Epicenter - Learn about Crypto, Blockchain, Ethereum, Bitcoin and Distributed Technologies - Preston Byrne & Siân Jones: Eris Industries – The Distributed Application Software Stack

Episode Date: January 19, 2015

Eris Industries spawned when three people got together to come up with a solution to Olivier Janssens’ £100K bounty to replace the Bitcoin Foundation with software. Their proposal, initially called Project Douglas and built on top of Ethereum, was designed to replicate the functions of a trade association on a blockchain. Today, Eris has evolved into a Distributed Application Software Stack, with which developers can rapidly deploy distributed applications that are flexible, legally compliant and secure. Interestingly, Eris allows organisations and companies to adopt blockchain technology without being fully decentralised. We’re joined by one of the Founders and COO of Eris Industries, Preston Byrne, who explains how Eris works and talks about some of the practical use cases which may arise. Siân Jones is also here to weigh in on some of the innovative aspects of this exciting open-source project. Episode links: Eris Industries: Deserver White Paper Thelonious White Paper Eris Package Manager White Paper Eris Legal Markdown White Paper Blockchain Your Business in 7 Steps This episode is hosted by Brian Fabian Crain and Sébastien Couture. Show notes and listening options: epicenter.tv/062

This episode of Epicenter Bitcoin is brought to you by Shapeshift.I.O. With no account of signup required, it's the easiest way to buy and sell light coin, doge coin, dark coin, and other leading cryptocurrencies. Go to shapeshift.io to instantly convert all coins and to discover the future of cryptocurrency exchanges. Hello, welcome to Epicenter Bitcoin, the show which talks about the technologies, projects, and startups driving decentralization and the global cryptocurrency revolution. My name is Sebastienkutio. And my name is Brian Fabien, very nice. We're here today. We're two old guests and old friends of ours.

So, Sean, of course, everybody knows from all the episodes and wonderful interviews, she's done for episode of Bitcoin. And one of those interviews actually was with Preston, who is our second, who's our guest today. Preston was a lawyer once upon a time. And now he has fully subscribed to the gospel of blockchain, not Bitcoin, though. and has started his own startup, which is a very interesting project. I also quite an unusual project, I think. So we'll have a great chance today to talk about that.

Thanks for joining us today. Thank you. It's pleasure. As always. Hi, guys. So to get started off, Sean, you had some announcements to me. Oh, yes. Well, I've just opened my office in the Isle of Man.

So now I've got two offices, one. in the UK, one on the island man. And later on this year we'll be opening up in a couple of other offshore jurisdictions. And I'm also spending more and more time in Brussels, where I've co-founded the European Digital Currency and Blockchain Technologies Forum, which is a public policy platform, focused heavily on the European institutions, on the Parliament, the Commission,

and all the other European institutions to help them, be better informed about all this crypto stuff. And that's what I'm doing. Cool. Awesome. Congratulations. So you're not based in the Olive Man now, Argy? I'm spending more and more time there.

I'm sort of divided now. I'm there quite a few days every month. And who knows? I'm going to retire soon. So maybe I'll end up herding sheep or something. Yes, yes. decentralized sheep. Oh, yes.

I mean, if you're in the Outlaw of Man, you'd probably be more likely to be, like, managing poker star servers than hurting sheep, right? Oh, no, no, no, no, no, no. I think I'm going for a quieter life, not nearly so exciting. My CIO day is a well gone behind me now.

So, Sean, I also take it that means you're going to save us from all those evil regulations coming, like European license or the VAT and those things within New Brussels initiative, no? Well, you know, the European legislators and policymakers are being very pragmatic at the moment, but they are hungry to understand what

Bitcoin and digital currencies and indeed the blockchain is all about. But they certainly at the moment are very, much more measured in their approach than say their colleagues in New York who've got a very different approach, about which there'll be some new news quite soon. But the Bit License Proposals version 2 are going to come out soon. But now in Europe things are much more relaxed. The Isle of Man is a wonderful jurisdiction, a very friendly jurisdiction for virtual currencies, very welcoming. and very easy to do business in.

So they'd like to do on the Isle of Man for virtual currencies, what they have done in the past for e-gaming. So your reference to poker stars wasn't so far off. In fact, when poker stars, I think, started on the Isle of Man about 10 years ago, I think there were three or four people, and now they employ over 200 people, and I did read somewhere that they account for about 4% of the island's GDP now. So they hope that to repeat, you know, to repeat that with with with with digital currencies.

Yeah, that is impressive. So Preston, tell us. Why am I here? Tell us how did you, how did you decide to leave your job, you're well paid and and well-officed job as a lawyer? My sexy job is a securitization. or waiting through piles of documents. Well, all started last year, actually, at Bitcoin 2014. Sean was there when it all began,

because a self-described Bitcoin millionaire was very annoyed with the Bitcoin Foundation. He said he was going to issue a 100,000 pound bounty in Bitcoin to the team or group of individuals who could design a piece of software that could replace the Bitcoin Foundation and also promote development of the core protocol. So a bunch of the sort of Ethereum,

community enthusiasts gathered up in a Skype group and you know it's like wow a hundred grand very money wow and such currency that's two hours of your time as a lawyer isn't it yes the problem is I used to do all that stuff for free which was which is not very remunerative but understandably so we got together and three of us a chap who then went by the name Dennis McKinnon Casey Coleman who's currently our CEO myself started batting some ideas around in a Google Doc. And then it occurred to us. We could actually do it, the three of us

with our respective skill sets. So we didn't sleep for a month, and we worked and worked and worked. And then eventually we came up with a prototype, RAS 0.1, which was built on Ethereum and designed to replicate the functions of a trade association on a blockchain. And what it could do is some pretty interesting stuff.

It had a series of smart contracts, about 30 or 40 of them, which governed how users were able to interact with the various databases they represented. those smart contracts could be changed over time because of a kernel which held the logic which allowed you to update the entire system. So the first contract on the sort of cascading branch of contracts going all the way down enabled you to make a state change in any of the subcontracts. And then it occurred to us that you could actually do that with a blockchain. And that's really where Eris started, this idea that if you take all of your blockchain logic, you remove it from being hard-coded in the blockchain and you put it into a,

script in the Genesis block, you can have a blockchain which acts a lot more like a regular piece of software and a regular database than it does like Bitcoin. And so that's how all that got started. Three days after we wrote our white paper, a very nice guy named Sean Park, who also happens to be a VC, sent us an email and said, I'd like to meet you guys. And we started a relationship with that firm then, Anthemus Group, and we've had one with them ever since. And so, and the company's on the move and growing and building cool shit. So that's, you know, that's how it started. It was a total accident.

My law firm was very good about it, actually. They represented us on the deal. So big thanks to Norton Rose Fulbright in London for that. No, they, yeah. I cannot imagine many law firms being that charitable to a junior associate. Hey, guys, I'd like to quit my job. Can you keep me employed while I said about the business of quitting? which is exactly what they did.

So, but yeah, and that's how it all started. And credit, credit to you and the other two for having, unfortunately, you didn't win this prize, but it was so impressive that the second prize was created specifically to reward you guys for the fantastic offer, a fantastic proposal that you came up. up with. So, um, and we were really grateful for that. Yeah, that, that, that, that, that, that, that, that's grateful for that. Um, so yeah, and that, that's how it all started. So where, where are you guys based? We're notionally based in London, um, although it's, in typical fashion, it's distributed. We've got two guys in, uh, in Guelph, Ontario, which seems to be a sort of hotbed of smart contract

activity. A lot of Ethereum people come from there. And, um, and, uh, one guy in, in Sweden, in a farm about five hours outside of Stockholm. Casey, our CEO is in Amsterdam, and then I'm in our busy London headquarters by myself. So we're spread out all over the place, and which, you know, we all met on the internet and we all met talking about blockchain stuff over Skype, really, and doing projects

and collaborative work with each other remotely. And so we've started out with that as the model because it doesn't make sense to move us all into one room. When the team is this big, you can do collaborative work, or rather when the team is this small, collaborative work is fairly easy to accomplish. So let's talk about this. So Ares Industries is, I mean, I used to be a developer and sort of UX designer.

I used to be quite involved a lot of web projects, also as a project manager. And to me, this looks, I mean, this looks a lot like the same sort of software stack that you we see in the, I guess, traditional world only it's distributed. I think you've described it as no jazz for the peer-to-peer technology. Can you sort of give us an overview of what Aeros Industries is proposing? I mean, so an interview of basically what we're proposing is a software stack that uses a blockchain in a real-world context. Because I think a lot of people in the, in the decentralized computing space or distributed computing space, particularly blockchain, have tried to create a sort of mirror universe which is designed to replicate the functions

of whatever institution or organization that they work with with the real world without necessarily needing to interact with the real world at all. The idea, for example, that Bitcoin can replicate a banking system. Our hypothesis is somewhat different. It's that Bitcoin can't replicate a banking system because a banking system is dependent on legal relationships, legal constitution of assets, and human oversight, making strategic decisions. So what we said is, what if, instead of trying to replicate the system entirely automatically, you use these tools which can automate data-driven relationships, plug them in to these

organizations, have human administration to a degree, and realize efficiencies when you deploy these particular databases in economies of scale. So it's the difference between with Bitcoin attempting to do something where you're getting financial inclusion by having access to Bitcoin in a developing country. Instead, we would say, well, that kind of would look and feel like a credit union in, let's say, Ghana or someplace like that. But if you actually had a real bank deploying one of these databases and doing it at very low cost, you would have an actual credit union in that country instead of something that just kind of looked and acted and mimicked. And the qualitative difference is significant because when you're dealing with something like Bitcoin, you're relying on the network effect which monetizes the token in order to move value around. Whereas when you're dealing with something like a banking institution, you're looking at actual

obligations, whether that be fiat or a debt obligation or something else, which are enforceable against someone, which have a real world and legal nexus. And that, from our perspective, is very important because most of mainstream finance deals in these kinds of abstractions. It deals in debts. It deals in obligations. It deals in rights. And these are not things you can pin down. They only really adopt an existence and a character when they are presented to a court for enforcement. And that's what makes people follow them. So on the one hand, we recognize that this is substantially at variance with the cryptocurrency model, which says that value is going to vest in a token because the token, because everybody wants it, and therefore

you can use it for certain things. We say value vests in the obligation. And so it's kind of pulling cryptocurrency down to earth a little bit. But the blockchain data structure is something which you can use in order to transfer, record, and manage those obligations extremely efficiently. So, you know, and that applies to all kinds of other things as well, whether you're looking at a purely utility task, like, for example, version control. You know, do you really need to decentralize completely version control or, you know, if you just want a private GitHub repo? Can you just set up a network with five nodes in your startup? And then each person in the startup will run a node and then they'll have an extra hard drive and you won't need to pay GitHub every

month and so on and so forth. So the idea is that we're not trying to recreate a new order that exists outside of everything that is. We're trying to create something that works in the way that the real world works in the sense that you have applications. They have developers. Those developers improve them that are responsible for their management and maintenance. can we make developers lives easier by putting in a blockchain database or any other kind of consensus database for that matter? And so that's the core hypothesis of the company. So it's interesting that, well, in Bitcoin, it seems the notion is very,

well, the notion is very central that it's about decentralization, right? And it's about disintermediating big players, big companies, et cetera. And this seems to be a completely different philosophy and interpretation of Bitcoin and the blockchain that's going on here, which is that it's just something that provides more efficiency. It lowers costs. It, you know, helps business. And then I guess, you know, in the way that lowering costs helps, you know, the third world, developing countries, in that way, you know, it benefits them. but it's not sort of through this revolutionary alternative system that we're building that will displace what we have.

It depends on who you're disintermediating, right? So I think Bitcoin, we look at Bitcoin and we see the core innovation, not the currency, not anything political. We look at it and say, this is a clearing and settlement system sort of merged into one, because there's no clearing, there's no central counterparty, so it's really just peer-to-peer settlement. And for that particular brand of settlement, it is really super efficient. But why is it efficient and why is it cheap?

The answer is, you know, but for the fact that you're having token generation and thus you need mining and other kinds of things to protect the chain. In terms of the pure settlement function, Bitcoin is, how to describe it, Bitcoin isn't disintermediating a bank. It's disintermediating the labor of a bank, the overheads of a bank, the costs of the bank. And so you have those costs arising somewhere else in the form of database management. So we said, okay, well, what happens if you take another clearing and settlement system, any take anyone you like? And then you script in the functionality that that clearing and settlement system carries out. You put an administrator in charge.

And then because you've set all of your input and output parameters in advance, you know what's coming in is going to give rise to a certain result with a very high degree of certainty. And then you say, well, if you're a bank, you want to disintermediate your costs. If you're someone who doesn't like banks, you want to disintermediate your bank. So different users are going to have different requirements and there will be different design parameters. But we think that for both the bank and the people who want to disintermediate them, each of them should have the option to set up their own system. And so what ERIS or rather what our blockchain design, which is a very heavily modified derivative of Jeffrey Wilkes-Go client for the Ethereum Protocol, what that's designed to do is give people the ability to select the parameters that they want for the application they want.

So if you want, you can go and do a Bitcoin clone, you know, totally distributed, whatever shot you know shot two 56 proof of work go for it all yours or in the alternative you can say well you know i'm running a clearing system for i'm running a government accounting system in a in a rural area in the middle of west africa and i want to keep track of where money is going to reduce corruption then i'll deploy this blockchain and i'll know that anyone who has a particular balance which they redeemed through a gateway which i lock down and trust very heavily um you know i'll make sure that there's no leakage and there's less, that's not my idea, by the way, that's Zachary Caseras of the Startup Cities Institute in Guatemala. He said, put a blockchain in the government and then you

won't have any leakage. You'll have the representations of value moving around and you could even have someone in control. But if they're attempting to fiddle with that database, it's going to be very transparent when they do. So you could have a public government accounting database that works with the blockchain. You wouldn't want that to be fully decentralized. What you'd want it to do is rest in the hands of a particular entity and then have people watch it and see what they're doing with the funds that move in and out. Well, I was going to say the reality is that you don't actually need a totally decentralized system for all applications. That's the point. There's been the assumption

that you, because of where Bitcoin comes from, and effectively most of the crypto revolution that's followed from Bitcoin, there's the assumption that total decentralization is is valid in all cases. And the point is, I think, that it isn't necessarily valid in all cases. And you guys have come up with something which addresses that particular area that doesn't need total decentralization. You have a decentralized network, but you don't necessarily have decentralized administration. Have I got that about right? When I read about this, the impression that I get, when I first read it was that this is really just about creating. using the technology that Bitcoin has brought on to create a way to have distributed web apps.

Is that about some of that? That's sort of the way that we've been describing it, because that, at least initially, our first applications are going to be web apps. We're going to have a YouTube and an interactive marketplace. However, you can extend the analogy. If you can do a web app with it, you can do any other kind of data as well, which is kind of the point. If you can do YouTube, you can do a clearing system.

If you can do YouTube, you can do data security and file storage. If you can do YouTube, you can do anything. And so, in effect, you can do DRM if you add a couple of other modules on top. For example, end-to-end encryption and messaging so that keys can get broadcast back and forth. So we're starting with the web apps, and that's as the proofs of concept. Because as a startup, we've only been incorporated for like seven or eight months. We've hustled their asses in that time. But you have to start somewhere.

And you could go and say, right, well, we're going to design a clearing system. And isn't that great? And go up to Euroclear and say, hey, guys, here's a clearing system. Or go up and say, hey, guys, you know, Citibank, here's something for your, you know, here's something for your FX trading. And they'd go great, you know, go away. We have a perfectly good system and we're not going to let a startup that's less than a year old, start fiddling with our software stack.

So for us, it was about demonstrating the wider utility. And it's an open source project. It's designed for people to use for their own applications. So for us, it's designed to, We want to make something people can see. And then go, damn, I didn't know you could do that with the blockchain. That's really interesting. So then they can take their own ideas, pork, pack, pull request, and off they go to the races,

building stuff of their own, which is designed to utilize the distributed internet to scale their applications and challenge existing providers. I mean, you know, why not do a distributed Uber for a particular locality? If you can script it and all profits go to charity, Uber has some PR problems. If someone wanted to build that and do something along those lines. and then create a challenger entity to Uber in a particular city by working with the state. And they could do it if they wanted to. The point is we want to allow developers to exercise their utility and control rather than

enforcing them to build on top of other platforms. Other platforms, Bitcoin and Ethereum in particular, are going to be very useful going forward for this kind of stuff. Ethereum, we will know and love it and we're sure it's going to be great. But for us, it's checkpointing and security and hashing things. into a central chain which has a different trust profile. That will be useful for many applications. However, for running application logic,

it's this distributed application where you have, you know, it's free to the end user to use. And the cost is on the person deploying it in terms of making sure that they have the adequate server capacity or computing capacity doesn't necessarily need to be server capacity to roll that application and distribute the logic. Right. And I want to get into some of the more practical aspects of this.

So there are different components to, to what you guys are proposing. There's a sort of server component, which I guess would also be the view component to like your web browser, an equivalent to the web browser. There's a blockchain. There's also some sort of a framework

for generating contracts and a package manager. So we'll get to that in just a minute. Before we do that, we'd like to talk about our sponsor, ShapeShift. So ShapeShift, as many of you know, is the fastest and easiest way to buy and sell alt coins. You know, if you want to buy alt coins today,

I mean, before ShapeTift existed, really, it was quite cumbersome. You know, you had to find a replicable exchange that supported the coin that you want to buy or sell. You've got to create an account, give them some personal information sometimes, and place an order, wait for the order to be fulfilled. It's just a long and cumbersome

and it's just like not very streamlined process. And then ShapeShift comes. along and just makes all that completely useless. I mean, they're the best way to, I mean, why would you use an altcoin exchange now that you have Shapeshift that you could just, you know, buy and sell your coins instantly? So let's show you how this works. So when you go to Shapeshift.io, you've got essentially what is Google Translate for cryptocurrencies. And, uh, well, let's say, let's get some doche.

Okay. Preston, do you have an address? If you're really quick, it can be go to you. Sweet. No, it's all right. I don't actually have my wallet on this computer. This is my office computer. Yeah, yeah, okay.

All my serious stuff, I leave at home. So, doge included. Okay. So on one side you have the currency you want to convert. The other side you have the currency you want to convert to. In this case, Dor. So let's, Brian, put your address and put 1,000 Doge in the amount, or not. It doesn't matter.

And then you just send the Bitcoins, or in this case, Bitcoins, but it could be like coin for Doge. It could be new bits for pure coin. It could be whatever you want. We've been using simple examples here, but the possibilities are endless. And then so you just need to scan that QR code. Send the currency that you want to convert to the address. Have you sent it? Yeah, just send it now.

I had to pull up my And there it is There you go So it's a waiting exchange So they support Bitcoin, light coin, pure coin Dark coin, Doge coin, name coin NXT, feather coin, black coin

Bitcoin dark quark Quark Red coin and new bits So just like I'm not really good at doing math on top of my head but think of all the possibilities there you could do dark coin for Namecoin NXT for feather coin Black coin for quark

Or Bitcoin for Dose coin You know, I mean, it's just, it's just amazing. And there you go. So in about 20 seconds, the order was fulfilled. I've received Dogecoin on my wallet. I don't know how many I've got there, but I'm sure I can send lots of Reddit tips. A thousand six hundred fifty-five. Awesome. Well, let's just hope for that Dogecoin price to go off, eh? Yeah, so great tool. It's the fastest and easiest way to buy and sell alt coins.

and they only take a small fee, which is included in the price when you're sending your currency. So go to shepshift.io, give it a try. Tell us what you think. We haven't gotten any feedback yet. We've loved to hear what you think about it. And we'd like to thank Shapeshift for their support of every cent of Bitcoin. And the reason everybody's been smiling is because Preston is a well-known supporter of

Doge coin in favor of any other coin. it really is the future of money i mean i see a future i see a future where walking through kibara and and you see the little the little smiley face that little shiba inu staring back at you i see that in my dreams and so that that i think is really the future no i mean i don't think any of us would disagree with those being the future of cryptocurrencies so just uh to sort of introduce this topic there are There are four components to ERIS. And I think if you're a web developer and you read these white papers that you guys have put

out on your website, you really get it. I mean, the D-Server, for me, the D-Server part was pretty straightforward when I first read it. It's the components which allows you to create web apps, web style, data-driven, distributed apps, as you call them. And there's a browser component to that as well. So the question that always came to my mind when thinking about how are we going to create this decentralized internet was like how do you integrate that into like a technology that we all know and use, which is open web technologies like HTML, CSS, and JavaScript, if you don't have a browser and you guys are solving that. Others are solving it too, like Ethereum.

With mist. Like OpenBazaar, yeah, with mist. But so this is sort of a clever way to solve that problem is to integrate a browser. Yeah, I mean, so there are in any blockchain implementation, there are, you know, there are any blockchain application. There are two halves of the software. You have the protocol in the chain itself, and then you have the implementation in the client.

So if you're dealing with something like Dogecoin, the future of money, and you'll have the blockchain and the protocol, which is distributed, and then you'll have the client, which is designed to match up to that protocol. If you want to make changes to the protocol, you have to change, substantial changes. You have to change the implementation in the client. What we did is we said, well, what Ethereum's done is they've got this very flexible and capable blockchain design. So if we have a distributed component, which is the blockchain, and then we move a lot of

those consensus parameters into a VM, which is on the client's side, and we structure it in such a way that what the blockchain is telling that particular VM to display through a web browser displayed at local host is something which looks like a web page, then you've got an application that looks like a web page. Now, the way that we've done that is through something which is called the D-servers. So if you imagine the blockchain is the database backend. The D-Server displays all of the information and then allows a Thelonious blockchain to go talk to other protocols.

So what it does, we started out and we have a Bitcoin module, an Ethereum Poc7 module, and an IPFS module. So you can currently write a DAP on a Thelonious chain. which talks to Bitcoin and talks to Ethereum and talks to IPFS. And this happens through the D-Server? Is that right? This happens through the D-Server, correct. So the technical details, you know, I'm more on legal structuring than the actual technical stuff, but we can always get Casey or Ethan or one of the guys to talk about this sort of deep dive on a later date.

But what the D-Server allows you to do is to talk to multiple protocols in the context of a single app. So if you've got a distributed YouTube, and the distributed YouTube we're building, for example, has a Bitcoin content incentivization function. So a user will have a Bitcoin key pair which they upload into their particular client program. The IPFS will store all of the data. Bologius will tell them what they're able to see. There will be magnet links, for example, to BitTorrent

is one thing we used with errors 0.1. And all of that then displays in a consistent application. And when the user sends a command to Thelonius and says, well, I want to watch this video, if they're not allowed to do it as put by the post or the video, then they're not going to see it. If they don't have access to that information, then the information is not going to display on their screen.

So much in the same way, it requires more design work, felonious, than other blockchains. It's not something which you just roll, and then all of a sudden it's designed to solve a problem. It's a framework for you to put scripts in and put functionality in, which you then will know will only execute on the provision of the relevant private key by the relevant user, who you've authorized to access that information or write on the database

in respect of the particular function that that contract governs. With this YouTube example, right, you mentioned Ethereum and then this is a sort of, you know, a fork of Ethereum, you could say. When would you... We don't like to use the word, but yeah. Yeah. So what's the advantage of doing something like this decentralized YouTube on top of Ethereum versus what you guys are doing?

Or where's the balance here or the trade-off? The trade-off is a cost trade-off. you do something on Ethereum, so our original ERIS DAP costs 250,000 gas just to deploy. And the other problem was the thing was huge. So you might not be able to get it onto a single block. The way that we've structured, Delonius, is that most of the DAP logic goes into the Genesis block. And then it's up to the developer to decide what parameters they want to set in terms of monetization. So if I can sort of rephrase that or like interpret how I see that, right?

So the reason why it would be hugely expensive with Ethereum is because you have the security of the entire theorem network. I mean, okay, it doesn't exist yet, but you will of the future theorem network securing that application. But in some cases, that makes no sense, right? If the essential, if this YouTube is run by a company that you sort of trust anyway, then the idea is that you can do something with a different security model. models, different consensus model is much, much cheaper, but it has a similar architecture. Is that correct? More or less. I mean, one example I use is if you're looking at a financial platform, so let's look at

an Ethereum-based financial platform versus a bank-deployed financial platform. An Ethereum-based financial platform has to contend with every user of the system being mutually untrustworthy. A bank-deployed system, however, can be designed so that you can have administrative control. I mean, you can secure these chains without mining. That's an important component. But couldn't you do this in an Ethereum contract as well? You could, but it would cost money.

So what you do with, it would cost money to run all of the computation. So with a thelonious chain, you can structure it. Our default gas price is zero. And the reason you can get away with that is because you simply just say in the Genesis block, well, the only people who are able to write to this database are people who the administrator has pre-authorized. So if you're a bank and you're running a bank platform, when someone attempts to make an API call to a contract,

your blockchain and they either haven't got a key pair or they're trying to spam it with some other sort of things. The contract is just going to bounce off because it'll say, well, you don't have the permissions to write, so go to hell. The idea is that when you have an application which is controlled by an entity, yes, you have an attack vector, which in the form of the private keys which control the chain. However, you are allowing, you're deploying a blockchain which is designed to protect your users from the rest of the world, but not you, instead of a blockchain which is designed, to protect everyone, including you, from everybody else. And in most commercial contexts, that's not what is required. I mean, if trust were that big of a problem in everyday life,

then we would be seeing blockchains everywhere. Bitcoin would have solved, you know, the commercial problem. And in fact, frankly, the opposite is true. In most commercial relations, you need to have third parties involved in order to make certain discretionary assessments as to whether facts have occurred or what the meaning of a provision was or even to constitute an asset itself. So instead, it's not, this isn't a technical detail. You know, oh, well, we have someone administering it. When you have someone administering something, you suddenly have accountability. You have a legal nexus, which allows you to deal in legal obligations. And that's something which Bitcoin doesn't have. So, you know, you're dealing with a

distributed ledger, but a distributed ledger does not have agency and it doesn't have legal personality. So it's going to be very hard to actually structure in legal obligations on a distributed ledger where something that's broken cannot be fixed or cannot be unwounder. cannot be undone. And so, you know, people say, well, maybe we don't want them undone, but the fact is in mainstream finance, undoing transactions and amending transactions, quite without the consent of the parties involved in some cases is something which happens all the time. So we've structured this blockchain system from a financial perspective to deal with those considerations. And it was something we looked at the distributed, you know,

when I was a lawyer, this is a problem I identified. How can you work with a system that you can't fix in the event of a misrepresentation or a fraud or a simple mistake. No one is going to use that system. If you have one system, and this is a simple question of competition, if you have a system which protects your rights and is slightly expensive, and one that doesn't protect your rights and is free of charge or has a different cost structure, the rights themselves are very valuable. And I suspect most people will go for the system that structures in their rights.

That's my own particular view on that. Okay. I recently saw a tweet by Peter Todd, and it said something like that. So the only advantage of Bitcoin, and I think he talked about, you know, cryptocurrencies as sort of as a class, is a decentralization. Now, it seems here that you are sort of taking the blockchain side, but then getting rid to decentralization, I guess to varying degrees, right? In some cases, maybe not at all, but in other cases completely.

How does that make sense? Because you can spread your data out without necessarily having to have redundancy is built in and security is built in. So blockchain security can be achieved in several dozen lines of code. What would require servers and IT administrators. I mean, this is what Bitcoin is proven. You can deploy a database which secures itself very, very simply and very elegantly in very few lines of code. So whereas currently we require oversight and administrators to do that. So by relying on mathematics instead of people in oversight, you're reducing.

a cost. Additionally, the data itself, fault tolerance is very, very high. If you're running 100 nodes, one example I use, let's say you're an international bank, right? I always refer to banking, I apologize. Let's say you're some kind of organization and you run a blockchain or a series of blockchains to administer your functions. And one of your offices, suddenly out of nowhere, an asteroid falls out of a clear blue sky and wipes your New York headquarters off the map. Well, if you're running nodes in 10 other countries that have redundant copies of the same data, then, you know, let's say it happens at night so while your people are at home. The following day, they just walk in, download a software program, plug in their private key, and they're up and running just as completely uninterrupted

because that data store has continued to administer itself without, you know, it's continued to administer itself by virtue of the way that it's structured. So redundancy and fault tolerance is extremely high. That's valuable. Currently, these companies need to use data centers offshore, three, four, five of them per corporate, very expensive to administer. And, that's a cost, and it's a very significant cost. So from our perspective, if you can just build that into a system and have it run quietly and automatically in the background, that's a substantial advantage that these systems will have

over existing data structures. And now here's a thought that makes it difficult for the purists. Here's a product, by the sound of it, that is going to be very attractive to existing mainstream banks to implement blockchain technology, to do some of the work that they currently do, and more cost effectively, potentially reducing the cost for those customers.

If that happens, we're likely to see a greater mass adoption of crypto indirectly than directly. So we're going to see people using the blockchain, even though they don't realize they're using the blockchain. Perhaps they don't feel the confidence to use the blockchain or to use crypto technology right now. They don't trust the trustlessness of it.

But indirectly, they may end up, many more people may be using the blockchain than would otherwise have been the case if they have the direct option of participating directly in Bitcoin in another currencies. Interesting thought. Mass adoption by the back door. That's exactly the point. I mean, another reason we're going with web apps is to show that you can use a blockchain without knowing you're using it. Because if you have to know you're using it, you know, I'm not that, you know, that computer literate. If I had to go in and run everything from the command line

in order to use it, I probably wouldn't, as would 99% of the population. So the idea is that you have a data structure which brings all of these principles and to a mainstream application without anyone needing to have the technical capacity to do so. So, I mean, there's a guy named Jawad Yaqqqq who's developed a distributed desktop, which has some blockchain components called Dios. And his thesis is, you know, you have a desktop which uses the blockchain to secure certain functions and people see a desktop. And it's the same thing with ERIS.

People have an interactive application and they see an interactive application. They do not see the blockchain. It runs in the background. to Ethereum's great credit, none of this really would have been possible without certain of the structures, particularly the Patricia Merkel tree, which they innovate as part of their open source project. So this is where we see the space is going and entirely because of the open source model is according, you know, and following that, we've open sourced all of our stuff as well.

Okay. So assuming, you know, this finds, you know, it works out, there's a lot of, A lot of developers start using it, developing applications like that. What would the impact of that be? How would that change the way people interact with applications? And in particular, also from a sort of business model perspective, do you think that will change the way maybe monetization works as well? I think, yes.

I mean, in terms of how the structure of the Internet might change, if this technology were widely used, is that you would have users, voluntarily, users would not necessarily use an application because it was convenient. They would also use it for other things. Like this particular developer respects my privacy. And there would be transparency as to what a developer could do with user data. So if you had a series of distributed social networks or Twitters or Reddits or God knows what

else, and a developer said, well, this is incentivized to do this, and we're not going to shove advertising in your face. That's something which I think people would find valuable, and they may migrate over to those systems. And as a result of which, it would be an order of magic. magnitude harder for corporates to sell that data or do any meaningful sales of that data, and also for governments to observe that data without authorization or user consent. And it would be transparent if the application changed over time, how the developer was

actually, what the developer was doing. So the difference here, right, because today someone could go and start an alternative social network and say we're not going to do any advertising, and of course people have done that, right? But so the difference here would be that it would be visible for everyone in the blockchain what they actually are able to do. Consent would become more transparent. I mean, if you structure a blockchain so that people can't see your data and that at a later

date, they would not be able to change it as to make that data readable, then yeah, you would have an application where you cannot reverse that kind of consent. And so that potentially could disrupt. a lot of business models in that you don't need advertising anymore to run an application. Your users use it simply because of the convenience. And let's say when you're opening the window, anytime the window's open, you start processing transactions. That's something where I think it'll have a very substantial impact.

But in another sense, one thing, version control and GitHub, I think I may have mentioned this earlier, so apologies from repeating myself. But we run a startup and we have to pay all manner of service providers, third-party service providers for the things we use. One of those is a private GitHub repo. if you can script version control, and we are working on that, and then have a distributed GitHub, you know, DAP,

that you and your company run, all of a sudden that cost falls away. So you're dealing with protocols governing the way that people interact instead of servers, which everybody's always querying, which hold all their data off-site, and frankly expose you to those servers. So people will have a lot more control over the risks to which they're exposed

because they're going to be able to move those risks in house and then distribute them in such a way that they're able to mitigate, them to a significant extent. So from, you know, there will be other considerations, private key, you know, private key management is going to be a very big one. But we think that that's, that's the direction of things are going. In terms of the business model, it's a free software model where services, we think that there's going to be a very big market for these services going forward, distributed database management. And so we would like to be the provider of those services.

And, yeah, because that's how business works. So we can't patent this stuff anyway. because of prior art and because no one would frankly use it because it has to be open source if it's going to be secure. Another Peter Todd line, nothing that, you know, nothing that isn't secure, you know, isn't open source or everything that is secure is, rather. So because people are able to assess it, test it, you know, take pot shots at it and use it for whatever purpose they want. And for us, that's really important. So, yeah, it's a free software model. We, you know, we think that skilled labor in this space is very, very thin on the ground. And, we would like to be the skilled labor that helps to bring blockchains into wider use.

So I'd like to come back to the browser for a second. So I think that the browser is an important component to sort of user adoption and consumer adoption and bring just regular people on. But there is sort of a problem with that as more and more of these blockchain technologies start issuing browsers. is that you have this, you know, you have multiple browsers that aren't necessarily compatible with each other and which require users to have multiple, well, multiple browsers installed on their systems if they want to be able to do anything. And if we sort of look back in history, this does resemble a little bit, you know, the early internet in the early 90s where you had

AOL and Netscape and each had their own protocol implementations and each had their own websites and each had their own even like HTML implementation standard. How do you think this will evolve? How will we overcome this? Well, you know, are we expecting, can we expect like browsers like like Google Chrome and Firefox to start implementing these protocols or are we waiting for a new generation of browsers to emerge on this? I mean, really what we've built, we use Chromium for the for the, for the D-server. So it actually, It's a Google Chrome browser that works best with it.

And so our approach is that you can take a module wrapper for any of the other protocols, plug it into the D server, and then your standard Google Chrome web browser will be able to display whatever that module wrapper has been written for. And you just access it through the VM and Local Host. So it's not like we built our own browser from scratch. We use Chrome, normal ordinary web browser. But the D server, which is sitting behind it, allows that normal web browser to go talk to all of those other protocols. So the D server is displaying the D-Serveerrower through Chrome or another web browser,

and then the D-servers what sits underneath it. So we can talk to Ethereum, Bitcoin. I mean, we're really big on cross-platform interoperability. But your browser has to have implemented those protocols in order for your browser to be compatible with it. You have to have written a module wrapper for the D-server. Right. in order, and then have a DAP, which, so the application will need to be able to talk to all of the various APIs for the different protocols. And if that happens, then you can put them through a regular web browser.

So we haven't built, the D-Server is the web browser, but it's only in the sense that it displays through a normal web browser. It's not a standalone browser. So yes, it's possible that, you know, Google or Firefox or someone else could create a D-server button. And then you could have your D-Server button, which allows you to go and do various other things. at the moment you don't even need to do that. You just go Local Host 3000 and hey, presto. You get your D-Server administrator's screen, and then your DAPs are in a little box on the side.

So that for us is, you know, we didn't have to reinvent the wheel. And it can talk to all of these other protocols just, you know, through stuff that most people already have on their computer. Okay. Well, it seems to me like probably the next logical step is to create some sort of a standard protocol. I mean, I don't know what the equivalent would be. in the traditional web world, but a standard protocol that every browser manufacturer would

implement and which would be able to talk to just about any protocol. I mean, we've talked to, all the protocols are different. So you can't have a standard protocol for protocols. I mean, or you could, but I think that would involve a lot of developer teams saying, well, giving up on their visions of the way things should work. And so the D-Server is designed to let them, and the way that they think their protocols should be structured, then create something which allows the D-Serber to talk to their protocol as they envision it and as they wish it to be. I don't think that moving to a standard, just in the same way

that we don't have a standard cryptocurrency, we're not going to have a standard DAP, but we have to have a way that those DAPs can communicate with each other in a uniform way. And so the important thing, you know, Pellonius is a protocol of design. It is not a protocol itself. It can be changed by the developers if they choose. They can set any consensus parameters they want. We're hoping to have variety in the kind of op codes that are available in the end. This is something where we want it to be as open as possible so that it requires work. You need to actually do the work, write the module wrapper, and then write the DAP, which is designed to plug one protocol counterparty into Ethereum or Bitcoin into Dogecoin.

So we don't want to tell people how their protocols are supposed to look. We want to give them a way that they can plug their protocols into other things and develop applications which are free to use, which leverage the utility of all of these separate protocols. And this includes BitTorrent, IPFS, you know, distributed file stores as well. So Preston, one of the things, and I think this also partially comes from your background as a lawyer that you guys have seemed to emphasize a lot is the legal side, right? So integrating the legal system.

So first of all, what's your view currently of the DCS? decentralized app space from sort of legal standpoint. And how do you think decentralized apps would be implemented? Or let's put it. So yeah, first of all, what's your view of decentralized apps space from a legal perspective? And second of all, the crowdfunding aspect and having its own token is like very central to decentralized app. So would that sort of thing also be built on top of, um, adop of IRIS?

I think we'll start with the second question before we go to the first, because it's a simpler answer. Personally, and we have different opinions on this in Eris Industries, I'm personally not legally comfortable with the crowdfunding model for a lot of the reasons that there's very few critics of that model have in that you're selling a, what is effectively, you know, you're selling something to people who are not sophisticated investors in a very high-risk environment and quite irrespective of the legal niceties of that approach. I don't think it's a wise approach. So it remains to be seen what will happen to startups that have followed that model. But I think that the more appropriate way to do it is to have an app which is free to

your users where you secure private funding that knows the risk they're getting involved in. From a legal perspective, more generally, I think a lot of the space is looking at a legal problem, which is asset transfer, because assets only have existence in the eyes of the law. there are legal concepts which depend on how they were created and how they came into the hands of the person who is then trading them. And this is especially true in finance. And I think that a lot of engineering solutions have been proposed, which rely on the base premise,

that you have a token of some kind, which is a non-zero value. For example, Bitcoin. And then what you do is you can replicate the economic substance of one of these transactions while disintermediating a third-party provider. The fact is there's a risk to that, which is that any user who does that. So, you know, let's say on the one hand, you have dollars and on the other hand you have gold. And you set up all of this computing architecture around it and then put a token in the middle, which is designed to replicate these assets and then mediate the trade with some price feeds and God knows what else.

You are actually exposed to movements in all three of the prices, whereas if you simply have a bilateral peer-to-peer trade in the real asset itself, then you're only exposed to the movements in the one. or over the life of the transaction if it's something like a derivative movement's in two. So it's using something which is actually very easily circumvented by simply having an enforceable claim, which requires the possibility of enforcement, which requires a third-party administrator of the database in question in order to give effect to that enforcement. So it's, you know, this isn't a technical thing. It's not a computing problem that can be solved.

It's a legal structuring issue. And if you're going to structure it correctly, you have to have the third party who can step in and amend that transaction on the provision of a court order. So that's why we took that approach. It's not something where we're like, yeah, we think decentralizations this and decentralization is that. It's a simple legal technical issue, which is that if you're going to have an asset, you need to have some kind of enforcement mechanism to deal with the full complexity of what that asset represents. A token is maybe a representation of something, but in most cases, let's say you're dealing with a debt obligation. You want to move that around

in a blockchain. Debt obligations are hundreds, if not thousands of pages of paper. worth of representations and obligations. They're tremendously complex. The placement of a comma, or A or the, one word in the wrong place can change the way you interpret very significant parts of that obligation. And there are two options. Either you try to script it all, which no one is yet done, and I think would be not worth the effort, or you simply script the payment mechanics, use the blockchain as the mechanism, which renders that transaction more efficient from a cost perspective and then you incorporate all of the legal control that you need by having a third party administrator who sits outside of the transaction but has the ability to amend the database.

So this is why we took that approach. It's a simple question of how things currently work. It's how it works and how it fits within a current legal framework. So if you want to take advantage of being able to enforce your rights, then you need to operate a system that works within the current legal system and clearly what you've come up with here makes that possible. If you don't care about that and you just want to trust the trustless world, then you don't need what you've come up with. You can do it by one of the existing methods. And really the decision here is do you want to take advantage of the legal system if things go wrong?

I think that's what it boils down to. There's some things like Mike Huron's lighthouse, which that's perfect for decentralization. You can see the code, you can inspect it, you know that if that particular crowd fund, and that's not a crowd sale, that's a crowd fund where it's by donation, if that particular project for the,

or improvement on the Bitcoin core protocol, if it crosses a certain threshold, the funds will move. And that's okay, because for that kind of a transaction, you're dealing with a very simple, straight, absolute disposal. if you're dealing with something where obligations start going multiple directions,

and you have 12, 15, 100 parties to a transaction, however many, and each set of obligations between them may be materially different. Then you have something which is so complex that if you want to code it, you can, but I don't see why you'd want to. So it's, you know, these transactions without quite apart from, quite apart from having to translate all this stuff into code, negotiating one of these deals can take a year or two years. So you can imagine what creating a coded framework for them would take in terms of labor power.

And you're talking about teams of people, you know, 10 lawyers per per transaction party and 10 transaction parties per transaction. This is very complex stuff. So the way that you simply deal with that is by leaving the law pretty much as it is, incorporating the law into the transaction and then using the blockchain as the mechanism which carries out payment mechanics and other things which are very entom. title even is very easy to quantify. In England, we have a title database, which is a central database of title. It's not going to be hard to reduce all of those categories to particular

number. Every title has a number. So people who say, well, we've got to quantify title. This is actually already been done in a centralized context. The question for us is how do we use a distributed data store to make that process more efficient and more effective? And it extends to other types of functions, you know, querying health records, that perfect application, where you would want to have a database that anyone can access, but you want a very simple security logic so that only certain people can access certain records. I mean, a blockchain is perfect for that, tied in with end-to-end encryption in a distributed data store, multiple redundant, automatic, requires no oversight, like, great, super, go for it. And so it's that kind of economy where

you're going to see a blockchain being very effective. So from our perspective, that's that's how we look at it. Well, if you want to learn more about Aris Industries and what you guys are doing, you can go to arisindustries.com. And what I really like about what you've done is you've actually set up separate domain names for all the components.

So it's really easy for a developer to come in and read the white paper. And actually, there's tutorials, documentation. So, I mean... About a blog post, too. Yeah, and very interesting blog posts as well. I'm actually going to... I mean, I've got some developing skills,

so I may look into this and maybe try to write something. Casey is going to love what you just said. because we had a substantial discussion in the 24 hours up to launch. You know, how many brands are we launching, Casey? No, Preston, it makes sense. This is how developers think. No, no, I love this. I love how you've done this.

And I think it's really clear, and especially what's really important is like the tutorials, right? Like, you know, copy this line into your terminal. And so, yeah, that's really great. Just before we wrap up, there's one article that you wrote. So, Eris Industries has a blog called Doing Business Distributed, or Doing Distributed Business, rather. And you wrote an article called Blockchain Your Business and, just seven steps, which is sort of like, you know, you've got a traditional business. Let's turn it into a blockchain business.

Here are the seven steps you need to go through. Could you just kind of walk us through those real quick? Yeah. So, I mean, basically, this blog post is designed to get people, you know, being a business, we have to get people thinking the way we do. So this was designed to do that. I'm attempting to brainwash everybody on this hangout into thinking about the world the way I do. But basically, the overarching theme is that blockchain isn't.

a one-size-fits-all solution. Bitcoin itself is not a one-size-fits-all solution to your problems. So blockchain's a database, smart contracts, or rather, adapt as an application, an interactive application. And if you want to make use of these things, you have to adopt a developer culture, and you need to start thinking about how you design interactive applications using these databases. So step one is reassess the landscape.

And that basically is what we've been discussing on legal obligations and thinking in terms have distributed rather than fully decentralized. Step two, redefining the problem. Again, Thelonius, which is our blockchain design, can do some pretty interesting stuff. One of those things is you can secure it without mining, which means it's very inexpensive to secure. And the other thing is that you can control it,

so you're not exposed to regulatory or operational risk. And in addition to that, you can amend the application over time. It can change its parameters without a hard for it. And getting that into people's heads, they go, really, what? You can do that? Yes, you can. Smart contracts allow it.

So if you assume that you can amend an application, you can control an application, you can secure it very cheaply, then start thinking about the other kinds of things you can do now that you've got one of these databases in your hands. Putting the user first, this is really about making sure that the users have a consistent and free to use internet, you know, interactive experience.

We haven't built a cryptocurrency. The internet, as it works today, you know, all of, you know, Google Hangouts, what we're using right now is free to us. and it costs money for Google. So in order for applications to be economically viable, they will have to continue to be free. And that's what ERIS allows.

There is some costs somewhere because a blockchain isn't a perpetual motion machine, but that cost will be borne by the developer, and ideally it will be much lower than those costs are currently. Step four, we've open-sourced it. It's free software. Forkack, do whatever you want. That's the way it should be.

Five, this is really, as a result of feedback with financial institutions and other corporates in that they're not resourcing their development arms enough. They've got developers, but they aren't giving them a mandate to actually go and develop and do some interesting stuff. But in order to really leverage this technology, people say, so what can you give us, ERIS? And we say, well, we can give you a database. And they go, great, so what will it do? And you go, well, that's something which you as an organization need to decide. It's up to you to figure out where your pain points are. We don't know them. You do. and then get your developers on this

and actually have your developers solve those pain points with an automatic database. So, you know, people aren't thinking of it in those terms, but now that they have a blockchain that can control, that's really how they need to start thinking. Step six, join the open source movement and save the world. That's, you know, that's the point where earlier we were saying, you know, the difference between a Bitcoin, you know,

credit union in a developing country and an actual credit union in a developing country, you know, a legal obligation can be transferred over a blockchain and if you can get inexpensive market infrastructure into places that don't have it, then what you're doing is you're using the blockchain, you're not relying on tokens in order to do it. There is a cost, that cost will be lower.

And finally, dive on in, the water's great. You know, pretty self-explanatory. We have a Skype channel where we're Eris Industries on free node. We've got a subreddit, our Eris Industries. And yeah, it's an open source project, and the more the merrier as far as we're concerned. You know, this is something which we build, these steps do they follow david johnson's uh dapped uh framework do they i haven't read it

no it definitely you should it is a definitive framework for building depth so you know perhaps there are there are some amendments that need to be done to this list of steps no it's definitely a different model right because uh the david johnson dab model that the whole tokenization is super key and you know he says like oh so I think it's a very different model but but this is very interesting and I think so we will put a link to this article also in the show notes and um I personally I am very excited to see kind of the first project because it's and and hopefully people actually developing applications on this soon and and if we actually you know if he's particularly if we will see applications running on areas we'll see applications running in Ethereum soon

I think that would be fantastic to see. And I hope you guys are going to be successful with that. We're really interested to see what, I mean, the Eris Ethereum connection, you know, there's no denying it. And we're really interested to see how an Eristap and an Ethereum Dap, or rather Ethereum the protocol are going to work together and what kind of added security in particular that can provide for an ERIS app that's used for something. So it is going to be interesting to see, you know, it's very early days.

We've only been around for two and a half weeks. but you know it should be you know but but it should be you know it should be a really exciting year and we're really looking forward to working with everyone from the various distributed protocols on how we can make daps that make their protocols more valuable and more yeah absolutely so if you're interested in that you know please check out the website they're getting touch with him and so thanks so much for joining us today also Sean thank thank you for joining us today you know giving us an update we didn't have so much time to talk you didn't have so much time to talk but I'm sure we'll

have you back on, you know, maybe when this bit of license thing is out, or definitely when the sort of definite version of the bit of license thing is out, we'll definitely have to do a full episode on that. Look forward to it. Yeah, absolutely. So, yeah, thanks so much for joining us. If you, so next week coming up, we're going to have Tim Swanson on to talk about, I don't know, he sent us like a list of 40 things you could talk about.

So I'm going to have to like dive through and figure out. We're gonna have to figure out which ones we should cover. So, but I think it will be a great episode, and we've been wanting to have them on for a while. So if you like to show, you know, please help us out. You know, leave us an iTunes review that helps new people find the show. If you watch this pie video, subscribe to us on YouTube. And then you will also get updates.

We're coming up on 300 subscribers. Yeah, you will update for the live episode as well. And of course, you can always give us a donation either on, episode of Biconda Com slash tips or you know just do it in YouTube if you're watching there so thanks so much I look forward to being back next week thanks guys