The Pomp Podcast - Jae Kwon, Founder & CEO of Tendermint: Byzantine Fault Tolerance and Environmental Awareness

Episode Date: May 2, 2019

Jae Kwon is the Founder & CEO of Tendermint. In this conversation, Jae and Anthony Pompliano discuss consensus algorithms, Game of Stakes, nation-state surveillance, climate change, cow farts, life on mars, and liquid-solid states of matter. ----- 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. Jay Kwan is the founder and CEO of Tendermint. In this conversation, we discuss consensus algorithms, game of stakes, nation state surveillance, climate change, cow farts, life on Mars, and liquid solid states of matter. I really enjoyed this conversation and Jay has very unique views of the world. I hope you enjoy it nearly as much as I did. 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'm here with Jay. We got a lot to cover. We're going to go super deep on the environment. He's going to teach me some stuff. I'm going to argue with them and you guys are going to learn. So thank you so much for coming. You're going to try to make me mad, right? I can try to make you mad about the environment, but I don't know enough about the environment. We can argue like sports or something and then maybe i could win but i can't talk about sports all right what's your

background um background uh computer science education from cornell graduated in 05 i've been in um san francisco for about 12 years uh doing uh development a lot of open source development and um i i wrote the yelp iphone app a while back and that gave me uh through the shares in the company some some freedom to explore a variety of projects like 3d printing at some point lots of open source projects played a lot of poker we could talk about that are you any good um i i'm good but my problem is i like to play at higher stakes than i should so that's what i learned about myself got it and yeah that got me to quit so there's that you play high stakes it It only matters if you lose a lot.

Yeah, that's right. It's a lot of fun. It does matter, yeah. But what else? I care a lot about privacy. So the Snowden revelations got me interested into programming end-to-end encrypted communication systems. I love distributed systems and complex emergent phenomenon.

So a lot of my background kind of got me into the Bitcoin space early on in 2013. And I've been working on a proof-of-stake consensus system called Tendermint. And now, starting from 2017, a network of blockchains. This vision for an interconnected blockchain network that will solve the scalability problem and a host of other problems for the cryptocurrency space called Cosmos. All right. We've got a lot to go over. First, San Francisco, what's up? Why is everyone leaving?

Why is everyone leaving? Because you've been there 12 years. Why are you still there? Good question. I've been busy. I've been kind of meaning to. I want to live in New York and be bi-coastal. You want to leave?

I kind of want to leave. Yeah. It's becoming cool to leave. Uh-huh. Yeah. Yeah. I mean, I'm not a hipster or anything, but like, yeah, I mean, I have a dog and I walk my dog on the sidewalk in a mission.

I was just going to say, the mission's like Brooklyn, basically. i haven't really lived in brooklyn so okay you tell me just trust me okay yeah i mean my dog steps into to human poop you know yeah it's pretty crazy kind of gross yeah and uh and then you pay a lot of money to live there so that doesn't help the fact that not only is it maybe not the cleanest but uh let's go on all right uh let's talk about uh snowden and privacy okay and uh julian assange and all that okay nobody's came on and talked about it yet uh why are you so excited about it Like what was the fascination with it all? Well, I've always had a problem with authority, you know.

And so I like to create and be part of voluntary systems that allow me to, you know, dictate my life and who sees my information. It's known in revelations we're quite revealing about to the extent to which we're being surveilled. And I think that's going to have ramifications eventually down the line where we're going to be living in an authoritarian regime, whether it's through a government or a collection of companies, you know, fascist corporate dictatorship, something like that. Do you think it's the future or do you think we're already doing that? We're already there and we're trying to create a better future. We'll see. What was the biggest thing that like upset you in all the revelations? Was it the participation of companies?

Was it just the government's kind of arrogance in it all? Or what was kind of the thing that caught your attention? It's like everything we learned about starting from school, say, like about the greatness of America just all seemed like a lie. You know, like it's like we're living in a matrix and we're part of a program that we don't even understand or get to control. You know, I mean, they call it a democracy, but we didn't vote for the system. The money that you use is controlled and issued by corporations, private banks, and a cartel of them called the Fed, right? And you don't get to decide where the government, where our humanity or civilization gets to divert or invest in terms of our resources. Now we're facing a huge environmental problem, and look at where we are.

I didn't choose this. I don't think my parents chose it, so why are we here? Yeah. In all of that, do you think the U.S. is better or worse on their surveillance side than other countries? China obviously is like really, really bad, but just take any other country than like the ones that are obviously bad. Where do you think U.S. is? Are we high on the list, kind of from middle of the pack? Are we actually doing better? I don't know the answer to that, you know, but like one thing that scares me about this is a story I heard recently about someone in China and this guy was riding a bicycle across the street lights without stopping and a camera took a photo picture of his face and then sent him a ticket at home. Like, that's crazy, you know, that everything you're doing is being tracked by AI and analyzed. So, yeah, China's already there. See, I agree that the facial recognition is, like, weird, right? And that probably makes me, well, it definitely makes me uncomfortable.

But the repercussion of you broke the rules and got a ticket for it, I'm not so worried about, right? in the sense of if there was a cop there, right, technically they could write the ticket. Oh, yeah, the ticket's fine. I don't mind the ticket. Yeah, yeah, charge it out of my credit cards or whatever. It becomes scary as if then because you did that, you can't go in a certain part of the city.

You can't, yeah. Or you can't take out a loan or your kids can't go to a certain school. By association, don't know what you're thinking, don't know what you're planning. And so, you know, we're entering the era of like pre-crime, you know, and they'll stop movements or, or insurrections, you know, stopping that sounds okay, but they'll stop other things too. Describe a pre-crime for the people that don't know. Okay. So before you commit a crime, some advanced technology that predicts that you will commit the crime. And so

before you even do it, you're, you're locked away essentially. So you prevent it from doing the thing. Yeah. You're on the way to rob the bank. You haven't robbed the bank yet, but you get stop and you uh you basically get charged with breaking the law even though you didn't do it yet yeah and so all right i don't want to live in that world you know what the u.s is good at um i don't know if the u.s is as like if they have as much technology in terms of you know tracking people but um they're very good at parallel reconstruction so you know they have they have a different set of skills i think how good is the encryption technology right now you think that it's actually protected i'm not i'm not um i'm not the best cryptographers i can't really answer that but

i see that there are um you know new vulnerabilities being discovered all the time i think the name of the game nowadays is is trying to um infiltrate um algorithms or like devices one of the things i hear about is um compromising the random number generator that's inside our devices right so that's an easy way to compromise cryptography without dealing with um compromising the algorithm itself yeah yeah it's uh it's pretty crazy that we're sitting here talking about like how good is end-to-end encryption in the uh in the context of like a surveillance state uh and the richest man in the world literally has pictures floating around who's that bezos yeah just like the fact that he's got more money than god right and can hire every cryptographer in the

world he can get as much security as he wants but uh pictures still get out right the things he's doing that he probably didn't want people to know about still get out and uh i like that i like that it got out you know and that he couldn't control it well and look i don't know all the details of it right i don't know if it was actually somebody hacked his phone or you know the piece at the pictures and then they kind of got socially engineered right in terms of somebody eventually got the photos because of that but it's just this idea that like no matter how good the tech is uh there's always a nefarious actor who potentially can beat it right and then there's also the human component right um you see all like the sim swapping in crypto for example

people put you know multiple layers of security on their mobile phone accounts and there's you know they literally put notes in there that say no matter what even if i come in do not give a sim card out to anybody and they still give it out because it all gets socially engineered right It has nothing to do with the technology systems. It has to do with the fact that there's still a human there as a failure point, right? Yeah, I agree. Which is pretty crazy. All right.

So talk to me about Tendermint. What is this consensus algorithm? We have one. We have Bitcoin. Why do we need another one? Bitcoin's great. And I'm not going to knock Bitcoin. I love Bitcoin.

You know, proof of work was like a necessary step for people to understand the need for a widely distributed BFD consensus system. Right. But what the problem is, is that the security of the system is really expensive in terms of energy expenditure. And what the Bitcoin maximalists or proof of work maximalists will say is that it's useful work because it's there to secure the system. But, you know, the response to that is, well, it's it's wasteful if there are alternatives that can do better without spending that much energy. You know, then even though it's useful, it's clearly wasteful. So your argument is I'm going to go to the extreme side and say if there was full feature parity or security parity, right? Both systems were completely secure and there was the same cost in terms of in order to have a secure system, you as an actor within that system had some sort of cost associated

with your participation. You're saying that having a proof of work system in that case is wasteful compared to a proof of stake system or some other consensus model. My understanding, and again, you're a thousand times smarter than me, is that the proof of stake and other consensus algorithms are either not at parity on the security side or on the different criteria, or they're not as proven, right? Proof of stake is not as proven. Okay. Even tenement, I have to admit, it's an experiment. We haven't had the system work, you know, and when you deploy something in a social context, like really anything could happen,

so who knows? And I wouldn't say that there's parity in security, but I like the way you phrased it, it's about the cost of launching an attack, right? And there's definitely a cost that can be proven about what would happen to an attacker who forced, say, a tenement blockchain. You know, it's like when there is a double spend attack on a tenement chain, it means that there's a way to punish at least one third of the stakeholders. What that means is it's kind of as if if you launch a 51% attack on Bitcoin, their mining hardware explodes and it's gone. You know, that's quite the expense in terms of launching an attack. Whereas today with proof of work, the only cost there is the ongoing electricity costs for like an hour or however many hours.

So potentially proof of stake based on classical BFT algorithms like Tendermint can be more secure than proof of work. So walk me through the Tendermint algorithm in layman's terms, right? So for a dummy like me, explain how the consensus algorithm is different. Okay. All right. I'm not going to go into like how the algorithm works because I've tried that and it's just like, so I have to admit consensus systems is very difficult even to explain. But the gist of it is you have a set of actors and they can have different voting power relative to each other. But they all have public-private keys, and they're signing messages in a gossip protocol, and there's a round-robin set of rounds where they need to come to consensus, ultimately.

It's a two-phase commit algorithm, which means there's one phase where they vote, and then a second phase where, based on what they saw of every one vote, they vote again. And if there's more than two thirds voting in favor of a block in the second phase, then that's a commit. That's proof that everyone will that everyone who is honest will eventually arrive at the same conclusion. And so really what you're doing is why the two phases, it just gets to a deeper level of clarity or kind of a more agreeable state. There's just there's just no way to to really make this work with just one phase. and uh to try to explain that i think i tried once couldn't quite quite do it okay why yeah all right so you have the tenderman consensus algorithm you built that or started working on it what like 2014 yeah 2014 so i i um i started working on trying to solve the nothing at stake

improve stake problem in 2013 and and i saw bits shares in nxt and the theoretical limitations or the holes you know i couldn't figure out and prove it was pretty clear that you could not prove that there is a guaranteed cost to launching a tech um so i tried to find a better solution i couldn't uh so i put that down and tried to create a cryptocurrency exchange to compete with cripsy worked on that for six months understood the regulations around like statewide you know and international regulations around securities and all that and um and then when i was about to launch it, I chanced upon some papers that described all the academic approaches to Byzantine fault-tolerant consensus algorithms. And I found this one 1988 paper by Dwork, Lynch,

and Stockmare, and it had all the components that convinced me that proof-of-stake could absolutely be solved. So, I dropped everything and started working on that. So, Tenement has been going on since 2014. byzantine fault tolerant systems i think a lot of people hear that phrase and they repeat that phrase because they think it sounds smart i just sounded smart saying it and i felt good about myself yeah uh what does it mean okay byzantine just means arbitrary behavior like when you run a program um you're supposed to run that program but when you do something else uh then that's Byzantine behavior. Collusion is also a subset of Byzantine behavior if you're deviating from

what you're supposed to do. And even just crashing and not participating is also Byzantine behavior. And that's called a crash fault, for example, in consensus literature. So it's not possible to create a consensus system like Bitcoin or Tendermint that can tolerate 99.9% of byzantine actors yeah but it is possible to create one that can tolerate a fraction in bitcoin that's 49 say and in tendermint that's 33 and um you know why those are different it gets into technical details but the idea is that in tendermint you can tolerate up to 33 of the voting power trying to attack the system or deviate from the original protocol or just crashing and the blockchain will still work fine and then you took tenderman consensus algorithm and you've

applied it and talk about cosmos and what the heck that is okay um do you remember the uh the bitcoin side change paper uh i do not know okay what it is um okay well it's not the people listening definitely don't remember okay okay so the cryptocurrency has a scaling problem i would say. There's the Lightning Network. I love the Lightning Network and the work that's been put in there. But there's also some issues with it. There's capital lockup costs. And it's also not a generic or general solution to all kinds of blockchains, and especially not like Ethereum smart contracts. So the general and easy way to solve the scalability problem will be to have many parallel blockchains that are running all at the same time, then the question is,

how do you coordinate between all those blockchains? If you have a thousand blockchains, we already do, right? But what that means is in order to use one blockchain, like blockchain A, you need to get tokens there. If you want to use blockchain B, you need to get B tokens. So if you have A tokens, but you want to use B, you have to go to an exchange, you can do an atomic swap, right? It would be better if we can just have the same token somehow transfer it to the other blockchain and use the logic

that's on that other blockchain. And this is, you can do this through two-way pegging. And the Cosmos network is about connecting all these blockchains together in a hub-and-spoke-like fashion,

all powered by classical BFT consensus algorithms like Tendermint, such that... BFT is the Byzantine fault tolerance. Yeah, Byzantine fault tolerance. Thank you.

I'm making progress over here. And so, yeah, the Cosmos Hub just launched. It's a multi-asset proof-of-stake blockchain powered by Tendermint. And its job is to connect to many other Tendermint powered blockchains such that you can transfer, quote unquote, tokens through two-way pegging. And so this is how we're going to solve the scalability and interoperability problem and how we're going to create a new foundation for a scalable token economy. Got it. Two-way peg. Explain that a little bit. Okay. Let's see. So I'm going to try two approaches to explain this. One is, say, this is from the Bitcoin sidechains paper.

You can move your tokens, your Bitcoins, to a multi-sig address. And that multi-sig address could be controlled by signers on another blockchain, say. So that's a sidechain, and it can have its own logic. it could be UTXO chain or an EVM chain. And so anyone can move their Bitcoins there by transferring your Bitcoins to a multi-sig address. You can do whatever you want on that chain and then you or whoever you gave those coins to can withdraw, right? So that's the idea of a two-way peg in Bitcoin. We also see this in the banking world with nostril accounting. So banks between banks the way uh banks hold accounts within each other is is also kind of two-way peg i would say

got it and a lot of people like this cosmos project like there's people really pumped that they are that you guys launched this um what to the detractors what's the detractors argument like the people who are seem to be in the minority at least in terms of um you know public sentiment why don't they like it okay i mean there's a whole slew of reasons why people don't like it but like there are proof-of-work maximalists who don't like the fact that we're creating proof-of-stake system there's like bitcoin maximalists or any coin maximalists that just don't like the fact that we're another chain right um and there are people who are creating competing systems say you know i mean in some sense there are competing systems who just try

to knock us down because we're the first and can you in the steady state is the belief that you could make every chain interoperable with each other uh just about yes but the proof of work chains could not participate um it's harder it's more it's a bit more difficult yeah so the beauty of tenement and you know classical bft algos is that it's very easy to prove to light client like your phone that something really happened on that blockchain this was the broadcast that was committed um and it's very quick because all you need to do is wait for a set of signatures to be created by the consensus set or the validator set and then uh uh and then you as long as you know the original validator set you can you can quickly verify it by verifying

the signatures in proof of work it's it's more difficult because you have to first wait for additional confirmation blocks to come and then there's also issues around eclipse attacks and so on um so uh it just turns out you know that tendermint and bft systems that uh that are like tendermint are better for uh cross-chain communication because um like client proofs is essentially how cross-chain communication is done and cosmos where does this uh game of stakes come I heard about this do you guys create this or somebody else created it on top of the project

yeah we administrated the game mistakes program that was a very political answer it's fine I'll let you get away with it there's PR people in the room but so explain what it is and then we can talk about why you guys did it

we like to be safe you know safety first is our not our mantra But we say that quite a lot, like tenement is safety first. And before we launch a blockchain, we want to be sure that everything is kind of ready. So we wanted to first get the validators going, the validator community, in terms of getting them used to the process of launching this chain. We also wanted to test for the economic model to make sure that it's not just going to crash and burn as soon as you launch it, which would be like a PR disaster. So, we tried to incentivize all kinds of attacks.

And what we found was there was a cartel that formed, Bitfish, and had a whole bunch of people sign up as validators when they signed up for the Game of Stakes program. and we found that the community uh was able to identify them and um and kind of forked them out because they were uh trying to be malicious so really what you're essentially doing is you're incentivizing people to trust no one and everyone kind of check everyone else yeah the community should uh should trust well they shouldn't certainly shouldn't trust uh any central point you know like even don't trust me don't trust our company don't trust the the foundation forget calling it game mistakes you should have just called it paranoia paranoia like yeah i mean we're aren't you paranoid you know isn't oh i'm not even saying it's a bad thing no right i mean

look the whole idea of not trusting anyone right trust no one but verifying everything i think it has a lot of validity to it it can get a little too far yeah does game mistakes go too far no i don't think it went too far you know and maybe it could have been pushed a little too far but for the people that are playing like how much economic benefit is there for them they win like 20 bucks or there were there were 50 winners so they got um they got tokens that they can validate i forget the exact amount but it wasn't insignificant and uh they also get to say that they participated and won so yeah were they doing it for the notoriety or for the money for both for both yeah that's fair all right let's talk about the environment okay what uh

How the hell does crypto and blockchain solve the environmental problems? What are the environmental problems? Okay, the environmental problems. I mean, there's a whole lot, right? Are there? Yes. Climate change is a huge one based on the amount of greenhouse gases and carbon dioxide that are in the air, right?

Where do those come from? Mostly fuel, right? Gasoline and coal, right? And now from the destruction of the ecosystem, some you know and just the ecosystem is producing it too so uh i don't claim to be well educated on the environmental uh front but uh i have heard and then i've also heard the opposite that uh a lot of the co2 that is emitted into the air and causes a lot of the global warming and climate change um comes from cow farts methane yeah methane is a huge deal that's like a real thing it is a real

thing but i don't think i'm not sure but i don't think that's uh much compared to you know overall the rest of the carbon dioxide that we're emitting if you calculate like how many barrels of oil we're we're pumping out into the atmosphere it's it's disgusting because because eventually we have to figure out a way to either stop doing that but not only stop doing that but figure out a way to put that back into the soil you know and it's really daunting it's on the scale of like everyone trying to build like a great wall of china or something it's a monumental task that i don't see happening until we we get our shit together very soon all right last question about the climate change uh it's like not cool to call it global warming anymore it's like now now the terminology

is climate change uh is that a thing or is that is that just my perception incorrect maybe i mean because like part of the problem is that it shifts global weather patterns so some places are colder I think the Midwest, for example, is flooding, and there's winter storms going on when there shouldn't be. So, climate change makes more sense. But overall, it's certainly about global warming. Although, yeah, just climate change, too, it affects agriculture. So, we're going to see food shortages pretty soon. You think so?

Oh, yeah. We're already seeing some of that from the U.S., but I believe within, say, 10 years, it's going to be affecting us, and it will be on our minds. Describe more about the food shortages. Well, with climate change comes, you know, the unpredictability of climate, like the crops aren't used to the crazy weather patterns where like droughts are worse and the floods are worse and so on. So we're going to see food shortages. What about like indoor farming? Does that solve if you're farming indoor farming, vertical farming? Again, those are big words, not really big words, but they make me sound and feel smarter.

so i'm gonna throw those out there at you all right man you do you dude um i think that i think i think it might help but i mean if you're talking about like a hydroponic setup where you have like light bulbs and everything you know i don't really see that helping out that's just probably gonna make things worse i think it might help but that's a lot of indoor farming you know we don't have the infrastructure to replicate the entire u.s food system indoors in a vertical farm in a vertical farm. Yeah. Yeah. Yeah. All right. And then what about, uh, I do think people should go out and live, uh, and figure out how to, how to produce food for themselves. I think that'll help out a lot, you know, and, and, and ensure our survival at least. Wow. I'm glad you brought that up.

Cause I'm gonna take it a step further. Do you know about a Ted Turner with the bison? Uh, tell me about it. So Ted Turner is the, uh, he's the founder of what CNN, a bunch of other rich dude and he's one of the largest landowners in the united states and he has been a big believer in i'm pretty sure that he's a big believer in food shortage being on the horizon he has been that way for like literally decades uh and the reason why he owns so much land is uh he made a very concentrated effort to try to prevent the i think it was the extinction in north america of bison great and like i guess breeds them right i don't remember all the details but he's like super into that so he's not just trying to figure out how do you make

food for yourself but how do i feed people in general yeah it sounds like he's trying to terraform the earth when we when he's billionaire so you know he's got a lot of money to play around and do things that he thinks are good for the world i guess but you know like that's kind of Yeah, the way we do farming now, there's all this private land, animals can't roam there anymore. But there was a TED Talk, I forget by who, who was saying one of the best ways we can increase carbon capture on soil is to ensure that there's wildlife and plants in the grasslands. The best way to do that, apparently, is to actually have bison or cows or bulls or whatever, you know, like urinate on the ground and stomp, you know, things and make sure things rot properly. So, yeah, going back to the basics of creating that ecosystem, I think is super important. Oh, you mean letting nature do the natural things that they do would be a good thing?

The thing that it's been doing forever. Yeah. And you know what? The cool thing is I think we can incentivize this. How? And if you take a look at a project called REGEN, for example, REGEN, it's about measuring carbon in the soil and ultimately about incentivizing the improvement of that soil. So I think the first thing we want and we need to do in order to improve anything is to measure and to observe and to see what's going on. And then with the blockchain, we could create an incentivization system.

You know, imagine if in the future, with enough knowledge and information about what's going on and understanding of the solutions needed, I think people would want to support, say, a fiat, not a fiat, but a stablecoin that perhaps might incentivize the creation of that infrastructure to make it happen. You know, so I think education goes a long way as well as measuring. What about the oceans? uh i don't know what's going on with the oceans oh well i know there's over too much overfishing you know it seems overfishing meaning that we're catching too much fish and taking them out of the ecosystem and the oceans are suffering because of it oh yeah yeah i think recently um i don't remember the exact numbers but like within a span of just a few decades almost like within our parents lifetimes we've what destroyed 90 something percent of the fish population

um yeah and then people say yeah 90 something percent it's a lot of sushi it's a lot of sushi yeah exactly um there's also issues around like pollution right so we don't do a good job figuring out how to manage pollution there's plastics going into the ocean all the time i was gonna say you see the whale that uh they found like all the tens of pounds of yeah of plastic in his stomach yeah it's pretty crazy it is um yeah i don't know that makes me sad yeah i mean i think it killed the the big one that like was a big story right i think it killed the whale and that and it had a lot to do with the plastic or whatever isn't there like the whole island like the size of texas um i don't think it's like a contiguous plastic island yeah yeah but but it all kind of gets

together yeah yeah i mean we we definitely don't know nearly enough about the ocean right i think everyone agrees on that um so this is where uh i'm just more experienced than you at sitting here and talking into this microphone that i'm going to show you that i just expertly walked you from uh co2 and uh global warming to the oceans because now we're going to talk about uh seaweed seaweed you know anything about seaweed i i've i've i know what it tastes like okay that's great and if you feed it to the cows i hear it's good so ah you know something about the cows all right so uh what is this true that there's a certain strain of seaweed that if you put it in cow feed it can actually drastically reduce the co2 like i haven't tested myself but you know it's probably

true i wouldn't lie about that right red seaweed or something like that yeah it will reduce methane emissions from cows yeah the only reason i know this is because somebody tried to get me to invest in their seaweed farm which sounds like you know we're like go farm but it's in the ocean it's in the ocean what because you have to you have to make the seaweed i wonder if you can make a seaweed farm like right in manhattan so uh all right now we're really getting off off topic here but it's interesting to me uh what i wanted them to do was to create like a vertical farming type situation but do it for seaweed so it's more like a aquaponic vertical farm and you could grow the seaweed in like a local swimming pool you could grow it in a factory or warehouse wherever because

part of growing the seaweed offshore right to some degree is uh the transportation cost there's not a lot of cows at the beach so you gotta get the seaweed somewhere to get it processed and get it into the feed um and so i always thought that like man if vertical farming is going to be a thing and the seaweed thing's real i'm sure you can make a lot of money by creating some kind of vertical farming seaweed yeah or we could just put a tax on cows why oh wow it's easier yeah i still eat beef i have to admit yeah cows chicken i eat chicken yes all meat uh almost all meat if we tax why do you want to put a tax on well then um then it would get me to eat less you know i do i have to admit sometimes i have some impulse control issues where i'm like you

know i just i just want to eat that thing yeah i admit and everyone i think has this issue and but if if we if we make it more expensive i mean it cows cow meat wasn't all that accessible to everyone you know yeah it's it's not inconceivable think that it might become more expensive the fake meat like uh impossible meats and and all these have you tried the impossible burger i've tried it it's okay it's all right but like i'm not i just don't know if it has like the right nutritional profile right so i don't want to eat it every day i'll defend them in the sense that going into it i thought it was gonna be really bad it was actually better than i thought but it still didn't taste like you know a mcdonald's burger right which might not be meat either yeah i don't

know what that is it's more like a sponge but like um oh are they gonna sue me now no right hey watch out it depends on who cooks that impossible burger meat so you just have to find a restaurant that can actually do it well because uh apparently you need like a like a different kind of oven for it you know why uh soda like coca-cola tastes better at mcdonald's than other places i have noticed that but i don't know why because uh they follow the recipe exactly other people dilute it right they put like too much water and stuff okay in the syrup because most of the restaurants make it on the spot yeah and so like maybe meets the same way where the impossible burger then when they send it to you if you don't follow the directions

doesn't taste as good yeah yeah most people don't have to write oven for it so it comes out with Like not medium rare, right? It'll come out to be too overcooked. That makes sense. All right, so how the hell does blockchain solve this stuff? How do you go from topic to topic like that? That's amazing. That's just how my brain works.

Yeah. Do you have like a mind map in your head where you can see the next topic? Well, I wanted to talk about seaweed, and I got you to talk about that. Okay. Sorry, what's the next topic? Talk about blockchain and crypto. How does that solve the environmental stuff? Okay, so I think, you know, the ICO bubble that we saw showed that it can solve at least the incentivization problem of incentivizing new approaches to solutions to problems, right?

Okay. I mean, we tried to do fundraising for a project to create like a blockchain platform a while back and approached a lot of blockchain VCs for it, and they didn't get it. But what we found is that the public does. The ones that were tracking a project have capital and were willing to fund it. And so when we conducted a fundraiser in 2017 for Cosmos, it was quite a surprise and a shock to see just how much demand there was. How much did you guys raise? We put a cap on it. So we said we wanted to raise $10 million.

And we said if there's enough demand within the first six hours, we'll cap it at $17 million. and then we closed that in 29 minutes and this is at the time time out time out what really 17 million dollars in 29 minutes yeah yeah yeah it's almost a million dollars a minute i'm not a mathematician but it's yeah yeah and and uh and people in california at least had to wake up at 6 a.m so they're also punctual people how many people came from california i don't really know yeah yeah and at the time it was like the most amount of like ether rays for a project um and And since then, we've had larger amounts. But, you know, by the way, yeah, I do think that, like, raising a billion dollars or whatever for a project is kind of insane.

I'm glad the SEC is putting a stop to that. A lot of founders don't realize that everyone knows that if you don't have enough money, right, you kind of starve the company and it can fail. But you also can die of overeating to some degree if you raise too much money. somebody once told me they're like look no matter how much money a founder raises they spend in 18 months right 18 months so if they raise a million dollars they make it last you know 12 to 18 months if they raise 250 million dollars they blow through in 12 to 18 months and if you look like 2017 right was kind of when all the craziness happened there's a lot of projects that raised a lot of money you know tens of millions of dollars that are running out of money now

we're about 18 months later right and so it's pretty interesting to see that phenomenon play out with teams that raised 15 20 50 million dollars uh and you know they have nothing to show for it what do they do with it look i think we're maybe spending money too slowly so maybe let's talk about uh vcs when you went to go pitch them i'm fascinated by the idea that you went to go pitch quote-unquote professional uh investors who are all contrarian obviously and uh no they're on no they're momentum seekers right of course patterns yeah uh and instead the crowd obviously uh was very interested in what you guys were doing but the venture capitalists were just not confident enough to put capital to work um what do you think their big uh

concerns were or like why do you think they they had uh kind of a shyness in terms of investing Well, they knew about Bitcoin, but they didn't understand why proof of stake mattered. So, yeah, whereas the people who were tracking the project were excited about the proof of stake aspect. I just think in general, I mean, there are contrarian VCs and those who are on the bleeding edge. But, you know, if you can be bleeding edge like that, maybe it's just more fun to be participating and building it. Right. So maybe that's the reason. can you tell me a great story about a venture capitalist that did something stupid during the fundraise process but don't use their name like you have any good stories about things that

you're smiling right now people can't see you so i know you have great stories uh did something no names no no just like when you were sitting there you're just like this is surreal the fact that i'm here pitching a company that is highly technical and and has all this prospect and should fit into somebody's thesis sorry i'm blanking let's move on you're lying but it's okay um all right so when you raise the money uh no equity right it was just a traditional ico in terms of non-divided capital or how did it work well we never called it an ico it's okay call it a fundraiser um and uh and it was structured as a donation modeled after the ethereum foundations okay how does that work a donation um well we explicitly

say it's a donation and that uh we'll create the software but that you know you don't have rights or anything or claims and we'll recommend recommend a genesis distribution and so on but that uh it's really up to the community to to take the software and do something with it which is what happened we had a distributed launch the uh neither the foundation nor the software company tenement ran validators and yet uh the blockchain launched with 67 validators and now has 100 or so wow and uh do you know who the validators are some of them like in terms of are they individuals are they a lot of them are organizations um they're software companies or crypto hedge funds um or exchange exchanges who just want to expand their business um and

individuals too yes um we're finding that they they want to um they want to identify themselves i thought there would be like anonymous validators but not so much uh it's it's because of the delegation system where uh stakeholders can delegate to validators and you want to delegate to those who are trustworthy turns out everyone kind of ends up wanting to declare who they are it's interesting do you think that uh a lot of the blockchain and crypto work that's being done today can have an impact on some of the privacy stuff um yeah you think so the reason why i'm asking is uh take proof of work take bitcoin for example right there is a pseudonymous aspect of it right so there's a wallet address i don't know that you right as a human own that wallet i just

know somebody owns the wallet address and has a identifier right in terms of the wallet address itself and i can watch what goes in and out of that wallet address and so that pseudonymous aspect uh isn't very private it's actually completely transparent um and if you were to ask let's say law enforcement for example they would love for criminals to use digital currencies like bitcoin compared to hard cash right how do we in our heads kind of um balance that right because i agree like Things like decentralized systems are probably more secure in many cases. But then something like financial surveillance, maybe it's easier with Bitcoin, right? Compared to cash, but maybe it's less easy than the traditional financial system, for example.

So I see a need for anonymization. People need privacy for certain transactions. They're not always breaking the law, but they don't want people to know everything that they're up to, especially businesses. who want to make a transaction but don't want the whole world to know what exactly they're doing, right? Because they have a competitive edge there. I think the Cosmos network and architecture, or the network that it's building out, may hold some answers here. So, for example, the Cosmos Hub itself, it's a multi-asset proof-of-stake system with many tokens that can be on there eventually. But it's like you mentioned, pseudonymous.

All the accounts, everything is public and transparent. You just don't necessarily know who it is. But when you have blockchains that provide additional privacy features connect to it, then I think the conversation will evolve toward gateways. So it may be that initially, I'm just going to draw a scenario. Maybe this isn't what's going to happen. But there might be blockchains, for example, Zcash-like chains or other BLS crypto-based chains or zero-knowledge chains that provide privacy and that they explicitly provide. That's why they exist.

And they connect to the Cosmos Hub. And maybe we'll see a lot of people use it. But eventually, when people can tell that that blockchain is being used towards evil, say, maybe something bad is happening, then there's going to be demand to figure out a way to put a throttle on that, for example. Or it may be that regulators say, these gateways are the ones that need to be regulated. So, they might have rules about whether you're allowed to put money into those privacy zones, say. So I think that's maybe where the conversation will end. This is interesting. What's the future look like, Cosmos and Tendermint?

What are you guys working on right now? Right now, we're working on IBC. So there's the Cosmos SDK, which is a blockchain framework written in Go that allows you to very easily create a production-level blockchain in Go that also is powered by Tendermint. You don't have to use the Cosmos SDK. There are other frameworks like Lotion. It's one in JavaScript that also ties into Tenement.

We're developing the IBC spec now. So IBC will soon be an implemented module in the SDK. So people who are building on the Cosmos SDK now will be able to connect to Cosmos very easily when that's released in a matter of months. What's IBC stand for? Inter-blockchain communication, it's kind of like TCPIP for packets. So I would say, here's the analogy that I like to draw. Tenement is like an operating system, like Windows or OSX, except what it does is it allows distributed replication of a computer.

So a blockchain, to me, is just to replicate a computer. IBC is like TCPIP between distributed computers. cosmos is like the worldwide web got it before we finish up i have rapid fire questions you don't have to answer quickly okay most important company in crypto can't say yourself can't say myself most important company in crypto you're coming in here talking about cow farts and all this other stuff and i just stumped you the most important company in crypto dude what kind of question is that uh the fed the fed yeah it's a private company right it is yeah why because they uh they're going to um eventually

when cryptocurrencies and this ecosystem um gets uh more and more widespread adoption And they are going to want to figure out a way to limit that because it's taking power away from the, you know, the consortium of banks, essentially. All right. That's actually a really interesting answer. No one's ever said that. Usually people just say like Coinbase or Facebook. What would be the one regulation that you would change or improve if you could? hmm you know i saw well let me think you know i think for one the sec is doing a pretty good job agreed yeah they i'm always impressed by like how much detail they go into and trying to analyze something and trying to create a good framework so i love that about them but what can be improved

um i think uh i think better clarity would be nice like right now there's no incentive for uh for for companies to go out and reach out to them it's almost like the lawyers tell you not to because uh if you're under radar then uh you're i guess potentially more likely to get some kind of uh penalizer somehow right so uh you know we haven't really had a conversation with the sec but i wish we could somehow yeah maybe there should be some framework for having that conversation that makes sense uh normally i ask people what their most controversial thought in crypto is but I want to know what's your most controversial thought in life. What's the one thing you believe that everyone else disagrees with you on?

This is my favorite part of the interview is when I ask questions, people sit there and just stare into space and think how much time do I have? I'm limited time. Are you sure? Isn't this live or something? No. Okay. it's never a good thing

when I ask questions somebody asks me how much time do I have this might not be controversial it's okay okay um i think so i'm i'm kind of like a i don't subscribe very much just like ideologies anymore but it used to be libertarian uh and i used to be interested in voluntarism and uh and copyism you know what it is uh voluntarism is uh the idea that uh And that systems should not enforce policies through violence or penalty of jail, say.

But that, say, for example, through the marketplace or through just providing better choices, incentivize people to adopt doing certain things. Copymism is kind of like a faux religion started by, I don't know, if you look at the Wikipedia page, it's funny. And it says it's started by a 19-year-old, something nice, Swedish philosopher or something like that. But the idea there is you don't want to enforce intellectual property right laws, but that information should be allowed to be copied for free, you know, without penalty. And I do still subscribe mostly to that. I think in the future, through crypto and blockchains, and especially the governance systems or decision-making systems that make use of the capital that can be generated from blockchain systems, through like inflationary tokens, say, as an example, we will see more alternatives to services offered traditionally by governments

or local governments. And that eventually the blockchain movement will make the world more voluntary so that you can choose what kind of system you want to live under. And people will choose this based on what kind of tokens they hold in their wallet. I mean, look, Bitcoin is a form of that today, right? If you just look at currencies, there's an inflationary fiat-based currency that's backed by or run by the monetary policy of the Federal Reserve. There's another one that is a disinflationary, decentralized, algorithmic, whatever currency, right? People have choice between those two things.

you could make the argument that money is a service that the government or government entities provides right and so if bitcoin gains mass global adoption it replaced it right yeah it's already true yeah and i think that you wouldn't be if you knew it money right other services also don't seem that big of a deal right uh what's the most important book you've ever read um i like the master switch no it's just a pretty good book um it's about it's about the evolution of um of the telephone system and and internet um uh but uh here's here's another one um uh principles by by ray dalio i really like that book yeah yeah we're trying to um trying to push that as much as we can i think uh i think people should embrace honesty transparency and um and

just always try to improve uh one another he he uh he's a big uh that u.s dollars in trouble guy he's been uh really pounding the table lately saying that uh you know no one's paying attention and hey this thing's gonna uh suffer a lot more than people think we'll see what about aliens you you believe oh okay so this is getting weird now all right um this is getting weird now that's the best response to the only question we've gotten so far all right i ask everybody the alien question all right special okay okay um yeah i think there are aliens out there um and other civilizations why because uh uh well okay i think at this point we we even know that there's life on mars right so just a fact life i think did you know that there's like life like way down

and across the earth where like you wouldn't imagine life to be so like cells are amazing life on mars explain uh recently there was a lot more evidence uh more evidence came out about life on mars um so what was it it was like there's a it's i think they found like some kind of like water yeah yeah some sort of i think it was it was an intelligent life it was just something didn't believe had existed on mars they've now discovered right right right right so i think i think the what is it pangea or something the theory that the life is all around in the universe i think that's about right um i also happen to think we're in a simulation so i do subscribe to that really yeah you know so i i think i think about the world in terms of multiverse and it can be

quite weird because because you're you're thinking about not only your life now in this track but also all the possible other you know tracks and places that you could be at and um and that they all exist simultaneously you know so um that that kind of changes your perception of who you are as individual you know so um i don't i don't think i think compared to other people i think less about myself as this being in a body more so as um as a as a i don't know just energy or just this thing that that also uh is interconnected to everyone else in the world did you see recently uh this new uh state that was uh discovered in terms of when i was in high school right i did a lot of science classes but i remember a couple of things and one of them was there's liquids solids and

gases there's only three of them they've now identified uh and confirmed a fourth state which is a liquid solid so there's now a liquid there's a solid there's a gas and there's a liquid solid okay yeah and uh it's fascinating to me that in what you know 15 20 years we can go in such incredible uh breakthroughs in science that drastically changed the way that we think about material right like like atoms and there's now we go from three to four states of being if you will and then you look at things on like mars where what the heck is there i don't know it's methane is it a water is it something else it's all just a bunch of molecules that are group together don't you think maybe like molecules maybe like subatomic particles themselves might be

composed of life like i feel like maybe maybe like electrons are just some kind of you know commodity produced by some company somewhere it's possible they why are they all the same well electrons and different types of molecules i guess are similar like pixels on a screen it was a you know the way we would think of a simulation it would just be pixels you would take those pixels and you'd make up people things yeah i mean i think the phenomenon of of molecules might be might be like macroeconomic phenomenon of like little tiny creatures i'm serious okay so that's the one you're not serious i'm so serious really yeah what if you believe that and you're right what changes uh what changes it means if if that were right you know like i'm not saying that's

right i'm just entertaining that thought in my head i can't get it out of my head all right but if if that's right it would mean that i don't know that life is recursive that um that that there's a purpose to why we're here and that the things that we end up doing ultimately also enable and ultimately you know make all of this possible you know so i feel like in that sense maybe life has a purpose probably probably what do you think purpose life is somebody asked me this today and i had to answer so i want to hear your answer then i'll tell you what i told him that's the purpose of life well you know like i said i can't get the thought out of my head i feel like

the purpose of life is to to do what we're kind of almost designed to do and such that in the metaverse everything works to enable even you know this coffee cup yeah but you're thinking more like in the macro physical sense right like the way i answered it was i said uh basically just to have fun and be happy which is more the micro psychological oh yeah perspective i don't have enough of that yeah where i don't think about myself but uh yeah uh i'm trying to change that myself yeah just go travel some you'll be all right yeah i don't like i don't like airplanes no why carbon dioxide oh my god that is yeah but listen if they fly to davos and they talk about saving the world on their planes it should be okay right i feel guilty every time i get on a plane

really yeah what about the uh do you see a boom what boom no the company boom in san francisco i think they're based in san francisco it's a supersonic electric plane okay basically they're saying that they think that they can make you get on a plane and not feel guilty well i wish i wish they would also describe all the all the mining required to get all those you know those metals and so on like there's not enough comprehensive like that's kind of getting back to what i was saying earlier we don't have enough information so everyone's kind of stumbling to dark and touching parts of the elephant not seeing the whole picture yeah yeah i wish i wish you could fix that humans aren't really that smart uh yeah you know like what should we call

the next species that evolves from us uh i'm not gonna be around you know a book uh have you ever read uh guns germs and steel yeah it was like required reading for me really yeah yeah that one though is when i think of like evolution i was thinking of that book and like the whole idea of yeah humans are we're screwed like well you know it's uh you've seen boston dynamics with the robots and like the flips and they can pick stuff up they're better than us already you know i feel like james cameron is like this this this arm of information that went back to the past from the future to warn us about what's coming and i feel like james cameron's a prophet perhaps and uh yeah that shit is coming i mean the matrix all the things he's done black mirror like it's pretty

real yeah yeah it's scary um before we end you could ask me one question what do you want to ask me okay well someone's already asked you about your purpose in life right you've already answered my purpose just the purpose of humans okay where would you like to see uh let's say you know as as a as um as a host in this in this program um you have influence you just made it sound way more serious than it is as a host at the program okay you hear that listeners it's a program it's a program yeah it's a professional operation here it's quite tidy uh you know you have you have power you have energy where would you like to direct energy towards uh i think that people are being really really really short term uh short-sighted when it comes to all this stuff

and uh i just pound the table over and over and over again that this stuff is all about automation and it's the machines and the algorithms are going to do a lot of the work but the existing assets are non-compatible right in terms of we can't use kind of the paper or the electronic assets that we currently have today and so if we can get people to understand that um i think it puts us in a much better position and the second thing is like you probably would go on a lot of podcast or talk to folks and they would just ask you about like tell about cosmos tell about tendermint and you know like what do you think about bitcoin and blockchain and it's just like that's like a such a one-sided conversation but obviously you have other interests you have other

um things that like you spend time thinking about or doing uh and so i try to like remind people that the individuals are so multifaceted and i actually think there's more overlap with the work that you do professionally and like your interest in let's say the environmental issues or the surveillance and security stuff right like all of that goes into informing the decisions you make and so like let's say you make a decision tomorrow right that hurts cosmos or tendering right if people understand the perspective that you have like i think that that is better for you and for them but most people don't ever like have the confidence or the opportunity to just be authentic like you said some crazy shit today i appreciate that of course thank you for asking like it's just

it's what you believe or what you think right so let people just be themselves and i think the world's a better place yeah more transparency yeah exactly all right we're gonna do this again and we're talking about really weird shit next time i'll be prepared 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.

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