Ethereum For Investors #26 – Ethereum Classic Investor Q&A w/Former ETH Founder, Charles Hoskinson

https://www.youtube.com/watch?v=zXc4lxBqkBw

Tai Zen: All right guys. Welcome to this broadcast, guys. This is Tai Zen, from the Cryptocurrency.market. And before I get started, I want to do the soundcheck and a video check, real quick before I introduce everyone on our panel.

Charles: Okay. Hi everybody. This is Charles Hoskinson from Boulder, Colorado.

Tai Zen: Hold on, let me just do the soundcheck first. If you guys can hear my voice and see us, please let me know. Can you guys hear us? Just say yes to the audio, so that way we can start it.

Charles: Yes,

Shaka: Yes.

Tai Zen: Let me see. I gotta make sure from the audience that they can hear us. Okay. So everyone says yes. Video’s good. Audio is good. This broadcast will be from 9:00 until 10:00 PM Eastern Time. And I just want to go ahead and quickly introduce our panel here, before we get started.

So let me just introduce the YouTubers first. First one is Shaka Daniel. He is from the YouTube channel: Chase That Coin. And he’s broadcasting from New York City. Say hello, Shaka.

Shaka: Hey everybody. How are you doing out there?

Tai Zen: Alright. And then next we have a very special guest, also another fellow, a Cryptocurrency investor, and a popular YouTuber. It goes by Omar and he’s broadcasting from Miami, beautiful place to live. Say hello Omar.

Omar: What’s up guys? I’m outside of Starbucks, I’m really excited to be here. Thanks so much.

Tai Zen: And then we also got the honorable grandmaster, the great Oracle of Cryptocurrency, LeonFu.com broadcasting from Austin, Texas. Say hello Leon.

Leon: Hi guys. I’m here in Austin, Texas. And I’m actually, in the Factom office based in Austin. So that’s where I’m broadcasting because I just decided that they host the meetup.

Tai Zen: Okay. So we got boots on the ground guys. We got LeonFu.com at the Factom headquarters, scooping up the latest news so we can share it with you guys so that so he’s going to be broadcasting out of the factum headquarters.

And for our special guests, our main special guest tonight, you guys all know him, Charles Hoskinson. He’s a former co-founder of the Ethereum. He’s also the founder of the Invictus Innovations and also Bitshares. I mean is there any Cryptocurrency that you’re not involved in, Charles?

Charles: The Dash guys want me to do something with them, but I dunno, we’ll figure something out.

Tai Zen: Okay. You’re also an advisor to the Lisk.io project with Max Kordek in them in Germany. So you got a whole, a long list of resumes there, Mr.Hoskinson. So say hello guys.

Charles: The one I’m most proud of is CEO of IOHK. We’re a great company and it’s been a heck of a lot of fun leading it for the last year and a half.

Tai Zen: Okay. I was gonna mention that next. IOHK guys build blockchains and Cryptocurrencies for people who need blockchains and Cryptocurrencies built for them. So you guys have a huge staff too. It’s like 30, 40 employees or something?

Charles: Yeah, we’re up to about 30 and we have a lot of connections throughout the world and academic connections. And our research division is really starting to get spooled up. In fact, this month we’re going to have a fully formalized proof of stake, I think August 14th with security proofs and a whole bunch of really cool things.

And so it’s really nice to see that proof of stake actually works and you can actually prove it’s secure. So we do a lot of research and we also have a really good service division that does all functional. So it’s been a lot of fun.

Tai Zen: Okay. Just so that we get as much information from you as we can, for our investors from our channel and from Omar’s channel and from Shaka’s channel. I made a list of questions ahead of time that I wanted to ask with you.

I’m gonna put it in the chatbox for the guys so they can see it. Follow along for the YouTube panel here. Then we’re going to get started. So I’m going to cover several things. I’m going to cover the status of the Ethereum Classic, and then we’re going to get your thoughts and your opinions on the current status of Ether Classic.

And then we’re going to do get your thoughts on the future development for Ethereum Classic. Also, I will say this before I asked the questions, guys, that I think this is a huge coincidence or that. I’ll mention afterwards, after you speak, Charles.

But we have a lot of investors that have questions about the status of the Ethereum Classic. The first question is why, in your opinion, do you think that your ether Classic is still alive?

Charles: Why aren’t you dead yet, huh? That’s a very good first question.

Tai Zen: I mean, like when they did the Hard Fork, no one expected this to come back. You know, it’s like a phoenix, it’s like resurrected? So what’s your thought on that?

Charles: Okay. Well, first, with respect to Ethereum Classic, to be honest, the project started, at least from my approximation as a protest movement. You had the foundation say there was ubiquitous consensus, 90%. Everybody agreed. There’s just no debate. It’s over. We’re gonna fork.

There was a very vocal minority that said you don’t have the consensus and the fork will not completely succeed and there will be two chains. They ignored that minority. They didn’t account for things like the replay attack. They assume that within a few hours the debate would be over and everybody would migrate over to Ethereum, the new chain obviously.

Leon: I’ll challenge you on that. Is that really true as well? I mean, just look at these statements.

Charles: Hang on. I was in the debate with Martin. He said 90% consensus the developers chose to ignore putting in protective code against the replay attack because they didn’t feel that it was likely that two chains would exist concurrently.

So there were their actions and their statements and both of those are aligned with the belief that there would not be to change. There would simply be one and most people would migrate over. That was how they developed and that’s what they said.

That said Ethereum Classic emerged, it sustained itself very quickly. Some very prominent people started connecting themselves to it and a minority grew around it. That is sustainable and sizeable.

We can argue about the size of that minority and we can argue about what support is it, is it 80 to 20, 70 to 30, 90 to 10, but in any event, Ethereum Classic has now formed kind of a sustainable angry mob, that is quickly deciding to change

Tai Zen: There’s just really quick. Let Leon comment on that.

Leon: Yeah. I agree with everything you’ve said, but then my question to you as if they really believed that, why did they give the users a switch? Like when you log into MYST or GUESS, you can actually run the software with a no fork option.

If they really believe like when you launch MYST, one of the first things it asks you is yes or no. Do you want to use the Hard Fork or not?

Charles: Like counter to your argument is why didn’t they put in any protective code against the replay attack? Why did they separate the network? They brought this up and they decided it wasn’t going to be an issue and they didn’t want to write code for it.

So they did mention it. They were definitely aware of it. They’re experts in this technology. They chose not to put any defensive code in place.

Shaka: I think they might have done because it was a matter of time.

Tai Zen: Just real quick guys, just real quick because we got five people on the line. We’re going to take turns. I’ll give each person a chance. Otherwise, the audience will not be able to hear any of us. And Leon, you need to put headphones on because there’s a lot of feedback

Charles: And it’s probably coming from me.

Leon: Yeah, I’m on mute. I’m on mute when I’m not talking.

Tai Zen: If you want to speak, just raise your hands and that way we’ll call. Otherwise, the audience cannot hear five people speaking. Before we continue, there’s confusion here, so I just want to clear it up.

When Charles says they, we need to clarify who they are, are you referring to Vitalik and the term development team and the Ethereum Foundation?

Charles: I am referring to the people who wrote the code for the Hard Fork. If that’s Vitalik and the Ethereum foundation and the core developers, then that’s the group of people.

Whoever was responsible for writing and pushing the code, which I assume is the Ethereum foundation. Then those are they, whoever was responsible for actually writing that code and I assume it was the Ethereum foundation.

Tai Zen: Okay. And I just want to clarify a scales too, I forgot to mention this before you got started, Charles. I just want to mention guys that Charles, in case you’re new to Cryptocurrency, he was one of the former founders, the Ethereum project. He was the CEO of the Ethereum project when it first got started.

And there was a debate among the Ethereum founders with Vitalik, with Dr. Gavin Wood, with Charles about the direction that Ethereum needed to take. And there were some differences and then Charles moved on with his project and the rest of the guys stayed with the Ethereum project.

And that’s how when Ethereum first came out in 2014. Charles and Vitalik, and I think with Stefan too, they were the main quote/unquote face of Ethereum because most of the videos included them in it. So Leon, did you have a comment?

Leon:  Yeah. I realized that they didn’t put in the replay attack, but my question to Charles was if they were so confident that the Fork would succeed, why would they even like put a dialogue box asking me, a user click yes or no. “Do you want to use a Hard Fork?” Why would they do that?

Charles: It’s very simple because then you get to say you gave the user a choice, why would you hold a vote with less than 10% participation and then claim the vote gives you a democratic mandate. It’s not my job to do the job of the foundation.

If they say they gave people choice and they got a democratic mandate and the fork was well supported and they did it, they did it. It’s in the past. We can’t do anything about it. Now there are two chains and I’m happy to talk about Ethereum Classic, but I don’t speak for the foundation. I don’t know their state of mind.

And if they want to speak for themselves, you’re welcome to get Vitalik or somebody else on the show and they can have that conversation. All I can do is to say what I see. And when you do a Hard Fork and it’s a contentious thing and you have an opportunity to make sure that there’s not going to be compatibility issues, and you can successfully break the networks, and you choose not to do that.

It seems to me that you think that you’re probably not going to have a major issue. This was a bad event for everybody. It resulted in the loss of some money. It really harmed the exchanges and it’s fractured the community. And I don’t think that anybody would want to go through that to save $40 or $50 million USD when you now have $200 million USD in a large community sitting somewhere else.

You’d probably choose some other option or some other methodology. The fact that they didn’t, at least to me, and this is my personal opinion, says that the people at the foundation probably felt that two chains would not be successful. And there’s some empirical evidence to that.

There’s been a lot of attempts to Hard Fork Bitcoin and create Bitcoin Classic or other things and they’ve all failed. So historically when people try to do this and when you have strong community consensus, people tend to go along, and another chain doesn’t tend to survive.

So the fact that if you’re in Classic is here, is probably an exception to the rule rather than the rule.

Leon: Thank you. I agree.

Tai Zen: Alright, so Omar, you have a comment?

Omar: Actually my main thing was sure you wanted to give them a choice, so maybe they weren’t able to fully flesh out that choice. Do you think that maybe it was just a matter of time?

Maybe they didn’t have enough time to fully figure out both forks, the foundation offers the choices fully instead of just focused on one fully, which is felt like to really quickly make sure it was bug tested and released.

And they didn’t have time necessarily to focus on bad choice because there seemed to be less interest in Classic, which obviously isn’t the case anymore.

Charles: Well, in their defense, I mean they had a ticking clock as a result of the DAO hacks action. It wasn’t like one of those things where you can just arbitrarily pick a deadline and say: “Oh, it has to be done by this date,” and you can work around it and choose something far off in the distance.

They had a preset deadline that was,” I’m not comfortable.” So they worked as fast as they could and it seems like they tried to obtain as much community consensus as they could, given what they had.

Omar: Yeah. I think there’s a demonization between both sides, between this core and the Classic and I don’t think that needs to be there. But like Vitalik himself, I said he supports the Classic side living. I think we need to come together and agree to let both sides because he did their best.

Charles: Well, when you make tweets like “I’m 100% Ethereum” and even if the Ethereum Classic is going to get bigger than Ethereum, I’m still gonna work on Ethereum. That’s not exactly a kumbaya tweet and the 100% of Ethereum and movement.

And all the people on the Ethereum Reddit who are saying things like ETC is a scam coin, it’s a puppet dump coin, it’s the thief coin and these types of things. And the foundations lack commentary on that

Omar: What would be really cool if you could clarify for us and the YouTubers, as there seems to be definitely on Ethereum and definitely the trade and all these subreddits. I think it’s because there’s this belief that they’re going to plagiarize code that’s something I’ve seen brought up a bunch of times from the gaps that are created for Ethereum on.

So that’s one thing. And also I was wondering about sharding what do you think is going to happen? Will it keep on with proof of work?

And it would be really interesting if it stayed proof of work on Ethereum Classic. I mean, remain profitable for miners to keep mining on that chain. I guess core, whatever you want to call it, it’s a Sharding and Casper and all that fun stuff.

Charles: That’s a lot of questions. With respect to DAP code, if the DAP is released in an open-source capacity then it’s not really plagiarism. If you commit to open source, people are allowed to use your code. That’s the particular author’s decision.

Of course, they’re different forms of open source and attribution, and there’re commercial and noncommercial licenses, but those should be handled on a case by case basis. And certainly I would not endorse anybody stealing code.

Now with respect to whether it should stay on proof of work or proof of stake, it seems to me that there is a consensus growing within the Ethereum Classic community that if it is to survive as a chain, several things need to happen.  The community needs to coalesce around a social contract, number 1.

Number 2, it needs to present a development roadmap, which is distinct and divergent from the Ethereum roadmap. Number 3, a governance structure needs to form. Number 4, you need to have some form of funding behind that governance structure.

Those are kind of the 4 basic ingredients that are required for Ethereum Classic to sustain itself. Getting back to Tai’s original question, “will the Ethereum Classic survive or not”, if those things aren’t done, it’s my belief that it won’t survive in the long term.

Now with respect to your final question, which is about sharding, there are plenty of ways to charge your state base using a proof of work algorithm. They’re usually derivations of Bitcoin, or something like that and there’s a lot of ways you can go about that route.

But it’s not intrinsically clear to me that the best way of handling scalability is to try to create a short at state space, instead, you can just embrace overlay protocols. Think of it kind of analogously to Bitcoin, with the lightning network, you have 2 approaches.

You could either try to make Bitcoin faster for settlement so you increase the block size, reduce the block interval, or do some sort of jujitsu to make a higher TPS. Or you could say 7 is fine and let’s just attach these overlay networks and run all of our microtransactions through them.  And if we make those secure and private we can get up to 10; 20; 50; 1000.

So similarly you can say, can we get our smart contract rate really high by doing all this jujitsu to the network and sharding things? Or can we just embrace overlay protocols and have a federal side chain that runs, like small units of computation with a proof of correctness that reconciles on and may change.

So it’s important to point out that they’re different computational models to achieve the same level of scalability and they don’t necessarily require something as drastic.

Tai Zen: Hey, Charles, and Omar let’s keep this some more so it’s not so deep and technical because of the investors on our channel, that’s like the stuff that you talked about with Andreas.

Let’s talk Bitcoin that suits that audience, this audience. If you started getting technical like that guys, we’re going to lose everybody. They’re going to start signing off. So if you don’t mind, I’m going to steer it back on track here.

Omar: I just want to wrap one thing I wanted to say that, I really loved that idea of Ethereum Classic going a completely different route in a way than your Ethereum itself, by doing something where they do open more lightening numbered style.

And that’s pretty cool. It’s interesting. I would like to share that in the future and it could totally survive that. Thanks for sharing.

Tai Zen: The next question I have is, in your opinion, where did the Hard Fork go wrong? If they were to Hard Fork, how should it have been done correctly?

Charles: That’s a really hard question because we don’t have a lot of evidence about how to do it. So I believe there’s kind of 2 buckets, in terms of the forking world that you can look at. One bucket is either correcting a flaw or optimizing something, but you’ve preserved the overall social contract of the system.

Its systems have social contracts and inhibiting money supply some of the core characteristics of how the system works is that attribution or non-attribution. These are part of your social contract.

And then the other bucket is where we’re going to make a change to the social contract. So for example, with Bitcoin, let’s just create 10 million new Bitcoins, or let’s reverse a particular transaction like the Bitfinex hacked, for example. Let’s try to reverse that or something.

That’s a change to the social contract because you’re changing kind of the promise that everybody signed up for the system. So I think if you’re going to make a fork in the first category, an optimization or an error correction, like when Bitcoin had a flaw where billions of Bitcoins were created because there was a flaw in the transaction language.

These were relatively non-controversial and most people will agree to get along with that road, and very quickly you’ll have a supermajority behind it and it’s not going to be an issue. So the way they forked Ethereum would work really well.

And that first case, things where you’re moving from let’s say proof of work to proof of stake or you’re now saying that we have to care about outcomes and smart contracts. To me, that’s a fundamental change in the social contract of the system.

With Ethereum, at least there was always this implicit idea that they’re going to switch because they have a difficulty department. So to answer your question, what they could have done, what I would have done is what’s called an assurance smart proof of burn contract.

Basically what you do, as you say, here’s this contract and it has a threshold and people send their funds to it and it’s has a time limit on. And if you get above 51% or 60% or 70% of the money supply in the system, it’ll trigger and destroy all the money in it, and give you a Cryptographic voucher that you can redeem for a completely new system, a completely new chain.

And if it doesn’t hit that limit, you get your money back. Now when you do that, what you’ve done is you’ve actually created a mass Exodus that has something at stake, your money to a new system and 100% of the people in the new system have agreed with the new social contract.

You can change whatever you want to change, the consensus algorithm, your money, monetary policy; you can do whatever the hell you want to do. That’s one really good way of doing it, but the problem with that approach is it leaves 2 chains.

The old chain where some subset did not migrate over and now the new chain. And I think what they were trying to do is treat this DAO hack as some sort of flaw, or some sort of optimization and try to just move everybody over and make them accept the new chain.

And the other way, you can change the social contract and it’s an opt-in system. I believe that these are transparent democratic systems and they need to be opt-in instead of somebody at the top saying, “I know best and I’m just going to decide for you”.

And I talked all the power brokers and you know, accept it. I don’t believe in systems like that and I try to avoid systems like that.

Tai Zen: Okay. So what happens? Like right now when you look at the hash rate and all the people that are mining on the Ethereum Classic chain versus the Ethereum Hard Fork chain, the Ethereum Classic chain has about 600 Giga hashes right now. And the Ethereum Hard Fork has like 4,000 Giga hashes, right?

What happens when the Classic chains start to build up the hash rate? And let’s just say it gets to the point where it reaches parity, where both of them each have equal hash rates. What happens then? Does the transaction on the Hard Fork chains start to show up on the other chain? Or how does that work?

Charles: Well, they’re already showing up on each other’s change. That’s the problem with a replay attack. The issue right now is Ethereum Classic and Ethereum talk the same language and they had the same transaction types. And so technically they can broadcast to each other.

It just they don’t quite understand each other and certain edge cases. So the mining rates hash less to do with it and more of it if it has code involving the DAO hack. So if at some point somebody has to blink and the chains have to be separated and so another Hard Fork is required to do that, and whether that’s you’re in Classic side or the Ethereum side is hard to say at the moment.

I would like to see it in the spirit of cooperation probably happen on the Classic side. At the same time, we do something like remove the difficulty balm or something like that, and you can safely separate the systems. But the hash rate has nothing to do with whether transactions show on ether network.

Tai Zen: And which chain needs to do the Hard Fork again, to protect it against the replay attacks. Is that in a Classic chain or the Ethereum Hard Fork chain that needs to do it or does it even matter?

Charles: It doesn’t matter. So somebody has to blink and it seems to me like what both chains have an opportunity. So Ethereum is moving towards a proof of stake so they could do it at that point.

If Ethereum Classic is still there and viable worth, you’re in Classic could do it while they’re squeaking some things up and, and for example, removing the difficulty balm. So there’s ample opportunity for somebody to do that. It just, both sides have to talk to each other and there needs to be some coordination and getting that cleaned up.

Shaka: I have a question. As far as with the replay attack in Ethereum Classic and Ethereum communicating with each other, I tweeted out the other day that this was Cryptocurrency. I don’t know what’s going to happen. You’re way smarter than me, but you probably don’t know what’s going to happen.

But what’re the chances if the Ethereum Classic and the Ethereum coming together like a hybrid or version of what NXT and Artery are doing. And my second question is, do you think the DAO attacking was done for monetary reasons or to create what we have right now with Ethereum Classic?

Charles: With respect to whether the communities can come together or not, I have chosen not to pursue a leadership position in the Ethereum Classic world, mainly because I’m a very divisive person. And obviously the foundation and I have a little bit of a history that I think would be counterproductive to these movements working together. So that’s up to other people.

I hope for the sake of the community that they at least can start a dialogue and try to figure out what’s best for everybody instead of just one site saying the others, a bunch of scammers and evil people and the other side’s thing.

The other side has no principles and they’re horrible people. With respect to the DAO hacker, it’s impossible to know what the motivations are of a person who does anything. What was the motivation of Bitfinex? Was it destroying Bitfinex? It wasn’t an inside job? Was it to steal money and make money? Who knows?

The DAO hacker is the same way. Was it to destroy the DAO? Was it to hurt Ethereum? Was it to gain money? I think a frankly a moot point. More relevant is: what does this do to Ethereum into Ethereum Classic?

With respect to Ethereum, that’s been addressed to taken care of with respect. With Ethereum Classic, you now have pockets of people who have large amounts of ETC and they can use that ETC to crush the market in the short term. And that’s a threat to any investor.

It’s kind of the same deal as Satoshi Nakamoto and Bitcoin. You have somebody who has a lot of Bitcoin and if he’s a malicious actor, he could just wake up one day and say, “it’s the time to sell 5% of the money supply”, and just put it all as a big cell wall. And that’s not so good for the system.

So whenever you have whales in your system that have a large set of currency, they do have a great deal of power. And it’s important to understand at the very least what their motivations are the short term, a long term horizon and so forth.

And it’s impossible to know the motivation of the DAO hacker unless the DAO hacker explicitly states that which he or she has not done it at the moment.

Shaka: Well, while we touched on that, there’re a lot of unknowns in this situation. We have the DAO hacker, unknown person. We have Arviko, unknown person.

And I brought that up because of the whole Satoshi comment you just said. So what is can you clarify as far as you know, what Arviko grows as he’s comparable to Vitalik as far as it’s in Classic.

Charles: So Arviko was the person who initially set everything up. What is gravity is another person and they’re both in the Slack.

I think they initially set up Ethereum Classic, at least from the conversations I’ve had with them, as frustration and a protest movement, and not fully anticipating that it would actually grow into a successful coin or at the very least be self-sustaining.

From the conversations, I’ve had with Arviko and I’ve had several, he’s expressed a desire not to be involved in the community in the long term, but rather try to develop out a leadership base and have it become its own thing and just kind of fade away similar to what Satoshi has done.

That said, I have no idea how much ETC Arviko has or hash rate that Arviko has. And he’s made no indication to me of those things.

Leon: I have a question, Charles.  I personally believe the reason ETC is alive. One of the main reasons is because Poloniex decided to list them, decided to start trading, make a market in Ethereum Classic. Are you aware of their motivations besides just wanting more trading volumes?

Because Poloniex doesn’t seem to be very transparent as to what their process is. They kind of just woke up one day, listed Classic and boom, we’re often trading and Ethereum Classic, which we thought was dead, was now all of a sudden alive, the other exchanges saw all that trading volume and then jumped on.

Do you have any insight as to what Poloniex decision-making process, I think that they must have been planning this for a while because I don’t think they just woke up one day and started trading Classics?

Charles: Yeah. Service providers are gonna provide. I remember a long time ago I was having a discussion about Bitcoin and I said, “guys, listen, all the infrastructure built for Bitcoin can wake up one day and say, Ethereum’s great or Lisk is greater, you know, whatever is great and support it and allow people to use it.”

So similarly an exchange can wake up one day and say, “fuck it, if people want to trade it, we’re going to let them trade it because there’s good money to be made.” Now if the coin is going to die, it’ll die very quickly. I mean enormous sell volume, no by volume, and it’ll crash. And it’ll become very clear that it’s frankly dead.

But if people are interested in it, well why not? And what’s really cool about it is it creates a price. And the miners, because they’re mercenaries to will say, “Wait a minute here, I can make more money mining chain X and I can chain Y and the way over to that chain.”

So it’s important to understand that service providers do not historically have loyalty to a particular standard. Instead, they have loyalty to whatever’s going to make them the most money. And this is something that the foundation frankly should have been aware of when they were doing the internal calculus of whether this was a viable idea or not.

Whenever you have the opportunity for markets to form, they probably will form, especially if there are controversy and people with money willing to get involved. Whether Poloniex unwanted to do this for weeks or months or the day off, they woke up and said, “Hey, this looks interesting. Let’s do it”.

Again, that’s for them to say, I think it was nice because it created a free market choice where people now got to vote with their money and if they thought that ETC was a good idea or not, they could buy it.” There were plenty of sellers. It looks like a lot of insiders, Ethereum movement thought ETC was worthless.

And they said, “Hey, I got some free money.” In fact, there were some, even some leaked Skype logs that showed, they said, “Wow, thanks for the free money.” So there was certainly a lot of belief on the one side that this was a bad deal and just go sell it and thanks for 20% profit, for like a bonus for Hard Fork well done.

And there was a buyer on the other side of that. I think there might be some merit to this particular community and I’m gonna invest in it the very least in the short term. And I applaud Poloniex for providing that choice to consumers.

Tai Zen: Yeah. Another question I have, Charles, from an investors’ perspective, who is going to be responsible for updating the Ethereum Classic software?

Charles: That’s a really good question. So as I mentioned before, you need 4 things to happen for Ethereum Classic to be even considered to be viable. So first it’s a bunch of tribes right now and they’re unified by frustration and anger over an event that is not a cohesive movement.

So those tribes have to be brought together with some sort of notion of what is Ethereum Classic really gonna be all about, you cannot in the long term have a protest movement. I remember being part of the Ron Paul movement. Our core didn’t last too long and it got co-opted and turned to something else, occupy Wall Street was the same way.

So you cannot in the longterm survive just on saying “we hate these guys and we’re the opposite of these guys.” So number 1, there has to be a social consensus form around a particular philosophy saying this is what this coin is all about.

Number 2, you have to have a development roadmap. As I was talking with the other panel Lisk, it’s important to say, “Okay, we’re going to do X, Y, and Z. This is the roadmap ahead and these are the things that need to be done.”

Number 3, you need governance structure. What we hold this roadmap accountable, how will we execute on this? Who is responsible for that? Is it going to be a central entity, like a foundation with a dictator at the top? Is it going to be some sort of decentralized movement, kind of like how the Bitcoin core development is done?

Is it going to be a kind of some sort of hybrid where some companies come together and they make a gentleman’s agreement to support it? That has to be decided and then finally funding. Now I’m going to put some of my own money into it.

My company’s money to hire some developers and we’ll certainly try to take it in a positive direction. But that’s not a permanent longterm thing, it’s not something that’s going to be here 3 years, 5 years, 10 years out like the Ethereum foundation is.

So it’s very important that in that funding conversation after your social contract is formed, your roadmap is formed, your governance structure is formed, that there’s enough gas in the tank to be able to get it into the longterm horizon. So I think it’s premature to answer your question.

Right now some basic things can be done like a blockchain explorer, can be created and make sure that the forecast is where it needs to be and so forth. But one term like are we going to go on to proof of work and are we going to use specter or some of this new super cutting edge technology that’s coming out, some of which haven’t even been announced.

That takes some really skilled people quite a bit of time to get where it needs to go. And there’s just no way to do that without some degree of funding and that’s not going to materialize unless there’s a reasonable governance structure.

So what I’m personally gonna try to do is get the social contract sorted, get some form of development roadmap, the consensus amongst the developers who are in the slack and then try to promote some form of a decentralized governance structure.

And if we can get those things done, at least I can execute on that, that roadmap for mine and then in the longterm, my hope is to form some sort of funding or at least specific money.

Leon: So Charles, that sounds very much like a leadership role you’ve just described. But no, you said earlier that you don’t want to lead.

Charles: No. It’s more like a referee. There needs to be somebody to moderate a conversation, but I don’t want to be the guy in charge, and I don’t frankly think it’s productive to seek somebody in charge.

The whole reason we’ve gotten into this mess is that we have a cult of personality around a couple of very strong, very intelligent people on the other side be scared to

Omar: I’d be scared to have lost a lot of investors’ money personally if I was a leader in that kind of position to it.

Charles: Yeah. And so they were caught in between a rock and a hard place and so they made some decisions, but they were untrusted because people believe in them and frankly they should. They put in a dollar, they got $60 USD back. I’d probably believe in any God who made that kind of deal for me.

Omar: So does the price matter to you? This is the price going really low matter as far as you got continuing development?

Charles: Yes, because it gives me a chance to work on a whole bunch of cool things that I’ve always wanted to play around with like verified compilers and write a new functional programming language for smart contracts.

There’re a lot of academic interests that my company has in the Ethereum Classic project that has nothing to do with the price or even frankly, the size and scope of community. If we happen to end up coalescing a very large community behind a vision, that’s awesome.

But the reality is that a, if the prices 1 penny or $10 USD, it doesn’t really change my opinion on the matter. I think it’s a great opportunity to test some extremely cool new tech that’s coming online and see where it takes us in the smart contract world. And that says something I’d like to participate in.

Tai Zen: Hey Charles, so based on compliment investors perspective, you are one of the original founders of Ethereum. I mean, no matter what anybody says, people, the community and the public that anybody that’s in Cryptocurrencies still sees you as one of the faces of Ethereum.

It would be very easy for you to rally up the troops and lead the charge with the Ethereum Classic because the separation where you and Vitalik and the team apart away was because you had a vision of Ethereum going one way and the other guys have a vision of Ethereum going this way.

And now you have an opportunity to where you can rally the developers and the people that’s in the Ethereum Classic community because there’s evidence that it wants to stay alive. Why would you not take advantage of that opportunity and lead the development team for it?

Charles: Well, there’re 2 primary reasons. Number 1, I’m the CEO of IOHK and I have fiduciary obligations to that company, to our projects. And it’s not fair of me to say, “Hey guys, you all entrusted me to be the CEO and you all work for me.” By the way, I’m going to go chase this whale over here and live in the past.

I have a responsibility to them and so it’s not fair for me to go and take over another thing if it’s a substantial distraction to my duties as the CEO of my company. For example, with Lisk, I’m a non-fiduciary advisor, what that means is I do one phone call a week and I have a big role at the deck and I open it up and I say, “Max, what do you, who do you want to talk to?”

But ultimately, Max is the one spending the money, making the decisions and he’s the guy working 80 hour weeks, not me. With Ethereum Classic, if I was to step into a leadership role, commensurate was what I was doing with the original Ethereum before I left, that would be a very substantial commitment.

It would take a lot of time and that’s not fair to I wish came. Second, I’m a very divisive figure in the Ethereum movement. The reality is that there are certainly more than a few people on the Ethereum side that don’t like me.

And the fact that I’m in the room would only create a perception that this is Charles Hoskinson versus Vitalik Buterin. And that’s not productive for anybody. It doesn’t add any value to the coin, it doesn’t add any value to cooperation.

There are certain things that Ethereum Classic and Ethereum and we’re probably gonna have to agree on. And if I’m in the room preventing an agreement from happening, I don’t really see that adding value to the ecosystem. I just see it taking value away.

So the challenge for me is how can I referee a conversation to get some sort of social consensus, to get a good roadmap, to get a good governance structure and eventually figure out how it’s going to get funded in place and then kind of take a step back and just let my developers work on it, and be productive in that capacity instead of trying to be the leader and build some culture personality and control the system.

Again, I think it’s counterproductive. Furthermore, is this kind of a hidden third thing? I think there’s a tremendous opportunity here for the Ethereum Classic community to innovate in terms of governance of a project.

Normally when a coin gets started, you have a group of people saying, “we’re the founders, trust us, give us a bunch of money, we’ll figure it out and get it done.” And we give them a bunch of money and we hope they get it done.

It would be a lot nicer to say, “let’s start with what we wanna do”, and the roadmap, and then let’s kind of hold people accountable and have groups of people from around that and each one responsible for something and fund them as they go.

And if one group doesn’t do a good job, get rid of them, have another group’s doing a great job, maybe give them more responsibility. I think it’s better from an investor’s perspective and I think it’s better from an ecosystem perspective, to try to embrace that type of a governance model than try to create a new foundation with a new leader and say, “this is what we’re going to do” and so forth.

We’ll just go down to the same road. Eventually, we all make some mistake and we’ll have Ethereum Classic classic, and then where are we going to go there?

Tai Zen: Okay. So if you don’t see yourself as the Go-To man or the leader for the Ethereum Classic chain, and if it was up to you, who would you nominate?

Or who would you pick or suggest to lead the development for the Ethereum Classic so that the investors would know that this software is not just going to die out and that there’s somebody qualified to continue the project?

Charles: Again, first the investor has to know that there’s an actual strategy and there’s an actual consensus amongst the Ethereum Classic community, that that strategy is acceptable.

That’s the first thing the investor has to know. Or else you have fractures and people are going to split and half your community goes one way and half your community goes the other way. That’s the first thing.

Tai Zen: Who needs to come up with that strategy, who needs to formulate that strategy?

Charles: Anyone institution. Was it just one guy? It was a committee. It was a group of people. So somebody has to referee the conversation, but it should be done by the people in the Ethereum Classic community as a whole, as many as possible, need to participate.

And my experience with open source movements is that generally, these people are self-selected. They just show up and they start contributing, they start doing things. You talk to them every day and you notice that they’re actually doing real work. It’s a meritocracy, it’s not an autocracy.

So we need time, basically, over the coming weeks, people are going to start working on these types of things and you’re going to see the same names recurring. It’ll form like Bitcoin did kind of a cohesive leadership structure.

We’ll see the Greg Maxwell’s and the Gavin’s and so forth, kind of emerge out of the pool, and these people will become the kind of the face of the movement over time. My job is just to try to referee everything. You get everybody together and try to host a conversation and see the plurality of conversation, see where it goes.

I don’t want to be the face, and I don’t want to endorse somebody and say, “This person’s the next Vitalik and he’s the guy to lead us home” because ultimately, it’s just going to lead us down the same path before and we’ll fracture again.

Shaka: I have a question. As far as value to Ethereum Classic ETH, we know it has digits, it has Akasha come in, the Golem project. Do you think the mutability is going to be enough to carry it in Classic on, or what do you think is gonna add value to Ethereum Classic?

Charles:  It’s important to understand that as large as Ethereum has gotten, it’s like a drop of water in an ocean or a grain of sand on a beach. In the entire space of cloud computing and the entire space of applications, Ethereum has yet to go viral and hit the big moment. It certainly gained a lot of traction.

And there’re some great projects on it like Gnosis and Augur and so forth. So it’s a little early to say what’s the killer set of projects that will materialize on Ethereum Classic. I think that if you have seen some stabilization in the development and a clear roadmap form, people are gonna start being attracted to types of depths that favor that roadmap.

It’s too early to say what those gaps are going to be because we don’t exactly know what the roadmap is. The other thing is there might be a slight geographic split here. There is a lot of foreign interest in Ethereum Classic, in particular in Russia and in Eastern Europe.

So it couldn’t be entirely possible that we kind of have like a Viber, Telegram, Moments here or you know, we have like 25 messaging apps, right? I travel all around the world, so my phone has like 15 on it. And everywhere you go, like you’re in Ukraine, they use Viber, I go to Japan, they use Line.

So similarly, it might be that situation where there are a constituency and a core group of people that really Ethereum Classic and deploy to that chain because that’s where all the community is.

Omar: What if China just decided to take over and they haven’t already touched Ethereum Classic yet and they decide to go that way instead because they feel like there’s more centralize already in Ethereum Classic after the cycle will be decentralized out.

Charles: The other thing we understand is that the Ethereum is giving up a core constituency. They’re walking away from the minors, they’re saying the proof of stake is the way to go and we’ve poisoned the chain to make it impossible to mind, at some point.

So that’s a constituency that is very powerful and they’re well funded and they have every interest in continuing mining on some form of a chain. The nature of Ethereum, they can’t mind on Bitcoin, you need different equipment for, it’s a GPU mining base.

So I think that constituency could be very powerful and it could drive a different type of adoption and interest. As for China, it’s very clear that Ethereum is trying to move into China. That’s why DEVCON, I think is in Shanghai. The director of the Ethereum foundation in Chinese. I believe she speaks Chinese.

Vitalik speaks Chinese and spent a considerable amount of time there. So it’s very clear that they’re definitely pushing into China and they’re trying to get some interest there. But it’s too early to tell, I mean, what is gonna be the killer apps?

The other thing guys you have to understand is that we’re entering into a multiple or world in terms of the EVM rootstock has come out counterparties done some stuff. So there’re all these people who are using like EVM compatible. It’s almost like the JVM where you have Dalvik running on an Android, I guess it’s art now.

You have open JDK Oracle’s version and so forth. So we have all these different flavors that run the same code base and they have kind of different constituencies behind them and that could be entirely where the EVM goes. The other thing is the roadmap may actually create very significant development split from Ethereum.

For example, if we did a fully verified compiler in a functional programming language and all these other things for smart contracts, people may decide to push very valuably high assurance contracts on Ethereum Classic and more like really hacky prototype contracts on Ethereum.

As an example that could a split or the DAPs split, but I think it’s way too early to tell if Ethereum Classic’s too young. Frankly, Ethereum is too young and Ethereum has a very shaky roadmap and there’s also some very significant competition that’s coming out in 2017 with some institutional projects, like project Bletchley, project Juno, some of the things that I see 3 is doing and so forth.

And these guys have very well thought out approaches for how to do federated smart contracts and in many cases that are the order of magnitude cheaper to run significantly faster and more efficient. Just they sacrificed some of the decentralization and they sacrificed some of the immutability. So it’s going to be interesting to see how the market reconciles those.

Tai Zen: Okay. Do you have any other comments guys?

Leon: I’m good here. It was awesome. It was really cool to meet you.

Omar: No, I’m all right. Thank you.

Tai Zen: I’m looking at my list of questions here. One of the questions: Have you had an opportunity to speak with Vitalik or anyone, Dr.Gavin, wouldn’t any of the guys on the Ethereum, or is there still a split since the Hard Fork?

Charles: I’ve had a chance to talk to Anthony Di Iorio and Anthony is a great guy. He’s a very level headed person. He’s a businessman, he’s a true professional and it’s easy to talk with him even if he doesn’t agree with you. At least you can have a civil and professional conversation with him.

And I really do appreciate that. I also talked with a retreat was another one of the Ethereum founders quite a bit cause he has interests all over the board. But I have not had a conversation with Vitalik, the foundation or anyone else nor have they reached out to me in any capacity. Maybe they will, but that’s up to them.

Tai Zen: So do you have any idea, how long it’ll take before a community coalesces and forms around this if Ethereum Classic so there’s a viable development team?

Charles: Weeks, not months. And regardless, I’m gonna form my own development team. We’re probably going to hire a community organizer as well. I’ve noticed that there’s a lot of fun going around like, Barry Silbert is doing this or Charles is doing this or whatever.

And it seems to be a lot of effort to manipulate the price and the Reddit. So at this point, it’s probably a good idea to just get a community organizer full time and try to create some sort of cohesion. Once that’s been done, I think we can get a roadmap done within weeks.

And then after that’s been done, I can source developers, we’ll do an open application on the Reddit. And we have 4 different staffing organizations we work with that are quite good. And we also have a lot of contacts in Germany and Switzerland with some very qualified people.

So what I’ll do is hire the first, the core developer, like the top guy and then build a small team around him or her. And I hope by maybe at the end of August, early September, we should at least have one person on staff full time to start following a roadmap.

But the most important thing is community cohesion, coalescing aggregation. And we’re certainly gonna have some fun there. The other thing we’re doing right now internally is we’re examining some of our own code out.

In particular, we’re looking at score X, which is one of our codebases written in Scala, seeing if we could convert score X using the Ethereum J client to actually create an Ethereum client. And that’d be really cool because it would be a nice scholar based client.

It’s extremely modularized and we’ve used it to prototype a lot of different things and there’s a lot of traction behind scores, particularly in that world.

Tai Zen: Okay. As an Ethereum Classic investor, I’m kinda confused cause earlier you said that you are not interested in leading the Durham Classic project, but you are talking that right now you’re in the process of building a roadmap for Ethereum Classic.

Charles: The roadmap has to be built by the community. So I can make proposals as because things I’m interested in, but ultimately there’s going to be community consensus behind something.

And once consensus has occurred, whatever that consensus is, the developers I hire will implement that even if it’s divergent.

Tai Zen: So what is your motive Operandi, your goal or your objective for spending your own money and your own time to get this Ethereum Classic project going? What is the motivation behind that?

Charles: Originally I believe in the social contract. I signed up for Ethereum because I believed in immutable code. I don’t like this Frankenstein monster the foundation has chosen to create. To be frank, it makes no sense to me at all seeing that we can just change code arbitrarily when it’s inconvenient.

When you have competitors that are a hundred times more efficient, some of which are being built by Microsoft, it makes no sense at all. I don’t see a chain surviving if that’s its value proposition.

When I signed up for Ethereum, whatever grievances I had about the governance structure or the direction, I made a commitment to see these immutable chain things survive. And in my view, it’s been abandoned. So at the very least, I’d like to see it stabilize.

It’s not going to cost me a lot of money relative to where our company is at. And I think that we will gain a lot of great knowledge, experience and frankly build a nice community that we could certainly deploy apps too, and certainly use other product lines with.

Furthermore, I think we’ll probably have a lot of input into whatever roadmap that ends up being built. And this is all open source technology and we’re a company that uses these types of things as tools. So if somebody comes to me in the future, I’m now going to have on my tool shelf 10 new things as a result of our participation here, that I can take right off the shelf and put it into those products for them.

And a 6-month dev cycle turns into a 6-week dev cycle. So, for a cost-benefit, it’s actually a good investment for me to give a couple of developers for a year to this project. And also it’s nice to see a community coalesces around the original vision and that vision not be abandoned.

So they’re both an emotional component to it and there’s a practical component, from getting skilled devs who understand this to test new ideas.

Leon: I have a question, Charles. What about the DAO hacker, who’s still floating out there with, I don’t know how I forgot how many millions of Ethereum Classic is that going to leave on the danger.

Charles: Stephan probably has a lot of Ethereum Classic because he probably has a lot of Ether. There’re certainly a lot of people who aren’t exactly Ethereum Classic friendly who are large scale holders of Ethereum Classic. And as I mentioned before, my interest in this project is academic.

I can’t tell you where the price is going to go. And I think if we coalesce behind something, get a good roadmap, a good governance structure, and figure out the funding, that certainly gonna be a positive movement in the longterm.

But in the short term, it’s rocky guys. It’s going to be as volatile as hell. Does anytime any conferences occurred, people are going to dump to try to kill us.

Leon: Sure. But I guess my question is we have these, I don’t think any of us advocate theft, right? Even if you advocate immutability, that doesn’t mean you agree that stealing is right. And so there is a large holder of Ethereum Classics out there who many people view as illegitimate like “you should have that”.

Charles: That’s not a legitimate point. I mean, there’s $1 billion USD in stolen Bitcoin, like $1 billion USD if you go through all the hacks for the years. So working on Bitcoin, we’re making $1 billion USD worth of thieves rich, right?

The whole point of these protocols is, you have the protocol and you have what people use the protocol for, just like BitTorrent. You have BitTorrent and you have what people use BitTorrent for. And to say that people work on BitTorrent or endorsing the fact that some minority of that system use BitTorrent for child pornography or use BitTorrent to traffic classified information is a red herring.

There’s a philosophical split. So if I choose to work on an Ethereum Classic technology, I’m not making a statement whether the smart contracts running on the system are good or bad, or the holders of that have legitimately gotten their coins.

Furthermore, there’s actually an interesting legal conversation to be had. Is Ethereum Classic the full coin, or is it a shared drop that was given for free to people? No one paid anything to get their initial with here in Classic.

So just because the DAO hacker got some, is he holding the original Ethereum or is he holding a share drop like Protoshares, the Bitshare. It’s an unresolved question. I don’t care. It doesn’t matter to me. I don’t think about it. It’ll clear the market at some point and the market will move on, just like Bitcoin’s moved on from $1 billion USD worth of theft.

Tai Zen: So you don’t see the DAO attacker holding 7 million Ether Classic is going to hurt the network.

Charles: I think it’ll hurt it in the short term if the DAO hacker chooses to liquidate. Similarly, if Satoshi Nakamoto chooses to liquidate his or her holdings or their holdings, it would hurt Bitcoin.

When you have whales who have a lot of a token, if the whale wakes up one day and decides to dump it onto the market, that’s gonna hurt the market. It’s just like any company that has a majority shareholder or shareholder with a large amount.

If Mark Zuckerberg woke up tomorrow and said, “I’m going to dump tons of Facebook stock”, it would severely hurt the market price, which is why the SEC steps in and says, “you can’t quite do that” if there’s some regulation there.

Unfortunately, there is no equivalent in the Crypto world. So we just have to accept if we choose to invest in a Cryptocurrency that has known whales, those whales can cause substantial damage in the short term to the price of the Cryptocurrency. It’s a buyer beware.

Tai Zen: Because up from my perspective as an investor, a lot of people talk about the DAO attacker having 7 million Ether Classic that could possibly hurt the Ethereum Classic change. But I also look at it like this, is that the Ethereum developers and the Ethereum foundation also holds millions of Ether Classics?

Do you ever have a fear that while you are working on developing the Ethereum Classic chain, the people that you may not get along with on the Ethereum Hard Fork chain, that they might dump or do something with their Ethereum Classic to hurt, just to make you look bad or anything like that?

I’m not trying to create drama between you guys, but is that even a possibility?

Charles: No, I don’t worry about it at all because again, I’m not price motivated. If it goes down to zero, if it goes up to a million, that doesn’t matter to me. I’m here for academic reasons. But for as an investor of Ethereum and as full disclosure, I actually don’t own any Ether and I don’t own any Ether Classic.

I don’t have a stake in the chain. I’m interested in this from an academic standpoint. If I was an investor though, I certainly would be concerned. Furthermore, I don’t believe that anybody owns the ether Classic that the foundation holds.

I don’t believe that it’s right to say, “Give us the ether Classic so we can form a Genesis foundation” or somebody can try to claim Ether from person X, Y, Z because they said that in the other chain they happen to own it.

So it is what it is. Whales are going to exist and that’s another reason frankly why the Ethereum foundation should work with ether Classic. They’re investors, they hold a lot of it and if ether Classic is a success and they diverge then the value gained at ether Classic come at the expense of Ethereum.

To me it’s a good investment for them to work together and support each other instead of being divisive, instead of a trying to dump everything and kill it, they should actually promote it growing because if it grows to $1 billion USD, they have gotten a 5X on the Ether Classic that they hold. And I hope they start thinking that way

Omar: As an investor, it seems to me like what I’m taking away is that for the short term, we should definitely be aware of the solid bear trend of the way that it’s moving down, which is awesome. I mean, we can see that because of the possible dumps from both of the DAO attackers on the 31st, from whoever the core developers are that decides of dump if they dump.

And the fact that we have a Wallet like Jaxx haven’t even added ether. I’m pretty sure it had an Ether Classic on Jaxx. Most of my ether was on Jaxx and I haven’t even been able to access that. So we’re going to see definitely a downtrend.

But I think in the longterm if your roadmap succeeds, it would be really a cool thing to be invested in once we see that bottom. So I hope the price is 2 cents next week personally because I would totally buy it.

Charles: Right. It’s always important to understand that at the end of the day, the core value of a Cryptocurrency is always the size, vigilance, and passion of its community. Bitcoin went through some extremely hard times during its lifespan and the only reason Bitcoin is here today is that it had a very vigilant, passionate community.

So if Ether Classic is to survive, it has to hold itself to that standard. The technology comes, developers come, the funding comes, all that will come. But if you don’t have a community, you have nothing.

So if you’re an investor, the first question you have to ask is, “where is the community? Who is the community? Are they growing? Are they contracting? Are they united? Are they fractured?” And if you can’t get a clear answer to that question, you should not invest. You should not put any money into the chain, in my view, my personal opinion.

Shaka: Charles, as far as your vision, I heard your last interview, you said that Ethereum was inefficient. It was an expensive computer. And Ethereum Classic, as you said, we could debate whether it’s the original, whether it’s a copy, is Ethereum.

And you said that you don’t have any skin in the game and your investment is academic. When you say academic, can we say that you’re trying to stare ether in the way that you think it should have been?

Charles: Yeah, I mean you guys have to understand that my background is in mathematics and I’m a huge fan of things like Haskell and Cock and Isabelle. And when I look at a smart contracting system, I think to myself and say, “What are we trying to accomplish here?”

Writing small snippets of code that is high assurance, we’re building the Mars Rover, we’re not building some web application that breaks all the time. And when you live in that kind of world, the development methodology, expectations of performance, to kind of take a back seat to correctness and security and fidelity, and that kind of a model.

And it seems to me like the emphasis that the Ethereum core developers have had has been accessibility. Let’s build something to get as many people as possible. And that’s why Solidity exists, it looks very syntactically similar to Java Script.

The danger of that paradigm is it’s really hard to write really secure code like the DAO for example, and have guarantees that that thing is not gonna fail. So where I’m going to try to focus the roadmap, and if we can get community consensus that’d be awesome, is trying to steer it into the direction of saying ‘this is for high assurance code”.

There’s a good 35; 40 years going back to Robin Milner and others of academic literature on how to do that well and there’s a lot of applied projects that have pulled that off successfully. Now in terms of performance and efficiency, I’m of the belief that most of your performance gains can be gained by overlay protocols using good Cryptography.

We’re already starting to see kind of Phantoms of that with Hawk and other things that people are talking about. And it’s my belief in the long term that we’re going to see a lot of overlay protocols. These ephemeral black boxes that do computation using an SMC protocol and then they reconcile at some point on the main chain.

So in my view, it’s a fool’s errand to try to chase the super-efficient computer that will have a charted seat space and somehow be capable of doing the mass computation for billions of people, rather than just focus on getting it to work, and be secure, and have correct code.

And then let’s try to connect it with overlay protocols that were connected to service providers, like Microsoft blockchain as a service and say, “can we connect this to project Bletchley? Or can we connect this to Hyperledger? Can we connect this to Juno or something like that?”

And now we at least have some sort of trust model that moves through. That’s where I’m going to try to steer it because I think that’s a more reasonable approach to take. There is a definite use case for that, and you’re not competing with these super funded giants who have built-in advantages over you.

And you know, we’ll see where that goes. Maybe people want to take it in a different direction and that’s okay too.

Shaka: I’ve seen some big names in Crypto that weren’t in favor of Ethereum, but now they are in favor of Ethereum Classic. Do you think that their door has been strengthened because you’re a part of it? That’s one of the reasons that I took a position in Ethereum Classic.

Charles: Yeah, it would be hubristic for me to say that though. There’s the Charles Hoskinson effect and the Cryptocurrency, I mean, it hasn’t been so good for Lisk. My name came on and went from 30th to 20th, so I don’t know how much of my name brand brings into the system, but I think actually it’s old.

I was against its effect and I realized it’s actually a good idea, but to save face, I have to still be against it. So the reality was when Ethereum first came out, there was a lot of big names who were like, that’ll never work. It’s boiling the ocean Ethereum’s crazy. And so they took a very harsh and negative view.

You look at Jeff Garza tweets for example, and now they’re kind of left in this situation where they realize that Ethereum actually is pretty cool and there are some good ideas there, but they don’t really want to say that.

So Ethereum Classic comes out and they’re like, “Oh well I have a second chance. I could go and support Ethereum Classic cause Vitalik’s not there, the foundation’s not there.” It’s like a new thing even though it’s the same. So I think it’s a brand new thing and it gives them a chance to sneak in that, that’s my personal opinion why the big names are coming in.

The other thing, there’s a lot of gamblers who are like, “wow, if this thing could reach parity with Ethereum, I get a 5 or 10X, so why not? Why don’t we try it and see where it goes.” And there’re certainly some people who are pulling the dice on that. And I hope they’re lucky, but I say no.

Tai Zen: Charles, why are you talking about us when we’re right here talking to you? You’re talking about those gambles. You’re talking about us. You’re telling on me, Leon, Shaka. You’re taking a stab at us when we’re trying to interview you on the Google Hangout.

Charles: No, actually those comments were right for a different person who has put a lot of money into Ethereum Classic, very publicly who shall remain nameless. I think that’s a big risk and I applaud that person for that risk.

But I won’t feel promises or guarantees. Again, I’m not a leader. I’m just trying to be a referee and investing your own risk. I don’t recommend one way or the other.

Tai Zen: I know you have to remain neutral, but because myself and Omar and Shaka and Leon and all investors and we are the quote/unquote gamblers that you’re referring to, I think it’s okay for us to say that the person you’re talking about is a Barry Silbert.

Charles: I cannot confirm or deny who that person is, who’s publicly decided to make a very large investment.

Tai Zen: What do you guys think?

Leon: I agree, Tai. I will agree with it.

Shaka: Yeah, you hit that one time.

Omar: Barry’s getting so much fun these days. He’s the one that needs a community, right?

Tai Zen: Okay. We’re coming to the end of the hour here guys. And I think that this is a question that’s on everybody’s mind and I think this is going to be the last question that I have for you for the night.

In a separate episode, Leon and I discussed “who is the potential DAO attacker”, and we said that it’s only a limited number of people. We know that’s only a small number of people that knows Solidity. And that is the insider on Ethereum. And we want you to go on the record tonight and state, confirm or deny: “It’s Charles Hoskinson, the DAO Attacker.”

Charles: I just want to say something. There were a group of people in Ethereum. When I left Ethereum, stepped out to all was included in that group who said I had no technical skills. So I find it incredibly erotic that there is a group of people at Ethereum of who say Charles has a competent, he has technical skills, he didn’t know what he’s doing.

But at the same time, I’m some sort of hyper sophisticated hacker. No, I’m not the DAO hacker. If I was the DAO hacker, I wouldn’t get involved in Ethereum Classic. Again, it’s pointless to speculate who these people are cause there’s nothing to be gained from it.

More likely than not, the DAO hackers, probably in Russia, if you look at the community that’s formed around Ethereum Classic, and you look at these things, that’s where most of these attacks occur. But it’s a senseless thing and there’s no reason to speculate.

Tai Zen: Would you agree with a LeonFu.com and I, that the DAO attacker had to be someone from inside the Ethereum, as an insider? I mean, they handled no Solidity know.

Charles: No. You have to understand that the DAO attack that was done was not super sophisticated. Second, it seems like a few days, or even up to a week before the DAO hack occurred, there was a report of a bug that could have been used to exploit the DAO hack.

So it was just a simple case that somebody was able to connect the dots. And frankly, Solidity is not a very complicated programming language. We’re not talking about like ADA or C or you’re doing some sort of like analysis of assembly code here.

This was a situation that you have a language that syntactically similar to JavaScript. And if a person is pretty clever about how to put things together, they can very quickly determine that there’s some sort of flaw. So I think it’s more of a situation that the DAO was poorly designed, it was poorly coded, it was coded in the language that was rather unforgiving for mistakes.

And there were no provisions put in for fail-safes. Like one of the things that happened when the DAO first came out and say, “Why they held it, they have two smart contracts.”

They should’ve had a feeder contract where all the value listed lived and they had curators who could shut off the flow of value from the theater clown track to the main contract. And over time, money moved over and you either sit there or if you have an account, you can pull your money out.

Now that’s a very sensible model because if there’s a problem with the DAO and you say, “Oh, okay, well let’s cut the money off and move it to a new contract or something like that.” And my value at risk is very small. The people who built the DAO for whatever the hell reason decide to just put it all into one bucket and hope to God that everything worked out.

It’s akin to like flying on a plane that’s never been tested. No one in their right mind would ever do that. So I think it was just a case of somebody fucked up and there’s a huge pool of candidates that can take that opportunity.

And as we’ve seen with Bitfinex, as we’ve seen with Mt.Gox, as we’ve seen with hundreds of hacks, if there is an opportunity to take advantage of a situation, and there are hundreds of millions of dollars at stake, somebody going to take advantage of the situation.

That’s exactly what happened with the DAO hacker. Shame on slock.it and shame on the people who created the DAO for not having the foresight to think that they could make mistakes, and engineer around that.

Tai Zen: Okay. That’s all the questions that we have. Any of you guys have any last questions before we wrap it up?

Leon:  I’m good. Thanks a lot, Charles. It was great talking to you again.

Charles: Yeah, it was a lot of fun guys. I had a lot of fun.

Shaka: Yeah, I’m good. Thank you, Charles.

Omar: Thank you, Charles. I’m going to be awesome to this again after you finished the whole roadmap if that actually makes out.

Charles: So yeah, there are 4 things: we’ve got to get social consensus, the roadmap, a governance structure, and then figure out the funding to get those 4 things.

Tai Zen: Okay. So I want to wrap it up here guys. I will say whenever the next time you have a chance, I like to get you and Max Kordek to see what the latest developments are for the Lisk project that’s possible. And then also do you have anything to say or plug for the IOHK before we wrap it up?

Charles: We’re going to be on epicenter Bitcoin here pretty soon and we’ll be talking about score X at the very least. We may talk a bit about Ethereum Classic and some of the directions we could take the technology. So that’ll be fun.

We’re gonna film that I think on Saturdays, so the episode should come up pretty soon. The proof of stake is going to be released here in August and that’ll be a lot of fun. Our hope is to add a delegated component to that at some point in a side chains component to that. So look for that.

And we’re gonna be doing a survey of blockchain sharding and a survey of transaction languages used in Cryptocurrencies. Those papers will come out over the summer and probably somewhat into the fall. We’re also sitting up a governance lab. We’re tentatively calling it DAO labs, but we might change the name.

That’s going to study basically how do you construct a blockchain-based governance system and build a treasury and make decisions like how to fork protocols in a more reasonable way. So look on the horizon for some form of an announcement about it.

Tai Zen: Shaka is broadcasting from New York City; do you want to plug your YouTube channel?

Shaka: Whenever you get a chance, come and check out my channel Chase That Coin, and check me out at the same Chase That Coin on Twitter.

Tai Zen: Omar, you’re broadcasting from Miami, correct?

Omar: Yeah, correct. Actually, I’ve started off with the Ethereum new channel, which I eventually took into steam it and a little bit of big point. I’ve always been in that first. And so please check out, I usually go by Crypto with a zero at the end on that.

But if you type Ethereum you would find me, so I would love to have new people checking out the channel and putting some input. Thank you for having fun

Tai Zen: And LeonFu.com, you’re broadcasting from the factum headquarter. Is at 10:30 PM at night, they still get the doors open for you?

Leon: I think they’re about to kick me out. So I got to sign off here.

Tai Zen: Thanks for joining us tonight guys. If you guys like these live broadcasts, give us a thumbs up. If you guys don’t like it, give us a thumbs down so we’ll know not to waste time making it.

And if you guys haven’t followed Charles on Twitter or Shaka on YouTube and Twitter, and Omar, make sure you guys go to do that and we’ll look forward to seeing you guys in the future of video guys. And this will conclude the broadcast here with Charles Hoskinson.

Charles: Thanks, guys.

 

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