IOHK | Charles Hoskinson at LSE, Cardano’s goals for Africa.

you [Music] if you'd all like to give a warm welcome to Charles Hoskinson [Applause] [Music] hi everybody okay everybody a Londoner didn't anybody come here to travel to see me we get show hands okay a few people let's play the longest route anybody from Europe North America Asia Asia what we're at you know when I was poke at MIT I had the same situation how long is the flight from Singapore okay we got to give him a good show then well first I'd like to thank the generosity of London School of Economics for hosting us as well as the Cardinal foundation for putting the event on in particular Michael Parsons and his crew Michael's here tonight I think he's similar Michael show hands oh there he is there yeah there's Michael parson chairman at Cardinal foundation wonderful guy okay so like all my speaking I I didn't prepare anything so we'll talk extemporaneously and I thought for a bit while the Cobb cab ride over what should I talk about and I said oh well you know third-generation blocking but you guys probably all heard that before and who cares about that we're actually at an economic forum you know LSC so in the spirit of that I'd actually like to talk about Cardno in the developing world and I've never actually given this pitch before so we'll just see where it goes and how it goes how's that sound I just hear your enthusiasm and excitement it's thank you thank you okay great all right let me put my phone over here and if I start rambling somebody stop me by the way this is our website you can see we have these cool little colors and things like that nobody knows what we do but they love our website okay so we're going to play the imagination game for a little bit so imagine if you live in a country where your father he has some land it's a pretty good land its farmland ranch land whatever it might be you've been there for a long time you grew up there and then suddenly some people show up and they start surveying around you tell them to get off they don't and then suddenly they show up again and they kick you off of your own land and you say well you can't do this I've lived here for two generations you're bloody mad who are these people of come here take my land away and then you go and find out that the government property register says you don't actually own the land that this company apparently does why is that well somebody paid the land register people a hundred dollars of value of the local currency to swap the record and now you have to go to court and fight with resources you don't have to preserve the land that you grew up on you get all your neighbors to come and say but the record says you don't own it that's a reality that about a billion people or more live with it's the same for war zones you know Syria will eventually have peace it always comes back and what happens people come home the millions of refugees and they're going to be people living in their homes people living on their land the things that they thought were there is that they abandoned due to war are now occupied by others and they're gonna say that's my land that's my house and the squatter says I survived the war it spoils it's fine I said well we'll go and settle this so you go to the Land Registry and you know what it doesn't exist or if it does it's been manipulated it's been shredded it's been mutated in some way to meet the needs of Isis or whoever the heck came back so who owns it person there knows that's a reality that every single war refugee lives with it's just a fact of life it seems then let's talk about identity anybody ever been to Vietnam or Cambodia countries like this come on there's got to be at least one or two ok we got a few people Cambodia in particular has a big problem with identity you can buy a passport in some cases a Cambodian passport for under $100 so we say hey renew kyc and AML ok that's exciting show me your passport in your birth certificate everything and guess what I can be a Cambodian citizen guys for less than the cost of a decent watch so does that mean that we have a stable identity space does that mean that when you see these documents you can rely upon them and if they're no good how do you build reputation and try and if you can't build reputation trust how do you do business with people that you've never met is that person qualified for a loan I don't know maybe maybe not is that person somebody you'd like to sell a product to online or maybe they're an outsource or a freelancer and they want offer their services would you do business with them if they have no reputation if you don't have identity you can't build reputation you can't build reputation you can't work you can't get credit you can't do global business with people that's reality literally billions of unbanked people throughout the entire world suffer from so this is a known problem okay so then we also have the issue that when you want to offer these services to people in these places the costs grow exorbitantly large so there's remittances that's when you send money home so let's say you're from the Philippines and you have a daughter and you send her to go be a maid in Tokyo or California or Hawaii or something like that and every single month she diligently sends a hundred dollars back to you the average cost of that for most places in the Philippines about fifteen dollars for every hundred dollars fifteen dollars just to move the money you haven't bought anything you haven't done anything that's the average rate according to the World Bank World Bank also estimates the cost of credit so a microfinance transaction so this is a loan under $100 for the unbanked for $100 loan is about thirty five percent interest to eighty five percent interest can you imagine getting a loan like that how do you survive how do you get ahead how do you build wealth furthermore you can't get insurance so what happens when the rain comes and destroys your crops what happens when war breaks out and destroys your property who covers that you do and as a consequence even if you've built something that can be taken away by an act of God a fourth Missouri event and again this is the reality that billions of people live in so you say well how do we then solve this problem what do we do it's a problem that's multivariate it's an incredibly complex problem if anybody comes to you and says we can solve your problem they're there to steal something from you or they're a deluded and delusional they're crazy you can't solve the problem you know there there's if you go to places like Africa or South America or Southeast Asia it's literally littered with the bodies of millions of entrepreneurs and would be saviors over the centuries who have come in and said we have the solution we have the ideas just adopt this way of governing just adopt this way of banking just adopt as government structure or democracy and then suddenly all your problems will go away and it never seems to quite get there does get better or famine and disease have gotten better over the last century but what excites me most about cryptocurrency technology is I look at it and I say this is a collective tool just like democracy was a collective tool that we now have available to ourselves to use to potentially actually start resolving this problem as a group not as an individual not as a company not as a country not as a savior so one of the reasons why the Cardno project exists one of the reasons why I entered the cryptocurrency space was to explore what capabilities foundational capabilities are required for me to give this tool to people across the world so that they can solve their own problems I'm a libertarian at halt heart there's plenty of socialists plenty of Communists there's plenty of people running around say the government can solve everything and you know what they're very well represented and they're mostly in control over the Western world governments so they have absolutely all the freedom in the world to continue trying to save everyone but there's not many libertarians with a lot of power and now we have something at our disposal this cryptocurrency so what do we have in mind what do we think we can do well first off Cardno is nothing new it's just an extension of the concept of a cryptocurrency and what is a cryptocurrency it's basically a way of accounting facts and circumstance it's a way of accounting value it's a way of accounting ownership so all those problems I mentioned things like property if you can represent money on a blockchain you can represent property on a blockchain and nobody controls that there is no notion of a central registrar that decides who owns what it's just whoever registered and how you put records in and there's a social process to decide what that means but it's not mutable by the local government and they can't be bribed to change records that's the power of immutability and audibility then you look at identity you say well this you can put property in a ledger can't you put identity in a legend sure there's plenty of beautiful blockchain standards that are starting to emerge in great ideas it's turning merge about how to do that and once you have a stable place that you can put identity in a ledger well doesn't that mean you can start talking about are those actors good people or bad people yes you can just like on eBay once you have a reseller rating you can be a good seller or a bad seller right you have good content bad content similarly you can say I traded with Bob and Bob treated me fairly and because you have a financial system connected to it you can do all kinds of things like you can bond say if they screw you you get some money and there's a guarantee you'll get paid and the escrow somewhere else there's there's complex transactions that you can put in and these don't require a government or a central third party like Facebook to decide how that's going to work for lending smart contracts can do all of these things you can basically build an entire decentralized lending system you take exactly what Grameen Bank is done or Kiva's done or any of these wonderful firms that want to go save the world or Lending Club and you can put it all on a blockchain if you want you can even entertain the idea of building a value stable currency something that looks like a cryptocurrency but it's baked to something like the pound or it's the dollar and then use that as a lending asset so all of these things are possible and there are literally thousands of entrepreneurs floating around the world who are very well capitalized they have billions of dollars and they have a mandate to build these things a financial incentive to build these things not because they want to save the world but because if they do they get rich and that's how you know the stuff gets done not when you bet on altruism it's when you bet on greed that's kind of the magic of crypto currencies as they brought this to the forefront so we in particular at Cardinal we said you know first things first for this protocol let's start from bedrock on first principles there was one actor that was not represented in the cryptocurrency movement and it was just amazing to us when we entered this space the Academy of the University before we entered in they had all these small research groups occasionally writing papers mostly scoffing at the ineptitude arrogance and lack of skill of cryptocurrency engineers they would publish attacks they would publish models showing things couldn't be possible but for the most part if you showed up at a cryptography conference in 2014 like crypto or euro crypt and you say I do crypto currencies you know what they would say is say like oh sure get over there it was really hard they didn't take it seriously why because you have amateurs implementing crypto and we've been Bert by this for decades and so very rightfully so people understand that you probably shouldn't do these things and when you have people running around claiming infinite scalability free transactions latency in the milliseconds instead of transaction anywhere in the world and it always clears and there's never gonna be a failure and all the models are right and there's no actual rigor behind it there's no peer review behind him the Academy doesn't take you seriously they throw you out they consider you to be an undergraduate mathematics who thinks they've solved the Goldbach conjecture you're Nord and so the first contribution we made with the Cardno project is we were very humble we went creative Research Center's we went to Scotland to Edinburgh just there we went to Tokyo to Tokyo Tech we went the University of Athens and we set up actual labs we hired a bunch of people people with PhDs and we said hey let's do some first principles foundational research on cryptocurrencies so we asked questions like what is a ledger a blockchain what is that do we actually have a good definition for this do we even know what properties it's supposed to have and we know when it's secure and when it's not secure turns out we didn't actually have an answer to this so wrote a paper about it paper one through peer review then we said okay this proof of stake thing it's kind of funny some people say it doesn't work they say that doesn't work very loudly over and over again do we have an answer to that does it work or not is it secure and under what conditions is it here is it practical it can it ever be fast it did the economics of it work out so we just started publishing papers we published or Boris and scrape and or Boris browse and we have horeb horas browse let's here blockchain from a bootstrap from Genesis OBG and then after that we'll have our Bors Hydra we have a whole list of papers we've written and it's taken me from California and in April two euro crypt and we present these papers to the academic community and you know what's happened they're actually taking this seriously now they're saying wow people are actually taking the effort to show that there are interesting problems to solve we can augment our CVS we can get tenure from actually getting involved in this space it's not all just scams and icos there's academic merit to the things that we want to do and now we've seen dozens of scientists start writing more papers if you look at the amount of publications from 2015 to 2016 the 2017 to this year they just keep drawing up by a curve like this there's tons of money being flooded into the space so that's the first thing is you have to get the academy involved you have to get the adults involved in this thing and you have to actually understand what are the problems you're really trying to solve and they're not just technological problems the reality with crypto currencies is that while cryptography is the interesting part and that it's actually the least important of all the parts because once it's done it's done you have sociological problems you have cultural problems you have legal problems like we all love dows decentralized autonomous organizations why aren't those cool so can you sue a Dow Canada on property maybe maybe not who knows when something bad happens like the Dow owns the chemical plant and it spills into the river killing a bunch of people who's liable for that there's a Bhopal disaster from Bhopal Dow I don't know we don't have any answers to any of these things that's a legal question that's a regulatory question that's a cultural question and there's gonna be a lot of answers in opinions so OTT we go and engage people to answer that thought we can go and engage policymakers to answer that you kind of need to have that notion because it's not really different from these problems of the developing world when a bank says you need a credential to do business with us and that satisfies compliance satisfies kyc and AML know your customer and anti-money laundering wouldn't it be nice to say that this block chain based ID that we've built which is unfortunate which actually has a high degree of assurance behind it which is global in that you can move from country to country and use it is just as good as a US passport or a British passport do you think that there's a technology chuckle solution for that no I can come up with the most secure amazing beautiful thing in the world the government has to adopt it it has to be accepted in some capacity or merchants have to accept it that's a social process ultimately so the first step was that we got the academy evolved and we created a very broad research agenda with Cardona with the help of the Cardinal foundation and distributed futures with the help of our university partners with the help of a lot of independent researchers throughout the community they just came to us and said hey we'd love to write papers with you and we just started writing papers and we said boy that's interesting are we done yet no not even close the next step is you actually have to go talk to people in countries you want help that's a novel idea you know I was in Silicon Valley not too long ago I saw these kids with their hoodies we're going around say oh man this is gonna be so great for Africa I say that you might be right you ever been no I never been it's just insane rich kids in California think they can go save the whole world for places they don't know anything about don't speak the language never been have no material connection to the only way you're gonna change the world you have to go there and you're not gonna be the one doing it you have to be humble enough to let the people there do it so how do you do that well I'm an academic and I tend to believe that most solutions are in some way education related so you go teach people how to use the tech so we said alright let's create an education department on IOH Kay let's actually go teach people Haskell that's the first step gives them a tuned with our stack and then eventually we can talk about blockchain tech and smart contracts and these things but we have to just get used to teaching people so we said let's run a pilot course in Athens because we have a very strong base there to get the curriculum right and then we immediately went to Barbados which structurally speaking is has a remittance culture it has credit problems it has banking issues but we have very strong partnerships there and right now we have a whole cohort of people in Barbados with partnership with the University of West Indies learning Haskell first time it's ever been taught ever in the history of the country that a class of this was actually brought in and one of the creators of Haskell even flew out to Barbados to teach people fill Wadler he's a resident professor in Edinburgh wonderful guy they call him lambda man whereas a big lambda like Superman on a shirt so we sent them out and you know what the next class will probably be done in Ethiopia that's the next step we're already in negotiations and conversations with people on the ground in fact one of the people doing that's even here today his name is John O'Connor and that's just the beginning once we have that model we'll train a large group of people there some will hire some will be able to go on some will get access to capital through venture capital and things like that and teach them how to crowdfund and then they'll be able to deploy software on our platform so that's one side of it is that you have to create a base of people in the country who have an incentive to care and actually understand how the tech works and you actually have to go myself I'm going I was going to go this month but traveling too much so maybe April but now first half of this year I'll go and I'll just keep going back and back and back and till I either I get it done or die so we'll see which one happens first okay but as are we done no no not even close see once you have infrastructure once you have substance in the jurisdiction the next thing you do is you go and talk to the local government they're not mean evil Oguri people and they're all super corrupt and they go from door to door and steal the reality is this is their community they care about their people there are problems and there's certainly endemic corruption but for the most part people want to do the right thing so you go and talk to those people and say you know we all really want to solve this Land Registration problem don't we and they suck or Swee do we say let's run a pilot the advantage we have is we're gonna have this beautiful peer-reviewed technology written in Haskell with formal methods that really is top-notch it's the type of stuff that you would expect to see from NASA it's the best software the absolute best but we can then actually have local people on the ground implement this for the pilot so you say I'm gonna run a pilot program and a hundred percent of the developers are going to be people in Ethiopia for example or Ghana or Kenya that's not something you can do in California can you and that's not something you can do in New York or London you actually have to be there and so you run pilots you say we're going to start putting land registration on a blockchain it's oh that's so cool you know what happens it becomes so much cheaper and more efficient to maintain and manage the government has God why aren't we doing this and there'll be a huge amount of resistance and pushback but eventually you'll get there it's the same for identity it's the same for voting it's the same for a litany of service and features so you kind of grow in that particular direction but then you have to create a financial incentive for people to adopt these things well guess what there's a wonderful economist named Hernando DeSoto Pilar and he writes all these lovely books and articles and things talking about the liquidity crisis so it's not that Africa's poor or South America's poor Irvin as well has actually resource-wise one of the wealthiest countries you can find they have an enormous oil deposits there's a lot of potential there they're just poorly managed so would anybody here give credit to someone no why because they don't think there's gonna get it back would they buy something no because they think that the government's going to seize it okay so this is a credibility problem it's a governance problem well guess what what if you can disintermediate the government the middleman from these types of things and you can tokenize natural resources you can tokenize labor you can tokenize property so you can securitize all of these types of things and you can do it with blockchain tech you can do it with these tokens icos aren't just good for auger and the aren't just good for tokens are because is good for crypto kitties it turns out you can do real things with these platforms so let's go and try that and if you look at Hernando DeSoto pilars work he says if you count the locked up liquidity in these countries it's in the trillions of dollars so it's a great paradox where there's tremendous potential value in places that if only it could be accessed if only it could be securitized if only it could be released and given to the people in some efficient and fair way then actually the poverty would melt away very quickly and these could become some of the wealthiest countries in the world so that's the other thing we're really going to explore as we enter these jurisdictions and we start training people and we do pilots with the government we're going to go to places like for example Guinea or they sell bauxite they have about 1/4 of the world's supply of aluminum go figure and they sell it to Rio Tinto and to China for two cents on the dollar they get screwed you can go to these guys and say hey for a small deposit over here why don't we securitize that and make a futures token that's connected to the total supply of it you say ah but Charles what about these corrupt politicians well guess what we have corrupt politicians in the cryptocurrency space they're called token founders so you what are the token founders get they get a pre mine so why can't we just give the politicians a pre mind with the tokens give them 5% 10% they'll make a better deal I can outfit China with this deal so you can leave some of the corruption and if you have to and you can still actually be much more fair get a much better price and once the system is known it's not my system it's known people know they can make money from it when we started aetherium guys it was at the time the largest ICO in the world 18 million dollars today that would be a failed ICO think about that for a half billion I think have been raised I went to the ICO summit in Zurich just to walk around and talk to people at the time I went last year there were 46 ICO s going on that day and we were one of the first and one of the largest and now it's actually one of the smallest so when people learn that they can raise money when people learn that they can use a tool to enrich themselves what do they do they go and use the tool it's just like being an iPhone app developer as soon as people realize people bought this stuff there were customers to sell to a lot of people went into the field and they did pretty well for themselves so that's the key is that you don't actually need to solve it globally you just need to do a proof of concept you need to show up why it's faster why it's better you need to show that people on the ground can actually solve that particular problem you need to show that you can get it rolled out and make it understandable and then you need to show people can make money from it a lot of money and then everybody says me too and competition drives a tsunami wave of people in including my blockchain competitors if we're successful no doubt Yoast will come in and Boyd and Larimer will claim you invented it and then Tasos will come in and all the others will come in to with their billion dollars of capital and say boy this is the market to go with man I'm excited about this stuff all right okay so are we done yet no no we're not done yet we need to solve two more problems we need to solve the intermittency issue and we need to solve the cash in cash out problem I suppose three the value stability as well so we'll get we'll get to all three of those so for the intermittency issue what does that admit said you don't have consistent internet all throughout places with bad infrastructure so you go and say ah I will solve all the problems of Africa using a system that requires you to have 24/7 reliable internet and power yeah okay in 25 years maybe that's a good idea but guess what you don't have it it was the same from the people who wanted to bring vaccines to Africa had what was the issue well they couldn't refrigerate them so they spoiled all the time so you could pay for them you could create distribution channels you could get them into the right places and you couldn't get the people to the right place as fast enough the vaccines went bad because he didn't have power to refrigerate them just that simple right too expensive to give everybody a generator similarly it's too expensive to go and put fiber-optic cable all throughout the country it'll come in time but it comes as a consequence of prolonged wealth of a nation they can improve their infrastructure so how do we solve the intermittency problem well there are two ways you can do it one is you don't solve it but you still get away with it and the other is you solve it cleverly so the don't solve it but get away with it part is to say wait wait a minute here do these transactions really need to happen online no they don't so this is a cellphone anybody here have one a few people okay well guess what Sony and all these other guys they apparently like this thing called copyrights and software licenses and they want to rent you movies and stuff like that and when you have DRM it's real hard to do in software so they said boy wouldn't it be so cool if we built special circuits in your phone for DRM and we'll it'll wrap it in security and everything to make it more consumer friendly but you know basically it's I want to do key management so when you rent a movie the decryption key deletes in 24 hours simple concept big economic incentive to get it done correctly so what if those circuits were programmable what if other people could use them and guess what you can it's called Intel SGX it's called arm trust own these hardware secure modules exist and here's what they allow you to do it's hardware that can't lie so when you run code on it it's just going to run the way it is and it's signed by the hardware vendor not by you so you as a user of the don't have control over how that code executes trusted hardware is really amazing like that well it turns out that we could repurpose trusted hardware to do offline off chain transactions well how would that work well here's what you do you create a special address on the phone you load it up and it's basically one-time use and then when you want to transact it you move the private key to another trusted Hardware Enclave and once the transaction settles the key is destroyed on your phone another person you've sent it to is the only person with a copy so from the blockchains perspective no transactions happened it's as if nothing occurred but what you've done is you've move access from one device to another device and the device receiving gets a guarantee of uniqueness and a guarantee of destruction and this can be done over Bluetooth so that means anywhere in the world you can have instantaneous settlement movement of funds without being online and the party receiving those they've actually received the money and it's totally anonymous think about that trusted hardware lets you do these things it's pretty magical like that so that's one way of solving it so we set up a trusted hardware lab at University of Edinburgh and we'll make an announcement about it soon but boy it's real special we got some very good people there and we're doing it in partnership with several hardware companies and we're gonna dump a bunch of money into it but the beautiful thing is once it's done it just runs on your phone it just runs in your laptop because these capabilities have been given to us by arm and by Intel so that's one side of it is solving intermittency through offline off chain payments but it would be nice to have internet connection if anything because there's a democratic element to these systems you'd like the vote we'd like to do these things so why don't we give people a second internet called mesh nets you can do that or you can use satellite uplinks block streams experimenting with this so it turns out that apparently it's getting cheaper to launch things and it's apparently getting cheaper to rent satellites back I'm gonna apparently it's getting cheaper to connect to these devices that for not a huge insane amount of money like 50 to 100 million you could get reasonable satellite coverage of most of the impoverished areas of Africa as an example Tasos has raised what a billion euros the same so these are in striking distances for our projects given the capital that we have at our disposal in the market capitalizations that have been granted to us people say why is Cardinal worth as much as SpaceX well I guess we have to go and do a SpaceX thing if we're gonna be worth that much so guess what these things are in the striking range and once you have that it means then you can talk about being completely off the grid just connecting pretty much anywhere you'd want to connect relaying transactions into these networks and because their proprietary because they can have custom hardware well that means you can put all kinds of cool things in you can put trusted hardware in the satellites you can put rina native support into these things so you get all this beautiful second Internet crap it just makes it magical so one of the goals of the Cardinal project is to explore things like mesh nets and explore things like satellite connections with partners and some local innovation to figure out how are we going to resolve the connection issue we're not the only company in this space there are dozens and there's dozens of really good ideas that are being proliferating and UAB tests them and the advantages guess what we're already going to be in the jurisdictions we already have local partnerships we already have government relationships by the time we get to this so it's real simple for us to go and run this in five ten countries and see how it works out and if it does we have an economic incentive to continue to roll out now the other problem is cash in cash out what does that mean well you have this thing called a Bitcoin and have you ever tried to actually buy anything with a Bitcoin here in England anybody actually buy something with a Bitcoin show of hands okay there's a few people in a relatively well-educated cryptocurrency friendly audience in London who have actually tried to use a cryptocurrency to purchase something so outside of the economics of it you're just not going to get efficient exchange for these crypto assets if you send them to people in countries so for example if you're in the Philippines you're in your Manila and your daughter's in California she sends home $100 worth of a crypto to you every single month she gets it that's great now how does she convert it to pesos who does she go to the local Bitcoin trader in her neighborhood yeah there you go some hustlers man right and what rate do you think they're gonna give her and she can get robbed okay yeah so that's one of the fundamental problems is that even if we have the second parallel beautiful crypto economy worse left with two options one is to grow so insanely large that people just start accepting it for products and services we might get there that's going to take a while the other way is we could go about creating exit points what are those exchanges ATMs these are exit points make sense so how about we do this how about we go and invest some time effort money into building a really low-cost ATM that can operate off-grid that can act as an open source exit an entry point for people who want to trade and let's try to get it under five hundred dollars for the price point to build one deploy one get it installed that's a sweet spot if you do that I can put a thousand ATMs for a half million dollars that cover most of a country for most places if you're strategic about it okay so once you have that then it can run off grid once you have that it can act as a lending point where people can withdraw money and for a microfinance loan it can act as an identity hub or it can create cryptographic credentials and sign them up once you have that it can act as an exit an entry point and you can partner with networks of traders and market makers to give people the best possible price on the assets they're selling relative to the local currency and I won't a have to own them you give them the small business owners well who are these small business owners well they're the relatives friends and in some cases students of the classes we host and of the meetup groups we set up it's very simple and for them it's just another product for them it's just another thing to make some money from so that's an example of how we can go about thinking about the cash in and cash out point well there are regulatory issues there's infrastructure and logistical issues so it's not an ideal solution but once these things exist they can service at least some subset of a population who in turn can actually act as local traders kind of like local bitcoins in that respect and you can at least get slightly better cash in and cash out points and they're sufficiently cheap that I can deploy thousands of them without breaking the bank and if you have satellite connection that you can connect them directly there and they're online 24/7 with a very high throughput with Reena and trusted hardware you get hundreds of thousands of TPS on these systems for a network so that's the that's the cash in cash out point now there are other firms that think about this like VIP ASA and you know this is a big topic at Davos and so forth and again we're not the only player in the space but the goal of cart danau is to try to meet these aspirations and goals with academic rigor all the things I mention are things born of science we can start there we can start with the cryptography we can start with the distributed systems theory we can write papers and work our way gradually up to the actual hardware and work our way gradually up to the social processes and then it's just a matter of experimenting it's just a matter of playing around and getting good allies and having fun with them when I start in the Bitcoin space guys there weren't a lot of people I've been in this game for a very long time and guess what when I had my first Bitcoin meetup group well the first one no one showed up it was three people registered nobody showed up the second one five people showed up and two of them really hated each other and they sat in different sides of the room and look how big we've gotten in just a very short period of time because people get it they're in charge of their own destiny now their own property their own money it's pretty magical when you really think about it this idea of having a payment system that no one owns and by extension a voting system that no one owns in a Land Registry that no one owns that's magical and so we have a moral obligation to try to explore and proliferate this technology to as many people as possible because then at least somebody is going to figure out how to get it to everybody now the last problem is the most difficult it's one we actually as an industry don't know how to solve yet and that's the value stable currency problem and this is the most common complaint amongst anyone who actually knows what they're talking about they say Charles bitcoin will never stabilize it's kind of like gold it's a commodity and in certain price respects you have relatively stable supply at any given time and demand is all over the place of the price fluctuates right so it's some pipe dream that somehow magically off into the future off into the distance that Bitcoin will achieve some low volatility much lower than the dollar it's not going to happen not with the way the supplies function works so you can't do credit with it why well as an example Bruce you're gonna be my volunteer for the day we're gonna go back in time it is December 30th 2012 okay now I need another volunteer and show of hands okay you guy what's your name Alex you got a phone okay so look up what it was the historical price of Bitcoin December 30th 2012 and so the interest of time while you're calculating I'll estimator I think was around $10 okay Bruce so I make a deal with you I say all right I'm gonna give you a 10 Bitcoin loan are you ready to go okay all right you got to pay me back 11 bitcoins as of December 30th 2013 no that's not too bad maybe 10% okay so I think the price of Bitcoin was around $1,200 at that point yeah so how did you come out on that loan so he said oh well this this was yes sir well hang on well it's a Q&A it's coming next so we'll talk about that so then you say ah well we'll go in the other direction well let's go to December 2014 obviously he's still winning right no the Queen went way down it's like two hundred three hundred dollars okay so it you lose in both directions with lending when you have an asset that is unstable so you can come up with schemes like you say okay we're going to create an overlay asset a derivative some party takes the risk the other party gets stability like a contract for difference you can create central authorities to issue value pick currencies like together and say okay yes we promise we have the USD ask our auditor when we get a new one you can do these types of things sure but at the end of the day would be so nice to have an asset that's just like Bitcoin it's this centralized there's no promise but it has a reasonable degree of stability so that when Bruce enters into that loan he knows that he's repaying with relatively stable value that is the hallmark of modern economies economies don't work when you don't have credit because you can't buy things that you need to buy to get ahead in life you can't buy an education you can't buy a car you can't buy a house you can't buy heavy equipment you can't start a business the basic things you need to do to get out of the cast your in into a higher caste you can't acquire and so it's no coincidence that in countries that have unstable money the social pyramid is a true pyramid there's a few people at the top who have no need for credit or can easily get it because they're the powerful people and everybody else can't and so they can't get ahead in life so that's the last mile of cryptocurrencies and that's the one thing Cardno hasn't quite gotten a good strategy or philosophy around because it's an industry-wide problem now we've seen tons of ideas there's maker Dow and for lending there's things like salt and when I was with bitshares bitusd and then this steam dollar came later and everybody has their favorite solution their favorite idea about how to do these things but you know what what we entered into space in 2015 we didn't really know about consensus we said we think we know what a blockchain tends but we're not so sure and we think we know what proof of stake is but we're not so sure so we aggressively wrote a lot of papers and now we have a really good idea about these problems so we're starting a research agenda this year about value stable currencies and that's something we expect it makes some headway and progress on by probably next year but it's the last part of the system you like some of the infrastructure you get the education you get people into the jurisdiction there is no silver bullet it's just a series of experiments it's a series of hard work and hard labor and it's a serious travelling and meeting people talking to people getting know their stories there's no difference so that's what Cardno is going to do for the developing world and we are already starting to do is that we're thinking real hard about how can we make the crypto work best and we're thinking real hard about how do we make this platform scale to a huge size so that when we get the users we can support them and then we have education initiatives Hardware initiatives all these things that we're starting to roll out that we think will help solve problems like caching caching intermittency and eventually we hope to be able to solve the hard problem of value stability you know even if we don't people know it's a problem to solve someone will get it done so that's Cardno for the developing world Cardno is a project in general for those who don't know who came and said god he's been talking about Cardinal for 40 damn minutes and didn't even tell me what it is it's a cryptocurrency see and it's a cryptocurrency I which K's building working with the Cardinal foundation emerge go and others and we're building in a very rigorous systematic way and a wonderful language called Haskell and with formal methods and we have some great engineers here actually if you want to talk to them after the presentation who can tell you a bit more about how the tech works and so forth we have a wonderful website called Cardinal hub org you can go there and learn more about the project and you can always follow me on Twitter so here begins my favorite part that QA thank you guys so much for your patience and listening to me ramble in my extemporaneous presentation I hope it was somewhat good and I'd love to have your questions thank you yes sir thank you so you introduce yourself first right my name is cliff okay I'm originally from China I've lived in London for since 2003 so my interest is about China since you talked about developing countries which China is the biggest but I think China's different from those ones you talked about Chris it's got Internet it's got banks and it's in some to some extension it's the high tech is even more advanced in China than some of the right developed countries so you can pay with WeChat yeah exactly yeah so you don't need to use cash you don't need to use credit card it's so a mobile payment and there's the share economy so there's huge power from China as well because if you see look at that like top three exchanges in the world like three of the top five are from beautify Chinese people they're not necessarily based in China for example Hong Kong or Tokyo right yeah and so right now it's very like everyone's asking what's going to happen in China next you know they've banned ICO and and they basically I've got lot lots of friends for interest in this and this but putting so much money but they are not sure so what is your view of this and I especially in the long term what's going to happen in China right opinion and I suppose I should have an opinion on this because the HK and I which K is Hong Kong so we might have some knowledge of the jurisdiction I don't know I don't promise gay chat is a difficult nut to crack and as a non Chinese person it is a very alien culture to me I tried very hard to understand these things like I I went and watched this whole lecture series on the history of China and I learned about the Mandate of Heaven and all the dynasties and so forth and I said I understand China and then I go go to Shanghai and I'm like no I do not so that's the first part is that China is going to decide its own destiny it always has throughout all of human history that's the one country that seems to have the right to do that and China currently has a government that likes to have a tight grip of control over the financial autonomy of its citizens so they're okay with WeChat and they're okay with the People's Bank of China issuing its own cryptocurrency because at the end of the day there's a a change function at the end of the day there's a KY CML component the end of the day if somebody's doing something they don't like who is disruption cultural harmony I think is the term that they can address that issue in a very Chinese way so and you can infer what that means so you know it's kind of funny because I saw the same thing you saw I saw the surge of Chinese exchanges and Bobby Lee any other guys they were doing very well we shall always doing great they were making a lot of money man and and I said you know we're not gonna go into mainland China and all my competitors thought I was crazy they said oh come on man you're right there it's across the pond go do it so well yeah but what happens when they figure out they're gonna fake capital controls with this and it's not just politicians doing it it's actually everyday people sending it to their cousins in Toronto who then sell the Bitcoin yeah it's not gonna last too long the other thing is they have this thing called the Great Firewall yeah they like their big walls there they went from physical to digital Trump should learn some things so so what do they do well that wall can filter Bitcoin traffic you can filter a cryptocurrency traffic and the other thing all that mining power can you guys move a mining pool easily is it simple process so you just like grab the miners and take them in the middle of the night you know Washington style you know moving as troops fleeing fleeing into no no you can't it's hard to move these things and they often run off of stolen or subsidized power so it's a difficult question of what is gonna happen there if I had to guess hazard a guess what's gonna happen is that state-controlled industry will nationalize the exchanges and they'll reopen that's the first step is that there'll be a transfer of power maybe some of these guys like Bobby will stay around but they'll stay around with a new member on the board who happens to be connected to some Bureau somewhere KY caml we'll get much harsher and they'll get a much cleaner clearer sense of who are using these currencies and then there'll be some form of a social stigma that they silently pushed their way through and for a while the innovation will do what it always does China doesn't give up they just go into the shadow still they'll do it in Macau and they'll do it in Hong Kong and they'll do it in Japan and so forth but this technology has a great way of teaching people things you know when Bitcoin came out everybody thought it was crazy they said these magic internet tokens that aren't backed by anything created by an anonymous hacker on the Internet and you want me to buy it they give you a look like you're a green-eyed monster now the question of can a Bitcoin have value is a silly one of course it does everybody agrees that in fact so much so we have Forbes with crypto billionaire list yay right we just all assume these things have real value but there's still the same magic crazy tokens they were ten years ago but somehow they just changed right so it has a way of changing people's perceptions about money it has a way of changing people's perceptions about how money should work like why do we have capital controls what uses it to you to have a capital controller you'd have a capital control not so much it's a limitation of your freedom for that greater good right but if you don't have to follow the greater good well people just don't and so I think what's going to happen is we'll have an underground economy that will run kind of like a pachinko style economy and it'll just do its thing and it will continue to fester and grow and fester and grow and this generation of leaders probably will deem it very harsh but eventually there'll be a sea change there was in China used to be under Maoist philosophy and then they decided to become cap in their way and eventually China will embrace it and they'll do it in a very Chinese way it's different Chinese way than the other Chinese way and it'll end up becoming a powerhouse and I feel that China will in the long term be one of the strongest cryptocurrency countries around but if in the next five or ten years it's going to be dangerous if you're a Chinese entrepreneur and cryptocurrencies you have two options you just don't make a lot of noise or you move and you live in exile for five or ten years but that's okay it's how the world works and they'll watch South Korea and Japan gain greater prominence and greater competitive edge they'll watch lots of cool innovations and technologies come out in those countries and not in earth and eventually some people will find ways to get it embedded and once it's there it'll be there forever and the good news is that everybody uses a cell phone so the adoption curve will be very dramatic next question Wow whoa all right Tom you got a heart decision all right Magic Mike my name is Lucas I have a question you mentioned you can make transactions on card on Oh is there any fees involved when you make a transaction on card Anna yeah that's a great question so do transactions need fees or not and we get this question a lot so transactions always cost a fee always but when you hang on my tree to talk now yose transactions always cost a fee because somebody has to store the transaction somebody has to broadcast the transaction somebody has to process the transaction is energy free our CPU is free is network bandwidth free is hard-disk space free no so the question isn't is it free the question is who pays and we had this debate a long time ago with credit cards with credit cards there's a processing fee for accepting a credit card so the first question is should the customer pay that or should the merchant pay that that processing fee it's a good question right but the question is like those days you can send an image you can send the voice message you can send an email for free hang on hang on you're not you have to pay to access the Internet and somebody has to pay to store that email so how does Gmail do that by having access to all your emails and reading all your emails and being able to serve ads to you so how is that free you if it's free you are the product that's always been the truth so how do we pay for with you so are these other guys they pay for it with inflation somebody at the end of the rainbow gets compensated with it or it can build a business model for it but they have to pay out of their pocket some way or another now you can also do it with transaction fees but here's why I think this is such a silly silly thing it's not a USP it's not a competitive differentiator you know how I can reset transaction fees in card ATO one parameter it's not hard so if there it turns out another model is more competitive for adoption which so far it has not been the dominant transaction system is Bitcoin is aetherium then we can just go to a felis model where we compensate processing using inflation as other people do it's simple to do this it's not a USP the second point is that you have to understand that this is a more complicated issue than just interaction with business there are all kinds of non-financial transactions that people would might want to do let's say you want to use the blockchain as a storage broker like you want to put a check point on the blockchain should you just be able to do that for free and put kilobyte here kilobyte there kilobyte here is a decentralized network so but but here's getting dusty it goes to the people who maintain the system and also if you have a Treasury it goes to the system itself that's the other point of transaction fees which are so nice inflation always hurt you my grandfather bought a house long time ago for $5,000 how many people here can buy a house for $5,000 in Detroit maybe it's not gonna be a good house okay but his house was great 2,000 square feet half acre land beautiful white picket fence the American Dream why can't he do it anymore because the Federal Reserve debates the dollar and eroded all of its value over an arc of time so if you achieve global large-scale adoption and the only way to sustain the system is to print money and print money we already have that it's called the dollar why would we want to embrace that kind of an economic system it's better it's managed by a big army there's like good people behind it it's not decentralized Network kabuki so that's my first point but I could be wrong and I free technology yet actually the credit card example I was bringing up supports the free list transaction model the consumer doesn't pay the merchant pays and that model worked so maybe that model makes more sense there's a reasonable philosophy behind it but to me if I'm gonna have a Treasury paid for by transaction fees and I don't want it to base my money over and over and over again it might be good to embrace some zero economics where when you do something you consume something as opposed to debasing everybody's money equally the people who use it should pay now you also can build overlay protocols which have free transactions it's entirely possible to build something like lightning and allow a person to use these types of things and live in these types of networks and create special hubs that when you send money to them and back they're free I can build a special transaction type for that so I can say this is the slow high fetal Minh system and this is the high speed free system that people can use subsidized through some other methodology may be a compromise of privacy in facebook get your data or maybe inflation there's plenty of ways to do that but the point is it's a nuanced conversation and it's one that comes out of market dynamics and it's one that comes out of empirical evidence after you roll out a system and once you do that if you're wrong you change and everybody software is supposedly open source so you can borrow whatever innovation your competitors have as they can mine and if you're right okay you keep it but that's the point about this and I think this is what people miss about the economics of these systems they're not set in stone the payment models aren't set in stone none of the things I come up with are right the only person who gets to tell me if it's right is you the audience the market over an arc of time based on the price of the token the adoption of the token the utility of the token the merchants who have adopted it and used it there's been the world is littered with beautiful elegant protocols which are more right than the ones we use for example PGP it is great encrypted email it's free to use right under that mall we should use it but we don't why it's too hard who is controlling actually the that's a good question so how do you have decentralized governance and this is where it all stems down to the problem that hasn't been solved in the cryptocurrency space yet which is one of the planks of Cardinal the sustainability plank is the idea of sustainability Treasury and voting on changes to the system so who should vote well the people who own the system ie the people who have the tokens create a democratic system that people can propose changes to the parameters of the system whether it be block size or it be transaction fees to go to a fee system or felis system and guess what Charles Hoskinson can lose that vote if it's truly decentralized you don't need me and I shouldn't be able to influence one way or the other similarly if you have a Treasury component connected to it which is filling up from those transaction fees that money now is a toll for the common good of the system it's a toll that allows you then to reallocate funds to subsidize development events competing clients research all of these things without having to do an IC o---- and trusting a central entity or without having to result to believe in the beneficence of man and hope that somebody's just going to donate a lot of money to solve your problems if you're going to build a serious global scale system with billions of users that system by definition needs a decision-making system within it and that system by definition needs to have a way of paying for itself and if it doesn't you're dead in the water because you're gonna get them anyway but you're gonna get the wizard behind the curtain the dictator who actually controls the whole thing and that's what we have right now we have a shadow banking system we have all these central banks around here that we don't elect and we don't have a lot of control over who make decisions that we're not even privy to that control the value of our money control the price of our credit whether our country fails or succeeds we don't vote for them but they're there and we feel them so the magic of cryptocurrencies is we get the same system in terms of utility as the old system if not better and I argue it is better but it's all out in the open now and you guys control it not me I just pushed the first domino that's it and it's a cascading reaction next question hi Stefan thank you for thank you for your time this evening I've spent the last decade and in the FCA regulated FinTech industry okay in London I'm so sorry how is compliance for you I've learnt to love compliance one of my specific areas of interest around blockchain and crypto is how can we launch build launch you know one of the world's first FCA regulated businesses whether it's financial transaction processing on the banking side trading side in the inshore tech space or even other solutions are the crypto based solutions like you know a POS solution ATMs and speaking to the different vendors at the moment I'm trying to see how we can create the bridge and go to market and go mainstream under the umbrella of the FCA can you please comment on some of the challenges you've seen oh you're seeing in this area and how as an industry and I would say the 2.0 of FinTech how we can address these issues and go to market that's a great question and actually get two answers to that question one that comes from me and there's Michael Parsons up there who's an expert with British regulation so he either today or later or during the the meet and greet you can talk to him okay so I get this question a lot and what I think about is what happened in Switzerland because that's my personal model so when we came to Switzerland with aetherium the percentage of Swiss lawyers the percentage of Swiss bureaucrats that understood Bitcoin was like zero you go and ask them what is Bitcoin they say I read some stuff in the papers didn't that used to buy drugs for something it's like we started from there that was our that was our model okay it was stuff okay so what do we do well we found a lawyer in that jurisdiction who was very well-connected named Luca Miller and he runs him many partners and Luco was a trooper man this guy had a soldier mentality he came in and he said teach me everything about crypto currencies I want to know so we start with Jerry brudos papers and we just went through this whole thing right and he come in everyday like four hours a day and then III had this panic attack about a month into it cuz I just dawned on me I was walking to get something to eat I'm like oh god are these billable hours oh no four hours a day Pramod Swiss lawyer I'm ruined okay I thought that and then I said oh you're billing me for this right oh no no he did it of his own free time oh the partner the M in Mme one of the amps I think it's the first - the second I can't remember well anyway so what did Luca do he just kept chipping away and he created a self-regulatory organization then he kind of helped create Krypto Valley by advising a lot of people and so forth and then fin ma came to him say hey you're the guy who really knows what's going on amongst a few other people and they say write up some guidelines for what is a security token what is a utility token you know how do we figure out this whole ICO thing how do we figure out compliance and so he did and guess what if you go to Coyne desk you can actually look at the fruit of those labors now we entered in 2014 and it's 2018 this is for years for a conservative banking country that's extraordinary speed it's small okay and there's value and they want to you know replace displaced industries because of global changes but at the same time it's an inspiration for how you do these things you start by educating the well-connected the lobbyists the politicians and these people who have an open mind then you lay out well what is the value proposition for you the regulator why would you care about this well okay you know that you're gonna get time-stamping for free you're gonna get auditability for free you're gonna get immutability in your records second you can even have a discussion about transitivity with AML which is notoriously difficult okay and as an example I love doing this I brought a dollar with me because I love dollars all right Bruce here's what I want you to do I want you to go ahead and take that dollar and just pass it all the way down just starting with him and just hand it to your neighbor behind you and then make it you and then come back for it and he'll eventually get it maybe I'll get my dollar back some presentations I do some presentations that don't never present in France I'm kidding Vincent I'm kidding all right now pass it for it and come on now this is another way waking up the audience it's a parlor trick keep going we're almost there I should develop like a cool joke or a story I can tell well the dollar is being passed next time I do it I will I'll tell you about the three-legged chicken well ok didn't get to the right person but that's all right all right so here's what I want you to do well that's another failure of compliance tell me every person who touched that dollar exactly and what if one of those people was a bad actor who was a politically exposed person or associated with in a bar code country or something like that well guess what with Bitcoin if that was a chain of transactions we'd have that whole record would we you know we would okay so the game is a little different with the flow of money when you're talking about a blockchain based system than when you're talking about cash or even digital banking because these records are siloed so that's the next step is you start showing them examples like that and the wheels start turning in their head and then they start realizing that they get much more granular control they can also ask things of entities that they don't necessarily have total dominion over you know big buzz words Bank of England had in 2008 and beyond with macro micro-prudential policy why because we Americans kind of destroyed the whole world financial system we do it a few times you know is we said hey we hadn't done in a few decades let's go back to it and guess why they said well we need to solve systemic risk what does I mean you need to see the ledgers of everybody to know who is over-leveraged right why is everybody gonna give you their ledger no no not gonna happen but what if you had proof of solvency what if you had real time continuous auditing what if you had private Ledger's but you could query things about the ledger like it balances or you know the level of exposure do you think you can get other countries to adopt that and share that amongst central banks and so forth of course you can because it costs them nothing just upgrading the technology so the fact that compliance can be done in a much more automated way you have the whole transaction graph the fact that you can have it look at someone's books without actually seeing the books and getting proofs that certain properties are there once they get that then it's no longer a question of do you want it it's a question of how do we get it and that's exactly what happened in Switzerland it was a series of conversations stemming from this is all about buying drugs with cypherpunks in Eastern European criminals too we are now going to be the first country in the world to actually talk about utility tokens in a very serious way and create regulations or at least advisory or clarification about it that other countries will start copying that's the first answer to your question I think the second answer is a bit more nuanced and delicate it's a answering of sandboxes no one wants to be the first mover but if you're a small country and you have the whole world against you you have to be if you're Gibraltar Isle of Man Barbados these types of places you have to encourage somebody to come out and it can't just be the warm sunny beaches because the man doesn't have them maybe you like motorcycles I don't know so what you do is you say we're gonna be a regulatory sandbox and we're going to give you some special features well that's not like alone and isolated the FCA watches that fin if instead watches that the sec watches then they see what are the outcomes you collect the data and you see did good things happen did bad things happen did systemic risk happen etc etc and then you use that as another part of that story one is a capability story and what is an outcome story you combine those together with the right connections and you can change things now one of the reasons why I like the developing world is that it's not a rigged game but it's rigged in America you know Obama got elected I was so excited I said these bankers 60 Democratic senators and the most socialist wave we've had since the New Deal my god the things that Obama is going to do these guys it's going to be an inquisition I fully expected to see guys in red robes marching down Wall Street you know holding the grand inquisitors there to burn these bankers after all the incredibly illegal things they did emails saying we know we're selling them bad products ha ha ha emails from Goldman Sachs and Chase public record not a single one of the bastards went to jail and their reward for blowing up the world was to get more money by getting bigger or getting golden parachutes you can't tell me with that administration the political leanings of it the populist rage against the things they've done that this is a fair game and then it's it's built for us it's not so you can't compete with these guys you can't how you compete with them is you go ahead and you go to a country that doesn't have it that they don't care about it's not that they're racist and evil it's that it's a cost per customer the reason why there's only 2% of people back in Cambodia is because the value per customer is lower than the cost of banking the customer so they don't expand into the market but if I can go and get 2 billion people into a new system that's free fair transparent democratic and it's not controlled then the only way to access that now humongous wealth is for the legacy system to change itself and grow out of where it's at and you can say no to me you can't say no to 2 billion people that's a revolution so I think that's the long-term solution for all these things the short-term is embrace sandboxes it's to educate people about what you can do it's to show people the success stories and you're gonna have small victories like now you can do a security token and you can do it with reggae and sell it in this t-zero sandbox or something like that huzzah great Silicon Valley has yet another fundraising mechanism but if you want true progress you're gonna have to look to more ambitious Browns as we are doing with Cardona next question Tom did I tell you I'm a political firebrand did anybody pick that up gather that I'm very not very conservative hi Charles thanks for the talk is really interesting so far I hope I'm not rambling too much no no it's a story behind everything it's awesome okay so we took we know a lot about how the blockchain is immutable how the information once it's on there is secure and what we're missing is how do we how do we filter the information that goes onto the blockchain in the first place you know what are your thoughts on making sure the quality of the data that goes on there in terms of title deeds when we're talking about land or identification you know who is actually the gatekeeper making sure that all the information that goes on there is is valid in the first place right the Oracle bootstrap problem yeah how do we how do we actually know that the record and the chain is correct so I can go in and say that Bruce Springsteen wrote purple rain and I can put that as a record in a blockchain and guess what for the end of time the blockchain will say that and maybe thousands of years from now and the far distant future it's the only archaeological thing left and Bruce Springsteen unfairly gets gets credit for a writing Purple Reign right so it's not a question of just can you safely store the record and the record immutable and auditable it's how do you know the record is correct to begin with so this is a multivariate problem you can solve it many different ways one way is to say I trust Bob Bob is amazing so in addition to the information that's being appended to the chain Bob shall sign it as an ax tester and say this is correct and that usually is done with identity so you go and identify it with Estonia or your favorite source and they say yes you are who you say you are I saw your passport I sign it and then it's referential who the hell is the guy signing it so you have some sort of root of trust or identity and that's how the internet basically works how do we know google.com is Google there's a certificate authority this DNS system there's a way of sorting out who's who and we trust I can and we trust the CAS okay so that's a practical system it scales to billions of records as we've seen with the internet but it admits some degree of centralized control which potentially could be resolved through Federation okay another example is a probabilistic notion of correctness where you say ah this is what augurs trying to do is pca ah okay okay i have a data feed here for the price of bitcoin and a data feed for here for the price of bitcoin on December 30th 2012 by the way did you ever get that for me what was it $32 I was awesome off my factor a three shame on me 32 well Bruce you got out a little bit better I'm sorry okay alright so we have a probabilistic notion where he tells me something maybe she tells me something and we wait it and maybe we figure out the composition is the version of truth whatever that means okay so that's another way you can go about the problem now one of my favorite ways though and it's seldom discussed it's the idea of trusted hardware it comes up a lot in IOT so IOT is real sexy I mean if you want to get money in Silicon Valley here's what you do you walk up and be like dude I I've got this social IOT machine learning blockchain product and they're gonna they're gonna be like whoa I don't know what it is are you gonna do an IC o---- we've already done an IC o---- whoa add an airdrop to Bitcoin it's called Bitcoin God it's actually already taken by Chandler Wow so anyway where was I so trusted Hardware trusted hardware well guess what well trusted hardware knows where it's at and it can't lie so when you enter a geo stamp say I'm in America you can actually have your trusted Hardware sign that and it can impend a chain and you actually know that the phone is there there's a lot of conversations about how do you create records when humans have incentives to lie when humans have incentives to manipulate and usually it involves finding a trusted party finding a federated party getting a probabilistic notion of truths or disintermediating the truth telling to a trusted device that can't lie in some capacity now those are your four core options for these things so you also have social pressures so let's say that example I opened with this idea that somebody lives on some land for two generations he's been there forever that dude's got neighbors and those neighbors under my system would be identified so they would contest the property ledger that the government claims to have and all the neighbors would be able to do that digitally at a very low cost cuz they're all on a cellphone right and they'd be able to say hey we're identified you know we live here and we've lived next to this guy for two generations he owns the land this other company there was no transaction none of these things it's a false record and then you can build decision systems within your system that say is it right and you can even have a point scale this many points then the record is accepted as trusted Bitcoin actually works this way if you think about it it's a probabilistic notion of immutability it's not absolute i send you a transaction there's theoretically like amount of atoms in the universe theoretically a chance that somebody could have built an alternative version of history after you know sufficiently many blocks they could have done it because they had a secret blockchain they were mining in their closet and they had enough hash power for it or something like that you know so there's always a chance that you can unwind history but at some point it's like good enough you know and I won't tell that story that one's too now ok I won't tell that story so anyway that's uh see my PR person Jane she's all like thank god he's learning alright so anyway that's the best I can give you that's the best non answer I can give your question those are the four things you can do and we can talk about particulars later next question Wow lots of hands this is fun that's John O'Connor by the way he's the one Ethiopia hey John come up here you're introducing yourself real quick everyone supposed to be here sat and standing up with Charles Charles talks a bit about the work which we're doing in developing countries and how card are know is it's gonna make a bit of a difference there my role will be to fly off to Ethiopia next week start negotiating on some of the contracts and some of the work that we've already begun but where we're hoping to make a big difference and we're very excited thank you nice shot and of course he has to have an Oxford connection because we have a bias there personally I prefer Cambridge but we just keep hiring Oxford people for some damn reason okay next question hey my name is Alex I'm a master's student at UCL and following on from the main theme of the talk I was just wondering as to what sort of research is going into ensuring the funding for state-run institutions in these countries you're working in isn't being damaged by the kind of tax evasion properties that come with crypto currencies generally so the problem is that's another one of those multivariate problems so you you have an issue of chronic starvation via under taxation people just simply who have an obligation to pay choose not to pay either because they're geopolitically in a position that they don't have to or they hide it abroad or they just simply hide in general guess what there's nothing new the American Revolution we won that one the American Revolution was plagued by this problem we would have what a long time ago if not for the fact that our army was chronically underfunded so much so they ate their own shoes because why well because the states were not collecting enough tax revenue to fund and field an army so there were technically taxes on the books but tax evaders and profit ears would just simply not pay and so that meant we had to slog it out for seven eight years and have a heck of a lot of fun freezing every winter and having a third of our army dissipate every year it was tough and it's absolutely no different hundreds of years later in many jurisdictions where tax evasion is common well in my view I think cryptocurrencies in general are going to fundamentally change taxes in that it's going to become harder and harder and harder to know how much you actually make if you're talking about a system that has strong built in privacy and talking about a system that I can remember twelve words and walk across a border with a billion dollars guess what income tax doesn't make a lot of sense because the people who tattletale on you the banks who have to file SARS and have to report their Ledger's to the regulatory bodies they don't exist anymore when you've disintermediated them so it's just you and your government and on our system so I believe what's going to end up happening is we're going to move to alternative taxation systems things like consumption taxes things like supply chain taxes you know higher property taxes these types of things because you can't really move land you know merchants generally comply they can't really relocate themselves those are generally going to have a higher compliance rate in my view so in America we keep talking about the Fair Tax and I'm sure every country has their version of it but I think crypto currencies are going to be the straw that breaks that camel's back the unintended consequence of this is that you no longer have in a system where you actually know how much people make which is pretty magical now what can we do to ensure that money's collected well what we could do we're not going to do this but what we could do is build a central bank token and force people to use the central bank token and put in a backdoor into the token that tattles on all the people and the government at any time has a global ledger connected to identity and they can just query a person and they'd have their entire financial history that's what PBOC is doing People's Bank of China that is their goal is to know at any point whomever they want who that person is their social history their financial history their voting history and then you can throw ml at it and then you can say who's the cheater and who's the bad actor and so forth I believe that this will be 1984 if we go down that road so I think there's a trade-off here the things you can do to make crypto compliant with income tax over the long arc will also inadvertently build the capabilities that could institute a tyranny so we have to make a philosophical decision are we okay with a bit of evasion are we okay as a culture with a bit of cheating for our privacy in our liberty or do we want to get rid of all of that for our safety and for the good of the government you can't have it both ways there is no silver bullet that somehow is going to make all of this stuff work just perfectly you can build better systems where you federer control and you have checks and balances and you know what an intelligence collection we tried to do with the FISA courts after the Pentagon Papers and after the church committee we said we ain't here to reform the CIA we need to reform the way we collect intelligence because it's been abused by powerful people and those are never again will we see the Intelligence Agency spying on the American people and we go to Bluffdale and they built a 50 megawatt power plant just to power all the hard drives that store all the information they've stolen from us for Yoda bytes of data harvested from Facebook and Google and all these other things by the intelligence agencies for our safety and you think they can't query that to find out who good people aren't bad people are I don't like it I think it's fundamentally against human rights and I think it's a recipe for disaster on the other hand total anarchy is a bad idea well guess what you don't have to take one or the other you can embrace crypto currencies which have rules they have laws it's built into the ledge here it's built into the contracts and then we can have a social discussion of where of that spectrum we want to live and how much privacy ought we to live what I can do is create more capabilities I can write papers and implement protocols that give you maybe a little bit for example if you want a backdoor I can build backdoors using quantum cryptography that are one-time use that's within the realm of that technology so maybe that's a fair compromise you can build backdoors that tell you if something's been tampered with publicly if you ever go to a classified facility like a skiff the skiff actually has special boxes that if you break into the box you know the box has been tampered with it broke it into they're designed that way so while the lock itself may not defeat somebody who broke into it people know that the records been accessed unlawfully so similarly you can create a system where you have a backdoor that's one-time use with a tamper key and if somebody pulls that lever the entire network knows what's the first thing the government does when you give them the power they make warrants illegal to tell people about that's why we have warrant Canaries that's the first thing they do because they don't want anybody knowing they're looking into something there's probably a dozen or so investigations going on right now in the cryptocurrency space by the sec and other actors but I guarantee you people have been served with papers and they probably can't talk about those things so I believe that we have the technology and the Opera tunity to think about this a bit differently and choose a third path that's a balance between anarchy and total regulation but I also believe we have to enter into this conversation with some practicality and some principles we have to accept that no matter what we do some people will get hurt you create adjust the system you're going to convict at least one innocent man it's gonna happen unless you let every murderer free anyway I won't introduce somebody come on up Michael so this is the man of the hour I wanted everybody to get my hand this is Michael Parsons the chairman at the Cardinal foundation he's a good friend and he's one of the guys that make Cardinal happen he's been here since the very beginning here we go Michael okay Thank You Charles for again speech and I really appreciate what you've done and our night speeches again I'd like to add to your speech if I may you began to be very beginning how you wanted to bring in the great unbanked of 3 billion 500 people into banking but let me just tell you why they can't come into the system why you shouldn't be in the system yourself he was a credit card how many people have got credit cards put your hands up all right and how many people if you use credit cards to do to online purchase purchases how many hands up 95% do you know what you're about to be hacked you're committing your party to a fraud credit cards are unfit for purpose total and for online purchases so why does the world need a cryptocurrency I'll tell you why because when you produce your credit card to a merchant here it is here's mine don't look finger over the top the merchant asks you for four or five things right he says what's your name on the credit card yeah so he's got their number two what's the 16 digit number on the credit card yeah what's the expiry date right what's the number on the back secret right and finally might even ask you what your address is now with that information he can do one of five things he's supposed to do one thing the one thing is supposed to do is take out the amount of money you've authorized him on the phone or internet to take only that amount you trust that person implicitly 100% you've never met him you don't know him is on the internet etc whether it's my for no internet you trust that person what he can do is one of five things the first thing you should do is take out the exact amount of money he could take out the long amount of money either by mistake or by intention he could take out the payment twice he could take out he could copy your credit card you could then clone your identity you could clone the card or do all five of those things that's why 45% of people in the USA and in Great Britain have had their card compromised at least once if not twice forty five percent that's why the interest rates you pay are between eighteen point nine percent and twenty nine point nine why twenty nine point nine because thirties hands such a big number user story that's why you pay an interest rate to cover the fraud so why does the world need a cryptocurrency because debit cards credit cards were not intended for other than person-to-person transactions never ever never can be they're broken never intended to be but we're using nearly nearly most of the use of credit cards now is for online purchases by value now if we're a credit if we had a cryptocurrency and sort of me giving you all the information and exposing my entire wallet or bank balance or credit card limit to the merchant whom I have to trust I don't he doesn't ask me for information I ask him for his information I say to you mr. merchant Bruce you're a merchant please give me give me your Bitcoin or your ADA address and then and then I will transfer to you the merchant that amount of money and that's it that's it that's why the world needs a cryptocurrency and that's why we can't give the unbanked people credit cards because they'll be used they'll be part of this massive fraud going on with credit cards around the world and that's such a great point if Michael brings up such a simple but such at a powerful point isn't it funny that there's a system that we all accept we all use we all have and 50% of us are going to get screwed by it and we just say that's ok and then we're told that the legacy currencies such as great things and we should inflict it upon the other 3 billion who don't have these things yeah it's madness it's absolute madness and it's such a valid point you still get screwed it's called inflation I mean I mean the US dollar in in the year 1900 you could buy I could buy a house in why I wasn't around then but in 1914 buy a house 400 plans in England now yes in 1940 yes and in 1962 you could buy a house in Devon for 200 pounds now that same house is 200 thousand pounds it's called inflation it's the it's the worst tax in the world which we don't vote to pay and we're paying it and there's no political consequences for inflation because the people who commit it they get all the upside they get the good economy they get the economic growth and acceleration by the time we feel the effects and the consequences it's the next guy who's in office and it's so politically easy because who do you ask to do inflation you ask people to raise taxes there's a big debate man it's tough these tax debates right ok paper it costs 17 pence to produce right now the only reason that you accept it you accept a bit of paper is because you know that you know that you know that some other idiot will take that off for you as value that's all otherwise got no value otherwise otherwise it's worth 17 pencil now how does this money get created I'm an ex-banker and I'll tell you the secret the secret is this this money gets created because the Bank of England goes to Delarue was one of my audit clients to print this money and the same and Barclays Bank saying or we've heard about this imagine there's no money in England no paper money and they've heard the story from America or what America they've got this paper money what's that oh it's paper money and it's got pictures of dead presidents on it well we'll have pictures of live Queens on our money so we do that so they go to the bank you mean can you print some of this money there America's Got but put put our queen and not not dead Queens but Papa Queens on it so they do that and then parties banks said well we want this money and how much they cost the bank even says well it's um 17 pence our note so they pay 17 pence a note for digital for this paper money and they receive it and the banking and says well hanging them and this is not quite right it's just given them a hundred million dollars of money at seventeen friends are known so the parties Bank will then produce an IR you to the Bank of England for the money that's how paper money is created printed it just like that the other way is that they do quantitative easing they create electronic money to buy back their own debt now I've put it to HM Treasury about four years ago they should create quantitative easing for the people so everyone in there in this country with a social security number should receive at least a thousand pound a month of free digital money to pay back their credit cards although we can't do that well why not the government does it all the time that's how they create inflation that's how money is created it's a fraud a complete fraud it's sometimes as simple as points that are the most poignant right thank you so much for that much well here's another point is the quantitative easing for the people let's say you've identified everybody in a jurisdiction well if you've done that well why can't you use it for universal basic income or for foreign aid it was a big problem like let's say a hurricane happens let's say you're even a semi development Porto Rico it's just technically America my god we should have the highest standard of living we're the richest country supposedly and yet people don't have power it's hard to get money to people we're having to have refugee camps it's a very difficult situation so wouldn't it be so cool if everybody was identified that you could then deploy foreign aid through those identities digitally to everybody you don't know where they're at but you know they got it because you send it to the accounts you know they have access to for the most part this is what you can do with this technology it's very powerful senior rich to the people which is dangerous idea so we will speak no more of it next question how do you think banks will respond to the future cryptocurrencies and do you think they're gonna embrace it or oppose it well they're already embracing it in a very Pinker way there's r3 sev and people are looking at the hyper ledger and people looking into enterprise aetherium and so forth the tech itself is good and it's neutral tech is always neutral you can split the atom for power you can split the atom to destroy a city there's no notion of good or bad there's always something you can do with these great capabilities so banks look at it and say my compliance costs are astronomical it's usually one of the largest items on their budget it's one of the reasons why banks can't get small they get big because it's really easy for banks to it's really easy for banks to consolidate those departments and get economy of scale but when they're small there's fixed costs and compliance so the very first thing they're looking into is can we lower the cost of compliance with blockchain technology that's a very high item on their list get rid of systemic risk and these types of things great so they're excited about that they're excited that they can have different kinds of relationships with their clients for example banks take the risk of holding your money so if something happens it's on them today it's less of an issue than it was in the days of gold and paper because people could go on robbing steal it the old western bank heist but there are still issues and hacks occur and you know we are littered with these types of things so they say wait a minute here I can offer banking services but my customers can actually hold control of the asset that's kind of like what blockchain does if you think about it it's a cloud wallet but the customer has some sort of control over that asset that is above and beyond what you would have with a bank account so thanks for liking that they say wow we can have very granular account by compound account business logic that's customizable that's a smart contract we can give the customer control over the asset we could have multi signature control we can have decay of multi-sig we can give the government audit access like for example I give my auditor our Bitcoin public keys I'm an audit identity you know we're in Hong Kong we have to have an independent auditor every year so we give the auditor our public key that you can see real time how much cryptocurrency the company has you know it's pretty cool couldn't do that before they you'd have to give them access to the bank ledger and maybe there are issues there so they love it from that perspective but then the question is what do they hate about it okay well they hate the people they hate the environment and they hate the environment because we do all the things that they wish they could have done back in the day man back in the 19th century during the great Gilded Age right up until the Knickerbocker crisis 1907 every sin you could commit was committed transitive wards where people would sit on 50 boards have access to inside information trade on that you have asymmetric markets where certain people could trade before other people so when they knew something was coming they could get out first you had fractional reserve everything you had rampant speculation and margin trading you had boiler rooms damn near everywhere and of course all that eventually got shut down does that remind you of any current state of an industry where certain people may pay a different price for a certain IC o---- be able to exit the IC o---- before other people they may know that there's something coming about their project and suddenly the markets always seem to crash before the news item hits instead of after the news item hits yeah so they hate us because we as an industry are committing the sins that they can no longer commit which are horrendously profitable they also hate us because they know that a lot of people are gonna get hurt they seep it connect they see one coin they see the ico mania and they know at the end of the rainbow value is conserved it doesn't just magically come out of nowhere and we haven't just magically created 500 billion dollars of wealth and these numbers are real if you have a billion dollars of something and you can only sell $100 of it do you really have a billion dollars and that's the situation we're in is that a lot of these assets are illiquid and when the markets crash these people bought in at this high price level thinking they're gonna get a hundred extra or 200 X or 300 X and none of them will very small group of people will the insiders who committed the scam well they see these things and it irritates them it irritates the regulator irritates me I've over and over again from the highest mountaintop set that this is a moral hazard it's an agency failure yet it just keeps happening why because it's so profitable for people to do these things and they'll continue until they're forcibly stopped to continue the last part is that their concern they're scared they're scared because it's a technology that they don't fully grasp we'll take the future because I don't know no one knows and I'm in the middle of all of it I have the best scientists we have the best people so I'm in a position that predict better than most and I don't even know where this is gonna go how it's gonna transform the world and they're sitting on a multi trillion dollar business model and they're asking themselves is this gonna be like we're making horse whips and the car comes out is this gonna be good for us or is this just going to be something like when the internet came and newspapers found a new business model and they were able to survive some consolidated but you know the New York Times probably is not going to go anywhere they'll find a way to survive right so they're trying to figure that out and they're also concerned because the regulator is incredibly concerned they're deeply concerned here is what you do when your regulatory body you have this thing called a suspicious activity report when you're fin sent or the SEC or even the IRS you don't have ten million people at your beck and call anytime there's an issue they'll go and find it proactively they're small by design and what they do is they have the bank's tattletale on the bad actors and they say hey bad actor you know you if you have somebody in your a ledger that you think is better report to us and then we can look into it puts the Eye of Sauron on them right well when you cut out the middleman compliance doesn't work so well so they're having all of this value that's living in this dark world that they don't fully understand and they sure as hell know it doesn't conform to normal generally accepted compliance at anytime a little practioners it could have touched that open embargoed country like North Korea or Iran at any time it could have been in the hands of a criminal at some point the chain and there's no de minimis clause for anti-money laundry so it's not like they agree with the laws but they're subject to the laws and the laws are old and archaic and it causes them to get very scared because the fines are huge and they really want to keep their business model going so I think from one dimension they love it I think from another dimension they're sickened by it because of the excess and bad behavior that they see and that they because they're trained professionals know how to spot these things and know them for what they are and I think they're deeply concerned about these things and they're afraid about where we're gonna go and how we'll get there my personal opinion is I think they will start getting diminished over time and not be as relevant to society because they won't control the levers of society like credit as much as they used to but I could be wrong maybe they'll take over maybe they'll figure it out and then we'll live in dystopian 1984 land and I'll be reprogrammed to love my government okay next question go in the red jumper thanks Jobs for everything you said super super interesting my name is Tom and my question is about timescales I think that the way that Cardno is approaching the whole you know new ecosystem from the ground up academic review all of that kind of thing is is super exciting but I just wondered if you had anything to say about the fact that you know you've got projects like V chain which have a very specific you know functioning products you've got a theory on which you know you know pretty well which has a fairly significant and Bitcoin which has a significant first mover advantage so how is Cardno going to be relevant as time goes on as more projects are based off the etherion platform how does cardano's start to eat into that ecosystem and and stay relevant when the academic review process that takes so long well you know there's a couple of misconceptions the first misconception is peer review somehow dramatically slows down the development time I argue is it slows it down on the front end but you actually get huge accelerations on the back end and I have a real-life example of this if theorem has been wanting to go to proof of stakes since 2015 as far as I can tell that's about three years that they've been working on this problem diligently not following a peer-review process following more of a traditional engineering well let's just think about it real hard and keep redesigning and keep redesign until we come up with something interesting approach we started Ora Boris's research in mid-2016 okay so they had a significant lead on us so far we published now 302 and soon to be three major results that in our view solve all the problems of proof of stake it's dynamically available at bootstraps from the Genesis block just like proof work does we proved it in global Universal composability it's fast as hell it's got all these beautiful features with it and we've already implemented in has and rust meanwhile have they launched Casper no and we have a version of warhorse in a live system with ten billion dollars of value behind it so I followed a peer-review process and I went to California and showed it off at crypto 17 or going to Israel to show it off at Euro Crypt 18 we introduced it to all of our academic peers and now they're thinking about it trying to break it emailing a suggestion so we've activated the Academy and we're getting great feedback from people all around and we spent about half the time they've spent and we've done it all in the open for anybody to see it's all up on ePrint for as most of the in preliminary work there was done in a closed setting so I think the first thing you have to recognize is well it is harder to do peer review we have to live with these protocols for generations we've had to live with the sins and the glory of tcp/ip now for a long time and I do not like Michaels example with credit cards want to late in the world with a broken inferior system that only succeeded because of first mover advantage not because of the merits of the giant design so if I can move just as fast or faster in some cases than my competitors should do it so that's the first point the second point is that how many people have actually adopted crypto currencies for real things and the answer is none there's trials and pilots and other things you can't point to a single functioning economy with a majority of the economies in a crypto currency because it's not ready for primetime there are no distributed truly systems here they're all replicated at the moment which is why crypto kitties killed aetherium and it's the same for Bitcoin you can't have $10 transactions you can't have systems built like this and even if you can get a reasonable technological headstart where's the governance side of it how do you get to influence or control these projects or modify them and avoid having Bitcoin cash in between gold and between God and aetherium classic and so forth how do you decide there's no real holistic thought about the interdependencies of these systems the other thing is that they're just missing basic computer science in their view if you can do ten thousand hundred and million transactions per second let's say you can where do you store it and who stores that if it's only a small group of actors who are service providers aren't they like the kings of the system then they can just decide not to provide you history what recourse do you have so you have shard it how do you do that who's doing that well there's all some ideas but nothing prevalent yet same you have to move the data if you have a hundred thousand transactions per second a million transactions per second even if they're a kilobyte large you're talking about hundreds of megabytes to gigabytes of data that you're just moving around every second how do you stay up with that network when you're on a 1.5 megabit connection you can't so so you have to trust somebody to stay up to date for you unless you have a different network model okay so I think that first many of these blotching ventures the smaller ones are focusing on a very particular thing that they know is low-hanging fruit they know that they can have quick early victories with to show that they've made progress they can get pilots with but what happens is always the same people who are serious get serious about using their technology and when they use it they discover it's not as good as they claimed every single successful application on aetherium is looking at off chain ways of handling their load whether it's a ride-sharing app or crypto kitties I've talked to them all because they want to come to us and guess what they all say the same thing we have a two-tiered system what we do with aetherium which is super expensive and really annoying and then what we do on our private servers so how is that a decentralized grid that's going to provide people the service they want it's not it's a fantasy it's a mirage okay so that's the first thing is that it's it's a holistic system and it's a system that requires you to think very carefully about how you keep everything in balance and there's a lot of protocols you have to build at the same time for to actually scale to millions to billions to users the other thing is that even if you've accomplished it you have to convince people to use it that's the problem of PGP perfect protocol no one uses it does exactly what's intended why does no one use it let's say you can teach them you have mail it's super easy to use male Volokh I can teach my lawyer to do it in 20 minutes so it's not a technical competency thing yet no one encrypts emails they don't even talk about it and it had we've done that we'd have a password free internet right now no usernames no password just click the log in it just works as secure and attacker can't Forge it but yet no one adopted it so there is a usability and a user adoption component to this as well and I'm sorry I have not seen any example in the cryptocurrency space yet of large scale adoption morality outside of replicating existing experiences like a video game or something like that so I think that we see great potential I think that we see great technology in certain isolated settings but I don't think we see a holistic approach yet so what I'm trying to do is trying to offload the enormity of redesigning basically the entire Internet to the university system and incentivizing hundreds of academics hundreds of university partners and eventually industry partners to say hey there's merit here and this is all being done open-source patent free and we all have equal footing to it it's a common goal and then we have billions of dollars from the NSF from the EU from DARPA all these places that will pay for these projects to get a kick in the ass and grow government funding is already coming and it's starting to come like a river and the same thing happened with AI people got together they really pushed it out that got it into the Academy at a very deep level and then we saw kalo at DARPA anybody know what kalo is cognitive assistant that learns and organizes it ran from 2003 to 2008 anybody have an iPhone you're using their tech you have something called Siri that's where Siri came from so this is the key is if you want to solve big problems you make the problems small by breaking them into thousands of tiny pieces and handing those pieces in a distributed way to many many different people and by aggregation all those people together can solve that big problem the other thing is we're committing the great sin of Microsoft all over again it's so good it's so crazy how history rhymes it's so predictable they say oh you can't compete with aetherium that because they already have all that purrs I heard this before you can't compete with windows because they have the platform and all the developers and for a time it was true you can't compete with Yahoo or you can't compete with MySpace because they have all the people you know it's in it funny that we're trying to build a decentralized system where you the developer are looking at what is best for my customers my application and where I want to deploy but then at the same breath we're telling you to get locked into one system and one token that you have little control over and that's decentralized know what's going to happen is we're gonna have an Internet of blockchains what doesn't matter is the particular chain it matters the standards it's why the second color of Cardinal is interoperability how do we talk to all these block chains we have thousands of them even if two are perfect they'll disagree because they come from competing cultures and they don't want to get along Korea is gonna have its own thing it's just gonna happen as is China and there's no technological or market momentum argument I can make too can change their mind because that's what's wired in let's build our own and probably the same for India as well the way things go so my view is you have to take a holistic view my view is that you have to take an intranet a blockchains view and my view is you have to take a freedom view and say to the developer to the user you're not loyal to Bitcoin you're not loyal to aetherium you're loyal to the utility of the protocol and just like pipes if you can't use a because it's too expensive and congested you can use be could you imagine the internet constructed the way cryptocurrencies are where you have the Bitcoin circuits and you have the theory umpires the etherium fiber-optic cables and so forth and then you when you get an internet subscription you can only use the Bitcoin network they only use the Bitcoin fiber-optic cable could you imagine that and that gets congested and that's just your user experience you're locked in you can't switch so sorry that's the world these people are trying to inflict upon us by this centrality why because they want to make money if you use their token the token gets valuable and they have 10% of the token and that's why people are on Forbes now okay so we have to be smarter we have to learn from history we have to see how the internet evolved have to see how operating systems evolve an application development evolved we have to see how science works and we have to understand that the only way we're gonna get our way out of this mess without centralizing without cursing the next generation - yet another bad standard but this time it works on a cell phone so it's okay is by embracing a multi blockchain environment where everybody has a fair shot at it and sometimes on up and sometimes I'm down I didn't sign up to make Cardinal the best blockchain in history and everything's wonderful I signed up to get this technology in the hands of every single person so maybe we're too slow and some other standard beats us to it but at the end of day I go home with my head held high because we changed the world and we made it a good place that's what it should all be about not about how big is my house or how many Ferraris do I have which is how some people are rating themselves right now okay do we have time for one more question or okay names that call so just two very quick hang and I have a question for you okay what is the airspeed velocity of an unladen swallow the proper response is African or European and then I get flung into the river come on no Monty Python fans here shame on you sir no national pride okay as I said just two very quick questions one is what you're creating would you look to police that's one quick question and the other one is if you do put it out there for voting are they gonna maybe move away from your vision sure maybe crazing something that's different to what you want to create you know the founding fathers had the same problem they said wow we just won this revolution we can do whatever we want and so they headed this grand vision of what America is going to be and then Hamilton's like wait a minute if we give it to the people won't the people just change everything and you know be Burton to the whims and fancies of the future living and they'll just throw away everything that we've done and inflict another tyria on us and that is fortunately what happens you have to accept it that you take the chance that society couldn't vote you out that society can decide that what you've done is no good and embraced hiren II and that's the way it is and in some cases the people in charge the leaders they become corrupt fat ineffective they become old they don't understand society the way it is not as it was and so they need to be removed so death in many ways is one of the most magical things in voting in many ways is one of the most powerful things as long as it's properly incentivized and people participate so the challenge is not are we worried about democracy the challenge is have we built a voting system in a way that we have slain or could slay the demon of rational ignorance that is that the incentive to vote is less than or that should say the incentive to be informed about the things you're voting on is less than the value as an example you can learn all about healthcare very complicated topic for 70 years my family's been in health care my grandfather and my dad my brother all in health care doctors nurses wonderful people and they have devoted their lives to becoming domain experts in this field their vote counts exactly the same as my vote doesn't and as does the hobo on the street who's never thought of it so then you have to ask yourself what is the incentive is a regular everyday citizen to get that level of mastery and expertise about that topic if it the reward at the end of the rainbow is that you get the same privilege now from Anna Galit aryan standpoint you'd say well but there are human beings and all humans have equal potential that's true but from a practical standpoint it creates apathy it creates bite shedding it creates frivolous debates where we worry about persons color of their hair and how tall they are we worry about build a wall instead of actually talking about real things and then the elections devolve blockchains are not immune to this if we create a democratic system and inflicted on everybody it's very easy for people to come in off of mantras like million transactions per second and 300 millisecond latency and free this and free that and we can do this and that that guy sounds better I trust him and I like him and they're focused on people and they're focused on rhetoric instead of process instead of rigor instead of facts because facts are hard to learn facts are hard to parse they're hard to validate critical thinking takes time if you get nothing for it outside of the privilege of voting well the system will devolve into chaos so the hard part for us is figuring out how do we ameliorate that and it's not an easy part and it's something we think deeply about the advantages we've copulated the printing press with the voting ballot so we can incentivize it with cash but that alone is not good enough and then you also have to have some exogenous notion of who ought to vote but I can't decide that you asked about regulation of I cos Who am I to decide what is a legitimate ico or not if I was an external watcher of aetherium I probably would have said no bloody way in hell it's a not-for-profit sitting in Switzerland led by a group of people who don't have strong software engineering background these guys don't have vesting for their pre mind ether these guys don't have federated control so as a consequence they can tap into the for-profit elements whenever they do and bias the protocol or recommend this or that they don't have a clear business strategy about how they're gonna roll out the protocol no one is there to hold them accountable there's not even a real board of directors any normal venture capitalist looking at that event would say no way no how and that's why they didn't get VC money apparently they were didn't want to have those controls they didn't want to have that oversight that adult supervision and boy did they get lucky they lost nine million just a market volatility and nearly spent the other nine that they raised okay so I'm not in a position to look at an ICO and say that's bad the market should do that but we should have a fair playing field where people have standards so what project Brooklyn is about and a lot of these other projects that are cropping up about ICO standards and rating and the market should provide some of these things regulators will provide some of these things but if we were to build a capability into the system to restrict behavior that would be so powerful that it could stop an IC o---- that capability will be abused by basically anybody who wants to that's the reality right so I think that you have to solve the voting problem it's a hard problem it's a shared problem there's been enormous progress in a hundred years and voting theory the e-voting revolution has really created a lot of great ideas from liquid democracy there's fundamentally different ways to vote than just Bob or Bill or Jane or Eric it you can do linear preference ordering like condors say and boorda and you can create all kinds of a really exotic set of schemes and you can also localize votes you can make them global votes you can do approval voting and now we're in a position where we actually experiment with these things and the magical part about it is that we get to run hundreds of experiments concurrently and it's an evolutionary thing where we get to see which systems tend to survive and keep their principles the longest and those are the ones that we can steal bring into our system and then we have them for free that's the magic of this it's Darwinian in the nature but it's Darwinian at the speed of light so systems evolve very rapidly so that's the best non answer I can give you to your question because the reality is there isn't a good one there is no good answer just like the question about data on a blockchain there are ways you can go about getting higher assurances of a potentially good outcome but there is no silver bullet that you can adopt that somehow some way will magically make the system work and when you turn over control to the next generation that the next generation won't muck it up they didn't live the lives of the people who built the system they didn't suffer the pains of the people who built the system so they don't understand the nuances of the system and they'll take it for granted and eventually start changing it to accommodate the the things that they run into in their day-to-day lives sometimes that's necessary I don't think England needs a law anymore paying somebody to watch for Napoleon that one kind of that one kind of past but sometimes it still is necessary if we didn't have a constitutional amendment for freedom of speech it would have already been taken from us long long ago okay and so the key is to balance those two things the will of the dead and the will of the living and you have to find a way to incentivize good behavior and because you don't know what that actually is you just got to measure it and see outcomes and be Darwinian about it and ruthlessly change when necessary and if you don't like the system I've built there are their systems and you can go right to them and if you don't like the system I built eventually you'll be able to vote to change it and fire me I have a habit of getting fired I'd like to be fired again it'd be great because the ones I get fired from tend to do well anyway you've been a great audience I really enjoyed this this was a lot of fun thank you so much [Applause] [Music]

Channel: IOHK

Views: 246,227

Keywords: Director of African Operations, John O’Connor, LSE, Blockchain, cryptocurrency businesses, Cardano, ADA, Charles Hoskinson, Cardano Whiteboard, coinscrum, Neil Davis, PNSol, Aggelos, Ouroboros, Meet the team, IOHK, Input Output, goals for Africa, Duncan Couttes, DeltaQ, Imperial Collage London, Bernardo David, ADA coin, Cardano Review

Id: YSzVsjG2QoQ

Length: 116min 42sec (7002 seconds)

Published: Sat Feb 24 2018

Reddit Comments

[u/[deleted]]

If Charles is smiling while waiting patiently for a question to finish being asked, you know he's about to make a new believer, casting out all doubts. He's heard so many questions he knows what people are going to say based on the first few words. It's like how we don't read all the letters of a word when speed reading, Charles speed reads the intent behind the questions everyone asks. Part of what makes him such a good speaker, imho. Really smart guy.

[u/Chicag00000]

This talk was at London school of economics. There were some sceptics in the audience that asked some pointed questions including if Charles is worried that his platform is taking “too long” to roll out. His response is basically the time they are spending now obviates the need for hard forks and all the scaling/pos problems ethereum and bitcoin are having currently.

Not many other crypto supporters would get up in front of an audience of economists and argue against the current global financial system.

I think one of the reasons cardano gets downvotes so often is the value of the token is of no importance to the team building it. If cardano stays at $.32 cents but it banks the unbanked in third world countries they would see it as the ultimate success.

Not great for investors, but one would have to assume with that much adoption the price would have to go up right?

[u/BitcoinIsTehFuture]

Love that super confident microphone flip at the beginning.

[u/thomas723]

Everytime Charles gives a talk I end up right back at binance doubling down on more ADA

[u/Native411]

whelp. I posted the same video in r/cryptocurrency and it's getting auto downvoted by people. Sorta sucks.

[u/YodaaaTheWise]

Wow just wow

[u/Ernst_Lanzer]

You... errr... 'Etherium'? For real man?

[u/anonmonty024]

Charles for President. This is the kind of guy you buy a beer for and he can teach you about any subject. At the end of your conversation you feel your IQ has substantially grown.

[u/Suishou]

So in the future governance model, domain experts will be our representatives instead of idiot congressmen and women and their paid lobbyists? Your tech expert nephew will be part of a consortium of geeks who get to vote on net neutrality laws? This sounds pretty cool. Anyone care to elaborate?