Seven Trends in Blockchain Computing (Spring 2019) | Summary and Q&A

TL;DR

The interview discusses the potential of blockchain technology, emphasizing the importance of open protocols and the role of stablecoins. It also explores decentralized finance, incentivized infrastructures, and the potential for vertically integrated applications. Education is highlighted as a key barrier to adoption, and the benefits of blockchain in various industries are discussed.

Key Insights

• 🔡 Stablecoins, particularly crypto collateralized stablecoins, are a critical part of the cryptocurrency ecosystem, enabling lower volatility for transactions and expanding use cases.
• 💨 Vertically integrated applications that own the full tech stack, including user interfaces, can drive faster adoption and iterate more quickly.
• 🐕‍🦺 Markets for any type of asset or service can be built on blockchains, expanding opportunities for creators and removing intermediaries.
• 👾 The interoperability of avatars, items, and levels in virtual worlds and games has the potential to revolutionize the gaming industry.
• 🤩 Education is a key barrier to adoption, and the misunderstanding of cryptocurrencies and blockchain technology by the media contributes to this challenge.

Transcript

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Questions & Answers

Q: What got Olaf excited about Bitcoin in the early days?

Olaf was fascinated by the concept of native internet money that isn't controlled by any central party, which allowed for digital scarcity and the potential for a global financial system outside political control.

Q: How has the possibility space for cryptocurrencies expanded since the early days of Bitcoin?

With the launch of Ethereum, the potential for cryptocurrencies expanded significantly. The introduction of smart contracts and the ability to build decentralized applications opened up new use cases beyond digital money.

Q: What are the advantages of WebAssembly (Wasm) in blockchain development?

Wasm provides a more familiar development experience by allowing developers to use their favorite programming languages and leverage existing tools. This increased abstraction layer makes it easier to build applications on blockchain platforms.

Q: How does proof-of-stake differ from proof-of-work systems in terms of governance?

Proof-of-stake systems, such as Tezos and Cosmos, have a better alignment of interests between token holders and block producers, as they are often the same people. This allows for more secure on-chain governance, which can lead to faster upgrades and better funding of core protocol development.

Summary

In this video, Chris Dixon and Olaf Carlson-Wee discuss the potential and future of cryptocurrency, particularly in regards to Ethereum and the development of decentralized applications (dApps). They touch on topics such as the significance of Bitcoin and its impact on digital scarcity, the limitations of Bitcoin for building complex applications, the introduction of Ethereum and its advancement in developer experience, and the importance of open-source software and composability in blockchain technology. They also discuss the potential of proof of stake as a governance mechanism, the possibilities of autonomous software on the blockchain, and the need for stable coins to mitigate volatility and enable new types of applications.

Questions & Answers

Q: How did Olaf initially get interested in Bitcoin and what fascinated him about it?

Olaf got interested in Bitcoin in 2011 while in college. He was fascinated by the idea of a native internet money that wasn't controlled by any central party. He saw the potential for digital scarcity and a global monetary system that was outside of political control.

Q: How has the possibility space expanded since the early days of Bitcoin?

The possibility space has expanded dramatically with the introduction of Ethereum. While Bitcoin was primarily focused on digital money, Ethereum introduced a more expressive programming language that allowed for the creation of other tokens and assets. This opened up new use cases and made it easier to build applications on the blockchain.

Q: How does the development of Ethereum and its programming language compare to the development of Bitcoin?

Ethereum's programming language, Solidity, provided a more expressive environment for developers compared to Bitcoin's limited scripting language. This allowed for the creation of more complex applications like crowdfunding. Developing similar functionality in Bitcoin was more difficult and required a significant amount of time and effort.

Q: What makes the introduction of webassembly (wasm) a big deal for Ethereum?

Webassembly (wasm) is a runtime environment that is now supported by all browsers. With the adoption of wasm by blockchain platforms, developers can use existing programming languages and tools to build applications instead of having to learn a new language like Solidity. This opens up new possibilities and accelerates the development process.

Q: How does Chris compare Bitcoin and Ethereum as computing platforms?

Chris sees Bitcoin as a computing platform with a limited range of applications, primarily focused on moving bitcoins around. Ethereum, on the other hand, expands the range of applications that can be built using its more expressive programming language. Ethereum allows for the development of smart contracts and decentralized applications.

Q: What are some advantages of proof of stake as a governance mechanism?

With proof of stake, token holders are also the validators, which creates a better alignment of interests between participants. In the event of an attack, proof of stake systems can mitigate the damage more easily by hard forking the chain and removing the attacker's influence. Additionally, proof of stake requires less energy consumption compared to proof of work.

Q: How can governance be achieved in a decentralized system without compromising security?

The token holders in a proof of stake system already control the consensus and the blockchain. By designing a coordinated upgrade process controlled by the same people, it becomes a secure way to upgrade the protocol. This allows for improvements and advancements in the system while maintaining security.

Q: What are some challenges of proof of stake governance and how can they be addressed?

Some skeptics worry about a potential plutocracy where large token holders control the governance or the system being vulnerable to bribery attacks. However, existing proof of stake systems have already proven to be highly resistant to attacks, with bug bounty programs ensuring the security of the network. Economic incentives and smart contract design can also address these concerns.

Q: How does the decentralized architecture of blockchains enable innovation and new types of applications?

The decentralized architecture of blockchains allows for permissionless building and composability. Developers can build on top of existing protocols and create new applications without relying on a centralized authority. This creates a fertile ground for innovation, similar to how open-source software and composability have driven innovation in the traditional tech industry.

Q: What are the challenges and opportunities for the future of decentralized applications (dApps)?

The challenges include the need for developer tools, security, maturity of the ecosystem, and creating a user-friendly experience. However, the opportunities are vast, with applications ranging from decentralized finance (DeFi) and prediction markets to entirely new use cases that may be unimaginable today. The ability to create autonomous software and composable systems opens up exciting possibilities for the future.

Takeaways

The development of cryptocurrency and blockchain technology has witnessed significant advancements since the early days of Bitcoin. The introduction of Ethereum and its more expressive programming language has expanded the possibility space for building complex applications. With the adoption of webassembly (wasm), developers can use their favorite programming languages to build on blockchain platforms. Proof of stake offers advantages in governance by aligning the interests of token holders and mitigating attacks more easily. The decentralized architecture of blockchains enables innovation and composability, leading to the creation of new types of decentralized applications (dApps). While there are challenges to overcome, the future promises exciting advancements such as autonomous software, composable systems, and new use cases that may be unimaginable today.

Summary & Key Takeaways

• Olaf explains his early fascination with Bitcoin and the concept of digital scarcity.

• He highlights the expansion of possibilities in the cryptocurrency space with the launch of Ethereum.

• The conversation explores the importance of developer abstractions and the potential of WebAssembly (Wasm) in enabling easier development on blockchain platforms.

• The interview discusses the importance of governance mechanisms and the potential for secure on-chain governance in proof-of-stake systems.