Ryan Solomon: Before we break for launch, this is definitely an unmissable session and a bucket list interview bringing two of the biggest visionaries in the blockchain space to join me up on stage for an exclusive conversation. Please give a gigantic welcome to Cardano founder Charles Hoskinson and Hedera and Hashgraph co-founder Dr. Leemon Baird.

Charles Hoskinson: Hi, everybody. 

Dr. Leemon Baird: Hmm, are you turned on? We’re turned on. 

Hoskinson: All right, we’re turned on. 

Solomon: Well, I know we have about 25 minutes here, so we’re gonna try to extract out as much as possible. I want to start with a question for both of you gentlemen up here; your thoughts on the current state of the blockchain industry, key milestones, trends, opportunities, and challenges shaping adoption in the US, and beyond. I know, Charles,.., bicameral commission, token, or stablecoin legislation and things like that.  So Charles, I’d love if you could kick us off here with key milestones. What are we watching right now? 

Hoskinson: Well, actually. It’s never been a better time to be in the industry. So, there’s kind of like three things happening all at once and very concisely, and briefly: First, on the regulatory side, we actually have the US government being a good party and trying to get things along. So there’s a bicameral working group with the Senate and Congress. There’s a Crypto Czar. There’s an all-of-government approach. We will see legislation very quickly for stablecoins and for asset classification. So that’s the first thing that’s awesome because it merges the TradFi and Web3 worlds together and we can actually get them to be one family.

Second, the technology has been remarkable. You have a lot of wonderful projects like Hashgraph, Cardano, Algorand and others that have evolved to a point where they’re actually able to surface what the vision has been and that takes quite a bit of time to kind of work your way through. But we’re there.

And third, we now have bridges for retail adoption that are going to work their way into Microsoft and Google and Apple and these other devices. So when they flip a switch, suddenly it’s in Android and it’s in iOS and it’s in Windows. You have billions of consumers that are going to be allowed to come into the industry. So, it’s a good time to be in crypto.

Solomon: Same question for you Leemon; key milestones, trends, opportunities, challenges shaping blockchain in the US and beyond right now. 

Baird: Oh yeah. You said it’s a good time. It is a good time. I think that we have all sorts of opportunities this year… the things you were talking about. And it is going to be a good year. I am very excited about what we’re going to see this year. 

Solomon: Awesome. Well, Leemon, I want you to maybe give us an overview and an intro into DeRec — the Decentralized Recovery Alliance for those of you guys out there listening that may not have heard that term because I’m sure many of you will — the Decentralized Recovery Alliance and the origins of that Alliance.

Baird: So I talked earlier about the problem that people are used to having a safety net. And if we want our industry to go reach the other 7 billion people, we’ve got to provide a safety net. We have to have it where you can’t just forget something or lose a piece of paper and lose everything in your life. Especially as we go to things like identity where it really is your whole life that is controlled by it. 

So we have to have a safety net. It’s clear how to do it. You back things up by breaking [those things] into pieces, and you send those pieces of your secret to various helpers who are going to help you. However, we had this danger that we end up with not just one protocol for that, but a thousand protocols for that and they’re all not intercompatible. And so, if I need a helper and you’re running a helper service, can I talk to you? Or are we all going to be speaking different languages? 

The real danger here is not that we wouldn’t end up with decentralized recovery. Everyone knows there needs to be decentralized recovery. There can be a million different protocols for it, and it’s easy to make a good protocol. The real danger is that we end up with more than one protocol. That’s the real danger. Not that we end up with a bad protocol, but that we end up with multiple protocols. 

And so that’s why it was so important that the Decentralized Recovery Alliance — the DeRec Alliance — is not a Hedera thing. It’s a multi-chain thing and Cardano is a founding member. Hedera is a founding member. We have Ripple. We have Algorand. We have a bunch of founding members. This is what we as an industry need — is to be working together as an industry.

Can you imagine what the World Wide Web would be if every website had a different protocol and you had to have the right browser to even talk to that website. That would be a nightmare. And we as an industry need to come together to have a single protocol for this and this is the tip of the iceberg. We as an industry — [Charles and I] were just talking about things [backstage] — we, as an industry need to be cooperating on lots of different things. That is good for Hedera, good for Cardano and good for our industry. That’s where we’re headed. 

Solomon: Charles, I would love if you could give us a little bit of a backdrop on what sparked your interest in joining an open standard such as the DeRec Alliance and helping found it.

Hoskinson: So, many years ago, I was in Israel at Eurocrypt and I ran into Phil Zimmerman. And I said “Phil, how’s PGP coming along? He’s, like, well, we’re working on it. And they’ve been working on since 1991. So, this idea of connecting identity and authentication to a public key system,… it’s an awesome idea because you have a password for your internet, you have super secure commerce and comms channels. But, what we’ve learned is that consumers are horrifically bad at dealing with public keys. 

So, we’re in the market for — and very interested in — standards  that we as an industry can all agree about that get the business of managing public keys away from everyday consumers like Grandma and find alternative approaches for recovery and for issuance and spending. Or else it’s never going to be a consumer product. Because we have 30 years of data from the PGP world — the web-of-trust world to showcase that.

So this is good and I don’t particularly care if it’s standard A or B as Leemon  said. The worst thing that can happen is fragmentation. So you eventually just need to pick a winner consolidate to it, and then brilliant minds can work together and add lots of great capabilities. I watched Manu Sporney do this with Chris Allen and the others at the W3C (World Wide Web Consortium) and DIDs (decentralized IDs) and that was a big step forward. We watched this with the FIDO Alliance and we’ve seen a lot of these great projects in the Hyperledger world do this.  

So, we said “this is a great movement, there’s great actors, Ripple is here, Algorand is here, Hedera is here. They have the technical acumen and the network effect — hundreds of billions of dollars of collective value — and that’s good enough to get started.” And then we can just go and push the hell out of it and get it done. And it’s good for all the consumers.

Baird: I love those two examples: DIDs for identity or passkeys for authentication. Those are great. And the best thing about them is they are standards. That’s really what’s great about them.

Hoskinson: Yeah. And and it’s the only thing Microsoft and Google and Apple and these other guys can agree on, right?

Baird: Yes.

Hoskinson: Standards.

Solomon: Charles, if you could kick us off here again. Open standards initiatives — like cohesive [standards where] everybody’s working together — kind of as the missing link to mass adoption. [What] are some of your thoughts around what gets us to that adoption point that [the blockchain industry] has been talking about obviously for years in this space. I know Leemon uses the term “safety net” a lot. But, I would love just your take on some of the missing cogs in the wheel that are going to get us to that place.

Hoskinson: Well, there’s these gatekeepers to mass adoption and gatekeepers to the consumerization of technology. We live in a world where five companies control the lived experience of 3 billion people. So, when you live in that world, you have to ask. “Well, how do they procure? How do they think? What’s the rate at which they change things?” And that gives you a good sense of where the market is going to evolve and how you work your way around it. So, standards are remarkably important from that lens.

A great example is post-quantum crypto. A lot of people saw Microsoft announce that they have topoconductors and say “yeah, we have quantum computers now.” Well, I guess we all care about post-quantum signatures. So, which one, do you pick? Well, the correct answer is whatever NIST tells you to. Because, even if you pick something outside of that, all the hardware manufacturers are going to build ASICS into the AMD chips and the Nvidia chips and things to accelerate the NIST standards.

So, they’ll be 50 times faster than the software enabled things. So, you have to look at the standards bodies, you have to look at the procurement systems and the ebbs and flows of that. And the good news is, we’re now at a position where we as an industry have a lot of influence over this and we can partner with these bodies. We work with Microsoft. We work with others. We’re a member of  the W3C. We worked on DIDs. So, you just be there work, with the industry, work with partners outside of the industry and over time, you can get those set. Once they are, they automatically roll their way into procurement. 

You see them supported in the browser. You see them supported in the Android devices and the iOS devices, and they just become part of the day-to-day experience, and the consumer gets it for free.

Solomon: Leemon, I would love you’re kind of take too as far as the missing link for mass adoption. But even under the framework of future proofing; things like DeRec as far as making sure it’s post-quantum and making sure that [the DeRec Alliance is] using the most secure levels of cryptography that you could possibly use, but also publicly available cryptography. Any of your thoughts down that path would be great.

Baird: Absolutely. So, there’s two separate questions. But the one about post-quantum; DeRec is post quantum. The design is to use ML-KEM (Module-Lattice-Based Key-Encapsulation Mechanism) as the initial connection, and then use AES 256 GCM (Galois/Counter Mode) for everything else, and so it doesn’t matter what those are. What’s important is that it’s post-quantum, which is important. 

But the more important thing is, the real thing is, how do you get mass adoption? You do it by making the user interface very easy and ideally, even invisible. So, we have people at the DeRec Alliance that are saying, we’re going to work with banks and credit unions and we’re just going to set it up so that when you create an account, your ordinary app that’s talking to the bank that has your banking bank balance — your dollars in your bank balance — also has your crypto balance and your tokens. It just looks like it’s all one thing. And how about DeRec?  [The bank will] set you up with DeRec automatically, invisibly, without you even knowing about it with three helpers.

Now, if you’re an expert, you can go into the menu and you can add more helpers. You can add your friends and families. You could add servers and services that charge you for it. If you’re an expert, you can get further security, and you can even remove those original three after you’ve added the others.  If you’re an expert, we give you the power to do all that. But for the other 7.9 billion people, it’s invisible, it’s automatic and you don’t even think about it until you lose your keys. And then you learn how you do have a safety net that you didn’t even know was there, but you assumed was there.

And so I think across the the board, the most important thing here — after having one standard, not a million of them — is to make the user experience super easy. And the best experience is the one where you don’t even know you’re experiencing it. That’s the key.

Solomon: 100 percent. I want to ask Charles: Open standards such as this and just in general thoughts on greater collaboration. I think that we’ve seen that you’re one of the best Twitter accounts. I’ve followed your Twitter account… 

Hoskinson: …It depends on who you ask…. (laughter)

Solomon: Over the past handful of months, especially. it’s like just public outreach to try to get into conversations and say “Hey, you know, let’s work together to grow this industry and really try to make some moves.”

Hoskinson: Well, I mean there needs to be standards on formal verification and semantical correctness of implementations because we have too many hacks with smart contracts as we’ve seen recently as some people have had issues. That’s a bug bear of mine and it’s something we’ve pushed very aggressively with. And I think cross-chain standards on that make sense.

Cross-chain languages as well. It’d be very nice to see if we could have a canonical set of programming languages that work for smart contracts on multiple things. And there’s been some great progress with that. There needs to be some standards on the virtual machine infrastructure that we use. Like RISC-V is really making big in roads, especially in Bitcoin space. But it’s been used elsewhere as has Web Assembly. 

Standards on decentralization is something I care more about than anything else. Like the Edinburgh Decentralization Index is a good example of that where we have eight different parameters upon which you can look from the token distribution to the consensus layer and everything in between about the level of decentralization or lack thereof of a system. Because everybody uses that word; decentralized, decentralized, decentralized. What the hell does that mean?  So, anything where there’s an ambiguous definition you probably need a standard to be able to handle that for regulation and procurement purposes. Now that the U.S government’s interested, it will get done.

We as an industry need to come together, set the adversarial stuff aside because it can either get done the right way, or get done in a horrifically bad way, as some of us have seen throughout the years. And that’s not so good. Standards also on how we go about proving things. You know, we, we have one of the largest academic groups in the world, and have 168 scientists that work with us from Stanford to Tokyo Tech, and we’ve written 240 papers. In particular for industry-wide problems, like, how do we mitigate quantum adversaries? It’s not just post-quantum signature schemes. You need to model a quantum adversary, and what’s the standard model almost like GUC (generalized universal composability) or something that could be used there. That’s something that we have to work on as an industry and get people together.

And what’s nice is when you have founders who also have a deep technical sophistication. It’s quite easy to have those conversations. Like we just talked to Aptos the other day and we’re right now proving out the liveness and safety properties of Jolteon which is one of their protocols that they have. It’s kind of homework that they never bothered to do.

But, you know, we do it and it’s been great to collaborate with them because we get a sneak peek at kind of their next generation stuff. But then, we can start talking around [about] how do you prove safety and liveness properties of protocols in general and and that helps with consumer protection, interoperability, government procurement, amongst other things. Especially. when we talk about higher software readiness levels or assurance levels that come in there. So it’s a very fertile environment and really, you just have to set ego aside. You say “Look, we work a lot better together than we work apart. And, we as an industry have to work together for the betterment of the consumers, and especially in building secure systems for that.”

Baird: I agree. We work better together than apart. That is really true. And provable security; I think it’s going to become more and more important. I really see that as the future of software, not just our industry. We started with math proofs that were checked in Coq of the aBFT (asynchronous Byzantine Fault Tolerance) properties of our thing. I think that we as an industry — as a software industry, not just Web3 — have to be doing that more and more. I think this is really important. Also, we as an industry need to have best practices for user interface type things. All of these things we need to be doing as an industry. I strongly agree.

Hoskinson: Yeah, proof carrying code and also inter-ledger interoperability. Like, how do you take a transaction from Hedera to Cardano or Cardano to Algorand and do it and be able to prove that the things that are being said in that are accurate without having the underlying blockchain infrastructure…. there’s a huge area of standardization that needs to be done there because we could all do our own recursive start. But we probably should focus around a collection of these types of standards for proof carrying code and for recursive structures, because that’s very important for interoperability between the ledgers; when you want to move assets and information there. It doesn’t make any sense for a winner take all with an oracle or something like that. That should be an open standard for all the people.

Baird: Absolutely.

Solomon I’m curious, and I know Leemon, you briefly touched on this; kind of a question for both of you gentlemen up here.  As far as abstracting away complexities for user experience… in particular for something like DeRec where it just works. Where it’s just pinging your helpers and your helpers need to kind of verify. In the framework of DeRec, if you could touch on user experience. But then, just in a broader sense, where do you feel like we get to as far as user experience and blockchain? Is blockchain just going to be operating under the hood in our daily lives? Or are we going to be like “I’m going to log into my wallet and then, I’m going to do this, and then I’m going to do that?” Where do you think we’re kind of at in that journey?

Baird: So, where we’re headed, is what I was about to answer and where we’re at, is we’re just at the very beginning. We have so much work to do. So, for the users, it should be both invisible and when it needs to be visible, you want to simplify it as much as possible, but no more. So, there are times when you want to see what you have. I want to see my tokens. I want to go to markets and know that I’m in a market. We need to do that. But we also want to make it invisible as much as possible. I think things like identity are going to become part of this and everything you do online will be controlled by your identity. That also has to be invisible, and it has to be very, very easy for me to make sure I don’t accidentally show you more than I should.

We have all these cool zero knowledge proof things that I can show you just what I need to. But that doesn’t do me any good if the user interface makes it makes it easy for me to push one button and tell you my whole life’s history, I need to make it very clear. We have to have warnings that are intelligent. If I’m about to accidentally send you my life savings by pushing one button, maybe it should tell me, don’t do that. Or if I’m going to accidentally upgrade code in my smart contract because I thought I was signing something else, maybe it should warn you: “Do you know how dangerous what you’re about to do is? Are you really, really sure you want to push the yes button?”  These are things that we need to do as an industry to be making these safer for people and to make it the user interface be better for people.

And this is how we go. This is how we make the whole world, not just the Web3 part of it. You were saying, also, “Do we have to have a wallet?” In some cases, you should have a wallet. I launch my wallet. But in other cases, it’s built into my banking app. It’s built into my game. And maybe I’m buying and selling assets in my game and don’t even know there’s an NFT (non-fungible token) involved underneath it. I just know I play the game and I earn some things and I can now make money by selling them to someone else.

And I don’t know the infrastructure. The plumbing should be invisible wherever the plumbing can be invisible. That’s our goal.

Solomon: Same question for you, Charles. I’m just curious on your take on kind of where we’re at right now with user experience. DeRec is interesting because, essentially. streamlined, decentralized recovery of your key… bitcoin’s been around since 2009. There haven’t been any crazy inventions that have come out that have really solved the industry problem. But where do you think we’re heading towards user experience?

Hoskinson: Well, you have to always moderate user experience in terms of your philosophical invariance. So, these are things in the system that you build into the design of the system, which you can never compromise. Otherwise, you can always get a better user experience by compromising some property that you’d probably like to have. And I’d say there are two that are extremely important from Satoshi’s vision and we should never forget them.

One is what’s called inclusive accountability. And this is basically your ability as a user with your device to prove what you’re seeing is true. So, when I send you a Bitcoin, and if you have a full node, you can always know that it’s never been double spent. You can always know that that Bitcoin actually exists and it’s real. And you don’t have to trust a third party. You can trust it from your own node and your own node and your own experience. It gets harder actually over time because nodes get very heavy. Like, Solana is a great example: 300 terabytes to chain.

So, zero knowledge cryptography helps to preserve and protect inclusive accountability. And then, the other is censorship resistance. Uh, you know, we signed up for these systems so that we’re in charge of these systems. We don’t want a situation where, because you’re inconvenient to some power structure like Social Credit in China or something like, that you wake up and then suddenly your money’s locked and you can’t spend it. And there are some systems like Circle and others that violate those invariants with freeze and seize. But, in general, you’d like to have systems at the protocol level that enforce those two things.

The challenge is, how do you build a great user experience and also something that has lots of curation and other things built into that, but also preserves those invariants philosophically. It’s kind of, like consensus protocol design; you can always make it faster by just running it on Amazon. How do you make it faster but still have some decentralization and a dynamic quorum and these types of things and not violate some liveness properties and other things like that, which is, which is challenging.

So, I care a lot about these things which is why we invest very heavily in first principles thinking. And I think there is a path there.

The other thing in terms of wallets is that your cell phone is your wallet. Every cell phone has trusted hardware built into it. So, Samsung has Knox and Google has Titan and Apple has something. So, as those open up and they become more programmable, especially these next generation trusted hardware enclaves, it’s basically having a ledger built into your phone. Or Trezor built into your phone. So, that’s going to open up an entire design space of not only great wallet recovery experiences, but also something called quantum money. And so that basically means that you can spend transactions without having a blockchain or without being online. Just through a proof of secure <unintelligble> and proof uniqueness with key architecture.

So, I’m very excited to see where trusted execution goes, especially since we’re out of the SGX (Intel’s Software Guard Extensions) days and those were bad. Now, we have AMD SEV (Secure Encrypted Virtualization) and these next generation things, and they’re being pushed very aggressively. And that’s going to massively improve the consumer experience.

But then to Leemon’s point, you need a protocol. So, I think what DeRec has done is design something that’s quite sanguine and it allows the federation of all those concepts together and preserve inclusive accountability and preserve censorship resistance on top of it. So it’s quite an exciting development. 

Baird: I love what you said about how the phones already can store things securely. They already have the hardware and the Apple phone already has something that Apple calls a wallet. But, I can’t put crypto in my Apple wallet. Why can’t I? Why can’t I put NFTs in my Apple wallet. And why can’t it store them in that secure hardware? And why can’t it have DeRec built in so they don’t have to trust Apple.

I sort of do trust Apple. They’re better than some people. But, I would rather not have to trust them. That’s the whole point. I don’t want to have to trust them to keep my secrets secret. Or to store my passwords for me. Everything should be under my own control. And that’s the interface we need to get built into the phones themselves. I agree with you.

Hoskinson: And we’ll get there.

Baird: We’ll get there. 

Hoskinson: Regulatory reasons were one of the biggest barriers but those are coming down this year. So, once those guys get in, they can’t put the genie back in the bottle.

Baird: Exactly. And actually, we’ve talked to regulators who are happy about the idea of self-control over your tokens as opposed to the bank holding your tokens. They actually like that idea.

Hoskinson: It solves a lot of problems.

Baird: It solves a lot of problems. Yep, I agree.

Solomon: I’ve got basically one big picture question left for both you. Gentlemen, we’ve got three minutes left. I know we’re gonna probably go over a minute or two here. But I know as far as zero knowledge is concerned and AI is concerned, we’re at a really interesting time in humanity where we have a lot of different technologies seemingly converging at once. I would love both of your gentlemens’ take, and I will start with Charles here. Kind of forward-looking statements. What excites you most about the future? What is the ultimate impact of distributed ledger? How do initiatives like DeRec contribute? Kind of just the big picture future forward-looking statements type aspects. Charles?

Hoskinson: I live in a crazy world because I’ve got six companies and I play in a lot of different spaces, including synthetic biology. But this decade, we’re going to see the rise of quantum computers, the resurrection of the wooly mammoth,  we see blockchain reaching billions of people. Probably artificial general intelligence and fusion reactors are doing pretty good, too. I mean, go figure. It’s a strange world man. The 20s have been very productive from technology. But where it gets interesting is not in the individual innovations, but rather the emergence of these innovations.

So, what does the rise of AI do for information security or software development? What does the rise of synthetic biology do for other adjacent Industries, for example? And so, what’s cool is blockchain has always had a special role as it’s the regulating function of exponential technologies. It’s something that can co-evolve and grow, and it helps you sort out things like, could I build a decentralized large language model where all of the servers are decentralized instead of being owned by Microsoft or by OpenAI or Black Rock? Or could I create an IP management system for synthetic biology where the intellectual property of the de-extincted species belongs to the commons in a blockchain as opposed to a single company?

So that’s what gets me most excited is the emergent properties of exponential technologies. We focus mostly in that space these days and it’s extraordinary to see what’s been happening.

Baird: Two Trends. In addition to all the things you’re talking about and space advancing and humanoid robots and things we can’t even imagine — Crispr and other things doing cool things and longevity — two big trends: One is giving people more power over their own things, their own life. You are your own bank. You are your own identity manager. You are your own everything. That’s one of the big trends is to be able to give us more control of our own things and to disintermediate, which just allows more things to flourish. I no longer have to worry about a middleman helping me for many things. I can directly transact. 

And the second thing is, in addition to us being able to control our own life, we need to be able to have more and more safety nets and things, giving us the power to actually do it in a way that works well. And so I get control of my own identity. But I also have zero knowledge proofs that let me only show you the pieces that I want to show you rather than show you my whole passport. I have passkeys letting me be able to log into websites without having to memorize passwords that could be lost, But I also have DeRec that’s backing them up for me and the identity — DeRec can back that up for me.

I think that we have the more and more I am my own bank, but I also have control of my own bank. And we work out [questions] like “How does that work with AML/KYC (anti-money laundering/know your customer) safety things?” We can make society be safe at the same time we’re making me be safe. And increasing both of them together.

So, I think more and more, what we are seeing is that in this new world of a million different things out there, the trend — if we do it right, we have to do it right, the people in this room are making it right — is that we have to have more and more control of everything in your own life and not having to depend on some trusted third party. And more and more safety around that control.

Solomon: Leemon, where can we go to learn a little bit more about DeRec. 

Baird: For DeRec, go to DeRecAlliance.org. And the booth is right over there. There’s a booth right outside that door.

Solomon: Wow. Everybody, let’s give a huge round of applause to Charles Hoskinson and Dr. Leemon Baird.