The Pomp Podcast - David Sønstebø, Founder of IOTA: Digitally Native Assets and the Future Economy

Episode Date: April 24, 2019

David Sønstebø is the founder of IOTA. In this conversation, David and Anthony Pompliano discuss machine to machine transactions, automation, and how digitally native assets, accounting, and contracts fit into the future digital world. ----- If you enjoyed this conversation, share it with your colleagues & friends, rate, review, and subscribe. This podcast is presented by BlockWorks Group. For exclusive content and events that provide insights into the crypto and blockchain space, visit them at: https://www.blockworksgroup.io

What's up, everyone? This is Anthony Pompliano. Most of you know me as Pomp. You're listening to Off The Chain, simply the best podcast in crypto. Let's kick this thing off. David Sanstibo is the founder of IOTA. In this conversation, we discussed machine-to-machine transactions, automation, and how digitally native assets, accounting, and contracts fit into the future digital world. I really enjoyed this conversation and I hope you do as well. Anthony Pompliano is a partner at Morgan Creek Digital. All opinions expressed by Pomp or his guests on this podcast are solely their opinions and do not reflect the opinions of Morgan Creek Digital or Morgan Creek Capital Management. You should not treat any opinion expressed by Pomp

as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. This podcast is for informational purposes only. All right, guys. Bang, bang. I am here with David. I'm super excited about this conversation because I think we're going to get really deep in the weeds when it comes to automation and how digital assets are going to engage with the machines and algorithms. So thank you so much for taking the time to do this, David. Yeah, thanks for having me. absolutely before we get into uh the fun stuff let's uh let's start with your background uh and kind of how you got into crypto um and kind of what you were doing beforehand

yeah for sure so i started my career so to speak way back when i was like 14 15 years old and i was really into artificial intelligence and the impact it would have on society further down the line and all of these kind of futuristic concepts well today they aren't futuristic anymore but back then it was pretty much still seen as science fiction so this was where i really got my comprehension of this whole future of technology and this was where way die and hal finney and these kind of bitcoin legends hung around in the less wrong and the everything list and so on and so forth these communities online that were discussing these issues at the time of course the bitcoin white paper came out and in the beginning i wasn't really interested

because it had all these kind of presupposed ideological components like hardcore neoliberalism and all of that, which didn't interest me. I was much more interested in the technology, how it can lead to these autonomous real-world applications. But then in 2012, I had read the white paper several times and really got into it and started communicating with some of the early members. and um yeah so i decided to devote all my time to work on on blockchain so that's how i got into blockchain and then in 2013 i met my iota co-founders dominic schiener sergey vanceglo

and sergey popov on this project called nxt this was back in 2013 it was the first full proof of stake blockchain and we also had the first decentralized asset management decentralized voting and so on and so forth it was pretty much just an experimental protocol to see how far we could take blockchain um but then when we kind of went back to my deep passion which is this uh let's just call it decentralized internet of things where you have billions and billions of devices communicating uh we started thinking about how can we actually ensure that the data integrity between these devices that the transactions between these the agreements between these devices can be immutable and cryptographically insured in a ledger and we

realized that regular blockchain architecture which sits behind bitcoin ethereum etc was not sufficient and therefore we had to start from scratch and take the principles of blockchain i.e immutability and decentralization and start kind of from scratch and what we ended up with was the iota protocol which we call tangle which i'll i presume we'll get into later and since then i've been running the iota foundation and yeah working 24 7 on the iota project and vision got it talk to me about why you guys were so attracted to proof of stake early on what was the attraction yeah so early on like back in 2013 of course it was partially experimental because back then there was absolutely no real world use cases for blockchain like you could

make the argument that there were some gambling sites and some uh dark net markets etc but beyond that it was just experimental that's that was kind of the blockchain space in 2013 so we looked at proof of stake and we realized that it was more efficient and you could also kind of get away from this constant mining pool oligopoly centralization that we see in bitcoin because you know ever since the beginning bitcoin and the other blockchains has always been saying that this is decentralization but then you look under the hood and you see the consensus mechanism and how the incentives are structured in Bitcoin, and you realize that it will always end up centralized around hashing power, which is the mining pools. So we thought, okay, let's actually explore this

proof of stake route. And we implemented it. It worked very well. Of course, it was still early days, but it was good. And we also made the prediction that in the future, where you assume worldwide adoption, the energy consumption of mining will become an issue. And there will probably be regulatory issues surrounding that and we're starting to see this now with the rumors around china banning mining farms etc so that was kind of what attracted us to it like we just didn't see the reason to waste insane amounts of computation that could be otherwise outsourced via the ledger to carry out actual computation so yeah that's why we explored a proof of stake early on got it and then um before we get into kind of uh why something like iota uh

you know is important or kind of how you guys see the world let's just describe how it works today right so like how is it actually designed and where are you guys with the with the product development yeah for sure so if we can uh contrast it to bitcoin i think that will make it easier to understand so with bitcoin of course you have these blocks and these blocks are of a finite size and you can put a certain amount of transactions in them. And then you have one block after one block, after one block, the traditional blockchain, so to speak is sequential ordering of, uh, of blocks with transactions. And this automatically creates a bottleneck because first of all, you can only validate or the network can only validate one block at a time

and you can only fit a certain amount of transactions in it. So right away you have this supply and demand economy arise where the miners, the people that are validating the blocks will only pick the transactions with the highest fee so when there's a lot of usage we see the fees skyrocket i think during the 2017 early 2018 uh yeah the mania the mania that happened i think bitcoin peaked around 90 dollars per transaction um and that's because the in my opinion the entire incentive structure the entire consensus mechanism in blockchain bitcoin blockchain ethereum blockchain is fundamentally flawed. Whereas in IOTA, what we did was we kind of took it and turned it on its head. So we got rid of the blocks. So you no longer have this one-dimensional

block after block after block architecture. Instead, you have this thing called directed acyclic graph, which is in IOTA, we call it a tangle. And the reason we call it a tangle is that when you issue a transaction, that is broadcast to the entire network. And when you're issuing it, you're also validating two previous transactions from other participants in the network that have been broadcasted and those two transactions again have validated two previous transactions and so on and so on and then you can kind of imagine these individual transactions building up this this graph this directed acyclic graph and it's it's no longer one-dimensional it's multi-dimensional so you can have as many transactions as people are issuing and there is

no block there is no one after one bottleneck preventing performance so instead you end up with this um scalable thing and and the other thing that this really solves is also the issue of fees because just like i mentioned with the block after block architecture in blockchain where you have the supply and demand economy in in the iota network instead when you issue a transaction you validate transactions meaning that validation has become an intrinsic property of utilizing the network and therefore you don't have to pay anyone to validate your transaction because your your transaction will be validated when someone else issues their own transaction so that kind of kills both the scalability bottleneck as well as the fees right off the bat

and thirdly and finally it also resolves this oligopoly centralization that happens in regular blockchains because there is absolutely no incentive to own the the hashing power there is there is no such thing in iota so there you won't get any block rewards there is nothing like that So there is no incentive to pull resources together to control the network. Got it. That all makes sense. All right. So let's talk about why all of this matters, right?

And I think one thing, as I've talked more and more about this idea that crypto and Bitcoin and blockchain, there's tons of hype, tons of excitement. And when I spend time with institutional investors or just people who say, hey, look, I don't really know that much. tell me what is going on here. I constantly go back to this idea that we're entering a digital world. In the digital world, we need digitally native assets, we need digitally native accounting, and we need digitally native contracts. And those three things empower or unleash this world of automation. And I think that you specifically have a very similar view.

So take some time and really just explain how you view the proliferation of automation and how uh blockchain plays into that yeah for sure so when you think about the world today like you said it's entirely digitized like everything we do is becoming more and more and more digitized and this will continue in perpetuity like there will never there will never be less digitalization um and the consequence of digitalization is automation and we see this all over the place where all usually back in the day people had to gather data literally go there and see okay how much water has fallen today and they had to take a tape measure and and see how much water had fell but today you have a tiny tiny tiny sensor that just automatically get

gathers this data computes it and emits this signal back to the cloud and it's there and you can see the weather forecast and this is happening on every single scale whether it's your entertainment whether it's the infrastructure for electricity or whatever other infrastructure, all of this is becoming automated. The problem today, however, is that this automation is not open. It's not permissionless. It's completely in the control of a few big conglomerates. Same thing with our social media. Of course, you have the Facebooks and you have the Googles of the world that essentially control the data pipeline and in 2019 and going forward data is genuinely the new oil data is immensely valuable we can already see this from google and facebook how many billions and

billions of dollars that they are gathering but all of this goes into one bucket and if i'm participating in facebook it seems like it's a free service but in reality i am the product i the commodity which they then sell on to advertisers etc so today you have a lot of automation you have a lot of digitalization but it has happened in a way that is not secure and it's it's truly not open to participate it's it's very much these closed silos and that first of all is very insecure and which we've seen in ad nauseum attacks on these services where databases get leak passwords get leaked private information gets leaked you don't really own your own data which is kind of very varying but furthermore it also prevents this true automation where devices

can actually contact each other and communicate and trade resources whether it be data computation bandwidth electricity or assets like if you have an autonomous fleet of vehicles that should be able to trade it between um between different entities and today that is that is borderline impossible because you would have all these companies would have to sign these contracts for each individual transaction and it's simply inefficient and extremely costly and i can i can like as a norwegian we are the world leader when it comes to digital money i think something in order of 95 of our transactions are digital i like personally i haven't seen cash in probably two years like you just don't see it in norway um and same thing with our taxes all of these

are digital but it's not it's not frictionless because you still have these intermediaries you have to download this app if you want to pay for that thing you have to download this app if you want to pay for that other thing and they don't speak to one another and one of the reasons they don't speak to one another is the security component because you would have to get every single participant in the room and sign a contract every single day and you have this cornucopia of variables to take into account and that's just impossible for any system and then you just end up with these big conglomerates that you just have to trust and they get all the money they get all the profits they get all the control and that is not good so what we see with the iota ledger and

the division behind it is that literally every single microprocessor every single sensor every single a gadget vehicle whatever it be has to be autonomous in the sense that it also has its own autonomy so a vehicle like today let's let's take vehicles electrical vehicles for instance it's a big big hype right now that they will become completely autonomous and you will be able to rent out your car and someone else you have this sharing economy someone else will ride it and then it will be rented on etc etc but true automation is actually that vehicle not even having a single owner that vehicle should have its own autonomy so to speak and you can invest in that as a asset so let's say you own 10 of the car for instance and then this car is riding around like

an uber um is riding around people or packages for that matter and you have this completely openness where everyone can participate and you can build new solutions on top of that And that is what truly excites me. I foresee this new Cambrian explosion, just like the internet was a Cambrian explosion. I think we will see the same with the digital world in distributed ledgers. Got it. And so let's talk about a couple of examples, right? So you gave the example of the autonomous car. What's a couple of other examples where you see this automation really taking place between machines that the everyday user or kind of citizen would see the benefit of? yeah so one one very good example is the prosumption and consumption of electricity so of course as we are moving forward now more and more people are installing solar panels and so on and so forth you have this excess amount of energy the problem with energy is of course the storage it's very very hard to store energy so what do you do with this so in an ideal world

you would always be able to sell it back to the grid and get money for it because you have installed the solar panels for instance and so you you have made this investment so you want to of course be able to capitalize on it however the problem is that they can't store it either like the grid can't just magically store this power so the problem becomes how do you load balance this energy how do you distribute this energy efficiently and you could do it through the traditional centralized method of trying to send it back and they would have to have sensors everywhere and they decide where the energy goes and they decide how much money you get if you get any at all a better model which we're exploring here in norway actually together with um antenu

which is norway's biggest science and technology university as well as one of the biggest energy providers of norway is this self-regulating grid so if you have excess energy you sell it to your neighbor and that neighbor then pays you directly in real time pay per watt essentially because keep in mind you don't have fees on these transactions so you don't have to pay up front you don't have to pay a subscription you don't have to pay at the end of the month you literally pay in real time and earn money in real time and same thing goes for let's say social media that you're using this you're generating all this data you have ownership of the data and you can sell it back and the whole social media platform itself could also be ran on distributed servers instead

of facebook you could have let's say 20 000 people that have servers with storage computation etc etc and they rent this out in real time to this decentralized social media platform and then every participant of the platform owns thrown data and can choose what to do with it whether they want to sell it or whether they don't want to sell it and they can earn directly from that and this literally goes for every single thing um you know in life you can also imagine yeah go ahead no go ahead yeah so i was just gonna because i just saw my smartphone lying next to me and of course my smartphone can act as a router so when i go out it could literally sell bandwidth in real time to other participants instead of using these very expensive um data plans if i have excess data

that i won't be using i could sell it in real time to other participants because your smartphone can do a lot of things but it doesn't have this payment settlement built into it and that is what iota is building and in like i said yeah it goes for every single thing you can imagine got it and so let's talk about uh you know in these many of these cases there is uh the technology enables the ability for automation. But how does the marketplace actually figure this out or find equilibrium, if you will? What I mean by that is whether you're transacting data, you're transacting electricity or payments, there's an element of the rails make it possible, but there's got to be two sides to the transaction. There's a sender and a receiver, regardless of what the value is.

And so how does that play into it? Is it that these machines or algorithms that are playing sender or receiver uh are just traditional you know machines and algorithms is there some sort of upgrade that legacy uh parties have to go through to be able to interact here like how do you view that um kind of compatibility between the rails and and the uh the parties that are of the transaction yeah so of course the incumbents they have to upgrade some of their legacy systems because of course these legacy systems weren't built for openness they weren't built for automation they were built for these very central top-down approaches but we are we as the iota foundation we are in dialogue with the biggest semiconductors of the world the biggest energy

providers of the world the biggest automotive manufacturer of the world and they see this as the future and they really want to be on board with this because this is coming regardless of whether it's the incumbents that do it or whether they get disrupted and perish which none of them of course want to do however it's not really that difficult because most of this is software of course there are some hardware components that will need to be uh integrated like application specific integrated circuitry for very efficient hashing of cryptographically of the data uh very efficient execution of smart contracts and offloading of outsourced computation etc but most of it is more about getting them to understand the vision and joining the vision which we at

least are seeing more and more we literally over a thousand companies that are collaborating with the iota foundation and the iota project and exploring it experimenting with it um and one of the things i would say is that if you don't join this open world it's kind of like you're sitting on the intranet whereas the rest of the world is joining the internet and that is of course not a way to ensure longevity of your business and and there's also another thing i want to mention so when we think about the internet of things we think about our smartphone is connected to our refrigerator is connected to our tv and to our car etc these very human centric application, but there's also hundreds and hundreds of billions of devices that are

being deployed over the next 10 to 15, 20 years that are going to sit at the edge of the network, kind of at the fog. What we are living in is what is called the cloud, where you have an abundance of resource, you have abundance of most of these resources, whereas at the edge of the network, whether it is climate sensors gathering data far into the forest or electrical vehicles that are needing uh over the air software updates in the middle of nevada or something this is the edge and here is where these devices need to also um if i have excess electricity i want to sell it if you have excess bandwidth i want to purchase it this is where this true machine economy also

arises at the edge of the network and the way to think of this as a market is more like if i am a solar panel i'm gathering the i'm gathering electricity if you are a fog computational station you need electricity so you purchase that from me and if i'm a sensor i have data so i can send that or i can sell that to the computational station which then transforms this data into information and sells this back to the cloud as knowledge and you this is where you have this supply and demand prosumer consumer um economy arise and if you start if you just start extrapolating from that where you have hundreds of billions of participants it's a huge huge economy much bigger than any individual small country for instance it will be its complete own

um paradigm its own echelon in the the market got it and so let's talk a little bit about uh as this plays out, right? And I tend to agree with you that, again, blockchain, crypto, Bitcoin is all really just laying the foundation for automation. Why not build this all on top of the Bitcoin blockchain? What is the need or the reason for IOTA and kind of to build it on something other than the Bitcoin blockchain? So if we go back to what I mentioned earlier in terms of how the Bitcoin and all the other blockchains that kind of took the model of Satoshi Nakamoto, the Bitcoin model, where you have miners and then you have users. If you take that one sequential blockchain approach, you always run into these bottlenecks of scaling and the fees skyrocket

whenever there's actual usage. And this is what we've observed all throughout the history of blockchain. It's also inevitable. You could do this back of the envelope calculation all the way back since the first day that the architecture was laid out that if this actually gains adoption there will be a race to war a race to the bottom to get the mining rewards and to collect the block rewards um and this will automatically create very high fees um so for us it was very important to just turn it on the set and think completely new we are very appreciative of the foundation that bitcoin laid it was a very very good prototype of a distributed ledger but it's completely unusable in the real world for anything other than a speculative store of value and you

can see this like you have a handful of transactions per second how is that going to accommodate hundreds of billions of devices that are transacting not only value but also data and and other asset tokens so for us it was imperative to come up with a completely new approach that still kept the principles that the prototype Bitcoin brought, the immutability and the promised decentralization and the security aspect. And also in the beginning, Bitcoin was touted as having very low fees, whereas today that is not the case. So this is why we had to start from scratch. It was a very hard and long journey, of course. A lot of theory goes into that, a lot of research, a lot of experimentation, et cetera. But now we feel we've reached a point

where yes it works we already have um have it running and of course we're still optimizing it but um yeah this this is the reason why we had to had to switch from a let's say uh version one blockchain to what we call the dag or directed acyclic graph tangler approach which you can consider as a kind of blockchain 3.0 if ethereum is 2.0 this kind of evolution and this is just how software evolves and technology and innovation evolves. So we got rid of the fees, the scaling limitations and the centralization components. And with this, right now, where we are right now, 2019, is to bring this to enterprise readiness. Because one of the big issues that you can see with all of this hype around blockchain, et cetera, is that everyone has ideas. Everyone

has really good ideas and long, lofty goals, but very few of them take the technology seriously enough to spend the three, four, five years of hardcore research, testing, et cetera, the less sexy stuff before they actually deploy. Instead, we have just seen this wave of crazy ICOs and speculative assets. Whereas in IOTA, we took the complete opposite approach. We set up a nonprofit foundation. We did not pre-mine a single IOTA to any of the founders, any of the Anyone, everyone had to join at the same level as everyone else. And since then, we built this nonprofit foundation. Now we are over 100 people in this foundation across 23 countries.

And we have a community of, of course, I don't know the exact amount of people, but hundreds of thousands of people. And yeah, now we're trying to go towards this enterprise readiness. And what that means is simply that if you are an enterprise today and you want to use blockchain, you sort of have to hire a blockchain expert because it's so hard still to implement this technology into either existing products or future products. We want to reach the point where virtually any software engineer can just pick it up, use the libraries, use the tools, get going, build products and not have to be an expert at it. That is the goal right now for the IOTA project. Got it. And what do you feel like is the one or two biggest challenges that you guys either have to solve or kind of get around in order to see that world become reality? Yeah, that's a good question. So of course, when we are talking about solving the scalability limitation, we have the blueprint for it. This is the tangle. This is the other approach. So this is the blueprint, but now we have to optimize it so we can actually handle hundreds of thousands of transactions per second. And that is what we've been doing for the past two years, but that is still an ongoing effort. We have actually reached a point where we have mathematical proofs of our consensus algorithms, et cetera, but it still needs to be implemented. And that takes time because, of course, you have security risks and you have a live network that is worth almost a billion dollars. So you have to be careful about deploying, et cetera.

And that is, of course, always a balance game. But right now, it's more just about, essentially, we have to hire a lot more people. We have the funds for it. So it's not an issue of that. It's just finding the right people to implement this as efficiently and securely as possible. That is one challenge. The other challenge is to ensure that IOTA has a seat at the table when the regulators decide the future, because it's very important that this technology does not get regulated out of existence. And fortunately, all across the globe, or not all across the globe, but most of the globe has taken quite a open mind approach towards blockchain, I would say. But it's still important to have a seat at the table there. And that's also the ethos of the IOTA project and the philosophy behind why we set up in Germany, set up a nonprofit foundation in Germany rather than the more easy places like Switzerland or one of the isles or some other location. We decided Germany because we wanted that rigid, onerous oversight when it comes to regulatory affairs so we can be at the forefront of that as well. and right now we have launched this international association of trusted blockchain applications with european commission and there's over 100 other entities with us there so this is also

of course an ongoing challenge to make sure that people that can regulate understand what they're regulating because that's usually what we see happen that when it comes to these new technology regulations come in and the people that are making the regulation doesn't necessarily understand what they're regulating so we want to ensure that we also educate people on this and explain the bigger vision of this automation that is inevitable and therefore it's important that um the the governments as well as the big conglomerates are completely aligned with this got it that uh that makes a ton of sense what um what do you think is the one area of crypto uh that people are not paying attention to but uh but they should be focused on yeah so here i have a couple of

opinions so the first thing i would say is most too many people care too much about the what's new right now like who has the best new white paper logo or website which doesn't mean anything and i mean we saw hundreds of billions of dollars just perish into thin air as a consequence of people being too FOMO like fear of missing out on that i would say that the entire space needs to focus a lot more on the fundamentals and the long-term vision and not get impatient because that's what we're seeing like whenever there's a new exciting technology that has promise everyone bill gates said it best many many years ago that people tend to overestimate what can be accomplished in two years and underestimate what can be accomplished in 10

years and i think that's just a mental shift that the entire space should take the other thing that everyone interested in crypto or involved in crypto need to start to think about is consolidation because you have these you have thousands and thousands of these copy paste blockchains out there and everyone is kind of creating their own tiny community and it's so much tribalism and there's fighting against one another when in reality people should start to consolidate around the long-term vision and share these insights that these different projects have with one another So we can end up with some global standards that can be adopted across the globe, instead of just having thousands of fractions fight one another, which is just stupid. And in terms of kind of visionary stuff, I would say, certainly the Internet of Things. And IOTA was the first project to care about the Internet of Things in the blockchain space. But I think it's the single most important one, because when I say the Internet of Things space, I really mean just the future.

I mean, there's not a single thing that will not be part of this digital economy and this digital universe in the future. Yeah. I mean, look, the thing to me that's so crazy is when you think about the world we're going into, I usually argue less about like, hey, Bitcoin's the future and more about the assets we currently have. You can only own four assets, stock, bond, currency, or commodity. Those four types of assets are incompatible with the machines and algorithms that are going to run the future, right? They can't use paper money, paper contracts, paper deeds, paper stock certificates, but they also can't use the electronic versions either, right? If you think of a stock certificate, for example, it's simply an electronic QSIP that represents the physical

stock certificate, right? And so if we want to have a fully efficient global transaction system, right, which is essentially what economies are, then we have to upgrade the assets to be compatible with those machines and algorithms and and it's just to me it's so clear but you know again i think that people get caught up in kind of the hype and the sexiness of so many different things in crypto that that message is getting lost a lot very good point very very good observation and i i 100% emphatically share that view and it's it's so important that's exactly what we're trying to do with iota is to create this this fungible asset this this value that exists embedded into all digital systems whether it's the internet or whether it's the edge compute where you have

mesh nets instead you you need this and you need all of these assets let's say you have this fleet of vehicles like i mentioned earlier you need every single like piece of firmware to be validated into the ledger itself there can't be any human middleman that has to verify it because then you haven't really created anything new it has to be seamless end-to-end verifiability same goes for the supply chain i mean today the supply chain is one of the hottest topics in in crypto like oh we can we can we can scan this qr code and we can see uh which farmer created my coffee beans which is cool as a proof of concept but you really need to get nitty-gritty into the soil sensors where um the produce has actually been created from scratch literally from

seed and see okay what was the soil conditions what was the ph levels in the soil how much rainfall came that season etc etc and when you have that entire fine granular train uh trail you can start to automate insurance you can literally have real-time insurance and this one of the other other things we're exploring in the automotive sector is to see instead of having this premium that you pay what if what if you actually just pay based on how you use the car so if you are a good driver you don't have to worry about it if you're a bad driver you pay in real time for the bad driving and when the cars get autonomous same kind of deal and and this is what i see like virtually every single asset will be needing to be real time as well

And that's, sorry for going on a tangent, but this is also one of the points I think a lot of people forget is that we are so used to this, either we pay before or we have this running subscription or we pay after the fact. It's very archaic, slow system. Whereas in the future where things are increasingly automated, the economy has to match that. It has to be real-time payments for the exact presumption and consumption. Absolutely. That makes sense. um all right before i wrap up i always do some rapid fire what uh what's the most important company in crypto most important company in crypto oh interesting putting me on the spot here um

uh i think the most important company in crypto would not be a crypto company um it would actually be one of the big um conglomerates that are making the internet of things devices and i don't want to say whether it's that company or that company but that's that that's i i think the most important company for crypto are the ones that are generating the real actual assets that we're using not not not just speculative um stuff but in terms of in terms of um trading etc then of course there's been some very recent reports or very good reports recently and over the last six months actually of wash trading so i would just say without mentioning names i would say go look at list of the exchanges that are actually real volume and you can probably guess which one it

is already those i consider very very important because those are the ones that truly make this fluidity at the moment so just as an example we're working with a lot of smart city projects so we have this eu horizon 2020 a grant from the european commission to to embed iota protocol into the smart cities so for automated parking charging and so on and so forth um and these companies are reliant on liquidity in the market but if it if they were reliant on a fake wash trading market that economy would not work so i would definitely say that these gateways are also extremely important um yeah that's a bit of a tangent but yeah it makes uh makes sense to me what um what's the one regulation that you would change or improve if you could

Oh, very good. So, okay. So I'll take two if that's legal. The one thing I would take, and this is dependent on country, of course, but certainly the taxes on crypto liquidity is absolutely bonkers, particularly here in Norway, which is weird given that we are at the forefront of digitalization, but the taxes around it, the way you hold it, the way you trade it, it's just absolutely asinine. um yeah that that's one of the things i would change and i i really hope the regulators will understand the technology to see why you can't regulate cryptocurrency in the same way that you regulate a random commodity that's one thing um secondly would be data uh just data ownership in general i think that even with gdpr which is a good uh first step and kind of sentiment that they care about this stuff uh is to go much further and say that if i generate data i own that data that's literally my asset that is my asset that is something i would want to regulate because that that directly ties in with this whole vision of uh distributed ledgers and automation

absolutely what uh what's your most controversial thought in crypto like what do you believe that uh everyone else will disagree with you on probably that's blockchain and when i say blockchain i mean the the bitcoin ethereum that kind of model with sequential blocks is just a prototype it's literally just a prototype it will never work in the real world in order to make it work they will have to upgrade their networks towards something that is similar to iota and the problem they have is that they have to convince the miners that they are no longer going to get paid which is a very hard bargain so that was that is probably one of my most controversial you know that's controversial but it's the truth so i have to be honest here

i disagree with you but i'm gonna let you go on that one what's the most important book you've ever read the most important book i've ever read important papers or collection of writings that i read was nick bostrom back in 2004 2005 um today there's a book out he he kind of took all his earlier work compiled it into this book called super intelligence that was released in 2014 i believe which was actually that book was kind of the precursor to why suddenly elon musk and all of these people started worrying about artificial intelligence um but i read this back in 2004 2005 that really shaped my mind in thinking about the future how automated it will be and the and the fact that this will happen

very rapidly and if i go back to when i were just 14 15 16 years old reading this stuff and now they're on 29 a lot of those things have already happened like ai today beating the best chess engines all of this stuff or the best go player in the world or the best starcraft player in the world i don't think most people understand just how huge of a leap that already is and then if you extrapolate 5 10 15 years into the future the level of automation is just absolutely insane what we will see over the next few years so it's so important to get this right so yeah i i would say that's probably the most important nick bostrom's work very cool what um what do you about aliens real not real believer non-believer yeah interesting question so uh my view on aliens

is pretty much just based on physics if you look at physics you have eternal inflation as the leading theory of how the universe was created meaning that there are an infinite number of them and virtually every configuration that can exist does exist and by following that train of thought with logic you end up with aliens are definitely real whether aliens as they are portrayed in hollywood and they have visited earth etc no i don't really believe in that i am very intrigued by the idea that our our planet may just be seeded by another um alien far far far distant alien civilization though that life on earth was created uh kind of as a seed from another planets i love it i love it um what about the depths of the ocean would you rather go depths

of the ocean or uh or go to space which one's uh more attractive to you oh very good question it depends how deep because if we're going into space most of it will be quite boring it'll just be stars all around and you won't really see anything but if i'm allowed to violate the laws of physics and go to another uh solar system or another galaxy then certainly space if i'm just going to float around in space and not be able to go to any, any exotic places, then certainly ocean. Like if I were asked, do you rather want to go to Mars or do you want to go to the bottom of the ocean? I would choose probably bottom of the ocean because there's so much more exciting things of life, et cetera, that you can see on your way down there. I think Mars is yeah, overrated.

mars is overrated all right i love it uh what uh what one question do you have for me to finish up with so when you think about crypto and you have already mentioned that automation is undoubtedly where it's all headed how do you what is the most important component for you is it data integrity i.e the data is generated and you have this immutable record of it that can't be changed or is it the transactional settlement layer to to me um data integrity i think is something that uh improves over time right so if you think of you know take just bitcoin for example what was the quality of the data in 2009 versus today over time as more people come into the market uh and there's just kind of more capital and uh intellectual capital and financial capital

put towards it, I think the data ultimately gets cleaner, more structured, more standardized, and really just the data integrity improves. And so that's kind of a natural evolution of technology where I think that there's got to be a very intentional focus is on the transaction settlement layer, right? So if you think about like payment data, there's been a very fast accelerating improvement in payment data in traditional markets for a long time. But the creation of a transaction settlement layer that's decentralized, censorship resistant, right? Everything that Bitcoin brings to the table creates such an inflection point that it's very hard to compare the creation of that transaction settlement layer with data

integrity, right? It's almost like you need the transaction settlement layer and then the data integrity becomes important but if you don't have the transaction settlement layer then the data integrity doesn't even matter right because there's nothing to transact that's kind of how i think about it yeah it's a very it's a it's a very good uh way of viewing it and i actually do think i agree with you because this is this is what we at least we are doing in iota that we kind of embed those into the same layer so data integrity and transactional settlement is on the same because it doesn't cost anything to use the ledger for data integrity so no i think that's a good arguments. I love it, man. Listen, I really appreciate you doing this. I'm intrigued by

the fact that you guys believe in the automation and kind of the machine to machine transactions so much. And obviously you guys are doing a bunch of work to make that become a reality. So best of luck to you. And then we'll have to do this again in the future and catch up on all the progress. Yeah. Thanks for having me. It was a blast. Hey everyone, Pop here. If you like this episode of off the chain and want to help us take crypto to the top of the apple spotify and other podcast charts please do us a favor and rate review and subscribe to review simply go to the off the chain homepage scroll down until you see the five blank stars taking 15 seconds to fill those stars in and leave a quick review goes a long way in helping us take the entire crypto

ecosystem to the top of the charts i appreciate you listening and see you next time on off the chain