Q&A 08/23/2018

Introduction as CEO of IOHK, a 130 person crypto company across 10 countries with an engineering arm doing high assurance Haskell and a research arm.

Three research labs at the University of Edinburgh, Tokyo Institute of Technology and the University of Athens do peer reviewed work on consensus, incentives, privacy and policy.

In Israel to present papers at Eurocrypt with chief scientist Aggelos Kiayias, the first time the conference has come to the country and the first IOHK visit.

Israel has more cryptographers per capita than anywhere and produced foundational work like SNARKs and Aviv Zohar's DAG research.

Cardano is a best guess at a third generation cryptocurrency, defined by scalability, interoperability and sustainability.

Real scaling means gaining resources as you gain users, like BitTorrent, while Bitcoin and Ethereum are replicated systems where new participants only shrink everyone's slice of the pie.

With over a thousand coins in use, interoperability is about standards for moving value and information between ledgers, via Interledger and sidechain research on both proof of stake and proof of work.

Sustainability is the who pays and who decides question: the first ICO, Mastercoin, raised $500,000, the market later raised six billion, but that money is finite and runs out by year ten or fifteen.

He who has the gold makes the rules, so funding decides governance, and a system without a decision process ends up forking into Bitcoin Cash, Bitcoin Gold, Bitcoin Private and Ethereum Classic.

The best thing Satoshi did was go away, but Bitcoin's implicit governance is hitting its limits, and Tezos, Decred, PIVX and Zcash each have their own answer to who pays and who decides.

Cardano launched in 2015 with partners and a five year research agenda, on the view that scaling, interoperability and sustainability have to be solved together.

Ouroboros and the sidechain design were built by Aggelos Kiayias, Peter Gazi and Bernardo David, and Lancaster work on liquid democracy supplies the governance model.

Implementation uses Haskell and formal methods with FP Complete auditing, alongside other work on Ethereum Classic, Zencash and unannounced projects.

The permissioned ledger space, Hyperledger, Kadena and Corda, shares the technology's DNA but is really about coordination between parties who neither fully trust nor fully distrust each other.

Medical records moving between hospitals and countries, and telecom roaming like a T-Mobile phone working on Israeli networks, are coordination problems a permissioned ledger can broker.

Exchanges like Bitstamp and Coinbase make little sense on the main network, since a private ledger gives them more mitigation options after a hack.

A sidechain connecting a public ledger to a private exchange ledger enables proof of solvency, real time continuous auditing, front-running prevention and tokens moving in and out of Cardano.

Pushes as much as possible off chain with verified and multi-party computation, and let people write contracts in Java, C++ or JavaScript alongside dedicated high assurance DSLs.

Asked whether Cardano's smart contract model is Turing complete and uses gas, the answer starts with separating accounting from computation, which lowers regulatory risk and stops a bug bricking the whole chain.

The settlement layer CSL uses an extended UTXO model with a Turing incomplete language to start, opened up carefully via Template Haskell and Plutus.

LLVM was chosen over WebAssembly after consulting UIUC, Grigore Rosu and LLVM co-creator Vikram Adve, producing K semantics and the lightweight IELE virtual machine.

Runtime Verification's 19 person team handles gas and memory management, and the K framework behind it has 15 years of theory and users like NASA and Boeing, with Marlowe and Plutus as the high assurance DSLs.

Developers should pick whatever language they like and register its semantics on chain, and an EVM clone shipping alongside IELE will run Solidity and Viper, with a model like EOS attachable later.

Asked whether a proof of stake economy is sustainable, punts to Aggelos Kiayias and Peter Gazi, who invented the first provably secure proof of stake protocol and speak next.

On SegWit, Lightning and Bitcoin's energy use: running a poker game off chain is fine because only the final settlement needs to be on the ledger.

State and payment channels, trusted hardware and Bernardo David's MPC protocols can run poker, blackjack and even decentralized exchange off chain, scaling to millions of concurrent users.

Proof of work is an ecological nightmare because efficient ASICs just raise difficulty, and alternatives like Algorand, Snow White, Ouroboros and Tendermint show a shovel is not more moral than a backhoe.

Nothing at stake and long range attacks have been addressed, so burning Ireland's worth of electricity is no longer justified, and mining always centralizes around ten players with subsidized power and hardware access.

Proof of work research continues with useful work, proof of storage and DAG designs, including Israeli papers on GHOST, SPECTRE and PHANTOM by Yonatan Sompolinsky and Aviv Zohar.

Asked whether banks have a future: banking is a relationship business propped up by lenders of last resort, the FDIC and regulation, and that part works.

Compliance turns the bank against its own customer through KYC, AML and secret suspicious activity reports, and the cost is now so high that foreign banks refuse US clients.

Retail and investment banking got conflated, so betting against customers, dark pools and risk transfer sit next to services people actually want like credit and custody.

Cryptocurrency deconstructs the bank service by service, pulling data and money back under individual control, and banks must reinvent themselves the way print media did or die.

Three billion people outside the banking system are coming online but cost too much per customer to serve, yet they demand to be banked and digitized.

Ever more exotic derivatives and CDOs since 2008 can only be untangled with consolidation at the information layer, a conversation already running at Davos, the G20 and the IMF.

China's citizen score gamifies being a citizen by scoring searches, purchases, votes and travel, and if the state also controls your money it can simply switch off your card, WeChat or Alipay.

Governments are hostile to cash and use tools like civil forfeiture, so a transnational digital cash that cannot easily be seized has to exist.

Napster, Kazaa and BitTorrent made old style IP enforcement physically impossible, and suing twelve year olds did not stop the shift in the distribution model.

Moving from a few hundred licensed compliance points to millions of entry and exit points breaks the old standard, and pushing harder just produces Zcash on steroids and Tor style anonymity.

Prohibition never worked for drugs, gambling or prostitution, and marijuana in 28 states plus gay marriage show that enough momentum forces government policy to change.

Asked how Cardano governs itself: the project was federated from the start, with IOHK on the tech held accountable by peer review on the science and independent third party code audits.

The Cardano Foundation in Switzerland under Michael Parsons acts as neutral custodian and Emurgo is the independent venture arm, comparable to ConsenSys, with weekly reports and monthly updates keeping everyone informed.

In a liquid democracy community leaders become the delegates people hand voting power to, the way Bitcoiners followed Andreas Antonopoulos, Adam Back or Roger Ver, and improvement proposals then only ship once voted on.

A treasury sets priorities because funded things get built, as Dash has shown by allocating millions every month, and anyone can submit a ballot to start a debate.

IOHK cannot be the core protocol developer forever, so the plan is alternative clients, a full treasury and an end to participation around 2020, mirroring Satoshi's exit.

Governance has to beat rational ignorance and misaligned incentives, the same demons every democracy faces, making this a social experiment as much as a technological one.