Lex Fridman Podcast - #181 - Sergey Nazarov: Chainlink, Smart Contracts, and Oracle Networks

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 Sergey Nazarov.

Is that Jozsik 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,

because 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.

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.

So don’t you think there’ll be like a versioning system?

Like there’ll be, this is a soft fork

versus hard fork question.

Whether Sergei version 2.0 would be different

from Sergei version 1.0, there’ll be an upgrade.

So that’s a mortality.

Sergei 1.0 would die in the digital world.

And 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 written 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?

Like the original state? 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 I don’t, you know, ignorance isn’t bliss,

which is that consistent statement in the matrix, right?

Ignorance is bliss is that that’s what one of the guys says

when he’s like, you know, 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, you know,

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.

So my intuition says like,

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.

Like it might be just as simple

as just a really nice quake game,

like with a nice engine,

with just creating all the basic visual elements

that trick our cognitive, our visual cortex

into believing that we’re actually

in the 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 brainwaves

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 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 brainwaves 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 a actually moral ethical question there

about whether you should allow a bunch of people

to get manipulated and killed and slaved,

because 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 the opposing a system

that includes the suffering of others

versus just for yourself enjoying the ride.

I mean, if there is such a binary choice,

why choose to oppose the system?

I think it’s the nature of kind of the ethical dilemma

that you face in that situation.

There’s kind of some,

this is obviously not something that’s happening now, right?

We don’t know this, right?

No, we don’t know this.

At the end of the day,

at that scale of something like that happening,

yeah, 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 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 things.

Yeah, 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.

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 a 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 decentralized 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.


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

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, right?

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 the 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, right?

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,

is 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

because 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, right?

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 that 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 is more used

is because 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’ve ever known about me.

That will create a much, much better world.

That currently there’s a complete lack of transparency

on 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 coupled 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.

Because 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 couple 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.

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

or only a small percent of the population

know what the hell they’re doing.

Everybody else is clueless sheep.

So those two coupled together is really to me inspiring.

Just to really quickly comment on this 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 like 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,

now 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

because 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, it gives 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 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.

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 digging 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 oracle and 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, right?

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, right?

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

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 gonna 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.

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’s 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,

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 it, 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 a hundred thousand dollars

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.

So it’s 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 decentralized 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 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 link 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 a 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 Oracles

to consistently do that.

So if you were to think about the stack

in a very generic high level,

you would see blockchains or 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, you know, 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 the currents of a decentralized world,

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 do 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 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 because it doesn’t have

a tokenization component,

partly because it’s actually much more important

than it might seem.

What is crop insurance?

Right, 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 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 back,

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’ll 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 free market of global trade without middlemen.

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 like logistics network,

like 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,

then 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 gonna 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 gonna take the oil

and I’m gonna 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,

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 the 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 can have conflict codified.

And that would potentially resolve conflict much faster

because there’s honesty, transparency and control

within that conflict, because there’s conflict in this world.

And I, 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.

It’s actually kind of scary,

the stuff you’re thinking through now

with like the war contracts or something.

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 oracles.

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.

Like you can read it, you can understand it.

And there’s something about,

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

and 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

because 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 because 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, 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 and 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, right?

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?


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 safe on the safe ground

for quite a long time, assuming encryption holds.

I, 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 nonhuman 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, right?

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 if, 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,

right, 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 determinism,

the deterministic nature 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, 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 is the master agreement

for derivatives or you have these agreements

that basically already reference a system somewhere,

like for example, many legal agreements

already accept eSignature.

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 eSignature 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.

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.

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,

gonna 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 it is this, I think it’ll actually be a lot simpler

to explain to people what the contract is about.

It’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.

You know, 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?

They could, 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, you know,

all this kind of stuff.

So if there’s actual demand that that would 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, you know,

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, you know,

how many people are wearing hard hats.

If I’m the construction site owner, well, you know,

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’ll be motivating totally new data feeds being created.

By the way, the insurance industry broadly,

the revolutions there, it would 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 feeds,

revolutionizing how like not by crappy,

I mean very crude.

Like literally the insurance is based on things like age,

gender, 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 I’m not, again,

not sure how that would change things,

but in terms of the fundamental experience of life,

because 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.

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 companies.

And the insurance company knows that the smart contract

will evaluate it according to the policy.

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.

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 the 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

because nobody will give it to them

because 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, right?

And so the trust problem was solved.

But it’s just the same story, right?

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 wanna 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.

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 hardware

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 decentralized 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, right?

So you could basically make a derivative that,

or a binary option is the example used

in the Mixicles 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, right?

Determined a certain outcome

that the relevant user would get paid

and there was still a place to put value, right?

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 eCommerce while everything was an HTTP

and credit cards were transmitted publicly.

And so eCommerce was kind of tough

because how am I gonna send my credit card

over public on encrypted channels, right?

But the second HTTPS appears,

eCommerce 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 eCommerce

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, 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 for outside of your interest?

Because 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

because 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

because I’ve given you the data, right?

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 write,

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

because 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 solve.

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 blank.

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 and 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 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, 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 terms of 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 a hundred years.

There’s a lot of marble.

Put a lot of marble.

Big building, lots of marbles.

This is why banks have such nice buildings, right?

It’s not because they want to spend money on buildings.

It’s to create confidence in them as an entity

in order for people to transact through them, right?

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, right?

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, right?

Now for the first time, you have mathematical agreements.

You have mathematically guaranteed encryption secured,

decentralized infrastructure powered agreements, right?

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, you know,

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 a 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,

right, 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,

now 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,

you know, 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 wanna put into another system

where there’s thousands of independent computing systems

that are promising me, you know,

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, you know, 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 improving 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

that 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 them 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,

like 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 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.

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,

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 will 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.

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

once the 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 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,

it’s 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 like 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 businesses 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 crossed $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 does 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 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, right?

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, right?

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, right?

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, right?

This is why so it’s really as powerful as the ideas

that people ascribe to it are, right?

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?

You know, 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 is the point,

might be worth a lot.

What is it all worth if all three of these things,

you know, 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 don’t think it’s,

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 know,

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 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.

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 things changed.

There wasn’t 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

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, you know, this is nice,

but I’d like to keep 10, 20% of my wealth

in non governmental fiat, just in case,

you know, what are those numbers?

I mean, if that happens, you know,

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?


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.

You know, 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, right?

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, you 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,

a relinquishing power is inspiring

because it’s ultimately about the progress of the community

and 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 Maximus 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 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 it’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 will 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 chain,

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

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 kind of, 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, right?

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 decentralized 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 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 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,


It’s like the decentralized oracle network

and the conditions that that decentralized oracle network

needs to meet is gonna 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 distributed oracle network side,

you want to remove the restrictions of design choices.

You want to provide maximal flexibility then.

So it’s a completely separate kind of a 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

of 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 need it to even exist.

And we really want them to exist because once they exist,

it’s gonna 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.

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 preintegrated 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 market.

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 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 web page traces of what happened?

Or is there a future actual hackathons

that people could literally participate in?

There’s plenty of more hackathons coming up.

We wanna enable as many developers in web3 and web2

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 preregister or 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 hello world entry point

for hybrid smart contracts?

And two, on the hackathon side,

what kind of stuff do you see people building at first?

Just kind of getting their feet wet

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

because 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 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.

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 Dbridge,

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

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 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 a…

I think I tweeted today something

about like 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 Dogecoin.

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.

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 covalls

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 will 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 say 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.

Plutarchs, 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 a theory of time around them,

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,

I 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

because 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.

Right or wasn’t right.

And then fascinating 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.

And that did two interesting things that 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 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.

It’s a 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.

It is deemed to be so valuable

that it should be a public good.

Yeah, I think so.

I think that’s a pretty,

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 on 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 will 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, in 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 fairer, 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.

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 I’m not a fan of Star Trek.

It’s that this is what the world looks like

if technology takes us towards a utopia, right?

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, right?

Because in the Star Trek universe,

you’re not seeking money or you’re not seeking safety

or 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, right?

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 like 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, right?

Of some kind or a universe or ecosystem or whatever.

And you’re looking at it, you’re like,

you know, this is like,

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,

because 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.

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 a 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 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 or 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 will diminish by 90%.

And the 10% that you have,

you’ll be resting to get back to work and get things done.

So what I think young people should do,

and this is why it’s very different for each of them, right?

I can’t tell young people,

hey, you should study philosophy, travel,

and start your own enterprise to achieve something

worthwhile in the world, right?

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 longterm view

and make these decisions now that’ll get you

to a longterm future that you can look back on

and be proud of your life, right?

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.

So at the end of the day.

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?

Like 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.

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 gonna take you,

it’s gonna fashion you into a very specific tool

for a very, most people, into a very specific set of tasks.

If you want to have an education in something, get it now.

If you wanna travel somewhere, travel there now.

If you wanna 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 gonna get more responsibilities,

you’re gonna 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 wanna 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 I, 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,

because I always thought,

let me get the career first

and then I’ll have a chance to play video games.

That’s the way I was thinking.

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 death bed,

I’m glad I built Baldur’s Gate 2

and all those arena, Daggerfall, Morrowind

and all the Elder Scrolls 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

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

because there’s no mattress and somebody who is single

and somebody who’s thinking about doing a startup,

I felt like you’re 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 surrogate 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, right?

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,

if 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 not throwing garbage

on the floor and 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.

It’s the meaning of life in society.

Right, what’s the meaning of life for the choice

that you’ve made within society, right?

Because 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 going to live in society, yes or no?

Yes, OK.

Most people choose yes.

I understand why, to a degree.

I understand why some people choose no.

And then what is the but?

And I’m going to be in society.

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 want to do this, it’s very confusing.

They should just leave.

They should just go, look, I don’t like this deal.

I’m going to go somewhere else.

I’m going to live in Tibet.

I’m going to live in the woods.

I’m going to live wherever 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 going to 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.

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, right?

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.

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 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 made it 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 to me, Sergei.

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 Sergei 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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