Leemon Baird, Founder at Hedera Hashgraph: From PhDs and the Air Force to Building a New Consensus Algorithm

Leemon Baird is Founder and Chief Scientist at Hedera Hashgraph. In this conversation, Leemon and Anthony Pompliano discuss his time in the Air Force, building jam resistance technology, consensus algorithms, why Leemon built Hedera Hashgraph, and what his plans for the future of the project are. 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. Visitcoinmine.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. Lamone Baird is founder and chief scientist at Hedera Hashgraph. In this conversation, we discuss his time in the air force, building jam resistance technology, consensus algorithms, why Lamone built Hedera Hashgraph, and what his plans for the future of the project are. 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.

• 0:44Anthony Pompliano?

  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 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,

• 1:29Anthony Pompliano?

  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. 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. 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

• 2:12Anthony Pompliano?

  a particular investment or follow a particular strategy, but only as an expression of his opinion. This podcast is for informational purposes only. All right, guys. Bang, bang. I've got Lehman here. Super excited to talk with him. He is a fellow military veteran and also going to fill us in on some of the things going on with Hedera and the other things he's working on. So thank you so much for taking the time to do this, sir.

• 2:38Speaker 01

  Oh, thank you.

• 2:39Anthony Pompliano?

  Let's jump into your background. You had a pretty lengthy and storied career in the military. Maybe talk about that a little bit and kind of what you did in the Air Force, etc.

• 2:51Speaker 01

  Yeah, so I'm retired Air Force. 24 years in the Air Force. I was a college professor. I was a professor of computer science at the Air Force Academy for a number of years. I was a research scientist in a bunch of labs. And I have a PhD from Carnegie Mellon in computer science back in the last millennium. And I've started a bunch of companies, a couple of them have been acquired. And now I'm doing this and it's a lot of fun.

• 3:17Anthony Pompliano?

  For sure. And one of the things that you worked on previous, I'm gonna pick on one of the projects because I just think it's cool, is jam resistance. Maybe tell us a little bit about that because when I saw it, it was just a really interesting technology that I don't think a lot of people understand.

• 3:33Speaker 01

  Yeah, it was kind of fun. Math can sometimes do kind of magic things. Right now, if you want to be on a radio and you and I are going to talk on the radio, we want people to not be able to jam it easily. You know, where you and I are just using a little bit of energy to send radio waves back and forth, but an attacker would have to use a lot more energy to stop us from talking. There are ways of doing that. You know, the simplest way is we just keep jumping to different frequencies. It's like we keep changing the channel many times a second. And you know what the sequence is going to be, and I know what the sequence is. But if the bad guy doesn't know it, they can't really jam us unless they jam all the channels, and that takes a lot more energy. So that's the traditional way of doing it. Turns out, all the ways that everyone does jam resistance require the same thing. They require that you and I have a secret, that you and I know that the attacker doesn't know.

• 4:19Speaker 01

  Except one, I was able to create a system where you don't have to have any secrets. And so you and I can just talk on the radio and be just as jam resistant as if we had a secret, but there is no secret. And so you and I just talk back and forth and the attacker still has to use lots more energy to jam us, even though you and I don't have any secrets. And so you could have a whole bunch of little robots out there that all know how to talk to each other, jam resistant, and you don't have to worry if a bad guy captures one of your robots and pulls the key out of it, because there is no key. You don't have to worry if they pulled the secret out of it, because there is no secret. So that was fun.

• 4:51Anthony Pompliano?

  And as part of that, is that something that really only has military applications? Or are there other applications that kind of the military is working on technology like that, and then they expect it to eventually permeate into kind of more consumer technology circle?

• 5:09Speaker 01

  Oh, yeah. So anytime you care about security, so if you have IOT, lots of little devices all talking to each other, what happens if somebody walks into your smart house, or your smart factory, or your smart car, and jams it all? There are little tiny jammers you can buy that fit on a keychain. What if they just jam everything in the room using that? That would be bad. It'd be better if they were able to talk to each other with jam resistance. But if you've got a million little IOT devices, you're not going to be able to give them all keys and keep all those keys secret and keep all the secrets secret. So you could just use this, the BBC algorithm, and have them all talk to each other without any secrets. You could even use this to have RFID tags in a warehouse, where you just ask them all to give you their address, and they all give you their address, and they don't jam each

• 5:53Speaker 01

  other, even accidentally. So there's lots of civilian applications, and it's all open source and, you know, free. And so people can use it, public domain, people can use it.

• 6:02Anthony Pompliano?

  That's pretty cool. And so how do you go from the Air Force, teaching, researching, you know, working on cool things like this jam resistant technology to Bitcoin, blockchain, and cryptocurrencies?

• 6:16Speaker 01

  As I said, math is cool, and math doesn't know any boundaries. So I just was interested in this math problem. How could you create cyberspace that people can share? You can just carve out a piece of cyberspace for yourself, invite your friends to join you, invite people you don't even know to join you, and everybody can trust that the rules are being enforced and that you're creating and interacting in a way that is, that everybody has to follow the rules, and there is no one person controlling it all. Basically, what I just said is, could we have a really, really fast blockchain? But that isn't where I started. I just started in the cyber space question and just it was a math problem that I worked on. And, you know, when I finally found the solution, then that's what started swirls and Hedera.

• 6:56Anthony Pompliano?

  Got it.

• 6:57Speaker 01

  It was the hash graph algorithm.

• 6:58Anthony Pompliano?

  And so when you first started looking at the consensus mechanisms, was Bitcoin part of that? Or did you kind of come on to blockchain technology without going through any study of Bitcoin?

• 7:13Speaker 01

  Oh, no. I was aware of Bitcoin. I thought it was cool, but it's completely unrelated. It couldn't handle tens of thousands a second. It's not ABFT. It doesn't have any of the security or speed properties of what I wanted. Now, the interesting math problem was, could you be both secure and fast at the same time? And, you know, in some sense, Bitcoin doesn't have either of those the way you would want. It's not ABFT, and it's not tens or hundreds of thousands of transactions a second. So I knew that it existed, but there's no way you could take that algorithm and tweak it slightly to get what I wanted. What I was doing is completely different. And, you know, hash graph is completely different.

• 7:46Anthony Pompliano?

  Yeah. And to me, it seems like, you know, people who have built these consensus mechanisms or blockchains other than Bitcoin, most of them seem to say, hey, Bitcoin is really good at optimizing for security. It's really good at doing what it was intended to do, but I wanted to build something else with different properties. And so I built whatever, in your case, Hedera. Is that accurate?

• 8:12Speaker 01

  Yeah. So, you know, I built hash graph to solve a bunch of problems. And then as a side effect, it also solves the problem of how do you build a good ledger, distributed ledger technology. And so, yeah, it's very, very different from the existing algorithms out there. It really doesn't look very similar at all to the existing algorithms that are used in ledgers. Now, it looks in many ways similar to the ones from 30 years ago that never really got used because they were so inefficient. There's, you know, the old voting algorithms, BFT voting algorithms. It looks a lot like those, with the only mild difference is that it doesn't have any actual voting in it. So it's basically a voting algorithm with no voting.

• 8:50Anthony Pompliano?

  Got it. And so maybe explain to us how Hedera hash graph works, and then we can get into kind of where you are today. But just explain the general framework and the design of what you built.

• 9:03Speaker 01

  Yeah. So if a bunch of computers are all sending messages to each other, and they all want to come to a consensus agreement on when each Message was sent to the whole network and what order they're in. Then what you do is you spread out your messages as fast as we know how to do, which would be a gossip protocol. Each person just randomly calls someone else and says, "Here's everything that I know that you don't." And they reply, "Oh, well, here's everything I know that you don't." You know, "All the messages that I have that you don't have." And then you say, "Thank you," and you both hang up and you call somebody else at random. If you do that, then messages spread through the community exponentially fast. It's the fastest we know how to do on the Internet with a bunch of computers.

• 9:43Speaker 01

  If you do one extra thing, and in each message you include two hashes, the hash of the last message you created and the hash of the last message by the person you talked with last. If you do that, two cryptographic hashes, then your message decorated with just two hashes, not a long chain of hashes, just two hashes. Once somebody gets all those messages, they can look at them and see how they connect together like puzzle pieces to form a complete history of how we have talked to each other. And at that moment, you know, not just all the messages, but you know everybody in the world, everybody in your network, when they received each message.

• 10:27Speaker 01

  And you could say, "Oh, this one, everybody received it at these times." And you could see what time everybody received it. And then you could put all those times in order, sort them in order, and take the middle one and say, "You know, that's the moment at which it reached the majority of the community." And then you could sort the messages by those times, those median timestamps, and put them in a consensus order. And you don't have to do anything. You don't have to talk to anybody about how to put them in order. You just know the order. And I said all the nodes, I mean all the active nodes, and there's a lot of details and trickiness in how you do that calculation. But, uh, but given all that, you, um, you end up having consensus, very strong, mathematically

• 11:11Speaker 01

  provable, and we have a math-proof consensus, without any actual discussion or voting. It's all just virtual voting. In your mind, you pretend that we ran one of those old algorithms, but you don't actually run them. That's how it works. Got it. And then, um...

• 11:26Anthony Pompliano?

  Who's doing the validating or participating in the governance, etc.? Because I think that's part of one of the aspects of the design that is unique, or at least you guys were at the forefront of creating.

• 11:41Speaker 01

  Yeah, so you validate, you separate validation from governance. So by validation, what we mean is, we'll look at the transactions and see if they're valid. And when I send money to somebody, cryptocurrency to somebody, look at my transaction and decide whether it's valid in the sense that at the moment I sent those 10 coins, I actually owned enough coins to do it. So did I actually own 10 coins at the moment that I sent 10 coins? Every one of these nodes that are reaching consensus can look at all the transactions in the consensus order and calculate which ones were valid. So they're all validators. They're full nodes, they're validator nodes, they can update their state if they remember how many coins every person has, they can update that based on all these transactions

• 12:26Speaker 01

  in the consensus order. So validation is being done by the nodes doing the consensus. We actually have a way of doing validation on a separate network and doing consensus on Hedera. That's the new Hedera consensus service, HCS, which is kind of cool. But without using our new service, the traditional thing is just you're doing that. Now that's validation. Governance is a different thing. Governance is who gets to decide when we update our software and what new features will be in our software and what fees to charge and how much do we pay every node because it was a node? Because we want people to want to be nodes, so we have to pay them to be nodes. Who makes all of those decisions? That's governance.

• 13:09Speaker 01

  And for that, we are doing what is arguably the most decentralized governance that you can have and reasonable governance by people that...

• 13:21Speaker 01

  ought to be able to understand things like how to set prices and so on. What we have is a council doing our governance and that's a big deal.

• 13:28Anthony Pompliano?

  And so let's start with the validation, right? The validation that you described from Hedera Hashgraph. What are the main advantages in your opinion for that validation mechanism versus let's say something like Bitcoin? That I think is probably the most popular cryptocurrency consensus mechanism that people are aware of.

• 13:52Speaker 01

  Yeah, well, once you have everything in order, validation is pretty trivial. Once you have the whole blockchain, it's easy to look through the blocks in order and look at which transactions fail and which ones succeed. And it's just kind of obvious how you do it and we do it and they do it and it's kind of obvious. The tricky part is how do we put them all in order? And how do you make sure that we're all agreeing on the order? And will there be a moment when you have finality and you know the order? Or do you just kind of vaguely get more confident with each confirmation and you never really know? And will you still be able to guarantee that we all come to the same order? Even if some of us are bad and malicious and even if there are firewalls that are bad and malicious between us? Can you still guarantee it? That's all the stuff about BFT.

• 14:35Speaker 01

  And can you still guarantee that we'll make progress even if an attacker can shut down a couple of our computers with DDoS attacks flooding us with packets? Can we still guarantee we'll reach it even when people might shut down and when firewalls might delay packets? And that's the A in ABFT. That's where the real difference is. But once you have them all in order, validation is easy. The hard part is getting them all in order and knowing that we will have consensus finality. We can handle timing attacks, all of that. That's what ABFT is.

• 15:08Anthony Pompliano?

  Okay, and would it be fair to say that a critique of Bitcoin coming from not necessarily you specifically, but just somebody who wants both security and speed would be that Bitcoin's consensus mechanism and the way that it validates the transactions in a sequential order is what causes slower speeds?

• 15:32Speaker 01

  Yeah, so Bitcoin, of course, proof of work. The point of proof of work is to slow things down. So people take turns putting the next block on the stack. But if everyone did it so fast, you'd have two people adding the next block at the same time, your chain would fork and you'd have a problem. And so you have to slow them down so that the community as a whole has time to gossip and know about the fork and to sort of vote with their feet by which of the two that they extend and everybody tries to extend the longer one and eventually you can chop off the shorter one. That's the whole point of it, is that we have to slow them down. That's why we do proof of work. If we didn't have proof of work, every node could be adding 10 blocks a second, which would be a disaster for a blockchain. Coincidentally, that's exactly what we do. Every node adds 10 blocks a second.

• 16:16Speaker 01

  They aren't even blocks, we call them events, but they're like a block. But it's not a blockchain, it's this whole graph of blocks. And so none of them are ever thrown away and we're forking all the time and we don't care. It all weaves together into one graph. And so each node is by itself creating 10 blocks every second. We're not having to slow down on purpose because they're all at the same time and that's great, we love it.

• 16:38Anthony Pompliano?

  Skrskr. 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 him Pomp sent you. Download the app or visit Crypto.com. Pomp's got you, always. Everyone 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

• 17:21Anthony Pompliano?

  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 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 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. And what do you think is the trade-off from like a security standpoint,

• 18:01Anthony Pompliano?

  optimizing for the speed by having a much more kind of interwoven web structure versus the more sequential blocks in a blockchain like Bitcoin?

• 18:14Speaker 01

  So you get much better speed with this interwoven structure, but you also get very strong math guarantees. ABFT is the strongest level of guarantee that you could get, and it's mathematically proven. In fact, we had a professor at Carnegie Mellon actually turn this into a COQ proof. COQ is a way to let a computer check a math proof, and it can check the math proof and guarantee that it is ABFT. That is extremely strong. And you get, you know, very fast speed. It's basically at the speed of gossip. You're adding a tiny bit of overhead on top of gossip, and then you're doing no communication at all to get the consensus. And there's no leader that can be a bottleneck, because we never have a leader, even temporarily. We don't even take turns being leaders. We never have a block proposer.

• 18:59Speaker 01

  We never even take turns for that. And so you get extreme speed and extreme security with this kind of an approach.

• 19:05Anthony Pompliano?

  Got it. And then on the governance side, what is your take in terms of, you know, having a kind of fully decentralized, no council model like Bitcoin, and then having the council model, which I would put as like a semi-decentralized model? What are the trade-offs, both pros and cons, to those two variations of governance?

• 19:29Speaker 01

  Yeah, so basically Bitcoin or whatever ends up being more centralized. And that seems counterintuitive. Don't they have, you know, 10,000 nodes? Sure. But most of the mining is done by a handful of the nodes. And they basically together, along with a handful of developers, are charting the course. And you could say, well, there's a gazillion developers as well. True. But what emerges is a small handful that end up basically being the de facto leaders. And so they do this. And... So you have a small group governing. Of course, you might wonder, well, are they all in different countries? Or are they possibly all under the same government? And, you know, maybe lots of the miners are all under the government of one country. That's not entirely good. And you could wonder, do they even have the power to govern?

• 20:14Speaker 01

  What happens if there's a disagreement? No, the disagreement is you get a fork. You know, you get a split. So it becomes two. And for cryptocurrency, now maybe you do a hard spoon and everybody gets the new cryptocurrency too. And that might be fun, or it might be bad. The IRS actually has some bad things to say about that. And Congress has yelled at the IRS recently for not knowing what to say about that. But you have bigger problems too. What if you're more than just a cryptocurrency? What if you're doing smart contracts? Or you're storing files? And you're using this for real world applications? Like you're storing the records of who owns what land on the ledger? And this handful of informal governors that always arise end up having arguments and they split?

• 20:56Speaker 01

  And now you have two ledgers that both start off at the same state. So now both of them know who knows who owns your house? And now you sell your house to someone and you only record it on one of the two? Now what does a potential buyer do? Which of the two do they look at? They have a difference of opinion on who owns your house. Having splits like that is a bad thing. And so what you end up with is centralized governance. It's still just a handful of people governing and weak governance as well, which encourages lots of splits. So this is all, um, this is all what's, uh, what some of the issues are. What we are doing is saying, you know, every system has a handful of governors, but we're going to make it transparent.

• 21:41Speaker 01

  It's not just going to be whoever shouts the loudest and does lots of work of developing, who ends up being the de facto leaders. We're going to formalize it. We're going to have 39 of the world's biggest companies. And we're going to make sure that they are diverse, that they are in different countries, on different continents, in different industries, that they are even diversified over time. We're going to put term limits on them. They can only stay for six years at most. They have three year terms, they only do two of them, and then they have to turn over. We're going to make sure that they are giants so that they have some degree of intelligence of what they're doing. That's actually important, too. For example, right now, the prime exchange rate or the prime interest rate in the United States is set by a small group of banks and there's a chairman of the Fed and they

• 22:25Speaker 01

  they end up meeting quarterly and setting the prime interest rate and maybe they do a good job, maybe they do a bad job. Probably they at least know something about economics. What would happen if we just said every person on the planet who holds a US dollar is allowed to vote on the prime next quarter? You might not actually get good decisions, the men don't know what they're doing. And so what we are doing is creating governance where the people who are doing it have some degree of knowing what they're doing and they're so diversified that they they kind of keep each other honest, there's checks and balances on each other. And they are diversified over three different things: geography and industry and time. And they are huge companies that care about their reputation.

• 23:09Speaker 01

  And if they do anything underhanded, it will be revealed. So they can't change the code without everybody knowing it because the code will be open review, anybody can look at the code. It won't be open source, we want to stop those splits, but it'll be open review, so anybody can look at it and everybody can see, is the state of the network evolving the way that code would say it should be? And so if they do anything sneaky, everybody will know and it'll destroy their reputation. And so we can hold them accountable. And so we have people that are well-known, that are respected, that have some degree of intelligence, that are checks and balances on each other, that are diversified and that have radical transparency. We even publish the meeting minutes from the council meetings, the minutes even get published.

• 23:51Speaker 01

  No backroom, smoke-filled-room things. Everybody knows what's going on. And so I would argue this is the most diversified governance of any system on the market right now. And that it is important that you need that.

• 24:04Anthony Pompliano?

  Got it. And then what would you say to the detractors? Let me play kind of devil's advocate here. With detractors saying, it's great that you have the large companies, but you don't have representation from non-large corporations, right? You don't have nonprofit representation or individuals or small companies or organizations. How do you kind of balance that or what would your response to them be?

• 24:31Speaker 01

  So we do have an open source community, of course, of developers and people who are involved in a lot of the tools. We're open sourcing all the layers other than the bottom layer. We have a lot of tools that they're doing. We have SDKs that they're building. They've already built a bunch. We have mirror nodes that they're building and they're building companies that be on top of it. We're part of Hyperledger, which is open source and contributing ways to Hyperledger can connect to it that's open source. We have a lot of people that are very excited. In addition to all the DAS, over 500 said that they're building on top of us. In addition to all that, all those people that are excited about it, we take their inputs. And so they give inputs to this and they, and we listen. And so they are doing the normal open source process for the tools and the SDKs and the

• 25:13Speaker 01

  upper layers of the stack. And in addition to that, we are listening to their feedback. We have developer advocates that are talking to them and getting feedback. And then the ultimate decision is made by the governing council that I've described. And so you get advice, you get input from lots of different people, and you have the final decision being made by the governing council. And so you get the best of both worlds. And that is what we're trying to do.

• 25:37Anthony Pompliano?

  Got it. And then where are you today in terms of, give us kind of a state of Hedera Hashgraph. What's built and launched? What's kind of being worked on? And then what's on the product roadmap moving forward?

• 25:51Speaker 01

  Yeah. So we have been making great progress on getting council members. We just last week announced IBM and Tata Communications are council members now. And this is not like some other ledgers that have given a long list of names of people that are playing along, but those people just have LOIs, letters of interest. They haven't actually signed anything real. No, we have council members that have signed something real. IBM actually is a 139th owner of Hedera. So is Tata. So are the other ones that we announced earlier, Deutsche Telekom and Nomura and Magalu and Swisscom Blockchain and the others, DLA Piper.

• 26:32Speaker 01

  These are growing rapidly, getting the best top people in their industries. One of the top law, three law firms in the country, and one of the top financial institutions in Japan, and the top telecommunications in India and in Europe, and now IBM and Tata. We're getting all of these, and we are just last week announcing those two. We have a couple more that have already signed, not just letters of intent, but actually to be owners, we'll be announcing them soon. And we have a lot more in the pipeline that we're making great progress on signing up in the near future. And so it has been exciting to watch the momentum build on this, and we just have enormous momentum now. We're very excited about our partners, who are not just advisors to Hedera, but they're

• 27:16Speaker 01

  owners of Hedera, they are Hedera, and that's extremely exciting to me. And then in the next few weeks, we will have Open Access. We had a webinar that talked about our path to decentralization and how we're leading up to Open Access, had several webinars on e-leading up to Open Access. The next few weeks we'll be having that, we'll be announcing the date for that soon, and we'll be having Open Access. And that means that everybody can use the network. You know, right now, we have a test program. Anybody can sign up, and you can get free H-bars if you test the program and test out the ledger. We've got, I think, over 50,000 people who have created profiles, and we appreciate that. But at Open Access, everyone on the planet can use it. And for the test program, you have to tell us who you are, because we're giving you the H-bars, we can't just give it to anonymous people.

• 28:00Speaker 01

  But at Open Access, anonymous people can use it. So it'll be just the whole planet can use it. And so we have that coming up very soon. And then, over in the near future after that, we'll be rolling out the fourth service, the consensus service, and that enables a new kind of thing, where you can stand up a network of computers, they're sort of like their own blockchain, except instead of needing more than two-thirds to be honest, you don't need any of them to be honest. As long as Hedera is honest, your side thing, your application network, your app net, is trustworthy. It inherits the trust from Hedera, but it gives you perfect privacy.

• 28:42Speaker 01

  So it is not clear to the world what you're doing. You can keep your privacy. You know, if you run a smart contract on a public network, then everybody can see what your smart contract did. And if your smart contract is, say, managing non-fungible tokens, everybody can see those accounts and who own, which accounts own which non-fungible tokens. But with app nets, with our consensus service, HCS, you can have privacy. You could run something like non-fungible tokens, and nobody gets to see what the accounts are and how many are in each account. And they can't see it moving back and forth between them. Yet, all those computers in the app net could be dishonest, all of them. As long as the one that you're running is honest, you can trust it, and you know for sure that it's being honest because of the way things flow through Hedera.

• 29:26Speaker 01

  As long as you trust Hedera to be more than two-thirds honest, you don't have to trust any of the computers in your network. So that's a new thing that we're doing. That'll be rolling out shortly after OA. So that's our roadmap. We've got council members now that are exciting, like IBM and Tata this past week, and a few will be announcing soon, and then more that will be signing up and announcing as time goes on. And then we have OA, and then we have new services coming right after OA. We've got a lot going on.

• 29:54Anthony Pompliano?

  What do you say to entrepreneurs who are building projects or companies that are looking to leverage a blockchain or consensus mechanism? Why build on Hedera Hashgraph over, let's say, Bitcoin, Ethereum, or some other chain? And then also, what type of product or company is ideal for the state of the network today?

• 30:20Speaker 01

  We have a lot. You say, "What type?" Well, pretty much all of them. We have a lot of very diverse companies building on top of us right now. We have Chainlink who's done Oracles. So even if you want to use Oracles, you can build on top of us. If you want to do smart contracts, you can build on top of us. We have a beta version of the HCS, that new service. Already, the beta version is running that allows you to use Hyperledger Fabric to build networks that are kind of hanging off the side of us, but they aren't side chains. Because all the information stays there. They don't have to periodically put some data into the main network. They're just using the main network to put things in order. That's it, just for the consensus. So the possible uses are very widespread. But you said, "Well, why would anybody want to?" Well, I'll tell you something. One thing you might ask yourself is, "Do you have an application where it matters

• 31:05Speaker 01

  if an attacker can shut you down for a few hours?" If they can do a DDoS attack. Now if an attacker gets a bunch of computers on the internet, and they can start flooding computers with messages, with packets, and shut them down for a few hours, in some cases, that could be disastrous. The DynaAttack last fall, you know, shut down some really big people, like Netflix and Amazon, for a few hours. Do you think that impacts the bottom line? If you shut down for a few hours? Probably not a good thing. And so you want to say, well, you know, you can get good speed on a leader-based system, but a leader-based system, like PBFT-based systems, are going to have a real problem. Or Raft, or Paxos, they're going to have a real problem if the attacker shuts down your leader.

• 31:49Speaker 01

  Now, of course, they can switch to a new leader after a few seconds. But then they can switch the attack to the new leader. They can play "Follow the Leader" and shut you down for hours. That's a real problem. So you really, if you care about that, maybe you want a network that's ABFT. Maybe you don't want a network that's leader-based. That would matter. Maybe you care about throughput. So you don't want to do a proof-of-work system that's very slow. You want something that, yeah, we're going to start at 10,000 and go up by tens, you know, and then we'll go to 20,000 and we'll just keep going up very fast. We have a much faster than that in the lab. We're just starting off throttling down to a mere 10,000 cryptocurrencies per second, because we just want to start off safe. But that's still a lot more than 7, and a lot more than 15, and a lot more than a few hundred.

• 32:33Speaker 01

  So even 10,000 is, you know, just a lot to start with. And we're going to go rapidly up a lot from that. So if speed matters, maybe you do that. And, you know, you can always try to get speed by sharding and side ledgers and things, but it's better if you just have the central ledger itself, the main net, be fast. That just makes life simpler in a lot of ways. So if you need speed, you'd want us. And if you want fairness, you have basically no other choices. Fairness means no attacker or no single computer can ever have an undue influence on the ordering of the transactions. And any kind of a system where one person builds the block and then they get to be the next leader or the next miner who mines a block, they would get to decide the order

• 33:15Speaker 01

  of the transactions in their block and when it's, you know, for that 10-minute period or that 15-second period, their block is the only block and they control the order. Well, that's not good for a stock market or something where the order matters. If you care about the order, you can go with us and then, as I said, everybody is creating 10 blocks a second and the ordering of those blocks, they're not blocks, they're events, but you're creating 10 events a second, the ordering of those is fair. Nobody gets to do it. There's no one miner that wins the next round that gets to choose. It's the whole group as a whole, based on the median time of when you reach the whole network, when you reach everybody in the network. And so it is fair and it is just not possible for somebody to undermine that.

• 34:00Anthony Pompliano?

  I see. And so before we finish up, I want to do a rapid-fire set of questions. Other than Hedera Hashgraph, what do you think is the most important company in crypto?

• 34:11Speaker 01

  Oh, I wouldn't want to play favorites. What I find amazing is just how fun this field is in that all these different companies are really doing amazing things. And it's fun to watch the prices. They go way up and way down and then way back up again and it's just kind of exciting. It's like the Wild West. But I think that the industry is starting to shift towards being more mature. And so I think that we're going to see that over time.

• 34:34Anthony Pompliano?

  What's the one regulation that you would change or improve if you could?

• 34:38Speaker 01

  Oh, no question. The one regulation that I would change is the fact that we don't have clear regulations at all. I can't tell you a regulation that clearly puts rules and I don't like the rules. I think that it's the uncertainty right now that is so frustrating. And we spend a lot of time talking to regulators and trying to get as much clarity as we can, telling them everything we're doing, being very above board, and the regulators themselves say, you know what, regulation isn't clear in this area yet and we need to get that clarified. And so we're trying to work with them to help try to bring some clarity. I think that, again, it's the Wild West, it's the early days, no one has really good clarity on what the regulations even are or even what a cryptocurrency is. Is

• 35:23Speaker 01

  it money? Is it a security? Is it something else? Is it a commodity? Is it emerging of all the above? Is it none of the above? Is it a whole new kind of animal? We don't even have clarity on that. So... I don't want to complain about any existing regulations. I just wish we had clarity. And a lot of people are on board with that wish, including the regulators themselves. And I think we'll get there.

• 35:44Anthony Pompliano?

  What's the most controversial thought you have in cryptocurrency?

• 35:52Speaker 01

  You know, people say, "It's terrible that you're not allowing forking, that you're trying to keep the very bottom layer, not be open source, and you're doing state proofs to stop forking. You should allow forking. It allows innovation." And I would say, "It's great that in the early days, we had lots of chaos and lots of forking and innovation." But I think that it's now time to grow up as an industry and to stop forking. Because if you're going to build real applications, like recording land ownership, then you can't afford to have it fork out from under you. And now there's two sources of truth, and nobody can tell which one's the real one. And so I would say that it is time for us as a community to mature and to stop having problems with forking.

• 36:35Speaker 01

  And so that would be, I think it's controversial, but I think people are going to realize this is actually a good thing. We need stability. And if you don't need stability, then work on another ledger that doesn't give you stability. But we're trying to provide stability for those people who actually want stability.

• 36:49Anthony Pompliano?

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

• 36:52Speaker 01

  The Bible. No question.

• 36:54Anthony Pompliano?

  Why?

• 36:55Speaker 01

  Because it's actually practical to so much of everyday life. It's really interesting. It doesn't just talk about, I don't know, religious stuff. Although that's actually practical to everyday life too. But it also talks about how do you handle your money, and how do you handle relationships, and how do you handle your time, and how do you handle stress? And it's really cool.

• 37:13Anthony Pompliano?

  What about aliens? Believer, non-believer?

• 37:18Speaker 01

  I have no idea whether there are aliens out there. There very well might be. I mean, that is not at all surprising. I'm not convinced that they've ever visited us. And if that's true, then probably the best evidence that there is intelligent life out there is that they never came to visit us. That's really good evidence that they're intelligent.

• 37:36Anthony Pompliano?

  What's the last question to wrap this up that you have for me?

• 37:39Speaker 01

  A question for you.

• 37:43Speaker 01

  What do you think is the most exciting thing on the horizon? I'll make it better, not including Hedera. What do you think is the most exciting thing on the horizon in just the world of blockchain and distributed ledger technology in general? Where do you think it's going to go and change the world? What do you think?

• 37:58Anthony Pompliano?

  Definitely Bitcoin. And I think Bitcoin has a higher probability of becoming a global reserve asset than most people are putting on it today. Doesn't necessarily mean that it's 90% likely, but I just think that it is easier to see the bear case than the bull case of Bitcoin becoming the global reserve asset or a global reserve asset for a wide majority of people. And so I tend to say that that may be one of the most misunderstood or best arbitrage opportunities today in the way that people are thinking about the development of the industry.

• 38:40Anthony Pompliano?

  And then I think the good thing for everything else is as Bitcoin goes, from an investment standpoint, I think that a lot of other things follow it. And so it's one of these things where if you believe in an overall industry succeeding, you want to see multiple winners across different applications or use cases. And so Bitcoin leading the way there, I think, is super exciting.

• 39:08Speaker 01

  Oh, yeah. And I agree. We want to see multiple winners. A rising tide raises all boats. And every technology, I think, has had the same pattern. First, you have a thousand companies spring up, and then after a while, it settles down to a handful that are working. You never have just one company that ends up dominating everything, or one platform, or one technology. But it'll come down to a handful that really survive for the long term.

• 39:30Anthony Pompliano?

  For sure. Well, listen, I really appreciate you taking the time to record this and kind of share with us exactly what you guys are working on, that we'll have to do again in the future as you continue pressing forward. We've got more updates.

• 39:43Speaker 01

  Well, great. Well, thanks. It's been great talking with you, and I appreciate it.

• 39:47Anthony 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.