 So if Bitcoin goes up, everything goes up, rising tides affect us. If it goes down, everything goes down. We want a system that scales the billions of people. We want a system that's interoperable with other systems. And we want a system that's sustainable. We suddenly have the most decentralized cryptocurrency in the world, probably 50 to 100 times more decentralized than Bitcoin. Each year at a snowy getaway nestled in the heart of the Swiss Alps, the most powerful people in the world gather to decide the fate of the global economy. This is the 2020 World Economic Forum Crypto Valley Summit, brought to you by Cointelegraph. Hi everybody, we are here at Crypto Valley Summit in Davos, you're in the World Economic Forum, and I'm very happy to greet here Charles Hoskinson. Thank you very much for coming and to talk to us. So please let me know your first thoughts about the event, about the week, about the mountains, and what are your goals for this time in Davos? Well first, thank you so much for having me on. It's always fun to be chatting with Cointelegraph, it's a great publication. Davos is an interesting place and WEF is what brings everybody here every year. I think the population of the town increases by a factor of 10, and it's just remarkable. There's already I think 30 heads of state that have visited, I had dinner with the Prime Minister of Georgia, I was having dinner in a restaurant yesterday and the table next to us was the Prime Minister of Finland. So it's just incredible to see the amount of diversity and power that's here. There's over 100 billionaires who have attended the event, tons of industry leaders, lots of Fortune 500 CEOs, you know, Trump came here. So it's a little bit of everything. And what happens with WEF is that well that's the main event, there's tons of satellite events that pop up and they tend to suck people in and attract people who are wandering about and this is one of the events and there's several others that have been going on throughout the week. And these are just tremendous networking opportunities. You just never know who you're going to run into. For example, I ran into the drummer of Guns N' Roses last night, we had dinner and Matt and it's like, okay, I guess I'm hanging out with Guns N' Roses. Did he come here for the forum or? He came for the World Economic Forum for an unrelated event, but he has a personal friend here who's a friend of mine and he said, hey, I'm having dinner with him. Do you want to come? And I said, sure. That's fascinating. Let's see what happens. So does he know what is crypto? Not only does he know what is crypto, he wants to do a crypto project. So it's really amazing to see how broad our industry has gotten. It's no longer just a bunch of nerds sitting around talking about code. We're really talking about solving real life problems and generally the problems are always the same. So we think about things like this man in the middle, this middleman of necessity that sucks value out of commercial connections between the edges. So you have the Airbnb's and the Ubers and the Googles and these other platforms like Facebook where their product is their customer. And basically they get so powerful, they get to sculpt an entire marketplace, whether it be advertising or commercial rentals or rideshare or whatever it might be. And then eventually they become predatory in those practices and they can't be displaced because they have a monopoly of scale. So a lot of people in various industries, whether it be the music business or the hotel industry, are looking for escape hatches so they can get out of these predatory systems and have a direct relationship with their customers so they can have fair commercial transactions, which are not only more efficient and lower costs, but also allow people to preserve their own data and allow people to preserve their own customers and the fruits of their labors. So it's lingua franca now, this kill the middleman that every industry is excited about and the music business is notorious for having these issues and Napster didn't solve anything. All it did is it just transferred from the record companies to the streaming services and they traded one evil for another evil. So any way to break those up and find a better way to do distribution and a better way to have a relationship with their clients is quite appealing to them. So it's just fun to have those conversations because when you think about their problems, they're not so different from banks or banking the unbanked and not so different from supply chain management and fertilizer sales and so forth. The technology is the same, it's just a different application of that technology and that means we have something very special in this industry. Interesting. Okay, the focus of this edition of the WAF is sustainability. So my question to you is what does this concept mean to you and what role should the blockchain technology play in building up the sustainable future? So sustainability is that to me, you know, kind of an armchair definition you can use is if you project yourself into some spectrum of the future because when you talk about sustainability it's always scoped within a time frame. So if you couldn't care less about something and you're only going to live there for a few years, your sustainability horizon is very short-term. Like the Steve Miller song, take the money and run. You just want to take as much as you can, get out of there. But if your spectrum is I want to leave something behind for my children and their children and their children, then you kind of have to project out and say, how can we create an environment, an economy, an economic system, incentives in a way that a hundred years from now, people living in that time period will have the same quality of life and the same ecosystem as we do, at least the same or better. And if you're in a trend where over time you start draining more and more resources, destroying more and more biodiversity, polluting more and more, destroying quality of life, then you're not in a sustainable system. You're in a system headed towards extinction. And we see this everywhere. Like for example, we have an office in Ethiopia in Addis Ababa and we talked to a lot of the ministers there and one of the saddest things I heard from the agricultural minister was that Ethiopia over the last hundred years has lost 90% of its biodiversity. This is a country where the lion is the national symbol and there's only a few thousand of them left in the wild, which is just truly remarkable. And that's because their population's gone from 10 million to over 100 million and mostly through unsustainable farming practices and other such things. So WEF is really talking about, well, how do we achieve sustainability given that population is going to grow, given that we still haven't solved these big collective action problems like global warming and we see the consequences of that in Australia. Now in terms of the blockchain industry, it is a collection of tools that allow us to approach these problems differently. So when you talk about sustainability, it's not a personal issue. It's a collective issue on a global scale. So historically, how we solve collective global issues is we put somebody in charge, usually by force. So some empire forms, it could be the Russian empire, the American empire, the British empire. And then they set all the standards and they say, for the greater good, we're going to force everybody to collectively sacrifice. And you can't really say no because they have all the power. But with blockchain, what you do is you say, we can create a collective global agreement amongst everyone, but we can do that in a way that does not require to have a leader. It's all decentralized powers pushed to the edges. We've never had technology like that in human history. So it's a great extension to the conversation about how do we achieve sustainability. Also sustainable regulation, not just about financial regulation, but a regulation of the use of other technology classes. We have two pieces of technology that are really dystopian and terrifying if they're handled incorrectly in the 21st century. One is gene engineering, so CRISPR style stuff. And then the other is AI. Now both of these, if we leave them unchecked, have the capacity to destroy the entire human race. So the question is, well, how do we create a common rule set so that we can safely get the benefits of these systems, but then prevent people from cheating and doing things that could destroy us all? Just like with the creation of nuclear weapons in the 20th century, we had to put a very tight, aggressive regulatory global regime on that with force. Now we have to do the same with these two classes of technology, but there's just too many economic incentives. And these are much different than nuclear weapons. They can be done at a much smaller scale. So anybody can work on CRISPR, anybody can work on AI, and only a small team could cause a lot of havoc. So again, blockchain technology is another great global regulator in that respect. You can create a common set of rules without electing a leader that everybody has to follow and put things within that. So we love having those conversations. We get to kind of talk about the future. We get to talk about environmentalism. And we get to talk about, well, how do we set rules amongst people and enforce them and put people behind them? Interesting. So you're working with the governments. Is that really a new business avenue for Kadana? Is there a belief that governments are ready for the technologies? Yeah, there's many governments, especially developing nations, that are intensely aware of the need to upgrade. And in some cases, it's just simply being forced upon them. So let's say Starbucks wakes up and they're actually starting to do this. And they say, look, we want to buy coffee beans from, we want to buy coffee beans from suppliers that are fair trade certified, who are using sustainable agricultural processes, who aren't exploiting their workers, et cetera, et cetera. Okay, so then you look at Ethiopia. It's one of the world's largest exporters of coffee. Well, when Starbucks says that, what they're basically saying is, unless you can prove these things, we're not going to buy your coffee. We'll go to Indonesia. We'll go to somewhere else, Colombia or Hawaii or Philippines. So what does this functionally mean to the coffee farmer on the ground in Ethiopia? They have to digitize now for the first time ever. And that means we have to put infrastructure in. That's not optional. They either can't sell their good or they sell their good at a tremendously lower rate, which creates poverty. So there's a lot of direct foreign investment in these jurisdictions to basically build new social systems and new commercial systems, which are digital. That's a great market opportunity for our industry because then what we can do is say, look, let's go for the whole banana. We can put a supply chain in, but not only that, we can put an identity system in, a payment system in, a voting system in, a land registration system in, and it has a common set of DNA across the whole country. And it's going to run in a transnational way, meaning that the rules will be fixed in the same. The merchants outside of the system know that the system is credible because Ethiopia, for example, can't change the Cardano protocol and so forth. So these are the kinds of conversations we're having, and they're nice that they're facilitated by market need. So there's a time limit on it. You have to get it done or else you lose market access. And it's great because you then get to talk about basically country 2.0, the future nation state, and how these countries are going to navigate through the 21st century. And what's really cool is once you've done it for one country, it's very templatable. So it's extremely easy to go into another jurisdiction with similar demographics and basically install a system like that. And then suddenly, both these countries are interoperable with each other. So everything gets so much easier from cross-border trade to mutual regulation to financial regulation, law enforcement, anything you can think about, it becomes dramatically easier. So when we look to Africa, the fastest growing, youngest economy in the entire world, we say, well, within the next 30 to 40 years, they're going to get very rich, we have a chance to build a pan-African system on blockchain, which can be as strong as the European system or the American system. And that alone, I think, will actually cause a tsunami wave, an avalanche, that will change the entire world to our technology. Interesting. Okay, let's get back to Kadana. We're all looking forward to the hard fork. So how do you think the community will meet the hard fork and what are the key developments that are involved in the hard fork? Yeah, so Cardano kind of had an unusual evolution. So it was an old way for a new industry. And because this new industry has never done things the old way, they didn't really understand what we were doing. So we started Cardano like a DARPA program. And we said, hey, let's just treat this like hardcore high-risk high-return research and development. So we started from first principles and we did a huge amount of science starting in 2015. We wrote over 50 papers, mostly peer-reviewed. And those papers basically mapped out the trade-off profiles and the capabilities of where this technology can go. And the key design requirements were we want a system that scales the billions of people, we want a system that's interoperable with other systems, and we want a system that's sustainable, meaning that it's low power consumption, it can pay for its own bills, and it has a way to evolve itself. So you don't have these contentious forks like Bitcoin Cash and Bitcoin SV and Ethereum Classic and whatever the fork of the week happens to be. So about two years into that research agenda, we developed enough knowledge that we felt comfortable to bring a product to market. And that was the Byron release of Cardano, which was kind of like Bitcoin and Ripple had a child. So it was good enough to get liquidity, get into market, get exchange listings, propagate the philosophy, build a community, these types of things. But by no means is a representation of that core research we've done. The most exciting release in the history of the project is just about to happen and that's the Shelley release. And that's for the first time ever where we're turning over the federation, so the driver's keys of the system, to the community and they can run stake pools. So we've been very systematic about this release. We started with what was called the incentivized test net. And basically the point of that was create a sandbox, a parallel system that has similar rules, allowing people to demonstrate their technical proficiency and their business as a staking pool. So that people would have fair chance and opportunity to make real money and get real configurations and build a real brand in anticipation of launching the main net. So that incentivized test has been running since December and it'll continue running for a few more months. And then at the same time in parallel, we're starting an upgrade program to start turning on Shelley in the main net. So the first step in that is in February with your Boris BFT hard fork and the deployment of the new code. And that's not going to be a contentious fork. The exchanges are on board. The community is on board. So it'll just be very seamless. It basically just download a new client and it just works for the client. Nothing special there. But buried within that is all the necessary infrastructure so that we can begin then turning on upgrade by upgrade all of the Shelley features. And so the next milestone after that will be the Shelley Haskell test net. And the point there is all the people who deployed on the rust side can now configure their pools to run on what it's going to look like for the main net. And after we get that baked in for a bit, we'll just simply turn on the main net. And then we suddenly have the most decentralized cryptocurrency in the world, probably 50 to 100 times more decentralized than Bitcoin. And that's just an amazing achievement by itself. That said, we're trying to get into a release cadence where every month or two months, we just keep adding new features. So in the immediate future, right after Shelley, we'll do some additional Shelley improvements, but then we'll add smart contracts. And then in a few months later, we'll add some more capabilities, more capabilities. And eventually add Hydra, which is our scalability solution. And then the back end will be the governance solutions. That's the both. What's the timeline? Hopefully all this year, I think it's a little aggressive, but we have the engineers, we have the people, and you know, we have the proper foundations. The code that we're deploying this on, we spent over a year and a half rewriting from lessons we learned from the Byron release, and it's being rewritten with formal methods with a very large development team that's incredibly well trained. The average education's like master's degree or PhD and 15 years development experience. So these are very experienced Western engineers, mostly in the UK. They went to Oxford and other things like that. So these guys and gals, they really know what they're doing. And they've been meticulously, systematically working using top techniques for a very long time. And it's created some very high quality foundations for us to quickly deploy things. So we're very optimistic about how quickly we can move into it. Looking forward, looking forward. Okay, what do you make of the recent press speculations that went viral? I tend not to speculate about individual prices. You know, the reality is our industry is still a macro industry and it's led by kind of two events, two forcing factors. One is the price of Bitcoin. So if Bitcoin goes up, everything goes up, rising tides affect, if it goes down, everything goes down. And then two, it's tend to be led by a counter cyclical economic tide. So if the US economy is not doing well and the stock market is not doing well, the Chinese stock market is not doing well, we tend to see an increased amount of interest in cryptocurrency and the prices go up. The US economies, you know, doing well, the cryptocurrencies tend to flatline or go down a little bit. Now that said, we're starting to see a tremendous amount of institutional infrastructure and investment. And we're starting to see a lot of real life use cases and demand factors starting to enter the cryptocurrency space. So institutional investment is going to probably drive billions of dollars of fresh capital into the cryptocurrency space. And by projection, that's going to rise everything up. Right now, the single biggest discussion is proof of work versus proof of stake coins. So will proof of work continue to be the economic paradigm of the cryptocurrency space? Because if you look at the top 10, the majority of value is still in proof of work tokens. Or will proof of stake now become the majority value of tokens? So a lot of institutional investors are taking time to build portfolios of proof of stake tokens. So they're taking some Tezos and some ADA and some EOS and they're going to take some ETH to whenever it comes out and put a bill to basket. And that will bring billions of dollars in it should normalize the price between the two. There's still a lot of questions around regulatory certainty and clarity. And there's this concept of, well, the next big wave is going to be the STO revolution. But the only reason we haven't seen that is because the regulators have not opened up the floodgates. There's still not a lot of liquidity with security tokens, not a lot of regulatory clarity. You can't do cross-border settlement. And there's kind of a patchy framework of how these things work. So they're kind of like the provenance of funding for the SMEs in the five to $20 million range, but they're not viable trading instruments. So where does Cardano fit into all of this? Well, you know, if macroeconomic trends improve, then of course I would be bullish. But I think long term, five to 10 years, the only thing that's going to differentiate us from everybody else is good old fashioned adoption and real demand, natural demand for the token. And the only way that's achieved is if we achieve making ADA a great payment system, a great platform for dApps, a great place to build side chains and infrastructure on. And if we can accomplish that, then I'm very bullish and I'm very excited about the future of the project. And given that we have a huge technological lead on everybody and given that we should be the preferred platform for Fortune 500 enterprise companies and governments, given the formal methods, nature of the code and the stability of the ecosystem, I think our prospects are quite good. I'm going to tease now that Charles Hoskinson will be a part of our top 100 list that we are going to reveal very soon. And so my question is, what do you consider your personal achievements, the biggest achievements of the last year? That's a great question. I mean, you can look at it from a strictly technical sense or you can look at it from an emotional sense. From an emotional side, I think the most humbling event that we had in 2019 was the graduation of our Ethiopia class. So we spent over a year from 2018 to 2019 working with the Ministry of Innovation and Technology and local university partners in both Ethiopia and Uganda to find a bunch of women who had technical skills who were willing to learn Haskell, which was not an easy task. And the Ministry actually requested that the class be all female and we said, sure. And we actually went through over 350 resumes and we went out it down to 23 very good candidates. And we sent our director of education, Lars Brunius, to live in Ethiopia for three months to train that class. And these women, they worked so incredibly hard. Some of them took public transportation two to three hours one way to get the class. It was unbelievable, the personal sacrifices they made, the Ugandan gals that came up. One of them had a child and she had to leave her young kid behind in Uganda with her mother while she trained for three months in Ethiopia. So she didn't see her daughter for three months. Very hard, but all of them graduated. And I went down to Ethiopia for the ceremony with the Minister and Lars and the rest of the gang. And I got to hear their personal stories and there wasn't a dry eye in that entire room. But what I was most proud about was that we figured we'd hire all of them. And so we made some offers and they were very competitive offers above market rate. And they said, no, we're sorry, we're taking other positions. And we said, really? And they say, yeah. And these girls were in a jurisdiction that the average developer makes $500, $2,000. And some of them were getting offers like six times that or eight times that from Western companies. And so we didn't quite get as many people as we wanted out of it. But we created high paying great jobs for a country that has had a lot of difficulty with female programmers. And that was just super humbling. And it shows you can really make a difference. We made a difference in their lives. And it showed us that that model works quite well. And just a little bit more investment, it could be scaled very rapidly. From a technological sense, the greatest achievement of 2019 was the clarity and completion of the Orboros roadmap. So in 2015, we said proof of stake is really cool and interesting. But we didn't know if it was actually work or if it was secure. It's an open theoretical question. And Aguilos Casas, our chief scientist, he has spent the last five years of his life meticulously with the team of some of the best scientists in the world from 10 different universities is systematically building up the entire theory of proof of stake and showing that not only does it work, it works just as well as proof of work. And you could build a global scale system with 10 kilowatts of power, the power of a large home. Unbelievable work. I mean, our seminal paper there was GKL published in 2015. It has almost 800 citations, which is just amazing. And then the same for the Orboros Classic paper and so forth. So just seeing that shape up, the rewriting of the core papers to make them more understandable and with lessons learned, and the firming of the tail end of that research agenda, which will end this year, was incredibly humbling. We solved probably one of the hardest problems in computer science. And we did it in a commercial sense. And we did it in less than five years. And we did it with principles in a peer reviewed way with scientists all across the world, many languages. And as an academic, that's that's always a once in a career thing and a very satisfying thing. And so I'm super proud of our division. And I'm proud we can actually bring these innovations to market and allow everybody in our industry to benefit from them.