INT 05/24/2019

This interview was requested as text by a Korean WeChat group of 499 female entrepreneurs in blockchain, so it became a video instead.

Cardano began in 2015 as a federation building a third generation cryptocurrency with formal methods and peer review, aiming at billions of users, interoperability and sustainability, formed by the Cardano Foundation as a Stiftung in Zug, Emurgo in Japan and IOHK as technical partner in Wyoming.

The first launch existed to build a community, get liquidity and test how to ship a Haskell based product with exchanges, ledger and wallet providers, and now Cardano is leaving Byron for the Shelley phase with multi-sig as a top Daedalus priority.

Planned Daedalus upgrades through 2019 and 2020: account differentiation for paper and hardware wallets, staking, a stake pool center, CSV export, metadata, a friend system, address aliases, light wallet support, a command line inside the GUI, and eventually a treasury voting center.

Emurgo drives commercialization across Japan and Indonesia, while Mongolia has been pursued aggressively as a case study for local currencies, air quality pilots and supply chain projects.

Most top 15 projects play a zero sum game, telling developers to abandon Ethereum for something like Tron, which just moves existing users around.

Negotiations with the Ethiopian government on a token for Addis Ababa could bring millions of brand new people into crypto with wallets and digital identities, who then use dApps on Cardano.

Plutus is the best and safest development environment for high assurance smart contracts, but competing for existing users is like moving water from one side of the bathtub to the other, you have to add new water.

Japan's rural areas need innovation badly: an aging population drains Hokkaido, Fukuoka and Okinawa toward Tokyo, and they could be reinvigorated with blockchain plus AI and IoT applied to verticals like rice and agriculture so people have an incentive to stay.

A visit to the University of Wyoming in Laramie showed the same brain drain as rural Japan, a monolithic economy of agriculture and resource extraction that loses its young people.

An ADA card in Korea only matters with good liquidity and easy cash in and cash out, and that should come organically as Samsung supports crypto wallets on the Galaxy S10, with a July meeting in Korea to explore it and HTC and iPhone likely to follow.

Phones with crypto wallets, NFC and programmable point of sale plus market makers taking the volatility for a fee, like BitPay does, mean merchants never have to hold ADA or Bitcoin themselves.

An MoU signed before the Africa summit explores a municipal currency for Addis Ababa, where paying a water or power bill can take hours or days, so a digitized birr would settle bills instantly and later cover phone bills, tolls and transit.

Mongolia's telco Mobicom has run a similar system called Candy for about 12 years, digitizing the tugrik from a loyalty point scheme into a currency system regulated by the Bank of Mongolia.

The unbanked are not necessarily poor, they hold local wealth in knowledge, land and raw resources that the global economy systematically undervalues, so the first step is finding that local value and giving it liquidity.

Mongolia is the second lesson: only three million people and 900,000 nomads living in gers, yet 93 percent of the country has access to banking services even without roads or cell signal outside Ulaanbaatar.

Ethiopia's Agricultural Transformation Agency ran voucher pilots since 2012 letting farmers buy fertilizer, with a repayment rate near 100 percent that is unheard of in microfinance.

The third step is that you do not bank people directly, you start with identity, reputation and social graph, and that data is fragmented: the ATA holds records on three of Ethiopia's 15 million smallholder farmers in agricultural commercialization clusters, spread on paper across six or seven silos.

A correctly built identity gives you a public and private key pair that roots a wallet and payment rails, and digitizing the local currency beats hauling stacks of birr around from the ATM.

With identity and digital local currency you can build micro banks and cooperatives backed by agricultural collateral to keep default risk low, which takes years or decades, but Muhammad Yunus started this long ago with Grameen Bank so it is old concepts with new tools.

Working with governments is hard because they do not play by normal rules: a commercial partner like Microsoft or IBM can be sued, but a government that defrauds you leaves no recourse, as seen in Venezuela, Africa and Asia.

In those jurisdictions the contract is necessary but not sufficient, it is about politics and leverage: local employment and goodwill make breaking the deal politically costly even for a corrupt regime.

Mongolia refreshes its civil service constantly, unlike the United States which abandoned the patronage system so career staff at the FBI or Department of Energy stay put across Clinton, Bush and Trump, and rebuilding relationships every 24 to 36 months stalls projects like Ulaanbaatar mass transit.

Constant civil service turnover creates a perverse incentive to keep strongmen in power for stable business relationships, while rotating democracies look unstable to partners.

The balance between regional and central government varies wildly: Swiss cantons hold taxation power as if Colorado could tell the IRS what to do, while Rwanda's central government dictates terms.

Success comes from listening, business intelligence and reading the thousands of pages from RAND Corporation, the Council on Foreign Relations and other think tanks to build a risk profile per country, then getting paid up front where certainty is low.

A third generation cryptocurrency has to absorb first generation payments like Bitcoin and second generation smart contracts like Ethereum, then add scale, interoperability and a treasury with voting, and each of those is extremely hard on its own.

The proofs that make you interoperable also give best in class light clients with full node security on a cell phone, and the work that scales you to millions makes ADA usable at a point of sale, ATM or vending machine, unlike a Bitcoin style system.

A treasury system opens up new monetary policy and new funding structures, so the protocol could become its own venture capital fund for future companies.

Marlowe is a financial DSL being combined with ACTUS to give a bank in a box, alongside legal DSLs for computer understandable contracts, contingent settlement, decentralized identifiers and off chain computation with MPC circuits and STARKs.

Some things need more basic science first: Ouroboros research started in 2015 and is only now midstream, and the first generation treasury lands in 2020 but needs five or ten years before the space accepts a governance system the way it accepted proof of stake.

The project reads like a hero's journey in epochs: it started as high level goals on a whiteboard with no funding, nobody took it seriously and he was just the guy who left Ethereum.

Then funding, scientists and engineers materialized and the project earned the right to try, with more than 40 papers, products in market, liquidity and a community all visible publicly.

The first hope is for Cardano to become ubiquitous infrastructure like Bitcoin, and self evolving and self sustaining so that no lawsuit, no country ban, no death and not even IOHK disappearing can undo it.

Inevitability is the goal: almost nobody doubts self driving cars anymore as Teslas gather sensor data, and nobody doubts the internet or 5G, yet Americans stay cynical about health care and Social Security in 2030.

Inevitability carries a system through regressions, the way severed undersea cables and tsunami damage always get repaired, and the second hope is for ADA to feel that inevitable through continuous papers and code.

The third hope is to be a competitive impulse, which is what IOHK's tagline cascading disruption means: a small perturbation like a butterfly effect that changes everything years later.

Nobody in the top twenty was doing peer review, formal methods or functional programming when Cardano started, and now Harmony, Tezos and others claim these principles while Ethereum funds research centers, grants and fellows who publish peer reviewed papers.

Losing some of that unique selling point is fine because thousands of scientists now indirectly work for whoever adapts the science fastest, so a Dan Boneh paper on verifiable delay functions can go straight into a product.

An altcoin in 2011 was a Bitcoin fork swapping SHA-256 for Scrypt, while today projects ship sharding, new BFT protocols, RaptorQ and fountain codes, Ergo's white paper has a proof of no premine and IOHK built a proof of burn that hides burned addresses until afterwards.

The cascading effect made the field politically safe, so Microsoft can announce an identity system on Bitcoin at Consensus, Facebook is launching a coin and Google and Amazon are involved, which validated peer review and multiplied funding far beyond what IOHK could spend.

Getting proof of stake and sidechains out is what he looks forward to most, because a blueprint only comes alive when people actually use the thing.

Smart contracts only became real to people when MakerDAO and similar projects hit market on Ethereum, and now the University of Wyoming teaches an undergraduate blockchain course that built a voting system in Solidity, with one student founding a hemp supply chain company.

Closing thanks to the Korean group of female entrepreneurs, with a trip to Korea planned in July and an open door for more interviews.