Charles Hoskinson - The Fourth Generation of Cryptocurrencies - TOKEN2049 Singapore 2024
Summary
TLDRThe speaker reflects on the evolution of cryptocurrencies, from Bitcoin's inception to the current focus on scalability, interoperability, and governance. He discusses the challenges of integrating real-world assets into blockchain technology, emphasizing the need for privacy and identity. Introducing 'Midnight,' a new blockchain platform designed to address these issues with private smart contracts and a hybrid application model, aiming to unify the crypto space and facilitate the mainstream adoption of blockchain technology.
Takeaways
- 🌐 Cardano has undergone significant upgrades, embracing on-chain governance and representation.
- 🌍 The ecosystem is global, with workshops in various countries aiming to create an online government for decentralized decision-making.
- 📱 The talk emphasizes the evolution of cryptocurrencies, starting from Bitcoin's decentralization to smart contracts and now focusing on scalability, interoperability, and governance.
- 🔄 The third generation of blockchain is characterized by the need for better scalability, interoperability, and governance.
- 🏦 The fourth generation's focus is on privacy, identity, and real-world asset integration, which are crucial for mainstream blockchain adoption.
- 🔒 Privacy is a complex issue in blockchain, requiring solutions that balance public and private aspects of transactions.
- 🆔 Identity on the blockchain is a challenge that needs to be addressed to bring real-world applications to the crypto space.
- 💡 The speaker discusses the problem of blockchain fragmentation and the need for interoperability to build a cohesive ecosystem.
- 🌌 The project 'Midnight' aims to solve these challenges by offering a private smart contract stack and a hybrid application model.
- 🚀 Midnight's approach includes a fair distribution model called 'glacier drop' and a new consensus protocol called 'Minotaur' for multi-resource consensus.
- 🌟 The vision for the future of blockchain is one of collaboration, with the potential to bring trillions of dollars in real-world assets into the cryptocurrency space.
Q & A
What major upgrade did Cardano recently embrace?
-Cardano recently embraced on-chain governance and representation, which involves the ecosystem in making decisions about budgets, roadmaps, and upgrades.
What is the purpose of the workshops and conventions mentioned in the script?
-The workshops and conventions are for people from around the world to collaborate on building an online government for decentralized systems, focusing on creating constitutions and improving governance.
How does the speaker categorize the generations of cryptocurrencies?
-The speaker categorizes cryptocurrencies into generations based on their capabilities: the first generation focused on decentralization, the second on smart contracts and programmability, the third on scalability, interoperability, and governance, and the fourth on privacy and identity.
What challenges does the third generation of blockchain technology face according to the script?
-The third generation of blockchain technology faces challenges such as scalability, interoperability, and governance, which are crucial for evolving the system and making it more efficient and inclusive.
What are the two main pillars necessary for the fourth generation of blockchain technology?
-The two main pillars for the fourth generation of blockchain technology are privacy, including private smart contracts, and identity, which are essential for merging the legacy and web 3 worlds and bringing in billions of consumers.
Why is privacy considered a challenge in blockchain technology?
-Privacy is considered a challenge because blockchains are good at handling public information but struggle with private information, which is necessary for real-world applications. Balancing privacy with the need for transparency and security is complex.
What is the significance of the 'Midnight' project mentioned in the script?
-The 'Midnight' project is significant because it aims to solve the challenges of the fourth generation of blockchain technology by offering privacy, identity, and a hybrid application model that can work with existing blockchains.
How does the 'Midnight' project plan to distribute its tokens?
-The 'Midnight' project plans to distribute its tokens through a 'glacier drop', air-dropping them to 135 million accounts across all major cryptocurrencies, allowing for a fair distribution where everyone who holds major cryptocurrencies already owns a part of it.
What is the 'Minotaur' protocol and how does it relate to the 'Midnight' project?
-The 'Minotaur' protocol is a multi-resource consensus mechanism that allows maintaining a blockchain with multiple consensus protocols simultaneously. It is integral to the 'Midnight' project as it enables the network to borrow security and consensus from other systems and incentivize collaboration.
How does the speaker envision the future of blockchain technology post the fourth generation?
-The speaker envisions the future of blockchain technology post the fourth generation as an era where everything is about iteration and collaboration, with real-world assets and businesses fully integrated into the cryptocurrency space, driven by the principles of privacy, identity, and interoperability.
Outlines
🌐 Cardano's Evolution and Governance
The speaker reflects on Cardano's major upgrade, embracing governance and on-chain representation. They discuss the ecosystem's collaborative efforts in workshops across dozens of countries to establish an online government capable of making decisions on budgets, roadmaps, and upgrades. The narrative contrasts centralized companies like Microsoft and Apple with decentralized protocols that rely on community support. The speaker highlights the challenge of decentralized control and the quest for on-chain governance, including writing a constitution through a convention in Argentina. The paragraph also delves into the history of cryptocurrencies, starting with Bitcoin's focus on decentralization and disintermediation, followed by the second generation's introduction of smart contracts and programmability. The speaker emphasizes the need for scalability, interoperability, and governance in the third generation, which Cardano is currently addressing.
🚀 The Future of Cryptocurrency: Scalability, Interoperability, and Governance
The speaker discusses the future of cryptocurrencies, focusing on the third generation's emphasis on scalability, interoperability, and governance. They mention various projects like Squeeze, Aptose, and Cardano, all striving to improve these aspects. The speaker then transitions to the potential of the fourth generation, which is expected to integrate real-world assets and businesses onto the blockchain. They highlight the current limitations, such as the lack of privacy and identity management in blockchain applications, which are critical for real-world adoption. The paragraph concludes with the idea that the fourth generation must address privacy, identity, and the challenges of integrating public and private aspects of business and assets onto the blockchain.
🔒 Privacy and Identity: The Cornerstones of the Fourth Generation
The speaker emphasizes the importance of privacy and identity in the fourth generation of blockchain technology. They argue that while blockchains excel at public and transparent transactions, they fall short in handling private data, which is essential for real-world applications. The paragraph discusses the need for private smart contracts and identity management on the blockchain. The speaker also addresses the challenge of creating a standard for identity, as evidenced by the development of decentralized identifiers (DIDs) and the formation of the Digital Identity Foundation. They highlight the complexity of quantifying subjective attributes like reputation and the need for a privacy model that can cater to varying levels of disclosure and security.
🌌 Midnight: A New Frontier in Blockchain Technology
The speaker introduces Midnight, a project developed by Input Output, which aims to solve the challenges of privacy, identity, and interoperability in blockchain technology. They describe Kina, a private smart contract stack, and a hybrid application model that allows developers to build applications using Ethereum, Solana, Binance Smart Chain, Bitcoin, or Cardano, while leveraging Midnight for privacy and identity functionalities. The paragraph also discusses the冰川滴(glacier drop) distribution model, which aims to provide a fair and widespread distribution of the network's tokens. Furthermore, the speaker introduces Minotaur, a multi-resource consensus protocol that supports multiple consensus mechanisms simultaneously, fostering collaboration among different blockchain communities. The paragraph concludes with the vision of Midnight as a unifying force in the blockchain industry, enabling the integration of trillions of dollars in real-world assets and driving the next wave of blockchain adoption.
Mindmap
Keywords
💡Cardano
💡Governance
💡Decentralization
💡Smart Contracts
💡Interoperability
💡Scalability
💡Privacy
💡Identity
💡Hybrid Applications
💡Minur
💡Midnight
Highlights
Cardano has embraced on-chain governance and representation.
The ecosystem has been working closely together in workshops across dozens of countries.
The challenge of decentralized control and who's in charge in protocols without companies.
The first generation of cryptocurrencies was about decentralization and disintermediation.
The second generation introduced smart contracts and programmability.
The current third generation focuses on scalability, interoperability, and governance.
The future fourth generation will need to address real-world assets and business on the blockchain.
Privacy is a critical component missing for real-world application of blockchain.
The need for identity on the blockchain to bring real-world assets into crypto space.
The challenge of creating a standard for decentralized identity.
The importance of selective disclosure in identity management.
The problem of too many blockchains and the need for collaboration.
The concept of Midnight, a new blockchain aiming to solve privacy and identity issues.
Kina, a private smart contract stack created by Midnight.
Hybrid application model allowing developers to use their preferred blockchain with Midnight's privacy features.
Minur, a new protocol for multi-resource consensus to bring different blockchain communities together.
The冰川 drop distribution method ensuring a fair launch for Midnight.
Recursive SNARKs for advanced privacy features in Midnight.
The vision for the next 10 years of crypto, focusing on collaboration and solving real-world problems.
Transcripts
you know I've been very reflective in
the last decade because cardano just
went through a major upgrade we embraced
governance we embraced onchain
representation for the last two years
the ecosystem has been working very
closely together workshops and dozens of
countries people from all around the
world trying to figure out how do you
build an online government that allows
you as an ecosystem to make decisions
about budgets and road maps upgrades
when you look at Windows you got
Microsoft when you look at the iPhone
you got Apple you have companies Behind
these big complicated things but
protocols don't have companies they have
supporters they have people that work
with them people connected to them but
at the end of the day if we say we're
decentralized who's in control who's in
charge
so we've been trying to solve that
problem onchain government the consent
of the government the institutions
writing a constitution I was down in
Argentina we're having a constitutional
convention there boy that's going to be
fun delegates from 50 countries 63
different workshops to vote on a
constitution and as fun and exciting as
that is that's not what I'm here to talk
about today talked about the
future see I think about
cryptocurrencies in terms of generations
I've been in this space for so long I
was actually in the middle of the very
first generation Bitcoin so in 2010 2011
nobody was in it for the money I know
that because there was no money we had
to buy our own coffee nobody knew what
Bitcoin was they thought it was a cult
probably still is and what was fun about
it and exciting about it is that we had
these broad aspirations and goals of
where we wanted to go and what we wanted
to do it was the cipher Punk movement
that came from the
1980s information moves instantaneously
so money should email for money let's do
that then Bitcoin started catching on
first generation was about
decentralization disintermediation this
idea of being your own bank mission
accomplished well what's the first thing
you do when something is successful you
criticize it we love the iPhone but we
love windows but we love Android but so
we love Bitcoin but we don't have
programmability so the second generation
came and the second generation was about
smart contracts programmability Eureka
at the time everybody thought we were
crazy it was but in hindsight it was
like when JavaScript came to the web
browser you had these static websites
they could be pretty but you couldn't do
much with them JavaScript comes and you
have Amazon and you have Facebook and
you have Google you have all these
amazing
things Eureka
awesome and when we have programmability
what do we do we say well that's all
fine and dandy but damn it's expensive
apparently building a virtual machine a
shared State amongst millions of people
a finite resource doesn't scale very
well does it second how do you get it to
work with everything where's your
interoperability
and yes what cardano is dealing with
right now how do you build a government
because you're not dealing with a simple
utility digital gold teleporting Bitcoin
around you're talking about a
programmable system so you have to
upgrade that system you have to evolve
that system you have to make that system
better okay so the third generation
comes in and there's tons of booths all
around you see them and they talk about
scalability and interoperability and
governance you have your squeeze
congratulations on Circle missing
anyone you have your aptose you have all
of these people alaran salana and yes
cardano and we're all fighting and we're
in the middle part of the third
generation and it's exciting and it's
fun because every time you have a
generation you get a whole new scale of
capabilities when you have scalability
it means it's cheap to use the systems
for millions of people when you have
interoperability it means your systems
talk to each other you can truly build
an internet of money you can build an
internet of Finance it's awesome and
when you have governance it means you
harness the wisdom and the capabilities
of millions of people throughout the
world the wisdom of the crowds suddenly
the people building on your system are
your product managers the engineers
building daps and defi are the ones
talking about how to improve the
protocol and grow the protocol the
collective wisdom of this is worth
billions of dollars of Labor
and we get to harness all of that we
couldn't with the second generation and
we couldn't even possibly tackle the
problems we're tackling in this industry
from defi to intellectual property and
other things with Bitcoin it's why
everybody's trying to upgrade
it so what is the fourth
generation do we need
one what do we care about well you'll
hear lots of terms like real world
assets okay security tokens Dows
business on the blockchain all these
things why don't we have them it's like
the flying car it's like Fusion it's
always 5 years away don't worry
trillions of dollars are waiting they'll
come into our
industry why can't we get there because
here's the problem blockchains are super
awesome at public
stuff they're auditable timestamp
transparent
mutable good great you put it there like
a domain name service you put something
there like a financial transaction
everybody in the world can see it
believe it it has an Integrity awesome
but what about the private stuff what do
we do with that do you like running a
business where all your HR is public
like running a business where all the
money in the cash registers is public
how many people want all their Google
searches to be public show hands nobody
what about Amazon purchases
what about your political preferences
what about who you voted for in the
election turns out that privacy is kind
of part of the deal and every real world
application asset business transnational
agreement always has two sides a public
side and a private side the public side
we do well and we're starting to master
the art of programming it and scaling it
and getting it done but the private side
is still something that's not clear and
in practice how we're solving it is the
same way we've always solved it you pick
somebody you trust you give them the
information and you hope to God they
don't lie steal cheat manipulate so if
you have a blockchain application with a
private and a public side and the
private side is offchain and centralized
do you have a decentralized
application no that's the first
challenge the Second Challenge is in the
the Legacy Financial world and frankly
the real world you don't have this idea
of transactions without identity you
don't have this idea of businesses and
no identity assets and no identity when
you see a plot of land what's the first
question you ask who owns that when you
see a business who owns that who
something happened who were the people
involved what's the story behind that so
where is this in crypto we have accounts
we have utxo we have transactions and we
have metadata but where's the identity
primitive of these types of things the
Legacy world has spent centuries
regulating and optimizing and figuring
out how to answer the question who how
to adjudicate the question of who the
dispute resolution systems and the
property rights systems and the
transnational agreements the
cryptocurrency space doesn't so how do I
bring real world assets how do I build
real world businesses in a space that
lacks a who I have to invent one a
digital who Horton heard the who I need
to have Identity On The
Chain so you have to have identity with
privacy because the minute you have who
you have to decide who gets to know who
gets to see who gets to decide you have
to have this concept of selective disc
closure so the fourth generation the
generation that's going to merge the
Legacy and the web 3 world and bring
billions of consumers in really the two
big pillars of this is in addition to
being scalable and interoperable and
having good governance and
programmability and
decentralization must have privacy
private smart contracts and must have
some concept of
identity the challenge is unlike
scalability unlike interoperability
unlike decentralization where there
seems to be an obvious path of where to
go and how to do that more is better
cheaper transactions faster transactions
and tradeoffs privacy is kind of a
nebulous thing what exactly does that
mean how exactly does that work and also
the same for identity took us as an
industry 10 years of discussions and
work to figure out how to create a
standard just to represent identity it's
called the did the decentralized
identifier at the
w3c we worked on it a lot of other
people did in fact formed a foundation
the digital identity Foundation 35
members all these people came together
built Frameworks great is that the game
no we're not over yet we have all kinds
of things like well now you have a
representation well how do you prove
properties of it oh we had to create a
non-eds as a standard what about your
creditworthiness or your reputation man
management that's a subjective not an
objective thing objective is when were
you born subjective is are you a good
person well it depends on who you
ask some people in this room like me
some people do not they're getting up
and
leaving so subjectivity of reputation so
how do you quantify that how do you
build marketplaces for that this is the
challenge of identity the same for
privacy when you look at privacy what
are we actually talking about like to
whom what guarantees do you get what's
the portability of that how do you
disclose that how much overhead is
required is it private forever to the
end of time is it private for a little
while is it private within a certain
security model so this is the next
Generation as we talk about these things
but then there's also a meta problem in
the blockchain space we've gone from too
few to too many there's more than 40,000
blockchains there's millions of assets
all around we all have perverse
incentives to hate each other not pay
attention to each other dislike each
other why because we have tokens you
have token a and token B and token C and
token D and you put your names in and
you go and talk to these people and if
the person owns the token it is virtuous
and good and if it's competing against
another token that token is evil and bad
bag holding that's the world we live in
and guess what you can never build an
economy where people's Financial
incentives are at risk people no matter
what their politics and beliefs are will
always default to their incentives it's
a reality of human nature so then how
can we build a space that has
interoperability and everybody's working
together and collaborating and it's good
for the consumer if the system by its
very design promotes incentivizes and
rewards
fragmentation it's a problem so that's
the fourth generation in a nutshell is
there a way to have computational
privacy is there a way to have identity
is there a way to get around the
incentives problem and actually get
everybody to work
together nope all right well anyway it's
been
great actually it turns out last six
years we've been thinking about this
we've been working on this input output
is a magical company in addition to
being a great engineering firm most
noted for building cardano we also have
Labs all around the world at Stanford
and CMU and University of Edinburgh and
Tokyo Institute of Technology 168
scientists that work with us we've
published 223 papers over 10,000
citations rigorous academic papers where
we asked these questions in a very
foundational way a very fundamental way
we're thinking about it and what we did
with these papers is we tried to figure
out a light blend of these types of
things and I said you know what would be
really cool is I've been in the space
for so long and I've gotten to a point
where I just like solving
problems and I don't like working with
the VCS and I don't like the normal
economics of this space it would be
really cool just to build something and
give it to everybody that actually
solves a real
problem so six years of hard work we
created something called Midnight
October 1st of this year it's reaching
the test net it's been in the dev net
for a little while and if you go to
midnight. network you can build on it
and the first thing we figured out on
how to do with midnight is we created a
private smart contract stack called Kina
and you can write smart contracts and
typescript anybody can do that it's
pretty simple language second thing we
figured out is we're building what's
called a hybrid application model so if
you're an ethereum salana BNB Bas
Bitcoin or cardano developer over time
you're going to be able just to
basically query midnight and do the
private and identity stuff for your
application and you can pay your
transaction fees with the underlying
currency ether or Soul or Bitcoin or
what have you so you don't really care
too much about tokens now do you call
these hybrid applications they're good
ideas now it turns out it's really hard
under the hood to do this but that's
what we do we do the science part and
then there's a question of incentives
and
distribution ordinarily because I've
been in space so long I kind of know all
the dirty tricks what you do is you go
to a VC they give you a bunch of money
they get founder tokens and then they
dump on retail when the network launches
you know who you
are you do and they make great money and
then the ecosystem collapses and the
next thing goes the next thing goes the
next thing goes that's not how we get
ahead so instead here's what we do just
do something called a glacier drop so
you take 135 million accounts across all
the major
cryptocurrencies it just air drop to
them and if people want it they mine it
in the process of mining it they launch
the
network so that's how you get a fair
distribution right everybody gets it
everybody has
it and here's the other beautiful part
about that in the process of doing this
we invented a new protocol called minur
we wrote it with Shere who went on to
create igen lay with the technology and
we created midnight with it and it's
called Minotaur and it's multi-resource
consensus what's so m iCal and special
about multi-resource consensus is it
allows you to maintain a blockchain with
multiple consensus protocols at the same
time you go talk to the Bitcoin Maxis
and they say proof of work you go talk
to us in the third generation we say
proof of stake but you know what you got
to get your peanut butter and jelly
together so why can't we hybridize
things and bring all the consensus
protocols together and guess what if you
have the validators maintaining the
state of the system together you can pay
block rewards to them so you start
looking like a lay or two to
everybody doesn't that bring everybody
together if every system is working
together so that's midnight it solves
real problems if you hold any of the
major cryptocurrencies you already own
it congratulations you're welcome Papa
Charlie took care of you you got hybrid
applications you pay in the currency
that you know and love you don't have to
actually do anything you don't have to
leave the network effect of your network
and you can borrow security and
consensus from all the other systems and
because you're doing that your consensus
layer is directly observing all of the
major cryptocurrencies which means
you're also the single best Oracle chain
and Bridge system around and because you
have all the Privacy Tech what do you
have you have recursive snarks which by
the way are also upgradeable because we
care about these things with love I'm
Italian you have to make things with
love and because of that cre ability and
because of that recursion it also means
that you can use it as a data
availability layer all kinds of magical
things so that's the fourth generation
it's the generation that brings us
together it's the generation that gives
us identity it's a generation that gives
us our privacy and for the first time
ever allows blockchains to keep us
secret and it's the generation that
opens up the floodgates and allows us to
finally have the trillions of dollars of
real world assets that are waiting on
the sidelines that require these things
to come into the cryptocurrency
space that is the last generation we
need because at that point everything is
just iteration at that point everything
is just is it the right asset or is it
the right partner but this is what's
going to bring the medical records in
this is what's going to bring esgn with
Supply chains and measure the carbon of
every business in the world this is
what's going to bring the financial
markets in because you don't have to
reveal your trading strategies to trade
on chain this is what's going to allow
you to have Dows that live 100% on chain
because the Dows for the first time ever
can keep a secret and thus a real
business can be on chain and you know
what by giving it away to everybody like
Satoshi did with
Bitcoin just mine it if you want it it
means the whole industry for the first
time ever has one thing that they can
care about together and agree about
I have 30 seconds left and I'll spend
them this way great things in life come
as a result of working together and
cooperating with each other the Apollo
Mission had a million people work on it
and those people are proud because the
end result was that they got to go to
the Moon we want to go to the moon and
Beyond in crypto we have to start
working with each other and we do that
by giving each other incentives to do so
so thanks for spending 20 minutes with
me and learning about the generations
I really appreciate it and I can't wait
to see what you build on midnight and I
can't wait to see the next 10 years of
crypto it's been a wild ride and it's
going to be even more wild cheers
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