that it can be made available to emerging markets.
00:47:59 And on a personal level,
00:48:00 I feel that the emerging markets will benefit much more
00:48:04 from this technology,
00:48:06 just like the emerging markets benefit much more
00:48:08 from the internet or from those $50 Android phones
00:48:12 that people can have,
00:48:13 because it’s such a massive shift
00:48:15 in how people’s lives work, right?
00:48:17 I have always had access to books and a library,
00:48:20 which has been fantastic and very important.
00:48:23 But there are places in the world
00:48:24 where people don’t have libraries,
00:48:26 but now they have the internet and a $50 Android phone
00:48:29 and they can watch the same Stanford lecture that I watch.
00:48:32 I mean, that’s kind of mind blowing realistically, right?
00:48:35 They just went from zero to one in a very,
00:48:38 very dramatic way.
00:48:40 I think all of these smart contracts,
00:48:43 and in my case, I think the one
00:48:45 that I seem to keep coming back to is crop insurance,
00:48:48 where partly because it doesn’t have
00:48:49 a tokenization component,
00:48:50 partly because it’s actually much more important
00:48:52 than it might seem.
00:48:55 What is crop insurance?
00:48:57 Right, so this is the nature of why it’s sometimes hard
00:49:03 to see the full value of what our industry does,
00:49:05 because it solves all these kinds of backend problems
00:49:07 that we don’t have, right?
00:49:08 So crop insurance is if I own a farm and it doesn’t rain,
00:49:12 I get an insurance payout,
00:49:14 so I don’t need to close down my farm,
00:49:16 because if it didn’t rain, I don’t have crops, right?
00:49:19 So people in the developed world can get crop insurance
00:49:23 and there’s all kinds of systems
00:49:25 that basically pay them out,
00:49:26 and then they can argue with the insurance company
00:49:29 if they don’t get paid out properly and whatever.
00:49:31 And this allows people to smooth out risk.
00:49:35 In fact, a lot of the global options markets
00:49:39 were about this, right?
00:49:40 They were initially about people selling their produce
00:49:43 or their crops ahead of time,
00:49:45 so that if there was a risk of drought,
00:49:47 they weren’t impacted by it, right?
00:49:49 And that’s where a lot of options trading
00:49:51 and all this kind of stuff came from,
00:49:53 even though it’s now turned into this kind of global casino.
00:49:57 But in the emerging market,
00:49:58 there are literally people that,
00:50:01 if they don’t have rain for two seasons,
00:50:03 they need to close down their farm
00:50:04 and become a migrant worker of some kind.
00:50:07 And now they have a $50 Android phone
00:50:10 where they can read Wikipedia,
00:50:12 but they’re still decades away from an insurance company
00:50:15 coming to their geography and offering them insurance
00:50:18 because their local legal system simply doesn’t allow
00:50:20 that type of thing to exist.
00:50:22 No insurance company is gonna go and create insurance entity
00:50:25 and offer them insurance because the levels of fraud
00:50:27 and the ability to resolve that fraud through courts
00:50:29 would just not exist.
00:50:31 So now these people have to wait for decades
00:50:34 to have this very basic form of financial protection
00:50:37 or something like a bank account even.
00:50:39 And with this technology, they don’t, right?
00:50:42 So with this technology, if I have a $50 Android phone
00:50:45 and the smart contract has data from satellites
00:50:48 or weather stations about the weather conditions
00:50:51 in the geography that my farm is in,
00:50:53 I can put value into the smart contract
00:50:57 and the smart contract will automatically pay me out back,
00:51:00 pay me back out at my Android phone.
00:51:02 And guess what?
00:51:04 I just leapfrogged past my corrupt government
00:51:07 not being able to provide a legal infrastructure
00:51:10 to create insurance.
00:51:12 I just leapfrogged past dealing with insurance companies
00:51:15 that’ll probably price gouge me and often not pay out.
00:51:19 And I leapfrogged into the world of hyper reliable
00:51:24 kind of guaranteed smart contract outcomes
00:51:27 that are as good or in many cases better
00:51:29 than what farmers in all parts of other parts
00:51:31 of the world have.
00:51:32 And this type of dynamic for the emerging markets
00:51:35 of creating a way for people to control and manage risk
00:51:37 in their economic life, I think extends way past insurance.
00:51:41 It extends to them having bank accounts
00:51:42 to combat local inflation.
00:51:44 It extends to them being able to sell their goods
00:51:46 on the free market of global trade without middlemen.
00:51:50 It extends to all these things
00:51:51 that we don’t really care about, right?
00:51:53 Because we’re not farmers,
00:51:54 but are unbelievably impactful for people
00:51:57 that don’t have a bank account
00:51:59 and their inflation rate in their country is double digits
00:52:03 or their farm completely depends on rain
00:52:06 or their livelihood completely depends
00:52:07 on their ability to sell goods.
00:52:10 And they can’t sell those goods because there’s a middleman
00:52:12 who essentially controls all the trust relationships.
00:52:16 But now we have the internet and smart contracts
00:52:18 and that might not have to be the case
00:52:20 in the next five or 10 years.
00:52:22 Yeah, so that definitely has a quality of life impact
00:52:25 on the particular farmer’s life,
00:52:27 but I suspect it has a huge like down the line ripple effect
00:52:32 on the whole supply chain.
00:52:33 So if you think about farmers,
00:52:36 but any other people that produce things
00:52:41 that are part of a large like logistics network,
00:52:46 like supply chain network,
00:52:48 that means when you increase reliability,
00:52:52 you sort of increase transparency and control,
00:52:57 but like where any one node in that supply chain network
00:53:01 can formalize the way it operates
00:53:06 in its agreements with others,
00:53:08 then you could just have a very like at scale
00:53:13 transformative effect on how people that down the line
00:53:18 use the services that you provide,
00:53:20 the products that you create operate.
00:53:23 So like, it’s almost hard to imagine
00:53:27 the possible ways it might transform the world.
00:53:30 I wonder how much friction there is in the system,
00:53:33 I guess, currently that smart contracts might remove.
00:53:37 That’s almost unknown.
00:53:40 You can sort of hypothesize and stuff, but I wonder.
00:53:44 I’ve seen enough bureaucracy in my life
00:53:47 to know that smart contracts in many cases
00:53:50 would remove bureaucracy.
00:53:52 And I wonder how the world will be
00:53:55 once you remove much of the bureaucracy.
00:53:58 Coming from the Soviet Union,
00:54:00 where I just have seen the life sucked out
00:54:05 of the innovative spirit of human nature by bureaucracy.
00:54:11 I wonder, the kind of amazing world that could be created
00:54:14 once bureaucracy is removed.
00:54:17 Yeah, I think it’s fascinating how the world can evolve.
00:54:22 I think this extends a lot further than people think
00:54:25 into many, many different parts of the global economy.
00:54:28 It might start with NFTs for art,
00:54:30 or it might start with DeFi, right?
00:54:33 Or it might start with fraud proof ad networks next.
00:54:36 We don’t know what it’s gonna go to next,
00:54:39 but I think the implication of people being
00:54:42 in a system of contracts that holds them accountable
00:54:46 and guarantees contractual outcomes,
00:54:48 regardless of a local legal system,
00:54:51 is something that I think extends to the supply chain.
00:54:53 You can prove that goods were sourced in an ethical way,
00:54:57 and you can prove that in a way that can’t be gamed.
00:55:00 That’ll change buying power and supplier power
00:55:03 and how people produce goods that we all consume.
00:55:06 And then on the political level,
00:55:08 I personally think that in a number of decades,
00:55:11 we could literally be in a place
00:55:13 where politicians can commit
00:55:16 to a certain set of smart contract kind of budget,
00:55:20 definitional kind of results.
00:55:22 For example, we discovered oil.
00:55:24 I promise as a politician, I’m gonna take the oil
00:55:26 and I’m gonna redistribute it to all of you.
00:55:29 Well, that’s wonderful.
00:55:30 That’s a great idea.
00:55:31 Sounds very nice when you’re running for office.
00:55:34 Why don’t we codify that in a smart contract?
00:55:36 And why don’t we put those conditions
00:55:38 very solidly on a blockchain?
00:55:40 And then once you’ve been elected,
00:55:44 we’ll just turn that one on
00:55:45 and it’ll distribute the money just like you said,
00:55:48 and everything will be fine.
00:55:50 I personally think that this new level of systems
00:55:53 that allows trustworthy collaboration between everybody,
00:55:57 between supply chain partners, ad network users,
00:55:59 the financial system, insurance companies, and farmers,
00:56:04 all of these are just interactions
00:56:06 that require a trusted entity,
00:56:09 or in this case, a trusted piece of code
00:56:12 to orchestrate the interaction
00:56:14 in the way that everyone agrees.
00:56:17 Yeah, one of the things that makes the United States
00:56:20 fascinating is the founding documents.
00:56:23 And it’s fascinating to think of us moving into the new
00:56:26 in the 21st century to a digital version of that.
00:56:30 So the constitution, a smart constitution,
00:56:33 no offense to the paper constitution,
00:56:37 and that would have transformative effects
00:56:39 on politicians and governments,
00:56:43 holding people accountable.
00:56:45 Oh man, that’s so exciting to think that
00:56:50 we might enforce accountability
00:56:58 through the smart contract process.
00:57:00 Exactly, why can’t that happen?
00:57:02 Anything that we could codify into a smart contract,
00:57:05 and anything that we all agree
00:57:07 is the way the world should work.
00:57:09 And then anything that we can get proof about, right?
00:57:12 Anything that a system somewhere could tell us happened,
00:57:15 those are the pieces of the puzzle, right?
00:57:19 We need a trusted piece of code,
00:57:21 we need to have agreement
00:57:23 that that’s how the world should work,
00:57:24 and we need a system that’ll tell that trusted piece
00:57:26 of code what happened.
00:57:28 As long as we have those three things,
00:57:30 we can theoretically codify any set of agreements
00:57:34 about anything where those three properties take hold.
00:57:39 I wonder if you could apply that
00:57:40 to like military conflict and so on.
00:57:43 Recently, Biden announced that we’re going to pull off
00:57:48 from Afghanistan after 20 years in the war.
00:57:52 I wonder, there’s a lot of debacles around war in Afghanistan
00:57:58 and invasion of Iraq, all those kinds of things.
00:58:00 I wonder if that was instead formulated as a smart contract.
00:58:06 Like that might have actually huge impact
00:58:11 on the way we do conflict.
00:58:12 So you think of the smart contract
00:58:15 as a kind of win win situation where you’re doing
00:58:18 like financial transactions or something like that.
00:58:21 But you could see that also about military conflict
00:58:25 or like whenever two nations are at tension with each other,
00:58:30 different scales of conflict,
00:58:32 that you can have conflict codified.
00:58:36 And that would potentially resolve conflict much faster
00:58:40 because there’s honesty, transparency and control
00:58:43 within that conflict, because there’s conflict in this world.
00:58:46 And I, again, very, very inspiring to think
00:58:49 about the kind of effects it might have
00:58:52 on the negative kinds of contracts,
00:58:56 on the tense, painful kinds of contracts.
00:58:59 I haven’t thought about that as much.
00:59:01 It’s actually kind of scary,
00:59:02 the stuff you’re thinking through now
00:59:04 with like the war contracts or something.
00:59:06 That’s not in the white paper.
00:59:07 We don’t have anything about war contracts or anything.
00:59:09 Again, this is the Russian, we’re both Russian,
00:59:12 but I’m a little more Russian in the suffering side.
00:59:15 Maybe I read way too much Dostoevsky
00:59:17 and military kind of ideas.
00:59:19 But anyway, holding politicians accountable in all forms,
00:59:24 I think is really powerful.
00:59:26 Is there something you could say as a small aside
00:59:29 on how smart contracts actually work if we look at the code?
00:59:33 Is there some nice way to say technically
00:59:37 what is a smart contract?
00:59:39 What does it mean to codify these agreements,
00:59:41 the actual process for people
00:59:42 who might not at all be familiar?
00:59:46 I think you just write it into code
00:59:48 that operates in this kind of decentralized infrastructure.
00:59:52 You usually write code
00:59:54 that runs in a central server somewhere.
00:59:56 Now you write code that runs across a lot
00:59:58 of different machines in this decentralized way.
01:00:01 And then after you write it, you need services.
01:00:04 And that’s where oracles come in,
01:00:05 they provide all the services.
01:00:07 So just like you would be writing code in web 2.0 land,
01:00:10 running it on a server somewhere
01:00:11 and using an API, here you’d be writing code,
01:00:14 putting it on a decentralized infrastructure
01:00:16 like a blockchain or a smart contract platform like Ethereum.
01:00:20 And then you would be using various services
01:00:22 in the form of oracles.
01:00:23 So they’ll just be called oracles
01:00:24 or decentralized services instead of APIs.
01:00:27 And you’re basically composing the same type of architecture
01:00:31 except it’s hyper reliable.
01:00:33 At the moment, it’s a little bit less efficient
01:00:34 because there’s an early stage to our industry.
01:00:39 But it provides this extreme level of reliability
01:00:43 and transparency, which for certain use cases
01:00:46 is an absolute critical component
01:00:48 and is completely reinventing how they work.
01:00:50 So I think people should look at what are the use cases
01:00:53 where that trust dynamic can be so heavily improved.
01:00:56 And that’s probably the ones
01:00:57 where this is maybe initially useful.
01:00:59 But I mean, just to emphasize,
01:01:01 I don’t think people realize when you say code
01:01:04 that we’re talking about non obfuscated actual program.
01:01:09 Like you can read it, you can understand it.
01:01:11 And there’s something about,
01:01:15 maybe this is my computer science perspective
01:01:17 of like software engineering perspective,
01:01:19 but there’s something about the formalism
01:01:21 of programming languages, which enforces simplicity
01:01:26 and clarity and transparency.
01:01:28 And because it’s seen to everybody,
01:01:31 I mean, simplicity is enforced.
01:01:34 There’s something about natural language,
01:01:36 like language as written in the constitution, for example,
01:01:40 where there’s so many interpretations.
01:01:44 With the nice thing about programs,
01:01:47 there’s not going to be a huge number of books written
01:01:51 about what was meant by this particular line
01:01:54 because it’s pretty clear.
01:01:56 Like programming languages have a clarity to them
01:01:58 that natural language does not,
01:02:01 and they don’t have ambiguity, which I think it’s important
01:02:06 to pause on because it’s really powerful.
01:02:08 It’s really difficult to think about.
01:02:09 I think we live in a world where all the philosophers
01:02:12 and legal minds don’t know how to program.
01:02:15 So I think, not all, most don’t.
01:02:18 And so we don’t often see the philosophical impact
01:02:22 of this kind of idea that the agreements
01:02:25 between humans can be written in a programming language.
01:02:30 That’s a really transformative idea.
01:02:32 That, I mean, yeah, it’s an idea that’s not just technical.
01:02:38 It’s not just financial.
01:02:39 It’s philosophical.
01:02:41 It’s rethinking human nature from a digital perspective.
01:02:46 Like what is human civilization?
01:02:48 It’s interaction between humans.
01:02:51 And rethinking that interaction as a digital interaction
01:02:55 that is managed by programming languages,
01:02:58 by programs, by code.
01:03:00 I mean, that’s fascinating.
01:03:03 That we’ll look back at this time potentially
01:03:06 as one where us little descendants of apes
01:03:10 did not realize how important this moment in history is.
01:03:16 Like human beings might be totally different
01:03:19 a century from now because we codified
01:03:23 the interaction between humans.
01:03:25 That might have more of an impact than anything else
01:03:28 we do today.
01:03:30 You think about the impact of the internet,
01:03:31 one of the cool things is digitization of data.
01:03:35 But we have not yet integrated the tools,
01:03:38 the mechanisms fully that use that data
01:03:42 and interact with humans yet.
01:03:43 And that’s what smart contracts do.
01:03:45 I wonder if you think about the role
01:03:47 of artificial intelligence in all of this.
01:03:50 Because your smart contracts are kind of agreements,
01:03:56 maybe you disagree with this,
01:03:57 but at least the way I’m thinking about it
01:03:59 is agreements between humans or groups of humans.
01:04:03 But it seems like because everything’s operating
01:04:07 in the digital space that you can integrate
01:04:10 non humans into this.
01:04:12 Or AI systems that help out humans,
01:04:16 managed by humans.
01:04:17 Like what do you think about a world
01:04:20 of hybrid smart contracts,
01:04:25 codifying agreements between hybrid
01:04:30 intelligent being networks of humans and AI systems?
01:04:35 Yeah, I think that makes perfect sense.
01:04:39 In terms of AI, I’m not an expert, right?
01:04:42 So it might be a bit simplistic or naive,
01:04:45 my ideas in this field.
01:04:48 I think everyone saw the Terminator movie, right?
01:04:51 Everybody kind of saw the Terminator movie in the 90s.
01:04:55 And it was like, this is really scary.
01:04:57 I personally think AI is amazing and makes perfect sense.
01:05:02 I think it will evolve to a place where people have…
01:05:06 Just to understand,
01:05:07 I work in the world of trust issues, right?
01:05:09 I work in the world of how can technology solve trust
01:05:12 and collaboration issues using encryption,
01:05:16 using cryptographically guaranteed systems,
01:05:18 using decentralized infrastructure, right?
01:05:20 So that’s the world that I’ve been inhabiting
01:05:22 for many, many years now,
01:05:24 building smart contracts for seven or eight,
01:05:26 doing stuff before that.
01:05:27 It’s kind of what I’m focused on.
01:05:29 So I view AI through that same lens.
01:05:32 And my brain naturally asks,
01:05:34 well, what is the trust issue
01:05:35 that people might have with AI?
01:05:37 And my natural kind of response is,
01:05:40 well, let’s say AI continues to be built and improve.
01:05:44 At some point, I have no clue where we are on this now.
01:05:48 I’ve seen different ideas that were very far from this.
01:05:51 I’ve seen other ideas were very close to this.
01:05:52 At a certain point, we’d arrive at a place with AI
01:05:55 where we would be a little bit worried
01:05:57 about just how much it could do, right?
01:05:59 We might be worried that AI could do things
01:06:02 we don’t want it to do,
01:06:04 but we still want to give AI
01:06:06 a level of control over our lives, right?
01:06:08 So in my world, that’s a trust issue.
01:06:11 And the way that that trust issue
01:06:13 would be solved with blockchains
01:06:15 is actually very straightforward.
01:06:16 And I think in its simplicity, quite powerful.
01:06:19 You could have an AI that has an ability to do
01:06:23 and control key parts of your and our lives, right?
01:06:28 But then you could limit it with private keys
01:06:32 and blockchains and create certain guardrails
01:06:35 and firm kind of walls and limits
01:06:41 to what the AI could never go past,
01:06:44 assuming that encryption, right?
01:06:46 That encryption continues to work, right?
01:06:49 And assuming that if it’s not that AI’s specialization
01:06:53 to break encryption, that it wouldn’t be able to do that,
01:06:55 right?
01:06:56 So if you have an AI that controls
01:06:59 something very important, whatever it is,
01:07:01 shipping or something in defense
01:07:03 or something in the financial system, whatever it is,
01:07:07 but you’re sitting there and you’re kind of worried,
01:07:09 hey, this thing is unbelievable.
01:07:11 It’s coming up with things
01:07:13 we wouldn’t have thought of in a hundred years,
01:07:14 but maybe it’s a little too unbelievable.
01:07:17 How do you limit it?
01:07:19 Well, if you bake in private keys
01:07:22 and you bake in these kind of blockchain based limitations,
01:07:27 you can create the conditions
01:07:28 beyond which an AI could never act.
01:07:31 And those could once again be codified
01:07:33 in the very specific unambiguous terms
01:07:36 in which you described,
01:07:38 which once again, in my trust issue focused world,
01:07:41 would solve the trust issue for users
01:07:45 and make them comfortable with using the AI
01:07:47 or ceding control to the AI,
01:07:50 which I think in more advanced versions of AI
01:07:53 will continue to be a concern, right?
01:07:55 This is fascinating.
01:07:57 So smart contracts actually provide a mechanism
01:07:59 for human supervision of AI systems.
01:08:01 With encryption, very encryption heavy.
01:08:04 So it’s not about like, is it smarter than us?
01:08:07 It’s about will the encryption hold up?
01:08:09 Yep.
01:08:10 So that’s based on the assumption that encryption holds up.
01:08:15 I think that’s a safe assumption.
01:08:16 We can get into that whole discussion,
01:08:18 but from quantum computing,
01:08:19 but cracking encryption is very difficult.
01:08:22 That’s a whole nother discussion.
01:08:23 I think we’re safe on the safe ground
01:08:25 for quite a long time, assuming encryption holds.
01:08:29 I, there’s a space that is at the cutting edge
01:08:38 of general intelligence research in the AI community,
01:08:41 which is the space of program synthesis
01:08:44 or AI generating programs.
01:08:47 So that’s different than what you’re referring to
01:08:50 is AI being able to generate smart contracts.
01:08:54 And that to me is kind of fascinating
01:09:00 to think of, especially two AI systems
01:09:03 between each other, generating contracts,
01:09:07 sort of almost creating a world
01:09:10 where most of the contracts are between nonhuman beings.
01:09:15 I think an AI system, as I think about it,
01:09:17 and once again, this is not my field.
01:09:19 This is something I might watch a YouTube video on
01:09:21 or just see something interesting about at some point.
01:09:25 I think if I were to just reason through it even now,
01:09:29 I think the highly deterministic
01:09:30 and guaranteed nature of smart contracts
01:09:34 would probably be preferable to an AI
01:09:37 because I’m guessing an AI would have a lot of problems
01:09:41 with dealing with the human element
01:09:43 of how contracts work today, right?
01:09:45 So an AI, for example, couldn’t pick up the phone
01:09:48 and call Dave at a bank to do a derivative
01:09:53 and kind of discuss with Dave and have a call with him
01:09:55 and kind of have a conversation and get him comfortable
01:09:58 and tell him it’s gonna be fine
01:10:00 and kind of smooth out all the weird social cues
01:10:03 that have to do with making certain derivatives.
01:10:06 I’m assuming that that’s a pretty complicated
01:10:09 neural map AI kind of problem.
01:10:15 Yeah, so if I think about it,
01:10:17 the deterministic guaranteed nature of smart contracts
01:10:21 probably would, and if, assuming they’re accessible to AIs,
01:10:25 could actually, interestingly enough, be the format
01:10:28 that they prefer to codify their relationship
01:10:32 with non AI systems and very possibly other AI systems,
01:10:37 right, because it is very,
01:10:41 I mean, it’s pretty guaranteed, right?
01:10:44 All the other types of contracts
01:10:46 that an AI could go out there and seek to do
01:10:50 would require some language processing around the law.
01:10:56 And I think, I don’t know if this is a term,
01:10:59 but probably not a smart AI or a good AI
01:11:01 or whatever the term is for a high quality AI,
01:11:04 would probably realize some of the limitations
01:11:08 and the risks.
01:11:09 Yeah, yeah, AI definitely dislikes ambiguity
01:11:12 and would prefer the determinism,
01:11:14 the deterministic nature of smart contracts.
01:11:17 I do wonder about this particular problem
01:11:19 and maybe you could speak to it of how smart contracts
01:11:23 can take over certain industries in a sense
01:11:27 or how certain industries can convert their sets
01:11:31 of agreements into smart contracts,
01:11:34 which is, you mentioned sort of talking to Dave
01:11:36 from the bank, many of our laws, many of our agreements
01:11:41 are currently through natural language, through words.
01:11:46 And so there is a process of mapping that has to occur
01:11:50 in order to convert the legal agreements,
01:11:53 legal contracts of today to smart contracts
01:11:58 that by the way, AI may be able to help with.
01:12:01 But by way of question, how do you think we convert
01:12:06 the legal contracts on which many industries
01:12:09 currently function today or not even legal contracts,
01:12:13 but ambiguous kind of agreements,
01:12:15 maybe they’re loose sometimes into more formal
01:12:19 deterministic agreements that are represented
01:12:22 by smart contracts?
01:12:25 So I think there’s two, maybe two sides to this.
01:12:30 I think the first one is actually not a huge problem
01:12:32 where you have things like the is the master agreement
01:12:35 for derivatives or you have these agreements
01:12:37 that basically already reference a system somewhere,
01:12:41 like for example, many legal agreements
01:12:43 already accept eSignature.
01:12:45 And so they’re saying, hey, I’m gonna use
01:12:46 this computing system over here around signatures
01:12:49 and I’m gonna consider, and there’s laws around that
01:12:51 and there’s clauses that say eSignature is good enough
01:12:53 for this agreement.
01:12:55 I actually don’t think this is a big problem
01:12:57 for the vast majority of legal agreements
01:12:59 that use systems already.
01:13:02 So what you’ll do is you’ll swap out one repository
01:13:05 or one set of system of contract settlement.
01:13:09 And you’ll just say, hey, this blockchain system over here
01:13:11 is my new system of contract settlement.
01:13:13 Whatever it says is the state of the agreement
01:13:16 instead of the centralized system over there.
01:13:20 And so there’s actually a huge amount of agreements
01:13:22 that are already able to do that
01:13:24 and I think we’ll do that.
01:13:26 I think there’s another side to your question,
01:13:28 which is the amount of agreements that are very ambiguous
01:13:33 that can be turned into smart contracts.
01:13:36 And I think the limitation there is twofold.
01:13:39 First of all, like you said earlier,
01:13:41 the highly reliable smart contract
01:13:44 and the lack of opaqueness and the clarity
01:13:46 of smart contracts is very high and very powerful
01:13:52 and very clear and it’s, in my opinion,
01:13:54 gonna be much, much easier to take a smart contract
01:13:58 and turn it into a set of natural language explanations
01:14:01 and just say, hey, this is what this does, right?
01:14:05 So I think that many contracts are,
01:14:08 and even now in decentralized finance and DeFi
01:14:11 and in decentralized insurance,
01:14:12 they’re basically being rebuilt in this format
01:14:14 and that rebuilding will make them clearer, like you said,
01:14:18 and then restating those in natural language
01:14:20 and explaining to people, well, you know,
01:14:21 whether it is this, I think it’ll actually be a lot simpler
01:14:24 to explain to people what the contract is about.
01:14:26 It’s fascinating.
01:14:27 Mapping smart contracts into natural language,
01:14:29 I didn’t even think about that.
01:14:30 So that’s, you’re saying that’s doable
01:14:33 and natural and easy to do.
01:14:35 Because there’s so much clear, right?
01:14:37 There’s that forced clarity that you talked about.
01:14:40 I think the second aspect of this problem
01:14:42 is the nuance around what contracts can be made unambiguous
01:14:47 and I think that comes down to,
01:14:49 often comes down to proving what happened,
01:14:51 which is where Oracle networks
01:14:53 and decentralized Oracle networks and Chainlink would come in
01:14:56 and our experience there is quite extensive
01:14:58 over the many years that we’ve worked on many different
01:15:00 contract types.
01:15:02 I think what it fundamentally comes down to
01:15:05 is whether there is data.
01:15:07 So we’re not gonna be able to make a hybrid smart contract
01:15:11 about whether somebody painted your house
01:15:13 the right color blue.
01:15:15 We’re just not gonna be doing that
01:15:16 because there’s no data feed that tells us
01:15:18 that your house was painted blue
01:15:19 or that it was the right color of blue.
01:15:22 You know, unless somebody sets up a drone
01:15:24 with a color analysis tool and they generate that data.
01:15:28 Which by the way, it could be possible, right?
01:15:29 They could, there could be, if there’s enough demand
01:15:32 then the service would be created
01:15:33 that has drones flying around
01:15:35 that’s telling you about the colors of, you know,
01:15:38 all this kind of stuff.
01:15:38 So if there’s actual demand that that would be created
01:15:41 and because there’ll be value to connect that data feed
01:15:44 to the smart contracts and so on.
01:15:46 I think you have it unbelievably right
01:15:48 because there are already insurance companies
01:15:51 that use drones to monitor construction sites from overhead
01:15:54 and see how many people are wearing hard hats.
01:15:57 And if the percentage of people wearing hard hats
01:15:59 isn’t sufficiently high, then, you know,
01:16:01 the policy is voided.
01:16:02 And so in that case, there is a data source
01:16:05 and that data source can be put
01:16:06 into a hybrid smart contract.
01:16:08 So the limitation of hybrid smart contracts is,
01:16:11 is there a data source or a set of data sources
01:16:13 to create definitive truth,
01:16:15 to settle the contract and eliminate ambiguity.
01:16:18 And then as you said, I think as people realize
01:16:22 that smart contracts are a format
01:16:24 in which they can form agreement about things
01:16:27 like that insurance product around, you know,
01:16:29 how many people are wearing hard hats.
01:16:31 If I’m the construction site owner, well, you know,
01:16:33 I would really like a guarantee
01:16:35 that your insurance policy is gonna pay me out
01:16:38 if everyone is wearing hard hats.
01:16:40 And in that case, there is demand for the data
01:16:44 and people will generate the data.
01:16:46 And I actually think the insurance industry
01:16:48 is interestingly a precursor of this
01:16:50 because they’re so data driven.
01:16:51 You already see insurance companies paying IoT companies
01:16:56 to put data into their customer’s infrastructure
01:16:59 at the cost of the insurance company
01:17:01 to generate the data that the insurance company uses
01:17:03 to make a policy for the customer.
01:17:05 So you basically already have people
01:17:08 who really want to price data into their agreements
01:17:12 when they’re of sufficiently high value paying
01:17:15 for their own customers to get data sensors
01:17:18 into their infrastructure.
01:17:20 And I think as smart contracts become more
01:17:23 of a requested format or data driven contracts
01:17:26 become more of a format,
01:17:28 there will be a growing demand
01:17:31 about proving what happened through data.
01:17:33 So it’ll be motivating totally new data feeds being created.
01:17:36 By the way, the insurance industry broadly,
01:17:40 the revolutions there, it would be huge.
01:17:42 I’ve worked quite a bit with autonomous vehicles,
01:17:44 semi autonomous and just vehicles in general.
01:17:47 The insurance industry there, by the way,
01:17:49 makes a huge amount of money,
01:17:51 but is using very crappy data feeds,
01:17:56 revolutionizing how like not by crappy,
01:18:00 I mean very crude.
01:18:01 Like literally the insurance is based on things like age,
01:18:06 gender, like basic demographic information
01:18:09 as opposed to really high resolution information
01:18:13 about you as an individual,
01:18:15 which you may or may not want to provide.
01:18:18 So you can choose from an individual perspective
01:18:20 to provide a data feed.
01:18:21 And there like the power of insurance
01:18:30 to enable the individual,
01:18:33 to empower the individual could be huge
01:18:36 because ultimately smart contracts motivate the use of data,
01:18:40 the creation of new data feeds,
01:18:42 but leveraging the whatever service it provides in truth,
01:18:48 as opposed to some kind of very loose notion of who you are.
01:18:52 So that I’m not, again,
01:18:55 not sure how that would change things,
01:18:57 but in terms of the fundamental experience of life,
01:19:02 because I think we all rely on insurance,
01:19:04 not just in business, but in life
01:19:06 and grounding that insurance
01:19:09 in more and more accurate representation of reality
01:19:13 might just have transformative effects on society.
01:19:15 Well, just to mention one quick thing that you said,
01:19:18 where I noticed another trust issue,
01:19:20 you said the user might not want to share their data.
01:19:23 So what you could actually do,
01:19:25 and what we’ve already worked on is,
01:19:26 you can have a smart contract that holds the data
01:19:30 and evaluates the data of the user
01:19:32 without sharing it with the insurance companies.
01:19:35 And the insurance company knows that the smart contract
01:19:38 will evaluate it according to the policy.
01:19:40 They don’t need the data.
01:19:41 And the user can provide the data
01:19:45 knowing it’ll never touch the insurance company
01:19:47 because it’s only provided to the smart contract.
01:19:49 And suddenly you’ve solved another trust issue
01:19:52 because the autonomous piece of code
01:19:54 can evaluate information separately from the interests
01:19:58 of both of the counterparties.
01:20:00 And so this is the recurring theme.
01:20:02 I think you’re seeing this recurring theme
01:20:03 where there’s a trust issue,
01:20:05 people can’t use the system, they can’t collaborate,
01:20:07 they can’t share information
01:20:09 that would make a better agreement for both of them,
01:20:11 they can’t solve a risk in their daily life,
01:20:14 they can’t participate in a market,
01:20:16 they can’t have a bank account
01:20:17 because nobody will give it to them
01:20:18 because they can’t give it to them in that legal system.
01:20:22 And once you have an autonomous piece of code
01:20:25 that can also know what’s going on,
01:20:27 thanks to Oracle networks and that combination of the code
01:20:30 and the Oracle network for the hybrid smart contract,
01:20:34 the same pattern just recurs.
01:20:36 It’s really the same pattern.
01:20:38 And this is why I keep saying trust issues.
01:20:40 It’s because I basically,
01:20:43 almost every contractual trust issue that I see
01:20:45 where there is a piece of data to prove
01:20:47 and settle the trust issue
01:20:49 in a way that works for both parties,
01:20:53 there is no reason not to use an autonomous,
01:20:55 highly reliable contract and piece of code.
01:20:59 And I have to tell you,
01:21:01 I’ve seen this in a lot of different industries.
01:21:04 I’ve seen it insurance, ad networks,
01:21:07 global finance, global trade,
01:21:09 those are all multi trillion dollar industries.
01:21:11 And then there are other smaller industries.
01:21:14 Like even one of the first smart contracts
01:21:16 we worked on many years ago
01:21:17 was for search engine optimization firms
01:21:20 where they would tell you,
01:21:21 hey, I’m gonna raise your search engine ranking,
01:21:24 give me the money.
01:21:25 And people wouldn’t wanna give them the money
01:21:26 because they never knew if they were gonna do it.
01:21:29 And then the search engine firm
01:21:30 doesn’t wanna do any work
01:21:31 thinking they’ll never get any money.
01:21:33 So we just initially even came up with a system
01:21:36 where you could put Bitcoin into a smart contract
01:21:38 and it would be released based on whether the search rank
01:21:42 of a website got to a certain level on Google
01:21:45 for a certain keyword, right?
01:21:47 And so the trust problem was solved.
01:21:49 But it’s just the same story, right?
01:21:50 It’s kind of like trust issues around AI,
01:21:52 trust issues around financial products,
01:21:54 trust issues around insurance,
01:21:55 trust issues around social media, whatever it is.
01:21:58 I think that’s what people looking at this industry
01:22:04 really need to understand.
01:22:06 And once they do understand,
01:22:07 they realize what this is all about.
01:22:09 This is about redefining how everyone collaborates
01:22:14 with everyone about everything
01:22:17 where we can prove something through data.
01:22:20 You’ve mentioned confidentiality and privacy
01:22:23 that the parties don’t need to necessarily know private data
01:22:27 in this interaction.
01:22:28 You talk about confidentiality in the white paper
01:22:32 for Chainlink 2.0.
01:22:33 Can you talk more about how to achieve confidentiality
01:22:38 in this process?
01:22:39 Sure, sure, absolutely.
01:22:43 So I think you once again need to think of the contract
01:22:45 as existing in two parts, right?
01:22:47 You have the on chain code
01:22:48 and then you have this off chain system
01:22:49 called the centralized Oracle network.
01:22:52 So the question is really what portion of the contract
01:22:56 should live in what part of these two systems, right?
01:23:00 So if you wanna create transparency,
01:23:03 you should put more information on chain
01:23:06 because that’s what blockchains are very good at.
01:23:09 They’re public, transparent,
01:23:12 but they don’t necessarily have privacy.
01:23:15 Well, you can see how those two things
01:23:16 are a little bit kind of completely diametrically opposed.
01:23:21 So I do think and I do see blockchains working
01:23:25 on on chain encrypted smart contracts.
01:23:28 That’s very inefficient.
01:23:29 It has a lot of nuances around it.
01:23:32 That I think will appear at some point.
01:23:35 I think until it appears,
01:23:37 you have an option of taking a part of the computation
01:23:41 and putting it into the centralized Oracle network.
01:23:44 We actually did an entire paper about this
01:23:47 that we presented at Stanford in February of last year,
01:23:52 something called Mixicles,
01:23:53 which basically talks about how you can take
01:23:55 an Oracle network and you can put a portion
01:23:58 of the computation into the Oracle network,
01:24:01 assuming that you’re comfortable with that limited set
01:24:04 of nodes knowing what the computation is.
01:24:07 And you could actually provide additional confidentiality
01:24:09 through special hardware
01:24:11 called trusted execution environments
01:24:12 that all those nodes are forced to run.
01:24:15 So they won’t even know what they’re operating.
01:24:17 And so at the end of the day,
01:24:19 if you look at a hybrid smart contract
01:24:22 as gaining functionality from its on chain code
01:24:24 and gaining other functionality
01:24:26 from its off chain decentralized Oracle network component,
01:24:30 you can place the part of the computation
01:24:32 that you would like to be private
01:24:34 in the decentralized Oracle network,
01:24:37 because you can control the set of nodes.
01:24:40 You can control the committee of nodes
01:24:42 and you can require that they run certain hardware
01:24:46 to keep the information private, right?
01:24:48 So you could basically make a derivative that,
01:24:50 or a binary option is the example used
01:24:52 in the Mixicles paper where the payout happened on chain,
01:24:57 but it was actually impossible to tell
01:24:59 what the outcome of the contract was.
01:25:02 So the outcome of the contract was computed
01:25:04 in the centralized Oracle network.
01:25:06 And then there was a switch that triggered
01:25:08 who received the payment,
01:25:10 but from the point of view of analyzing
01:25:13 the on chain transactions and seeing who received
01:25:18 the payment or what the outcome of the contract was,
01:25:21 you couldn’t derive that,
01:25:24 you couldn’t backward engineer what that was,
01:25:26 but the users of that hybrid smart contract
01:25:30 still had on chain code that guaranteed them
01:25:33 that as long as the decentralized Oracle network
01:25:36 found a certain outcome, right?
01:25:37 Determined a certain outcome
01:25:39 that the relevant user would get paid
01:25:42 and there was still a place to put value, right?
01:25:45 So there is this kind of fundamental tension
01:25:49 between confidentiality, privacy,
01:25:52 which is very important for many contracts,
01:25:54 which is critical to many contracts
01:25:56 and the public and transparent nature of blockchains,
01:25:59 which I think eventually will be solved
01:26:01 through encrypted on chain smart contracts.
01:26:04 That’ll take some time,
01:26:05 I think that’ll take years in my opinion.
01:26:08 And before we arrive there,
01:26:11 I think people will put the private portion
01:26:13 into the centralized Oracle network.
01:26:15 Once again, going back to what
01:26:16 the decentralized Oracle networks do,
01:26:19 they seek to provide these services, right?
01:26:21 So the ability to do a privacy preserving computation
01:26:25 is perhaps a service without which
01:26:28 a certain type of contract might never come into existence
01:26:31 in the form of an on chain hybrid smart contract.
01:26:34 And so this is once again,
01:26:35 what we see the centralized Oracle networks
01:26:38 and decentralized services doing
01:26:40 is providing people these tools and building blocks
01:26:43 to compose, like I’m great at making
01:26:46 these derivatives contracts,
01:26:48 but I can’t make them unless I can retain
01:26:50 the privacy of them.
01:26:52 And our goal is to provide the infrastructure
01:26:56 that gives you as a developer
01:26:57 and as a creator of smart contracts, that capability.
01:27:00 And what we’ve seen is that as we provide that capability,
01:27:03 people create more,
01:27:04 which is also really the story of the internet, right?
01:27:07 The story of the internet is it was really tough
01:27:09 to do eCommerce while everything was an HTTP
01:27:13 and credit cards were transmitted publicly.
01:27:15 And so eCommerce was kind of tough
01:27:17 because how am I gonna send my credit card
01:27:18 over public on encrypted channels, right?
01:27:21 But the second HTTPS appears,
01:27:23 eCommerce becomes a lot easier
01:27:24 because I can put in my credit card number
01:27:26 and it can be sent over an encrypted channel
01:27:29 and it’s not at risk.
01:27:30 And so I can participate in eCommerce
01:27:32 as long as I have a credit card.
01:27:33 I think those types, and I’m sure that was unexpected,
01:27:36 right, I’m sure at the time that was an unexpected outcome
01:27:40 from that technology.
01:27:42 And so I think this is why we sometimes have this focus
01:27:45 on privacy because in our work with contracts
01:27:48 and their transition into this hybrid smart contract form,
01:27:51 we see a substantial amount of need for privacy
01:27:55 as an inherent property of these contracts.
01:27:59 And it’ll take a while before that’s possible
01:28:01 to create the kind of technology innovation required
01:28:04 to do that on chain.
01:28:05 I know there’s a few ideas that are being floating about,
01:28:07 but so the currently distributed Oracle networks
01:28:10 provide that feature, which is essential to many contracts.
01:28:14 What brings to mind in this whole space,
01:28:16 again, it might be outside of your expertise,
01:28:20 but within the world which I’m passionate about,
01:28:23 which is machine learning,
01:28:25 and it seems like very naturally
01:28:27 because current machine learning systems
01:28:31 are very data hungry
01:28:33 and much of the value mined by companies
01:28:37 in the digital space are from data.
01:28:40 They often want their data to maintain privacy.
01:28:44 So you think about an autonomous vehicle space,
01:28:47 Tesla is collecting a huge amount of data,
01:28:49 Waymo is collecting a huge amount of data.
01:28:53 It seems like it would be very beneficial
01:28:54 to form contracts where one could use the data
01:28:57 from the other in some kind of privacy preserving way,
01:29:00 but also where all the uses of data are codified
01:29:05 and you can exchange value cleanly,
01:29:08 basically contracts over data,
01:29:10 over machine learning systems use of different data.
01:29:15 I don’t know, do you talk to machine learning folks
01:29:19 that use ideas of smart contracts
01:29:21 or is that for outside of your interest?
01:29:23 Because it seems like exceptionally applicable set of,
01:29:27 when we talk about different services
01:29:29 that might be created and revolutionized by smart,
01:29:33 especially hybrid smart contracts,
01:29:36 I think machine learning systems comes to mind to me
01:29:40 in all industries.
01:29:42 I don’t know if you’ve gotten a chance
01:29:43 to interact with those folks, with those services.
01:29:46 I think what you’re talking about is more data marketplaces
01:29:49 in the data marketplace side of things.
01:29:52 Well, this is actually once again, very applicable
01:29:55 because there’s a trust issue.
01:29:56 At the end of the day,
01:29:58 let’s say I’m trying to sell you some data.
01:30:00 You don’t know the quality of the data.
01:30:03 So you don’t know what you wanna pay for it.
01:30:04 And I can’t give you the data for you
01:30:06 to determine the quality
01:30:07 because I’ve given you the data, right?
01:30:09 Guess what?
01:30:10 We need an autonomous impartial agent.
01:30:13 We need an impartial computational kind of agent
01:30:17 and on chain smart contract with an Oracle network
01:30:20 to assess my data to write,
01:30:23 to basically take random cross section samples of the data,
01:30:28 assess it for quality, assess it for signal
01:30:31 from the algorithm you have,
01:30:33 which you don’t wanna share with me
01:30:35 because you don’t wanna know the algorithm
01:30:36 you’re working on, right?
01:30:37 You don’t want me to know what you want the data for.
01:30:40 So now the autonomous agent takes your algorithm,
01:30:44 keeping it private from me and takes my data,
01:30:46 keeping it private from you,
01:30:47 assesses it on a random cross section sampling
01:30:50 for quality of data, returns the scoring back to you,
01:30:54 allows you to determine a price.
01:30:57 And now both you and me know that we’ve arrived
01:31:00 at a fair price for the quality of my data
01:31:03 for what you wanna do with it.
01:31:06 And that’s once again,
01:31:09 from what I’ve seen in the data marketplaces,
01:31:12 which are full of people who want that data
01:31:14 for these learning models, often for financial markets,
01:31:17 often for other reasons,
01:31:20 this is their fundamental problem,
01:31:22 which amazingly enough,
01:31:24 there’s a trust issue that is getting solved.
01:31:28 And I think you can see even on the face of it,
01:31:31 once that trust issue is solved,
01:31:33 those markets can work a lot better, right?
01:31:36 I don’t need to know your algorithm.
01:31:38 You don’t need to know my data.
01:31:39 We both know that the autonomous agent
01:31:41 is not under either of our control
01:31:43 and gave us a fair assessment and a fair price.
01:31:46 And that’s it.
01:31:47 And we’re all very comfortable with that.
01:31:50 I could even make conditions
01:31:52 that your algorithm isn’t analyzing the data
01:31:55 for something I don’t want you to analyze it for,
01:31:57 or you could make conditions
01:31:59 that the data has to have any number of properties.
01:32:02 And once again, you haven’t leaked any signal to me
01:32:05 and I haven’t leaked any data to you,
01:32:07 which is once again,
01:32:09 just another type of trust issue that all of this solve.
01:32:12 So it’s the same pattern.
01:32:14 If you work in this industry long enough,
01:32:15 or if you really look at these use cases long enough,
01:32:18 you’ll simply come to the question,
01:32:20 and this is the useful question,
01:32:22 what is the trust issue this is solving?
01:32:24 And then if you can get an answer to that question
01:32:27 on a case by case basis,
01:32:28 that’s when you’ll understand why blockchains are relevant.
01:32:32 And then once you do that with enough use cases,
01:32:35 it becomes a little bit mind blank.
01:32:38 You’ve mentioned trust quite a bit.
01:32:40 You also mentioned trust minimization
01:32:45 in the Chainlink White Paper.
01:32:48 Can we dig into trust a little bit more?
01:32:51 What is the nature of trust
01:32:53 that you think about in these smart contracts?
01:32:56 What is trust minimization?
01:32:58 How do we accomplish, achieve trust minimization?
01:33:02 Sure, sure.
01:33:03 I think it’s important maybe to have a conception
01:33:05 of what the alternative is, right?
01:33:07 What is highly reliable trust minimized off chain
01:33:11 and on chain computation and alternative to?
01:33:14 So this is just kind of how I see the world
01:33:17 in these two camps.
01:33:18 One camp is the traditional,
01:33:20 what I call brand based or paper guarantee camp.
01:33:25 And this is the world as pretty much most
01:33:27 or all people know today.
01:33:29 This is the world where there’s a bank logo
01:33:31 or an insurance company logo, or some kind of logo.
01:33:34 There’s a very big building with marble arches
01:33:36 and columns, it’s the biggest building in the town.
01:33:39 It’s bigger than the church.
01:33:40 And everybody feels very good.
01:33:42 Everybody’s got such a nice logo.
01:33:43 It’s such a big building.
01:33:45 Why don’t I give them my money?
01:33:47 Why don’t I interact with them on the basis
01:33:49 of any kind of agreement?
01:33:51 And that’s good.
01:33:52 And that is definitely better than that not being there.
01:33:56 And that is definitely a huge improvement
01:33:57 for how people conduct commerce.
01:34:00 Letters of credit from branded entities
01:34:04 are very important for global trade to take place
01:34:06 in the early stages of global trade.
01:34:09 So that’s good, but it is fundamentally
01:34:13 just a paper agreement with a legal framework behind it.
01:34:16 And if the paper agreement you have would say Robinhood
01:34:20 or somebody else suddenly has to change,
01:34:24 well, it changes and you can’t really do anything about it.
01:34:26 You won’t be able to change anything
01:34:28 about what happened there.
01:34:29 There’s some long terms of service.
01:34:31 There’s some other agreements around all this stuff.
01:34:34 At the end of the day,
01:34:36 that’s the brand based and paper guarantee world
01:34:40 where it’s all very vague and opaque
01:34:42 and you’re kind of hoping for the best
01:34:44 because there’s a nice logo.
01:34:45 It’s been around a hundred years.
01:34:47 There’s a lot of marble.
01:34:48 Put a lot of marble.
01:34:49 Big building, lots of marbles.
01:34:50 This is why banks have such nice buildings, right?
01:34:53 It’s not because they want to spend money on buildings.
01:34:56 It’s to create confidence in them as an entity
01:35:00 in order for people to transact through them, right?
01:35:03 This is why all these kind of go to cities
01:35:06 that had gold rushes, go to cities
01:35:08 that needed banking as a service in certain time periods,
01:35:12 they’re the most beautiful buildings
01:35:14 at least in the United States.
01:35:15 So this is the brand based paper guarantee model
01:35:19 for which up until now,
01:35:20 there has never been an alternative, right?
01:35:22 So up until now, if you had a bad experience with a bank
01:35:25 or insurance company or some logo somewhere,
01:35:28 you would only have one option.
01:35:30 Your option would be to go across the road
01:35:32 and down the block to another building
01:35:35 with another color of marble
01:35:37 and another set of agreements
01:35:39 that are fundamentally still paper brand agreements, right?
01:35:43 Now for the first time, you have mathematical agreements.
01:35:47 You have mathematically guaranteed encryption secured,
01:35:52 decentralized infrastructure powered agreements, right?
01:35:56 This is really the shift.
01:35:59 This is really the comparison and the alternative
01:36:03 through which people should view all of this in my opinion,
01:36:05 because there’s once again, this conception
01:36:07 that everything is fine, everything works very well.
01:36:11 Well, it does, it works fine and very well
01:36:13 as long as nothing goes wrong.
01:36:15 And then in the cases when things go wrong,
01:36:17 which they pretty much invariably at some point do,
01:36:20 then you find out that, well, you know,
01:36:22 turns out they don’t have to pay me
01:36:23 or turns out I can’t trade
01:36:25 or turns out the ATMs can be locked up
01:36:27 and only give me 66 euros per day,
01:36:30 whether I’m a business or an individual,
01:36:31 like what happened in Greece a few years ago, right?
01:36:35 And the reality is that once that becomes a strong enough
01:36:41 kind of realization for people,
01:36:43 I think they will all just migrate
01:36:45 to mathematically guaranteed contracts
01:36:47 because why wouldn’t you?
01:36:49 So in the world of mathematically guaranteed contracts,
01:36:53 kind of how do we, and cryptographically secured
01:36:56 and decentralized infrastructure powered,
01:36:57 how do we evolve into that world?
01:37:01 Well, at the end of the day, it comes down to consensus,
01:37:05 right, it comes down to a collection of independent nodes,
01:37:09 a collection of provably independent computing systems
01:37:13 arriving at the same conclusion impartially.
01:37:17 That conclusion might be the transaction
01:37:20 is valid between address A and address B,
01:37:25 address A has one Bitcoin,
01:37:26 wants to send it to address B,
01:37:27 now address B has one Bitcoin, right?
01:37:29 So that’s one degree of validation.
01:37:32 It has certain cryptographic primitives
01:37:33 that are used, certain levels of cryptography,
01:37:36 encryption, and other methods
01:37:37 that basically provide clarity and those guarantees.
01:37:42 But fundamentally, it’s this level of consensus
01:37:44 that multiple independent computing systems
01:37:48 came to the same conclusion, verified that conclusion
01:37:51 and created a sense of finality,
01:37:53 created a final state that is globally considered
01:37:56 to be the state of a transaction.
01:38:00 And that is how it’s achieved, right?
01:38:03 So it’s achieved by users looking
01:38:06 at these mathematical contract systems and saying,
01:38:11 you know, if I have money in a bank,
01:38:13 there’s one single person who controls that money,
01:38:16 that’s the bank,
01:38:17 they could choose to give me my money
01:38:18 or choose not to give me my money.
01:38:20 And that’s great,
01:38:22 but maybe there’s a percentage of what I own
01:38:24 that I wanna put into another system
01:38:26 where there’s thousands of independent computing systems
01:38:29 that are promising me, you know,
01:38:31 with the help of cryptographic primitives,
01:38:33 that I will be able to always have access to this,
01:38:36 whatever this is, whatever this token is,
01:38:41 I will at least, or at the very least,
01:38:43 I will always have unfettered,
01:38:45 complete control and access to it.
01:38:48 So, you know, that’s one example.
01:38:50 Another example is, hey,
01:38:51 we have a hybrid smart contract
01:38:52 for something like crop insurance.
01:38:55 I, as the user, evaluate where this smart contract runs.
01:38:59 Oh, wow, the smart contract runs on Ethereum.
01:39:01 Great, thousands of nodes,
01:39:03 lots of computational security,
01:39:06 hash power, so on and so on.
01:39:08 Then I look at, oh, well, what triggers the contract?
01:39:10 Oh, there’s this Oracle network.
01:39:12 Okay, it’s composed of 25 nodes or 15 nodes,
01:39:15 gets data from five different weather stations.
01:39:18 You know, I’m comfortable with that.
01:39:19 I have a certain level of comfort
01:39:21 with that hybrid smart contract
01:39:23 and its ability to provide me consensus
01:39:26 about the transaction
01:39:28 once the contract knows what’s happened,
01:39:30 and I’m comfortable with the consensus around the event
01:39:34 that controls the contract, right?
01:39:36 Because once again,
01:39:37 that event is what determines
01:39:39 what happens with the contract.
01:39:41 And if the contract is super well written,
01:39:43 it doesn’t matter if the event isn’t reliable, right?
01:39:47 So now I’ve made this determination.
01:39:48 I’ve gotten all this clear, transparent information
01:39:51 about this system that combines the contract code
01:39:55 with a decentralized Oracle network.
01:39:57 And I’ve made my decision to participate
01:39:59 in this decentralized insurance,
01:40:02 kind of crop insurance policy.
01:40:03 I’ve sent the Bitcoin or the stable coin
01:40:06 or whatever I have on my Android phone.
01:40:09 And then time goes by and let’s say it doesn’t rain,
01:40:12 lo and behold, the smart contract returns
01:40:15 the relevant amount from the policy back to me.
01:40:19 I continue my life as a farmer.
01:40:22 And by the way, the fact that that happened
01:40:25 contributes reputation and contributes proof
01:40:28 back to both the contract
01:40:30 as something that can prove to other people
01:40:32 that it has settled and the Oracle network
01:40:35 as something that can prove
01:40:36 that it has properly assessed reality
01:40:39 or properly triggered a contract.
01:40:41 And this is where there’s one of many network effects
01:40:44 where the more that smart contracts
01:40:47 and Oracle networks are used,
01:40:49 they themselves generate this immutable on chain data
01:40:54 that proves their value and reliability.
01:40:57 And improving more and more of that
01:41:00 in more and more kind of use cases
01:41:03 and more and more variants of the same contract,
01:41:06 they arrive at a greater body of proof
01:41:09 that they like, I am the decentralized crop,
01:41:12 the decentralized insurance contract for crop insurance
01:41:16 used by a million users.
01:41:19 And my failure rate is non existent or really low.
01:41:24 And here’s my Oracle network.
01:41:25 And by the way, it’s also settled a million of these.
01:41:28 And so it’s not the logo, right?
01:41:31 It’s not, hey, what a nice logo you have
01:41:35 on top of a building above a train terminal or something.
01:41:40 It’s much more, hey, there’s a million people,
01:41:44 there’s a million separate contracts
01:41:45 that got settled correctly.
01:41:46 I have all the proof that I could ever need about that.
01:41:50 And it’s not something that’s very easy to gain, right?
01:41:53 Because real value was at stake, real value was moved around.
01:41:57 And so I think once again,
01:41:59 the transparency aspect comes in where you’re able to prove
01:42:02 that the cryptographically enforced contracts are better.
01:42:09 That said, you can still integrate the traditional banks
01:42:12 as long as you create a data feed
01:42:13 on the amount of marble that’s included.
01:42:16 So if that’s valuable to you in terms of reputation,
01:42:19 you could still integrate the marble, the amount of marble
01:42:22 that and the size of the logo.
01:42:26 We could still keep the banks around.
01:42:28 I think we will.
01:42:29 I think what’ll happen with the banks
01:42:30 and all the insurance companies, by the way,
01:42:32 is not that they’ll all just die or something.
01:42:34 I think it’ll be just like the internet.
01:42:36 There’ll be some of them that adopt this
01:42:38 and some of them that don’t,
01:42:40 and some of them that do it faster,
01:42:41 some of them that do it slower.
01:42:42 And that’s an economic decision that they’ll make.
01:42:45 I think their whole question is,
01:42:46 is this a foregone conclusion?
01:42:48 I mean, I think my answer is yes,
01:42:51 this is definitely gonna be happening.
01:42:52 I think they still have a question of,
01:42:55 is this gonna change my industry?
01:42:58 But I’m seeing a definite shift in people’s understanding.
01:43:03 And I think that shift is gonna accelerate rapidly
01:43:06 as one or two of them of their competitors
01:43:08 throw their hat in the smart contract ring
01:43:11 and say, well, I have smart contracts.
01:43:14 I guarantee my outcomes to you.
01:43:17 What do they do for you?
01:43:19 It’s risky, just use mine.
01:43:22 And the second some of them start losing business
01:43:24 because of that, they’re gonna move very quickly
01:43:27 because that’s what all of their compensation structures
01:43:30 and all their goal planning structures are based around.
01:43:32 They’re based around what is losing us business
01:43:35 or getting us business.
01:43:36 Yeah, it’s fascinating organizationally though,
01:43:38 to think about banks, they’re very old school
01:43:41 and their ability to move quickly is questionable to me.
01:43:46 I just look at basic online banking,
01:43:50 like how good banks are creating
01:43:53 a frictionless online experience.
01:43:55 And I think they’re not very good.
01:43:58 And so that speaks to the kind of people
01:44:01 who are in leadership positions at banks,
01:44:03 the kind of people they hire,
01:44:05 the kind of culture there is.
01:44:07 So I do wonder if banks will from inside
01:44:12 revolutionize themselves to include smart contracts
01:44:15 or whether totally new competitors will have to emerge
01:44:18 that basically create new kinds of banks.
01:44:22 Whether, what is the company square?
01:44:26 I think it comes up out of nowhere really with Cash App
01:44:30 and they have Bitcoin on Cash App,
01:44:31 whether they will start incorporating smart contracts
01:44:34 and they will revolutionize the whole banking industry
01:44:40 or whether Bank of America will revolutionize themselves
01:44:44 from within.
01:44:46 I’m skeptical on Bank of America, but you never know.
01:44:50 In general, I’m fascinated by how big organizations,
01:44:53 whether it’s Google or Microsoft or Bank of America,
01:44:56 pivot hard in a world that’s quickly changing.
01:45:00 I think that takes bold leadership and a lot of firing
01:45:05 and a lot of pain and a lot of meetings
01:45:08 where the one asshole brings up the
01:45:10 from first principles idea that, you know what,
01:45:13 the ways we’ve been doing stuff in the past require,
01:45:16 we need to throw that out and do stuff totally differently.
01:45:20 I know a lot of those assholes
01:45:22 in a lot of these different industries.
01:45:25 First of all, I think they’re getting listened to more
01:45:27 and second of all, I think all of these places,
01:45:30 as I look at it more and more,
01:45:32 I think they have a fundamental line of business
01:45:35 that they try to protect
01:45:37 and then everybody’s compensation
01:45:39 and everybody’s metrics and goals
01:45:40 is focused around that line of business.
01:45:43 So the second that things begin to impact that,
01:45:48 then everybody will be in a senior meeting
01:45:52 and that asshole will be quite listened to
01:45:55 because he will have the only thoughtful explanation
01:45:57 as to why this is happening.
01:45:59 How things will evolve from there, I actually don’t know
01:46:02 because that hasn’t been the case yet.
01:46:05 But my thinking is that there will be people
01:46:08 who don’t wanna cannibalize certain parts of their business
01:46:12 or don’t wanna change certain parts of their business
01:46:15 and then there will be people who say,
01:46:16 look, I think this is how the world’s gonna work.
01:46:18 We’re gonna make a very, very heavy
01:46:23 kind of set of commitments to put resources towards this.
01:46:27 I already see that with a few banks
01:46:29 working on various blockchain based systems,
01:46:33 but granted, they’ve been working on those for years.
01:46:34 So I think all of this comes down
01:46:37 to these kind of quarterly earnings calls
01:46:39 where somebody asks them, hey, I saw that bank over there
01:46:44 once the blockchain bond
01:46:45 or a smart contract derivative platform.
01:46:47 And I also saw that they made $10 billion in revenues
01:46:51 or $10 billion in volume or whatever it is from that.
01:46:55 What’s your plan on the earnings call?
01:46:58 And I promise you by the next earnings call,
01:47:00 there’s a plan.
01:47:02 And then the question on the next one is,
01:47:03 well, when’s the plan gonna happen?
01:47:04 And then by the next earnings call,
01:47:06 it’s a plan is happening.
01:47:08 And that’s what these people are sensitive to.
01:47:11 That’s what these organizations are structured around.
01:47:13 It’s not completely economically like disconnected, right?
01:47:17 They have this core business, they wanna protect it.
01:47:20 I understand that idea,
01:47:23 but I think that the problem with that
01:47:26 is sometimes it requires this myopic focus, right?
01:47:31 And that’s what all the innovation stuff is about.
01:47:34 Every time somebody at a corporate entity
01:47:36 is about innovation, they’re trying to sidestep this.
01:47:40 But once again, the incentives to maintain
01:47:42 whatever the core businesses is so strong
01:47:45 that the innovation people, even though they are there,
01:47:52 I think they get a phone call and go like,
01:47:53 what are we doing for this?
01:47:55 And the ones that actually did good work
01:47:58 and got ready to do something for this
01:48:00 have done their employer and their organization
01:48:03 a very positive service.
01:48:05 Whereas the ones that aren’t ready,
01:48:07 I mean, they’ll make up something
01:48:09 and maybe they’re really smart and they’ll get it together.
01:48:11 I don’t know.
01:48:12 Can we talk about tokens a little bit?
01:48:15 Generally speaking, there’s been a meteoric rise
01:48:19 of a bunch of different tokens.
01:48:20 We could just talk about Bitcoin and Ethereum as examples.
01:48:24 Bitcoin I think crossed $60,000 in value.
01:48:27 What are your thoughts in general on this rise?
01:48:31 What’s the future of Bitcoin?
01:48:32 What’s the future of Ethereum?
01:48:34 There’s the total value locked metric
01:48:38 that I think generalizes the different kind of value
01:48:42 of these tokens.
01:48:46 What does the future value and impact
01:48:51 of cryptocurrency look like
01:48:52 if we look through the lens of these tokens?
01:48:56 I think valuing all these tokens
01:48:58 and determining that isn’t something
01:48:59 I’m particularly great at.
01:49:01 I haven’t spent a lot of time on that.
01:49:02 I’ve spent the vast majority of my time
01:49:05 on building these systems and architecting them
01:49:07 and getting them to fruition and getting them to a place
01:49:09 where they operate properly on both the technical
01:49:12 and the crypto economic and in every other sense.
01:49:15 I think with Bitcoin,
01:49:17 there is a certain conception
01:49:21 of non governmental fiat money
01:49:24 that Bitcoin is really the first creator of, right?
01:49:28 So there’s this very powerful idea called fiat money.
01:49:31 It’s basically more or less a kind of 40 year experiment.
01:49:36 I think on August 15th of this year
01:49:38 is maybe I think given the 40th anniversary,
01:49:41 government can say, hey, I have a currency
01:49:42 and it’s worth something and here it is.
01:49:46 In terms of the way that governments have stopped that
01:49:50 in the past is if anyone tries to make
01:49:52 another fiat currency in their country,
01:49:54 they immediately shut it down, right?
01:49:56 They immediately say, hey, this is really bad.
01:49:58 You’ve done something really bad.
01:50:00 It’s time for you to stop.
01:50:01 Don’t do it anymore.
01:50:03 And it stops, right?
01:50:04 That’s been the history of non governmental fiat currency.
01:50:07 Bitcoin is really due to its decentralized nature,
01:50:12 the first and possibly in some cases,
01:50:15 in many people’s minds,
01:50:16 it’s still the only true non governmental fiat currency.
01:50:20 Now, how powerful is non governmental fiat currency?
01:50:24 I have no idea, right?
01:50:26 This is why so it’s really as powerful as the ideas
01:50:31 that people ascribe to it are, right?
01:50:33 So let’s say people start saying,
01:50:36 like right now people are saying,
01:50:37 hey, it’s internet money.
01:50:39 It’s the money of the internet.
01:50:41 Okay, great.
01:50:42 What’s that worth?
01:50:43 I don’t know.
01:50:44 It’s probably worth a lot.
01:50:45 I have no idea what it’s worth,
01:50:45 but as an idea, as a concept to underpin the fiat money,
01:50:51 the let there be aspect of fiat and of Bitcoin,
01:50:56 you basically look at it and you say,
01:50:58 yeah, internet money.
01:51:00 Okay, that could be worth whatever,
01:51:02 60,000, 600,000, great question, right?
01:51:07 There are other versions of the world, right?
01:51:08 Where people say,
01:51:12 there are countries that don’t have a good fiat currency
01:51:14 and I see a lot of people using Bitcoin.
01:51:16 So Bitcoin isn’t internet money,
01:51:19 it’s countries without a good currency money.
01:51:24 So all the countries without a good currency
01:51:25 now use Bitcoin and let there be,
01:51:29 Bitcoin as this, right?
01:51:31 As this conception of Bitcoin.
01:51:33 What’s the value of that?
01:51:34 I don’t know.
01:51:35 That’s a great question.
01:51:36 Probably huge amount of value.
01:51:39 Then there’s a further conception of Bitcoin
01:51:42 as some digital gold.
01:51:45 There’s a scarcity dynamic.
01:51:46 There’s all these other kinds of dynamics.
01:51:49 What is a portable version of digital gold
01:51:52 with some kind of built in scarcity worth?
01:51:57 You know, kind of artificially created scarcity.
01:52:01 What’s that worth?
01:52:02 I don’t know.
01:52:04 That’s a great question.
01:52:05 I haven’t done the analysis on that is the point,
01:52:07 might be worth a lot.
01:52:09 What is it all worth if all three of these things,
01:52:13 you know, flow into the same fiat,
01:52:16 kind of let there be Bitcoin
01:52:18 as these three things conception of Bitcoin?
01:52:21 I don’t know what that’s worth.
01:52:22 I also don’t know what that’s worth,
01:52:23 but could be worth a huge amount.
01:52:25 So I think it’s not,
01:52:28 I don’t think it’s,
01:52:28 I personally don’t think it’s super important
01:52:30 what I think it’s worth
01:52:31 or what many other people think it’s worth.
01:52:33 I don’t think that’s really that important.
01:52:35 I think what’s probably important
01:52:37 is understanding what the societal conception of Bitcoin is
01:52:44 and how does that societal conception evolve over time.
01:52:49 And that interestingly enough,
01:52:51 doesn’t just depend on, you know,
01:52:54 you or me or the people who made Bitcoin or anything else.
01:52:58 It actually depends on current events.
01:53:00 So for example, if people suddenly say,
01:53:02 I’m more and more worried about fiat currency.
01:53:05 I’m more and more worried that governmental fiat,
01:53:09 even if it’s the most reliable version of that
01:53:12 is not as good as I thought it was.
01:53:14 Maybe I should go on the PayPal app
01:53:17 and maybe I should get some Bitcoin just in case.
01:53:20 What’s the world where Bitcoin is a certain percentage
01:53:25 of everyone’s ownership as a hedge
01:53:28 against governmental fiat money not being so good?
01:53:32 Haven’t done the analysis, but another example, right?
01:53:35 Here’s this conception, that’s the conception.
01:53:38 So when I look at Bitcoin,
01:53:40 what I see is a lot of these fascinating conceptions
01:53:43 of what the fiat, let there be value of Bitcoin is.
01:53:47 By the way, all of them could be true.
01:53:50 Maybe some of them are true.
01:53:51 Maybe some of them aren’t true.
01:53:53 And the fascinating thing is that
01:53:54 I’ve seen this conception change, right?
01:53:56 So when I started in the Bitcoin space,
01:53:59 the conception was micropayments.
01:54:01 The cost of Bitcoin is low, we’ll have micropayments.
01:54:05 Micropayments are wonderful for machine to machine
01:54:09 transactions, micropayments are wonderful.
01:54:10 The emerging market, and that’s fine, right?
01:54:13 And that was one conception of Bitcoin
01:54:15 as let there be Bitcoin as micropayments platform, right?
01:54:19 But then the value rose and things changed.
01:54:21 There wasn’t enough expansion in certain ways.
01:54:24 And now the conception has evolved
01:54:26 into this other conception.
01:54:28 But at the end of the day,
01:54:30 I think governments have a very clear set of steps
01:54:34 for directing the public’s conception of their fiat, right?
01:54:40 They say our fiat is worth this for these reasons.
01:54:44 Bitcoin doesn’t have that.
01:54:45 Bitcoin doesn’t have an official Bitcoin spokesperson
01:54:49 that goes out and says,
01:54:50 the non governmental money called Bitcoin,
01:54:53 the non governmental fiat money called Bitcoin
01:54:55 has value on the basis of this, this, this and this.
01:54:57 Here’s our fiscal budget, here’s our future plans.
01:55:00 Our money will continue to be safe and secure and reliable.
01:55:04 And so what that hole creates
01:55:07 is a hole that we all fill, right?
01:55:09 We all basically come to some vague kind of
01:55:12 group understanding that Bitcoin is worth this
01:55:16 because it is tied to,
01:55:23 let’s say all non governmental fiat money comes
01:55:27 into question, everybody doubts it,
01:55:30 possibly due to inflation.
01:55:32 And everybody says, you know, this is nice,
01:55:35 but I’d like to keep 10, 20% of my wealth
01:55:39 in non governmental fiat, just in case,
01:55:44 you know, what are those numbers?
01:55:47 I mean, if that happens, you know,
01:55:49 I’m guessing you can add a few zeros.
01:55:52 I like how you say I haven’t done the analysis
01:55:55 as if I’m sure a lot of people have done
01:55:56 quote unquote analysis, but it’s not,
01:55:59 it’s still speculation.
01:56:00 Nobody can predict the future,
01:56:02 especially when so much of it has to do
01:56:04 with a large number of people holding an idea
01:56:08 in their mind as to the importance
01:56:10 of a particular technology like Bitcoin.
01:56:13 There’s a lot of excitement by its possibilities,
01:56:15 but the number of zeros you add is an open question
01:56:19 and nobody can do a perfect analysis
01:56:22 except whoever created this simulation.
01:56:27 Let me ask you this question.
01:56:30 Who is Satoshi Nakamoto?
01:56:33 There’s quite a few people who suggest that person is you.
01:56:39 So is it you?
01:56:42 No.
01:56:45 Who do you think it could be?
01:56:47 I don’t know who it is.
01:56:48 I think if I had to guess, it’s probably a group of people,
01:56:52 some of which might not even be around anymore.
01:56:55 You know, obviously I’m very grateful to,
01:56:57 if this is a singular or a group of people
01:56:59 for kicking off this entire industry
01:57:00 and making this amazing change in the world
01:57:02 that I have the privilege and luxury
01:57:05 of being part of in some small way in the work that I do.
01:57:09 I think also this kind of focus on who is Satoshi
01:57:13 or who isn’t Satoshi,
01:57:14 shouldn’t in my opinion matter so much
01:57:17 because regardless of who it is,
01:57:20 that in my opinion should have no substantial
01:57:24 significant effect or bearing on the functioning
01:57:27 or the value or the use
01:57:29 or the security of the Bitcoin system, right?
01:57:33 So I think whoever it is,
01:57:35 they’re probably better off not making that public.
01:57:38 And I think beyond that,
01:57:41 whoever it turned out to be shouldn’t matter
01:57:43 because it has nothing to do
01:57:46 with how the system is made useful
01:57:48 or secure or anything else.
01:57:50 And so I think that’s the point of view that I have.
01:57:54 Now, if you were Satoshi Nakamoto, would you tell me?
01:57:58 Because you said they shouldn’t,
01:58:02 whoever Satoshi is, you should keep that private.
01:58:05 So would you tell it to me or no?
01:58:08 We’re in some kind of weird like thought experiment here.
01:58:12 If I was this guy, let me think about this,
01:58:16 which I’m not, by the way, I am not this person.
01:58:19 But if you were, would you say it?
01:58:21 I think probably not.
01:58:29 I don’t see the,
01:58:30 I think that they would cause a lot of distraction
01:58:33 and a lot of weird stuff.
01:58:34 And so realistically, I don’t think it would help anybody
01:58:38 or even the person who discloses it,
01:58:40 but just to be clear, I am not.
01:58:42 And whoever it is, I think they haven’t said anything
01:58:45 because they don’t want the attention
01:58:46 and they don’t want the distraction
01:58:47 and they don’t want all the problems from this.
01:58:49 And that makes sense to me, conceptually.
01:58:53 It’s fascinating to think if they’re still out there
01:58:55 and part of the Bitcoin, the cryptocurrency community,
01:59:00 and it is inspiring to think that if they’re out there,
01:59:04 that they’re not revealing their identity
01:59:09 because it would be a distraction.
01:59:11 That’s kind of inspiring that people are like that.
01:59:13 Just like George Washington,
01:59:15 a relinquishing power is inspiring
01:59:17 because it’s ultimately about the progress of the community
01:59:20 and not some kind of ego driven attention scheme.
01:59:25 Again, very inspiring.
01:59:26 The humans at their best are inspiring.
01:59:29 What do you think about the certainty
01:59:31 that people in the Bitcoin Maximus community
01:59:34 have about this particular piece of technology, Bitcoin?
01:59:38 Is there something interesting that you think
01:59:41 that you might wanna say about this community
01:59:44 or is it just is what it is?
01:59:48 I think at the end of the day,
01:59:49 results speak for themselves
01:59:51 and Bitcoin has had an amazing impact on our industry
01:59:55 and has had an amazing impact on the world.
01:59:59 And I think the result is still
02:00:01 that Bitcoin is very widely adopted
02:00:03 and driving the adoption of our industry in many ways.
02:00:07 So I think it’s very difficult for people to say
02:00:08 that Bitcoin maximalists don’t have something
02:00:12 that they can latch onto and say,
02:00:14 hey, there’s something very real here.
02:00:16 I think there’s been decisions made
02:00:18 by the Bitcoin community
02:00:19 and the people who made the Bitcoin protocol
02:00:21 to focus it on Bitcoin
02:00:24 and to focus it on the kind of storing
02:00:28 of the ledger of Bitcoin
02:00:29 and the information about Bitcoin
02:00:31 and the transaction of Bitcoin
02:00:32 and to focus on securing that.
02:00:34 And I understand why that decision was made
02:00:37 to a certain degree, right?
02:00:38 It was about focus.
02:00:39 It was about getting something worthwhile right
02:00:43 without adding additional features and additional risk.
02:00:46 And that decision is a decision that was made
02:00:49 and has kind of the benefits of focus
02:00:53 and the benefits of a certain amount of security
02:00:57 and a certain amount of guarantees around Bitcoin
02:01:01 and what that is and the value of that.
02:01:04 And then it has certain limitations
02:01:07 as a consequence of doing less
02:01:10 or having the system hold data
02:01:12 that isn’t related to Bitcoin
02:01:13 or not having the system hold contractual outcomes
02:01:17 or smart contract code.
02:01:19 So I think it’s just kind of a decision, right?
02:01:21 And I understand why they’re excited
02:01:24 and I’m very excited.
02:01:25 I started in this industry going to Bitcoin meetups
02:01:28 and I met a lot of fantastic people,
02:01:30 libertarian people that wanted
02:01:32 to see the world work differently
02:01:34 and shared a lot of my beliefs
02:01:35 and a lot of my points of view.
02:01:37 And so anyone who’s been in the industry
02:01:40 as long as I have has had to come
02:01:44 from the Bitcoin ecosystem
02:01:45 by virtue of kind of starting out that early.
02:01:48 So I have an unbelievable amount of respect
02:01:50 and admiration and gratitude for Bitcoin
02:01:55 and that it exists and everything that it’s done
02:01:56 and that it birthed this industry.
02:01:58 There’s absolutely no doubt about that.
02:02:01 At the same time, whatever design decisions people make
02:02:04 are the design decisions they make, right?
02:02:07 And so if you’ve made a design decision
02:02:08 that this ledger and this thing will be about Bitcoin,
02:02:11 it won’t be about colored coins,
02:02:13 it won’t be about op return at 80 bytes,
02:02:16 it won’t be about these other kind of nuances
02:02:20 that you don’t want this to be about, then that’s fine.
02:02:23 That’s fine and that’s a logical decision
02:02:26 and it’s called focus.
02:02:28 And focus has a lot of value
02:02:30 and a lot of great technology products
02:02:32 have focused on something and done that.
02:02:36 And then there’s a lot of smart people around Bitcoin
02:02:39 building kind of additional systems
02:02:41 that anchor their security within Bitcoin.
02:02:44 And I think that’s an interesting approach
02:02:45 that could bear fruit.
02:02:48 I think it’ll eventually require an interaction
02:02:51 with a Bitcoin protocol in more advanced ways.
02:02:54 And then there will be another question of,
02:02:56 what is the design decision for Bitcoin?
02:02:58 Is it that Bitcoin will be just about the Bitcoin ledger?
02:03:02 Or does Bitcoin want to evolve
02:03:05 into an anchor for all these other systems
02:03:10 and maybe create additional data store,
02:03:13 kind of more data on chain,
02:03:15 on the Bitcoin blockchain related to that?
02:03:18 So I’m excited to see how that evolves,
02:03:20 but until then kind of results speak for themselves
02:03:23 and the results that Bitcoin has achieved
02:03:25 for our industry and for itself
02:03:27 as kind of the dominant cryptocurrency
02:03:30 and the conception of our industry
02:03:31 that people interact with first
02:03:33 is obviously very important and something
02:03:36 that I think really everybody in our industry
02:03:39 is grateful for, right?
02:03:40 Because without Bitcoin, where would our industry be?
02:03:43 And that’s obviously something that we can’t forget.
02:03:46 What are your thoughts about Ethereum
02:03:49 in the chain link distributed Oracle network world?
02:03:55 Is it competition?
02:03:57 Is it collaboration?
02:03:59 Is it complimentary technology?
02:04:02 What do you think about Ethereum?
02:04:03 How much do you think about Ethereum?
02:04:05 What role does it have?
02:04:07 Yeah, I think about a lot.
02:04:08 I think we’re completely complimentary.
02:04:11 So there’s no competitive dynamics in my opinion.
02:04:13 We are completely collaborative and complimentary
02:04:16 with Ethereum and all other blockchains
02:04:18 and all other layer twos that operate a contract, right?
02:04:22 So we do not seek to operate a smart contract.
02:04:26 We seek to augment and enable smart contracts
02:04:29 to go further in what they’re able to do.
02:04:32 In fact, Oracle networks have some value,
02:04:35 but they don’t have nearly as much value in what they do
02:04:38 if there isn’t a mission critical system
02:04:40 like a smart contract that needs their data, right?
02:04:43 So we’ve made our own explicit design decisions
02:04:46 in our own and created our own focus
02:04:48 around guaranteeing that smart contracts can go further.
02:04:53 We’ve already done that, right?
02:04:54 Decentralized finance, the rate at which we put data
02:04:57 is to a degree the rate at which certain
02:04:59 decentralized financial markets grow.
02:05:01 And as we put more data, we see more
02:05:03 financial products go live, gaming, we provide VRF.
02:05:05 So we have this kind of focus and it’s a very useful
02:05:08 and valuable kind of, valuable for our industry focus.
02:05:13 At the end of the day, I think that smart contract platforms
02:05:18 like Ethereum made a different set of design decisions
02:05:22 from Bitcoin and others.
02:05:23 And they focused on creating the smart contract capability
02:05:27 and they kind of wanted that functionality to exist.
02:05:32 And I think since then, there’s been a number of people
02:05:34 that try to improve on that or try to make variants of that.
02:05:37 From our point of view, we want to support smart contracts
02:05:41 in all of their variations and in all of their use cases.
02:05:46 So one of the things that I personally like about Chainlink
02:05:49 is their ability or Chainlink’s ability
02:05:52 and the Chainlink network’s ability to be useful
02:05:54 to many different chains and across many different use cases.
02:05:58 I’m personally a fan of Ethereum.
02:06:00 Ethereum has done a huge amount for our industry as well.
02:06:03 Ethereum took us from a world where it literally took months
02:06:06 to make a new smart contract by being forced
02:06:08 to code it into a protocol.
02:06:10 You had to go to the protocol developers
02:06:12 and you had to say, hey, I need a DEX
02:06:15 or I need some kind of smart contract.
02:06:17 Put it in the protocol itself.
02:06:19 Put it in the actual blockchain mining
02:06:21 and kind of block generation, transaction generation protocol.
02:06:25 That would take months or sometimes even over a year.
02:06:27 That was a horrible experience
02:06:29 and obviously very few people wanted to participate in that
02:06:31 and so very few people made smart contracts,
02:06:33 which I was not a fan of, right?
02:06:35 And then Ethereum came along
02:06:37 and really did a lot of innovative things
02:06:39 and introduced this approach to scriptable smart contracts
02:06:43 where you could script all of these different conditions.
02:06:46 And I found that fascinating before Ethereum.
02:06:49 I found that fascinating once Ethereum
02:06:51 arrived, I found it fascinating after Ethereum launched
02:06:54 and I still find it fascinating.
02:06:55 And I’m also very grateful to Vitalik
02:06:58 and the Ethereum community and all the core developers there
02:07:01 for taking our industry a step further.
02:07:03 So I think they absolutely deserve a huge amount of credit
02:07:06 for taking our industry from it takes months
02:07:10 to make a really small smart contract
02:07:12 to it takes weeks to make a relatively secure,
02:07:15 relatively advanced piece of on chain code
02:07:18 that anybody can script and people can do audits on
02:07:21 and that’s an unbelievable leap forward for our industry
02:07:25 and I’m genuinely grateful to them for that.
02:07:29 I think the next step in line with our body of work
02:07:32 is how does that scriptable on chain code
02:07:36 become more advanced in its interaction
02:07:40 with all of the systems and events in the real world,
02:07:44 which is in my opinion, the final missing piece
02:07:47 of the puzzle, right?
02:07:48 So my body of work, the body of work that I’m involved in
02:07:51 would not be where it is right now
02:07:52 without Bitcoin by any measure.
02:07:54 It wouldn’t even be where it is now without Ethereum
02:07:57 and the growth in smart contract development
02:07:59 that they’ve created.
02:08:01 And now what I think is gonna happen next
02:08:04 is there’ll be a lot of different smart contract platforms,
02:08:07 a lot of different layer twos,
02:08:09 some of them will be private for enterprise,
02:08:10 some of them will be public,
02:08:12 there’ll be some public winners in certain geographies
02:08:15 for maybe regulation reasons, maybe other reasons,
02:08:18 there’ll be other public winners, the larger internet,
02:08:21 and there’ll be a number of different people
02:08:23 building smart contracts in different languages.
02:08:26 We are excited and I am excited
02:08:29 and the Chainlink community is excited
02:08:30 and basically there’s a lot of,
02:08:34 I mean, for lack of a better word, excitement
02:08:36 in seeing our industry graduate
02:08:39 to providing more use cases,
02:08:43 more usable hybrid smart contracts, right?
02:08:46 Because once again, it’s absolutely amazing
02:08:49 that Bitcoin created non governmental fiat money.
02:08:51 It’s an unbelievable innovation
02:08:53 and invented decentralized infrastructure
02:08:55 and birthed our industry.
02:08:57 It’s an unbelievably great achievement,
02:09:00 an amazing achievement that we now have
02:09:01 scriptable smart contracts through something like Ethereum.
02:09:04 Once again, monumental achievement in my opinion.
02:09:08 Once again, we still need to look to the future.
02:09:10 We need to look to how do we take
02:09:13 the decentralized infrastructure concepts
02:09:16 that Bitcoin initially put forward,
02:09:17 that Ethereum then improved upon
02:09:19 and created into these scriptable smart contract formats,
02:09:23 and how do we expand that into the world
02:09:25 of real world outcomes to change
02:09:28 the global financial industry, the global trade industry,
02:09:31 the global data marketplace industry,
02:09:34 and many other global industries.
02:09:36 You mentioned results speak for themselves
02:09:38 and how design decisions have consequences.
02:09:43 The Chainlink community have come up
02:09:44 with a lot of brilliant designs.
02:09:48 So how do you think through the design choices
02:09:51 that you’re facing where you can’t predict the future,
02:09:55 but you’re trying to create a better future?
02:09:58 Is there something low level introspective advice
02:10:05 that you can give or describe
02:10:06 as to how you think through those decisions
02:10:09 or high level how you think about those decisions?
02:10:12 Sure, absolutely.
02:10:14 I think that’s a great question.
02:10:16 And I think that actually gets to the core
02:10:18 of what the Chainlink network is supposed to achieve.
02:10:22 We are supposed to achieve a maximally flexible system.
02:10:27 So once again, this is the big difference
02:10:28 between Chainlink and Oracle networks in general
02:10:31 and blockchains in my opinion.
02:10:33 Blockchains do not seek to be maximally flexible, right?
02:10:36 They say, here’s my block size,
02:10:39 here’s the transaction types you can put in those blocks.
02:10:43 Here’s the contract language I have.
02:10:46 Here’s kind of my blockchain system, right?
02:10:49 Here’s the fee structure for those blocks.
02:10:51 They’re gonna keep getting kind of composed,
02:10:54 transactions are gonna get put into blocks,
02:10:56 blocks will get connected and it’ll continue, right?
02:10:58 And that’s a very focused type of system.
02:11:00 And that’s great.
02:11:01 And that makes sense because it’s focused
02:11:03 on creating security for that category
02:11:05 of on chain activity, which is once again,
02:11:08 a critical, critical part of building
02:11:10 a highly transparent system and something
02:11:12 that Chainlink enables and doesn’t compete with
02:11:14 and just enables to do more.
02:11:17 Oracle networks, conversely, have to interact
02:11:21 with all the world’s data and provide all the services
02:11:25 that blockchains don’t provide, right?
02:11:27 So there’s kind of a spectrum.
02:11:28 On one end of the spectrum, you have blockchains
02:11:31 that are highly secure, highly reliable,
02:11:33 highly tamper proof, highly transparent,
02:11:36 but are not very feature rich.
02:11:38 For example, they cannot talk to an API.
02:11:41 Many of them can’t generate randomness.
02:11:42 They cannot do some kind of privacy preserving computation.
02:11:46 So they’re very secure.
02:11:47 And there are these kind of data structures
02:11:50 and smart contract platforms to hold on chain code
02:11:53 that can define conditions, receive value,
02:11:57 pay value back out under conditions
02:11:59 and create transparency around all that,
02:12:01 which makes perfect sense.
02:12:03 And then there’s oracles and oracle networks.
02:12:06 That is all the world’s data, right?
02:12:08 We’re talking about taking all the world’s data
02:12:11 and making it consumable for all the world’s use cases
02:12:14 that have trust issues.
02:12:16 So the amount of variability there is absolutely massive,
02:12:19 right?
02:12:20 It’s like the decentralized oracle network
02:12:22 and the conditions that that decentralized oracle network
02:12:25 needs to meet is gonna vary very widely
02:12:28 from an insurance contract to a lending contract
02:12:32 to an ad network contract to the data sales contract
02:12:36 that we discussed to any number of other smart contracts.
02:12:40 So really the ability of a decentralized oracle network
02:12:44 to flexibly address all of those requirements
02:12:47 is what’s necessary.
02:12:49 So flexibility is the goal,
02:12:51 whereas with on chain like Bitcoin,
02:12:55 flexibility is the enemy in the sense
02:12:58 that you want security, you want the focus there.
02:13:03 And in that kind of world,
02:13:05 design decisions have huge consequences.
02:13:08 And then if you look at the distributed oracle network side,
02:13:12 you want to remove the restrictions of design choices.
02:13:16 You want to provide maximal flexibility then.
02:13:19 So it’s a completely separate kind of a design framework.
02:13:23 It’s a slightly different problem, right?
02:13:25 Because we’re not trying to define transaction types
02:13:28 fitting into blocks on a certain timeline
02:13:30 of those blocks being generated.
02:13:32 We’re trying to say, hey, there’s this world of services
02:13:35 or this world of data that’s not very deterministic,
02:13:37 but it’s unbelievably useful
02:13:39 to these smart contracts over here.
02:13:40 And actually they need it to even exist.
02:13:42 And we really want them to exist because once they exist,
02:13:45 it’s gonna completely redefine
02:13:46 what our whole industry is known for, right?
02:13:48 And defined NFTs are not even the tip of the iceberg.
02:13:51 They’re like the snow coming off the top of the iceberg.
02:13:54 And so our goal is to create a framework
02:13:57 and an infrastructure and a software
02:14:00 that allows people to compose
02:14:03 decentralized oracle networks, right?
02:14:04 So initially you can compose a decentralized oracle network
02:14:08 of seven nodes that goes to three data sources
02:14:11 to trigger your contract worth a million dollars.
02:14:14 And that’s where you could start.
02:14:15 And then let’s say your smart contract,
02:14:16 your DeFi smart contract goes to a billion dollars.
02:14:19 Well, then you need to make some changes, right?
02:14:21 You need to go from seven nodes
02:14:23 to 15 or maybe 31 nodes.
02:14:25 And you need to go from three data sources
02:14:27 to five or seven.
02:14:29 And you maybe need to create some kind of
02:14:32 what we call circuit breakers and some other checks.
02:14:36 And you need to make sure
02:14:36 that the decentralized oracle network
02:14:38 comes to consensus around those checks.
02:14:40 Because now the centralized oracle network
02:14:42 isn’t controlling a million dollars,
02:14:43 it’s controlling a billion dollars.
02:14:45 And we have decentralized oracle networks
02:14:47 that control well over a billion dollars,
02:14:48 multiple billions of dollars.
02:14:50 And we see them growing and getting more advanced
02:14:52 data sources and more advanced features.
02:14:55 And then if somebody else comes and says,
02:14:56 well, I don’t really wanna make a DeFi product,
02:14:59 I wanna make crop insurance.
02:15:00 And I have a completely different set of conditions.
02:15:02 I want this method of consensus
02:15:04 and I want data to be aggregated in this way,
02:15:06 but not the way that you do
02:15:07 for decentralized financial products.
02:15:09 I mean, what are we supposed to tell them?
02:15:10 We’re supposed to tell them, no,
02:15:12 our decentralized oracle network can’t let you do that.
02:15:15 And you can go and wait another five years
02:15:18 until somebody builds it for you.
02:15:21 That’s not what we wanna do, right?
02:15:23 What we wanna do is be able to say,
02:15:24 absolutely, here’s an example of how somebody else
02:15:29 made a decentralized oracle network for weather insurance.
02:15:34 Here’s a template, change that template,
02:15:37 evolve it to meet your needs.
02:15:39 And then someone else comes and says,
02:15:41 hey, I have some other use case in gaming, right?
02:15:44 I wanna make NFTs related to real world sports events,
02:15:48 or I wanna do whatever I wanna do
02:15:49 with some kind of sports related data.
02:15:52 Wonderful, here’s the framework,
02:15:54 here are your risk dynamics,
02:15:56 here’s a collection of node operators,
02:15:58 here’s a set of preintegrated data sources,
02:16:02 here’s a reputation system to assess
02:16:05 the quality of your ensemble of nodes,
02:16:08 here’s a way to scale that up
02:16:09 as the value in your contract scales.
02:16:13 Here’s all the tools that you need to build this contract.
02:16:17 And what we actually see now as there are multiple types
02:16:20 of computations and data sources that are provided
02:16:23 by different decentralized oracle networks,
02:16:25 of which there are now hundreds,
02:16:27 we now see that a single hybrid smart contract
02:16:31 might use multiple decentralized oracle networks.
02:16:34 So there might be a hybrid smart contract
02:16:36 that uses a price data, decentralized oracle network,
02:16:39 a proof of reserve oracle network,
02:16:41 a randomness oracle network.
02:16:43 And I think we’re gonna continue to see
02:16:45 this dynamic that more and more advanced contracts
02:16:49 compose various decentralized oracle networks
02:16:53 into more advanced use cases.
02:16:55 And this is the dynamic that we’re focused on enabling.
02:17:01 And I think it’s actually a very virtuous cycle
02:17:03 for everybody because the more of these
02:17:05 hybrid smart contracts we enable on Ethereum
02:17:08 and other blockchains, the more our industry
02:17:11 provides real world outcomes to the market.
02:17:15 To the larger world, which is at the end of the day,
02:17:18 what I think everybody in our industry wants.
02:17:21 Everybody in our industry wants hybrid smart contracts
02:17:24 to become the way that global finance works,
02:17:28 global trade works, global insurance products work,
02:17:31 because they will inherently need both a blockchain
02:17:34 on which the contract itself lives
02:17:36 and an oracle network that powers
02:17:39 all of the other interactions, right?
02:17:41 As a developer, how would you recommend
02:17:44 somebody listening to this, but also me,
02:17:50 to get started with smart contracts
02:17:52 and to get started with hybrid smart contracts?
02:17:57 Well, for hybrid smart contracts,
02:17:59 I’m gonna have to do some kind of shameless promotion.
02:18:01 Please, let me twist your arm.
02:18:05 Thank you.
02:18:06 I think you can go to our YouTube.
02:18:08 We have a number of developer tutorials.
02:18:11 Chainlink YouTube?
02:18:12 Yeah, Chainlink.
02:18:13 I think if you just search Chainlink on YouTube,
02:18:14 you should find it.
02:18:17 Beyond that, we recently had a hackathon
02:18:19 where we had a huge amount of very kind of
02:18:22 advanced hybrid smart contracts getting built.
02:18:25 To elaborate on that, you had a hackathon.
02:18:28 Is that something that people can follow along
02:18:30 like a video or there’s web page traces of what happened?
02:18:35 Or is there a future actual hackathons
02:18:37 that people could literally participate in?
02:18:39 There’s plenty of more hackathons coming up.
02:18:41 We wanna enable as many developers in web3 and web2
02:18:44 to build hybrid smart contracts
02:18:46 as a way to redefine our industry
02:18:47 and kind of make all of these smart contracts come to life.
02:18:52 There are definitely gonna be more hackathons.
02:18:54 So people should go and preregister or register
02:18:56 on a list to get involved in that.
02:18:58 That’s a great resource where we have a lot of speakers
02:19:00 and a lot of educational tools.
02:19:01 They happen over a course of weeks, not days.
02:19:04 So there’s a long time for people to work on these things
02:19:07 at the speed that they find comfortable.
02:19:09 Two questions.
02:19:10 One, is there a kind of hello world entry point
02:19:14 for hybrid smart contracts?
02:19:17 And two, on the hackathon side,
02:19:19 what kind of stuff do you see people building at first?
02:19:22 Just kind of getting their feet wet
02:19:25 in terms of the kind of applications that could be enabled.
02:19:28 I mean, there’s unbelievable things
02:19:30 that we see people building.
02:19:32 I think how to get your feet wet,
02:19:35 I think the hello world is probably DeFi
02:19:37 because it’s pretty straightforward.
02:19:38 And there’s a large amount of data sources
02:19:40 that we already have putting data on chain on test net,
02:19:42 which is the test environment in which people would build.
02:19:45 So I think DeFi is probably to a certain degree
02:19:47 the most exciting for certain people
02:19:49 and pretty expansive in terms of the tutorials
02:19:54 and the amount of contracts
02:19:55 to see how people have already built it.
02:19:57 I think beyond that,
02:19:58 we see people building amazing things at these hackathons.
02:20:01 In the previous hackathon,
02:20:02 we saw somebody build a smart contract
02:20:04 that allows someone to rent out their Tesla.
02:20:09 So it allows the Tesla API to give someone else access
02:20:14 and rent out someone’s Tesla
02:20:16 on the basis of a smart contract kind of coordinating payment,
02:20:19 which was kind of amazing.
02:20:22 The more recent hackathon,
02:20:23 we saw something called Dbridge,
02:20:25 which is a cross chain solution that uses Oracle networks
02:20:28 to confirm data on different chains.
02:20:30 So I think the things that people build
02:20:33 will just become expansive and varied
02:20:36 in ways that I can’t even imagine.
02:20:40 But I think this recent hackathon saw a huge, huge list
02:20:44 of different kind of winners in different categories.
02:20:48 And there’s so many different categories.
02:20:49 We even have a GovTech category
02:20:50 and a whole bunch of things.
02:20:53 If people wanna see what’s possible,
02:20:54 they can go look at the winners.
02:20:55 I think that’s probably a good idea.
02:20:59 Yeah, that’ll be on the side of the hackathon.
02:21:01 There’s a blog related to that,
02:21:03 and we’re gonna have more of these.
02:21:05 And once again, our explicit goal
02:21:08 is to take our industry into this world
02:21:11 of hybrid smart contracts, which just benefits everybody.
02:21:14 It makes more on chain activity.
02:21:16 It helps provide real world value to the average person
02:21:21 from all of this infrastructure period.
02:21:23 And at the end of the day,
02:21:25 I think that it just redefines what our industry is about
02:21:28 through use cases, right?
02:21:29 Because if you only learn through our industry
02:21:33 from the point of view of a single use case,
02:21:35 like the NFT use case or some other use case,
02:21:37 that’s what our industry is about.
02:21:39 And the more of these use cases
02:21:41 that people can make available to the average person
02:21:44 or to the FinTech world or to the insurance world
02:21:46 or wherever, the faster our industry will not just be
02:21:50 about Bitcoins or tokens,
02:21:52 it will be about changing global finance,
02:21:55 changing global insurance, changing global trade.
02:21:58 And that’s the change in the world
02:22:00 that I and a lot of other people in this industry,
02:22:02 I think, got into this for.
02:22:04 Now it’s funny, you’ve mentioned about,
02:22:06 you’ve had a lot of kind words to say about Bitcoin
02:22:09 and Ethereum as important technology
02:22:12 that paved the way for the future.
02:22:14 And you somehow did not mention
02:22:16 one of the most profound pieces of technology,
02:22:18 which is Dogecoin.
02:22:20 What are your thoughts about this particular
02:22:24 revolutionary technology?
02:22:26 And what are your thoughts about Dogecoin
02:22:28 going to the moon, to Mars,
02:22:30 and outside of the solar system?
02:22:32 I think Dogecoin is a very interesting kind of,
02:22:36 probably closer to a social experiment than anything else.
02:22:40 Isn’t everything a social experiment?
02:22:42 Yeah, I guess that’s fair to a degree.
02:22:46 I think it’s fascinating how that’s evolved.
02:22:49 I think the people that made it
02:22:51 with certain goals in mind
02:22:53 and then it’s kind of taken on a life of its own.
02:22:56 I don’t fully understand exactly why it’s taken on a life
02:22:59 of its own at this point.
02:23:01 I once again, I don’t spend too much time
02:23:03 thinking about different tokens and how they’re evolving.
02:23:07 I’m much more focused on the launching and…
02:23:10 The technology around trust and all those kinds of ideas.
02:23:15 But I think one of the fascinating things about Dogecoin
02:23:18 is how technology that leverages social dynamics,
02:23:23 that technology’s ability to utilize fun and memes to spread.
02:23:30 I think it’s really interesting.
02:23:31 I don’t think it should be discounted as a…
02:23:35 I think I tweeted today something
02:23:36 about like the fundamental force field of fun.
02:23:41 That fun has an effect on the space time.
02:23:45 So general relativity describes how mass and energy
02:23:50 can curve space time. And I was just giving an example
02:23:53 that when life is fun, it seems short.
02:23:56 When life is not fun, it seems very long.
02:23:58 So fun has a very similar effect on space time,
02:24:01 like in curved space time.
02:24:02 In that same sense, there is a power to the meme.
02:24:07 And I think Dogecoin illustrates that.
02:24:09 I think Elon is an example of somebody that uses Dogecoin.
02:24:12 I don’t know his philosophy in particular on this aspect,
02:24:16 but he does use Dogecoin.
02:24:18 But he does use it effectively to excite the world
02:24:23 in a fun way about the possibilities
02:24:26 of future technologies like cryptocurrency.
02:24:29 I think the Bitcoin world is very serious right now.
02:24:33 We’ve spoken about Bitcoin maximalists.
02:24:36 There is very little space for fun and joking
02:24:40 in the Bitcoin world, but there’s still a little bit of fun
02:24:45 and humor left in the Dogecoin world.
02:24:48 In that sense, I think it’s exceptionally powerful
02:24:51 to inspire, to excite, to be able to talk about stuff
02:24:57 without the seriousness of financial impact
02:25:05 that now certain cryptocurrencies have like Bitcoin.
02:25:08 So I keep an eye on, I’ve previously mentioned
02:25:12 that Dogecoin I think is a fascinating piece of technology
02:25:16 because I do think cryptocurrency is much bigger
02:25:19 than the technology that you focus on.
02:25:23 There is also a social element that you also spoke to
02:25:27 that’s I think not quite yet understood
02:25:31 and it’s fascinating to watch, especially as it covalls
02:25:35 with the different tools on the internet,
02:25:37 the different social networks,
02:25:39 social network mechanisms on the internet.
02:25:42 So I’m a huge supporter of Dogecoin
02:25:46 because I’m a huge supporter of fun.
02:25:49 I’m fascinated to see how it’ll work out.
02:25:54 You think it’ll go to the moon?
02:25:55 You think it’ll be the first cryptocurrency
02:25:57 to land on the moon?
02:25:59 I couldn’t say.
02:26:00 I haven’t done the analysis as I’ve said before.
02:26:04 I haven’t done the analysis.
02:26:05 Well, yeah, no matter what,
02:26:09 I do hope we will get humans back on the moon
02:26:12 and hopefully get humans on Mars soon.
02:26:15 Dogecoin, Bitcoin or not.
02:26:21 Let me ask you about books and movies.
02:26:25 What books and movies in your life long ago
02:26:30 when you were a baby Sergei or today had an impact on you?
02:26:36 Maybe you would recommend to others
02:26:39 and maybe what ideas you took away from those books,
02:26:43 movies, coloring books, children’s books, blogs, whatever.
02:26:49 Yeah, yeah, sure.
02:26:51 So I think one of the things that had a very big impact
02:26:54 on me were Plato’s dialogues
02:26:56 and particularly Protagoras and Gorgias
02:26:58 as some of the two initial ones.
02:27:02 I think what Plato’s dialogues do very well
02:27:05 is they give people a clear picture of what dialogue looks
02:27:09 like and what the assessment
02:27:11 of information probably should look like, right?
02:27:15 And how the dissection and analysis
02:27:18 of an idea is very important
02:27:20 and how it can actually be taken in either direction.
02:27:22 But at the end of the day that the process
02:27:25 of eliminating kind of this fuzzy thinking
02:27:30 and arriving at whether it’s an external dialogue
02:27:33 or an internal dialogue about an accurate picture
02:27:36 of reality is actually very important.
02:27:38 And so I think I’m very lucky to have read the dialogues
02:27:42 when I was in my early teenage years
02:27:44 and it had a very large impact on me
02:27:46 because it kind of showed me that nobody knows
02:27:49 what they’re talking about.
02:27:51 I would play out dialogues in my mind
02:27:55 and I would engage in certain dialogues
02:27:56 with different people.
02:27:58 And what the Platonic dialogue showed me was kind
02:28:02 of how to tell when someone has no clue.
02:28:06 And a lot of people are very good
02:28:07 at kind of say they have a clue, right?
02:28:12 Saying like, here’s how the world works.
02:28:14 Here’s what you should do with your life.
02:28:15 Here’s what you should do with your time.
02:28:16 Here’s what you should do with your money.
02:28:18 Here’s what you should do with your attention.
02:28:19 Here’s what you should do with all these things.
02:28:22 And I think the ability to evaluate information
02:28:26 generally is something that is surprisingly under taught.
02:28:31 I don’t actually understand why there isn’t a course
02:28:33 in like high schools or universities
02:28:35 that’s just like, here is how you evaluate information.
02:28:39 Here’s how you engage in external dialogue
02:28:41 and internal dialogue to arrive
02:28:43 at an accurate picture of reality
02:28:45 rather than the picture of reality
02:28:47 that other people want you to have
02:28:48 for their benefit most often, right?
02:28:50 And at the end of the day,
02:28:52 I think that put me down a path
02:28:54 to really try and understand.
02:28:57 Beyond that, I think biographies
02:29:00 have had a very large impact on me.
02:29:03 Plutarchs, Greek and Roman lives.
02:29:05 After I read Plato,
02:29:07 I started reading a bunch of stuff, Greek stuff.
02:29:09 I was just like, these Greek guys,
02:29:10 they really know how it is.
02:29:12 They did this 2000 years ago and they still got it right.
02:29:15 There’s something here.
02:29:16 It’s kind of this like a theory of time around them,
02:29:19 the value of intellectual ideas, right?
02:29:21 If an intellectual idea has survived the test of time,
02:29:24 it’s much more valuable than the intellectual idea
02:29:27 that I just came up with 10 minutes ago,
02:29:28 I haven’t told anybody and hasn’t gone up against
02:29:31 all of the kind of rebuttals.
02:29:35 So…
02:29:36 So what’s your favorite,
02:29:37 what would you say would be a most impactful biography
02:29:41 that you’ve come across?
02:29:43 I don’t think it was those Greek or Roman biographies
02:29:45 because they were very far away.
02:29:48 I think that probably one of the most impactful ones
02:29:53 that I can remember recently is around Vanderbilt.
02:29:59 And so Vanderbilt was this guy who basically,
02:30:03 without that much of an education,
02:30:05 he would invent or work with people
02:30:08 to make these steamboats.
02:30:10 And then he had a lot of acumen
02:30:12 around creating certain monopolies,
02:30:15 regardless of what was right or wasn’t right.
02:30:20 Right or wasn’t right.
02:30:22 And then fascinating enough,
02:30:23 it all hinged on like a Supreme Court case
02:30:25 that decided if monopolies were acceptable
02:30:29 in the form of state created monopolies or not.
02:30:32 And if it was deemed that state created monopolies
02:30:36 were acceptable, he would have had a huge problem, this guy.
02:30:39 But it was deemed that state created monopolies
02:30:41 through these licenses for steamboat routes
02:30:46 was not acceptable.
02:30:47 And that did two interesting things that unseated
02:30:51 some kind of old time landed gentry in the Americas
02:30:55 in like the 1830s and 40s.
02:30:57 And it basically made him right
02:31:00 and he saw it before other people.
02:31:03 So I think Vanderbilt was a very interesting personality,
02:31:08 first of all, of all the biographies that I read
02:31:11 is somebody who really took the situation in hand
02:31:16 and kind of took action to achieve an outcome,
02:31:20 which I think was an amazing result.
02:31:23 The fascinating thing, by the way,
02:31:26 is, or amazing way of looking at things.
02:31:28 The fascinating thing, by the way,
02:31:29 is that the ferries now in New York Harbor
02:31:32 are all run as a public good.
02:31:36 So the fascinating thing is that the guy,
02:31:37 he focused on an industry and he worked on something
02:31:40 that was so important that it ended up
02:31:42 becoming a public good.
02:31:44 And I think that that’s an interesting conception
02:31:48 of how to look at this industry.
02:31:51 I think there’s a lot of economics dynamics
02:31:54 around this industry,
02:31:55 but I think I might’ve said this somewhere else before,
02:31:58 but really the success of someone in this industry
02:32:03 is whether they’re able to make a Linux or HTTP
02:32:06 or an HTTPS like system that lives on for a very long time
02:32:11 and is essentially a kind of public good.
02:32:14 It’s a success of an idea,
02:32:16 even if that idea is originally sort of a capitalist idea
02:32:19 above that’s grounded in financial benefit.
02:32:23 Success of it is if it becomes a public good.
02:32:26 It is so universal.
02:32:27 It is so fundamental to the quality of life
02:32:30 that it’s a public good.
02:32:32 It is deemed to be so valuable
02:32:34 that it should be a public good.
02:32:37 Yeah, I think so.
02:32:38 I think that’s a pretty,
02:32:39 a pretty good definition of success that you work
02:32:42 on a body of work and that body of work
02:32:44 isn’t just some commercial enterprise.
02:32:47 It’s a body of work that whatever commercial aspects
02:32:51 or economic incentive aspects it might have,
02:32:54 it eventually is so important
02:32:56 that it becomes critical to how society functions.
02:33:00 I’m personally quite lucky and grateful to be,
02:33:04 in my opinion, working on something like that
02:33:07 with an amazing team and an amazing community
02:33:11 that seems to really very much care
02:33:13 about this hybrid smart contract transparent world
02:33:18 that a lot of people on our industry,
02:33:20 realistically, I think this is why a lot of them signed up.
02:33:23 This is why I came into our industry.
02:33:25 It wasn’t because Bitcoin,
02:33:27 it was because Bitcoin was a picture
02:33:32 of how the world could work in so many other ways.
02:33:34 And that picture of how the world could work
02:33:37 in so many other ways attracted me a very long time ago.
02:33:42 And I think that all of this stuff
02:33:47 will eventually become a public good.
02:33:49 I think it will become so critical
02:33:50 to how societies function internally and internationally
02:33:54 that just like there are systems,
02:33:56 like the Federal Reserve, like global payment systems,
02:33:59 like all these types of things,
02:34:00 I think eventually all of this technology
02:34:03 will be baked into these societally critical systems.
02:34:08 And if I, in our community and the people I work with
02:34:11 and the body of work that we’re working on
02:34:13 can make some kind of contribution to that shift
02:34:18 towards a fairer, economically fair, transparent society,
02:34:23 from my point of view, it’s a very worthwhile body of work.
02:34:27 In terms of the show, you also mentioned the show,
02:34:30 one of the shows that I really seem to like more and more
02:34:33 for some reason is Star Trek, not the old Star Trek.
02:34:37 I don’t really get the old Star Trek.
02:34:39 The special effects aren’t good enough.
02:34:41 Star Trek, like The Next Generation and Voyager
02:34:44 and Deep Space Nine and all those.
02:34:47 I think whenever I happen to watch a Star Trek show again,
02:34:52 I have a very simple conception in my mind
02:34:54 that I really didn’t have whenever I saw it way back when.
02:34:57 It’s that I’m not a fan of Star Trek.
02:35:00 It’s that this is what the world looks like
02:35:03 if technology takes us towards a utopia, right?
02:35:06 So I think there’s this fascinating thing
02:35:08 where technology can take us towards a utopia
02:35:11 or towards a dystopia.
02:35:13 And in my mind, those kind of three Star Trek shows
02:35:18 are a picture of what human civilization looks like
02:35:23 if everybody’s technological ambitions
02:35:26 successfully take us towards a utopia, right?
02:35:28 Because in the Star Trek universe,
02:35:30 you’re not seeking money or you’re not seeking safety
02:35:34 or you’re not really seeking anything for yourself.
02:35:38 Everybody within Maslow’s hierarchy of needs
02:35:41 has gotten so many things for themselves
02:35:43 that their goal is learning and discovering and or helping.
02:35:49 And I think there is this conception of human life
02:35:53 once the baser needs are satisfied.
02:35:56 And at the end of the day,
02:35:59 I think that’s what technology generally can elevate
02:36:02 all of human civilization to, right?
02:36:04 It can elevate us to Star Trek world
02:36:07 where if people want to invent,
02:36:10 they can do that all day and nothing else.
02:36:11 If people wanna explore the stars,
02:36:13 they can explore the stars
02:36:14 and they don’t have to worry about economic scarcity
02:36:18 or any number of these other conceptions.
02:36:21 So I don’t know what the most impactful on me shows have been
02:36:24 but for some reason recently Star Trek
02:36:27 in the newer variant,
02:36:29 not the most new Star Trek shows.
02:36:32 Those shows are a little strange.
02:36:33 The kind of middle Star Trek universe
02:36:35 where everybody is doing something
02:36:37 with like a very important purpose
02:36:40 and nobody’s thinking about like,
02:36:42 where’s my paycheck or where’s my whatever.
02:36:46 They’re all kind of like,
02:36:47 we have to discover the formula to this
02:36:50 to save the planet over there.
02:36:52 And literally every episode you’re discovering a formula
02:36:54 to save a planet, right?
02:36:55 Of some kind or a universe or ecosystem or whatever.
02:36:58 And you’re looking at it, you’re like,
02:37:00 you know, this is like,
02:37:02 this is a pretty good place to end up.
02:37:03 This is where we might wanna end up.
02:37:05 So it gives you hope.
02:37:06 I mean, it’s funny that we don’t often think about the,
02:37:13 I think it’s very useful to think about positive visions
02:37:16 of the future when we’re trying to design technology.
02:37:20 There’s a lot of sort of in public discourse,
02:37:25 a lot of people are thinking about
02:37:27 kind of how everything goes wrong.
02:37:29 It’s important to think about that sometimes,
02:37:31 but in moderation, I think,
02:37:33 because there’s not enough in my little corner
02:37:37 of artificial intelligence world,
02:37:39 people are very kind of fear monger centered.
02:37:42 There’s a lot of discussions
02:37:44 about how everything goes wrong.
02:37:46 Important to do, but it’s also really important
02:37:48 to talk about how things can go right,
02:37:53 because we ultimately want to guide the design
02:37:56 of the systems we create to make things right.
02:37:58 And I think with hope and optimism,
02:38:02 not naiveness, but optimism,
02:38:05 you can actually create a better world.
02:38:08 Like you have to think about a positive,
02:38:11 a better world as you create,
02:38:14 because then you can actually create it.
02:38:16 Yeah, I’m one of the people that thinks
02:38:19 that having an optimistic view of the world
02:38:24 is better for design and creativity
02:38:26 than having a pessimistic one.
02:38:28 It’s hard to design when you’re in fear.
02:38:33 Do you have advice for young people,
02:38:37 speaking of being excited about
02:38:38 and hopeful about the future world,
02:38:40 do you have advice for young people today
02:38:43 in computer science world,
02:38:46 in software engineering world, in crypto world,
02:38:48 but maybe in any world whatsoever for life,
02:38:53 how to pick a career or how to live life in general?
02:38:58 I think the thing that young people should do
02:39:02 is not any one specific thing
02:39:04 for any one specific young person.
02:39:07 I think what they should do is what they won’t be able to do
02:39:11 in the later stages of their life.
02:39:14 And the way, in my opinion,
02:39:16 from a framework point of view to think about that
02:39:19 is that the amount of obligations
02:39:23 and the amount of time that a person has
02:39:27 seems to just diminish over time, right?
02:39:30 So the amount of free time they have, right?
02:39:32 So you start your job,
02:39:33 you get a bunch of responsibilities,
02:39:35 something with your partner or spouse,
02:39:37 more responsibilities,
02:39:38 kids, probably even more responsibilities,
02:39:40 and soon enough, the time that you have to educate yourself,
02:39:45 to travel, to experience the world however,
02:39:50 create whatever creative endeavor you’re interested in,
02:39:53 slowly but surely disappears.
02:39:55 I think this is something
02:39:57 that young people don’t fully realize.
02:40:01 They assume that the world as it is now
02:40:04 and the amount of free time that they have to travel,
02:40:08 to educate themselves, to make new friends,
02:40:11 to do all these things,
02:40:12 will somehow maybe diminish by 10%.
02:40:16 It won’t diminish by 10%, it will diminish by 90%.
02:40:20 And the 10% that you have,
02:40:22 you’ll be resting to get back to work and get things done.
02:40:27 So what I think young people should do,
02:40:30 and this is why it’s very different for each of them, right?
02:40:32 I can’t tell young people,
02:40:33 hey, you should study philosophy, travel,
02:40:36 and start your own enterprise to achieve something
02:40:38 worthwhile in the world, right?
02:40:39 That might be something that’s good for me
02:40:41 with my values and my kind of worldview,
02:40:45 but for other people might be something else.
02:40:47 I think the way that they should conceptualize it
02:40:51 is imagine if over the next 10, 12 years,
02:40:58 the amount of choice that you had about what you could do
02:41:02 was cut down by 90%.
02:41:05 What would you, and this is copying from this kind of
02:41:07 Jeff Bezos regret minimization framework.
02:41:11 In that framework, it’s like,
02:41:12 what would I regret not doing at 80?
02:41:16 And that’s kind of meant to create this longterm view
02:41:19 and make these decisions now that’ll get you
02:41:22 to a longterm future that you can look back on
02:41:24 and be proud of your life, right?
02:41:26 What I think young people should do
02:41:28 is they should say to themselves,
02:41:30 look, if I never get the chance to travel
02:41:33 for as long as I live,
02:41:36 assuming that after 25, after 27, after 29,
02:41:40 that’s the case, how will I feel about that?
02:41:43 If I never get to start a company after 25,
02:41:46 after I get married, after I have kids,
02:41:49 how will I feel about that?
02:41:50 And whatever they feel the worst about
02:41:53 is what they should do.
02:41:54 Whatever they feel like when they say to themselves,
02:41:57 you know, if I don’t travel now, I will never travel.
02:42:01 And they feel horrible about that.
02:42:02 They just have an overwhelming fear
02:42:05 and disgust at themselves in that type of state
02:42:10 at 25, 27, 29, that’s what they should do.
02:42:14 And they shouldn’t listen to anybody else.
02:42:19 Let me put it to you this way.
02:42:20 If you’re really smart, you’re gonna make it anyway.
02:42:24 There’s a lot of people putting a lot of pressure on you
02:42:26 because they’re afraid whether you’re gonna make it.
02:42:28 If you’re really smart, you’re gonna make it anyway.
02:42:31 If you’re not really smart, you’re screwed anyway.
02:42:33 So at the end of the day.
02:42:36 Either way, just relax with it and use your time well
02:42:39 to do the things you would most regret not doing.
02:42:43 That’s really fascinating.
02:42:44 I wouldn’t say relax.
02:42:46 I would say very much cherish the free time,
02:42:50 the discretionary time that you have
02:42:52 from the age of 18 to maybe 25.
02:42:56 Because at 25, everyone’s gonna start looking at each other
02:42:59 and asking, what have I achieved?
02:43:02 Like my friends have achieved, I haven’t achieved.
02:43:04 And then by the time you get to 30,
02:43:06 you’re gonna look at each other again and go,
02:43:07 well, my friends have a family or a company
02:43:11 or a PhD or a whatever, what do I have?
02:43:14 And the pressure will just increase.
02:43:16 And it’ll increase so much that even if you want to go
02:43:20 and do the fun thing, it will not be fun.
02:43:22 Because the pressure of comparing yourself
02:43:26 to your friends at 25 or your peers at 30
02:43:29 will be so great that it will no longer be normal
02:43:33 for you to be in a hostel at 30,
02:43:36 kind of like living it up.
02:43:40 And this is why I also can’t tell you
02:43:42 specifically what it is.
02:43:43 For me, it was getting an education in philosophy
02:43:46 that was rigorous and in depth.
02:43:47 It was traveling and it was starting an enterprise
02:43:50 that I thought that was worthwhile, that I directed,
02:43:52 that I could make into something great.
02:43:54 That’s what it was for me.
02:43:55 For other people, it might be something with a band,
02:43:58 it might be something with painting,
02:43:59 it might be an education.
02:44:02 You, by the way, also should not assume
02:44:04 that your ability to get an education will improve.
02:44:09 All of those responsibilities will take away
02:44:13 your ability to get an education.
02:44:15 So if you value having an education,
02:44:17 if you value being a deeply educated, well rounded person
02:44:22 with a wide array of knowledge on a wide array of topics,
02:44:25 capitalism will force you to specialize.
02:44:27 That’s what it’s good at, it’s gonna take you,
02:44:29 it’s gonna fashion you into a very specific tool
02:44:32 for a very, most people, into a very specific set of tasks.
02:44:36 If you want to have an education in something, get it now.
02:44:40 If you wanna travel somewhere, travel there now.
02:44:43 If you wanna do some kind of creative endeavor
02:44:45 that you doubt whether you’ll have time for in the future,
02:44:48 do it now.
02:44:49 You won’t have time for it in the future,
02:44:51 you won’t have time to read philosophy books all day,
02:44:54 unfortunately, you won’t have time to fly to Italy
02:44:59 and kind of hang out with people.
02:45:02 If you’re serious about your life,
02:45:04 you’re gonna get more responsibilities,
02:45:05 you’re gonna get more stuff to do.
02:45:07 And so my advice to you is do not piss away
02:45:10 this rare, unique, discretionary time.
02:45:14 And if your friends are, get new friends.
02:45:18 Get smarter friends, get people who are using
02:45:21 the limited time they have better.
02:45:23 That’s my advice.
02:45:25 So it’s just a quickly comment, it’s brilliant.
02:45:29 You know, to reframe high school
02:45:31 and undergraduate college education,
02:45:34 sometimes people wanna quickly get it over with.
02:45:37 But one thing I remember thinking,
02:45:42 and it’s very true about high school,
02:45:45 is one of the only times in your life
02:45:48 you’ll get a chance to truly get a broad education.
02:45:51 You don’t often think of it that way,
02:45:53 but it’s a chance to really enjoy learning things
02:45:57 that are outside of the specialty
02:45:58 that you’ll eventually end up with.
02:46:00 And that’s how college education is.
02:46:02 And on a more fun side, I played music,
02:46:05 I did martial arts, and we offline mentioned
02:46:09 played video games.
02:46:10 I find it fascinating and brilliant what you said,
02:46:14 which is the world will not give you a chance
02:46:17 to truly enjoy many of these things
02:46:19 and truly get value from many of those things
02:46:23 once you get older.
02:46:25 I find it exceptionally difficult to enjoy video games now.
02:46:29 There’s so much stuff to do,
02:46:30 there’s so much responsibility.
02:46:32 And I, at the time when I played Elder Scrolls
02:46:37 and Baldur’s Gate and Diablo II,
02:46:39 and at the time I thought maybe that was a waste of time.
02:46:45 But now looking back, I realize,
02:46:49 because I always thought,
02:46:50 let me get the career first
02:46:52 and then I’ll have a chance to play video games.
02:46:54 That’s the way I was thinking.
02:46:55 It was a waste of time
02:46:57 because I should really progress on the career
02:47:01 and then I’ll have time to play video games.
02:47:03 No, the reality is that was really fulfilling.
02:47:06 Those are some of the happiest travel experiences
02:47:10 of my life is me traveling to those virtual worlds
02:47:14 and spending time in them.
02:47:15 And it was really fulfilling
02:47:16 and they stayed with me for the rest of my life.
02:47:19 And I get to experience echoes of that
02:47:21 when I play video games these days
02:47:23 for an hour here, an hour there,
02:47:25 like one hour a month or something like that.
02:47:27 But even those experiences, as silly as they are,
02:47:30 they seem like a waste of time at the time,
02:47:33 enjoying them fully, unapologetically.
02:47:37 And in a framework exactly as you said,
02:47:41 would I regret being the kind of person
02:47:43 who’ve never played those video games?
02:47:46 And I can, for myself, honestly say that yes.
02:47:50 Look, when I’m on my death bed,
02:47:53 I’m glad I built Baldur’s Gate 2
02:47:57 and all those arena, Daggerfall, Morrowind
02:48:00 and all the Elder Scrolls games.
02:48:03 And yeah, the things that don’t necessarily fit
02:48:10 into this kind of storyline
02:48:12 of what a career is supposed to be,
02:48:14 travel and all those experiences that you mentioned.
02:48:16 I think I’d just like to say one final quick thing on this.
02:48:21 I think this extends to really hard things as well.
02:48:24 It extends to the things you wanna do,
02:48:25 but one of the best pieces of advice
02:48:27 one of my mentors gave me early on in my career
02:48:31 around this time is that it will actually become harder
02:48:35 to start a company as you get older.
02:48:38 Once again, because you have more responsibilities,
02:48:41 you’re responsible to your partner for some kind of income
02:48:44 to create a life together.
02:48:45 Once you have kids, you’re responsible
02:48:47 for an even greater income to create a life for kids.
02:48:50 And startups do not generate income, right?
02:48:53 They take many, many years before anything happens.
02:48:56 People are getting evicted, people are eating ramen noodles.
02:48:59 That is a thing, that happens, that will happen.
02:49:02 So I’m not saying that you should do the fun things
02:49:05 or the enjoyable things.
02:49:07 I’m saying the things that you would regret not doing,
02:49:12 that you can uniquely do in the time span from 18 to 25.
02:49:18 Which one of which is, if you plan to have a family
02:49:22 and start a family when you’re 25,
02:49:24 you should start a company now.
02:49:26 You should not wait until a bunch of people depend on you
02:49:29 for income to eat, to start a company.
02:49:32 The amount of pressure that will be on you at that point
02:49:34 will be monumental.
02:49:36 You should start a company when nobody depends on you
02:49:39 and you can sleep on the floor eating ramen noodles
02:49:42 and still have a great time and show up
02:49:45 with a lot of enthusiasm and be excited.
02:49:47 So I just mean whatever you want to really devote yourself
02:49:52 to and really do, don’t put it off.
02:49:56 Don’t go to consulting or banking or any other industry
02:49:59 and say, I’m gonna do this for three years
02:50:00 and I’ll get experience.
02:50:02 The only way you get experience is by doing something.
02:50:04 You go, you do it, you fail, you do it again and again
02:50:07 and again and again and again and then you have experience
02:50:09 and then you can do it right.
02:50:10 That’s the only way experience happens.
02:50:12 There is no other way short of mentorship.
02:50:14 If you’re lucky to get mentorship,
02:50:16 99% of people don’t get mentorship.
02:50:18 And even though we’re talking about young people,
02:50:20 I feel like you’re speaking to me as somebody who spent
02:50:23 the last two weeks sleeping on the floor
02:50:25 because there’s no mattress and somebody who is single
02:50:28 and somebody who’s thinking about doing a startup,
02:50:30 I felt like you’re speaking to me as a fellow young person.
02:50:34 Let me ask you about this whole life of ours
02:50:41 to zoom out on the big philosophical question,
02:50:43 the ridiculous question.
02:50:44 What do you think is the meaning of it all?
02:50:47 Do you think about this kind of stuff
02:50:49 as you’re creating all the technology,
02:50:51 as you’re thinking about this future?
02:50:54 You ever zoom out and think like, why?
02:50:57 Why are you surrogate striving?
02:50:59 Why are we the human species striving for the stars?
02:51:05 So I think it comes down to whether people
02:51:08 wanna live in society.
02:51:11 So if people decide to be part of society,
02:51:14 they have a certain set of conditions
02:51:20 that they decide to take part in, right?
02:51:23 So I think what this comes down to is a lot of
02:51:27 really involved conversations.
02:51:30 But if we assume people have free will and choice,
02:51:33 if we just kind of make that blanket assumption,
02:51:36 then the question starts to become,
02:51:37 well, what choices do we make?
02:51:39 And how do we live with those choices?
02:51:41 And I think probably the most fundamental choice
02:51:44 is whether we exist in a society
02:51:47 or we choose to leave society.
02:51:49 And there are people that do this.
02:51:50 There are people that go live in the woods.
02:51:52 There are people that immigrate to other societies
02:51:55 and they make a choice, right?
02:51:56 And as they enter those other societies
02:51:58 or they choose to leave society and go live in the woods,
02:52:01 they adopt a certain set of values, right?
02:52:05 They adopt values that the society prescribes,
02:52:08 they compromise their own values,
02:52:09 they define their own values,
02:52:11 and they create a set of values for themselves, right?
02:52:14 I think at the end of the day,
02:52:18 if you’re going to choose to live in society,
02:52:22 in addition to all the minimums of not throwing garbage
02:52:25 on the floor and doing nice things for people
02:52:28 that need help and doing any number of things
02:52:31 to just be a normal human being within society,
02:52:34 you have to ask yourself,
02:52:37 what am I doing as part of society, right?
02:52:39 You can always say, hey, I’m going to leave society.
02:52:42 I’m going to live in the woods.
02:52:43 I did that, right?
02:52:44 I went and I lived in the woods and I gave it a shot,
02:52:46 realized a ton of stuff, huge amount of clarity from that.
02:52:49 But when you decide to live in society,
02:52:52 you take on, first of all, certain minimal agreements.
02:52:57 You mold your values a little bit to that society.
02:53:01 That’s another choice that people inherently make.
02:53:03 And then there’s a question of,
02:53:07 well, what am I doing here, right?
02:53:08 What am I doing in society, right?
02:53:11 So when people say the meaning of life,
02:53:12 I don’t know what the meaning of life is.
02:53:14 It’s the meaning of life in society.
02:53:16 Right, what’s the meaning of life for the choice
02:53:18 that you’ve made within society, right?
02:53:20 Because that’s maybe the first fundamental choice
02:53:22 you made.
02:53:23 You made a choice and you continue
02:53:24 to make a choice to be part of society
02:53:27 and a specific society, right?
02:53:30 So you’ve made this choice.
02:53:32 You’re part of a society.
02:53:34 And now you kind of have a life and you have people around you.
02:53:41 And then the question is, in my opinion,
02:53:44 the question is, what is the body of work
02:53:46 that you want to make, right?
02:53:50 I think, personally, that life is kind of so short.
02:53:55 And the ability to get enough resources for yourself
02:53:57 in at least the developed markets
02:53:59 where we’re lucky to be in is so relatively abundant
02:54:03 that we, you and me, have the luxury,
02:54:08 by your pursuit of a PhD, you’ve had this luxury,
02:54:10 I’ve had this luxury through the work
02:54:13 that I’ve been doing, to pursue something
02:54:16 that makes society better.
02:54:19 So this is kind of the question, I would say.
02:54:25 The question is, am I going to live in society, yes or no?
02:54:28 Yes, OK.
02:54:28 Most people choose yes.
02:54:30 I understand why, to a degree.
02:54:31 I understand why some people choose no.
02:54:33 And then what is the but?
02:54:35 And I’m going to be in society.
02:54:37 If you choose to be in society, you’re
02:54:38 just choosing to abide by the rules.
02:54:40 You’re choosing to just do the minimum, right?
02:54:42 That’s what being part of society means.
02:54:44 People that choose to be part of society
02:54:45 but don’t want to do this, it’s very confusing.
02:54:47 They should just leave.
02:54:48 They should just go, look, I don’t like this deal.
02:54:51 I’m going to go somewhere else.
02:54:52 I’m going to live in Tibet.
02:54:53 I’m going to live in the woods.
02:54:55 I’m going to live wherever the rules are to my liking, right?
02:55:00 You’ve chosen to be in society.
02:55:02 Next question, kind of final question,
02:55:04 is what is the body of work that I’m going to be involved in?
02:55:07 Because in looking at that Jeff Bezos kind of regret
02:55:10 minimization framework thing, I think
02:55:12 that’s what a lot of it really comes down to,
02:55:14 is you kind of, the framework is at 80 years old,
02:55:16 you look back over your life, what would you
02:55:18 regret not doing?
02:55:19 What would you regret not pursuing?
02:55:23 I think there are a number of things on a personal level
02:55:26 each person has, but I think, at least for me,
02:55:29 and probably for many of the other people I know,
02:55:32 there’s a question of what is the body of work
02:55:35 that I was involved in?
02:55:37 What did I do?
02:55:38 What happened, right?
02:55:40 What was I involved in?
02:55:42 And in my opinion, you should have a good answer to that.
02:55:47 You mentioned the body of work in relation
02:55:50 to whether it helped make a better world.
02:55:54 And the fundamental question there is,
02:55:58 what does better mean?
02:56:00 So it’s our striving to understand what is better.
02:56:03 What kind of world would we love to exist after we’re gone?
02:56:09 And I think that’s another thing,
02:56:12 almost unanswerable question,
02:56:13 but it’s one we can strive towards,
02:56:16 is what is a better world?
02:56:19 Right, I think that’s once again,
02:56:22 that’s a very personal question.
02:56:23 I’m not sure if there’s an objective moral truth
02:56:26 that’s gonna suddenly give us all an answer.
02:56:28 I think it’s actually quite fascinating to me
02:56:30 when people feel they have this objective moral truth,
02:56:32 they’re so sure in their opinions,
02:56:34 this is what we do, we should go hurt them or help them
02:56:37 or kill them or rescue them or whatever, right?
02:56:41 There’s all these kind of very situational specific
02:56:44 kind of like, this is the right thing to do,
02:56:46 the objective moral truth told me that this is it.
02:56:49 But maybe there’s a definitive truth
02:56:51 that we can arrive towards sort of a consensus
02:56:56 of what that is within the little local pocket
02:56:59 of society that you’re in.
02:57:01 Yeah, that’s the point.
02:57:02 That’s what happens.
02:57:03 People just then mislabel it
02:57:04 and they go like objective moral truth.
02:57:06 This is not our idea.
02:57:09 This is coming up from on high here.
02:57:10 This is the objective moral truth that,
02:57:15 I think exists in some metaphysical form somewhere.
02:57:18 And then you build a building with marble and it’s big
02:57:21 and usually what happens.
02:57:22 And then you convince yourself
02:57:23 that that building represents.
02:57:24 I think those people actually,
02:57:26 the people who build those buildings
02:57:27 probably understand that there is no metaphysical objective.
02:57:30 They’re just like, we’re all just coming to consensus.
02:57:32 I’m gonna build the biggest building and you’re like me
02:57:34 and that’s what we’re gonna do, right?
02:57:35 They just look at it that way probably.
02:57:37 I think what ends up happening with all these values is,
02:57:43 yeah, people should determine that for themselves.
02:57:45 I agree that there’s a second order question here
02:57:47 of what is the best body of work to work on.
02:57:51 Personally, I think that’s probably a mix
02:57:53 of what could you realistically achieve?
02:57:57 Is that gonna have an impact on society
02:57:59 that you feel good about?
02:58:00 Yeah. Right?
02:58:01 So these are probably the two aspects of this question
02:58:04 and is this gonna have a good impact on society
02:58:07 that you feel good about?
02:58:08 Obviously very subjective, right?
02:58:09 Some people save animals, some people save forests.
02:58:13 We and I are creating this system of economic fairness
02:58:17 and transparency.
02:58:19 I feel that I’m in a good position to enable that.
02:58:22 I feel that I have a good chance of succeeding at that.
02:58:25 And I think that the impact will be quite meaningful
02:58:29 for a large number of people.
02:58:30 And so I’m completely happy to look back
02:58:34 once I made it and see a body of work that achieved that
02:58:37 and be very proud of that, right?
02:58:38 Because I think that’s what I’ll be doing
02:58:40 when I’m looking back.
02:58:42 Well, I agree with you.
02:58:43 The scale of impact as a hybrid smart contracts,
02:58:48 this whole idea that you’re working on
02:58:50 has a potential to transform the world for the better
02:58:55 at a scale that I can’t even imagine.
02:59:00 So speaking of which means even more
02:59:03 that you would waste so many hours
02:59:05 of that exciting life with me.
02:59:07 Thank you so much for talking to me, Sergei.
02:59:09 This is a really fascinating conversation,
02:59:11 a really fascinating space, and I can’t wait to learn more.
02:59:14 So thank you so much for talking today.
02:59:17 Thank you for having me.
02:59:17 It’s been an absolute pleasure.
02:59:19 Thanks for listening to this conversation
02:59:21 with Sergei Nazarov.
02:59:22 And thank you to Wine Access, Athletic Greens, Magic Spoon,
02:59:27 Indeed, and BetterHelp.
02:59:29 Check them out in the description to support this podcast.
02:59:33 And now let me leave you with some words from Copernicus.
02:59:37 To know that we know what we know
02:59:39 and to know that we do not know what we do not know,
02:59:43 that is true knowledge.
02:59:45 Thank you for listening and hope to see you next time.