Charles Hoskinson, CEO of IOHK: A Corporate Ethereum Dystopiaal

Charles Hopkinson is a Colorado-based tech entrepreneur and mathematician. He's also the CEO of IOHK. In this conversation, Charles and Anthony Pompliano discuss why he didn't want to do an ICO, what Ethereum would have become had it gone with a corporate structure, what he did once he left Ethereum, IOHK and Cardano, where we're going, and what needs to happen to get there. BLOCKFI-----BlockFi allows you to keep your crypto, put it up as collateral, and receive a USD loan funded directly to your bank account. They do loans ranging from $2,000 to $10,000,000, and they're perfect for helping you reach your financial goals of all sizes. Visit BlockFi.com/Pomp to learn more about putting your crypto to work without having to sell it. CRYPTO. COM-----Crypto.com is a pioneering payment and cryptocurrency platform that seeks to accelerate the world's transition to cryptocurrency. With the vision of "cryptocurrency in every wallet", the Crypto.com App offers a full range of financial products with competitive pricing, well designed UX and high security. It is the best place to buy, sell and pay with crypto. COINMINE-----The Coinmine One is like an Xbox that turns your electricity into Bitcoin. You just plug it in, connect to wifi, and tap on the crypto you want. It’s so easy anyone can do it. Everything is controlled from the Coinmine mobile app and the Coinmine keeps getting better with over the air updates that add new coins, features and services to your Coinmine. Visit coinmine.com/pomp to get a Coinmine and earn crypto for powering a new world.

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

• 0:01Anthony Pompliano?

  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?

  Charles Hoskinson is a Colorado-based technology entrepreneur and mathematician, and the current CEO of Input Output Hong Kong. In this conversation, we discuss why he didn't want to do an ICO, what Ethereum would have become had it gone with a corporate structure, what he did once he left Ethereum. He gives an explanation of I O H K and Cardano, and then we talk about where we're going and what needs to happen to get there. I really enjoyed this conversation, and I hope you do as well. Skrt skrt. Wanna know who has the best URL? Crypto.com. That's right, Crypto.com. They're a crypto platform with one goal: motherf***ing mass adoption. That's why we're

• 0:56Anthony Pompliano?

  all here. We're trying to get crypto in every wallet. Crypto.com is helping people do that through buying, earning, lending, and card payment. Everything you could want at Crypto.com. Go help your boy out, tell him Pomp sent you. Download the app or visit Crypto.com. Pomp's got you, always. Ever wanted to get into mining and didn't know how? Don't worry, your boy Pomp's got you. Everybody got some electricity and wifi. All you gotta do is go to CoinMine.com, you buy a coin mine. It's like an Xbox or a Playstation that helps you turn your electricity into Bitcoin. That's right, you purchase it, it shows up at your doorstep, you pull it out of the box, you plug it in, connect to your wifi, five minutes or less, you're

• 1:38Anthony Pompliano?

  mining Bitcoin. All you have to do is control it from the mobile app they provide, and then you receive over-the-air updates that add new coins and new features on a consistent basis. Kinda like how Tesla does over-the-air updates and updates the car software. Just your update in your coin mine. Consumer mining made easy. That's right, go to CoinMine.com, tell them Pomp sent you, and thank me later. As many of you know, crypto investors store their digital assets on exchanges or in cold storage for long-term safekeeping. However, this strategy doesn't help them grow their investment holdings or build overall wealth. With the new BlockFi interest account, users can now securely store their Bitcoin or Ether at BlockFi and receive 6% annual interest,

• 2:21Anthony Pompliano?

  paid monthly in cryptocurrency. 6% is an absurdly high rate. It's the best rate in the industry. I highly suggest you go check out blockfi.com/pomp. Again, that's blockfi.com/pomp to sign up and start earning crypto today. If you follow Bitcoin and crypto, you've probably heard of eToro. They're the world's number one social trading platform, and I love it. They've got more than 10 million other traders that love it, too. And guess what? They just launched in the United States. eToro offers access to the world's most popular cryptocurrencies, including Bitcoin, Ethereum, and others. With the smartest trading tools and the ability to connect with the best traders around the world, there's no better place to build your perfect portfolio. If you're new to Bitcoin and crypto, you can test the waters with their $100,000 virtual

• 3:06Anthony Pompliano?

  trading feature. But if you're more experienced, you can create custom technical charts and use eToro's social feeds to inform your trading decisions. They've got transparent fees, and so you never miss out. They also have an easy-to-use application available on iPhone, Android, or any web browser. You can get started today in just a few clicks at etoro.com. Again, that's etoro.com. Get VIP access to Bitcoin and crypto markets today. 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

• 3:49Anthony Pompliano?

  a particular strategy, but only as an expression of his opinion. This podcast is for informational purposes only. All right, guys. Bang, bang. I'm here with Charles himself. Thanks so much for doing this. Thanks for having me on. We are recording at the Wyoming Bitcoin and Crypto Conference. You've given a number of talks while you've been here. Before we jump into all that, though, let's go through your background. You've done a bunch of stuff.

• 4:19Anthony Pompliano?

  What was the first thing you did in crypto? What did you do before crypto?

• 4:21Speaker 01

  Before that, I was a mathematician.

• 4:23Anthony Pompliano?

  Okay.

• 4:23Speaker 01

  It wasn't a particularly good one, but you know, I did a little bit of consulting, a little bit of programming, and I was trying to find my place in life. I was kind of a nomad. So at one point, I wanted to be a doctor because all my family does that. My brother's a doctor, my dad's a doctor, grandfather's a doctor. But I don't like people. So it's kind of not a field you go into if you're not a people person. So I said, all right, well, mathematics sounds fun. And I did that, but I really didn't want to climb the academic hierarchy. It's one of those like exercises in self-flagellation where you spend 10, 15 years getting abused, being completely poor. Then you get tenure and you're like, yay, I have tenure now. I can do whatever I want and I'll still be paid little amounts of money, but I'll be a big fish in a small tank. So that wasn't particularly appealing. But then I was trying to figure out, well, what do I do as a mathematician?

• 5:07Speaker 01

  You know, maybe I go into finance, maybe I'd be a developer, whatever have you. And I really, really liked things like Austrian economics and so forth. I'd worked on the Ron Paul campaign back in 2007. And so suddenly that when Bitcoin came by, I said, wow, this thing's really cool and this might be interesting. But I didn't think it was going to work, anybody would adopt it. Because I was in very early in like 2011. People were still trading on spreadsheets. There weren't really stable exchanges. Nobody was taking it seriously. So it was a fun thing to do. It felt like a club and yet another one of those Austrian economic protest movements, but it wasn't a real movement. Then in 2013, that was kind of the bellwether year. All of a sudden, all this money came in, Bitcoin hit a billion dollars. And I said, wow, this thing's probably here to stay and it's going to move really quickly. So I should do something.

• 5:52Speaker 01

  Problem is, I didn't know anybody. I didn't really have any job skills. I'm not particularly good at business, especially back then. So I said, all right, well, I remember when an old professor told me, he said, those who cannot do, teach. So what I did is I created a free class called Bitcoin or How I Learned to Stop Worrying or Love Crypto. It was after, you know, Dr. Strangelove. And I released it on Udemy and I said, all right, if anybody wants to sign up, sign up. And I ended up getting over 80,000 students for the class.

• 6:16Anthony Pompliano?

  Wow. And How'd you market it?

• 6:18Speaker 01

  I didn't. It was just viral. I put it on Bitcoin Talk and their edit and so forth. And people just shipped the link out and they'd send it to friends and family. And I met everybody through that. I met Roger Ver, Eric Voorhees, Andreas Antonopoulos, and back then, nobody was really that important and didn't really have a big ego. So they'd actually talk to you. You could send them emails. It almost reminds me of Minecraft. I was an early adopter there and I used to send emails to Notch and he would reply back. And then after he got really rich, he'd stop replying back. I said, "There's some sort of relationship here between wealth and power and access." But anyway, after I did that, one of my students was a Chinese guy. His name was Li Xiaolao and he ran a fund called BitFund. And he said, "Hey, I love what you guys are doing. I'll give you half a million dollars to start something."

• 7:03Speaker 01

  I said, "Well, that's a terrible idea. I don't have a business plan. I'm not an entrepreneur. I don't know how to do any of this." He's, "Oh, I like the cut of your jib. You'll figure it out." So I said, "All right, well, let me poll my students." And so I asked my students, "If you had a half million dollars, what would you do?" And I got a bimodal distribution between two answers. Some group of people said stablecoins. Some group of people said decentralized exchange. So I said, "Shit, let's put them both together and I'll create a forum post on Bitcoin Talk and see if anybody's interested in this." It's still searchable. It says, "Project Invictus." And I had this mind map and I said, "I want to do this. Is anybody interested?" Ironically, the very first person who replied was Dan Larimer, Byte Master. And this was before anybody knew who he was. He was working as a contract programmer

• 7:48Speaker 01

  at some robotics company. And he said, "I have this crazy idea called BitShares." And I said, "Well, that looks interesting." So I called up Dan and we started emailing back and forth. And we eventually decided to set up a company and we set up something called Invictus Innovations. Okay. It's I3. Invictus Innovations, Incorporated. It was a Virginia company. And I flew out and lived with Dan's father, Stan, and his mom Pam. And they had this lovely little farm out in Floyd, Virginia, which was right next to Blacksburg. And for a few months, I was working on BitShares with Dan. But, boy, we just started fighting every day. Really? Yeah. Oh, God, it was miserable working with Dan. And he probably found it miserable working with me. You see, the Chinese investor we had said, "Hey, there's this thing called an ICO. We should do that." And I looked at it, and this was back in 2013, pre-Ethereum.

• 8:33Speaker 01

  Mastercoin had just been done. That was the very first ICO. And I said, yeah, I don't know about that. You know, this seems like a securities offering. I don't know. And the Chinese were like, yeah, yeah, but you guys go do that. It's easy for you to say that. You're in Beijing, right? You'll get liquidity and I have to deal with it. We're in Virginia, in the backyard of the United States. So eventually, we just couldn't come to terms and I took a buyout and then I moved on and immediately.

• 8:56Anthony Pompliano?

  And when you and Dan were disagreeing, what were the disagreements on?

• 9:00Speaker 01

  I didn't want to do an ICO.

• 9:02Anthony Pompliano?

  Oh, it was really on the ICO?

• 9:03Speaker 01

  Yeah, well, I mean, that was one of the things. The other thing was the lack of rigor in the project. Because Dan has this habit of going from A to D. And you say, what about B and C? And he says, oh, don't worry about it. That's already, that's a done deal. And you're like, well, no, that's not how you design protocols. I've always been a guy who like, we need to do things in a peer-reviewed way, in a structured way. We need to get third-party validation, these types of... He said, no, that's not how this works. We need to be first to market. We need a momentum. We need to, you know, just release and if we screw something up, we can fix it, yada, yada, yada. So there was just strategic disagreements and then there's direction disagreements. And at the end of the day, his dad owned part of the company. He owned part of the company. There was two Lammers, one Hoskinson. So I wasn't, I wasn't gonna win that. And I learned early on, if, if early in a relationship, you can't get along, don't try to drag it out and make it painful for everybody. Just go.

• 9:48Anthony Pompliano?

  Yep.

• 9:48Speaker 01

  So I took a buyout and, you know, I got some Bitcoin out of it. And then I was kind of unemployed for a little bit and Anthony Diorio reached out to me and he said, hey.

• 9:58Anthony Pompliano?

  For those that are, are listening, we are at the conference and we are in the room right now and there's a baby. And the baby is very enthralled with the conversation. So he's letting you know that, that it's here.

• 10:12Speaker 01

  Yeah. So anyway, Anthony reached out to me and at the time, he was running the Bitcoin Alliance of Canada. And he knew me from my education work that I had done. And he said, hey, can you create some educational content for BAC? And I said, sure. So I started doing that and about a month into it, he said, by the way, there's this really brilliant kid. And he gave me a white paper and I can't make heads or tails of it. Can you read it and let me know what you think about it? And I said, sure. And I read the white paper and it was Ethereum. It was an overlay protocol on Prime Coin and Vitalik wrote it. And Vitalik knew Anthony because they both lived in Toronto. And Vitalik was going to a meetup group, in the Decentral meetup group. And anyway. After I read it, I said, "There's a lot missing, but I think this could be something

• 10:54Speaker 01

  great. What are you guys doing?" And he said, "Well, we have this informal Skype meeting we're holding, and there's a few people in it. If you want to join it, you're well more than welcome." And I said, "Sure." So I was the fifth person to join that meeting. The other four were Anthony, Mihai Alisia, Amir Shetrit, and Vitalik himself. So Vitalik knew Amir through color coins. He knew Mihai because they started Bitcoin Magazine together, and then he met Anthony from Decentral. And so, basically, I came in in November, December of 2013, and started having conversations about how we should structure it, what we should do. Eventually, we just came to the conclusion that the only way we were going to move forward is if we all met each other. So Anthony said, "Look, we're speaking at the North American Bitcoin Conference in January

• 11:36Speaker 01

  of 2014. I'll rent a beach house and fly on down, and if you guys want to come, come, and we'll see if we're assholes, or if we like each other." And so, we flew down there, and the rest is kind of history in this space. We liked each other enough to try for it. We left Miami knowing that we had something very real and very significant. And there's really kind of two factions that were there. One were the developer or open-source-y factions, and the other was kind of the business arm. So in the business arm, there was Amir, and Mihai, and Anthony, and Joe Lubin. And then the developer side, it was Jeff Wilchi, and Gavin, and Vitalik. And I was kind of in the middle, where I was sufficiently technical, I could talk to them, and I had kind of enough business sense where I could talk to the business arm. So I tried to keep everything

• 12:18Speaker 01

  together, and we had to make kind of a philosophical decision about what to do with the project. We called it the Crypto Google or the Crypto Mozilla question. So basically, do we create a for-profit, take some VC money, go build Ethereum, and then release it like Ripple? Or do we go and do an ICO like Mastercoin from a not-for-profit organization? So I made a very strong argument for Crypto Google. I felt that if there weren't golden handcuffs and financial incentives, kind of all the founders would scatter to the wind the minute that we became successful, and the project wouldn't have right governance. And there was a high probability we'd just spend all the money, and it wouldn't work out so well. And initially, everybody was on board with that. It was an eight-to-zero vote, so no dissent. Then it, but it didn't sit right with Vitalik and little by little, he started thinking about it.

• 13:02Speaker 01

  The project kept getting bigger and by June of 2014, there were like a hundred people that were doing various things. There was like a thousand people in the Skype groups. So it was just too big. So we revisited that decision and Vitalik decided, you know, laterally to go to Crypto Mozilla and shortly thereafter, like the whole business arm got devastated. So Amir and I left that day. We got pushed out and then shortly after Joe started consensus and did his thing, Anthony left and started Decentral. And then the developers started getting gutted. So Gavin created F Dev and eventually Parity Tech and then Jeff started doing video games. So no one actually stayed. So we were both right, you know? He created a tremendously successful product and I was right in that there wasn't an incentive to stay, but I guess it didn't matter regardless.

• 13:46Speaker 01

  What would have happened to Ethereum if you had gone with the corporate structure and everyone had stayed? What we were proposing was that we would own a for-profit Swiss entity. It was called Ethereum Switzerland, GMBH, and we would get some VC money, centralize the project there, build the protocol and then release the protocol under our foundation and do the ICO with a finished product. I felt the risk to investors was significantly lower. And second, if we were going to have existential problems, they would be, occur under the for-profit structure, under smart money. So we would have less risk of lawsuits and these types of things. So had we launched it, we probably would have looked a lot like Ripple in that respect. The only difference being that there would have been an ICO still and it would have been done from a foundation. And there also would have been a clear separation

• 14:31Speaker 01

  of concerns between the founders and the custodians who do the ICO. They would have been a separate board that was truly independent. So probably consensus and Decentral would have been rolled up into one entity that we own. So maybe that would have been a better model or maybe the model that they chose was better. It's one of those what-if games. Yeah. You don't really know. When you left, what'd you go do next? Yeah, so I was kind of in the hinterlands, you know, I was 0-2, you know, bit shares didn't work out for me and Ethereum didn't work out for me and everyone was like, "Man, maybe this crypto thing isn't for you, Charles." And I said, "Ah, okay, maybe." But I got invited to do a TED Talk in Bermuda and I said, "Okay, that'll be my capstone. I'll do my TED Talk, I'll leave the space and then I'll go back into mathematics or something, who knows?

• 15:13Speaker 01

  Maybe I'll sell cars." I don't know, you know. So I went and did the TED Talk and people liked it so much that I started getting invitations to speak at other locations and then somebody who worked on me on the Ethereum project, Jeremy Woods, said, "Hey, there's these guys in Japan that would really like you to build a cryptocurrency for them." I said, "Okay, well, I don't have a company and, you know, I'm just one guy and if we're gonna do that, you know, it's like a serious deal, we have to kind of figure this out." So I flew out to Osaka, Japan, and then basically Jeremy and I started talking to these guys and we said, "Fine, let's build a company." So we formed IOHK. We formed it in early 2015 and basically the idea would be that there's probably gonna be a lot of money and a lot

• 15:56Speaker 01

  of desire for cryptocurrencies, but not a lot of scientific or engineering talent to service that money. So if we built a specialized firm that's kind of like a factory for cryptocurrencies, we'd probably do pretty well. And we basically went and did that. We got a contract and started getting paid and then we started hiring lots of scientists and lots of engineers and we started working on Cardano and it was really what got us started. IOHK? Yes. What is that? Input Output Hong Kong. Where did that name come from? Well, Input Output was mostly just, we looked at cryptocurrencies as like regulating the inputs and outputs of society. So we say, "Okay, there's these new systems and you put stuff in, you get stuff out, and we're now in complete control of how commerce,

• 16:40Speaker 01

  society, identity, property rights are going to work." So we like the association with kind of traditional engineering things. IO is like an engineering term, right? But we also like that philosophical connection. And Hong Kong, because, you know, we got an Asia contract and we were in Asia and it was either Singapore or Hong Kong. And we went to both and we liked Hong Kong more and we incorporated there. We eventually left Hong Kong, you know, we're pulling assets out. Because of geopolitics and also because the Chinese government's really swallowing that country. But it was it was good for the time and it was also a crypto haven back in 2015. There were a lot of crypto businesses there.

• 17:13Anthony Pompliano?

  Got it. And so you start and you the first thing you build is Cardano.

• 17:17Speaker 01

  Yeah, and it was a high risk, high return project. So basically, we structured it like a DARPA project. We said, look, if we're going to build a cryptocurrency, then it's got to be worth our time. It's got to be worth the industry's time. It's very easy to fork Bitcoin or just take what Ethereum had done. It hadn't been released at the time, but there was a testnet. We could have easily just taken that like Tron did and just put some stuff on it and said, OK, we have a product now, yay, and walked away. We said, no, if I'm going to spend years of my life doing something, then let's do it right. So what we did is said, OK, if a system was to scale to billions of people and be useful for those people and be really a financial operating system for them, so their whole financial life lives in it, from securities and commodities to currencies to their identity to their land, then what would it have to have?

• 18:02Speaker 01

  And we identified three areas to go do some research in. So the first was scalability, and we said, the system has to get faster or stay at the same performance regardless of how many users it has. So as you gain users, you get faster, kind of like BitTorrent. When you download Game of Thrones, you get it really quickly because a lot of people are doing it. But if you download Pee Wee's Playhouse, you get it really slowly because very few people download that. Then second, interoperability is a big deal because at the end of the day, there's going to be tons of these systems. And if they can't talk to each other, it would almost be like Wi-Fi where all your Samsung phone can only connect to a Samsung router or your Apple phone can only connect to an Apple router. That would just be a terrible user experience and Wi-Fi would be useless to us. But because it's ubiquitous and it's a standard and we can talk to each other, it's now a very useful thing to society. So this is going to be the same way.

• 18:46Speaker 01

  These systems have to have protocols that allow you to move information and value between them. And then finally, sustainability. The governance problem we have in this space is normally products are curated by a company or a federation of companies. So you have the iPhone to Apple or Windows to Microsoft. And so then there's that who pays and who decides thing. It's obvious. You say, oh, Microsoft is going to pay and they're going to decide the future of Windows. Great. And if I have faith in them, I have faith in that product. But we're trying to make the argument that these protocols are headless. Bitcoin has no leader, no controller. But at the same time, we're trying to say that this is a stable, great platform to build your business on and stake your country's financial future on. And you say, "Well, if I don't really have an explicit way of understanding, how will this protocol evolve or change and who will pay for it?"

• 19:31Speaker 01

  Then I run into two problems. One is the golden rule. It's he who has the gold makes the rules. So whoever's paying for it is probably going to have a huge amount of influence over the roadmap, and that's probably not you. Second, there's the issue of, well, if we disagree, we run into like a Bitcoin Bitcoin Cash type of deal where, you know, suddenly the entire ecosystem forks and now you have two where there was one. And you have to pick sides, and the minute you pick a side, then you're a monster to the other side. You go from Bitcoin Jesus to Bitcoin Judas. And that's just really not a good thing for the ecosystem. So we said, if these are to be real and scaled to this many users, we need to have protocols that allow us to govern them, to pay for things, to print money to pay for things, and to vote on improvement proposals in a way that people are okay with that reduce forks.

• 20:15Speaker 01

  So these were the kind of three base philosophical research goals. And we started from first principles. So we said, "We're not going to assume anything. Proof of work, proof of stake, blockchain, not a blockchain, whatever. We're just going to do a bunch of research." So for the first two years of the project, 2015, 2016, and a little bit in 2017, it was just pure R and D, pure research. We wrote tons of papers. We did a boatload of research into proof of stake. We learned a lot about all the stuff in the industry. Like, we actually wrote a formal mathematical definition for a blockchain. It's called the GKL 15 model. We just did all this stuff. We also did a lot of research into programming languages because we looked at smart contracts. We said, "These are kind of necessary for the system to be useful." But then, what makes a good smart contract language? What accounting system should we use? We formalized the UTXO system.

• 20:59Speaker 01

  We proved the UTXO system's equivalent to Ethereum-style accounts. We did all this like broken window fixing along the way. Then, at the end of that, we said, "Okay, we have enough now to actually pivot and go from a research project to try to commercialize the technology." So then, what we did is we started gradually building up a protocol. And the first milestone was just releasing it in kind of a federated mode, similar to how Ripple runs, and just use it to get exchange listings, get the philosophy out there, and tell people what we're trying to do. Because no one had heard of Cardano. It was like, didn't- No marketing at all. So for two years, we were just silently sitting there and everybody thought I was dead. They're like, Charles is gone. No one invited me to anything. No one really cared. And then suddenly in 2017, we're like, oh yeah, by the way, we got this protocol and here's all these papers and I guess there's 100 people working here and all these scientists

• 21:44Speaker 01

  and everything. Oh, that's what he's been doing for two years. Okay, this is interesting. So Cardano released and immediately it hit the top 10. And for a little while, we were worth like $30 billion, which was just batshit crazy. I was like, guys, we're in a bubble. This is bad for everybody. And then it brought a huge amount of people into the ecosystem and we were able to leverage that to learn a lot. And then all throughout 2018, we started actually building the foundations of getting this into to market as a fully decentralized product. So now we're in a position where we're just about to release the Shelley release, which is turning over the system from a federated state to a fully decentralized state. And there's just a ton of innovations we made. The proof of stake protocol we have, Orboris, it does everything proof of work does. You have a bootstrap from Genesis property, which that basically means if you have multiple

• 22:28Speaker 01

  chains, you can pick the longest chain, the correct chain, without a checkpoint, just like Bitcoin does. We operate in a semi synchronous model, just like Bitcoin does. We're 50% Byzantine tolerant, just like Bitcoin is. So we systematically built up this corpus of theory that matched Bitcoin's security properties and we did it through the peer review process. It wasn't trust Charles Hoskinson or his scientists. We wrote a paper. We went to a major academic conference that accepted only 10 to 20% of the papers that were submitted and they accepted the paper. Eurocrypt, CCS, crypto and so forth. So there was like independent third-party validation that we're not saying crazy things. There's some reasonable merit behind the things we're doing. And what was really nice about what we've designed is the system is really decentralized.

• 23:10Speaker 01

  In fact, at launch, we can have 1,000 stake pools. EOS has 21, Bitcoin has four major mining operations. So you're looking at 50 to 250 times more decentralized than the incumbents, which is a, you know, a good point. The other thing is with Orboris Hydra, the protocol we're just about to publish, that's our sharding protocol. When you have a lot of these guys, they do different work. So you're no longer to replicate a system, you're distributed, which means the system gets faster as you get more participants. Which was one of the original design goals. We also have a lot of other things, like we formalized sidechains. It blew our mind that Blockstream didn't do this. This was their whole thing. They raised 76 million dollars. They got all these great guys. We're like, oh, okay, cool. We'll just take whatever Blockstream's done. We'll modify it to work for us and that'll be great.

• 23:54Speaker 01

  Then we looked and it's like they didn't really do anything. They said, this was their whole business model. We're going to bring sidechains to Bitcoin and all the innovation in the altcoin space will be dragged into Bitcoin and Bitcoin will be the one chain to rule them all. I was like, great. And then that never happened. So we had to actually write all the theory out for sidechains. We created a paper called NEPA PALS, Incidents for Non-Interactive Proofs in Proof of Work. Then we created an equivalent for that for proof of stake. And basically, we created a system where if I send you a transaction from a foreign system, I send it with a proof and the proof does two things. One, it proves that the coins are real. And two, it proves the coins haven't been double-spent, which is basically what you need to do to be able to have, like, clients or sidechains. So we built a whole corpus of theory and submitted a lot of papers for that. So we're bringing that into Cardano.

• 24:37Speaker 01

  And then finally, we just did a ton of PL research, which is why we're actually here in Wyoming. You know, we thought about smart contracts a lot and we realized that at the end of the day, smart contracts probably aren't going to be a world computer that replaces everything and just, you know, that we go from Amazon now to Ethereum and then we run the whole app there. The reality is you're still probably going to have server client for a lot of these things. But what you're going to do is you're going to take certain logic in your application that causes your app to be trusted, pull that out and put it into a blockchain, run that as a smart contract. That's the on-chain code and the rest of the stuff will run off-chain on Amazon or Azure or something like that. So we designed a programming model that is very graceful in that respect. You write your off-chain and on-chain code in the same source file.

• 25:18Speaker 01

  Off-chain is Haskell or whatever language you want eventually and then on-chain is Plutus and Marlowe or DSL that's for that particular application, whether it be a financial contract or a supply chain contract or something. So we spent three years designing that with some really good guys. We hired the guy who created the Haskell programming language and this is now the place where we're actually starting to show it off and get developers to tell us what we did wrong, the good, the bad, and the ugly, you know, that process. What's next?

• 25:45Anthony Pompliano?

  Skrt skrt. Want to know who has the best URL? Crypto.com. That's right. Crypto.com. They're a crypto platform with one goal. Motherf***ing mass adoption. That's why we're all here. We're trying to get crypto in every wallet. Crypto.com is helping people do that through buying, earning, lending and card payment. Everything you could want at crypto.com. Go help your boy out. Tell them Pomp sent you. Download the app or visit crypto.com. Pomp's got you always. Ever wanted to get into mining and didn't know how? Don't worry, your boy Pomp's got you. Everybody got some electricity and wifi. All you gotta do is go to coinmine.com. You buy a coin mine. It's like an Xbox or a Playstation that helps you turn

• 26:29Anthony Pompliano?

  your electricity into Bitcoin. That's right. You purchase it. It shows up at your doorstep. You pull it out of the box. You plug it in, connect to your wifi. Five minutes or less, you're mining Bitcoin. All you have to do is control it from the mobile app they provide and then you receive over the air updates that add new coins and new features on a consistent basis. Kind of like how Tesla does over the air updates and updates the car software. Just your updating your coin mine. Consumer mining made easy. That's right. Go to coinmine.com, tell them Pomp sent you and thank me later. One more word from our sponsor BlockFi. Their new interest account allows you to securely deposit your Bitcoin or Ether at BlockFi and receive 6% annual interest paid monthly in cryptocurrency.

• 27:14Anthony Pompliano?

  This rate actually compounds, so you receive a 6.2% APY, which is very attractive given the alternatives. So you can actually take your Bitcoin, you can deposit it with BlockFi and get paid an interest rate of 6% in return. Go check out blockfi.com/pomp. Again, blockfi.com/pomp to sign up and start earning interest on your crypto today. What's next?

• 27:40Speaker 01

  Well, we got to get Shelly out, and that's all about decentralization, and that's a huge milestone unto itself. It's scary, you know? It's like having kids, and you raise them for a while, and they live with you, and then they've gotten big enough to get a bicycle, and you're like, "Okay, please don't get run over by a car." So that's where we're at, and we're just about to release the network testnet this month, and November, we're releasing the incentivized testnet. So people, when they stake, they actually make real data from that, and then we'll get up to a certain critical density of stake pools, and then, once we're there, we can fork the main network, and then the whole network is being run by third parties. Once we clear that, and that's a huge milestone, very shortly thereafter, we'll roll smart contracts into the system, turn it on, and then, at that point, it's fully decentralized, and it has smart contracting capabilities.

• 28:24Speaker 01

  So it's basically like Ethereum in that respect, but just more decentralized, more performant. But then the next step is to turn on Orbis Hydra, where those stake pools now can shard the ledger, and then all of a sudden, we get very high TPS with the system. There's still a lot more to do on the network side and the storage layer to make it truly scalable, but that's a major milestone for us. And then, the kind of the last thing to do is put in the governance stuff. Tezos has been a really big leader in the space in that respect, and Dash has also been a leader in this space of having the conversation of what does it mean to participate and vote? Whether they got it right or wrong, at least they had the courage to actually go ahead and do something. So there's a lot there, and we did write some papers on this. We wrote a liquid democracy paper out of Lancaster University, Bin Cheng Zhang is the one who did that, and we created kind of a new voting system.

• 29:06Speaker 01

  So we created a cardinal improvement proposal process and a ballot system, and rolled the voting system in, and hopefully, our community is able to use that. It's a big democratic experiment.

• 29:15Anthony Pompliano?

  For sure. One of the things that you've been talking a lot about here at the conference is regulation and the regulatory environment. Maybe talk a little bit about what the issues you see and kind of where we're going, what needs to happen there?

• 29:26Speaker 01

  Well, one of the biggest problems with Bitcoin is it's blind, deaf, and dumb, and that was by design. And because if you're doing an experiment, you're launching something, you don't want to go do 90 things. Right? You know, it's like, I'm gonna see if smoking causes cancer and radioactive waste. We're like, well, if they get cancer, it just tells you one or the other or both are causing that, right? Or neither, right? So you want to design an experiment where there's as few variables as possible in a control group. So you can kind of see if what your thesis is is true. Okay, so Bitcoin, it was, well, will proof of work actually result in a decentralized system? And will the token actually achieve value? These were the two core features of the experiment. But it never said, okay, we're also going to build a system that is able to replicate the world financial system

• 30:08Speaker 01

  and also is fully compliant with that system or capable of being compliant. This was not in scope. So now the FATF and regulators and these other guys are waking up and saying, look, we like what you're doing. And there's a lot of merit here, but you got to make provisions for everybody else. Like, for example, contingent settlement. So that's where A sends to B if and only if X, Y, and Z or whatever have happened. Multi-sick is an example of that. You can only execute the transaction if Alison, Bob, and Jim sign the transaction. But you can have all kinds of contingencies. So for example, imagine you have a for not-for-profit. And you say, anybody can donate to me as long as they satisfy X, Y, and Z. So those are contingencies for settlement.

• 30:50Speaker 01

  So it would be nice if you could bake that right into the address that you present publicly. And the only way I can send you funds is by satisfying those conditions. Maybe I have to sign it with a unique identifier. Maybe I have to sign a contract and hash, you know, hash that and sign that and embed that into the transaction, saying I consent to the donation deed. All of these types of things. So that's a bread and butter of all finance. Nobody just sends you money for the sake of sending you money. They need, there's always a commercial story behind that. Then second, we have this situation where the commerce is now divorced from the people behind it. So we don't really have a notion of identity in these systems yet. We're trying to figure out, how do we install identity into these? Should this be meta to the system, so outside of the system? The problem is then that it becomes malleable.

• 31:36Speaker 01

  So you can swap it and say, oh, that transaction actually belonged to Charles. And it was actually Jim, but no, we're gonna make it swap it, make it look like it was from you. You don't get any of the benefits, the immutability, the timestamping, the auditability. So there's a lot of arguments of saying that these transactions, they need to be more than just pushed. They also need to be pulled, they need to have contingencies. They need to embed the story, they need to have provisions for identity. They need to be able to be smarter and have contracts baked in. And those may need to be templatable so that third parties can come in and reverse transactions or things like that. It's a big conversation. And regulators are willing to have it with us. Example, here in Wyoming, they're actually been very open, but we as an industry have to be willing to have that conversation with them.

• 32:17Speaker 01

  The problem with maximalism is that it basically says there's one God, one gospel, it is Satoshi. If there's any deviation from that vision, then it's wrong and everybody else is going to have to change to accommodate us. It's a very bad view and it doesn't cover things. I mean, I can't even do pull payments with Bitcoin. And that's like half of commerce, right? You sign up for a subscription and every month Netflix pulls out $9 or YouTube pulls out this much money for YouTube Red. Well, that's the bread and butter of most of our commercial systems and I can't even do that with this system easily. So you have to concede that this is not necessarily a fit for perfect system and to say that I have to go off-chain to build these things is saying now you have to centralize your solution.

• 32:59Speaker 01

  You don't solve your decentralized reality and your decentralized dream by centralizing it. I'm sorry, that's just philosophically incompatible. So what we're working on with Cardano is now that we've built all these capabilities and we have more than 40 papers we've written and half of them have been peer reviewed, we know the tech works. It's more of a question of how do we steer this tech in a direction that is actually useful for people? Like if, for example, you're a small Ethiopian business that has a great cash flow and you want to go and issue a security token. Okay, great. Well, you're going to live in a regulatory environment, so how do we build a toolkit for you to do that where you can comply with that regulatory environment? And then we can go to the Ethiopian government and say, hey, we have this capability, can you just tell us if it's legal or not?

• 33:42Anthony Pompliano?

  And this is essentially the idea of like taking the law and writing it into code.

• 33:45Speaker 01

  Exactly. Yeah, exactly. And then we as an industry can actually have that conversation as opposed to an individual basis. So it'd be great to collectively bargain. I can go to Consensus and Blockstream and all these other guys and we can all sit in a room and say, okay, this is what we want as an industry. Then we can collectively go as an industry to the government and say, we are willing to implement this into code. You just have to tell us if it's right or wrong, or make changes to it. And then we'll haggle for a while, we'll come to a compromise, and then that code right there is signed by the US government. Suddenly, you as an entrepreneur, all you have to do is say, "My smart contracts have to inherit this requirement. My address has to have this contingency built into it. And now I'm in compliance." Not "my opinion is compliance." I have basically a no-action letter effectively

• 34:29Speaker 01

  from the US government saying, "You're doing this, you're okay." I don't have to hire a lawyer for that. I don't have to hire an accountant for that. I've completely circumvented this whole legal-industrial complex that's formed to make people satisfy these compliance regimes. Second, it's super easy to globalize that. Because then you just pick the countries you're doing business with, and you just put them right into the structure of your contract, right into the structure of the transaction. What's the Algerian standard? What's the Mongolian standard? What's the French standard? Click, click, click. If my customer's coming from a new jurisdiction, I can't say, "Oh, that's a high-risk customer, high-risk jurisdiction." You just say, "Oh, let me just grab the contract." And if the customer's willing to satisfy those requirements, then now we're in full compliance. And it costs me nothing as a business to do that. Maybe my transaction fee goes up by a penny or something because there's a little extra computation.

• 35:14Speaker 01

  But we now have a global system. And if there's a problem in the contract, we just, as an industry, go and fix it. And we evolve from it, we grow from it. But it's all cumulative, and we start converging to global standards as opposed to this fractured system. Furthermore, you don't get sued by the regulator because you've established the mens rea and an intent to follow the law. And if they got it wrong, we got it wrong, we fix it. And then we just move on. So I think this is probably the single greatest feature of what our industry is doing, is we're starting to realize that we're living in a global business environment, but we have a very fragmented, was fallient notion of how karma should be. And we're saying, "We now have better tools to unify everybody and get people to coordinate, cooperate with each other without giving up sovereignty." Because you're not telling Germany

• 35:57Speaker 01

  that they now have to correspond to, to be compatible with Chinese law or US law. You're saying, "You get to decide what the standards are." And then I, as an entrepreneur, will now know that upfront and know how to comply with that. And then me and my customers, we have to sit down and make a decision. Are we okay with that?

• 36:13Anthony Pompliano?

  Mm-hmm.

• 36:14Speaker 01

  For example, if China does this, they're almost certainly going to put backdoors in the system that will de-anonymize everything and potentially even give them custodianship over the assets. So then you will now know upfront, if you do business in China, this is what it's going to be. And then the global marketplace will actually start making decisions accordingly and say, maybe I don't want them to have that. And so if countries have boneheaded bad policy, instead of just us silently dealing with it, they actually start losing business and they start losing money. And the global market will start collapsing down on them and forcing them to change their standard.

• 36:46Anthony Pompliano?

  For sure. One question I want to ask before I finish up with some rapid-fire questions is proof of work versus proof of stake. You've seen many variations. You've been involved in a lot of the more technical nuances of both systems and those variations. What's your take today in terms of, in the steady state, 10, 20 years from now, will we have proof of work and proof of stake? Will one be more dominant than the other? And is there any one variation that you're overly bullish on being kind of that dominant one?

• 37:16Speaker 01

  So with both protocols, you're trying to do the same thing. So you have three things you're trying to do. First, you're trying to decide who's in charge for that particular period of history. And then that person in charge makes that block or makes that update to the system, and then the network decides whether they've accepted it or not. So imagine a poker game. You have to decide who's the dealer. And so then the dealer is, once selected, will deal the cards, and then everybody looks at the cards and collectively they make a decision if they think the dealer's cheated or not. Like if I pick up and I have five aces, I say, well, there's only four on the deck, so the dealer's done something wrong, and I reject the dealer or reject the block. Okay? Both systems are legitimate. Both systems work. We've done an enormous amount of theoretical work to prove that proof of stake is a viable

• 38:00Speaker 01

  system if you accept its trade-offs. Okay? The question is... Given that the first step is super expensive with proof of work and it's free for proof of stake, does that alone cause a tendency to push into the proof of stake space? And my argument is no, because it turns out that that really expensive first step could be potentially very useful. So, right now, we're just using useless algorithms, whether it be Prague Power, the Bitcoin SHA 256 algorithm, or whatever. They're useless, it's just digging holes and filling them back up again. But there are projects, like the PermaCoin paper in 2013, or Chia, or others, that are actually looking and saying, can we create useful work?

• 38:43Speaker 01

  Or, for example, we're creating an incentive for people to store large amounts of data. Or, there's a paper, actually, it was titled "Proof of Useful Work," it came out of Berkeley, that basically says, if you solve these puzzles, you're solving real-life problems. And so, instead of saying, "We're just doing worthless stuff," you're now creating a marketplace for distributed computation. And that's really valuable. And, right now, if you look at capacity, a lot of businesses exist from excess capacity. You have a car, you only drive it so often, maybe you drive it a little bit more and drive people around. There's Uber. You have a house, and you have a spare bedroom, maybe you rent it out, and you have some friends stay there, or somebody stay there. Well, that's Airbnb, right? You have a computer, you're not using that laptop right now, it has excess capacity.

• 39:25Speaker 01

  So, if you have all this computational equipment, and 99% of the time, you're not using it, well, maybe you can monetize it through these types of protocols. And then, suddenly, you now have the next generation of proof of work. So, if we move in that direction, I do think proof of work will stay. If we stay in the, "We're only doing this because it's the only logical way to select people," that's just madness. And I think proof of work cannot survive in that kind of environment, especially given that there are so many reasonably well-established academics, whether they be Sylvia Macaulay with Algorand, or what we've done with Ouroboros, or what we've seen with a lot of the other proof of stake protocols, which are academically verified, peer-reviewed, and there's mathematical proofs that they do work. And you say, "Well, what are you really trading off?

• 40:08Speaker 01

  Oh, I might have to trust a coalition of people at some point in the future to create a checkpoint," or something like that. Okay. Well, yeah, you're trusting there's not a backdoor in your computer chip, or you're trusting there's not a backdoor in your operating system. Are you so pathologically paranoid that you're utterly unwilling to trust anyone, or even a group of people, at some point to upgrade the system, or do something to the system, or intervene in the system when there's a problem? Meanwhile, your entire life is surrounded by people you trust every day, from the mechanic with your car to these other types of things. So, I think that if, that's the only...

• 40:42Anthony Pompliano?

  We're in an interview right now, we're recording.

• 40:47Speaker 01

  I think that if, you know, if that's the only argument they have, that there's this absolute trust, no one, just trust the protocol, proof of work doesn't stand a chance in hell. Proof of stake is just so much better from that perspective. And frankly, you can tune proof of stake to have many different types of trust parameters. The other thing is proof of work in its current instantiation always federates. There are only four mining pools that control more than 51% of the hash power, and you cannot play that game. It's not egalitarian. It's basically saying the people have subsidized power, the people who can afford data centers, and the people who can afford specialized ASICs are the ones who win. And 99.99% of the world population is not in that set of people. So what you're doing is saying it's a trustless protocol,

• 41:32Speaker 01

  but the curators of the system are not me, can never be me, and will live in jurisdictions that aren't so nice, like China, or Kazakhstan, or things like that, that potentially could become very problematic. I just, I just don't see the logic in that. So, my whole argument is if we find useful proof of work, it will stay. It'll be more egalitarian and democratic. It'll be based on commodity hardware that everybody has, and it's a capacity play like Airbnb or Uber. If we can't find that, then proof of work will be completely replaced with proof of stake-style systems in the next five or 10 years.

• 42:04Anthony Pompliano?

  Got it. What do you think is the most important company in crypto, other than your own?

• 42:09Speaker 01

  Well, I'd say it depends on your perspective. If you're talking about DApps, DAOs, and the smart contracts space, the bellwether there, the significant company is ConsenSys. They're just a huge company, a lot of money, a lot of people, a lot of stuff going on, and they've made massive and meaningful contributions to the space. We're a competitor of theirs, and there are a lot of people at ConsenSys really hate me and say horrible things about me, but I will give them their due. They've done great work in our industry. If you're talking about upcoming, exciting companies that are doing really good science, Algrand is definitely one of them. I have a lot of respect for Silvio McCauley. I mean, we tend to forget, this guy has the Nobel Prize of computer science. He has a Turing Award, he's a tenured professor at MIT, and he's kind of dragging the whole club. He's

• 42:53Speaker 01

  got the boys back together. It's like the Beatles are coming back together. And he's getting them interested in our space, and if he's successful, that's going to bring a lot of horsepower on the mindshare side into our industry. So they're very important. I think there's a good custodial role from Blockstream's perspective, and they have been a very effective vehicle of ensuring people that Bitcoin is going to be around and people are going to sustain and maintain it. So it's very important, and Bitcoin frankly is the brand of cryptocurrencies. You know, we can't say, "Oh, well, I'm going to succeed, but Bitcoin is going to fail." If Bitcoin fails, our whole industry's probably in for a really bad time. Yeah, I agree with that. Yeah, so we have to be, we have to be good to Bitcoin, and Blockstream has been.

• 43:35Speaker 01

  They've done a lot of cool things, like BEC32 and Simplicity, and, you know, the movement to Schnorr sigs to make Bitcoin far more useful, the push for Lightning. You know, these things are good for Bitcoin, I think, and they allow Bitcoin to at least be, continue to be competitive in its own right. So I have a lot of respect for them. Some of the exchanges are very creative and very innovative, like Binance is always innovative. Sometimes they push the envelope a little too much, but at the very least, you have to say CZ is a true entrepreneur, and he's trying to innovate where and when he can. So and you also have to have a lot of respect for Coinbase for being the Ned Flanders of our space. They didn't piss anybody off. They never took the easy road out. And what

• 44:16Speaker 01

  Coinbase was able to do was legitimize Bitcoin in our industry in ways that many companies could not legitimize. So I have tremendous amount of respect for them as well. And I think they're always going to be here until they IPO or get acquired. But they're profitable and they do what they're going to do. I also like Ledger a lot. I think they've done some great work on the trusted hardware side of things. And they've invited a conversation about opening up the possibility of what specialized devices can do. And right now they're a hardware wallet, but one day they could be Lightning Node, one day they could be a trusted data feed for an oracle. There's thousands of things you can do with trusted hardware. That's very magical. So to have well capitalized, well run, funded companies that actually know how to ship products that are high quality to the consumer and work with us in the industry, because it's been a joy working with Ledger for their integration

• 45:01Speaker 01

  with Cardano. I have a lot of respect for that. And I have a lot of respect for any entrepreneur who can do these things. So these are the kinds of companies that I tend to like. And it's more meritocratic than whether they are pro Ethereum or pro Cardano or pro Charles or anti Charles. It's just have we been able to effectively work with them? Are they making meaningful open source contributions to the space? Are they providing stability and support to our industry as a whole? These types of criteria. And the ones I've mentioned, another is Eric Voorhees with Shapeshift and what he's done there. Eric is just one of those transformative guys. He started as a frothing libertarian anarchist who's like Bitcoin is the only way and everything else is garbage to the king of all coins with Shapeshift. And it's just been a really amazing transformation. And he kept his core,

• 45:46Speaker 01

  but he also became a very competent businessman along the way. And he built very necessary infrastructure for our space.

• 45:52Anthony Pompliano?

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

• 45:54Speaker 01

  Well, the one that changed my perspective probably the most was Yuval Harari's book, Sapiens, and then the follow up book, Como Dias. Because he basically said, "The whole world works on narratives." And it's one of those things that, once you know what you're looking for, you see it, you say, "Wow, that's absolutely right." I mean, religion, economics, all these things are just social systems that were created to stave off certain things. So, the old order was war, famine, and disease. And these were just the banes of human existence. There's a reason why the Four Horsemen represented these things. You know, and the point of governments, religions, and society was to basically create a firewall to try to collectively protect ourselves from this. So, all these institutions, these fictions we constructed, were to enable us to overcome

• 46:38Speaker 01

  these challenges. And as they die, and we no longer worry about starving to death, or a war killing us, or a disease killing us, then we have new challenges that come. Which means that the fictions we currently have, the narratives we currently have, have to change. So, I thought that that perspective was just so incredibly valuable. And another was House of Morgan from Ron Chernow. Ron is a great biographer. He writes about everybody, whether it be George Washington or Rockefeller. And he does these enormously in-depth things where, like when he wrote about George Washington, he literally read every letter this guy wrote. He went and found them. And Washington was meticulous in archiving them, and there was tens of thousands of them. And so, the House of Morgan was great because it really gave a window into how the American financial system got to where it's at.

• 47:23Speaker 01

  Because there was just, seriously, no entity, no person, no family that had more influence on US finance than J.P. Morgan's family. And it started from the, "We're all Ponzi scheme, we're all scams." And this was back in the 1850s and 60s, when we were just an international joke. And, you know, nobody wanted to buy bonds from the US because we'd default on them. We had no respect for it. The English were kind of running the world financial system. So, if you wanted to actually be a finance guy, you know, like Junius Morgan, J.P. Morgan's father, you had to go to England. And he worked with George Peabody there. But then, suddenly, there was this pivot to America, especially after the Civil War. And it became clear the United States was gonna become the world financial system. And we just kinda did everything wrong. We made every mistake from the these giant trusts that people formed and these transitive

• 48:08Speaker 01

  boards and basically people rigging the system so they'd win to boiler rooms and other things. And the Morgans in some way, shape or form, had something to do with all of it, either from bailing out the US government to getting the US government into trouble. They also were an extension of US foreign policy for the first half of the 19th, uh, the 20th century. So if we couldn't get into Mexico or the Philippines or somewhere, we'd get in through a bank. And so JP Morgan's guys were probably somehow involved, like Tom Lamont and so forth. So it was just an eye-opening book and it really said, wow, there's a lot more to this world financial system and these guys were touching it. So highly, highly recommend that book, just absolutely great. Another one, Secrets of the Temple. It's a book about the Federal Reserve system and kind of where it came from and why it

• 48:53Speaker 01

  operates. It's a little out of date, it was written in the 80s and I really wish they'd write an update to it. Anything from Niall Ferguson is also really good, like The Ascent of Money. Ascent of Money, yeah. Yeah, that's a great book to read as well. And I'm actually, I have some Medici blood in me, so it was always fun to see that. I'd say, oh wow, my ancestors were interesting people and they were quite innovative and quite violent at the same time. So there we go. Hopefully, some other genetics have moderated that a little bit, somewhere along the way. So I'd highly recommend anything he has and that's certainly a lot of fun. But I read a lot of biographies and a lot of history books and I, that's what tends to consume a lot of my time. I also tend to read about great failures, like the latest one I just finished was Bad Blood. Mm-hmm.

• 49:36Speaker 01

  Yeah, and that's just a great story of what happens when group think comes into play. Silicon Valley just wanted a female entrepreneur to succeed and they have all these models that they preach and they tell me and everyone else to follow. And if you apply those very models to Elizabeth Holmes, it was an obvious scam. Yet somehow she was able to sneak her way into getting huge amounts of funding. She knew the game. She knew the game and she knew how to succeed within that game. And it's just a great lesson when you run a business and you're in an industry that tends to start having monolithic thought. That's where you always get into trouble. If you are saying the same things that your competitors are saying and you believe the same things that all your other people believe, we're doomed. Is the whole point is to have diversity of opinion and thought and you know kind of different approaches and then the market decides which ones are more valuable and that changes over time.

• 50:20Speaker 01

  And the valley just let her do this and not only they let her do it, she got amazing people on her board like Henry Kissinger and General Mattis and so forth. These are people I couldn't talk to and somehow she networked her way and got them to put their branded reputation into her system. And what amazed me, I come from a medical background, my dad's a doctor and you know, very simple test, you say, okay, you're claiming that your magic box can tell me things about my blood. Great, here's what I'm gonna do, you have your magic box sit in my office, I'm, I don't need you to tell me how it works, I'm just gonna put 10 blood samples through this thing and we're gonna treat it like a magician and you're not gonna be able to move and go to a different room or anything, we're just gonna wait around for the results. And you're gonna tell me what those 10 samples did.

• 51:01Speaker 01

  And if you got it right, okay, you know, you got something, now let's have a discussion, sign some nondisclosures, get it done. But if you're not willing to do that, well, I don't care if it's magical or not, there's just no way to verify the claims you're making are true. I look at the same situation in our space with our protocols, like whether it be proof of stake or this, if all these people, 800,000 TPS or this or that or infinitely scalable, they say these things, I say, great, write a paper, a scientific paper, here's the conferences you submitted to, if they accept the paper, then I take you seriously. It's not elitism, it's just, to get there, it's a process. And then we have something to talk about. I understand your trade-offs, I understand your approach, I understand your theory, I kinda know where you're coming from then.

• 51:43Speaker 01

  I can't have a conversation with you when you say, there's a wizard behind the curtain and that wizard is somehow gonna moderate or control all these things and then, and it's gonna make everything great. You're gonna get scammed. 99.999% of the time, there is no wizard, it's all made up, it's all a scam. All the way back to when Benjamin Franklin was beaten by the Amazing Turk playing chess. It was actually a midget inside the machine that was actually controlling it and playing chess against him. You know, it wasn't a robot, though, it's our, the 18th century, we didn't invent Deep Blue. Yeah, of course. Right? But you know, this is always the scam and how they do these things. So Bad Blood was a great... rollout of how that failure occurred. And I think every CEO, every decision maker, every VC, every investor should read that.

• 52:27Speaker 01

  Because it's a return to reality. And then when you get enthralled by fabulous claims or enthralled by fabulous, you know, proclamations of some capability, then you'll just be healthy skepticism and say, that might be true. So let's talk about the process upon which we're going to jointly discover how that's true and why that's true. What am I giving up for that?

• 52:47Anthony Pompliano?

  Before I end the podcast, I always ask about aliens. A believer, non-believer?

• 52:54Speaker 01

  Well, you know, there's the Fermi paradox, right? And there's all these other-

• 52:56Anthony Pompliano?

  Every mathematician brings up the Fermi paradox.

• 52:59Speaker 01

  Yeah, well, yeah. He trained to be healthy skepticism. Statistically speaking, there's probably life in the universe. There's an open question of how evolved and advanced it is. And we're certainly looking for it. And there's a lot of indications that things, things, that these aliens could exist. It's one of those things where we'll, we'll eventually get to that juncture as a species. Either we'll create it or we'll find it. Actually, if you ever watch the Joe Rogan podcast, he had Alex Jones on. And man, that was a fun four hour podcast. But one of the things Alex is firmly believes now is that apparently there are transdimensional aliens. And the only way to talk to them is to take large amounts of DMT. Which of course got, which of course got Joe really excited.

• 53:43Speaker 01

  It's like, all right, DMT, we're finally talking about that. But I don't know, you know, this is one of those things I'm not qualified to talk about. It's just a, it's a belief thing. So if I had to make a bet, I'd say yes. Have they visited us? Do they have a relationship with us? There's no evidence of it that's credible, but it doesn't mean it's not the case. So healthy skepticism, but probably true.

• 54:02Anthony Pompliano?

  Yeah. You pretty much articulated exactly how I think about it. Mathematically, very likely, but until we have the credible evidence, you know, you sound a little crazy if you go around saying that the aliens are out there.

• 54:14Speaker 01

  Right, yeah, the transdimensional DMT, Alex Jones aliens. That's a great podcast to listen to.

• 54:18Anthony Pompliano?

  Absolutely. All right, well, listen, thank you so much for doing this. I know that there were a little rush for time, but I think people will really enjoy this and it's super interesting to hear kind of your story and how you've got to where you are and what you're working on today. So I'll have to do it again in the future.

• 54:31Speaker 01

  Cheers.

• 54:34Anthony 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.