Lex Fridman Podcast - #192 – Charles Hoskinson: Cardano

Starting point is 00:00:00 The following is a conversation with Charles Hoskinson, founder of Cardano, co-founder of Ethereum, and a mathematician who is one of the most well-read and knowledgeable people on the technical side of cryptocurrency that I've ever spoken to. Quick mention of our sponsors, Galala Games, All Form, Indeed, ExpressVPN, and A Sleep. Check them out in the description to support this podcast. As a side note, let me say that Charles is not just a mathematician or cryptocurrency innovator, but also a Colorado-based farmer of bison and mushrooms, a gamer, a fisherman, and a world traveler.

Starting point is 00:00:41 When I asked him if he has a nice professional picture of himself, he set me a picture of him in Mongolia with a hawk on his shoulder, meeting the Mongolian president. That to me pretty much says it all, speaking to the humor and the intelligence of a man who's bold, innovative, it does not shy away from a bit of fun and a bit of controversy, which makes him a fascinating human being to explore ideas with. I do want to say in terms of ideas that at least to me, cryptocurrency is much bigger than just the way for a few Americans to make a quick buck through meme-driven speculation. It is technology that enables freedom from oppression, from suffering in the world, because money is power. Mongolia, for example, was a reminder of that for me.

Starting point is 00:01:30 Next day, after talking with Charles, I spoke with Wang Yon Mi Park, who is a North Korean defector, and who spent time in Mongolia as many defectors do, in her and their escape from North Korea. Her story, the story of North Korea, the story of atrocities throughout the 20th century committed by Hitler, Stalin, and others is a reminder that the world is full of darkness, but it is also full of beauty and love, and it is a world worth fighting for in every way we know how. As usual, I'll do a few minutes of ads now, never any ads in the middle.

Starting point is 00:02:06 I try to make this interesting, but I give you time stamps. So if you skip, please still check out the sponsors by clicking the links in the description. It's the best way to support this podcast. We're very picky about the sponsors we take on. So hopefully, if you buy their stuff, you'll find value in it just as I have.

Starting point is 00:02:22 This show is sponsored by Gala Games, a new sponsor and a fascinating one. They have created a gaming ecosystem on a blockchain where in-game assets are NFTs. They can keep trade in the game and outside the game. They are attracting big game designers and I think have a real chance to create totally new gaming experiences. If all the stuff I've done in Diablo 2 and 3 was on the blockchain, my experience would I think be more immersive and persistent, perhaps taking items from one game to another and blending the lines between game worlds. Maybe I could take the items I had in Diablo 2 and bring them back to Diablo 2 Resurrected coming out I think in the fall of 2021.

Starting point is 00:03:07 I'm very excited about that. I'll probably spend a few hours playing that. I'm officially giving myself max 3 hours per month of gaming, so I can still have a little bit of the thing I love without having a destroy my schedule completely. But back to Gala games. I started playing the town simulation game called Townstar. I created Town called very creatively Lexington and started building stuff. I love it. So I'll do my best to release another gaming video soon. Anyway, check out gala.gameslashlex. That's gala.gamesslashlex. This show is sponsored by all

Starting point is 00:03:48 form a furniture company, my favorite furniture company. They shipped to your home real quick, easy to assemble, looks beautiful and classy, feels amazing. Like I said, I just love it. In fact, relevant to this particular podcast with Charles Hoskinson, Charles actually came over with a few of his friends and I felt terrible because I have no furniture in my place. I haven't yet moved the all-form couches that I have in the previous place to this one. So we did this super long podcast with his friends just sitting in the carpet. One of the things I realized with the podcast, especially long form podcast, is everybody involved should be really comfortable. Like you have to create a certain

Starting point is 00:04:30 kind of place where you can just chill and relax. These conversations, to be honest, I know they're being recorded, but in themselves, they're just really enjoyable. And I think whether you have a podcast or not, I recommend you have conversations with your friends or people you find interesting like that in general. In this world full of distraction, deep focus conversation is magic. And having nice couches, like those from all form, is definitely going to be a big plus when you're trying to relax and talk about life. Anyway, go to allform.com slash Lex. They're offering 20% off all orders

Starting point is 00:05:08 if you go to allform.com slash Lex. This episode is brought to you by Indeed, a hiring website. I've used them as part of many hiring efforts I've done for the teams I've led in the past. They have tools like Indeed, Instant Match, giving you quality candidates whose resumes unindeed fit your job description immediately. I think this first phase of hiring is the most beneficial by tools like these, which

Starting point is 00:05:34 is basically quickly bringing you a large set of good candidates. Now as you get closer and closer to the final candidates you select, that's one more, more manual human labor is acquired. It's an art form, I think, more than a science. It's a process I'm going through now for my small personal projects. And if I launch a startup, it'll be a thing that I go through on a much larger scale.

Starting point is 00:05:58 Hiring is damn difficult. You can honestly use all the help you can get. So right now, get a free $75 sponsored job credit to upgrade your job posts at indeed.com slash Lex get it at indeed.com slash Lex terms and conditions apply offer valid through June 30th indeed.com slash Lex. This show is also sponsored by ExpressVPN. They protect your privacy like the websites you visit and unlike incognita mode on Chrome and other browsers that make you think that they're protecting your data and privacy, but they're not. In fact, your employer, your school, your ISP can get full access to all the sites you visit. I know there's at least a few of you backing away from this audio in fear, wandering what the rest of the world knows

Starting point is 00:06:51 about all the dark things you've been doing on the internet. Anyway, darkness of the human spirit when channeled properly can lead to beauty, so do not be embarrassed, but use the right tools for the job like ExpressVPN So your darkness can be yours and yours alone my friend Anyway, go to ExpressVPN.com slash Lex pod to get an extra three months free and Enjoy the simplicity and the beauty of ExpressVPN's design with a big button. That's expressvpn.com slash Lex pod. This episode is sponsored by eight sleep and it's pod pro mattress. It controls temperature with an app, it's packed with sensors, it can cool down

Starting point is 00:07:35 to as low as 55 degrees and each side of the bed separately. It has been in Austin 100 degree weather for the past few days. And uh, the air conditioning works wonderfully, but I can't tell you how nice it is on top of that to have a nice cold bed to look forward to when I finally actually get the sleep. I've been not sleeping very much in the past few days just because of the amount of work.

Starting point is 00:08:01 Napping, yes, but the work or rather the deadlines have been messing with my sleep schedule. When I do get the sleep, I sleep wonderfully, but you know, it's been a tricky dance, but I'm super happy, low stress, enjoying life, enjoying food, so nothing to complain about. But way more important in the amount of hours is the quality, and that's where eight sleep can really help out. They have a pod pro cover, so you can just add that to your mattress without having to buy theirs. But their mattress is nice. Just in case you were wondering, you can track a bunch of metrics like heart rate variability, but cooling alone is worth the money. Go to 8thsleep.com slash lux to get special savings. That's 8thsleep.com slash slash Lex. This is the Lex Friedman podcast,

Starting point is 00:08:46 and here is my conversation with Charles Hoskinson. Let's start with a fun question. If we're living in a simulation, what programming language do you think it's written in? And maybe from a software engineering perspective, what do you think are some of the design principles that operates under? You know, there are a lot of really lovely papers. One came out of MSR, the auto-dactic universe. Did you have a chance to see that? You got to read it. April is 21. It's just brand new, but basically the idea is that the universe is some sort of giant self-learning system that can self-volve, almost like NOMIC. Then you have Wolfram running around saying,

Starting point is 00:09:44 hey, we can come up with these very simple rules and we can reconstruct all of reality at some arbitrary point. So I have absolutely no idea what's right. And I look at it kind of like a formal system and I say, well, if you're stuck within the system, it's hard to actually understand that you're inside the system.

Starting point is 00:10:00 It's kind of like an object language to a metal language. And there's this thing that is outside of it, but because you're constrained and limited by the simulation, you can't really understand the nature of the thing that's outside of it. It's almost like Minecraft. You can build these redstone computers within Minecraft and simulate and emulate things within it, but you really can't go outside of that environment. The people outside of it can formally prove that it's correct or whatever, but the creatures

Starting point is 00:10:26 inside of the system can't hope to perfectly understand and improve something about it. Well, also, the question is, it's a computation question. You know, does P equal Np? Because you'd have to be able to emulate all of these things. How long will it take? Yeah, exactly. And so, I have no clue what type of language you would have to look like, but it would probably not be anything we're used to at the moment.

Starting point is 00:10:48 It'd have to be something else. You would have to have some more fundamental resolution of the relationship, these formal systems and how they get extended. So that's like a 20 second century question. It's a 21st century. Do you like, do you find this even more from my dear compelling? It's a very different way of programming, which is you've set some rules, you set some initial conditions and let it run and see what happens. Yeah, and it's not a new

Starting point is 00:11:09 concept. I mean, like the Santa Fe Institute's been doing that for a long time and you can use it for economic modeling and you can show that in certain cases, there's this concept of simple rules evolving into a complex system is somewhat more predictive than trying to build a complex top-down model for things. And I guess there's some analogies these things in AI where you start with some a complex system is somewhat more predictive than trying to build a complex top-down model for things. I guess there's some analogies, these things in AI, where you start with some simple things and then somehow it just figures stuff out in its environment over time. Much better than if you actually tried to model it with ProLog or something like that.

Starting point is 00:11:39 That is exciting because you get to just do a few things, let the thing run, and then see what happens. That's a lot of fun. In fact, it got so exciting, Wolfram came to us and he said, hey, let's do an NFT marketplace. I said, what do you want to do? He said, I got all these universes to sell. Okay, well, that's going to be fun. We're going to set up an auction system or something like that with him.

Starting point is 00:12:00 I think maybe end of this month or next month we'll figure out how to do NFTs on Cardano with Wolfram universes. So as soon as we can sell one, I'll give you one and then we can all just claim that we're living in some sort of Wolfram simulation. I don't know how much money I have, but I'm gonna give everything I have to get Rule 30, which is one of his universes that he's created. One of the ones, one of the first ones where he discovered some Interesting complexities. I think world 30s turning complete or is that 45? I can't remember which one You know your stuff. Yeah, actually. I'm not sure if they proved anything about a little 30 in terms of what there's turn complete or not Okay, but there's fun competitions on it Which is trying to predict something about rule 30 about the way it evolves and so far nobody's been able to do it

Starting point is 00:12:44 Just like looking at the middle column try try to predict as the system evolves, say anything like conclusive about the future of the systems that evolves. It's fascinating. It's both beautiful that simple rules can create that kind of complexity and it's also sad that we can't like make perfect sense of it like perfectly predict the future. Even though it's all simple and deterministic, we can't say something conclusive about like when the thing will end. When will this little cellular tomatah like evolve in certain way and then nuclear weapons will be invented and they blow each other up and then they'll just be this empty one deceleratomata Well, doesn't that make it fun though? Yeah, it's fun, but when you're trying to create and we'll talk about something that

Starting point is 00:13:33 operates the economy and the way humans transact and cooperate and fall in love and work together, then you'd like to be a little bit more formal, try to say something conclusive. If this entire universe is just cellular automata, then being conclusive is kind of hopeless, generally speaking. And the hope is, I guess, that there will be pockets of within the cellular automata where you could be predictive, where you can be, where you can formally show that something is true, and then you can rely on that, you'll be resilient and all those kinds of things, even though the rest of the thing is a giant mess that's unpredictable. Did they call that Laplace's demon? Yes, well I wonder what the demons up to these days.

Starting point is 00:14:17 Okay, thank you for entertaining me with that. But sticking on philosophy, you've also mentioned, among others, that Bertrand Russell and Saul Kripke are two of your favorite philosophers Maybe you can comment on what ideas are there as you find insightful and also what do you use the difference because you're both an engineer and a thinker so what to use the difference between philosophy and computer science yeah, so yeah So what to use the different routine philosophy and computer science? Yeah, so yeah, there's both a deeply human element to both Russell and Saul, and then there's this, of course, amazing work that they did in the late 19th and 20th century. And you can't really talk about Russell or Saul without also mentioning Vickenshtine and Tarsky, because when you actually

Starting point is 00:15:02 look at these guys and you put them together, what they were attempting to do was increase the level of precision we had in analyzing both formal languages and also language in general. And so, eviction style makes no sense at all to me. So, there's amazing people out there that somehow can parse that, but he doesn't make sense to himself either. I think you're right about that. However, Kripki has Kripki in Stein. He has his whole building on that, right? And he built a whole higher. And at least there, I have modal logic. And I have the little boxes and I have the diamonds and I can do a computation and I can kind

Starting point is 00:15:35 of reason about things that are people are saying. But really, it was all just about precision and the nature of truth, precision, the nature of necessity and possibility. And the magic of these statements is that you can then start getting a better understanding of basically how far a formal language can take you. And so that's the work of it. And David Hilbert also did the same thing. And in Russell, he got his career started working with the Alfred North Whitehead. He was a logician.

Starting point is 00:16:02 And there was this whole desire in late 19th century mathematics to formalize mathematics and a completely new and better way. And they started with geometry and Hilbert's geometry was like a complete system, although recently discovered as a few holes in that. But for the most part is complete and the axioms are independent and they're consistent. And they said, Oh, well, now we can do this for all of mathematics. And Russell and Whitehead wrote this huge set of books, like two big books, Principia Mathematica, thousand pages, and the conclusion is one plus one equals two.

Starting point is 00:16:35 So they linked Seth theory and arithmetic and logic all in these beautiful ways. Then little by little, as we entered the 20th century, logicians started chipping away at this idea that you could actually construct a complete system of mathematics. First with Gertel and then later with the work of Turing and Church and others, they said, oh, you're not complete. You're not Decidable. And so suddenly, Russell was left in this really bad position where his early life's work was basically forgotten. So he had to kind of reinvent himself and so he wanted to ethics and he went into different fields of philosophy. And he became just titan in analytic philosophy. And he was also a great pacifist. And he was just a phenomenal writer. You know, if you read why I'm not a Christian or any of his other attacks on metaphysics, you know, he said, look, I can only

Starting point is 00:17:19 deal with the world I'm in in the senses that I have. And if I can deduce it, I believe it, if it's outside of that, I really can't make meaningful statements about it. And he'm in in the senses that I have. And if I can deduce it, I believe it. If it's outside of that, I really can't make meaningful statements about it. And he said it in a lovely English prose that you would expect of a man of a stature. Now, Soul Crickery, it was like the complete opposite. This guy's really down to earth, dude, not aristocratic at all. And, you know, he was one of those guys that just could have done anything because he was so, he's so brilliant. I guess he's still alive. I think is 80 something. Yeah, exactly. Yeah, he's getting up there, man. But I mean, literally when he was in high school, he wrote these papers and logic and Harvard contacted him said, hey, could you teach graduate courses at Harvard. And he said, no, I really would like to finish high school first before I go and teach grad school at Harvard.

Starting point is 00:18:02 And so this is just one of those guys that you can see through his work that he can think deeply about anything. It's like the gal wall of philosophy. And he chose to try to clean up a lot of the messes that Tarski and others couldn't resolve. He said, let's really get serious about the nature of truth. Let's really try to resolve paradoxes. Let's really try to build things in such a way

Starting point is 00:18:22 that the work that we leave behind can actually be built upon and it's not thrown away Every 50 years or a hundred years. It was a St. Frutarsky comes in He says we mathematicians love this concept of truth But yet we've never really created a nice rigorous definition that that doesn't have paradoxes embedded inside of it So we had to invent metal languages and object languages all these notions and so forth So I really like those those four if you think about them and there's a lot of great lessons. And where it's relevant today is,

Starting point is 00:18:51 you have human beings and you have computers and they're trying to understand each other. And computers live in the formal world and human beings live in the natural language world. And those bridges between those two are still not completely clear. And so a lot of the work that these guys were doing at 20th century and 19th century

Starting point is 00:19:06 had nothing at all to do with that. But gives you hope that perhaps a bridge can exist between those two worlds. And maybe there are some nice tools for that bridge to be built upon. And maybe that in some way will allow computers to better understand us. I mean, there've even created languages,

Starting point is 00:19:21 natural spoken languages that are completely ambiguity-free, like Loachbond and things like that. What? Yeah, right. L-O-J-B-A-N Loachbond. It's based on a language called Loglan, and it's a spoken language that's equivalent to first order predicate calculus. Oh, interesting.

Starting point is 00:19:37 So no ambiguity is it's logically consistent. Yeah. Loachbond. But can you still have fun in it? You can get, can you write poetry or what? Yeah, there's people's people who actually write poetry in lowgebot. I'm gonna switch to that Yeah, I can't pleading in it. Yeah, there you go So you know, there's a lot there and they're just fun to study and think about and unfortunately if you go down that rabbit hole It you'll spend way way too much time and there's diminishing returns now the second question

Starting point is 00:20:01 You asked was one on theoretical computer science to, I guess, engineer philosophy. No, no, no, no, no. So, first step, you said humans and computers. Right. So, theoretical computer science is theory of the computer and philosophy is the theory of the human. And then we can dissect different stuff about the computer, but in terms of these two worlds

Starting point is 00:20:22 of the theory of the human, which is philosophy and the theory of the computer, which is computer science, what do you think is the difference? Like as we try to bridge that gap, as you mentioned, what is going to be the biggest challenge? Like can we formalize love? Can we formalize music, art, poetry, all that kind of stuff?

Starting point is 00:20:42 Or is that a human nonsense that we need to get rid of? No, I don't think it's human nonsense at all. I mean, there's even attempts to create algorithmically generated music. And, you know, the question is, is love just strictly a chemical phenomena? Is there something like metaphysical about it or, you know, transcendent of some sort of formal system? I mean, computer science is just saying, hey, we have this notion of computing. We have this brain that we've constructed, this formal system that we've built, and given that we have it, what can we do with it?

Starting point is 00:21:14 And so some people worry about the roots of the tree of knowledge, the great yigzole of computer science. They worry about the roots and say, how far can we grow them? And let's keep adding these new models of computation. And other people worry about the roots and say, how far can we grow them? And let's keep adding these new models of computation. And other people worry about the trunk of the tree. And some people worry about the leaves of the tree. And the more advanced the field gets,

Starting point is 00:21:33 the closer and closer it gets to the people who constructed it. Us, we have better image processing. We have better ways of handling speech detects. And we have better ways of computers kind of understanding the intent of what a human being is saying. And then the question is, well, how will a computer understand love or poetry or music? Well, it'll understand it the same way we understand it. You have to get a computer to grow up to a point where it can learn the way we learn or as close to it as possible. Then you just expose it to the things that we were exposed with and that at some point the computer will start creating things.

Starting point is 00:22:07 So the question is, well, how do you quantify creativity? I have no clue about that. But it's a- You make it into an NFT and see how much it sells for. That's one way. But basically, yeah, there's so much of a subjective and that's a fascinating whole area of that I'm fascinated with this human robot interaction is how do we create compelling experiences that are subjectively compelling whether it's art or just to humans talking or to humans interacting in some kind

Starting point is 00:22:35 of way to maximize the richness of the subjective experience. And I think that could be an optimization problem that could be solved. We're solving it all the time. Human civilization is constantly trying to we're constantly trying to impress each other when a younger trying to get laid. Right. Whatever fall in love, impress your boss at work, by all the awesome stuff you do, when you were trying to optimize that problem that's purely for the most part is subjective. Right. Did you ever watch Blade Runner 2049? Yes. Yeah. Did you remember the whole relationship between joy and K?

Starting point is 00:23:07 You know, and like, did she really love him the hologram or not? Was it like fake love or real love? Fake it till you make it. It was my view on love. No comment from Charles. So let's, let's go to the difference between theoretical computer science and software engineering. Or I don't know if you draw

Starting point is 00:23:27 a distinction, but if we look into this computer world now, is there a difference between theory, things you can say formally, and the pragmatic implementation of that theory into actual systems that people use, which I guess we'll call software engineering. So, you know, the engineer, they're obsessed with the domain of, well, what do you want to accomplish and who are you accomplishing it for? So they live in the world of people if they're good engineers.

Starting point is 00:23:52 And they say, okay, what's the experience, you know, how are we going to use this? Why are we going to use this? What's the commercial application? What's the non-commercial application? And you collect all these business requirements. And once you've done all of that, the better job you do, the more self-evident it is

Starting point is 00:24:09 of how do we apply the toys and tools of computer science and other such things to actually resolve that. And the point of theoretical computer science from the software engineering domain is it can tell you kind of where your guardrails are. It won't make perfect programs, and there's no such thing as that, but rather it can give you kind of where your guardrails are. It won't make perfect programs. And there's no such thing as that. But rather, it can give you a good notion in sense that your program has some desirable properties. Like, maybe you can prove that it can terminate

Starting point is 00:24:36 if you're dealing with total programs, or maybe you can prove you'll never have a buffer overflow, or you know, you'll demote divide by zero somewhere or something like that. Some event won't occur that'll cause a catastrophic failure in your system. But there's always this combinatorial explosion between what you can test and think about and what you can actually code. So the stuff on the left-hand side lives in a different cartonality, a different universe. There's something significantly larger there. The tools on the right-hand side, we have property-based testing and these SAT solvers. We have all this great stuff here

Starting point is 00:25:09 in formal methods, LAN and computer science theory LAN, but there's only a small subset of things that they actually give you good answers about. So the balance of the two things is basically saying, well, what do you care about and what are you okay throwing away? That's the art of engineering and building these types of things. So, you know, cryptocurrencies, we deal with these complex distributed systems that have cryptography in game theory and Byzantine actors. So the balance there is saying, okay, what can't fail in that system? And that's the kind of stuff that you want to apply as heavy a tool set as you can because when that stuff fails, you either have a loss of billions of dollars, privacy, or potentially

Starting point is 00:25:50 even life depending on how these systems get adopted. But then other things, what can fail? Is it okay if the block doesn't get made every now and then? Is it okay if your latency goes up or your network suddenly becomes a synchronous and you disconnect from it and you have to restart the computer or something like that. That's probably okay. It's an inconvenience and burden to the user.

Starting point is 00:26:12 If you actually try to chase that tail, you'll end up spending 10 years chasing phantoms and ghosts. Meanwhile, the whole world moves on. It's really figuring out those balance of the two. What's really beautiful is that the formal methods tools have gotten so much better over the last 20 years in particular, mostly because of incredibly high investments from Microsoft and Google and big universities, because these guys are building these gargantuan systems, if you look at the Googleplex or what Amazon has or others, and they have so much value, so many users, so many things going on, and no

Starting point is 00:26:45 person can keep that in their head. And so you're talking about systems may have 10 million lines of code, 15 million lines of code, millions of nodes connecting, faulty processes happening all the time, hackers breaking in on a regular basis. So when you're trying to model all of that, trying to ask yourself, what formal guarantees and properties can I get to simplify this system as much as possible? So instead of the applications of formal methods flowing you down, in many cases, it actually massively reduces your debugging time and your ability to find where errors occur. In some cases, you can't find where errors occur and set these

Starting point is 00:27:18 massive concurrent systems. And you say, well, we're a cryptocurrency is going. We're talking about just the same thing. But we're talking about a much more hostile operating environment. We're instead of it running in a pristine data center in California somewhere, it's running on your cell phone. It's running on your mom's phone. It's running your dad's phone. It's running on some computer and Mongolia

Starting point is 00:27:38 that may have good internet on Tuesday, but not any other day. So when you live in that kind of environment, you really do need to think carefully about a whole new class of protocols, and then you need to think carefully about a whole new class of tools and techniques to test the reliability of those systems. And you need to separate the world and say, what is high assurance and cannot fail because if it fails, people lose money. And what is low assurance, and it's okay if that falls apart. The other thing I'll mention is there are perverse financial incentives in our industry, because the reality is when something blows up, the people who built those things that blow up

Starting point is 00:28:12 usually get paid up front. So what they're focusing on is time to market, speed to market, and getting tokens out and getting them liquid. I mean, then people come in, they buy it, but if there's an incian bug and some defy protocol, it'll probably be discovered six months later or something like that. It blows up who suffers? The users. They already got the people that created that already got paid. Exactly. That's why you pay the guy who makes the

Starting point is 00:28:35 brakes software for your train last. And you make sure he writes the train every day. So that that's that you're basically describing the complexity of a distributed system that's that you're basically describing the complexity of a distributed system that's fundamental game theoretic. And like if you think about turtles all the way down, humans all the way down. I mean, you at the very bottom is still human nature. Is there something you can say formally about human nature to try, you said, can't, there's

Starting point is 00:29:02 certain parts of the system that can't fail. You know, some people talk about nuclear war in that same kind of way, that there's this game theoretic construction of mutually-assured destruction, oh, that rhymes, see, I'm gonna pull it. That system can't fail because we're gonna blow everyone up, but you can't formally say for sure it's not going to fail. Right. So like, you're basically trying to chase, like statistically reduce the probability that these particular critical aspects will fail. And then you test, I guess, by deploying in the real world a small scale to see where things go wrong. Yeah, it's a great question.

Starting point is 00:29:39 And the problem with game theory and mechanism design is that you can develop this concept of a rational actor. And I don't think in my life develop this concept of a rational actor. And I don't think in my life I've ever met a rational actor. There's a rational actor on Tuesday, but any other day of the week who the hell knows. And there's even, I think there was a book, Freakinomics, and there's a few of these things where it just shows again

Starting point is 00:29:55 and again where people behave in ways that are against their best interest. So then you have these protocol designers, and they say, well, we need an honest majority for this thing to work. And they say, okay, well, we'll create this incentive model and rational actors will behave with that incentive model. And they say, well, the individual won't do that, but the firm, the government, the entity will. The problem with that is we have a lot of counter examples where the system was actually

Starting point is 00:30:21 behaving in weird ways. Like we almost completely eradicated the human population twice in the 20th century. Once during the Cuban Missile Crisis, and again in the 1980s, there was a Russian colonel and the installed a new satellite system. And it said, hey, the Americans are launching Missile status.

Starting point is 00:30:37 You need to turn the key and launch all the missiles in the silo. And he said, oh, that's not right. That doesn't seem right. And he was reprimanded for not launching the missiles. So in both cases, a single person stood against the systems of superpowers between us and nuclear annihilation. So in general, we're really bad at building these types of things.

Starting point is 00:30:58 So what you look for instead is they can the system be self-correcting. It's not about avoiding a problem. It's more about can the problem be resolved? And that's how nature engineers thinks. It gives you an immune system. It gives you the ability to heal. If a rainforest has a fire or some catastrophic event, the ecosystem will find a way to patch things up.

Starting point is 00:31:19 So it's a better question of how do you align the incentives over the long term of a system where all the actors within the system, when an event occurs that disrupts it, have an incentive to push it back into a healthy, productive, useful state, which is going back kind of to that complexity theory stuff that we began with and a little bit about, you know, how do you handle modern economics? Like, for example, we knew this coming into the COVID crisis that there would be catastrophic economic disruption throughout the entire world.

Starting point is 00:31:48 And the developed world, it was print lots of money and hope that God it works. And the developing of world is trying not to starve to death. Over 100 million people were pushed into acute starvation. So acute hunger, terrible situation. But every economist knew we were going into that. So the question is, how do you restart the system? How do you realign the system and so forth and make sure that it doesn't collapse at some point?

Starting point is 00:32:10 So it's an imperfect, inexact science. And that's actually one of the things that makes our industry so much fun is that these are kind of like micro experiments for the macro. In the years past, you never got a chance to experiment with monetary policy. I mean, it's like every 20 years, 30 years, you'd have some conference, usually in a cool island like Jamaica, and be like, okay, let's go talk about monetary policy and amend the Bretton Woods agreement. These would be nation states, invitation only.

Starting point is 00:32:38 And now you have over 8,000 cryptocurrencies floating around all with their own monetary policy and their rules. It's very Darwinian. A lot of dying Some are succeeding Anomalies happen like dogecoin and you say God is this temporary is this permanent? Why doesn't this horrible thing die and then other things you think would be absolutely successful and just take off and be in the top 10 Don't really get as much traction like Algrand is a great example of that. I mean Sylvia is

Starting point is 00:33:03 He's incredibly bright guy. Every time I go to MIT, we have dinner and, you know, his work is legendary and it's just beautiful and elegant. And he literally has all the people. He went and hired Tal Robyn and, you know, she got an IBM research and Craig Gentry, the guy did homework encryption under damn when he's there. There's all these amazing people on that team and they have money in the VCs. So you'd say, okay, that's a contender. But if you look at market adoption, Ethereum classic sometimes is above it.

Starting point is 00:33:32 And other things are above it. So it's- Then there's this weird Darwinian evolution-produced douche coin organism that's just like stomping all around. Evolution doesn't make sense. Exactly, but maybe it's worth a problem, not evolution, because the market's the market, and you can scream and cry and pound and stamp your foot and said, this makes no sense, but

Starting point is 00:33:54 that's the way the world works. There's plenty of mountain climbers that didn't want gravity to apply to them, and it's the same situation here. There's plenty of people in these marketplaces that had the best of intentions, the best team, the best technology. And for whatever reason, they didn't get that adoption. So the question isn't the local, it should be the long term. And will the system over time converge to a state

Starting point is 00:34:16 that actually is useful and meaningful to society and actually solve problems for it? And that's what we try to figure out is, how do we perturb these things in a way to kind of push them in that direction. So before we go into this fascinating Darwinian evolution of cryptocurrencies, let me ask you sort of a basic programming question. There's a fascinating aspect to your work with Cardano that use Haskell as to build the infrastructure, but even stepping back more, looking at this landscape, another place where Doug Wynian Evolution operates, looking at this landscape

Starting point is 00:34:52 of programming languages. You as an engineer, you as a philosopher, both, what programming languages do you think are interesting, and more practically, what programming languages, if you were to advise students today, should they learn? Yeah. So there's the pedagogy of learning how to program and to express the theory of computer science. Like, you have to learn how to write algorithms. You have to learn what data structures are.

Starting point is 00:35:17 You have to be able to do analysis of these things. And that, probably, I think the debate is over Python is probably the best language or JavaScript to get started with because they're very useful. The libraries are amazing. There's just tons of online materials. Even MIT is now teaching their introduction to computer science and Python. And they used to do Lisp.

Starting point is 00:35:38 I mean, these guys were hardcore. That's the love list. Oh, man, it's great. You know, these are your father's parentheses. They're elegant weapons from a time long ago. But you know, that's a great starting point. And it's not about falling in love with a language. It's just falling in love with computing.

Starting point is 00:35:53 It's about falling in love with having a dialogue with a computer and thinking about, well, how would I solve that? How would I interact with that? What does this need to look like? Functional programming is what we've chosen to use for Cardano, mostly because we're living in the academic world. We've written 105 papers. And the problem is you have to translate that work into code. And the gap between an imperative language like a C plus plus or C, and these academic rigorous papers is extremely large. And so there's going to be a

Starting point is 00:36:23 lot of symmetrical ambiguity between those two. And what I mean by that is that you might end up implementing a wrong thing. You might think that what you've built is the paper, but the computer's not going to tell you that because the paper is written in pros and maybe typed up in late tick or something. But there's no proof chain evidence chain that you can show that there's no ambiguity. When you look at a functional language, you're a little closer to math. And so, as a consequence, the translation of the papers that we spent so damn long writing and writing proofs about and so forth, to code is much smaller.

Starting point is 00:36:58 Now, the downside is these functional languages tend to be a bit more academic and they tend to have not necessarily the best windows support and the libraries aren't so good and also they tend to be a little slower when compared as a whole on average to languages like C for example. So it's really a question of okay what are you designing for for version one? Are you designing for performance and are you designing for developer accessibility? Are you designing for correctness and are you designing for correctness, and are you designing for a high fidelity representation of the protocol? Okay. So, Haskell was chosen as kind of the version one because we knew that the kinds of people

Starting point is 00:37:36 who think about that are also the kinds of people that would have an easy time reading a paper like a War of Boris and working their way through all of this. And they would do a pretty good job running a formal specification and then translating that into running code. Then once you have that, you have a blueprint that you can actually reason about, maintain. And if you really wanted to, you could then turn that into a Rust code base or into a Java code base. Going the other way around would be kind of pointless and counterproductive. The other side of it is that

Starting point is 00:38:06 cascal code or functional code tends to be significantly more concise. I actually have a real life example of that. If you take a look at Mantis, we implemented a full Ethereum node in Scala. It's only about 14 or 15,000 lines of code. You compare that with C++ Bitcoin. I think that's 120, 15,000 lines of code. And you compare that with like C++ Bitcoin, I think that's 120, 150,000 lines of code. So it's almost 10 times smaller.

Starting point is 00:38:31 And so less code, less to read. And you tend to read code significantly more than you would read write code. So it's always an advantage for a maintenance, understandability, documentation, and other sort of things when you have more concise code bases. And also, it's a lot easier for you to apply stronger tools to a functional code base, like static analysis or property

Starting point is 00:38:56 based testing or these types of things than an imperative code base. But the thing is, it's almost like a religion, it's like, or language is like saying, what's French versus Russian versus English. Everybody has their adherence. They say, oh, they have the best poetry here. Russian, yeah. Yeah. There you go. Always. Everybody has their favorite tools, their favorite languages, but it just comes down to what problems are you trying to solve, and what problem domain do you live in? If you're inventing new protocols based on science,

Starting point is 00:39:24 you're going to take the time to write a paper, go through the peer review process, as you've done personally, you know, how hard it can be to get into a conference and go through that and get your ass kicked. Then you also have to apply the exact same level of care to the engineering side in terms of the implementation of that, or else you will make a mistake and that mistake will probably be an exploit in the system that destroys the security properties of the system. So we really had no choice but to go to some notion of functional. The question was what's the Goldilocks language? Do you use a hybrid language like Scala and F-Sharp or Closure, where you still have some connection to understandable things like .NET or the JVM?

Starting point is 00:40:02 Or do you go to an overly academic language like Idris or Agda or, you know, Isabel. And there you can really dial up the correctness and write all kinds of crazy proofs. But by the way, it's like the seven people who write your code, they go on vacation a lot, you'll never get anything done. So Haskell kind of felt like a nice mill ground between those two where we needed to pull into the left. We could, if you wanted to pull into the right, you could as well. That said, it's really amazing to see what the hybrid languages have done. If I was a new student in computer science and I said, you know, learn any language to

Starting point is 00:40:36 grow your career from, Scholar 3 is probably the language to go with. Yeah, it's great because it's like, you want it to be like Java, it's Java. And it looks kind of like a Java program. You want it to be like Java. It's Java and it looks kind of like a Java program You want it to be like Python and script it and you reuse a rep or you can do that You want to go hardcore Dot, you know, dependent object types and do like weird proofs and stuff in the functional you do all that You have access to all of these things and Martin Adirsky is a brilliant guy. He's done some Phenomenal work basically because he was a he was one guy who created the JVM

Starting point is 00:41:06 and he's worked on compilers for over 20 years. He did a lot of really hardcore work and trying to build a concise, nice, modern language that does a little bit of everything. And it's got great applications and data science and an AI. And it's also heavily used in modern companies. Like Netflix uses Scala for all their microservice architecture Yeah, so there's that's a great language and it's easy to pick up and it's easy to hire people into

Starting point is 00:41:31 You just find these Eastern European guys were job for programmers for 10 years 15 years And they got tired of making $20 an hour so they picked up Scala so they can make $35 an hour And they're really good at it, you know, And that's a great gateway drug because quick check in Haskell, you have Scholar, check in Scholar. You can also do model checking. You can also go and use a TLA spec and make it work with Scholar and so forth. So it gets you a little bit of everything and you can then move

Starting point is 00:42:00 around that entire design space in a beautiful way. So the recommendation is maybe if you want to go vanilla, go Python and JavaScript, when you're getting started, it's getting started. That'll get you everything. You can go web scrapers and anything. It's like all this experiment with drugs and undergrad. This was a scholar three comes in. It's a gateway drug to then potentially more hardcore functional languages like Haskell.

Starting point is 00:42:24 Do you think C and C++, C++ still have a role? No, I think Rust is completely Rust. Placed a need for them. Go and Rust. Those are the two twins of doom. I mean, Google created go just to get rid of C. They hated C that much. And then Rust is just a phenomenal language as well. It can be a great motivator.

Starting point is 00:42:41 Let me ask a question from Reddit on this topic. We're going depth first today. Sure. As a developer, why should I be incentivized to create Cardano-based applications? What is on the Cardano developer roadmap? Any other language, I guess this is the key question I want to ask.

Starting point is 00:42:58 Any other language support other than Haskell? Example this person gives us, TypeScript, Go Go Java, Python, et cetera. Also, have you considered a yearly conference focused on developers? Yeah, we saw that Pluto is fast. We did the first one in 2018, 2019. I can't remember. We were going to do one last year, but then COVID hit. We'll bring it back, and we'll probably do it annually at the University of Wyoming for their hackathon there. In fact, just so happens that coincides with the Gogan Summit, so we're doing that I think the third week is September, but yeah, it's great to do an annual conference You can read a lot of cool people together and you can do hackathons and awards and so forth

Starting point is 00:43:37 But to the question in particular Plutus is is like any other language Plutus core you can compile things into it So it's entirely possible to write a scholar to Pl Plutus Core compiler, or a TypeScript compiler, or something like that. But I'm a big believer of separation of concerns, and we don't live in a single chain model anymore. So you have a situation where you probably want to have different execution environments in different chains, so you have different virtual machines there.

Starting point is 00:44:06 And that's why we worked so closely with the University of Illinois about a champagne, Cagori Roshius team, at Runtime Verification. What they did is they said, let's start with something very familiar, LLVM, which has been around for a really long time, and they happen to have created it there with Apple. And let's take that and translate that into the blockchain space.

Starting point is 00:44:23 Okay, then when you have it, then it's very easy to modify compilers of standard languages like the C's and C++'s and other things that do compile to LLVM already and have them run there. So that's a different execution model than what we tried to build for Plutus, which focuses on correctness. Okay, so then all you have to really do is say can both of these models coexist within the same ecosystem? Because then you kind of and I did a video, it was called the Island, the Ocean, the Pond. And the basic idea was say you have an island where everything's perfect. Calypso lives there. Life is great.

Starting point is 00:44:57 You know, people feed you grapes every day, but maybe you can't do everything on the island, you know, and the ocean's big. It has everything, but the ocean's got sea monsters and sharks and Bodimic boat face and all kinds of crazy stuff. That's what yellow is about. It's basically this will bring LLVM into our world, and at some point, the next three to five-year time horizon, we can bring modern programming languages in, but they're going to come in with all their flaws and their wards and their problems. And then the pond was the idea of the Ethereum Virtual Machine. There's some network effect around it and there's some great tooling that's materialized and evolved. And it's not clear if that's the

Starting point is 00:45:35 standard yet, or if like my space or blackberry or all these other things it'll fade away. Well, if it becomes the standard, okay, don't fight nature, just support it. And the same thing that gives you the ability to bolt on to LVM, will also give you the ability to bolt on the EVM. And they can run with their own models, and they're encapsulated, bulkheaded, separated systems, but you can move ADA applications, information between those two systems. And so your main chain will always stay somewhat conservative and have the minimum viable amount of expressiveness required on it to do all kinds of interesting things and also for interoperability

Starting point is 00:46:12 be able to talk to all kinds of interesting things. But it's not trying to be everything to everyone. There's never going to be an ice cream store in the island. You'll have the grapes and the beautiful women, but no ice cream. Now you just like distracting me with the ice cream. So just for, because we'll throw around a bunch of terms for the record, what is Plutus? So Plutus is a programming language. It's kind of a DSL that we built on top of Haskell.

Starting point is 00:46:36 And basically we wrote it after spending about three years thinking about all smart contracts. We were trying to figure out, like, what is the ideal language to express a smart contract? And then we started thinking, well, what is a smart contract? Is it the whole application, or is it just like a submodule within an application?

Starting point is 00:46:53 And usually it's the latter more than a former. You can build a self-contained program like a script. But usually what's happening is you'll have it like a video game, let's say, World of Warcraft or something like that. He said, hey, maybe I want to actually create gold and World of Warcraft that's actually a currency. Okay, so I'm going to issue a token.

Starting point is 00:47:12 Well, and then maybe I want to create some mechanics behind how people are going to trade that amongst each other so that would be like a smart contract layer and issue an asset. So you have this centralized server running and proprietary software controlled by a single company. But then you've opened your application up to a broader world. And we've done that. I was added a blockchain layer and the blockchain handles the accounting of that asset and the spending policy of

Starting point is 00:47:36 that stuff. So that is a much smaller program than what Blizzard is doing with World of Warcraft. So the point of pollutants was let's create a language where you can write these small to midsize programs and have a high degree of confidence that they behave with correctness. And also, they give you deterministic results on the consumption of resources. You can run things locally and you actually understand what it costs to run. And that doesn't change when you deploy it on the system. If you dial up the expressiveness of the system and you're like Ethereum does and these big, mutable account systems, the problem is you have to have global state.

Starting point is 00:48:12 So whatever you test locally doesn't actually necessarily translate to what you've deployed. So we spent a long time asking, where's the Goldilocks zone? Bitcoin script was too restrictive, and every single time Satoshi tried to dial it up, it led to mega problems. Like, there was a beautiful thing called the Value Overflowing Student in 2010, which led to the creation of billions of Bitcoin, and they had to quickly clean that up and sweep it under the rug and pretend like it didn't exist. But that was mostly because of an issue with how the scripting language was implemented. because of an issue with how the scripting language was implemented. And when you look at Ethereum, it's like this pure game of stomping down these skirmishers

Starting point is 00:48:50 where every update, there's something they have to change or tune, and then it's not clear how you shard such a model. So we said, let's build something that's in the middle of this, and that's what Pluto is basically as. And it's really designed to play very nicely with off-chain infrastructure as much as on-chain infrastructure. So you can look at all those different examples, whether it's Wolfram wants to auction off their universes or Blizzard wants to issue an in-game currency, or you're Uber and you want to start putting peer-to-peer dynamics inside your system,

Starting point is 00:49:20 you're going to gracefully connect to that on-chain code, and it's very clear how those two things connect together. Just so happens, Haskell's really good for this. They have template Haskell and it makes it very easy to embed domain-specific languages and it makes it very easy to wire your Haskell code onto off-chain infrastructure. In the future, you'll be able to have your off-chain run and node or the job of virtual machine or

Starting point is 00:49:42 a done-ed application and they'll just be this beautiful interface and then it can talk to all your on-chain code and that's written in that DSL and you have a high degree of assurance that it's right. Is there like a hello world program in Plutus that reveals the beauty of this balance that you're referring to sort of simple but not too simple, Einstein idea? Yeah, so we did do our first hello World program actually today because we heard about this. Yeah. Um, but you know, there you'd want to have the whole round trip. So you'd like to have an interaction. And I think a video game would probably show it the best. Like if we could re-implement crypto kitties or something like that on it and you have

Starting point is 00:50:18 the soft chain infrastructure and you have your gooey, your front ends running on your phone or a browser and most of that lives off chain. And then, but your crypto kitties, they live on the blockchain, the whole round trip end to end with relatively low fees and low latency, and high availability of service, it never goes down.

Starting point is 00:50:37 That would probably be the best thing to do. And we'll have something like that by August. It's pretty easy to build this stuff. So what kind of off chain interactions are supportive of the pollutants? What are the limits you want to put on the thing so it doesn't get chaotic? Well, that's the beautiful thing. When you have a less expressive model on chain, it means you can do anything you want off-chain. So you started talking

Starting point is 00:50:54 about smart contracts, but let's zoom back out and ask the big question here is what is the block chain and what is a cryptocurrency? So blockchain is just a ledger and really it has three nice properties. Your time stamp, your immutable and auditable, either in a global or a local sense. And so there's all kinds of things mankind has invented where it's really important that when you put some information down, it doesn't change and other people can see it and that you know when it was put down. For example, a property ledger. So when you buy land, or you have rights associated with land,

Starting point is 00:51:30 like mineral rights, or water rights, or these things, you'd like to transitively see, how does it go from Alice to Bob to Charlie to Jim, and so forth, and what was the state of these things as they were transitioning? So how much did they pay, when did it occur, et cetera, et cetera? The metadata that follows that. Okay, well, normally these types of ledgers are so important that they're managed either by governments or regulated entities. And the issues are that while they can be efficient, they're generally brittle, the political manipulation and their brittle to geopolitical events.

Starting point is 00:52:05 For example, when Syria fell apart, the very first thing ISIS did, they started saying, hey, the ownership of the land, it's going to fundamentally change. We've decided that this guy over here now wants all these things. Then when peace comes, how do you unwind all of that? Put it all back together. The power of a blockchain is that it gives you a transnational way of sorting all these details out and putting all together and in place that you know that even if it's inconvenient to a very powerful actor, that it will still stay preserved. This is an asymmetry we haven't had

Starting point is 00:52:40 as a society. Usually kings and empires, they have the ability to decide what's true. And then, certainly, you have this asymmetrical thing that is above them, kind of like a synthetic laws of physics. And once something goes in there, you know that that's there. Okay. So that's the first part of it. The second part of it is that it's auditable, meaning that instead of saying only the high cleric or the president or some very special club of people get to see what's going on, suddenly now all the people can actually see who owns what, where? Like I imagine a tax system where the pro-propagluchus leaked the taxis of all these different

Starting point is 00:53:21 billionaires and said, well, how much they make and how much they pay. Imagine a tax system where that's just done by default or other social systems where this type of information is put in by default. So it's tremendously useful, this type of structure and all kinds of things, medical records, supply chains, just a good thought experiment. I travel a lot of into 52 countries in the last five years.

Starting point is 00:53:43 Imagine if I got sick in Zimbabwe, you know, I could hit by a car or something and I'm unconscious lot of into 52 countries in the last five years. Imagine if I got sick in Zimbabwe, you know, I hit by a car or something, and I'm unconscious, and as Zimbabwean doctor calls my doctor in Colorado, it says, hey, you know, I need all the Charles' medical records. You know, he's unconscious right now, but I need it to treat him because he's quite ill.

Starting point is 00:53:59 They'd say, who is this person in Zimbabwe? I don't know you, I can't give you his records. I need his consent. Oh, no, he's unconscious in the hospital. I can't do it. Well, a broker system that would allow the movement of medical records would be an example of what a blockchain could potentially do in the foreseeable future. Cryptocurrency is just an application that runs on top of blockchain because it turns

Starting point is 00:54:17 out that when you issue property, you also can issue tokens of value. And then you could have a monetary policy. It could be inflationary or deflationary. You're going to demourage, or it decays over time, or whatever have you. And the very same mechanics that would ensure your property records are secure, your medical record access is secure, could also be applied for the ownership of the cryptocurrency. And again, you can either be completely transparent, and everybody can see what everybody owns, and that's what Bitcoin does.

Starting point is 00:54:44 Or you can be as opaque as you seek to be. That's what ZCASH basically attempts to do. It says, hey, let's keep these things as private as possible. But they have relatively the same mechanics in terms of those properties of auditability and time stamping and immutability. You know things won't be reversed. You know that people are going to manipulate the time stamps and you can audit at least enough to know that the ownership is right.

Starting point is 00:55:05 But the way, if you think about physics and the universe, the universe has figured out a way to update the ledger of physics in a way where like a lot of people can be updating it and it stays consistent. Is there something you can say about the task of updating the ledger when a bunch of people are trying to do it? What a bunch of people are trying to do it? What a bunch of entities are trying to do it? Well, yeah, that's the whole point of a consensus algorithm. So whatever ledger you're running, there has to be some mechanism to decide who's in charge. And that's what proof of work does and proof of stake does and all these other systems.

Starting point is 00:55:38 And you break them down basically three steps. And so we'll use Eve for kind of step number one. Hi, Eve, how you doing? And we're going to use Wally for step number two. And I need the monkey, giving the monkey. What's the monkey's name? Daisy, Daisy the monkey. Okay. I like Daisy. Daisy is a very confused monkey. pondering its own mortality just right. And so anyway, the first step is is all about basically deciding who's in charge for that moment. So blockchain is just a sequence of events. The heart has to beat.

Starting point is 00:56:09 The metronome has to click. So somebody has to be in charge. And so generally, you have this notion of a resource. So there's some pool of resource out there. And it can be a token. And in that case, it's a plutocratic system. And that's what proof of stake does. Or it can be computation.

Starting point is 00:56:23 But there can be other resources. But computations, what proof of stake does, or it can be computation, but there can be other resources, but computations what proof of work does. And so you make so many hashes, and then eventually somebody wins, and that person who wins is now the person who basically gets to decide the order of transactions and put them all together from their perspective in the system.

Starting point is 00:56:38 Then once that person wins, they'll make the block, that's step two, and after it's made, transmit it, and it gets validated and accepted. So actually it's quite fortuitous. You have the magnifying glass because at this stage, people are trying to decide is what I'm looking at correct or not. Now there are other ways to potentially conceive of this, but this particular model gives you

Starting point is 00:56:59 kind of a way of thinking of all consensus algorithms in one setting. You can be Algorand, you can be a classic BFT protocol, you can be Paxos, you can be Raffed, you can be Proof of Work, you can be Proof of Stake. It's always the same idea. You have to find someone or some group to be in charge. They'll reach a consensus on order. They have to then do some work, change the state of the system, update it, and then the network has to accept that that's valid.

Starting point is 00:57:29 So even if this process works well, this side will say, oh, you created a Bitcoin out of thin air, you're not allowed to do that. So that's rejected. So there's checks and balances and guards all the way through. There's a meta question of fairness in all of this. So the proof of work people, they're kind of a cult and they say that this is the only truth and everything out here, any other resource is not legitimate or valid. And there's not a lot of evidence to that, but that's what they believe. The proof of stake people, the downside and weakness they have is it's

Starting point is 00:57:58 a plutocratic model. The more ownership of the system you have, the more control you have over that system. And it suffers from the same thing, the shareholder model suffer from, whereas you may maximize short-term gain over the long-term viability of the system. So a really cool question is, can you build systems that are multi-resource? So instead of just pulling from one resource

Starting point is 00:58:19 to select who wins, this 25% of the time, and maybe this 25%, you can do that. In fact, the cryptocurrency space 25%. You can do that. In fact, the cryptocurrency space did that a long time ago. There was a cryptocurrency called Peercoin in 2011, and it was a hybrid proof of work proof estate. So some of the blocks were made with the token ownership distribution,

Starting point is 00:58:37 and some of the blocks were made with proof of work. But you could keep adding. You could put in like, hey, I want hard disk, in my thinking, you put permacoin in or something like that, so create incentive for hard drives. And then you could say, like, hey, I want hard disk in my thinking, you put permacoin in or something like that. So create incentive for hard drives. And then you could say, oh, no, I want to do like a human system, like a proof of merit. Oh my God, now we're up to four.

Starting point is 00:58:53 And you just keep adding. And each of these pools will have different adherence in actors and then you can actually balance out the whole thing. So it's supposed to have in one called, you have many calls. Exactly. And they argue. And the calls argue with each other and we call that a government. By the way, not all cults are bad.

Starting point is 00:59:08 Physics is a cult too. And it's sometimes bad. It's honest at least. Nature is a cult. Nature is metal. It's called the Instagram. So that's really the crux of it. You have a ledger and the ledger is just all about saying, hey, we need to put some stuff

Starting point is 00:59:24 in here and once it's put in here, you can't turn it back. And you know, when it was put in and everybody can see it or some group can see it. And then you need to pick somebody to modify that. So all this chaos will happen, all these transactions are all around the world. And our perception of them are different. There's a beautiful paper from Lamport that kind of talks about this from the 70s. It's like one of the most classic papers ever in computer science. I think it's been cited like 50,000 times or something like that. It's crazy paper. But basically you have to figure out, okay, well, somebody has to be in charge.

Starting point is 00:59:54 Some group has to be in charge. You can do it with a meritocratic, hasherocratic computation thing. You can say, well, if you have coins 25% of supply, 25% of the time on average, you'll be selected to have the right to do this or give it to somebody else, or you can search for other resources. They can even be human resources, like some notion of merit or social benefit. Maybe you get a token for that, and you can wait it with these other systems. That's where everything's going.

Starting point is 01:00:20 We're getting to a point where we've really optimized all the properties here. We've proven all these nice things about it. There's a lot of competition to basically build like the perfect proof of stake system, whether you're Polkadot or Algorand or any of these other guys. But now the next step is to say, well, why do we just have one? We should have multiple resources. The point is, each of these has different trade-off profiles. And so they balance each other. And you end up building a much more resilient system. So it's not winner-take-all with one particular demand. Okay, so there's a million questions that spring up right there. But first, Lingga on the topic and say, what is proof of work? What is proof of stake?

Starting point is 01:00:59 Just zooming in on each of those. And what are the differences? Okay, so they all have the same three properties of, pick someone and charge, do something and validate it. The difference is that the picking mechanism for proof of work is you have to solve a puzzle. So it's basically like buying lottery tickets and you can buy a certain amount every second with your computing devices.

Starting point is 01:01:20 And some of them are ASIC resistance, so you run them on like a laptop or a GPU. And some of them are, you specialized, so you run them on like a laptop or a GPU, and some of them are you specialized hardware that you have to either manufacturer or buy from someone who sells it to you, and that's just how many tickets per second you can get, and eventually you hit those magic numbers, and when you do, it means you have the right to make the block,

Starting point is 01:01:39 and generally you bundle the blockmaking with the proof of work system. Now, you can do this looking for a single, or you can do this to actually shard it and look for multiple block makers at the same time. So there are sharded proof of work protocols, like prism is an example of that. And actually Ethereum got started this way with Spector and Ghost and Phantom, the obvious of these O'Hars work in Jonathan Somalopinski. But the basic idea is you pick some collection of people, they make some collection of things, and there's some way to sort it all out, serialize it and prevent double spends. Great. Proof of stake is the same, but it's a synthetic

Starting point is 01:02:13 resource. So instead of doing things, they say, well, if you had 25% of the hash power on average over a long period of time, you'd probably win 25% of the time. Well, why don't we just introduce some randomness in from some source, and then 25% of the time. Well, why don't we just introduce some randomness in from some source and then 25% of the time on average over a long period of time, you'll win. So it's a synthetic resource. But you still have to do the other two things. You still have to make the block and you still have to validate the block.

Starting point is 01:02:36 The big difference is this step in the proof of work world is horrendously expensive. You use more energy than the nation of Switzerland. And the problem with that is that you have less resources for the other two. And the other problem with that is that if this is horrendously expensive, you have an economy of scale. So what ends up happening is the system becomes less decentralized over time because you have these vertically integrated operations. I mean, not everybody can go build a mining facility on a volcano and El Salvador. Not everybody can go to Mongolia and set up a five gigawatt power plant and a huge data thing. Not everybody has access to the patent today, six that people produce, because what if I don't sell it to you and I have the patent on it or what if I control the supply chain for these things? So,

Starting point is 01:03:18 you'll end up having centralization around maybe ten or five major operations, as we've seen, historically with proof of work. And that means you end up having a ruling class of a mining oligarchy in the system. Proof of stake, if you design the parameters correctly, you actually get more to centralize over time, because as the currency goes up in value, the distribution of the currency tends to get more, more egalitarian.

Starting point is 01:03:45 For example, Bill Gates, when he started Microsoft, he had 64% of the shares. Now, he has less than 5% of the shares. So, this founder drift over time, as the value goes up, divestment occurs, you have more and more and more people coming in. That means there's more people who can participate in the consensus. You can even tune economic parameters. This is what we did with Cardano and Oraboras. We created this concept of K in the system and it's just a parameter. It's like a forcing factor that tends to accumulate a certain amount

Starting point is 01:04:14 of state pool. You can set it to 200 and then 500 and a thousand and so forth. But the basic idea is as the price of 8 goes up, you make K larger, and then you end up in practical terms having a larger and larger set of actors making blocks that are unique and distinct. And the other good thing is this is a virtual resource instead of a physical resource, which means it's portable by a click of a button. So let's say China says mining is bad, we're going to shut it all down. It looks like they're moving in that direction. You have all these people in WeChat,

Starting point is 01:04:45 just like trying to sell miners or trying to figure out how the hell do I move miners? Because they have these huge data centers they've constructed. You can't exactly go and grab a server and take it with you. It's huge. It's a lot of work.

Starting point is 01:04:56 And if the government sees it, well, it's their property now. A virtual resource, you can click a button and redeploy it to a different jurisdiction. So to me, for a virtual asset, it makes a lot more sense to try to tie your security to something endogenous, something within the system, because it's just like the asset, it can move anywhere at a click of a button,

Starting point is 01:05:16 and human beings have a much harder time attacking something like that. Well, so people maybe you could sort of play devil's advocate and say, what is the strength of a proof of work system? Because some people argue that proof of work has because it's outside the system. It's tied to physical resources. It's more secure. It's less prone to to attack by large groups of people. Yeah, that's a great question. And the first question we had was could proof of stake actually work or not?

Starting point is 01:05:44 So the problem was that the engineer is kind of led when the science should have led. And so there were all these POS protocols that came out in the early 2010s. Like, and Peercoin was the first and the NXT and others came out. And there they had suffered from things like the random number generation wasn't good. They had grinding attacks and nothing had stayed and all these other things. And there's a lot of beautiful properties for proof of work from a theoretical sense. We even wrote a paper called G.K.L. named after the author is Juan Grey, an equalian artist and agalusicicists are our chief scientist.

Starting point is 01:06:15 It's got 1100 citations now. It's published in 2015. But basically all it did is just modeled a blockchain and created some security properties for it. And then it started talking about, well, what does proof of work actually do for you? And it turns out it does a lot. It's an asynchronous system. You can bootstrap from Genesis.

Starting point is 01:06:32 So if Eve joins the network and Wally joins the network and Daisy joins the network, then you give them some different chains, like five or ten different chains. They can run a calculation and they will always pick the longest chain, the heaviest chain inside the system. That's a great property of proof of work. Until we published a Orborist Genesis in 2018, you actually needed to solve that and proof of stake with a trusted checkpoint. So some actor had to be observing, watching the whole thing and creating checkpoints.

Starting point is 01:07:03 And then when new people joined in, they would only be able to distinguish between a chain based upon a checkpoint telling them that. So you have to do a lot of really wonky, crazy math to show, and create this notion of like density, to be able to show that that's possible. But there's a lot of properties of proof of work that were super hard to replicate and emulate in the proof of stake world. McCally kind of revolutionized the whole VRF thing. There was a group out of Cornell that talked about better network conditions.

Starting point is 01:07:30 They wrote a paper called Sleepy. We did Genesis. We also did the very first proof-of-the-sakeer protocol, but that was six years of work and like 12 papers. And it's still not done. There's still a few polishing things that have to be cleaned up because this is a physical resource, and there's something there. But there's a flaw to proof of work that is a little problematic.

Starting point is 01:07:52 It's a winner-take-all type of a system. So maximalism is philosophically and computationally built into it. Let's say you have two proof of work systems, and they have roughly the same market cap and hash rate, and they have roughly the same market cap and hash rate, and they use the same algorithm. Then the problem is if the miner comes in, and let's say the miner has enough resources to have 51% for any of these chains, they actually have a perverse incentive to come and destroy one chain, and short sell the asset.

Starting point is 01:08:22 It's called a gold finger attack, and then go mind the other asset, because they're not bound to that asset, they're not loyal to it, and they can make just as much profit mining this as they can make mining the other system, and the markets allow them to profit from the destruction of a system. So that's something that proof of stake doesn't suffer from, because the only way you can participate in a proof of stake system is you have to actually own equity and you have to have ownership in that system. So if you go and destroy Daisy's chain, it would just be a net loss for the most part. Unless you have really messed up markets or something like that. So there's always trade-offs in all these things and this is why I like this concept of going

Starting point is 01:08:59 one to end and having multiple resources because why not have proof of work and proof of stake together if the proof of work is useful, not wasted computation, because why not have proof of work and proof of stake together? If the proof of work is useful, not wasted computation, and why not add other things, like create incentives for network relay. Right now, there's no incentives in the system for you to run peer-to-peer nodes and share data. Right now, it's not a problem, but if you're running like Amazon Web Services level of bandwidth, it could cost you like $5,000 a month in bandwidth just to run a full node or something

Starting point is 01:09:23 like that. No one would do it. So then your system will centralize along the weakest link, whether it be the storage layer, the computation layer, or the network layer of the system. So if you can incentivize the resources differently, then you'll be in a beautiful position where you end up having a resilient system that pays its own bills. So how does Cardano solve the consensus problem? Do you tend to eventually wanting to solve it in the hybrid approach of proof of stake and proof of work?

Starting point is 01:09:52 Yeah, this was a philosophical difference between Vitalik and myself. You know, the problem with the people and the theorist, so it's a really bright and these really bright people, what they do is they try to do everything all at once because they're really really smart And they keep going until they run up against the wall and they realize the problems a lot harder If you're more experienced and that's why we brought in proper academics like agolose and others because they'd been beaten up through life You know the agolose works with David Chom and these other there's really hard work with those guys and They'd already been humiliated and yelled at, had chalk thrown at them and all that stuff.

Starting point is 01:10:27 And so they were humbler to say, I'm not smart enough to solve the big problem. So don't even try. What you do is you decompose it and you say, okay, what's the first problem to solve in a chain of problems that you can compose your way up to a working system? And once you get far enough along, you have something that's pretty good. And then you have an obvious path forward of how do you iterate and improve that system? That's why we started with GKL 15 because it was just saying, we don't know what a fucking blockchain is.

Starting point is 01:10:53 This is what is this thing, right? What's the security properties of this stuff? Like what do we really mean? Then we did a laborers classic, the original laborers protocol in 2017. And that protocol was like a synchronous system and it assumed the nodes were always on and it worked but it was useless because that's not real life. Then prowess came out and then suddenly we relaxed things. These are all by the way names for consensus algorithms. Yeah, the app papers that we published and they're all peer reviewed like GKL was Euro

Starting point is 01:11:19 Crypt. That's a very hard conference to get into and An Orbours Classic was crypto and Prouse was Euro-Cripped and Genesis was CCS. So basically every step of the way was first an academic validation that there was some merit to the work that was done. Second, it solved a particular class of problems, either showing the feasibility of the entire problem. Because when I said, let's do the model first, because let's see if we can do an FLP thing.

Starting point is 01:11:43 Let's see if we can get them a possibility theorem. That's great, because you're done. It's like, those short math papers, we're like, I found a counter example. It's like, oh, okay, this whole thing is followed apart, because you have a two line proof, thank you. So that's what we were looking for in the beginning of the agenda was, let's either prove it's possible

Starting point is 01:11:59 in a straw man case or show that there exists an impossibility result, in which case, we can just abandon the entire inquiry, proof of stake is impossible. And then once you've gotten past that threshold, it goes from theory to practicality. What actual network conditions are you looking at? Are you okay with living with an external clock or do you want to build time from within? How are you generating random numbers, etc., etc.? And every step of the way, each paper you're solving one particular class of problems.

Starting point is 01:12:25 With Prism it said, probably shouldn't know ahead of time who Eve is. You probably shouldn't know who's making those blocks. That should be something after the fact. But if you know ahead of time, you can attack them. You can deduce them because all kinds of problems. So, you know, adaptive security. Also, we move from an NPC,

Starting point is 01:12:43 random number generation, which was great, but very heavy and very slow, and you can't scale to large amounts of people to a VRF based system, which is super fast, but a little dirtier, because Algrant actually did some great work there. There was some good knowledge there. What are the really hard problems? Maybe if you just linger a little bit, what are some of the really hard problems you have to solve along this chain of papers, ideas, the evolution of the consensus algorithm? Yeah, not only are they really hard problems you have to solve along this chain of papers, ideas, the evolution of the consensus algorithm. Yeah, not only are they really hard problems, they actually require different cryptographers,

Starting point is 01:13:09 because you're moving from mathematician style cryptographers, like the Neal Coplitzes and the Adi Shamiris, the people that like start as proper mathematicians, and they really love theory. And that's their thing. And the proofs are dense and they're thick and they're beautiful to practical applied work where you're saying, okay, now this is something an engineer can look at and say, I know how to build that. I know how to think about that.

Starting point is 01:13:33 So that transition from GKL to Orapur's classic to prowess, I'd say the biggest leap was classic to prowess because that was going from a system that would only work in a consortium chain like fabric to a system that would actually work and is working. That's what's implementing Cardano today, you know, $50 billion cryptocurrency and all these people. That was a huge leap. But that paper alone wasn't enough. We also had to layer on the economic model because we said, well, hang on a second here. Not everybody's going to be online all the time to be available to make a block.

Starting point is 01:14:06 So you need some notion of delegation. The many have notion of delegation. You have these stake pools. What the hell does that mean? And so this is a beautiful kind of interdisciplinary notion that layers, computer science, and biology together. And minute that complexity starts going up, you start seeing cell specialization.

Starting point is 01:14:23 So you go from single cell organisms to organisms where you have eyeballs and brains and hearts and each of these tissues do different things. Well, analogously, complex distributed systems start getting specialization. You move from the single cell thing, Bitcoin, where everything is a full node. They all have the same rights and responsibilities. A lot of homogeneity in that system, but you're only as good as your weakest link. You're only as capable as whatever the basic cell can do to a specialized system where you start having these actors in the system that are actually a little different than

Starting point is 01:14:53 the other actors. So you introduce this concept of the stake pool. And suddenly, now you have this actor where you're probably going to be online 24-7. You're probably going to have extra relay infrastructure. There's a trust relationship where you don't own the ADA, but you have a right to use it for something. And a person's made that choice to endow you with that. The minute that you introduce specialization, though, the system gets more complicated,

Starting point is 01:15:15 the game theory gets more complicated. And then you start having to think really deeply and carefully about, okay, well, can this now introduce a new attack vector that we didn't have before? So that leap from classic to prowess and adding in stake pools and figuring out how to handle the game theory There was exceedingly hard to two years to do that. So stake pools Allow sort of from multiple parties to delegate their staking capabilities to others. Can you describe a little bit of how this works? It's kind of fascinating. It's a super simple concept. So you register a pool, and then the pool is there. And basically, they advertise, and they're actually registered on chain with a certificate.

Starting point is 01:15:51 And then in the wallet software itself, you can see all of the pools that have registered. There's over 3,000 of them now inside the system. And then you can click a little tile, and it shows you all the metadata that's in the certificate, and says, hey, I have my own pool. It's called rats, King of the Rats. So you can see all the stuff that's described there. And pools have an operating fee because they're like a business. And they say, well, if you delegate to me, I'll charge this much. So if you get like a hundred bucks in rewards,

Starting point is 01:16:18 I'll give you 90 and I'll take 10 or something like that. And then you make your decision. And whichever one you select, you click, you know, delegate, push the button. And then you have now given your staking rights to them until revoked. OK, so it lives there. And then the stake pools weight in the system is proportional to the amount of stake

Starting point is 01:16:38 that they have delegated to them. And then we have this other limiting factor, k, which says that you get diminishing returns with the more stake you have. So it's kind of like an S function. So you kind of go up and up and then eventually caps and then at some point you get no rewards beyond a certain threshold. So there's an incentive to split pools to different owners after some points.

Starting point is 01:16:57 Yeah. And so that's a complex thing and you have to actually model the game theory out to understand where those parameters should be set. And we didn't know how to do that. So what we did is we bought talent. We went to Oxford and we hired this guy named Alias Casupas, he's an algorithmic game theorist. And he said, hey, would you like to do

Starting point is 01:17:13 some game theory work in crypto? And he's like, that sounds fun. So he's been a year and a half, we built all these beautiful models and we kind of figured out what those curves needed to look like. So figure out like the S curve, the result in a nice distribution of responsibility. So not everybody delegates to the king of their ads.

Starting point is 01:17:29 Exactly. How does it feel to be royalty, by the way? It's not a very impressive kingdom, but you're never less a king. I'll take it because I think it's the kindest thing people call me in this space. Yeah, people love you. So, okay, so that, I mean,

Starting point is 01:17:43 so is that would you say a solved problem? The game theory of stake pools? No, it's, um, the starting and I was getting back to my original point is that you build things and iterations. Every step, if you've done it right, is an invitation for 10 more sexy, fascinating, fun problems. And this is why we have such a great time building labs, you know, we started in Edinburgh. Now we're at Tokyo Tech, in University of Wyoming, and Athens, and we're sending up more labs this year. And all these academics wanna work with us, hey, because we write a lot of really fascinating papers,

Starting point is 01:18:11 but be because we're focused on all these really cool, sexy interdisciplinary problems. We're actually running the problems where we don't even know where to publish the paper. Cause you'll have this paper where there's like these PL guys working with crypto guys, working with systems guys, working with economists. And you put all together and you have this Frankenstein paper monster and we're like,

Starting point is 01:18:29 where do we submit this? Where does this go? Nature. Yeah, there we go. Nature, Quanta or something, I don't know. It'll write a nice book. So the sexy problems multiply exponentially? Exactly.

Starting point is 01:18:40 And we've now gotten to a point where we're starting to work on refinements to the system rather than fundamental things that are like, if you don't solve it, the system just simply doesn't work. For example, you can run all of this with NTP as your clock server, but you actually can create an ocean of time within. We wrote a paper called the World Wars Chronos for that. But that's not necessary for the system. It's just a nice-to-have thing.

Starting point is 01:19:02 It's a nice property. Optimization in the random number generation is another example of that. You can run it with a heavier thing. You just have more blockchain bloat and slower time and transition. We have this concept of epic. So you elect leaders to run the system every five days with Cardano. But there's been derivative work. We didn't even do this. This work occurred at University Villanoi. And that derivative work said, well, you don't actually need to do that. You can do it on a block-by-block basis. It's like, oh, that's pretty cool.

Starting point is 01:19:28 So that's the other point about doing things in a very rigorous way. Is that that way creates a lingua franca for what you're trying to solve with the totality of the academic community. So suddenly, people that you've never met, you know, nothing about have read your papers, cited your papers, and start writing their own papers, either to try to attack and destroy

Starting point is 01:19:47 the things you've done, or to build on top of the things that you've done. So people are trying to figure out ways to attack this. Exactly. As rigorous as you are trying to do that, you're gonna be able to do it. And I don't have to pay them. That's the beautiful thing. It's fun. Yeah.

Starting point is 01:20:00 It's fun to try to destroy, and that's how we go stronger. And that's how you build your career, too. There's plenty of people that they've gotten tenure just kicking the hell out of Intel SGX. You go to CCS every year, there's some guy there and he's having a hell of a time making Intel cry. Can we pull back historically speaking and in terms of the big picture of cryptocurrency real quick

Starting point is 01:20:19 and ask the question, what is Cardano? We started talking about already the consensus algorithm Cardano takes, but maybe when you look at the history books, you know, sort of a hit track is guy to the galaxy and Cardano have one sentence. What's that one sentence going to be? And in general, what's like the vision in the context of the history of cryptocurrency? You have like this whiteboard overview video that you talk about the three generations of cryptocurrency, or Cardano's the third. So that's a five different questions. We'll

Starting point is 01:20:50 have asked in the exact same thing. You can answer how or the how you want. You know, I always term Cardano as like a FOSS, a financial operating system, and nobody likes it, and everybody picks on me for using that term. But basically the idea is that the world runs on systems, especially the financial world, the BIS and Swift and all this other stuff. These protocols allow you to move value around and represent things like identity and allow you to express yourself in some way. Those protocols, for the most part, work well for people in rich countries.

Starting point is 01:21:25 And they don't work so well for people who aren't in rich countries. And so the point of what we do, or at least what I do, and what my company does is we think a lot about how do we build a universal protocol that does all the stuff the legacy system has, but just does it better, faster, and cheaper for everybody in the world. And everybody has equal access to it. It's the people's protocol. You have a situation where the guy in Senegal has the same access that I do or Pilgates does or someone else who's kind of higher on the spectrum of wealth and power.

Starting point is 01:21:57 That is what we seek to achieve, but then the question is, well, is Cardano the solution? Is that that thing? The answer is no, because you need a lot more evolution. You need decades of evolution to work your way there. In many ways, the work is never quite done, but it's better than what came before. Why? Because you have a realization that first, the control of the system needs to be more balanced and nuanced, and it needs to be more democratic.

Starting point is 01:22:26 So there's this sustainability component of like who's in charge and how do you pay for things? Well, the system can print its own money. So it always has the ability to have a budget. OK, so there's a treasury idea. And then there's a voting thing. Well, the same things that allow you to move money around, allow you to represent votes. So you can do evoting with the type of system.

Starting point is 01:22:44 OK. And if you played no Mick with the type of system, okay? And, you know, if you played NoMick in the 1980s and you're Peter Superfan or any of these things, you can build a self evolving system. You can actually create a game where the rules can be voted on and changed in the game itself. Great.

Starting point is 01:22:56 Okay, so that exists there. And then you say, okay, well, but this thing still has to touch the legacy world. There has to be cash in and cash out and these types of things. So there's this interoperability thing that you need a Wi-Fi or a Bluetooth moment for the industry because nothing understands each other right now. And there are all these chains are blind, deaf, and dumb to each other.

Starting point is 01:23:14 And then there's this thing that it has to work on a huge scale, like billions of people. And we've done that, but we've done that with large multinational trillion dollar companies with centralized infrastructure. We've never really done that with one master protocol that somehow does it forever. The closest approximation is probably BitTorrent. And there is, you know, there was, it's a cool protocol, but it doesn't have all the necessary to do something like this. So Cardano is just our first approximation. And like any good system, we wanted it to be self-evolving.

Starting point is 01:23:45 So once you get the philosophy out of where's the target of what do you want to do, then you build a community, and it's over a million people strong, and that community keeps growing, and they keep pushing the system in that particular direction. And what's nice about is if you build the right philosophy within the system, it doesn't need founders. This is the great lesson of Satoshi. It doesn't need founders to be able to get there. So if you look at the academic side, that's very decentralized. We have more than 30 different contributors for the 105 papers, and that set keeps growing within the next five years. There'll probably be two, three, four hundred different scientists from all across the

Starting point is 01:24:22 world, some from Russia, and some from India, some from China, and some from Japan, and America, and Africa, and South America. And the faces change, the languages change, the cultures change, but the process stays the same. And that is a permanent organ within what we have constructed as a system. It's the same situation entering marketplaces, like we entered Ethiopia. What are we doing there? We have 5 million people in Ethiopia. We're getting them digital identity and we're dragging that digital identity into the system because that's the most fundamental thing of a financial operating system. You need to know who people are in order to be able to do business with them, give them

Starting point is 01:24:56 credit, be able to give them economic agency and so the thing. But once they're there, they're going to grow up with that system. They're going to deploy applications on that system. They're going to deploy applications on that system. They're going to build on that system. You're going to use it every day for getting alone or payments and so forth. If they have pain points, what they're going to do is evolve that system to be able to mitigate and manage those particular pain points to a point where the system is competitive for it.

Starting point is 01:25:19 My job is to be, we have this tagline on our company, cascading disruption. My job is to be, we have this tagline on our company, Cascading Distruption. My job is to be the first domino. Just knock it over and watch the cascade. And it blows and blows and blows up until eventually it gets to where we need to go. What I was trying to think about with Cardano was how do you build the minimum viable set of tools and social processes that once we push the domino, the system will just evolve to a point where eventually you can grow to fill that need not out of charity but out of self-interest. People want things better, faster, cheaper. People want to have economic agency, especially when

Starting point is 01:25:58 they lack it. Nobody wants to grow up in a world where they're unbanked and they have no access to marketplaces. They're going to seek it. Look at M. Pesa. It's a great example of that. Like cell phone minutes, they're using as a currency. So that's where we're at. And I say a few more years, I think, we'll have that right minimum viable set of dynamics inside the system.

Starting point is 01:26:18 And then it's inevitable, in my view, that it'll kind of grow and consume and become this concept. And what's really cool is there's competition in the systems and concepts. So China is trying to do the same thing. They're saying, how do we de-dollarize the world and create a digital you on? So they have a very top-down notion of how to apply this technology and bring it in.

Starting point is 01:26:35 And they even have an identity system, they're building in parallel, called Social Credit. We have an identity system, a teleprism that we're putting in, ours is bottom up and you own your own identity, social credit, you have no idea, you just have a number and some computers given it to you, but they're both trying to do the exact same thing. And it's going to be this clash of cultures at some point between the open fosses and

Starting point is 01:26:54 the top down authoritarian fosses and probably some hagelian dialectic action. And we'll create some sort of somewhat close, somewhat authoritarian, libertarian utopia. Yeah, most likely it would be AI's battling in the space of Fossas. So I really like this idea of financial operating system, but the letter F, so financial, is this just a basic mechanism with which you can have social interaction there for, or all kinds of interactions, therefore have an identity like is effusential to this. Yeah, because that's how people care. You need resources to survive.

Starting point is 01:27:33 And you know, finances is kind of like this field of managing your resources in an intelligent way. And you could call it so far to social finance, you know, the the the the nomenclature has an exactly been settled for our industry, and that's fun. But basically, the concept is that you have something and you want to be able to store it, transform it, trade it, and use it to survive. The question is, what rails do you do that on? Do you do those on centralized controlled rails where there are these third parties that are,

Starting point is 01:28:05 basically able to live off those things, come very fat and nepotistic, or do you wanna do it on rails where there's no middleman? You have a direct relationship with whoever you're doing business, and if you invite more people into the transaction, they're middlemen of value, not necessity. And that's really the,

Starting point is 01:28:19 I would like to say the resident debt drop are space, the reason we exist, is to try to figure out a way to kill the middle man and try to figure out a way that we can better quantify value and transform it, move it, manipulate it. And in many ways, we've actually discovered some amazing things in the last 10 years as an industry. We've kind of created the financial stem cell. This idea of a token can now just as well be a national currency as a CBDC, as it can

Starting point is 01:28:43 represent a crypto kitty. The same architecture can do stuff at the nation scale, can do stuff for a 12 year old kid in Texas. It's pretty amazing to see that. But sort of in that whiteboard presentation, you gave these three phases, and you're kind of implying that there'll be end phases to this whole evolution.

Starting point is 01:29:05 And Cardano is just like the cutting edge, but if you look back to Bitcoin, how would you compare Cardano versus Bitcoin? Sort of where we are, how we started and how it's going. Okay. So what I did in that video and I've done a lot of media interviews because I think it really helps people understand where we're at in the clock is phrase, face things in terms of generations. And so I said, well, first generation is Bitcoin. Really, the problem Bitcoin was trying to solve is saying every time we want to represent or move value, we need some sort of trusted third party

Starting point is 01:29:39 to facilitate that. So can we build some sort of system where we can create some notion of value that can be teleported around the world and it doesn't require a trusted third party. That's it. And it's done in a beautiful way because it didn't try to be anything else. It just was, you only have Bitcoin, you can only do one type of thing, you can only push it, you can do some things on the incumbrances of like, you know, multi-sig and other things, but that's a one-trick pony as a system. And it wasn't really clear if that was going to work or not for a long time. It took several years to build up enough network effect and for Bitcoins to actually become

Starting point is 01:30:14 valuable. And I'd say the inflection point was 2013. And at that point it became a billion dollar market cap. There were like Silicon Valley startups, real exchanges performing. And it got to a point where there was legitimacy behind the concept and people started getting, this is a really incredible idea because I can have a capital controls with it. I can like move 10 billion dollars of something from one country to another country in five minutes.

Starting point is 01:30:38 It's like I could never do that before. And you know, this is incredible. Okay. The problem is the minute that people validate the idea, they immediately want something they don't have. So like the minute Elin can land a rocket, you know, there's the next big thing, right? You've landed the Falcon 9 now you're on the starship.

Starting point is 01:30:56 Similarly, you say, okay, I want programmability with this thing. It's kind of like when JavaScript came to the web browser, you went from the static, perhaps pretty, but ultimately static non-interactive pages to YouTube and Google and Facebook and these amazing, rich, incredible experiences because now you can actually interact with the user, you can program things, stuff runs on their side, stuff runs on your side, it's a beautiful two-way relationship. So that's what Ethereum effectively did.

Starting point is 01:31:24 They bolted a programming language onto a blockchain and they went from a certain use case to whatever your imagination can have, like sunshine and rainbows and unicorns and these types of things. So what you're saying is Bitcoin is HTML and Ethereum is JavaScript. Basically, yeah, it was like when JavaScript came

Starting point is 01:31:42 and with JavaScript it has all kinds of problems and issues. I wonder who's flashing this analogy. Well, that's metaphor. But that's not well. Actually, there were plenty of active access and flashes. NXT was an example of a fail to start and bitchairs was another example. There were a lot of people who tried to add some notion of programmability and or a different view of how these things should be done. And they they were not as competitive. Ethereum kind of came out at that JavaScript moment. Okay, the minute you have that, then suddenly you have ICOs and D5 and STOs and NFT, so all these word salads of things.

Starting point is 01:32:14 And then people start using it and get frustrated. Why? Because it's too slow, it's too expensive. It doesn't talk to the things they wanted to talk to. And also, it gets too big to manage itself. When you're small, you have founders and foundations and you have trusted actors and court developers and you can feed them with pizzas. You know them. You can meet them. You can shake their hands at conferences.

Starting point is 01:32:36 When you're a multi-billion person system, you're too large to be able to do that. For example, we had the Shelley Summit last year, we invited Vince surf to come to the summit. Vince is a brilliant guy and he had created the internet with Bob and the rest of the gang. And back in those days, it was such a simple, small system that one of their students, they said, hey, you need to test, you created a video game, just kind of test the thing.

Starting point is 01:33:01 You could call the guy on the other side and say, are you seeing this? Are you getting the signal? These have to have a actual address book for email addresses. Yeah, so you'd open up the book. That's amazing. And look it up. And now look at the internet.

Starting point is 01:33:11 It's like, who's in charge of that? It's this gargantuan network. And there's no group of people you can bring in. And thus, the internet evolves very slowly. You see, and so that's the problem is that you have this situation where you want to do lots of utility. you want to do a lot of things, you want to be on financial operating system and, you know, be everything to everyone, but then your rate of evolution slows down as your rate of adoption speeds up. So that's one of the other design goals of the third

Starting point is 01:33:38 generation. It's not good enough just to do things better, faster, cheaper, and have consistent cost with your population growing or talked to everything, your Wi-Fi moment, you also need a system that can govern itself at a scale of millions to billions of people who have divergent interest, some cases, ice pick and eye divergent interest. They really hate each other and they don't get along. So that's what we termed a third-generation cryptocurrency and there's a lot of people attempting to compete in that space. There's Tezos, and Algrant, ICP, and Polkadot, and so forth, and each and every one of them

Starting point is 01:34:09 kind of brings a different blend of things that they value. So it's not completely equal between scalability and irreoperability and sustainability. Some people were very focused on high throughput, lots of transactions per second. Other people very focused on governance. Tezos is like the governance chain and they were one of the first to do a self-amending ledger. And other people are like Aeon or Polkadot, they're really thinking carefully about how do we build a nice interoperable ecosystem. With Cardano, we tried to actually tackle all three at the same time, which was one of

Starting point is 01:34:40 the reasons why we were a little slow around at the gate. We had to write a lot more protocols, but we think we'd kind of come up with a beautiful interlocking design for all of them. And again, the point is not to get it perfect, but rather get those just right set of evolutionary factors that when you click the domino, it just self evolves into what you need it to get through. Allow me to stretch the metaphor further. If Bitcoin is HTML, there's HTML5. If Ethereum is JavaScript, JavaScript with V8 has become quite fast, quite, you know,

Starting point is 01:35:12 it runs much of the internet. So the argument could be that eventually everything will be JavaScript, or maybe you could say eventually everything will be HTML, and it's just be a bunch of different tools that generate that HTML. So is it possible that just like we were so, we eventually returned to generation one Bitcoin, or we returned to generation two Ethereum, as we, you know, at the end of this journey.

Starting point is 01:35:42 You know, the problem is your tail is wagging the dog there. You have a situation where you're so focused on the technology that you're failing to understand that there's still Daisy here. You still have the user. And where's the app store? Where's the one click install? Where's the use and utility? All these layer two protocols and these DeFi applications in five years that are completely

Starting point is 01:36:03 protocol and blockchain-agnostic. Because at the end of the day, they care about liquidity, operating cost, and user experience. It's so popostrous and absurd for somebody to say, oh, well, I'm gonna go build my application, get on the Apple Store, and I am gonna use Amazon as my web host.

Starting point is 01:36:20 And no matter what happens, I will always use Amazon, even if the operating cost is crazy. You see? And so, we're just in a unique period of history where there's a network effect around some initial infrastructure, and people tend to be building around that. But every single one of the top D5 providers are, if they're getting successful into a certain network effect, they're having the multi-chain conversation. So I don't really believe in a winner takes all, Maximus view of, well, there's going to be some protocol that becomes the God Protocol.

Starting point is 01:36:49 First, because they evolved too quickly, second, the incentives aren't aligned for that. TCPIP didn't have a token connected to it. There was no financial incentive, whereas TCPIP got adopted over something else, so you'd make some big company crazy amounts of money. It's a useful piece of infrastructure. So I think that the third generation is going to be as defined by the social components and the usability components as it is by the technological capabilities of the system.

Starting point is 01:37:15 Really what these technological capabilities gave you was the ability to demonstrate a proof of concept and say these things are possible. Kind of like Xerox Park, you know, when Steve and Bill came in, they said, wow, you have networked computers, object oriented programming, and a GUI. And this is like, what was it? 70s? It's like, wow, it's like incredible.

Starting point is 01:37:34 But none of that was an actual product. That wasn't a Macintosh. But it was enough to get the idea, and then it was a race to how do we productize something like that. And in that case, it actually took several decades to roll out that vision that those guys had. And I think that's what Bitcoin and Ethereum did. But what's unique about this is normally you throw away the prior experiments with these

Starting point is 01:37:54 things, these are self evolving systems. So it's entirely possible to, you know, Joe Rogan quote, to evolve Bitcoin to a point where it could become a third generation system is desired as a some al-malgamation of layer one and layer two protocols and it's the same for a theorem in fact Vitalicus throwing away a theorem and replacing with a theorem two because he recognizes he needs to upgrade and evolve the system and that's what makes it fun because the techniques and methodologies that they've chosen to evolve and upgrade this system are distinctly different from the ones that we've chosen and evolve and upgrade this system are distinctly different

Starting point is 01:38:25 from the ones that we've chosen. And we have no idea which ones actually going to win, but we learn from each other and we co-evolve from each other. So you're running like all these experiments in real time in a giant marketplace and maybe they'll consolidate, maybe they'll stay divergent. I mean, look at Big Tech. You have Google, Apple, Microsoft, Facebook, they all coexist and they're trillion dollar companies.

Starting point is 01:38:45 Some cases with TCP, it consolidates to one standard and that's what we end up using. So what's your intuition with Cardano having the proof of stake and then eventually smart contracts versus the Bitcoin with layer two technologies that's kind of evolving creature. Again, you said you can't really predict the future, but what's your intuition? Why one might be more successful than the other? So the problem with Bitcoin is it is so slow. It's like the main frame programming of the past. And the only reason it's still around is because there was so much invested in keeping it around that we just kind of have to leave it there. And one day, Coball will die. You know, it's, it's, it's, it's, there's nothing about it from a collection of

Starting point is 01:39:34 USPs that's particularly desirable. You have extremely long settlement time, you have extremely low programmability, it's not aware of any other system. There's no native way of issuing an asset in that system. you can't even do a pull transaction. You can't do anything that's interesting or unique there. And yeah, all due respect, it's, you know, mafia, I'll do respect home. You got some problems. You need to lose the weight.

Starting point is 01:39:57 You need to lose the weight. You need to lose the weight. I know, I know. So, you know, I'll do respect to the Bitcoin people. It's like an amazing, incredible first generation thing. And it really, we're all here because of Bitcoin. But the promise you have to upgrade the damn thing. You know, just because you were a high school football star, it doesn't mean that 30 years later, you're still a high school football star in the same shape. You got the beer belly, your old, you're not doing this thing again. That's

Starting point is 01:40:21 what Bitcoin has to do. There's fundamental improvements that I think Bitcoin can make at the protocol level that would actually make it an incredibly competitive system. Like, if they want to keep knock-a-moto consensus, proof-of-work, there's ways to enhance proof-of-work. I mean, Amin Gansir did this with Bitcoin and G. Promotivist Monos did this with Prism, make it 10,000 times faster, and you don't compromise the fundamental security assumptions that the system has. You can add programmability to it, block stream, create a language called simplicity. So there's actual ways to extend, and we did this with Cardano with the extended UTXO

Starting point is 01:40:55 model. There's ways to extend what Bitcoin has, keep the philosophy, the counting, the way of thinking about transactions, but then suddenly you can now do DeFi and other things. But what they've done is said, we will not evolve the base layer at all, and we're just going to build all this layer to stuff, which is usually highly fragile and centralized, and requires enormous effort at the base level to do anything. It's not a coincidence, Vitalik started as a color coin, this guy, and a master coin guy, hanging out in those circles. He was trying to innovate and do things in Bitcoin, and it was so hard and difficult that

Starting point is 01:41:27 he started diverging and going and doing things in a different system entirely. You know, I knew the master coin guys, share on the all these people. They were maximalists. They really wanted to build something cool and exciting for Bitcoin. Anything they did, the developers would attack them. It's all your misusing op return. You're doing this, that it was a holy war anytime you wanted to evolve.

Starting point is 01:41:47 So I think it's its own worst enemy. It has the network effect, it has the brand name, it has the regulatory approval, but there's no way to change the system, even correcting obvious downsides in that system. Now what's really cool is Ethereum doesn't suffer from that problem. It's getting to a point where it has a similar network effect to Bitcoin, but the community

Starting point is 01:42:07 there is completely different in culture. They love evolving. They love upgrading, sometimes a little too much. And so that means that if you look at the trajectory of things, if I had to bet just those two systems, Bitcoin or Ethereum, I would say nine times out of ten, Ethereum is going to win the fight against Bitcoin if it was the only competitor. But obviously we're here and a lot of other people are here, so there's different things going on, so it's a much more complex game. But I think that's always a key,

Starting point is 01:42:35 you know, zooming out a little bit, you know, you know, it's set the technology aside in the word salad of cryptography aside because it's too much. We have to always do is say, what incentives does the system have to evolve? And when you look at things like Android and the App Store and these analogous platforms, you say, ah, the evolution is user driven, and there's a financial incentive for the user to participate. So if I had to look at the trajectory of this thing,

Starting point is 01:42:59 come back 10 years later, it's probably gonna have millions of applications and lots of stuff going on because that's the way the system was constructed. Okay, it makes sense. When you look at Bitcoin, you say what is the incentive to evolve the system? There's none. What is the incentive for the system to get more competitive? It's not. In fact, it's the opposite. They've turned it into a religion. I was in Miami at this Bitcoin conference there. I had a toilet paper roll thrown at me that had shit coin written on it.

Starting point is 01:43:25 You have Max Kaiser out on the stage, you know, doing his best Rick James impression, you know, we'll see the guy that did the F.E.L. on. Yes, yes, yes. You know, and so you're watching this stuff and you say, okay, first, why would anybody want to join that? And then second, where is the conversation about how do we achieve something? I started with Cardano in the end in mind. I said, we really want to sit down and build this financial operating system. And the definition of success is the poorest person in the world has access

Starting point is 01:43:55 the same system as the richest person in the world. And they both get treated fairly. We've never had that happen before. Okay, that's something. You can agree with it, disagree with it, say it's boiling, the ocean is impossible. At least I have something. I can't for the life of me understand what the hell is the point of Bitcoin? When I joined the Bitcoin space way back in the day, it was, hey, we hate the dollar and, you know,

Starting point is 01:44:16 hey, we like gold a lot. Let's create digital gold. Let's build a payment system. And then it just kind of went all these different directions and nobody can actually tell you what Bitcoin is for. It's a store of value, okay. You know, if there's some proof of work thing where maybe you're like incentivizing alternative energy to be pretty, I don't know. It's like, nobody really knows the philosophy. There's no direction.

Starting point is 01:44:37 And they say, but don't worry, just buy and hold and everything will sort its way out. I believe it's hot. Yeah, hot. What about the idea of digital gold? buy and hold and everything will sort its way out. I believe it's hotdle. Yeah, hotdle. What about the idea of digital gold? So try to replace that particular physical material that is gold, the transfer into the digital space. That's something.

Starting point is 01:44:53 Okay, let's do that then. And just say that's all it does, then why are we doing lightning? Why are we doing any of these other things? You don't really need a commodity, a digital commodity, high throughput. You can have slow settlement, you can have high transaction fees, all these types of things. And that's fine. Okay, that's something. Pick it.

Starting point is 01:45:10 Well, the idea is to try to come up with technology, like the Lightning Network, that could have something like gold, but then still build an economy around it, something with the high throughput transactions. And have we ever built a successful banking credit system off of gold? Never. It never works because there's too much volatility underline asset. Would you take a gold denominated loan for something? And so he says, all right, I'll give you five bars of gold to go buy this car and pay me back five and a half bars of gold.

Starting point is 01:45:37 Nobody would know in five years where they come out and that kind of a range. The idea is that the gold is used for the settlement of transactions. And then you're operating the actual economies operating outside of gold and then you kind of connect back to gold So you go back to the gold reserve and we tried that for a long time It didn't really work in a modern global economy We had the redwoods agreement all these other things and and so I understand what you're saying And you maybe maybe there's some merit to that

Starting point is 01:46:02 But if that was really an earnest where they want to go, then the conversation should be about, well, how do we make it easy for layer two protocols to interact with Bitcoin? So why is simplicity not built into it? Why is it taking so long to do snorsex? Why is it taking so long to do all these obvious upgrades, which are cryptographically low danger? Also, NEPA-POWS. Now, an interactive proof-s-approof-of-work, there's no cost to doing that.

Starting point is 01:46:24 It's just a property-approof--proof work where certain puzzles are more special than other puzzles. And by noticing that, you can create these beautiful proofs that allow you to have side chains and light clients. It's not compromising security to system. It's just something you get for free with proof-of-work. Those came out in 2016. There's derivative work, fly client floating around. What the hell is it?

Starting point is 01:46:44 This is the frustration that I have. It's like, if you really are serious about this whole lightning and gold economy thing I love choice. I'm a libertarian by nature. I love competition And you know, I read all those books. I read Louweek Von Mises's work and Murray Rothbard's work And I love what Hayek had to say about private currencies. Let's go try it. That's great But then you have to have some focus and commitment as an ecosystem. And the excuse they use is, well, no, we don't, because we're decentralized, and because we're decentralized,

Starting point is 01:47:13 we don't need that, as if there's some sort of guiding swarm intelligence that will naturally push the system in that particular direction. But then you ask, well, how do people measure the success of Bitcoin? Is it the fact that they've actually achieved lots of transactions and lots of actual economic activity and lots of businesses accepting it? It's the price.

Starting point is 01:47:35 That's what they do. And that's the only thing they pay attention. That's why this is the most attended Bitcoin conference in history, not because somehow Bitcoin got so much more adoption. It's because this is the highest price point Bitcoin has ever been this year, you know, over 30,000. So first of all, let me state that Charles, for the most part, is purely objective. The bias that comes in for the record, I want to say, that I have heard, because you mentioned the mafia, that you prefer good fellows over the Godfather. So a man who prefers good fellows over Godfather, you take it for that opinion for what it is.

Starting point is 01:48:10 Actually, I have to think about that one for quite a bit. I think I'll come on. Joe Pesci with so good. He's incredible. I also love casino and those big glasses on the dinner. I love it with Sharon Stone, but we could talk about that for hours. But let me ask you about the Bitcoin conference, because it is kind of, I would say an important moment in human history.

Starting point is 01:48:32 It was quite exciting in terms of size and kind of turmoil and all those kinds of things. And you were there. And what is it, hot and humid Miami? I believe it's the way you introduced it. So what do you make of the community of Bitcoin or that particular event in human history? What makes me sad is I remember the old Bitcoin community and I've seen what it's become

Starting point is 01:48:55 and the old community was really fun. Like the San Jose conference in 2013 or subsequent conferences, you know, there was just a lot of people they had no money. And they just really loved this idea of decentralized money. They loved this idea of decentralization in particular. And you could strike up a conversation with everyone. There's no ego at all. But what was really fun is you could really get intimate friendships and relationship and great conversations

Starting point is 01:49:22 with people there. It's kind of like the early days of AI, you know, the all-met and Dartmouth and all these other places. It's a very intimate. There was no ego. Everybody was just trying to do some really cool stuff. Now, just like those early days, there was an overestimate of how robust the solutions would be. So we believed, oh, yeah, 10 years we're in a real world, right? Didn't exactly happen. On the other hand, Bitcoin grew from nothing in just 11 years to, I'm in Mongolia riding camels and the camel herder has Bitcoin and it'll be desert. So that's telling you, that's a pretty pervasive technology if you have that level of

Starting point is 01:49:56 adoption that quickly. When I went to Miami, it was unrecognizable. You know, everything was so commercial. Half of the vendors at the conference were like watches that were cost half a million dollars and they were covered in diamonds. So when you see that kind of materialism leak its way in, it's first is repulsive. The other thing was there was no, like I remember one of the first conferences,

Starting point is 01:50:18 I Moe 11's conference in January of 2014, the North American Bitcoin conference, ironically in Miami, there was a Bitcoin Help Center booth, Dima Rannet, and a few of the other Bitcoin OGs ran it. The core developers actually came over, like Jeff and others, who were there and sat at the booth,

Starting point is 01:50:34 and anybody come up and ask a question. Anything you want to ask about Bitcoin? And it's like, that was the culture. It just helped people welcome it. There was no help booth there. There was no notion of that. There were six hour lines and superstars and things like that. And again, again, it was always the same thing.

Starting point is 01:50:50 Look how much money all these people have made. And the whole point of Bitcoin was to redefine the notion of money, redefine the notion of value, these types of things. So it's just, I'm no longer part of that. And it made me sad because I really enjoyed being part of the, how I got started was the Bitcoin education project that I did a class on you to me. I gave it away for free.

Starting point is 01:51:09 I had 80,000 students and they would email me. I got 5,000 emails before I stopped answering them. And everyone come in and ask me some question about something. Sometimes arcane, sometimes trivial. And I take the time to sit down and answer the question or for the email to somebody I knew who could answer that particular type of question. And there were some amazing people in the early days like Mike Herne and Gavin and others, and they were just super committed. And Mike's case, he knew Satoshi, he actually emailed him back and forth because he was around

Starting point is 01:51:38 2009, 2010. He did the Bitcoin Jaffa client. And Satoshi was all excited. He's like, wow, Bitcoin can come to a cell phone This is really cool and exciting and then what happened Mike lot left Bitcoin in 2013 over the whole big block debate that That happened they just treated him like dirt like it was subhuman or something So I don't know the cultures changed a lot and and it's if they like it. It's good for them. They can enjoy their religion But it's it's not for me and where I enjoy their religion, but it's not for me.

Starting point is 01:52:05 And where I like being is, like I had a guy who used to work for me, Alex Chirpinoy, and he created this beautiful project called Ergo. To me, that is the spiritual successor to Bitcoin. Ergo is really special because it has the same culture, it has the same mentality, and the technology is kind of like a natural evolution of what you would do if you knew about Bitcoin and you wanted to build the next big thing. So it's still a proof of work system, it's still a UTXO system,

Starting point is 01:52:30 but he added UTXO with some smart contracts. It's this Sigma Protocol idea. On the proof of work side, Satoshi had this one CPU, one VOD idea, so Alex tried to create non-aloserable puzzles to make it impossible to have mining pools. And there's all these other beautiful little things. And he's just, he's just brilliant Russian programmer.

Starting point is 01:52:48 And he's around himself with all these other brilliant people. He has zero ego. He's like, he has negative ego. When you put him with the person with ego, your ego goes down, right? And everything about Alex is always like, how do I solve this? How do I do that?

Starting point is 01:53:00 And he gets legitimately excited when he meets somebody that he can collaborate with or learn from. That's where Bitcoin was in the beginning. Everybody set their egos aside, whether it was Hal Finney or whatever, and they would just say, how can I help? What can I do? And it was all about coming up with some cool new thing or solving some cool new problem.

Starting point is 01:53:20 I don't see any of that in Bitcoin today. So quite a few people are excited about Ergo and excited about the fact that you kind of appreciate Alex and Ergo. Do you see Cardano potentially utilizing the proof of work mechanism from Ergo as part of this pool for the consensus mechanism? I mean, anything's possible. And there's a lot of evolution Ergo has to go through. Ergo was kind of like when the Xbox 360 first came out,

Starting point is 01:53:46 while they were prototyping at Microsoft needed a development environment, they ironically purchased a lot of Apple computers to do that. Because Apple was moving away from the PowerPC to Intel and Microsoft was moving towards the PowerPC, just this weird intersection of history. So at that time,

Starting point is 01:54:00 the largest order of Mac computers made was done by Microsoft. And they were using a Frexbox stuff. So, Ergo we viewed the same way. So, we said, well, we have this extended DTXO model. The only thing that's as sufficiently close to it where we can beta test contracts is actually with Ergo. And Alex just was a little faster in getting certain things out

Starting point is 01:54:19 because we were doing things in a slightly more rigorous way and slightly more expressive way. So, we actually tested a stable coin and Oracle and other things on Ergo, and it has just incredible community. When we said, hey, we're coming here to work and build the, oh yeah, we love work with you guys. This is so cool. The other thing is Alex used to work for us, and he had this lovely project called Scorex,

Starting point is 01:54:39 and it was all about like a pedagogical framework for building blockchains. And if you wanted to do prototyping or academic research, it was great. It was super modular and it separated the consensus network and transaction layer from each other in just the right way so that you can make it modular and mix and mix things. So you can put secure codymilyon

Starting point is 01:54:56 or maybe a different network layer and a different consensus protocol like proof of work to another proof of work and so forth. So we loved having that kind of IP sitting around because it gave us the ability to kind of play around with ideas in a matter of weeks instead of months or years. And then he just took that concept and he gave it away. The wave protocol was built on it that was Sasha Ivanov. He did that. And I think there's two or three other cryptocurrencies that were launched from Scorx. And then Alex took and built Ergo from it. So there was a nice intersection where there was overlapping technology with Ergo,

Starting point is 01:55:29 with our technology and the other thing was that the community was so open and friendly, it was just an opranner. Just go in and start building some things there. Now in terms of evolving ideas, the whole Sigma protocol idea is very different and it's very interesting and there's a guy at a Boston University name will come to me in a segment who came up with this stuff and I think there's some merit there especially as we start moving closer to this idea of blockchains being used to validate proofs instead of running computation. What's the sigma protocol by the way? So it's just a way of expressing scripts and basically you get these concise Representations of proofs and then you can say okay the script is correct But you don't have to run the whole program. So there's a lot I'm not doing the topic justice

Starting point is 01:56:12 There's a lot more to it But that's the basic concept and in a redeemer validator model you need stuff like that because as as your your model gets more Complex and a lot more things happen. It's you don't want to have a situation where I have to run, replay a huge amount of the UTXO graph to be able to get to a point where I have the state of the system. You need some mathematical artifact that gives you the state of the system quickly. And then you're say, okay, I now know what computation thread I need to run to get enough to be able to redeem this transaction. So he just found a more compressed representation of it.

Starting point is 01:56:47 The math doesn't matter. What matters is there's a whole beautiful field that thinks about this type of stuff, and it was never once linked before into our industry. The brilliance of Alex was to actually realize you could do that and pull those things together, and it may actually have some merit. But no means is the only guy that does this stuff. There's actually other approaches and verified computing that have explored that. Like my favorite came out of Microsoft Research is a project called Pinocchio, and there was

Starting point is 01:57:15 a follow-up called Chepetto. And the basic idea was that it's fortuitous that you have these computer science problems like hashing where you can do all this computation, and once you've done all of it, you found this magic number that you can verify that the computation was done correctly. So, proof of work works this way. Hard to do the proof of work, easy to check the proof of work. Cryptography also works this way. You have some trap door where you can verify something is correct, but to get that thing done, if you're doing a brute force, it takes an enormous amount of computation.

Starting point is 01:57:49 Well, not all problems are like this, like protein folding. To verify the protein is folded correctly, you have to fold the protein. You have to redo the work. But what if for arbitrary computation, you could take a problem, and then you could generate a proof

Starting point is 01:58:02 that you've done that computation correctly in the proof validates in logarithmic time or constant time. Wow, that's incredible, right? Well Microsoft actually wrote a paper on how to do that. It's called Pinocchio. So that's another example of these types of things, these roll-ups of things, where instead of doing the computation on chain or trying to create some sort of replicated machine that does all this stuff, you instead just say, okay, only thing I'm going to use the

Starting point is 01:58:24 blockchain for is to check your proof. But I'm going to turn it into a distributed computing problem and any person in the world can do the problem on any server untrusted server even because you don't have to trust the output, you trust the proof and the proof is deterministic. It tells you these things. So whether you're using zero knowledge, your sigma protocols, or some other mechanism, it's moving you in that particular direction to turn it from a replicated to a distributed problem and go from, I'm doing the work to, I'm checking that the work

Starting point is 01:58:52 was done correct. That's fascinating. And all of a sudden, we were back to the P equals MP thing where the, for many very interesting problems, the checking is efficient, is much more efficient than the solving. Right. And also, do you want complete determinism or is it probabilistic? Because if you relax that requirement a little bit, then suddenly actually you have a broader class of things you can construct this stuff for. You mentioned UTXO. There's a paper titled the Extended UTXO model. It writes in the introduction,

Starting point is 01:59:22 Bitcoin and Ethereum hosting the two currently most valuable and popular cryptocurrencies used to rather different ledger models, known as the UTXO model and the account model respectively. At the same time, these two public blockchains differ strongly in the expressiveness of the smart contracts that they support. This is no coincidence. Ethereum chose the account model, explicitly to facilitate more express smart contracts.

Starting point is 01:59:50 On the other hand, Bitcoin chose UTXO also for good reasons, including that its semantic model stays simple in a complex concurrent and distributed computing environment. This raises the question of whether it is possible to have express smart contracts while keeping the semantics simplicity of the UTXO model. Okay. So what's the fuck that mean?

Starting point is 02:00:11 Exactly. What is UTXO? What is the account model and what is the idea of the extended UTXO model? So I guess the easiest way of visualizing it is that UTXO is kind of like cash register accounting. So you know, let's assume you don't have credit cards, you just have cash. So I guess the easiest way of visualizing it is that UTXL is kind of like cash register accounting So you know, and let's assume you don't have credit cards You just have cash and so when you go and buy some milk and potatoes or whatever you go to the cash here You pull out your $20 bill

Starting point is 02:00:34 You give it to them and let's say that comes up to 1750 they have to make change So you don't tear your $20 bill and cut a piece of it off and say here's part of my 20 You give them the entire $20 bill and cut a piece of it off and say, here's part of my $20. You give them the entire $20 bill and then they give you something back and the things that they give you back are also atomic units. They don't cut those things up. So, that's kind of what UTXO is all about. In a nutshell, is that there's inputs and outputs.

Starting point is 02:00:58 Your inputs to that $20 and your outputs will be the $17.50 that goes to them and then the remaining change that goes back to you. Okay? The problem with this particular model is that the way it was implemented with Bitcoin, there was no notion of how do we run complex predicates, complex contracts on this thing, where instead of just saying, okay,

Starting point is 02:01:20 I'm just gonna push value to you, I wanna put lots of terms and conditions into the movement of that value. Like you only get this if I mow your lawn on Tuesday or you only get this if some event happens like the Broncos when the Super Bowl or something like that. Okay, so you need some notion of programmability with it. So a lot of people are trying to figure out in the early days of Bitcoin, how could we improve the expressiveness of the system?

Starting point is 02:01:45 One of the ways of doing it is you can go to a different accounting model, bank style accounting. In a bank ledger, every time you do it withdrawal and deposit, it's a mutable system. With the cash register accounting, you don't tear up the bills, but the bank, you can deduct or add a ledger all the time. A Ethereum kind of works in that bank accounting system where you send messages, you send transactions, and you're going up or down, and so you can trigger programs the same way. So what we did is we said, okay, if you take the UTXO model and you have some data to it, and instead of saying it's just a digital signature, but it's an script, you can basically create something that's still the same as

Starting point is 02:02:26 cash register, but now you have programmability and the big differences local versus global. So in the case of UTXO, your scripts are your concerns. So whatever is going on in that cash register has no bearing or impact on the other cash registers. But when you look at bank accounting, you have to know the state of the entire banking world to be able to make that work. Why? Because if that transaction is inbound, that wire transfer is in accounting, you have to know the state of the entire banking world to be able to make that work Why? Because if that transactions inbound that wire transfers inbound you have to know those funds are actually there that thing is actually happening So when you have a global state for a program

Starting point is 02:02:55 It's like you can do a lot more with it But it's a lot more dangerous and so you have to build all these mechanisms to try to protect yourself from it So what we did is we said okay add data add a programmability and you're kind of this nice Goldilocks zone between what Ethereum did with an account style model and a global state system, and you're not as restrictive as Bitcoin, but you're still a turning complete world, you can still run all kinds of things. And then any standard mathematician they'll say, okay, well, is it isomorphic, you know, is there a mapping between this? What type of function can I actually take something expressed in one structure and transmit it to the other structure and properties are preserved?

Starting point is 02:03:31 So we wrote a paper, it's called Climatic Ledgers, where we actually show that UTXO, extending UTXO and accounts are somewhat similar in that you can map things that happen in one system to the other system, the properties are preserved between the two. So in practice, what's nice about extended UTXO is that you can put infrastructure on top of it to make the development experience relatively similar to the development experience of what you would do with Ethereum, but you don't have to worry about this global state. So when you talk about sharding, it's a lot easier to do that. It's a lot more conceivable to that.

Starting point is 02:04:05 And also you get determinism in the system. So when I have a plutus smart contract, whatever I run locally is exactly what I expect to run in the system. When you have a concept of this mutable global state in the system, whatever you run locally is not necessarily what you're going to get when you actually push it into the system. So you may misprice things in the contract will fail. It doesn't ever happen in the plutus world. So you got a lot of advantages with this particular model. The downside is that it's a little bit less expressive on the boundaries and a little bit harder to write certain types of software with it. But again, how you resolve that is you kind of build

Starting point is 02:04:41 higher level languages and other such things that compensate for these types of things and design things that compensate for these types of things, and design patterns that compensate for these types of things. The other advantage that we have, and that's really fun and exciting, is that Bitcoin lives in this model, and there are other UTXO based systems, and so they're all talking about smart contracts as well, and they would like to continue working in the UTXO model. So if you're a Bitcoin contract developer or other things, there's actually already a group of people that understand this very well and that's still a fairly large part of the mind share of the entire space. So there are no silver bullets and anytime

Starting point is 02:05:13 you pick a particular model, there's an upside and the downside and there's different ways of doing things from cash register accounting or bank accounting, you can even do different accounting models. But we felt this was kind of the best first step to go into because it we started with something very familiar that had a long history behind it. And it maps very beautifully to functional programming principles, this concept of immutability and these things and you know much more strict management of state and no notion of having this global concept that you have to kind of manage as you break up the system. Now, in practice, what does this mean to the developer, and when they actually start real writing

Starting point is 02:05:51 an application? Not too much. There's going to be a little bit of retooling and some new patterns you have to learn, but in practice, you can still do the same thing. So, you can implement a Uniswap-style thing. In fact, we even wrote that code with the Plutus Pioneers program, so you can go to YouTube and watch a lecture and see how that's done. You can do a stable coin, you can do an Oracle, you can do interactive contracts. It has to be done a little differently than the way that you would do it in an account style model. Just like you can run an application Java, you can run an application in Haskell. They both can do the same thing, but the code is going to look different and they're going to kind ofodical way of looking at things is different.

Starting point is 02:06:28 So in terms of Oracle, Oracle Networks, what do you think about Chainlink and External off-chain data sources? And everything we've been talking about now with the external, with the extended UTex on model. Yeah, I mean, trying to do smart contracts with that oracles like trying to have sex with your pants on. I mean, it's not really fun. It's not exactly the best of things. The way I've been doing it all these years, I didn't know. For any other person, Lex, I wouldn't believe you, but for you. That's why I'm single. This makes so much sense now. Okay, so anyway, you need the outside world

Starting point is 02:07:04 to be ejected into your system, right? I'm trying to keep a straight face, right up. It's great. You need the outside world to make your system useful. It's like all the kinds of things that you'd care to do with a smart contract usually involve human beings and information streams aggregating and doing something. So the Oracle is a super important component in practice

Starting point is 02:07:23 for any smart contract involving any notion of value. You need to know when things have happened, how they happen, who won, who lost, et cetera, et cetera. So first, where do you get the data from? So what's the aggregator? You know, this is why we love our relationship with Wolfram because if, you know, one of the things you'll know about Wolfram is you get to know the guy is he's a data pack rat. Every email, every communication, every interaction, he's archive somewhere. Like last time I talked to him, oh, yeah, I have emails from you from 2012. He's like, you still have those? Yeah, every keystroke has written down and stored somewhere. So if you use Wolfram Alpha, it's a similar act from the way his mind thinks. And so you can

Starting point is 02:07:58 query the system and be like, oh, how many shipwrecks have happened in Florida between 1950 and 2000 that have resulted more than a billion dollars of cargo laws and at least one fatality? And it'll return an answer. I mean, it has this incredible source of data that's computable. But people who don't know, well, from Alpha, it's more than just the thing that assists you with your math homework in high school. It's actually this giant network of data of like weather data, location data,

Starting point is 02:08:26 just all kinds of, is doing the aggregation in a way that you can query across data sets. And it's exactly this kind of idea. It basically represents the very kind of thing you would hope to be able to query off chain as part of the smart contracts. Right, but the only downside is it's centralized. And that's always the Achilles heel of the frame. He tends to like proprietary things,

Starting point is 02:08:51 and he tends to like centralizing things, and mostly because he likes running the things. And then everybody can have an opinion on that. The thing though is that after you've done aggregation, there's a question of injection. How do you get that data into the system? You can do that in a very naive way where you can say, I'm just going to attach a public key to it and it'll sign for that data feed, that injection.

Starting point is 02:09:13 Then somehow, I'll just trust it as it is. Or you could try to make it more complicated. You could wait data feeds from different sources and have some notion of truthiness or of a lyracity metric or something like that. So Chainlink is just one of many different philosophies that was born out of the academy. I believe R.A.J.L. was connected to it, then there's some good people on that side. And it has a philosophy about how do you aggregate a philosophy about how do you inject and how do you create incentives so that that process over time gets more federated

Starting point is 02:09:46 or more decentralized instead of centralizing around one particular setup. Now closely related corollary to this is computation off chain. So as I mentioned, smart contracts are intimately connected to our oracle. The question is how much preprocessing and state management are you going to do outside of the system versus what do you do inside of the system. So it's a very interesting balance between these two. And they were thinking about this stuff for a long time. There was a great paper called Town Cryer came out way back in the day at Cornell. And that was all about using like SGX to scrape things.

Starting point is 02:10:20 And you can rely on trusted hardware to give you good data. But you could also use those SGX cores to do contract processing. Because if it runs in trusted hardware, then it's very unlikely to be tampered with or manipulated. And because of that, you can don't have to federate it or decentralize it. You can run it on a single device as if it was running on a cryptocurrency.

Starting point is 02:10:38 So there seems to be a desire in that community to capture more and more of the smart contract stack and pull more and more of that stack into that layer two infrastructure from running on layer one. Why? Because you have cost reduction. And potentially because your trust model collapses to whatever chain link is offering, you're not gaining anything by doing the computation on Ethereum or another platform. Because you know, you ever watched The Simpsons, there was this beautiful episode where Mr. Burns wants to turn the power off in Springfield. It is the perfect analogy for information security.

Starting point is 02:11:12 So he and Smithers, they go through this elaborate series of doors and secret passages and guard dogs and robots and shit to get to the center of the power plant to turn off the power. And when they arrive at the center of the plant, there's like this stray dog that's inside the room. And there's this wicker door that, you know, screen door that leads to the outside. And you're like, well, why the hell did you go through this elaborate series of doors and things if there's like a back door into your system? Well, that's basically a real-life analogy of, you know, the relationship between the

Starting point is 02:11:41 Oracle and the smart contract. You're only as good in your infrastructure model as your weakest link. It doesn't matter if all of your computation is decentralized if you're at the mercy of your data feed. Because I can just manipulate that and break the entire security model of the system. You'll perfectly execute the wrong answer. They say, well, if you're trusting us anyway, why don't you pull more of what you're doing on chain into our stack,

Starting point is 02:12:03 which creates more transaction fees for them and more value for them. But there are many different ways you can do oracles. Earlier I was talking about the biology of these things, cell differentiation, the minute that you admit heterogeneity in your system and you start having cells like stake pools or things that are on in 24-7, then you can start asking the what if question of why don't you guys just also provide data feeds? Why don't you guys also provide state channels or payment channels or generate random numbers from here, whatever, and you're now a service provider, you're making

Starting point is 02:12:35 the blockchain full time, but part time you're doing this. If you're making bagels, you can probably make donuts, that type of a concept. So I think that type of competition is going to be very difficult for a lot of these layer two protocols and aren't tightly coupled with the protocol, because the ones that are tightly coupled with the protocol, they have a built in trusted manage. They've already built a commercial reputation. There's already an increasingly more decentralized set. The other thing is you don't need a token. You can just use ADA.

Starting point is 02:13:05 You don't need an Oracle coin for these types of things to work. By the way, that's just for the injection component and the veracity at the station. It's a true or not. That's not about the aggregation. That's still a tremendously time intensive, expensive proposition. There's only a few people in the world that have what Steve has with Wolfram. And those guys by just cutting off those supply to replicate what they have is something that would cost hundreds and millions or billions of dollars.

Starting point is 02:13:31 And so it's an interesting question of, how do you incentivize the centralized aggregation of information? And that's kind of what town cryer and other protocols were trying to achieve. So maybe you can say how town cryer works because like, what's your vision? You're not partnering with Wolfram Wolfram Alpha in sort of exploring this partnership of data

Starting point is 02:13:52 and the blockchain. What's your vision for possible distributed version of Wolfram Alpha? Well, you know, the first step is just say, can we use this as a feed and they can be what Bloomberg is the financial markets. So you have a terminal and you have something and there's always a value of at least offering choice. So it's not like we're anti-chainlink or picking winners and losers, it's an open protocol, it's an open system. So if we're successful, Chainlink will migrate or will at least support us because they

Starting point is 02:14:19 like money. They like users, they like liquidity. It's a disservice to their community, not to support a potential customer set. But, you know, you're going to have a spectrum from the desire to do a completely decentralized aggregation, curation, injection, and veracity attestation to a completely centralized, vertically integrated set. You need to be able to have that whole spectrum and offer that to the Spark Contract developer to decide what

Starting point is 02:14:45 makes sense. By the way, a lot of cases, they're going to be their own Oracle. So, for example, the World of Warcraft example that I gave, it's a completely centralized thing. It's a video game run by a single company. There's no sense in saying that we're somehow going to decentralize that. What they're just trying to do is extend their currency or NFTs or whatever into new marketplaces. So the minting of that is controlled by a single entity and the world state of that, you just have to trust Blizzard to inject that into the system. You could try to imagine some sort of like, you know, set an old group of people within

Starting point is 02:15:19 the game who keep Blizzard honest, but it's completely unnecessary because they can change the rules of the system arbitrarily. So in that case, you're optimizing around efficiency and cost reduction. So you'd want a single feed that gets injected into the system from that. If you look at a stable coin that's algorithmic, and it's basing its value on the aggregation of many different exchanges, that's the polar opposite example. Because there, you're saying, okay, what's the price of my asset relative to some basket? But how do I know that the price feeds I'm looking at are accurate? You'd have to look at Binance and Bitrix and all these other things, or maybe there's

Starting point is 02:15:55 conventional Forex exchanges or something like that. Okay, well, how do you wait that? And how do you clip outliers? And these types of things, that's a completely different conversation. And there's a lot more mechanics you have to put in for that bundling and attestation of the veracity of the data feed. And what happens if you get it wrong? Your stablecoin gets mispriced.

Starting point is 02:16:14 And everything goes to hell. And you know, the markets will eventually correct it for arbitrage seeking behavior, but anything that was built on that will fail in the short term. So Oracle's really just a game of, you have to build a standardized interfaces and make it as easy as possible for people to do that, and then let people choose how they want to inject data and what level of assurance do they need behind that. The question is, how much do you leave to the user versus how much does the protocol take

Starting point is 02:16:40 care of for you? It's a difficult design question. For our part, we love working with Steve and Wolfram, and they're a great company, and they really have some bright people there. We know on the data that they're second to none, because not only do they have it, it's computable. You can do all kinds of things and manipulate with a very rich query language. That's a great thing, and we want to make sure that that's accessible to developers and

Starting point is 02:17:02 Cardano. Remember, they're like Bloomberg. It's essentialized developers and Cardano. But remember, they're like Bloomberg. It's a centralized speed in that respect. So if you want to build a chain-like S competitor, there's other protocols you could do for that. Now you ask about Tom Cryer, and that was an attempt to kind of sweep the oceans with the net.

Starting point is 02:17:18 Get the data through a decentralized way. And that was just saying, hey, let's use trusted hardware to go read all kinds of websites and other things. get the data through a decentralized way. And that was just saying, hey, let's use trusted hardware to go read all kinds of websites and other things. And because it's trusted hardware, the scraping is nonbiased. If you find something inconvenient to whatever the person who's scraping is, the trust hardware will still

Starting point is 02:17:36 do it, and it can't be changed. You'd have to manipulate SGX to do that. So that's great, but you still run on the problem of, why are that together? The underlying websites still don't have any notion of veracity or reputation behind them. And then you also have the issue of storage, or the hell do you put all of it? If you have exabytes of data, what's the incentive for that?

Starting point is 02:17:57 That's the dream of the semantic web. I still think it's a fascinating idea to basically convert the internet into a core, like a knowledge base that you can query, you can integrate and say what you did with the world from alpha, but much bigger. But that means basically revolutionizing the way we put the internet together. Which I think these ideas of off-chain data will motivate people because there's a lot of money to be made. And creating, finally, there's money to be made with a semantic web. So that would be an interesting kind of feature. I do want to ask you about video games really quick, because it's a small tangent.

Starting point is 02:18:38 Because you said this really interesting idea of Blizzard being centralized control. Is it possible to have items in the game that are not controlled by Blizzard? Sure. Being controlled in a decentralized fashion that you can, like what is it, the grandfather sword in Diablo? Hmm, what was it really? Somebody who's criticizing me, I said, I was saying all these kinds of nice things about Diablo 3 and they said Diablo 2 resurrected is coming out, they need to check it out. There's a lot of cams and war.

Starting point is 02:19:10 We both know that Diablo 2 is far better than Diablo 3. That's what they're saying. This is the war that they're having. Okay, so we'll play it's coming out soon. I'll play it fine. But nevertheless, those items are owned by Blizzard. Is there, is it possible to create video games where items are owned by the people like outside of Blizzard? And do you think, you know, like a half century from now we will all live in those games

Starting point is 02:19:37 and we'll forget the physical space even using that? Well, yeah, that's definitely possible. I look at Crypto Kiddies. That's a great example of that. Can you explain what Crypto Kiddies is? Well, it's basically just a video game that kind of lives on a blockchain, and the creatures within the game can breed with each other and create new crypto kitties, and you can own them.

Starting point is 02:19:52 So it's like, like some sort of dystopian tomogachi with lots of money behind. But, but anyway, you know, the thing is, those assets actually have a blockchain-based representation. And so whether the the infrastructure that hoists up that game off chain goes on or off, because that ledger exists outside of the game, any person can come in and replicate it, restore it, and turn it back on. Sands intellectual property. So yeah, it's completely possible to break your architecture up where you have a notion of the player apart and then you have a notion of the experience part

Starting point is 02:20:29 and you can interchange experiences. Almost like you do cascading style sheets or something for you know, have different presentations and the ownership of the underlying layers, the players. So yeah, that's definitely doable. And frankly, that's what's gonna happen in the gaming world because there's so much value in that. I mean, everybody wants play.

Starting point is 02:20:46 And, you know, right now the model is you make a game, you sell licenses, and you have a huge surge of people at the beginning of the game buying the video game. And then you have this long tail, but you've gotten almost 95% of your value in the first six months. You have a huge churn rate. The odds are the vast majority of people won't be playing the game within 12 months. But if you can create an interactive game where there's an actual economy inside the game, then you have EVE Online or Second Life for any of these things where you have people playing

Starting point is 02:21:12 for 10 years and there's people buying virtual real estate and all these other things. And you as a game developer actually don't have to create a lot of content. So your long tail gets a lot fatter and it generates a lot more revenue and your cost of operating system is fairly fixed or diminishing. So the economics align for doing exactly what you're talking about. I think it'll get done. Well, I just saw recently sort of this calculation that people played a wow and fortnight for 140 billion hours.

Starting point is 02:21:44 So and that's without the economic incentives there. So, do you think it's possible that like, most of our economy in the future, people playing video games essentially? Like, okay, so one vision of the future, especially with AI and automation, that people like, that we get wealthy and wealthier, there's this kind

Starting point is 02:22:05 of rising GDP for the entire world and then people are losing their jobs, but there's still a well off enough to be able to have a high quality of life. So we're all looking for meaning and meaning we'll find this by putting video games and now there's this extra levels like you can be a Bill Gates within a video game world in the digital world, is the matter. Right. The physical world. Is that, do you think that's the future? You just want to have the Westworld. If you can't tell, the difference doesn't matter.

Starting point is 02:22:31 Line uttered to you. Did you ever interview Yavol Harari? Was he? Not yet. Eventually. But you know, I guess, you know, home of the East, that's kind of like the roadmap there. This hedonistic dystopia where everybody just lives wired into some simulation.

Starting point is 02:22:47 And there's some movies about that, Ready Player One, and the other one was Ceregett and so forth. So, yeah, it was Hollywood has certainly visualized what this could be. But, you know, I'm not so pessimistic in that respect. I do believe that the video game world is evolving at an amazing pace. If you look at where Unreal is at, it's just incredible, the latest Unreal Engine. Within one or two more ticks of that clock, the iterations, so five to ten years, the photorealism will be so good that it'll be hard to distinguish between real life and video games. The hardware is almost there. The the question is, then when you have photorealistic experiences where you've successfully traversed the uncanny value to a point where it's good enough, then will virtual reality be more desirable than actual

Starting point is 02:23:37 reality? And for the vast majority of people, the answer is probably yes, because for actual reality, it's tough. It's hard, you know. But then your knowledge of that you live in a virtual world actually becomes a problem for you. So there's going to be this kind of sad, dark industry where people try to create amnesia where they're not aware that they're inside the virtual world. And so that's why it's sad. I mean, it's almost like, because you know, it's not real.

Starting point is 02:24:05 But if you could forget that it's not real, then you believe what you're experiencing is real. Yeah, but yeah, so what? You forget, you forget all the ugly parts of life, which is the physical space, and then you should get to enjoy a video again. But it's always lurking in the back of your mind that you're in the matrix.

Starting point is 02:24:22 Well, that have to not be in the matrix. That's just why the bald dude in the matrix was like, I want to be rich and have a beautiful wife and eat a steak every day. You know, he didn't want to know he was in the matrix. So you would take the red pill, not the blue pill? Well, no, hang on. It is a, it depends on how good the virtual world is. Well, that's what I'm trying to tell you.

Starting point is 02:24:40 This is, I mean, isn't that what most of the beautiful experiences about human life are is forgetting for a moment, for a time, like the mess of it? Yeah. I mean, that's what love is, you forget, like all of a sudden everything is beautiful, but like the reality is you're gonna lose that person, and most likely the love will fade,

Starting point is 02:25:00 and no matter what, even if it doesn't, you're both gonna be dead soon. She's surprised. So I'm taking the blue pill on that one. You went full earnest becker on me, man. Okay. But you know, I get what you're saying, though, and actually, but then it begs the question

Starting point is 02:25:17 how do we, and goes back to the very first question you asked in this interview, which is like, how do we know we're not in a simulation? Or, you know, is this, this boss trimmer's concepts or these ideas like real? Well, it's entirely possible that we are and that we desire to be because the real world is horrifically dystopian or bad or maybe we're actually don't exist, we're completely virtual and does it matter? And I'd argue that it probably doesn't. At some certain point, if you're at the end of your life and you're 90s dying of cancer, the fact that you can live up being young, healthy, and 25 is probably a desirable thing,

Starting point is 02:25:50 and no one would ever complain about that. Where it becomes problematic is if the vast majority of society enters this virtual simulacra of reality, and as a consequence, nothing works because there's no one to do anything. Society falls apart in that respect. You know, there's no desire to do anything in the real world. Innovation stops. The desire to actually do real work stops because you're always inside this virtual economy.

Starting point is 02:26:15 So I don't know. It's an interesting question, but you know, drawing it back more to where we're at today, the evolution factors are there. You know, VR is evolving at a very rapid rate. The game engines are just incredible today, and they're really doing amazing things. And there seems to be an overwhelming desire for people to escape the harshness of where they live,

Starting point is 02:26:36 just by evidence, by how many billions of hours have been spent playing video games. People still play Skyrim. Yeah, yeah. Yeah. It's good games. Probably my favorite game with the whole Elder Scroll series. But it's fascinating because smart contracts is actually the mechanism by which we take

Starting point is 02:26:52 a lot of the meat space stuff and move it to the digital world. All the stuff we've been talking about is really probably the mechanisms which take us there, which I find that world not distoping, I find that world quite utoping because there's so many opportunities to create beautiful experiences. But since we're talking about the future, let me ask you the timeline question, or even just like definitional, what is a Lonzo? You mentioned some fun, hello world experiments going on. And. All right. And how and when we'll card down, I'll get smart contracts.

Starting point is 02:27:29 Yeah, so Alonzo Church is a famous famous mathematician, computer science guy, and he was a contemporary of touring. And there was like these three different views of computing, recursive functions from girdle and touring machines from touring and your church had lambed a calculus and they're all equivalent and they all give you the ability to build a computer. So we like functional programming. So we decided-

Starting point is 02:27:49 That's your favorite church. So we had to name something after church and it's just weird that we never did. So we said, okay, Alonzo is a good release name. Basically it was bringing smart contracts to Cardano. It took us a long time to get here and we'll be there in the next 90 days. You know, it's like everything we do, there's a process and so there's all the colors of the rainbow. We start with a Lonzo blue and then white and purple. And each step you do some more things, you bring more users in and then eventually

Starting point is 02:28:16 you get to a threshold where you say, okay, everything works the way intended and you push a button and we initiate what's called a hard for a commonator event and boom, the system has smart contracts. You just wake up and it's there. It's like it's in your house. It's like when I got my blue check mark on Twitter, I woke up and I had it. It's just like Christmas game.

Starting point is 02:28:33 And you'll never the same. You can't go back. It's like hard fork. It's a hard fork of Charles. Yeah, exactly. You got blue, well, I actually I think you can take it away, but can they take my check mark away? I think you can take it away, but can they take my checkmark away? I think so.

Starting point is 02:28:45 But it'd be like a hard fork backwards, I guess. Okay, so great. But currently, there's a testing procedure going on to see what does that look like, and what will give you confidence that things are working well. Yeah, so first, you start with the Mary era, which is where we're right now multi-asset. So you can do metadata and issue tokens on Cardano, but you have limited programmability on chain.

Starting point is 02:29:13 Lanzo adds the programmability in, but we already have most of the foundations of the extended UTXO model and the smart contract model, just those things aren't ready. So the first step is say fork it, so all those rules are now there. Okay? So that's what we did with Lanzo Blue. We forked a test net-based layer

Starting point is 02:29:30 and it's successfully survived going from Merri to Lanzo, which means that you can move transactions from one side to the other. Both systems work. And then the next step is, say, okay, well, are the stake poll operators, people run the infrastructure, able to run this test net, just like they run Cardano.

Starting point is 02:29:45 And that's what we're doing right now with Blue. We're bringing all these SPS and then are we able to submit and run smart contracts on the system and they actually return around trip. You send something, you get something back. Yeah, okay. So that's where we're at. And then what you do is each step. So the next is why you go from like 50 people to several hundred and then purples an open

Starting point is 02:30:06 Testnet where we want every single person the entire ecosystem to use it It's also a DevNet so that means that people are writing with clues playground and local interpreters They're their smart contracts can actually start testing them now on the public infrastructure So it's kind of like releasing Dev kits to the Xbox or something like that you send them out to game developers before you release the Xbox so they can test their video games and anticipation of the release of the system. So you run that for at least a month and as long as it doesn't blow up in your face and oh god, what have we done?

Starting point is 02:30:36 Hindenburg, oh the humanity. You release it and you ship it. The problem is it's no longer in our control. There's over a hundred exchanges that have listed Cardano. There's lots of wallet infrastructure. There are thousands of different constituencies. So it's less of a technological problem now, and it's more of a coordination problem.

Starting point is 02:30:53 So you have to evolve in a very methodical way, and each step of the way you bring new actors in, they get ready for it. They upgrade their infrastructure to it, and then like shells, eventually you get to the outer shell, which is the hard fork for the general public. And if we've done it right, like that blue check mark, they wake up and it's exactly the same. They just get a little update. They update your client. And they start demanding Walgrew beef. Is there a stuff you're worried about in terms of like when something's this tricky,

Starting point is 02:31:24 you know, goes up several orders of magnitudes in terms of scale. Are there problems that you foresee? Is there like, like we said, there's game theoretic aspects, all those kinds of things. Like, what worries you the most? I, I mean, I sleep like a baby. I wake up every two hours crying. Oh, damn, that's a good line. You're full of good lines. I mean, there's a lot to it. You just made me realize that expression makes no sense. I slept like a baby, but go ahead.

Starting point is 02:31:52 Yeah, exactly right. Bessing your whole world up right now, Alex. No, I mean, there's so much that keeps me up at night. You know, it's like you're at a cold sweat every day when you have an ecosystem like this because you, you, you, invade. The other thing is your judge just much by the applications people build on the platform as you are by the platform you've constructed. So, you know, one of the most unfair things

Starting point is 02:32:13 that happened in our industry was blaming Vitalik for the Dow hack. He didn't write the code, he wasn't responsible for it, it's completely independent, different team. And because it blew up, a lot of people just developed this idea. Ethereum is not secure. I'm as fundamentally broken. And it it blew up, a lot of people just developed this idea. Ethereum is not secure.

Starting point is 02:32:25 I'm as fundamentally broken. And it's true there are some issues there, but come on, that's like saying, oh well, Photoshop didn't work, fuck Bill Gates. And that's the issue. You get as a platform developer, coupled with the wins and losses of your application developer.

Starting point is 02:32:44 So if they go do amazing things, it's like, oh yeah, Windows is great. We love it. And if they go do terrible things, they're like, oh man, I guess he's trying to kill all of us. So what we're kept up a night about is not just what we've constructed, but also how do we curate an ecosystem and foster the development of an ecosystem where you have assurance baked into the application. And that's somehow expressible to the user. When you download your smart contract or you click your one

Starting point is 02:33:10 click install the user's Uniswap clone or whatever the hell it is that's deployed on Cardano, you have a green check mark or something that indicates to you that somebody audited the code or followed a specification. The lack of that is problematic because then first there's impersonations, the whole my ether wallet thing, like your videos or my videos are the same. Every comment there's a bot that says, hey, you know, give me some money or something like that. That kind of stuff happens, but then just protocol level flaws, like what happened with the Dow hack. That's what really keeps me up at night. How do you resolve that problem? Because I don't hire these people. I don't tell them what to do. I didn't tell them how to build things on the platform.

Starting point is 02:33:47 They may have tons of experience in knowledge they could be Simon Payton Jones, or they could have absolutely no knowledge whatsoever when they read one tutorial and they've written three lines of code in their entire life and they've deployed something horribly broken, copy paste. And suddenly it all goes to hell, I'm judged by both.

Starting point is 02:34:03 That's what really keeps me up at night. And we're, as a company, trying to figure out, and as the ecosystem, trying to figure out standards, like at University Wyoming, we're setting up the Smart Contract Engineering Institute. We're negotiating with them right now. And the goal there is just to create some standards for how to certify smart contracts. And so that you can get that green check mark and know that it actually has some assurance level behind it. But God, that's a huge coordination problem.

Starting point is 02:34:27 And it's a huge information presentation problem and incentives problem and so forth. And unfortunately, people who value being first to market will kind of piss in the pool for everybody else. In terms of maybe you can comment on the topic of decentralized exchanges. What kind of decentralized exchanges decks is, what are they, first of all, and what kind would you like to see built around Cardano? Yeah, so people want to create exchanges that don't have custodial risk.

Starting point is 02:34:55 The point of exchange is to build you a marketplace where bids and asks can find each other. Market people can meet and trade. You can find a price and you get liquidity. You got gold, you want to turn your gold into dollars. Well, somebody has to create a marketplace for that. So like Coinbase is an example of marketplace, but centralized. But the problem is you have custodial risk. So when you put your gold and your dollars, your digital representations of these things into the exchange, what if Wally, he was, he broke up with him and now he's really sad and he's

Starting point is 02:35:27 gone to the dark side and he's become Wally the hacker. Okay, so he can go and sneak his way in and hack into Coinbase and steal all your gold and your tokens. So instead of actually being able to swap these things, he've lost all your money. And there's other problems too, like, what's say, Daisy has now come in and become a regulator and said, oh, I don't like these exchanges anymore. I'm just going to shut them all down. Yeah. And then you have no access to it. So you have sovereign risk. You have the risk of threat. You have regulatory risk. You have the issue of banks may be cutting you out. So it's been in our

Starting point is 02:35:58 industry for more than 10 years. Mount Gox was the most famous example of that. They collapsed, I believe in 2013. And hundreds of millions of dollars was lost most famous example of that. They collapsed, I believe, in 2013. And hundreds of millions of dollars was lost over the course of a while. So the point of a deck is saying, can we do what a marketplace does, but not have coin base, not have a central actor run this thing? And there's a lot of problems with that because exchanges are generally creatures of latency, you know, high frequency trading, for example, these things, the nanosecond.

Starting point is 02:36:28 They co-locate their infrastructure with the exchange software just so they confront random orders over other people. I mean, it's crazy the amount of technology that they put in. So the traditional wall street version of an exchange is very centralized, very fast, very optimized, and kind of behaves by a very close set of rules. When you look at a DEX, you have to accept that you're going to have to have slightly different rules because you're operating on a global systems latency,

Starting point is 02:36:55 and you're operating a system that has different behaviors. However, that said, there's a lot of great protocols that have been built for it. You know, Uniswap has kind of evolved a lot over the years, and we've seen a huge competition and a lot of evolution to basically build out protocols that kind of excuse some of these security problems and enjoy high liquidity. And then also have this beautiful concept of openness. One of the gatekeepers, the crypto when you're a cryptocurrency developer, are the exchanges.

Starting point is 02:37:22 I remember when we first created Cardano, you know, the Biff and X guys reached out the Cardano Foundation. They said, oh, we'd be happy to list data. I said, okay. And they said, yeah, we want $5 million to do it. You know, so there was kind of a some Italian for go fuck yourself in those email conversations. Fuff, who knows what I said. But anyway, there was the that kind of back and forth happens all the time. And because these guys are gatekeepers, they have this nepotistic control information asymmetry and so forth. So having a deck, you don't have that problem. You have open listing. You basically just put the asset into it. And if anybody wants to trade it, they will. And if it seems

Starting point is 02:38:00 like it's a good idea, a natural market will form, market making will occur. And you get liquidity with it. So there's no barrier to entry for that type of system. The biggest existential problem for Dexas right now is the concept of regulation. So basically right now when you use Binance or Coinbase or these other guys, you have to go through KYC and ML, know your customer and anti-money lottery. So basically who are you and your money real or not, or are you drug dealers or something? So normally you do that by saying, okay, I'm going to give them my copy of my passport and maybe they're going to request some tax records or whatever the best practices are

Starting point is 02:38:35 for the particular jurisdiction. And then that exchange is liable if that's fucked up. So if the government comes in and says, hey guys, you know, we've pulled your compliance records and they find discrepancies, they'll actually put the exchange at a business or find them very heavily. JP Morgan Chase got $19 billion in finance and fines over the last 20 years for various compliance issues amongst other things. So it's an expensive, very difficult thing. And it decks, it's open system. You just have value coming in, not identity. And so all these things are trading

Starting point is 02:39:07 amongst Sadanamist accounts. And so there's no notion of compliance right now for that. So a lot of regulators are coming in and saying, oh, well, this is just a cesspool for terrorism and drug dealing and bad stuff. And they're word salad of bullshit. But you know, it is what it is. You have to deal with these guys.

Starting point is 02:39:23 And so there's been a lot of discussions of, can we take Dexas and we'll keep the openness and keep the liquidity and no counterpart a custodial risk. And can we add some notion of compliance to that and a decentralized way that doesn't require a single actor to be a gatekeeper. So I think actually by combining did the centralized identifier is the way to do it. But it's actually the next generation of the technology, it's the regulated DECs. And who regulates that? How does that work and so forth? But I think ultimately, those are going to be the only marketplaces that end up surviving

Starting point is 02:39:55 in this current environment if your desire is to exit to a dollar. If you don't really care about the fiat side, like traditional legacy currency, you can always do things in a shadowy, unregulated way, but I mean, it's a personal preference and a business preference. Can we kind of return to proof of work and proof of stake? There's just so many topics I want to talk to you about.

Starting point is 02:40:18 So I'll jump around a little bit. But at the Bitcoin conference, Jack Dorsey spoke, I think I believe he said Bitcoin changes everything. I think you made a video for Jack trying to explain different ideas to him. I guess the describing the difference between proof of work and proof of stake is what we've talked about. What do you hope Jack Dorsey comes to understand about the difference between proof of work

Starting point is 02:40:41 and proof of stake? Well, I hope he understands this is just a resource. That's the entire point of the video I was trying to make. It's like, dude, you're like in this cult where you think the only way to be secure is proof of work or in somehow proof of stake is less secure than proof of work. I don't even know how you put those inequalities there

Starting point is 02:40:58 because you're talking about apples and oranges. You're making different trade-offs and there's different assumptions about the nature of the people involved, but the mechanics are the same. And so it's really more of a question of what type of system do you prefer? Do you want mercenaries guarding Rome or do you want Roman citizens guarding Rome? Okay, and as the Romans learn, it's better to have citizens as usually doing that. Okay, and that's the only point I was trying to make to Dorsi. And, you know, I don't think he watched it or particularly cared,

Starting point is 02:41:26 but it was more of a video for everyone. And to start that dialogue of realizing that the real game is not, is proof of stake better than proof of work, is how do we go from one to n and what should n be? You just mentioned that's semantical addressable web going back to IPFS and these other concepts. Well, how do you pay for the enormous burden of storing that much data? You can create a consensus protocol for it.

Starting point is 02:41:50 There actually is one. It's called permacoin came out 2014, 15, Andrew Miller wrote it and a few other authors. I think our John Katz may have been an author as well, but basically it was just a throw away proof of work style algorithm that only works if you have large amounts of data. It's like your miner is like a hard drive effectively.

Starting point is 02:42:12 Proof of storage, I think you call this. This type of stuff. There's been since then many iterations, evolutions of that type of protocol. What if you throw that into your resource back? Now you have a capacity in your system for storing huge amounts of information. That's incentivized by the way the system works. And you can balance that with a proof of stake system. And you can balance that with, let's say you have proof of useful computation.

Starting point is 02:42:36 We may have a paper on that, who knows? Coming soon. And what if you have a proof of useful computation where maybe you can do walk sad or something who knows? Well, something like that. Okay. Well Well now you have three resources inside your system and those three things keep your system secure, they keep each other balanced, and they just so happen to create the world's largest supercomputer that's programmable, and it just so happens to create the world's largest database that's programmable. In addition to having a shareholder style model for ownership inside of it, to kind of balance these things out.

Starting point is 02:43:04 So people care about the appreciation value inside the system. So that was my point to Jack, is your business guy, why are you betting all your eggs? And one crazy model that's occult, step away and realize that that does something. It's a tool, but saws aren't the only tool in the toolbox. There's hammers and screendrivers and other things. Go to end resources.

Starting point is 02:43:24 And let's have a real conversation about what would a world computer or a world infrastructure that's useful for your business, don't you? In his case, Twitter require, and what type of resources would you need for such a thing? In this case, Square more importantly. Currently, if you look at Square and Cash App, they support Bitcoin. He is all in on the proof of work idea. Not all in, but currently kind of, that's the one supported idea.

Starting point is 02:43:51 I guess there's an adjusted tip in proof of work. I love you so much Charles. Thank you, appreciate this. But I'm not gonna run with that, even though I'm tempted to, looking forward to you hope Cardano Becomes part of cash app. I mean he's the business guy or at least I'd hope he is and it's not about what I want or what he wants It's about what markets want, you know when you run a publicly traded company You have a fiduciary obligation your shareholders to maximize the, it's the sustainability and value of your company.

Starting point is 02:44:25 And so if he's running a company that makes money off of these things, it makes absolutely no sense to be a maximalist. You want transaction volume, that's how you make your damn money. It was Coinbase was the same way. They were very maximalist at the beginning. Very quickly, they started realizing, hey, we're losing a lot of money. If we want an IPO, we kind of need to be a bit more diverse. Eric Voorhees was also a maximalist way back today. Now, look at Eric.

Starting point is 02:44:49 He's got a shapeshift and all these other pieces of infrastructure. He's a lot more friendly with us alties. So Jack will make that decision. His people will make that decision, I think, based on market dynamics, transaction volume and value to the user. And if the concern is actually legitimately security, then the only question I'd ask their team is, can you please provide me a definition of one? Doing POW is more secure than proof of stake as a tweet is not really a proof.

Starting point is 02:45:19 You need to actually come out and sit down and say, what is your security model? What do you care about? What do you value? What's the problems you're concerned about proof of stake? And they never really get there. That's why I call this maximum like a religion because it's just like saying, well, the angels descended from the heavens

Starting point is 02:45:35 and it's like, well, how do you know? Because the Bible says so or this doctrine said so. It's like, well, that's your evidence. Somebody wrote something down. Can you please give me a little bit more? They say, no, you're challenging the word of God. more they say no you're challenging the word of God in this case You're challenging the word of Satoshi and all I ask for is just what is the burden approved? We wrote the papers we have security models we went through the peer review process God that was not easy

Starting point is 02:45:56 We wrote formal specifications in some cases we formalized those specifications with isabel for God's sakes, which is not easy to do And then we implemented it and it's running in production with a million users at a $50 billion market cap. I mean, is it, what point does, do you start saying, well, maybe there's something there? You know, and they say, no, there's nothing there. And it's not secure, it can't be secure. And he's okay.

Starting point is 02:46:18 Then why do you believe what you believe? And then never come back to me with an answer, ever. Well, I believe God didn't go through a peer review process when you wrote the 10 Commandments. So sometimes it works out, sometimes not. Let me ask on that same thread, Tesla, SpaceX, Elon Musk currently invested in Bitcoin but are openly looking to explore other cryptocurrency investments.

Starting point is 02:46:42 What case would you make for Cardano? Well, if they truly care about alternative energy and sustainability, carbon reduction or carbon neutrality, you can't be in a system where there is no built-in mechanism to constrain the energy consumption. With proof of stake, energy consumption is a negative. You want to minimize it. If you can get the same amount of stuff done on a raspberry pie as you can at big server, you're going to do it on the pie because ultimately that server costs and energy cost is coming out of your budget. With proof of work, any innovation you come up with to optimize power, you just build more asix because you know, it's always 30% more power efficient.

Starting point is 02:47:21 Great. By 30% more. You keep you keep you keep you keep adding to the works That because you want more hash power more hash power more share of the pie So you have no energy savings component I know these people are saying well, there's a lot of wasted energy in the grid And this is kind of incentivizing Using that wasted energy and it's a better way of storing it than batteries because you're now storing it as a Bitcoin instead of storing it as energy. Okay, maybe there's some truth to that. But anyway, it's just- The energy is a critical point for you like that. Yeah, and that's exactly right. The energy is a critical point for me with Tesla because they assert to be an alternative energy company.

Starting point is 02:48:01 And unless they can make the case that somehow the proliferation of Bitcoin is legitimately going to proliferate batteries, solar, and wind, or other things, then it's probably good for them to just focus on the most efficient, energy efficient cryptocurrency possible. Otherwise, you're exacerbating global warming, you're exacerbating the ecological consequences of it. The other thing is Bitcoin is the least programmable

Starting point is 02:48:23 of all the cryptocurrencies. And if you want to do interesting, sexy, unique things, let's say Tesla, for example, they want to start doing Vida and V2V for autonomous vehicles and have the vehicles start talking to each other and connected to 5G. Well, imagine if you want to build a telco coin or some sort of 5G coin and you want to build an IoT layer in network, there's just no real way to do that on Bitcoin with the way it's designed. So you'd need fundamentally different infrastructure to create such a token and regulate such a system and have these things autonomously negotiating to do business with each other.

Starting point is 02:48:55 You need Dex's and stable coins and all kinds of mechanics to make something like that possible. Well, that's really beneficial to Tesla if they could figure that out because they could create like an information sharing incentive scheme where if the cars talk to each other, including other branded cars like GM cars and Ford, they can now actually get data from those cars through a marketplace in exchange for the benefit of autonomous driving or for the benefit of understanding road conditions or safety enhancements, so forth. So it's just depending. Are you just here to speculate? Are you here to actually

Starting point is 02:49:24 use as another medium of exchange or do you actually want to build infrastructure on this thing? The more closely you get to utility, the further down the road you get there, then the more programmability you need. And so it makes a lot more sense to be an Ethereum fan or Cardano fan, then to be a Bitcoin fan. So to be both both a stake and have the small contracts capabilities? Yes. And that's why we went over Ethereum because they're proof of work. done to be a Bitcoin fan. So to be both both of us to stake and have the smart contracts capabilities. Yes. And that's why we went over Ethereum because they're proof of work. You mentioned God, God spelled backwards as dog. How's that for transition? And Elon Musk and Tesla are at least a little bit curious about a coin called Dogecoin.

Starting point is 02:50:06 Right. You made a video directed to Elon on how to improve Dogecoin. What are your ideas for making Dogecoin even better than it already is? Well, you know, Dogecoin is just based, it's like that 9-inch nail song, a copy of a copy of a copy. Yeah, it's just a copy of a copy. It's a Bitcoin gave, Litecoin, Litecoin gave, Dogecoin. And it was kind of a parody cryptocurrency. And I think Jackson was trying to do it to like prove a point about altcoins. And then true to forms, like nobody got the doctrine

Starting point is 02:50:36 and completely perverted the entire religion. It's almost like the emperor of man and warhammer 40k. It was like this atheist, don't worship me. And now there's like this whole religion built around the emperor. So, Dogecoin has become a thing and it's become such a large thing that it is a reasonable target for somebody to fix it up and repair it, make it an interesting cryptocurrency. The point of the video was to show what a modern third generation cryptocurrency really would require. It's a major overhaul and there are already people doing this. You know, there's the Salinas and the Harmony Ones and the Cardano's, Neosis and all these other guys and billions of dollars and huge dev teams and all these innovative protocols.

Starting point is 02:51:12 If you're really serious about this thing sticking around, being useful and doing stuff, then the point of the video was to show the types of things you'd have to think about and the types of papers that are all open source source patent-free and don't have any notion of intellectual property behind them that his engineers could grab and go and do. And he did mention on Twitter that he was looking for feedback on how to improve Doge. So I said, all right, well, I'll just put all these things together. It was a little tongue-in-cheek because I figured he'd ignore it. But it was also showing how hard it is to innovate in this entire space.

Starting point is 02:51:46 You don't just go and say, I'm going to go build a battery power car or rocket or enter a new industry. It's really hard to do that. You spend years and lots of effort. You have to do a series of small learning steps. You have to pick up destroyed rockets on the side of the beach and things like that before you get to the rocket landing itself. Well analogously, it's really hard to build a cryptocurrency.

Starting point is 02:52:06 Satoshi probably spent years thinking carefully, and that work was a derivative of 30 years of work in the digital assets based starting the 1980s, working its way through. And then Bitcoin only did very limited things relative to what Ethereum can do, or Cardano can do, and so forth. So the minute that you extend that complexity, you're talking about years of R&D, years of engineering effort, then needs to be done. So what's the point of doge? Is it just a meme? Is it actually contending to be useful? Or is it competing as a store of value against Bitcoin? Now if it's competing as a store of value against Bitcoin, why the hell does it have the monetary policy it does? Also there's predatory distribution of the underlying asset.

Starting point is 02:52:48 And over 90 some percent is consolidated less than 1 percent of the holders. For a dogecoin? For a dogecoin at a very, very low price point. So they can sell at almost any price point and make a profit. So it hits 50 cents there. They're billionaires. And it's not like 20,000 people. It's probably less than 100 wallets that have that distribution.

Starting point is 02:53:08 So there's this existential ticking time bomb that's in Doge that once the guys who are vested start selling, they can just keep selling and keep selling and ride it all the way down and make windfall profits regardless of what price they sell down. And who are they selling against? The retail investors. People make $500 spare you know, spare money a month or something like that. And it bothers me because I see it in my community. So I live in Longmont, Colorado, and I was at a restaurant and I was talking to the waitress

Starting point is 02:53:35 and she asked me what business I was in. I said, I'm in the cryptocurrency space and she's like, what is that? I started explaining all of it. And she says, oh, yeah, I own some dogecoin. I said, you own anything else? No, no, I just bought some to it. Why did you buy doge? Oh, I thought you'd be tweeting about it. And I thought it was a good deal. So when you see stuff like that,

Starting point is 02:53:53 where people know clue what they're doing, they don't really understand the supply dynamics, the ownership dynamics and these types of things. And then when the clock stops, they're the ones who get hurt. And then the regulator comes in, the Elizabeth Warrens of the world, and they say, see, this is an evidence, these guys can't regulate themselves,

Starting point is 02:54:11 control themselves, we need to control everything. Either it lets ban it, or let's just announce that the only three are legitimate, and everyone of them has to be connected to identity, and ra ra ra. And I'm just very concerned that that's a bad thing to do. And that's why I've been so vocal about this topic. And my hope is that a compromise can be made where real developers come in and they start working on Doge and they find a way to create some

Starting point is 02:54:34 sort of use and utility for it. So at least it has a value floor and you know, it won't collapse. Is it possible for Cardano and Doge going to work together somehow? Yeah, it'd be a lot of fun. You know. I'm not adverse to the idea of cleaning up the code base, but legitimately, whoever comes in, be two years or three years of work. Because you have to do real stuff. That code is like Litecoin Circa 2012, 2013. Well, the interesting thing about Elon, I've got to directly look quite a bit.

Starting point is 02:55:03 That combination of humor and extreme ambition in the face of impossible odds is something he does really well. I think that's the spirit of Dushcoin. It's fun and almost like bold, ambitious innovation. I think you can't discount the power of that. But where's the innovation? What's the issue? Well, this is step one. What's going to Mars for Coachcoin? Well, I mean, he came, he came in the same way to to Rockiss, he came in the same way to to to electric cars. It was

Starting point is 02:55:38 seemed impossible at first, but you step in and you solve the problems first principles one at a time. But it'll get you a little bit on this because I think he had some trends though that he was very smart to recognize in the case of battery Paracars is that hang on everybody has tablets and cell phones and these other things and There's an incentive to make batteries better faster cheaper and charge faster and that's connected to mobile computing So regardless if you want battery Parac or not, every year you have billions of dollars of R&D being pushed to force this capacity to evolve and he's just getting on the train and piggybacking on that. So that was a brilliant business acumen to recognize that. The case of SpaceX, it was just a obvious question. Every time you get on a plane,

Starting point is 02:56:19 you have to throw the plane away and no one would fly. So reusability is like a fundamental thing that if you solve that, you've now opened space up to a complete new class of commercialization. I don't see the problem in Dogecoin because if he was looking for it, then why not look at a real platform actually trying to solve a real problem. There are so many of them. He has, he has, he throw a rock, he can hit 15 of these guys and they'd all die to work with you in Musk. Yeah, it's very interesting. I mean, so first I could continue pushing back on your intuition about electric cars and batteries and so on. I don't think it's more obvious in retrospect than it is at the time, I would say, because

Starting point is 02:56:58 I would agree with you on the batteries front, I wouldn't necessarily agree with the electric car, because first of all, nobody started a successful car company for decades Hopefully it was the loyalty the EV for it guys or whatever it was with GM They didn't want to give them back when they they had the least program So there's some basic intuition that there is some hunger here But it's not obviously you can do it successfully and with relaunching rockets for cheap That's not that sounds good on paper, but to do it well, NASA is spending way more money for this. And the Russians were assholes, not selling any rockets.

Starting point is 02:57:32 So you have to do it all yourself from scratch. How do you build the team? How do you launch rockets when, if you fail, if you times you're gonna go bankrupt? I mean, it's just business-wise, I would rather build an app like Angry Birds. Oh, yeah, yeah.

Starting point is 02:57:47 He's got this mantra. You gotta give him crazy. He's got boulders for balls. Yeah. That's a good answer. Yeah, thank you for that. But I don't, maybe that's what, I mean, I think there's not enough first principle thinking

Starting point is 02:58:02 on the cryptocurrency side. I think I agree with you on that. But there's some aspect to which the seriousness of the cryptocurrency world is paralyzing. So in some way, the innovation that you spoke to requires taking risks, requires not taking everything so seriously, like being afraid to take large bold risks in the space of ideas, not in the space of financials. So in that way, I think that's one pro for Bitcoin is there's room, it's hungry for innovation. But I think Cardano in that same way is hungry for innovation, just because you said, with some more rigor and formulas in behind it. And even Ethereum has a hunger for innovation.

Starting point is 02:58:47 That's where Bitcoin is a little bit more, I would say conservative in terms of how much innovating they're willing to do. In terms of the incentives they built into the systems for the evolution of the cryptocurrency. But yeah, I mean, it's difficult to psychoanalyze why Doshcoin is the thing that excites Elon so much. But at the same time, there's some power to the fun.

Starting point is 02:59:12 It sounds ridiculous to say, but the fun, the this this idea that, you know, the most entertaining outcome is the most likely. Right. It there could be something built into the physics of the universe that makes that true. Because you know, the, the viral nature of fun has power. Well, it's a neural science thing. We liked opening. We like these these chemicals in our brain, you know, and when we have fun, we want more of it.

Starting point is 02:59:46 So you tend to gravitate towards work activities and play activities that are enjoyable to you. And it is nice sometimes to kind of come in and troll an entire industry. Yeah, I can imagine he's probably able to time his life. It's the same as like taking Tesla private at 420. That kind of stuff.

Starting point is 03:00:04 And it's one thing, when you do it with friends. And it's one thing when you do it with friends, it's the only thing when you do it with the whole industry and it hurts people financially. And also I understand he hates short sellers and there's some things there. And I can't speak for him because I only know the guy from a distance. It just I live in this space.

Starting point is 03:00:21 And I have to deal with the consequences and clean up the mess. You feel the pain. Yeah. This results in a regulatory event. It's like, I'm the guy who has to put on a suit and go to Washington and go and sit in a senate inquiry and all this stuff. And he's the guy that, you know, just like, laugh with his friends about how he crashed the crypto market and how easy it was to do it. And that's, that's my only umbridge about this. On the other hand, you know, if it brings a lot of cool, new, interesting things and people into

Starting point is 03:00:46 the space, that's a net positive. And so, you know, it's not university bad or universally good. And I'd like to give people the benefit of the doubt. And so I'm really hopeful to see what comes about this recent surge of interest. And if Elon actually puts his money where his mouth is and takes some of his enormous engineering talent and capital and starts contributing and building something in the cryptocurrency space. Be really cool to see that happen.

Starting point is 03:01:10 There's a bunch of different technical aspects I want to ask you about on the cardano side. First, maybe on the scaling side, what is Hydra? How does Hydra compare to other different ideas for scalability like roll ups, main trade offs with respect to security UX and anything else you want to then, you want to talk about. I have to have a little bit more energy, Lex, come on. You know what I need?

Starting point is 03:01:37 I need that Coke machine that you mentioned, the thing that converts water to cocaine. Water to cocaine from Dr. Bullock. We'll leave this in, right? Yeah. I use the Morphic State channels. That's a great topic, right? There's a word salad of cryptographic terms.

Starting point is 03:01:54 Whether lighting, hydra, rollups, any of these things, really what you're trying to do is say, okay, if I do it on layer one, it's slow and expensive. What I'm going to do is batch something somehow, some way, and then do it in a different system where it's fast and cheap. And what I'm doing with that is I'm losing some of the security guarantees of the base layer, and admitting a slight higher degree of centralization. But then I get super fast settlement,

Starting point is 03:02:23 I get super low cost transactions, and potentially I may even be able to get distributed computing, meaning that instead of having the smart contracts run in a replicated system, they can run on a single node like a stake pool, and their stuff is different from the other guy's stuff. So you go from a system of capacity of whatever it is to a system of n for the totality of all the

Starting point is 03:02:45 stake pools. So, basically Hydra is just the next generation of that when you have the ability to tinker with the accounting model and the layer 2 solution is co-designed with the layer 1 solution. So it's like what lightning would have been had lightning been co-developed when Bitcoin came out. There would have been special provisions made in Bitcoin specifically to accommodate lightning, and it would have made it very easy for you then to move inside the system, outside of the system, and have security properties preserved,

Starting point is 03:03:14 like availability, for example, or fraud resistance, say, oh, you can't steal the money or these types of things. Where things get really complex, and this is why Hydra's novel overlighting is when you want to move beyond payments to state management. So payments are just, I want to move between Alice to Bob as quickly as possible as low cost possible.

Starting point is 03:03:33 So for example, I have a micro tipping application, like Change Tip on Twitter, or like a video, I'm watching YouTube video, like maybe this video in the future, and people really like it, and they click Tip and you get five cents or something like that. Okay, so that's an example of a perfect payment application and that's great. But what happens when you actually have a rich smart contract like a Dex or you know, you want to do a video game or something like that, you want to run that off chain.

Starting point is 03:03:58 But then there's some reconciliation on chain that happens. So a state channel basically lets you do that. But it's a lot more complicated and there's a lot more to think about. So Hydra basically just has, and it's designed a collection of ideas of how to do that. And the current paper is for a single head. The next thing you do is composition. So you go multiple heads and there's a routing protocol between them.

Starting point is 03:04:23 And then eventually you create these tail protocols for when things get asynchronous. So instead of always being aligned and always being available, what happens if they die for a bit and then they come back? And you can create all kinds of guarantees that your funds won't be lost or locked forever or things like that. There's a failure recovery mode for this type of stuff. And basically the idea is leverage what Lightning has already achieved with Bitcoin. But then take advantage of the fact that you have a more expressive accounting model of stuff. And basically, the idea is leverage what Lightning has already achieved with Bitcoin, but then take advantage of the fact that you have a more expressive accounting model and

Starting point is 03:04:49 a more expressive programming model, so you can just physically do more. And you can put more crypto and tie that thing. Now, contrast it with rollups, really that is just saying, you're going to take some thing, batch a bunch of transactions together, and you're going to generate a proof. And then what you can do is whenever you see some part of that history, you can check it against that proof that's rolled up. And there's closely related concept of recursive snarks that you'll see a lot. There's things like the mena protocol or other things. And basically the idea is that whenever you see something, you can always generate two

Starting point is 03:05:18 proofs, an existential proofs that the coins exist and a non-existence of a double spend. So you can always check those two properties. And the proof is verifiable and logarithmic time, ideally. So you can have giant amounts of data, but it's very small. The actual proof is concise, okay? So there's just different boats for different floats. The advantage of a layer two network

Starting point is 03:05:41 where there's actual channels and there's interaction and there's service providers, is the channels can eventually scale in the collection of things that they can do, and eventually they can become interoperability networks between cryptocurrencies. So at some point, we could modify the Bolt spec and make it somewhat interoperable with Hydra. And then what you could happen is you could use it as a bridge to actually do cross-chain traffic and send transactions between the systems. You don't really think about that too much when you're talking about roll-ups.

Starting point is 03:06:07 That's more of optimizing what you have within the system. Within the chain. So, can you elaborate how is possible to do cross-chain traffic? Well, you already have the intermediary. You have the channel operator and you already have like, protocol, right? And you just build a Dex that runs within that system and they can swap assets or you can do wrap assets. So you like a little cost, I guess you could just switch low. Yeah, the same thing lets you batch things on one, we'll let you batch the other. So if lightning works on Bitcoin and hydro works on Cardano, you can eventually bridge these two together and

Starting point is 03:06:38 create a way of moving back and forth. And the same things that make transactions in and out of that network cheap will make creating wrapped assets cheap, at least on the Bitcoin to Cardano side. You can't create assets on Bitcoin. Another flaw of Bitcoin that they've never fixed. What's your thought about layer two technologies in general? Is there stuff you're excited about? We talked quite a bit about lightning network, hydrogen, these ideas. Do you think there'll be somebody that wins out or is this going to be this kind of dynamic thing that we just keep building different ideas and they all interact with each other? It goes back to biology that's cell differentiation concept. You have to build specialized tissue to use things.

Starting point is 03:07:14 Point of layer two is to extend the network. It's adding a foot, it's adding an arm, it's adding a brain, it's adding a heart, it's adding eyes. Giving you additional senses, you have years now. So when you add these layer two products like a teleprism as a perfect example of that, we don't have identity at the base layer of Cardano. It's a real bad deal to do that, because then China will come in or US will come in

Starting point is 03:07:34 and tell you how to do that. We do the layer two protocol that's blockchain agnostic and then the user can decide when and where they need an identity and then bring that identity into the system. And if you designed it right, when they bring it in, it's very easy, very fluid, and suddenly the experience enhances. Everything just gets better. Oh, wow. Okay. Now I can use all these regulated things.

Starting point is 03:07:54 They go from gray to green in the app store. That's so cool. Oh, wow. Now I can send to human readable addresses. Because if I have an identity and you have an identity, we can alias them with some game space. And now I sent a Lex instead of some horrible back 32 address structure. Okay, so that's really what you need to do with layer two is say, okay, each layer to protocol is meant to do something. Either it gives me payments or lower cost of our contracts or interoperability or identity.

Starting point is 03:08:22 And then it's a marketplace. So you should have blockchain agnosticism with your layer two solutions. And so you can mix and match and choose whichever collection of services you need. And that's actually how IT works these days with microservices and these other things. And cloud software, you know, every firm is an aggregation of dozens of providers. And basically that composition of them is your software stack. Jumping around back to proof of work. What are non-interactive proofs of proof of work?

Starting point is 03:08:51 NIPO, POWS. NIPAPOW. NIPAPOW. NIPAPOW. It's fun to say, right? NIPAPOW. It's just one of those things that you notice that certain proofs of work when you solve them come up less frequently than other ones.

Starting point is 03:09:05 And just by that nature, you can sample them and then construct proofs from them. So you can with that just set have a more concise representation of an amount of work for a range of the chain. So that work. I can say that again. Yeah, I can say that word salad basically, the idea is okay. So let's say this block, and I'm just simplifying the concept a lot, this block, you know, you get a regular green type of proof of work, and then this block, you get a green, and you keep going, and then suddenly you get a red

Starting point is 03:09:33 one, okay? So it's still a valid proof of work, but it's more rare than the other ones, okay? So if you notice that particular pattern, what you can do is you can just start not caring so much about the green ones, and you can just bookend your chain with red. Okay, and then you can just repeat that and repeat that. You can collect, you can create this really compressed representation of these things. So what does it mean? It means that suddenly when you have that, now you have a way of representing a long range

Starting point is 03:10:00 of history with a very small proof. So you can use it for light wallets and you also can use it for sidechains, if both sidechains use proof of work. So when you see a transaction come in, you don't have a copy of the sidechain, but you have a copy of the proof of work. And it has the same algorithmic weight as the normal longest chain, because you don't have all the greens, but the reds only occurs to a certain sampling frequency. So this is the brainchild of Dionysus Zindros and Agalos, and it's just an amazing paper. And what's so cool about it is it doesn't require

Starting point is 03:10:32 any structural changes to prove it work. It's just something you notice as an off-cast of proof of work. It's like you're watching an engine operate, and you notice like every 500 times a piston will do a certain weird thing. And so you take advantage of that, you say, well, if I count 10 of them, now I have 5,000 pistons, strikes.

Starting point is 03:10:49 Because I observe that pattern. And so it's the same concept there. And it's just a property of the engine. So you don't really need a hard fork and end. It's just there. And because you can build proofs that way, now you can use those proofs to do like clients. And you can use those proofs to do other things. Because you can just use that as something that comes with the history.

Starting point is 03:11:06 You don't have to have the whole blockchain. Now, is this a weird property of multiple proof-of-work chains? It has to be key to the particular consensus algorithm, but usually there's some portability in this type of thing. Like, we're right now exploring, can you do Neapopal's with Prism or any of these sharded proof-of-work protocols, but it looks like you can. The closely related is luck space mining. So you can use this concept,

Starting point is 03:11:27 and instead of having the entire blockchain to be able to mine, you can use a compressed representation of it. We wrote a paper called luck space mining that basically explains how to do that. So your miner only has this very small micro ledger as opposed to the entire ledger. How does it connect back to the entire ledger?

Starting point is 03:11:46 How does the... Because you have those red blocks, you have those special things. So you know that the state you're working on is actually legitimate, right? So the map goes both ways. Yeah. It's pretty cool. Wow. That's really interesting.

Starting point is 03:11:59 Yeah, and Dines is as a genius. He's a really, really smart kid. And he got his PhD under us. He went to University of Athens and he was a agglosis graduate student. And now he's doing a postdoc at Stanford under David Shee. And this is literally the only thing he does. He does interoperability, side-chains stuff,

Starting point is 03:12:15 knee papalals and so forth. And he's written a lot of great papers on it. And that was a testimony to hard work for getting the paper published. Because the paper came out in 2016. But I think it took three or four years for it to go through peer review. He kept trying to push it one conference after rejection, after another rejection, but he got it through.

Starting point is 03:12:33 Real proud of that kid. And then he's just doing all this beautiful derivative work now, like lock space mining and so forth. So Reddit, and he said in this, it was Reddit, you know, it's going to be fun. The top question on the Cardano subreddit, which is quite a wonderful place, by the way, was, can you get Charles to play devil's advocate against Cardano? If it's going to fail, what would failure look like and what are the most likely reasons it would fail.

Starting point is 03:13:05 Okay, well, there's the failure. For example, I said one of the project goals was to achieve self-evolution. So if it doesn't achieve that where it can evolve itself iteration by iteration, then obviously the product didn't do what was intended. If it continuously required the supervision of custodians in order for it to succeed, the system just won't work. The good news is we have a lot of data showing the opposite. We used to run a federated model and now we're completely decentralized for block production, but that didn't just happen overnight. I mean, there was a whole process with

Starting point is 03:13:41 the instead of I testnet and the state pool pioneers program and the launch of shelly and the decrementing of the decentralization parameter. Every step of the way people showed up and had to do things, and we went from several to thousands of people who were regularly maintaining the infrastructure. But there's no guarantee that that would be sustainable. And there's no guarantee that the next step, the smart contract step, will achieve what we want. And the next step, the governance step will achieve what we want. I mean, it's an experiment and all these types of things.

Starting point is 03:14:09 All cryptocurrencies, all companies are in a sense, experiments when they are evolving the business model. And as our case, our business's systems and society, we're offering to the world a vision of how to run humanity in a different way. And the only way the system can do that is by millions of people joining the system is self evolving the system and growing it in that particular direction. Another failure scenario would be the system evolves in the wrong direction. So it's self evolving, but it goes into a more centralized dystopian way, and that's problematic as well. What would that look like? What would dystopian way and that's problematic as well. What would that look like? What would dystopia, the self-evolution toward dystopia look like? A small group of actors have total control over who gets to use the system and how they get to use the system.

Starting point is 03:14:54 And your use of the system is monitored and shared with that small group of actors. So social credit in China is a great example of that. Small group of people have access to that and then your experience in the Chinese society is determined by it. So that's an example of a failure mode. And then another could be just network effect. We start experiencing a churn rate, and inputs don't match the outputs,

Starting point is 03:15:19 and that you lose more than you gain, and then over time the system dies off. However, that's really hard in practice. Once you reach a certain network effect, even if you become stagnant and stale, you tend not to lose your users. Our evangelism is unbelievable in the Cardinal community. I think we're number one for tattoos. If you think about that, it's a strange metric to have, but there are brands that associate

Starting point is 03:15:43 that way. Apple and Harley Davidson and so forth, people tend to actually tattoo the logo. Those people don't leave. They don't actually walk away from an ecosystem. They're fanboys to the core. So there's a lot of people that are here for life. They don't care if it's dollar-a-da, two-cent data. They believe in the mission vision and value of what we wish to achieve, and they've become

Starting point is 03:16:04 evangelists in that respect. So the question is, does that community sustain itself, and also does that community not make the same sense and mistake of Bitcoin, where they become toxic and maximalistic, and they start becoming highly religious about whatever beliefs they have? My hope is our community will be open and socratic and love the scientific method and be willing to entertain ideas without adopting them and discard ideas that are proven to be wrong. If we become dogmatic and embrace an orthodoxy that is counterproductive innovation,

Starting point is 03:16:36 then it'll stall out the ecosystem. And you'll notice I never said price in any of this. I never said, hey, failure is if the price goes way down and success is if the price goes way up. That's unfortunate and metric that most people use, but I couldn't care less about it because if the reality is, if you construct a system that encompasses the entire globe and has billions of users, it's probably going to be a pretty valuable system. That's a secondary thing. It's an after-effective having success and adoption use and utility.

Starting point is 03:17:07 Unfortunately, most people aren't reddit and Twitter and other channels. They tend to just judge your entire success based on that. I had very few people when Shelley launched, even though it took us four years to get there, a lot of work. Say, congratulations on Shelley. But I had a lot of people when they reached the dollar, say, we're so proud of you.

Starting point is 03:17:24 Amazing work. Congratulations and so forth. And that's probably the most disheartening thing about the whole being around and doing this stuff where all the things you do only matter as long as it's making someone else rich. And in a way, I feel almost like a failure, you know, because that mindset means that we haven't yet inculcated the community in a proper way saying, hey guys, this is about more than money. It's about more than the value of ADA. What we're attempting to do here is reengineer

Starting point is 03:17:54 the way society works. I'd like your voting to be different. I'd like your property to be different. I'd like you on your cell phone to have a universal wallet. And when you go to Starbucks or wherever, you can buy your coffee with silver, gold, or airline miles or something like that. And they get paid whenever the hell they want to get paid. And I want those rails to be done with a system that puts you in charge, not someone else. And they say, yeah, that's all fine and great. As long

Starting point is 03:18:15 as eight is five dollars, we're all happy. You see, so that's a problem. There are, of course, other things that could fail. Like, you know, we could lose project cohesion. Lots of people could quit and die. But again, there's so much momentum. There are, of course, other things that could fail. We could lose project cohesion. Lots of people could quit and die. But again, there's so much momentum. There's so many things here. The ideas are already out there. And there's no intellectual property. When you publish 100 papers, you write a million lines of code.

Starting point is 03:18:35 That's something, and it's permanent. And it's in the commons now. So it's just as much yours as it is mine. So there's no notion that somehow, you know, if the core development company disappeared, then that concept is lost forever, like the library of Alexandria burning to the ground. It's there. And someone else will take it, fork it, and get it done. I mean, first of all, that's fascinating. The self-havillusion, you don't know which trajectories that's going to take. But also, there could be singular events like bugs in the system create an opportunity to hack the system. Is that

Starting point is 03:19:12 something that you see as a potential failure case? Yeah, it's always a possibility. Bugs can exist. There can be flaws in the protocol design. Z-Cash was a great example of that where there was a subtle flaw and it damaged the fidelity of the cryptocurrency in ways no other cryptocurrencies ever experienced. Normally when you have a bug, the bug you can see it like the Bitcoin overflow, the value overflowing today. Yes, Bitcoin can be created, but we can verify they weren't. So the monetary policy is preserved. When you have a bug with a private system like ZCash and it exists on the shielded side, there's no guarantee unless you can audit the total supply inside that shielded side.

Starting point is 03:19:48 My understanding is you can't, that somebody didn't exploit the bug and create trillions of these coins out of thin air and just hiding them on that system and dripping them out. So the monetary policy is for every damage as a consequence of bug like that. It's probably the worst type of bug you can have for these types of products. No matter how good of a job you do, they have great scientists, they're great people, they're great engineers, they're, you can always have something like that, seep its way and leak its way and that lurks in the distance. But if that's a problem shared with every one of your neighbors, it's like everybody working on a nuclear power plant, well, yeah,

Starting point is 03:20:23 you can all dive radiation poisoning. Well, we all kind of knew that, didn't we? You know, so it's like, I don't really think too much about it. I think the context of the question was more, what is Cardano specific over Ethereum or Bitcoin or any of these other things? Okay, existential lurking bug could happen. It's lower probability for us than the other systems because we use formal methods. And we use peer review inside the protocol design. So there's been more eyeballs and tools and techniques used to check things.

Starting point is 03:20:52 And we actually have discovered a lot of weird wonky bugs before production and result those bugs. So it shows you the system works. It's a lot of fun. What about close kind of competitors? I don't know if you would put it that way, but if you look in the space of ideas competitor cryptocurrencies like Polkadot What are some interesting differences between Cardano and Polkadot

Starting point is 03:21:14 Technically philosophically historically is that something you think about when you think about the future of Cardano? Yeah, I bet we do we actually have a whole group of people that do business intelligence and comparative analysis and We're getting to a point where we want to start eventually forking their code and running private versions of it just playing around with things getting better It's it's it consensus actually does this they actually did it with eos and it wrote this lovely report like trashing eos saying hey By the way all those claims these guys made are just not true But you know it's nice to do that. It's nice to use your competitors technology or competing protocol technology because you learn a lot along the process.

Starting point is 03:21:51 It's not all bad. There's always something there because they have different trade-offs and customers that potentially are more interesting. Like right now we're rocking how do we want to do the side chain model of Cardano? Polkadot's actually a tremendously useful piece of infrastructure for that conversation because they copied part of our infrastructure. You know, Gavin's a trained computer scientist. He got his PhD from York and he read our papers, obviously, and he realized that Orboros was a really good starting place for building a proof-of-stake system. So Polkadot's consensus is very similar to ours. And so if you're saying, hey, how do you do a good sidechain model with a more worse style proof of stick? Well, we already

Starting point is 03:22:30 have this parachain thing, right? So now I, by just looking at that, I can kind of get an idea of how one way of doing it. And so that's just beautiful that we live in a space where that's there, it's open source. And if it's really good, you just say, okay, we'll just take that and adopt that. There's no shame, you know? The other side of it is that Polkadot really has focused a lot on commercial adoption, Silicon Valley adoption, and getting real use and utility. I say in a much more sustainable way than Ethereum is focused on.

Starting point is 03:23:00 Ethereum was kind of a spray and pray thing. Polkadot was more of like, hey, let's go ahead and actually cureate our ecosystem more carefully. And we're gonna build it in a way where there's predictable or as predictable cost as possible with the rollout of the infrastructure. And that's so important for a business.

Starting point is 03:23:19 It's not necessarily important for an experiment or a startup where they're just trying to get populations quickly as possible, will figure out later. But if you're actually sitting here saying, I need to know what my expenses are three years, five years, ten years into the future, you need predictability there. I think they have a better shot of it than anything in F2 or with currently Ethereum. Now, the big contrast between the two systems, those, we actually have native multi-asset. We have a different accounting model.

Starting point is 03:23:47 I think our base ledger is far more expressive. Our rate of evolution with proof of stake is much faster than ours because they're based on derivative work and we already have a word or a somega and other things there. I think we have a better, ultimately, a better sidechain model will come because we have something called mithril for that, but we learned a lot from their work. The other thing is that we thought about governance a lot more carefully in my view. We have catalysts and Voltaire, and really the key there is saying, how do we make sure that every single person who holds data can participate in the network?

Starting point is 03:24:17 That wasn't a high design priority of Polkadot. It was more a fast commercial adoption, the acquisition of customers. We'll come to governance later, and those were just different business philosophies. But it's nice to have a competitor like that. And oftentimes I've said that the Polkadot is like a Ethereum 1.5. It's what F2 probably should have been. There was what Vitalik wanted to do, which was incredibly aggressive and brilliant, but it's a lot.

Starting point is 03:24:42 And there's so much execution risk in that plan. And I think they've had like six years of playing around with it. Had they gotten on the Polkadot road, they probably would have been a market within 2018. And because they already had the network effect, they would have had years of building on that, iterating that. And they already had a path to it too. All they had to do was just give Elaine Chi and her cohorts at Cornell, you know, $5, $10 million grants. No white would have been the dominant protocol, not at Urbours in

Starting point is 03:25:09 the proof of stake space. So it's really fascinating historically when you look at these things, the rivalries and what they did and what they didn't do. And, you know, Gavin had a chance to have C++ Ethereum be used as the IBM's enterprise blockchain. The only reason they didn't do it is, you know, it was licensed GPL. And I think they wanted to realize in Apache, if you ever talked to Bob Summerwall, he was there at the time and he had this amazing story about, like, these terrible fights where, you know, it's like, guys, just realized since the guy at the M. C.O. let's figure out a way to make this happen so that we can, you know, get this huge network effect of being basically IBM's

Starting point is 03:25:45 play. They didn't do it. They created fabric, you know, these types of things. So there's a lot of lore and stories in that respect. But the space is better because of Polkadot, and there's a lot of good people there. Web3 is a good concept, and you know, we've run into their people in Germany and Zurich a lot, and they've always been cordial and friendly and really affable. Before I talk to you about governance, which is one of the most fascinating things about Cardano, because there's a lot of stuff to untangle there. Since you mentioned

Starting point is 03:26:15 some humans in this wonderful story, you did make a video before we talked directed to me. Thank you so much for that It came from a place of love But it was basically saying as as we have been you would love to talk about the technology about the future That you're creating with Cardano and just the future of the cryptocurrency space I think you were kind of worried that you'll be talking to a journalist that's looking for clickbait content, that kind of thing. But I'm fascinated by human beings.

Starting point is 03:26:52 I think you're all from an outside of perspective and credible human beings. I don't know about personal tensions, all those kinds of stuff, but I think you're changing the world together in different ways. And I just wanted to sort of give you an opportunity. If there's in the name of love and friendship, is there something from your history over the past decade or so,

Starting point is 03:27:14 outside of technology and the human side of things that you draw inspiration from, you draw inside from, you're just proud that happened. I mean it's like asking Paul McCartney about John Lennon. It'll tell us about John Lennon. It's like, how much do you hate Yoko? For almost eight years now, I've been, it's just been this reoccurring pattern every interview. Tell us about your time at Ethereum. Those six months you spent there that were so pleasant

Starting point is 03:27:39 and enjoyable. Tell us all about it. And tell us about your relationship with Vitalik. It's like, I barely talked to the guy. I see him every now and then, I make every two years, we say, hey your relationship with Vitalik. It's like, apparently talk to the guy. I see him every now and then make every two years. We say, hey, he says, hey, it's like, okay, maybe 10, 20 years in the future, you know, Walt Mossberg or Robo Walt will bring us together like he did Steve Jobs and Bill Gates and we can kind of talk about, you know,

Starting point is 03:28:00 that was a tense conversation by the way. The 2007 interview. Yeah, the 2007. Oh, great though, wasn't it? Yeah, that was the body language. That was a tense conversation, by the way. The 2007 interview. Yeah, the 2007. Right, though, wasn't it? Yeah, that was the body language. That was art. Yeah, it was, that was fascinating. And that was a fascinating study, human nature.

Starting point is 03:28:14 Yeah, so maybe that'll be us in like 10 or 20 years. Who the hell knows? The robot versions of all three of you. Yeah, my only point, though, was that, you know, it's a closed chapter and it's funny. I was there for six months. I've been building Cardano for years. We've done all this stuff. I've been to 52 countries. I love talking about those experiences and there's so many of them. I've met heads of

Starting point is 03:28:34 state. I was Mongolia, like Eagle hunting and being bucked off horses and riding the sand dunes. We've invented all this new cool technology that's the space itself is using, and we've had a chance to sit on government panels, pass laws, 24 laws in Wyoming. I mean, there's like all this amazing stuff that's there, and it's such a fun conversation. There's so many superheroes in that conversation, like Kaelin Long and Taylor Limholm, and there's Alex Sherpinoi, who we already mentioned that I met along the travels. I met Ralph Merkel. Cool, I met all these amazing people along the way.

Starting point is 03:29:10 I have fun memories of, by the, he should interview him by the way. Amazing guy does nanotech now. You know, I met, you know, I was hanging out with Sylvia McColley and I remember four launch y'all grand. I said, you should really just do a Bitcoin cash style play and air drop Bitcoin. what the hell are you doing

Starting point is 03:29:25 distributing this? It's like, trust me, I know what I'm doing. You know, so it's like so many great conversations and so many great people. And what I've really noticed in this industry, when you separate the tribalism, the maximum of the side, there really is a love of creativity and building. And there's like no other industry like it.

Starting point is 03:29:43 You know, I've been in many different places in life and here people just love art, they love beauty, they love the unknown, they love pushing things, they love, you know, really, you know, in some cases, necessarily the most socially beneficial way, but they really love the challenge, right? And that has been fun. I wouldn't trade it for anything in the world.

Starting point is 03:30:05 The dark side of the industry is that people love labels. They love saying, this person is good, this person is evil. This person is a sociopath, this person is not. And by the way, they've never met that person. They've never interacted with that person. And they just say, well, I heard from this person, I read this book or I did that. I was like, oh, so some books written by a journalist makes $50,000 a year who's looking for a movie deal.

Starting point is 03:30:30 Say that somebody said this or did this in an unconfirmed way. So what can you do? Sue them for slander? I mean, so you just let it ride and you let it roll. And if it was just ending there, that'd be great. But the problem is it cascades and people just repost it and they relive it again and again and again. And then what do you do about it? Eventually, just say, I'm not going to talk about it anymore. I'm done with it. And you move on. And you say, you know what, if it's your problem, it's your problem, it's your reality that you

Starting point is 03:30:55 want to live in, I'll be defined by the things that I achieve and do and the people that we help and the things that we build. And you know, since I started this industry, I've gotten to a point where not only do we have this amazing company with these incredible people who work at this company, but we also have the ability to pursue amazing different interests like I met Ben Gortzol. And Ben and I are going to do an AGI project together in a whole place for Wanda. And he gave me this 85 fucking page paper. He was wearing that damn hat that he always wears. I don't, I think he showers with the hat on. He never takes that thing off.

Starting point is 03:31:30 I think he refused, I interviewed him and he refused to tell me the story of the hat. He wouldn't tell me either. I interviewed him as well in Wyoming. And he, every time I call him, he'll have his shirt off, he'll have the fucking hat on. And now all I can think about is the hat. I wonder what the story there is. I know, it's like, it's gotta be, it'll have the fucking hat on. And now all I can think about is the hat. I wonder what the story there is.

Starting point is 03:31:45 I know, it's like, it's gotta be, it might be the AGI. Yeah, exactly. But anyway, he gives me this 80-page paper, and he says, Charles, it's like the culmination of everything I want to, this is how we're gonna do AGI. And I say, that's crazy, Ben. I say, I'll throw some money at it.

Starting point is 03:31:59 So we're gonna hire some developers, and I have no idea where it's gonna go, but I mean, I get to hang out with Ben Corso. I know, that's fun. That's the kind of stuff. That's the really cool side of the space. And it's what I enjoy. In the Vitalik rival, the thing, the Ethereum thing, I try my best, not to mention it.

Starting point is 03:32:17 I hate the fact that it's still when Bloomberg or anybody else writes a story about me, they'll say Ethereum co-founder. Like can you say something else? Well, I think if I've learned anything from the internet, you can't resist that kind of stuff. You just have to... It's the Elon. It's the joke. Joke it away. I've noticed this. This is already starting to happen with me. It's like people just make up stuff. They haven't made up anything interesting yet, but they could. And I've seen that with Bill Gates, for example, just stuff being made up. I mean, probably half of this trip. Sorry, you know, I'm sorry.

Starting point is 03:32:47 But like, you know, I guess what I realized, this is the dark side of memes, is you can just make something up, and it'll spread. Yeah. And then that's it. And that's what happens. But then, and the problem is half the world will believe it. Yeah. It could be good stuff.

Starting point is 03:33:02 It could be bad stuff. So I guess the whole place it bounces on the end. I tend to believe you almost want to play with that and not take it seriously, just kind of laugh it off and enjoy life and keep creating, keep doing awesome stuff. Right. Operating both in the physical space with other humans and in the digital space with humans and AI systems and just have fun. Yeah. Because most of us in the long arc of history will be completely forgotten and will matter. It for all the dolphins are running this thing. And they're talking to the UFOs recently, which is very interesting because the UFOs keep going to the water.

Starting point is 03:33:53 So we humans assume that the UFOs are here to visit the aliens, they're here to visit us, but it's probably the fish. No, I just think it's next generation aircraft that we're using. Oh, that we're just not aware of. But why are they talking to the fish? Well, that's the place you test hypersonic aircraft is over oceans. So that's the Russians with their hypersonic nuclear weapons.

Starting point is 03:34:13 That's what I like. Rods from God, man. Rods from God. So let me try to transition from UFOs to Abraham Lincoln. Lincoln said that nearly all men can stand adversity, but if you want to test a man's character, give him power. Do you think power and money can corrupt most people? And if so, do you worry of this corrupting force on your own mind? You're one of the leading minds in the cryptocurrency space. You're the leader of the Cardano project. You're the king of the rats.

Starting point is 03:34:50 Of the rats. Does this corrupt your mind, both the power and the money of it? Yeah, I mean, you see this most pervasively with people who inherit large amount of money or title, like, you know, dynasties, like the melons or the Rockefellers or the people. It's the worst thing you can do to somebody. It's just hand them an enormous amount of power that they're not prepared for. And the challenge with the space is like everybody's young, and we're all billionaires now, and we have these called followings and do all these things, right? Nobody really says no to you. Like, for example, I have this ranch up in Wyoming, know to you. For example, I have this ranch up in Wyoming and it has 400 bison on it. So now I'm a bison rancher. If somebody was monitoring auditing that be like Charles, you have an experience raising taken care of bison. I'd be like, no. So you think it's really a

Starting point is 03:35:38 good idea to have this ranch with 400 bison running around. What the hell are you going to do with bison? I just have to figure out what I'm gonna do with these bison. And I, you know, we'll make a video game. We'll do crypto bison. But you're gonna get one. I'm not pulling out of you. I would love to.

Starting point is 03:35:55 I'm not pulling at that string just yet. So let's, I'm wondering how you gonna connect this back to power. Right. And so my point is that when you are unrestrained, like literally no one can say no, or you have the ability to distort reality around yourself and you're not constrained by social customs, it creates a situation where you start losing perspective. You're not grounded anymore.

Starting point is 03:36:20 I think so it's less of a question of will you become evil or not? It's more of a question of will you lose so much touch with humanity that you just can't relate or understand people and then you inadvertently by your actions start harming people either through the policies that you pursue or you know the things that you start building and so forth. So I think the best inoculation against that is to surround yourself with activities that are utterly divorced from your reputation and status. The best thing are animals and gardening. Because a donkey

Starting point is 03:36:50 doesn't care if you're a billionaire or a broke, you'll shit on you exactly the same way. And so there's a humility behind these types of activities and these things. And there's a honest work component like when you grow hay or whatever, you have to plant. You have to actually water, you have to irrigate, you have to actually be there. And you can't use something excuse while I was meeting the president of El Salvador. I was doing this. I was like, hey, it doesn't give a shit. It's hey, right?

Starting point is 03:37:15 So it grounds to connect you. The other thing is you have to get used to giving away all the best things in my life have come as a consequence of first giving. Like I got started the cryptocurrency space space by giving away free class. Bitcoin or how we learn to stop wearing your love crypto. You did a free podcast, right? In life, if you give and you develop that mindset of, I'm not attached to the things I have and if push comes to shove, it goes away.

Starting point is 03:37:39 Usually, you get more back. Like, I keep away all my ether. I never received any of 293,000 ether at the all time high over 1.2 billion dollars. I give it to my secretary. I had no idea if it was going to be worth anything or not, but he kind of got shafted and I was like, well, they don't like me. So they don't like you by the transit of property of relationships. So you're screwed. And it's like, well, I'm going to go back and my wife is probably going to divorce me and all this stuff. And what do I do? And I said, well, I'll give you my ether. I don't know if it's going to be worth anything.

Starting point is 03:38:05 So he's still pretty good. But then again, regardless of doing that, I now have Cardano. I have this great career. I've done all these amazing things. So I think that's the single best way of handling power is you have to do things to keep yourself grounded. In case of Washington, he's deeply connected Mount Vernon during the Revolutionary War. He was like sending letters, talking about the irrigation

Starting point is 03:38:29 stitches and the barn and things like that. He was always connected to that. And then also, develop a mindset that you're only here temporarily. Everything you have is finite. It's going to go away at some point, no matter how much you want to keep it, you will die and somebody else will have it. So you live for the next generation. You don't live for yourself. You look to the future and you say, what am I going to leave behind? What am I going to transmit?

Starting point is 03:38:53 And then in that kind of mindset, always forces you to be more gracious, cooperative and collaborative with people. All these dictators, they are egomaniacs and they can can connect at these fantasies, and they live for themselves. Look at Xi and China. He's unraveling a power structure that was what made China, China today. After Mao, they said, we probably shouldn't have another one of those guys.

Starting point is 03:39:16 And so they said, let's build something where there's checks and balances, and no one person is going to run the whole show, or else it'll descend and regress and we'll have problems. And then what he's done, he's thinking only about himself, not the best interest of China, so he's systematically unraveling a system they've been embracing for over 40 years. And to what end?

Starting point is 03:39:38 After he dies, the next guy who comes in even as he's super competent, the next guy is going to horrifically abuse that power structure. And this same thing happened with the Romans. After Augustus, the Great Emperor, then suddenly down the line you have Caligula and Nero and all these other terrible emperors that just destroyed everything that the Republic and the Empire sought to achieve. So you have to think for the future, you have to think in institutions and systems, you have to have things that crowned yourself, and you have to be fully prepared to lose everything

Starting point is 03:40:08 and give up everything. After I left Ethereum, I had nothing. Reputation was damaged, not a lot of money. Nobody really want to work with me. No one pick up phone for two whole years. It was horrible. And so I was a bedrock in that experience. And now look where I'm at. I built all the way up to that and

Starting point is 03:40:27 said that wasn't by accident. It was I had to surround myself with amazing people. Why would amazing people want to surround themselves with me? If I was just in our statistic asshole who just looks like it's me, me, me, everything would be a transactional relationship. It would be okay. Well, get as much as we can and then run away as quickly as possible. Instead, I'm going to invest in you. Maybe I'll win. Maybe I won't win, but I'll be the last guy to leave the boat. If they were freezing to death, you get my coat and I'll just deal with the cold.

Starting point is 03:40:58 That kind of mindset. You have to have that. I got that from my dad. He got it from his father. My grandfather and great grandfather and great grandfather my dad's a group of Montana and they were like products of the homestead act Very rough Montana, you know a lot of people died and froze to death up there eating by animals or something or shop by their neighbors And nobody investigates anything because it's Montana So the only way you survive is by taking care of each other and being a good member of that community. And if somebody gets big, you have this implicit desire to go

Starting point is 03:41:29 and give back and take care of the community that you came from and invest in that community. Like I came from the mathematical community. I never completed a PhD, but one of the things that I'm doing is I'm going to put 20 million dollars and set up a center to do automated theorem proving and we're going to heavily invest in leans because I'm super excited about mechanizing math and making machine understandable. I know all these guys who do this work. There's like all these mathematicians and computer scientists and no one pays attention to them and they're kind of like

Starting point is 03:41:56 the red headed step children of mathematics and they live on the boundaries and periphery. Meanwhile, they're super passionate. They absolutely love what they do. And if only they had the right resources within 50 or 100 years, what they're doing can probably come the dominant model of how to do mathematics. So I'm now in a position where I have the financial means to take care of these guys. So all I have to do is just call them up and say, hey, would you like to work with? Oh, absolutely. And cut a check and it's done.

Starting point is 03:42:25 up and say, hey, would you like to work with, oh, absolutely, and cut a check and it's done. So the interesting tension here, so we talked about ways to prevent power from corrupting a human being that's in a leadership position. There's an interesting case in the cryptocurrency space of Bitcoin and Satoshi Nakamoto that's basically doesn't have a leader. So the benefit of a leader is somebody that perhaps even when they don't carry power, maintains a little bit of a flame of vision. I suppose Bitcoin has that with the original work by Satoche Nakamoto and the sort of that, even though it's anonymous, the idea still lives on through the community, but nevertheless the leader is anonymous. Do you think this is an interesting

Starting point is 03:43:13 case study about leadership is for the leader to maintain anonymity? It was saying from SunZoo paraphrasing that the best leaders are felt but never seen. Yeah. So I think that's exactly right. The less the leader can be in the room, and the more the principles of the leader are in the room, the better for the firm, because what you're doing is creating more leaders that way. You're inspiring the next generation,

Starting point is 03:43:37 the next wave, the next circle out to act with those principles, but contribute in their own way and their own flare. And so you gain collective intelligence inside the organization instead of just constraining yourself to however the great the leader can be. The other side of it is if the the leader's principles are too strong. So this is the dark side of it. You end up with what's happened Disney with Walt Disney after he died. people said, well, we don't do that because Walt Disney wouldn't do it that way, or to a lesser extent, Apple. They always don't do that, because Steve Jobs wouldn't do it that way.

Starting point is 03:44:08 Well, he's dead, he's gone. Move on. So somebody, I think, asked you whether you're a clone or a deep fake, and you said that you admitted, you slipped up on video saying that you're a deep fake. So on that talk. No, actually a poker playing robot that escaped a lab. The truth finally comes out. but I said on that topic,

Starting point is 03:44:26 who do you think is Satoshi Nakamoto? Is it possible that you are in fact Satoshi Nakamoto? No. You know, if you have a preponderance of the evidence, I think the most likely candidate would be Adam Beck. It's the Occam's razor candidate. And mostly because he's the rightam's razor candidate. And mostly because he's the right place, right time, right age, right skill set. You know, if you look at the

Starting point is 03:44:50 design of Bitcoin, the types of decisions like the use of fourth, the scripting language, it was pretty common in English and European pedagogy in the 1980s and 1990s. It's like an example language for a stack-based assembly and like little stuff like that, little quirks like that. Also he created Hash Cash, which is the predecessor of Proof of Work. He just kind of got a chip on a shoulder that Microsoft never did anything with it. So he's probably looking for something. He grew up with all the Cypher punks. He knew of Hal Fenty. He knew of all these people. He knew Phil's ever-final. Well, no, because the code was not good enough. How was a Unix Linux guy? He was a talented programmer.

Starting point is 03:45:27 He was a talented developer. The initial code for Bitcoin was developed to look like on a Windows machine. You know, Adam worked at Microsoft, GoFigure. And also, it was very academic. And it had to be cleaned up. And a lot of things had to be patched up and fixed. If got like how developed it,

Starting point is 03:45:43 they probably had less of the, let's use secp 256K1 and these types of things and more of like, hey, let's build this cool engineering thing and we'll figure out the protocol design later on. It just stinks of an older academic, the initial design of Bitcoin and the initial rollout of Bitcoin and then brilliant people like Greg Maxwell

Starting point is 03:46:04 and others, they came and cleaned it all up and lo and behold, where's Adam? It's like the CEO of the largest Bitcoin development company in the space who's trying to keep working on and building out Bitcoin and where the hell was Adam when Satoshi was around? I don't think there was any overlap where they were pulled together at the same period of time, but I mean, if you really care, you can even do this. There's a lovely paper written by the US Army. If you just Google like code's Dallometry, US Army, it's a technique where you can use ML and a few other things to actually kind of develop a fingerprint

Starting point is 03:46:37 for the way that people write code. So all you got to do is take the original Bitcoin source code and they take all the open source repos from around that time period and before and see if there's a match between those two. Now, if he's really good at creating an alias, probably not so good at upviscating the code that was written.

Starting point is 03:46:55 So the odds are that you'd probably find a match to a repo that's connected to a real life human identity or at least a weaker opsec because, you know, you're younger, you have weaker op-seq. Do you know people have tried that? I don't think anybody's actually done it, but there's actually a beautiful paper and it's like 94% accurate, the code's the longest.

Starting point is 03:47:12 The closed-seq, so I've, for various reasons, I've worked with people that work on salametry of natural language. Okay. And I think it matches closest to Nixabo. If you actually do the, the, the, the, the, and it's the Lama tree analysis of Satoshi's writing. So I meant the Lama tree as a field. I didn't actually look for application for this particular problem. But so you're saying Nixabo is the closest match. Yeah. Somebody did it years. I didn't look at if the model

Starting point is 03:47:41 was a sound or not, but I just remember reading on a Bitcoin talk. And the Saba was another one of the common candidates. How many Saba and Adam are probably the top three things that people listen? What do you think about this idea of anonymity of publishing something anonymously? Would you ever consider publishing a paper? You've been part of, I mean, the Cardano and ecosystem has published a lot of incredible papers. Is there ever a value to publish anonymously? Well, every paper that goes through the referee process, the authors are ripped off. So you don't actually see the authorship when you submit to the conference. So that's just best practice.

Starting point is 03:48:17 But the question is, do you preserve the anonymity post-conference and actually not reveal the author of the paper? It's a detriment for the deals we make because the whole premise of working with our company as an academic is that you're going to have amazing co-authors and your work is going to appear in great conferences, great journals, and as a consequence, you get tenure. If you publish anonymously, it's like doing clearance work on high energy physics or something like that. It's like, after 30 years of this amazing career working on nuclear weapons and classified reactors,

Starting point is 03:48:48 you know, you finish and then you go to apply for a job and they're like, so what have you done for the last 30 years? Stuff. If where is it on your CV? Well, I can't really talk about it. Okay, welcome to Community College. Yeah. You know, so you get, you can't really screwed if you do that.

Starting point is 03:49:02 So there's a misalignment of incentives in the academic world towards anonymity. And generally, it's only done when you're doing something very controversial or there's a whistle-blowing type of a component. It's not typically done for foundational work. And Satoshi was really one of the first things. If there was a Satoshi doxed themselves,

Starting point is 03:49:20 and I don't think it's possible anymore, but if he or she did that, that's like a Nobel Prize in Economics, likely. You know, there's a, you're on the short list for that. And there's enormous accolades that become beyond the monetary incentives of being able to dock yourself. But that'd be cool if they give a Nobel Prize in Economics to an anonymous institution of remote. It's been proposed and it was 2000. That's it. Yeah. So, yeah, I mean, there are a few people in our company that have done Sadonymous Publications,

Starting point is 03:49:50 like the, if you look at the Chimera-Col-Edgers paper, that's not a real name, it's a crazy name. It's Sadonymous Publication. And, you know, but that's usually for throw away work. There is one project we inherited from an anonymous person which is fascinating, it's called QEDIS. It's basically an extension of the QED manifesto from the 90s, and the pseudonym is Bill White. I think it's some anonymous mathematician, but I can't figure out which one it is. But basically, it's a marketplace for deduction.

Starting point is 03:50:19 It's like a magic machine where you can create incentives for people to write mathematical proofs and a theorem proofer and makes the money from it So there's there's some cool work that's there and it's sad that Bill State anonymous because I think that could have been easily published And there was a lot of really cool things that could be done with Qaditas So you did say the success of Cardano sort of the vision you have is for you to have less and less power over time you have is for you to have less and less power over time. So this idea of governance, what's your vision for a decentralized, secure governance system? So the first thing you have to do is you've got to look at meaningful metrics, not vanity metrics. So what does it mean to have legitimacy in a governance system? You could build any

Starting point is 03:50:59 governance system you want. You have a dictator, right? Like Bob is in charge. It's like whether you like Bob or not, you know, he's in charge. It's not very legitimate. And you can have pure democracy where every single person votes and then nothing ever gets done, you know, county dog catchers like a six-year election or something like that. So there's a spectrum there between absolute power to one and perfectly egalitarian power to every single potential participant inside the system. And then the question is, okay, well, how do you handle choice architecture in that? So like, are you asking your people about every question?

Starting point is 03:51:34 Or are you asking your people about a subset of questions related to a particular set of topics, but then they're not allowed to talk about other topics? Like, for example, are they allowed to change the tax rate, but they can't change freedom of speech, that kind of a thing. So the first thing you have to do when you build these types of systems and they get to a certain scale is you have to build some mechanism for people who are interested in governance to self-select and participate. Just create a collection bucket. And Bitcoin, we had Bitcoin talk and Bitcoin, read it, and these things.

Starting point is 03:52:02 And eventually, the GitHub repos and these things, there was a place to go if you were interested. And you need some sort of change management system where people who want to evolve the system can write it down in a very careful way. So in Bitcoin's case, it was Bitcoin improvement proposal on Ethereum. It's the Ethereum improvement proposal. And for us, it's the CIP, the Cardano improvement proposal, but it's just a structured way of discussing how you wish to change. Then there's a question of, do you want to do this implicitly or explicitly?

Starting point is 03:52:28 It's a case of Bitcoin and Ethereum, it's an implicit system. So there's no on-chain voting. There's no like five people said this and four people said this, so we do this. In the case of Cardano, we're actually explicitly inviting this. This is one of the biggest differentiators between Cardano, Polkododios, and these other things. We're really serious about governance, to the extent that we're actually doing foundational research in e-voting. We're building new voting systems.

Starting point is 03:52:52 We're exploring preference voting and quadratic voting. And the long of the short is that we want more and more people to participate in voting for things. And you just have to start somewhere. So we're at our hypothesis as we can bootstrap the system with the treasury system. So in Cardano, some of the inflation goes to the block producers, just like any other cryptocurrency, but some goes into a decentralized treasury, which now has over a billion dollars of ADA in it. So it's a lot of money. And that treasury is not on our mind control

Starting point is 03:53:23 or the foundation's control. It's actually controlled by the community as a whole through a program called Catalyst. And so all these people can come together. They can submit spending ballots and other people who hold data can vote to approve that. What's nice about it is you have a growth engine to improve to two accesses. One is absolute participation. So increase the amount of people who hold data participating. So the absolute number of people participating. And the other is meaningful participation. So, increased the amount of people who hold data participating. So, the absolute number of people participating. And the other is meaningful participation. So, the depth of participation. Did you just show up

Starting point is 03:53:51 and vote? Or did you spend hours debating things on idea scale, the innovation management platform, interacting with the funding proposal, going back and forth? And there's dozens of little things like that. Now, my hypothesis is if you run this with enough iterations, eventually you get to a certain critical mass, like over 50% absolute participation at a high level of meaningful participation, where you can move beyond funding, and you can start actually having meaningful questions about protocol design and improvement proposals and so forth. And then what you can do is you can roll out new voting systems and new social structures,

Starting point is 03:54:25 and you can let them start voting on training wheels like system parameters, like for example, the minimum transaction fee or that K parameter for the amount of stake pools or these types of things, okay. Then they build enough competency there, and they move up a next level, and they actually start talking about hard forks using the update system, the hard for combinator system. See, so that's how you're voting on a hard fork, voting on a hard fork. You can't do it unless your social dynamics are right,

Starting point is 03:54:49 and your voting system is right. And by the way, you also need to write a constitution around the same time, because not all hard for us are created equally. The kinds of things that would add support for a new cryptographic primitive are distinctly different from the kinds of things that would change your monetary policy of the system. So the constitution would be written,

Starting point is 03:55:07 and maybe you can comment on what is the innovation management. It's a company, so we partnered with a company called Ideascale and they run a kind of a side platform. So people are interested, that's kind of our version of a forum. They sign up and there's special tools in that platform for discussions that are productive. So they don't descend into kind of like trolley Reddit style conversations, but they're much more focused around how is your product building out.

Starting point is 03:55:31 And by the way, we're going to add more infrastructure over time. In fact, our chief of staff, Tamara Hassan, she's working on setting up an incubator and accelerator, and we have lots of cool partners we've talked with in that space. And it's the same concept. Your idea comes in. What enters the system should not be what gets approved on the other side. And you should go through some sort of gauntlet, some sort of crucible where you iterate your way through. And there's all kinds of optimizations and upgrades and evolutions and combinations and destructions that occur. And then by the time you get to the other side, either the

Starting point is 03:55:59 the idea just dies on the vine because it was a bad idea or it's a significantly stronger, far more fundable thing, and potentially even gets attached with accountability. So you just fund the idea. You'd actually fund the auditor at the same time who actually holds the person accountable because blockchain is not a real company. It's an ethereal thing. You need a counterparty to hold someone accountable who's real for that type of stuff and that type of funding. So that's what we're doing this year.

Starting point is 03:56:24 So we have a whole team of people, partners like governance live and idea scale, and papers we've written in about 30, 40,000 people regularly participating in this. So it's a huge social experiment. And we're learning an enormous amount. And then our goal is by the end of the year to have a meaningful percentage of the entire cardinal population inside of it, like 40, 50%. Then once you're at that threshold, now you have democratic majority of the entire system. And you can have a real conversation about, okay, how do we read a constitution for this

Starting point is 03:56:53 type of a system? And sorry to interrupt, but so the constitution, you know, people still argue about it because natural language, much like poetry, lends itself to multiple interpretations. Is it possible to formalize some of these ideas that reduce the ambiguity? Everything is old as new again. We were talking about Lodgebond back in the day, right? So there's definitely formal languages you can use to express these things. This way, I'm so interested in things like Idris and Cock and Agda and Theorem Proving, because that's exactly what you're attempting

Starting point is 03:57:25 to do is to express some concept or desire or construction and a language that's machine understandable and manipulatable. In particular, how does a system know its own design? So what is the reference of a cryptocurrency? Usually it's a canonical code base, like, you know, here's Bitcoin Core and the C++ code is, that is the canonical code base. But actually, that's not right. You should have specifications, blueprints, that are implementation agnostic as your canonical code base. And can your system know those specifications,

Starting point is 03:57:54 understand those specifications, and can your change management system be for that, and then can you provide a proof that your client is by similar to that specification? So that's 10 years in the future, but that's where you would go with that kind of a concept. But you're attending towards the formalism. Eventually, but that's not necessary

Starting point is 03:58:13 for the system in the short term. It's good enough just to have, you know, annoyed a winner and say the Haskell client is that, and then what you basically do is you vote on a SIP, and then once it's approved, then you go and implement that. And there's some mechanism to trigger the update system to update the reference class. You have an example of a sip of cardano improvement proposal. Yeah, like the current benefit

Starting point is 03:58:34 pledge, sip 0 0 7. So the double O seven. Yeah, I really love that. Yeah, I can change my luggage code now, Lex. What is that? So, yeah, so basically, it just has to do with the pledges. So, pledges, a certain amount of data that a state pool operator will set aside and connect to his pool in order to be listed in the registry, and actually, it's connected to how much income you make as a pull operator. So if you set it too high, you have a consolidation, you have lots of pools. If you set it too low, what will happen is larger pools will tend to fragment and actually run multiple instances of themselves. And so this is delicate parameter that you have to tweak. And so we have a formula for it, our formal specification, that's quite involved.

Starting point is 03:59:25 And so one of the community members came and said, well, I think we can massively simplify this design and actually get a better result for smaller stake pool operators. And so it's CIP-007. And there's actually a lot of conversation and people are thinking about it. It was just stunning for me, because to understand how to write a CIP like this, you actually have to read like a hundred pages of mathematical pros in the formal specification. So the guys who wrote it was like, fuck yeah, this is great. I'll have this example of a sip of the, that's one thing, but it can be as big as, hey,

Starting point is 03:59:55 I want to add like quantum resistance to this system. And here's how you do that, you know, like quantum VRF and I want to put XMSS and all this other stuff. So there's a lot you can do and you can do it you can do it indirectly or implicitly where there's some social process outside of the system where you eventually approve a SIP or you can do it explicitly where you directly vote or some representative democracy some group of representatives directly votes and then once you've decided it's there the constitution is necessary because you need to know the decision threshold. Is it super

Starting point is 04:00:28 majority or majority? And also the voting process. Like a lot of policy experts believe that if Brexit was a multi-stage vote, it would have never passed. Because what people would have done the initial stage and all the horrors of Brexit would have been broadcast to society. And then there would have been some reluctance and buyers remorse on it. And then the second round would have failed or something like that. But because it was just a single year event, you know, it's like they passed it. Now, British are all passive aggressive about it with no sign. Very well.

Starting point is 04:00:56 We shall remove from Europe. And so your voting system has a lot to do with, you know, the outcome you get. The other thing is, you know, what type of voting voting is it just an absolute or is it preference voting? So you pick your favorite sip, follow your second favorite sip or something like that. So condrace or border or two examples of season one. Are you a fan of those like the ranked choice vote? I love them so much, especially for political diversity.

Starting point is 04:01:19 Because this whole concept of throwing your vote away, if it's Alice or Bob, you're always gonna get a, in self-park did it best, right? The giant- Turned? Yeah, you know, you know, the one. Turned versus F.A.G. What else? Douch versus turn.

Starting point is 04:01:32 Douch versus turn itself park. So if it's ranked order, you know, or preference voting, you never have that situation because you always pick your favorite and you get a lot more diversity on the ballot, but then you have arrows, paradox, and you know, all these other things that come up. So it's, there system, and really you have to be comfortable with governance in a game of inches. And you start by some guiding principles. The guiding principles is more is better, and productive interactions are better than destructive interactions.

Starting point is 04:02:00 And you have to be able to quantify those things. As long as you have an engine that allows you to grow in those directions, then you have a lot more people on for the ride when you actually start talking about these bigger and bigger things. The other challenge was that we had to decentralize development of the protocol and the brain of the protocol. We have fully decentralized the brain of the protocol. The peer review academic process means

Starting point is 04:02:19 that there's now an academic incentive for graduate students, postdocs, and professors to spend enormous amounts of time writing papers in our ecosystem, because they want tenure. They want to, and we showed that you can get it. There's been a lot of people who've gotten great academic careers from working with us. So yeah, keep adding to that pile of 105 papers.

Starting point is 04:02:40 This is great. And that doesn't need Charles Hoskinson, it doesn't need IWGK funding or anything like that. The rhyme, we're already seeing unfunded derivative work from people are completely disconnected from us, writing papers about stuff in our ecosystem. So just continue to develop that, but that's looking good. The centralized development, we're working on that as well. Our goal is sometime in the next few years to make sure there's at least three independent clients, so three completely independent team's and code bases, and also to get a separation of the commercial clients

Starting point is 04:03:09 from the reference code and turn the reference code into like a formal specification, a formal blueprint, and then have that change management be completely decentralized. The core developers are actually voted on, and the SIP process is used to change that, and then some way of proving that your client follows the specification as use of the protocol.

Starting point is 04:03:31 Is there beyond the Cardano ecosystem, these ideas of distributed governance, do you see ways of good revolutionized politics? Yeah, yeah. Yeah. Yeah. Governments. Oh yeah, like Ethiopia deal, for example, you know, we have five million people that we brought in with the did system there.

Starting point is 04:03:52 That's going to follow them throughout their whole life or in other high school students. But when they're in their 20s, 30s, they're going to want to use that for evoting and for payments and so forth. Can you describe the Ethiopia project because that's fascinating? Yeah. So we spent four years in Ethiopia. Yeah. I went there in 2017 and shook a lot of hands, kissed a lot of fourth. Can you describe the Ethiopia project because that's fascinating. Yeah. So we spent four years in Ethiopia. I went there in 2017 and shook a lot of hands, kissed a lot of babies and they said, Oh, yeah, we'll have it all done in six months.

Starting point is 04:04:12 Everything is a lot of fun there, but it takes a little bit longer than you think to get anything done. And that's okay. I really love Ethiopia. It's a beautiful country. So we spent four years. We trained a whole cohort of developers. And then we started a relationship with the Ministry of Education. And they care a lot about proper credentials. One of the biggest problems they have is when someone graduates, it's really hard for them

Starting point is 04:04:35 to prove the quality of the credentials that they have, and it's really hard for them to prove the knowledge that they have. So if you want to be an ICT outsourcer, how does somebody know that this is a real programmer, or how does somebody really know that this is a real doctor, or whatever the hell you're outsourcing? So they said, can you come and build a digital identity system for credentials? So every student in the country at some point will get a did, a decentralized identifier,

Starting point is 04:04:58 and then you can prove all sorts of things about them, like GPA, or what particular diploma they hold, or blah or blah blah blah. And then the beautiful thing is the way we designed it is it's extensible to include payments extensible to include proofs about themselves like are you over the age of 21 that kind of stuff. And then eventually it can be used to link into a cryptocurrency system. In this case, we built it for Cardano. So a talloprism is the framework we're using for it. Every student will get one. And then those students will be able to use those credentials in the Cardano. So, a talloprism is the framework we're using for it. Every student will get one, and then those students will be able to use those credentials in the Cardano ecosystem,

Starting point is 04:05:29 eventually for D5, like lending and so forth. So, it's the largest blockchain deal of its kind, and it probably will grow to 20 million people over the next 24 months. The other beautiful thing about Ethiopia that people don't know is the Prime Minister is a cryptographer. And is it just like 40s, 50s, a young guy. And he can actually read the papers we write. And so he's really bright guy. And he's written this beautiful agenda called digital Ethiopia 2025. And one of his things in the agenda is digital identity. He wants every person in the country to have a digital identity by 2025. And he wants to implement an EVO-ting system at some point for that.

Starting point is 04:06:06 So when you ask about governance, all these governance tools that we're constructing for Cardano are completely reusable for nation-state, accompanied, and by the way, if you create a Cardano application, will eventually be reusable for you. Because if you have a DeFi protocol, you need a voting system. Why the fuck do you have to re-implement that? Native Multiasat, anything that works on ADA works with a native multi-asset. You can use our voting system for your asset. You get a government in a box that you

Starting point is 04:06:31 can parameterize any way you want. Similarly, when a government does something with Cardano, not only did they get all this amazing infrastructure, but wait, there's more. They actually get this amazing voting system that they can use for smaller, large-scale decisions that they want to do. On the US side, we're thinking about trying to roll something like this out in the state of Wyoming. There's been tons of laws that are passed. It's a very friendly crypto place. The very least did be fun to see if we can do the Republican Democrat primaries with preference voting and voter registration this way and do it completely

Starting point is 04:07:04 online with an evoting system. So, you know, that's something we'll be pursuing in 2022. You think there's some openness to that? Yeah. Yeah. That's the one good thing about the craziness of Trump. He made like half of America think the election system is completely air-parably broken. So, you know, you walk in, it's like,

Starting point is 04:07:19 we're gonna go kill Dominion and they're like, yay, that's great, let's go do that. Whether you believe that or not, you know, it's created a market opportunity, created a lack of faith and credibility in the system to improve the, to improve the, exactly. Well, what do you think about El Salvador becoming the first country to approve a cryptocurrency Bitcoin in this case as, as a legal currency? And where's this trend going? First of all, this event you mentioned the bitcoin conference

Starting point is 04:07:47 bitcoin folks believe that this is a monumental event do you think this is a start something new well they're both right the critics and the the pro people uh... so the critics are saying this is a nothing burger and it's just a publicity event for else alvador and then that the people say this is the most monumental event they may actually be right because there's reciprocal agreements. When a country issues a currency, other countries honor that, usually,

Starting point is 04:08:11 and it trades on Forex exchanges. So if Bitcoin becomes a recognized currency of a country, then it may be the case that United States and European Union others can't actually stop them from trading on Forex exchanges and being treated as a currency for a regulatory perspective. So it was like a really clever back door into the league of nations. And actually we had this crazy hair-brained idea years ago. We were down in Mexico at the Satoshi Roundtable and we're like,

Starting point is 04:08:37 hey, let's go buy a country. Let's go to Tuvalu and get them to do something with their currency. Because they sell everything in Tuvalu, like the .tv extension and their fishing rice and Taiwan pays them money to recognize them and so forth. So I'm like, man, maybe we can convince Tuvalu to do something with crypto. That didn't work out so well. But now El Salvador is actually playing the game. And that's a real country. It's got like 5 million people and so forth.

Starting point is 04:09:02 So we know the president's brother and we've had some conversations there So maybe we'll go you know next few months and see what's going on there and do a state visit and talk to the president But it's a it's an interesting development and it's one of those things that it can't quite be ignored because the nation states doing it on the other hand You have to manage expectations. It's the central bank taking a position in Bitcoin You know, are they actually switching over to a cryptocurrency as their unit of account? Are they now getting off of BIS?

Starting point is 04:09:31 And they're all using the settlement rails of central banks? Are they actually blockchain the entire country? And they have some broad, ambitious agenda to go and do all that. That remains to be seen. And so it really is a commitment there. The other thing is that if you're autocratic, these systems are not so good for you, because the minute

Starting point is 04:09:48 you adopt these types of systems, you're pushing a lot of power to the edges. So there's a world of difference between optics and actual commitment. And actual commitment is, I'm prepared to accept the consequences that the state is going to lose a lot of power along the way. And the problem is it's not clear to me some of these politicians who are pro-blockchain and I'm not making a statement on El Salvador in particular, I'm just saying in general, are fully aware of that reality. A lot of them seem to think that somehow they can contain the blockchain genie in the bottle and blockchain their whole country, but you know, stay president for life.

Starting point is 04:10:22 That doesn't work. Once they have that power, they're gone. So do you think once they realize that this is one of the failure cases, one of the things that people concerned about is government's banning cryptocurrency? Well, that's China case, right? They started realizing this was a legitimate threat to capital controls into the autocratic system that they've constructed there. And then suddenly China started to build its own people's bank of China blockchain. And Bitcoin is now the red headed stepchild.

Starting point is 04:10:48 They didn't really care too much because it was great for corruption. You could have eight capital controls and it's all the like well connected people. There's, oh yeah, Bitcoin's bad, but then they'd have Bitcoin of their own and they could use it as a cent money around. But now the government's gotten very serious about it. They're saying, okay, we want to control and dominate this whole thing. And it's a threat to our plan for the digital you want to become the world's standard to displace the dollar.

Starting point is 04:11:10 But so the moment you have a Salvador and just more and more countries say there will be a country in Europe, for example, that accepts Bitcoin or other cryptocurrencies, Cardano, the ideas that would put a lot of pressure on you. So there will be like this kind of ripple that you'll be, and then the individual governments won't be able to help. And eventually, there'll be a superpower like, I don't know, Russia or the United States

Starting point is 04:11:34 and or Canada. So do you see that sort of an inevitable trend where cryptocurrency takes over the world as a store value and as a method of payments. Yeah, probably. I mean, you can do just so much more with programmable finance. You know, transaction is generally five properties. You know, you have the asset that runs on the rail. That's what we always think about. And you can transact that, you know, and then you have the identity and you transact that either like one to one, one to many, many to one or many to many.

Starting point is 04:12:06 And then you have metadata. So that's the story of the transactions. Like where did it take place, these types of things. And then you have the contractual relationships. So that's the smart contract component. And then you embed that within regulation. So transactions always live within jurisdictions. This is relevant to the conversation where well, digital currencies take over because those

Starting point is 04:12:26 things are right now done separately in a very fragmented and fractured way and they're not completely globalized. And so super expensive, they'll hoist up this entire system and automate things like compliance. It's usually a huge part of every balance sheet. So when you look at the concept of a digital currency, you're saying all five of those things are programmable. And so they could be like library driven. You say, oh, I want to be in compliance with the air trail. Okay, pull up the air train library. Now you are built into the transaction. Previously, it's like go hire some lawyers and go figure out the entire code and translate some things and run, run, run. It's crazy. So just the orders of magnitude efficiency gains that you get in the increased liquidity

Starting point is 04:13:12 you get and the fact that you can now represent all assets with a universal way, that financial stem cell, there's an inevitability to the victory of our industry. The challenge is how do we deal with this with the squabbling of superpowers? China wants to be the new world standard. America wants to preserve that. And the rest of the world is trying to figure out how do we create something that's a bit more fair and balanced. And so crypto comes in, and it potentially is both an ally and a competitor to those desires, because if you do too much crypto, you need to nation-state anymore. If you do too little crypto, well, you know, it's China or America, you know, so what's that sweet spot? Do you hope that in the process of cryptocurrency pushing power to the edges, to the people

Starting point is 04:13:58 that we would be able to alleviate some of the suffering in the world caused by centralized power and the abuses of power, corruption, all those kinds of things. A hundred percent. I made a very angry video months ago. I make angry videos from now. I should drink, Kleks. I really should. I'm gonna need you to drink more. I know, right.

Starting point is 04:14:15 It depends on who you ask. I made a video a little while. I said, you know, our industry is an industry of frustration. It exists because we weren't the industry that charged 85% interest to the poorest people in the world for loans. We weren't the industry that charged 15% to move money for a maid sending money home to mom and Manila. We weren't the industry that laundered hundreds of billions of dollars of drug money and funded arms dealers in Africa and all these things are permitted oil for food to exist and so forth. And the people who did these things aren't in jail. They're rich. They're billionaires.

Starting point is 04:14:49 They fly private jets. So our industry is the antidote to these types of things. We say, guys, we want a system that's fair. That's it. And we want everybody to be treated equally. That doesn't mean it's everybody's going to win. It doesn't mean that when you lose, somebody's gonna come on a white horse and bail you out, you're gonna have winners and losers, but it's fair. That's all we want, that's all we've ever wanted. There's no coincidence that Bitcoin was created right around the same time as the 2008 financial crisis.

Starting point is 04:15:18 It's not like these were just unrelated events. They're highly correlated to each other. Okay, I'd say perhaps you've been causal, Go figure. And everything we've done as an industry from that moment to today and beyond has been about that, that endless relentless desire to make things a little bit less corrupt, a little bit less nepotistic and a bit more open. And it's gotten so insane that they have these things in Wyoming called speedy bags where you're full reserve bags. They have 100% of their balance sheet is accounted for. They don't lend.

Starting point is 04:15:53 And then you have the people in the banking community saying, well, those are a risk to banking. We were scared that these speedy bags are going to default. It's like, world, are you living in? You have fractured reserve, sometimes like 2% assets on the ballot sheet. And then you're worried that the guys who actually have a dollar for every dollar they say they have are the ones that

Starting point is 04:16:13 are going to collapse. It's like the 1984 level double speak when you see the system and negative interest rates and all these other things. And so I absolutely believe the direction and course of this industry is to make things more honest and fair. And also by its very existence, it exposes double standards hypocrisy and corruption. Just the fact that it's there, because it's one thing to say that, well, it just can't be because of the nature of global finance. There's no

Starting point is 04:16:39 way to do it otherwise. It's another thing to see it there as an example and say, well, that thing is doing it. Why can't you guys be this way? That's why I'm so passionate about Africa because they don't like the systems they have and everybody's really young and they are going to throw all the systems out in the next 20 years and they're going to replace them with something else. If we get this stuff into Africa, 1.2 billion people will be living in a considerably better system than the rest of the world. And then everybody else will look at that and say, why the hell are those guys so rich? Why are those guys making the money? Why are those guys doing so well?

Starting point is 04:17:11 And it's not satisfying here. Well, Africa is just better. No one's going to say that. They're going to say, okay, yeah, it's nepotism and corruption and a lack of transparency in these types of things. So I think absolutely it has the potential to improve the human condition, but humans have to get out of the way.

Starting point is 04:17:29 Humans have ingrained in themselves selfishness and it is a desire to maximize them for themselves and their family and not think in systems. And so we have to evolve capitalism at the same time. And one of the by that is right now, you're trying to maximize the amount of resources you get today. What we need to do is start thinking about how do we create future versions of ourselves in 2100 and create a resource for that time period. And then the name of

Starting point is 04:17:54 the game is to maximize that or balance that with what you get in the short term. And then suddenly you're saying to yourself, well, if I'm doing things that are good for me today, but compromising that I make less money. So capitalism as an engine is okay, the problem is it's misparameterized. Right, almost like inject long-term incentives into the capital system. Exactly. And cryptocurrency space is the only economic system where that's actually possible. You can create a tokenomics scheme where doing things that are beneficial for people you'll never meet because you're long dead actually makes you money today. You can't do that in a legacy financial system and so forth So I think that that's the real impact capital conversation that has to be had as you explore these things is

Starting point is 04:18:35 You have to talk to people and say look, it's not about communism or socialism versus capitalism It's not about hey, let's donate and save the world or try to be charity and make things better. It's all about how do you use the fact that we have a better tool kit to create a different system, a different incentive model where the default configuration of the system is long-term thinking. And the default consideration of the system is to get rid of all these negative externalities that marketplaces have and judge the success of society not by how the greatest of society are doing, but by how the least of society are doing. You know, HDI, not GDP, this kind of thinking.

Starting point is 04:19:10 And I think crypto can actually be the vanguard that kind of pushes us there. And the first countries to adopt that are going to be just significantly better places to live. And the people who envy them will force the other countries to change. That's right. That would be a ripple effect. So when you wake up in the morning or as you sleep like a baby wake up multiple times in the middle of the night, are you, do you feel the burden of this kind of future that's in your hands and not to mess it up?

Starting point is 04:19:37 Like, what's the big Lebowski? Her life is in your hands, dude. Don't worry about them. They're nihilists, don't worry. Do you feel the burden of like, because we're talking about all these, you know, 100 plus papers and the academic beauty of the algorithms we're talking about, but then there's millions of human lives that stay here. I mean, you always feel the burden, especially my own company. I mean, I have all these people work for me and, you know, they eat because I pay them, right? So if I can't pay them, then that's my fault. So you have to, as a leader, you always have to be cognizant that there's all these people who have signed up for your crazy vision, and you have to be larger than life. You know, you always have

Starting point is 04:20:19 to be good. You're not allowed to have a bad day. You're not allowed to feel like shit. You always have to show up. You always have to be pushing for it. And so that's a huge burden on many respects because there's Charles the person and then Charles the CEO and these are very different things in terms of expectations at the very least. And so it's heavy in that respect. That said, what gives you solace

Starting point is 04:20:44 is that you're not in it alone. You know, it's lonely, but you're not alone. You have so many amazing people around you that are willing to help. And actually, take some of that burden. And my life has gotten considerably better when I learned how to delegate and trust. And even if people screw up and fail, it's worth the risk.

Starting point is 04:21:02 Because ultimately you're amplifying yourself. The other thing is that it's okay not to get all the way. You want to, you want to push there, but make sure whatever the hell you do, you leave something for somebody else to pick up and carry on. That's why we care so much about the publication process and open source code. We'll never file a patent in our entire history. Because whatever we do, it's yours as much as it is mine. And maybe I can only get you 70% of the way.

Starting point is 04:21:29 And I'll plop over dead from a heart attack or get killed by an eagle or something like that. Maybe somebody brings the hat. Maybe somebody brings the haste, go back and it kills me. You know, so it could happen. They're bringing the woolly mammoth back, talk to the George Church about that. It's a good way to go. Yeah, I know. The ego or the mammoth.

Starting point is 04:21:47 I'd rather be crushed by a mammoth, because Eagles actually fly you up and drop you. It's... Oh, so you won't die of your slow death and they probably peck at you. Exactly. You just be grievously wounded on the ground and the Eagles like slowly devouring you. Yeah, don't go down that way. The point is you feel deeply great. A bunch of people have done it. And then you give, uh, yeah, you delegate, you delegate. And somebody fights the eagle and another people takes care of that and this, that, yeah, they're, you just do the best you can. You're in the arena. You fight as hard as you can. You leave nothing, uh, uh, it's for home. You could put it all on the field. And then when you go home, you have pride in what you've done. And you know that you've at least made a slight difference. You could put it all on the field and then when you go home you have pride in what you've done

Starting point is 04:22:25 And you know that you've at least made a slight difference And you know one person can make a huge difference look at Norman Borlong I mean just one or a whole world teaching people how to grow crops They saved a billion lives over the course of his life billion people didn't start to death because of one guy It's amazing the asymmetry and the returns on that type of a thing, just for the knowledge transfer of all things, and yet not a household name. So that's the other side of the burdens. People always want something for something.

Starting point is 04:22:54 So they say, oh, if I endure all these burdens, I should be given something. I entered into this space fully expecting that probably the most likely outcome was jail. That's what my dad told me and other people told me. I was, it was because it's like, look at where we came from, the Liberty Dollar, Eagle, all this, anybody tries to innovate the monetary system,

Starting point is 04:23:12 either end up like a Dhafi or they end up in prison or they end up, you know, nepotistic corrupt banker or something like that. And so, you know, financial regulations are not built for rapid innovation. They're not built for Bitcoin. There's a reason Toshi was anonymous. It wasn't because you know, he enjoyed the anonymity.

Starting point is 04:23:31 There was legitimate criminal risk for this type of activity. So the fact that I've gotten this far and I'm doing pretty good, that's a win. You know, you take that. Life is good. What is a productive day in the life of Charles Hoskinson look like? Now we're getting to the details here. Diet, like fasting or not maybe coffee, non-coffee, exercise, sleep, scheduling, like periods of deep work, programming, then the social media stuff that you do.

Starting point is 04:24:02 You clearly enjoy being a social media and also live streaming, educating, inspiring the world, or getting drunk and ranting at the computer. Well, first off, you do a wet year and a dry year. That's what prevents you from becoming an alcoholic. So, unfortunately, the way that schedule worked, 2020 was my dry year. Like, it didn't drink the entire year. Now, single sip of alcohol. So, the worst.

Starting point is 04:24:24 Yeah, you do a dry year and then you do a wet year. Oh, so this is one of your ideas about life as you alternate. Yeah, you have to alternate. You know, never do too much of any one thing. Well, church will never alternate. He just kept drinking throughout his life. He did pretty good. Just just just just to to push back. Yeah, him and Alfred North Whitehead. Although it didn't church. I'll get kicked out as Prime Minister at some point. So maybe he took one drive. Yeah, he was sober happy in shape, Churchill. He had to let it Britain for 30 fucking years. See Lex. Yeah. Why we can't have

Starting point is 04:24:56 nice things. Uh, Connor Thompson, maybe you're onto something. Oh, you know, it's really crazy. If you go to Aspen and see the bar, he used to go to there's I actually met a waitress who knew him really well. And he'd go in there like two, three times a day and she's like, yeah, he'd do cocaine right here on the table and he'd come in with lots of pills and just put them all out on the table and be taking them at different hours. And they were all clearly illegal substances, but we just give him coffee, whatever he wanted. He's a great guy.

Starting point is 04:25:22 But then we asked the day in a life of Charles, I tried to do intermittent fasting, 16, eight. The longest fasting ever did for a long term fast was two weeks, which was just crazy. Wow. Oh my God, I was... Keep me to the journey of philosophically what was going on in your mind. Well, so normally when I do an extended fast

Starting point is 04:25:39 it's about three, four days because that's the sweet spot before you start losing muscle mass and other things start happening. And there's people know so much more about this than I do. But I just feel pretty good. And you kind of get addicted to the fast high. You don't have to eat. You have no downtime. You're just going. You're never, you're energy never dips. And so I used to do like three, five days, maybe three, four was, was the sweet spot. But then after about a week, I was like, how long can I make this go? So I started talking to the people and they said, well, Angus Barmery did 384 days.

Starting point is 04:26:12 Of course, I'm not as fat as Angus. So I said, I can do two weeks. So I just kept going and kept going and kept going and kept going. Right around the two week mark, I fainted for a little bit in a chair and I was like, okay, maybe I should start eating again. But then I was legitimately worried about like, refeeding syndrome and this stuff like, okay, how do I take care of that? So my brother's a doctor and I called him and I said, hey, Willie, you know, I haven't

Starting point is 04:26:36 eaten in two weeks. How do I, how do I start eating again? And he's like, what? Slowly. Slowly. Yeah. So in the usual routine or mid and fasting, although I haven't been as good about it as I should be, and I used to work out, I don't do as much as that.

Starting point is 04:26:52 The stress and the work life balance has been horrible the last 24 months, and I've gained a lot of weight and all that stuff, but I'll fix that. But I do try a lot of things. Like, I used to call map, and I do meditation. Recently, I started doing photo biomodulation. You ever heard of that? It's crazy headset called V-light. You saw that picture of me with the weird thing with the red lights on.

Starting point is 04:27:12 It actually shoots lights into your brain. It's really cool stuff. But it proves blood flow and actually there's some peer review studies that show that it does neural genesis. So you actually generate new neurons and things like that. It's really cool stuff. So I do that and it actually helps a lot. And you know, it's every day's a little different.

Starting point is 04:27:29 Do you get a few hours of like a long time to work to think? Yeah, deep work is so important. There's even a book on that like deep work. Yeah, but I call a new part of the long one. I think you interviewed him, didn't you? Yeah, everyone should listen to his podcast. Deep questions, he's awesome. He's a mathematician, theoretical computer scientist,

Starting point is 04:27:49 so those guys really need their time and want to really think. That's the one thing I deeply miss. When you're a CEO, you're the master of the five minute deal. You come in, you talk to people, you make a decision, you move on. The next thing, you move on, the next thing. And I used to be used to like really deep focus.

Starting point is 04:28:04 You'd sit down and think about something for 10 hours, 15 hours, 20 hours. on the next thing. And I used to be used to like really deep focus. You'd sit down and think about something for 10 hours, 15 hours, 20 hours. And that's that. And I enjoyed it. It was just so beautiful to be get lost into something and just go and go and go. And then you become a CEO. It's like you never can go and go.

Starting point is 04:28:17 You're lucky if you read a four page thing because there's something else that comes up. You have to travel, you have to do that. So I've been trying lately to have, and actually our chief of staff recommend it, like Fridays is do not disturb day. So it's for deep work, you know, you don't have meetings, none of these things. And so far, I have not committed to that. But everybody else in the organization has started to move there. But my hope is next month that I can actually get serious about that. The other

Starting point is 04:28:40 time I'm lost in thought is I do a lot of float tanks. Have you ever done isolation tanks? But I really want it. It's one of the most amazing things you can do You know you come out on the other side and all your stress worries. It's just gone and you have so much Productivity and clarity if you combine that with daily naps. That's the way to go. Yeah, I'm a huge fan of naps So what about the social media stuff? And like you do in the live streams. Do you ever dread those? Do you energize by those? So because you're exceptionally good at communicating all the different kinds of ideas

Starting point is 04:29:15 and being very transparent with the community on those kinds of things. I really enjoy the live stream. It's fun. It's never been a chore because it's for them. It's a chance for people in the community who've been loyal and they really love it to actually just be there, ask some questions and well, I try to make it

Starting point is 04:29:29 as entertaining as possible and you have your trolls and you have your love and it's actually a nice to have a mixture of the two because sometimes you can beat down trolls just for fun. You know that kind of stuff and it's grown to a cult following, I think there's like 40,000,000 people. And it's almost like fight club in a certain respect. So I was in Vancouver years ago. And I was at Air Canada checking in just about to fly back to Colorado. And it's getting this weird vibe from the guy that was checking me in. And then right right

Starting point is 04:29:57 after he takes my bag, he kind of leans over to me. He's like, I love Ada. You know, and I was like, really? He's like, yeah, I watch your livestreams. And then I was flying to London. I was in London. He threw an airport in the passport control guy. I was there. And I was just about to take my passport out. And he says, welcome to London, Mr. Hoskinson. I was like, oh, God, am I going to jail in London? Why does the border patrol guy know who I am?

Starting point is 04:30:20 This is a bad deal for me. And it turned out he watched my livestreams. And so there's a lot of that. And that's that's so much fun. In fact, here in Austin, as a Mexican restaurant just down close to this place. And while eating there, two different people recognize me. And I took a picture with one of them. And again, they watched the life streams.

Starting point is 04:30:40 So that's- Well, if there's anything like fight club, you have to wonder if some of those people are all of them are just figments of your imagination. Right. I would. I don't I don't have an answer for that. The I could be a figment of your imagination was just proves that yeah, but honestly, if I was capable of that level of delusion, why the hell don't I look like Brad Pitt? Good point. Okay. So on this topic, let me ask you about mushrooms.

Starting point is 04:31:04 Okay, so on this topic, let me ask you about mushrooms. You're interested in mushrooms, growing mushrooms. I believe you are also interested in the mind-expanding capabilities of psychedelics, at least you mentioned kind of the interesting place where your interest in non-psychedelic mushrooms might go. Can you explain the nature of your interest in mushrooms as Is it personal? Is it business? Is it both? That's a little bit of everything. You know, it's just an under explored area of Science and botany that ought to be explored because there's so much cool interesting stuff there mushrooms

Starting point is 04:31:38 do so much like there's these things called quarter steps and They are like a zombie fungus that infects insects, takes them over, and then it will have them kind of get to other insects and burst out of their head like an alien and spray spores on them and repeat the process. I mean, they even made a damn game about this, the last of us or something like that. And this is a real thing, like you can Google it and see like these dead ants with these fungal stabs coming out of them. It's like holy god, this is crazy. And in the same topic, you go all the way to Lion's Main and it could actually help treat Alzheimer's and treat depression and Parkinson's and regrow nerves and so forth.

Starting point is 04:32:19 Other things, they've shown some effectiveness against COVID. It's just so crazy crazy the diversity in the mushroom kingdom of the medicinal applications, the pesticide applications. You can use it a lot to kind of save hay and trees. There's a lot of things you can do to combat all kinds of invasive species. And it's true, there's a lot of cool stuff with psychedelic

Starting point is 04:32:43 mushrooms. There's great book called, from Michael Pollan, How to Change Your Mind, where he was really the first journalist a long time to go and Roland Krifts' work his way through the Johns Hopkins studies. But the longest short for me when I read that book, like, okay, my next man changed his great, but look at the effectiveness of psychedelics, you know, and philosophy mushrooms with SSRIs. It's electiveive serotonin read-up taken hibbers for treatment of depression. They showed in the John Hopkins studies that

Starting point is 04:33:10 they're equal or better in effectiveness in many cases. Yes, fascinating. For the treatment of depression, then a drug that you have to take forever, and this is just one or two treatments, and then you desist from it. That's some miracle, because there's so many people suffer from severe depression and it's a lifetime ailment and the fact that we have something in the toolbox that we've under explored is a very powerful thing. The other thing was end-of-life issues. A lot of people get cancer.

Starting point is 04:33:38 I've lost people in the family from cancer. And it's so hard those last two, three months because they kind of have this, they're in a horrific pain, they're trying to find meaning and why is this happening to me. And if you can just give them a substance that on the other side of it, there's a good chance they can come to peace with everything and die with a lot more dignity and happiness. That alone justifies an enormous amount of study. And the fact that these things are super cheap and they grow pretty much anywhere, it's pretty cool. Now, on the commercial side,

Starting point is 04:34:07 you can make a lot of money from mushrooms. And I'm working with a company called Farmbox Foods. And it's one of the, they do both vertical hydropower farming. They also do mushroom. And, you know, they put these amazing labs and shipping containers that are kind of like controlled environments. You can have 400 pounds of gourmet mushrooms

Starting point is 04:34:27 a single week off of that. And your margins can be up to 30% per year. If you're just selling them for food consumption, if you're doing supplements, they can be even higher than that. So it just kind of made sense from a diversification of assets to say, hey, let's do some stuff in hydroponics and aquaponics and in mushrooms. But the more I do and the more I learn that community, just the cooler that community is.

Starting point is 04:34:48 I went to this beautiful mushroom festival in Cape Springs down in Georgia. And I met this guy named Bill Yule. And he just looks like a druid. And I just like he lives in a tree and he opens up the tree and goes out and everything. And I was like, Bill, what do you do? So I go and I try to study beetles and bull eats in a very particular type of beetle. And they mate in the most crazy way is like this, this beetle will fuse

Starting point is 04:35:12 on top of another beetle and they'll vibrate. And if they make the right harmony, she'll mate with him. Otherwise, they'll kick her off. And you can only make the harmony while you're on a specific type of bully mushroom. If it's anywhere else, the harmony does it's like, who the fuck that's like's like 20 years, 30 years just thinking about goddamn beetles and bullied mushrooms, but that's that community. They're the happiest people you'll ever meet. And they're just so much fun to talk to. And there's just so much lore there that's not discovered. The other thing is there's a ton of undiscovered mushrooms. So, you know, you go to my ranch up in Wyoming, go out that National Forest next to it,

Starting point is 04:35:46 you'll probably discover six or seven new species, just doing some gene sequencing and things like that. So there's like a gold rush for new things to discover, to treat all kinds of things. So love mushrooms, love that community. I think there's a lot of wonderful medicinal properties and everybody there is just a lot of fun to hang out with. The other passion is aquaponics and hydroponics and I got a lot more serious after COVID.

Starting point is 04:36:08 I go to the supermarket all the store shelves are barren and I say guys can you imagine if like we had a real big thing what this would be like we need to have domestic food production we need to have resilience at the community level. So let's go build a 40-50 million dollar aquaponics facility next to every major city. So at least you have some local production of food and people won't starve to death. Otherwise, it's very bad. And again, the margins are phenomenal. They're 20%, 30%. If you actually do it right and alternate your crops properly and so forth, and you create a lot of high-paying jobs with it as well.

Starting point is 04:36:41 And so you kind of draw a lot of value from staying close to nature and all of these kinds of ways to keep you in your humble. Like you said, what is it, the goat is still going to crap on you? Oh, yeah, the dockies will shit on you whether you're broke or a billionaire. That's a good line. That's the line you'll be remembered for. Right. If the universe has a sense of humor.

Starting point is 04:37:04 Yes, it's a neo-Yogi pair. So I think Mushroom is a good place to, to ask about my friend, Joe Rogan. So I keep folks from the Cardano community kept saying, keep saying things like, uh, Lex podcast first, then Joe Rogan experience. Uh, I guess I'm the moon and Joe's Mars in this metaphor. Since I'm a CS person, I can talk a little bit, more fluently about cryptocurrency because fundamentally, cryptocurrency is a computational idea.

Starting point is 04:37:35 But then there's somebody like Joe, who is more like an every man, and he does not necessarily know the technical intricacies of cryptocurrencies. What kind of, and I don't think he's had a cryptocurrency person on. I did an interview and race on Tenoppilus. Oh he did. That's right.

Starting point is 04:37:52 Long, long time ago. But that was almost like, you know, the cryptocurrency space goes through phases. And I think we're in a new era of some kind. And what, how do you talk to Joe about Cardano? How do you talk to Joe about what the heck, I remember somebody tried to explain to him what Dogecoin is. How do you explain this whole space?

Starting point is 04:38:12 So what Bitcoin is, of where Ethereum is, of where Cardano is, some of our contracts and some of this booth is work with this booth of stake ideas that we've been talking about. You don't. What you do is you start with applications that they're interested in. So he's an Elk Hunter.

Starting point is 04:38:25 And so he's probably interested in ElkTax, right? So you start there. And you say that whole system can be put on a blockchain. And here's how it's going to be better for you. You say that's what you do. You always connect it to something they know and love. And then once they get that, they say, oh, that's really cool.

Starting point is 04:38:40 And then they ask, what else can you do with it? What else can you sell me on it? And you kind of work your way outwards there. The problem technologists make is they're so damn in love with the technology. They have that tail wagging the dog where they just want to talk about the technology and how incredibly cool it is. And that's fun. It's like talking about math. Oh God, let's talk about co-bortisms. That's fun. All right. Yeah. Like, these, everybody's eyes glails over. You know, you always have to connect it to the interest of the particular person and what they care about,

Starting point is 04:39:07 what they love, what they need, royalty payments. You know, he's a big guy, he's got the Spotify thing, he's got all these things going on. Intellectual property is probably pretty important, Joe, it's some juncture. So NFTs, we can talk about this concept of perpetual royalties. So for example, let's say that you create a piece of art, you can build into the token itself.

Starting point is 04:39:26 A perpetual royalty does something you care about. Maybe every time it sells, it pays it back to you. Or maybe every time it sells it donate to some clean water charity or something like that. The point is that the actual acquisition of the NFT requires adherence to that smart contract. So people can't deviate from your desire even after you die. So, you know, stuff from Andy Warhol or from Picasso that can still be generating some donation every time a Picasso sells to something else. You can do that with NFTs. NC starts thinking, God, what else can I do? I do shows. Maybe I can do my tickets with

Starting point is 04:40:01 these types of things. Maybe I can do loyalty points for my fans. So now you've got to engage in these thinking of all the opportunities for him. And it gives him an incentive to anchor and connect to those concepts. And then over time, he starts asking questions, well, how do we know it's secure? Then we can talk about proof of work or proof of stake or these types of things. Well, so this is how it stays secure if you're really interested. And there's an incentive to have the attention span necessary to do the homework, eat the broccoli, and get over that hill.

Starting point is 04:40:28 But it's also an opportunity, at least it was for me, especially with Bitcoin a while ago, is to take another look at the monetary system. Even look at the, you know, been looking quite a bit at the history of the 20th century, and sort of look at that history through the perspective of the monetary system, the gold standard standard and all those kinds of things. And just add that little layer of consideration of how much money, of how money can be used to, by people in power to control the populace. Right. And it's, it's fascinating to look at the history from that perspective and then that

Starting point is 04:41:04 allows you to look at the future of that perspective, and then that allows you to look at the future of how we can change that in order to empower people. And then, of course, the governance thing that you're working on is fascinating because, I mean, I don't know, but it seems like a deeply broken aspect of our government is just a voting system, and discussing how that could be revolutionized is fascinating. Because a lot of conversations end up being on the internet about like number go up, which is like financial side. And to me personally at least, I think that's the same for Joe, that's just boring. Like it's the investing, the financial side of it, I know it has a lot of impact, but it's kind of boring.

Starting point is 04:41:45 Right. Because long term is not going to have any impact. If the idea is a strong, long term is going to win. Right. The idea is a week, long term is going to lose. The ups and downs of the short term don't matter. That's just like casino games that you play. Speaking of games, video games.

Starting point is 04:42:02 Got to ask you about those. Okay. You mentioned Diablo. Maybe you're a fan of Di those. Okay, you mentioned Diablo, maybe your fan of Diablo. Yeah, yeah, and Diablo too. All right. Great. You like Skyrim? Skyrim was great too. Like the Elder Scrolls.

Starting point is 04:42:12 I actually bought the game that the Elder Scrolls was based on, do you know that? So way back in the day, the Elder Scrolls series was inspired by a game called Legends of Valor that I played when I was a little kid and it doesn't actually have an ending. They ran out of money before they finished it, so they just kind of like put this little thing on and say, okay, but you never finish it. So I actually bought all the intellectual property from the cake. I didn't know there was a connection to Legends of Valor. Yeah, I forget the name.

Starting point is 04:42:37 The guy was at Todd's something at Bethesda. He played it and he was inspired by it. Then he created Arena right after you're playing it That's such a good game arena daggafal yet. Yeah. Yeah I had a copy of daggafal when I was a kid but I had a bug in so when you left the dungeon It would crash and this was before like you can get an easy patch for it So I never actually played daggafal. I entered in through morwant Yeah, no the daggaggerfall was the fascinating thing

Starting point is 04:43:05 which is jumping all over, but we'll return to legends of ox. I won't ask you about that, but Daggerfall was fascinating because I think of all the other school games. It was like the largest because it was like randomly generated. Right. It would like randomly generate the world, the dungeons and so on, which is fascinating to think about like how big can you make the world both in actuality and feel. Like it's incredible to have a video game. I don't know how many video games do this well, where the feeling is you can be lost here forever. You can live here.

Starting point is 04:43:41 Because most video games have like a bottom. It feels like you can run out of stuff. When Daggaffal was like, I could just keep doing this. At least that's what I felt at the time. But yeah, why, what the heck legends of valor was the idea there? Well, I mean, there's really nothing about it that's super compelling today. I mean, there's a nostalgia of youth that's there, but I mean, it doesn't even have a class system, a level system, the combat system is terrible. There's level system, the combat system is terrible. There's no journal, the magic system is terrible, and so forth.

Starting point is 04:44:09 And so I just wanted to start somewhere, and I felt like that would be an incredibly fun overhaul project. I kind of got the idea from Beam Dog Studios when they did another one of my favorite games, remember Baldur's Gate? Yeah, and they did the end hit. I love that Baldur's Gate too.

Starting point is 04:44:21 Oh, yeah, the enhanced edition was great. They should have never just done thrown a ball. They should have done an actual proper sequel. And I got down that whole road. But anyway, I got the idea there. I say, well, take some old piece of IP and then you can kind of retrofit it and clean it up. And what's nice about Legends of Aller

Starting point is 04:44:39 is it's like blank slate. You can do your own elders scrolls. You can create your own class system and level system and so forth. You could write some beautiful, exciting fun narratives for that. And also, it gives me a chance to explore a lot of things that I think should be dragged into game development, like algorithmically generated music is one example. The problem with sound games, as you mentioned, you play lots and lots of hours, but your sound content is much smaller. So you have tons of repetition in the soundtrack.

Starting point is 04:45:05 So what if you could connect the music to the state of the game world and automatically through some process will generate music? And there's actually people who studied this. And so that's one dimension. The other thing is you have things like GPT-3 and so forth.

Starting point is 04:45:18 There was a great game event zero. And it came out like 2016 where you could actually have a dialogue with an AI. And you're like a marooned astronaut on a space station that's abandoned. And you have to somehow work with this AI through communicating with it to convince you to take you home. But the AI is a bit duplicitous and I don't want to spoil the plot of the game because it's such a cool game. But it's actually like a paint by Nemers. It's almost Zork where you you don't have pre-selected dialogue You actually type in the terminal and the AI will reply to you back and forth

Starting point is 04:45:52 And this was 2016 is like things have gotten an order of magnitude better So the evolution of that tech I think within the next five years brought into video games Could you give you incredibly cool dialogue inside the game? So, algorithmically, generative music, better dialogue, better gameplay mechanics. Also, I'd love to explore alternative physics systems, alternative geometries, like, hyperbolic geometry or these types of things. And there's actually hyperbolic, a game that does that. And you can do down the Euclidean geometry as well and bring those elements

Starting point is 04:46:25 into a game design. And that's what we'll do is Legends of Aller. So it'll be kind of like Skyrim, but with a lot of really cool new shit. It's kind of like I saw Erosmith years ago and he was out there like, do you like the old shit? Do you like new shit? Kind of middle shit. You know, so we're seeing you going for the middle. Yeah, I'm going to try to do some of the old and some of the new and you know, bring it in. So that'll be a lot of fun. And what's nice about it is that there is a lot of new play in the market because of the Microsoft acquisition of Bethesda. They've been losing employees like Crazy and there's a lot of belief that Elder Scrolls 6 will not live up to expectations because Microsoft will go. I went to eat it. Okay live up to expectations because Microsoft will feel like.

Starting point is 04:47:05 I will tweet it. Okay, listen to me. I will go into, I'm all about love on the internet, but I will go hard at you, Microsoft, if you scrub all the scrolls. Well, we might have to do a spiritual successor, right? It might have to happen with Legends of Aller, you never know. But it's a passion project, so I have no time for it at all. It's like so low on my list of things to do. So I'll do in 2022 2023 and we'll build a nice crew and we'll do it Wyoming

Starting point is 04:47:30 Probably in Wheatland or some really small town and we'll import everybody and then we'll have to build the whole city up Like Eland is doing here in Texas. It'll it'll be a fun project Well, I like programming at the generated music you mentioned ball this gate I there's by the way Haskell frameworks for that. Uturpee is one. For generating music? Yeah. For doing it. I want to have success with that because I remember Baldur's Gate was the first game

Starting point is 04:47:51 where I realized music is so important to the game. It was the thing I remembered about the game. It was the reason that it was the thing I thought about when I was away from the game. It's like that the feeling it created that music, I don't even remember the music anymore, but I remember that music was. Bum, bum, bum, bum. Jeremy Sol, I think, was the composer.

Starting point is 04:48:13 Yeah. It was great. And actually getting like, Ramanju Adi or Farrah McCreaty end to do that, it would be so cool. Ha, ha, ha. Okay, this is awesome. Ridiculous question.

Starting point is 04:48:23 What's the, maybe let's say, top three graded video games of all time? Yeah, Baldur's Gate is definitely the top three. Arcanem is my favorite game. And Arcanem was a Troika Games was just this amazing studio where they took the time to build Probably the most compelling game worlds in the case of Arcanem It takes place in like kind of like a 19th century Victorian England play, so a steampunk. But then there's also magic inside this game world. And there is this crazy juxtaposition between magic and technology. And the more technology you have, magic stops working, the more magic you have, it disrupts

Starting point is 04:48:59 technology. So all the people on the magic side hate the technology people and vice versa. And so you're just this character in this game world and you're just trying to figure out, like, where do you fit? And it has this incredible plot where you're, you're kind of just a, a stow away on a zeppelin that gets shot down and you get dragged into this conspiracy. And you have to kind of figure out the conspiracy as you go through the whole game world and you meet all these different races, like the elves and the dwarves and so forth.

Starting point is 04:49:29 And they've all been impacted by the proliferation of technology in different ways like the humans You steam engines to clear cut all the forest and it caused a lot of problems the dwarves leaked that technology to the humans And so they kind of got exiled for it and so forth and you have to decide like where do you fill all this and you have a lot of choices As a player you can be on the magic side, the technology side kind of be neutral. And there's like 40 different endings for the game. It's just incredible. And this is all like 2000. And then you talk about a procedurally generated world. You have a quick travel.

Starting point is 04:49:55 But if you want, you just walk in the world randomly generates. But it's not like Niagara Falls where there was interesting things along the way. So it was really ahead of its time. And it was kind of the last of a generation of games. It was based on the same framework that Interplay used for Fallout, the original Fallout, Fallout 2. So that was really a cool set. How were the graphics? They were not essential.

Starting point is 04:50:16 Oh, it's isometric top down. Yeah, kind of like the Fallout look. And so it doesn't hold up super well today, but that was never the point. It was a more of a story driven game, but it was one of the very few games where at the very end of the game, you can actually talk the villain into killing himself instead of fighting you. If you had to really work at it, you had to become a master of persuasion and get your charisma score maxed out and learn all this stuff along the way. And you have this philosophical debate over the nature of life and death with him. That's amazing.

Starting point is 04:50:47 Yeah, and then you're just like, by the way, you're wrong. And here's why. And he's like, oh, yeah, you got a point. I'm just going to kill myself. I was like, wow, this is great. Plainscape torment is the other one, I think, is probably the greatest. Was it called Plainscape? Yeah, it's another one on the infinity engine, which was what was used for Bollars Gate.

Starting point is 04:51:04 So it looks like Bollars Gate. And God, that was such an incredibly well-written game. You play this character called the nameless one, and this little blue guy, and you wake up in a morgue, and it turns out that you're immortal, and every time you die, you lose all your memories. And so you've just been apparently living this life for a very long time, and you meet all these people in this crazy city called Sigil who know you but you don't know yourself And you're trying to figure out your name your identity and why do you have this curse where you live forever

Starting point is 04:51:31 But you keep forgetting every time you get killed and it turns out you weren't such a nice person I throughout this entire game world, but then again, it's this question of well If you can start over and you lose all your memories, do you have a chance for redemption? or not? So it's incredible game planes can torment and it's actually another one of those games where you can you can never actually have a fight You can just kind of talk your way out of everything and there's probably like thousand pages of dialogue and so the game Those guys have a lot of fun and a lot of drugs making that game Do you think these are the these three games are the kinds that would still be okay to play today?

Starting point is 04:52:05 Or are they forever lost in time because uh because we sort of our God disensitized to the richness of Computer graphics and all those kinds of things in modern games. I think you enhance these games because your storytelling Medium is so much more engaging You know, I was at the movie theater before COVID and the person to left of me was looking at their cell phone during the movie and the person to the right of me was looking at their cell phone.

Starting point is 04:52:28 They're just not engaged anymore. Everybody is attention starved. And the video game is one of the last mediums where you have undivided attention to people. They're really into it. They're all into that thing. And so I think the fact that you have VR and AR and enhanced graphics and all these new gameplay mechanics, it's a value ad instead of a value negative.

Starting point is 04:52:47 Because ultimately, what are you doing? Telling stories and you're trying to connect people to something, maybe it's the nature of life and death or are we truly real? Are we in a simulation or not? Or something like, it'd be great to do 13th floor as a game or something like that. And the question is, well, how good of a story

Starting point is 04:53:04 can you tell while you're constrained by your storytelling tools and technology? The fact that games are so much more advanced now means that you now have many more dimensions of storytelling available to you. And actually, with AI now coming in and really good AI coming in the next five or 10 years, your storytelling is not static anymore. The person can actually majorly participate and change the outcome in ways that were previously unpredictable. The other thing is they're still educational. You can teach people concepts that they never knew before.

Starting point is 04:53:33 It's like if you want to teach people about bizarre geometries or like Minecraft as a great example, a lot of people learn how computers work from Redstone. Think about that. It's true. Yeah. Yeah. I mean, yeah, as we said, we're more and more going to be living in the video game worlds, might as well.

Starting point is 04:53:53 Sort of as opposed to just make it fun, also expand our knowledge, expand our ability to think, like explore different ideas and do education broadly defined within those video game worlds. So we can do the entirety, the entirety of life in video game worlds. Hopefully it doesn't look like Minecraft, but we'll see. Do you have advice for young people today, aside from playing lots of video games? You know, high schoolers, college students, thinking about their career career thinking about life?

Starting point is 04:54:25 Well, we no longer live in a world where you get one skill set, you do it for 40 years and retire. I mean, that ship has sailed a long time ago. So learn how to learn and learn an appreciation and love for learning. So that's the first thing. Josh Wateskins wrote this beautiful book, The Art of Learning, if you ever read it. Stuff like that. So good study skills, slip box notes, these things.

Starting point is 04:54:47 What was it? Is that all cast in or whatever? Yeah, there's a lot of little techniques that you can pick up along the way. And basically, the teacher had to process lots of information very quickly, retain it, and then decide what's useful to you for that moment. The second thing is do not undervalue EQ emotional intelligence. We've lived for a long time in a society where IQ was dominant. It's like how smart you are, excuses everything else. You could be a horrible human being, but he's a really bright guy,

Starting point is 04:55:15 right? The asshole, mathematician or physicist. We now live in a world where the balance is far more important. You have to be smart, but you also have to be a nice guy. And don't undervalue that. So learn things like close circuit communication and active listening. These skill sets will always pay enormous dividends along the way. Third, remember that you're judged for the things that you have and what you do with those things. If you have very little, you still have to do something, whether you have a lot, you have to do even more.

Starting point is 04:55:42 So learn how to give and do that early on. Learn how to give back. Volunteerism, charity, mentoring, these types of things. Those are so incredibly valuable to a person's development. The people that you mentored, and the academic world you learned is you have graduate students. They, one day, will be professors. And it might just so happen.

Starting point is 04:56:02 They might eclipse you. Remember Gouse had a doctoral advisor. Never forget that. And so did Feynman. Make sure that you mentor people, you give back and you learn how to learn it and you learn how to teach. Super important for your development as a person. Now you'll notice all those things are agnostic

Starting point is 04:56:19 to whatever domain you happen to have chosen. You can be in medicine or law or technology. Whatever that you're fancy, whatever your passion happen to have chosen, you can be in medicine or law or technology, whatever that you're fancy, whatever your passion happens to be. And don't conflate your earning in your career. And people try to keep putting these things together, they're increasingly becoming decoupled. There's a lot of cases where people do their passions

Starting point is 04:56:37 and they do it for free or for sustenance, but then they have something else they do on the side to also augment or supplement their income. Probably best that way When you conflate the two you tend to get burned out terribly You see the slide with musicians or other people and they just they want to make music But they have to tour or whatever because they got to pay bills stuff like that happens Other than that. I mean, I'm not a guru. I'm not in any particular position

Starting point is 04:57:01 He showed up in a robe, which I thought was kind of weird. And you had a crown and you kept calling yourself king. I think of the rats. And that was in a robe that was a Yukata. Okay. Thank you for clarifying. The way audience he's joking. Reddit. I heard somebody's going to write blog posts. Charles Hoskins walks around with a crown.

Starting point is 04:57:23 Let me ask you a ridiculously big and the most important question. What's the meaning of this whole thing of life? Well, I got a story for that. Does this have something to do with the farm? Well, no, no, no. It's from Japan. I used to live in Japan. I live in Osaka.

Starting point is 04:57:40 I run into Tanamba. A beautiful area. It's like, if you're going to live anywhere in Japan, live in Osaka. You live anywhere in Osaka. I in Osaka, and you live anywhere in Osaka, live next to the restaurant district, at four o'clock in the morning, get good ramen. These are the things in life that make you who you are. So there was a shogun, and he was kind of a badass.

Starting point is 04:57:57 He was really good at killing people, really good at running his empire, and then he got a bit disgruntled in his late 40s, and he said, you know, I'm just going to give it all to my son. And I'm going to wander around Japan until I find the perfect cherry blossom. That's what I'm going to do. Everybody thought he went crazy.

Starting point is 04:58:12 He said, no, no, that's what I'm going to do. He took his whole entourage with him. And so his son is now the show gun. And then he's just wandering throughout Japan and having all these incredible crazy adventures as he's wandering throughout Japan. He got a fighting band-ins and loving beautiful women and so forth. And then 30 years later, he's passing these two Gashikals and one of them turns around

Starting point is 04:58:33 and they notice some slumped over next to a cherry tree. So she goes over to try to rouse him and he's dead. And in his hands, this is a wilted cherry blossom. So that's a very Japanese story, right? The point is that it's not the actual Blossom finding the perfection that matters. It's the it's the things you do on a day-to-day basis. The places you go, the people you meet, the experiences you have, and the joy you take in the things that you do here in the moment now. You have to get there. You know, if you look at Giro dreams of sushi, there's this guy, 70 years of his life, making the same damn piece of sushi again and again and again, he's the

Starting point is 04:59:09 happiest guy around. Albert Camou and his story of Sisyphus. Sisyphus should be miserable. It's the Greek curse. No, he's happy. He has total clarity of purpose. And every day, he gets to basically roll that stone just a little bit better than the day before, a different way than the day before. And it's not the destination, it isn't getting the stone up at the top of the hill that matters, it's the fact that the act, you find that joy in that act, that Ike guy, that way of life, that purpose of life.

Starting point is 04:59:38 That I think is the closest thing a human can get to a meaning. You're a blip, you know, You didn't exist. You're dead. And if you compare it to the size of the universe, and that time it's just a little blip. So all you can do with what you have is just find meaning in the things that you do on a daily basis. And you can't predict the macro. We have all this wealth and power in America. What if the world war breaks out? We could be destitute, like war marked Germany. And so, you know, you could be a big guy,

Starting point is 05:00:07 you could be now living on the street side. Would you be miserable? The point of life is getting to a point that no matter what comes your way, what misfortune comes your way, you're in a position where you can find an modicum of happiness and love and empathy for others in that moment.

Starting point is 05:00:24 And then the highest pursuit of life is the ability to share that mindset with other people and give it to them somehow. And that's really hard, you know, because everybody comes here, they're always you're doing good and sinacole, you know, but this and that and reputation this, you have to somehow transcend all of it and say,

Starting point is 05:00:40 you know, that doesn't matter. Look at the cherry blossoms, aren't they beautiful today? And let's find a better one tomorrow. See, you're also fan of fishing, I've read somewhere. Yeah. And one of my favorite books is Old Man in the Sea, where there's an old man,

Starting point is 05:00:58 sort of battling a big fish. And basically closing out the last chapter of his life in this battle. So I think another aspect of life with this boulder, it feels like the boulder gets bigger and bigger as we get closer to death. And you know, you find yourself married to a particular struggle in life that eventually just kind of overtakes the entirety of meaning of your existence. Do you think I know what it is for me? Do you have something like that?

Starting point is 05:01:30 The broader vision that you nice your work with Cardano and everything you've done in life, the big fish that you're going to end up in the dark of night struggling with in the last chapter of your life, like the big problem you're taking on. Well, in mathematics, it was the goal-block conjecture. I'd like to prove that. That's probably not good. That's a really big fish.

Starting point is 05:01:56 So you still have a love for mathematics. Oh, God, yeah, of course I do. You never lose that. You never lose it. You lose the ability to do deep work and you don't have the creativity and the raw inspiration. This is why I've gotten to automated theorem proving

Starting point is 05:02:08 because what I lack and, because I'm getting older, I can now have computers understand it and use AI to just solve the stuff. It's like the cheat codes for math, so fuck those guys, we'll still do that. But you know, mathematics still has those last passions and there's all kinds of cool things

Starting point is 05:02:23 that I'd like to see done. Like, quote, a complex is allowed to unify topology and never theory and really novel ways. And there are all kinds of cool things. But who cares? It's everybody has those white whales. And the thing I love to do is bring back the woolly mammoth. You know, that's George Church's, you know,

Starting point is 05:02:41 hidden pleasure. And five to 10 years, it's actually gonna happen. And I have this beautiful ranch in Wyoming, and I kind of find a way to convince George to let me raise his clone mammoth fence on my ranch. Among the bison. Among the bison, they'd probably get along really well. And then I have to learn all these cool things

Starting point is 05:02:55 about William Amos, like, you know, do you shave him in the summertime and let him get shaggy during the winter? Or do you just let that coco and then fall, who knows? It's an undiscovered country. I just had the image of Charles Hoskins alone on a bison farm trying to raise a willing mammoth

Starting point is 05:03:11 and just start wearing a white suit and say welcome to Hoskins and ranch. I'll have a cane with amber on it. Yeah, with the chalkboard that you keep scrambling on like the beautiful mind, the movie, you'll have voices to think. Oh, this gets a frenzy has already come. You guys are all figments of my imagination anyway.

Starting point is 05:03:28 Now, one of my goals though, I love catfish and they live a long time. They get really damn big if you see this going. I love to catch one now and be in my 60s and catch the same fish twice and recognize it. Maybe I'll lift a scar or something. That'd be really cool. Going back to the fish thing.

Starting point is 05:03:43 Because both the fish has gone through a lot, I've gone through a lot, and we can just be like, whole front. Exactly. Exactly. And then I'll die of a heart attack, and my mammoths will eat me. That's something I look forward to.

Starting point is 05:03:56 Charles, this is one of the most amazing conversations I've ever had. It's truly an honor that you would spend your valuable time with me. And I'm glad you exist in the cryptocurrency and time with me. And I'm glad you exist in the cryptocurrency and the technology space and I can see your love from mathematics and your love for life just to radiate to everything you do. So thank you for being you and thank you for talking to me today.

Starting point is 05:04:15 It's a lot of fun. Thank you so much Lex. Thanks for listening to this conversation with Charles Hoskinson and thank you to Gala Games, All Form, Indeed, ExpressVPN and Aithsleep. Check them out in the description to support this podcast. And now let me leave you with some words from William Falkner. You cannot swim for new horizons until you have the courage to lose sight of the shore. Thank you for listening and hope to see you next time. you

Lex Fridman Podcast - #192 – Charles Hoskinson: Cardano

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