Do We Need Web3? — With Gavin Wood

Gavin Wood is the co-founder of Ethereum and creator of Polkadot. He joins Big Technology Podcast from Davos for a discussion about whether we need Web3 — a new web built with blockchain technology. Joins us for a broad conversation on what inspired Wood to dedicate himself to the Web3, movement, how the technology works in practice, and whether the economic downturn may actually help the crypto movement. Learn more about your ad choices. Visit megaphone.fm/adchoices

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

• 0:00Alex Kantrowitz?

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• 1:03Speaker 01

  LinkedIn Presents.

• 1:14Alex Kantrowitz?

  Hello and welcome to the Big Technology Podcast, a show for cool-headed nuanced conversations of the tech world and beyond. And we are coming to you from Davos this week in collaboration with the Web3 Foundation and Unfinished. Our guest today is Gavin Wood, the co-founder of Ethereum and creator of Polkadot. We've had a handful of conversations about Web3 on this show, but I don't think any has been as in-depth as the one you're about to hear. Gavin, welcome to the show.

• 1:41Speaker 02

  Thanks for having me on.

• 1:42Alex Kantrowitz?

  So you're the co-founder of Ethereum, creator of Polkadot, two of the most influential crypto projects that we have today. And both of them challenge the current institutions. And so I've heard two legends about you.

• 1:57Alex Kantrowitz?

  The first is that you decided to get into this after seeing the revelations from Ed Snowden. The second is that you decided to make these moves after seeing the financial collapse in 2009. So which one of those is true?

• 2:15Speaker 02

  I think the... The time that this happened was was around 2013. Um, so I guess, you know, the the Snowden revelations were sort of pretty timely back then. Um, and certainly, uh, you know, I mentioned this in the Web three, um, sort of, um, little document thing that I wrote back, back, uh, back in 2014. Uh, but that said, um, the, the, the, the financial crash in 2008 was, uh, it very much sort of set the scene and it, it, it made me increasingly aware that a lot of the, uh, a lot of what goes on in the world that is very, uh, that is crucial for, you

• 2:57Speaker 02

  know, the, uh, continued, uh, functioning of, of everyday life is, uh, is hidden and and rather opaque and not always in the best of hands.

• 3:06Alex Kantrowitz?

  Right, and so it is great to start off this way because we often hear about, uh, people who are interested in Web three and their desire to fix a broken system, but we don't really talk too much about the broken system. Oftentimes it's assumed. So what about the Snowden revelations in particular made you think that the system we had was broken and that we needed to build a new one?

• 3:28Speaker 02

  Um, the, the, the depth to which, um, you know, I have expectations as a citizen in a free society. And those expectations sort of, uh, I, you know, I expect certain, um, things to work in particular ways. I expect a degree of privacy. I expect that, um, you know, random government employees cannot arbitrarily snoop on my video calls, like without good cause at least, um, preferably from a judge who is, uh, entirely unbiased, right?

• 4:10Speaker 02

  And when, you know, when it became clear the degree to which um this was really not happening in society, when it became clear that the um the social contract was not being um faithfully honoured on the side of of government, and in particular, security services in government, I don't, you know, I don't doubt that there are um plenty of government employees that are, you know, uh great, decent, upstanding people keen on um on on honouring the the sort of social contract, but I think to a large extent, the security services, uh and certainly the Snowden revelations would would would support this, um sort of

• 4:53Speaker 02

  consider themselves um, you know, a power uh um that that needs little um judicial oversight, little uh little need for checks or balances. And this is um unfortunate that we that that uh that we live in a society where um on the face of it, we have uh statutes, we have um uh, you know, ethics, we have um a a rich history of of of of understanding

• 5:33Speaker 02

  and trying to keep in place and um and and and be very vigilant of our freedoms, and yet um, you know, behind the curtains, um it's not all quite as it seems.

• 5:44Alex Kantrowitz?

  So one of the things that I want to know is why then go ahead and try to build a new web, build something totally from scratch that has technical difficulties versus just try to reform the system as it existed back then, exists today?

• 5:58Speaker 02

  Yeah, I'm, well firstly, I'm a technologist, not a politician, and I I fear that to attempt to reform the system begins in the world of politics, um a murky world at best.

• 6:14Speaker 02

  Secondly, I actually, I believe that to a large extent, technology, I wouldn't say necessarily created the problem, but the, the use of, of, you know, internet of, this broad, you know, all encompassing communication technology

• 6:37Speaker 02

  has, has facilitated this problem to exist. And I, I'm not convinced,

• 6:49Speaker 02

  or at least I am hopeful that technology is, is the means by which we can turn this technology to a slightly better path.

• 7:03Alex Kantrowitz?

  Well, I'm going to blow up my order of questions now. So, so you talked about communications as the issue, communication technology. Can you expand on that?

• 7:12Speaker 02

  I wouldn't say it's the issue. I would say it facilitated the issue.

• 7:15Alex Kantrowitz?

  Yeah, what does that mean?

• 7:17Speaker 02

  I think, I think there is a natural tendency towards those in power to consolidate that power. And I think the internet provided a really effective means to consolidate power on a scale not seen before. And the, we need a quite revolutionary antidote to that if we are to escape the consolidation of power.

• 7:47Alex Kantrowitz?

  And this is, I'm thinking you're talking about the Facebooks and the Googles?

• 7:52Speaker 02

  That's one element of it, yeah.

• 7:53Alex Kantrowitz?

  Okay, and so the antidote is decentralization versus maintaining this power centrally in these big tech companies?

• 8:00Speaker 02

  Decentralization is a means to an end, but it's a very powerful means, yeah.

• 8:05Alex Kantrowitz?

  So what, what is decentralization?

• 8:07Speaker 02

  Essentially, well, it has a couple of, of different meanings to, to a few different groups of people.

• 8:16Speaker 02

  The meaning that I that I use it in and that I think is today the most important is what some call political decentralization. But it's it's essentially reducing the amount of of power over a system that any individual economic actor has. So most of our political systems, whether they're, you know, the military, government, democracy even, as it's as it's implemented today, or corporates, they all have a relatively hierarchical power structure whereby essentially there is oftentimes one or very few individuals

• 8:58Speaker 02

  at the top with decision-making capacity, like over at organizational level, decision-making capacity. So we we kind of naturally centralize. And then there's like a degree of delegation that happens to the levels until you get to sort of the bottom level where there's very minimal decision-making capacity. And this is, you know, of course, there are more novel organizational structures that are being proposed and, you know, at times kind of implemented, or at least flirted with implementation. Most of the big ones still are these very top-down power structures. And decentralization really is about trying to remove that power structure, at least in

• 9:42Speaker 02

  a structural way, like at least in a way that makes it non-negotiable. Now, not not to say that a decentralized system cannot have small versions of this power structure in it, in the same way that a capitalist economy can have, you know, a company that has a boss with, you know, employees and so on. That's no problem, but that doesn't make it a command-driven economy. It just means that there is a, you know, a component that exists under, you know, notionally fair rules, competing with other companies and providing services and selling goods. And that's that's really what what we come down to mean with these with political decentralization.

• 10:26Speaker 02

  It's about not placing all the decision-making eggs in one basket, or at least if we do, not doing so in a in a structural fashion.

• 10:35Alex Kantrowitz?

  Is it weird for you to be here in Davos where like all those people at the top that you just mentioned are gathering?

• 10:42Speaker 02

  Uh, it's an, it's an odd collection walking down the street. It really is. Yep.

• 10:46Alex Kantrowitz?

  Why are you here?

• 10:48Speaker 02

  Why?

• 10:48Alex Kantrowitz?

  Yeah.

• 10:49Speaker 02

  Um, I, why am I personally here or why is?

• 10:52Alex Kantrowitz?

  Well, it's very interesting to me that, you know, if you're talking about how we need to decentralize and, you know, it's a political form of decentralization. We're down the block. I mean, of course, we're not in the event, but we're down the block from all that centralization. So is it, is it a political message to be here or is it just like this is a convenient gathering of people? Um, what, what about Davos made you want to come?

• 11:16Speaker 02

  Um, I would be, I think it's an, I think overall there are relatively few forums in the world that collect together quite the same set of people. Um, I think that the message is important and I think that the, it's, there are sort of competing messages all sort of going under the same banner. You know, you walk up the street. Web three means quite a lot of different things depending on where in the street you, you decide to take off and go to a shop. Um, and I think it's, uh, it's, I don't, I wouldn't want the message to become, um, overly diluted or otherwise misused. So I think like with any forums, um,

• 12:01Speaker 02

  if, if there is something that you, that if there is a point of education that you, that, that makes sense to get across to people, um, you know, you, you need to, you need to join the conversation and you need to, um, to make it clear and you know, maybe, um, maybe those, some of those people are somewhat, um, ideologically, um, not, not necessarily super aligned. But I think there's people here that, that have, um, Open minds and that have, you know, a desire to understand where the world's going and understand what frameworks and toolkits will exist in the future to, you know, help the world get to a better place.

• 12:43Alex Kantrowitz?

  Okay, so let's continue on the Gavin journey. So you watch what happens with Snowden. You believe there's too much centralization of power. It's too easy for the government to go in and listen into what you're doing and you decide to apply a technological solution to that. So what happens next?

• 13:03Speaker 02

  Well, I mean, I didn't, it wasn't quite as like step one to step two there. It kind of set things up in my mind a little bit. It made me, I think over the last 10 years and probably longer, but over the last 10 years, I have moved from a sort of, let's say, trust ambivalent stance, trust neutral stance, like there are banks and government and all this sort of thing and I kind of have to trust them and that's kind of okay. You know, they could leave me alone, you know, it's all good.

• 13:42Speaker 02

  And over those 10 years, I have felt that what my expectations, that which I had been given to expect had been, had not been honored by those who should be the ones honoring it. And it's not that I sought to fix any specific thing. So it's not that it was like, oh, you know, here are the Snowden revelations, government spying on us, especially in the free world, against what appear to be the law, right? The laws of the world.

• 14:21Speaker 02

  I will fix that and prevent them from spying on me. No, I mean, I could have started encrypting all my stuff. I didn't. There are concrete steps I could have taken to sort of at least fix it for me and maybe even help fix it for others. That wasn't really the the path that I went on, but it helped um cement in my mind that technology does need to be created that will allow people to or will allow the world in general to deal with this kind of trust issue in the future. Like, I don't believe we're going to be able to anyone can wave a wand and suddenly make everyone trustworthy. Suddenly make all organizations trustworthy.

• 15:02Speaker 02

  I don't believe electing a politician is going to do that at all, like not a chance. I reckon the world had a pretty decent chance with Obama and not much changed, right? He got through a a a, you know, a healthcare bill that was really just US centric and that is increasingly being repealed now. It's like, I don't one's Panama Bay still open, security services still run amok, there is increasingly little judicial oversight of certain things. So I don't think politicians are the way to fix fix the trust issues of the world. In many respects, I I think they're the problem.

• 15:42Speaker 02

  And I think it would be better if I I and so I'm I'm looking for a I'm looking to create new tools such that we have alternative solutions to this problem.

• 15:56Alex Kantrowitz?

  And so that's where Ethereum comes in.

• 16:00Speaker 02

  Yeah, so this this kicked off in late 2013.

• 16:04Speaker 02

  And

• 16:05Alex Kantrowitz?

  What for for the listeners that are tuning in that don't fully know what Ethereum is, you explain it simply.

• 16:11Speaker 02

  Uh, it's a

• 16:16Speaker 02

  It's a, it's, it's sort of a derivative in some sense, like, like technologically speaking, of the Bitcoin protocol, which is, you know, this decentralized currency. So Ethereum is like a decentralized currency and it adds additional programmability to that currency.

• 16:37Alex Kantrowitz?

  So you can build on it?

• 16:39Speaker 02

  You can, yeah, you can, you can program the money.

• 16:43Alex Kantrowitz?

  Right. Now, we hear about this a lot, and for those of us that are not in the space, this is where the point of confusion often comes in, because people know that there's, you know, they hear about this new web and they hear about the programming that you could potentially do on top of blockchains, but we don't have any programs that most of us use that have been built this way. So what's going on? Is it a technological problem? Or is the hype a little bit too early? Where are the programs that are supposed to be built on top of this technology? Because it sounds nice in theory, you know, distributed, the government can't spy, you know, and maybe even users are, you know, have some ownership through tokens.

• 17:25Alex Kantrowitz?

  But, you know, that's where I think the disconnect comes for the general public and the Web 3 community, where, you know, folks are trying to, they hear all this, it all sounds good, but they're asking, where's the cream filling? Like, what's going on inside?

• 17:40Speaker 02

  It's, uh, it's a little bit like, sort of taking the home computer revolution in like 80, 81, 82, and sort of asking, hey, you know, where's, where's the AI? Where's the, you know, where's the VR?

• 17:58Alex Kantrowitz?

  But the difference is, we have much more powerful computers now than we did back then. So is it a computing power issue?

• 18:07Speaker 02

  No, no, it's, it's more of a, so we've moved up a couple of levels since then.

• 18:14Speaker 02

  So we've got powerful computers and we have pretty decent connectivity. We have a incredible level of like accessibility, so we can, you know, access all this, you know, the internet from all sorts, from these tiny little devices that we carry around with us. We've come very far in that regard, but there's still a substantial amount of...

• 18:39Speaker 02

  Of a gap in terms of the the higher level elements. So these basically boil down to software. So software libraries, software development kits, services and integrations.

• 18:59Speaker 02

  So when I think integration, I'm really talking about, you know, integrating with the the rest of the world's services. Whether they're digital or meet space doesn't really matter so much.

• 19:10Speaker 02

  And we we'll make, you know, we are moving slowly there, but it will take a while. It's not it's not it's not something where you can sort of click your fingers, invest a billion dollars and expect like in three months' time, everything to have been changed over.

• 19:32Speaker 02

  It it takes a lot of people to understand. It's an education problem as much as it is a technological problem. People have to like get their heads around what this is. Like a lot of web two could have been built on the technologies that we had five or 10 years before web two arrived, but they weren't. Web two didn't like didn't come about until people had got to grips with the web, the internet. When they, you know, they'd had the they understood, you know, the difference between like a phone line and a DSL line and all the, you know, they understood what what how to how to sort of connect to the internet.

• 20:14Speaker 02

  They understood the difference between a computer that was connected and a computer that wasn't connected. There's a lot of there's a lot of base level education that has to go on. The world has to come around to a new way of doing things. Right. And so.

• 20:30Alex Kantrowitz?

  Let's talk about how in an ideal world, when we get to that point, a Web 3 application, let's say a Web 3 communication application, would solve some of those problems that Snowden had pointed out. Like, is it, it won't be able to be hacked by a government, or, you know, what does it look, how does it look like different for the user, as opposed to, you know, what we have today, built on the blockchain, or?

• 20:57Speaker 02

  The blockchain is one very important component of this, but it's not the only one. I mean, blockchains work largely through two sort of distinct technology sets. One of them is cryptography, which is just basic mathematics, and the other one is game theory, so economics, right? And these two together combine to allow for what we, what we call like blockchain, trust-free computing. But blockchain, broadly speaking, there are a few avenues that are sort of a little different. But blockchain, broadly speaking, is a very transparent system. It doesn't help users keep hold of their data, right, of itself,

• 21:41Speaker 02

  right? Everything on Bitcoin is on the, is a public ledger. You can see all the transactions that happen. Same with Ethereum. Now, there are, there are technology avenues that are aiming to reduce this sort of public nature of the information, but they tend to have a, an unfortunate side effect that it centralizes the computation. So it actually ends up centralizing some of the information flow as well, and that's kind of problematic. But Web 3 in and of itself is about trying to reduce, at a broad level, how much we trust, how much we have to trust. It's not that trust is necessarily a bad thing, but

• 22:22Speaker 02

  that the requirement to trust essentially means blind faith. It's like, I have no choice but to trust that the security services are not trying to snoop on everything, you know? I have no choice but to trust that the judge in the court is actually unbiased. And this is like, it's not a great position to be in, because if you have no choice but to trust, well, that means that you're basically powerless, and that, and you have no way of actually ensuring that you're not under an arbitrary authority that can essentially tell you what to do without any real reason or rationale. So this is the the broad web three technology set is about building technologies

• 23:05Speaker 02

  that allow us to to not have to trust. And there are two that roughly speaking cryptography and game theory that allows to do this. Blockchain is like a composite technology. There's also encryption, a branch of cryptography, that allows us to communicate in a way that we don't have to trust an intermediary communication middleman in order to have some credible guarantee that our our communication is private, right? And this is sort of one of the issues with the internet pre 2013 was that we weren't using encryption by and large. Services were HTTP, not HTTPS, and that little green lock symbol that you see

• 23:46Speaker 02

  in the top right of the browser wasn't there most of the time. These days it is, and we have, you know, we have a little bit more credible expectation that we have privacy over our internet communications. Great. Web three is sort of saying, well, how far can we take this? Can we gain more credible expect more credible guarantees their expectations will be met? Like, we had an expectation even pre 2013 that we weren't being massively spied on, right? That mass surveillance was not was not being sponsored by our governments. And yet it turned out that it was. So given that, as a technologist, it's like it's my job to say, well, okay, looks like this was a step in the right direction. Great.

• 24:31Speaker 02

  Billions of people have a little bit more credible guarantees over their expectations of the world. But can we can we push things further?

• 24:39Alex Kantrowitz?

  Yeah. And I want to ask you more about the ledger being public and how that what that means for privacy. But I'm going to hold that for the second half. I want to conclude this half with a question that's been puzzling me since I started really looking into this stuff. So I went to El Salvador and just kind of ran into the country's Bitcoin experiment where Bitcoin is legal tender there and started listening to some of the podcasts that were talking about this and how how they were going to make Bitcoin the currency in El Salvador. And I've heard you speak about it. It seems like it can be helpful to avoid some of the fees with remittances. But when I listen to Bitcoin people, I don't know what the deal is. They hate Web 3 people. And the Web 3 people can't stand Bitcoin people.

• 25:24Alex Kantrowitz?

  It seems like you'd have common ground. What's going on in that rivalry?

• 25:28Speaker 02

  I'm not sure. I suspect that the Bitcoin people that are not super keen on the Web 3 people are probably just on Web 3 movement. Maybe think of it a little too much in terms of the, you know, the NFT hype stuff rather than the underlying, let's say, social and technological direction. I certainly have very good, you know, relationships, very good friendships with people in the Bitcoin space. So I don't know. I mean, I don't know about the Web 3 people who don't seem to get on with the Bitcoin people. Wow.

• 26:10Speaker 02

  I think, you know, there's probably some degree of, you know, it's kind of sad, but some degree of tribalism that happens here. But I suspect that modulo a few, a few of the sort of, let's say, less, less in it for the movement, more in it for the money people on both sides. I think, I think there is a lot of shared desire to use this technology to, to really, you know, help get society onto a better footing.

• 26:44Alex Kantrowitz?

  Yeah, I would think there would be more common ground. And it is interesting for me to see the Bitcoin maximalists, people like Jack Dorsey, for instance, you bring up Web 3. He says, you know, it's a fraud, something like that. However, his idea is to use some of the same technology for some of the same ends. Yep. We're here with Gavin Wood, the co-founder of Ethereum and creator of Polkadot, live from Davos and playing on the Big Technology Podcast feed. We will be back right after this. This episode is brought to you by Avpoint. Everyone's racing to roll out AI right now. Co-pilots, chatbots, agents doing real work. But here's the part nobody loves talking about. All that AI runs on your data. And most teams have no single way to see it,

• 27:29Alex Kantrowitz?

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• 29:19Alex Kantrowitz?

  And we're back here on the Big Technology Podcast from Davos with Gavin Wood, the co-founder of Ethereum, creator of Polkadot. So we've spoken a lot in the first half about the theory of Web3, of blockchains and Bitcoin. Let's go to something more practical. So I was asking, where is the cream filling in the first half? But there's an interesting headline in Protocol this week that says Ethereum's co-founder thinks the blockchain can fix social media. And not only is it a thought, it seems like there is something that's in action right now. So I'd love to hear you expand upon that.

• 29:57Speaker 02

  Yeah, I mean, I think social media suffers from much, many of the same problems that we've already been discussing, namely opaque, largely unaccountable, very centralized entities that are in charge of, that control services that a lot of the world rely upon, and that have demonstrated themselves as being either incapable, or, you know, asleep at the wheel, or worse, in their duty.

• 30:37Speaker 02

  And, you know, while I think that, I think people should really be the ones to, to be responsible over their own choices, you know, authority and responsibility start at home. Nonetheless, I think, I think that we need better frameworks and tools, technologically speaking, to allow people to make the right choice, and make a choice where they don't have to trust these centralized entities to, to provide them with the services that they rely upon.

• 31:17Alex Kantrowitz?

  And so, tell me a little bit more about this protocol that you're working on.

• 31:21Speaker 02

  Yeah, I mean, this is a collaboration.

• 31:25Speaker 02

  And I'm happy to sort of

• 31:30Alex Kantrowitz?

  Yeah.

• 31:30Speaker 02

  announce that you know Polkadot is the sort of underlying

• 31:35Speaker 02

  technical framework that you know this will be implemented upon.

• 31:41Alex Kantrowitz?

  What is this?

• 31:43Speaker 02

  It's well, it's a combination of technologies like it's a stack of technologies as all good technologies should be. So you can choose where where on the stack you want to come in and build. But essentially, it's a it's a very general social social networking protocol.

• 32:00Speaker 02

  Sort of conceptually a social graph protocol. So basically manage it a means of like managing the connections between individuals, humans on the planet. And also managing the the information that individuals have associated with them and that potentially can be associated between the connections of individuals. So it's a very, very kind of

• 32:29Speaker 02

  abstract platform on which the sorts of applications that can be built are those which we we sort of today think of as the the big social networking things. But you know, the hope is that it will also as a platform facilitate many more kinds of applications and they won't have to build up a social graph from from the bot from zero. They'll be able to very easily users will be able to very easily sort of not migrate, but sort of

• 33:00Speaker 02

  share or copy or utilize these additional products and services without having to sort of do all of this horrible signing up, bringing your friends over and all the rest of it.

• 33:14Alex Kantrowitz?

  So the idea is essentially I would go in, build my social network on this protocol and then be able to export it to different applications.

• 33:22Speaker 02

  So yeah, essentially, yes. And likewise, you'll be able to go in, build your application on this platform and users will be able to sort of come across en masse relatively easily. But it would be their choice, right? You would still have to kind of pitch the application to them. But in principle, it would be an awful lot easier to break these incredible moats and barriers that the social networking giants put up around their social graph.

• 33:49Alex Kantrowitz?

  Yeah, I like this idea in theory. However, I think about it in practicality and I have some questions. So the idea of, okay, build your social graph on the blockchain and then maintain control of it and give it to certain applications as you see fit makes sense. But I think about the nature of the different types of applications or the different types of graphs that I have on each application. So for instance, Facebook is my social graph. LinkedIn, my professional graph. Twitter is a asymmetric follow model where I, it's an interest graph, really. And then something like TikTok, my graph doesn't actually matter because the application is looking only at my behavior with the follow as a somewhat of an interesting signal and saying, this is what I should show you. So how does the

• 34:33Alex Kantrowitz?

  fact that every application has its own unique graph then sync with the idea of making a graph portable? Because it seems like it would only be useful in some cases and not others.

• 34:45Speaker 02

  Well, the graph is, if we, if we think about it as a conceptual model, it's still just nodes and connections, right? Individuals are the nodes and there are connections between them, whether it's following, liking, being friends. And this is really, this is why I say it's very abstract. It's, it's a model that can, that can be used by all of these applications. But you're right, each application will use this model, this, this, this underlying data differently. Now you say that, oh, well, you know, LinkedIn is professional, whereas, you know, Facebook is social. I mean, there are plenty of, there's so much overlap there, at least for me. Like, my, my work life and my private life are, you know, fairly heavily

• 35:28Speaker 02

  overlapping and there are many people that would exist on both of them. And it doesn't really make sense for me to have to add them on one and add them on the other. Similarly with Twitter, like the, the, I think, like, everyone on LinkedIn and everyone on Facebook are Twitter followers as well. So why would I, why would I want to replicate these connections so many different times? Say with Instagram, Instagram, it's like basically the same as Twitter.

• 35:51Speaker 02

  Not all of them will use the underlying data in the same way. As you say, TikTok may take it as only a very sort of, in terms of the services it provides, may only take a relatively glancing look at the, at the actual social graph and use alter, you know, alternative means of deciding what content it will show you and when. But in principle, there are an awful lot of applications out there that are using the same basic data, but that data has to be entered to every platform. And that data is under the control and, you know, who knows what they're doing with it. If you want to read their terms and services, they're usually pretty opaque and most people don't. Who knows what they're doing with it?

• 36:36Speaker 02

  And so now instead of having, you know, you have control of your data, you can sort of decide this, this application can use it for this, for this means, this purpose. And that application can use it for that means and that purpose. You now have 10 applications plus maybe, I don't know, depending if you're a big social networking user, maybe it's like 20, 30, 40, 50 applications, all working on kind of more or less the same data, all using it the way that they want, which means it's, you've got a multiplication of the amount of trust that you're needing to give for your personal data. And I think, and this came up in an earlier conversation, I think this, this turns a lot of people off.

• 37:21Speaker 02

  Like a lot of people are not super keen on, I know I'm not, on sharing, you know, all of the information with all of the providers. And as such, it limits what, what kind of products and services can be provided. Like if there's not that much information being, being given by the, by the user to the application, then the application can do accordingly relatively little. If, if we get to a model where, where individuals are sort of happy to, in some sense,

• 37:54Speaker 02

  Input their their information, their data into the services because they know they're not handing it over to a third party, but rather to a algorithm that's been audited by many different entities, at least one of which they actually believe, that is is processed in a means that doesn't allow for an arbitrary, you know, some third party to actually inspect it all and do whatever they want to, you know, advertise various stuff to them that they don't want to advertise to them, or conclude certain socio-political things that they don't want concluded about them, then we're in a much better situation. It's much more likely that a person's going to sort of give up more information. I know

• 38:39Speaker 02

  I would. So I think I think as long as we rely on centralized service providers that have absolute control and visibility into the information, people are not going to give up as much information as they would otherwise.

• 38:53Alex Kantrowitz?

  So in the protocol article I referenced, there's a line in there, I think the belief is that data disrupts the model, you know, to change the way that these companies hold and process data, you end up in a better society. So I want to hear your critique of what's wrong with the social networks today, and how changing their relationship with data, changing our relationship to our own data might fix it.

• 39:14Speaker 02

  I think what's wrong with them is pretty much what's wrong with all of this sort of centralized information communication architecture.

• 39:25Speaker 02

  It's it allows we as as decision-making, independent, sovereign, decision-making entities to be manipulated. And if you can manipulate people en masse, then the world doesn't turn into such a great place. It's, you know, I think the democratic is often used as a means of trying to say.

• 39:54Speaker 02

  We as sovereign decision-making entities should should be empowered

• 40:00Speaker 02

  through, you know, the ability to inform ourselves about the world and through the ability to sort of make decisions based upon that information.

• 40:10Speaker 02

  And I don't think, I think, I think that is with the services that are being provided to us at the moment through the big social media companies, that's not being, that's not working so well.

• 40:24Speaker 02

  I think we are losing the ability to inform ourselves well.

• 40:30Speaker 02

  And we are increasingly being manipulated.

• 40:34Alex Kantrowitz?

  And so is your idea that if we have transparent algorithms out there that, you know, maybe we can choose, then we'll be in a better better position?

• 40:43Speaker 02

  Yeah, that's, that's right. No, that, that, that's, that's quite, that.

• 40:48Alex Kantrowitz?

  Why does it have to be web three versus allow the web two companies to implement that?

• 40:54Speaker 02

  I mean, the issue is that we can't trust that they have actually implemented that. Like, we can't trust that they're running these algorithms on their servers and providing us with the results in an in an unfiltered format. We don't know what data they're running. We can't see that. So like the data, then the data needs to be, we need a trust-free way of doing this. It's not enough to say, ah, well, you know, I trust Mark Zuckerberg. He wouldn't, he wouldn't, you know, do anything bad to me, you know?

• 41:24Alex Kantrowitz?

  I think you'll hear many people saying that, so.

• 41:26Speaker 02

  Right. And so we need, web three is is really just, you know, a proposition of a technology stack that can do exactly this, that allows us to have the data to know that maybe no individual person can see the data because we have all of this great technology that allows us to consolidate the data without an individual person having the power to actually look at it. But we can run algorithms on it if we all agree on it. If we all agree that yeah, this is an algorithm that we want to run on our collective data and we want to see the results. Great. Then if we don't want to run the algorithm collectively, then we don't run it. It doesn't get run. And it's not that Mark Zuckerberg can come along and say, well, actually, I'd quite like to know the results of that. I shall run it anyway.

• 42:10Alex Kantrowitz?

  So your idea is that people would collectively decide which algorithm they would want to be run on the whole platform versus pick individually?

• 42:17Speaker 02

  And maybe there's like a rage quit option where before, if you really don't want the algorithm to be run on, on, you know, on, on a consolidated piece, consolidated data that would include your data. Then you can rage quit and remove your data from it before the algorithm gets run. Right? So yeah, the, the, anything that, that allows a collect, a collector's information to be processed, that there must be a collective decision-making

• 42:43Speaker 02

  effort to, to ensure that, that, that it's not being done without the permission of, of, of those, of those individuals. And if that permission is like, give me 50 bucks and, you know, have at it. Fine. But, you know, at least there's transparency.

• 42:58Alex Kantrowitz?

  We had Nick Clegg in this space here yesterday. He's the VP, no, the president of global affairs for Facebook. And I tried to explain to him like, listen, people rate the amount of enjoyment they get out of social media. And in recent studies, it's been the last out of every leisure activities in terms of its ability to generate happiness. And what he responded was, we have 3.5 billion people that use our products every month. Clearly they're not that upset. So I want to ask you about the willingness of people to actually jump onto, you know, something like you're proposing and leave Facebook. I mean, it seems like, yeah, well, I'm curious. Yeah, go ahead. I mean, I want to hear you respond to what Clegg said and, and.

• 43:36Speaker 02

  How many smokers are there in the world these days?

• 43:39Alex Kantrowitz?

  Okay.

• 43:40Speaker 02

  Three and a half billion as well? I'm not sure. And they're obviously quite happy with the product from Marlboro and all of the rest of them.

• 43:48Speaker 02

  Look, I mean, people are hooked, right? And they're hooked because of the network effects. We, we, it's super. There's huge amounts of inertia. It's not that, it's not that the product is necessarily, is necessarily like.

• 44:03Speaker 02

  So amazing that the individuals are using it purely based on that. It's that there is a service being provided that the individual has decided that they now cannot do without. Classic addictive products, right? Classic, very similar to, I would say, like the nicotine industry.

• 44:26Speaker 02

  And I think we, that if this can be like, I don't know, some means of allowing people to get the same like social fix, but without the bad,

• 44:42Speaker 02

  I would say like potentially democracy destroying elements of it, then great, you know? This is, this is, this is a good thing.

• 44:50Alex Kantrowitz?

  Do you think people will collectively vote to have an algorithm that shows them more boring stuff, but less rage filled things?

• 44:57Speaker 02

  I don't think it's, I mean, I wouldn't say that, I wouldn't say that like everybody would need to do this. I look upon it as like lots of different groups of people, some of which overlap. And these different groups, it's like I'm in a group, I'm in this, this, this set, a social set. And I want, I care about this particular, I care about like, hey, what's the average?

• 45:22Speaker 02

  Give me the average political considerations that this group has concluded. Give me the extremes, I want all the extremes, right? Let me, I don't know, there's all sorts of like potential algorithms and products out there. But the point is that as long as we have only, you know, three or four places in the, in the Western world at least, where this discourse is happening, and therefore three or three, three or four centralized organizations that get to dictate the rules of the discourse and the forum, the mechanics of the forum under which it happens, then that's, that's really not a great way of, of allowing technology to continue innovating and continuing to facilitate healthy discos.

• 46:03Alex Kantrowitz?

  If we build social networks on the blockchain. Does that mean the posts that people put there are immutable and permanent even if they want to delete them?

• 46:12Speaker 02

  This is, you know, so at least with Project Liberty, this is, the blockchain isn't going to be used as like a means of, like a data depository. It's, it's really more as like a permissioning infrastructure. And then all of the data stuff comes on top of that. Like all the data stuff happens largely off-chain. And this is how you like have the ability to keep things relatively private, like solid expectations that the, that privacy will be respected without having to put it all

• 46:55Speaker 02

  in the hands of like a single trusted entity that will manage all the permissioning for you. In principle, the technology is then able to handle, you know, manage the encryption on your side so that the people or the groups that, that you want to see certain elements of your data are able to see it, whilst still having reasonable expectation that, that the data won't be passed to a broader set of individuals.

• 47:24Alex Kantrowitz?

  Yeah, and I was gonna, I teased it in the first half. I was gonna ask you what happens in a, in a situation where you're using the blockchain and a lot of that stuff is public, but, and so how does that deal with privacy if you're using a social network built on the blockchain? But I think you just answered the question. That stuff will be stored outside and the blockchain will do some of the other stuff.

• 47:44Speaker 02

  Yeah, so the, I mean, the idea is of the blockchain that primarily it's, it's about permissioning, so it's about managing what, what the arcs in the social graph are, what these connections are, and what, what privileges those connections have. And these privileges, the set of privileges and the structure and, and sort of language used to describe these privileges might be different for different applications. That's, that's, the whole point of that is that it's meant to be sort of able to be extensible. And the underlying technology, ideally, you know, that uses some of the more advanced levels of cryptography so that we can store these, the social graph and store the information, the sort of metadata of this social graph in such a way that...

• 48:29Speaker 02

  It it doesn't, it it retains still a substantial degree of privacy. Now ultimately, it may be, uh, it may not be as simple as, um, I share this information with this group of people. And, uh, there is no way that that information can ever get outside of this group of people. I mean, you know, for a start, you can always take a, get your camera out, take a, a shot of the, the, the screen of the display. And it's like, yeah, okay, some, some photo can then be shared, like making it be completely end to end. Absolutely 100% private is not really the goal. The goal is to give people credible expectations and that their privacy will be respected.

• 49:08Speaker 02

  And, uh, and I think we're, you know, 80 plus percent of the way there from, from the Facebook model. Um, um, uh, by, by, you know, using this technology.

• 49:20Alex Kantrowitz?

  I have to go back one more time to the will of the people question. I mean, it, it does seem like, it seems like all the well-meaning folks on social media would want to use your solution. And all the angry people who are getting clout from being angry would want to stay. So maybe, I, I'm curious if you see that as an adoption barrier. Maybe enough of the folks that the trolls want to troll will move over. That they'll end up having a shell of a platform. I mean, what's going to happen there?

• 49:47Speaker 02

  Um, yeah, I mean, it's, it, it's hard to say, but I mean, the.

• 49:55Speaker 02

  I would hope it's not a singular platform. I mean, the, the whole point of this is that it's extensible and that many different applications can be developed on top of it. Um, and I, I would, I would expect that, um, people will, will follow where the discourse is, you know,

• 50:11Speaker 02

  uh, is, is most enlightened, is most enlightening.

• 50:16Alex Kantrowitz?

  Yeah.

• 50:16Speaker 02

  Um, and, uh, and over time, I, you know, if the trolls are the ones that tend to stay on the, on the legacy platforms, then.

• 50:25Alex Kantrowitz?

  Sweet, leave them there.

• 50:26Speaker 02

  Yeah.

• 50:27Alex Kantrowitz?

  Um, so I, I also want to talk to you about, um, transaction fees. Because the, the big barrier for building something like a social network on maybe a blockchain like Ethereum has been that the gas fees would be out of control to make any transactions. You'd have to pay thousands of dollars. So I understand this is going to be built on Polkadot, um, which is the second, second blockchain you've created.

• 50:53Alex Kantrowitz?

  Is it gonna have the same issues in terms of transaction fees and gas fees that the others have?

• 50:58Speaker 02

  No, from the ground up, it's been built to have scalable decentralized security. And that was from the 2016 paper on Polkadot that I put out. That's really what the premise of this is. And, you know, it achieves this through essentially dividing, you know, division of labor, you know, pretty obvious stuff really, but the engineering behind like ensuring that the labor is divided. But we retain the security of the decentralized system provides is, that's the hard bit. Like, that engineering is non-trivial. And it's sometimes mentioned, but like, I think it does, you know, it does deserve a special point.

• 51:43Speaker 02

  You know, I built the original version of Ethereum, you know, like C++ Ethereum back in early 2014. I don't know, I got something working after a month or two, right? And that was pretty much just me.

• 51:58Speaker 02

  And it's taken me and a whole load of really great engineers, four plus years, to build Polkadot. And it's not that we, you know, we had, I don't know, some sort of terrible car accident at the beginning and we were just like debilitated or something. No, it take like the engineering effort required for this. Plus, we have a research team working behind us, making sure that, you know, what we're doing is sensible, what we're doing is actually secure. It takes a long time and it's, you know, I would sort of extend the same point to the Ethereum two folks. Like, building it right, getting it right, takes time. And if you see people like touting that, hey, we've got a solution already, you know, it only took us six months.

• 52:43Speaker 02

  That's very unlikely to be, to be the breakthrough that they're suggesting it is. But yeah, and there's a lot more to come as well, like.

• 52:54Speaker 02

  We already, we opened the, uh, the, the sort of labs division at Parity at the beginning of this year. Parity company, primary company building Polkadot at the moment. And this is like looking into, um, super scalar, super scaling ways for, uh, super scaling methods for Polkadot. So like, we're, we're really looking to push beyond this, like, um, uh, even thousands of transactions per second. That's, uh, that's like a bit of a, a sort of a goal right now and looking, uh, in the, in the next three or four years. To be, uh, uh, orders of magnitude greater.

• 53:29Alex Kantrowitz?

  You know, it was interesting to hear you, um, a couple of minutes ago, talk about how the blockchain would be the guts of, you know, these potential social networks. But they would still build a lot of stuff off of the blockchain, just as you would with a normal company. Is that really, is, is that kind of like the, the, um, where the best case scenario is for web three, right? An internet built on top of the blockchain is that the blockchain serves as some of the guts, but we still use regular, regular programmed programs as, um, as the things that mediate most of our experience. You know, there was this great post from, uh, Moxie at Signal that talked about how, I'm sure you've read it, how no one wants to set up their own server.

• 54:07Speaker 02

  Yeah.

• 54:07Alex Kantrowitz?

  Um, in that we basically just want platforms to do the work for us. So is the future that you're envision a future where platforms will still do most of the work for us? But they'll just have a slightly better architecture inside that can assure us that there'll be a better experience. Or, or that they'll take care of our data, uh, in a way that the others wouldn't. Or is, or is there something bigger? Am I missing something?

• 54:33Speaker 02

  The programs that are programmed will still be.

• 54:37Alex Kantrowitz?

  Programs.

• 54:37Speaker 02

  They'll still be programs, right? No one's, I'm not, I'm not suggesting that there's going to be a case of like, hey, speak into the microphone, you know, make me a, uh, make me a new currency, make me a new, um, uh, taxi service company. Like, it's not going to be like that. Like it's, uh, or at least maybe it will, but that's not going to be the blockchain element.

• 54:58Speaker 02

  Or the Web3 element. Like, I think it's still going to require normal software developers doing normal software. But the APIs will be different, and the means that you'll think about architecting will be quite different. When I went to university back in the 90s, the, you know, the way that we architected a system was client-server. Like, that's what was taught. There wasn't really, we didn't have a single class on peer-to-peer decentralization. It was not a thing in academia. And funnily enough, when I went back into my old university back in 2014, May 2014, and tried to show them what Ethereum was, they, zero interesting

• 55:40Speaker 02

  questions and almost zero interest. It's just like, it didn't, like decentralization and, you know, a lot of, a lot of the more novel elements of cryptography, a lot of, you know, peer-to-peer and game theoretic stuff, it's just not really a big thing in academia. It's getting there, but it's not really a big thing in established, in established, you know, computer science, software circles. And I think this is going to change. I think it has to change. People have to be educated better on what it means to build a system that is secure and a peer-to-peer, you know, under peer-to-peer circumstances and trust-free

• 56:20Speaker 02

  circumstances. You can't just like, put the server code down, now do the client code. Do the client code, just trust the server code. The server says that this is that, then it is that, and you don't question it. No. And what Moxie, one of Moxie's points that I thought was very interesting was that, you know, at this point, people are still falling back on that model. People are still falling back on the client-server model, even in Web3. If you, half of the, more than half, 98% of the DApps on Ethereum are not really decentralized. Yeah, a big portion of the logic sits on the Ethereum blockchain. Right, great. But there's still, you still have to go through a centralized service to actually use the thing, right? You still go through Inferra, which runs an RPC that's

• 57:02Speaker 02

  entirely trusted, right? This is, this isn't decentralization, this isn't Web3.

• 57:08Speaker 02

  Web three, it's partly web three, you know, this part of the puzzle is done. And this is one of the things that we're really pushing forward in Polkadot. And the Polkadot ecosystem is, you know, what we call like clients, which is essentially

• 57:24Speaker 02

  getting the sort of the complete picture so that you can use a service and the service is is hosted in a decentralized fashion, but also when the user comes to use it, it doesn't go through another just centralized service provider to help you do that.

• 57:42Speaker 02

  And, and yeah, I fear that, you know, in the industry at large, it's, you know, it's, it's patchy at best, this, you know, this, this attitude that decentralization is either is, you know, absolute or it's worthless. But I think, I think maybe things are changing, at least in terms of the political environment that this industry sits.

• 58:07Alex Kantrowitz?

  Yeah, and I think a big part of that is the economic environment. And I want to close on this, we're in the middle of a pretty big economic downturn. So I have a couple of questions for you about that. First is a couple of days ago, Vitalik tweeted that he's not a billionaire anymore. So are you diversified or are you in the same boat?

• 58:30Speaker 02

  For that, I'd have to ask my family office manager. And I'm not sure he's at liberty to say anything.

• 58:36Alex Kantrowitz?

  Let's get him on the line. One of friends. All right, but the actual stuff, so Ethereum is down forty four percent year to date. Bitcoin is down thirty four, thirty five percent year to date. We just saw what happened with Terra and Luna.

• 58:51Alex Kantrowitz?

  You mentioned that one of the things that the folks, the Bitcoin folks don't like about web three is that there has been a lot of like, you know, froth around things like NFTs and scammy projects. Do you think that this downturn might actually be a blessing in disguise for the space where the things that were on shaky foundations like Terra and Luna fall apart? And the things that have some staying power are what remains and the industry becomes more credible as a result?

• 59:19Speaker 02

  This is a very, very big silver lining to that cloud. Yeah, I think so. I mean, of course, if there's less money floating around, then. There are a few doors that that get closed. But overall, I find, you know, I've I've been in, I've been in one or two bear markets before. And overall, I find that it's

• 59:43Speaker 02

  in terms of, in terms of building, in terms of the technology, it's it's quite a lot. Things make more sense, you know, there's fewer people are hyped up about nonsense. There's a bit less nonsense going around.

• 1:00:00Speaker 02

  And there's, you know, other silver linings like it's easy to to pick up, let's say, more

• 1:00:12Speaker 02

  talented individuals. They're not being stolen away with a big dollar signs in their eyes.

• 1:00:21Speaker 02

  Things get, things get more real. And that's, that is a good thing for those who are building real things.

• 1:00:28Alex Kantrowitz?

  Well, Gavin, you know, I've had a lot of conversations about Web three. And it's nice to have a conversation with someone who's a proponent and who will sit and talk about some of the criticisms and help flesh out

• 1:00:42Alex Kantrowitz?

  where the opportunity and weaknesses are without becoming defensive or dogmatic. And I really do appreciate the conversation. Thank you, Gavin.

• 1:00:51Speaker 02

  Thank you.

• 1:00:52Alex Kantrowitz?

  Thanks, everybody.

• 1:01:01Alex Kantrowitz?

  Thanks, everyone, for listening. This has been an episode of the Big Technology Podcast. If this is your first time listening, I invite you to subscribe in your podcast app of choice. We always love a rating. We will be back with multiple episodes here from Davos over the next coming weeks. So we hope you tune in. And until next time, take care.

• 1:01:24Speaker 03

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