#246 David Sonstebo - The Power of Technology to Transform Human Progress

This is episode #6 in the Automation Series. You can learn more about the Automation Series here. You can learn more about IOTA on their website. David Sonstebo is a serial entrepreneur with a passion for any kind of technology that can push human progress forward. In this conversation, Anthony and David dive into the intersection of distributed ledger technology and automation. Specifically, around digital currencies, digital wallets, machine to machine transactions, and how distributed ledger technology will empower the full potential of automation. =============================== ~If you enjoyed this episode and want to stay updated on everything Bitcoin, blockchain, and crypto. Check out Off the Chain newsletter by visiting offthechain.substack.com and join 35,000+ other investors currently subscribed to my daily investor letter.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:01Speaker 00

  What's up everyone, this is Anthony Pompliano. Most of you know me as Pomp. You're listening to Off the Chain, simply the best podcast in crypto. Let's kick this thing off.

• 0:13Anthony Pompliano?

  The following episode is part of the Off the Chain Automation Series sponsored by IOTA. The goal of this special series is to explore the intersection of distributed ledger technology and automation, specifically around digital currencies, digital wallets, and machine-to-machine transactions. My core belief is that every stock, bond, currency, and commodity will eventually be digitized, and distributed ledger technology will empower the full potential of automation to be realized. IOTA is the sponsor of the Automation Series. Their mission is to support the research and development of new distributed ledger technologies, including IOTA Tangle. The IOTA Foundation encourages the education and adoption of distributed ledger technologies through the creation of ecosystems and the

• 0:55Anthony Pompliano?

  standardization of these new protocols. You can find out more about the Automation Series and IOTA in the show notes.

• 1:02Speaker 00

  Anthony Pompliano is a partner at Morgan Creek Digital. All opinions expressed by Pomp or his guests on this podcast are solely their opinions and do not reflect the opinions of Morgan Creek Digital or Morgan Creek Capital Management. You should not treat any opinion expressed by Pomp as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. This podcast is for informational purposes only.

• 1:28Anthony Pompliano?

  Alright guys, bang, bang. I'm here with David. I'm super excited to have this conversation. It's the next installment of the Automation Series. They've made a few recent announcements that I think will be fun to get into. So David, thanks so much for taking the time to do this.

• 1:44Speaker 02

  Yeah, thanks for having me.

• 1:46Anthony Pompliano?

  For sure. Let's jump right into your background and then kind of how you got up with IOTA and kind of where you guys are today.

• 1:56Speaker 02

  Definitely. So yeah, my interest in technology really started to blossom in my teens. Got really into the futurist movement and artificial intelligence, etc., which was very nascent back in those days, kind of in the Ice Age of AI, I would say. And this is where I, well, how Finney, Wade, I and all those legends of crypto hung around in the same communities. And so naturally, the white paper of Bitcoin appeared there quite early on.

• 2:26Speaker 02

  And in the beginning, I wasn't too excited about it just because I didn't really buy into the ideology that were surrounding it at the time. I felt it was too ideologically driven rather than technologically driven. But back in 2012, I started to contemplate what you could actually do with this technology if you applied it to different sectors. And so I got really into it and devoted pretty much my last seven, eight years to this technology. So then in 2013, I met my co-founders Sergey Ivanchenko, Sergey Popov and Dominic Sheiner in this NXT project, which was kind of blockchain 2.0. It was the first blockchain with proof

• 3:08Speaker 02

  of stake, first blockchain with an asset exchange and voting and all of these kind of 2.0 functionalities. But it still had the same limitations as regular blockchain, i.e. Bitcoin and Litecoin at the time. So me and Sergey and Dominic and the other Sergey Popov, we decided to tackle this problem. And the reason we tackled this problem was because of this vision we had about the Internet of Things and how the machine-to-machine communication would require a new protocol layer that ensures data integrity as well

• 3:49Speaker 02

  as transactional settlements for incentivizing technological resource trade. And that was kind of the beginning of IOTA in 2014 and then announced in 2015.

• 4:01Anthony Pompliano?

  Got it. So what have you guys built so far, right? In terms of IOTA, I think a lot of people are kind of aware of it on the surface, but help us understand what the technology that's been built and then we can get into today's announcement.

• 4:15Speaker 02

  Yeah, sure. So IOTA, of course, we started with the white paper. We were really excited about this new approach where we used a directed acyclic graph rather than a linear block after block architecture. Because what we saw with that is the promise of a truly scalable, decentralized and feeless network. So that is what we began to build in 2015 and of course, since then, we have iterated and gone through several different phases of the technology. And currently, we are very happy where we are at because right now, the, I should probably provide a little more background there. So IOTA promises to give a truly scalable ledger with no fees.

• 5:00Speaker 02

  And of course, that is a very, very high, high task to achieve. So, one of the things we had to do in the beginning, just to get the network rolling, was to implement this pseudo-centralized coordinator, this special node that just issues milestones. So the network itself is completely decentralized, but there is this quasi-centralized component called the coordinator. And right now, we are getting rid of said coordinator, which is the project core decide. So this is the stage we are at right now. We have solved all the theoretical problems. It's being peer reviewed and we've already launched the Alphanet.

• 5:43Speaker 02

  So it's kind of in a very, very early stage of being deployed and we are very happy about this because that's, of course, something we've worked towards ever since the beginning.

• 5:52Anthony Pompliano?

  For sure. And so as you guys have built this, like what have been the technical challenges that you've had to overcome, right? Because I think that a lot of people see projects that get built and they kind of see the final result, but they don't actually see the technical obstacles that had to be overcome. So what sticks out in your mind as the big ones that you guys had to, had to deal with?

• 6:11Speaker 02

  A very good question. So, and I think you're very right, that most people, they see a white paper or they see a basic description of a product or a project and then they think, hey, this should work perfectly from the beginning. But that's of course not how cutting-edge technology evolves. So we've had a lot of different things that we had to resolve. And what a lot of people may not understand is just how much theoretical work goes into a functional decentralized ledger that had to do with consensus and so on and so forth. So one of the biggest things was indeed to figure out how can we actually achieve this without being susceptible to cyber attacks where you can just fire up these fake nodes

• 6:56Speaker 02

  and take over the network and do Eclipse attacks, etc. That has taken a lot of work. So we've employed a lot of mathematicians, computer scientists, etc., to really flesh this out properly. And I believe the current Cordyside IOTA white paper is one of the absolute most comprehensive ones in the entire space. And in terms of having a live network, as you can imagine, especially during the 2016, 17, 18 boom, of course, that comes with a lot of responsibility. You have to keep the network going even though you are deploying this experimental technology that you are iterating on constantly and improving, but you still have this obstacle of keeping

• 7:41Speaker 02

  it alive and secure. So we've had, of course, bugs we had to flesh out. We had some design decision that we made in the beginning that we had to revert and so on and so forth. But to us, that's just, that's just how innovation should be. It's kind of this Darwinian process and you have to adapt all the time and change the protocol and eventually you end up with the fit gene, so to speak.

• 8:10Anthony Pompliano?

  For sure. And then talk a little bit about, you guys made a pretty big announcement today with Eclipse, etc. So maybe talk a little bit about that announcement and kind of why you guys are spending time and resources on this and what that means for IOTA.

• 8:23Speaker 02

  Definitely. So we're very, very excited about the Tangle EE working group we're launching today together with the Eclipse Foundation in a partnership. And we're also, of course, we have several companies, several academics, or academia, I should say, as well as startups that are co-founding this Tangle EE working group. For us, as the IOTA Foundation, this really represents what we are all about. We don't care about ideology. We don't care about hype. We don't care about none of that. What we truly care about is this path towards production readiness and standardization. And of course, Eclipse being one of the biggest open source organizations in the world, they've established plenty of products and projects that are being, or have been widely

• 9:08Speaker 02

  adopted and used for two decades now or more. That is for us a very important step to take because one thing is to develop this in-house in your own foundation, but it's a whole other thing to get other companies, academics and open source organizations to actually buy into that vision and participate in creating that software going forward. So now what we're doing with the Tang Lee working group is gather all these companies and academic institutions to develop solutions on top of it, which then kind of become blueprints for these different industrial verticals that these companies exist in. So yeah, for us, this is a very, very major, major achievement.

• 9:51Anthony Pompliano?

  Got it. And maybe explain a little bit more about kind of the importance of those, that open source component and, and why you guys thought that this was the best path.

• 10:02Speaker 02

  Yep. So ever since the beginning, when we, we set the Iota Foundation, we decided, let's set it up in Germany. And everyone was like, why the hell would you want to set it up in Germany? It's pretty much the hardest thing you can do. It's like, why don't you go to Switzerland or Isle of Man or the Caribbean like everyone else? But we really insisted that if this is going to get global adoption, we really need to make sure that we can make it in the regulatory framework in one of the strict, strictest regions in the world. And it's kind of the same philosophy that makes this Eclipse partnership so valuable and important to us. It's one of the most trusted and important open source organizations in the world.

• 10:47Speaker 02

  They have a proven track record, hundreds of members, the biggest companies in the world. And so their, their open source governance model is extremely mature. And that is exactly what this kind of software needs to reach global adoption and widespread usage. Because of course, everyone can issue open source software, just create some code, put it on GitHub, give it an MIT license or whatever. But if you really want to do open source in the big, big way, the same way that Android was developed, for instance, you really need to do it with the Proper governance structure and the experience that such a organizations as Eclipse brings to the table.

• 11:28Anthony Pompliano?

  For sure. And then, you know, one of the things in crypto, I think, is a lot of people kind of announce these partnerships. We're literally today, there's a partnership that got announced and all of a sudden everyone goes nuts. But really, it's just a company basically saying, hey, we're going to participate in some way with with that organization. And so the substance doesn't really kind of exist. For you guys, partnership with Eclipse is a little bit different. Maybe talk a little bit about like, in practice, what does this look like for Iota Foundation? For the developers and kind of how you guys will work with the technology and the open source libraries, et cetera,

• 12:12Anthony Pompliano?

  to actually implement a lot of these use cases or kind of production-ready products.

• 12:19Speaker 02

  Yeah, for sure. You're completely right. It's this isn't this entire space has always been about associating your project with another more important project. So you get the halo effect from it. In Iota, we've always had a lot of big partnerships, but for us, that's always been with the aim of getting it into the real world. And that is precisely what this partnership with Eclipse has been about. So this has evolved over the last two years. And we have taken our time to make sure that everything is proper, that we have the buy-in from the right companies, the buy-in from the right academic institutions, as well as startups that really just want to innovate on top of this. So for for me, this is literally probably the biggest announcement to date.

• 13:04Speaker 02

  Because what it will mean in practice is that no longer is Iota solely developed by the Iota Foundation or community members. Now you actually have big conglomerates like Dell and SD Microelectronics, who are developing on this with the intent of Developing it into a product or implement it into their products. And we also have the Object Management Group as well as the Industrial Internet of Things Consortium in this working group, which means that once we have these things, we can standardize them. We can standardize the protocols that come out of this, meaning other companies can come around and just pretty much copy paste without having to start from scratch.

• 13:47Speaker 02

  So for me, this is a new chapter for the IOTA project because now it's no longer just in the hands of the founders and the tremendous team that we've built, but it's in the real world. It's being co-developed in the real world, as I think all open source software should be.

• 14:04Anthony Pompliano?

  For sure. And then so give us an update in terms of the IOTA Foundation and kind of where you guys are today. And then maybe we can get into a number of the specific use cases or projects that are actually being built for those use cases.

• 14:21Speaker 02

  So the IOTA Foundation today is almost 120 people, full time, spread across a lot of people. And they are spread across 30 countries. So you can imagine the time zones and it's a truly distributed project in its very most literal sense. And we're very proud, of course, to have built this very solid foundation. And for us, the very good thing is that we have a really solid research team, plenty of professors in mathematics, computer science. And we have engineers, all the way like very senior engineers to very young engineers, junior engineers that really just want to get there, just experiment with everything.

• 15:05Speaker 02

  And we also have a full competent media project. What should I call it? A department in the foundation. We've built this really solid foundation precisely because this is what we consider absolutely necessary. And at the moment, we feel we have pretty much all the different bases that you need in order to bring forth such a big vision to the world within the IOTA Foundation. And yeah, we have been very fortunate, unlike a lot of other projects that kind of went bust when the boom went bust. So. Yeah, I'm just very happy about the current state of the Iota Foundation overall,

• 15:48Speaker 02

  because we no longer, we're not desperately hiring anymore and we've kind of filtered out all of that. Now, everything is focused, structured, and that has taken quite a lot of time, as you can imagine. But we are one of the few projects that still stand and we are just growing stronger. So, I'm very excited about that.

• 16:05Anthony Pompliano?

  Yeah, and then, so you guys have 120 people, like, what are those people doing, right? In terms of the breakdown of engineering versus operations or other things, like, how do you think about the divvying up of the work, if you will?

• 16:22Speaker 02

  Yeah, so, of course, in its nature, we are primarily a research and development organization, so that is the bulk of our employees. But then you also have, like, when you grow to that scale, you also need to have HR, because of course, you're dealing with human beings and you have to make sure everyone has their rights, like, for leave and so on and so forth, even though you would pretty much want everyone to be automated and just code away 24/7. All of these things-

• 16:49Anthony Pompliano?

  You just want machines all the time.

• 16:53Speaker 02

  Exactly. So, everyone at the Iota Foundation is essentially working towards this automation goal, which will render the jobs non-existent. But, in reality, though, it's just, it comes with the territory. So, even though it's the overwhelming majority of the Foundation is comprised of developers and researchers, we also have HR and we have social, we have media, because you need to present this vision. That is another thing that I think a lot of people don't get right, even though there's a lot of hype in this space, which is bad. It's very important to be able to communicate and convey your message in a way that appeals to others, so the community grows.

• 17:37Speaker 02

  Because at the end of the day, there is no successful open-source project without the community. So, we've hired- I can't even begin to praise them enough, the graphic designers and the front-end developers. And that again goes to adoption, because when you have good front-end developers, and you create a proof of concept or a pilot project with another company, and you make it really beautiful and really polished, they want to do more. So all of these people play a very important role in driving the adoption of the more hardcore theoretical underpinnings that lie beyond the technology itself.

• 18:18Anthony Pompliano?

  Got it. And so, let's talk about kind of the actual use cases that are being built out here with with some kind of concrete examples. What are some of the ones that you're most excited about, you know, through IOTA? And then with some of these partnerships or other folks you guys are working with?

• 18:37Speaker 02

  Yeah, for sure. So, one of the biggest ones is probably decentralized marketplaces. This is kind of one of the things that have always been promised by distributed ledger technology, but then hasn't really come to fruition. So, when I think about decentralized marketplaces, I really mean truly autonomous decentralized marketplaces where actual machines can also issue orders for parts if they need repair. Or also more human-centric things like ordering an autonomous vehicle in the next few years.

• 19:12Speaker 02

  These things, in my opinion, should be completely automated, and that requires this underlying

• 19:19Speaker 02

  trust layer, and that is exactly what the IOTA protocol brings. And that's one of the things we're focusing on in the Tangle EE working group. That is one of the two first projects we're launching. So if people want to check the first product out, it's on industry.iota.org. You can already play around with this. This was made together with E-Class and some other entities in Germany, and this is now just being expanded upon. Another very exciting thing that we are doing right now is the decentralized identity protocol. And this again goes back to truly true autonomy, I should say. Because if these devices do not have an identifier, if they cannot have verified claims of what they are capable of doing,

• 20:04Speaker 02

  it's very hard to create an autonomous world. So that's another very important project. And again, it also has this human component. There are so many people in this world that are undocumented, that don't even have an identity. And we have been working with different nonprofit organizations across the world to test this out. So fleshing this out further as a technology is very exciting for us. And then, of course, as you probably have seen before, the Jaguar Land Rover, the idea of cars paying for themselves, paying or being rewarded for detecting potholes, etc. That's all extremely exciting because it ties into kind of this autonomous city that we will all live in in the future.

• 20:50Speaker 02

  So yeah, those are probably three of the most exciting ones that just come to my head right away. But we also have things in the supply chain, for instance, in Africa, solving some of the big problems with documentation there. Because currently we're losing four trillion dollars every year due to this kind of messy old system that we have in the supply chain across the globe. So if we could solve some of the most troublesome problems there, that would be a great benefit to mankind. So yeah, those are just some of the very exciting ones, at least to me.

• 21:26Anthony Pompliano?

  And maybe describe a little more, go deeper on this idea of the identifiers in an automated world. Because I don't think that people have really kind of heard or talked about that in detail.

• 21:36Speaker 02

  Yeah, so people, I think people tend to think of machines as just kind of this inanimate, non-existent, not non-existent, but inanimate object. It's just there and it has some function and that's it. But in an autonomous world, this device itself has to be in, it has to have its own autonomy. And that means it has to have its own identifier so that the rest of the other devices, as well as humans, can identify it and communicate with it, transact with it. But it also needs to have these qualifications or these verified claims about it. So for instance, if it's a sensor that is gathering a certain amount of data, you want to know that, okay, it has this much storage capability.

• 22:21Speaker 02

  It's not infected by viruses, so I can indeed receive data packets from it. And the data that it's gathering has been purchased by this and this entity for this and this price at an open data marketplace. So therefore, you need to be able to verify that. That can't just be trusted. That needs to be verified in a distributed ledger that cannot be tampered with. So just like you need a driver's license, your ID to get into clubs, et cetera. Essentially, the devices need the same thing to prove that they are able to do what they are offering as a service to do.

• 23:03Speaker 02

  So I believe that the identity of things is just as important as identity for people in general to get a functioning economy and a functioning, truly connected autonomous ecosystem.

• 23:17Anthony Pompliano?

  Got it. And I guess really the idea here is, in that automated world, like what is the security concerns around this identification, right? So like, identity can definitely help empower certain aspects of automation, but what about like the security side of this? And really, I'm coming at this somewhat uneducated in the sense of, obviously, identity is really important for humans when it comes to security. Is that also true on the machine side or not so much?

• 23:46Speaker 02

  No, I would say it's probably more important because as we are entering this autonomous world, we truly entrust our lives, like everything, we are trusting to the machines. And so if they don't have the same or higher standards of security than human verification, then it's a very scary world we're starting to enter because soon, over the next decade, we will have complete autonomous fleets of vehicles. You do not want that to go crazy. You don't want crazy artificial intelligence on the loose. So you need this identity system also for databases. So for instance, when a car is using machine learning,

• 24:31Speaker 02

  they need data sets and those data sets need to be verified. And that's just essentially another identifier. And that needs to sit on top of a completely cryptographically secured distributed ledger that cannot be affected or tampered with in any way. And this, it also goes for more mundane use cases like, let's say, insurance. It's increasingly becoming automated through Internet of Things. But there's of course this huge incentive from both parties, both from the insurer as well as the insured, to tamper with the data in their favor. So here again, you really need these sensors that are providing the data

• 25:12Speaker 02

  that you're acting upon to both be, of course, secure in their hardware, but also in the software side, which is where the IOTA protocol comes in. But we are also working, as the IOTA Foundation, we're also working on the hardware component. We really need to solve this problem as well. Otherwise, yeah, it's going to be not the most optimal world.

• 25:35Anthony Pompliano?

  For sure. And then in terms of the IOTA EE working group, talk a little bit about like what exactly that is? Because I think people will start to see that written in more places. But maybe describe a little bit about what that is and kind of how the Eclipse partnership plays into that.

• 25:55Speaker 02

  Yeah, for sure. So Tangle EE, the EE stands for Enterprise Edition, which kind of sums up the goal of it is to bring IOTA to enterprise solution and production readiness. And the working group itself is co-founded by 15 members, different companies and academic institutions, where the sole goal is to provide these blueprints for distributed identity for decentralized marketplaces, which includes the data marketplace as well as autonomous vehicles, et cetera.

• 26:26Speaker 02

  And the entire working group is focused solely on all of these entities coming together, providing their input and coming to a consensus on how this software should look, how it interoperates with the Tangle, which is the Iota Ledger, and then standardizing that through the Object Management Group. Yeah, that's the role that it plays. But we also believe that it also kind of sets forth this whole vision of a truly back to decentralized ledger, because we already have Hyperledger with Linux.

• 26:59Anthony Pompliano?

  Yep.

• 26:59Speaker 02

  And Iota Foundation is also collaborating with the Linux Foundation and Hyperledger. We've just built a bridge to Hyperledger, but we see Hyperledger more like the Intranet versus Iota, which is the Internet. And Eclipse is to Iota what Linux Foundation essentially is to Hyperledger. And that's what this working group is really all about.

• 27:22Anthony Pompliano?

  Got it. And so how does that play into kind of your future development plans and the Iota Foundation plans?

• 27:30Speaker 02

  Yeah, so our next goal is definitely the Cordiside, which is kind of Iota 2.0, if you want to call it that. That's at least what we are calling it, so you're free to call it that. For us, that is the true version of Iota that we set forth all those years ago, where you no longer have any fees on transactions. You no longer have any kind of centralization around mining pools or staking pools, because at the end of the day, these are really comprised of oligopolies. It's not really decentralized, it's quasi-centralized. And also, it's scalable. So you don't need this to be on an off-chain ledger. You don't need this to be like a Layer 2 solution.

• 28:14Speaker 02

  We truly believe that we can bring scalability on Layer 1, and that's what we're doing through Cordiside, and that's exactly what we're developing right now. Just a week ago, we launched the first very early 0.1 alpha version of this, which is called GoShimmer, so people can check that out and play with it already. And this is pretty much what 2020 is all about for the Iota Foundation to really bring this to life. We also have this intermediary period where we are releasing something called Chrysalis, which is Iota 1.5, where we are changing some of the things, optimizing some of the things that we've learned from Cordicide,

• 28:56Speaker 02

  but still containing or retaining the coordinator. But it will increase the transaction throughput to hundreds and hundreds of DPS and be much, much more optimal for Internet of Things devices. So this is kind of the intermediary stage and then we go to Cordicide. And then from there on, we go into what we call slicing, which is a form of sharding, but it's not really the same as the projects that use the term sharding, so we call it slicing. And yeah.

• 29:28Anthony Pompliano?

  What are the main differences there between slicing and sharding?

• 29:31Speaker 02

  So the main differences go back to how the tangle is, a directed cyclic graph rather than a blockchain. So it's just kind of this different way of approaching the concept of clustering different

• 29:48Speaker 02

  different slices of the networks. You can have, for instance, you can have a slice in Berlin and you can have a slice in San Francisco. And they will be essentially, both of them will be operating at their maximum capacity. So the whole global network can have hundreds of thousands, if not even more, transactions per second going through them without you having to check the whole global ledger. If you're in Berlin, you don't really care about what is happening in San Francisco, unless you are transacting with San Francisco.

• 30:21Anthony Pompliano?

  Got it. And so when, like, what is the impact of being able to do that? Is it a similar impact to sharding or other methods, but it's just a different way of doing it? Or do you think that you can actually drive a different impact?

• 30:35Speaker 02

  Very good question. I would say, of course, I'm biased, but I would say that the tangle itself, due to its nature, is a lot more friendly to sharding, I would say, because, you know, blockchain is kind of very built around this rigid structure, this artificial structure, I would say, where you need to have block after block after block, and then you add these layers, and you try to make sharding work somehow, but you're still working within these very constrained parameters, whereas the tangle is much more malleable by nature. So, pretty much everyone working in the Cordiside project and beyond, they see tangle

• 31:18Speaker 02

  as way more optimized for sharding or slicing, as we call it.

• 31:22Anthony Pompliano?

  Got it. That makes sense. And so, once that gets implemented, what would be next for you guys?

• 31:30Speaker 02

  Yeah, so the next will, of course, we will continue to develop. We are working on smart contracts. We are exploring this web assembly approach, which is kind of becoming the consensus, I think, around all smart contract platforms, as well as the future of the web. So we have this project called WASP, because we kind of use, we use B and Hornet and all of these names, so we decided to just call it WASP instead of WASM, which is the official name for a web assembly. So, in this project, we are bringing smart contracts to the IOTA project. We're bringing Oracles to IOTA, all of these 2.0, 3.0, 4.0, whatever you want to call it, features. So that will be very exciting and open up

• 32:15Speaker 02

  completely new possibilities and doors for the project itself. And the foundation will just continue to push for adoption and standardization across the globe. That is really our primary motive. And continue to increase the relationships that we have with academic institutions and companies to really converge in this tangle EE working group.

• 32:37Anthony Pompliano?

  Got it. That makes sense. And then, in terms of the current state of crypto outside of IOTA, like, what are you paying attention to there? And what are you kind of excited about?

• 32:48Speaker 02

  So I'm very, I'm very excited about the current state of crypto. I believe that we have Proven as a community, as a whole community, the entire crypto community, that this technology is not going anywhere. That the boom of 2017, the bubble there, it wasn't, it wasn't all bullshit, although there was a lot of bullshit there. And I believe that in crypto right now, we are entering a new era where only the serious projects really matter. Of course, there's still some nonsense going around and there will forever be. But at least from the perspective that I'm seeing in terms of talking with corporates and talking with open source organizations,

• 33:32Speaker 02

  it has entered just a completely new realm of being taken very, very seriously. And one of the most interesting things for me is to see that these corporates are actually asking for decentralization. Whereas back in 2016, 17, 18, it seemed like permission ledgers were going to win, so to speak, at least in the, in the enterprise world. But we are actually seeing the opposite. We're seeing companies and organizations come to us and say, we do not want to rely on a permission ledger. We don't want to be in this kind of oligopoly. We want true decentralization. We want the internet equivalent of, of DLT. And to me, that is very exciting.

• 34:15Speaker 02

  And in terms of what I'm paying attention to in the crypto sphere itself, I, I try to keep up with all the different projects. And of course, there's a lot of exciting research being done, and that's what I'm paying most attention to. Of course, as you can imagine, I don't hold any other token than Iota. So I don't really worry too much about the price of other tokens or how well that particular project is doing. But I always pay attention to the ideas and, and solutions, because there's a lot of brilliant people in the crypto space. And even though it's often very tribalistic, I try to see beyond that and just look at what is the best ideas. And maybe we can be inspired by some of the other projects

• 34:58Speaker 02

  and maybe they are inspired by some of our work. And that's how open source should be.

• 35:03Anthony Pompliano?

  For sure. And, and so as you think about, you know, what's to come in, in the crypto industry, what are the things that maybe haven't happened yet? But you're like, look, if, you know, A, B, or C occurs, those will be massive inflection points for, for the industry as a whole and kind of all boats rise together.

• 35:21Speaker 02

  Yeah, very, very good question. I would say that achieving standardization is one of those things because even though enterprises and companies have shown and continue to show this deep interest for the technology, it's still such a hassle to build products from scratch because you have to hire specialized engineers, you have to start from scratch, you have to give them a budget of over like one and a half or two years to develop just simple prototypes. But when you have standardization, you cut down the development costs so immensely that you remove the barrier for entry. And I think at that point, we will suddenly see this explosion of adoption. And at that point, no one can deny crypto anymore.

• 36:06Speaker 02

  And I believe that cryptocurrency itself, actual transactional value being settled on the ledger, is something we will start to see really happening outside of just the cryptosphere. And that's what you're seeing with, for instance, the Jaguar Land Rover project that we are doing, or they are doing with the IOTA technology, where they are actually communicating and working on this, that these payments happen with the actual cryptocurrency, not with some fiat IOU token.

• 36:37Anthony Pompliano?

  Do you think that standardization helps the startups more or kind of the incumbent large companies?

• 36:44Speaker 02

  I would say both because of course, as a startup, you have very constrained resources. So if you have this idea that you want to build on top of a distributed ledger, then having that, all of that pre-work done and just being able to focus on your solution, that is priceless. It's going to, it kind of levels the playing field, so to speak. Because of course, these big conglomerates, even though they don't like spending the money on starting from scratch, they have the luxury of being able to do so, whereas startups don't have that luxury. So with standardization, I believe that the playing field has been leveled. And now, just like with the internet, everyone can participate and the best solutions or

• 37:29Speaker 02

  the best services end up winning.

• 37:31Anthony Pompliano?

  Got it. That makes sense. Awesome. Where can people find out more information about IOTA and then also contact you if, as they're listening to this, they've got questions or want to have a conversation?

• 37:45Speaker 02

  Yeah, for sure. So if they want to learn more about the IOTA project, go to iota.org. And if you want to learn more about specifically the Tangle EE working group, go to tangle.ee. And if you want to contact me specifically, you can do so at [email protected] or twitter slash David Sonstebo. I doubt anyone will be able to guess the spelling, but you will find me if you Google me.

• 38:12Anthony Pompliano?

  I love it. I love it. Before I wrap up, I always ask rapid fire questions. What do you think is the most important company in crypto outside of IOTA?

• 38:21Speaker 02

  Very good question. I would say one of the most important companies is probably DCG, which is kind of like a holding group for 130 or some different companies. Because they have this diversified portfolio, but still it seems they are working in synergy. And I believe that is very important. So I would say that is undoubtedly one of the most important companies. And if I can add another one, I would say perhaps at least from our perspective, ST Microelectronics, because it's not a crypto startup or a crypto company. It's an established semiconductor, but they are very, it seems they are very committed

• 39:06Speaker 02

  to distributed ledger technology. And I believe that will accelerate adoption tremendously, especially within the realm of automation and internet of things.

• 39:16Anthony Pompliano?

  Got it. What's the one regulation or law that you would change or improve if you could?

• 39:23Speaker 02

  Ah, that's a very good question again. I think that pretty much all the regulations that have been made regarding crypto so far have been reactionary, not proactive, not been led by the industry itself. That has to change. And that's why we were part of co-founding INATPA with the European Commission to really try to influence that discussion. If I had to select one single thing, it would probably have to do with somewhat stricter regulation on scams. I just absolutely cannot stand how much money these different shit projects have been able to get away with. So.

• 40:05Speaker 02

  Yeah, I would actually ask for stricter regulations because, yeah, again, we've been through it. And we are, we committed ourselves to it, so I like to hold people to that standard.

• 40:15Anthony Pompliano?

  For sure. What's the most controversial thought you have in crypto? It's like the one thing you believe that other people will disagree with you on.

• 40:22Speaker 02

  Yeah, so this is easy, but it's definitely controversial. And that is that regular blockchain architecture will never work. And by that, I mean, the current incarnations of blockchains, all of them, won't work. The fees are too high, the bottlenecks are too tight, decentralization is scandalous. I don't even like to discuss, like, I don't even like to say that there are these, most of these like blockchain networks are decentralized, because they're not. They are oligopolies of miners or stakers. So that is probably controversial, but it's also factual, so that's just my opinion. So I don't think, I, I think they will have to adapt a lot if they are going to be around the next decade.

• 41:07Anthony Pompliano?

  What, um, what's the most important book you've ever read?

• 41:10Speaker 02

  I keep changing when I think about that. Today, I would, today I would probably say the collections of Sinisa, the, the, the Roman philosopher, Stoic philosopher. I've been reading, I'm rereading his different theses. And yeah, anyone that's, that want peace of mind, I recommend reading some of the ancient wisdom there. It, and I'm really excited about it because today, in our age, we can really see that some of the mindsets and the principles and the philosophy of that age actually seems to work very well with our neuroscience and what we're finding.

• 41:52Speaker 02

  So that is, that has always influenced me quite a lot, so I will say that today.

• 41:56Anthony Pompliano?

  All right, that, that sounds good. What about aliens, believer or non-believer?

• 42:01Speaker 02

  Uh, I, I'm a pragmatist, so I think of it as this. I think the most plausible, um, theory of our universe is inflation, i.e. eternal inflation. And that means aliens by default exist statistically. I do not believe in alien-like Area 51.

• 42:21Anthony Pompliano?

  Why not?

• 42:22Speaker 02

  Just because of the laws of physics again. The speed of light, you can't beat it unless they figure out some kind of wormhole loophole. And of course, I'm not going to rule it out entirely, but just realistically, personally, I don't believe it.

• 42:39Anthony Pompliano?

  I love it. I love the contrarian thought. You know that I'm a believer. What part do you have for me to wrap this up?

• 42:48Speaker 02

  One question for you. Yeah, so I would ask you, how do you see distributed ledger technology play into the infinite of things and autonomous era we're entering?

• 43:00Anthony Pompliano?

  Yeah, I've said a lot, like my whole view on this is this idea of triple entry accounting, right? So if you go back in history, pre 1400s, you've got single entry accounting. Around the 1400s, the idea of double entry accounting becomes popular. And then with the invention of triple entry accounting, now all of a sudden you are adding connectivity to balance sheets, right? And me, like that drastically increases human production and potential. And so when that occurs, what you get is a world that unlocks a lot of automation. And the way that I always talk about it is I say, for the true value of automation to be realized,

• 43:45Anthony Pompliano?

  you need two things. You need the application of triple entry accounting or kind of automated accounting. And then you need digitally native assets, right? And so I think that those two things are kind of the crux of what crypto is about. And part of what is so exciting about it is you have all these different entrepreneurial and kind of innovation-driven teams that are, you know, working while competitive on a micro level. On a macro level, they're working together to kind of usher that world in. And so it gives me great confidence that we're going to get there. It's just a matter of time. And so the more smart people we can get working on this stuff and kind of experimenting,

• 44:27Anthony Pompliano?

  I think it's a net positive for kind of where we're all trying to go.

• 44:31Speaker 02

  I completely concur with you 100% 100% and I really like the fact that you've thought through this topic on a much deeper level than I think a lot of people have so I very much commend you for that and I think our visions are quite aligned even though we may diverge on Bitcoin itself at least the vision is seemingly aligned.

• 44:55Anthony Pompliano?

  Absolutely I think that's what makes this so much fun so well look David I really appreciate you taking the time to do this I know you guys are having a big day today with the announcement and everything like that so I really appreciate the time that you took and then we will have to do this again as you guys kind of continue building and moving towards that vision.

• 45:14Speaker 02

  Yeah no definitely and thanks for having me been a pleasure always.

• 45:19Anthony Pompliano?

  Hey everyone Pop here if you liked this episode of Off the Chain and want to help us take crypto to the top of the Apple Spotify and other podcast charts please do us a favor and rate review and subscribe to review simply go to the Off the Chain homepage scroll down until you see the five blank stars taking 15 seconds to fill those stars in and leave a quick review goes a long way in helping us take the entire crypto ecosystem to the top of the charts I appreciate you listening and see you next time on Off the Chain.