 If you'd all like to give a warm welcome to Charles Hoskinson. Hi everybody. Okay, everybody a Londoner or did anybody come here to travel to see me? Let me show you a hands. Okay, a few people. Let's play the longest route. Anybody from Europe? North America, Asia? Asia, we're at. You know, when I spoke at MIT, I had the same situation. How long is the flight from Singapore? Okay, we got to give them 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 Cardano Foundation for putting the event on, in particular Michael Parsons and his crew. Michael's here tonight. I think he's somewhere. Michael, show your hands. Ah, there he is. There's Michael Parsons, chairman of the Cardano Foundation. Wonderful guy. Okay, so like all my speaking, I didn't prepare anything. So we'll talk extemporaneously. And I thought for a bit on the cab ride over, what should I talk about? I said, oh, well, you know, third generation blockchain, but you guys probably all heard that before. And who cares about that? And we're actually at an economic forum, you know, LSE. So in the spirit of that, I'd actually like to talk about Cardano 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. Thank you. Thank you. Okay, great. All right. I'm going to 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. It's 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 and 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 who have come here to 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? Nobody paid the land register people $100 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. Peace 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 theirs that they abandoned due to war are now occupied by others. And they're going to say, that's my land. That's my house. And the squatter says, I survived the war. It spoils. It's mine. 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? The person there? Who knows? And 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. Okay, 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, we're going to do KYC and AML. Okay, that's exciting. Show me your passport and your birth certificate and 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 trust? And if you can't build reputation and 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 outsourcer, a freelancer, and they want to 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 $100 back to you. The average cost of that, for most places in the Philippines, is about $15 for every $100. $15 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. The 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 35% interest to 85% 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 majority 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 going to steal something from you. Or they're deluded and delusional. They're crazy. You can't solve the problem. You know, 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 this government structure or democracy. And suddenly all your problems will go away. And it never seems to quite get there. It does get better. More 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 Cardano 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 heart. There's plenty of socialists. There's plenty of communists. There's plenty of people running around saying the government can solve everything. And you know what, they're very well represented and they're mostly in control of 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, Cardano 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 circumstances. 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, you can put property in a ledger. Can't you put identity in a ledger? Sure. There's plenty of beautiful blockchain standards that are starting to emerge. And great ideas are starting to emerge 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 seller 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 S grows somewhere else. There's complex transactions that you can put in, and these don't require a government or 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 can take exactly what Grameen Bank has 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 pegged to something like the pound or 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 stuff gets done. Not when you bet on altruism, it's when you bet on greed. That's kind of the magic of cryptocurrencies is they brought this to the forefront. So we in particular at Cardano, we said, you know, first things first, for this protocol, let's start from bedrock and 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, 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 that things couldn't be possible, but for the most part, if you showed up at a cryptography conference in 2014, like crypto or Eurocrypt, and you say, I do cryptocurrencies. You know what they would say? They'd say, 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 burnt 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 transactions, latency in the milliseconds, instead of transaction anywhere in the world, and it always clears, and there's never going to be a failure, and all the models are right, and there's no actual rigor behind it. There's no peer review behind it. 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 ignored. And so the first contribution we made with the Cardano project is we were very humble. We went to research centers. We went to Scotland, to Edinburgh, just there. We went to Tokyo, to Tokyo Tech. We went to 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? Do we even know when it's secure it turns out we didn't actually have an answer to this. So we wrote a paper about it. Paper went 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 secure? Is it practical? Can it ever be fast? Did the economics of it work out? So we just started publishing papers. We published Ouroboros and Scrape and we have Ouroboros, Prowse, let's hear, Brutstra from Genesis, so BG. And then after that we'll have Ouroboros, Hydra. We have a whole list of papers we've written. And it's taken me from California and in April I'll go into Israel to Eurocrypt. 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. So we've looked at 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 to 2017 to this year, they just keep growing up by a curve like this. There's tons of money being flooded into this space. So that's the first thing, is you have to get the academy involved. What are the problems 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 cryptocurrencies is that well, cryptography is the interesting part and 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. We all love DAOs, the centralized autonomous organizations. Boy, aren't those cool. So can you sue a DAO? Can a DAO own property? Maybe. Maybe not. Who knows? When something bad happens like the DAO owns the chemical plant and it spills into the river killing a bunch of people, who's liable for that? There's a Bopal disaster from Bopal DAO. 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 and opinions. So ought we go and engage people to answer that? 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 you're a customer in anti-money laundering, wouldn't it be nice to say that this blockchain-based idea that we've built, which is unforgeable, which actually has a high degree of assurance behind it, which is global and that you can move from country to country and use it is just as good as a U.S. passport or a British passport. Do you think that there's a technological 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 involved and we created a very broad research agenda with the help of the Cardano 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. 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 to help. That's a novel idea. I was in Silicon Valley not too long ago and I said, you might be right. You ever been? No, 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 going to change the world is you have to go there and you're not going to 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 so you go teach people how to use the tech. So we said, all right, let's create an education department at IOHK. Let's actually go teach people Haskell. That's the first step. Gives them a tune 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 Barberos which structurally speaking has a remittance culture. But we have very strong partnerships there and right now we have a whole cohort of people in Barberos with a 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 Barberos to teach people. Phil Waddler, he's a resident professor in Edinburgh. A wonderful guy. They call him Lambda Man. Whereas a big Lambda like Superman, I'm assured. 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's 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 crowd fund and how to perform. So that's one side of it. 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 I'm traveling too much, so maybe April. But first half of this year I'll go. And I'll just keep going back and back and back until either I get it done or die. So we'll see which one happens first. But is that are we done? So first off, we're going to talk about 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, ogre 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 they're 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? We have 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. Absolutely best. But we can then actually have local people on the ground implement this for the pilot. So you say, I'm going to run a pilot program and 100% 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 and say, oh, that's so cool. And you know what happens? It becomes so much cheaper and more efficient to maintain and manage. The government asks, 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 de Soto Pilar. And he writes all these lovely books and articles and things talking about the liquidity crisis. So it's not that Africa is poor or South America is poor. Venezuela is actually resource-wise one of the wealthiest countries you can find. They have 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 they're going to 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 augur and the aren't just good for tokens are just good for crypto-kitties. It turns out that you can do real things with these platforms. So let's go and try that. And if you look at Hernando de Soto Pilar's 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, where they sell bauxite. They have about a fourth of the world's supply of aluminum. Go figure. 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 what do the token founders get? They get a pre-mine. So why can't we just give the politicians a pre-mine with the tokens? They'll make a 5%, 10%. They'll make a better deal. I can outbid China with this deal. So you can leave some of the corruption in 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 Ethereum guys, it was at the time, the largest ICO in the world, $18 million. Today, that would be a failed ICO. Think about that. $4.5 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 ICOs 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 realized people bought this stuff that 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 it 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 EOS will come in. And boy, Dan Lerimer will claim me invented it. And then Tezos will come in and all the others will come in too with their billion dollars of capital and say, boy, this is the market to go with, man. I'm excited about this stuff. Alright. 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 and cash out problem. I suppose three, the value stability as well. So we'll get to all three of those. So first the intermittency issue. What is that? It's that 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 seven reliable internet and power. Okay. And then you change 25 years, maybe that's a good idea, but guess what? You don't have it. It was the same problem 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 places fast enough, the vaccines went bad because you didn't have power to refrigerate them. Just that simple, right? Too expensive to give everybody a generator. You could have a cable all throughout the country. It will 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 a minute here, do these transactions really need to happen online? No they don't. So this is a cell phone. 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 wrap it in security and everything for consumer-friendly. But basically 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 Trustone. 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 up. Not by you. So you as the user of the device 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. No transaction settles. The key is destroyed on your phone. And the other person you've sent it to is the only person with a copy. So from the blockchain's perspective, no transactions happened. It's as if nothing occurred. But what you've done is you've moved 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 being online. And the party receiving knows 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. And 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've got some very good people there and we're doing it in partnership with several hardware companies. And we're going to dump a bunch of money into it. But the beautiful thing is once it's done, it 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. We'd like to 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. Blockstream is experimenting with this. So it turns out that apparently it's getting cheaper to launch things and it's apparently getting cheaper to rent satellite spectrum and 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. Tezos has raised what, a billion? EOS 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 Cardano worth as much as SpaceX? Well I guess we have to go and do a SpaceX thing if we're going to 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 they're 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 rena 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 Cardano 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 proliferated 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 5, 10 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 caching 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 with 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 daughters in California she sends home $100 worth of crypto 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 going to give her? And is she going to get robbed? Okay. Yeah. So that's one of the fundamental problems is that even if we have this second parallel beautiful crypto economy where it's 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 but 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. Makes sense. So how about we do this? How about we go and invest some time, effort and money into building a really low cost ATM that can operate off grid. That can act as an open source point for people who want to trade and let's try to get it under $500 for the price point to build one, deploy one, get it installed. That's a sweet spot. If you do that I can put 1,000 ATMs for 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 micro finance loan it can act as an identity hub where it can create cryptographic credentials and sign them up. Once you have that it can act as an exit and 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 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 the 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 because it's very efficiently cheap that I can deploy thousands of them without breaking the bank. And if you have satellite connection then you can connect them directly there and they're online 24-7 with a very high throughput with rena entrusted hardware you get hundreds of thousands of TPS on these systems for a network. So that's the cash in cash out point. Now there are other firms that think about this like BitPesa and this is a big topic at Davos where we need 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. 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 and 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 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 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 do credit with it well as an example Bruce you're going to be my volunteer for the day we're going to go back in time it is December 30th 2012 okay now I need another volunteer and a show of hands okay you guy what's your name Alex you got a phone okay so look up what was the historical price of bitcoin December 30th 2012 and so the interest of time while you're calculating all estimated I think it was around $10 okay Bruce so I make a deal with you I say alright I'm going to give you a 10 bitcoin loan are you ready to go alright you got to pay me back 11 bitcoins as of December 30th 2013 that's not too bad maybe 10% okay so I think the price of bitcoin was around $1200 at that point yeah so how'd you come out on that loan so you say oh well this this was yes sir well hang on well there's a Q&A 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 $200-$300 okay so 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 pig currencies like tether 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 it would be so nice to have an asset that's just like bitcoin it's decentralized 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 you're in and to a higher cast 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 Cardano 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 megadow and for lending there's things like salt and when I was with BitShares with 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? when we entered into space in 2015 we didn't really know about consensus we said we think we know what a blockchain is 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 this year about value-stable currencies and that's something we expect to make some headway and progress on by probably next year but it's the last part of the system you lay 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 series of just traveling and meeting people talking to people and getting to know their stories there's no difference so that's what Cardano's 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, cashing out and intermittency and eventually we hope to be able to solve the hard problem of value stability and even if we don't, people know it's a problem to solve someone will get it done so that's Cardano for the developing world Cardano has a project in general for those who don't know, who came and said God, he's been talking about Cardano for 40 damn minutes and didn't even tell me what it is it's a cryptocurrency and it's a cryptocurrency IOHK's building working with the Cardano Foundation, Amergo and others and we're building in a very rigorous systematic way in 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 cardanohub.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 Q&A 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 introduce yourself first my name is Cliff I'm originally from China but I've lived in London since 2003 and so my interest is about China since you talked about developing countries which China is the biggest but I think China is different from those ones you talked about because it's got internet it's got banks and to some extent it's the and high tech is even more advanced in China than some of the developed countries you can pay with WeChat so you don't need to use cash you don't need to use credit card, it's all mobile payment there's the share economy so there's huge power from China as well because if you see, look at that top three exchanges in the world like three of the top five are from built by Chinese people they're not necessarily based in China for example, Hong Kong or Hong Kong or Tokyo yeah so right now it's very everyone's asking what's going to happen in China next they've banned the ICO and they are basically, I've got lots of friends who are interested in this and they've spent putting so much money in but they're not sure so what is your view of this especially in the long term what's going to happen in China I suppose I should have an opinion on this because the HK and IOHK is Hong Kong so we might have some knowledge of the jurisdiction I don't know, I don't promise can China is a difficult nut to crack and as a non-Chinese person it is a very alien culture to me I try very hard to understand these things like 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 to Shanghai and I'm like no I do not so the first part is that China is going to decide its own destiny, it always has throughout all of human history it'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 change function at the end of the day there's a KYCML component at the end of the day if somebody's doing something they don't like who is disrupting cultural harmony I think is the term 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 and the other guys they were doing very well Alicia Lau was doing great they were making a lot of money man and I said you know we're not going to 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 can evade 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 it's not going to 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 what do they do well that wall can filter bitcoin traffic it can filter 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 Manhattan no no you can't it's hard to move these things and they often run off of stolen or subsidized power so if I had to guess, hazard a guess what's going to happen is that state controlled industry will nationalize the exchanges and they'll reopen that's the first step is that they'll be a transfer of power maybe some of the 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 KYC AML will get much harsher and they'll get a much cleaner, clearer sense of who are using these currencies in the form of a social stigma that they silently push 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 shadows 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 are 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! we just all assume these things have real value but they're still the same magic crazy tokens they were ten years ago but somehow they just changed so 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 control or you to have a capital control not so much, it's a limitation of your freedom for the greater good 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 capitalist in their way and eventually China will embrace it and they'll do it in a very Chinese way 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 in the next five or ten years it's going to be dangerous if you're a Chinese entrepreneur in 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 theirs and eventually some people will find ways to get it embedded and once it's there the good news is that everybody uses a cell phone so the adoption curve will be very dramatic next question whoa alright Tom, you got a hard decision alright, magic mic hi, my name is Lukas I have a question you mentioned you can make transactions on Cardano is there any fees involved when you make a transaction on Cardano? that's a great question so do transactions need fees or not we get this question a lot transactions always cost a fee always hang on, my turn to talk now 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? are CPUs 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? the question is like those days you can send an image you can send a voice message you can send an email for free to anyone but hang on, you're not you have to pay to access the internet and somebody has to pay to store that email 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? if it's free, you are the product that's always been the truth so how do we pay for it with EOS or these other guys, they pay for it with inflation somebody at the end of the rainbow gets compensated 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 thing it's not a USP it's not a competitive differentiator you know how I can reset transaction fees in Cardano one parameter it's not hard so if there turns out another model is more competitive for adoption which so far it has not been the dominant transaction system is Bitcoin is Ethereum then we can just go to a feeless model where we compensate processing using inflation as other people do 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 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 and put it with hundreds of gigabytes of decentralized network so who is getting that fee 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 hurts 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 going to be a good house but his house was great 2,000 square feet, half acre of land beautiful white picket fence the American dream why can't he do it anymore because the Federal Reserve debased 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 it's not decentralized network kabuki so that's my first point but I could be wrong and I freely acknowledge that 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 going to have a treasury paid for by transaction fees and I don't want to debase my money over and over and over again it might be good to embrace some zero economics 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 settlement system and this is the high speed free system that people can use subsidized through some other methodology maybe a compromise of privacy and Facebook gets 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's software is supposedly open source and that's what developers 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 availability of the token the merchants who have adopted it and used it 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 we should use it but we don't why it's too hard who is controlling the fee that's a good question so how do you have decentralized governance where it all stems down to the problem that hasn't been solved in the cryptocurrency space app which is one of the planks of Cardano 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 i.e. 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 or else 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 ICO and trusting a central entity 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 going to get them anyway but you're going to 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 preppy 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 push the first domino that's it and it's a cascading reaction next question Hi Stefan thank you for your time this evening I've spent the last decade in the FCA regulated fintech industry in London I'm so sorry how was compliance for you I've learned to love compliance so one of my specific areas of interest around blockchain and crypto is how can we build, launch 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 other crypto based solutions like a POS solution ATMs I'm speaking to the different vendors at the moment 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 or you're seeing in this area and how as an industry and I would say the 2.0 fintech how we can address these issues and go to market that's a great question and actually you 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 either today or later or during 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 Ethereum 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 like drugs or something we started from there that was our model it was tough so what did we do, well we found a lawyer in that jurisdiction who was very well connected his name was Luca Miller and he runs MME partners and Luca was a trooper man this guy had a soldier mentality he came in and he said teach me everything about cryptocurrencies I want to know so we started with Jerry Brutto's papers and we just went through this whole thing and he'd come in every day like 4 hours a day and then I had this panic attack about a month into it because I just dawned on me I was walking to get something to eat and I'm like oh god are these billable hours oh no, 4 hours a day prominent Swiss lawyer, I'm ruined okay I thought that and then I said you're billing me for this right he said no, he did it at his own free time the partner, the M in MME one of the M's, I think it's the first to the second I can't remember so what did Luca do, he just kept chipping away he created a self-regulatory organization then he kind of helped create crypto valley by advising a lot of people and so forth and then FINMA came to him and said 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 coin desk you can actually look at the fruit of those labors now we entered in 2014 and it's 2018 this is 4 years for a conservative country, that's extraordinary speed it's small, okay, and there's value and they want to 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 going to get time stamping for free you're going to get auditability for free you're going to get immutability in your records second, you can even have a discussion about transitivity with AML which is notoriously difficult as an example I love doing this I brought a dollar with me because I love dollars alright 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 a U and then come back forward and he'll eventually get it maybe I'll get my dollar back some presentations I do, some presentations I don't never present in France I'm kidding Vincent, I'm kidding alright now pass it forward and come on now this is another way of 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 while the dollar is being passed I'll tell you about the three-legged chicken well ok didn't get to the right person but that's alright alright 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 an embargoed 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? yeah we would ok 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 buzzwords Bank of England had a macro-micropredential policy why? because we Americans kind of destroyed the whole world financial system we do it a few times you know we said hey we haven't done it in a few decades let's go back to it and guess what they said well we need to solve systemic risk what does that mean? you need to see the ledgers of everybody to know who is over-leveraged right? why is everybody going to give you their ledger? no no no not going to happen but what if you had proof of solvency? what if you had real-time continuous auditing? what if you had ledgers 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 a 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 cypher punks and Eastern European criminals to 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 an 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 Isle of Man doesn't have them maybe you're like motorcycles I don't know so what you do is you say we're going to 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 FinCen watches that the SEC watches that and they see what are the outcomes you collect the data and you say 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 one 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 way we've had since the new deal my god the things Obama is going to do to these guys it's going to be an acquisition 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 the 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 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 banked 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 reg a sell it in this t0 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 grounds as we are doing with cardano 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 hello because he seems pretty keen hi Charles thanks for the talk it's really interesting so far I hope I'm not rambling too much no no no a story behind everything it's awesome 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 on to the blockchain in the first place what are your thoughts on making sure the quality of the data that goes on there in terms of title when we're talking about land or identification now who is actually the gatekeeper making sure that all the information that goes on there is is valid let's say in the first place right the oracle bootstrap problem yeah how do we how do we actually know that the record in 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 maybe thousands of years from now far distant future it's the only archeological thing left and Bruce Springsteen unfairly gets credit for writing purple rain right so it's not a question of just can you safely store the record and is 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 the chain Bob shall sign it as an attester and say this is correct and that usually is done with identity so you go and identify 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 as Google is a certificate authority there's this DNS system there's a way of sorting out who's who and we trust ICANN 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 auger is trying to do is PCA is 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 by factor 3 shame on me 32 well Bruce you got out of a little bit better I'm sorry okay all right so we have a probabilistic notion where he tells me something maybe she tells me something and we wait it 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 is the idea of trusted hardware 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 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 ICO we've already done an ICO whoa and 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 geostamp say I'm in America you can actually have your trusted hardware sign that and it can impend the 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 truth 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 pressure 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 because they're all on a cell phone 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 could 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 okay I won't tell that story so anyway that's 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 you 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 in Ethiopia hey John come up here here introduce yourself real quick hello everyone it's a pleasure to be here so sat and standing up with Charles Charles talked a bit about the work which we're doing in developing countries and how Cardano is going to make a bit of a difference there my role will be to fly off to Ethiopia next week to start negotiating on some of the contracts and some of the work that we've already begun but we're hoping to make a big difference we're very excited thank you 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 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 that 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 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 this is nothing new the American Revolution we won that one the American Revolution was plagued by this problem we would have won 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 profiteers which is 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 crypto currencies 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 12 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 tattle tail on you the banks who have to file SARS and have to report their ledgers 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 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 cryptocurrencies are going to be the straw that breaks that camel's back the unintended consequence of this is that you no longer have a system where you actually know how much people make which is pretty magical now what can we do to ensure that money is collected well what we could do we're not going to do this but what we could do is build a central bank token enforce people to use the central bank token and put in a back door 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 tradeoff 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 and 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 federate control and you have checks and balances and you know what intelligence collection we tried to do this with the FISA courts after the Pentagon papers research committee we said we need to reform the CIA we need to reform the way we collect intelligence because it's been abused by powerful people and those will 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 4 yotabytes of data harvested from Facebook and Google and all these other things buy the intelligence agencies for our safety to find out who good people are and 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 cryptocurrencies which have rules they have laws it's built into the ledger it's built into the contracts and then we can have a social discussion and 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 they're broken into they're designed that way so while the lock itself may not defeat somebody who broke into it people know that the record's 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 something 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 and I guarantee ya people have been served with papers they probably can't talk about those things so I believe that we have the technology and the opportunity to think about this a bit differently and choose a third path that's a balance between anarchy and action with some practicality and some principles we have to accept that no matter what we do some people will get hurt you create a justice system you're going to convict at least one innocent man it's gonna happen unless you let every murderer free anyway I want to introduce somebody come on up Michael this is the man of the hour I want everybody to give him a hand this is Michael Parsons the chairman of the Cardano Foundation he's been here since the very beginning here you go Michael again thank you Charles for a great speech and I really appreciate what you've done and erudite speeches again I'd like to add to your speech if I may you began at the very beginning how you wanted to bring in the great unbanked of 3 billion 5 billion 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 here's a credit card how many people have got credit cards put your hands up don't photograph it not in the back and how many people if you use credit cards to do online 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 out 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 don't look the merchant asks you for 4 or 5 things he says what's your name on the credit card number 2 what's a 16 digit number on the credit card what's expiry date what's the number on the back secret and finally he might even ask you what your address is now with that information he can do one of 5 things he's supposed to do one thing the one thing he's supposed to do is take out the amount of money you've authorised him on the phone on the internet to take only that amount you trust that person implicitly 100% you've never met him you don't know him he's on the internet etc but it's by phone or internet you trust that person what he can do is one of 5 things the first thing he should do is take out the exact amount of money you could take out the wrong amount of money either by mistake or by intention you could take out the payment twice you could copy your credit card you could then clone your identity you could clone the card or do all 5 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 45% that's why the interest you pay are between 18.9% and 29.9% why 29.9% because 30's has such a big number that's why you pay the interest rate to cover the fraud so why does the world need a copper currency 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 most of the use of credit cards now is for online purchases by value now if we had a cryptocurrency instead 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 the credit cards around the world you know, and that's such a great point yeah yeah and Michael brings up such a simple but such 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 okay and then we're told that the legacy currencies are just great things and we should inflict it upon the other 3 billion who don't have these things yet it's madness, it's absolute madness and it's such a valid point and it's worse, if you deal with real proper cash without credit card, you still get screwed it's called inflation I mean the US dollar in the year 1900 you could buy a house in, well I wasn't around then but in 1940 you could buy a house for 100 pounds in England, yes in 1940, yes and in 1962 you could buy a house in Devon for 200 pounds now that same house is 200,000 pounds it's called inflation, 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 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 this piece of paper this piece of useless paper it costs 17 pens to produce now the only reason that you accept it you accept a bit of paper because you know that some other idiot will take that off your value that's all, otherwise you've got no value otherwise it's worth 17 pens now how does this money get created I'm an ex-banker and I'll tell you the secret this money gets created because the Bank of England goes to De La Rue who's one of my audit clients to print this money and Barclays Bank say we've heard about this imagine there's no money in England no paper money in 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 of England can you print some of this money that America's got but put our queens, not dead queens but proper queens on it so they do that and then Barclays Bank say well we want this money and how much does it cost the Bank of England says well it's 17 pens a note so they pay 17 pens a note they print paper money and they receive it and the Bank of England says well hang on a minute this is not quite right they've just given them $100 million of money at 17 pens a note so the Barclays Bank will then produce an IOU 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 so everyone in this country with a social security number should receive at least a thousand pound a month a free digital money to pay back their credit cards oh no 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 the simplest points that are the most poignant right? thank you so much for that Michael well here's another point people, let's say you've identified everybody in a jurisdiction well if you've done that well why can't you use that for universal basic income or for foreign aid there's a big problem like let's say a hurricane happens let's say you're even a semi-developed like Puerto Rico it's technically America my god we should have the highest standard of living for the richest country and yet people don't have power it's hard to get money to people we're having to have refugee camps 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 account 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 a dangerous idea so we will speak no more of it next question how do you think banks will respond to the future of the cryptocurrencies and do you think they're going to embrace it or oppose it well they're already embracing it in a very banker way there's R37 and people are looking into hyper ledger and people are looking into enterprise Ethereum and so forth the tech itself is good and it's neutral tech is always neutral you can split the atom for power or you can split the atom to destroy a city there's no notion of good or bad 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 cost 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 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 and rob and steal it the old western bank heights but there are still issues and hacks occur and we are littered with these types of things so they say wait a minute here I could 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 of that asset that is above and beyond what you would have with a bank account so banks are liking that they say wow we can have very granular account business logic that's customizable that's a smart contract we can give the customer control over the asset we can 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 audited entity we're in Hong Kong and we have to have an independent auditor every year so we give the auditor our public key they can see real time how much cryptocurrency the company has you know it's pretty cool couldn't do that before you'd have to give them access to the bank ledger maybe there are issues there so they love it from that perspective 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 nickerbocker crisis in 1907 every sin you could commit was committed transitive boards where people would sit on 50 boards have access to inside information trade on that there were 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 certain ICO be able to exit the ICO 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 going to get hurt they see bit 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 five hundred billion dollars of wealth and these numbers are real if you have a billion dollars of something and you can only sell a hundred dollars 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 a liquid and when the markets crash these people bought in at this high price level thinking they're going to get a hundred X or a two hundred X or a three hundred X and none of them will very small group of people will the insiders who committed the scam will they see these things and it irritates them it irritates the regulator irritates me I've over and over again from the highest mountaintop said 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 they're concerned they're scared because it's a technology that they don't fully grasp will 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 to predict better than most and I don't even know where this is going to go how it's going to transform the world and they're sitting on a multi-trillion dollar business model and they're asking themselves is this going to be like we're making horse whips and the car comes out is this going to 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 so they're trying to figure that out they're also concerned because the regulator is incredibly concerned they're deeply concerned here's what you do when your regulatory body you have this thing called the suspicious activity report when you're FinCen or the SEC or even the IRS you don't have 10 million people at your beck and call that any time there's an issue they'll go and find it proactively all by design and what they do is they have the banks tattle-tell on the bad actors and they say hey bad actor you know if you have somebody in your alleged that you think is bad file a report to us and then we can look into it puts the eye of sorrow 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 any time a little fraction of it could have touched an embargoed country like North Korea or Iran at any time it could have been in the hands of a criminal at some point in the chain and there's no de minimis clause for anti-money laundering 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 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 going to go and how we'll get there my personal opinion is I think they'll 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 next question Guy in the red jumper Thanks Charles for everything you said super interesting my name's Tom and my question is about time scales I think that the way that Cardano is approaching the whole new ecosystem from the ground up academic review, all of that kind of thing is super exciting but I just wondered if you had anything to say about the fact that you've got projects like VeChain which have a very specific functioning products, you've got Ethereum which you know pretty well which has a fairly significant and Bitcoin which has a significant first mover advantage so how is Cardano going to be relevant as time goes on as more projects are based off the Ethereum platform how does Cardano start to eat into that ecosystem and stay relevant when the academic review process 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 Ethereum has been wanting to go to proof of stake since 2015 as far as I can tell so it'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 part and keep redesigning and keep redesigning until we come up with something interesting approach we started Ouroboros' research in mid-2016 okay so they had a significant lead on us so far we've published now two 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 of work does we've 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 Haskell and in Rust meanwhile have they launched Casper? No and we have a version of Ouroboros 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 and we're 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 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 e-print whereas most of the 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 the DCP IP now for a long time and I do not like Michael's example with credit cards want to laden 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 cryptocurrencies 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 where the majority of the economy is in a cryptocurrency because it's not ready for prime time there are no distributed truly systems here they're all replicated at the moment which is why crypto kitties killed Ethereum and it's the same for bitcoin you can't have ten dollar transactions you can't have systems built like this and even if you can get a reasonable technological head start 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 and bitcoin gold and bitcoin god and ethereum 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 thousand million transactions per second 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 sharded how do you do that who's doing that well there's some ideas but nothing prevalent yet same you have to move the data if you have 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 so you have to trust somebody to stay up to date for you unless you have a different network model so I think that first many of these blockchain 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 Ethereum is looking at off-chain ways of handling their load whether it's a ride sharing app or crypto kiddies I've talked to them all because they want to come to us we have a two tiered system what we do with Ethereum which is super expensive and really annoying and what we do in 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 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 it to actually scale billions 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 volope super easy to use mail volope 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 had we done that we'd have a password free internet right now no user names 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's 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 virality 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 they 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 because we're committing the great sin of Microsoft all over again it's so crazy how history rhymes it's so predictable they say oh you can't compete with Ethereum because they already have all the developers 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 funny that in the 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 no what's going to happen is we're going to have an internet of blockchains what doesn't matter is the particular chain it matters the standards it's why the second pillar of Cardano's interoperability how do we talk to all these blockchains even if two are perfect they'll disagree because they come from competing cultures and they don't want to get along Korea is going to have its own thing just going to happen as is China and there's no technological or market momentum argument I can make to 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 internet of blockchains view 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 Ethereum 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 B could you imagine the internet constructed the way cryptocurrencies are where you have the Bitcoin circuits and you have the Ethereum pipes the Ethereum 5 Roptic cables and then when you get an internet subscription you can only use the Bitcoin network they only use the Bitcoin 5 Roptic 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 we have to see how operating systems evolved and application development evolved we have to see how science works and we have to understand that the only way we're going to get our way out of this mess without centralizing without cursing the next generation to yet another bad standard but this time it works on a cell phone so it's okay is by embracing and sometimes I'm up and sometimes I'm down I didn't sign up to make Cardano 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 the 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 in my cell phones right now okay do we have time for one more question or okay it's named there Carl so just two very quick questions hang on I have a question for you what is the airspeed velocity of an unladen swallow oh you got me there I don't know the proper response is African or European and I get flung into the river come on no Monty Python fans here shame on you sir no national pride question one is what you're creating would you look to police the network in terms of the bad actors in terms of bad ICOs that's one quick question and the other one is if you do put it out there for voting are they going to maybe move away from your vision sure maybe creating 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 had this grand vision of what America is going to be Hamilton's like wait a minute if we give it to the people won't the people just change everything and you know be burdened to the women's infantis of the future living and they'll just throw away everything that we've done and inflict another teary on us and that is unfortunately what happens you have to accept it that you take the chance that society can vote you out that society can decide that what you've done is no good and embrace tyranny and that's the way it is and in some cases the people in charge the leaders they become corrupt fat and effective 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 and 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 that we have slain or could slay the demon of rational ignorance that is that the incentive to vote is less than or I 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 a very complicated topic for 70 years my family's been in healthcare my grandfather my dad my brother all in healthcare doctors nurses wonderful people and they have devoted their lives to having domain experts in this field their vote counts exactly the same as my vote does 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 as a regular everyday citizen to get that level of mastery and expertise about that topic if the reward at the end of the rainbow is that you get the same privilege now from an egalitarian standpoint you'd say well but they're human beings and all humans have equal potential that's true but from a practical standpoint it creates apathy it creates bike shedding it creates frivolous debates where we worry about person's 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 inflict it on everybody it's very easy for people to come in million transactions per second and 300 millisecond latency and free this and free that and we can do this and that and 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 you get nothing to 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 ICOs who am I to decide what is legitimate ICO or not of Ethereum 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 aether 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 going to 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 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 9 million just to market volatility and nearly spent the other 9 that they raised 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 that's 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 ICO 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 100 years in 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 you can do linear preference ordering like Condor say and Borda and you can create all kinds of really exotic set of schemes and you can also localize 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 nature but it's Darwinian at the speed of light there's a 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 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 passed but sometimes it still is necessary if we didn't have a constitutional amendment for freedom of speech that's not even 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 gotta measure it and see outcomes and beat Darwinian about it and ruthlessly change when necessary and if you don't like the system I've built there are other systems and you can go right to them and if you don't like the system I've built 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