Revolution or Evolution? The Philosophy of Blockchain with Charles Hoskinson, Co-Founder of Ethereum and IOHK (Part IV)

Key Highlights

• Hoskinson says using open-source is a prerequisite to get governments and universities to adopt a system
• Blockchain allows the producer and the consumer to find each other, and interact as if Uber or Airbnb existed, but without these middlemen 

Listen to the full podcast version of this interview

Transcript of Part IV

The revolutionary comes from open-source. But increasingly, we’re seeing from the corporate world including JP Morgan, really applying blockchain technology internally within their own systems and it’s privatized. Is that a good direction for the industry?

I think overall, software is moving in the open-source direction. The last grand holdout was Microsoft. They had a CEO who said open source software is cancer. That was Steve Ballmer — and Bill Gates — they both thought that. Now they have Satya Nadella, and they’re using Linux, they have opensource.net. So the fact that a company that can be that hostile to that ethos is now moving so far in the other direction that they’re taking some of their core infrastructure and giving it to Apple…

And Azure is actually working a lot with…

Open-source software, yeah. And they have a blockchain as a service project. So as a consequence the trend is moving towards open-source. Now with that said, there are certainly plenty of people in our space who are patenting things. Hashgraph is patenting things, Algorand is, DML, Digital Asset Holding, excuse me, probably has some patents in their portfolio and a lot of cases they do this to get acquired or to work with larger companies because they can get a license deal. 

But in our view, that violates the fundamental ethos of decentralization and being useful to everybody. So, we as a company don’t pursue patents, don’t pursue intellectual property. All software we write is under MIT license, and there are many other people in the space that also follow that ethos. In fact, the majority of the people are open-source. And at the end of the day, when we talk with governments and universities, usually this is a prerequisite for adopting a system. They don’t want to get locked into a particular standard, and be forced forever to license from one particular company. They’d much rather have an open-source foundation and know that if regimes change, facts and circumstances change, they have the freedom to fork and go in a different direction without my consent or some other person’s consent. 

The regimes not only include industries, but it also includes nation-states, it also includes complete economic ecosystems in which we currently exist. Do you feel that if we do get to a point of mass adoption in which you’re working towards, that that’s going to be upended, that society, the fabric, and the economy that exists today is really going to shift dramatically because of blockchain?

I think the Internet is what is changing society. We think of it as an old technology, but we’re just now running an experimentation. If you look at human society, it’s many many thousands of years, right? The Internet has only been around for a little bit. 

This concept of having instantaneous access to information, it fundamentally changes the structure of society. We used to build cities around libraries and palaces because that was where all the knowledge was and where all the smart people were. So now, all of the sudden, we now have a situation where somebody in the Namibian Desert can be just as well-informed as someone in Cambridge, Massachusetts at Harvard. There’s never been a time in human history where we’ve had that. 

What is the social consequence for all this? People have an overwhelming amount of information and now they see counter-narratives to what the governments are saying, the religions are saying, the media is saying. And in some cases you have the fake news phenomenon, or conspiracy theories or siloing. Another case is you have people saying ‘wait a minute, these systems we’ve inherited from our fathers, from our grandfathers and their fathers, maybe aren’t well-suited for society today.” 

Back in the 19th and 20th century, there’s a very famous picture when one of the monarchs in England died — all these kings of Europe showed up for his funeral, because he was related to most of the European royal families. And within just ten years of that picture being taken, almost all those kings had been deposed or de-powered as a consequence of World War I. So you have this social system of kings ruling Europe for a very long time, and then suddenly an inflection point is reached where almost all of them are removed and new governments are put in. 

And I think the Internet is causing this globally speaking. It’s making us think less about our particular country and more about the world. It’s making us think more about collective global problems like global warming or systemic poverty or equal treatment of people and things that are happening in Nuba Mountains or Saudi wives are suddenly problems in New York or suddenly are problems in London, and that’s the first time in human history. 

Knowledge though is one thing, access to a greater world in understanding it is one thing, being able to participate in it and do something about it is completely different, and that’s where really blockchain changes the equation for a lot of people.

Right, because it gives you an economic voice. I was in Mongolia — I was in the outskirts of Mongolia — and I saw this camel herder come by. And we talked to him, and he has bitcoin. It just blew my mind. When I first entered the space, I signed up for a meetup group. There were two people who registered, myself and another person. The other didn’t show up, so I had a great conversation with myself about my love of bitcoin. And then just eight years later, I’m in Mongolia and a camel herder has bitcoin. So it really tells you that things change pretty quickly. 

And what does that mean? It means he has an economic voice. It’s that person can now for the first time ever buy things and participate in a global economy and when that gets extended to voting, it gets extended to property rights, it gets extended to securitization in financial markets, that means that everybody in the world is now on the same playing field and this smallest person now has the same access that Bill Gates has. 

So then what happens to central banks, what happens to banks?

They have to — instead of being middlemen of necessity, they have to become middlemen of value. There’s all these entities in society that provides a service, and we don’t really like them, but they’re there and we need them to get something done. It’s like the eBays, the Airbnbs, the Ubers. They’re there. They provide a lot of utility. They bring two sides of a market together, a producer and a consumer. But then what happens is that they get a monopoly, and as a consequence of that, they start to de-platform people, or screwing people on fees. They really sculpt a market in a way that really becomes unfair. 

So, what our technology is doing is getting rid of these middle men of necessity. It’s allowing the producer and the consumer now to find each other and interact with each other as if Uber existed or Airbnb existed, or the other middleman existed, but instead of having that middleman taking value away from them, we no longer need them. 

It’s almost an interesting analogy to blockchain platforms themselves that is there a winning platform or can many platforms exist because they serve different functions in the same way, is there a winning economic system or can there be multiple economic systems that work in concert with each other?

There’s never been a time in human history where we’ve ever universally agreed on everything. We’ve never had one god, or one language, or one government. People are diverse because facts and circumstances and resources and situations are diverse. Weather is diverse. I live in Colorado and we are going through a polar vortex right now and it’s pretty brutal. But it’s nice and warm out here. So given that the world is a very diverse place, reflections of that diversity will manifest themselves in political and economic systems. So we are going to have many blockchains and many different ways of handling money, some more decentralized some more centralized. 

The point is: consumer choice and the freedom of movement is increasing. Instead of being locked into a system and forced to live in that system and endure the consequences of that system — like if you’re in Venezuela — you now have a way of insulating yourself a bit or voting with your digital fee and moving into a different system. So, in the not too distant future — instead of just having one currency, and say, if I live in America, I’m dollars, if I live in Europe, I’m euros — you can now actually have portfolio-based wealth with some gold, some silver, some stocks, some different currencies, and you can spend any one of them at any point of sale. 

So, when you go to Starbucks, you’ll be able to just tap your phone, you pay them in gold. They got paid in dollars. They have no idea that you’ve paid them in gold, because that infrastructure is all there and nobody even knows that composition. You could be from Ukraine. You could be from South Korea. It doesn’t really matter. So, what does it mean? It means that the impact that central banks have upon your lifestyle and your quality of life diminishes, and if they’re going to be relevant, then they actually have to become middlemen of value. They add something to your life, they add something to the transaction, they add something to the economy. And if not, they become obsolete like the horse and buggy makers and the horse whip makers and the others that got pushed out by the cars, and society moves on and changes. 

Keep Watching

Part I: Charles Hoskinson, Co-Founder of Ethereum / IOHK, on Why Cardano is a Better Platform
Part II: Launching a Blockchain-Powered Coffee Supply Chain Project in Africa with Cardano
Part III: Of All the Programming Languages in the World, Why Haskell?
Part IV: Revolution or Evolution? The Philosophy of Blockchain with Charles Hoskinson, Co-Founder of Ethereum and IOHK
Part V: From Africa to Asia, What does Global Growth Look Like for Cardano?
Full Interview: In Conversation with Charles Hoskinson