Sergey Nazarov: Chainlink, Smart Contracts, and Oracle Networks
Guests: Sergey Nazarov
Full transcript · Read the full conversation in order, with its original context.
Contents21 chapters
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The following is a conversation with Sergei Nazarov,
CEO of Chainlink, which is a decentralized Oracle network
that provides data to smart contracts.
He and his team have done seminal research
and engineering in the space of smart contracts.
Check out the Chainlink 2.0 white paper
that I found to be a great overview
of their technology and vision.
It's 136 pages, but very accessible.
Quick mention of our sponsors, Wine Access,
Athletic Greens, Magic Spoon, Indeed, and BetterHelp.
Check them out in the description to support this podcast.
As a side note, let me say that externally connected
smart contracts that combine the ocean of data out there
with the security of the blockchain are fascinating to me,
both technically and philosophically.
Data is knowledge, and knowledge is power.
I think the more reliable data sources we integrate
into our decision-making, especially when those decisions
are executed by programs, the more efficient
and productive our decisions become.
There are interactions between humans
that should not be formalized digitally,
like love, for example, but for all the others,
there's no reason for smart contracts
not to automate away the menial parts of life,
making more room for good conversation over brisket
and maybe some vodka with old and new friends.
This is the Lex Friedman Podcast,
and here is my conversation with Sergei Nazarov.
- Is that Jozhek there?
- So I gave away everything I own a few times in my life,
and he accidentally survived,
and I don't like stuffed animals.
What I really liked about, I got him in a thrift store.
What I liked about him is 'cause I'd never seen
a stuffed animal that looks pissed off at life.
Like they're usually smiling in the dumbest of ways,
and this guy was just pissed.
- Yeah, I gotta tell you, that's actually pretty funny.
- I like this guy.
If you had to live only in the digital world
or the physical world, which would you choose?
- So I think this is actually a question more about
what the fidelity of the digital world would be
versus the physical world.
I think this type of question, this whole simulation thing
actually comes from papers about 20, 30 years ago
in the philosophical world where people tried to make
this thought experiment of would you be comfortable
if everything that was happening to you
happened in a simulation?
What they were trying to do is they were intuitively
trying to understand is there some kind of intuitive
personal connection we have to something being
the real world, right?
And then the Matrix movie actually came out of these papers,
and then these ideas made their way
into the public consciousness.
I personally think that if I had the choice
to be in the digital world at the same fidelity
as the real world with immortality,
I would absolutely go with the digital world.
- Wait, wait, wait, wait, wait.
How'd you add the immortality part?
That's a, you don't get immortality.
- If you think about how we would go into the digital world,
right, our brain patterns would be mapped
onto some kind of probably virtual machine, right?
And that would mean immortality, right?
Because the virtual machine has no limit
to how long it can exist.
- Well, don't you think there would be like
a versioning system?
Like there'd be, this is a soft fork
versus hard fork question.
Whether Sergei version 2.0 would be different
from Sergei version 1.0, there'd be an upgrade.
So that's a mortality.
Sergei 1.0 would die in the digital world.
You get like a software update, and then that's it.
- Well, yeah, when people go into the Star Trek transporter,
are they killed or are they transported?
I don't really know.
I haven't read any papers on this.
I haven't really thought about it too much.
- There's no white paper on the transporter.
- Not at this point, so.
- Well, what does fidelity mean exactly to you?
Is it like strictly, so the fidelity of the physics world,
the physical world is maybe now questions of physics,
quantum mechanics, what is at the bottom of it all?
Or do you mean the fidelity of the actual experience?
- It's just perception.
It's just perception.
- But that's limited by human cognitive capabilities.
- It is, but I don't really have anything else, right?
I think all of these papers that brought up these questions
of assimilation, they were like in epistemology
and metaphysics, and what they were trying to do,
I think, was they were trying to put people
through a thought experiment where they would come out
on the other end and say,
the reality of life is really worth something,
and ignorance isn't bliss, which is that consistent
statement in the matrix, right?
Ignorance is bliss, that's what one of the guys says
when he's doing something wrong
and trying to get back into the matrix.
And the question is, is ignorance bliss?
And it's like a different version of that.
I think from a perceptual point of view,
if my perceptions aren't in any way different,
so fidelity is very good, it doesn't matter.
I don't know, right?
So if I don't know something, it doesn't really exist,
and if it doesn't exist in my perception
or my consciousness, then it doesn't exist,
period, for me, at least.
And then whether it exists in some more metaphysical
version of things, I personally never really got
into the metaphysics stuff because I could never really,
I couldn't understand what the point of it was, right?
It's one of these things where I couldn't really get
what the practical application of it was,
and this is from those realm of questions, right?
Like if there was something about the world,
but you didn't have a capacity to perceive it,
would it matter to you?
To me, it wouldn't matter.
- Right, to me, by the way, the simulation thing
is a really interesting engineering question,
which is how difficult is it to engineer a virtual reality,
a digital world that is sufficiently of high fidelity
where you would want to live in it?
I think that's a really testable
and a fascinating engineering question
'cause my intuition says it's not as difficult as we think.
It's not nearly as difficult as having to create
a quantum mechanical simulation that's large enough
to capture the full human experience.
It might be just as simple as just a really nice Quake game,
like with a nice engine, just creating
all the basic visual elements that tricked our cognitive,
our visual cortex into believing that we're actually
in a physical environment.
And I think that if that's true,
then that's quite, a high fidelity digital world
is actually achievable within a century.
And that changes things.
- Yeah, yeah, maybe in our lifetime.
I'm really hoping for that.
I'm hoping somebody can copy my brain waves
onto a virtual machine and allow that consciousness
to continue to exist.
Whether that's death or not, I don't know.
But I think it's actually gonna require some serious leaps.
Like even the VR headsets, right?
They don't work if they go below 90 frame rates, right?
People start getting freaked out.
So you have to go from one gaming screen
of 60 frames per second to two screens
of 90 frames per second.
And so the people's hardware today can't even handle that.
And that's for these two little screens by your eyeballs.
What it's gonna take to completely trick my consciousness
into not knowing the difference in terms of like,
all the sensory inputs.
I'm keeping my fingers crossed.
Whoever does that and is close to doing that,
they should contact me.
I want to have my brain waves turned into a virtual machine.
- Would you in that context, if Morpheus came to you,
would you take the blue pill or the red pill?
Meaning, would you be happy just living in that world
and not knowing that you're living inside
that virtual world that's running a computer?
Or would you want to know the truth of it?
- Well, actually, I think that's a very different question.
There's actually moral ethical question there
about whether you should allow a bunch of people
to get manipulated and killed and slaved.
'Cause in the matrix, they're all enslaved
as like a AAA battery to turn a human being
into the battery, right?
So I think the moral and ethical question of that,
fascinating enough, isn't actually different
than the moral and ethical questions we face today
in modern daily life.
But I probably have given the choice
of just completely going along or going against it.
I would probably go against it
if I had to make this kind of binary choice.
Because going along with it,
I think at that scale of scary stuff happening to people,
is probably something really, really, really difficult.
- But for your individual life,
it's way more fun to go along with it.
So you're saying you value
opposing a system that includes the suffering of others
§02Transcript · 09:11–17:45
versus just for yourself enjoying the ride?
I mean, if there is such a binary choice,
why choose the opposite system?
- I think it's the nature of kind of the ethical dilemma
that you face in that situation.
There's kind of some, you know,
this is obviously not something that's happening now, right?
- We don't know this, right?
- We don't know this, but at the end of the day,
at that scale of something like that happening,
yeah, at that scale of people being manipulated and harmed,
then I think pretty much almost all people
have an obligation to go against it.
Probably that's what that looks like in my opinion.
- So you've talked about the concept of definitive truth.
What is it?
And in general, what is the nature of truth
in human civilization?
And just talking about the digital age,
the nature of truth in the digital age.
- So the interesting thing about definitive truth
is that it actually exists on this,
at least in my mind, on this spectrum
between objective truth and just, you know,
somebody made something up and nobody else agrees.
So what I think definitive truth is,
is it's somewhere in the middle on that spectrum
where if you and me define what truth is, right?
Like if you and me have an agreement of some kind
and we say, as long as the weather is sunny
or the weather isn't, there is no rain on that day,
then there'll be an insurance policy that results.
And you and me both agree that as long as three sensors,
three weather monitoring stations all say that,
then the definitive truth for us and for that agreement
is the result of those systems coming to consensus
about what happened out in the real world.
I think the objective truth definition
from kind of the philosophical world
is really, really stringent and very, very hard to attain.
And that's not what this is.
And that's actually not what commerce
or the ability for people to interact about contracts needs.
What I think the world of commerce needs is an upgrade
from someone can unilaterally decide what the truth is
to there can be a pre-agreed set of conditions
where we define what the truth is under those conditions.
And then you and me basically say,
if these 20 nodes or of these 30 data sources
come to consensus within this method of consensus
with this threshold of agreement,
then definitive truth has been achieved for you and me
in our relationship for this specific agreement
and the specificity and our shared agreement
to that kind of truth or that definitive truth
being acceptable to both of us
is probably what's kind of necessary and sufficient
for everything to move forward in a better way.
In any case, much better than,
I'm a bank or an insurance company,
I'm gonna unilaterally decide what happens.
It's definitely an upgrade from that.
- Do you think it's possible to define formally in this way,
a definitive truth for many things in this world?
Like you talked about weather,
basically defining that if three sensors of weather agree,
then that we're going to agree
that that is a definitive useful truth
for us to operate under.
So how many things in this world
can be formalized in this way, do you think?
- A huge amount.
So there's actually two things going on here.
One thing is the amount of data that already exists,
and the pieces of data coming off of markets,
IOT, shipment of goods, any number of other things.
Like even your YouTube channel
has a certain amount of likes
or a certain amount of clicks or a certain amount of views,
and even that's quantifiable.
So even to a certain degree, what we do here today,
you and me right now can be quantified
as far as the amount of views,
the amount of clicks, the amount of any number of other--
- You, the viewer, have power of data in your hands
by clicking like or dislike right now,
or the subscribe button or the unsubscribe button,
which I encourage you to do.
Anyway, okay, so there's data flowing
into all interactions in this world, there's data.
- There's more and more data, right?
- More and more data.
- More and more data,
that data is more and more accessible to everybody,
and that accessibility and the fact that there's more of it
means we can form more definitive truth proofs.
We can form more and more proofs,
and as we form those proofs,
well, we can provide them to these blockchains
and smart contract systems that consume them,
and then they're tamper proof, right?
So they can't be manipulated.
And so now we've combined a system that can prove things
with a system that guarantees us certain outcomes,
and we have a better system of contracts,
which is actually an unbelievably powerful tool
that has never existed before.
- Can we talk about the world of commerce and finance,
decentralized finance, what is it,
what's its promise from both the philosophical
and technical perspective,
if we just zoom in on that particular space
of the digital world?
- Sure, so the centralized finance is the instantiation
of a specific type of smart contract, right?
Or what I call hybrid smart contracts,
which are these contracts that combine the on-chain code
together with the off-chain proofs that something happened.
They're called a hybrid because they basically use
both of these systems, right?
The blockchain and the proofs about what happened.
And what DeFi is, is one specific type
of hybrid smart contract that is taking on
the contractual agreements you traditionally find
in the global financial system, right?
And that's basically the world of lending,
the world of yield generation for people giving me
or giving whoever their money
and somebody giving back them, yield back to them,
which is what bonds do and what treasuries do
and what a lot of the global financial markets do,
as well as the ability to gain exposure and protection
from different types of events and risks.
That's a lot of what derivatives do, right?
Derivatives allow us to say,
"Hey, something's gonna happen
and I'm either gonna protect myself by getting paid
if it happens, or I'm going to benefit from it happening
by basically saying it's gonna happen,
putting money down on that
and that prediction will get me a return."
Now, that's a very large part
of the global financial system,
excluding all the stuff for global trade
and letters of credit
and all the stuff that facilitates international trade.
So excluding that at least for now.
So if we look at what decentralized finance does,
it takes all of those agreements
about generating yield, lending,
and all of these types of things you find in global finance
and the world of derivatives
and a few other types of financial products.
And it basically puts them into a different format, right?
So the format you have for centralized financial agreements
is that you go to a bank, even if you're a hedge fund,
even if you're like the richest people,
you go to a bank, they make a product for you
and you hope that they honor the product
that they made for you.
Or you do a deal with another hedge fund
or whoever, some counterparty,
and you hope that that deal is honored.
- Yeah.
- And then a number of very freaky things
start to take place.
One of them is people don't have clarity
about what the agreement is, right?
So a lot of people don't know exactly
what the agreement is between those parties
because they can't actually see it.
Sometimes agreements are kept very private
or parts of them are kept private.
And that keeps other counterparties,
other people in the system
from understanding what's going on.
This is actually partly what happened
with the mortgage crisis.
The mortgage crisis in 2008 was basically,
there were a lot of agreements, there were a lot of assets,
but because the centralized financial system
worked in such an opaque way,
it was so unbelievably difficult
to understand what was going on, right?
And so that lack of understanding
for the global financial system
basically led to a big boom
and then correspondingly, very, very big bust,
which amazingly enough had a huge impact on everybody,
even though they didn't participate
in the boom part of the equation.
In any case, what decentralized finance does
is it takes these financial contracts
that power the global financial system.
It puts them in this new blockchain-based format
that basically at this point
provides three very powerful things.
The first thing that it provides is complete transparency
over what's going on with your financial product.
So this means when you use a financial product
§03Transcript · 17:47–26:06
in the DeFi format, you, and you as a technical person
actually can drill down very, very, very deeply.
And you can understand where the collateral is,
you can understand how much collateral there is,
you can understand what format it's in,
you can understand how it's changing,
you can understand this on a second to second
or block to block basis.
So you have complete transparency
into what's going on in the financial protocol
that you have your assets in,
which is because blockchains and infrastructure,
all of these things are built on,
force that transparency.
Whereas the centralized financial system
is very, very good at hiding it.
It's very good at hiding it
and packaging things in a glossy wrapper,
creating a boom, then a bust.
The centralized finance is built on infrastructure
that forces transparency,
such that everyone can understand
what the financial product does from day one.
And in fact, escaping that property
is practically impossible.
Or if someone tries to escape it,
it becomes immediately obvious
and people don't use their financial product.
So that's number one.
Number two is control.
So if you look at what happened with Robinhood,
everybody thought the system worked a certain way.
Everybody thought I have a brokerage account,
I can trade things under a certain set of market conditions.
And then the market conditions changed
within the band of what people thought they could do.
And everybody was fascinated to find out that,
oh my God, I thought my band of market conditions
in which I can control my assets is X,
but it is actually Y.
It's actually much, much smaller band.
And the reason it is a much, much smaller
group of market conditions
is that the system doesn't work
the way people think it works.
The system was wrapped up in a nice glossy wrapper
and given to them to get them to participate in the system
'cause the system requires and needs their participation.
But if you actually look at how the system works underneath,
you will see that it does not work
the way people think that it works.
And this is actually another reason
that DeFi is so powerful
because DeFi actually, and these blockchain contracts,
give people the version of the world
they think they already have,
which is why they don't beg for it.
So everybody thinks they're in a certain version
of the world that works in this reliable way,
transparent way.
They're not.
They don't realize it.
And so they're confused when you tell them,
I'm gonna make the world work this way
because they think they're already in that world.
But then things like Robinhood
make it immediately painfully clear
that that's not how the world works.
So the second real property of DeFi is control,
which means that you control your assets,
not a bank, not a broker, not a third party, you.
You control your Bitcoins,
you control your tokens in the finance protocol.
If you don't like how something's going in that protocol,
you can remove it.
You can send it to another protocol,
or you can use a feature of the protocol
to do something it's supposed to do.
And guess what?
Nobody can just say, oops, that feature,
that isn't so good for my friends over here.
That feature is actually,
we're just gonna pause that feature
in the critical moment when you need it
to execute your strategy,
which is why you took all the risks to begin with.
And then the final reason,
the final thing to know about DeFi
is that DeFi is inherently global,
and actually right now provides better yield globally.
So if you go to a bank right now with the US dollar,
you get 1% or less.
If you go to DeFi with the US dollar,
you get 7% or 8%.
So if we think about that in a world
where there's a lot of inflation coming down the road,
and we think about, well,
a lot more systems might be failing soon,
and they might be highlighting these types of problems
that were there for,
or as a result of the type of control
that you see in Robinhood,
and people are more and more concerned
about both transparency and control,
and they're looking for yield to combat inflation,
I think that's what DeFi is about in a practical sense.
It is this clarity about your risk,
it is control over your assets,
and amazingly, at the same time
as having those two unbelievably useful properties,
it is actually superior yield,
which just leads me to the very obvious conclusion
that the only reason DeFi isn't more used
is 'cause more people don't know about it,
and by virtue of this long kind of explanation
here and elsewhere, more people will know about it,
and it's just such an obviously superior solution
that I haven't heard a single explanation
as to why, no, no, don't earn 8% and take less risk
and have more transparency with your assets,
earn 7% less, take more risk,
and give people the ability to change the rules on you
at their discretion, go do that.
Who's gonna do that?
- And in general, on the first two
of transparency and control,
first of all, I do think, maybe you can correct me,
but from my perspective, they're deeply tied together
in the sense that transparency gives control.
- Transparency creates accountability,
and there's this kind of game being played,
game theoretic game, where if I know,
if you know I'm gonna discover your deviation,
you're not gonna deviate.
- Yes, this could be a whole 'nother conversation,
but just as a small aside,
on the social network side of things,
which I've been thinking deeply about in the past year or so
of how to do it right there,
how to fix our social media,
and I tend to believe that human beings,
if they're given clear transparency
about which data is being stored, how it's being used,
where it's being moved about,
just all a clear, simple transparency
of how their data is being used,
and them having the control at the very minimal level
of being able to participate or to walk away,
and walk away means delete everything
you ever known about me,
that will create a much, much better world.
That currently there's a complete lack of transparency
in the social media, how the data is being used
for your own protection.
I mean, there's a lot of parallels
to the central bank situation,
and there's not a control element
of being able to walk away.
Like being able to delete all your data,
delete your account on Facebook is very difficult.
It doesn't take a single click,
which I think is what it should take.
There should be a big red button that says,
delete everything you've ever known about me,
or like forget me.
So I think that couple together can create
a very different kind of world,
and create an incentivization that will lead
to like progress and innovation,
and just like a much better social network,
and a really good business for the future social networks.
But so I tend to see like control as naturally
being a sort of an outgrowth from the transparency.
It should all start at the transparency,
which is why the smart contract formulation is fascinating.
'Cause like you're formalizing in a simple, clear way,
any agreements that you're participating in.
And as a side comment also,
what's really inspiring to me is that I think
there's a greater, I don't know if this is always the case,
but it seems like from having talked to people
on the psychological element,
there's a hunger amongst people for transparency
and for control.
Like transparency, another word for that is authenticity.
If you look at the kind of stuff that people hunger for now,
they want to know the reality of who you are as an individual.
So that means you can create businesses,
you can create tools that are built on authenticity,
a transparency.
And then the same, I'm inspired by the intelligence
of people if you give them control,
if you give them power, that they would make good choices.
That's really exciting.
Of course, not everybody,
but that means that decentralized power
can create effective systems.
So a couple of that, there's a hunger for transparency
so we can move to a world where everyone's being
just like real, conveying their genuine human nature.
§04Transcript · 26:10–34:29
And people are sufficiently intelligent
that if they're given power in a distributed mass scale sense
that we're going to build a better world through that,
as opposed to centralized supervised control,
where only a small percent of the population
know what the hell they're doing
and everybody else is clueless sheep.
So those two coupled together is really, to me, inspiring.
- Just to really quickly comment on the stuff
that you just said, which I think is super,
super, super fascinating.
I think that's all exactly right.
I think everything that you said is right.
And I think it's actually going to be the same
for social media and banking and every other type of contract
is that all of those systems that house people's value
for them and take control of either their social media value
or their financial value or whatever for them,
all of that is going to be made available to people
in this autonomous piece of code
that does the same thing
that the centralized entity used to do.
So they get all the features,
but the autonomous piece of code gives them the ability
to have control while getting all the features.
- Right.
- So banks give you features,
social media sites give you features,
whatever other system that you use online gives you features
and then it takes your data
and it takes control of your assets from you
in return for those features.
Right?
I think the whole big difference here,
partly in line with the definition of smart contracts
and its evolution,
is that there's this autonomous piece of code
that's giving you all those features
without requiring the ownership and lock-in and control
and unilateral kind of ownership of your data or your value
or whatever it is that you're giving it.
Right?
And I think what this will lead to fundamentally
is just more of a free market dynamic
among how people make...
I think with the social media folks,
you should just make some kind of law or something
where you can just export all your data from them.
Everyone should be able to get their data exported
by another application.
And then the network effect of all these social media sites
will kind of crumble
'cause people will just combine your Twitter data
with your Facebook data, with everything else,
into an application that you control.
And there'll just be thousands of different interfaces
competing for how to consume all the social media data
because it isn't locked in
in one centralized actor's control.
And so this is just the recurring pattern
of what I think all of this will do
is it'll give people a better deal.
Right?
It gives them features without ownership of data,
without ownership of value.
And that's really the difference.
- So I think this is a good place
to talk about smart contracts then.
Can you tell me the history of smart contracts
and the basic sort of definitions of what is it?
- Sure.
So I think smart contracts as a definition
has actually gone through some kind of changes
or a small evolution.
Initially, I think it was actually a conception
of a digital agreement that was tamper-proof
and could know things about the world, right?
So it could get proof
and it could define that something happened
and it could conclude an outcome
and release payment or do something else.
That's actually the definition of smart contracts
that I began working in this industry with
seven or eight years ago
when I started making smart contracts.
That is the conception that I had of a smart contract.
Then what happened was that was really hard to do, right?
Building that type of tamper-proof digital agreement
that could also know things about the real world
and release payments back to people about those events
that were codified in this tamper-proof format
was actually a very tall order.
Turns out it's consistent of three parts.
It's consisting of the contract,
the proof about what happened
and the release of value.
The way things have evolved so far
is that the definition has now come to mean on-chain code,
right?
So it's come to mean the codification
of contractual agreement on a blockchain, right?
So there's some code somewhere on some blockchain
that defines what the agreement is.
Now, that eliminates the part of the definition
that's related to knowing things about the world
and it partly eliminates the definition about payments
and stuff like that.
But basically it's on-chain code, right?
We in our recent work on a second white paper
have actually put out a different definition
that we call hybrid smart contracts
that actually tries to go back to the initial definition
that I started with seven or eight years ago,
which basically says that there's some proof somewhere
that's proven to the contract
and the contract can know that
and the contract can gain proof.
Then it can use that proof to settle the agreement
that's codified on a blockchain.
So you both need a mechanism to provide proof,
you need a mechanism to codify the contract
in a tamper-proof way on something like a blockchain.
And then as with all contracts,
there's a presumption that there's some kind
of release of value.
So I think a smart contract in our industry right now
means on-chain code,
which limits it to whatever can be done on-chain only.
And then in our internal definition for us,
and for us at Chainlink and for me,
it's hybrid smart contracts,
which is actually the original definition.
It's the idea that a contract can both know what happened
and automatically resolve to the proper outcome
based on what happened.
- So you're referring to the Chainlink 2.0 white paper,
which is a paper that I recommend people look.
It's a very easy read and very well-structured
and very thorough, so I really enjoyed it.
Very recently released, I guess.
Can you dig in deeper?
What is a hybrid smart contract?
You mentioned sort of this idea of data
or knowing about the world and on-chain and off-chain.
So what are the different roles in this?
So hybrid, by the way, refers to the fact
that it's on-chain and off-chain contracts.
So maybe dig in deeper of what the heck is it
and what does it mean to know stuff about the world?
Like how do you actually achieve that?
- Yeah, absolutely.
So the on-chain part is where the agreement itself is.
That's the smart contract itself.
And that's where you codify certain conditions,
such as the conditions under which
an interest payment is made,
or the conditions under which the contract
pays out the full amount that it holds
to someone based on a derivative outcome
or something like that.
Now, what the on-chain code is very good at
is creating transparency about what the core conditions
of the contract are.
It's very good at taking in money
from other private keys that send it tokens
and send it value to hold.
And then it's also very good at returning money
or returning value back to other addresses
or other private keys.
It can also be involved in governance.
It can be involved in a few other
private key signature-based operations.
But primarily the on-chain part of a hybrid smart contract,
from what I've seen so far,
defines the agreement, takes in value,
and returns value based upon the conditions codified
in the agreement on a blockchain.
The second and equally important off-chain part
is where the term an oracle comes in,
or an oracle mechanism,
or a decentralized oracle network,
as we describe it in the paper.
And this is another decentralized computational system
that has a different goal.
So blockchains have the goal
of packaging transactions into blocks
and connecting them in a cryptographically unique way
to create security and assurance
about that chain of transactions.
Oracles and decentralized oracle networks
achieve consensus and they achieve decentralization
about the topic of what happened.
So blockchains structure transactions.
Some of those transactions might be the state changes
in different pieces of on-chain code.
And then those on-chain pieces of code require input.
I think the thing that people
get kind of a little bit thrown by
is despite being called smart contracts,
the on-chain code on a blockchain
§05Transcript · 34:32–43:43
cannot actually speak to any other system.
So blockchains are valuable and useful
as far as they're tamper-proof and secure.
And to be tamper-proof and secure,
they're made this kind of walled garden
that is able to know and interact
only with the highly reliable information
that's within that system,
which is basically tokens and private key signatures.
All the other world's information
is not available in a blockchain inherently.
And a smart contract or a piece of on-chain code
can't just say,
"Hey, I'm going to go get some data from over here,"
because the API they would get it from
creates a whole bunch of security concerns
for the blockchain itself
and a whole bunch of consensus issues
about how to agree on what that API said
or what the truth of the world is, right?
Because it's not even agreeing on what one API said.
It's more so creating a reliable form
of decentralized computation
that can give you a definitive proof of what happened
and not just what one API said.
So for example, some of our most widely used networks
have well over 30 nodes and well over 10 data sources
that are all providing information
about the same type of data.
And then there's consensus on that one piece of data,
which is then written in and essentially given back
into the on-chain code to tell it what happened.
Because you can't really make an agreement
unless you know what happened, right?
If you and me were to make an agreement
and set some contractual conditions,
but our agreement could never know what happened,
it would be completely useless.
However, if you and me made an agreement
and there was another system called an Oracle mechanism
or decentralized Oracle network
that proved what happened definitively,
and you and me pre-agreed
that whatever this mechanism says is what happened,
then we can achieve an entirely new level of automation, right?
We can suddenly say,
there's this piece of on-chain code that's highly reliable.
We can give it millions, billions,
eventually trillions of dollars in value.
And it is controlled by this other system over here
that's also highly reliable
under this configurable set of definitive truth
and decentralization conditions,
which we all agree are sufficiently stringent
to control that much value.
And therefore, the combination
of this tamper-proof on-chain representation of a contract
and this mutually agreed upon definition
of a trigger or a proof system combined
is a hybrid smart contract,
which as you can see probably already
does a lot more than just a contract on-chain, right?
- Can you talk about this consensus mechanism,
which by the way is just fascinating.
So there is the on-chain consensus mechanism
of proof of work and proof of stake.
And then there is this Oracle network consensus mechanism
of what is true.
So how do you, can you compare the two?
Like, how do you achieve that kind of consensus?
How do you achieve security
in integrating data about the world?
In a way that's definitively true,
in a way that is usefully true,
such that we can rely on it in making major agreements
that as you said, involve billions of trillions of dollars.
- Right, so this is the challenging question, right?
This is the challenging problem that Oracle networks,
Oracles, we at Chainlink that we work on
in order to create this definitive truth
to trigger and create hyper automation
in this more advanced form,
more advanced form of hybrid smart contracts.
The reality I think of this problem
is that it is very specific to each use case.
And this is actually how we've architected our system
is in a very flexible way.
So for example, you need an ability for an Oracle network
to grow in the amount of nodes that it has
relative to the value it secures, right?
So if you have an Oracle network
that secures $100,000 in like a beta of a financial product,
maybe it can be fine with only seven nodes
and only two or three data sources, right?
Because the risk to that Oracle network
is relatively low based on the value it secures.
So the first question is actually
how do you scale security relative to value
secured by that Oracle network?
Because it wouldn't be very efficient
to have a thousand nodes securing $100,000 worth of value.
So one of the first questions is how do we properly scale
and how do we compose ensembles of nodes
in a decentralized way where we can know that,
okay, we're going from seven nodes in a network
to 15 to 31 to 57 to 105 to a thousand, right?
So that's one dimension of the problem.
- So you have to be scaling the number of nodes
relative to the value that's derived
from the truth integrated into those nodes.
- Well, that's not the only problem, right?
The other side of this is that you're trying to create
a deterministic result, a deterministic output
from a set of non-deterministic disparate systems,
data sources, or places that prove things.
- Can you also just as an aside, what is an Oracle node?
What is the role of an Oracle node?
- Sure, so an Oracle node essentially exists
in both places, it exists in both worlds.
It exists as an on-chain contract that represents
either an Oracle network or an Oracle node.
So there's an on-chain interface in the form of a contract
that says, I exist to give you this list of inputs.
You can request weather data from me,
you can request price data from me,
you can ask me to send a payment somewhere.
- Like an API, so it's a pointer to a API
that provides truth about this world.
- It's an interface.
So just like an API is an interface for Web 2.0 engineers,
Oracle networks and the contracts that represent them
or individual nodes are the interface
of Web 3.0's use of services.
And services includes all services, data, payment systems,
messaging systems, whatever Web 2.0
or any kind of computing service that you can conceptualize
needs an interface on-chain in the form of a contract
that says, here are the services I can provide for you,
here are the transactions you need to send me
to get back this data or that computation or this result.
And then what you actually see
is that the centralized Oracle networks,
because they're uniquely capable of generating
their own computations in a decentralized way
around the data that they have access to,
you actually see decentralized Oracle networks
generating a lot of these services.
So for example, we have a randomness service,
a verifiable randomness function service
that basically provides randomness on-chain
and that randomness is then used in lotteries
and various other contracts that need randomness.
But that randomness, it's not a piece of data
that comes from somewhere else.
We don't go to another data source and get it,
we generate it within an Oracle node
that then provides it over into Oracle node
or Oracle nodes that provide it
into the contracts themselves.
- So why do you say Oracle nodes are non-deterministic?
- Well, they are as far as they come to consensus,
but see, there's this kind of different problem here, right?
The blockchains are very focused
on generating blocks of transactions
within a smaller universe of transaction types,
a certain block size and a certain set of conditions.
And then they have a economic system that says,
I will perpetually generate blocks of this size
with these transaction types
in this kind of limited set of transaction types,
whether those are UTXO transactions
or scripted solidity or whatever it is.
Oracles and Oracle networks,
we don't have a blockchain, for example,
there is no chain-linked blockchain.
Our goal is not to generate a certain set
of very clearly predetermined transaction types
into a set of transactions that are put into blocks
and it will infinitely be done that way.
Our goal is actually to create what we call a meta layer,
a decentralized meta layer
between the non-deterministic, highly unreliable world
and the highly hyper-reliable world of blockchains
so that the unreliable world can be passed
through this decentralized meta layer.
- And it can coexist with the reliable on-chain world.
- Exactly, it can coexist and in some cases,
the meta layer might generate it.
So the problem in giving you this straight answer
is that there's just such a wide array of services.
If you were to say, well, Sergey,
how do we generate randomness from a data source?
Well, we don't use a data source
to generate the randomness,
that's the type of service that can be generated
in an Oracle network itself.
And so there'll be certain computations
that Oracle networks themselves generate themselves
to augment and improve blockchains.
And it is actually the goal of Oracle
§06Transcript · 43:44–51:48
is to consistently do that.
So if you were to think about the stack
in a very generic high level,
you would see blockchains are databases.
They're basically the data structures
that retain a lot of information
in this transparent, highly reliable form.
Smart contract code is the application logic.
It is the logic under which all of this
kind of activity occurs,
storing data in the data structure, in the blockchain
as a database in a certain conceptualization of it.
And then Oracles and Oracle networks
are all the services that are used by the application code.
So by analogy, let's take Uber.
Uber initially, some core code goes and gets the GPS API
from Google Maps about the user's location,
sends a message to the user through Twilio,
pays the driver through Stripe.
If those services weren't available
to the people who made Uber,
they wouldn't have made Uber, right?
Because they would have written their core code
on some database,
and then they would have had to make a geolocation company,
a telecom messaging company,
and the global payments company.
And they wouldn't have done that because it's too hard.
And that's the weird scenario
that a lot of people in our industry are in.
And that's the problem that Oracles
and Oracle networks fix,
is they provide these decentralized services
to take this developer ecosystem,
the blockchain and smart contract developer ecosystem from,
hey, I can have a database
and write some application logic
about tokenization and voting and private key signing,
all of which is super useful and is a critical foundation.
But now if you just layer on all the world's services,
whether that's market data, weather data, randomness,
suddenly people can build DeFi, fraud-proof gaming,
fraud-proof global trade, fraud-proof ad networks.
And that's why this world of decentralized services
and decentralized Oracle networks is particularly,
in my opinion, important to our industry.
- Yeah, it's funny.
And you talk about that the currents
of decentralized world, DeFi,
but decentralized services world is primarily just tokens.
And it's basically just financial transactions.
And the kind of thing,
the reason why it's super exciting,
the kind of thing you're doing with Chainlink
and Oracle networks,
is that you can basically open up
the whole world of services
to this kind of decentralized smart contract world.
I mean, you're talking about just orders of magnitude
greater impact financially and just socially
and philosophically.
Are there interesting near-term
and long-term applications that excite you?
- Yeah, there's a lot that excites me.
And that is how I think about it,
that it's not just about,
we made a decentralized Oracle network.
It's about, we made a decentralized service
or collection of services
that's going from hundreds to thousands
and then people are able to build
the hybrid smart contracts,
which I think will redefine what our industry is about.
Because for example,
for the people that only learned about blockchains
through the lens of NFTs,
they understand blockchains through NFTs,
not through speculative tokens or Bitcoins, right?
And I think that will continue.
I think the use cases that excite me,
they vary between the developed market,
the developed world's economies and emerging markets.
I think in the developed world,
what you will see is that transparency,
creating a level, a new level of information
for how markets work and the risk that is in markets
and kind of the dynamics that put
the global financial system at systemic financial risk,
like 2008.
And my hope is that all of this infrastructure
will soften the boom and bust cycles
by making information immediately available
to all market participants,
which is by the way, what all market participants want,
except for the very, very, very small minority
that are able to game the system and their benefit
and benefit from booms, but avoid busts
because of their asymmetric access to information,
which really everybody should have
and which this technically solves.
I think in the process of doing that,
and which is happening, I think right about now,
you see a polishing of the technology
such that it can be made available to emerging markets.
And on a personal level,
I feel that the emerging markets will benefit much more
from this technology,
just like the emerging markets benefit much more
from the internet or from those $50 Android phones
that people can have,
because it's such a massive shift
in how people's lives work, right?
I have always had access to books and a library,
which has been fantastic and very important,
but there are places in the world
where people don't have libraries,
but now they have the internet and a $50 Android phone,
and they can watch the same Stanford lecture that I watch.
I mean, that's kind of mind-blowing, realistically, right?
They just went from zero to one
in a very, very dramatic way.
I think all of these smart contracts,
and in my case, I think the one
that I seem to keep coming back to is crop insurance,
where partly 'cause it doesn't have
a tokenization component,
partly 'cause it's actually much more important
than it might seem.
- What is crop insurance?
- Right, so, exactly.
So this is the nature of why it's sometimes hard
to see the full value of what our industry does,
because it solves all these kinds of backend problems
that we don't have, right?
So crop insurance is if I own a farm and it doesn't rain,
I get an insurance payout,
so I don't need to close down my farm,
because if it didn't rain, I don't have crops, right?
So people in the developed world can get crop insurance,
and there's all kinds of systems
that basically pay them out,
and then they can argue with the insurance company
if they don't get paid out properly and whatever.
And this allows people to smooth out risk.
In fact, a lot of the global options markets
were about this, right?
They were initially about people selling their produce
or their crops ahead of time,
so that if there was a risk of drought,
they weren't impacted by it, right?
And that's where a lot of options trading
and all this kind of stuff came from,
even though it's now turned into this kind of global casino.
But in the emerging market,
there are literally people that,
if they don't have rain for two seasons,
they need to close down their farm
and become a migrant worker of some kind.
And now they have a $50 Android phone
where they can read Wikipedia,
but they're still decades away from an insurance company
coming to their geography and offering them insurance
because their local legal system
simply doesn't allow that type of thing to exist.
No insurance company is gonna go and create an insurance
entity and offer them insurance
because the levels of fraud
and the ability to resolve that fraud through courts
would just not exist.
So now these people have to wait for decades
to have this very basic form of financial protection
or something like a bank account even.
And with this technology, they don't, right?
So with this technology, if I have a $50 Android phone
and the smart contract has data from satellites
or weather stations about the weather conditions
in the geography that my farm is in,
I can put value into the smart contract
and the smart contract will automatically pay me out,
pay me back out at my Android phone.
And guess what?
I just leapfrogged past my corrupt government
not being able to provide a legal infrastructure
to create insurance.
I just leapfrogged past dealing with insurance companies
that will probably price gouge me and often not pay out.
And I leapfrogged into the world of hyper-reliable
kind of guaranteed smart contract outcomes
that are as good or in many cases better
than what farmers in all parts of other parts
of the world have.
And this type of dynamic for the emerging markets
of creating a way for people to control
and manage risk in their economic life,
I think extends way past insurance.
It extends to them having bank accounts
to combat local inflation.
It extends to them being able to sell their goods
on the global free market of global trade
without middlemen.
§07Transcript · 51:49–1:01:11
It extends to all these things
that we don't really care about, right?
Because we're not farmers,
but are unbelievably impactful for people
that don't have a bank account
and their inflation rate in their country is double digits
or their farm completely depends on rain
or their livelihood completely depends
on their ability to sell goods.
And they can't sell those goods
because there's a middleman
who essentially controls all the trust relationships.
But now we have the internet and smart contracts
and that might not have to be the case
in the next five or 10 years.
- Yeah, so that definitely has a quality of life impact
on the particular farmer's life,
but I suspect it has a huge,
like down the line ripple effect on the whole supply chain.
So if you think about farmers,
but any other people that produce things
that are part of a large logistics network,
like a supply chain network,
that means when you increase reliability,
you sort of increase transparency and control,
but like where any one node in that supply chain network
can formalize the way it operates
in its agreements with others,
you could just have a very like at scale
transformative effect on how people that down the line
use the services that you provide,
the products that you create operate.
So like, it's almost hard to imagine
the possible ways it might transform the world.
I wonder how much friction there is in the system,
I guess, currently that smart contracts might remove.
That's almost unknown.
You can sort of hypothesize and stuff, but I wonder.
I've seen enough bureaucracy in my life
to know that smart contracts in many cases
would remove bureaucracy.
And I wonder how the world will be
once you remove much of the bureaucracy.
Coming from the Soviet Union,
where I just have seen the life sucked out
of the innovative spirit of human nature by bureaucracy.
I wonder, the kind of amazing world
that could be created once bureaucracy is removed.
- Yeah, I think it's fascinating how the world can evolve.
I think this extends a lot further than people think
into many, many different parts of the global economy.
It might start with NFTs for art,
or it might start with DeFi, right?
Or it might start with fraud-proof ad networks next.
We don't know what it's going to go to next.
But I think the implication of people being
in a system of contracts that holds them accountable
and guarantees contractual outcomes,
regardless of a local legal system,
is something that I think extends to the supply chain.
You can prove that goods were sourced in an ethical way,
and you can prove that in a way that can't be gamed.
That'll change buying power and supplier power
and how people produce goods that we all consume.
And then on the political level,
I personally think that in a number of decades,
we could literally be in a place where politicians
can commit to a certain set of smart contract
kind of budget definitional kind of results.
For example, we discovered oil.
I promise as a politician, I'm going to take the oil
and I'm going to redistribute it to all of you.
Well, that's wonderful.
That's a great idea.
Sounds very nice when you're running for office.
Why don't we codify that in a smart contract?
And why don't we put those conditions
very solidly on a blockchain?
And then once you've been elected,
we'll just turn that one on,
and it'll distribute the money just like you said,
and everything will be fine.
I personally think that this new level of systems
that allows trustworthy collaboration between everybody,
between supply chain partners, ad network users,
the financial system, insurance companies, and farmers,
all of these are just interactions
that require a trusted entity,
or in this case, a trusted piece of code
to orchestrate the interaction
in the way that everyone agrees.
- Yeah, one of the things that makes the United States
fascinating is the founding documents.
And it's fascinating to think of us moving into the new
in the 21st century to a digital version of that.
So the constitution, a smart constitution,
no offense to the paper constitution,
but, and that would have transformative effects
on politicians and governments,
holding people accountable.
Oh man, that's so exciting to think that
we might enforce accountability
through the smart contract process.
- Exactly, why can't that happen?
Anything that we could codify into a smart contract,
and anything that we all agree
is the way the world should work.
And then anything that we can get proof about, right?
Anything that a system somewhere could tell us happened,
those are the pieces of the puzzle, right?
We need a trusted piece of code,
we need to have agreement
that that's how the world should work,
and we need a system that'll tell
that trusted piece of code what happened.
As long as we have those three things,
we can theoretically codify any set of agreements
about anything where those three properties take hold.
- I wonder if you could apply that
to like military conflict and so on.
Recently, Biden announced that we're going to pull off
from Afghanistan after 20 years in the war.
I wonder, there's a lot of debacles
around war in Afghanistan and invasion of Iraq,
all those kinds of things.
I wonder if that was instead formulated as a smart contract.
Like that might have actually huge impact
on the way we do conflict.
So you think of a smart contract
as a kind of win-win situation,
where you're doing like financial transactions
or something like that.
But you could see that also about military conflict
or like whenever two nations are at tension with each other,
different scales of conflict,
that you could have conflict codified.
And that would potentially resolve conflict much faster
because there's honesty, transparency,
and control within that conflict.
'Cause there's conflict in this world.
And again, very, very inspiring to think about
the kind of effects it might have
on the negative kinds of contracts,
on the tense, painful kinds of contracts.
- I haven't thought about that as much
as actually kind of scary,
the stuff you're thinking through now
with like the war contracts or something.
You know, that's not in the white paper.
We don't have anything about war contracts or anything.
- Again, this is the Russian, we're both Russian,
but I'm a little more Russian in the suffering side.
Maybe I read way too much Dostoevsky
and military kind of ideas.
But anyway, holding politicians accountable in all forms,
I think is really powerful.
Is there something you could say as a small aside
on how smart contracts actually work?
If we look at the code,
is there some nice way to say technically,
what is a smart contract?
What does it mean to codify these agreements,
the actual process for people
who might not at all be familiar?
- I think you just write it into code
that operates in this kind of decentralized infrastructure.
You usually write code
that runs in a central server somewhere.
Now you write code that runs
across a lot of different machines
in this decentralized way.
And then after you write it, you need services.
And that's where Oracles come in.
They provide all the services.
So just like you would be writing code in Web 2.0 land,
running it on a server somewhere and using an API,
here you'd be writing code,
putting it on a decentralized infrastructure
like a blockchain or a smart contract platform like Ethereum.
And then you would be using various services
in the form of Oracle.
So they'll just be called Oracles
or decentralized services instead of APIs.
And you're basically composing the same type of architecture,
except it's hyper reliable.
At the moment, it's a little bit less efficient
because there's an early stage to our industry.
But it provides this extreme level of reliability
and transparency, which for certain use cases
is an absolute critical component
and is completely reinventing how they work.
So I think people should look at what are the use cases
where that trust dynamic can be so heavily improved.
And that's probably the ones
where this is maybe initially useful.
- But I mean, just to emphasize,
I don't think people realize when you say code
that we're talking about non-obfuscated actual program.
You can read it, you can understand it.
And there's something about,
§08Transcript · 1:01:14–1:11:12
maybe this is my computer science perspective
of like software engineering perspective,
but there's something about the formalism
of programming languages, which enforces simplicity,
clarity and transparency.
And because it's seen to everybody,
I mean, simplicity is enforced.
There's something about natural language,
like language as written in the constitution, for example,
where there's so many interpretations.
With the nice thing about programs,
there's not going to be a huge number of books written
about what was meant by this particular line
'cause it's pretty clear.
Like programming languages have a clarity to them
that natural language does not,
and they don't have ambiguity.
Which I think it's important to pause on
'cause it's really powerful.
It's really difficult to think about.
I think we live in a world where all the philosophers
and legal minds don't know how to program.
So I think, not all, most don't.
And so we don't often see the philosophical impact
of this kind of idea that the agreements between humans
can be written in a programming language.
That's a really transformative idea.
That, I mean, yeah, it's an idea that's not just technical,
it's not just financial, it's philosophical.
It's rethinking human nature from a digital perspective.
Like what is human civilization?
It's interaction between humans.
And rethinking that interaction as a digital interaction
that is managed by programming languages,
by programs, by code.
I mean, that's fascinating.
That we'll look back at this time potentially
as one where us little descendants of apes
did not realize how important this moment in history is.
Like human beings might be totally different
a century from now because we codified
the interaction between humans.
That might have more of an impact
than anything else we do today.
You think about the impact of the internet,
one of the cool things is digitization of data.
But we have not yet integrated the tools,
the mechanisms fully that use that data
and interact with humans yet.
And that's what smart contracts do.
I wonder if you think about the role
of artificial intelligence in all of this.
Because your smart contracts are kind of agreements,
maybe you disagree with this,
but at least the way I'm thinking about it
is agreements between humans or groups of humans.
But it seems like because everything's operating
in the digital space that you can integrate
non-humans into this.
Or AI systems that help out humans, managed by humans.
Like what do you think about a world
of hybrid smart contracts,
codifying agreements between hybrid
intelligent being networks of humans and AI systems?
- Yeah, yeah, I think that makes perfect sense.
In terms of AI, I'm not an expert, right?
So it might be a bit simplistic or naive,
my ideas in this field.
I think everyone saw the Terminator movie, right?
Everybody kind of saw the Terminator movie in the '90s.
And it was like, this is really scary.
I personally think AI is amazing.
It makes perfect sense.
I think it will evolve to a place where people have...
Just to understand, I work in the world of trust issues.
I work in the world of how can technology solve trust
and collaboration issues using encryption,
using cryptographically guaranteed systems,
using decentralized infrastructure, right?
So that's the world that I've been inhabiting
for many, many years now,
building smart contracts for seven or eight,
doing stuff before that.
It's kind of what I'm focused on.
So I view AI through that same lens.
And my brain naturally asks,
well, what is the trust issue that people might have with AI?
And my natural kind of response is,
well, let's say AI continues to be built and improve.
At some point, I have no clue where we are on this now.
I've seen different ideas that were very far from this.
I've seen other ideas were very close to this.
At a certain point, we'd arrive at a place with AI
where we would be a little bit worried
about just how much it could do, right?
We might be worried that AI could do things
we don't want it to do,
but we still want to give AI
a level of control over our lives, right?
So in my world, that's a trust issue.
And the way that that trust issue
would be solved with blockchains
is actually very straightforward.
And I think in its simplicity, quite powerful.
You could have an AI that has an ability to do
and control key parts of your and our lives, right?
But then you could limit it with private keys
and blockchains and create certain guardrails
and firm kind of walls and limits
to what the AI could never go past,
assuming that encryption, right?
That encryption continues to work, right?
And assuming that if it's not that AI's specialization
to break encryption, that it wouldn't be able to do that.
So if you have an AI that controls
something very important, whatever it is,
shipping or something in defense
or something in the financial system, whatever it is,
but you're sitting there and you're kind of worried,
hey, this thing is unbelievable.
It's coming up with things
we wouldn't have thought of in a hundred years,
but maybe it's a little too unbelievable.
How do you limit it?
Well, if you bake in private keys
and you bake in these kind of blockchain based limitations,
you can create the conditions
beyond which an AI could never act.
And those could once again be codified
in the very specific unambiguous terms
in which you described,
which once again, in my trust issue focused world
would solve the trust issue for users
and make them comfortable with using the AI
or ceding control to the AI,
which I think in more advanced versions of AI
will continue to be a concern, right?
- This is fascinating.
So smart contracts actually provide a mechanism
for human supervision of AI systems.
- With encryption, very encryption heavy.
So it's not about like, is it smarter than us?
It's about, will the encryption hold up?
- Yep.
So that's based on the assumption that encryption holds up.
I think that's a safe assumption
we can get into that whole discussion,
but from quantum computing,
but cracking encryption is very difficult.
That's a whole nother discussion.
I think we're on the safe ground for quite a long time
assuming encryption holds.
There's a space that is at the cutting edge
of general intelligence research in the AI community,
which is the space of program synthesis
or AI generating programs.
So that's different than what you're referring to
is AI being able to generate smart contracts.
And that to me is kind of fascinating
to think of especially two AI systems between each other
generating contracts,
sort of almost creating a world
where most of the contracts are between non-human beings.
- I think an AI system, as I think about it,
and once again, this is not my field.
This is something I might watch a YouTube video on
or just see something interesting about at some point.
I think if I were to just reason through it, even now,
I think the highly deterministic
and guaranteed nature of smart contracts
would probably be preferable to an AI
because I'm guessing an AI would have a lot of problems
with dealing with the human element
of how contracts work today.
So an AI, for example,
couldn't pick up the phone and call Dave at a bank
to do a derivative and kind of discuss with Dave
and have a call with him and kind of have a conversation
and get him comfortable and tell him it's gonna be fine
and kind of smooth out all the weird social cues
that have to do with making certain derivatives.
I'm assuming that that's a pretty complicated
neural map AI kind of problem.
Yeah, so if I think about it,
the deterministic guaranteed nature of smart contracts
probably would, and assuming they're accessible to AIs,
could actually, interestingly enough, be the format
that they prefer to codify their relationship
with non-AI systems and very possibly other AI systems
because it is very, I mean, it's pretty guaranteed, right?
All the other types of contracts that an AI
could go out there and seek to do
would require some language processing around the law.
And I think, I don't know if this is a term,
but probably not, a smart AI or a good AI
or whatever the term is for a high-quality AI
would probably realize some of the limitations
and the risks.
- Yeah, yeah, AI definitely dislikes ambiguity
and would prefer the deterministic nature
§09Transcript · 1:11:15–1:19:58
of smart contracts.
I do wonder about this particular problem
and maybe you could speak to it
of how smart contracts can take over certain industries
in a sense or how certain industries can convert
their sets of agreements into smart contracts,
which is, you mentioned sort of talking to Dave
from the bank, you know, many of our laws,
many of our agreements are currently
through natural language, through words.
And so there is a process of mapping that has to occur
in order to convert the legal agreements,
legal contracts of today to smart contracts
that by the way, AI may be able to help with.
But by way of question,
how do you think we convert the legal contracts
on which many industries currently function today
or not even legal contracts,
but ambiguous kind of agreements,
maybe they're loose sometimes,
into more formal deterministic agreements
that are represented by smart contracts?
- So I think there's two, maybe two sides to this.
I think the first one is actually not a huge problem
where you have things like the,
it's the master agreement for derivatives
or you have these agreements
that basically already reference a system somewhere, right?
Like for example, many legal agreements
already accept e-signature.
And so they're saying,
hey, I'm gonna use this computing system over here
around signatures and I'm gonna consider,
and there's laws around that.
And there's clauses that say e-signature
is good enough for this agreement.
I actually don't think this is a big problem
for the vast majority of legal agreements
that use systems already, right?
So what you'll do is you'll swap out one repository
or one set of system of contract settlement.
And you'll just say, hey,
this blockchain system over here
is my new system of contract settlement.
Whatever it says is the state of the agreement
instead of the centralized system over there, right?
And so there's actually a huge amount of agreements
that are already able to do that.
And I think we'll do that.
I think there's another side to your question,
which is the amount of agreements that are very ambiguous
that can be turned into smart contracts.
And I think the limitation there is twofold.
First of all, like you said earlier,
the highly reliable smart contract
and the lack of opaqueness
and the clarity of smart contracts
is very high and very powerful and very clear.
And it's, in my opinion,
going to be much, much easier to take a smart contract
and turn it into a set of natural language explanations
and just say, hey, this is what this does, right?
So I think that many contracts are,
and even now in decentralized finance and DeFi
and in decentralized insurance,
they're basically being rebuilt in this format.
And that rebuilding will make them clearer, like you said,
and then restating those in natural language
and explaining to people,
well, you know, whether there's this,
I think it'll actually be a lot simpler
to explain to people what the contract is about.
- That's fascinating.
Mapping smart contracts into natural language,
I didn't even think about that.
So that's, you're saying that's doable
and natural and easy to do.
- Because there's so much clear, right?
There's that forced clarity that you talked about.
I think the second aspect of this problem
is the nuance around what contracts
can be made unambiguous.
And I think that comes down to,
often comes down to proving what happened,
which is where Oracle networks
and decentralized Oracle networks
and Chainlink would come in.
And our experience there is quite extensive
over the many years that we've worked
on many different contract types.
I think what it fundamentally comes down to
is whether there is data.
So we're not gonna be able to make a hybrid smart contract
about whether somebody painted your house
the right color blue.
We're just not gonna be doing that
because there's no data feed that tells us
that your house was painted blue
or that it was the right color of blue.
Unless somebody sets up a drone
with a color analysis tool and they generate that data.
- Which by the way, it could be possible, right?
There could be, if there's enough demand
then the service would be created
that has drones flying around
that's telling you about the colors of,
all those kinds of stuff.
So if there's actual demand that that will be created
and because there'll be value to connect that data feed
to the smart contracts and so on.
- I think you have it unbelievably right
because there are already insurance companies
that use drones to monitor construction sites from overhead
and see how many people are wearing hard hats.
And if the percentage of people wearing hard hats
isn't sufficiently high, then the policy is voided.
And so in that case, there is a data source
and that data source can be put
into a hybrid smart contract.
So the limitation of hybrid smart contracts is,
is there a data source or a set of data sources
to create definitive truth,
to settle the contract and eliminate ambiguity.
And then as you said, I think as people realize
that smart contracts are a format
in which they can form agreement
about things like that insurance product around,
how many people are wearing hard hats.
If I'm the construction site owner,
well, I would really like a guarantee
that your insurance policy is gonna pay me out
if everyone is wearing hard hats.
And in that case, there is demand for the data
and people will generate the data.
And I actually think the insurance industry
is interestingly a precursor of this
because they're so data driven.
You already see insurance companies paying IOT companies
to put data into their customer's infrastructure
at the cost of the insurance company
to generate the data that the insurance company uses
to make a policy for the customer.
So you basically already have people
who really want to price data into their agreements
when they're of sufficiently high value
paying for their own customers
to get data sensors into their infrastructure.
And I think as smart contracts
become more of a requested format
or data driven contracts become more of a format,
there will be a growing demand
about proving what happened through data.
- So it'd be motivating totally new data fees being created.
By the way, the insurance industry broadly,
the revolutions there will be huge.
I've worked quite a bit with autonomous vehicles,
semi-autonomous and just vehicles in general.
The insurance industry there, by the way,
makes a huge amount of money,
but is using very crappy data fees.
Revolutionizing how, like not by crappy, I mean very crude.
Like literally the insurance is based on things like age,
gen, like basic demographic information
as opposed to really high resolution information
about you as an individual,
which you may or may not want to provide.
So you can choose from an individual perspective
to provide a data feed.
And there, like the power of insurance
to enable the individual, to empower the individual
could be huge because ultimately smart contracts
motivate the use of data, the creation of new data feeds,
but leveraging the whatever service it provides in truth
as opposed to some kind of very loose notion of who you are.
So that, again, not sure how that would change things,
but in terms of the fundamental experience of life,
'cause I think we all rely on insurance,
not just in business, but in life.
And grounding that insurance in more and more
accurate representation of reality
might just have transformative effects on society.
- Well, just to mention one quick thing that you said,
where I noticed another trust issue,
you said the user might not want to share their data.
- Yes.
- So what you could actually do,
and what we've already worked on is
you can have a smart contract that holds the data
and evaluates the data of the user
without sharing it with the insurance company.
And the insurance company knows that the smart contract
will evaluate it according to the policy,
so they don't need the data.
And the user can provide the data
knowing it'll never touch the insurance company
because it's only provided to the smart contract.
And suddenly you've solved another trust issue
because the autonomous piece of code
can evaluate information separately from the interests
of both of the counterparties.
§10Transcript · 1:20:00–1:28:10
And so this is the recurring theme.
I think you're seeing this recurring theme
where there's a trust issue,
people can't use a system, they can't collaborate,
they can't share information
that would make a better agreement for both of them,
they can't solve a risk in their daily life,
they can't participate in a market,
they can't have a bank account
'cause nobody will give it to them
'cause they can't give it to them in that legal system.
And once you have an autonomous piece of code
that can also know what's going on,
thanks to Oracle Networks and that combination of the code
and the Oracle Network for the hybrid smart contract,
the same pattern just recurs.
It's really the same pattern.
And this is why I keep saying trust issues.
It's because I basically,
almost every contractual trust issue that I see
where there is a piece of data to prove
and settle the trust issue
in a way that works for both parties,
there is no reason not to use an autonomous,
highly reliable contract and piece of code.
And I have to tell you,
I've seen this in a lot of different industries.
I've seen it insurance, ad networks,
global finance, global trade.
Those are all multi-trillion dollar industries.
And then there are other smaller industries.
Like even one of the first smart contracts
we worked on many years ago
was for search engine optimization firms,
where they would tell you,
"Hey, I'm gonna raise your search engine ranking.
"Give me the money."
And people wouldn't wanna give them the money
because they never knew if they were gonna do it.
And then the search engine firm
doesn't wanna do any work
thinking they'll never get any money.
So we just initially even came up with a system
where you could put Bitcoin into a smart contract
and it would be released
based on whether the search rank of a website
got to a certain level on Google for a certain keyword.
And so the trust problem was solved.
But it's just the same story.
It's kind of like trust issues around AI,
trust issues around financial products,
trust issues around insurance,
trust issues around social media, whatever it is.
I think that's what people looking at this industry
really need to understand.
And once they do understand,
they realize what this is all about.
This is about redefining how everyone collaborates
with everyone about everything
where we can prove something through data.
- You've mentioned confidentiality and privacy
that the parties don't need to necessarily know
private data in this interaction.
You talk about confidentiality in the white paper
for Chainlink 2.0.
Can you talk more about how to achieve confidentiality
in this process?
- Sure, sure, absolutely.
So I think you once again need to think of the contract
as existing in two parts, right?
You have the on-chain code
and then you have this off-chain system
called the centralized Oracle network.
So the question is really what portion of the contract
should live in what part of these two systems, right?
So if you want to create transparency,
you should put more information on-chain
because that's what blockchains are very good at.
- They're public, transparent,
but they don't necessarily have privacy.
- Well, you can see how those two things
are a little bit kind of completely
diametrically opposed, right?
So I do think, and I do see blockchains working
on on-chain encrypted smart contracts.
That's very inefficient.
It has a lot of nuances around it.
That I think will appear at some point.
I think until it appears,
you have an option of taking a part of the computation
and putting it into the centralized Oracle network.
We actually did an entire paper about this
that we presented at Stanford in February of last year,
something called Mixicles,
which basically talks about how you can take
an Oracle network and you can put a portion
of the computation into the Oracle network,
assuming that you're comfortable with that limited set
of nodes, knowing what the computation is.
And you could actually provide additional confidentiality
through special hard work
called trusted execution environments
that all those nodes are forced to run.
So they won't even know what they're operating.
And so at the end of the day,
if you look at a hybrid smart contract
as gaining functionality from its on-chain code
and gaining other functionality from its off-chain,
the centralized Oracle network component,
you can place the part of the computation
that you would like to be private
in the decentralized Oracle network
because you can control the set of nodes.
You can control the committee of nodes
and you can require that they run certain hardware
to keep the information private.
So you could basically make a derivative that,
or a binary option is the example used
in the Mexico's paper where the payout happened on-chain,
but it was actually impossible to tell
what the outcome of the contract was.
So the outcome of the contract was computed
in the centralized Oracle network.
And then there was a switch that triggered
who received the payment,
but from the point of view of analyzing
the on-chain transactions and seeing who received
the payment or what the outcome of the contract was,
you couldn't derive that,
you couldn't backward engineer what that was,
but the users of that hybrid smart contract
still had on-chain code that guaranteed them
that as long as the decentralized Oracle network
found a certain outcome,
determined a certain outcome,
that the relevant user would get paid
and there was still a place to put value.
So there is this kind of fundamental tension
between confidentiality, privacy,
which is very important for many contracts,
which is critical to many contracts
and the public and transparent nature of blockchains,
which I think eventually will be solved
through encrypted on-chain smart contracts.
That'll take some time,
I think that'll take years in my opinion.
And before we arrive there,
I think people will put the private portion
into the centralized Oracle network.
Once again, going back to what
the decentralized Oracle networks do,
they seek to provide these services, right?
So the ability to do a privacy preserving computation
is perhaps a service without which
a certain type of contract might never come into existence
in the form of an on-chain hybrid smart contract.
And so this is once again,
what we see the centralized Oracle networks
and decentralized services doing
is providing people these tools and building blocks
to compose, like I'm great at making
these derivatives contracts,
but I can't make them
unless I can retain the privacy of them.
And our goal is to provide the infrastructure
that gives you as a developer
and as a creator of smart contracts, that capability.
And what we've seen is that as we provide that capability,
people create more,
which is also really the story of the internet, right?
The story of the internet is,
it was really tough to do e-commerce
while everything was in HTTP
and credit cards were transmitted publicly.
And so e-commerce was kind of tough
'cause how am I gonna send my credit card
over public unencrypted channels, right?
But the second HTTPS appears,
e-commerce becomes a lot easier
because I can put in my credit card number
and it can be sent over an encrypted channel
and it's not at risk.
And so I can participate in e-commerce
as long as I have a credit card.
I think those types,
and I'm sure that was unexpected, right?
I'm sure at the time that was an unexpected outcome
from that technology.
And so I think this is why
we sometimes have this focus on privacy
because in our work with contracts
and their transition into this hybrid smart contract form,
we see a substantial amount of need for privacy
as an inherent property of these contracts.
- And it'll take a while before that's possible
to create the kind of technology innovation
required to do that on chain.
I know there's a few ideas that are being floating about,
but so the currently distributed Oracle networks
provide that feature,
§11Transcript · 1:28:12–1:37:00
which is essential to many contracts.
What brings to mind in this whole space,
again, it might be outside of your expertise,
but within the world, which I'm passionate about,
which is machine learning.
And it seems like very naturally
because current machine learning systems
are very data hungry
and much of the value mined by companies
in the digital space are from data.
They often want their data to maintain privacy.
So you think about an autonomous vehicle space,
Tesla is collecting a huge amount of data,
Waymo is collecting a huge amount of data.
It seems like it would be very beneficial
to form contracts where one could use the data
from the other in some kind of privacy preserving way,
but also where all the uses of data are codified
and you can exchange value cleanly,
basically contracts over data,
over machine learning systems use of different data.
I don't know, do you talk to machine learning folks
that use ideas of smart contracts
or is that from outside your interest?
'Cause it seems like exceptionally applicable set of...
When we talk about different services
that might be created and revolutionized by smart,
especially hybrid smart contracts,
I think machine learning systems comes to mind to me
in all industries.
I don't know if you've gotten a chance
to interact with those folks, with those services.
- I think what you're talking about
is more data marketplaces
in the data marketplace side of things.
Well, this is actually once again, very applicable
'cause there's a trust issue.
At the end of the day,
let's say I'm trying to sell you some data.
You don't know the quality of the data,
so you don't know what you wanna pay for it.
And I can't give you the data for you to determine
the quality 'cause I've given you the data.
Guess what?
We need an autonomous impartial agent.
We need an impartial computational kind of agent
and on-chain smart contract with an Oracle network
to assess my data, to basically take
random cross-section samples of the data,
assess it for quality, assess it for signal
from the algorithm you have,
which you don't wanna share with me
'cause you don't wanna know the algorithm
you're working on, right?
You don't want me to know what you want the data for.
So now the autonomous agent takes your algorithm,
keeping it private from me and takes my data,
keeping it private from you,
assesses it on a random cross-section sampling
for quality of data, returns the scoring back to you,
allows you to determine a price.
And now both you and me know that we've arrived
at a fair price for the quality of my data
for what you wanna do with it.
And that's once again, from what I've seen
in the data marketplaces, which are full of people
who want that data for these learning models,
often for financial markets, often for other reasons,
this is their fundamental problem, which amazingly enough,
there's a trust issue that is getting solved.
And I think you can see even on the face of it,
once that trust issue is solved,
those markets can work a lot better, right?
I don't need to know your algorithm,
you don't need to know my data.
We both know that the autonomous agent
is not under either of our control
and gave us a fair assessment and a fair price.
And that's it.
And we're all very comfortable with that.
I could even make conditions that your algorithm
isn't analyzing the data for something
I don't want you to analyze it for,
or you could make conditions that the data has to have
any number of properties.
And once again, you haven't leaked any signal to me,
and I haven't leaked any data to you,
which is once again, just another type of trust issue
that all of this solves.
So it's the same pattern.
If you work in this industry long enough,
or if you really look at these use cases long enough,
you'll simply come to the question,
and this is the useful question,
what is the trust issue this is solving?
And then if you can get an answer to that question
on a case by case basis,
that's when you'll understand why blockchains are relevant.
And then once you do that with enough use cases,
it becomes a little bit mind-blowing.
- You've mentioned trust quite a bit.
You also mentioned trust minimization
in the Chainlink white paper.
Can we dig into trust a little bit more?
What is the nature of trust
that you think about in these smart contracts?
What is trust minimization?
How do we accomplish, achieve trust minimization?
- Sure, sure.
I think it's important maybe to have a conception
of what the alternative is, right?
What is highly reliable, trust minimized off-chain
and on-chain computation an alternative to?
So this is just kind of how I see the world
in these two camps.
One camp is the traditional,
what I call brand-based or paper guarantee camp.
And this is the world as pretty much most
or all people know it today.
This is the world where there's a bank logo
or an insurance company logo or some kind of logo.
There's a very big building with marble arches and columns.
You know, it's the biggest building in the town.
It's bigger than the church.
And everybody feels very good.
Everybody's got such a nice logo.
It's such a big building.
Why don't I give them my money?
Why don't I interact with them
on the basis of any kind of agreement?
And that's good.
And that is definitely better than that not being there.
And that is definitely a huge improvement
for how people conduct commerce,
letters of credit from branded entities
are very important for global trade to take place
in the early stages of global trade.
So that's good, but it is fundamentally
just a paper agreement with a legal framework behind it.
And if the paper agreement you have would say Robinhood
or somebody else suddenly has to change, well, it changes
and you can't really do anything about it.
You won't be able to change anything
about what happened there.
There's some long-term service.
There's some other agreements around all this stuff.
At the end of the day, that's the brand-based
and paper guarantee world where it's all very vague
and opaque and you're kind of hoping for the best
because there's a nice logo.
It's been around 100 years, a lot of marble.
- Put a lot of marble.
- Big building, lots of marbles.
This is why banks have such nice buildings.
It's not because they wanna spend money on buildings.
It's to create confidence in them as an entity
in order for people to transact through them.
This is why all these kind of go-to cities
that had gold rushes, go-to cities that needed banking
as a service in certain time periods,
they're the most beautiful buildings,
at least in the United States.
So this is the brand-based paper guarantee model
for which up until now,
there has never been an alternative.
So up until now, if you had a bad experience with a bank
or insurance company or some logo somewhere,
you would only have one option.
Your option would be to go across the road
and down the block to another building
with another color of marble and another set of agreements
that are fundamentally still paper brand agreements.
Now, for the first time, you have mathematical agreements.
You have mathematically guaranteed encryption-secured,
decentralized infrastructure-powered agreements.
This is really the shift.
This is really the comparison and the alternative
through which people should view all of this, in my opinion,
because there's once again this conception
that everything is fine, everything works very well.
Well, it does, it works fine and very well
as long as nothing goes wrong.
And then in the cases when things go wrong,
which they pretty much invariably at some point do,
then you find out that, well, turns out
they don't have to pay me, or turns out I can't trade,
or turns out the ATMs can be locked up
and only give me 66 euros per day,
whether I'm a business or an individual,
like what happened in Greece a few years ago, right?
And the reality is that once that becomes strong enough
kind of realization for people,
I think they will all just migrate
to mathematically guaranteed contracts,
because why wouldn't you?
So in the world of mathematically guaranteed contracts,
kind of how do we, and cryptographically secured
and decentralized infrastructure powered,
how do we evolve into that world?
Well, at the end of the day, it comes down to consensus.
§12Transcript · 1:37:05–1:46:20
It comes down to a collection of independent nodes,
a collection of provably independent computing systems
arriving at the same conclusion impartially.
That conclusion might be the transaction is valid
between address A and address B,
address A has one Bitcoin, wants to send it to address B,
and address B has one Bitcoin, right?
So that's one degree of validation.
It has certain cryptographic primitives that are used,
certain levels of cryptography, encryption,
and other methods that basically provide
clarity and those guarantees.
But fundamentally, it's this level of consensus
that multiple independent computing systems
came to the same conclusion, verified that conclusion,
and created a sense of finality,
created a final state that is globally considered
to be the state of a transaction.
And that is how it's achieved, right?
So it's achieved by users looking
at these mathematical contract systems and saying,
if I have money in a bank,
there's one single person who controls that money,
that's the bank, they could choose to give me my money
or choose not to give me my money.
And that's great, but maybe there's a percentage
of what I own that I want to put into another system
where there's thousands of independent computing systems
that are promising me,
with the help of cryptographic primitives,
that I will be able to always have access to this.
Whatever this is, whatever this token is,
I will at least, or at the very least,
I will always have unfettered,
complete control and access to it.
So that's one example.
Another example is, hey, we have a hybrid smart contract
for something like crop insurance.
I, as the user, evaluate where this smart contract runs.
Oh, wow, the smart contract runs on Ethereum.
Great, thousands of nodes,
lots of computational security,
hash power, so on and so on.
Then I look at, oh, well, what triggers the contract?
Oh, there's this Oracle network.
Okay, it's composed of 25 nodes or 15 nodes,
gets data from five different weather stations.
You know, I'm comfortable with that.
I have a certain level of comfort
with that hybrid smart contract
and its ability to provide me consensus
about the transaction,
once the contract knows what's happened,
and I'm comfortable with the consensus
around the event that controls the contract, right?
Because once again, that event is what determines
what happens with the contract.
And if the contract is super well-written,
it doesn't matter if the event isn't reliable, right?
So now I've made this determination.
I've gotten all this clear, transparent information
about this system that combines the contract code
with a decentralized Oracle network,
and I've made my decision to participate
in this decentralized insurance,
kind of crop insurance policy.
I've sent the Bitcoin or the stable coin
or whatever I have on my Android phone.
And then time goes by, and let's say it doesn't rain.
Lo and behold, the smart contract returns
the relevant amount from the policy back to me.
I continue my life as a farmer.
And by the way, the fact that that happened
contributes reputation and contributes proof
back to both the contract as something
that can prove to other people that it has settled,
and the Oracle network as something that can prove
that it has properly assessed reality
or properly triggered a contract.
And this is where there's one of many network effects
where the more that smart contracts
and Oracle networks are used,
they themselves generate this immutable on-chain data
that proves their value and reliability.
And in proving more and more of that
in more and more kind of use cases
and more and more variants of the same contract,
they arrive at a greater body of proof that they,
like I am the decentralized crop,
the decentralized insurance contract for crop insurance
used by a million users.
And my failure rate is non-existent or really low.
And here's my Oracle network.
And by the way, it's also settled a million of these.
And so it's not the logo, right?
It's not, "Hey, what a nice logo you have
on top of a building above a train terminal or something."
It's much more, "Hey, there's a million people.
There's a million separate contracts
that got settled correctly.
I have all the proof that I could ever need about that."
And it's not something that's very easy to gain, right?
Because real value was at stake, real value was moved around.
And so I think once again,
the transparency aspect comes in
where you're able to prove
that the cryptographically enforced contracts are better.
- That said, you can still integrate the traditional banks
as long as you create a data feed
on the amount of marble that's included.
So if that's valuable to you in terms of reputation,
you could still integrate the marble,
the amount of marble and the size of the logo.
We could still keep the banks around.
- I think we will.
I think what'll happen with the banks
and all the insurance companies, by the way,
is not that they'll all just die or something.
I think it'll be just like the internet.
There'll be some of them that adopt this
and some of them that don't
and some of them that do it faster,
some of them that do it slower.
And that's an economic decision that they'll make.
I think their whole question is,
"Is this a foregone conclusion?"
I mean, I think my answer is yes,
this is definitely gonna be happening.
I think they still have a question of,
"Is this gonna change my industry?"
But I'm seeing a definite shift in people's understanding.
And I think that shift is gonna accelerate rapidly
as one or two of their competitors throw their hat
in the smart contract ring and say,
"Well, I have smart contracts.
"I guarantee my outcomes to you.
"What do they do for you?
"It's risky, just use mine."
And the second some of them start losing business
because of that, they're gonna move very quickly
because that's what all of their compensation structures
and all their goal planning structures are based around.
They're based around what is losing us business
or getting us business.
- Yeah, it's fascinating organizationally though
to think about banks, they're very old school
and their ability to move quickly is questionable to me.
I just look at basic online banking,
how good banks are creating a frictionless online experience
and I think they're not very good.
And so that speaks to the kind of people
who are in leadership positions at banks,
the kind of people they hire, the kind of culture there is.
So I do wonder if banks will from inside
revolutionize themselves to include smart contracts
or whether totally new competitors will have to emerge
that basically create new kinds of banks.
Whether, what is it, the company Square?
I think it comes up out of nowhere really
with Cash App and they have Bitcoin on Cash App,
whether they will start incorporating smart contracts
and they will revolutionize the whole banking industry
or whether Bank of America will revolutionize themselves
from within.
I'm skeptical on Bank of America,
but you never know.
It's in general, I'm fascinated by how big organizations,
whether it's Google or Microsoft or Bank of America
pivot hard in a world that's quickly changing.
I think that takes bold leadership and a lot of firing
and a lot of pain and a lot of meetings
where the one asshole brings up the,
from first principles idea that, you know what,
the ways we've been doing stuff in the past require,
you know, we need to throw that out
and do stuff totally differently.
I know a lot of those assholes
in a lot of these different industries.
First of all, I think they're getting listened to more.
And second of all, I think all of these places,
as I look at it more and more,
I think they have a fundamental line of business
that they try to protect.
And then everybody's compensation
and everybody's metrics and goals
is focused around that line of business.
So the second that things begin to impact that,
then everybody will be in a senior meeting
and that asshole will be quite listened to
because he will have the only thoughtful explanation
as to why this is happening.
How things will evolve from there, I actually don't know
because that hasn't been the case yet.
But my thinking is that there will be people
who don't wanna cannibalize certain parts of their business
or don't wanna change certain parts of their business.
And then there'll be people who say,
"Look, I think this is how the world's gonna work.
We're gonna make a very, very heavy
kind of set of commitments to put resources towards this."
§13Transcript · 1:46:27–1:55:11
I already see that with a few banks
working on various blockchain-based systems.
But granted, they've been working on those for years.
So I think all of this comes down
to these kind of quarterly earnings calls
where somebody asks them,
"Hey, I saw that bank over there launched a blockchain bond
or a smart contract derivative platform.
And I also saw that they made $10 billion in revenues
or $10 billion in volume or whatever it is from that.
What's your plan?"
Right, on the earnings call.
And I promise you by the next earnings call, there's a plan.
And then the question on the next one is,
"Well, when's the plan gonna happen?"
And then by the next earnings call, a plan is happening.
And that's what these people are sensitive to.
That's what these organizations are structured around.
It's not completely economically disconnected, right?
They have this core business, they wanna protect it.
I understand that idea,
but I think that the problem with that
is sometimes it requires this myopic focus, right?
And that's what all the innovation stuff is about.
Every time somebody at a corporate entity
is about innovation, they're trying to sidestep this.
But once again, the incentives to maintain
whatever the core business is, is so strong
that the innovation people, even though they are there,
I think they get a phone call and go like,
"What are we doing for this?"
And the ones that actually did good work
and got ready to do something for this
have done their employer and their organization
a very positive service.
Whereas the ones that aren't ready,
I mean, they'll make up something
and maybe they're really smart and they'll get it together.
I don't know.
- Can we talk about tokens a little bit?
Generally speaking, there's been a meteoric rise
of a bunch of different tokens.
We could just talk about Bitcoin and Ethereum as examples.
Bitcoin, I think, costs $60,000 in value.
What are your thoughts in general on this rise?
What's the future of Bitcoin?
What's the future of Ethereum?
There's the total value locked metric
that I think generalizes the different kind of value
of these tokens.
What is the future value and impact
of cryptocurrency look like
if we look through the lens of these tokens?
- I think valuing all these tokens
and determining that isn't something
I'm particularly great at.
I haven't spent a lot of time on that.
I've spent the majority,
vast majority of my time on building these systems
and architecting them and getting them to fruition
and getting them to a place where they operate properly
on both the technical and the crypto economic
and in every other sense.
I think with Bitcoin, there is a certain conception
of non-governmental fiat money
that Bitcoin is really the first creator of.
So there's this very powerful idea called fiat money.
It's basically more or less a kind of 40-year experiment.
I think on August 15th of this year is maybe,
I think given the 40th anniversary,
government can say, "Hey, I have a currency
"and it's worth something and here it is."
In terms of the way that governments have stopped that
in the past is if anyone tries to make another fiat currency
in their country, they immediately shut it down.
They immediately say, "Hey, this is really bad.
"You've done something really bad.
"It's time for you to stop.
"Don't do it anymore."
And it stops.
That's been the history of non-governmental fiat currency.
Bitcoin is really due to its decentralized nature,
the first and possibly in some cases,
in many people's minds,
it's still the only true non-governmental fiat currency.
Now, how powerful is non-governmental fiat currency?
I have no idea.
It's really as powerful as the ideas
that people ascribe to it are.
So let's say people start saying,
like right now people are saying,
"Hey, it's internet money.
"It's the money of the internet."
Okay, great.
What's that worth?
I don't know.
It's probably worth a lot.
I have no idea what it's worth.
But as an idea, as a concept to underpin the fiat money,
the let there be aspect of fiat and of Bitcoin,
you basically look at it and you say,
"Yeah, internet money.
"Okay, that could be worth whatever,
"60,000, 600,000."
Great question, right?
There are other versions of the world, right?
Where people say,
"There are countries that don't have a good fiat currency.
"And I see a lot of people using Bitcoin."
So Bitcoin isn't internet money.
It's countries without a good currency money.
So all the countries without a good currency
now use Bitcoin and let there be Bitcoin
as this, right?
As this conception of Bitcoin.
What's the value of that?
I don't know.
That's a great question.
Probably huge amount of value.
Then there's a further conception of Bitcoin
as some digital gold.
There's a scarcity dynamic.
There's all these other kinds of dynamics.
What is a portable version of digital gold
with some kind of built-in scarcity worth,
kind of artificially created scarcity?
What's that worth?
I don't know.
That's a great question.
I haven't done the analysis on that as the point.
Might be worth a lot.
What is it all worth if all three of these things
flow into the same fiat,
kind of let there be Bitcoin as these three things,
conception of Bitcoin?
I don't know what that's worth.
I also don't know what that's worth.
But could be worth a huge amount.
So I think it's not,
I personally don't think it's super important
what I think it's worth
or what many other people think it's worth.
I don't think that's really that important.
I think what's probably important
is understanding what the societal conception of Bitcoin is
and how does that societal conception evolve over time.
And that, interestingly enough,
doesn't just depend on you or me
or the people who made Bitcoin or anything else.
It actually depends on current events.
So for example, if people suddenly say,
I'm more and more worried about fiat currency,
I'm more and more worried that governmental fiat,
even if it's the most reliable version of that,
is not as good as I thought it was,
maybe I should go on the PayPal app
and maybe I should get some Bitcoin just in case.
What's the world where Bitcoin is a certain percentage
of everyone's ownership as a hedge
against governmental fiat money not being so good?
Haven't done the analysis, but another example, right?
Here's this conception.
That's the conception.
So when I look at Bitcoin,
what I see is a lot of these fascinating conceptions
of what the fiat, let there be value of Bitcoin is.
By the way, all of them could be true.
Maybe some of them are true,
maybe some of them aren't true.
And the fascinating thing is,
is that I've seen this conception change, right?
So when I started in the Bitcoin space,
the conception was micropayments.
The cost of Bitcoin is low, we'll have micropayments.
Micropayments are wonderful
for machine to machine transactions.
Micropayments are wonderful in the emerging market.
And that's fine, right?
And that was one conception of Bitcoin
as let there be Bitcoin as micropayments platform, right?
But then the value rose and certain things changed.
There was enough expansion in certain ways.
And now the conception has evolved
into this other conception.
But at the end of the day,
I think governments have a very clear set of steps
for directing the public's conception of their fiat, right?
They say our fiat is worth this for these reasons.
Bitcoin doesn't have that.
Bitcoin doesn't have an official Bitcoin spokesperson
that goes out and says,
the non-governmental money called Bitcoin,
the non-governmental fiat money called Bitcoin
has value on the basis of this, this, this, and this.
Here's our fiscal budget, here's our future plans.
Our money will continue to be safe and secure and reliable.
And so what that hole creates
is a hole that we all fill, right?
We all basically come to some vague
kind of group understanding that Bitcoin is worth this
§14Transcript · 1:55:16–2:04:46
because it is tied to,
let's say all non-governmental fiat money
comes into question, everybody doubts it,
possibly due to inflation.
And everybody says, this is nice,
but I'd like to keep 10, 20% of my wealth
in non-governmental fiat just in case.
What are those numbers?
I mean, if that happens,
I'm guessing you can add a few zeros.
- I like how you say, I haven't done the analysis
as if I'm sure a lot of people have done
quote unquote analysis, but it's not,
it's still speculation.
Nobody can predict the future,
especially when so much of it has to do
with a large number of people
holding an idea in their mind
as to the importance of a particular technology like Bitcoin.
There's a lot of excitement by its possibilities,
but the number of zeros you add is an open question
and nobody can do a perfect analysis
except whoever created this simulation.
Let me ask you this question.
Who is Satoshi Nakamoto?
There's quite a few people who suggest that person is you.
So is it you?
- No.
- Who do you think it could be?
- I don't know who it is.
I think if I had to guess,
it's probably a group of people,
some of which might not even be around anymore.
Obviously I'm very grateful to,
if this is a singular or a group of people
for kicking off this entire industry
and making this amazing change in the world
that I have the privilege and luxury
of being part of in some small way in the work that I do.
I think also this kind of focus on who is Satoshi
or who isn't Satoshi shouldn't in my opinion matter so much
because regardless of who it is,
that in my opinion should have no substantial,
significant effect or bearing on the functioning
or the value or the use or the security
of the Bitcoin system.
So I think whoever it is,
they're probably better off not making that public.
And I think beyond that,
whoever it turned out to be shouldn't matter
because it has nothing to do
with how the system is made useful
or secure or anything else.
And so I think that's the point of view that I have.
- Now, if you were Satoshi Nakamoto, would you tell me?
Because you said they shouldn't,
whoever Satoshi is, he should keep that private.
So would you tell it to me or no?
- We're in some kind of weird like thought experiment here.
If I was this guy, let me think about this,
which I'm not by the way,
I am not this person.
- But if you were, would you say it?
- I think probably not.
I don't see the,
I think that they would cause a lot of distraction
and a lot of weird stuff.
And so realistically, I don't think it would help anybody
or even the person who discloses it.
But just to be clear, I am not.
And whoever it is, I think they haven't said anything
because they don't want the attention
and they don't want the distraction
and they don't want all the problems from this.
And that makes sense to me conceptually.
- It's fascinating to think if they're still out there
and part of the Bitcoin, the cryptocurrency community.
And it is inspiring to think that if they're out there,
that they're not revealing their identity
because it would be a distraction.
That's kind of inspiring that people are like that.
Just like George Washington,
relinquishing power is inspiring
'cause it's ultimately about the progress of the community.
Not some kind of ego driven attention scheme.
Again, very inspiring.
The humans at their best are inspiring.
What do you think about the certainty
that people in the Bitcoin maximalist community
have about this particular piece of technology, Bitcoin?
Is there something interesting that you think
that you might wanna say about this community
or is it just is what it is?
- I think at the end of the day,
results speak for themselves
and Bitcoin has had an amazing impact on our industry
and has had an amazing impact on the world.
And I think the result is still
that Bitcoin is very widely adopted
and driving the adoption of our industry in many ways.
So I think it's very difficult for people to say that,
Bitcoin maximalists don't have something
that they can latch onto and say,
hey, there's something very real here.
I think there's been decisions made by the Bitcoin community
and the people who made the Bitcoin protocol
to focus it on Bitcoin
and to focus it on the kind of storing
of the ledger of Bitcoin and the information about Bitcoin
and the transaction of Bitcoin and to focus on securing that.
And I understand why that decision was made
to a certain degree, right?
It was about focus.
It was about getting something worthwhile, right?
Without adding additional features and additional risk.
And that decision is a decision that was made
and has kind of the benefits of focus
and the benefits of a certain amount of security
and a certain amount of guarantees around Bitcoin
and what that is and the value of that.
And then it has certain limitations
as a consequence of doing less
or having the system hold data that isn't related to Bitcoin
or not having the system hold contracts,
contractual outcomes or smart contract code.
So I think it's just kind of a decision, right?
And I understand why they're excited and I'm very excited.
I started in this industry going to Bitcoin meetups
and I met a lot of fantastic people, libertarian people
that wanted to see the world work differently
and shared a lot of my beliefs and a lot of my points of view.
And so, anyone who's been in the industry
as long as I have, has had to come
from the Bitcoin ecosystem by virtue
of kind of starting out that early.
So I have an unbelievable amount of respect
and admiration and gratitude for Bitcoin
and that it exists and everything that it's done
and that it birthed this industry.
There's absolutely no doubt about that.
At the same time, whatever design decisions people make
are the design decisions they make, right?
And so if you've made a design decision
that this ledger and this thing will be about Bitcoin,
it won't be about colored coins,
it won't be about op return at 80 bytes,
it won't be about these other kind of nuances
that you don't want this to be about, then that's fine.
That's fine and that's a logical decision
and that's called focus.
And focus has a lot of value
and a lot of great technology products
have focused on something and done that.
And then there's a lot of smart people around Bitcoin
building kind of additional systems
that anchor their security within Bitcoin.
And I think that's an interesting approach
that could bear fruit.
I think it'll eventually require an interaction
with a Bitcoin protocol in more advanced ways.
And then there'll be another question of,
what is the design decision for Bitcoin?
Is it that Bitcoin will be just about the Bitcoin ledger
or does Bitcoin want to evolve into an anchor
for all these other systems
and maybe create additional data store,
kind of more data on the Bitcoin blockchain related to that.
So I'm excited to see how that evolves,
but until then kind of results speak for themselves
and the results that Bitcoin has achieved for our industry
and for itself as kind of the dominant cryptocurrency
and the conception of our industry
that people interact with first is obviously very important
and something that I think really everybody in our industry
is grateful for, right?
Because without Bitcoin, where would our industry be?
And that's obviously something that we can't forget.
- What are your thoughts about Ethereum
in the chain link distributed Oracle network world?
Is it competition?
Is it collaboration?
Is it complimentary technology?
What do you think about Ethereum?
How much do you think about Ethereum?
What role does it have?
- Yeah, I think about a lot.
I think we're completely complimentary.
So there's no competitive dynamics in my opinion.
We are completely collaborative and complimentary
with Ethereum and all other blockchains
and all other layer twos that operate a contract, right?
So we do not seek to operate a smart contract.
We seek to augment and enable smart contracts
to go further in what they're able to do.
In fact, Oracle networks have some value
but they don't have nearly as much value in what they do
if there isn't a mission critical system
like a smart contract that needs their data, right?
So we've made our own explicit design decisions
in our own and created our own focus
§15Transcript · 2:04:48–2:13:12
around guaranteeing that smart contracts can go further.
We've already done that, right?
Decentralized finance, the rate at which we put data
is to a degree the rate at which certain
decentralized financial markets grow.
And as we put more data,
we see more financial products go live.
Gaming, we provide VRF.
So we have this kind of focus
and it's a very useful and valuable
for our industry focus.
At the end of the day,
I think that smart contract platforms like Ethereum
made a different set of design decisions
from Bitcoin and others.
And they focused on creating the smart contract capability
and they kind of wanted that functionality to exist.
And I think since then,
there's been a number of people
that try to improve on that
or try to make variants of that.
From our point of view,
we want to support smart contracts
in all of their variations and in all of their use cases.
So one of the things that I personally like about Chainlink
is their ability or Chainlink's ability
and the Chainlink network's ability
to be useful to many different chains
and across many different use cases.
I'm personally a fan of Ethereum.
Ethereum has done a huge amount for our industry as well.
Ethereum took us from a world where
it literally took months to make a new smart contract
by being forced to code it into a protocol.
You had to go to the protocol developers
and you had to say, "Hey, I need a DEX
or I need some kind of smart contract."
Put it in the protocol itself.
Put it in the actual blockchain mining
and kind of block generation,
transaction generation protocol.
That would take months or sometimes even over a year.
That was a horrible experience.
And obviously very few people wanted to participate in that.
And so very few people made smart contracts,
which I was not a fan of.
And then Ethereum came along
and really did a lot of innovative things
and introduced this approach to scriptable smart contracts
where you could script all of these different conditions.
And I found that fascinating.
Before Ethereum, I found that fascinating.
Once Ethereum arrived,
I found it fascinating after Ethereum launched
and I still find it fascinating.
And I'm also very grateful to Vitalik
and the Ethereum community
and all the core developers there
for taking our industry a step further.
So I think they absolutely deserve a huge amount of credit
for taking our industry from,
it takes months to make a really small smart contract
to it takes weeks to make a relatively secure,
relatively advanced piece of on-chain code
that anybody can script and people can do audits on.
And that's an unbelievable leap forward for our industry.
And I'm genuinely grateful to them for that.
I think the next step in line with our body of work
is how does that scriptable on-chain code
become more advanced in its interaction
with all of the systems and events in the real world,
which is in my opinion,
the final missing piece of the puzzle, right?
So my body of work,
the body of work that I'm involved in
would not be where it is right now
without Bitcoin by any measure.
It wouldn't even be where it is now without Ethereum
and the growth in smart contract development
that they've created.
And now what I think is gonna happen next
is there'll be a lot of different smart contract platforms,
a lot of different layer twos.
Some of them will be private for enterprise.
Some of them will be public.
There'll be some public winners in certain geographies
for maybe regulation reasons, maybe other reasons.
There'll be other public winners,
the larger internet,
and there'll be a number of different people
building smart contracts in different languages.
We are excited and I am excited
and the Chainlink community is excited.
And basically there's a lot of,
I mean, for lack of a better word, excitement
in seeing our industry graduate
to providing more use cases,
more usable hybrid smart contracts, right?
Because once again, it's absolutely amazing
that Bitcoin created non-governmental fiat money.
It's an unbelievable innovation
and invented the centralized infrastructure
and birthed our industry.
It's an unbelievably great achievement,
an amazing achievement
that we now have scriptable smart contracts
through something like Ethereum.
Once again, monumental achievement in my opinion.
Once again, we still need to look to the future.
We need to look to how do we take
the decentralized infrastructure concepts
that Bitcoin initially put forward,
that Ethereum then improved upon
and created into these scriptable smart contract formats,
and how do we expand that
into the world of real world outcomes
to change the global financial industry,
the global trade industry,
the global data marketplace industry,
and many other global industries.
- You mentioned results speak for themselves
and how design decisions have consequences.
The Chainlink community have come up
with a lot of brilliant designs.
So how do you think through the design choices
that you're facing,
where you can't predict the future,
but you're trying to create a better future?
Is there something low level,
introspective advice that you can give
or describe as to how you think through those decisions
or high level, how you think about those decisions?
- Sure, absolutely.
I think that's a great question.
And I think that actually gets to the core
of what the Chainlink network is supposed to achieve.
We are supposed to achieve a maximally flexible system.
So once again, this is the big difference
between Chainlink and Oracle networks in general
and blockchains in my opinion.
Blockchains do not seek to be maximally flexible, right?
They say, here's my block size,
here's the transaction types you can put in those blocks.
Here's the contract language I have.
Here's kind of my blockchain system, right?
Here's the fee structure for those blocks.
They're gonna keep getting, you know,
kind of composed transactions are gonna get put into blocks,
blocks will get connected and it'll continue, right?
And that's a very focused type of system.
And that's great.
And that makes sense because it's focused
on creating security for that category
of on-chain activity, which is once again,
a critical, critical part of building
a highly transparent system
and something that Chainlink enables
and, you know, doesn't compete with
and just enables to do more.
Oracle networks conversely have to interact
with all the world's data and provide all the services
that blockchains don't provide, right?
So there's kind of a spectrum.
On one end of the spectrum, you have blockchains
that are highly secure, highly reliable,
highly tamper-proof, highly transparent,
but are not very feature-rich.
For example, they cannot talk to an API.
Many of them can't generate randomness.
They cannot do some kind of privacy-preserving computation.
So they're very secure and there are these kind
of data structures and smart contract platforms
to hold on-chain code that can define conditions,
receive value, pay value back out under conditions
and create transparency around all that,
which makes perfect sense.
And then there's oracles and oracle networks.
That is all the world's data, right?
We're talking about taking all the world's data
and making it consumable for all the world's use cases
that have trust issues.
So the amount of variability there is absolutely massive.
Right?
It's like the decentralized oracle network
and the conditions that that decentralized oracle network
needs to meet is going to vary very widely
from an insurance contract to a lending contract
to an ad network contract to the data sales contract
that we discussed to any number of other smart contracts.
So really the ability of a decentralized oracle network
to flexibly address all of those requirements
is what's necessary.
- So flexibility is the goal, whereas with on-chain
like Bitcoin, flexibility is the enemy
in the sense that you want security,
you want the focus there.
And in that kind of world,
design decisions have huge consequences.
And then if you look at the distributor oracle network side,
you want to remove the restrictions of design choices.
§16Transcript · 2:13:16–2:21:29
You want to provide maximal flexibility then.
So it's a completely separate kind of design framework.
- It's a slightly different problem, right?
Because we're not trying to define transaction types
fitting into blocks on a certain timeline
and have those blocks being generated.
We're trying to say, "Hey, there's this world of services
or this world of data that's not very deterministic,
but it's unbelievably useful
to these smart contracts over here."
And actually they needed to even exist.
And we really want them to exist because once they exist,
it's going to completely redefine
what our whole industry is known for, right?
And defined NFTs are not even the tip of the iceberg.
They're like the snow coming off the top of the iceberg.
And so our goal is to create a framework
and an infrastructure and a software
that allows people to compose
decentralized oracle networks, right?
So initially you can compose a decentralized oracle network
of seven nodes that goes to three data sources
to trigger your contract worth a million dollars.
And that's where you could start.
And then let's say your smart contract,
your DeFi smart contract goes to a billion dollars.
Well, then you need to make some changes, right?
You need to go from seven nodes to 15 or maybe 31 nodes.
And you need to go from three data sources to five or seven.
And you maybe need to create some kind of
what we call circuit breakers and some other checks.
And you need to make sure that the decentralized oracle
network comes to consensus around those checks.
Because now the centralized oracle network
isn't controlling a million dollars,
it's controlling a billion dollars.
And we have decentralized oracle networks
that control well over a billion dollars,
multiple billions of dollars.
And we see them growing and getting more advanced
data sources and more advanced features.
And then if somebody else comes and says,
"Well, I don't really wanna make a DeFi product,
I wanna make crop insurance.
And I have a completely different set of conditions.
I want this method of consensus.
And I want data to be aggregated in this way,
but not the way that you do
for decentralized financial products."
I mean, what are we supposed to tell them?
We're supposed to tell them,
"No, our decentralized oracle network can't let you do that.
And you can go and wait another five years
until somebody builds it for you."
That's not what we wanna do, right?
What we wanna do is be able to say,
"Absolutely, here's an example of how somebody else
made a decentralized oracle network
for weather insurance, right?
Here's a template.
Change that template, evolve it to meet your needs."
And then someone else comes and says,
"Hey, I have some other use case in gaming, right?
I wanna make NFTs related to real world sports events,
or I wanna do whatever I wanna do
with some kind of sports related data."
Wonderful.
Here's the framework.
Here are your risk dynamics.
Here's a collection of node operators.
Here's a set of pre-integrated data sources.
Here's a reputation system to assess the quality
of your ensemble of nodes.
Here's a way to scale that up
as the value in your contract scales.
Here's all the tools that you need to build this contract.
And what we actually see now
as there are multiple types of computations
and data sources that are provided
by different decentralized oracle networks,
of which there are now hundreds,
we now see that a single hybrid smart contract
might use multiple decentralized oracle networks.
So there might be a hybrid smart contract
that uses a price data, decentralized oracle network,
a proof of reserve oracle network,
a randomness oracle network.
And I think we're gonna continue to see this dynamic
that more and more advanced contracts
compose various decentralized oracle networks
into more advanced use cases.
And this is the dynamic that we're focused on enabling.
And I think it's actually a very virtuous cycle
for everybody because the more of these hybrid smart
contracts we enable on Ethereum and other blockchains,
the more our industry provides real world outcomes
to the larger world, which is at the end of the day,
what I think everybody in our industry wants.
Everybody in our industry wants hybrid smart contracts
to become the way that global finance works,
global trade works, global insurance products work,
because they will inherently need both a blockchain
on which the contract itself lives,
and an oracle network that powers
all of the other interactions, right?
- As a developer, how would you recommend
somebody listening to this, but also me,
to get started with smart contracts
and to get started with hybrid smart contracts?
- Well, for hybrid smart contracts,
I'm gonna have to do some kind of shameless promotion.
- Please, let me twist your arm.
- Thank you.
I think you can go to our YouTube.
We have a number of developer tutorials.
- Chainlink YouTube?
- Yeah, Chainlink.
I think if you just search Chainlink on YouTube,
you should find it.
Beyond that, we recently had a hackathon
where we had a huge amount of very,
very kind of advanced hybrid smart contracts getting built.
- To elaborate on that, you had a hackathon.
Is that something that people can follow along
like a video or there's webpage traces of what happened,
or is there future actual hackathons
that people could literally participate in?
- There's plenty of more hackathons coming up.
We wanna enable as many developers in web three and web two
to build hybrid smart contracts
as a way to redefine our industry
and kind of make all of these smart contracts come to life.
There are definitely gonna be more hackathons.
So people should go and pre-register,
register on a list to get involved in that.
That's a great resource where we have a lot of speakers
and a lot of educational tools.
They happen over a course of weeks, not days.
So there's a long time for people to work on these things
at the speed that they find comfortable.
- Two questions.
One, is there a kind of a hello world entry point
for hybrid smart contracts?
And two, on the hackathon side,
like what kind of stuff do you see people building at first?
Just kind of getting their feet wet,
like in terms of the kind of applications
that could be enabled.
- I mean, there's unbelievable things
that we see people building.
I think how to get your feet wet,
I think the hello world is probably DeFi
'cause it's pretty straightforward.
And there's a large amount of data sources
that we already have putting data on chain on test net,
which is the test environment in which people would build.
So I think DeFi is probably to a certain degree,
the most exciting for certain people
and pretty, pretty expansive in terms of the tutorials
and the amount of contracts
to see how people have already built it.
I think beyond that,
we see people building amazing things at these hackathons.
In the previous hackathon,
we saw somebody build a smart contract
that allows someone to rent out their Tesla, right?
So it allows the Tesla API to give someone else access
and rent out someone's Tesla
on the basis of a smart contract
kind of coordinating payment,
which was kind of amazing.
The more recent hackathon,
we saw something called D-Bridge,
which is a cross-chain solution that uses Oracle networks
to confirm data on different chains.
So I think the things that people build
will just become expansive and varied in ways
that I can't even imagine.
But I think this recent hackathon saw a huge, huge list
of different kind of winners in different categories.
And there's so many different categories.
We even have a GovTech category
and a whole bunch of things.
If people wanna see what's possible,
they can go look at the winners.
I think that's probably a good idea.
Yeah, that'll be on the side of the hackathon.
There's a blog related to that
and we're gonna have more of these.
And once again, our explicit goal
is to take our industry
into this world of hybrid smart contracts,
which just benefits everybody.
It makes more on-chain activity.
It helps provide real-world value to the average person
from all of this infrastructure, period.
And at the end of the day,
I think that it just redefines what our industry
is about through use cases, right?
Because if you only learn through our industry
§17Transcript · 2:21:33–2:30:46
from the point of view of a single use case,
like the NFT use case or some other use case,
that's what our industry is about.
And the more of these use cases
that people can make available to the average person
or to the fintech world
or to the insurance world or wherever,
the faster our industry will not just be
about Bitcoins or tokens.
It will be about changing global finance,
changing global insurance, changing global trade.
And that's the change in the world
that I and a lot of other people in this industry,
I think, got into this for.
- Now, it's funny, you've mentioned about,
you've had a lot of kind words to say about Bitcoin
and Ethereum as important technology
that paved the way for the future.
And you somehow did not mention
one of the most profound pieces of technology,
which is Dogecoin.
What are your thoughts about this particular
revolutionary technology?
And what are your thoughts about Dogecoin
going to the moon, to Mars,
and outside of the solar system?
- I think Dogecoin is a very interesting kind of,
probably closer to a social experiment
than anything else.
- Isn't everything a social experiment?
- Yeah, I guess that's fair to a degree.
I think it's fascinating how that's evolved.
I think the people that made it
with certain goals in mind,
and then it's kind of taken on a life of its own.
I don't fully understand exactly why
it's taken on a life of its own at this point.
I, once again, I don't spend too much time
thinking about different tokens and how they're evolving.
I'm much more focused on the launching and--
- The technology around trust,
and all those kinds of ideas.
But I think one of the fascinating things about Dogecoin
is how technology that is,
that leverages social dynamics,
that technology's ability to utilize fun
and memes to spread.
I think it's really interesting.
I don't think it should be discounted
as if, I think I tweeted today,
something about the fundamental force field of fun,
that fun has an effect on the space-time.
So general relativity describes how mass and energy
can curve space-time.
And I was just giving an example that when life is fun,
it seems short, when life is not fun, it seems very long.
So fun has a very similar effect on space-time,
like in curved space-time.
In that same sense, there is a power to the meme.
And I think Dogecoin illustrates that.
I think Elon is an example of somebody that uses Dogecoin.
I don't know his philosophy in particular on this aspect,
but he does use it effectively to excite the world
in a fun way about the possibilities of future technologies
like cryptocurrency.
I think the Bitcoin world is very serious right now.
And we've spoken about Bitcoin maximalists.
There is very little space for fun and joking
in the Bitcoin world,
but there's still a little bit of fun and humor left
in the Dogecoin world.
In that sense, I think it's exceptionally powerful
to inspire, to excite,
to be able to talk about stuff
without the seriousness of financial impact
that now certain cryptocurrencies have like Bitcoin.
So I keep an eye on,
I've previously mentioned that Dogecoin, I think,
is a fascinating piece of technology
because I do think cryptocurrency is much bigger
than the technology that you focus on.
There is also a social element that you also spoke to
that's, I think, not quite yet understood.
And it's fascinating to watch,
especially as it co-evolves
with the different tools on the internet,
the different social networks,
social network mechanisms on the internet.
So I'm a huge supporter of Dogecoin
because I'm a huge supporter of fun.
- I'm fascinated to see how it'll work out.
- You think it'll go to the moon?
You think it'll be the first cryptocurrency
to land on the moon?
- I couldn't say.
I haven't done the analysis, as I've said before.
- I haven't done the analysis.
Well, yeah.
No matter what, I do hope we get humans back on the moon
and hopefully get humans on Mars soon.
Dogecoin, Bitcoin,
or not.
Let me ask you about books and movies.
What books and movies in your life,
long ago, when you were a baby Sergei,
or today, had an impact on you?
Maybe you would recommend to others.
And maybe what ideas you took away from those books,
movies, coloring books, children's books,
blogs, whatever.
- Yeah, yeah, sure.
So I think one of the things that had a very big impact
on me were Plato's dialogues,
and particularly Protagoras and Gorgias
as some of the two initial ones.
I think what Plato's dialogues do very well
is they give people a clear picture
of what dialogue looks like
and what the assessment of information
probably should look like, right?
And how the dissection and analysis
of an idea is very important.
And how it can actually be taken in either direction.
But at the end of the day,
that the process of eliminating
kind of this fuzzy thinking
and arriving at whether it's an external dialogue
or an internal dialogue about an accurate picture of reality
is actually very important.
And so I think I'm very lucky to have read the dialogues
when I was in my early teenage years.
And it had a very large impact on me
because it kind of showed me that,
nobody knows what they're talking about.
I would play out dialogues in my mind
and I would engage in certain dialogues
with different people.
And what the Platonic dialogue showed me
was kind of how to tell when someone has no clue.
And a lot of people are very good at
kind of saying they have a clue, right?
Saying like, here's how the world works.
Here's what you should do with your life.
Here's what you should do with your time.
Here's what you should do with your money.
Here's what you should do with your attention.
Here's what you should do with all these things.
And I think the ability to evaluate information
generally is something that is surprisingly under taught.
I don't actually understand why there isn't a course
in like high schools or universities
that's just like, here is how you evaluate information.
Here's how you engage in external dialogue
and internal dialogue
to arrive at an accurate picture of reality
rather than the picture of reality
that other people want you to have
for their benefit most often, right?
And at the end of the day,
I think that put me down a path
to really try and understand.
Beyond that, I think biographies
have had a very large impact on me.
Plutarch's Greek and Roman lives.
After I read Plato, I started reading a bunch of stuff,
Greek stuff.
I was just like, these Greek guys,
they really know how it is.
They did this 2000 years ago and they still got it right.
There's something here.
It's kind of this like theory of time around
the value of intellectual ideas, right?
If an intellectual idea has survived the test of time,
it's much more valuable than the intellectual idea
that I just came up with 10 minutes ago,
haven't told anybody and hasn't gone up against
all of the kind of rebuttals.
- So what's your favorite,
what would you say would be a most impactful biography
that you've come across?
- I don't think it was those Greek or Roman biographies
'cause they were very far away.
I think that probably one of the most impactful ones
that I can remember recently is around Vanderbilt.
And so Vanderbilt was this guy who basically
without that much of an education,
he would invent or work with people
to make these steamboats.
And then he had a lot of acumen around
creating certain monopolies regardless of
what was right or wasn't right.
And then fascinatingly enough,
it all hinged on like a Supreme Court case
that decided if monopolies were acceptable
in the form of state created monopolies or not.
And if it was deemed that state created monopolies
were acceptable, he would have had a huge problem, this guy.
But it was deemed that state created monopolies
through these licenses for steamboat routes
was not acceptable.
§18Transcript · 2:30:47–2:40:22
And that did two interesting things.
It unseated some kind of old time landed gentry
in the Americas in like the 1830s and '40s.
And it basically made him right
and he saw it before other people.
So I think Vanderbilt was a very interesting personality
first of all, of all the biographies that I read
is somebody who really took the situation in hand
and kind of took action to achieve an outcome
which I think was an amazing result.
The fascinating thing by the way is,
or amazing way of looking at things.
The fascinating thing by the way is that the ferries now
in New York Harbor are all run as a public good.
So the fascinating thing is that the guy,
he focused on an industry and he worked on something
that was so important that it ended up
becoming a public good.
And I think that that's an interesting conception
of how to look at this industry.
I think there's a lot of economics dynamics
around this industry, but I think I might've said this,
I might've said this somewhere else before,
but really the success of someone in this industry
is whether they're able to make a Linux or HTTP
or an HTTPS like system that lives on for a very long time
and is essentially a kind of public good.
- The success of an idea,
even if that idea is originally sort of a capitalist idea
above that's grounded in financial benefit,
success of it is if it becomes a public good.
It is so universal, it is so fundamental
to the quality of life that it's a public good,
is deemed to be so valuable
that it should be a public good.
- Yeah, I think so.
I think that's a pretty good definition of success
that you work on a body of work
and that body of work isn't just some commercial enterprise.
It's a body of work that whatever commercial aspects
or economic incentive aspects it might have,
it eventually is so important
that it becomes critical to how society functions.
I'm personally quite lucky and grateful to be,
in my opinion, working on something like that
with an amazing team and an amazing community
that seems to really very much care
about this hybrid smart contract, transparent world
that a lot of people in our industry,
realistically, I think this is why a lot of them signed up.
This is why I came into our industry.
It wasn't because Bitcoin,
it was because Bitcoin was a picture
of how the world could work in so many other ways.
And that picture of how the world could work
in so many other ways attracted me a very long time ago.
And I think that all of this stuff
will eventually become a public good.
I think it'll become so critical
to how societies function internally and internationally
that just like there are systems,
like the Federal Reserve, like global payment systems,
like all these types of things,
I think eventually all of this technology
will be baked into these societally critical systems.
And if I and our community and the people I work with
and the body of work that we're working on
can make some kind of contribution to that shift
towards a fair, economically fair, transparent society,
from my point of view, it's a very worthwhile body of work.
In terms of the show, you also mentioned the show.
One of the shows that I really seem to like more and more
for some reason is Star Trek, not the old Star Trek.
I don't really get the old Star Trek.
The special effects aren't good enough.
(laughing)
Star Trek, like The Next Generation and Voyager
and Deep Space Nine and all those.
I think whenever I happen to watch a Star Trek show again,
I have a very simple conception in my mind
that I really didn't have whenever I saw it way back when.
It's that this is what the world looks like
if technology takes us towards a utopia.
So I think there's this fascinating thing
where technology can take us towards a utopia
or towards a dystopia.
And in my mind, those kind of three Star Trek shows
are a picture of what human civilization looks like
if everybody's technological ambitions
successfully take us towards a utopia.
Because in the Star Trek universe,
you're not seeking money or you're not seeking safety
or you're not seeking,
you're not really seeking anything for yourself.
Everybody within Maslow's hierarchy of needs
has gotten so many things for themselves
that their goal is learning and discovering and/or helping.
And I think there is this conception of human life
once the baser needs are satisfied.
And at the end of the day,
I think that's what technology generally can elevate
all of human civilization to.
It can elevate us to Star Trek world
where if people want to invent,
they can do that all day and nothing else.
If people wanna explore the stars,
they can explore the stars
and they don't have to worry about economic scarcity
or any number of these other conceptions.
So I don't know what the most impactful
on me shows have been,
but for some reason recently Star Trek
in the newer variant,
not the most new Star Trek shows.
Those shows are a little strange.
The kind of middle Star Trek universe
where everybody is doing something
with a very important purpose
and nobody's thinking about like,
where's my paycheck or where's my whatever.
They're all kind of like,
we have to discover the formula to this
to save the planet over there.
And literally every episode you're discovering a formula
to save a planet of some kind
or a universe or ecosystem or whatever.
And you're looking at it, you're like,
you know, this is a pretty good place to end up.
This is where we might wanna end up.
- So it gives you hope.
I mean, it's funny that we don't often think about the,
I think it's very useful to think about positive visions
of the future when we're trying to design technology.
There's a lot of sort of in public discourse,
a lot of people are thinking about
kind of how everything goes wrong.
It's important to think about that sometimes,
but in moderation, I think,
'cause there's not enough,
in my little corner of artificial intelligence world,
people are very kind of fear monger centered.
There's a lot of discussions
about how everything goes wrong.
It's important to do,
but it's also really important to talk about
how things can go right,
because we ultimately want to guide the design
of the systems we create to make things right.
And I think with hope and optimism,
not naiveness, but optimism,
you can actually create the better world.
Like you have to think about a positive,
a better world as you create,
because then you can actually create it.
Yeah, I'm one of the people that thinks that
having an optimistic view of the world
is better for design and creativity
than having a pessimistic one.
It's hard to design when you're in fear.
Do you have advice for young people,
speaking of being excited about
and hopeful about the future world,
do you have advice for young people today
in a computer science world,
in software engineering world, in crypto world,
but maybe in any world whatsoever,
for life, how to pick a career
or how to live life in general?
- I think the thing that young people should do
is not any one specific thing
for any one specific young person.
I think what they should do
is what they won't be able to do
in the later stages of their life.
And the way, in my opinion,
from a framework point of view to think about that,
is that the amount of obligations
and the amount of time that a person has
seems to just diminish over time, right?
So the amount of free time they have, right?
So you start your job,
you get a bunch of responsibilities,
something with your partner, spouse, more responsibilities,
kids, probably even more responsibilities,
and soon enough, the time that you have
to educate yourself, to travel,
to experience the world however,
create whatever creative endeavor you're interested in,
slowly but surely disappears.
I think this is something
that young people don't fully realize.
They assume that the world as it is now
and the amount of free time that they have
to travel, to educate themselves, to make new friends,
to do all these things
will somehow maybe diminish by 10%.
It won't diminish by 10%.
It'll diminish by 90%.
And the 10% that you have,
you'll be resting to get back to work and get things done.
§19Transcript · 2:40:26–2:49:32
So what I think young people should do,
and this is why it's very different for each of them,
I can't tell young people,
"Hey, you should study philosophy, travel,
and start your own enterprise
to achieve something worthwhile in the world."
That might be something that's good for me
with my values and my kind of worldview,
but for other people might be something else.
I think the way that they should conceptualize it
is imagine if over the next 10, 12 years,
the amount of choice that you had about what you could do
was cut down by 90%.
What would you, and this is copying
from this kind of Jeff Bezos regret minimization framework.
In that framework, it's like,
what would I regret not doing at 80?
And that's kind of meant to create this long-term view
and make these decisions now
that'll get you to a long-term future
that you can look back on and be proud of your life.
What I think young people should do
is they should say to themselves,
"Look, if I never get the chance to travel
for as long as I live,
assuming that after 25, after 27, after 29, that's the case,
how will I feel about that?
If I never get to start a company after 25,
after I get married, after I have kids,
how will I feel about that?"
And whatever they feel the worst about
is what they should do.
Whatever they feel like when they say to themselves,
"You know, if I don't travel now, I will never travel."
And they feel horrible about that.
They just have an overwhelming fear
and disgust at themselves in that type of state
at 25, 27, 29, that's what they should do.
And they shouldn't listen to anybody else.
Let me put it to you this way.
If you're really smart, you're gonna make it anyway.
There's a lot of people putting a lot of pressure on you
because they're afraid whether you're gonna make it.
If you're really smart, you're gonna make it anyway.
If you're not really smart, you're screwed anyway.
(laughing)
So-
- Either way, just relax with it and use your time well
to do the things you would most regret not doing.
That's really fascinating.
- I wouldn't say relax.
I would say very much cherish the free time,
the discretionary time that you have
from the age of 18 to maybe 25.
Because at 25, everyone's gonna start looking at each other
and asking, "What have I achieved?
My friends have achieved, I haven't achieved."
And then by the time you get to 30,
you're gonna look at each other again and go,
"Well, my friends have a family or a company or a PhD
or a whatever, what do I have?"
And the pressure will just increase.
And it'll increase so much that even if you want to go
and do the fun thing, it will not be fun
because the pressure of comparing yourself
to your friends at 25 or your peers at 30
will be so great that it will no longer be normal
for you to be in a hostel at 30,
kind of like living it up, right?
And this is why I also can't tell you
specifically what it is.
For me, it was getting an education in philosophy
that was rigorous and in-depth.
It was traveling and it was starting an enterprise
that I thought that was worthwhile, that I directed,
that I could make into something great.
That's what it was for me.
For other people, it might be something with a band,
it might be something with painting,
it might be an education.
You, by the way, also should not assume
that your ability to get an education will improve.
All of those responsibilities will take away
your ability to get an education.
So if you value having an education,
if you value being a deeply educated, well-rounded person
with a wide array of knowledge on a wide array of topics,
capitalism will force you to specialize.
That's what it's good at.
It's going to take you, it's going to fashion you
into a very specific tool for most people,
into a very specific set of tasks.
If you want to have an education in something, get it now.
If you want to travel somewhere, travel there now.
If you want to do some kind of creative endeavor
that you doubt whether you'll have time for in the future,
do it now.
You won't have time for it in the future.
You won't have time to read philosophy books all day,
unfortunately.
You won't have time to fly to Italy
and kind of hang out with people.
If you're serious about your life,
you're going to get more responsibilities.
You're going to get more stuff to do.
And so my advice to you is do not piss away
this rare, unique, discretionary time.
And if your friends are, get new friends.
Get smarter friends.
Get people who are using the limited time they have better.
That's my advice.
- So it's just a quickly comment.
It's brilliant.
You know, to reframe high school
and undergraduate college education,
sometimes people want to quickly get it over with.
But one thing I remember thinking,
and it's very true about high school,
is one of the only times in your life
you'll get a chance to truly get a broad education.
You don't often think of it that way,
but it's a chance to really enjoy learning things
that are outside of the specialty
that you'll eventually end up with.
And that's how college education is.
And on a more fun side, I played music.
I did martial arts,
and we offline mentioned played video games.
I find it fascinating and brilliant what you said,
which is the world will not give you a chance
to truly enjoy many of these things
and truly get value from many of those things
once you get older.
I find it exceptionally difficult to enjoy video games now.
- There's so much stuff to do.
There's so much responsibility.
- And at the time when I played Elder Scrolls
and Baldur's Gate and Diablo II,
and at the time I thought maybe that was a waste of time.
But now looking back, I realize,
'cause I always thought, you know,
let me get the career first,
and then I'll have a chance to play video games.
That's the way I was thinking.
You know, it was a waste of time
because I should really progress on the career,
and then I'll have time to play video games.
No, the reality is that was really fulfilling.
Those are some of the happiest travel experiences
of my life is me traveling to those virtual worlds
and spending time in them.
And it was really fulfilling,
and they stayed with me for the rest of my life.
And I get to experience echoes of that
when I play video games these days
for an hour here, an hour there,
like one hour a month or something like that.
But even those experiences, as silly as they are,
they seem like a waste of time at the time,
enjoying them fully, unapologetically.
And in a framework exactly as you said,
would I regret being the kind of person
who've never played those video games?
And I can, for myself, honestly say that yes.
Look, when I'm on my deathbed, I'm glad I-
- Play Baldur's Gate.
- Yeah, I build Baldur's Gate 2
and all those Arena, Daggerfall, Morrowind,
and all the Elder Scroll games.
And yeah, the things that don't necessarily fit
into this kind of storyline
of what a career is supposed to be,
travel and all those experiences that you mentioned.
- I think I'd just like to say one final quick thing on this.
I think this extends to really hard things as well.
It extends to the things you wanna do,
but one of the best pieces of advice one of my mentors
gave me early on in my career around this time
is that it will actually become harder
to start a company as you get older.
Once again, because you have more responsibilities.
You're responsible to your partner for some kind of income
to create a life together.
Once you have kids, you're responsible
for an even greater income to create a life for kids.
And startups do not generate income, right?
They take many, many years before anything happens.
People are getting evicted.
People are eating ramen noodles.
That is a thing that happens, that will happen.
So I'm not saying that you should do the fun things
or the enjoyable things.
I'm saying the things that you would regret not doing,
that you can uniquely do in the time span from 18 to 25.
Which one of which is, if you plan to have a family
and start a family when you're 25,
you should start a company now.
You should not wait until a bunch of people depend on you
for income to eat, to start a company.
The amount of pressure that will be on you at that point
§20Transcript · 2:49:34–2:58:13
will be monumental.
You should start a company when nobody depends on you
and you can sleep on the floor, eating ramen noodles
and still have a great time and show up
with a lot of enthusiasm and be excited.
So I just mean whatever you want to really devote yourself
to and really do, don't put it off.
Don't go to consulting or banking or any other industry
and say, I'm gonna do this for three years
and I'll get experience.
The only way you get experience is by doing something.
You go, you do it, you fail, you do it again and again
and again and again and again.
And then you have experience and then you can do it right.
That's the only way experience happens.
There is no other way short of mentorship.
If you're lucky to get mentorship,
99% of people don't get mentorship.
- And even though we're talking about young people,
I feel like you're speaking to me.
As somebody who spent the last two weeks
sleeping on the floor 'cause there's no mattress
and somebody who is single and somebody who's thinking
about doing a startup, I felt like you were speaking to me
as a fellow young person.
Let me ask you about this whole life of ours
to zoom out on the big philosophical question,
the ridiculous question.
What do you think is the meaning of it all?
Do you think about this kind of stuff
as you're creating all the technology,
as you're thinking about this future?
You ever zoom out and think like, why?
Why are you, Sergey, striving?
Why are we, the human species, striving for the stars?
- So I think it comes down to whether people
wanna live in society.
So if people decide to be part of society,
they have a certain set of conditions
that they decide to take part in.
So I think what this comes down to is a lot of
really involved conversations,
but if we assume people have free will and choice,
we just kind of make that blanket assumption,
then the question starts to become,
well, what choices do we make
and how do we live with those choices?
And I think probably the most fundamental choice
is whether we exist in a society
or we choose to leave society.
And there are people that do this.
There are people that go live in the woods.
There are people that immigrate to other societies
and they make a choice, right?
And as they enter those other societies
or they choose to leave society and go live in the woods,
they adopt a certain set of values, right?
They adopt values that the society prescribes,
they compromise their own values,
they define their own values,
and they create a set of values for themselves, right?
I think at the end of the day,
if you're going to choose to live in society,
in addition to all the minimums of, you know,
not throwing garbage on the floor and, you know,
doing nice things for people that need help
and doing any number of things to just be
a normal human being within society,
you have to ask yourself,
what am I doing as part of society, right?
You can always say, hey, I'm going to leave society,
I'm going to live in the woods.
I did that, right?
I went and I lived in the woods and I gave it a shot,
realized a ton of stuff, huge amount of clarity from that.
But when you decide to live in society,
you take on, first of all, certain minimal agreements,
you mold your values a little bit to that society,
that's another choice that people inherently make.
And then there's a question of,
well, what am I doing here, right?
What am I doing in society, right?
So when people say the meaning of life,
I don't know what the meaning of life is.
- What's the meaning of life in society?
- Right, what's the meaning of life for the choice
that you've made within society, right?
'Cause that's maybe the first fundamental choice you made.
You made a choice and you continue to make a choice
to be part of society and a specific society, right?
So you've made this choice, you're part of a society,
and now you kind of have a life
and you have people around you.
And then the question is, in my opinion,
the question is what is the body of work
that you want to make, right?
I think personally that life is kind of so short
and the ability to get enough resources for yourself
in at least the developed markets where we're lucky to be in
is so relatively abundant that we, you and me,
have the luxury, by your pursuit of a PhD,
you've had this luxury, I've had this luxury
through the work that I've been doing
to pursue something that makes society better.
So this is kind of the question, I would say,
the question is, am I gonna live in society, yes or no?
Yes, okay, most people choose yes.
I understand why to a degree,
I understand why some people choose no.
And then what is the, and I'm gonna be in society,
I'm gonna, if you choose to be in society,
you're just choosing to abide by the rules,
you're choosing to just do the minimum, right?
That's what being part of society means.
People that choose to be part of society
but don't wanna do this, it's very confusing,
they should just leave, they should just go,
look, I don't like this deal, I'm gonna go somewhere else.
I'm gonna live in Tibet, I'm gonna live in the woods,
I'm gonna live wherever where the rules are to my liking.
Right?
You've chosen to be in society.
Next question, kind of final question is,
what is the body of work that I'm gonna be involved in?
Because in looking at that Jeff Bezos
kind of regret minimization framework thing,
I think that's what a lot of it really comes down to,
is you kind of, the framework is at 80 years old,
you look back over your life,
what would you regret not doing?
What would you regret not pursuing?
I think there are a number of things
on a personal level each person has,
but I think, at least for me,
and probably for many of the other people I know,
there's a question of, what is the body of work
that I was involved in?
What did I do?
What happened?
Right, what was I involved in?
And in my opinion, you should have a good answer to that.
- And you mentioned the body of work in relation to
whether it helped make a better world.
And the fundamental question there is,
what does better mean?
So it's our striving to understand what is better.
What kind of world would we love to exist after we're gone?
And I think that's another thing,
almost unanswerable question,
but it's one we can strive towards,
is what is a better world?
- Right, I think that's, once again,
that's a very personal question.
I'm not sure if there's an objective moral truth
that's gonna suddenly give us all an answer.
I think it's actually quite fascinating to me
when people feel they have this objective moral truth,
they're so sure in their opinions,
this is what we do, we should go hurt them,
or help them, or kill them, or rescue them, or whatever.
There's all these kind of very situational specific,
kind of like, this is the right thing to do,
the objective moral truth told me that this is it.
- But maybe there's a definitive truth
that we can arrive towards, sort of a consensus
of what that is within the little local pocket
of society that you're in.
- Yeah, that's the point.
- That's what happens, people just then mislabel it
and they go like, objective moral truth.
This is not our idea.
This is coming up from on high here.
This is the objective moral truth
that I think exists in some metaphysical form somewhere.
- And then you build a building with marble
and it's big and usually what happens?
And then you convince yourself
that that building represents objective truth.
- I think those people actually,
the people who build those buildings
probably understand that there is no metaphysical objective.
They're just like, we're all just coming to consensus.
I'm gonna build the biggest building
and you're like me and that's what we're gonna do, right?
They just look at it that way probably.
I think what ends up happening with all these values
is yeah, people should determine that for themselves.
I agree that there's a second order question here
of what is the best body of work to work on.
Personally, I think that's probably a mix
of what could you realistically achieve?
Is that gonna have an impact on society
that you feel good about?
- Yeah. - Right?
So these are probably the two aspects of this question
and is this gonna have a good impact on society
that you feel good about?
Obviously very subjective, right?
Some people save animals, some people save forests.
We and I are creating this system
§21Transcript · 2:58:16–2:59:50
of economic fairness and transparency.
I feel that I'm in a good position to enable that.
I feel that I have a good chance of succeeding at that.
And I think that the impact will be quite meaningful
for a large number of people.
And so I'm completely happy to look back once I'm 80
and see a body of work that achieved that
and be very proud of that, right?
Because I think that's what I'll be doing
when I'm looking back.
- Well, I agree with you.
The scale of impact as a hybrid smart contracts,
this whole idea that you're working on
has a potential to transform the world for the better
at a scale that I can't even imagine.
So speaking of which, means even more
that you would waste so many hours
of that exciting life with me.
Thank you so much for talking today, Sergey.
This is a really fascinating conversation,
a really fascinating space,
and I can't wait to learn more.
So thank you so much for talking today.
- Thank you for having me.
It's been an absolute pleasure.
- Thanks for listening to this conversation
with Sergey Nazarov.
And thank you to Wine Access, Athletic Greens,
Magic Spoon, Indeed, and BetterHelp.
Check them out in the description to support this podcast.
And now let me leave you with some words from Copernicus.
To know that we know what we know
and to know that we do not know what we do not know,
that is true knowledge.
Thank you for listening and hope to see you next time.
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