Transcript
00:00:00 The following is a conversation with Charles Hoskinson, founder of Cardano, co founder
00:00:05 of Ethereum, and a mathematician who is one of the most well read and knowledgeable people
00:00:11 on the technical side of cryptocurrency that I’ve ever spoken to.
00:00:15 Quick mention of our sponsors, Galila Games, Allform, Indeed, ExpressVPN, and Asleep.
00:00:23 Check them out in the description to support this podcast.
00:00:26 As a side note, let me say that Charles is not just a mathematician or cryptocurrency
00:00:31 innovator, but also a Colorado based farmer of bison and mushrooms, a gamer, a fisherman,
00:00:40 and a world traveler.
00:00:41 When I asked him if he has a nice professional picture of himself, he sent me a picture of
00:00:46 him in Mongolia with a hawk on his shoulder, meeting the Mongolian president.
00:00:52 That to me pretty much says it all, speaking to the humor and the intelligence of a man
00:00:57 who is bold, innovative, and does not shy away from a bit of fun and a bit of controversy,
00:01:04 which makes him a fascinating human being to explore ideas with.
00:01:07 I do want to say in terms of ideas that, at least to me, cryptocurrency is much bigger
00:01:13 than just a way for a few Americans to make a quick buck through meme driven speculation.
00:01:19 It is technology that enables freedom from oppression, from suffering in the world, because
00:01:24 money is power.
00:01:26 Mongolia, for example, was a reminder of that for me.
00:01:30 Next day, after talking with Charles, I spoke with Wyoming Park, who is a North Korean defector,
00:01:35 and who spent time in Mongolia, as many defectors do, in her and their escape from North Korea.
00:01:42 Her story, the story of North Korea, the story of atrocities throughout the 20th century
00:01:47 committed by Hitler, Stalin, and others, is a reminder that the world is full of darkness,
00:01:54 but it is also full of beauty and love, and it is a world worth fighting for, in every
00:02:00 way we know how.
00:02:03 This is the Lux Friedman podcast, and here is my conversation with Charles Hoskinson.
00:02:22 If you
00:02:37 self evolve, almost like gnomic.
00:02:39 And then you have Wolfram running around saying,
00:02:41 hey, we can come up with these like very simple rules
00:02:43 and we can reconstruct all of reality
00:02:45 at some arbitrary point.
00:02:47 So I have absolutely no idea what’s right.
00:02:50 You know, I look at it kind of like a formal system
00:02:52 and I say, well, if you’re stuck within the system,
00:02:54 it’s hard to actually understand
00:02:56 that you’re inside the system.
00:02:57 You know, it’s kind of like an object language
00:02:59 to a metal language.
00:03:01 You know, there’s this thing that is outside of it,
00:03:03 but because you’re constrained and limited by the simulation,
00:03:06 you can’t really understand the nature of the thing
00:03:09 that’s outside of it.
00:03:10 It’s almost like Minecraft.
00:03:12 You can build these redstone computers within Minecraft
00:03:14 and simulate and emulate things within it,
00:03:16 but you really can’t go outside of that environment.
00:03:19 The people outside of it can formally prove
00:03:21 that it’s correct or whatever,
00:03:22 but the creatures inside of the system
00:03:24 can’t hope to perfectly understand it
00:03:27 and prove something about it.
00:03:28 Well, also the question is, it’s a computation question.
00:03:31 You know, does P equal NP?
00:03:33 Because you’d have to be able to emulate all of these.
00:03:35 How long will it take?
00:03:36 Yeah, exactly.
00:03:37 And so I have no clue what type of language
00:03:39 it would have to look like,
00:03:41 but it would probably not be anything we’re used to
00:03:44 at the moment.
00:03:45 It’d have to be something else.
00:03:46 And we’d have to have some more fundamental resolution
00:03:48 of the relationship of these formal systems
00:03:50 and how they get extended.
00:03:52 So that’s like a 22nd century question
00:03:54 instead of a 21st century.
00:03:55 Do you like, do you find the Stephen Wolfram idea compelling?
00:03:58 It’s a very different way of programming,
00:04:01 which is you set some rules,
00:04:03 you set some initial conditions,
00:04:04 and let it run and see what happens.
00:04:06 Yeah, and it’s not a new concept.
00:04:07 I mean, like the Santa Fe Institute’s been doing that
00:04:09 for a long time and you can use it for economic modeling
00:04:12 and you can show that in certain cases,
00:04:14 there’s this concept of simple rules
00:04:16 evolving into a complex system
00:04:18 is somewhat more predictive
00:04:20 than trying to build a complex top down model for things.
00:04:23 And I guess there’s some analogies to these things in AI
00:04:25 where you start with some simple things
00:04:27 and then somehow it just figures stuff out
00:04:29 in its environment over time
00:04:30 and much better than if you actually tried to model it
00:04:32 with prologue or something like that.
00:04:35 So that is exciting
00:04:38 because you get to just do a few things,
00:04:40 let the thing run and then see what happens.
00:04:43 And that’s a lot of fun.
00:04:43 In fact, it got so exciting, Wolfram came to us and he said,
00:04:46 ‘‘Hey, let’s do an NFT marketplace.’’
00:04:48 I said, ‘‘What do you wanna do?’’,
00:04:49 and he said, ‘‘I got all these universes to sell.’’
00:04:51 And I said, ‘‘Okay, well that’s gonna be fun.
00:04:54 So we’re gonna set up an auction system
00:04:56 or something like that with him.
00:04:57 And I think maybe end of this month or next month,
00:05:00 we’ll figure out how to do NFTs on Cardano
00:05:02 with Wolfram universes.
00:05:04 So as soon as we can sell one, I’ll give you one
00:05:06 and then we can all just claim
00:05:08 that we’re living in some sort of Wolfram simulation.
00:05:10 I don’t know how much money I have,
00:05:12 but I’m gonna give everything I have to get rule 30,
00:05:15 which is one of his universes that he’s created.
00:05:18 One of the first ones where he discovered
00:05:21 some interesting complexities.
00:05:24 I think rule 30 is Turing complete or is that 45?
00:05:26 I can’t remember which one.
00:05:28 You know your stuff.
00:05:29 Actually, I’m not sure if they proved anything
00:05:31 about rule 30 in terms of whether it’s Turing complete
00:05:33 or not, but there’s fun competitions on it,
00:05:35 which is trying to predict something about rule 30,
00:05:38 about the way it evolves.
00:05:39 And so far, nobody’s been able to do it.
00:05:41 Just like looking at the middle column,
00:05:43 try to predict as the system evolves,
00:05:45 say anything like conclusive about the future
00:05:49 of the system as it evolves.
00:05:50 It’s fascinating.
00:05:51 It’s both beautiful that simple rules
00:05:54 can create that kind of complexity.
00:05:56 And it’s also sad that we can’t like make perfect sense
00:06:01 of it, like perfectly predict the future.
00:06:05 Even though it’s all simple and deterministic,
00:06:08 we can’t say something conclusive about like
00:06:10 when the thing will end.
00:06:12 When will this little cellular automata
00:06:14 like evolve in a certain way
00:06:15 and then nuclear weapons will be invented
00:06:17 and they blow each other up
00:06:18 and then they’ll just be this empty 1D cellular automata.
00:06:21 Well, doesn’t that make it fun though?
00:06:24 Yeah, it’s fun, but when you’re trying to create
00:06:27 and we’ll talk about something that operates the economy
00:06:32 and the way humans transact and cooperate
00:06:36 and fall in love and work together,
00:06:39 then you’d like to be a little bit more formal
00:06:41 and try to say something conclusive.
00:06:42 If this entire universe is just cellular automata,
00:06:45 then being conclusive is kind of hopeless,
00:06:49 generally speaking.
00:06:50 And the hope is, I guess, that there’ll be pockets
00:06:54 of which within the cellular automata
00:06:57 where you could be predictive,
00:06:58 where you can formally show that something is true
00:07:01 and then you can rely on that.
00:07:03 You’ll be resilient and all those kinds of things,
00:07:05 even though the rest of the thing is a giant mess
00:07:08 that’s unpredictable.
00:07:09 Didn’t they call that Laplace’s demon?
00:07:11 Yes, I wonder what the demons up to these days.
00:07:14 Okay, thank you for entertaining me with that.
00:07:17 But sticking on philosophy, you’ve also mentioned,
00:07:21 among others, that Bertrand Russell and Saul Kripke
00:07:24 are two of your favorite philosophers.
00:07:27 Maybe you can comment on what ideas of theirs
00:07:30 you find insightful and also what do you use the difference,
00:07:33 because you’re both an engineer and a thinker,
00:07:37 so what do you use the difference
00:07:38 between philosophy and computer science?
00:07:40 Yeah, so yeah, there’s both a deeply human element
00:07:43 to both Russell and Saul.
00:07:45 And then there’s this, of course, amazing work
00:07:47 that they did in the late 19th and 20th century.
00:07:50 And you can’t really talk about Russell or Saul
00:07:54 without also mentioning Wittgenstein and Tarski.
00:07:58 Because when you actually look at these guys
00:08:00 and you put them together, what they were attempting to do
00:08:02 was increase the level of precision we had
00:08:05 in analyzing both formal languages
00:08:06 and also language in general.
00:08:08 And so Wittgenstein makes no sense at all to me.
00:08:11 So there’s amazing people out there
00:08:13 that somehow can parse that, but.
00:08:15 He doesn’t make sense to himself either.
00:08:17 I think you’re right about that.
00:08:18 However, Kripke has Kripkenstein.
00:08:20 He has his whole building on that, right?
00:08:24 And he built a whole hierarchy.
00:08:25 And at least there I have modal logic
00:08:27 and I have the little boxes and I have the diamonds
00:08:30 and I can do a computation and I can kind of reason
00:08:32 about things that people are saying.
00:08:35 But really it was all just about precision
00:08:38 and the nature of truth, precision,
00:08:40 the nature of necessity and possibility.
00:08:41 And the magic of these statements
00:08:43 is that you can then start getting a better understanding
00:08:47 of basically how far a formal language can take you.
00:08:52 And so that’s the work of it.
00:08:53 David Hilbert also did the same thing.
00:08:55 And Russell, he got his career started
00:08:57 working with Alfred North Whitehead.
00:08:59 He was a logician and there was this whole desire
00:09:01 in late 19th century mathematics to formalize mathematics
00:09:04 in a completely new and better way.
00:09:07 And they started with geometry
00:09:08 and Hilbert’s geometry was like a complete system,
00:09:11 although recently we’ve discovered
00:09:13 there’s a few holes in that.
00:09:14 But for the most part it was complete
00:09:16 and the axioms are independent and they’re consistent.
00:09:20 And they said, oh, well now we can do this
00:09:22 for all of mathematics.
00:09:23 And Russell and Whitehead wrote this huge set of books,
00:09:26 like two big books,
00:09:27 Principia Mathematica, a thousand pages
00:09:29 and the conclusion is one plus one equals two.
00:09:32 So they linked set theory and arithmetic and logic
00:09:34 all in these beautiful ways.
00:09:36 Then little by little, as we entered the 20th century,
00:09:40 logicians started chipping away at this idea
00:09:42 that you could actually construct
00:09:43 a complete system of mathematics.
00:09:45 First with Gödel and then later with the work of Turing
00:09:48 and Church and others.
00:09:49 They said, oh, you’re not complete, you’re not decidable.
00:09:52 And so suddenly Russell was left in this really bad position
00:09:55 where his early life’s work was basically forgotten.
00:09:59 So he had to kind of reinvent himself.
00:10:00 And so he went into ethics
00:10:02 and he went into different fields of philosophy.
00:10:03 He became this titan in analytic philosophy
00:10:05 and he was also a great pacifist
00:10:08 and he was just a phenomenal writer.
00:10:11 If you read Why I’m Not a Christian
00:10:12 or any of his other attacks on metaphysics,
00:10:15 he said, look, I can only deal with the world I’m in
00:10:18 in the senses that I have
00:10:19 and if I can deduce it, I believe it.
00:10:21 If it’s outside of that,
00:10:23 I really can’t make meaningful statements about it.
00:10:25 And he said it in a lovely English prose
00:10:28 that you would expect of a man of his stature.
00:10:30 Now, Sol Cryptry, it was like the complete opposite.
00:10:33 This guy’s really down to earth dude,
00:10:35 not aristocratic at all.
00:10:36 And he was one of those guys
00:10:38 that just could have done anything
00:10:40 because he was so, he’s so brilliant.
00:10:42 I guess he’s still alive.
00:10:43 I think he’s 80 something.
00:10:44 Yeah, exactly.
00:10:45 Yeah, he’s getting up there, man.
00:10:47 But I mean, literally, when he was in high school,
00:10:49 he wrote these papers in logic and Harvard contacted him,
00:10:52 said, hey, could you teach graduate courses at Harvard?
00:10:55 And he said, no, I really would like to finish high school
00:10:57 first before I go and teach grad school at Harvard.
00:10:59 And so this is just one of those guys
00:11:01 that you can see through his work
00:11:03 that he can think deeply about anything.
00:11:05 He’s like the Galois of philosophy
00:11:07 and he chose to try to clean up a lot of the messes
00:11:10 that Tarski and others couldn’t resolve.
00:11:12 He said, let’s really get serious
00:11:14 about the nature of truth.
00:11:15 Let’s really try to resolve paradoxes.
00:11:17 Let’s really try to build things in such a way
00:11:19 that the work that we leave behind
00:11:21 can actually be built upon
00:11:23 and it’s not thrown away every 50 years or 100 years.
00:11:26 And it was the same for Tarski.
00:11:27 He comes in and he says,
00:11:28 we mathematicians love this concept of truth,
00:11:31 but yet we’ve never really created
00:11:32 a nice rigorous definition
00:11:33 that doesn’t have paradoxes embedded inside of it.
00:11:36 So he had to invent metal languages and object languages,
00:11:39 all these notions and so forth.
00:11:40 So I really liked those four, if you think about them.
00:11:43 And there’s a lot of great lessons.
00:11:46 And where it’s relevant today is,
00:11:48 you have human beings and you have computers
00:11:50 and they’re trying to understand each other.
00:11:52 And computers live in the formal world
00:11:53 and human beings live in the natural language world.
00:11:56 And those bridges between those two
00:11:58 are still not completely clear.
00:12:00 And so a lot of the work that these guys were doing
00:12:03 in the 20th century, 19th century
00:12:04 had nothing at all to do with that,
00:12:06 but gives you hope that perhaps a bridge can exist
00:12:09 between those two worlds.
00:12:10 And maybe there are some nice tools
00:12:11 for that bridge to be built upon.
00:12:13 And maybe that in some way will allow computers
00:12:16 to better understand us.
00:12:17 I mean, they’ve even created languages,
00:12:19 natural spoken languages that are completely ambiguity free
00:12:21 like Lojban and things like that.
00:12:23 What? Yeah, right.
00:12:25 Wait, what? L O J B A N, Lojban.
00:12:27 It’s based on a language called Loglan
00:12:29 and it’s a spoken language
00:12:30 that’s equivalent to first order predicate calculus.
00:12:33 Oh, interesting.
00:12:34 So no ambiguities, it’s logically consistent.
00:12:36 Yeah, Lojban.
00:12:38 But can you still have fun in it?
00:12:40 You can get very.
00:12:40 Can you write poetry or what?
00:12:42 There’s people who actually write poetry in Lojban.
00:12:44 I’m gonna switch to that and start tweeting in it.
00:12:46 Yeah, there you go.
00:12:48 So there’s a lot there
00:12:49 and they’re just fun to study and think about.
00:12:52 And unfortunately, if you go down that rabbit hole,
00:12:55 you’ll spend way, way too much time
00:12:56 and there’s diminishing returns.
00:12:57 Now, the second question you asked
00:12:59 was one on theoretical computer science to,
00:13:02 I guess, engineering.
00:13:03 Philosophy, no, no, no, no, no, no.
00:13:04 So first step, you said humans and computers.
00:13:07 So theoretical computer science
00:13:09 is theory of the computer
00:13:11 and philosophy is the theory of the human.
00:13:14 And then we can dissect different stuff about the computer,
00:13:17 but in terms of these two worlds
00:13:19 of the theory of the human,
00:13:20 which is philosophy and the theory of the computer,
00:13:22 which is computer science,
00:13:23 what do you think is the difference?
00:13:25 Like, as we try to bridge that gap, as you mentioned,
00:13:29 what is going to be the biggest challenge?
00:13:33 Like, can we formalize love?
00:13:35 Can we formalize music, art, poetry,
00:13:38 all that kind of stuff?
00:13:39 Or is that human nonsense that we need to get rid of?
00:13:42 No, I don’t think it’s human nonsense at all.
00:13:43 I mean, there’s even attempts
00:13:44 to create algorithmically generated music.
00:13:47 And the question is,
00:13:49 is love just strictly a chemical phenomena?
00:13:51 Is there something like metaphysical about it
00:13:54 or transcendent of some sort of formal system?
00:13:59 I mean, computer science is just saying,
00:14:00 hey, we have this notion of computing.
00:14:03 We have this brain that we’ve constructed,
00:14:06 this formal system that we’ve built.
00:14:08 And given that we have it, what can we do with it?
00:14:11 And so some people worry
00:14:12 about the roots of the tree of knowledge,
00:14:14 the great Yggdrasil of computer science.
00:14:17 They worry about the roots and say,
00:14:18 how far can we grow them?
00:14:20 And let’s keep adding these new models of computation.
00:14:22 And other people worry about the trunk of the tree.
00:14:25 And some people worry about the leaves of the tree.
00:14:27 And the more advanced the field gets,
00:14:30 the closer and closer it gets
00:14:32 to the people who constructed it, us.
00:14:35 We have better image processing.
00:14:37 We have better ways of handling speech to texts.
00:14:39 And we have better ways of computers
00:14:41 kind of understanding the intent
00:14:43 of what a human being is saying.
00:14:45 And then the question is, well,
00:14:46 how will a computer understand love or poetry or music?
00:14:50 Well, it’ll understand it the same way we understand it.
00:14:52 You have to get a computer to grow up to a point,
00:14:54 work and learn the way we learn
00:14:56 or as close to it as possible.
00:14:58 Then you just expose it to the things
00:15:00 that we were exposed with.
00:15:01 And then at some point,
00:15:02 the computer will start creating things.
00:15:04 So the question is, well, how do you quantify creativity?
00:15:07 And I have no clue about that.
00:15:09 But it’s a…
00:15:10 You make it into an NFT and see how much it excels for it.
00:15:12 That’s one way.
00:15:14 Yeah.
00:15:15 But basically, yeah, there’s so much of it is subjective.
00:15:18 And that’s a fascinating whole area of,
00:15:21 that I’m fascinated with this human robot interaction
00:15:23 is how do we create compelling experiences
00:15:27 that are subjectively compelling,
00:15:28 whether it’s art or just two humans talking
00:15:31 or two humans interacting in some kind of way
00:15:33 to maximize the richness of the subjective experience.
00:15:36 And I think that could be an optimization problem
00:15:38 that could be solved.
00:15:39 We’re solving it all the time.
00:15:41 Human civilization is constantly trying to…
00:15:43 We’re constantly trying to impress each other.
00:15:46 When we’re younger, trying to get laid,
00:15:49 whatever, fall in love, impress your boss at work
00:15:53 by all the awesome stuff you do.
00:15:54 I mean, we’re trying to optimize that problem
00:15:56 that’s purely, for the most part, is subjective.
00:15:59 Right, did you ever watch Blade Runner 2049?
00:16:01 Yes.
00:16:02 Yeah, did you remember the whole relationship
00:16:03 between Joy and Kay?
00:16:05 And did she really love him, the hologram or not?
00:16:08 Was it like fake love or real love?
00:16:10 Fake it till you make it is my view on love.
00:16:13 No comment from Charles.
00:16:14 So let’s go to the difference between
00:16:19 theoretical computer science and software engineering.
00:16:22 Or I don’t know if you draw a distinction,
00:16:24 but if we look into this computer world now,
00:16:27 is there a difference between theory,
00:16:29 things you can say formally,
00:16:31 and the pragmatic implementation of that theory
00:16:34 into actual systems that people use,
00:16:37 which I guess we’ll call software engineering?
00:16:40 So the engineer, they’re obsessed with the domain of,
00:16:43 well, what do you want to accomplish
00:16:44 and who are you accomplishing it for?
00:16:46 So they live in the world of people,
00:16:48 if they’re good engineers.
00:16:49 And they say, okay, what’s the experience?
00:16:52 How are we going to use this?
00:16:54 Why are we going to do this?
00:16:55 What’s the commercial application?
00:16:57 What’s the noncommercial application?
00:16:59 And you collect all these business requirements.
00:17:01 And once you’ve done all of that,
00:17:03 the better job you do, the more self evident it is
00:17:06 of how do we apply the toys and tools of computer science
00:17:10 and other such things to actually resolve that.
00:17:13 And the point of theoretical computer science
00:17:15 from the software engineering domain
00:17:17 is it can tell you kind of where your guardrails are.
00:17:20 It won’t make perfect programs.
00:17:22 And there’s no such thing as that,
00:17:24 but rather it can give you a good notion and sense
00:17:27 that your program has some desirable properties.
00:17:30 Like maybe you can prove that it can terminate.
00:17:33 If you’re dealing with total programs
00:17:34 or maybe you can prove you’ll never have a buffer overflow
00:17:37 or you won’t divide by zero somewhere or something like that.
00:17:41 Some event won’t occur
00:17:43 that’ll cause a catastrophic failure in your system.
00:17:45 But there’s always this combinatorial explosion
00:17:47 between what you can test and think about
00:17:50 and what you can actually code.
00:17:52 So the stuff on the left hand side
00:17:54 lives in a different cardinality, a different universe.
00:17:57 There’s something significantly larger there.
00:17:59 And the tools on the right hand side,
00:18:01 we have property based testing and these SAT solvers.
00:18:04 We have all this great stuff here in formal methods land
00:18:07 and computer science theory land,
00:18:09 but there’s only a small subset of things
00:18:11 that they actually give you good answers about.
00:18:14 So the balance of the two things is basically saying,
00:18:17 well, what do you care about?
00:18:18 And what are you okay throwing away?
00:18:20 That’s the art of engineering
00:18:22 and building these types of things.
00:18:24 So, you know, cryptocurrencies,
00:18:26 we deal with these complex distributed systems
00:18:28 that have cryptography and game theory
00:18:30 and Byzantine actors.
00:18:33 So the balance there is saying,
00:18:35 okay, what can’t fail in that system?
00:18:37 And that’s the kind of stuff that you want to apply
00:18:40 as heavy a tool set as you can,
00:18:42 because when that stuff fails,
00:18:44 you either have a loss of billions of dollars,
00:18:46 privacy, or potentially even life,
00:18:48 depending on how these systems get adopted.
00:18:50 But then other things, you know, what can fail?
00:18:52 Is it okay if the block doesn’t get made every now and then?
00:18:56 Is it okay if your latency goes up
00:18:58 or your network suddenly becomes asynchronous
00:19:01 and you disconnect from it and you have to restart
00:19:03 the computer or something like that?
00:19:05 That’s probably okay.
00:19:06 It’s an inconvenience and burden to the user.
00:19:09 And if you actually try to chase that tail,
00:19:10 you’ll end up spending 10 years chasing phantoms and ghosts.
00:19:13 And meanwhile, the whole world moves on.
00:19:16 So it’s really figuring out those balance of the two.
00:19:18 And what’s really beautiful is that the formal methods tools
00:19:21 have gotten so much better
00:19:23 over the last 20 years in particular,
00:19:25 mostly because of incredibly high investments
00:19:27 from Microsoft and Google and big universities,
00:19:31 because these guys are building these gargantuan systems.
00:19:34 If you look at the Googleplex
00:19:36 or what Amazon has or others,
00:19:37 and they have so much value, so many users,
00:19:40 so many things going on,
00:19:41 and no person can keep that in their head.
00:19:44 And so you’re talking about systems
00:19:46 may have 10 million lines of code,
00:19:48 15 million lines of code,
00:19:49 millions of nodes connecting,
00:19:51 faulty processes happening all the time,
00:19:53 hackers breaking in on a regular basis.
00:19:56 So when you’re trying to model all of that,
00:19:58 trying to ask yourself,
00:19:59 what formal guarantees and properties can I get
00:20:01 to simplify this system as much as possible?
00:20:04 So instead of the applications of formal methods
00:20:06 slowing you down, in many cases,
00:20:08 it actually massively reduces your debugging time
00:20:11 and your ability to find where errors occur.
00:20:13 In some cases, you can’t find where errors occur
00:20:15 inside these massive concurrent systems.
00:20:17 And you say, well, where are cryptocurrencies going?
00:20:19 We’re talking about just the same thing.
00:20:21 But we’re talking about
00:20:22 a much more hostile operating environment,
00:20:24 where instead of it running in a pristine data center
00:20:27 in California somewhere,
00:20:28 it’s running on your cell phone,
00:20:30 it’s running on your mom’s phone,
00:20:31 it’s running your dad’s phone,
00:20:32 it’s running on some computer in Mongolia
00:20:35 that may have good internet on Tuesday,
00:20:37 but not any other day.
00:20:39 So when you live in that kind of environment,
00:20:40 you really do need to think carefully
00:20:42 about a whole new class of protocols.
00:20:44 And then you need to think carefully
00:20:46 about a whole new class of tools and techniques
00:20:48 to test the reliability of those systems.
00:20:50 And you need to separate the world and say,
00:20:52 what is high assurance and cannot fail?
00:20:55 Because if it fails, people lose money.
00:20:57 And what is low assurance?
00:20:58 And it’s okay if that falls apart.
00:21:01 The other thing I’ll mention
00:21:02 is there are perverse financial incentives in our industry.
00:21:05 Because the reality is when something blows up,
00:21:07 the people who built those things that blow up
00:21:09 usually get paid upfront.
00:21:11 So what they’re focusing on is time to market,
00:21:13 speed to market, and getting tokens out
00:21:16 and getting them liquid.
00:21:18 And then people come in, they buy it,
00:21:20 but if there’s a nascent bug in some DeFi protocol,
00:21:22 it’ll probably be discovered six months later
00:21:24 or something like that.
00:21:25 It blows up, who suffers?
00:21:27 The users.
00:21:28 The people that created that already got paid.
00:21:30 Exactly, that’s why you pay the guy
00:21:31 who makes the breaks software for your train last.
00:21:34 And you make sure he rides the train every day.
00:21:37 So you’re basically describing the complexity
00:21:41 of a distributed system that’s fundamentally game theoretic.
00:21:45 And like, if we think about turtles all the way down,
00:21:48 it’s humans all the way down.
00:21:49 I mean, at the very bottom is still human nature.
00:21:52 Is there something you can say formally about human nature
00:21:58 to try, you said you can’t,
00:22:00 there’s certain parts of the system that can’t fail.
00:22:02 Some people talk about nuclear war in that same kind of way,
00:22:05 that there’s this game theoretic construction
00:22:08 of mutually assured destruction.
00:22:10 Oh, that rhymes, see, I’m a poet.
00:22:12 That system can’t fail because you’re gonna blow everyone up
00:22:15 but you can’t formally say for sure
00:22:18 it’s not going to fail.
00:22:20 So like, you’re basically trying to chase,
00:22:24 like statistically reduce the probability
00:22:26 that these particular critical aspects will fail.
00:22:29 And then you test, I guess, by deploying in the real world
00:22:32 at small scale to see where things go wrong.
00:22:35 Yeah, it’s a great question.
00:22:36 And the problem with game theory and mechanism design
00:22:39 is that you can develop this concept of a rational actor.
00:22:42 And I don’t think in my life
00:22:43 I’ve ever met a rational actor.
00:22:44 There’s a rational actor on Tuesday,
00:22:46 but any other day of the week, who the hell knows?
00:22:49 And there’s even, I think there was a book Freakonomics
00:22:50 and there’s a few of these things
00:22:51 where it just shows again and again
00:22:53 where people behave in ways
00:22:55 that are against their best interest.
00:22:57 So then you have these protocol designers and they say,
00:22:59 well, we need an honest majority for this thing to work.
00:23:02 And they say, okay, well, we’ll create this incentive model
00:23:05 and rational actors will behave with that incentive model.
00:23:08 And they say, well, the individual won’t do that
00:23:10 but the firm, the government, the entity will.
00:23:13 The problem with that is we have a lot of counter examples
00:23:16 where the system was actually behaving in weird ways.
00:23:20 Like we almost completely eradicated the human population
00:23:22 twice in the 20th century,
00:23:24 once during the Cuban missile crisis.
00:23:26 And again, in the 1980s, there was a Russian Colonel
00:23:29 and they installed a new satellite system and it said,
00:23:32 hey, the Americans are launching missiles at us.
00:23:34 You need to turn the key in,
00:23:35 launch all the missiles in the silo.
00:23:36 And he said, oh, that’s not right.
00:23:38 That doesn’t seem right.
00:23:39 And he was reprimanded for not launching the missiles.
00:23:42 So in both cases, a single person stood
00:23:45 against the systems of superpowers
00:23:48 between us and nuclear annihilation.
00:23:50 So in general, we’re really bad
00:23:53 at building these types of things.
00:23:55 So what you look for instead is say,
00:23:57 can the system be self correcting?
00:23:59 It’s not about avoiding a problem.
00:24:01 It’s more about can the problem be resolved?
00:24:04 And that’s how nature engineers things.
00:24:06 It gives you an immune system.
00:24:07 It gives you the ability to heal.
00:24:09 If a rainforest has a fire or some catastrophic event,
00:24:13 the ecosystem will find a way to patch things up.
00:24:16 So it’s a better question of how do you align
00:24:18 the incentives over the longterm of a system
00:24:20 where all the actors within the system,
00:24:22 when an event occurs that disrupts it,
00:24:24 have an incentive to push it back
00:24:26 into a healthy, productive, useful state,
00:24:29 which is going back kind of to that complexity theory stuff
00:24:32 that we began with and a little bit about,
00:24:35 how do you handle modern economics?
00:24:37 Like for example, we knew this coming into the COVID crisis
00:24:41 that there would be catastrophic economic disruption
00:24:43 throughout the entire world.
00:24:45 In the developed world, it was print lots of money
00:24:48 and hope to God it works.
00:24:49 In the developing world is try not to starve to death.
00:24:52 Over 100 million people were pushed into acute starvation.
00:24:55 So acute hunger, it’s a terrible situation.
00:24:58 But every economist knew we were going into that.
00:25:00 So the question is how do you restart the system?
00:25:02 How do you realign the system and so forth
00:25:04 and make sure that it doesn’t collapse at some point.
00:25:08 So it’s an imperfect, inexact science.
00:25:11 And that’s actually one of the things
00:25:12 that makes our industry so much fun
00:25:14 is that these are kind of like micro experiments
00:25:16 for the macro.
00:25:18 In the years past, you never got a chance to experiment
00:25:22 with monetary policy.
00:25:23 I mean, it’s like every 20 years, 30 years,
00:25:25 you’d have some conference,
00:25:26 usually in a cool island like Jamaica
00:25:28 and be like, okay, let’s go talk about monetary policy
00:25:31 and like amend the Bretton Woods Agreement.
00:25:33 And these would be nation states, invitation only.
00:25:35 And now you have over 8,000 cryptocurrencies
00:25:37 floating around all with their own monetary policy
00:25:39 and their rules and it’s very Darwinian.
00:25:42 A lot are dying, some are succeeding.
00:25:44 Anomalies happen like Dogecoin and you say,
00:25:46 God, is this temporary, is this permanent?
00:25:48 Why doesn’t this horrible thing die?
00:25:51 And then other things you think
00:25:52 would be absolutely successful
00:25:54 and just take off and be in the top 10
00:25:56 don’t really get as much traction.
00:25:57 Like Al Grant is a great example of that.
00:26:00 I mean, Silvio, he’s an incredibly bright guy.
00:26:03 Every time I go to MIT, we have dinner
00:26:04 and his work is legendary
00:26:07 and it’s just beautiful and elegant
00:26:09 and he literally has all the people.
00:26:11 He went and hired Tal Robin
00:26:12 and she got at IBM Research and Craig Gentry,
00:26:16 the guy who did homomorphic encryption
00:26:17 under Dan Boneh is there.
00:26:18 There’s all these amazing people on that team
00:26:20 and they have money in the VCs.
00:26:22 So you’d say, okay, that’s a contender.
00:26:25 But if you look at market adoption,
00:26:27 Ethereum Classic sometimes is above it
00:26:30 and other things are above it.
00:26:31 And then there’s this weird Darwinian evolution produced
00:26:35 Dogecoin organism that’s just stomping all around.
00:26:38 Evolution doesn’t make sense.
00:26:40 Exactly, but maybe it’s worth the problem, not evolution,
00:26:43 because the market’s the market
00:26:44 and you can scream and cry and pout
00:26:48 and stamp your foot and say this makes no sense,
00:26:50 but that’s the way the world works.
00:26:52 There’s plenty of mountain climbers
00:26:54 that didn’t want gravity to apply to them
00:26:56 and it’s the same situation here.
00:26:58 There’s plenty of people in these marketplaces
00:27:00 that had the best of intentions, the best team,
00:27:02 the best technology, and for whatever reason,
00:27:04 they didn’t get that adoption.
00:27:06 So the question isn’t the local,
00:27:08 it should be the longterm and will the system over time
00:27:12 converge to a state that actually is useful
00:27:15 and meaningful to society and actually solve problems
00:27:17 for it and that’s what we try to figure out
00:27:20 is how do we perturb these things in a way
00:27:22 to kind of push them in that direction.
00:27:24 So before we go into this fascinating
00:27:27 Darwinian evolution of cryptocurrencies,
00:27:31 let me ask you sort of a basic programming question.
00:27:34 There’s a fascinating aspect to your work with Cardano
00:27:37 that use Haskell to build the infrastructure,
00:27:41 but even stepping back more, looking at this landscape,
00:27:44 another place where Darwinian evolution operates,
00:27:48 looking at this landscape of programming languages,
00:27:51 you as an engineer, you as a philosopher, both,
00:27:55 what programming languages do you think are interesting
00:27:58 and more practically, what programming languages,
00:28:01 if you were to advise like students today, should they learn?
00:28:05 Yeah, so there’s the pedagogy of learning how to program
00:28:08 and to express the theory of computer science.
00:28:11 Like you have to learn how to write algorithms,
00:28:12 you have to learn what data structures are,
00:28:14 you have to be able to do analysis of these things
00:28:16 and that probably the, I think the debate is over Python
00:28:21 is probably the best language or JavaScript
00:28:24 to get started with because they’re very useful,
00:28:26 the libraries are amazing,
00:28:27 there’s just tons of online materials,
00:28:29 even MIT is now teaching their introduction
00:28:32 to computer science in Python and they used to do Lisp,
00:28:35 I mean, these guys were hardcore.
00:28:37 I still love Lisp.
00:28:38 Oh man, it’s great, these are your father’s parentheses,
00:28:41 they’re elegant weapons from a time long ago.
00:28:44 But that’s a great starting point
00:28:46 and it’s not about falling in love with a language,
00:28:49 it’s just falling in love with computing,
00:28:50 it’s about falling in love with having a dialogue
00:28:53 with a computer and thinking about,
00:28:55 well, how would I solve that?
00:28:56 How would I interact with that?
00:28:57 What does this need to look like?
00:29:00 Functional programming is what we’ve chosen to use
00:29:02 for Cardano mostly because we’re living in the academic
00:29:06 world, we’ve written 105 papers and the problem is
00:29:08 you have to translate that work into code
00:29:11 and the gap between an imperative language
00:29:14 like a C++ or C and these academic rigorous papers
00:29:18 is extremely large and so there’s gonna be
00:29:20 a lot of semantical ambiguity between those two
00:29:23 and what I mean by that is that you might end up
00:29:26 implementing a wrong thing.
00:29:28 You might think that what you’ve built is the paper
00:29:31 but the computer’s not going to tell you that
00:29:33 because the paper’s written in prose
00:29:35 and maybe typed up in LaTeX or something
00:29:37 but there’s no proof chain, evidence chain
00:29:40 that you can show that there’s no ambiguity.
00:29:42 When you look at a functional language,
00:29:43 you’re a little closer to math and so as a consequence,
00:29:47 the translation of the papers that we spent
00:29:49 so damn long writing and writing proofs about
00:29:52 and so forth to code is much smaller.
00:29:55 Now the downside is these functional languages
00:29:57 tend to be a bit more academic and they tend to have
00:29:59 not necessarily the best Windows support
00:30:02 and the libraries aren’t so good
00:30:03 and also they tend to be a little slower
00:30:04 when compared as a whole on average
00:30:07 to languages like C for example.
00:30:10 So it’s really a question of okay,
00:30:11 what are you designing for for version one?
00:30:14 Are you designing for performance
00:30:16 and are you designing for developer accessibility
00:30:19 or are you designing for correctness
00:30:21 and are you designing for a high fidelity representation
00:30:26 of the protocol?
00:30:27 Okay, so Haskell was chosen as kind of the version one
00:30:32 because we knew that the kinds of people
00:30:34 who think about that are also the kinds of people
00:30:36 that would have an easy time reading a paper
00:30:38 like Ouroboros and working their way through all of this
00:30:41 and they would do a pretty good job
00:30:43 running a formal specification
00:30:45 and then translating that into running code.
00:30:47 Then once you have that, you have a blueprint
00:30:49 that you can actually reason about, maintain
00:30:52 and if you really wanted to,
00:30:53 you could then turn that into a Rust code base
00:30:55 or into a Java code base.
00:30:57 Going the other way around would be kind of pointless
00:31:00 and counterproductive.
00:31:01 The other side of it is that Haskell code
00:31:06 or functional code tends to be significantly more concise
00:31:09 and I actually have a real life example of that.
00:31:12 So if you take a look at Mantis,
00:31:14 we implemented a full Ethereum node in Scala.
00:31:17 It’s only about 14 or 15,000 lines of code
00:31:21 and you compare that with like C++ Bitcoin,
00:31:23 I think that’s 120, 150,000 lines of code.
00:31:26 So it’s almost 10 times smaller
00:31:28 and so less code, less to read
00:31:31 and you tend to read code significantly more
00:31:33 than you would read write code.
00:31:36 So it’s always an advantage for a maintenance,
00:31:39 understandability, documentation and other sort of things
00:31:42 when you have more concise code bases
00:31:45 and also it’s a lot easier for you to apply stronger tools
00:31:50 to a functional code base like static analysis
00:31:53 or property based testing or these types of things
00:31:55 than an imperative code base.
00:31:57 But the thing is, it’s almost like a religion
00:31:59 or language, it’s like saying,
00:32:01 French versus Russian versus English,
00:32:03 everybody has their adherence.
00:32:05 They say, oh, they have the best poetry here.
00:32:07 Russian, yeah, wins.
00:32:08 There you go, always a Russian.
00:32:10 Everybody has their favorite tools
00:32:11 and their favorite languages,
00:32:14 but it just comes down to what problems
00:32:15 are you trying to solve
00:32:16 and what problem domain do you live in?
00:32:18 If you’re inventing new protocols based on science,
00:32:21 you’re gonna take the time to write a paper,
00:32:23 go through the peer review process
00:32:25 as you’ve done personally,
00:32:26 you know how hard it can be to get into a conference
00:32:28 and go through that and get your ass kicked.
00:32:30 Then you also have to apply the exact same level of care
00:32:34 to the engineering side in terms of implementation of that
00:32:37 or else you will make a mistake
00:32:39 and that mistake will probably be an exploit in the system
00:32:41 that destroys the security properties of the system.
00:32:44 So we really had no choice
00:32:46 but to go to some notion of functional.
00:32:48 The question was, what’s the Goldilocks language?
00:32:50 Do you use a hybrid language like Scala and F Sharp
00:32:53 or Clojure where you still have some connection
00:32:56 to understandable things like.NET or the JVM?
00:33:00 Or do you go to an overly academic language like Idris
00:33:03 or Agda or, you know, Isabel?
00:33:06 And there you can really dial up the correctness
00:33:09 and write all kinds of crazy proofs.
00:33:10 But by the way, it’s like the seven people
00:33:12 who write your code, they go on vacation a lot,
00:33:15 you’ll never get anything done.
00:33:16 So Haskell kind of felt like a nice mill ground
00:33:19 between those two where if we needed to pull into the left,
00:33:22 we could, if you wanted to pull into the right,
00:33:24 you could as well.
00:33:25 That said, it’s really amazing to see
00:33:27 what the hybrid languages have done.
00:33:28 If I was a new student in computer science
00:33:30 and I said, you know, learn any language
00:33:32 to grow your career from,
00:33:34 Scala 3 is probably the language to go with.
00:33:37 Yeah, it’s great,
00:33:38 because it’s like you want it to be like Java, it’s Java.
00:33:41 And it looks kind of like a Java program.
00:33:42 You want it to be like Python and scripted
00:33:44 and you reuse a REPL, you can do that.
00:33:46 You want to go hardcore dot, you know,
00:33:50 dependent object types and do like weird proofs and stuff
00:33:53 and the functional, you do all that.
00:33:55 You have access to all of these things
00:33:56 and Martin Niederski is a brilliant guy.
00:33:58 He’s done some phenomenal work basically,
00:34:01 because he was one guy who created the JVM
00:34:03 and he’s worked on compilers for over 20 years.
00:34:06 He did a lot of really hardcore work
00:34:08 in trying to build a concise, nice, modern language
00:34:12 that does a little bit of everything.
00:34:13 And it’s got great applications in data science and AI.
00:34:17 It’s also heavily used in modern companies,
00:34:20 like Netflix uses Scala
00:34:21 for all of their microservice architecture.
00:34:23 Yeah, so that’s a great language and it’s easy to pick up
00:34:27 and it’s easy to hire people into it.
00:34:28 You just find these Eastern European guys
00:34:30 who were Java programmers for 10 years, 15 years,
00:34:32 they got tired of making $20 an hour,
00:34:34 so they picked up Scala so they can make $35 an hour
00:34:38 and they’re really good at it.
00:34:39 And that’s a great gateway drug
00:34:41 because you have like QuickCheck and Haskell,
00:34:43 you have ScalaCheck and Scala.
00:34:45 You can also do model checking.
00:34:47 You can also go and use a TLA spec
00:34:49 and make it work with Scala and so forth.
00:34:52 So it gets you a little bit of everything
00:34:54 and you can then move around that entire design space
00:34:58 in a beautiful way.
00:34:59 So the recommendation is maybe if you wanna go vanilla,
00:35:05 you go Python and JavaScript.
00:35:07 When you’re getting started.
00:35:08 It’s the getting started.
00:35:09 That’ll get you everything.
00:35:10 You can do web scrapers and anything.
00:35:11 It’s just fun.
00:35:12 All this experiment with drugs in undergrad,
00:35:14 this was where Scala 3 comes in, it’s a gateway drug
00:35:17 to then potentially more hardcore functional languages
00:35:19 like Haskell.
00:35:21 Do you think C and C++, C++ still has a role?
00:35:24 No, I think Rust is completely replaced, a need for them.
00:35:26 Go and Rust, those are the two twins of doom.
00:35:30 I mean, Google created Go just to get rid of C.
00:35:33 They hated C that much.
00:35:34 And then Rust is just a phenomenal language as well.
00:35:37 Hate can be a great motivator.
00:35:39 Let me ask a question from Reddit on this topic.
00:35:41 We’re going depth first today.
00:35:43 Sure.
00:35:45 As a developer, why should I be incentivized
00:35:47 to create Cardano based applications?
00:35:50 What is on the Cardano developer roadmap?
00:35:52 Any other language, I guess this is the key question
00:35:54 I wanna ask.
00:35:55 Any other language support other than Haskell?
00:35:58 The example this person gives is TypeScript,
00:36:01 Go, Java, Python, et cetera.
00:36:04 Also, have you considered a yearly conference
00:36:06 focused around developers?
00:36:07 Ha ha, yeah, we saw the Plutus Fest.
00:36:10 And we did the first one in 2018, 2019, I can’t remember.
00:36:14 And we were gonna do one last year, but then COVID hit.
00:36:17 So we’ll bring it back and we’ll probably do it annually
00:36:19 at the University of Wyoming for their hackathon there.
00:36:22 In fact, it just so happens that coincides
00:36:24 with the Goguen Summit.
00:36:24 So we’re doing that, I think the third week of September.
00:36:28 But yeah, it’s great to do an annual conference.
00:36:29 You can bring a lot of cool people together
00:36:31 and you can do hackathons and awards and so forth.
00:36:34 But to the question in particular,
00:36:36 Plutus is like any other language.
00:36:38 Plutus core, you can compile things into it.
00:36:41 So it’s entirely possible to write a Scala
00:36:43 to Plutus core compiler or TypeScript compiler
00:36:46 or something like that.
00:36:47 But I’m a big believer of separation of concerns
00:36:51 and we don’t live in a single chain model anymore.
00:36:54 So you have a situation where you probably wanna have
00:36:59 different execution environments and different chains.
00:37:01 So you have different virtual machines there.
00:37:03 And that’s why we work so closely
00:37:04 with the University of Illinois, Urbana Champaign,
00:37:06 Kagori Roshu’s team at runtime verification.
00:37:09 What they did is they said,
00:37:10 let’s start with something very familiar, LLVM,
00:37:12 which has been around for a really long time
00:37:14 and they happened to have created it there with Apple.
00:37:17 And let’s take that and translate that
00:37:19 into the blockchain space.
00:37:21 Okay, then once you have it,
00:37:23 then it’s very easy to modify compilers
00:37:26 of standard languages like the C’s and C++’s
00:37:28 and other things that do compile to LLVM already
00:37:31 and have them run there.
00:37:33 So that’s a different execution model
00:37:34 than what we tried to build for Plutus,
00:37:36 which focuses on correctness, okay?
00:37:38 So then all you have to really do is say,
00:37:40 can both of these models coexist within the same ecosystem?
00:37:44 Because then you kind of, and I did a video,
00:37:46 it was called like the island, the ocean, the pond.
00:37:48 And the basic idea was say,
00:37:49 you have an island where everything’s perfect.
00:37:51 Calypso lives there, life is great.
00:37:54 People feed you grapes every day,
00:37:56 but maybe you can’t do everything on the island.
00:37:58 And the ocean’s big, it has everything,
00:38:01 but the ocean’s got sea monsters and sharks
00:38:04 and Boaty McBoatface and all kinds of crazy stuff, right?
00:38:08 So that’s what Yella is about.
00:38:10 It’s basically this bring LLVM into our world.
00:38:12 And at some point in the next three to five year time
00:38:14 horizon, we can bring modern programming languages in,
00:38:18 but they’re gonna come in with all their flaws
00:38:20 and their warts and their problems.
00:38:22 And then the pond was the idea
00:38:25 of the Ethereum virtual machine.
00:38:26 There’s some network effect around it
00:38:28 and there’s some great tooling
00:38:29 that’s materialized and evolved.
00:38:31 And it’s not clear if that’s the standard yet,
00:38:33 or if like MySpace or Blackberry
00:38:35 or all of these other things, it’ll fade away.
00:38:37 Well, if it becomes the standard, okay,
00:38:39 don’t fight nature, just support it.
00:38:42 And the same thing that gives you the ability
00:38:44 to bolt on the LLVM will also give you the ability
00:38:48 to bolt on the EVM and they can run with their own models
00:38:51 and they’re encapsulated, bulkheaded, separated systems,
00:38:54 but you can move ADA applications,
00:38:57 information between those two systems.
00:38:59 And so your main chain will always stay
00:39:01 somewhat conservative and have the minimum viable amount
00:39:04 of expressiveness required on it
00:39:06 to do all kinds of interesting things.
00:39:08 And also for interoperability,
00:39:10 be able to talk to all kinds of interesting things,
00:39:12 but it’s not trying to be everything to everyone.
00:39:15 There’s never gonna be an ice cream store in the island.
00:39:18 You’ll have the grapes and the beautiful women,
00:39:19 but no ice cream.
00:39:21 Now you’re just like distracting me with the ice cream.
00:39:23 So just for, because we’ll throw around a bunch of terms,
00:39:26 for the record, what is Plutus?
00:39:28 So Plutus is a programming language.
00:39:29 It’s kind of a DSL that we built on top of Haskell.
00:39:33 And basically we wrote it after spending about three years
00:39:38 thinking about all smart contracts.
00:39:40 We were trying to figure out like,
00:39:41 what is the ideal language to express a smart contract?
00:39:44 And then we started thinking, well,
00:39:45 what is a smart contract?
00:39:46 Is it the whole application,
00:39:48 or is it just like a sub module within an application?
00:39:50 And usually it’s the latter more than the former.
00:39:54 You can build a self contained program like a script,
00:39:56 but usually what’s happening is you’ll have it
00:39:58 like a video game, let’s say World of Warcraft
00:40:00 or something like that.
00:40:01 You say, hey, maybe I wanna actually create gold
00:40:04 in World of Warcraft that’s actually a currency.
00:40:07 Okay, so I’m gonna issue a token.
00:40:09 Well, and then maybe I wanna create some mechanics
00:40:11 behind how people are gonna trade that amongst each other.
00:40:14 So that would be like a smart contract layer
00:40:16 and issue an asset.
00:40:17 So you have this centralized server running
00:40:20 and proprietary software controlled by a single company,
00:40:23 but then you’ve opened your application up
00:40:26 to a broader world.
00:40:27 And what we’ve done now is added a blockchain layer
00:40:29 and the blockchain handles the accounting of that asset
00:40:32 and the spending policy of that stuff.
00:40:34 So that is a much smaller program
00:40:37 than what Blizzard is doing with World of Warcraft.
00:40:40 So the point of Plutus was let’s create a language
00:40:43 where you can write these small to midsize programs
00:40:46 and have a high degree of confidence
00:40:48 that they behave with correctness
00:40:50 and also they give you deterministic results
00:40:52 on the consumption of resources.
00:40:54 You can run things locally
00:40:55 and you actually understand what it costs to run
00:40:57 and that doesn’t change when you deploy it on the system.
00:41:01 If you dial up the expressiveness of the system
00:41:03 and like Ethereum does
00:41:05 and these big mutable account systems,
00:41:07 the problem is you have to have global state.
00:41:09 So whatever you test locally
00:41:11 doesn’t actually necessarily translate
00:41:13 to what you’ve deployed, okay?
00:41:15 So we spent a long time asking
00:41:17 like where’s the Goldilocks zone?
00:41:19 Bitcoin script was too restrictive
00:41:22 and every single time Satoshi tried to dial it up,
00:41:24 it led to mega problems.
00:41:26 Like there was a beautiful thing
00:41:27 called the value overflow incident in 2010,
00:41:29 which led to the creation of billions of Bitcoin.
00:41:32 They had to quickly clean that up
00:41:33 and sweep it under the rug
00:41:34 and pretend like it didn’t exist.
00:41:36 But that was mostly because of an issue
00:41:38 with how the scripting language was implemented.
00:41:41 And when you look at Ethereum,
00:41:44 it’s like this pure game
00:41:45 of stomping down these skirmishers
00:41:48 where every update there’s something
00:41:49 they have to change or tune
00:41:50 and then it’s not clear how you shard such a model.
00:41:54 So we said, let’s build something
00:41:55 that’s in the middle of this
00:41:56 and that’s what Plutus basically is.
00:41:58 And it’s really designed to play very nicely
00:42:01 with off chain infrastructure
00:42:02 as much as on chain infrastructure.
00:42:04 So you can look at all those different examples,
00:42:06 whether it’s Wolfram wants to auction off
00:42:07 their universes or Blizzard wants
00:42:10 to issue an in game currency
00:42:12 or your Uber and you wanna start putting
00:42:14 peer to peer dynamics inside your system,
00:42:17 you’re gonna gracefully connect to that on chain code.
00:42:20 And it’s very clear how those two things connect together.
00:42:23 Just so happens Haskell’s really good for this.
00:42:25 They have template Haskell
00:42:26 and it makes it very easy
00:42:27 to embed domain specific languages.
00:42:30 And it makes it very easy to wire your Haskell code
00:42:32 onto off chain infrastructure.
00:42:34 So in the future,
00:42:35 you’ll be able to have your off chain run a node
00:42:37 or the Java virtual machine or a.NET application
00:42:40 and there’ll just be this beautiful interface
00:42:42 and then it can talk to all your on chain code
00:42:44 and that’s written in that DSL
00:42:45 and you have a high degree of assurance that it’s right.
00:42:49 Is there like a Hello World program in Plutus
00:42:52 that reveals the beauty of this balance
00:42:55 that you’re referring to?
00:42:56 Sort of simple but not too simple, the Einstein idea?
00:42:59 Yeah, so we did do our first Hello World program
00:43:02 actually today.
00:43:03 Yeah, I heard about this.
00:43:04 Yeah, but you know,
00:43:06 there you’d want to have the whole round trip.
00:43:08 So you’d like to have an interaction
00:43:10 and I think a video game would probably show it the best.
00:43:12 Like if we could re implement CryptoKitties
00:43:14 or something like that on it
00:43:15 and you have this off chain infrastructure
00:43:17 and you have your GUI in your front end,
00:43:18 it’s running on your phone or a browser
00:43:21 and most of that lives off chain.
00:43:22 And then, but your CryptoKitties,
00:43:24 they’d live on the blockchain.
00:43:26 The whole round trip end to end
00:43:27 with relatively low fees and low latency
00:43:30 and high availability of service, it never goes down.
00:43:34 That would probably be the best thing to do
00:43:35 and we’ll have something like that by August.
00:43:37 It’s pretty easy to build this stuff.
00:43:39 So what kind of off chain interactions
00:43:40 are supported with Plutus?
00:43:41 What are the limits you want to put on the thing
00:43:43 so it doesn’t get chaotic?
00:43:45 That’s the beautiful thing.
00:43:46 When you have a less expressive model on chain,
00:43:48 it means you can do anything you want off chain.
00:43:50 So you started talking about smart contracts,
00:43:52 but let’s zoom back out
00:43:55 and ask the big question here is what is a blockchain
00:43:59 and what is a cryptocurrency?
00:44:02 So a blockchain is just a ledger
00:44:04 and really it has three nice properties.
00:44:05 You’re timestamped, you’re immutable and auditable,
00:44:08 either in a global or a local sense.
00:44:10 And so there’s all kinds of things mankind has invented
00:44:13 where it’s really important
00:44:15 that when you put some information down,
00:44:17 it doesn’t change and other people can see it
00:44:21 and that you know when it was put down.
00:44:23 For example, a property ledger.
00:44:24 So when you buy land or you have rights associated with land
00:44:28 like mineral rights or water rights or these things,
00:44:31 you’d like to transitively see how does it go
00:44:33 from Alice to Bob to Charlie to Jim
00:44:35 and so forth and what was the state of these things
00:44:38 as they were transitioning?
00:44:39 So how much did they pay, when did it occur,
00:44:43 et cetera, et cetera, the metadata that follows that.
00:44:46 Okay, well normally these types of ledgers
00:44:48 are so important that they’re managed either by governments
00:44:51 or regulated entities.
00:44:52 And the issues are that while they can be efficient,
00:44:55 they’re generally brittle to political manipulation
00:44:58 and they’re brittle to geopolitical events.
00:45:02 For example, when Syria fell apart,
00:45:04 the very first thing ISIS did, they started saying,
00:45:06 hey, the ownership of the land,
00:45:08 it’s gonna fundamentally change.
00:45:10 We’ve decided that this guy over here
00:45:12 now owns all these things and then when peace comes,
00:45:15 how do you unwind all of that, put it all back together?
00:45:18 So the power of a blockchain is that it gives you
00:45:21 a transnational way of sorting all these details out,
00:45:25 putting all together in a place that you know
00:45:29 that even if it’s inconvenient to a very powerful actor,
00:45:33 that it will still stay preserved.
00:45:35 This is an asymmetry we haven’t had as a society.
00:45:38 Usually kings and empires,
00:45:40 they have the ability to decide what’s true.
00:45:43 And then suddenly you have this asymmetrical thing
00:45:45 that is above them, kind of like a synthetic laws of physics
00:45:49 and once something goes in there,
00:45:50 you know that that’s there.
00:45:52 Okay, so that’s the first part of it.
00:45:54 The second part of it is that it’s auditable,
00:45:59 meaning that instead of saying only the high cleric
00:46:02 or the president or some very special club of people
00:46:07 get to see what’s going on,
00:46:08 suddenly now all the people can actually see
00:46:11 who owns what where.
00:46:13 Like imagine a tax system where the public club
00:46:16 just leaked the taxes of all these different billionaires
00:46:19 and said, well, how much do they make
00:46:20 and how much do they pay?
00:46:21 Well, imagine a tax system where that’s just done by default
00:46:24 or other social systems where this type of information
00:46:27 is put in by default.
00:46:29 So it’s tremendously useful, this type of structure
00:46:32 and all kinds of things, medical records, supply chains,
00:46:35 just a good thought experiment is I travel a lot,
00:46:38 I’ve been to 52 countries in the last five years.
00:46:41 Imagine if I got sick in Zimbabwe,
00:46:43 I get hit by a car or something and I’m unconscious
00:46:46 and a Zimbabwean doctor calls my doctor in Colorado
00:46:48 and says, hey, I need all Charles’s medical records.
00:46:51 He’s unconscious right now, but I need it to treat him
00:46:54 because he’s quite ill.
00:46:56 They’d say, who is this person in Zimbabwe?
00:46:58 I don’t know you, I can’t give you his records,
00:47:00 I need his consent.
00:47:01 Oh no, he’s unconscious in the hospital, I can’t do it.
00:47:04 Well, a broker system that would allow the movement
00:47:06 of medical records would be an example
00:47:07 of what a blockchain could potentially do
00:47:09 in the foreseeable future.
00:47:10 Cryptocurrency is just an application
00:47:12 that runs on top of blockchain
00:47:14 because it turns out that when you issue property,
00:47:16 you also can issue tokens of value
00:47:18 and then you could have a monetary policy,
00:47:20 it could be inflationary or deflationary,
00:47:22 you know, demurrage where it decays over time
00:47:25 or whatever have you.
00:47:27 And the very same mechanics that would ensure
00:47:29 your property records are secure,
00:47:31 your medical record access is secure,
00:47:33 could also be applied for the ownership
00:47:35 of the cryptocurrency.
00:47:36 And again, you can either be completely transparent
00:47:38 and everybody can see what everybody owns
00:47:40 and that’s what Bitcoin does,
00:47:41 or you can be as opaque as you seek to be,
00:47:44 that’s what Zcash basically attempts to do.
00:47:46 It says, hey, let’s keep these things
00:47:47 as private as possible.
00:47:49 But they have relatively the same mechanics
00:47:50 in terms of those properties of auditability
00:47:52 and timestamping and immutability.
00:47:54 You know things won’t be reversed,
00:47:56 you know, that people aren’t gonna manipulate
00:47:57 the timestamps and you can audit at least enough
00:48:01 to know that the ownership is right.
00:48:03 But the way, if you think about physics and the universe,
00:48:06 the universe has figured out a way
00:48:07 to update the ledger of physics
00:48:10 in a way where like a lot of people can be updating it
00:48:13 and it stays consistent.
00:48:16 Is there something you can say about the task
00:48:19 of updating the ledger when a bunch of people
00:48:21 are trying to do it or a bunch of entities
00:48:23 are trying to do it?
00:48:24 Oh yeah, that’s the whole point of a consensus algorithm.
00:48:26 So whatever ledger you’re running,
00:48:28 there has to be some mechanism to decide who’s in charge.
00:48:32 And that’s what proof of work does
00:48:33 and proof of stake does and all these other systems.
00:48:35 And you break them down to basically three steps.
00:48:37 And so we’ll use Eve for kind of step number one.
00:48:40 Hi, Eve, how are you doing?
00:48:42 And we’re gonna use Wally for step number two.
00:48:44 And I need the monkey, give me the monkey.
00:48:47 What’s the monkey’s name?
00:48:49 Daisy.
00:48:49 Daisy the monkey, okay.
00:48:50 I like Daisy.
00:48:52 Daisy is a very confused monkey.
00:48:54 It’s pondering its own mortality.
00:48:56 Right.
00:48:57 And so anyway, the first step is all about
00:49:00 basically deciding who’s in charge for that moment.
00:49:03 So blockchain is just a sequence of events.
00:49:05 The heart has to beat, the metronome has to click.
00:49:08 So somebody has to be in charge.
00:49:09 And so generally you have this notion of a resource.
00:49:12 So there’s some pool of resource out there
00:49:14 and it can be a token.
00:49:15 And in that case, it’s a plutocratic system
00:49:17 and that’s what proof of stake does
00:49:18 or it can be computation, but there can be other resources.
00:49:21 But computation is what proof of work does.
00:49:23 And so you make so many hashes
00:49:25 and then eventually somebody wins.
00:49:27 And that person who wins is now the person
00:49:29 who basically gets to decide the order of transactions
00:49:32 and put them all together
00:49:33 from their perspective in the system.
00:49:35 Then once that person wins, they’ll make the block.
00:49:37 That’s step two.
00:49:38 And after it’s made, transmit it
00:49:41 and it gets validated and accepted.
00:49:43 So actually it’s quite fortuitous
00:49:44 you have the magnifying glass
00:49:45 because at this stage people are trying to decide
00:49:48 is what I’m looking at correct or not.
00:49:51 Now, there are other ways to potentially conceive of this,
00:49:54 but this particular model gives you a kind of a way
00:49:57 of thinking of all consensus algorithms in one setting.
00:50:02 You can be Algorand, you can be a classic BFT protocol,
00:50:06 you can be Paxos, you can be Raft,
00:50:08 you can be proof of work, you can be proof of stake.
00:50:10 It’s always the same idea.
00:50:12 You have to find someone or some group to be in charge.
00:50:15 They’ll reach a consensus on order.
00:50:18 They have to then do some work,
00:50:21 change the state of the system, update it,
00:50:23 and then the network has to accept that that’s valid.
00:50:26 So even if this process works well,
00:50:28 this side will say,
00:50:29 oh, you created a Bitcoin at a thin air,
00:50:31 you’re not allowed to do that.
00:50:32 So that’s rejected.
00:50:33 So there’s checks and balances and guards all the way through.
00:50:36 There’s a meta question of fairness in all of this.
00:50:39 So the proof of work people, they’re kind of a cult
00:50:42 and they say that this is the only truth
00:50:44 and everything out here,
00:50:46 any other resource is not legitimate or valid.
00:50:49 And there’s not a lot of evidence to that,
00:50:51 but that’s what they believe.
00:50:52 The proof of stake people,
00:50:53 the downside and weakness they have
00:50:55 is it’s a plutocratic model.
00:50:57 The more ownership of the system you have,
00:50:59 the more control you have over that system.
00:51:01 And it suffers from the same thing
00:51:03 that shareholder models suffer from,
00:51:04 whereas you may maximize short term gain
00:51:07 over the long term viability of the system.
00:51:09 So a really cool question is,
00:51:11 can you build systems that are multi resource?
00:51:14 So instead of just pulling from one resource
00:51:16 to select who wins,
00:51:18 this 25% of the time and maybe this 25%, you can do that.
00:51:22 In fact, the cryptocurrency space did that a long time ago.
00:51:25 There was a cryptocurrency called Peercoin in 2011,
00:51:27 and it was a hybrid proof of work proof of stake.
00:51:30 So some of the blocks were made
00:51:31 with the token ownership distribution
00:51:34 and some of the blocks were made with proof of work,
00:51:36 but you could keep adding.
00:51:38 You could put in like, hey, I want hard disk in my thing.
00:51:41 You can put Permacoin in or something like that.
00:51:43 So it created incentive for hard drives.
00:51:45 And then you could say, oh no,
00:51:45 I want to do like a human system, like a proof of merit.
00:51:48 Oh my God, now we’re up to four.
00:51:50 And you just keep adding.
00:51:51 And each of these pools will have different adherence
00:51:54 and actors, and then you can actually balance out
00:51:56 the whole thing.
00:51:57 So as opposed to having one cult, you have many cults.
00:51:59 Exactly. And they argue.
00:52:01 And the cults argue with each other
00:52:02 and we call that a government.
00:52:03 By the way, not all cults are bad.
00:52:05 Physics is a cult too.
00:52:06 And it’s sometimes bad.
00:52:09 It’s honest at least.
00:52:10 Nature is a cult.
00:52:12 Nature is metal, I saw it on Instagram.
00:52:15 So that’s really the crux of it.
00:52:17 You have a ledger and the ledger is just all about saying,
00:52:20 hey, we need to put some stuff in here.
00:52:21 And once it’s put in here, you can’t turn it back.
00:52:24 And you know when it was put in and everybody can see it
00:52:27 or some group can see it.
00:52:29 And then you need to pick somebody to modify that.
00:52:31 So all this chaos will happen.
00:52:33 All these transactions are all around the world
00:52:35 and our perception of them are different.
00:52:37 There’s a beautiful paper from Lamport
00:52:38 that kind of talks about this from the 70s.
00:52:40 It’s like one of the most classic papers ever
00:52:43 in computer science.
00:52:44 I think it’s been cited like 50,000 times
00:52:46 or something like that.
00:52:47 It’s a crazy paper.
00:52:48 But basically you have to figure out,
00:52:50 okay, well, somebody has to be in charge.
00:52:51 Some group has to be in charge.
00:52:53 And you can do it with a meritocratic,
00:52:55 hashocratic computation thing.
00:52:58 You can say, well, if you have coins 25% of supply,
00:53:00 25% of the time on average,
00:53:03 you’ll be selected to have the right to do this
00:53:04 or give it to somebody else.
00:53:06 Or you could search for other resources.
00:53:07 And they can even be human resources,
00:53:09 like some notion of merit or social benefit.
00:53:12 Maybe you get a token for that
00:53:13 and you can weight it with these other systems.
00:53:15 And that’s where kind of where everything’s going.
00:53:18 We’re getting to a point where we’ve really optimized
00:53:21 all the properties here.
00:53:22 We’ve proven all these nice things about it.
00:53:24 And there’s a lot of competition
00:53:25 to basically build like the perfect proof of stake system,
00:53:28 whether you’re Polkadot or Algorand
00:53:30 or any of these other guys.
00:53:32 But now the next step is say, well,
00:53:34 why don’t we just have one?
00:53:36 We should have multiple resources.
00:53:38 And the point is each of these
00:53:40 has different trade off profiles.
00:53:42 And so they balance each other
00:53:43 and you end up building a much more resilient system.
00:53:45 So it’s not winner take all with one particular demand.
00:53:49 Okay, so there’s a million questions
00:53:50 that spring up right there.
00:53:52 But first linger on this topic and say,
00:53:54 what is proof of work?
00:53:55 What is proof of stake?
00:53:56 Just zooming in on each of those.
00:53:59 And what are the differences?
00:54:01 Okay, so they all have the same three properties
00:54:03 of pick someone in charge, do something and validate it.
00:54:06 The difference is that the picking mechanism for proof
00:54:09 of work is you have to solve a puzzle.
00:54:11 So it’s basically like buying lottery tickets
00:54:13 and you can buy a certain amount every second
00:54:16 with your computing devices.
00:54:18 And some of them are ASIC resistant.
00:54:19 So you run them on like a laptop or a GPU.
00:54:22 And some of them are you specialized hardware
00:54:24 that you have to either manufacturer
00:54:26 or buy from someone who sells it to you.
00:54:28 And that’s just how many tickets per second you can get.
00:54:31 And eventually you hit those magic numbers.
00:54:32 When you do, it means you have the right to make the block
00:54:36 and generally you bundle the block making
00:54:38 with the proof of work system.
00:54:39 Now you can do this looking for a single
00:54:43 or you can do this to actually shard it
00:54:44 and look for multiple block makers at the same time.
00:54:47 So there are sharded proof of work protocols
00:54:49 like Prism is an example of that.
00:54:50 And actually Ethereum got started this way
00:54:53 with Spectre and Ghost and Phantom,
00:54:56 the Aviz Ahar’s work and Yonatan Sonlopinsky.
00:54:59 But the basic idea is you pick some collection of people,
00:55:02 they make some collection of things
00:55:03 and there’s some way to sort it all out,
00:55:04 serialize it and prevent double spends, great.
00:55:07 Proof of stake is the same, but it’s a synthetic resource.
00:55:11 So instead of doing things, they say,
00:55:13 well, if you had 25% of the hash power on average
00:55:15 over a long period of time,
00:55:17 you’d probably win 25% of the time.
00:55:19 Well, why don’t we just introduce some randomness in
00:55:21 from some source and then 25% of the time on average
00:55:24 over a long period of time, you’ll win.
00:55:26 So it’s a synthetic resource,
00:55:28 but you still have to do the other two things.
00:55:30 You still have to make the block
00:55:31 and you still have to validate the block.
00:55:33 The big difference is this step in the proof of work world
00:55:36 is horrendously expensive.
00:55:38 You use more energy than the nation of Switzerland.
00:55:41 And the problem with that is that you have less resources
00:55:43 for the other two.
00:55:45 And the other problem with that is that
00:55:46 if this is horrendously expensive,
00:55:48 you have an economy of scale kick in.
00:55:50 So what ends up happening is the system becomes
00:55:52 less decentralized over time
00:55:54 because you have these vertically integrated operations.
00:55:56 I mean, not everybody can go build a mining facility
00:55:59 on a volcano in El Salvador.
00:56:00 Not everybody can go to Mongolia
00:56:02 and set up a five gigawatt power plant
00:56:05 and a huge data thing.
00:56:06 Not everybody has access to the patented basics
00:56:08 that people produce.
00:56:10 Because what if I don’t sell it to you
00:56:11 and I have the patent on it?
00:56:12 Or what if I control the supply chain for these things?
00:56:15 So you’ll end up having centralization around maybe 10
00:56:18 or five major operations as we’ve seen historically
00:56:22 with proof of work.
00:56:23 And that means you end up having like a ruling class
00:56:27 of a mining oligarchy in the system.
00:56:29 Proof of stake, if you design the parameters correctly,
00:56:32 you actually get more decentralized over time
00:56:34 because as the currency goes up in value,
00:56:37 the distribution of the currency
00:56:38 tends to get more egalitarian.
00:56:43 For example, Bill Gates, when he started Microsoft,
00:56:45 he had 64% of the shares.
00:56:47 Now he has less than 5% of the shares.
00:56:49 So this founder drift over time,
00:56:52 as the value goes up, divestment occurs,
00:56:54 you have more and more and more people coming in.
00:56:56 That means there’s more people
00:56:57 who can participate in the consensus.
00:56:59 You can even tune economic parameters.
00:57:01 And this is what we did with Cardano and Ouroboros.
00:57:03 We created this concept of K in the system
00:57:06 and it’s just a parameter.
00:57:07 And it’s like a forcing factor
00:57:09 that tends to accumulate a certain amount of stake pools.
00:57:12 So you can set it to 200 and then 500 and 1000 and so forth.
00:57:16 But the basic idea is as the price of ADA goes up,
00:57:19 you make K larger and then you end up in practical terms
00:57:23 having a larger and larger set of actors making blocks
00:57:27 that are unique and distinct.
00:57:28 And the other good thing is this is a virtual resource
00:57:31 instead of a physical resource,
00:57:32 which means it’s portable by the click of a button.
00:57:35 So let’s say China says, mining is bad,
00:57:37 we’re gonna shut it all down.
00:57:39 And it looks like they’re moving in that direction.
00:57:40 You have all these people in WeChat,
00:57:42 just like trying to sell miners
00:57:44 or trying to figure out how the hell do I move miners,
00:57:46 because they have these huge data centers
00:57:48 they’ve constructed.
00:57:49 You can’t exactly go and grab a server
00:57:50 and like take it with you, it’s huge.
00:57:52 It’s a lot of work.
00:57:53 And if the government sees it,
00:57:54 well, it’s their property now.
00:57:56 A virtual resource, you can click a button
00:57:57 and redeploy it to a different jurisdiction.
00:58:00 So to me, for a virtual asset,
00:58:03 it makes a lot more sense to try to tie your security
00:58:06 to something endogenous, something within the system,
00:58:08 because it’s just like the asset,
00:58:11 it can move anywhere at a click of a button
00:58:13 and human beings have a much harder time
00:58:15 attacking something like that.
00:58:16 Well, so people, maybe you could sort of play devil’s advocate
00:58:19 and say, what is the strength of proof of work system?
00:58:21 Because some people would argue that proof of work has,
00:58:25 because it’s outside the system,
00:58:28 it’s tied to physical resources, it’s more secure.
00:58:31 It’s less prone to attack by large groups of people.
00:58:36 Yeah, that’s a great question.
00:58:37 And the first question we had was,
00:58:39 could proof of stake actually work or not?
00:58:41 So the problem was that the engineers kind of led
00:58:44 when the science should have led.
00:58:46 And so there were all these POS protocols
00:58:48 that came out in the early 2010s,
00:58:50 like Peercoin was the first and then NXT and others came out.
00:58:54 And there they had suffered from things
00:58:55 like the random number generation wasn’t good.
00:58:57 They had grinding attacks and nothing at stake
00:58:59 and all these other things.
00:59:00 And there’s a lot of beautiful properties
00:59:02 for proof of work from a theoretical sense.
00:59:04 We even wrote a paper called GKL,
00:59:07 named after the authors, Juan Gray, Niko Leonardis
00:59:10 and Agelos Gassis, our chief scientist.
00:59:13 It’s got 1100 citations now and it was published in 2015.
00:59:17 But basically all it did is just model the blockchain
00:59:19 and created some security properties for it.
00:59:21 And then it started talking about,
00:59:22 well, what does proof of work actually do for you?
00:59:24 And it turns out it does a lot.
00:59:26 It’s an asynchronous system.
00:59:28 You can bootstrap from Genesis.
00:59:29 So if Eve joins the network and Wally joins the network
00:59:34 and Daisy joined the network,
00:59:36 then you give them some different chains,
00:59:39 like five or 10 different chains.
00:59:41 They can run a calculation
00:59:42 and they will always pick the longest chain,
00:59:45 the heaviest chain inside the system.
00:59:47 That’s a great property of proof of work.
00:59:49 Until we published Ouroboros Genesis in 2018,
00:59:52 you actually needed to solve that in proof of stake
00:59:54 with a trusted checkpoint.
00:59:56 So some actor had to be observing,
00:59:58 watching the whole thing and creating checkpoints.
01:00:00 And then when new people joined in,
01:00:02 they would only be able to distinguish between a chain
01:00:05 based upon a checkpoint telling them that.
01:00:07 So you have to do a lot of really wonky, crazy math
01:00:10 to show and create this notion of like density
01:00:12 to be able to show that that’s possible.
01:00:14 But there’s a lot of properties of proof of work
01:00:16 that were super hard to replicate and emulate
01:00:19 in the proof of stake world.
01:00:20 Macaulay kind of revolutionized the whole VRF thing.
01:00:24 There was a group out of Cornell
01:00:26 that talked about better network conditions.
01:00:28 They wrote a paper called Sleepy.
01:00:30 We did Genesis.
01:00:31 We also did the very first proofably secure protocol,
01:00:34 but that was six years of work and like 12 papers.
01:00:37 And it’s still not done.
01:00:38 There’s still a few polishing things
01:00:39 that have to be cleaned up
01:00:41 because this is a physical resource
01:00:44 and there’s something there.
01:00:46 But there’s a flaw to proof of work
01:00:48 that is a little problematic.
01:00:49 It’s a winner take all type of a system.
01:00:51 So maximalism is kind of philosophically
01:00:54 and computationally built into it.
01:00:56 Let’s say you have two proof of work systems
01:00:59 and they have roughly the same market cap and hash rate.
01:01:03 And they use the same algorithm.
01:01:05 Then the problem is if the miner comes in
01:01:07 and let’s say the miner has enough resources
01:01:09 to have 51% for any of these chains,
01:01:13 they actually have a perverse incentive
01:01:15 to come and destroy one chain
01:01:18 and short sell the asset, it’s called a gold finger attack,
01:01:21 and then go mine the other asset
01:01:23 because they’re not bound to that asset.
01:01:25 They’re not loyal to it.
01:01:26 And they can make just as much profit mining this
01:01:29 as they can make mining the other system
01:01:31 and the markets allow them to profit
01:01:33 from the destruction of a system.
01:01:35 So that’s something that proof of stake doesn’t suffer from
01:01:37 because the only way you can participate
01:01:39 in a proof of stake system
01:01:40 is you have to actually own equity
01:01:42 and you have to have ownership in that system.
01:01:44 So if you go and destroy Daisy’s chain, it would just be
01:01:48 a net loss for the most part,
01:01:50 unless you have really messed up markets
01:01:51 or something like that.
01:01:53 So there’s always trade offs and all these things.
01:01:55 And this is why I like this concept of going one to end
01:01:57 and having multiple resources,
01:01:58 because why not have proof of work
01:02:00 and proof of stake together?
01:02:02 If the proof of work is useful, not wasted computation,
01:02:05 and why not add other things
01:02:06 like create incentives for network relay?
01:02:08 Right now there’s no incentives in the system
01:02:10 for you to run peer to peer nodes and the shared data.
01:02:12 Right now it’s not a problem,
01:02:13 but if you’re running like Amazon web services
01:02:16 level of bandwidth,
01:02:17 it could cost you like $5,000 a month in bandwidth
01:02:19 just to run a full node or something like that.
01:02:21 No one would do it.
01:02:22 So then your system will centralize along the weakest link,
01:02:26 whether it be the storage layer, the computation layer,
01:02:28 or the network layer of the system.
01:02:31 So if you can incentivize the resources differently,
01:02:33 then you’ll be in a beautiful position
01:02:35 where you end up having a resilient system
01:02:37 that pays its own bills.
01:02:39 So how does Cardano solve the consensus problem?
01:02:43 Do you tend to eventually wanting to solve it
01:02:46 in the hybrid approach of proof of stake and proof of work?
01:02:50 Yeah, this was a philosophical difference
01:02:52 between Vitalik and myself.
01:02:54 The problem with the people in the Ethereum side
01:02:56 is they’re really bright.
01:02:57 And these really bright people,
01:02:58 what they do is they try to do everything all at once
01:03:01 because they’re really, really smart
01:03:03 and they keep going until they run up against the wall
01:03:05 and they realize the problem is a lot harder.
01:03:07 If you’re more experienced,
01:03:09 and that’s why we brought in proper academics
01:03:11 like Aggelos and others, because they’ve been beaten up
01:03:13 through life, Aggelos worked with David Chom
01:03:16 and these other, it’s really hard work with those guys.
01:03:19 And they’d already been humiliated and yelled at
01:03:22 and had chalk thrown at them and all that stuff.
01:03:24 And so they were humble enough to say,
01:03:25 I’m not smart enough to solve the big problem.
01:03:27 So don’t even try.
01:03:28 What you do is you decompose it and you say, okay,
01:03:30 what’s the first problem to solve in a chain of problems
01:03:33 that you can compose your way up to a working system?
01:03:37 And once you get far enough along,
01:03:39 you have something that’s pretty good
01:03:41 and then you have an obvious path forward
01:03:43 of how do you iterate and improve that system?
01:03:45 That’s why we started with GKL 15,
01:03:47 because it was just saying,
01:03:48 we don’t know what a fucking blockchain is.
01:03:50 This is, what is this thing, right?
01:03:52 What’s the security properties of this stuff?
01:03:54 Like, what did we really mean?
01:03:55 Then we did Ouroboros Classic,
01:03:57 the original Ouroboros protocol in 2017.
01:03:59 And that protocol was like a synchronous system
01:04:02 and it assumed the nodes were always on and it worked,
01:04:05 but it was useless because that’s not real life.
01:04:08 Then Prowse came out and then suddenly we relaxed things.
01:04:10 So these are all, by the way,
01:04:11 names for consensus algorithms.
01:04:12 Yeah, papers that we published
01:04:14 and they were all peer reviewed.
01:04:15 Like GKL was EuroCrypt.
01:04:17 That’s a very hard conference to get into.
01:04:19 And Ouroboros Classic was Crypto
01:04:20 and Prowse was EuroCrypt and Genesis was CCS.
01:04:24 So basically every step of the way
01:04:27 was first an academic validation
01:04:28 that there was some merit to the work that was done.
01:04:31 Second, it solved a particular class of problems,
01:04:34 either showing the feasibility of the entire problem.
01:04:36 Because when I said, let’s do the model first
01:04:38 because let’s see if we can do an FLP thing.
01:04:40 Let’s see if we can get them a possibility theorem.
01:04:42 That’s great because you’re done.
01:04:43 It’s like those short math papers
01:04:45 were like, I found a counterexample.
01:04:47 It’s like, oh, okay, this whole thing has fallen apart
01:04:49 because you have a two line proof, thank you.
01:04:51 So that’s what we were looking for
01:04:53 in the beginning of the agenda was,
01:04:54 let’s either prove it’s possible in a straw man case
01:04:57 or show that there exists an impossibility result,
01:05:00 in which case we can just abandon the entire inquiry.
01:05:02 Proof of stake is impossible.
01:05:03 And then once you’ve gotten past that threshold,
01:05:06 it goes from theory to practicality.
01:05:08 What actual network conditions are you looking at?
01:05:10 Are you okay with living with an external clock
01:05:13 or do you wanna build time from within?
01:05:15 How are you generating random numbers, et cetera, et cetera.
01:05:18 And every step of the way, each paper,
01:05:19 you’re solving one particular class of problems.
01:05:22 With Prism, it said, probably shouldn’t know
01:05:24 ahead of time who Eve is.
01:05:26 You probably shouldn’t know who’s making those blocks.
01:05:28 That should be something after the fact.
01:05:30 But if you know ahead of time, you can attack them.
01:05:32 You can DDoS them, you cause all kinds of problems.
01:05:35 So adaptive security, also we moved from an MPC,
01:05:40 random number generation, which was great,
01:05:42 but very heavy and very slow.
01:05:44 And you can’t scale to large amounts of people
01:05:46 to a VRF based system, which is super fast,
01:05:48 but a little dirtier.
01:05:49 Because Algorand actually did some great work there.
01:05:52 There was some good knowledge there.
01:05:53 What are the really hard problems that you,
01:05:54 maybe if you just linger on a little bit,
01:05:56 what are some of the really hard problems
01:05:58 you have to solve along this chain of papers, ideas,
01:06:01 the evolution of the consensus algorithm?
01:06:03 Yeah, not only are they really hard problems,
01:06:05 they actually require different cryptographers
01:06:06 because you’re moving from mathematician style cryptographers
01:06:10 like the Neil Koblitz’s and the Addie Shamir’s
01:06:12 and the people that like start as proper mathematicians.
01:06:14 They really love theory and that’s their thing.
01:06:17 And the proofs are dense and they’re thick
01:06:19 and they’re beautiful to practical applied work
01:06:23 where you’re saying, okay,
01:06:24 now this is something an engineer can look at
01:06:27 and say, I know how to build that.
01:06:28 I know how to think about that.
01:06:30 So that transition from GKL to Ouroboros Classic
01:06:34 to Prowse, I’d say the biggest leap was Classic to Prowse
01:06:38 because that was going from a system
01:06:40 that would only work in a consortium chain like Fabric
01:06:43 to a system that would actually work and is working.
01:06:45 That’s what’s implementing Cardano today,
01:06:47 50 billion dollar cryptocurrency and all these people.
01:06:50 That was a huge leap, but that paper alone wasn’t enough.
01:06:54 We also had to layer on the economic model
01:06:56 because we said, well, hang on a second here.
01:06:58 Not everybody’s gonna be online all the time
01:07:01 to be available to make a block.
01:07:03 So you need some notion of delegation.
01:07:05 The minute you have a notion of delegation,
01:07:06 you have these stake pools, what the hell does that mean?
01:07:09 And so this is a beautiful kind of interdisciplinary notion
01:07:12 that layers computer science and biology together.
01:07:16 And minute that complexity starts going up,
01:07:18 you start seeing cell specialization.
01:07:20 So you go from single cell organisms to organisms
01:07:23 where you have eyeballs and brains and hearts
01:07:26 and each of these tissues do different things.
01:07:28 Well, analogously, complex distributed systems
01:07:30 start getting specialization.
01:07:32 You move from the single cell thing, Bitcoin,
01:07:34 where everything’s a full node,
01:07:35 they all have the same rights and responsibilities,
01:07:37 a lot of homogeneity in that system,
01:07:39 but you’re only as good as your weakest link,
01:07:41 you’re only as capable as whatever the basic cell can do
01:07:45 to a specialized system where you start having
01:07:47 these actors in the system that are actually
01:07:49 a little different than the other actors.
01:07:51 So you introduce this concept of the stake pool
01:07:53 and suddenly now you have this actor
01:07:54 where you’re probably gonna be online 24 seven.
01:07:57 You’re probably gonna have extra relay infrastructure.
01:08:00 There’s a trust relationship where you don’t own the ADA,
01:08:03 but you have a right to use it for something.
01:08:05 And a person’s made that choice to endow you with that.
01:08:08 The minute that you introduce specialization though,
01:08:10 the system gets more complicated,
01:08:12 the game theory gets more complicated.
01:08:14 And then you start having to think really deeply
01:08:16 and carefully about, okay, well,
01:08:18 can this now introduce a new attack vector
01:08:20 that we didn’t have before?
01:08:22 So that leap from classic to Prowse
01:08:24 and adding in stake pools and figuring out
01:08:26 how to handle the game theory there was exceedingly hard.
01:08:29 It took two years to do that.
01:08:30 So stake pools allow for multiple parties
01:08:33 to delegate their staking capabilities to others.
01:08:36 Can you describe a little bit how this works?
01:08:38 It’s kind of fascinating.
01:08:39 It’s a super simple concept.
01:08:40 So you register a pool and then the pool is there
01:08:42 and basically they advertise
01:08:46 and they’re actually registered on chain with a certificate.
01:08:48 And then in the wallet software itself,
01:08:50 you can see all of the pools that have registered.
01:08:53 There’s over 3000 of them now inside the system.
01:08:56 And then you can click a little tile
01:08:57 and it shows you all the metadata that’s in the certificate
01:09:00 and says, hey, I have my own pool.
01:09:02 It’s called rats, king of the rats.
01:09:05 So you can see all this stuff that’s described there
01:09:07 and pools have an operating fee
01:09:08 cause they’re like a business.
01:09:09 And they say, well, if you delegate to me,
01:09:11 I’ll charge this much.
01:09:13 So if you get like a hundred bucks in rewards,
01:09:15 I’ll give you 90 and I’ll take 10 or something like that.
01:09:19 And then you make your decision
01:09:20 and whichever one you select, you click delegate,
01:09:23 push the button and then you have now given
01:09:26 your staking rights to them until revoked.
01:09:29 Okay, so it lives there.
01:09:30 And then the stake pools weight in the system
01:09:33 is proportional to the amount of stake
01:09:35 that they have delegated to them.
01:09:37 And then we have this other limiting factor K,
01:09:39 which says that you get diminishing returns
01:09:41 with the more stake you have.
01:09:42 So it’s kind of like an S function.
01:09:44 So you kind of go up and up and then eventually caps
01:09:46 and then at some point you get no rewards
01:09:48 beyond a certain threshold.
01:09:49 So there’s an incentive to split pools
01:09:51 to different owners after some point.
01:09:54 Yeah, and so that’s a complex thing
01:09:57 and you have to actually model the game theory out
01:09:59 to understand where those parameters should be set.
01:10:01 And we didn’t know how to do that.
01:10:02 So what we did is we bought talent.
01:10:04 We went to Oxford and we hired this guy
01:10:06 named Elias Kasupis, he’s an algorithmic game theorist.
01:10:08 We said, hey, would you like to do some game theory work
01:10:11 in crypto?
01:10:12 And he’s like, that sounds fun.
01:10:13 So he spent a year and a half,
01:10:15 we built all these beautiful models
01:10:16 and we kind of figured out what those curves
01:10:18 needed to look like.
01:10:19 So figure out like the S curve that would result
01:10:20 in a nice distribution of responsibility.
01:10:22 So not everybody delegates to the king of the rats.
01:10:26 Exactly.
01:10:27 How does it feel to be royalty, by the way?
01:10:28 It’s not a very impressive kingdom,
01:10:31 but you’re nevertheless a king.
01:10:33 I’ll take it, because I think it’s the kindest thing
01:10:35 people call me in this space.
01:10:37 Yeah, people love you.
01:10:39 So, okay, so that, I mean, so is that,
01:10:41 would you say a solved problem?
01:10:43 The game theory of stake pools?
01:10:45 No, it’s the starting, and I was getting back
01:10:48 to my original point that you build things in iterations.
01:10:50 Every step, if you’ve done it right,
01:10:53 is an invitation for 10 more sexy, fascinating,
01:10:55 fun problems.
01:10:56 And this is why we have such a great time building labs.
01:10:58 We started in Edinburgh, now we’re at Tokyo Tech
01:11:01 and University of Wyoming and Athens,
01:11:03 and we’re setting up more labs this year.
01:11:05 And all these academics wanna work with us,
01:11:06 hey, because we write a lot of really fascinating papers,
01:11:09 but B, because we’re focused on all these really cool,
01:11:12 sexy, interdisciplinary problems.
01:11:14 We’re actually running into problems
01:11:15 where we don’t even know where to publish the paper.
01:11:17 Because you’ll have this paper where there’s like
01:11:18 these PL guys working with crypto guys,
01:11:20 working with systems guys, working with economists.
01:11:23 And you put it all together
01:11:23 and you have this Frankenstein paper monster,
01:11:26 and we’re like, where do we submit this?
01:11:27 Where does this go?
01:11:28 Nature.
01:11:29 Yeah, there we go.
01:11:30 Nature or quanta or something, I don’t know.
01:11:32 It’ll write a nice little.
01:11:33 So the sexy problems multiply exponentially.
01:11:36 Exactly, and we’ve now gotten to a point
01:11:39 where we’re starting to work on refinements to the system
01:11:42 rather than fundamental things that are like,
01:11:44 if you don’t solve it, the system just simply doesn’t work.
01:11:47 For example, you can run all of this with NTP
01:11:49 as your clock server,
01:11:50 but you actually can create a notion of time with N.
01:11:52 We wrote a paper called the Workforce Chronos for that.
01:11:55 But that’s not necessary for the system.
01:11:58 It’s just a nice to have thing.
01:11:59 It’s a nice property.
01:12:00 Optimization of the random number generation
01:12:02 is another example of that.
01:12:03 You can run it with a heavier thing.
01:12:04 You just have more blockchain bloat
01:12:06 and slower time and transition.
01:12:08 We have this concept in Epic.
01:12:09 So you elect leaders to run the system
01:12:13 every five days with Cardano,
01:12:15 but there’s been derivative work.
01:12:17 We didn’t even do this.
01:12:18 This work occurred at University of Illinois.
01:12:20 And that derivative work said,
01:12:21 well, you don’t actually need to do that.
01:12:22 You can do it on a block by block basis.
01:12:24 It’s like, ooh, that’s pretty cool.
01:12:26 So that’s the other point about doing things
01:12:27 in a very rigorous way is that that way
01:12:31 creates a lingua franca for what you’re trying to solve
01:12:33 with the totality of the academic community.
01:12:36 So suddenly people that you’ve never met,
01:12:38 you know nothing about have read your papers,
01:12:40 cited your papers and start writing their own papers,
01:12:43 either to try to attack and destroy things you’ve done
01:12:45 or to build on top of the things that you’ve done.
01:12:48 So people are trying to figure out ways to attack this.
01:12:50 Exactly.
01:12:51 As rigorous as you are trying to build up.
01:12:52 And I don’t have to pay them.
01:12:54 That’s the beautiful thing.
01:12:54 It’s fun.
01:12:55 Yeah.
01:12:56 It’s fun to try to destroy
01:12:57 and that’s how we grow stronger.
01:12:58 And it’s how you build your career too.
01:12:59 There’s plenty of people that they’ve gotten tenure
01:13:02 just kicking the hell out of Intel SGX.
01:13:04 You go to CCS every year, there’s some guy there
01:13:06 and he’s having a hell of a time making Intel cry.
01:13:11 Can we pull back historically speaking
01:13:13 and in terms of the big picture
01:13:14 of cryptocurrency real quick
01:13:16 and ask the question, what is Cardano?
01:13:19 We started talking about already
01:13:20 the consensus algorithm Cardano takes.
01:13:23 But maybe when you look at the history books,
01:13:26 you know, sort of a Hitchhiker’s Guide to the Galaxy
01:13:28 and Cardano will have one sentence.
01:13:31 What’s that one sentence going to be?
01:13:33 And in general, what’s like the vision
01:13:35 in the context of the history of cryptocurrency?
01:13:37 You have like this whiteboard overview video
01:13:39 that you talk about the three generations of cryptocurrency
01:13:43 where Cardano is the third.
01:13:44 So that’s like five different questions
01:13:47 way of asking the exact same thing you can answer
01:13:49 however the hell you want.
01:13:50 You know, I always termed Cardano as like a FOSS,
01:13:55 a financial operating system and nobody likes it
01:13:57 and everybody picks on me for using that term.
01:14:00 But basically the idea is that, you know,
01:14:01 the world runs on systems, especially the financial world.
01:14:04 You have, you know, the BIS and Swift
01:14:06 and all this other stuff.
01:14:07 And these protocols allow you to move value around
01:14:11 and represent things like identity.
01:14:13 And allow you to express yourself in some way.
01:14:17 And those protocols for the most part work well
01:14:19 for people in rich countries.
01:14:22 And they don’t work so well
01:14:23 for people who aren’t in rich countries.
01:14:25 And so the point of what we do, or at least what I do
01:14:29 and what my company does is we think a lot about
01:14:32 how do we build a universal protocol
01:14:34 that does all the stuff the legacy system has
01:14:36 but just does it better, faster and cheaper
01:14:38 for everybody in the world.
01:14:39 And everybody has equal access to it, you know?
01:14:42 So it’s the people’s protocol.
01:14:43 You know, you have a situation where the guy in Senegal
01:14:46 has the same access that I do or Bill Gates does
01:14:48 or someone else who’s kind of higher
01:14:50 on the spectrum of wealth and power.
01:14:52 And so that is what we seek to achieve.
01:14:56 But then the question is well, is Cardano the solution?
01:14:59 You know, is that that thing?
01:15:01 And the answer is no,
01:15:02 because you need a lot more evolution.
01:15:05 You need decades of evolution
01:15:06 to kind of work your way there.
01:15:08 And in many ways the work is never quite done
01:15:11 but it’s better than what came before.
01:15:13 Why?
01:15:14 Because you have a realization that first
01:15:17 the control of the system needs to be more balanced
01:15:19 and nuanced and it needs to be more democratic.
01:15:23 So there’s this sustainability component
01:15:25 of who’s in charge and how do you pay for things?
01:15:28 Well, the system can print its own money
01:15:30 so it always has the ability to have a budget.
01:15:31 Okay, so there’s a treasury idea.
01:15:34 And then there’s a voting thing.
01:15:35 Well, the same things that allow you to move money around
01:15:38 allow you to represent votes.
01:15:39 So you can do eVoting with the type of system, okay.
01:15:42 And you know, if you played Gnomic in the 1980s
01:15:44 or Peter Superfan or any of these things,
01:15:46 you can build a self evolving system.
01:15:48 You can actually create a game
01:15:49 where the rules can be voted on and changed
01:15:51 in the game itself, great.
01:15:53 Okay, so that exists there.
01:15:56 And then you say, okay, well,
01:15:57 but this thing still has to touch the legacy world.
01:15:59 There has to be cash in and cash out
01:16:01 and these types of things.
01:16:02 So there’s just this interoperability thing
01:16:04 that you need a wifi or a Bluetooth moment for the industry
01:16:07 because nothing understands each other right now.
01:16:08 There are all these chains are blind, deaf
01:16:10 and dumb to each other.
01:16:11 And then there’s this thing that it has to work
01:16:13 at a huge scale, like billions of people.
01:16:15 And we’ve done that, but we’ve done that
01:16:17 with large multinational trillion dollar companies
01:16:19 with centralized infrastructure.
01:16:21 We’ve never really done that with one master protocol
01:16:24 that somehow does it for everyone.
01:16:25 The closest approximation is probably BitTorrent.
01:16:28 And there’s, you know, there was, it’s a cool protocol,
01:16:31 but it doesn’t have all the oomph necessary to,
01:16:34 necessary to do something like this.
01:16:36 So Cardano is just our first approximation
01:16:38 and like any good system,
01:16:40 we wanted it to be self evolving.
01:16:42 So once you get the philosophy out of where’s the target
01:16:44 of what do you want to do, then you build a community.
01:16:47 Now it’s over a million people strong
01:16:49 and that community keeps growing
01:16:51 and they keep pushing the system
01:16:52 in that particular direction.
01:16:54 And what’s nice about it is if you build the right philosophy
01:16:56 within the system, it doesn’t need founders.
01:16:58 This is the great lesson of Satoshi.
01:17:00 It doesn’t need founders to be able to get there.
01:17:02 So, you know, if you look at the academic side,
01:17:07 that’s very decentralized.
01:17:09 We have more than 30 different contributors
01:17:11 for the 105 papers and that set keeps growing
01:17:14 within the next five years.
01:17:15 It’ll probably be two, three, 400 different scientists
01:17:18 from all across the world, some from Russia
01:17:20 and some from India, some from China and some from Japan
01:17:23 and America and Africa and South America.
01:17:25 And the faces change, the languages change,
01:17:28 the cultures change, but the process stays the same.
01:17:32 And that is a permanent organ
01:17:34 within what we have constructed as a system.
01:17:36 And it’s the same situation entering marketplaces.
01:17:38 Like we entered Ethiopia, what are we doing there?
01:17:41 We have 5 million people in Ethiopia.
01:17:43 We’re getting them digital identity
01:17:44 and we’re dragging that digital identity into the system.
01:17:47 Cause that’s the most fundamental thing
01:17:48 of a financial operating system.
01:17:50 You need to know who people are
01:17:51 in order to be able to do business with them,
01:17:53 give them credit, be able to give them economic agency
01:17:56 and so the thing.
01:17:57 But once they’re there,
01:17:58 they’re going to grow up with that system.
01:18:00 They’re going to deploy applications on that system.
01:18:02 They’re going to build on that system
01:18:03 or use it every day for getting a loan
01:18:05 or payments and so forth.
01:18:06 And if they have pain points,
01:18:07 what they’re going to do is evolve that system
01:18:10 to be able to mitigate,
01:18:11 manage those particular pain points
01:18:13 to a point where the system is competitive for it.
01:18:16 So my job is to be,
01:18:18 we have this tagline in our company, cascading disruption.
01:18:21 My job is to be the first domino.
01:18:23 Just kind of knock it over and watch the cascade
01:18:26 and it kind of blows and blows and blows up
01:18:28 until eventually it gets to where we need to go.
01:18:31 And what I was trying to think about with Cardano
01:18:33 was how do you build the minimum viable set
01:18:36 of tools and social processes
01:18:40 that once we push the domino,
01:18:42 the system will just evolve to a point
01:18:43 where eventually you can grow to fill that need,
01:18:46 not out of charity, but out of self interest.
01:18:49 People want things better, faster, cheaper.
01:18:51 People want to have economic agency,
01:18:54 especially when they lack it.
01:18:56 Nobody wants to grow up in a world where they’re unbanked
01:18:59 and they have no access to marketplaces.
01:19:01 They’re gonna seek it.
01:19:02 Look at Mpesa.
01:19:03 It’s the great example of that, like cell phone minutes
01:19:06 they’re using as a currency.
01:19:07 So that’s where we’re at.
01:19:09 And I say a few more years,
01:19:10 I think we’ll have that rate minimum viable set of dynamics
01:19:13 inside the system.
01:19:15 And then it’s inevitable in my view
01:19:16 that it’ll kind of grow and consume and become this concept.
01:19:20 And what’s really cool is there’s competition
01:19:21 in the systems and concepts.
01:19:22 So China is trying to do the same thing.
01:19:24 They’re saying, how do we de dollarize the world
01:19:26 and create a digital Yuan?
01:19:28 So they have a very top down notion
01:19:30 of how to apply this technology and bring it in.
01:19:32 And they even have an identity system
01:19:33 they’re building in parallel called social credit.
01:19:35 We have an identity system,
01:19:36 a talaprism that we’re putting in.
01:19:38 Ours is bottom up and you own your own identity,
01:19:40 social credit.
01:19:41 You have no idea.
01:19:41 You just have a number and some computers giving it to you,
01:19:43 but they’re both trying to do the exact same thing.
01:19:46 And it’s gonna be this clash of cultures at some point
01:19:49 between the open fosses
01:19:50 and the top down authoritarian fosses
01:19:53 and probably some Hegelian dialectic action to happen.
01:19:56 We’ll create some sort of somewhat closed,
01:19:59 somewhat authoritarian, libertarian utopia.
01:20:02 Yeah, most likely it would be AIs battling
01:20:05 in the space of fosses.
01:20:06 So I really like this idea of financial operating system,
01:20:08 but the letter F, so financial,
01:20:13 is this just a basic mechanism
01:20:18 with which you can have social interaction
01:20:19 therefore or all kinds of interactions
01:20:22 therefore have an identity?
01:20:23 Like is F essential to this?
01:20:26 Yeah, because that’s how people care.
01:20:28 You need resources to survive.
01:20:30 And finances is kind of like this field
01:20:32 of managing your resources in an intelligent way.
01:20:36 And you could call it SOFI too, social finance.
01:20:38 The nomenclature hasn’t exactly been settled
01:20:42 for our industry and that’s fun.
01:20:44 But basically the concept is that you have something
01:20:48 and you wanna be able to store it, transform it,
01:20:51 trade it and use it to survive.
01:20:54 And the question is what rails do you do that on?
01:20:56 Do you do those on centralized controlled rails
01:20:59 where there are these third parties
01:21:01 that are basically able to live off those things,
01:21:04 become very fat and nepotistic?
01:21:06 Or do you wanna do it on rails where there’s no middleman?
01:21:08 You have a direct relationship
01:21:09 with whoever you’re doing business
01:21:11 and if you invite more people into the transaction,
01:21:13 they’re middlemen of value, not necessity.
01:21:15 And that’s really the, I would like to say
01:21:17 the resident detra of our space,
01:21:19 that the reason we exist is to try to figure out a way
01:21:21 to kill the middleman and try to figure out a way
01:21:24 that we can better quantify value and transform it,
01:21:27 move it, manipulate it.
01:21:28 And in many ways we’ve actually discovered
01:21:30 some amazing things in the last 10 years as an industry.
01:21:32 Like we’ve kind of created the financial stem cell.
01:21:35 This idea of a token can now is just as well
01:21:37 be a national currency as a CBDC
01:21:39 as it can represent a crypto kitty.
01:21:42 The same architecture can do stuff at the nation scale,
01:21:46 can do stuff for a 12 year old kid in Texas.
01:21:48 It’s pretty amazing to see that.
01:21:50 But sort of in that whiteboard presentation,
01:21:54 you gave these three phases and you’re kind of implying
01:21:58 that there’ll be end phases to this whole evolution.
01:22:02 And Cardano is just like the cutting edge.
01:22:05 But if you look back to Bitcoin,
01:22:08 how would you compare Cardano versus Bitcoin?
01:22:12 Sort of where we are, how we started and how it’s going.
01:22:16 Okay, so what I did in that video and I’ve done
01:22:20 in a lot of media interviews,
01:22:21 because I think it really helps people understand
01:22:23 where we’re at in the clock is face things
01:22:26 in terms of generations.
01:22:27 And so I said, well, the first generation is Bitcoin.
01:22:29 And really the problem Bitcoin was trying to solve
01:22:31 is saying every time we wanna represent or move value,
01:22:34 we need some sort of trusted third party to facilitate that.
01:22:39 So can we build some sort of system
01:22:40 where we can create some notion of value
01:22:42 that can be teleported around the world
01:22:44 and it doesn’t require a trusted third party?
01:22:47 That’s it.
01:22:48 And it’s done in a beautiful way
01:22:49 because it didn’t try to be anything else.
01:22:52 It just was, you only have Bitcoin,
01:22:54 you can only do one type of thing, you can only push it.
01:22:56 You can do some things on the encumbrances
01:22:58 of like multi SIG and other things,
01:23:00 but that’s a one trick pony as a system.
01:23:04 And it wasn’t really clear if that was gonna work or not
01:23:06 for a long time.
01:23:07 It took several years to build up enough network effect
01:23:09 and for Bitcoins to actually become valuable.
01:23:12 And I’d say the inflection point was 2013.
01:23:15 And at that point it became a billion dollar market cap.
01:23:17 There were like Silicon Valley startups,
01:23:20 real exchanges performing.
01:23:21 And it got to a point where there was legitimacy
01:23:23 behind the concept and people started getting,
01:23:25 this is a really incredible idea
01:23:27 because I can evade capital controls with it.
01:23:29 I can like move $10 billion of something
01:23:32 from one country to another country in five minutes.
01:23:35 It’s like, I could never do that before.
01:23:36 And you know, this is incredible.
01:23:38 Okay, the problem is the minute that people validate
01:23:42 the idea, they immediately want something they don’t have.
01:23:46 So like the minute Elon can land a rocket,
01:23:48 there’s the next big thing, right?
01:23:50 You’ve landed the Falcon 9, now you’re on the Starship.
01:23:53 Similarly, you say, okay,
01:23:55 I want programmability with this thing.
01:23:57 It’s kind of like when JavaScript came to the web browser,
01:23:59 you went from these static, perhaps pretty,
01:24:02 but ultimately static non interactive pages
01:24:05 to YouTube and Google and Facebook
01:24:08 and these amazing, rich, incredible experiences,
01:24:10 because now you can actually interact with the user.
01:24:13 You can program things, stuff runs on their side,
01:24:15 stuff runs on your side.
01:24:16 It’s a beautiful two way relationship.
01:24:19 So that’s what Ethereum effectively did.
01:24:21 They bolted a programming language onto a blockchain
01:24:24 and they went from a certain use case
01:24:27 to whatever your imagination can have,
01:24:30 you know, like sunshine and rainbows and unicorns
01:24:32 and these types of things.
01:24:33 So what you’re saying is Bitcoin is HTML
01:24:35 and Ethereum is JavaScript?
01:24:37 Basically, yeah, it was like when JavaScript came
01:24:39 and with like JavaScript,
01:24:41 it has all kinds of problems and issues.
01:24:43 I wonder who’s flash in this analogy, this metaphor,
01:24:46 but let’s not go there.
01:24:47 Well, actually there were plenty of active Xs and flashes.
01:24:49 NXT was an example of a failed to start
01:24:52 and BitShares was another example.
01:24:54 There were a lot of people who tried to add some notion
01:24:56 of programmability in or a different view
01:24:58 of how these things should be done
01:25:00 and they were not as competitive.
01:25:02 Ethereum kind of came out at that JavaScript moment.
01:25:04 Okay, the minute you have that,
01:25:05 and suddenly you have ICOs and DeFi and STOs and NFTs
01:25:09 and all these word salads of things
01:25:12 and then people start using it, they get frustrated.
01:25:13 Why?
01:25:14 Because it’s too slow, it’s too expensive,
01:25:16 it doesn’t talk to the things they want it to talk to
01:25:18 and also it gets too big to manage itself.
01:25:21 When you’re small, you have founders and foundations
01:25:25 and you have trusted actors and core developers
01:25:27 and you can feed them with pizzas.
01:25:29 You know them, you can meet them,
01:25:30 you can shake their hands at conferences.
01:25:32 When you’re a multi billion person system,
01:25:36 you’re too large to be able to do that.
01:25:39 For example, we had the Shelley Summit last year,
01:25:42 we invited Vint Cerf to come to the summit.
01:25:44 Vint’s a brilliant guy and he created the internet
01:25:47 with Bob and the rest of the gang
01:25:49 and back in those days, it was such a simple small system
01:25:53 that one of their students, they said,
01:25:56 hey, you need to test it.
01:25:56 He created a video game just to kind of test the thing.
01:25:58 You could call the guy on the other side and say,
01:26:00 are you seeing this?
01:26:00 Are you getting the signal?
01:26:01 They used to have a actual address book for email addresses.
01:26:05 Yeah, so you’d open up the book and look it up
01:26:07 and they’ll look at the internet,
01:26:08 it’s like, who’s in charge of that?
01:26:10 It’s this gargantuan network
01:26:12 and there’s no group of people you can bring in
01:26:15 and thus the internet evolves very slowly, you see?
01:26:18 And so that’s the problem is that you have this situation
01:26:21 where you wanna do lots of utility,
01:26:23 you wanna do a lot of things,
01:26:24 you wanna be a financial operating system
01:26:26 and be everything to everyone
01:26:28 but then your rate of evolution slows down
01:26:30 as your rate of adoption speeds up.
01:26:32 So that’s one of the other design goals
01:26:35 of the third generation.
01:26:35 It’s not good enough just to do things better, faster,
01:26:37 cheaper and have consistent cost
01:26:39 with your population growing
01:26:41 or talk to everything, your wifi moment.
01:26:43 You also need a system that can govern itself
01:26:46 at a scale of millions to billions of people
01:26:48 who have divergent interests.
01:26:49 Some cases ice pick an eye divergent interest.
01:26:52 They really hate each other and they don’t get along.
01:26:55 And so that’s what we termed
01:26:56 a third generation cryptocurrency
01:26:58 and there’s a lot of people attempting to compete
01:27:00 in that space.
01:27:01 There’s Tezos and Algran and ICP and Polkadot and so forth.
01:27:05 And each and every one of them kind of brings
01:27:07 a different blend of things that they value.
01:27:09 So it’s not completely equal
01:27:11 between scalability, interoperability and sustainability.
01:27:14 Some people were very focused on high throughput,
01:27:17 lots of transactions perspective.
01:27:19 Other people very focused on governance
01:27:21 like Tezos is like the governance chain
01:27:24 and they were one of the first
01:27:25 to do a self amending ledger.
01:27:27 And other people are like Aeon or Polkadot.
01:27:30 They’re really thinking carefully
01:27:31 about how do we build a nice interoperable ecosystem.
01:27:34 With Cardano, we tried to actually tackle all three
01:27:36 at the same time, which was one of the reasons
01:27:37 why we were a little slower out of the gate.
01:27:39 We had to write a lot more protocols
01:27:41 but we think we’ve kind of come up
01:27:42 with a beautiful interlocking design for all of them.
01:27:45 And again, the point is not to get it perfect
01:27:48 but rather get those just right set of evolutionary factors
01:27:52 that when you click the domino,
01:27:54 it just self evolves into what you need it to get to.
01:27:57 Allow me to stretch the metaphor farther.
01:28:01 If Bitcoin is HTML, there’s HTML5.
01:28:04 If Ethereum is JavaScript, JavaScript with V8
01:28:07 has become quite fast, quite, you know,
01:28:09 it runs much of the internet.
01:28:11 So the argument could be that eventually everything
01:28:15 will be JavaScript or maybe you could say
01:28:18 eventually everything will be HTML
01:28:20 and it should be a bunch of different tools
01:28:22 that generate that HTML.
01:28:23 So is it possible that just like Rousseau,
01:28:28 we eventually return to generation one Bitcoin
01:28:32 or we return to generation two Ethereum
01:28:37 at the end of this journey?
01:28:39 Yeah, the problem is your tail is wagging the dog there.
01:28:42 And it’s not, you have a situation
01:28:44 where you’re so focused on the technology
01:28:46 that you’re failing to understand
01:28:48 that there’s still Daisy here.
01:28:50 You still have the user and where’s the app store?
01:28:53 Where’s the one click install?
01:28:54 Where’s the use and utility?
01:28:56 You know, all these layer two protocols
01:28:58 and these DeFi applications in five years,
01:28:59 they’re completely protocol and blockchain agnostic
01:29:03 because at the end of the day,
01:29:04 they care about liquidity, operating cost
01:29:06 and user experience.
01:29:07 It’s so a preposterous and absurd for somebody to say,
01:29:10 oh, well, I’m gonna go build my application,
01:29:13 get on the Apple store
01:29:14 and I am gonna use Amazon as my web host.
01:29:17 And no matter what happens, I will always use Amazon
01:29:20 even if the operating cost is crazy.
01:29:22 I see. You see?
01:29:23 And so we’re just in a unique period of history
01:29:25 where there’s a network effect
01:29:27 around some initial infrastructure
01:29:29 and people tend to be building around that,
01:29:30 but every single one of the top DeFi providers
01:29:34 are if they’re getting successful
01:29:36 into a certain network effect,
01:29:38 they’re having the multi chain conversation.
01:29:40 So I don’t really believe in a winner takes all
01:29:42 maximums view of, well, there’s gonna be some protocol
01:29:45 that becomes the God protocol first
01:29:46 because they evolved too quickly.
01:29:48 Second, the incentives aren’t aligned for that.
01:29:50 TCPIP didn’t have a token connected to it.
01:29:53 There was no financial incentive
01:29:55 where if TCPIP got adopted over something else,
01:29:57 they’d make some big company crazy amounts of money.
01:30:00 It was a useful piece of infrastructure.
01:30:02 So I think that the third generation is gonna be as defined
01:30:06 by the social components and the usability components
01:30:09 as it is by the technological capabilities of the system.
01:30:12 Really what these technological capabilities gave you
01:30:14 was the ability to demonstrate a proof of concept
01:30:18 and say these things are possible.
01:30:19 Kind of like Xerox PARC, when Steve and Bill came in,
01:30:22 they said, wow, you have networked computers,
01:30:25 object oriented programming and a GUI.
01:30:28 And this is like, what was it, 70s?
01:30:30 It’s like, wow, it’s like incredible.
01:30:32 But none of that was an actual product.
01:30:33 That wasn’t a Macintosh, but it was enough to get the idea.
01:30:37 And then it was a race to how do we productize
01:30:39 something like that.
01:30:40 And in that case, it actually took several decades
01:30:43 to roll out that vision that those guys had.
01:30:45 And I think that’s what Bitcoin and Ethereum did.
01:30:47 But what’s unique about this is normally you throw away
01:30:50 the prior experiments.
01:30:51 With these things, these are self evolving systems.
01:30:54 So it’s entirely possible to, Joe Rogan quote,
01:30:57 to evolve Bitcoin to a point where it could become
01:31:01 a third generation system if desired,
01:31:02 as some amalgamation of layer one and layer two protocols.
01:31:05 And it’s the same for Ethereum.
01:31:06 In fact, Vitalik is throwing away Ethereum
01:31:09 and replacing with Ethereum too,
01:31:10 because he recognizes he needs to upgrade
01:31:12 and evolve the system.
01:31:13 And that’s what makes it fun because the techniques
01:31:16 and methodologies that they’ve chosen to evolve
01:31:19 and upgrade this system are distinctly different
01:31:22 from the ones that we’ve chosen.
01:31:24 And we have no idea which one’s actually going to win,
01:31:26 but we learn from each other and we co evolve
01:31:29 from each other.
01:31:30 So you’re running like all these experiments in real time
01:31:32 in a giant marketplace, and maybe they’ll consolidate,
01:31:35 maybe they’ll stay divergent.
01:31:36 I mean, look at big tech, you have Google, Apple,
01:31:39 Microsoft, Facebook, they all coexist
01:31:41 and they’re trillion dollar companies.
01:31:42 Some cases with TCP, it consolidates to one standard.
01:31:46 And that’s what we ended up using.
01:31:47 So what’s your intuition with Cardano having the proof
01:31:51 of stake, and then eventually smart contracts
01:31:55 versus the Bitcoin with layer two technologies,
01:31:59 this kind of evolving creature.
01:32:02 Again, you said you can’t really predict the future,
01:32:04 but what’s your intuition why one might be more successful
01:32:09 than the other?
01:32:10 So the problem with Bitcoin is it is so slow.
01:32:15 It’s like the mainframe programming of the past.
01:32:18 And the only reason it’s still around is because
01:32:20 there was so much invested in keeping it around
01:32:22 that we just kind of have to leave it there
01:32:24 and one day Cobalt will die.
01:32:29 There’s nothing about it from a collection of USPs
01:32:32 that’s particularly desirable.
01:32:34 You have extremely long settlement time,
01:32:36 you have extremely low programmability.
01:32:38 It is not aware of any other system.
01:32:39 There’s no native way of issuing an asset in that system.
01:32:42 You can’t even do a pull transaction.
01:32:44 You can’t do anything that’s interesting or unique there.
01:32:47 And yeah, all due respect, it’s, you know,
01:32:50 mafia, all due respect, Tom.
01:32:51 You got some problems.
01:32:54 You need to lose some weight.
01:32:55 You come to me on the day of my daughter’s wedding.
01:32:56 I know, I know.
01:32:57 So, you know, all due respect to the Bitcoin people.
01:32:59 It’s like an amazing, incredible first generation thing.
01:33:03 And it really, we’re all here because of Bitcoin.
01:33:06 But the problem is you have to upgrade the damn thing.
01:33:08 You know, just because you were a high school football star
01:33:11 doesn’t mean that 30 years later you’re still
01:33:14 a high school football star in the same shape.
01:33:16 You got the beer belly, you’re old,
01:33:17 you’re not doing this thing again.
01:33:18 And that’s what Bitcoin has to do.
01:33:20 There’s fundamental improvements
01:33:22 that I think Bitcoin can make at the protocol level
01:33:25 that would actually make it an incredibly competitive system.
01:33:28 Like if they wanted to keep Nakamoto consensus,
01:33:30 proof of work, there’s ways to enhance proof of work.
01:33:33 I mean, Minkun Sir did this with BitcoinNG,
01:33:36 Promotivus Wanus did this with Prism.
01:33:38 Make it 10,000 times faster
01:33:40 and you don’t compromise the fundamental security assumptions
01:33:43 that the system has.
01:33:44 You can add programmability to it.
01:33:46 Blockstream created a language called Simplicity.
01:33:48 And so there’s actual ways to extend.
01:33:50 And we did this with Cardano with the extended UTXO model.
01:33:53 There’s ways to extend what Bitcoin has.
01:33:55 Keep the philosophy, the accounting,
01:33:57 the way of thinking about transactions.
01:33:59 But then suddenly you can now do DeFi and other things.
01:34:02 But what they’ve done is said,
01:34:03 we will not evolve the base layer at all.
01:34:06 And we’re just gonna build all this layer two stuff,
01:34:08 which is usually highly fragile and centralized
01:34:11 and requires enormous effort at the base level
01:34:13 to do anything.
01:34:14 It’s not a coincidence Vitalik started as a color coins guy
01:34:17 and a master coin guy hanging out in those circles.
01:34:20 He was trying to innovate and do things in Bitcoin.
01:34:22 And it was so hard and difficult
01:34:24 that he started diverging and going and doing things
01:34:27 in a different system entirely.
01:34:30 I knew the master coin guys,
01:34:31 JR and all these people, they were maximalists.
01:34:33 They really wanted to build something cool
01:34:35 and exciting for Bitcoin.
01:34:36 And anything they did, the developers would attack them.
01:34:39 It’s all you’re misusing op return, you’re doing this,
01:34:42 that it was a holy war anytime you wanted to evolve.
01:34:44 So I think it’s its own worst enemy.
01:34:46 It has the network effect, it has the brand name,
01:34:49 it has the regulatory approval,
01:34:51 but there’s no way to change the system,
01:34:53 even correcting obvious downsides in that system.
01:34:56 Now, what’s really cool is Ethereum
01:34:58 doesn’t suffer from that problem.
01:35:00 It’s getting to a point
01:35:02 where it has a similar network effect to Bitcoin,
01:35:04 but the community there is completely different in culture.
01:35:08 They love evolving, they love upgrading,
01:35:09 sometimes a little too much.
01:35:11 And so that means that if you look at the trajectory
01:35:15 of things, if I had to bet just those two systems,
01:35:17 Bitcoin or Ethereum, I would say nine times out of 10,
01:35:20 Ethereum is going to win the fight against Bitcoin
01:35:23 if it was the only competitor.
01:35:25 But obviously we’re here and a lot of other people are here.
01:35:27 So there’s different things going on.
01:35:29 So it’s a much more complex game.
01:35:31 But I think that’s always a key,
01:35:33 zooming out a little bit, set the technology aside
01:35:36 and the word salad of cryptography aside
01:35:38 because it’s too much.
01:35:39 What you have to always do is say,
01:35:41 what incentive does the system have to evolve?
01:35:44 And when you look at things like Android and the App Store
01:35:46 and these analogous platforms,
01:35:48 you say, ah, the evolution is user driven
01:35:51 and there’s a financial incentive
01:35:52 for the user to participate.
01:35:53 So if I had to look at the trajectory of this thing,
01:35:56 come back 10 years later,
01:35:57 it’s probably gonna have millions of applications
01:35:59 and lots of stuff going on
01:36:01 because that’s the way the system was constructed.
01:36:04 Okay, it makes sense.
01:36:05 When you look at Bitcoin, you say,
01:36:06 what is the incentive to evolve the system?
01:36:09 There’s none.
01:36:10 What is the incentive for the system
01:36:12 to get more competitive?
01:36:13 There’s none.
01:36:14 In fact, it’s the opposite.
01:36:15 They’ve turned it into a religion.
01:36:16 I was in Miami at this Bitcoin conference there.
01:36:19 I had a toilet paper roll thrown at me
01:36:21 that had shit coin written on it.
01:36:23 You have Max Keiser out on the stage,
01:36:25 doing his best Rick James impression.
01:36:28 We’ll see the guy that did the F Elon, fuck Elon.
01:36:32 Yes, yes, yes.
01:36:33 And so you’re watching this stuff and you say,
01:36:35 okay, first, why would anybody wanna join that?
01:36:37 And then second, where is the conversation
01:36:40 about how do we achieve something?
01:36:42 I started with Cardano, the end in mind.
01:36:44 I said, we really wanna sit down
01:36:47 and build this financial operating system.
01:36:49 And the definition of success is
01:36:50 the poorest person in the world
01:36:52 has access to the same system
01:36:53 as the richest person in the world
01:36:55 and they both get treated fairly.
01:36:57 We’ve never had that happen before.
01:36:59 Okay, that’s something.
01:37:00 You can agree with it, disagree with it,
01:37:01 say it’s boiling the ocean, it’s impossible.
01:37:03 At least I have something.
01:37:04 I can’t for the life of me understand
01:37:06 what the hell is the point of Bitcoin.
01:37:08 When I joined the Bitcoin space way back in the day,
01:37:11 it was, hey, we hate the dollar.
01:37:13 And hey, we like gold a lot.
01:37:14 Let’s create digital gold.
01:37:15 Let’s build a payment system.
01:37:17 And then it just kind of went all these different directions
01:37:20 and nobody can actually tell you what Bitcoin is for.
01:37:22 It’s a store of value, okay.
01:37:25 There’s some proof of work thing
01:37:27 where maybe you’re like incentivizing
01:37:29 alternative energy to be produced.
01:37:30 I don’t know.
01:37:32 Nobody really knows the philosophy.
01:37:33 There’s no direction.
01:37:35 And they say, but don’t worry, just buy and hold
01:37:38 and everything will sort its way out.
01:37:40 I believe it’s HODL.
01:37:41 Yeah, HODL.
01:37:42 What about the idea of digital gold?
01:37:44 So trying to replace that particular physical material
01:37:46 that is gold to transfer into the digital space.
01:37:49 That’s something.
01:37:50 Okay, let’s do that then.
01:37:51 And just say that’s all it does.
01:37:52 Then why are we doing lightning?
01:37:54 Why are we doing any of these other things?
01:37:55 You don’t really need with a commodity,
01:37:57 a digital commodity, high throughput.
01:38:00 You can have slow settlement.
01:38:01 You can have high transaction fees,
01:38:02 all these types of things.
01:38:03 And that’s fine.
01:38:05 Okay, that’s something, pick it.
01:38:07 Well, the idea is to try to come up with technology
01:38:09 like the lightning network
01:38:11 that could have something like gold,
01:38:13 but then still build an economy around it.
01:38:16 Something with a high throughput transactions.
01:38:18 And have we ever built a successful banking credit system
01:38:21 off of gold?
01:38:22 Never.
01:38:23 It never works because there’s too much volatility
01:38:25 in the underlying asset.
01:38:26 Would you take a gold denominated loan for something?
01:38:28 If somebody says, all right,
01:38:29 I’ll give you five bars of gold to go buy this car
01:38:32 and pay me back five and a half bars of gold.
01:38:35 Nobody would know in five years where they come out
01:38:37 in that kind of a range.
01:38:38 The idea is that the gold is used
01:38:39 for the settlement of transactions
01:38:41 and then you’re operating,
01:38:42 the actual economy is operating outside of gold.
01:38:45 And then you kind of connect back to gold.
01:38:48 So we had to go back to the gold reserve
01:38:49 and we tried that for a long time.
01:38:51 It didn’t really work in a modern global economy.
01:38:53 We had the Brentwood’s agreement and all these other things.
01:38:55 And so I understand what you’re saying
01:38:57 and maybe there’s some merit to that,
01:38:59 but if that was really an earnest where they want to go,
01:39:02 then the conversation should be about,
01:39:03 well, how do we make it easy for layer two protocols
01:39:06 to interact with Bitcoin?
01:39:08 So why is simplicity not built into it?
01:39:10 Why is it taking so long to do SnoreSigs?
01:39:12 Why is it taking so long to do all these obvious upgrades,
01:39:14 which are cryptographically low danger?
01:39:17 Also NipaPals, not interactive proofs of proof of work.
01:39:20 There’s no cost to doing that.
01:39:21 It’s just a property of proof of work
01:39:23 where certain puzzles are more special than other puzzles.
01:39:26 And by noticing that you can create these beautiful proofs
01:39:29 that allow you to have side chains and like clients.
01:39:32 It’s not compromising security of the system.
01:39:34 It’s just something you get for free with proof of work.
01:39:36 Those came out in 2016.
01:39:38 There’s derivative work fly client floating around.
01:39:40 Where the hell is it?
01:39:41 This is the frustration that I have is like,
01:39:43 if you really are serious about this whole lightning
01:39:45 and gold economy thing, I love choice.
01:39:48 I’m a libertarian by nature.
01:39:50 I love competition.
01:39:51 And I read all those books.
01:39:53 I read Ludwig von Mises’s work and Murray Rothbard’s work.
01:39:56 I love what Hayek had to say about private currencies.
01:39:58 Let’s go try it.
01:39:59 That’s great.
01:40:00 But then you have to have some focus and commitment
01:40:03 as an ecosystem.
01:40:04 And the excuse they use is, well, no, we don’t
01:40:07 because we’re decentralized.
01:40:08 And because we’re decentralized, we don’t need that.
01:40:11 As if there’s some sort of guiding swarm intelligence
01:40:14 that will naturally push the system
01:40:16 in that particular direction.
01:40:17 But then you ask, well,
01:40:19 how do people measure the success of Bitcoin?
01:40:21 Is it the fact that they’ve actually achieved
01:40:23 lots of transactions and lots of actual economic activity
01:40:27 and lots of businesses accepting Bitcoin?
01:40:29 That will go up.
01:40:30 It’s the price.
01:40:31 That’s what they do.
01:40:33 And that’s the only thing they pay attention.
01:40:34 That’s why this is the most attended Bitcoin conference
01:40:37 in history.
01:40:37 Not because somehow Bitcoin got so much more adoption,
01:40:40 it’s because this is the highest price point Bitcoin
01:40:43 has ever been this year, over 30,000.
01:40:46 So first of all, let me state that, Charles,
01:40:47 for the most part is purely objective.
01:40:51 The bias that comes in, for the record, I want to say,
01:40:55 that I have heard, because you mentioned the mafia,
01:40:58 that you prefer Goodfellas over the Godfather.
01:41:00 So a man who prefers Goodfellas over Godfather,
01:41:04 you take it for that opinion for what it is.
01:41:09 I actually had to think about that one for quite a bit.
01:41:11 I think.
01:41:12 Oh, come on.
01:41:13 Joe Pesci was so good in that movie.
01:41:14 He’s incredible.
01:41:15 I also love Casino and those big glasses on De Niro.
01:41:18 I love it.
01:41:19 With Sharon Stone.
01:41:20 But we could talk about that for hours.
01:41:21 But let me ask you about the Bitcoin conference,
01:41:23 because it is kind of, I would say,
01:41:27 an important moment in human history.
01:41:29 It was quite exciting in terms of size
01:41:31 and kind of turmoil and all those kinds of things.
01:41:35 And you were there in, what is it?
01:41:37 Hot and humid Miami.
01:41:39 I believe that’s the way you introduced it.
01:41:41 So what do you make of the community of Bitcoin
01:41:46 or that particular event in human history?
01:41:49 What makes me sad is I remember the old Bitcoin community
01:41:51 and I’ve seen what it’s become.
01:41:53 And the old community was really fun,
01:41:54 like the San Jose conference in 2013
01:41:57 or subsequent conferences.
01:41:59 You know, there was just a lot of people,
01:42:00 they had no money and they just really loved this idea
01:42:04 of decentralized money.
01:42:05 They loved this idea of decentralization in particular.
01:42:09 And you could strike up a conversation with everyone.
01:42:11 There’s no ego at all.
01:42:13 But what was really fun is you could really get
01:42:16 intimate friendships and relationships,
01:42:18 great conversations with people there.
01:42:21 It’s kind of like the early days of AI.
01:42:23 They all met in Dartmouth and all these other places.
01:42:25 Very intimate, there was no egos.
01:42:26 Everybody was just trying to do some really cool stuff.
01:42:28 Now, just like those early days,
01:42:30 there was an overestimate of how robust
01:42:33 the solutions would be.
01:42:34 So we believed, oh yeah, 10 years,
01:42:36 we’re gonna rule the whole world, right?
01:42:38 Didn’t exactly happen.
01:42:39 On the other hand, Bitcoin grew from nothing
01:42:42 in just 11 years to I’m in Mongolia riding camels
01:42:46 and the camel herder has Bitcoin in the Coby desert.
01:42:50 So that’s telling you that’s a pretty pervasive technology
01:42:52 if you have that level of adoption that quickly.
01:42:54 When I went to Miami, it was unrecognizable.
01:42:57 Everything was so commercial.
01:42:59 Half of the vendors at the conference were like watches
01:43:04 that cost half a million dollars
01:43:06 and they were covered in diamonds.
01:43:07 So when you see that kind of materialism leak its way in,
01:43:10 it’s first is repulsive.
01:43:12 The other thing was there was no,
01:43:14 like I remember one of the first conferences,
01:43:16 Mo Levin’s conference in January of 2014,
01:43:19 the North American Bitcoin Conference ironically in Miami,
01:43:22 there was a Bitcoin help center booth.
01:43:24 Dima ran it and a few of the other Bitcoin OGs ran it.
01:43:27 The core developers actually came over like Jeff
01:43:29 and others who were there and sat at the booth
01:43:32 and anybody come up, ask a question,
01:43:34 anything you wanna ask about Bitcoin.
01:43:35 It was like, that was the culture,
01:43:36 just help people welcome in.
01:43:38 There was no help booth there.
01:43:40 There was no notion of that.
01:43:42 There were six hour lines and superstars
01:43:44 and things like that.
01:43:45 And again, again, it was always the same thing.
01:43:47 Look how much money all these people have made.
01:43:50 And the whole point of Bitcoin
01:43:52 was to redefine the notion of money,
01:43:53 redefine the notion of value, these types of things.
01:43:57 So it just, I’m no longer part of that.
01:43:59 And it made me sad because I really enjoyed being part of it.
01:44:02 How I got started was the Bitcoin education project.
01:44:04 I did a class on Udemy.
01:44:06 I gave it away for free.
01:44:07 I had 80,000 students and they would email me.
01:44:09 I got 5,000 emails before I stopped answering them.
01:44:13 And everyone come in and ask me some question
01:44:15 about something, sometimes arcane, sometimes trivial.
01:44:18 And I take the time to sit down and answer the question
01:44:21 or forward the email to somebody I knew
01:44:22 who could answer that particular type of question.
01:44:24 And there were some amazing people in the early days
01:44:27 like Mike Hearn and Gavin and others.
01:44:29 And they were just super committed.
01:44:31 And Mike’s case, he knew Satoshi.
01:44:33 He actually emailed them back and forth
01:44:35 because he was around 2009, 2010.
01:44:37 He did the Bitcoin Java client.
01:44:39 And Satoshi was all excited.
01:44:40 He said, oh, wow, Bitcoin can come to a cell phone.
01:44:43 This is really cool and exciting.
01:44:45 And then what happened?
01:44:46 Mike left Bitcoin in 2013
01:44:48 over the whole big block debate that happened.
01:44:51 They just treated him like dirt,
01:44:53 like he was subhuman or something.
01:44:54 So I don’t know, the culture has changed a lot.
01:44:56 And if they like it, it’s good for them.
01:44:59 They can enjoy their religion, but it’s not for me.
01:45:02 And where I like being is, like I had a guy
01:45:05 who used to work for me, Alex Cherpanoi,
01:45:08 and he created this beautiful project called Ergo.
01:45:10 To me, that is the spiritual successor to Bitcoin.
01:45:13 Ergo is really special because it has the same culture.
01:45:15 It has the same mentality.
01:45:17 And the technology is kind of like a natural evolution
01:45:20 of what you would do if you knew about Bitcoin
01:45:22 and you wanted to build the next big thing.
01:45:24 So it’s still a proof of work system.
01:45:26 It’s still a UTXO system,
01:45:28 but he added UTXO with some smart contracts.
01:45:30 It’s this Sigma protocol idea.
01:45:32 On the proof of work side,
01:45:33 Satoshi had this one CPU, one vote idea.
01:45:36 So Alex tried to create non outsourceable puzzles
01:45:38 to make it impossible to have mining pools.
01:45:40 And there’s all these other beautiful little things.
01:45:42 And he’s this brilliant Russian programmer,
01:45:45 and he surrounded himself
01:45:46 with all these other brilliant people.
01:45:47 He has zero ego.
01:45:48 He has negative ego.
01:45:50 When you put him with a person with ego,
01:45:51 your ego goes down, right?
01:45:53 And everything about Alex is always like,
01:45:56 how do I solve this?
01:45:57 How do I do that?
01:45:57 And he gets legitimately excited when he meets somebody
01:46:00 that he can collaborate with or learn from.
01:46:04 That’s where Bitcoin was in the beginning.
01:46:06 Everybody set their egos aside,
01:46:08 whether it was Hal Finney or whatever,
01:46:10 and they would just say, how can I help?
01:46:11 What can I do?
01:46:12 And it was all about coming up with some cool new thing
01:46:14 or solving some cool new problem.
01:46:17 I don’t see any of that in Bitcoin today.
01:46:19 So quite a few people are excited about Ergo
01:46:20 and excited about the fact
01:46:21 that you kind of appreciate Alex and Ergo.
01:46:25 Do you see Cardano potentially utilizing
01:46:28 the proof of work mechanism from Ergo
01:46:30 as part of this pool for the consensus mechanism?
01:46:35 I mean, anything’s possible,
01:46:36 and there’s a lot of evolution Ergo has to go through.
01:46:39 And Ergo, it was kind of like,
01:46:41 when the Xbox 360 first came out,
01:46:43 while they were prototyping it,
01:46:44 Microsoft needed a development environment.
01:46:46 They ironically purchased a lot of Apple computers
01:46:49 to do that,
01:46:50 because Apple was moving away from the PowerPC to Intel,
01:46:52 and Microsoft was moving towards the PowerPC,
01:46:54 just this weird intersection of history.
01:46:56 So at that time,
01:46:57 the largest order of Mac computers made
01:46:59 was done by Microsoft,
01:47:01 and they were using it for Xbox stuff.
01:47:02 So Ergo, we viewed the same way.
01:47:04 So we said, well, we have this extended UTXO model.
01:47:06 The only thing that’s sufficiently close to it
01:47:09 where we can beta test contracts is actually with Ergo.
01:47:12 And Alex just was a little faster
01:47:15 in getting certain things out,
01:47:16 because we were doing things
01:47:17 in a slightly more rigorous way
01:47:18 and slightly more expressive way.
01:47:20 So we actually tested a stable coin and Oracle
01:47:22 and other things on Ergo,
01:47:24 and it has just incredible community.
01:47:26 When we said, hey, we’re coming here to work and build,
01:47:29 he said, oh yeah, we’d love to work with you guys.
01:47:30 This is so cool.
01:47:32 The other thing is Alex used to work for us,
01:47:33 and he had this lovely project called Scorex,
01:47:36 and it was all about like a pedagogical framework
01:47:39 for building blockchains.
01:47:40 And if you want to do prototyping or academic research,
01:47:42 it was great.
01:47:43 It was super modular,
01:47:44 and it separated the consensus network
01:47:46 and transaction layer from each other
01:47:48 in just the right way,
01:47:49 so that you can make it modular and mix and match things.
01:47:52 So you can put secure academia in,
01:47:53 or maybe a different network layer
01:47:54 and a different consensus protocol,
01:47:56 a proof of work to another proof of work and so forth.
01:47:59 So we loved having that kind of IP sitting around
01:48:02 because it gave us the ability
01:48:03 to kind of play around with ideas in a matter of weeks
01:48:06 instead of months or years.
01:48:07 And then he just took that concept and he gave it away.
01:48:10 The wave protocol was built on it.
01:48:12 That was Sasha Ivanov, he did that.
01:48:15 And I think there’s two or three other cryptocurrencies
01:48:17 that were launched from Scorex,
01:48:18 and then Alex took that and built Ergo from it.
01:48:22 So there was a nice intersection
01:48:23 where there was overlapping technology
01:48:25 with Ergo with our technology.
01:48:27 And the other thing was that the community
01:48:29 was so open and friendly, it was just a no brainer.
01:48:31 Just go in and start building some things there.
01:48:33 Now, in terms of evolving ideas,
01:48:35 the whole Sigma protocol idea is very different
01:48:38 and it’s very interesting.
01:48:39 And there’s a guy at Boston University,
01:48:42 his name will come to me in a second,
01:48:43 who came up with this stuff.
01:48:46 And I think there’s some merit there,
01:48:48 especially as we start moving closer to this idea
01:48:51 of blockchains being used to validate proofs
01:48:53 instead of running computations.
01:48:54 What’s the Sigma protocol, by the way?
01:48:56 So it’s just a way of expressing scripts.
01:48:58 And basically, you get these concise representations
01:49:03 of proofs, and then you can say,
01:49:05 okay, the script is correct,
01:49:06 but you don’t have to run the whole program.
01:49:07 So there’s a lot, I’m not doing the topic justice,
01:49:10 there’s a lot more to it, but that’s the basic concept.
01:49:12 And in a Redeemer validator model,
01:49:14 you need stuff like that,
01:49:15 because as your model gets more complex
01:49:19 and a lot more things happen,
01:49:20 you don’t want to have a situation
01:49:22 where I have to run, replay a huge amount of the UTXO graph
01:49:27 to be able to get to a point
01:49:28 where I have the state of the system.
01:49:30 You need some mathematical artifact
01:49:32 that gives you the state of the system quickly.
01:49:34 And then you’re saying, okay, I now know
01:49:35 what computation thread I need to run
01:49:37 to be able to get enough
01:49:39 to be able to redeem this transaction.
01:49:41 So he just found a more compressed representation of it,
01:49:43 and the math doesn’t matter.
01:49:45 What matters is there’s a whole beautiful field
01:49:49 that thinks about this type of stuff,
01:49:51 and it was never once linked before into our industry.
01:49:55 The brilliance of Alex was to actually realize
01:49:57 you could do that and pull those things together,
01:49:59 and it may actually have some merit,
01:50:01 but by no means is he the only guy that does this stuff.
01:50:03 There’s actually other approaches in verified computing
01:50:07 that have explored that.
01:50:08 Like my favorite came out of Microsoft research
01:50:10 is a project called Pinocchio,
01:50:12 and there was a followup called Geppetto.
01:50:13 And the basic idea was that it’s fortuitous
01:50:17 that you have these computer science problems
01:50:19 like hashing where you can do all this computation,
01:50:26 and once you’ve done all of it,
01:50:27 and you’ve found this magic number
01:50:28 that you can verify that the computation was done correctly.
01:50:31 So the proof of work works this way.
01:50:33 Hard to do the proof of work,
01:50:34 easy to check the proof of work.
01:50:37 Cryptography also works this way.
01:50:38 You have some trap door
01:50:39 where you can verify something’s correct,
01:50:41 but to get that thing done,
01:50:43 if you’re doing it brute force,
01:50:44 it takes an enormous amount of computation.
01:50:46 Well, not all problems are like this,
01:50:48 like protein folding, to verify the protein
01:50:50 is folded correctly, you have to fold the protein.
01:50:52 So you have to redo the work.
01:50:53 But what if for arbitrary computation,
01:50:56 you could take a problem,
01:50:58 and then you could generate a proof
01:50:59 that you’ve done that computation correctly,
01:51:01 and the proof validates in logarithmic time
01:51:04 or constant time.
01:51:05 Wow, that’s incredible, right?
01:51:06 Well, Microsoft actually wrote a paper on how to do that.
01:51:09 It’s called Pinocchio.
01:51:10 So that’s another example of these types of things,
01:51:12 these rollups of things
01:51:13 where instead of doing the computation on chain
01:51:15 or trying to create some sort of replicated machine
01:51:17 that does all this stuff,
01:51:19 you instead just say,
01:51:20 okay, only thing I’m gonna use the blockchain for
01:51:22 is to check your proof.
01:51:24 But I’m gonna turn it into a distributed computing problem,
01:51:26 and any person in the world can do the problem
01:51:28 on any server, untrusted server even,
01:51:31 because you don’t have to trust the output,
01:51:33 you trust the proof, and the proof is deterministic.
01:51:36 It tells you these things.
01:51:37 So whether you’re using zero knowledge
01:51:39 or Sigma protocols or some other mechanism,
01:51:41 it’s moving you in that particular direction
01:51:44 to turn it from a replicated to a distributed problem
01:51:47 and go from I’m doing the work to I’m checking
01:51:49 that the work was done correctly.
01:51:50 That’s fascinating.
01:51:50 And all of a sudden, we’re back to the P equals NP thing
01:51:54 where for many very interesting problems,
01:51:57 the checking is efficient,
01:51:59 is much more efficient than the solving.
01:52:01 Right, and also do you want complete determinism
01:52:04 or is it probabilistic?
01:52:05 Because if you relax that requirement a little bit,
01:52:07 then suddenly actually you have a broader class of things
01:52:10 you can construct this stuff for.
01:52:12 You mentioned UTXO.
01:52:14 There’s a paper titled the Extended UTXO Model.
01:52:18 It writes in the introduction,
01:52:20 Bitcoin and Ethereum hosting the two currently most valuable
01:52:23 and popular cryptocurrencies
01:52:25 use two rather different ledger models
01:52:28 known as the UTXO model and the account model respectively.
01:52:33 At the same time, these two public blockchains
01:52:35 differ strongly in the expressiveness
01:52:37 of the smart contracts that they support.
01:52:41 This is no coincidence.
01:52:42 Ethereum chose the account model
01:52:44 explicitly to facilitate more expressive smart contracts.
01:52:47 On the other hand, Bitcoin chose UTXO also for good reasons,
01:52:51 including that its semantic model stays simple
01:52:54 in a complex concurrent
01:52:55 and distributed computing environment.
01:52:57 This raises the question of whether it is possible
01:52:59 to have expressive smart contracts
01:53:01 while keeping the semantic simplicity of the UTXO model.
01:53:06 Okay.
01:53:07 So what’s the fuck that mean?
01:53:08 Exactly.
01:53:09 What is UTXO, what is the account model,
01:53:13 and what is the idea of the Extended UTXO model?
01:53:17 So I guess the easiest way of visualizing it
01:53:19 is that UTXO is kind of like cash register accounting.
01:53:22 So let’s assume you don’t have credit cards,
01:53:24 you just have cash.
01:53:25 And so when you go and buy some milk and potatoes
01:53:28 or whatever and you go to the cashier,
01:53:30 you pull out your $20 bill, you give it to them,
01:53:33 unless it comes up to 17.50, they have to make change.
01:53:36 So you don’t tear your $20 bill,
01:53:39 cut a piece of it off and say, here’s part of my 20.
01:53:42 You give them the entire $20 bill
01:53:44 and then they give you something back.
01:53:46 And the things that they give you back
01:53:48 are also atomic units, they don’t cut those things up.
01:53:50 So that’s kind of what UTXO is all about in a nutshell
01:53:53 is that there’s inputs and outputs,
01:53:55 your inputs that 20 and your outputs will be
01:53:57 the 17.50 that goes to them
01:53:59 and then the remaining change that goes back to you, okay?
01:54:03 The problem with this particular model
01:54:05 is that the way it was implemented with Bitcoin,
01:54:08 there was no notion of how do we run complex predicates,
01:54:12 complex contracts on this thing,
01:54:15 where instead of just saying, okay,
01:54:17 I’m just gonna push value to you,
01:54:19 I wanna put lots of terms and conditions
01:54:21 into the movement of that value.
01:54:22 Like you only get this if I mow your lawn on Tuesday
01:54:26 or you only get this if some event happens
01:54:29 like the Broncos win the Super Bowl or something like that.
01:54:32 Okay, so you need some notion of programmability with it.
01:54:35 So a lot of people are trying to figure out
01:54:37 in the early days of Bitcoin,
01:54:38 how could we improve the expressiveness of the system?
01:54:41 And one of ways of doing it is you can go
01:54:44 to a different accounting model, bank style accounting.
01:54:48 So in a bank ledger, every time you do a withdrawal,
01:54:51 a deposit, it’s a mutable system.
01:54:54 With the cash register accounting,
01:54:55 you don’t tear up the bills,
01:54:57 but the bank you can deduct or add ledger all the time.
01:55:00 So Ethereum kind of works in that bank accounting system
01:55:02 where you just, you send messages, you send transactions
01:55:05 and you’re going up or down.
01:55:07 And so you can trigger programs the same way.
01:55:10 So what we did is we said, okay,
01:55:12 if you take the UTXO model and you have some data to it,
01:55:15 and instead of saying it’s just a digital signature,
01:55:17 but it’s in a script, you can basically create something
01:55:22 that’s still the same as cash register,
01:55:24 but now you have programmability
01:55:26 and the big difference is local versus global.
01:55:28 So in the case of UTXO, your scripts are your concerns.
01:55:32 So whatever’s going on in that cash register
01:55:34 has no bearing or impact on the other cash registers.
01:55:37 But when you look at bank accounting,
01:55:39 you have to know the state of the entire banking world
01:55:42 to be able to make that work.
01:55:43 Why?
01:55:44 Because if that transaction is inbound,
01:55:45 that wire transfer is inbound,
01:55:46 you have to know those funds are actually there,
01:55:48 that thing is actually happening.
01:55:50 So when you have a global state for a program,
01:55:52 it’s like you could do a lot more with it,
01:55:54 but it’s a lot more dangerous.
01:55:55 And so you have to build all these mechanisms
01:55:57 to try to protect yourself from it.
01:55:58 So what we did is we said, okay, add data,
01:56:01 add a programmability,
01:56:02 and you’re kind of in this nice Goldilocks zone
01:56:03 between what Ethereum did with an account style model
01:56:06 and a global state system.
01:56:08 And you’re not as restrictive as Bitcoin,
01:56:10 but you’re still in a Turing complete world,
01:56:12 you can still run all kinds of things.
01:56:14 And then any standard mathematician, they’ll say,
01:56:16 okay, well, is it isomorphic?
01:56:19 Is there a mapping between this?
01:56:21 What type of function can I actually take something
01:56:23 expressed in one structure
01:56:25 and transmit it to the other structure
01:56:27 and properties are preserved?
01:56:28 So we wrote a paper, it’s called Climatic Ledgers,
01:56:30 where we actually showed that UTXO,
01:56:32 Extended UTXO and accounts are somewhat similar
01:56:36 in that you could map things that happen in one system
01:56:39 to the other system,
01:56:40 the properties are preserved between the two.
01:56:42 So in practice, what’s nice about Extended UTXO
01:56:45 is that you can put infrastructure on top of it
01:56:48 to make the development experience relatively similar
01:56:51 to the development experience
01:56:52 of what you would do with Ethereum,
01:56:55 but you don’t have to worry about this global state.
01:56:58 So when you talk about sharding,
01:56:59 it’s a lot easier to do that.
01:57:01 It’s a lot more conceivable to that.
01:57:02 And also you get determinism in the system.
01:57:05 So when I have a Plutus smart contract,
01:57:07 whatever I run locally is exactly what I expect to run
01:57:10 in the system.
01:57:11 When you have a concept of this mutable global state
01:57:13 in the system, whatever you run locally
01:57:15 is not necessarily what you’re gonna get
01:57:16 when you actually push it into the system.
01:57:18 So you may misprice things and the contract will fail.
01:57:21 It doesn’t ever happen in the Plutus world.
01:57:23 So you got a lot of advantages with this particular model.
01:57:26 The downside is that it’s a little bit less expressive
01:57:29 on the boundaries and a little bit harder
01:57:31 to write certain types of software with it.
01:57:34 But again, how you resolve that is you kind of build
01:57:38 higher level languages and other such things
01:57:40 that compensate for these types of things
01:57:42 and design patterns that compensate
01:57:44 for these types of things.
01:57:45 The other advantage that we have that’s really fun
01:57:47 and exciting is that Bitcoin lives in this model
01:57:50 and there are other UTXO based systems.
01:57:52 And so they’re all talking about smart contracts as well.
01:57:55 And they would like to continue working in the UTXO model.
01:57:58 So if you’re a Bitcoin contract developer or other things,
01:58:01 there’s actually already a group of people
01:58:02 that understand this very well.
01:58:04 And that’s still a fairly large part
01:58:06 of the mindshare of the entire space.
01:58:08 So there are no silver bullets.
01:58:09 And anytime you pick a particular model,
01:58:11 there’s an upside and a downside.
01:58:13 And there’s different ways of doing things
01:58:14 from cash register accounting or bank accounting.
01:58:16 You can even do different accounting models.
01:58:18 But we felt this was kind of the best first step
01:58:21 to go into because we started with something very familiar
01:58:24 that had a long history behind it.
01:58:27 And it maps very beautifully
01:58:29 to functional programming principles.
01:58:30 This concept of immutability and these things
01:58:33 and much more strict management of state
01:58:36 and no notion of having this global concept
01:58:39 that you have to kind of manage as you break up the system.
01:58:43 Now in practice, what does this mean to the developer
01:58:46 when they actually start real writing an application?
01:58:50 Not too much.
01:58:51 There’s gonna be a little bit of retooling
01:58:53 and some new patterns you have to learn.
01:58:54 But in practice, you can still do the same things.
01:58:56 You can implement a Uniswap style thing.
01:58:59 In fact, we even wrote that code
01:59:00 with the Plutus Pioneers program.
01:59:01 So you can go to YouTube and watch a lecture
01:59:03 and see how that’s done.
01:59:05 You can do a stable coin.
01:59:06 You can do an Oracle.
01:59:07 You can do interactive contracts.
01:59:10 It’s just, it has to be done a little differently
01:59:12 than the way that you would do it in an account style model.
01:59:14 Just like you could run an application in Java,
01:59:16 you can run an application in Haskell.
01:59:18 They both can do the same thing,
01:59:20 but the code is gonna look different.
01:59:21 And the canonical way of looking at things is different.
01:59:25 So in terms of Oracle, Oracle networks,
01:59:27 what are your thoughts about chain link
01:59:29 and external off chain data sources?
01:59:32 And everything we’ve been talking about now
01:59:34 with the external, with the extended UTXO model.
01:59:37 Yeah, I mean, trying to do smart contracts without Oracle
01:59:41 is like trying to have sex with your pants on.
01:59:43 I mean, it’s not really fun.
01:59:45 It’s not exactly the best of things.
01:59:47 That’s the way I’ve been doing it all these years.
01:59:49 I didn’t know.
01:59:49 For any other person, Lex,
01:59:51 I wouldn’t believe you, but for you.
01:59:53 That’s why I’m single.
01:59:55 This makes so much sense now.
01:59:57 Okay, so anyway, you need the outside world
02:00:01 to be injected into your system, right?
02:00:03 I’m trying to keep a straight face.
02:00:06 It’s great.
02:00:07 You need the outside world to make your system useful.
02:00:09 It’s like all the kinds of things that you care to do
02:00:12 with a smart contract usually involve human beings
02:00:14 and information streams aggregating and doing something.
02:00:17 So the Oracle is a super important component in practice
02:00:20 for any smart contract involving any notion of value.
02:00:24 You need to know when things have happened,
02:00:25 how they happen, who won, who lost, et cetera, et cetera.
02:00:28 So first, where do you get the data from?
02:00:31 So what’s the aggregator?
02:00:32 This is why we love our relationship with Wolfram
02:00:34 because one of the things you’ll know about Wolfram
02:00:36 as you get to know the guy is he’s a data pack rat.
02:00:39 Every email, every communication, every interaction,
02:00:41 he’s archived somewhere.
02:00:43 Like last time I talked to him,
02:00:44 oh, yeah, I have emails from you from 2012.
02:00:46 It’s like, you still have those?
02:00:48 Yeah, every keystroke is written down
02:00:50 and stored somewhere.
02:00:51 So if you use Wolfram Alpha,
02:00:52 it’s a simulacrum of the way his mind thinks.
02:00:55 And so you can query the system and be like,
02:00:57 oh, how many shipwrecks have happened in Florida
02:00:59 between 1950 and 2000 that have resulted
02:01:02 more than a billion dollars of cargo loss
02:01:04 and at least one fatality?
02:01:06 And it’ll return an answer.
02:01:08 I mean, it’s an incredible source of data that’s computable.
02:01:11 For people who don’t know, Wolfram Alpha
02:01:13 is more than just the thing that assists you
02:01:15 with your math homework in high school.
02:01:18 It’s actually this giant network of data
02:01:20 of like weather data, of location data,
02:01:23 just statistic, all kinds of,
02:01:25 it’s doing the aggregation in a way
02:01:26 that you can query across data sets.
02:01:30 And it’s exactly this kind of idea.
02:01:34 It basically represents the very kind of thing
02:01:36 you would hope to be able to query off chain
02:01:39 as part of the smart contracts.
02:01:41 Right, but the only downside is it’s centralized.
02:01:44 And that’s always the Achilles heel of Wolfram
02:01:47 is he tends to like proprietary things
02:01:49 and he tends to like centralizing things
02:01:50 and mostly because he likes running the things.
02:01:53 And everybody can have an opinion on that.
02:01:56 The thing though is that after you’ve done aggregation,
02:01:59 there’s a question of injection.
02:02:00 How do you get that data into the system?
02:02:04 And you can do that in a very naive way
02:02:05 where you can say, oh, I’m just gonna attach a public key
02:02:07 to it and it’ll sign for that data feed, that injection.
02:02:10 And then somehow I’ll just trust it as it is.
02:02:13 Or you could try to make it more complicated.
02:02:16 You could wait data feeds from different sources
02:02:18 and have some notion of truthiness
02:02:20 or a veracity metric or something like that.
02:02:23 So Chainlink is just one of many different philosophies
02:02:27 that was born out of the academy.
02:02:29 I believe Ari Jewell was connected to it
02:02:30 and there’s some good people on that side.
02:02:33 And it has a philosophy about how do you aggregate,
02:02:36 a philosophy about how do you inject
02:02:38 and how do you create incentives
02:02:39 so that that process over time gets more federated
02:02:43 or more decentralized instead of centralizing
02:02:46 around one particular setup.
02:02:47 Now, closely related corollary to this
02:02:50 is computation off chain.
02:02:52 So as I mentioned, smart contracts
02:02:54 are intimately connected to our Oracle.
02:02:56 The question is how much pre processing
02:02:58 and state management are you gonna do outside of the system
02:03:01 versus what do you do inside of the system?
02:03:03 So it’s a very interesting balance between these two.
02:03:07 And they were thinking about this stuff for a long time.
02:03:09 There’s a great paper called Town Crier,
02:03:11 came out way back in the day at Cornell.
02:03:13 And that was all about using like SGX to scrape things
02:03:16 and you can rely on trusted hardware to give you good data.
02:03:20 But you could also use those SGX cores
02:03:22 to do contract processing,
02:03:24 because if it runs in trusted hardware,
02:03:25 then it’s very unlikely to be tampered with or manipulated.
02:03:28 And because of that, you don’t have to federate it
02:03:31 or decentralize it, you can run it on a single device
02:03:33 as if it was running on a cryptocurrency.
02:03:36 So there seems to be a desire in that community
02:03:38 to capture more and more of the smart contract stack
02:03:42 and pull more and more of that stack
02:03:43 into that layer two infrastructure
02:03:45 from running on layer one.
02:03:47 Why?
02:03:47 Because you have cost reduction
02:03:49 and potentially because your trust model collapses
02:03:51 to whatever Chainlink is offering,
02:03:54 you’re not gaining anything
02:03:55 by doing the computation on Ethereum or another platform.
02:04:00 Because you ever watched The Simpsons?
02:04:02 There was this beautiful episode where Mr. Burns
02:04:04 wants to turn the power off in Springfield.
02:04:06 It is the perfect analogy for information security.
02:04:09 So he and Smithers,
02:04:11 they go through this elaborate series of doors
02:04:13 and secret passages and guard dogs and robots and shit
02:04:17 to get to the center of the power plant
02:04:18 to turn off the power.
02:04:20 And when they arrive at the center of the plant,
02:04:21 there’s like this stray dog that’s inside the room.
02:04:25 And there’s this wicker screen door that leads to the outside.
02:04:29 And you’re like, well, why the hell did you go
02:04:30 through this elaborate series of doors and things
02:04:32 if there’s like a backdoor into your system?
02:04:34 Well, that’s basically a real life analogy
02:04:36 of the relationship between the Oracle
02:04:39 and the smart contract.
02:04:40 You’re only as good in your infrastructure model
02:04:42 as your weakest link.
02:04:43 And it doesn’t matter if all of your computation
02:04:45 is decentralized, if you’re at the mercy of your data feed.
02:04:48 Because I can just manipulate that
02:04:50 and break the entire security model of the system, okay?
02:04:52 You’ll perfectly execute the wrong answer.
02:04:55 So they say, well, if you’re trusting us anyway,
02:04:57 why don’t you pull more of what you’re doing on chain
02:04:59 into our stack, which creates more transaction fees for them
02:05:02 and more value for them.
02:05:04 But there are many different ways you can do oracles.
02:05:06 And earlier I was talking about the biology of these things,
02:05:09 the cell differentiation.
02:05:11 The minute that you admit heterogeneity in your system
02:05:14 and you start having cells like stake pools
02:05:17 or things that are on 24 seven,
02:05:20 then you can start asking the what if question.
02:05:22 Why don’t you guys just also provide data feeds?
02:05:26 Why don’t you guys also provide state channels
02:05:28 or payment channels or generate random numbers
02:05:29 from here or whatever?
02:05:31 And you’re now a service provider.
02:05:32 You’re making the blockchain full time,
02:05:34 but part time you’re doing this.
02:05:35 And if you’re making bagels,
02:05:36 you could probably make donuts, that type of a concept.
02:05:39 So I think that type of competition
02:05:40 is going to be very difficult
02:05:43 for a lot of these layer two protocols
02:05:47 that aren’t tightly coupled with the protocol
02:05:49 because the ones that are tightly coupled with the protocol,
02:05:52 they have a built in trust advantage.
02:05:54 They’ve already built a commercial reputation.
02:05:56 There’s already an increasingly more decentralized set.
02:05:58 The other thing is you don’t need a token.
02:06:01 You can just use ADA.
02:06:02 You don’t need an oracle coin
02:06:04 for these types of things to work.
02:06:05 And by the way, that’s just for the injection component
02:06:08 and the veracity attestation.
02:06:10 So is it true or not?
02:06:12 That’s not about the aggregation.
02:06:13 That’s still a tremendously time intensive,
02:06:15 expensive proposition.
02:06:17 There’s only a few people in the world
02:06:18 that have what Steve has with Wolfram.
02:06:21 And those guys by just cutting off those supply
02:06:24 to replicate what they have is something
02:06:26 that would cost hundreds of millions
02:06:28 or billions of dollars.
02:06:29 And so it’s an interesting question
02:06:30 of how do you incentivize
02:06:31 decentralized aggregation of information?
02:06:33 And that’s kind of what town crier
02:06:35 and other protocols we’re trying to achieve.
02:06:37 So maybe you can say how town crier works
02:06:39 because it’s like, what’s your vision?
02:06:41 You’re now partnering with Wolfram and Wolfram Alpha
02:06:45 in sort of exploring this partnership of data
02:06:49 and the blockchain.
02:06:51 What’s your vision for a possible distributed version
02:06:54 of Wolfram Alpha?
02:06:56 Well, the first step is just say,
02:06:58 can we use this as a feed?
02:06:59 And they can be what Bloomberg is to the financial markets.
02:07:02 So you have a terminal and you have something
02:07:04 and there’s always a value of at least offering choice.
02:07:06 And so it’s not like we’re anti chain link
02:07:08 or picking winners and losers.
02:07:10 It’s an open protocol, it’s an open system.
02:07:11 So if we’re successful, chain link will migrate
02:07:14 or it will at least support us
02:07:16 because they like money.
02:07:17 They like users, they like liquidity.
02:07:19 It’s a disservice to their community
02:07:20 not to support a potential customer set,
02:07:23 but you’re gonna have a spectrum
02:07:24 from the desire to do a completely decentralized
02:07:28 aggregation, curation, injection and veracity attestation
02:07:33 to a completely centralized vertically integrated set.
02:07:36 You need to be able to have that whole spectrum
02:07:38 and offer that to the smart contract developer
02:07:40 to decide what makes sense.
02:07:42 By the way, a lot of cases,
02:07:44 they’re gonna be their own Oracle.
02:07:45 So for example, the World of Warcraft example that I gave,
02:07:49 well, it’s a completely centralized thing.
02:07:51 It’s a video game run by a single company.
02:07:54 There’s no sense in saying
02:07:55 that we’re somehow going to decentralize that.
02:07:57 What they’re just trying to do is extend their currency
02:07:59 or NFTs or whatever into new marketplaces.
02:08:02 So the minting of that is controlled by a single entity
02:08:07 and the world state of that,
02:08:08 you just have to trust Blizzard
02:08:10 to inject that into the system.
02:08:12 You could try to imagine some sort of like,
02:08:14 Sentinel group of people within the game
02:08:16 who keep Blizzard honest,
02:08:18 but it’s completely unnecessary
02:08:19 because they can change the rules
02:08:20 of the system arbitrarily.
02:08:22 So in that case, you’re optimizing around efficiency
02:08:26 and cost reduction.
02:08:27 So you’d want a single feed that gets injected
02:08:30 into the system from them.
02:08:32 If you look at a stable coin that’s algorithmic
02:08:34 and it’s basing its value on the aggregation
02:08:37 of many different exchanges,
02:08:38 that’s the polar opposite example.
02:08:41 Because there you’re saying,
02:08:42 okay, what’s the price of my asset relative to some basket?
02:08:45 But how do I know that the price feeds I’m looking at
02:08:48 are accurate?
02:08:49 You’d have to look at Binance and Bittrex
02:08:51 and all these other things,
02:08:52 or maybe there’s conventional Forex exchanges
02:08:53 or something like that.
02:08:54 Okay, well, how do you weight that?
02:08:57 And how do you clip outliers and these types of things?
02:08:59 That’s a completely different conversation.
02:09:01 There’s a lot more mechanics you have to put in
02:09:04 for that bundling and attestation of the veracity
02:09:07 of the data feed.
02:09:08 And what happens if you get it wrong?
02:09:09 Your stable coin gets mispriced and everything goes to hell.
02:09:13 And the markets will eventually correct it
02:09:15 for arbitrage seeking behavior,
02:09:17 but anything that was built on that will fail
02:09:19 in the short term.
02:09:21 So Oracle is really just a game of,
02:09:23 you have to build a standardized interfaces
02:09:25 and make it as easy as possible for people to do that.
02:09:27 And then let people choose how they wanna inject data
02:09:31 and what level of assurance do they need behind that?
02:09:34 And the question is, how much do you leave to the user
02:09:36 versus how much does the protocol take care of for you?
02:09:38 And it’s a difficult design question.
02:09:40 For our part, we love working with Steve and Wolfram
02:09:43 and they’re a great company
02:09:45 and they really have some bright people there.
02:09:47 And we know on the data set, they’re second to none
02:09:49 because not only do they have it, it’s computable.
02:09:51 You can do all kinds of things
02:09:52 and manipulate with a very rich query language.
02:09:55 So that’s a great thing.
02:09:56 And we wanna make sure that that’s accessible
02:09:58 to developers and Cardano.
02:10:00 Remember, they’re like Bloomberg.
02:10:01 It’s a centralized speed in that respect.
02:10:04 So if you wanna build a Chainlink S competitor,
02:10:06 there’s other protocols you could do for that.
02:10:09 Now you asked about Tom Cryer
02:10:10 and that was an attempt to kind of sweep the oceans
02:10:14 with the net, get the data through a decentralized way.
02:10:19 And that was just saying, hey, let’s use trusted hardware
02:10:22 to go read all kinds of websites and other things.
02:10:24 And because it’s trusted hardware,
02:10:26 the scraping is nonbiased.
02:10:28 If you find something inconvenient to whatever
02:10:31 the person who’s scraping is,
02:10:32 trusted hardware will still do it and it can’t be changed.
02:10:35 You’d have to manipulate SGX to do that.
02:10:37 So that’s great, but you still run into the problem
02:10:40 of how do you wire that together?
02:10:42 The underlying websites still don’t have any notion
02:10:44 of veracity or reputation behind them.
02:10:47 And then you also have the issue of storage.
02:10:49 Where the hell do you put all of it?
02:10:51 If you have exabytes of data,
02:10:53 what’s the incentive for that?
02:10:54 That’s the dream of the Semantic Web.
02:10:56 I still think is a fascinating idea
02:10:58 how to basically convert the internet into a core,
02:11:02 like a knowledge base that you can query,
02:11:06 you can integrate in the same way you did
02:11:08 with Wolfram Alpha, but much bigger.
02:11:11 But that means basically revolutionizing
02:11:14 the way we put the internet together,
02:11:17 which I think these ideas of off chain data
02:11:22 will motivate people, because there’s a lot of money
02:11:26 to be made.
02:11:27 Finally, there’s money to be made with the Semantic Web.
02:11:30 So that’ll be an interesting kind of future.
02:11:32 I do want to ask you about video games really quick
02:11:35 as a small tangent, because you said this really
02:11:37 interesting idea of Blizzard being centralized control.
02:11:40 Is it possible to have items in the game
02:11:45 that are not controlled by Blizzard?
02:11:48 Sure.
02:11:49 Being controlled in a decentralized fashion
02:11:51 that you can, like what is it,
02:11:53 the grandfather sword in Diablo?
02:11:56 Hmm, what was it really?
02:11:58 Somebody was criticizing me.
02:11:59 I was saying all these kinds of nice things
02:12:01 about Diablo III, and they said Diablo II Resurrected
02:12:04 is coming out, they need to check it out.
02:12:05 There’s a lot of camps and wars that need to be done.
02:12:08 Come on, we both know that Diablo II
02:12:09 is far better than Diablo III.
02:12:10 That’s what they’re saying.
02:12:11 This is the war that they’re having.
02:12:12 Okay, so we’ll play it, it’s coming out soon,
02:12:15 I’ll play it, fine.
02:12:17 But nevertheless, those items are owned by Blizzard.
02:12:20 Is it possible to create video games
02:12:23 where items are owned by the people outside of Blizzard,
02:12:28 and do you think in like a half century from now
02:12:32 we will all live in those games,
02:12:34 and we’ll forget the physical space even exists?
02:12:35 Well, yeah, that’s definitely possible.
02:12:37 I look at CryptoKitties, that’s a great example of that.
02:12:39 Can you explain what CryptoKitties is?
02:12:41 Well, it’s basically just a video game
02:12:42 that kind of lives on a blockchain,
02:12:44 and the creatures within the game
02:12:46 can breed with each other and create new CryptoKitties,
02:12:48 and you can own them.
02:12:50 So it’s like some sort of dystopian Tamagotchi
02:12:52 with lots of money behind it.
02:12:54 But anyway, the thing is those assets
02:12:58 actually have a blockchain based representation.
02:13:00 And so whether the infrastructure
02:13:03 that hoists up that game off chain goes on or off,
02:13:05 because that ledger exists outside of the game,
02:13:09 any person can come in and replicate it, restore it,
02:13:12 and turn it back on sans intellectual property.
02:13:16 So yeah, it’s completely possible
02:13:19 to break your architecture up
02:13:20 where you have a notion of the player part,
02:13:24 and then you have a notion of the experience part,
02:13:27 and you can interchange experiences,
02:13:29 almost like you do cascading style sheets or something
02:13:32 for different presentations,
02:13:33 and the ownership of the underlying layers, the players.
02:13:36 So yeah, that’s definitely doable.
02:13:38 And frankly, that’s what’s gonna happen in the gaming world,
02:13:40 because there’s so much value in that.
02:13:42 I mean, everybody wants play,
02:13:43 and right now the model is you make a game,
02:13:46 you sell licenses, and you have a huge surge of people
02:13:50 at the beginning of the game buying the video game,
02:13:52 and then you have this long tail,
02:13:54 but you’ve gotten almost 95% of your value
02:13:56 in the first six months, and you have a huge churn rate.
02:13:58 The odds are the vast majority of people
02:14:00 won’t be playing the game within 12 months.
02:14:02 But if you can create an interactive game
02:14:04 where there’s an actual economy inside the game,
02:14:06 then you have EVE Online, or Second Life,
02:14:08 or any of these things,
02:14:09 where you have people playing for 10 years,
02:14:10 and there’s like people buying virtual real estate
02:14:12 and all these other things.
02:14:13 You as the game developer actually don’t have to create
02:14:16 a lot of content.
02:14:17 So your long tail gets a lot fatter,
02:14:20 and it generates a lot more revenue,
02:14:21 and your cost of operating the system
02:14:23 is fairly fixed or diminishing.
02:14:25 So the economics align for doing exactly
02:14:28 what you’re talking about, and I think it’ll get done.
02:14:30 Well, I just saw recently sort of this calculation
02:14:34 that people played WoW and Fortnite for 140 billion hours.
02:14:40 Yeah.
02:14:41 So, and that’s without the economic incentives there.
02:14:44 So do you think it’s possible that like most of our economy
02:14:47 in the future, people playing video games essentially?
02:14:52 Like, okay, so one vision of the future,
02:14:56 especially with AI and automation,
02:14:58 that people like, that we get wealthier and wealthier,
02:15:01 there’s this kind of rising GDP for the entire world,
02:15:04 and then people are losing their jobs,
02:15:06 but they’re still well off enough
02:15:08 to be able to have a high quality of life.
02:15:11 So we’re all looking for meaning,
02:15:12 and the meaning we’ll find is by playing video games,
02:15:14 and now there’s this extra levels,
02:15:17 like you can be a Bill Gates within a video game world,
02:15:19 in the digital world as opposed to the physical world.
02:15:22 Is that, do you think that’s the future?
02:15:24 You just wanna have the Westworld
02:15:26 if you can’t tell the difference, does it matter?
02:15:28 Lion uttered to you.
02:15:30 Did you ever interview Yuval Harari?
02:15:32 Not yet, eventually.
02:15:34 Well, yeah, but yeah, I guess, you know,
02:15:35 Homo Dias, that’s kind of like the roadmap there, right?
02:15:38 This hedonistic dystopia where everybody just lives
02:15:42 wired into some simulation,
02:15:44 and there’s some movies about that,
02:15:46 Ready Player One, and the other one was Surrogate,
02:15:49 and so forth, so yeah, Hollywood has certainly visualized
02:15:52 what this could be, but you know,
02:15:54 I’m not so pessimistic in that respect.
02:15:58 I do believe that the video game world
02:16:00 is evolving at an amazing pace,
02:16:01 if you’re looking at where Unreal is at,
02:16:03 is just incredible, the latest Unreal Engine,
02:16:06 and within one or two more ticks of that clock,
02:16:09 the iteration, so five to 10 years,
02:16:11 the photorealism will be so good that it’ll be hard
02:16:15 to distinguish between real life and video games,
02:16:18 and you know, the hardware is almost there,
02:16:20 so the question is then,
02:16:22 when you have photorealistic experiences
02:16:25 where you’ve successfully traversed the uncanny valley
02:16:27 to a point where it’s good enough,
02:16:29 then will virtual reality be more desirable
02:16:33 than actual reality?
02:16:35 And for the vast majority of people,
02:16:37 the answer’s probably yes,
02:16:38 because actual reality’s tough, it’s hard, you know,
02:16:42 but then your knowledge that you live in a virtual world
02:16:46 actually becomes a problem for you,
02:16:48 so there’s gonna be this kind of sad, dark industry
02:16:52 where people try to create amnesia,
02:16:54 where they’re not aware that they’re inside
02:16:55 the virtual world, and so that’s interesting.
02:16:57 Why is it sad?
02:16:58 I mean, it’s almost like a…
02:17:00 Because you know it’s not real,
02:17:02 but if you could forget that it’s not real,
02:17:05 then you believe what you’re experiencing is real.
02:17:07 Yeah, but yeah, so what?
02:17:09 You forget, like you forget all the ugly parts of life,
02:17:12 which is the physical, the meat space,
02:17:14 and then you get to enjoy video games.
02:17:16 But it’s always lurking in the back of your mind
02:17:18 that you’re in the matrix.
02:17:19 Well, that’s… You have to not be in the matrix.
02:17:20 That’s just why the bald dude in the matrix was like,
02:17:22 I wanna be rich and have a beautiful wife
02:17:25 and eat a steak every day.
02:17:27 You know, he didn’t wanna know he was in the matrix.
02:17:29 So you would take the red pill, not the blue pill.
02:17:31 Well, no, hang on, it depends on how good
02:17:34 the virtual world is, Lex.
02:17:36 Well, that’s what I’m trying to tell you,
02:17:37 is I mean, isn’t that what most of the beautiful experiences
02:17:40 about human life are, is forgetting for a moment,
02:17:46 for a time, like the mess of it?
02:17:48 Yeah.
02:17:49 I mean, that’s what love is, is you forget.
02:17:51 Like all of a sudden everything is beautiful,
02:17:53 but like the reality is you’re gonna lose that person
02:17:55 and most likely love will fade.
02:17:57 And no matter what, even if it doesn’t,
02:17:59 you’re both gonna be dead soon.
02:18:01 Jesus Christ.
02:18:04 So I’m taking the blue pill on that one.
02:18:06 You went full Ernest Becker on me, man.
02:18:07 Okay.
02:18:10 But you know, I get what you’re saying though,
02:18:12 and then actually, but then it begs the question,
02:18:14 how do we, and it goes back to the very first question
02:18:17 you asked in this interview, which is like,
02:18:18 how do we know we’re not in a simulation?
02:18:20 Or, you know, is this Bostrom’s concepts
02:18:22 or these ideas like real?
02:18:24 Well, it’s entirely possible that we are
02:18:26 and that we desire to be because the real world
02:18:30 is horrifically dystopian or bad,
02:18:32 or maybe we actually don’t exist, we’re completely virtual
02:18:35 and does it matter?
02:18:36 And I’d argue that it probably doesn’t
02:18:38 at some certain point.
02:18:40 If you’re at the end of your life
02:18:41 and you’re 90s dying of cancer,
02:18:43 the fact that you can live out being young, healthy,
02:18:45 and 25 is probably a desirable thing
02:18:48 and no one would ever complain about that.
02:18:50 Where it becomes problematic is if the vast majority
02:18:53 of society enters this virtual simulacra of reality
02:18:57 and as a consequence, nothing works
02:18:59 because there’s no one to do anything,
02:19:01 society falls apart in that respect.
02:19:03 There’s no desire to do anything in the real world.
02:19:05 Innovation stops, the desire to actually do real work stops
02:19:09 because you’re always inside this virtual economy.
02:19:12 So I don’t know, it’s an interesting question,
02:19:14 but drawing it back more to where we’re at today,
02:19:18 the evolution factors are there.
02:19:20 VR is evolving at a very rapid rate.
02:19:22 The game engines are just incredible today
02:19:25 and they’re really doing amazing things.
02:19:27 And there seems to be an overwhelming desire
02:19:30 for people to escape the harshness of where they live,
02:19:33 just by evidence by how many billions of hours
02:19:36 have been spent playing video games.
02:19:37 People still play Skyrim.
02:19:39 Yeah, it’s a good game.
02:19:41 It’s probably my favorite game
02:19:42 of the whole Elder Scrolls series.
02:19:44 But it’s fascinating because smart contracts
02:19:47 is actually the mechanism by which we take a lot
02:19:50 of the meatspace stuff and move it to the digital world.
02:19:52 So all the stuff we’ve been talking about
02:19:55 is really probably the mechanisms which take us there,
02:19:59 which I find that world not dystopian.
02:20:03 I find that world quite dystopian
02:20:04 because there’s so many opportunities
02:20:05 to create beautiful experiences.
02:20:08 But since we’re talking about the future,
02:20:11 let me ask you a timeline question,
02:20:14 or even just like definitional.
02:20:15 What is Alonzo?
02:20:17 You mentioned some fun Hello World experiments going on.
02:20:20 Right, right.
02:20:22 And how and when will Cardano get smart contracts?
02:20:26 Yeah, so Alonzo Church is a famous, famous mathematician,
02:20:29 computer science guy, and he was a contemporary of Turing.
02:20:32 And there was like these three different views
02:20:34 of computing, recursive functions from Gödel
02:20:36 and Turing machines from Turing,
02:20:37 and Church had lambda calculus, and they’re all equivalent,
02:20:40 and they all give you the ability to build a computer.
02:20:42 So we like functional programming, so we decided.
02:20:46 That’s your favorite Church.
02:20:47 So we had to name something after Church,
02:20:49 and it’s just weird that we never did.
02:20:52 So we said, okay, Alonzo is a good release name.
02:20:54 Basically, it was bringing smart contracts to Cardano.
02:20:56 Took us a long time to get here,
02:20:58 and we’ll be there in the next 90 days.
02:21:00 It’s like everything we do, there’s a process,
02:21:03 and so there’s all the colors of the rainbow.
02:21:05 We start with Alonzo blue, and then white, and purple.
02:21:09 And each step, you do some more things.
02:21:11 You bring more users in, and then eventually,
02:21:13 you get to a threshold where you say,
02:21:15 okay, everything works the way intended,
02:21:17 and you push a button, and we initiate
02:21:18 what’s called a hard fork combinator event,
02:21:20 and boom, the system has smart contracts.
02:21:22 You just wake up, and it’s there.
02:21:24 It’s like it’s in your house.
02:21:25 So it’s gonna be a hard fork.
02:21:26 It’s like when I got my blue check mark on Twitter,
02:21:28 I woke up, and I had it.
02:21:29 Yeah, and you were never the same.
02:21:32 You can’t go back.
02:21:33 It’s a, yeah, like hard fork.
02:21:34 It’s a hard fork of Charles.
02:21:36 Yeah, exactly.
02:21:36 You got blue mark.
02:21:37 Well, actually, I think you can take it away, but.
02:21:39 Can they take my check mark away, Flex?
02:21:41 I think.
02:21:42 Oh, but that’d be like a hard fork backwards, I guess.
02:21:47 Okay, so great.
02:21:48 So that’s, but currently, there’s a testing procedure
02:21:55 going on to see what does that look like,
02:21:58 and what will give you confidence
02:22:00 that things are working well.
02:22:00 Yeah, so first, you start with the marry era,
02:22:02 which is where we’re right now multi assets.
02:22:04 So you can do metadata and issue tokens on Cardano,
02:22:08 but you’d have limited programmability on chain.
02:22:11 Alonzo adds the programmability in,
02:22:13 but we already have most of the foundations
02:22:15 of the extended UTXO model,
02:22:16 and the smart contract model is just,
02:22:17 those things aren’t ready.
02:22:19 So the first step is, say, fork it,
02:22:21 so all those rules are now there, okay?
02:22:23 That’s what we did with Alonzo Blue.
02:22:25 We forked a testnet base layer, and it successfully survived
02:22:29 going from marry to Alonzo,
02:22:31 which means that you can move transactions
02:22:33 from one side to the other.
02:22:34 Both systems work.
02:22:35 And then the next step is, say, okay, well,
02:22:37 are the stake pool operators, people who run
02:22:39 the infrastructure, able to run this testnet
02:22:41 just like they run Cardano?
02:22:42 And that’s what we’re doing right now with Blue.
02:22:44 We’re bringing all these SPOs in,
02:22:45 and then are we able to submit and run smart contracts
02:22:48 on the system?
02:22:49 And they actually return a round trip.
02:22:51 You send something, you get something back.
02:22:53 Yay, okay.
02:22:54 So that’s where we’re at.
02:22:55 And then what you do is each step,
02:22:57 so the next is white, you go from like 50 people
02:23:00 to several hundred, and then purple’s an open testnet
02:23:03 where we want every single person in the entire ecosystem
02:23:06 to use it, and it’s also a DevNet.
02:23:08 So that means that people who are writing
02:23:10 with Pluse Playground and local interpreters,
02:23:12 their smart contracts can actually start testing them now
02:23:16 on the public infrastructure.
02:23:17 So it’s kind of like releasing dev kits to the Xbox
02:23:20 or something like that.
02:23:21 You send them out to game developers
02:23:22 before you release the Xbox,
02:23:23 so they can test their video games in anticipation
02:23:26 of the release of the system.
02:23:27 So you run that for at least a month,
02:23:29 and as long as it doesn’t blow up in your face,
02:23:31 and oh God, what have we done, Hindenburg,
02:23:33 oh the humanity, you release it and you ship it.
02:23:37 The problem is it’s no longer in our control.
02:23:39 There’s over 100 exchanges that have listed Cardano.
02:23:42 There’s lots of wallet infrastructure.
02:23:43 There are thousands of different constituencies.
02:23:45 So it’s less of a technological problem now,
02:23:49 and it’s more of a coordination problem.
02:23:51 So you have to evolve in a very methodical way,
02:23:54 and each step of the way you bring new actors in,
02:23:56 they get ready for it.
02:23:58 They upgrade their infrastructure to it,
02:23:59 and then like shells, eventually,
02:24:01 you get to the outer shell,
02:24:03 which is the hard fork for the general public.
02:24:05 And if we’ve done it right, like that blue check mark,
02:24:08 they wake up and it’s exactly the same.
02:24:11 They just get a little update thing, update your client.
02:24:14 And they start demanding Wagyu beef.
02:24:16 Is there stuff you’re worried about
02:24:17 in terms of like when something’s this tricky,
02:24:21 you know, goes up several orders of magnitudes
02:24:24 in terms of scale?
02:24:25 Are there problems that you foresee?
02:24:27 Is there, like we said, there’s game theoretic aspects,
02:24:30 all those kinds of things.
02:24:32 Like what worries you the most?
02:24:33 I mean, I sleep like a baby.
02:24:35 I wake up every two hours crying.
02:24:37 Um.
02:24:38 Um.
02:24:39 Um.
02:24:40 Um.
02:24:40 Um.
02:24:41 Um.
02:24:42 Um.
02:24:43 Um.
02:24:44 Um.
02:24:45 Um.
02:24:45 Um.
02:24:46 And what makes no sense, I slept like a baby.
02:24:49 But go ahead.
02:24:49 Yeah, yeah, exactly, right.
02:24:51 Messing your whole world up right now, Alex.
02:24:54 Um.
02:24:55 No, I mean, there’s so much that keeps me up at night.
02:24:56 You know, it’s like you’re in a cold sweat everyday
02:24:58 when you have an ecosystem like this,
02:25:00 cause you, you, the other thing is you’re judged
02:25:02 as much by the applications people build on the platform
02:25:05 as you are by the platform you’ve constructed.
02:25:08 So, you know, one of the most unfair things
02:25:10 that happened in our industry was blaming Vitalik
02:25:13 for the DAO hack.
02:25:14 He didn’t write the code, he wasn’t responsible for it.
02:25:16 It was a completely independent, different team.
02:25:18 And because it blew up,
02:25:19 a lot of people just developed this idea,
02:25:21 Ethereum is not secure, the EBM is fundamentally broken.
02:25:24 And it’s true, there are some issues there,
02:25:25 but come on, that’s like saying,
02:25:28 oh, well, Photoshop didn’t work, fuck Bill Gates.
02:25:31 Yeah.
02:25:32 And that’s the issue is you get,
02:25:34 as a platform developer,
02:25:38 coupled with the wins and losses
02:25:40 of your application developer.
02:25:41 So if they go do amazing things,
02:25:43 it’s like, oh yeah, Windows is great, we love it.
02:25:45 And if they go do terrible things, they’re like,
02:25:47 oh man, I guess he’s trying to kill all of us.
02:25:50 So what we’re kept up a night about
02:25:53 is not just what we’ve constructed,
02:25:55 but also how do we curate an ecosystem
02:25:58 and foster the development of an ecosystem
02:25:59 where you have assurance baked into the application,
02:26:02 and that’s somehow expressible to the user.
02:26:04 So when you download your smart contract
02:26:06 or you click your one click install,
02:26:08 you use your unit swap clone
02:26:09 or whatever the hell it is that’s deployed on Cardano,
02:26:12 you have a little green check mark
02:26:13 or something that indicates to you
02:26:15 that somebody audited the code
02:26:16 or followed a specification.
02:26:18 The lack of that is problematic
02:26:19 because then first there’s impersonations,
02:26:22 the whole MyEtherWallet thing,
02:26:24 like your videos or my videos are the same.
02:26:26 Every comment, there’s a bot that says,
02:26:28 hey, give me some money or something like that.
02:26:30 That kind of stuff happens.
02:26:31 But then just protocol level flaws,
02:26:34 like what happened with the DAO hack,
02:26:35 that’s what really keeps me up at night.
02:26:37 How do you resolve that problem?
02:26:38 Because I don’t hire these people.
02:26:40 I don’t tell them what to do.
02:26:41 I didn’t tell them how to build things on the platform.
02:26:44 They may have tons of experience and knowledge.
02:26:46 They could be Simon Payton Jones
02:26:47 or they could have absolutely no knowledge whatsoever
02:26:50 and they read one tutorial
02:26:51 and they’ve written three lines of code their entire life
02:26:53 and they’ve deployed something horribly broken, copy paste,
02:26:56 and suddenly it all goes to hell.
02:26:58 I’m judged by both.
02:27:00 That’s what really keeps me up at night.
02:27:01 And we’re, as a company, trying to figure out,
02:27:03 and as the ecosystem, trying to figure out standards.
02:27:06 Like at University of Wyoming,
02:27:07 we’re setting up the Smart Contract Engineering Institute.
02:27:10 We’re negotiating with them right now.
02:27:12 And the goal there is just to create some standards
02:27:14 for how to certify smart contracts
02:27:17 so that you can get that green check mark
02:27:19 and know that it actually has some assurance level
02:27:21 behind it.
02:27:22 But God, that’s a huge coordination problem
02:27:24 and it’s a huge information presentation problem
02:27:27 and incentives problem and so forth.
02:27:29 And unfortunately, people who value being first to market
02:27:31 will kind of piss in the pool for everybody else.
02:27:35 In terms of, maybe you can comment
02:27:37 on the topic of decentralized exchanges.
02:27:40 What kind of decentralized exchanges, DEXs,
02:27:43 what are they, first of all,
02:27:45 and what kind would you like to see built around Cardano?
02:27:48 Yeah, so people want to create exchanges
02:27:51 that don’t have custodial risk.
02:27:52 The point of exchange is to build you a marketplace
02:27:55 where bids and asks can find each other,
02:27:58 people can meet and trade.
02:28:00 You can find a price and you can get liquidity.
02:28:02 So you got gold, you wanna turn your gold into dollars.
02:28:05 Okay, well, somebody has to create a marketplace for that.
02:28:08 So like Coinbase is an example of a marketplace.
02:28:09 Exactly. But it’s centralized.
02:28:11 But the problem is you have custodial risk.
02:28:13 So when you put your gold and your dollars
02:28:15 or your digital representations of these things
02:28:17 into the exchange, what if Wally,
02:28:22 Eve broke up with him and now he’s really sad
02:28:24 and he’s gone to the dark side
02:28:25 and he’s become Wally the hacker.
02:28:27 Okay, so he can go and sneak his way in
02:28:29 and hack into Coinbase and steal all your gold
02:28:32 and your tokens.
02:28:32 So instead of you actually being able to swap these things,
02:28:34 you’ve lost all your money.
02:28:36 And there’s other problems too.
02:28:37 Like let’s say Daisy has now come in
02:28:41 and become a regulator and said,
02:28:42 oh, I don’t like these exchanges anymore.
02:28:44 I’m just gonna shut them all down.
02:28:46 Yeah, and then you have no access to it.
02:28:47 So you have sovereign risk, you have the risk of threat,
02:28:50 you have regulatory risk, you have the issue of banks
02:28:53 maybe cutting you out.
02:28:54 So it’s been in our industry for more than 10 years.
02:28:57 Mt. Gox was the most famous example of that.
02:28:59 They collapsed, I believe in 2013
02:29:01 and hundreds of millions of dollars was lost
02:29:05 over the course of a while.
02:29:06 So the point of a DEX is saying,
02:29:07 can we do what a marketplace does,
02:29:10 but not have Coinbase, not have a central actor
02:29:15 run this thing?
02:29:15 And there’s a lot of problems with that
02:29:17 because exchanges are generally creatures of latency.
02:29:21 You know, high frequency trading, for example,
02:29:24 the things that nanosecond,
02:29:25 they co locate their infrastructure
02:29:27 with the exchange software
02:29:28 just so they can front run orders over other people.
02:29:31 I mean, it’s crazy the amount of technology that they put in.
02:29:34 So the traditional Wall Street version of an exchange
02:29:37 is very centralized, very fast, very optimized
02:29:40 and kind of behaves by a very closed set of rules.
02:29:44 When you look at a DEX, you have to accept
02:29:46 that you’re gonna have to have slightly different rules
02:29:48 because you’re operating in a global systems latency
02:29:52 and you’re operating in a system
02:29:53 that has different behaviors.
02:29:55 However, that said, there’s a lot of great protocols
02:29:57 that have been built for it.
02:29:58 You know, Uniswap has kind of evolved a lot over the years
02:30:01 and we’ve seen a huge competition
02:30:03 and a lot of evolution to basically build out protocols
02:30:07 that kind of excuse some of these security problems,
02:30:09 enjoy high liquidity
02:30:10 and then also have this beautiful concept of openness.
02:30:15 One of the gatekeepers to crypto
02:30:16 when you’re a cryptocurrency developer are the exchanges.
02:30:19 I remember when we first created Cardano,
02:30:21 you know, the Bitfinex guys
02:30:23 reached out to the Cardano Foundation.
02:30:24 They said, oh, we’d be happy to list ADA.
02:30:26 And I said, okay.
02:30:27 And they said, yeah, we want $5 million to do it.
02:30:30 You know, so there was kind of some Italian for go fuck
02:30:34 yourself in those email conversations.
02:30:36 Fuck, hula is what I said.
02:30:39 But anyway, that kind of back and forth
02:30:41 happens all the time.
02:30:42 And because these guys are gatekeepers,
02:30:44 they have this nepotistic control information asymmetries
02:30:47 and so forth.
02:30:48 So having a DEX, you don’t have that problem.
02:30:50 You have open listing
02:30:52 and you basically just put the asset into it.
02:30:54 And if anybody wants to trade it, they will.
02:30:56 And if it seems like it’s a good idea,
02:30:58 a natural market will form, market making will occur
02:31:00 and you get liquidity with it.
02:31:01 So there’s no barrier to entry for that type of system.
02:31:05 The biggest existential problem for DEXs right now
02:31:08 is the concept of regulation.
02:31:10 So basically right now, when you use Binance or Coinbase
02:31:14 or these other guys, you have to go through KYC and AML,
02:31:16 know your customer and anti money laundering.
02:31:18 So basically who are you and you know,
02:31:20 is your money real or not,
02:31:22 or are you a drug dealer or something?
02:31:24 So normally you do that by saying, okay,
02:31:26 I’m gonna give them my copy of my passport
02:31:29 and maybe they’re gonna request some tax records
02:31:31 or whatever the best practices are
02:31:32 for the particular jurisdiction.
02:31:34 And then that exchange is liable if that’s fucked up.
02:31:37 So if the government comes in and says,
02:31:39 hey guys, you know, pull your compliance records
02:31:43 and they find discrepancies,
02:31:44 they’ll actually put the exchange out of business
02:31:46 or fine them very heavily.
02:31:48 JP Morgan Chase got $19 billion in fines
02:31:52 over the last 20 years for various compliance issues
02:31:55 amongst other things.
02:31:56 So it’s expensive, very difficult thing.
02:31:59 And at DEX, it’s open system.
02:32:01 You just have value coming in, not identity.
02:32:03 And so all these things are trading
02:32:04 amongst anonymous accounts.
02:32:06 And so there’s no notion of compliance right now for that.
02:32:09 So a lot of regulators are coming in and saying,
02:32:11 oh, well, this is just a cesspool for terrorism
02:32:14 and drug dealing and bad stuff.
02:32:15 And they’re word salad of bullshit.
02:32:18 But you know, it is what it is.
02:32:19 You have to deal with these guys.
02:32:20 And so there’s been a lot of discussions of,
02:32:22 can we take DEXs and keep the openness
02:32:25 and keep the liquidity
02:32:27 and no counterpart or custodial risk?
02:32:29 And can we add some notion of compliance to that
02:32:32 in a decentralized way
02:32:33 that doesn’t require a single actor to be a gatekeeper?
02:32:37 So I think actually by combining DIDs,
02:32:39 decentralized identifiers, that’s the way to do it.
02:32:41 But it’s actually the next generation of the technology
02:32:43 is the regulated DEX and who regulates that,
02:32:46 how does that work and so forth.
02:32:47 But I think ultimately those are gonna be
02:32:48 the only marketplaces that end up surviving
02:32:53 in this current environment
02:32:54 if your desire is to exit to a dollar.
02:32:56 If you don’t really care about the fiat side,
02:32:59 like a traditional legacy currency,
02:33:01 you can always do things in a shadowy, unregulated way.
02:33:05 But I mean, it’s a personal preference
02:33:07 and a business preference.
02:33:08 Can we kind of return to proof of work and proof of stake?
02:33:13 There’s just so many topics I wanna talk to you about.
02:33:15 So I’ll jump around a little bit.
02:33:17 But at the Bitcoin conference, Jack Dorsey spoke,
02:33:21 I think I believe he said Bitcoin changes everything.
02:33:25 I think he made a video for Jack
02:33:27 trying to explain different ideas to him.
02:33:30 I guess describing the difference between proof of work
02:33:32 and proof of stake as we’ve talked about.
02:33:35 What do you hope Jack Dorsey comes to understand
02:33:37 about the difference between proof of work
02:33:39 and proof of stake?
02:33:40 Well, I hope he understands it’s just a resource.
02:33:42 That’s the entire point of the video I was trying to make
02:33:45 is like, dude, you’re like in this cult
02:33:47 where you think the only way to be secure
02:33:49 is proof of worker and somehow proof of stake
02:33:50 is less secure than proof of work.
02:33:52 I don’t even know how you put those inequalities there
02:33:55 because you’re talking about apples and oranges.
02:33:57 You’re making different trade offs
02:33:59 and there’s different assumptions
02:34:00 about the nature of the people involved,
02:34:02 but the mechanics are the same.
02:34:04 And so it’s really more of a question of
02:34:06 what type of system do you prefer?
02:34:08 Do you want mercenaries guarding Rome
02:34:10 or do you want Roman citizens guarding Rome?
02:34:13 Okay, and as the Romans learn,
02:34:14 it’s better to have citizens usually doing that.
02:34:16 Okay, and that’s the only point I was trying to make
02:34:19 to Dorsey and I don’t think he watched it
02:34:22 or particularly cared,
02:34:24 but it was more of a video for everyone.
02:34:26 And to start that dialogue of realizing
02:34:29 that the real game is not,
02:34:31 is proof of stake better than proof of work?
02:34:33 It’s how do we go from one to end and what should end be?
02:34:36 You just mentioned that semantical addressable web,
02:34:38 going back to IPFS and these other concepts.
02:34:41 Well, how do you pay for the enormous burden
02:34:44 of storing that much data?
02:34:46 You can create a consensus protocol for it.
02:34:48 There actually is one.
02:34:49 It’s called Permacoin, came out in 2014, 15.
02:34:51 Andrew Miller wrote it and a few other authors.
02:34:54 I think John Katz may have been an author as well.
02:34:57 But basically it was just a throwaway
02:35:00 proof of work style algorithm
02:35:02 that only works if you have large amounts of data.
02:35:05 Okay, so it’s like your miner
02:35:07 is like a hard drive effectively.
02:35:09 Proof of storage, I think you call it.
02:35:11 Yeah, this type of stuff.
02:35:12 And there’s been since then many iterations,
02:35:14 evolutions of that type of protocol.
02:35:17 Okay, so what if you throw that into your resource back?
02:35:20 Now you have a capacity in your system
02:35:22 for storing huge amounts of information.
02:35:24 That’s incentivized by the way the system works.
02:35:26 And you can balance that with a proof of stake system.
02:35:29 And you can balance that with,
02:35:31 let’s say you have proof of useful computation.
02:35:33 We may have a paper on that, who knows, coming soon.
02:35:37 And what if you have a proof of useful computation
02:35:39 where maybe you can do walk stat or something, who knows?
02:35:41 With something like that, okay,
02:35:43 well now you have three resources inside your system
02:35:45 and those three things keep your system secure.
02:35:47 They keep each other balanced.
02:35:48 And they just so happen to create
02:35:50 the world’s largest supercomputer that’s programmable.
02:35:53 And it just so happens to create
02:35:54 the world’s largest database that’s programmable.
02:35:56 In addition to having a shareholder style model
02:35:59 for ownership inside of it,
02:36:00 to kind of balance these things out.
02:36:02 So people care about the appreciation of value
02:36:04 inside the system.
02:36:05 So that was my point to Jack is,
02:36:07 you’re a business guy, why are you betting all your eggs?
02:36:09 And one crazy model that’s a cult step away
02:36:13 and realize that that does something.
02:36:14 It’s a tool, but saws aren’t the only tool in the toolbox.
02:36:18 There’s hammers and screwdrivers and other things.
02:36:20 Go to end resources.
02:36:22 And let’s have a real conversation about
02:36:24 what would a world computer or a world infrastructure
02:36:27 that’s useful for your business domain,
02:36:28 in his case, Twitter, require?
02:36:31 And what type of resources would you need
02:36:33 for such a thing?
02:36:34 Well, in this case, Square, more importantly.
02:36:36 Currently, if you look at Square and Cash App,
02:36:38 they support Bitcoin.
02:36:41 He is kind of all in on the proof of work idea.
02:36:44 Not all in, but currently kind of,
02:36:46 that’s the one supported idea.
02:36:48 I guess there’s not just a tip in proof of work.
02:36:51 I love you so much, Charles.
02:36:54 Thank you, I appreciate this.
02:36:57 But I’m not gonna run with that,
02:37:00 even though I’m tempted to.
02:37:02 But looking forward, do you hope Cardano
02:37:05 becomes part of Cash App?
02:37:07 I mean, he’s a business guy, or at least I’d hope he is,
02:37:10 and it’s not about what I want or what he wants,
02:37:13 it’s about what markets want.
02:37:14 When you run a publicly traded company,
02:37:16 you have fiduciary obligation to your shareholders
02:37:18 to maximize the utility, sustainability,
02:37:21 and value of your company.
02:37:23 And so if he’s running a company
02:37:26 that makes money off of these things,
02:37:28 it makes absolutely no sense to be a maximalist.
02:37:30 You want transaction volume,
02:37:32 that’s how you make your damn money.
02:37:33 Coinbase was the same way.
02:37:34 They were very maximalist in the beginning.
02:37:36 Very quickly, they started realizing,
02:37:38 hey, we’re losing a lot of money.
02:37:39 If we wanna IPO, we kinda need to be a bit more diverse.
02:37:43 Eric Voorhees was also a maximalist way back today.
02:37:46 Now look at Eric, he’s got ShapeShift
02:37:47 and all these other pieces of infrastructure.
02:37:49 He’s a lot more friendly with us alties.
02:37:52 So Jack will make that decision,
02:37:55 his people will make that decision, I think,
02:37:56 based on market dynamics, transaction volume,
02:37:59 and value to the user.
02:38:01 And if the concern is actually legitimately security,
02:38:04 then the only question I’d ask their team is,
02:38:06 can you please provide me a definition of what?
02:38:09 Doing POW is more secure than proof of stake as a tweet
02:38:14 is not really a proof, okay?
02:38:16 You need to actually come out and sit down
02:38:17 and say, what is your security model?
02:38:19 What do you care about?
02:38:20 What do you value?
02:38:21 What’s the problems you’re concerned about proof of stake?
02:38:23 And they never really get there.
02:38:25 And that’s why I call this maximalist like a religion
02:38:28 because it’s just like saying,
02:38:30 the angels descended from the heavens.
02:38:32 And it’s like, well, how do you know?
02:38:33 Well, because the Bible said so, or this doctrine said so.
02:38:36 It’s like, well, that’s your evidence?
02:38:37 Somebody wrote something down.
02:38:39 Can you please give me a little bit more?
02:38:41 They say, no, you’re challenging the word of God.
02:38:43 In this case, you’re challenging the word of Satoshi.
02:38:45 And all I ask for is just what is the burden of proof?
02:38:48 We wrote the papers, we have security models,
02:38:50 we went through the peer review process.
02:38:52 God, that was not easy.
02:38:53 We wrote formal specifications.
02:38:55 In some cases, we formalize those specifications
02:38:57 with Isabel, for God’s sakes, which is not easy to do.
02:39:00 And then we implemented it.
02:39:01 And it’s running in production with a million users
02:39:04 at a $50 billion market cap.
02:39:06 I mean, at what point do you start saying,
02:39:08 well, maybe there’s something there?
02:39:11 And they say, no, there’s nothing there,
02:39:12 and it’s not secure, it can’t be secure.
02:39:14 And you say, okay, then why do you believe what you believe?
02:39:17 And they never come back to me with an answer, ever.
02:39:19 Well, I believe God didn’t go through a peer review process
02:39:22 when he wrote the 10 commandments.
02:39:23 So sometimes it works out, sometimes not.
02:39:28 Let me ask on that same thread,
02:39:31 Tesla, SpaceX, Elon Musk currently invested in Bitcoin,
02:39:34 but are openly looking
02:39:36 to explore other cryptocurrency investments.
02:39:39 What case would you make for Cardano?
02:39:41 Well, if they truly care about alternative energy
02:39:43 and sustainability, carbon reduction or carbon neutrality,
02:39:47 you can’t be in a system
02:39:49 where there is no built in mechanism
02:39:53 to constrain the energy consumption.
02:39:55 With proof of stake, energy consumption is a negative.
02:39:58 You wanna minimize it.
02:39:59 If you can get the same amount of stuff done
02:40:01 on a Raspberry Pi as you can a big server,
02:40:03 you’re gonna do it on the Pi
02:40:05 because ultimately that server cost
02:40:07 and that energy cost is coming out of your budget.
02:40:09 With proof of work, any innovation you come up with
02:40:12 to optimize power, you just build more ASICs
02:40:16 because it’s always 30% more power efficient.
02:40:18 Great, buy 30% more.
02:40:20 You keep adding to the work set
02:40:23 because you want more hash power,
02:40:25 more hash power, more share of the Pi.
02:40:27 So you have no energy savings component.
02:40:30 I know these people are saying,
02:40:31 well, there’s a lot of wasted energy in the grid
02:40:33 and this is kind of incentivizing
02:40:35 using that wasted energy
02:40:37 and it’s a better way of storing it than batteries
02:40:39 because you’re now storing it as a Bitcoin
02:40:41 instead of storing it as energy.
02:40:42 Okay, maybe there’s some truth to that,
02:40:44 but anyway, it’s just…
02:40:47 The energy is a critical point for you.
02:40:50 Like the…
02:40:50 Yeah, that’s exactly right.
02:40:52 The energy is a critical point for me with Tesla
02:40:55 because they assert to be an alternative energy company.
02:40:58 And unless they can make the case
02:41:00 that somehow the proliferation of Bitcoin
02:41:02 is legitimately going to proliferate batteries,
02:41:04 solar and wind or other things,
02:41:06 then it’s probably good for them to just focus
02:41:09 on the most efficient,
02:41:11 energy efficient cryptocurrency possible.
02:41:13 Otherwise you’re exacerbating global warming,
02:41:15 you’re exacerbating the ecological consequences of it.
02:41:18 The other thing is Bitcoin is the least programmable
02:41:20 of all the cryptocurrencies.
02:41:21 And if you wanna do interesting, sexy, unique things,
02:41:24 let’s say Tesla, for example,
02:41:26 they wanna start doing V to I and V to V
02:41:28 for autonomous vehicles
02:41:30 and have the vehicles start talking to each other
02:41:32 and connect it to 5G.
02:41:33 Well, imagine if you wanna build a telco coin
02:41:35 or some sort of 5G coin
02:41:37 and you wanna build an IOT layer network,
02:41:40 there’s just no real way to do that on Bitcoin
02:41:42 with the way it’s designed.
02:41:44 So you’d need fundamentally different infrastructure
02:41:46 to create such a token and regulate such a system
02:41:49 and have these things autonomously negotiate
02:41:52 and do business with each other.
02:41:52 You need DEXs and stable coins and all kinds of mechanics
02:41:56 to make something like that possible.
02:41:58 Well, that’s really beneficial to Tesla
02:42:00 if they could figure that out
02:42:01 because they could create
02:42:02 like an information sharing incentive scheme
02:42:04 where if the cars talk to each other,
02:42:05 including other branded cars, like GM cars and Fords,
02:42:08 they can now actually get data from those cars
02:42:10 through a marketplace in exchange
02:42:12 for the benefit of autonomous driving
02:42:14 or for the benefit of understanding road conditions
02:42:16 or safety enhancement and so forth.
02:42:18 So it’s just depending, are you just here to speculate?
02:42:20 Are you here to actually use it as another medium of exchange
02:42:23 or do you actually wanna build infrastructure
02:42:25 on this thing?
02:42:26 The more closely you get to utility,
02:42:29 the further down the road you get there,
02:42:31 then the more programmability you need.
02:42:33 And so it makes a lot more sense to be an Ethereum fan
02:42:36 or a Cardano fan than to be a Bitcoin fan.
02:42:38 So to be both proof of stake
02:42:40 and have the smart contracts capabilities.
02:42:42 Yes.
02:42:43 And that’s why we went over to Ethereum
02:42:45 because they’re proof of work.
02:42:47 You mentioned God, God spelled backwards as dog.
02:42:52 How’s that for a transition?
02:42:53 And Elon Musk and Tesla are at least a little bit curious
02:42:59 about a coin called Dogecoin.
02:43:02 You made a video directed to Elon
02:43:04 on how to improve Dogecoin.
02:43:06 What are your ideas for making Dogecoin even better
02:43:10 than it already is?
02:43:12 Well, Dogecoin is just based,
02:43:14 it’s like that Nine Inch Nails song,
02:43:16 a copy of a copy of a copy.
02:43:18 Yeah, it’s just a copy of a copy.
02:43:19 It’s a Bitcoin gave Litecoin Litecoin.
02:43:22 Bitcoin gave Litecoin Litecoin gave Dogecoin.
02:43:25 And it was kind of a parody cryptocurrency.
02:43:26 And I think Jackson was trying to do it
02:43:28 to like prove a point about altcoins.
02:43:30 And then true to form, it’s like nobody got the doctrine
02:43:33 and completely perverted the entire religion.
02:43:35 It’s almost like the emperor of man and Warhammer 40K.
02:43:37 It was like this atheist don’t worship me.
02:43:39 And now there’s like this whole religion
02:43:41 built around the emperor.
02:43:42 So Dogecoin has become a thing
02:43:44 and it’s become such a large thing
02:43:46 that it is a reasonable target for somebody
02:43:49 to fix it up and repair it,
02:43:50 make it an interesting cryptocurrency.
02:43:52 The point of the video was to show
02:43:54 what a modern third generation cryptocurrency
02:43:56 really would require.
02:43:57 It’s a major overhaul.
02:43:59 And there are already people doing this.
02:44:01 There’s the Solanas and the Harmony Ones
02:44:03 and the Cardanos, Neoses and all these other guys.
02:44:05 And they have billions of dollars and huge dev teams
02:44:08 and all these innovative protocols.
02:44:10 If you’re really serious about this thing,
02:44:11 sticking around, being useful in doing stuff,
02:44:15 then the point of the video was to show
02:44:16 the types of things you’d have to think about
02:44:18 and the types of papers that are all open source,
02:44:21 patent free and don’t have any notion
02:44:23 of intellectual property behind them
02:44:25 that his engineers could grab and go and do.
02:44:28 And he did mention on Twitter
02:44:29 that he was looking for feedback on how to improve Doge.
02:44:32 And so I said, all right,
02:44:33 well, I’ll just put all these things together.
02:44:35 It was a little tongue in cheek
02:44:36 because I figured he’d ignore it,
02:44:38 but it was also showing how hard it is
02:44:41 to innovate in this entire space.
02:44:43 You don’t just go and say,
02:44:44 I’m gonna go build a battery powered car
02:44:46 or rocket or enter a new industry.
02:44:48 It’s really hard to do that.
02:44:49 You spend years and lots of effort.
02:44:52 You have to do series of small learning steps.
02:44:54 You have to pick up destroyed rockets
02:44:56 on the side of the beach and things like that
02:44:58 before you get to the rocket landing itself.
02:45:00 Well, analogously,
02:45:01 it’s really hard to build a cryptocurrency.
02:45:04 Satoshi probably spent years thinking carefully
02:45:08 and that work was a derivative of 30 years of work
02:45:11 in the digital asset space starting in the 1980s,
02:45:13 working its way through.
02:45:15 So, and then Bitcoin only did very limited things
02:45:18 relative to what Ethereum can do
02:45:20 or Cardano can do and so forth.
02:45:22 So the minute that you extend that complexity,
02:45:24 you’re talking about years of R&D,
02:45:26 years of engineering effort that needs to be done.
02:45:28 So what’s the point of Doge?
02:45:30 Is it just a meme?
02:45:32 Is it actually contending to be useful?
02:45:34 Or is it competing as a store of value against Bitcoin?
02:45:37 Now, if it’s competing as a store of value against Bitcoin,
02:45:39 why the hell does it have the monetary policy it does?
02:45:42 Also, there’s predatory distribution
02:45:44 of the underlying asset.
02:45:45 Over 90 some percent is consolidated,
02:45:48 less than 1% of the holders for Dogecoin
02:45:50 at a very, very low price point.
02:45:52 So they can sell at almost any price point
02:45:55 and make a profit.
02:45:56 So it hits 50 cents, they’re billionaires
02:45:59 and it’s not like 20,000 people.
02:46:02 It’s probably less than 100 wallets
02:46:04 that have that distribution.
02:46:05 So there’s this existential ticking time bomb
02:46:07 that’s in Doge that once the guys who are invested
02:46:10 start selling, they can just keep selling
02:46:12 and keep selling and ride it all the way down
02:46:14 and make windfall profits regardless
02:46:15 of what price they sell at.
02:46:16 And who are they selling against?
02:46:18 The retail investors.
02:46:20 People make $500, spare money a month
02:46:23 or something like that.
02:46:25 And it bothers me because I see it in my community.
02:46:27 So I live in Longmont, Colorado,
02:46:29 and I was at a restaurant and I was talking to the waitress
02:46:32 and she asked me what business I was in.
02:46:34 I said, I’m in the cryptocurrency space.
02:46:35 And she’s like, what is that?
02:46:36 And I started explaining all of it.
02:46:37 And she goes, oh, yeah, I own some Dogecoin.
02:46:41 I said, you own anything else?
02:46:42 No, no, I just bought some Doge.
02:46:43 Why did you buy Doge?
02:46:44 Oh, I saw Elon tweeting about it
02:46:46 and I thought it was a good deal.
02:46:48 So when you see stuff like that
02:46:50 where people have no clue what they’re doing,
02:46:52 they don’t really understand the supply dynamics,
02:46:55 the ownership dynamics and these types of things.
02:46:57 And then when the clock stops,
02:47:00 they’re the ones who get hurt.
02:47:02 And then the regulator comes in,
02:47:03 the Elizabeth Warrens of the world,
02:47:04 and they say, see, this is an evidence
02:47:06 these guys can’t regulate themselves, control themselves.
02:47:09 We need to control everything.
02:47:10 Either let’s ban it or let’s just announce
02:47:13 that the only three are legitimate
02:47:14 and every one of them has to be connected
02:47:16 to identity and rah, rah, rah.
02:47:18 And I’m just very concerned that that’s a bad thing to do.
02:47:22 And that’s why I’ve been so vocal about this topic.
02:47:24 And my hope is that a compromise can be made
02:47:27 where real developers come in and they start working on Doge
02:47:30 and they find a way to create some sort of use
02:47:32 and utility for it.
02:47:33 So at least it has a value floor and it won’t collapse.
02:47:37 Is it possible for Cardano and Dogecoin
02:47:39 to work together somehow?
02:47:40 Yeah, it’d be a lot of fun.
02:47:42 I’m not adverse to the idea of cleaning up the code base,
02:47:45 but legitimately, whoever comes in,
02:47:47 be two years or three years of work,
02:47:50 because you have to do real stuff.
02:47:51 And that code is like Litecoin circa 2012, 2013.
02:47:56 Well, the interesting thing about Elon,
02:47:58 and I’ve got to interact with him quite a bit,
02:48:00 that combination of humor and extreme ambition,
02:48:04 like in the face of impossible odds
02:48:06 is something he does really well.
02:48:08 And so I think that’s the spirit of Dogecoin
02:48:12 is fun and almost like bold, ambitious innovation.
02:48:19 And so I think you can’t discount the power of that.
02:48:22 But where’s the innovation?
02:48:23 What’s the agenda?
02:48:24 Well, this is step one.
02:48:25 What’s going to Mars for Dogecoin?
02:48:27 Well, I mean, he came in the same way to Ruckus.
02:48:31 He came in the same way to Electric Cars.
02:48:34 It seemed impossible at first,
02:48:37 but you step in and you solve the problems,
02:48:39 first principles one at a time.
02:48:41 But I’ll tell you a little bit on this,
02:48:43 because I think he had some trends
02:48:45 that he was very smart to recognize.
02:48:47 In the case of battery powered cars,
02:48:48 he said, hang on, everybody has tablets and cell phones
02:48:50 and these other things.
02:48:51 And there’s an incentive to make batteries better,
02:48:54 faster, cheaper, and charge faster.
02:48:56 And that’s connected to mobile computing.
02:48:57 So regardless if you want battery powered cars or not,
02:49:01 every year you have billions of dollars of R&D
02:49:03 being pushed to force this capacity to evolve.
02:49:07 And he’s just getting on the train
02:49:08 and piggybacking on that.
02:49:10 So that was a brilliant business acumen to recognize that.
02:49:12 In the case of SpaceX, it was just an obvious question.
02:49:15 If every time you get on a plane,
02:49:16 you have to throw the plane away, no one would fly.
02:49:19 So reusability is like a fundamental thing
02:49:22 that if you solve that,
02:49:23 you’ve now opened space up
02:49:25 to a complete new class of commercialization.
02:49:27 I don’t see the problem in Dogecoin,
02:49:29 because if he was looking for it,
02:49:31 then why not look at a real platform
02:49:33 actually trying to solve a real problem?
02:49:35 There are so many of them.
02:49:37 He can throw a rock, he can hit 15 of these guys
02:49:39 and they’d all die to work with you at Musk.
02:49:42 Yeah, that’s very interesting.
02:49:43 I mean, so first I could continue pushing back
02:49:45 on your intuition about electric cars
02:49:48 and batteries and so on.
02:49:49 I don’t think it’s more obvious in retrospect
02:49:51 than it is at the time, I would say,
02:49:55 because I would agree with you on the batteries front,
02:49:57 I wouldn’t necessarily agree with you with the electric car
02:50:00 because first of all,
02:50:01 nobody started a successful car company for decades.
02:50:04 Well, but it was the loyalty,
02:50:05 the EV4 guys or whatever it was with GM,
02:50:08 they didn’t wanna give them back
02:50:09 when they hit the lease program.
02:50:11 So there’s some basic intuition
02:50:13 that there is some hunger here,
02:50:14 but it’s not obvious that you can do it successfully.
02:50:17 And with relaunching rockets for cheap,
02:50:19 that sounds good on paper, but to do it well,
02:50:22 NASA is spending way more money for this.
02:50:25 And the Russians were assholes, not selling any rocket.
02:50:29 Like you said, you have to do it all yourself from scratch.
02:50:31 How do you build the team?
02:50:33 How do you launch rockets when if you fail a few times,
02:50:38 you’re gonna go bankrupt?
02:50:39 I mean, it’s just business wise,
02:50:41 I would rather build an app like Angry Birds.
02:50:43 Oh yeah, yeah, he’s got it.
02:50:44 Launch rockets.
02:50:45 You gotta give him credit.
02:50:46 He’s got boulders for balls.
02:50:47 I’m good for that.
02:50:49 That’s a good picture.
02:50:50 Yeah, thank you for that.
02:50:52 But I don’t, maybe that’s what, I mean,
02:50:57 I think there’s not enough first principle thinking
02:50:59 on the cryptocurrency side.
02:51:00 I think I agree with you on that.
02:51:02 But there’s some aspect to which the seriousness
02:51:06 of the cryptocurrency world is paralyzing.
02:51:09 So in some way, the innovation that you spoke to
02:51:14 requires taking risks,
02:51:16 requires not taking everything so seriously,
02:51:19 like being afraid to take those bold risks
02:51:21 in the space of ideas, not in the space of financials.
02:51:24 So in that way, I think that’s one pro for Bitcoin
02:51:29 is there’s room, it’s hungry for innovation.
02:51:33 But I think Cardano in that same way
02:51:35 is hungry for innovation, just like as you said,
02:51:37 with some more rigor and formalism behind it.
02:51:41 I mean, even Ethereum has a hunger for innovation.
02:51:45 That’s where Bitcoin is a little bit more,
02:51:47 I would say conservative in terms of how much innovating
02:51:50 they’re willing to do,
02:51:51 in terms of the incentives they built into the systems
02:51:54 for the evolution of the cryptocurrency.
02:51:57 But yeah, I mean, it’s difficult to psychoanalyze
02:52:00 why Dogecoin is the thing that excites Elon so much.
02:52:04 But at the same time, there’s some power to the fun.
02:52:09 It sounds ridiculous to say.
02:52:11 But the fun, this idea that
02:52:17 the most entertaining outcome is the most likely.
02:52:21 There could be something built into the physics
02:52:23 of the universe that makes that true.
02:52:25 Because the viral nature of fun has power.
02:52:30 A fun has power.
02:52:34 Well, it’s a neuroscience thing.
02:52:35 We like dopamine, we like these chemicals in our brain.
02:52:40 And when we have fun, we want more of it.
02:52:43 So you tend to gravitate towards work activities
02:52:46 and play activities that are enjoyable to you.
02:52:48 And it is nice sometimes to kind of come in
02:52:52 and troll an entire industry.
02:52:55 I can imagine he’s probably at the time of his life.
02:52:56 It’s the same as like taking Tesla private at 420.
02:53:00 That kind of stuff.
02:53:01 And it’s one thing when you do it with friends.
02:53:04 It’s another thing when you do it with the whole industry
02:53:06 and it hurts people financially.
02:53:09 And also I understand he hates short sellers
02:53:11 and there’s some things there.
02:53:12 And I can’t speak for him
02:53:14 because I only know the guy from a distance.
02:53:16 It’s just, I live in this space
02:53:18 and I have to deal with the consequences
02:53:19 and clean up the mess.
02:53:20 You feel the pain.
02:53:21 Yeah, and this results in a regulatory event.
02:53:24 It’s like, I’m the guy who has to put on a suit
02:53:26 and go to Washington and go and sit in a Senate inquiry
02:53:28 and all this stuff.
02:53:29 I’m the guy that just like laugh with his friends
02:53:32 about how he crashed the crypto market
02:53:33 and how easy it was to do it.
02:53:36 And that’s my only umbrage about this.
02:53:39 On the other hand, if it brings a lot of cool,
02:53:41 new, interesting things and people into the space,
02:53:43 that’s a net positive.
02:53:44 And so it’s not universally bad or universally good.
02:53:47 And I’d like to give people the benefit of the doubt.
02:53:50 And so I’m really hopeful to see what comes about
02:53:53 this recent surge of interest
02:53:55 and if Elon actually puts his money where his mouth is
02:53:57 and take some of his enormous engineering talent
02:54:00 and capital and starts contributing
02:54:03 and building something in the cryptocurrency space.
02:54:05 Be really cool to see that happen.
02:54:08 There’s a bunch of different technical aspects
02:54:11 I wanna ask you about on the Cardano side.
02:54:13 So first maybe on the scaling side, what is Hydra?
02:54:17 How does Hydra compare to other different ideas
02:54:20 for scalability like rollups,
02:54:22 main trade offs with respect to security, UX,
02:54:28 and anything else you wanna talk about?
02:54:31 You have to have a little bit more energy, Lex, come on.
02:54:33 You know what I need?
02:54:34 I need that Coke machine that you mentioned,
02:54:36 the thing that converts water to cocaine.
02:54:38 Water to cocaine from Director Bullock.
02:54:41 We’ll leave this in, right?
02:54:43 Yeah.
02:54:44 Isomorphic state channels, that’s a great topic, right?
02:54:47 There’s a word salad of cryptographic terms.
02:54:51 Whether lightning, Hydra, rollups, any of these things,
02:54:53 really what you’re trying to do is say,
02:54:54 okay, if I do it on layer one, it’s slow and expensive.
02:54:58 What I’m gonna do is batch something somehow, some way,
02:55:02 and then do it in a different system
02:55:04 where it’s fast and cheap.
02:55:07 And what I’m doing with that is I’m losing
02:55:09 some of the security guarantees of the base layer
02:55:12 and admitting a slight higher degree of centralization,
02:55:17 but then I get super fast settlement,
02:55:20 I get super low cost transactions,
02:55:22 and potentially I may even be able
02:55:24 to get distributed computing.
02:55:26 Meaning that instead of having the smart contracts
02:55:29 run in a replicated system,
02:55:30 they could run on a single node, like a stake pool,
02:55:32 and their stuff is different from the other guy’s stuff.
02:55:35 So you go from a system of capacity of whatever it is
02:55:40 to a system of N for the totality of all the stake pools.
02:55:44 So basically Hydra is just the next generation of that.
02:55:48 When you have the ability to tinker with the accounting model
02:55:51 and the layer two solution is co designed
02:55:54 with the layer one solution.
02:55:55 So it’s like what Lightning would have been
02:55:57 had Lightning been co developed when Bitcoin came out.
02:56:00 There would have been special provisions made in Bitcoin,
02:56:03 specifically to accommodate Lightning,
02:56:05 and it would have made it very easy for you then
02:56:07 to move inside the system, outside of the system,
02:56:09 and have security properties preserved,
02:56:12 like availability, for example, or fraud resistance,
02:56:15 say, oh, you can’t steal the money or these types of things.
02:56:18 Where things get really complex,
02:56:19 and this is why Hydra’s novel over Lightning,
02:56:22 is when you wanna move beyond payments to state management.
02:56:25 Okay, so payments are just,
02:56:26 I wanna move between Alice to Bob as quickly as possible,
02:56:29 as low cost as possible.
02:56:31 So for example, I have a micro tipping application,
02:56:34 like change tip on Twitter, or like a video,
02:56:37 I’m watching YouTube video,
02:56:38 like maybe this video in the future,
02:56:39 and people really like it, and they click tip,
02:56:41 and you get five cents or something like that.
02:56:43 Okay, so that’s an example of a perfect payment application,
02:56:46 and that’s great, but what happens
02:56:48 when you actually have a rich smart contract,
02:56:50 like a DEX, or you wanna do a video game,
02:56:53 or something like that, you wanna run that off chain,
02:56:55 but then there’s some reconciliation on chain that happens.
02:56:59 So a state channel basically lets you do that,
02:57:01 but it’s a lot more complicated,
02:57:04 and there’s a lot more to think about.
02:57:05 So Hydra basically just has in its design,
02:57:09 a collection of ideas of how to do that.
02:57:11 And the current paper is for a single head.
02:57:15 The next thing you do is composition.
02:57:17 So you go multiple heads,
02:57:18 and there’s a routing protocol between them.
02:57:20 And then eventually create these tail protocols
02:57:22 for when things get asynchronous.
02:57:24 So instead of always being aligned,
02:57:25 and always being available,
02:57:26 what happens if they die for a bit,
02:57:28 and then they come back?
02:57:30 And you can create all kinds of guarantees
02:57:31 that your funds won’t be lost, or locked forever,
02:57:34 or things like that.
02:57:35 There’s a failure recovery mode for this type of stuff.
02:57:37 And basically the idea is leverage what Lightning
02:57:40 has already achieved with Bitcoin,
02:57:42 but then take advantage of the fact
02:57:44 that you have a more expressive accounting model,
02:57:46 and a more expressive programming model,
02:57:48 so you can just physically do more,
02:57:50 and you can put more crypto into that thing.
02:57:52 Now contrast it with rollups,
02:57:53 really that is just saying,
02:57:55 you’re gonna take some thing,
02:57:56 batch a bunch of transactions together,
02:57:58 and you’re gonna generate a proof.
02:58:00 And then what you can do is whenever you see
02:58:02 some part of that history,
02:58:03 you can check it against that proof that’s rolled up.
02:58:05 And they’re closely related concept of recursive snarks
02:58:08 that you’ll see a lot.
02:58:09 Things like the MENA protocol, or other things.
02:58:11 And basically the idea is that whenever you see something,
02:58:14 you can always generate two proofs.
02:58:16 An existential proofs that the coins exist,
02:58:19 and a non existence of a double spend.
02:58:21 So you can always check those two properties.
02:58:23 And the proof is verifiable in logarithmic time, ideally.
02:58:27 So you can have giant amounts of data,
02:58:29 but it’s very small.
02:58:30 The actual proof is concise, okay?
02:58:33 So they’re just different boats for different floats.
02:58:35 The advantage of a layer two network
02:58:38 where there’s actual channels,
02:58:39 and there’s interaction, and there’s service providers,
02:58:42 is the channels can eventually scale
02:58:44 in the collection of things that they can do.
02:58:46 And eventually they can become interoperability networks
02:58:49 between cryptocurrencies.
02:58:51 So at some point, we could modify the bolt spec,
02:58:53 and make it somewhat interoperable with Hydra.
02:58:56 And then what you could happen is you could use it
02:58:57 as a bridge to actually do cross chain traffic,
02:59:00 and send transactions between the systems.
02:59:02 You don’t really think about that too much
02:59:03 when you’re talking about roll ups.
02:59:04 That’s more of optimizing what you have within the system.
02:59:07 Within the chain, so can you elaborate
02:59:09 how it’s possible to do cross chain traffic?
02:59:12 Well, you already have the intermediary,
02:59:14 you have the channel operator,
02:59:15 and you already have lightning protocol, right?
02:59:18 And you just build a dex that runs within that system,
02:59:21 and they can swap assets, or you can do wrapped assets.
02:59:24 So you lock it. So it would be like low cost?
02:59:26 I guess you could just switch low.
02:59:28 Yeah, the same thing lets you batch things on one,
02:59:30 will let you batch the other.
02:59:31 So if lightning works on Bitcoin,
02:59:32 and Hydra works on Cardano,
02:59:34 you can eventually bridge these two together,
02:59:35 and create a way of moving back and forth.
02:59:37 And the same things that make transactions
02:59:39 in and out of that network cheap,
02:59:40 will make creating wrapped assets cheap.
02:59:43 At least on the Bitcoin to Cardano side,
02:59:45 you can’t create assets on Bitcoin.
02:59:47 Another flaw of Bitcoin that they’ve never fixed.
02:59:49 What’s your thought about layer two technologies in general?
02:59:52 Is there stuff you’re excited about?
02:59:53 We talked quite a bit about Lightning Network, Hydra,
02:59:56 and these ideas.
02:59:57 Do you think there’ll be somebody that wins out,
02:59:59 or is this gonna be this kind of dynamic thing
03:00:01 that we just keep building different ideas,
03:00:03 and they all interact with each other?
03:00:05 It goes back to biology,
03:00:06 that cell differentiation concept,
03:00:08 is you have to build specialized tissue to do these things.
03:00:11 The point of layer two is to extend the network.
03:00:13 It’s adding a foot, it’s adding an arm,
03:00:15 it’s adding a brain, it’s adding a heart, it’s adding eyes,
03:00:18 giving you additional senses, you have ears now.
03:00:20 So when you add these layer two protocols,
03:00:21 like Atala Prism is a perfect example of that.
03:00:24 We don’t have identity at the base layer of Cardano.
03:00:27 It’s a real bad deal to do that,
03:00:29 because then China will come in,
03:00:30 or US will come in and tell you how to do that.
03:00:32 What you do is you build a layer two protocol
03:00:34 that’s blockchain agnostic,
03:00:35 and then the user can decide
03:00:37 when and where they need an identity,
03:00:38 and then bring that identity into the system.
03:00:41 And if you designed it right, when they bring it in,
03:00:43 it’s very easy, very fluid,
03:00:45 and suddenly the experience enhances.
03:00:47 Everything just gets better.
03:00:49 Oh, wow, okay, now I can use all these regulated things.
03:00:51 They go from gray to green in the App Store.
03:00:53 That’s so cool.
03:00:55 Or, oh, wow, now I can send to human readable addresses,
03:00:58 because if I have an identity and you have an identity,
03:01:00 we can alias them with some namespace,
03:01:02 and now I sent a Lex instead of some
03:01:05 horrible back 32 address structure.
03:01:08 Okay, so that’s really what you need to do with layer two
03:01:10 is say, okay, each layer two protocol
03:01:13 is meant to do something.
03:01:14 Either it gives me payments, or lower cost smart contracts,
03:01:17 or interoperability, or identity,
03:01:19 and then it’s a marketplace.
03:01:21 So you should have blockchain agnosticism
03:01:23 with your layer two solutions.
03:01:25 And so you can mix and match
03:01:27 and choose whichever collection of services you need.
03:01:29 And that’s actually how IT works these days
03:01:31 with microservices and these other things,
03:01:33 and cloud software, you know.
03:01:35 Every firm is an aggregation of dozens of providers,
03:01:38 and basically that composition of them
03:01:40 is your software stack.
03:01:43 Jumping around back to proof of work.
03:01:45 What are non interactive proofs of proof of work?
03:01:49 NIPOPOWS.
03:01:51 NIPOPOWS.
03:01:52 NIPOPOWS.
03:01:53 NIPOPOWS, it’s fun to say, right?
03:01:54 NIPOPOWS.
03:01:55 It’s just one of those things that you notice
03:01:57 that certain proofs of work, when you solve them,
03:02:00 come up less frequently than other ones.
03:02:02 And just by that nature, you can sample them
03:02:05 and then construct proofs from them.
03:02:07 So you can, with that just set,
03:02:09 have a more concise representation
03:02:11 of an amount of work for a range of the chain.
03:02:14 So that works.
03:02:14 Can you say that again?
03:02:15 Yeah, I was gonna say that word salad,
03:02:17 basically the idea is, okay, so let’s say that this block,
03:02:20 and I’m just simplifying the concept a lot.
03:02:22 This block, you get a regular green type of proof of work,
03:02:27 and then this block, you get a green,
03:02:28 and you keep going, and then suddenly you get a red one.
03:02:31 So it’s still a valid proof of work,
03:02:32 but it’s more rare than the other ones.
03:02:35 So if you notice that particular pattern,
03:02:37 what you can do is you can just start
03:02:39 not caring so much about the green ones,
03:02:41 and you can just bookend your chain with red.
03:02:44 And then you can just repeat that, and repeat that,
03:02:47 repeat that, and you can collect,
03:02:48 and you can create this really compressed representation
03:02:50 of these things.
03:02:51 So what does it mean?
03:02:52 It means that suddenly when you have that,
03:02:54 now you have a way of representing a long range of history
03:02:58 with a very small proof.
03:03:00 So you can use it for light wallets,
03:03:01 and you also can use it for side chains,
03:03:05 if both side chains use proof of work.
03:03:07 So when you see a transaction come in,
03:03:09 you don’t have a copy of the side chain,
03:03:11 but you have a copy of the proof of work,
03:03:12 and it has the same algorithmic weight
03:03:14 as the normal longest chain,
03:03:17 because you don’t have all the greens,
03:03:18 but the reds only occur with a certain sampling frequency.
03:03:21 So this is the brainchild of Dionysus Zintros and Agelos,
03:03:25 and it’s just an amazing paper,
03:03:27 and what’s so cool about it is it doesn’t require
03:03:29 any structural changes to proof of work.
03:03:31 It’s just something you notice
03:03:32 as an off gas of proof of work.
03:03:34 It’s like you’re watching an engine operate,
03:03:36 and you notice like every 500 times a piston
03:03:39 will do a certain weird thing,
03:03:41 and so you take advantage of that.
03:03:42 You say, well, if I count 10 of them,
03:03:44 now I have 5,000 pistons, strikes,
03:03:47 as I observed that pattern.
03:03:48 And so it’s the same concept there,
03:03:50 and it’s just a property of the engine.
03:03:52 So you don’t really need to hard fork it in.
03:03:54 It’s just there, and because you can build proofs that way,
03:03:56 now you can use those proofs to do like clients,
03:03:59 and you can use those proofs to do other things,
03:04:01 because you can just use that as something
03:04:02 that comes with the history.
03:04:03 You don’t have to have the whole blockchain.
03:04:04 Now, is this a weird property
03:04:06 of multiple proof of work chains?
03:04:08 It has to be key to the particular consensus algorithm,
03:04:12 but usually there’s some portability in this type of thing.
03:04:15 Like we’re right now exploring,
03:04:16 can you do NIPA piles with Prism
03:04:17 or any of these sharded proof of work protocols,
03:04:20 but it looks like you can.
03:04:21 The closely related is log space mining.
03:04:23 So you can use this concept,
03:04:25 and instead of having the entire blockchain
03:04:26 to be able to mine,
03:04:27 you can use a compressed representation of it.
03:04:29 We wrote a paper called Log Space Mining
03:04:31 that basically explains how to do that.
03:04:33 So your miner only has this very small micro ledger
03:04:38 as opposed to the entire ledger.
03:04:40 How does it connect back to the entire ledger?
03:04:43 How does the compressed?
03:04:43 Because you have those red blocks.
03:04:45 You have those special things,
03:04:46 and so you know that the state you’re working on
03:04:48 is actually legitimate, right?
03:04:51 So the map goes both ways?
03:04:52 Yep, it’s pretty cool.
03:04:55 Wow, that’s really interesting.
03:04:56 Yeah, and Denis is a genius.
03:04:58 He’s a really, really smart kid,
03:05:00 and he got his PhD under us.
03:05:01 He went to University of Athens,
03:05:03 and he was Agelos’s graduate student,
03:05:05 and now he’s doing a postdoc at Stanford under David Shi,
03:05:08 and this is literally the only thing he does.
03:05:10 He does interoperability, sidechain stuff,
03:05:13 NIPA piles and so forth,
03:05:14 and he’s written a lot of great papers on it.
03:05:16 And that was a testimony to hard work
03:05:18 for getting the paper published,
03:05:20 because the paper came out in 2016,
03:05:21 but I think it took three or four years
03:05:23 for it to go through peer review.
03:05:25 He kept trying to push it one conference
03:05:27 after another rejection, after another rejection,
03:05:29 but he got it through.
03:05:30 Real proud of that kid.
03:05:32 And then he’s just doing all this beautiful
03:05:33 derivative work now, like lock space mining and so forth.
03:05:37 So, Reddit.
03:05:40 Any sentence that starts with Reddit,
03:05:42 you know it’s gonna be fun.
03:05:43 The top question on the Cardano subreddit,
03:05:47 which is quite a wonderful place, by the way,
03:05:50 was can you get Charles to play devil’s advocate
03:05:55 against Cardano?
03:05:56 If it’s going to fail, what would failure look like
03:06:00 and what are the most likely reasons it would fail?
03:06:03 Okay, well there’s the failure.
03:06:06 For example, I said one of the project goals
03:06:09 was to achieve self evolution.
03:06:11 So if it doesn’t achieve that,
03:06:12 where it can evolve itself iteration by iteration,
03:06:16 then obviously the product didn’t do what was intended.
03:06:19 If it continuously required the supervision of custodians
03:06:23 in order for it to succeed, the system just won’t work.
03:06:26 The good news is we have a lot of data showing the opposite.
03:06:29 You know, we used to run a federated model
03:06:31 and now we’re completely decentralized
03:06:33 for block production,
03:06:34 but that didn’t just happen overnight.
03:06:36 I mean, there was a whole process
03:06:38 with the incentivized test net
03:06:40 and the stake pool pioneers program
03:06:41 and the launch of Shelley
03:06:42 and the decrementing of the decentralization parameter.
03:06:45 And every step of the way people showed up
03:06:47 and had to do things.
03:06:48 And we went from several to thousands of people
03:06:51 who were regularly maintaining the infrastructure,
03:06:54 but there’s no guarantee that that would be sustainable.
03:06:57 And there’s no guarantee that the next step,
03:06:59 the smart contract step will achieve what we want.
03:07:02 And the next step, the governance step
03:07:03 will achieve what we want.
03:07:04 I mean, it’s an experiment and all these types of things.
03:07:06 All cryptocurrencies, all companies are in a sense,
03:07:10 experiments when they are evolving the business model.
03:07:12 And as our case, our businesses systems and society,
03:07:17 we’re offering to the world a vision
03:07:19 of how to run humanity in a different way.
03:07:22 And the only way the system can do that
03:07:24 is by millions of people joining the system,
03:07:26 self evolving the system
03:07:27 and growing it in that particular direction.
03:07:30 Another failure scenario would be the system evolves
03:07:33 in the wrong direction.
03:07:34 So it’s self evolving,
03:07:36 but it goes into a more centralized dystopian way.
03:07:39 And that’s problematic as well.
03:07:41 What would that look like?
03:07:42 What would dystopia,
03:07:44 self evolution toward dystopia look like?
03:07:46 A small group of actors have total control
03:07:48 over who gets to use the system
03:07:50 and how they get to use the system.
03:07:51 And your use of the system is monitored
03:07:53 and shared with that small group of actors.
03:07:56 So social credit in China is a great example of that.
03:07:58 A small group of people have access to that.
03:08:00 And then your experience in Chinese society
03:08:03 is determined by it.
03:08:05 So that’s an example of a failure mode.
03:08:07 And then another could be just network effect.
03:08:10 We start experiencing a churn rate
03:08:13 and the inputs don’t match the outputs
03:08:16 and that you lose more than you gain.
03:08:19 And then over time, the system dies off.
03:08:21 However, that’s really hard in practice.
03:08:23 Once you reach a certain network effect,
03:08:25 even if you become stagnant and stale,
03:08:28 you tend not to lose your users.
03:08:29 And our evangelism is unbelievable
03:08:32 in the Cardano community.
03:08:33 I think we’re number one for tattoos.
03:08:35 And if you think about that,
03:08:37 it’s a strange metric to have,
03:08:38 but there are brands that associate that way,
03:08:41 like Apple and Harley Davidson and so forth.
03:08:43 People tend to actually tattoo the logo.
03:08:45 Those people don’t leave.
03:08:47 They don’t actually walk away from the ecosystem.
03:08:49 They’re fanboys to the core.
03:08:51 So there’s a lot of people that are here for life.
03:08:55 They don’t care if it’s dollar ADA, two cent ADA.
03:08:58 They believe in the mission, vision and value
03:08:59 of what we wish to achieve.
03:09:01 And they’ve become evangelists in that respect.
03:09:03 So the question is, does that community sustain itself?
03:09:06 And also does that community not make the same sins
03:09:09 and mistake of Bitcoin,
03:09:10 where they become toxic and maximalistic
03:09:12 and they start becoming highly religious
03:09:14 about whatever beliefs they have?
03:09:16 My hope is our community will be open and Socratic
03:09:20 and love the scientific method
03:09:21 and be willing to entertain ideas without adopting them
03:09:25 and discard ideas that are proven to be wrong.
03:09:28 If we become dogmatic and embrace an orthodoxy
03:09:31 that is a counterproductive innovation,
03:09:33 then it’ll stall out the ecosystem.
03:09:36 And you’ll notice I never said price in any of this.
03:09:38 I never said, hey, failure is if the price goes way down
03:09:42 and success is if the price goes way up.
03:09:44 That’s unfortunately the metric that most people use,
03:09:46 but I couldn’t care less about it.
03:09:48 Because the reality is if you construct a system
03:09:51 that encompasses the entire globe
03:09:53 and has billions of users,
03:09:55 it’s probably gonna be a pretty valuable system.
03:09:57 That’s a secondary thing.
03:09:59 It’s an after effect of having success
03:10:02 in adoption, use and utility.
03:10:04 Unfortunately, most people on Reddit and Twitter
03:10:07 and other channels,
03:10:08 they tend to just judge your entire success based on that.
03:10:11 I had very few people when Shelley launched,
03:10:13 even though it took us four years to get there,
03:10:15 a lot of work, say congratulations on Shelley.
03:10:18 But I had a lot of people when Ada reached the dollar
03:10:20 say, we’re so proud of you, amazing work,
03:10:22 congratulations and so forth.
03:10:24 And that’s probably the most disheartening thing
03:10:26 about the whole being around and doing this stuff
03:10:30 where all the things you do only matter
03:10:32 as long as it’s making someone else rich.
03:10:34 And in a way I feel almost like a failure
03:10:37 because that mindset means that we haven’t yet
03:10:42 inculcated the community in a proper way,
03:10:44 saying, hey guys, this is about more than money.
03:10:48 It’s about more than the value of Ada.
03:10:49 What we’re attempting to do here
03:10:51 is reengineer the way society works.
03:10:52 I’d like your voting to be different.
03:10:54 I’d like your property to be different.
03:10:55 I’d like you on your cell phone to have a universal wallet.
03:10:58 And when you go to Starbucks or wherever,
03:11:00 you can buy your coffee with silver or gold
03:11:03 or airline miles or something like that.
03:11:05 And they get paid whenever the hell they wanna get paid.
03:11:07 And I want those rails to be done with a system
03:11:09 that puts you in charge, not someone else.
03:11:11 And they say, yeah, that’s all fine and great.
03:11:12 As long as Ada’s $5, we’re all happy.
03:11:15 You see, so that’s a problem.
03:11:18 There are of course other things that could fail,
03:11:19 like we could lose project cohesion,
03:11:22 lots of people could quit and die.
03:11:23 But again, there’s so much momentum.
03:11:25 There’s so many things here.
03:11:26 The ideas are already out there
03:11:27 and there’s no intellectual property.
03:11:29 When you publish a hundred papers,
03:11:31 you read a million lines of code,
03:11:32 that’s something and it’s permanent.
03:11:34 And it’s in the commons now.
03:11:35 So it’s just as much yours as it is mine.
03:11:38 So there’s no notion that somehow,
03:11:41 if the core development company disappeared,
03:11:43 then that concept is lost forever,
03:11:46 like the library of Alexandria burning to the ground.
03:11:50 It’s there.
03:11:51 And someone else will take it, fork it and get it done.
03:11:55 I mean, first of all, that’s fascinating.
03:11:56 The self evolution,
03:11:57 you don’t know which trajectories that’s gonna take,
03:11:59 but also there’s could be singular events
03:12:03 like bugs in the system create an opportunity
03:12:07 to hack the system.
03:12:09 Is that something that you see
03:12:10 as a potential failure case?
03:12:12 Yeah, it’s always a possibility.
03:12:14 Bugs can exist.
03:12:15 There can be flaws in the protocol design.
03:12:17 Zcash was a great example of that,
03:12:19 where there was a subtle flaw
03:12:21 and it damaged the fidelity of the cryptocurrency
03:12:23 in ways no other cryptocurrencies ever experienced.
03:12:26 Normally when you have a bug,
03:12:27 the bug you can see it like the Bitcoin overflow,
03:12:30 the value overflow incident.
03:12:31 Yes, Bitcoin can be created,
03:12:32 but we can verify they weren’t.
03:12:34 So the monetary policy is preserved.
03:12:36 When you have a bug with a private system like Zcash
03:12:39 and it exists on the shielded side,
03:12:41 there’s no guarantee unless you can audit
03:12:43 the total supply inside that shielded side.
03:12:45 My understanding is you can’t,
03:12:47 that somebody didn’t exploit the bug
03:12:49 and create trillions of these coins out of thin air
03:12:51 and just hiding them on that system and dripping them out.
03:12:53 And so the monetary policy is forever damaged
03:12:55 as a consequence of bug like that.
03:12:57 It’s probably the worst type of bug you can have
03:12:59 for these types of products.
03:13:01 So no matter how good of a job you do,
03:13:03 they have great scientists,
03:13:05 there are great people there, great engineers there.
03:13:07 You can always have something like that,
03:13:08 seep its way in, leak its way in,
03:13:11 and that lurks in the distance.
03:13:12 But if that’s a problem shared
03:13:15 with every one of your neighbors,
03:13:18 it’s like everybody working on a nuclear power plant.
03:13:20 Well, yeah, you can all die of radiation poisoning.
03:13:22 Well, we all kind of knew that, didn’t we?
03:13:24 So it’s like, I don’t really think too much about it.
03:13:28 I think the context of the question was more,
03:13:30 what is Cardano specific over Ethereum or Bitcoin
03:13:33 or any of these other things?
03:13:34 And yeah, okay, existential lurking bug could happen.
03:13:37 It’s lower probability for us than the other systems
03:13:40 because we use formal methods
03:13:41 and we use peer review inside the protocol design.
03:13:45 So there’s been more eyeballs and tools and techniques
03:13:48 used to check things.
03:13:49 And we actually have discovered
03:13:50 a lot of weird wonky bugs before production
03:13:53 and resolve those bugs.
03:13:54 So it shows you the system works.
03:13:56 It’s a lot of fun.
03:13:57 What about close kind of competitors?
03:14:00 I don’t know if you would put it that way,
03:14:01 but if you look in the space of ideas,
03:14:05 competitor cryptocurrencies like Polkadot,
03:14:08 what are some interesting difference
03:14:09 between Cardano and Polkadot?
03:14:12 Technically, philosophically, historically,
03:14:14 is that something you think about
03:14:15 when you think about the future of Cardano?
03:14:17 Yeah, I mean, we do.
03:14:19 We actually have a whole group of people
03:14:20 that do business intelligence and comparative analysis.
03:14:23 And we’re getting to a point
03:14:24 where we wanna start eventually forking their code
03:14:27 and running private versions of it
03:14:28 and just playing around with things.
03:14:29 Well, that’s fascinating.
03:14:30 Getting better at it.
03:14:31 Consensus actually does this.
03:14:33 They actually did it with EOS.
03:14:34 And they wrote this lovely report like trashing EOS,
03:14:36 saying, hey, by the way,
03:14:37 all those claims these guys made are just not true.
03:14:40 But it’s nice to do that.
03:14:42 It’s nice to use your competitor’s technology
03:14:44 or competing protocol technology
03:14:46 because you learn a lot along the process.
03:14:48 It’s not all bad.
03:14:50 There’s always something there
03:14:51 because they have different trade offs and customers
03:14:53 that potentially are more interesting.
03:14:55 Like right now we’re grokking,
03:14:56 how do we wanna do the side chain model of Cardano?
03:14:59 Polkadot’s actually a tremendously useful piece
03:15:01 of infrastructure for that conversation
03:15:03 because they copied part of our infrastructure.
03:15:07 Gavin’s a trained computer scientist.
03:15:08 He got his PhD from York and he read our papers obviously.
03:15:12 And he realized that Ouroboros was a really good
03:15:15 starting place for building a proof of stake system.
03:15:18 So Polkadot’s consensus is very similar to ours.
03:15:21 And so if you’re saying,
03:15:22 hey, how do you do a good side chain model
03:15:24 with an Ouroboros style proof of stake?
03:15:26 Well, we already have this parachain thing, right?
03:15:29 And so now by just looking at that,
03:15:31 I can kind of get an idea of how, one way of doing it.
03:15:34 And so that’s just beautiful that we live in a space
03:15:36 where that’s there, it’s open source,
03:15:38 and it’s really good.
03:15:39 You just say, okay, well, we’ll just take that
03:15:41 and adopt that.
03:15:41 There’s no shame.
03:15:43 The other side of it is that Polkadot
03:15:46 really has focused a lot on commercial adoption,
03:15:49 Silicon Valley adoption, getting real use and utility.
03:15:53 I say in a much more sustainable way
03:15:55 than Ethereum is focused on.
03:15:57 Ethereum was kind of a spray and pray thing.
03:15:59 Polkadot was more of like,
03:16:00 hey, let’s go ahead and actually
03:16:02 curate our ecosystem more carefully.
03:16:04 And we’re gonna build it in a way
03:16:06 where there’s predictable or as predictable a cost
03:16:09 as possible with the rollout of the infrastructure.
03:16:12 And that’s so important for a business.
03:16:16 It’s not necessarily important for an experiment
03:16:18 or a startup where they’re just trying
03:16:20 to get populations quickly as possible.
03:16:22 We’ll figure out later.
03:16:24 But if you’re actually sitting there saying,
03:16:25 I need to know what my expenses are three years,
03:16:28 five years, 10 years into the future,
03:16:30 you need predictability there.
03:16:31 I think they have a better shot of it than anything
03:16:33 in F2 or with currently Ethereum.
03:16:37 Now, the big contrast between the two systems,
03:16:40 those we actually have native multi asset,
03:16:43 we have a different accounting model.
03:16:44 I think our base ledger is far more expressive.
03:16:47 Our rate of evolution was proof of stake
03:16:48 is much faster than theirs
03:16:50 because they’re based on derivative work
03:16:51 and we already have Ouroboros Omega and other things there.
03:16:54 I think we have a better,
03:16:55 ultimately a better side chain model will come
03:16:58 because we have something called Mythril for that.
03:17:00 But we learned a lot from their work.
03:17:02 The other thing is that we thought about governance
03:17:04 a lot more carefully in my view.
03:17:06 And we have Catalyst and Voltaire
03:17:08 and really the key there is saying,
03:17:10 how do we make sure that every single person
03:17:12 who holds data can participate in the network?
03:17:14 That wasn’t a high design priority of Polkadot.
03:17:17 It was more a fast commercial adoption.
03:17:19 The acquisition of customers will come to governance later.
03:17:22 And those were just different business philosophies.
03:17:25 But it’s nice to have a competitor like that.
03:17:28 And oftentimes I’ve said that Polkadot’s like Ethereum 1.5.
03:17:31 It’s what F2 probably should have been.
03:17:33 There was what Vitalik wanted to do,
03:17:35 which was incredibly aggressive and brilliant,
03:17:38 but it’s a lot.
03:17:39 And there’s so much execution risk in that plan.
03:17:42 And I think they’ve had like six years
03:17:44 of playing around with it.
03:17:45 Had they gone down the Polkadot road,
03:17:47 they probably would have been a market with it
03:17:49 in 2018.
03:17:50 And because they already had the network effect,
03:17:52 they would have had years of building on that,
03:17:55 iterating that.
03:17:55 And they already had a path to it too.
03:17:57 All they had to do was just give Elaine Chi
03:17:59 and her cohorts at Cornell,
03:18:01 five, $10 million grants.
03:18:02 Snow White would have been the dominant protocol,
03:18:05 not Ouroboros in the proof of stake space.
03:18:08 So it’s really fascinating historically
03:18:09 when you look at these things and the rivalries
03:18:11 and what they did and what they didn’t do.
03:18:12 And Gavin had a chance to have C++ Ethereum
03:18:17 be used as IBM’s enterprise blockchain.
03:18:21 The only reason they didn’t do it is it was licensed GPL.
03:18:24 And I think they wanted to relicense Apache.
03:18:27 If you ever talked to Bob Summerwall,
03:18:28 he was there at the time and he had this amazing story
03:18:31 about like these terrible fights where it’s like,
03:18:34 guys, just relicense the goddamn code.
03:18:36 Let’s figure out a way to make this happen
03:18:37 so that we can get this huge network effect
03:18:40 of being basically IBM’s play.
03:18:43 They didn’t do it, they created Fabric,
03:18:44 these types of things.
03:18:46 So there’s a lot of lore and stories in that respect.
03:18:49 But the space is better because of Polkadot.
03:18:52 And there’s a lot of good people there.
03:18:53 Web3 is a good concept.
03:18:55 And we run into their people in Germany and Zurich a lot.
03:18:58 And they’ve always been cordial and friendly
03:19:00 and really affable.
03:19:02 Before I talk to you about governance,
03:19:04 which is one of the most fascinating things about Cardano,
03:19:07 there’s a lot of stuff to untangle there.
03:19:10 Since you mentioned some humans
03:19:15 in this wonderful story,
03:19:17 you did make a video before we talked directed to me.
03:19:22 Thank you so much for that.
03:19:24 It came from a place of love.
03:19:29 But it was basically saying, as we have been,
03:19:32 you would love to talk about the technology,
03:19:34 about the future that you’re creating with Cardano
03:19:37 and just the future of the cryptocurrency space.
03:19:40 I think you’re kind of worried
03:19:42 that you’ll be talking to a journalist
03:19:44 that’s looking for clickbait content, that kind of thing.
03:19:47 But I’m fascinated by human beings.
03:19:49 I think you’re all, from an outsider perspective,
03:19:51 incredible human beings.
03:19:52 I don’t know about personal intentions,
03:19:54 all those kinds of stuff,
03:19:55 but I think you’re changing the world together
03:19:57 in different ways.
03:19:59 And I just wanted to sort of give you an opportunity.
03:20:02 If there’s, in the name of love and friendship,
03:20:06 is there something from your history
03:20:09 over the past decade or so,
03:20:11 outside of technology and the human side of things
03:20:13 that you draw inspiration from, you draw insight from,
03:20:16 you’re just proud that happened?
03:20:18 I mean, it’s like asking Paul McCartney about John Lennon.
03:20:21 Tell us about John Lennon.
03:20:23 It’s like, you know.
03:20:24 How much do you hate Yoko?
03:20:25 For almost eight years now,
03:20:28 I’ve been, it’s just been this reoccurring pattern
03:20:31 every interview.
03:20:32 Tell us about your time at Ethereum.
03:20:33 Those six months you spent there
03:20:35 that were so pleasant and enjoyable.
03:20:37 Tell us all about it.
03:20:38 And tell us about your relationship with Vitalik.
03:20:40 It’s like, I barely talk to the guy.
03:20:42 I see him every now and then.
03:20:43 Like, every two years we say, hey.
03:20:44 He says, hey.
03:20:45 It’s like, okay.
03:20:46 Maybe 10, 20 years in the future,
03:20:49 Walt Mossberg or Robo Walt will bring us together
03:20:52 like he did Steve Jobs and Bill Gates.
03:20:55 And we can kind of talk about, you know.
03:20:57 That was a tense conversation, by the way.
03:20:59 The 2007 interview?
03:21:00 Yeah, the 2007.
03:21:01 Oh, it was great though, wasn’t it?
03:21:03 Yeah, that was the body language.
03:21:05 That was art.
03:21:06 Yeah.
03:21:07 That was fascinating.
03:21:08 That was a fascinating study of human nature.
03:21:11 Yeah, so maybe that’ll be us.
03:21:12 In like 10 or 20 years.
03:21:14 Who the hell knows?
03:21:14 The robot versions of all three of you.
03:21:16 Yeah, my only point though is that, you know,
03:21:18 it’s a closed chapter and it’s funny.
03:21:20 I was there for six months.
03:21:21 I’ve been building Cardano for years.
03:21:23 We’ve done all this stuff.
03:21:25 I’ve been to 52 countries.
03:21:27 I love talking about those experiences.
03:21:29 And there’s so many of them.
03:21:30 I’ve met heads of state.
03:21:32 You know, I went to Mongolia, like eagle hunting
03:21:34 and, you know, being bucked off horses
03:21:37 and riding the sand dunes.
03:21:39 We’ve invented all this new cool technology
03:21:43 that the space itself is using.
03:21:45 And we’ve had a chance to sit on government panels,
03:21:48 pass laws, 24 laws in Wyoming.
03:21:51 I mean, there’s like all this amazing stuff that’s there.
03:21:54 And it’s such a fun conversation.
03:21:55 There’s so many superheroes in that conversation,
03:21:57 like Cailin Long and Taylor Limholm.
03:21:59 And there’s Alex Sherpanoi, who we already mentioned
03:22:03 that I met along the travels.
03:22:04 I met Ralph Merkle.
03:22:05 Cool, I met all these amazing people along the way.
03:22:07 I have fond memories of,
03:22:10 by the way, you should interview him, by the way.
03:22:11 Amazing guy, does nanotech now.
03:22:13 You know, I met, you know, I was hanging out
03:22:15 with Sylvia McCauley.
03:22:16 And I remember before we launched Yalgrant,
03:22:18 I said, you should really just do a Bitcoin cash style play
03:22:21 and airdrop Bitcoin.
03:22:22 What the hell are you doing distributing this?
03:22:24 He’s like, trust me, I know what I’m doing.
03:22:26 You know, so it’s like so many great conversations
03:22:29 and so many great people.
03:22:30 And what I’ve really noticed in this industry,
03:22:32 when you separate the tribalism, the maximum side,
03:22:34 there really is a love of creativity and building.
03:22:38 And there’s like no other industry like it.
03:22:41 I’ve been in many different places in life.
03:22:42 And here, people just love art.
03:22:44 They love beauty.
03:22:45 They love the unknown.
03:22:47 They love pushing things.
03:22:48 They love, you know, really, you know, in some cases,
03:22:53 not necessarily the most socially beneficial way,
03:22:55 but they really love the challenge, right?
03:22:58 And that has been fun.
03:23:00 I wouldn’t trade it for anything in the world.
03:23:02 The dark side of the industry is that people love labels.
03:23:07 They love saying this person’s good.
03:23:09 This person’s evil.
03:23:10 This person’s a sociopath.
03:23:11 This person’s not.
03:23:12 And by the way, they’ve never met that person.
03:23:15 They’ve never interacted with that person.
03:23:16 And they just say, well, I heard from this person,
03:23:19 I read this book, or I did that.
03:23:22 I was like, oh, so some books written by a journalist
03:23:24 makes $50,000 a year who’s looking for a movie deal,
03:23:27 say that somebody said this or did this
03:23:29 in an unconfirmed way.
03:23:32 What can you do, sue them for slander?
03:23:33 I mean, so you just let it ride and you let it roll.
03:23:36 And if it was just ending there, that’d be great.
03:23:38 But the problem is it cascades and people just repost it
03:23:41 and they relive it again and again and again.
03:23:44 And then what do you do about it?
03:23:45 You eventually just say,
03:23:46 I’m not gonna talk about it anymore.
03:23:47 I’m done with it.
03:23:48 And you move on and you say, you know what?
03:23:50 If it’s your problem, it’s your problem.
03:23:51 It’s your reality that you wanna live in.
03:23:53 I’ll be defined by the things that I achieve and do
03:23:55 and the people that we help and the things that we build.
03:23:58 And, you know, since I started in this industry,
03:24:00 I’ve gotten to a point where not only do we have
03:24:03 this amazing company with these incredible people
03:24:06 who work at this company,
03:24:07 but we also have the ability to pursue
03:24:09 amazing different interests.
03:24:10 Like I met Ben Gortzell.
03:24:13 And Ben and I are gonna do an AGI project together.
03:24:15 And of all places, Rwanda.
03:24:17 And he gave me this 85 fucking page paper.
03:24:20 He was wearing that damn hat that he always wears.
03:24:23 I think he showers with the hat on.
03:24:25 He never takes that thing off.
03:24:27 I think he refused, I interviewed him
03:24:29 and he refused to tell me the story of the hat.
03:24:32 He wouldn’t tell me either.
03:24:33 I interviewed him as well in Wyoming.
03:24:34 And every time I call him, he’ll have his shirt off.
03:24:37 He’ll have the fucking hat on.
03:24:39 And now all I can think about is the hat.
03:24:41 I wonder what the story there is.
03:24:42 I know, it’s like, it’s gotta be.
03:24:44 That might be the AGI.
03:24:46 Yeah, exactly.
03:24:46 But anyway, he gives me this 80 page paper
03:24:48 and he says, Charles, it’s like the combination
03:24:50 of everything.
03:24:51 This is how we’re gonna do AGI.
03:24:53 And I said, that’s crazy, Ben.
03:24:54 I said, I’ll throw some money at it.
03:24:56 So we’re gonna hire some developers.
03:24:58 I have no idea where it’s gonna go,
03:24:59 but I mean, I get to hang out with Ben Corson.
03:25:02 That’s fun.
03:25:03 That’s the kind of stuff.
03:25:04 And that’s the really cool side of the space.
03:25:06 And it’s what I enjoy.
03:25:09 And the Vitalik rivalry thing, the Ethereum thing,
03:25:12 I try my best not to mention it.
03:25:14 I hate the fact that still when Bloomberg
03:25:16 or anybody else writes a story about me,
03:25:18 they’ll say Ethereum co founder.
03:25:20 Like, can you say something else?
03:25:22 Well, I think if I’ve learned anything from the internet,
03:25:24 you can’t resist that kind of stuff.
03:25:25 You just have to, this is Elon.
03:25:27 It’s the joke, joke it away.
03:25:30 I’ve noticed this, this is already starting
03:25:31 to happen with me.
03:25:32 It’s like, people just make up stuff.
03:25:34 They haven’t made up anything interesting yet,
03:25:36 but they could.
03:25:37 And I’ve seen that with Bill Gates, for example,
03:25:39 just stuff being made up.
03:25:41 I mean, probably half of it is true.
03:25:43 Sorry, internet.
03:25:43 I’m sorry.
03:25:44 But like, I guess what I realized,
03:25:48 this is the dark side of memes,
03:25:49 is you can just make something up and it’ll spread.
03:25:52 And then that’s it.
03:25:53 And that’s what happens.
03:25:55 But then, and the problem is half the world will believe it.
03:25:58 Yeah, it could be good stuff, it could be bad stuff.
03:26:01 So I guess the hope is it bounces off in the end.
03:26:04 I tend to believe you almost want to play with that
03:26:06 and not take it seriously.
03:26:08 Just kind of laugh it off and enjoy life
03:26:10 and keep creating, keep doing awesome stuff.
03:26:13 Operating both in the physical space with other humans
03:26:16 and in the digital space with humans and AI systems
03:26:18 and just have fun.
03:26:19 Because most of us in the long arc of history
03:26:22 will be completely forgotten and will matter.
03:26:26 It’ll all be some kind of,
03:26:27 just like H Hacker’s Guide to the Galaxy
03:26:30 will just be one sentence that summarizes
03:26:32 all of our existence.
03:26:34 And the sad thing is most of us will not be part
03:26:37 of that sentence or all of us.
03:26:38 Well, thanks for all the fish, Lex.
03:26:41 Thanks for all the fish.
03:26:42 The dolphins are running this thing
03:26:43 and they’re talking to the UFOs recently,
03:26:46 which is very interesting.
03:26:48 Because the UFOs keep going to the water.
03:26:50 So we humans assume that the UFOs are here to visit,
03:26:53 the aliens are here to visit us,
03:26:55 but it’s probably the fish.
03:26:56 No, I just think it’s next generation aircraft
03:26:58 that we’re using.
03:27:00 Oh, that we’re just not aware of.
03:27:01 But why are they talking to the fish?
03:27:03 Well, that’s the place you test hypersonic aircraft
03:27:05 is over oceans.
03:27:06 So that’s the Russians with their hypersonic nuclear weapons.
03:27:10 That’s what a lot.
03:27:11 Rods from God, man, rods from God.
03:27:13 So let me try to transition from UFOs to Abraham Lincoln.
03:27:17 Lincoln said that nearly all men can stand adversity,
03:27:22 but if you want to test a man’s character, give him power.
03:27:27 Do you think power and money can corrupt most people?
03:27:31 And if so, do you worry of this corrupting force
03:27:33 on your own mind?
03:27:35 You’re one of the leading minds in the cryptocurrency space.
03:27:40 You’re the leader of the Cardano project.
03:27:44 You’re the king of the rats.
03:27:47 Does this corrupt your mind,
03:27:49 both the power and the money of it?
03:27:51 Yeah, I mean, you see this most pervasively
03:27:53 with people who inherit a large amount of money
03:27:55 or title like dynasties, like the Melons or the Rockefellers
03:28:00 or other people.
03:28:01 It’s the worst thing you can do to somebody
03:28:02 is just hand them an enormous amount of power
03:28:04 that they’re not prepared for.
03:28:06 And the challenge with this space is like,
03:28:08 everybody’s young and we’re all billionaires now
03:28:11 and we have these cult followings
03:28:12 and do all these things, right?
03:28:14 Nobody really says no to you.
03:28:15 Like, for example, I have this ranch up in Wyoming
03:28:18 and it has 400 bison on it.
03:28:21 So now I’m a bison rancher.
03:28:23 Like, if somebody was like monitoring, auditing,
03:28:28 that’d be like, Charles, do you have any experience
03:28:30 raising, taking care of bison?
03:28:31 I’d be like, no.
03:28:33 So you think it’s really a good idea
03:28:34 to have this ranch with 400 bison running around.
03:28:36 What the hell are you gonna do with bison?
03:28:38 I just have to figure out
03:28:39 what I’m gonna do with these bison.
03:28:40 So, and I, you know, we’ll make a video game.
03:28:43 We’ll do crypto, we’ll do crypto.
03:28:44 We’ll make a video game, we’ll do crypto bison.
03:28:47 But you’re gonna get one.
03:28:49 I’m not pulling, thank you, I’d love to.
03:28:52 I’m not pulling at that string just yet.
03:28:53 So I’m wondering how you’re gonna connect
03:28:56 this back to power.
03:28:57 Right.
03:28:58 And so, but my point is that when you are unrestrained,
03:29:01 like literally no one can say no,
03:29:03 or you have the ability to distort reality around yourself
03:29:06 and you’re not constrained by social customs,
03:29:10 it creates a situation where you start losing perspective.
03:29:16 You’re not grounded anymore, I think.
03:29:17 So it’s less of a question of, will you become evil or not?
03:29:20 It’s more of a question of,
03:29:21 will you lose so much touch with humanity
03:29:24 that you just can’t relate or understand people?
03:29:26 And then you inadvertently, by your actions,
03:29:28 start harming people, either through the policies
03:29:31 that you pursue or, you know,
03:29:33 the things that you start building and so forth.
03:29:35 So I think the best inoculation against that
03:29:38 is to surround yourself with activities
03:29:40 that are utterly divorced from your reputation and status.
03:29:44 The best thing are animals and gardening.
03:29:46 Because, you know, a donkey doesn’t care
03:29:48 if you’re a billionaire or a baroque,
03:29:49 they’ll shit on you exactly the same way.
03:29:51 Yeah.
03:29:52 And so there’s a humility behind these types of activities
03:29:55 and these things, and there’s a honest work component.
03:30:00 Like when you grow hay or whatever, you have to plant,
03:30:03 you have to actually water, you have to irrigate,
03:30:05 you have to actually be there.
03:30:06 And if you can’t use some excuse,
03:30:07 well, I was meeting the president of El Salvador,
03:30:09 I was doing this, and the hay doesn’t give a shit.
03:30:12 It’s hay, right?
03:30:13 So it grounds and connects you.
03:30:14 The other thing is you have to get used to giving away.
03:30:17 All the best things in my life have come
03:30:19 as a consequence of first giving.
03:30:21 Like I got started in the cryptocurrency space
03:30:23 by giving away a free class.
03:30:24 Bitcoin or how we learn to stop worrying or love crypto.
03:30:26 You did a free podcast, right?
03:30:28 In life, if you give and you develop that mindset
03:30:31 of I’m not attached to the things I have,
03:30:33 and if push comes to shove, it goes away,
03:30:36 usually you get more back.
03:30:37 Like I gave away all my ether, I never received any of it.
03:30:39 293,000 ether at the all time high over $1.2 billion.
03:30:44 I gave it to my secretary.
03:30:46 I had no idea if it was gonna be worth anything or not,
03:30:47 but he kind of got shafted.
03:30:49 And I was like, well, they don’t like me,
03:30:51 so they don’t like you by the transitive property
03:30:53 of relationships, so you’re screwed.
03:30:55 And he’s like, well, I’m gonna go back
03:30:56 and my wife is probably gonna divorce me
03:30:58 and all this stuff, and what do I do?
03:31:00 And I said, well, I’ll give you my ether.
03:31:01 I don’t know if it’s gonna be worth anything.
03:31:02 So he’s still pretty good.
03:31:05 But then again, regardless of doing that,
03:31:09 I now have Cordano, I have this great career,
03:31:11 I’ve done all these amazing things.
03:31:12 So I think that’s the single best way of handling power
03:31:16 is you have to do things to keep yourself grounded.
03:31:19 Case of Washington, he was deeply connected to Mount Vernon
03:31:22 during the Revolutionary War, he was like sending letters,
03:31:25 talking about the irrigation ditches and the barn
03:31:27 and things like that.
03:31:28 He was always connected to that.
03:31:29 And then also develop a mindset
03:31:31 that you’re only here temporarily.
03:31:34 Everything you have is finite.
03:31:35 It’s going to go away at some point.
03:31:37 No matter how much you want to keep it, you will die
03:31:40 and somebody else will have it.
03:31:42 So you live for the next generation.
03:31:44 You don’t live for yourself.
03:31:45 You look to the future and you say,
03:31:47 what am I going to leave behind?
03:31:48 What am I going to transmit?
03:31:50 And then in that kind of mindset always forces you
03:31:52 to be more gracious, cooperative
03:31:55 and collaborative with people.
03:31:57 All these dictators, they are egomaniacs
03:32:00 and they connected these fantasies
03:32:02 and they live for themselves.
03:32:04 Look at Xi in China, he’s unraveling a power structure
03:32:07 that was what made China, China today.
03:32:10 After Mao, they said, we probably shouldn’t have another
03:32:12 one of those guys.
03:32:13 And so they said, let’s build something
03:32:16 where there’s checks and balances
03:32:17 and no one person is going to run the whole show
03:32:21 or else it’ll descend and regress and we’ll have problems.
03:32:24 And then what he’s done, he’s thinking only about himself,
03:32:27 not the best interest of China.
03:32:29 So he’s systematically unraveling a system
03:32:31 they’ve been embracing for over 40 years.
03:32:34 And to what end?
03:32:35 After he dies, the next guy who comes in,
03:32:37 even as he’s super competent,
03:32:39 the next guy is going to horrifically abuse
03:32:41 that power structure.
03:32:42 And the same thing happened with the Romans.
03:32:45 After Augustus, the great emperor,
03:32:47 then suddenly down the line you have Caligula
03:32:49 and Nero and all these other terrible emperors
03:32:51 that just destroyed everything that the Republic
03:32:54 and the empire sought to achieve.
03:32:56 So you have to think for the future,
03:32:58 you have to think in institutions and systems,
03:33:01 you have to have things that ground yourself
03:33:03 and you have to be fully prepared to lose everything
03:33:05 and give up everything.
03:33:07 After I left Ethereum, I had nothing, okay?
03:33:10 Reputation was damaged, not a lot of money,
03:33:12 nobody really wanna work with me,
03:33:14 no one pick up a phone for two whole years, it was horrible.
03:33:18 And so I was at bedrock in that experience.
03:33:21 And now look at where I’m at.
03:33:22 I built all the way up to that.
03:33:24 And so that wasn’t by accident,
03:33:25 it was I had to surround myself with amazing people.
03:33:29 Why would amazing people wanna surround themselves
03:33:31 with me if I was this narcissistic asshole
03:33:34 who just was like, it’s me, me, me,
03:33:36 everything would be a transactional relationship.
03:33:41 It would be okay, we’ll get as much as we can
03:33:43 and then run away as quickly as possible.
03:33:45 Instead it was, I’m going to invest in you
03:33:47 and maybe I’ll win, maybe I won’t win,
03:33:49 but I’ll be the last guy to leave the boat.
03:33:51 If we’re freezing to death, you get my coat
03:33:54 and I’ll just deal with the cold, that kind of mindset.
03:33:57 You have to have that, I got that from my dad,
03:33:59 he got it from his father.
03:34:02 My grandfather and great grandfather,
03:34:04 my dad said, I grew up in Montana
03:34:05 and they were products of the Homestead Act.
03:34:07 Very rough, Montana.
03:34:09 A lot of people died and froze to death up there
03:34:11 or eaten by animals or something
03:34:13 or shot by their neighbors.
03:34:14 And nobody investigates anything because it’s Montana.
03:34:18 So the only way you survive is by taking care
03:34:21 of each other and being a good member of that community.
03:34:23 And if somebody gets big, you have this implicit desire
03:34:26 to go and give back and take care of the community
03:34:29 that you came from and invest in that community.
03:34:31 Like I came from the mathematical community.
03:34:32 I never completed a PhD, but one of the things
03:34:35 that I’m doing is I’m going to put $20 million
03:34:38 and set up a center to do automated theorem proving
03:34:40 and we’re going to heavily invest in lean
03:34:42 because I’m super excited about mechanizing math
03:34:44 and making machine understandable.
03:34:46 I know all these guys who do this work.
03:34:48 There’s like all these mathematicians
03:34:50 and computer scientists and no one pays attention to them
03:34:52 and they’re kind of like the redheaded stepchildren
03:34:54 of mathematics and they live on the boundaries
03:34:56 and periphery.
03:34:57 Meanwhile, they’re super passionate
03:34:58 and they absolutely love what they do.
03:35:01 And if only they had the right resources,
03:35:05 within 50 or 100 years, what they’re doing
03:35:07 can probably become the dominant model
03:35:09 of how to do mathematics.
03:35:10 So I’m now in a position where I have the financial means
03:35:14 to take care of these guys.
03:35:15 So all I have to do is just call them up and say,
03:35:18 hey, would you like to work with, oh, absolutely
03:35:20 and cut a check and it’s done.
03:35:22 So the interesting tension here,
03:35:25 so we talked about ways to prevent power
03:35:27 from corrupting a human being
03:35:30 that’s in a leadership position.
03:35:32 There’s an interesting case in the cryptocurrency space
03:35:35 of Bitcoin and Satoshi Nakamoto
03:35:38 that’s basically doesn’t have a leader.
03:35:40 So the benefit of a leader is somebody that perhaps
03:35:46 even when they don’t carry power,
03:35:48 maintains a little bit of a flame of a vision.
03:35:52 I suppose Bitcoin has that with the original work
03:35:56 by Satoshi Nakamoto and the sort of that,
03:36:00 even though it’s anonymous,
03:36:02 the idea still lives on through the community,
03:36:05 but nevertheless, the leader is anonymous.
03:36:08 Do you think this is an interesting case study
03:36:11 about leadership is for the leader to maintain anonymity?
03:36:16 It was a saying from Sun Tzu, paraphrasing it,
03:36:19 the best leaders are felt but never seen.
03:36:22 So I think that’s exactly right.
03:36:24 The less the leader can be in the room
03:36:26 and the more the principles of the leader are in the room,
03:36:28 the better for the firm
03:36:29 because what you’re doing is creating more leaders that way.
03:36:32 You’re inspiring the next generation,
03:36:34 the next wave, the next circle out
03:36:36 to act with those principles,
03:36:38 but contribute in their own way and their own flair.
03:36:41 And so you gain collective intelligence
03:36:43 inside the organization
03:36:44 instead of just constraining yourself
03:36:45 to however the great the leader can be.
03:36:48 The other side of it is if the leader’s principles
03:36:50 are too strong, so this is the dark side of it,
03:36:52 you end up having Disney with Walt Disney after he died.
03:36:56 For 20 years, people said, we don’t do that
03:36:58 because Walt Disney wouldn’t do it that way.
03:37:00 Or to a lesser extent, Apple is the only don’t do that
03:37:03 because Steve Jobs wouldn’t do it that way.
03:37:05 Well, he’s dead, he’s gone.
03:37:06 Move on.
03:37:07 So somebody, I think, asked you whether you’re a clone
03:37:10 or a deep fake, and you said that you admitted,
03:37:14 you slipped up on video saying that you’re a deep fake.
03:37:17 So on that talk.
03:37:18 I’m actually a poker playing robot that escaped a lab.
03:37:20 The truth finally comes out,
03:37:22 but I said on that topic,
03:37:23 who do you think is Satoshi Nakamoto?
03:37:25 Is it possible that you are, in fact, Satoshi Nakamoto?
03:37:29 No.
03:37:32 If you have a preponderance of the evidence,
03:37:35 I think the most likely candidate would be Adam Back.
03:37:39 It’s the Occam’s razor candidate.
03:37:41 And mostly because he’s the right place, right time,
03:37:43 right age, right skillset.
03:37:46 If you look at the design of Bitcoin,
03:37:48 the types of decisions,
03:37:49 like the use of fourth, the scripting language,
03:37:52 it was pretty common in English and European pedagogy
03:37:54 in the 1980s and 1990s.
03:37:56 It was like an example language for a stack based assembly
03:37:58 and like little stuff like that, little quirks like that.
03:38:01 Also, he created Hashcash,
03:38:03 which was the predecessor of proof of work.
03:38:05 He just kind of got a chip on his shoulder
03:38:06 that Microsoft never did anything with it.
03:38:08 So he’s probably looking for something.
03:38:10 He grew up with all the cypherpunks.
03:38:11 He knew of Hal Finney.
03:38:13 He knew of all these people.
03:38:15 He knew Phil Zimmerman.
03:38:16 You don’t think it’s Hal Finney?
03:38:17 Well, no, because the code was not good enough.
03:38:21 Hal was a Unix, Linux guy.
03:38:23 He was a talented programmer.
03:38:24 He was a talented developer.
03:38:26 The initial code for Bitcoin was developed
03:38:28 to look like on a Windows machine.
03:38:31 Adam worked at Microsoft, go figure.
03:38:33 And also it was very academic and it had to be cleaned up
03:38:36 and a lot of things had to be patched up and fixed.
03:38:38 If a guy like Hal developed it,
03:38:40 they probably had less of the,
03:38:43 let’s use secp256k1 and these types of things
03:38:47 and more of like, hey,
03:38:48 let’s build this cool engineering thing
03:38:50 and we’ll figure out the protocol design later on.
03:38:53 It just stinks of an older academic,
03:38:56 the initial design of Bitcoin
03:38:58 and the initial rollout of Bitcoin.
03:38:59 And then brilliant people like Greg Maxwell and others,
03:39:02 they came and cleaned it all up.
03:39:03 And lo and behold, where’s Adam?
03:39:05 Like the CEO of the largest Bitcoin development company
03:39:08 in the space who’s trying to keep working on
03:39:10 and building out Bitcoin.
03:39:11 And where the hell was Adam when Satoshi was around?
03:39:14 I don’t think there was any overlap
03:39:17 where they were both together at the same period of time.
03:39:19 But I mean, if you really care, you could even do this.
03:39:22 There’s a lovely paper written by the US Army.
03:39:25 If you just Google like code stalometry US Army,
03:39:28 it’s a technique where you can use ML
03:39:31 and a few other things to actually kind of develop
03:39:33 a fingerprint for the way that people write code.
03:39:36 So all you gotta do is take the original Bitcoin source code
03:39:39 and then take all the open source repos
03:39:41 from around that time period and before
03:39:43 and see if there’s a match between those two.
03:39:46 Now, if he’s really good at creating an alias,
03:39:49 probably not so good at obfuscating the code
03:39:52 that was written.
03:39:53 So the odds are that you’d probably find a match
03:39:55 to a repo that’s connected to a real life human identity
03:39:58 or at least a weaker opsec because you’re younger,
03:40:01 you have weaker opsec.
03:40:03 Do you know if people have tried that?
03:40:04 I don’t think anybody’s actually done it,
03:40:05 but there’s actually a beautiful paper.
03:40:07 It’s like 94% accurate, the code stalometry.
03:40:09 The code stalometry.
03:40:10 So I’ve, for various reasons, I’ve worked with people
03:40:15 that work on stalometry of natural language.
03:40:17 Okay.
03:40:18 And I think it matches closest to Nick Sabo
03:40:22 if you actually do the written stalometry analysis
03:40:26 of Satoshi’s writings to Sabo’s.
03:40:28 So I meant stalometry as a field.
03:40:30 I didn’t actually look for application
03:40:31 for this particular problem.
03:40:33 But so you’re saying Nick Sabo is the closest match.
03:40:36 Yeah, somebody did it years.
03:40:37 I didn’t look at if the model was sound or not,
03:40:39 but I just remember reading on a Bitcoin talk
03:40:41 and Sabo was another one of the common candidates.
03:40:44 How many Sabo and Adam are probably the top three things
03:40:48 that people could list.
03:40:48 What do you think about this idea of anonymity,
03:40:51 of publishing something anonymously?
03:40:53 Would you ever consider publishing a paper?
03:40:55 You’ve been part of, I mean, the Cardano ecosystem
03:40:59 has published a lot of incredible papers.
03:41:01 Is there ever a value to publish anonymously?
03:41:04 Well, every paper that goes through the referee process,
03:41:07 the authors are ripped off.
03:41:08 So you don’t actually see the authorship
03:41:10 when you submit to the conference.
03:41:12 So that’s just best practice.
03:41:14 But the question is, do you preserve the anonymity
03:41:16 post conference and actually not reveal
03:41:18 the author of the paper?
03:41:20 It’s a detriment for the deals we make
03:41:22 because the whole premise of working with our company
03:41:25 as an academic is that you’re gonna have amazing coauthors
03:41:28 and your work is gonna appear in great conferences,
03:41:31 great journals, and as a consequence, you get tenure.
03:41:33 If you publish anonymously, it’s like doing clearance work
03:41:38 in high energy physics or something like that.
03:41:40 After 30 years of this amazing career
03:41:42 working on nuclear weapons and classified reactors,
03:41:45 you finish and then you go to apply for a job
03:41:48 and they’re like, so what have you done
03:41:48 for the last 30 years?
03:41:50 Stuff.
03:41:52 Where is it on your CV?
03:41:53 Well, I can’t really talk about it.
03:41:55 Okay, welcome to community college.
03:41:57 So you get really screwed if you do that.
03:41:59 So there’s a misalignment of incentives
03:42:01 in the academic world towards anonymity.
03:42:04 And generally it’s only done when you’re doing something
03:42:07 very controversial or there’s a whistleblowing
03:42:09 type of a component.
03:42:10 It’s not typically done for foundational work.
03:42:13 And Satoshi was really one of the first things
03:42:15 because like if there was a, Satoshi docks themselves,
03:42:17 and I don’t think it’s possible anymore,
03:42:19 but if he or she did that,
03:42:21 that’s like a Nobel Prize in economics likely.
03:42:24 You’re on the short list for that.
03:42:26 And there’s enormous accolades that would come
03:42:28 beyond the monetary incentives
03:42:30 of being able to docks yourself.
03:42:33 That’d be cool if they give a Nobel Prize in economics
03:42:37 to an anonymous, to Satoshi Nakamoto.
03:42:39 It’s been proposed and it was turned down.
03:42:41 Yeah, so yeah, I mean, there are a few people
03:42:44 in our company that have done pseudonymous publications.
03:42:47 Like the, if you look at the Chimerical Edgers paper,
03:42:49 that’s a, it’s not a real name, it’s a crazy name.
03:42:52 It’s a pseudonymous publication.
03:42:55 And you know, but that’s usually for throwaway work.
03:42:58 There is one project we inherited from an anonymous person,
03:43:01 which is fascinating.
03:43:02 It’s called Cueditas.
03:43:03 And it’s basically a extension of the Cued manifesto
03:43:06 from the 90s.
03:43:08 And the pseudonym is Bill White.
03:43:10 And I think it’s some anonymous mathematician,
03:43:12 but I can’t figure out which one it is.
03:43:14 But basically it’s a marketplace for deduction.
03:43:16 So it’s like this magic machine
03:43:19 where you can create incentives for people
03:43:20 to write mathematical proofs in a theorem prover
03:43:23 and make some money from it.
03:43:24 So there’s some cool work that’s there.
03:43:26 And it’s sad that Bill stayed anonymous
03:43:29 because I think that could have been easily published.
03:43:31 And there was a lot of really cool things
03:43:32 that could have been done with Cueditas.
03:43:34 So you did say the success of Cardano,
03:43:36 sort of the vision you have is for you to have less
03:43:39 and less power over time.
03:43:41 So this idea of governance, what’s your vision
03:43:44 for a decentralized secure governance system?
03:43:48 So the first thing you have to do is you’ve got to look
03:43:50 at meaningful metrics, not vanity metrics.
03:43:53 So what does it mean to have legitimacy
03:43:55 in a governance system?
03:43:56 You can build any governance system you want.
03:43:58 You can have a dictator, right?
03:43:59 Like Bob is in charge.
03:44:01 It’s like whether you like Bob or not, he’s in charge.
03:44:04 That’s not very legitimate.
03:44:05 And you can have pure democracy
03:44:06 where every single person votes
03:44:08 and then nothing ever gets done.
03:44:10 County dog catcher is like a six year election
03:44:12 or something like that.
03:44:14 So there’s a spectrum there between absolute power to one
03:44:17 and perfectly egalitarian power
03:44:20 to every single potential participant inside the system.
03:44:23 And then the question is, okay,
03:44:24 well, how do you handle choice architecture in that?
03:44:28 So are you asking your people about every question
03:44:31 or are you asking your people about a subset
03:44:34 of questions related to a particular set of topics,
03:44:36 but then they’re not allowed to talk about other topics?
03:44:38 Like for example, are they allowed
03:44:39 to change the tax rate,
03:44:40 but they can’t change freedom of speech,
03:44:42 that kind of a thing.
03:44:43 So the first thing you have to do
03:44:45 when you build these types of systems
03:44:47 and they get to a certain scale
03:44:48 is you have to build some mechanism
03:44:50 for people who are interested in governance
03:44:52 to self select and participate.
03:44:54 Just create a collection bucket.
03:44:56 In Bitcoin, we had Bitcoin talk
03:44:58 and Bitcoin Reddit and these things.
03:44:59 And eventually the GitHub repos and these things,
03:45:02 there was a place to go if you were interested.
03:45:04 And you need some sort of change management system
03:45:06 where people who want to evolve the system
03:45:08 can write it down in a very careful way.
03:45:10 So in Bitcoin’s case,
03:45:11 it was Bitcoin Improvement Proposal on Ethereum.
03:45:13 It’s the Ethereum Improvement Proposal.
03:45:15 And for us, it’s the SIP, the Cardano Improvement Proposal.
03:45:18 But just a structured way of discussing
03:45:20 how you wish to change.
03:45:21 Then there’s a question of,
03:45:22 do you want to do this implicitly or explicitly?
03:45:25 The case of Bitcoin in Ethereum, it’s an implicit system.
03:45:28 So there’s no on chain voting.
03:45:30 There’s no like five people said this
03:45:32 and four people said this, so we do this.
03:45:34 The case of Cardano, we’re actually explicitly inviting.
03:45:37 This is one of the biggest differentiators
03:45:39 between Cardano, Polkadot, and these other things
03:45:41 is that we’re really serious about governance
03:45:43 to the extent that we’re actually doing foundational
03:45:46 research in eVoting.
03:45:47 We’re building new voting systems,
03:45:49 we’re exploring preference voting and quadratic voting.
03:45:51 And the long and the short is that we want
03:45:53 more and more people to participate in voting for things.
03:45:57 And you just have to start somewhere.
03:45:59 So our hypothesis is we can bootstrap the system
03:46:02 with the treasury system.
03:46:05 So in Cardano, some of the inflation goes
03:46:09 to the block producers, just like any other cryptocurrency,
03:46:11 but some goes into a decentralized treasury,
03:46:14 which now has over a billion dollars of ADA in it.
03:46:17 So it’s a lot of money.
03:46:18 And that treasury is not under my control
03:46:20 or the foundation’s control,
03:46:22 it’s actually controlled by the community as a whole
03:46:24 through a program called Catalyst.
03:46:26 And so all these people can come together
03:46:28 and they can submit spending ballots
03:46:29 and other people who hold ADA can vote to approve that.
03:46:32 What’s nice about it is you have a growth engine
03:46:34 to improve two accesses.
03:46:36 One is absolute participation.
03:46:38 So increase the amount of people
03:46:40 who hold ADA participating.
03:46:42 So the absolute number of people participating.
03:46:44 And the other is meaningful participation.
03:46:46 So the depth of participation.
03:46:48 Did you just show up and vote?
03:46:49 Or did you spend hours debating things on idea scale,
03:46:53 the innovation management platform,
03:46:54 interacting with the funding proposal,
03:46:56 going back and forth.
03:46:57 And there’s dozens of little things like that.
03:47:00 Now, my hypothesis is if you run this
03:47:02 with enough iterations,
03:47:02 eventually you get to a certain critical mass,
03:47:05 like over 50% absolute participation
03:47:07 and a high level of meaningful participation,
03:47:09 where you can move beyond funding
03:47:12 and you can start actually having meaningful questions
03:47:14 about protocol design and improvement proposals
03:47:17 and so forth.
03:47:18 And then what you can do is you can roll out
03:47:20 new voting systems and new social structures,
03:47:22 and you can let them start voting on training wheels
03:47:25 like system parameters.
03:47:26 Like for example, the minimum transaction fee
03:47:28 or that K parameter for the amount of stake pools
03:47:30 or these types of things.
03:47:32 Then they build enough competency there
03:47:34 and they move up a next level.
03:47:35 And they actually start talking about hard forks
03:47:37 using the update system, the hard fork combinator system.
03:47:40 See, so that’s how you.
03:47:41 Voting on a hard fork.
03:47:42 Voting on a hard fork.
03:47:44 You can’t do it unless your social dynamics are right
03:47:46 and your voting system is right.
03:47:47 And by the way, you also need to write a constitution
03:47:49 around the same time
03:47:50 because not all hard forks are created equally.
03:47:53 The kinds of things that would add support
03:47:55 for a new cryptographic primitive
03:47:57 are distinctly different from the kinds of things
03:47:59 that would change your monetary policy of the system.
03:48:02 So the constitution would be written,
03:48:04 and maybe you can comment on
03:48:05 what is the innovation management proposal system?
03:48:09 So we partnered with a company called Ideascale
03:48:11 and they run a kind of a side platform.
03:48:13 So people who are interested,
03:48:15 that’s kind of our version of a forum.
03:48:16 They sign up and there’s special tools in that platform
03:48:19 for discussions that are productive.
03:48:21 So they don’t descend into kind of like
03:48:22 trolly Reddit style conversations,
03:48:24 but they’re much more focused around
03:48:26 how is your product building out.
03:48:28 And by the way, we’re gonna add more infrastructure
03:48:29 over time.
03:48:30 Our chief of staff, Tamara Hasson,
03:48:32 she’s working on setting up an incubator and accelerator.
03:48:35 And we have lots of cool partners
03:48:36 we’ve talked with in that space.
03:48:38 And it’s the same concept.
03:48:39 Your idea comes in,
03:48:41 what enters the system should not be
03:48:43 what gets approved on the other side.
03:48:44 It should go through some sort of gauntlet,
03:48:46 some sort of crucible where you iterate your way through
03:48:49 and there’s all kinds of optimizations and upgrades
03:48:51 and evolutions and combinations
03:48:53 and destructions that occur.
03:48:55 And then by the time you get to the other side,
03:48:56 either the idea just dies on the vine
03:48:58 because it was a bad idea,
03:48:59 or it’s a significantly stronger, far more fundable thing
03:49:03 and potentially even gets attached with accountability.
03:49:05 So you don’t just fund the idea,
03:49:06 you’d actually fund the auditor at the same time
03:49:09 who actually holds the person accountable
03:49:10 because the blockchain is not a real company.
03:49:12 It’s an ethereal thing.
03:49:14 You need a counterparty to hold someone accountable
03:49:16 who’s real for that type of stuff and that type of funding.
03:49:19 So that’s what we’re doing this year.
03:49:21 So we have a whole team of people,
03:49:23 partners like Governance Live and IdeaScale
03:49:25 and papers we’ve written and about 30, 40,000 people
03:49:29 regularly participating in this.
03:49:30 So it’s a huge social experiment
03:49:32 and we’re learning an enormous amount.
03:49:34 And then our goal is by the end of the year
03:49:35 to have a meaningful percentage
03:49:37 of the entire Cardinal population inside of it,
03:49:39 like 40, 50%.
03:49:41 Then once you’re at that threshold,
03:49:42 now you have democratic majority of the entire system
03:49:46 and you can have a real conversation about,
03:49:48 okay, how do we write a constitution
03:49:50 for this type of a system?
03:49:51 And sorry to interrupt, but so the constitution,
03:49:54 people still argue about it because natural language,
03:49:57 much like poetry, lends itself to multiple interpretations.
03:50:00 Is it possible to formalize some of these ideas
03:50:03 that reduce the ambiguity?
03:50:07 Everything’s old is new again.
03:50:09 We were talking about Lojban back in the day, right?
03:50:12 So there’s definitely formal languages you can use
03:50:15 to express these things.
03:50:15 This is why I’m so interested in things like Idris and Koch
03:50:18 and Acta and theorem proving,
03:50:21 because that’s exactly what you’re attempting to do
03:50:23 is to express some concept or desire or construction
03:50:27 in a language that’s machine understandable
03:50:29 and manipulatable.
03:50:30 In particular, how does the system know its own design?
03:50:33 So what is the reference of a cryptocurrency?
03:50:35 Usually it’s a canonical code base,
03:50:37 like here’s Bitcoin core and the C++ code
03:50:40 is that is the canonical code base.
03:50:42 But actually that’s not right.
03:50:43 You should have specifications, blueprints
03:50:46 that are implementation agnostic
03:50:47 as your canonical code base.
03:50:49 And can your system know those specifications,
03:50:51 understand those specifications,
03:50:52 and can your change management system be for that?
03:50:55 And then can you provide a proof
03:50:57 that your client is by similar to that specification?
03:51:00 So yeah, that’s 10 years in the future,
03:51:02 but that’s where you would go with that kind of a concept.
03:51:05 But you’re tending towards a formalism.
03:51:08 Eventually, but that’s not necessary
03:51:10 for the system in the short term.
03:51:12 It’s good enough just to have,
03:51:14 I know in a winter and say the Haskell client is that,
03:51:17 and then what you basically do is you vote on a SIP
03:51:21 and then once it’s approved,
03:51:23 then you go and implement that.
03:51:24 And there’s some mechanism to trigger the update system,
03:51:26 to update the reference client.
03:51:27 Do you have an example of a SIP,
03:51:29 a Cardano Improvement Proposal?
03:51:31 Yeah, like the Curb Benefit Pledge, SIP 007.
03:51:34 So the…
03:51:37 007.
03:51:38 Yeah, everybody loves that.
03:51:40 Yeah, key.
03:51:41 I’m gonna change my luggage code now, Lex.
03:51:44 What is that?
03:51:45 So basically it just has to do with the pledge.
03:51:50 So a pledge is a certain amount of ADA
03:51:52 that a stake pool operator will set aside
03:51:54 and connect to his pool in order to be listed
03:51:57 in the registry.
03:51:59 And actually it’s connected to how much income you make
03:52:02 as a pool operator.
03:52:03 So if you set it too high, you have a consolidation,
03:52:07 you have lots of pools.
03:52:08 If you set it too low, what will happen is larger pools
03:52:11 will tend to fragment
03:52:12 and actually run multiple instances of themselves.
03:52:15 And so this is delicate parameter that you have to tweak.
03:52:18 And so we have a formula for it,
03:52:19 our formal specification that’s quite involved.
03:52:22 And so one of the community members came and said,
03:52:23 well, I think we can massively simplify this design
03:52:27 and actually get a better result
03:52:28 for smaller stake pool operators.
03:52:30 And so it’s SIP 007.
03:52:33 And there’s actually a lot of conversation
03:52:34 and people are thinking about it.
03:52:35 And it was just stunning for me
03:52:37 because to understand how to write a SIP like this,
03:52:39 you actually have to read like a hundred pages
03:52:41 of mathematical prose in the formal specification.
03:52:44 So the guys who wrote it, I was like, fuck yeah.
03:52:47 This is great.
03:52:48 I’ll just say an example of a SIP,
03:52:49 but that’s one thing, but it could be as big as,
03:52:52 hey, I wanna add like quantum resistance to the system.
03:52:55 And here’s how you do that,
03:52:56 like quantum VRF and I wanna put XMSS
03:52:59 and all this other stuff.
03:53:00 So there’s a lot you can do
03:53:02 and you can do it indirectly or implicitly
03:53:07 where there’s some social process outside of the system
03:53:10 where you eventually approve a SIP,
03:53:12 or you can do it explicitly where you directly vote
03:53:14 or some representative democracy,
03:53:16 some group of representatives directly votes.
03:53:19 And then once you’ve decided it’s there.
03:53:21 The constitution is necessary
03:53:22 because you need to know the decision threshold.
03:53:24 Is it super majority or majority?
03:53:26 And also the voting process.
03:53:29 Like a lot of policy experts believe
03:53:30 that if Brexit was a multi stage vote,
03:53:32 it would have never passed
03:53:34 because people would have done the initial stage
03:53:36 and all the horrors of Brexit
03:53:37 would have been broadcast to society.
03:53:39 And then there would have been some reluctance
03:53:41 and buyer’s remorse on it.
03:53:42 And then the second round would have failed
03:53:44 or something like that.
03:53:45 But because it was just a singular event,
03:53:48 it’s like they passed it now,
03:53:50 British are all passive aggressive about it with no sign.
03:53:52 Very well, we shall remove from Europe.
03:53:55 And so your voting system has a lot to do
03:53:58 with the outcome you get.
03:53:59 The other thing is, what type of voting?
03:54:01 Is it just an absolute or is it a preference voting?
03:54:04 So you pick your favorite SIP,
03:54:06 follow your second favorite SIP or something like that.
03:54:08 So Condorcet or Borda are two examples of systems like that.
03:54:11 Are you a fan of those, like the ranked choice vote?
03:54:13 I love them so much, especially for political diversity
03:54:16 because this whole concept of throwing your vote away,
03:54:18 if it’s Alice or Bob, you’re always gonna get a,
03:54:21 it’s South Park did it best, right?
03:54:23 The giant.
03:54:24 Turd.
03:54:25 Yeah, yeah, you know the one.
03:54:26 Turd versus I forget what else, Douche versus Turd.
03:54:29 Douche versus Turd, South Park.
03:54:31 So if it’s ranked order or preference voting,
03:54:34 you never have that situation
03:54:35 because you always pick your favorite
03:54:36 and you get a lot more diversity on the ballot.
03:54:38 But then you have arrows paradox
03:54:39 and all these other things that come up.
03:54:41 So there’s no perfect system.
03:54:44 And really you have to be comfortable with governance
03:54:47 in a game of inches.
03:54:48 And you start by some guiding principles.
03:54:51 And the guiding principles is more is better
03:54:53 and productive interactions are better
03:54:55 than destructive interactions.
03:54:57 And you have to be able to quantify those things.
03:54:58 As long as you have an engine that allows you
03:55:00 to grow in those directions,
03:55:02 then you have a lot more people on for the ride
03:55:04 when you actually start talking about these bigger
03:55:06 and bigger things.
03:55:07 The other challenge was that we had
03:55:08 to decentralize development of the protocol
03:55:10 and the brain of the protocol.
03:55:12 We have fully decentralized the brain of the protocol.
03:55:15 The peer review academic process means
03:55:17 that there’s now an academic incentive
03:55:19 for graduate students, postdocs, and professors
03:55:22 to spend enormous amounts of time writing papers
03:55:24 in our ecosystem because they want tenure.
03:55:28 And we showed that you can get it.
03:55:30 There’s been a lot of people who’ve gotten
03:55:32 great academic careers from working with us.
03:55:34 So yeah, keep adding to that pile of 105 papers.
03:55:37 This is great.
03:55:38 And that doesn’t need Charles Hoskinson.
03:55:40 It doesn’t need IOHK funding or anything like that thereon.
03:55:43 We’re already seeing unfunded derivative work
03:55:45 from people who are completely disconnected
03:55:46 from us writing papers about stuff in our ecosystem.
03:55:49 So just continue to develop that, but that’s looking good.
03:55:53 Decentralized development, we’re working on that as well.
03:55:55 Our goal is sometime in the next few years
03:55:57 to make sure there’s at least three independent clients,
03:56:00 so three completely independent dev teams and code bases,
03:56:03 and also to get a separation of the commercial clients
03:56:06 from the reference code and turn the reference code
03:56:09 into like a formal specification, a formal blueprint,
03:56:12 and then have that change management
03:56:14 be completely decentralized.
03:56:15 The core developers are actually voted on,
03:56:17 and the SIP process is used to change that,
03:56:21 and then some way of proving that your client
03:56:24 follows the specification as a use of the protocol.
03:56:28 Is there, beyond the Cardano ecosystem,
03:56:32 these ideas of distributed governance,
03:56:35 do you see ways it could revolutionize politics?
03:56:40 Oh yeah.
03:56:41 Governments.
03:56:42 Oh yeah, like the Ethiopia deal, for example.
03:56:45 We have five million people that we brought in
03:56:47 with the did system there.
03:56:49 That’s gonna follow them throughout their whole life.
03:56:51 Right now they’re high school students,
03:56:52 but when they’re in their 20s, 30s,
03:56:54 they’re gonna wanna use that for eVoting
03:56:55 and for payments and so forth.
03:56:57 Can you describe the Ethiopia project,
03:56:59 because that’s fascinating.
03:57:00 Yeah, so we spent four years in Ethiopia.
03:57:02 I went there in 2017 and shook a lot of hands,
03:57:05 kissed a lot of babies, and they said,
03:57:06 oh yeah, we’ll have it all done in six months.
03:57:08 Everything is a lot of fun there,
03:57:11 but it takes a little bit longer than you’d think
03:57:13 to get anything done, and that’s okay.
03:57:15 I really love Ethiopia, it’s a beautiful country.
03:57:19 So we spent four years,
03:57:20 we trained a whole cohort of developers,
03:57:22 and then we started a relationship
03:57:23 with the Ministry of Education,
03:57:25 and they care a lot about proper credentials.
03:57:28 One of the biggest problems they have is,
03:57:30 when someone graduates, it’s really hard for them
03:57:32 to prove the quality of the credentials that they have,
03:57:34 and it’s really hard for them
03:57:35 to prove the knowledge that they have.
03:57:37 So if you wanna be an ICT outsourcer,
03:57:39 how does somebody know that this is a real program,
03:57:41 or how does somebody really know that this is a real doctor,
03:57:44 or whatever the hell you’re outsourcing?
03:57:46 So they said, can you come and build
03:57:47 a digital identity system for credentials?
03:57:50 So every student in the country at some point
03:57:52 will get a DID, a decentralized identifier,
03:57:55 and then you can prove all sorts of things about them,
03:57:58 like GPA, or what particular diploma they hold,
03:58:00 or blah, blah, blah, and then the beautiful thing is,
03:58:03 the way we designed it is it’s extensible
03:58:06 to include payments, extensible to include proofs
03:58:09 about themselves, like are you over the age of 21,
03:58:11 that kind of stuff, and then eventually it can be used
03:58:14 to link into a cryptocurrency system.
03:58:16 In this case, we built it for Cardano.
03:58:18 So Atala Prism is the framework we’re using for it.
03:58:20 Every student will get one, and then those students
03:58:23 will be able to use those credentials
03:58:25 in the Cardano ecosystem, eventually for DeFi,
03:58:28 like lending and so forth.
03:58:29 So it’s the largest blockchain deal of its kind,
03:58:31 and it probably will grow to 20 million people
03:58:33 over the next 24 months.
03:58:35 The other beautiful thing about Ethiopia
03:58:37 that people don’t know is the prime minister
03:58:38 is a cryptographer, and he’s in his like 40s, 50s,
03:58:42 a young guy, and he can actually read the papers
03:58:44 we write, and so he’s a really bright guy,
03:58:46 and he’s written this beautiful agenda
03:58:48 called Digital Ethiopia 2025, and one of his things
03:58:52 in the agenda is digital identity.
03:58:55 He wants every person in the country
03:58:57 to have a digital identity by 2025,
03:59:00 and he wants to implement an eVoting system
03:59:01 at some point for that.
03:59:03 So when you ask about governance,
03:59:04 all these governance tools that we’re constructing
03:59:07 for Cardano are completely reusable for a nation state.
03:59:11 A company, and by the way, if you create
03:59:13 a Cardano application, will eventually be reusable for you,
03:59:16 because if you have a DeFi protocol,
03:59:17 you need a voting system, why the fuck
03:59:19 do you have to reimplement that?
03:59:20 Native multiasset, anything that works on ADA
03:59:23 works with a native multiasset.
03:59:24 You can use our voting system for your asset.
03:59:27 So you get a government in a box
03:59:28 that you can parameterize any way you want,
03:59:31 and similarly, when a government does something
03:59:33 with Cardano, not only do they get
03:59:34 all this amazing infrastructure, but wait, there’s more.
03:59:38 They actually get this amazing voting system
03:59:40 that they can use for smaller, large scale decisions
03:59:43 that they wanna do.
03:59:44 On the US side, we’re thinking about trying
03:59:46 to roll something like this out in the state of Wyoming.
03:59:49 There’s been tons of laws that are passed.
03:59:50 It’s a very friendly crypto place.
03:59:52 At the very least, it’d be fun to see
03:59:54 if we can do the Republican, Democrat primaries
03:59:57 with preference voting and voter registration this way,
04:00:00 and do it completely online with an eVoting system.
04:00:03 So that’s something we’ll be pursuing in 2022.
04:00:06 You think there’s some openness to that?
04:00:08 Yeah, yeah.
04:00:09 That’s the one good thing about the craziness of Trump
04:00:11 is you made half of America think the election system
04:00:13 is completely, irreparably broken.
04:00:15 So you walk in, it’s like, we’re gonna go kill Dominion,
04:00:18 and they’re like, yay, that’s great, let’s go do that.
04:00:20 Whether you believe that or not,
04:00:23 it’s created a market opportunity,
04:00:24 created a lack of faith and credibility in the system.
04:00:26 To improve the system.
04:00:28 Exactly, exactly.
04:00:30 What do you think about El Salvador
04:00:32 becoming the first country to approve a cryptocurrency,
04:00:35 Bitcoin in this case, as a legal currency?
04:00:39 And where’s this trend going?
04:00:40 First of all, this event,
04:00:42 if you mentioned the Bitcoin conference,
04:00:44 the Bitcoin folks believe that this is a monumental event.
04:00:47 Do you think this is a start of something new?
04:00:49 Well, they’re both right, the critics and the pro people.
04:00:53 So the critics are saying this is a nothing burger,
04:00:55 and it’s just a publicity event for El Salvador.
04:00:58 And then the people say this is the most monumental event.
04:01:00 They may actually be right, because there’s
04:01:02 reciprocal agreements.
04:01:04 When a country issues a currency,
04:01:06 other countries honor that, usually,
04:01:08 and it trades on forex exchanges.
04:01:09 So if Bitcoin becomes a recognized currency of a country,
04:01:14 then it may be the case that the United States
04:01:16 and European Union and others can’t actually stop them
04:01:18 from trading on forex exchanges
04:01:20 and being treated as a currency
04:01:22 from a regulatory perspective.
04:01:23 So it was like a really clever backdoor
04:01:26 into the League of Nations.
04:01:28 And actually, we had this crazy harebrained idea years ago.
04:01:31 We were down in Mexico at the Satoshi Roundtable,
04:01:34 and we’re like, hey, let’s go buy a country.
04:01:36 Let’s go to Tuvalu and get them to do something
04:01:39 with the cryptocurrency,
04:01:40 because they sell everything in Tuvalu,
04:01:42 like the.tv extension and their fishing rights,
04:01:44 and Taiwan pays them money to recognize them and so forth.
04:01:48 So I’m like, man, maybe we can convince Tuvalu
04:01:50 to do something with crypto.
04:01:51 And that didn’t work out so well.
04:01:53 But now El Salvador is actually playing the game,
04:01:56 and that’s a real country.
04:01:57 It’s got like 5 million people and so forth.
04:02:00 So we know the president’s brother,
04:02:02 and we’ve had some conversations there.
04:02:03 So maybe we’ll go in the next few months
04:02:05 and see what’s going on there,
04:02:06 and do a state visit and talk to the president.
04:02:09 But it’s an interesting development.
04:02:11 And it’s one of those things that it can’t quite be ignored
04:02:14 because the nation state’s doing it.
04:02:15 On the other hand, you have to manage expectations.
04:02:18 Is the central bank taking a position in Bitcoin?
04:02:22 Are they actually switching over to a cryptocurrency
04:02:24 as their unit of account?
04:02:26 Are they now getting off of BIS
04:02:28 and they’re all using the settlement rails of central banks?
04:02:31 Are they actually block chaining the entire country
04:02:34 and they have some broad, ambitious agenda
04:02:36 to go and do all that?
04:02:37 That remains to be seen.
04:02:38 And so it really is a commitment there.
04:02:40 The other thing is that if you’re autocratic,
04:02:43 these systems are not so good for you.
04:02:45 Because the minute you adopt these types of systems,
04:02:47 you’re pushing a lot of power to the edges.
04:02:49 So there’s a world of difference between optics
04:02:51 and actual commitment.
04:02:53 And actual commitment is I’m prepared
04:02:55 to accept the consequences that the state
04:02:58 is going to lose a lot of power along the way.
04:03:00 And the problem is it’s not clear to me
04:03:03 some of these politicians who are pro blockchain,
04:03:05 and I’m not making a statement on El Salvador in particular,
04:03:08 I’m just saying in general, are fully aware of that reality.
04:03:11 A lot of them seem to think that somehow
04:03:13 they can contain their blockchain genie in the bottle
04:03:16 and blockchain their whole country,
04:03:17 but stay president for life.
04:03:19 That doesn’t work.
04:03:21 Once they have that power, they’re gone.
04:03:23 So do you think once they realize that this is one
04:03:26 of the failure cases, one of the things
04:03:28 that people are concerned about
04:03:29 is governments banning cryptocurrency?
04:03:31 Well, that’s China case, right?
04:03:32 They started realizing this was a legitimate threat
04:03:35 to capital controls and to the autocratic system
04:03:37 that they’ve constructed there.
04:03:38 And then suddenly China started to build its own
04:03:41 People’s Bank of China blockchain,
04:03:43 and Bitcoin is now the redheaded stepchild.
04:03:46 They didn’t really care too much
04:03:47 because it was great for corruption.
04:03:48 You could evade capital controls,
04:03:49 and so all the well connected people,
04:03:51 they’re, oh yeah, Bitcoin’s bad,
04:03:53 but then they’d have Bitcoin of their own,
04:03:54 and they could use it to send money around.
04:03:56 But now the government has gotten very serious about it.
04:03:59 They’re saying like, okay, we wanna control
04:04:01 and dominate this whole thing,
04:04:02 and it’s a threat to our plan for the digital yuan
04:04:05 to become the world standard to displace the dollar.
04:04:07 But so the moment you have El Salvador
04:04:09 and just more and more countries,
04:04:10 say there’ll be a country in Europe, for example,
04:04:13 that accepts Bitcoin or other cryptocurrencies, Cardano,
04:04:18 the idea is it would put a lot of pressure on you.
04:04:21 So there’ll be like this kind of ripple effect
04:04:23 that you, and then the individual governments
04:04:26 won’t be able to help,
04:04:27 and eventually there’ll be a superpower like,
04:04:29 I don’t know, Russia or the United States,
04:04:32 and or, I don’t know, Canada.
04:04:34 So do you see that sort of an inevitable trend
04:04:38 where cryptocurrency takes over the world
04:04:40 as a store of value and as a method of payments?
04:04:46 Yeah, probably.
04:04:46 I mean, you can do just so much more
04:04:48 with programmable finance.
04:04:49 You know, transactions in general have five properties.
04:04:51 You know, you have the asset that runs on the rail.
04:04:54 That’s what we always think about.
04:04:55 And you can transact that, you know,
04:04:58 and then you have the identity,
04:04:59 and you transact that either like one to one,
04:05:02 one to many, many to one, or many to many.
04:05:04 And then you have metadata.
04:05:05 So that’s the story of the transactions,
04:05:07 like where did it take place, these types of things.
04:05:09 And then you have the contractual relationship.
04:05:12 So that’s the smart contract component.
04:05:13 And then you embed that within regulation.
04:05:15 So transactions always live within jurisdictions.
04:05:18 This is relevant to the conversation
04:05:19 that digital currencies take over
04:05:22 because those things are right now done separately
04:05:25 in a very fragmented and fractured way,
04:05:27 and they’re not completely globalized.
04:05:30 And so super expensive to hoist up this entire system
04:05:33 and automate things like compliance.
04:05:35 It’s usually a huge part of every bank’s balance sheet.
04:05:39 So when you look at the concept of a digital currency,
04:05:42 you’re saying all five of those things are programmable.
04:05:45 And so they could be like library driven.
04:05:47 You say, oh, I wanna be in compliance
04:05:48 with the Eritrea, okay, pull up the Eritrean library.
04:05:51 Now you are, it’s built into the transaction.
04:05:54 Previously, it’s like, go hire some lawyers
04:05:56 and go figure out the entire code
04:05:58 and translate some things and rah, rah, rah.
04:06:01 It’s crazy.
04:06:02 So just the orders of magnitude efficiency gains
04:06:07 that you get and the increased liquidity you get
04:06:10 and the fact that you can now represent all assets
04:06:13 with a universal way, that financial stem cell,
04:06:15 there’s an inevitability to the victory of our industry.
04:06:18 The challenge is how do we deal with this
04:06:21 with the squabbling of superpowers?
04:06:24 China wants to be the new world standard,
04:06:25 America wants to preserve that,
04:06:27 and the rest of the world is trying to figure out
04:06:29 how do we create something that’s a bit more fair
04:06:31 and balanced?
04:06:32 And so crypto comes in and it potentially is both an ally
04:06:36 and a competitor to those desires.
04:06:38 Because if you do too much crypto,
04:06:40 you don’t need a nation state anymore.
04:06:42 If you do too little crypto, well, it’s China or America.
04:06:45 So what’s that sweet spot?
04:06:47 Do you hope that in the process of cryptocurrency
04:06:52 pushing power to the edges to the people
04:06:55 that we would be able to alleviate
04:06:57 some of the suffering in the world
04:06:58 caused by centralized power and the abuses of power,
04:07:01 corruption, all those kinds of things?
04:07:03 100%.
04:07:04 I made a very angry video months ago.
04:07:07 I make angry videos.
04:07:08 I shouldn’t drink, Clex.
04:07:11 Maybe you should drink more.
04:07:12 Yeah, I know, right?
04:07:13 It depends on who you ask.
04:07:14 I made a video a little while.
04:07:15 I said, our industry is an industry of frustration.
04:07:18 It exists because we weren’t the industry
04:07:21 that charged 85% interest to the poorest people
04:07:23 in the world for loans.
04:07:24 We weren’t the industry that charged 15% to move money
04:07:27 for a maid sending money home to mom in Manila.
04:07:32 We weren’t the industry that laundered
04:07:33 hundreds of billions of dollars of drug money
04:07:36 and funded arms dealers in Africa and all these things
04:07:38 or permitted oil for food to exist and so forth.
04:07:42 And the people who did these things aren’t in jail.
04:07:44 They’re rich.
04:07:45 They’re billionaires.
04:07:46 They fly private jets.
04:07:48 So our industry is the antidote to these types of things.
04:07:51 And we say, guys, we want a system that’s fair.
04:07:54 That’s it.
04:07:56 And we want everybody to be treated equally.
04:07:59 That doesn’t mean everybody’s gonna win.
04:08:01 It doesn’t mean that when you lose,
04:08:03 somebody’s gonna come on a white horse and bail you out.
04:08:05 You’re gonna have winners and losers, but it’s fair.
04:08:08 That’s all we want.
04:08:09 That’s all we’ve ever wanted.
04:08:10 There’s no coincidence that Bitcoin was created
04:08:12 right around the same time as the 2008 financial crisis.
04:08:16 It’s not like these were just unrelated events.
04:08:17 They’re highly correlated to each other, okay?
04:08:20 I’d say perhaps even causal, go figure.
04:08:23 And everything we’ve done as an industry
04:08:26 from that moment to today and beyond
04:08:28 has been about that endless, relentless desire
04:08:32 to make things a little bit less corrupt,
04:08:35 a little bit less nepotistic and a bit more open.
04:08:38 And it’s gotten so insane
04:08:42 that they have these things in Wyoming called speedy banks,
04:08:44 where you’re full reserve banks.
04:08:45 They have 100% of their balance sheet is accounted for.
04:08:49 They don’t lend.
04:08:51 And then you have the people in the banking community
04:08:53 saying, well, those are a risk to banking.
04:08:55 We’re scared that these speedy banks are gonna default.
04:08:59 It’s like, what world are you living in?
04:09:02 You have fractional reserves,
04:09:03 sometimes like 2% assets on the balance sheet.
04:09:06 And then you’re worried that the guys
04:09:07 who actually have a dollar for every dollar
04:09:09 they say they have are the ones that are gonna collapse.
04:09:12 It’s like the 1984 level doublespeak
04:09:15 when you see the system and negative interest rates
04:09:17 and all these other things.
04:09:17 And so I absolutely believe the direction course
04:09:20 of this industry is to make things more honest and fair.
04:09:24 And also by its very existence,
04:09:26 it exposes double standards, hypocrisy and corruption.
04:09:30 Just the fact that it’s there,
04:09:32 because it’s one thing to say that, well,
04:09:34 it just can’t be because of the nature of global finance.
04:09:36 There’s no way to do it otherwise.
04:09:38 It’s another thing to see it there as an example
04:09:41 and say, well, that thing is doing it.
04:09:43 Why can’t you guys be this way?
04:09:45 That’s why I’m so passionate about Africa
04:09:46 because they don’t like the systems they have
04:09:48 and everybody’s really young.
04:09:50 And they are gonna throw all the systems out
04:09:52 in the next 20 years.
04:09:53 And they’re gonna replace them with something else.
04:09:55 If we get this stuff into Africa,
04:09:57 1.2 billion people will be living
04:09:59 in a considerably better system than the rest of the world.
04:10:02 And then everybody else will look at that and say,
04:10:03 why the hell are those guys so rich?
04:10:05 Why are those guys making the money?
04:10:07 Why are those guys doing so well?
04:10:08 And it’s not satisfying to hear,
04:10:10 well, Africa is just better.
04:10:13 No one’s gonna say that.
04:10:14 They’re gonna say, okay, yeah, it’s nepotism and corruption
04:10:17 and lack of transparency and these types of things.
04:10:19 So I think absolutely it has the potential
04:10:22 to improve the human condition,
04:10:23 but humans have to get out of the way.
04:10:26 Humans have ingrained in themselves selfishness
04:10:29 and it is a desire to maximize for themselves
04:10:32 and their family and not thinking systems.
04:10:34 And so we have to evolve capitalism at the same time.
04:10:38 And what I mean by that is right now you’re trying
04:10:40 to maximize the amount of resources you get today.
04:10:42 What we need to do is start thinking about
04:10:44 how do we create future versions of ourselves in 2100
04:10:47 and create a resource for that time period.
04:10:50 And then the name of the game is to maximize that
04:10:53 or balance that with what you get in the short term.
04:10:55 And then suddenly you’re saying to yourself,
04:10:57 well, if I’m doing things that are good for me today,
04:11:00 but compromising then I make less money.
04:11:02 So capitalism as an engine is okay.
04:11:05 The problem is it’s misparameterized.
04:11:07 Right, almost like inject longterm incentives
04:11:10 into the capitalist system.
04:11:10 Exactly.
04:11:11 And cryptocurrency space is the only economic system
04:11:13 where that’s actually possible.
04:11:15 You can create a tokenomic scheme
04:11:17 where doing things that are beneficial for people
04:11:19 you’ll never meet because you’re long dead
04:11:21 actually makes you money today.
04:11:23 You can’t do that in a legacy financial system and so forth.
04:11:26 So I think that that’s the real impact capital conversation
04:11:29 that has to be had as you explore these things
04:11:32 is you have to talk to people and say,
04:11:34 look, it’s not about communism
04:11:35 or socialism versus capitalism.
04:11:37 It’s not about, hey, let’s donate and save the world
04:11:40 or try to be charity and make things better.
04:11:43 It’s all about how do you use the fact
04:11:44 that we have a better toolkit to create a different system,
04:11:48 a different incentive model
04:11:49 where the default configuration of the system
04:11:51 is longterm thinking.
04:11:53 And the default consideration of system
04:11:54 is get rid of all these negative externalities
04:11:56 that marketplaces have and judge the success of society,
04:11:59 not by how the greatest of society are doing,
04:12:02 but by how the least of society are doing.
04:12:04 HDI, not GDP, this kind of thinking.
04:12:07 And I think crypto can actually be the vanguard
04:12:09 that kind of pushes us there.
04:12:10 And the first countries to adopt that
04:12:12 are gonna be just significantly better places to live.
04:12:16 And the people who envy them
04:12:17 will force the other countries to change.
04:12:18 That’s right.
04:12:19 That’d be a ripple effect.
04:12:20 So when you wake up in the morning
04:12:21 or as you sleep like a baby,
04:12:23 wake up multiple times in the middle of the night,
04:12:25 do you feel the burden of this kind of future
04:12:31 that’s in your hands and not to mess it up?
04:12:34 Like, what is it, Big Lebowski?
04:12:37 Her life is in your hands, dude.
04:12:38 Don’t worry about them.
04:12:41 They’re nihilists, Tony.
04:12:43 Do you feel the burden of like,
04:12:46 because we’re talking about all these 100 plus papers
04:12:49 and the academic beauty of the algorithms
04:12:52 we’re talking about,
04:12:53 and there’s millions of human lives at stake here.
04:12:56 I mean, you always feel the burden,
04:12:57 especially in my own company.
04:12:59 I mean, I have all these people work for me
04:13:00 and they eat because I pay them, right?
04:13:03 So if I can’t pay them, then that’s my fault.
04:13:06 So you have to, as a leader,
04:13:09 you always have to be cognizant
04:13:10 that there’s all these people
04:13:11 who have signed up for your crazy vision
04:13:13 and you have to be larger than life.
04:13:16 You always have to be good.
04:13:18 You’re not allowed to have a bad day.
04:13:20 You’re not allowed to feel like shit.
04:13:21 You always have to show up.
04:13:23 You always have to be pushing for it.
04:13:26 And so that’s a huge burden in many respects
04:13:28 because there’s Charles the person
04:13:29 and then Charles the CEO,
04:13:31 and these are very different things
04:13:34 in terms of expectations, at the very least.
04:13:37 And so it’s heavy in that respect.
04:13:39 That said, what gives you solace
04:13:41 is that you’re not in it alone.
04:13:43 It’s lonely, but you’re not alone.
04:13:45 You have so many amazing people around you
04:13:47 that are willing to help
04:13:48 and actually take some of that burden.
04:13:51 My life has gotten considerably better
04:13:53 when I learned how to delegate and trust.
04:13:55 And even if people screw up and fail,
04:13:57 it’s worth the risk
04:13:59 because ultimately you’re amplifying yourself.
04:14:02 The other thing is that it’s okay not to get all the way.
04:14:06 You want to, you wanna push there,
04:14:07 but make sure whatever the hell you do,
04:14:10 you leave something for somebody else
04:14:12 to pick up and carry on.
04:14:13 That’s why we care so much about the publication process
04:14:16 and open source.
04:14:17 We’ll never file a patent in our entire history
04:14:20 because whatever we do, it’s yours as much as it is mine.
04:14:23 And maybe I can only get you 70% of the way
04:14:26 and I’ll plop over dead from a heart attack
04:14:28 or get killed by an eagle or something like that.
04:14:30 Maybe somebody brings the.
04:14:31 Eagle.
04:14:32 Maybe somebody brings the hast eagle back and it kills me.
04:14:35 So it could happen.
04:14:36 They’re bringing the woolly mammoth back.
04:14:37 Talk to George Church about that.
04:14:39 It’s a good way to go.
04:14:40 Yeah, I know.
04:14:41 Even the eagle or the mammoth.
04:14:42 I’d rather be crushed by a mammoth
04:14:44 because eagles actually fly you up and drop you.
04:14:46 It’s.
04:14:47 Oh, so you won’t die via slow death
04:14:48 and they probably peck at you.
04:14:49 Exactly.
04:14:50 You just be grievously wounded on the ground
04:14:52 and the eagle is like slowly devouring you.
04:14:55 Yeah, don’t go down that way.
04:14:56 I’ve lost my train of thought.
04:14:58 The point is you feel deeply great
04:15:03 with a bunch of people around you and then you give.
04:15:06 Yeah, you delegate, you delegate.
04:15:07 And somebody fights the eagle
04:15:09 and then other people takes care of that
04:15:11 and this, that and the other.
04:15:12 You just do the best you can.
04:15:13 You’re in the arena.
04:15:14 You fight as hard as you can.
04:15:15 You leave nothing for home.
04:15:19 You could put it all on the field
04:15:20 and then when you go home,
04:15:21 you have pride in what you’ve done
04:15:23 and you know that you’ve at least made a slight difference.
04:15:26 You know, one person can make a huge difference.
04:15:28 Look at Norman Borlaug.
04:15:30 I mean, he just went around the whole world
04:15:31 teaching people how to grow crops.
04:15:32 He saved a billion lives over the course of his life.
04:15:35 Billion people didn’t starve to death because of one guy.
04:15:38 It’s amazing the asymmetry
04:15:40 and the returns on that type of a thing
04:15:41 just for the knowledge transfer of all things
04:15:44 and yet not a household name.
04:15:46 So that’s the other side of it, of the burdens.
04:15:49 People always want something or something.
04:15:51 So they say, oh, if I endured all these burdens,
04:15:53 I should be given something.
04:15:54 I entered into this space fully expecting
04:15:57 that probably the most likely outcome was jail.
04:16:00 That’s what my dad told me and other people told me.
04:16:02 And it was because it’s like, look at where we came from.
04:16:04 The Liberty Dollar, eGold, all these things.
04:16:07 Anybody tries to innovate the monetary system,
04:16:09 either end up like Gaddafi or they end up in prison
04:16:12 or they end up like nepotistic corrupt banker
04:16:15 or something like that.
04:16:16 And so the financial regulations
04:16:19 are not built for rapid innovation.
04:16:22 They’re not built for Bitcoin.
04:16:24 There’s a reason Satoshi was anonymous.
04:16:26 It wasn’t because he enjoyed the anonymity.
04:16:28 There was legitimate criminal risk
04:16:30 for this type of activity.
04:16:32 So the fact that I’ve gotten this far
04:16:34 and I’m doing pretty good, that’s a win.
04:16:37 You take that, life is good.
04:16:39 What does a productive day in the life
04:16:41 of Charles Hoskinson look like?
04:16:43 Now we’re getting to the details here.
04:16:46 Diet, like fasting or not maybe,
04:16:49 coffee, non coffee, exercise, sleep,
04:16:54 scheduling like periods of deep work, programming,
04:16:57 then the social media stuff that you do.
04:16:59 You clearly enjoy being on social media
04:17:01 and also live streaming, educating, inspiring the world
04:17:04 or getting drunk and ranting at the computer.
04:17:07 Well, first off you do a wet year and a dry year.
04:17:10 That’s what prevents you from becoming an alcoholic.
04:17:12 So unfortunately the way that schedule worked,
04:17:14 2020 was my dry year.
04:17:17 Like I didn’t drink the entire year.
04:17:18 Not a single sip of alcohol.
04:17:20 It was the worst.
04:17:21 On purpose.
04:17:21 Yeah, you do a dry year and then you do a wet year.
04:17:23 Oh, so this is one of your ideas about life
04:17:26 is you alternate.
04:17:27 Yeah, you have to alternate.
04:17:28 Never do too much of any one thing.
04:17:30 Well, Churchill never alternated.
04:17:31 He just kept drinking throughout his life.
04:17:32 He did pretty good.
04:17:33 Just to push back against the year.
04:17:37 Yeah, he had an Alfred North Whitehead.
04:17:39 Although didn’t Churchill get kicked out
04:17:41 as prime minister at some point?
04:17:42 So maybe he took one dry year.
04:17:44 Yeah, he was a sober, happy, in shape Churchill.
04:17:47 He would have led a Britain for 30 fucking years.
04:17:49 But you know, see Lex, that’s why we can’t have nice things.
04:17:55 Conor S. Thompson, maybe you’re onto something.
04:17:57 Oh, you know, it’s really crazy if you go to Aspen
04:17:58 and see the bar he used to go to.
04:18:00 I actually met a waitress who knew him really well
04:18:02 and he’d go in there like two, three times a day
04:18:05 and she’s like, yeah, he’d do cocaine
04:18:07 right here on the table and he’d come in with lots of pills
04:18:10 and just put them all out on the table
04:18:12 and be taking them at different hours
04:18:13 and they were all clearly illegal substances
04:18:15 but we’d just give him coffee or whatever he wanted.
04:18:18 He’s a great guy.
04:18:19 But anyway, that’s the day in the life of Charles.
04:18:20 I fast, I tried to do intermittent fasting, 16, eight.
04:18:23 The longest fast I ever did for a long term fast
04:18:26 was two weeks, which was just crazy.
04:18:28 Wow.
04:18:28 Oh my God, I was.
04:18:30 Can you take me through the journey of like philosophically
04:18:33 what was going on in your mind?
04:18:34 Well, so normally when I do an extended fast
04:18:37 it’s about three, four days
04:18:38 because that’s the sweet spot before you start losing
04:18:40 muscle mass and other things start happening
04:18:42 and people know so much more about this than I do
04:18:45 but I just feel pretty good
04:18:47 and you kind of get addicted to the fast high.
04:18:49 You don’t have to eat, you have no downtime,
04:18:52 you’re just going, your energy never dips
04:18:54 and so I used to do like three, five days,
04:18:58 maybe three, four was the sweet spot
04:19:00 but then after about a week I was like,
04:19:02 how long do I, can I make this go?
04:19:04 And so I started talking to some people,
04:19:05 I said, well, Angus Barbary did 384 days,
04:19:09 of course I’m not as fat as Angus
04:19:11 so I said, oh, I can do two weeks.
04:19:13 So I just kept going and kept going and kept going
04:19:15 and kept going and right around the two week mark
04:19:19 I fainted for a little bit in a chair
04:19:21 and I was like, okay, maybe I should start eating again
04:19:24 but then I was legitimately worried
04:19:26 about like refeeding syndrome and this stuff,
04:19:28 like, okay, how do I take care of that?
04:19:30 So my brother’s a doctor and I called him
04:19:31 and I said, hey, Willie, I haven’t eaten in two weeks,
04:19:34 how do I start eating again?
04:19:36 And he’s like, what?
04:19:39 Slowly.
04:19:40 Slowly, yeah, so the usual routine intermittent fasting,
04:19:43 although I haven’t been as good about it as I should be
04:19:46 and I used to work out, I don’t do as much as that,
04:19:49 the stress and the work life balance has been horrible
04:19:52 the last 24 months and I’ve gained a lot of weight
04:19:55 and all that stuff but I’ll fix that
04:19:57 but I do try a lot of things,
04:19:58 like I used to call map and I do meditation,
04:20:00 recently I started doing photobiomodulation,
04:20:02 you ever heard of that?
04:20:03 It’s a crazy headset called a Vlite,
04:20:06 you saw that picture of me with like the weird thing
04:20:08 with the red lights on,
04:20:09 it actually shoots lights into your brain,
04:20:10 it’s really cool stuff but it improves blood flow
04:20:13 and actually there’s some peer reviewed studies
04:20:15 that show that it does neurogenesis
04:20:17 so you actually generate new neurons and things like that,
04:20:19 it’s really cool stuff so I do that
04:20:21 and it actually helps a lot
04:20:24 and every day’s a little different.
04:20:27 Do you get a few hours of like alone time to work, to think?
04:20:31 Yeah, deep work is so important,
04:20:34 there’s even a book on that, like Deep Work.
04:20:36 Yeah, by Cal Newport.
04:20:38 I think you interviewed him, didn’t you?
04:20:39 Yeah, everyone should listen to this podcast,
04:20:41 Deep Questions, he’s awesome,
04:20:43 he’s a mathematician, theoretical computer scientist
04:20:46 so those guys really need their time
04:20:48 and want to really think.
04:20:49 That’s the one thing I deeply miss,
04:20:51 when you’re a CEO, you’re the master of the five minute deal,
04:20:54 you come in, you talk to people,
04:20:56 you make a decision, you move on to the next thing,
04:20:58 you move on to the next thing
04:20:58 and I used to be used to like really deep focus,
04:21:01 you’d sit down and think about something
04:21:02 for 10 hours, 15 hours, 20 hours and that’s that
04:21:05 and I enjoyed it, it was just so beautiful
04:21:08 to get lost into something and just go and go and go
04:21:11 and then you become a CEO and it’s like
04:21:13 you never can go and go,
04:21:14 you’re lucky if you read a four page thing
04:21:16 because there’s something else that comes up,
04:21:18 you have to travel, you have to do that
04:21:19 so I’ve been trying lately to have
04:21:21 and actually our chief of staff recommended
04:21:23 like Fridays is do not disturb day
04:21:26 so it’s for deep work, you don’t have meetings,
04:21:28 none of these things
04:21:29 and so far I have not committed to that
04:21:32 but everybody else in the organization
04:21:33 has started to move there
04:21:34 but my hope is next month
04:21:35 that I can actually get serious about that.
04:21:37 The other time I’m lost in thought
04:21:39 is I do a lot of float tanks,
04:21:40 have you ever done isolation tanks?
04:21:42 But I really want to.
04:21:43 It’s one of the most amazing things you can do,
04:21:46 you come out on the other side
04:21:48 and all your stress worries, they’re just gone
04:21:51 and you have so much productivity and clarity,
04:21:53 if you combine that with daily naps, that’s the way to go.
04:21:57 Yeah, I’m a huge fan of naps
04:21:58 so what about the social media stuff
04:22:01 and like you doing the live streams,
04:22:04 do you ever dread those?
04:22:06 Are you energized by those?
04:22:08 Because you’re exceptionally good
04:22:10 at communicating all the different kinds of ideas
04:22:12 and being very transparent with the community,
04:22:14 all those kinds of things.
04:22:14 I really enjoy the live streams,
04:22:16 it’s fun, it’s never been a chore
04:22:18 because it’s for them,
04:22:20 it’s a chance for people in the community
04:22:22 who’ve been loyal and they really love it
04:22:23 to actually just be there, ask some questions
04:22:25 and I try to make it as entertaining as possible
04:22:28 and you have your trolls and you have your love
04:22:32 and it’s actually nice to have a mixture of the two
04:22:34 because sometimes you can beat down trolls just for fun,
04:22:37 that kind of stuff and it’s grown to a cult following,
04:22:40 I think there’s like 40, 50,000 people
04:22:42 and it’s almost like Fight Club in a certain respect.
04:22:45 So I was in Vancouver years ago
04:22:47 and I was in Air Canada checking in,
04:22:49 just about to fly back to Colorado
04:22:50 and I was getting this weird vibe
04:22:52 from the guy that was checking me in
04:22:53 and then right after he takes my bag,
04:22:55 he kind of leans over to me, he’s like,
04:22:57 I love Ada and I was like, really?
04:23:00 He’s like, yeah, I watch your live streams
04:23:02 and then I was flying into London,
04:23:04 I was in London Heathrow Airport
04:23:05 and the passport control guy was there
04:23:07 and I was just about to take my passport out
04:23:09 and he says, welcome to London, Mr. Hoskinson.
04:23:11 I was like, oh God, am I going to jail in London?
04:23:15 Why does the border patrol guy know who I am?
04:23:17 This is a bad deal for me
04:23:19 and it turned out he watched my live streams
04:23:22 and so there’s a lot of that and that’s so much fun.
04:23:25 In fact, here in Austin, I was at a Mexican restaurant
04:23:28 just down in the closest place
04:23:31 and while eating there, two different people recognized me
04:23:33 and I took a picture with one of them
04:23:35 and again, they watched the live streams.
04:23:37 So that’s.
04:23:38 Well, if it’s anything like Fight Club,
04:23:39 you have to wonder if some of those people
04:23:40 or all of them are just figments of your imagination.
04:23:43 Right, I would.
04:23:46 I don’t have an answer for that.
04:23:49 I could be a figment of your imagination
04:23:51 which just proves that yes.
04:23:52 Yeah, but honestly,
04:23:52 if I was capable of that level of delusion,
04:23:54 why the hell don’t I look like Brad Pitt?
04:23:56 Good point.
04:23:57 Okay, so on this topic, let me ask you about mushrooms.
04:24:02 You’re interested in mushrooms, growing mushrooms.
04:24:05 I believe you are also interested
04:24:08 in the mind expanding capabilities of psychedelics.
04:24:11 At least you mentioned kind of the interesting place
04:24:14 where your interest in non psychedelic mushrooms might go.
04:24:17 Can you explain the nature of your interest in mushrooms?
04:24:21 Is it personal, is it business, is it both?
04:24:24 No, it’s a little bit of everything.
04:24:25 You know, it’s just an underexplored area
04:24:28 of science and botany that ought to be explored
04:24:31 because there’s so much cool, interesting stuff there.
04:24:34 Mushrooms do so much.
04:24:37 Like they have these things called cordyceps
04:24:39 and they are like a zombie fungus that infects insects,
04:24:43 takes them over and then it will have them
04:24:46 kind of get to other insects
04:24:47 and then burst out of their head like an alien
04:24:50 and spray spores on them and repeat the process.
04:24:52 I mean, they even made a damn game about this.
04:24:53 The Last of Us or something like that.
04:24:55 And this is a real thing.
04:24:56 Like you can Google it and see like these dead ants
04:24:59 with these fungal stabs coming out of them.
04:25:01 It’s like, holy God, this is crazy.
04:25:03 And in the same topic, you go all the way to Lion’s Mane
04:25:09 and it could actually help treat Alzheimer’s
04:25:11 and treat depression and Parkinson’s
04:25:14 and regrow nerves and so forth.
04:25:16 Other things, they’ve shown some effectiveness
04:25:19 against COVID, you know, it’s just so crazy
04:25:22 the diversity in the mushroom kingdom
04:25:24 of the medicinal applications, the pesticide applications.
04:25:29 You can use it a lot to kind of save hay and trees.
04:25:32 There’s a lot of things you can do
04:25:33 to combat all kinds of invasive species.
04:25:37 And it’s true, there’s a lot of cool stuff
04:25:39 with psychedelic mushrooms and there’s a great book
04:25:42 from Michael Pollan, How to Change Your Mind,
04:25:44 where he was really the first journalist
04:25:46 a long time to go and Roland Griffiths
04:25:48 work his way through the Johns Hopkins studies.
04:25:50 But the long and short for me when I read that book,
04:25:53 like, okay, mind expansion is great,
04:25:54 but look at the effectiveness of psychedelics,
04:25:59 psilocybin mushrooms with SSRIs,
04:26:02 selective serotonin reuptake inhibitors
04:26:04 for the treatment of depression.
04:26:05 They showed in the Johns Hopkins studies
04:26:07 that they’re equal or better in effectiveness
04:26:09 in many cases for the treatment of depression
04:26:13 than a drug that you have to take forever.
04:26:16 And this is just one or two treatments
04:26:18 and then you desist from it.
04:26:20 That’s a miracle because there’s so many people
04:26:22 suffer from severe depression and it’s a lifetime ailment.
04:26:26 And the fact that we have something in the toolbox
04:26:29 that we’ve underexplored is a very powerful thing.
04:26:32 The other thing was end of life issues.
04:26:34 A lot of people get cancer.
04:26:35 I’ve lost people in the family from cancer.
04:26:38 And it’s so hard those last two, three months
04:26:41 because they kind of have this,
04:26:43 they’re in a horrific pain, they’re trying to find meaning
04:26:45 and why is this happening to me?
04:26:47 And if you can just give them a substance
04:26:49 that on the other side of it, there’s a good chance
04:26:51 they can come to peace with everything
04:26:52 and die with a lot more dignity and happiness.
04:26:56 That alone justifies an enormous amount of study
04:26:59 and the fact that these things are super cheap
04:27:01 and they grow pretty much anywhere, it’s pretty cool.
04:27:03 Now on the commercial side,
04:27:04 you can make a lot of money from mushrooms.
04:27:07 I’m working with a company called Farmbox Foods
04:27:09 and it’s one of the,
04:27:11 they do both vertical hydropartic farming,
04:27:13 they also do mushroom and they put these amazing labs
04:27:18 and shipping containers
04:27:20 that are kind of like controlled environments.
04:27:22 You grow 400 pounds of gourmet mushrooms
04:27:24 a single week off of that.
04:27:26 And your margins can be up to 30% per year.
04:27:28 If you’re just selling them for food consumption,
04:27:31 if you’re doing supplements,
04:27:32 they can be even higher than that.
04:27:34 So it just kind of made sense
04:27:35 from a diversification of assets to say,
04:27:37 hey, let’s do some stuff in hydroponics
04:27:38 and aquaponics and mushrooms.
04:27:40 But the more I do and the more I learn that community,
04:27:43 just the cooler that community is.
04:27:45 Like I went to this beautiful mushroom festival
04:27:47 in Cape Springs down in Georgia.
04:27:49 And I met this guy named Bill Yule
04:27:52 and he just looks like a druid.
04:27:55 You know, it’s just like he lives in a tree
04:27:56 and he opens up the tree and goes out and everything.
04:27:58 And I was like, Bill, what do you do?
04:27:59 He said, I go and I try to study beetles and boletes
04:28:03 and a very particular type of beetle.
04:28:05 And they mate in the most crazy way.
04:28:07 It’s like this beetle will fuse on top of another beetle
04:28:10 and they’ll vibrate.
04:28:11 And if they make the right harmony,
04:28:12 she’ll mate with them, otherwise they’ll kick her off.
04:28:14 And you can only make the harmony
04:28:16 while you’re on a specific type of bolete mushroom.
04:28:18 If it’s anywhere else, the harmony doesn’t.
04:28:20 It’s like, who the fuck does this?
04:28:21 It’s like 20 years, 30 years just thinking
04:28:25 about goddamn beetles and bolete mushrooms,
04:28:27 but that’s that community.
04:28:29 And they’re the happiest people you’ll ever meet.
04:28:31 And they’re just so much fun to talk to.
04:28:33 And there’s just so much lore there that’s not discovered.
04:28:36 The other thing is there’s a ton of undiscovered mushrooms.
04:28:39 So, you go to my ranch up in Wyoming,
04:28:42 go out that national forest next to it,
04:28:43 you’ll probably discover six or seven new species
04:28:46 just doing some gene sequencing and things like that.
04:28:49 So, there’s like a gold rush for new things to discover,
04:28:52 to treat all kinds of things.
04:28:53 So, I love mushrooms, love that community.
04:28:55 I think there’s a lot of wonderful medicinal properties
04:28:57 and everybody there is just a lot of fun to hang out with.
04:29:00 The other passion is aquaponics and hydroponics.
04:29:03 And I got a lot more serious after COVID.
04:29:06 I go to the supermarket, all the store shelves are barren.
04:29:08 I say, guys, can you imagine if we had a real big thing,
04:29:12 what this would be like?
04:29:13 We need to have domestic food production.
04:29:15 We need to have resilience at the community level.
04:29:18 So, let’s go build a $40, $50 million aquaponics facility
04:29:21 next to every major city.
04:29:23 So, at least you have some local production of food
04:29:26 and people won’t starve to death.
04:29:27 Otherwise, it’s very bad.
04:29:29 And again, the margins are phenomenal there, 20%, 30%,
04:29:32 if you actually do it right
04:29:34 and alternate your crops properly and so forth.
04:29:36 And you create a lot of high paying jobs with it as well.
04:29:38 And so, you kind of draw a lot of value
04:29:41 from staying close to nature in all of these kinds of ways
04:29:44 that are keeping you humble.
04:29:45 Like you said, what is it?
04:29:46 The goat is still gonna crap on you.
04:29:49 Oh, yeah, the donkeys will shit on you
04:29:50 whether you’re broke or a billionaire.
04:29:53 That’s a good line.
04:29:54 That’s the line you’ll be remembered for
04:29:59 if the universe has a sense of humor.
04:30:01 It’s a neo Yogi Berra.
04:30:04 So, I think mushrooms is a good place to ask
04:30:07 about my friend, Joe Rogan.
04:30:11 So, I keep folks from the Cardano community
04:30:13 kept saying, keep saying things like,
04:30:15 Lex podcasts first, then Joe Rogan experience.
04:30:19 I guess I’m the moon and Joe is Mars in this metaphor.
04:30:24 Since I’m a CS person, I can talk a little bit
04:30:27 more fluently about cryptocurrency
04:30:29 because fundamentally cryptocurrency
04:30:31 is a computational idea.
04:30:33 But then there’s somebody like Joe
04:30:34 who is more like an everyman.
04:30:36 He does not necessarily know the technical intricacies
04:30:39 of cryptocurrencies.
04:30:40 And I don’t think he’s had a cryptocurrency person on.
04:30:45 Didn’t he interview Andreas on Todopolis?
04:30:47 Oh, he did.
04:30:48 That’s right, a long, long time ago.
04:30:49 But that was almost like the cryptocurrency space
04:30:53 goes through phases.
04:30:54 And I think we’re in a new era of some kind.
04:30:57 And how do you talk to Joe about Cardano?
04:31:01 How do you talk to Joe about what the heck?
04:31:04 I remember somebody tried to explain to him
04:31:06 what Dogecoin is.
04:31:07 How do you explain this whole space?
04:31:09 Of where Bitcoin is, of where Ethereum is,
04:31:12 of where Cardano and smart contracts
04:31:13 and some of this proof of work,
04:31:15 with this proof of stake ideas
04:31:17 that we’ve been talking about.
04:31:18 You don’t.
04:31:19 What you do is you start with applications
04:31:20 that they’re interested in.
04:31:21 So he’s an elk hunter.
04:31:22 And so he’s probably interested in elk tags, right?
04:31:25 So you start there and you say,
04:31:27 that whole system can be put on a blockchain
04:31:29 and here’s how it’s gonna be better for you.
04:31:31 You say, that’s what you do.
04:31:32 You always connect it to something they know and love.
04:31:35 And then once they get that, they say,
04:31:36 oh, that’s really cool.
04:31:37 And then they ask, what else can you do with it?
04:31:39 What else can you sell me on it?
04:31:41 And you kind of work your way outwards there.
04:31:43 Problem technologists make is they’re so damn in love
04:31:45 with the technology.
04:31:46 They have that tail wagging the dog
04:31:48 where they just wanna talk about the technology
04:31:50 and how incredibly cool it is.
04:31:52 And that’s fun.
04:31:52 It’s like talking about math.
04:31:53 Oh God, let’s talk about cool boardisms.
04:31:55 That’s fun.
04:31:56 All right, yeah.
04:31:58 Everybody’s eyes glows over.
04:31:59 No, you always have to connect it
04:32:01 to the interest of the particular person
04:32:03 and what they care about, what they love, what they need.
04:32:05 Royalty payments.
04:32:07 He’s a big guy.
04:32:08 He’s got the Spotify thing.
04:32:09 He’s got all these things going on.
04:32:11 Intellectual property is probably pretty important, Joe,
04:32:13 at some juncture.
04:32:14 So NFTs.
04:32:15 We could talk about this concept of perpetual royalties.
04:32:18 So for example, let’s say that you create a piece of art.
04:32:21 You can build into the token itself
04:32:24 a perpetual royalty to something you care about.
04:32:26 Maybe every time it sells, it pays it back to you.
04:32:29 Or maybe every time it sells,
04:32:31 it donate to some clean water charity
04:32:33 or something like that.
04:32:34 The point is that the actual acquisition
04:32:36 of the NFT requires adherence to that smart contract.
04:32:40 So people can’t deviate from your desire even after you die.
04:32:43 So stuff from Andy Warhol or from Picasso,
04:32:46 that can still be generating some donation
04:32:49 every time a Picasso sells to something else.
04:32:52 You can do that with NFTs.
04:32:54 And so he starts thinking, God, what else can I do?
04:32:56 I do shows.
04:32:56 Maybe I can do my tickets with these types of things.
04:32:59 Maybe I can do loyalty points for my fans.
04:33:01 So now you got him engaged,
04:33:02 and he’s thinking of all the opportunities for him,
04:33:04 and it gives him an incentive to anchor
04:33:07 and connect to those concepts.
04:33:08 And then over time, he starts asking the question,
04:33:11 well, how do we know it’s secure?
04:33:12 Then we can talk about proof of work or proof of stake
04:33:15 or these types of things.
04:33:16 Well, so this is how it stays secure
04:33:18 if you’re really interested.
04:33:19 And there’s an incentive to have the attention span
04:33:22 necessary to do the homework,
04:33:24 eat the broccoli and get over that hill.
04:33:25 But it’s also an opportunity, at least it was for me,
04:33:27 especially with Bitcoin a while ago,
04:33:30 is to take another look at the monetary system.
04:33:34 Even look at the, I’ve been looking quite a bit
04:33:36 at the history of the 20th century
04:33:38 and sort of look at that history
04:33:39 through the perspective of the monetary system,
04:33:42 the gold standard and all those kinds of things.
04:33:44 And you just add that little layer of consideration
04:33:47 of how much money,
04:33:49 of how money can be used by people in power
04:33:53 to control the populace.
04:33:55 And it’s fascinating to look at the history
04:33:59 from that perspective,
04:34:00 and then that allows you to look at the future
04:34:03 of how we can change that in order to empower people.
04:34:06 And then of course, the governance thing
04:34:09 that you’re working on is fascinating
04:34:11 because I mean, I don’t know,
04:34:13 but it seems like deeply broken aspect of our government
04:34:16 is just the voting system.
04:34:18 And discussing how that could be revolutionized
04:34:21 is fascinating.
04:34:22 Because a lot of conversations end up being on the internet
04:34:27 about like number go up, which is like financial side.
04:34:30 And to me personally at least, I think that’s the same
04:34:34 for Joe is that’s just boring.
04:34:36 Like it’s the investing, the financial side of it,
04:34:40 I know it has a lot of impact, but it’s kind of boring.
04:34:43 Cause longterm is not gonna have any impact.
04:34:45 If the idea is a strong longterm, it’s going to win.
04:34:48 The idea is a weak, longterm is gonna lose.
04:34:50 The ups and downs of the short term don’t matter.
04:34:52 That’s just like casino games that you play.
04:34:58 Speaking of games, video games,
04:35:00 gotta ask you about those.
04:35:01 Okay.
04:35:02 You mentioned Diablo, maybe you’re a fan of Diablo.
04:35:04 Well, yeah, and Diablo 2 was great.
04:35:06 Do you like Skyrim?
04:35:07 Skyrim was great too.
04:35:08 Like the Elder Scrolls.
04:35:09 I actually bought the game that the Elder Scrolls
04:35:11 was based on, do you know that?
04:35:13 So way back in the day, the Elder Scrolls series
04:35:16 was inspired by a game called Legends of Valor
04:35:18 that I played when I was a little kid.
04:35:20 And it doesn’t actually have an ending.
04:35:22 They ran out of money before they finished it.
04:35:23 So they just kind of like put this little thing on
04:35:25 and said, okay, but you never finish it.
04:35:27 So I actually bought all the intellectual property
04:35:29 of the game.
04:35:30 I saw that.
04:35:31 I didn’t know there was a connection
04:35:32 between Legends of Valor and Arena.
04:35:33 Yeah, well, I forget the name.
04:35:34 The guy, was it Todd something at Bethesda?
04:35:37 He played it and he was inspired by it
04:35:40 and then he created Arena right after playing it.
04:35:42 That was such a good game.
04:35:43 Arena, Daggerfall.
04:35:45 Yeah.
04:35:46 Yeah.
04:35:47 I had a copy of Daggerfall when I was a kid,
04:35:48 but it had a bug and so when you left the dungeon,
04:35:51 it would crash.
04:35:51 And this was before, like you can get an easy patch for it.
04:35:54 So I never actually played Daggerfall.
04:35:56 I entered in through Morrowind.
04:36:00 Yeah, no, the Daggerfall was the fascinating thing.
04:36:02 We were just jumping all over,
04:36:04 but we’ll return to Legends of Valor
04:36:05 because I want to ask you about that.
04:36:06 But Daggerfall was fascinating
04:36:07 because I think of all the other scroll games,
04:36:11 it was like the largest
04:36:12 because it was like randomly generated.
04:36:15 It would like randomly generate the worlds,
04:36:17 the dungeons and so on,
04:36:18 which is fascinating to think about like,
04:36:20 how big can you make the world both in actuality and feel?
04:36:25 Like it’s incredible to have a video game,
04:36:29 I don’t know how many video games do this well,
04:36:32 where the feeling is you can be lost here forever.
04:36:35 You can live here because most video games
04:36:39 have like a bottom.
04:36:40 It feels like you can run out of stuff.
04:36:42 When Daggerfall was like, I can just keep doing this.
04:36:45 At least that’s what I felt at the time.
04:36:47 But yeah, what the heck Legends of Valor?
04:36:50 What’s the idea there?
04:36:51 Well, I mean, there’s really nothing about it
04:36:54 that’s super compelling today.
04:36:56 I mean, there’s a nostalgia of youth that’s there,
04:36:59 but I mean, it doesn’t even have a class system,
04:37:00 a level system, the combat system is terrible.
04:37:03 There’s no journal,
04:37:04 the magic system is terrible and so forth.
04:37:06 And so I just wanted to start somewhere
04:37:08 and I felt like that would be
04:37:09 an incredibly fun overhaul project.
04:37:11 I kind of got the idea from Beamdog Studios
04:37:13 when they did another one of my favorite games,
04:37:15 remember Baldur’s Gate?
04:37:16 Yeah, they did the enhanced.
04:37:17 I love that Baldur’s Gate too.
04:37:18 Oh yeah, the enhanced edition was great.
04:37:21 They should have never just done thrown a ball,
04:37:22 they should have done an actual proper sequel
04:37:24 and gone down that whole road.
04:37:27 But anyway, I got the idea there.
04:37:29 I said, well, take some old piece of IP
04:37:32 and then you can kind of retrofit it and clean it up.
04:37:34 And what’s nice about Legends of Valor
04:37:36 is it’s a blank slate.
04:37:37 You can do your own Elder Scrolls,
04:37:39 you can create your own class system
04:37:40 and level system and so forth.
04:37:42 You could write some beautiful,
04:37:43 exciting, fun narratives for that.
04:37:46 And also it gives me a chance to explore a lot of things
04:37:49 I think should be dragged into game development,
04:37:50 like algorithmically generated music
04:37:52 is one example.
04:37:53 The problem with games, as you mentioned,
04:37:55 you play lots and lots of hours,
04:37:57 but your sound content is much smaller.
04:38:00 So you have tons of repetition in the soundtrack.
04:38:02 So what if you could connect the music
04:38:05 to the state of the game world
04:38:06 and it automatically through some process
04:38:08 will generate music.
04:38:09 And there’s actually people who study this.
04:38:11 And so that’s one dimension.
04:38:12 The other thing is you have things like GPT3 and so forth.
04:38:15 There was a great game, Event Zero,
04:38:18 and it came out like 2016 where you could actually
04:38:21 have a dialogue with an AI and you’re like a marooned
04:38:25 astronaut on a space station that’s abandoned.
04:38:28 And you have to somehow work with this AI
04:38:30 through communicating with it to convince you
04:38:32 to take you home.
04:38:34 But the AI is a bit duplicitous.
04:38:37 And I don’t wanna spoil the plot of the game
04:38:38 because it’s such a cool game,
04:38:39 but it’s actually like a paint by numbers.
04:38:41 It’s almost like Zork where you don’t have
04:38:45 preselected dialogue.
04:38:46 You actually type in the terminal
04:38:48 and the AI will reply to you back and forth.
04:38:50 And this was 2016 and it’s like things have gotten
04:38:52 an order of magnitude better.
04:38:54 So the evolution of that tech,
04:38:55 I think within the next five years,
04:38:57 brought into video games could give you
04:38:59 incredibly cool dialogue inside the game.
04:39:02 So algorithmically generated music,
04:39:04 better dialogue, better gameplay mechanics.
04:39:06 Also, I’d love to explore alternative physics systems,
04:39:10 alternative geometries like hyperbolic geometry
04:39:14 or these types of things.
04:39:15 And there’s actually Hyperbolica is a game that does that.
04:39:19 And you can do down the Euclidean geometry as well
04:39:21 and bring those elements into a game design.
04:39:23 And that’s what we’ll do with Legends of Valor.
04:39:25 So it’ll be kind of like Skyrim,
04:39:26 but with a lot of really cool new shit.
04:39:28 It’s kind of like, I saw Aerosmith years ago
04:39:30 and he was out there, he’s like,
04:39:31 do you like the old shit?
04:39:32 Do you like new shit?
04:39:34 Kind of middle shit, you know?
04:39:36 So.
04:39:37 So you’re going for the middle.
04:39:38 Yeah, I’m gonna try to do some of the old
04:39:39 and some of the new and bring it in.
04:39:41 So that’ll be a lot of fun.
04:39:43 And what’s nice about it is that there is a lot of
04:39:49 new play in the market
04:39:51 because of the Microsoft acquisition of Bethesda.
04:39:54 They’ve been losing employees like crazy
04:39:56 and there’s a lot of belief that Elder Scrolls 6
04:39:58 will not live up to expectations
04:40:00 because Microsoft will kill it.
04:40:01 I will tweet.
04:40:02 Okay, listen to me.
04:40:03 I will go into, I’m all about love on the internet,
04:40:07 but I will go hard at you Microsoft
04:40:09 if you screw up Elder Scrolls.
04:40:11 Well, we might have to do a spiritual successor, right?
04:40:14 It might have to happen with Legends of Valor.
04:40:16 You never know.
04:40:17 But it’s a passion project,
04:40:18 so I have no time for it at all.
04:40:20 It’s like solo on my list of things to do.
04:40:22 So I’ll probably do it in 2022, 2023
04:40:24 and we’ll build a nice crew and we’ll do it in Wyoming,
04:40:27 probably in Wheatland or some really small town
04:40:29 and we’ll import everybody
04:40:31 and then we’ll have to build the whole city up
04:40:32 like Elon is doing here in Texas.
04:40:34 It’ll be a fun project.
04:40:36 Well, I like programmatically generated music.
04:40:38 You mentioned Baldur’s Gate.
04:40:40 By the way, Haskell frameworks for that.
04:40:41 Euterpe is one.
04:40:43 For generating music?
04:40:44 Yeah, for doing it.
04:40:45 I wonder how successful that could be
04:40:46 because I remember Baldur’s Gate was the first game
04:40:49 where I realized music is so important to the game.
04:40:52 It was the thing I remembered about the game.
04:40:54 It was the reason that,
04:40:55 it was the thing I thought about
04:40:57 when I was away from the game
04:40:59 is like the feeling it created, that music.
04:41:02 I don’t even remember the music anymore,
04:41:04 but I remember the music.
04:41:05 Bum, bum, dum, dum.
04:41:08 Jeremy Soule, I think was the composer.
04:41:10 It was great.
04:41:12 And actually getting like Raman Juwadi
04:41:13 or Bear McCready in to do that, that would be so cool.
04:41:17 Okay, this is awesome.
04:41:19 Ridiculous question.
04:41:20 What’s the, maybe let’s say top three
04:41:23 graded video games of all time?
04:41:26 Yeah, Baldur’s Gate is definitely in the top three.
04:41:28 Arcanum is my favorite game.
04:41:30 And Arcanum was, Troika Games was just this amazing studio
04:41:34 where they took the time to build probably
04:41:38 the most compelling game worlds.
04:41:40 In the case of Arcanum, it takes place
04:41:42 in kind of like a 19th century Victorian England play.
04:41:44 So steampunk, but then there’s also magic
04:41:47 inside this game world.
04:41:48 And there’s this crazy juxtaposition
04:41:50 between magic and technology.
04:41:52 And the more technology you have, magic stops working.
04:41:54 The more magic you have, it disrupts technology.
04:41:57 So all the people on the magic side
04:41:58 hate the technology people and vice versa.
04:42:00 And so you’re just this character in this game world
04:42:03 and you’re just trying to figure out like where do you fit?
04:42:06 And it has this incredible plot
04:42:08 where you’re kind of just a stowaway on a zeppelin
04:42:11 that gets shot down and you get dragged
04:42:13 into this conspiracy and you have to kind of figure out
04:42:16 the conspiracy as you go through the whole game world.
04:42:18 And you meet all these different races
04:42:20 like the elves and the dwarves and so forth.
04:42:21 And they’ve all been impacted by the proliferation
04:42:24 of technology in different ways.
04:42:25 Like the humans use steam engines
04:42:27 to clear cut all the forest and it caused a lot of problems.
04:42:30 The dwarves leaked that technology to the humans
04:42:33 and so they kind of got exiled for it and so forth.
04:42:36 And you have to decide like where do you fit in all of this?
04:42:38 And you have a lot of choices as a player.
04:42:39 You can be on the magic side, the technology side,
04:42:42 kind of be neutral.
04:42:43 And there’s like 40 different endings for the game.
04:42:46 It’s just incredible.
04:42:47 And this is all like 2000.
04:42:48 And then you talk about a procedurally generated world.
04:42:51 You have a quick travel, but if you want,
04:42:53 you can just walk and the world randomly generates.
04:42:55 But it’s not like Daggerfall
04:42:56 where there was interesting things along the way.
04:42:58 So it was really ahead of its time
04:42:59 and it was kind of the last of a generation of games.
04:43:03 It was based on the same framework
04:43:05 that Interplay used for Fallout,
04:43:07 the original Fallout and Fallout 2.
04:43:09 So that was really a cool setup.
04:43:11 How were the graphics that were not essential to the game?
04:43:13 Oh, it’s isometric, top down.
04:43:15 So kind of like the Fallout look.
04:43:17 And so it doesn’t hold up super well today,
04:43:21 but that was never the point.
04:43:22 It was more of a story driven game.
04:43:24 But it was one of the very few games
04:43:26 where at the very end of the game,
04:43:27 you can actually talk the villain into killing himself
04:43:31 instead of fighting you.
04:43:33 If you, and you had to really work at it,
04:43:35 you had to become a master of persuasion
04:43:37 and get your charisma score maxed out
04:43:39 and learn all this stuff along the way.
04:43:40 And you have this philosophical debate
04:43:42 over the nature of life and death with him.
04:43:44 That’s amazing.
04:43:44 Yeah, and then you’re just like,
04:43:45 by the way, you’re wrong and here’s why.
04:43:47 And he’s like, oh yeah, you got a point.
04:43:48 I’m just gonna kill myself.
04:43:50 I was like, wow, this is great.
04:43:52 Planescape Torment is the other one,
04:43:54 I think is probably the greatest.
04:43:56 Was it called Planescape?
04:43:57 Yeah, it’s another one on the Infinity Engine,
04:43:59 which was what was used for Baldur’s Gate.
04:44:01 So it looks like Baldur’s Gate.
04:44:02 And God, that was such an incredibly well written game.
04:44:06 You play this character called the Nameless One,
04:44:07 this little blue guy, and you wake up in a morgue.
04:44:10 And it turns out that you’re a mortal.
04:44:11 And every time you die, you lose all your memories.
04:44:14 And so you’ve just been apparently living this life
04:44:17 for a very long time.
04:44:18 And you meet all these people
04:44:20 in this crazy city called Sigil who know you,
04:44:22 but you don’t know yourself.
04:44:23 And you’re trying to figure out your name, your identity,
04:44:25 and why do you have this curse where you live forever,
04:44:28 but you keep forgetting every time you get killed.
04:44:31 And it turns out you weren’t such a nice person
04:44:33 throughout this entire game world.
04:44:35 But then again, there’s this question of,
04:44:36 well, if you can start over and you lose all your memories,
04:44:40 do you have a chance for redemption or not?
04:44:42 So it’s an incredible game, Planescape Torment.
04:44:45 And it’s actually another one of those games
04:44:46 where you can never actually have a fight.
04:44:49 You can just kind of talk your way out of everything.
04:44:50 And there’s probably like a thousand pages of dialogue
04:44:53 inside the game.
04:44:54 You guys had a lot of fun and a lot of drugs
04:44:56 making that game.
04:44:57 Do you think these three games are the kinds
04:45:00 that would still be okay to play today
04:45:02 or are they forever lost in time
04:45:03 because we sort of got desensitized
04:45:08 to the richness of computer graphics
04:45:10 and all those kinds of things in modern games?
04:45:12 I think you can enhance these games
04:45:14 because your storytelling medium is so much more engaging.
04:45:17 I was at the movie theater before COVID
04:45:19 and the person to the left of me
04:45:21 was looking at their cell phone during the movie.
04:45:23 And the person to the right of me
04:45:24 was looking at their cell phone.
04:45:25 They’re just not engaged anymore.
04:45:26 Everybody is attention starved.
04:45:28 And the video game is one of the last mediums
04:45:30 where you have undivided attention of people.
04:45:33 They’re really into it.
04:45:34 They’re all into that thing.
04:45:35 And so I think the fact that you have VR and AR
04:45:39 and enhanced graphics and all these new gameplay mechanics,
04:45:42 it’s a value add instead of a value negative
04:45:44 because ultimately what are you doing?
04:45:46 You’re telling stories
04:45:47 and you’re trying to connect people to something.
04:45:49 Maybe it’s the nature of life and death
04:45:52 or are we truly real?
04:45:53 Or are we in a simulation or not or something like,
04:45:55 it’d be great to do 13th floor as a game
04:45:57 or something like that.
04:45:59 And the question is, well, how good of a story can you tell?
04:46:02 Well, you’re constrained
04:46:02 by your storytelling tools and technology.
04:46:05 The fact that games are so much more advanced now
04:46:07 means that you now have many more dimensions
04:46:10 of storytelling available to you.
04:46:12 And actually with AI now coming in
04:46:14 and really good AI coming in the next five or 10 years,
04:46:17 your storytelling is not static anymore.
04:46:20 The person can actually majorly participate
04:46:22 and change the outcome in ways
04:46:24 that were previously unpredictable.
04:46:26 The other thing is they’re still educational.
04:46:27 You can teach people concepts that they never knew before.
04:46:30 And it’s like, if you wanna teach people
04:46:32 about bizarre geometries or like Minecraft
04:46:35 is a great example.
04:46:36 A lot of people learned how computers work from Redstone.
04:46:40 Think about that.
04:46:41 It’s true.
04:46:42 Yeah. Yeah.
04:46:43 Yeah, I mean, yeah, as we said,
04:46:45 we’re more and more going to be living
04:46:47 in a video game worlds might as well
04:46:50 sort of as opposed to just make it fun,
04:46:52 also expand our knowledge,
04:46:55 expand our ability to think,
04:46:57 like explore different ideas
04:47:00 and do education broadly defined
04:47:02 within those video game worlds.
04:47:03 So we do the entirety,
04:47:05 the entirety of life in the video game worlds.
04:47:08 Hopefully it doesn’t look like Minecraft, but we’ll see.
04:47:11 Do you have advice for young people today
04:47:13 aside from playing lots of video games?
04:47:16 You know, high schoolers, college students,
04:47:19 thinking about their career, thinking about life.
04:47:23 Well, we no longer live in a world
04:47:24 where you get one skill set,
04:47:25 you do it for 40 years and retire.
04:47:28 I mean, that ship has sailed a long time ago.
04:47:30 So learn how to learn and learn an appreciation
04:47:33 and love for learning.
04:47:34 So that’s the first thing, you know,
04:47:36 Josh Waitzkins wrote this beautiful book,
04:47:37 The Art of Learning, if you ever read it.
04:47:39 Stuff like that.
04:47:41 So good study skills, you know,
04:47:43 slip box notes, these things.
04:47:44 What was it, Zettelkasten or whatever it is.
04:47:48 Yeah, there’s a lot of little techniques
04:47:49 that you can pick up along the way.
04:47:50 And basically they teach you how to process
04:47:52 lots of information very quickly,
04:47:54 retain it and then decide what’s useful to you
04:47:57 for that moment.
04:47:58 The second thing is do not undervalue EQ,
04:48:00 emotional intelligence.
04:48:01 We’ve lived for a long time in a society
04:48:03 where IQ was dominant.
04:48:06 It’s like how smart you are excuses everything else.
04:48:08 You can be a horrible human being,
04:48:10 but he’s a really bright guy, right?
04:48:12 The asshole mathematician or physicist.
04:48:15 We now live in a world where the balance
04:48:17 is far more important.
04:48:18 You have to be smart, but you also have to be a nice guy.
04:48:21 And don’t undervalue that.
04:48:23 So learn things like closed circuit communication
04:48:25 and active listening.
04:48:26 These skillsets will always pay enormous dividends
04:48:30 along the way.
04:48:31 Third, remember that you’re judged for the things
04:48:33 that you have and what you do with those things.
04:48:35 You know, if you have very little,
04:48:36 you still have to do something.
04:48:37 When you have a lot, you have to do even more.
04:48:39 So learn how to give and do that early on.
04:48:43 Learn how to give back, volunteerism, charity,
04:48:46 mentoring, these types of things.
04:48:48 Those are so incredibly valuable to a person who’s developed.
04:48:51 The people that you mentored in the academic world,
04:48:53 you learn this, you have graduate students.
04:48:55 They one day will be professors.
04:48:58 And it might just so happen, they might eclipse you.
04:49:00 Remember Gauss had a doctoral advisor.
04:49:04 Never forget that, you know, and so did Feynman.
04:49:08 Make sure that you mentor people, you give back
04:49:10 and you learn how to learn and you learn how to teach.
04:49:12 Super important for your development as a person.
04:49:15 And you’ll notice all those things are agnostic
04:49:17 to whatever domain you happen to have chosen.
04:49:19 You could be in medicine or law or technology, whatever.
04:49:21 That’s your fancy, whatever your passion happens to be.
04:49:24 And don’t conflate your earning in your career.
04:49:27 If people try to keep putting these things together,
04:49:30 they’re increasingly becoming decoupled.
04:49:32 There’s a lot of cases where people do their passions
04:49:34 and they do it for free or, you know, for sustenance,
04:49:37 but then they have something else they do on the side
04:49:39 to also augment or supplement their income.
04:49:41 Probably best that way.
04:49:43 When you conflate the two, you tend to get
04:49:45 burned out terribly.
04:49:46 You see this a lot with musicians or other people.
04:49:49 They just, they want to make music,
04:49:50 but they have to tour or whatever,
04:49:51 because they gotta pay bills.
04:49:53 Stuff like that happens.
04:49:54 Other than that, I mean, I’m not a guru.
04:49:57 I’m not in any particular position to…
04:49:59 You showed up in a robe, which I thought was kind of weird.
04:50:01 And you had a crown and you kept calling yourself king.
04:50:04 King of the rats.
04:50:06 And that was in a robe that was a yukata.
04:50:08 Okay, thank you for clarifying.
04:50:10 Audience, he’s joking.
04:50:11 I read it.
04:50:15 I heard somebody who’s gonna write blog posts.
04:50:17 Charles Hoskinson walks around with a crown.
04:50:20 Let me ask you a ridiculously big
04:50:23 and the most important question.
04:50:24 What’s the meaning of this whole thing, of life?
04:50:28 Well, I got a story for that.
04:50:31 Does this have something to do with a farm?
04:50:33 Well, no, no, no, it’s from Japan.
04:50:35 I used to live in Japan.
04:50:36 I live in Osaka, right next to Namba, beautiful area.
04:50:39 It’s like, if you’re gonna live anywhere in Japan,
04:50:41 I live in Osaka.
04:50:42 You live anywhere in Osaka,
04:50:43 live next to the restaurant district.
04:50:44 Four o clock in the morning, you can get good ramen.
04:50:47 These are the things in life that make you who you are.
04:50:50 So there was a shogun and he was kind of a bad ass.
04:50:54 He was really good killing people,
04:50:55 really good at running his empire.
04:50:57 And then he got a bit disgruntled in his late 40s.
04:50:59 And he said, you know, I’m just gonna give it all to my son
04:51:03 and I’m gonna wander around Japan
04:51:04 until I find the perfect cherry blossom.
04:51:07 That’s what I’m gonna do.
04:51:08 Everybody thought he went crazy.
04:51:09 He said, no, no, no, that’s what I’m gonna do.
04:51:11 And he took his whole entourage with him.
04:51:12 And so his son is now the shogun.
04:51:14 And then he’s just wandering throughout Japan
04:51:16 and having all these incredible crazy adventures
04:51:19 as he’s wandering throughout Japan,
04:51:20 fighting bandits and loving beautiful women and so forth.
04:51:24 And then 30 years later, he’s passing these two geisha gals
04:51:28 and one of them turns around
04:51:31 and they notice him slumped over next to a cherry tree.
04:51:33 And so she goes over to try to rouse him and he’s dead.
04:51:37 And in his hands is a wilted cherry blossom.
04:51:41 So that’s a very Japanese story, right?
04:51:43 The point is that it’s not the actual blossom
04:51:47 finding the perfection that matters.
04:51:49 It’s the things you do on a day to day basis.
04:51:52 The places you go, the people you meet,
04:51:53 the experiences you have and the joy you take
04:51:55 in the things that you do here in the moment now.
04:51:58 You have to get there.
04:51:59 You know, if you look at Jiro dreams of sushi,
04:52:02 there’s this guy 70 years of his life
04:52:03 making the same damn piece of sushi
04:52:05 again and again and again.
04:52:06 He’s the happiest guy around.
04:52:08 Albert Camus and his story of Sisyphus.
04:52:11 You know, Sisyphus should be miserable.
04:52:12 It’s the Greek curse.
04:52:13 No, he’s happy.
04:52:15 He has total clarity of purpose.
04:52:17 And every day he gets to basically roll that stone
04:52:19 just a little bit better than the day before,
04:52:21 a different way than the day before.
04:52:23 And it’s not the destination.
04:52:25 It isn’t getting the stone up
04:52:26 to the top of the hill that matters.
04:52:28 It’s the fact that the act,
04:52:30 you find that joy in that act, that ikigai,
04:52:32 that way of life, that purpose of life.
04:52:35 That I think is the closest thing
04:52:37 a human can get to a meaning.
04:52:39 You’re a blip.
04:52:40 You know, you didn’t exist, you’re dead.
04:52:44 And if you compare it to the size of the universe
04:52:47 in that time, it’s just a little blip.
04:52:49 So all you can do with what you have
04:52:51 is just find meaning in the things
04:52:53 that you do on a daily basis.
04:52:54 And you can’t predict the macro.
04:52:56 We have all this wealth and power in America.
04:52:58 What if a world war breaks out?
04:52:59 We could be destitute like Walmart Germany.
04:53:02 And so, you know, you could be a big guy.
04:53:04 You could be now living on the street side.
04:53:07 Would you be miserable?
04:53:08 The point of life is getting to a point
04:53:10 that no matter what comes your way,
04:53:11 what misfortune comes your way,
04:53:13 you’re in a position where you can find
04:53:15 a modicum of happiness and love and empathy
04:53:18 for others in that moment.
04:53:21 And then the highest pursuit of life
04:53:23 is the ability to share that mindset with other people
04:53:25 and give it to them somehow.
04:53:27 And that’s really hard, you know,
04:53:29 because everybody comes in, they’re always Eeyore,
04:53:31 oh, doom and gloom and cynical,
04:53:33 and but this and that and reputation this and that.
04:53:35 You have to somehow transcend all of it and say,
04:53:37 you know, that doesn’t matter.
04:53:38 Look at the cherry blossoms.
04:53:40 Aren’t they beautiful today?
04:53:41 And let’s find a better one tomorrow.
04:53:44 See, you’re also a fan of fishing, I read somewhere.
04:53:48 And one of my favorite books is Old Man and the Sea,
04:53:52 where there’s an old man sort of battling a big fish
04:53:58 and basically closing out the last chapter of his life
04:54:01 in this battle.
04:54:02 So I think another aspect of life with this boulder,
04:54:06 it feels like the boulder gets bigger and bigger
04:54:07 as we get closer to death.
04:54:10 And, you know, you find yourself married
04:54:13 to a particular struggle in life
04:54:17 that eventually just kind of overtakes
04:54:20 the entirety of meaning of your existence.
04:54:23 Do you think, I know what it is for me.
04:54:26 Do you have something like that?
04:54:28 The broader vision that unites your work with Cardano
04:54:32 and everything you’ve done in life,
04:54:34 the big fish that you’re going to end up
04:54:37 in the dark of night,
04:54:38 struggling with the last chapter of your life,
04:54:42 like the big problem you’re taking on?
04:54:45 Well, in mathematics, it was the Goldbach conjecture.
04:54:48 I’d like to prove that.
04:54:49 That’s probably not gonna work.
04:54:51 That’s a really big fish.
04:54:53 So do you still have a love for mathematics?
04:54:54 Oh God, yeah, of course I do.
04:54:57 You never lose that.
04:54:58 You never lose that.
04:54:58 You lose the ability to do deep work
04:55:00 and you don’t have the creativity
04:55:02 and the raw inspiration.
04:55:04 This is why I’ve gotten to automated theorem proving
04:55:06 because what I lack and because I’m getting older,
04:55:08 I can now have computers understand it
04:55:10 and use AI to just solve this stuff.
04:55:11 It’s like the cheat codes for math.
04:55:13 Fuck those guys, we’ll still do that.
04:55:16 But you know, mathematics still has those last passions
04:55:19 and there’s all kinds of cool things
04:55:20 that I’d like to see done.
04:55:22 Like quota complexes allow you to unify topology
04:55:24 and number theory in really novel ways.
04:55:26 And there are all kinds of cool things, but who cares?
04:55:29 Everybody has those white whales.
04:55:34 Another thing I love to do is bring back the woolly mammoth.
04:55:37 That’s George Church’s hidden pleasure.
04:55:39 In five to 10 years, it’s actually gonna happen.
04:55:41 And I have this beautiful ranch in Wyoming
04:55:42 and I gotta find a way to convince George
04:55:44 to let me raise his clone mammoth fence on my ranch.
04:55:47 Among the bison.
04:55:48 Among the bison.
04:55:49 They’d probably get along really well.
04:55:50 And then I have to learn all these cool things
04:55:52 about woolly mammoths.
04:55:53 Like do you shave them in the summertime
04:55:55 and let them get shaggy during the winter
04:55:56 or do you just let that coat go and then it falls?
04:55:58 Who knows?
04:56:00 It’s an undiscovered country.
04:56:02 I just had the image of Charles Hoskinson alone
04:56:05 on a bison farm trying to raise a woolly mammoth.
04:56:09 Just start wearing a white suit
04:56:10 and say welcome to Hoskinson’s ranch.
04:56:13 I’ll have a cane with amber on it.
04:56:14 Yeah, with a chalkboard that you keep scrambling on
04:56:17 like the beautiful mind in the movie
04:56:20 and you’ll have voices.
04:56:20 All the schizophrenia’s already come.
04:56:22 You guys are all figments of my imagination anyway.
04:56:25 Now one of my goals though, I love catfish
04:56:27 and they live a long time.
04:56:28 They get really damn big if you see those guys.
04:56:31 I’d love to catch one now and be in my 60s
04:56:33 and catch the same fish twice and recognize it.
04:56:36 Maybe I’ll lift a scar or something.
04:56:38 That’d be really cool, going back to the fish thing.
04:56:41 Because both the fish has gone through a lot,
04:56:42 I’ve gone through a lot.
04:56:43 We can just be like old friends.
04:56:44 Reminisce.
04:56:45 Exactly, exactly.
04:56:47 About a life well lived.
04:56:49 Then I’ll die of a heart attack and my mammoths will eat me.
04:56:51 That’s something to look forward to.
04:56:53 Charles, this is one of the most amazing conversations
04:56:56 I’ve ever had.
04:56:57 It’s truly an honor that you would spend
04:56:59 your valuable time with me.
04:57:01 I’m glad you exist in the cryptocurrency
04:57:03 and the technology space.
04:57:05 I can see your love for mathematics and your love for life
04:57:07 just radiate through everything you do.
04:57:09 Thank you for being you
04:57:11 and thank you for talking to me today.
04:57:12 It’s a lot of fun.
04:57:13 Thank you so much, Lex.
04:57:15 Thanks for listening to this conversation
04:57:17 with Charles Hoskinson.
04:57:18 Thank you to Gala Games, Allform, Indeed, ExpressVPN,
04:57:23 and Eight Sleep.
04:57:25 Check them out in the description
04:57:26 to support this podcast.
04:57:28 And now, let me leave you with some words
04:57:30 from William Faulkner.
04:57:32 You cannot swim for new horizons
04:57:35 until you have the courage to lose sight of the shore.
04:57:38 Thank you for listening and hope to see you next time.