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NYC 19 Conference Report May 14 - 15 | #TechonomyNYC

Internet & Blockchain: From ‘Don’t be Evil’ to ‘Can’t be Evil’

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  • David Kirkpatrick of Techonomy with Jutta Steiner of Parity Technologies. Photo credit: Rebecca Greenfield

Speaker

David Kirkpatrick
Founder and Editor-in-Chief, Techonomy

Jutta Steiner
Founder and CEO, Parity Technologies


Steiner was Chief of Security for Ethereum’s launch who had a vision for how related technologies could transform the entire internet. How should we think about crypto and blockchain technology now?

The following transcript has been lightly edited and condensed for ease of reading.

 

David Kirkpatrick: Jutta Steiner, she is the CEO of a company called Parity.IO. She was one of the original team that created Ethereum, which if anybody is a crypto blockchain expert knows, or not even expert, Ethereum is one the most important things that’s happened in the crypto in space. I never know what generic term to use. What generic term do you use for the whole?

Jutta Steiner: Crypto space.

Kirkpatrick: Crypto, okay. Thank you. And so but basically Ethereum always had a very, very ambitious idea of what is was possible and I want you to explain that a little bit and how Parity is an extension of that. Let me see if there’s anything else I should, we’ll get to Polkadot and Substrate as we go. But I told Jutta I wanted to start this way but maybe we’ll do this. What is wrong with the internet now that we need a new approach and why is crypto going to help?

Steiner: That’s a not a small question. A lot of things are wrong with the internet. But I mean I think it’s important to decompose that question. I mean right now we’re hearing a lot of call for like more regulation and like antitrust and what not. And while I certainly think there is a lot to be done on that side, our belief based on what the work we’ve done on blockchain is there is a technological component that will play a role in that blockchain and other peer to peer technologies provide a very new way of architecting applications that will bring us from a place of don’t do evil to can’t do evil basically.

Kirkpatrick: But how and why?

Steiner: Basically because it’s possible to hardcode rules into an application. So instead of having to rely on like in any case how to understand tendencies that can over time be unilaterally changed and what not like there’s a transparency that I as a user can access, can see and that can’t be unilaterally changed because there is no single provider or single operator sitting in the middle. And we’ve seen that like very early on with bitcoin basically like a decentral way of transacting, paying on the internet. If you look at it from that view and we’re sort of abstracting that and tearing it apart in order to see what else you can do with blockchain and ethereum was that first step basically realizing I think it was mainly Gavin Wood who realized—he was also part of the ethereum team and that the first implementation—that like sort of what you get is what we call the decentral world computer and that allows you to architect what we started to call decentralized applications and—

Kirkpatrick: The world computer.

Steiner: The world, no smaller thing than the world computer.

Kirkpatrick: Keep going.

Steiner: The world computer in a very new way. And ethereum was sort of that first step. Trying to see like is that actually true. Can you do that? And experimenting with the technology in that way and it had attracted a lot of people to the space, people who were frustrated by the status quo, I mean we’ve all seen it in the last few years. And who saw that alternative and that vision of like, yeah, there is technology that plays a role and when we can get away from having centralized servers in the middle and instead like a transparent interaction layer, sort of public digital commons and blockchain is that medium of hardcoding laws, agreements into the application. And that’s what we are now further doing with the company, with Parity and the project Polkadot/Substrate that you said, moving on from basically bitcoin and ethereum still being in some sort of sense prototypes or POCs.

Kirkpatrick: POCs?

Steiner: Proof of concept.

Kirkpatrick: Proof of concept.

Steiner: So more sort of a state where it can actually be used. It’s scalable and whatnot.

Kirkpatrick: Well, the reason I wanted you to speak here, you’re a very articulate explainer of what’s happening in blockchain but your company also is unusually ambitious. And I think you’ve sort of hinted at it but I just want the audience to understand, I mean so many things of what we hear about bitcoin and blockchain are, you know like Forbes, the new issue of Forbes has the blockchain 50, which is 50 companies that are using blockchain for this or that. Okay, that’s all cool. She’s talking about transforming the internet. That’s what she’s talking about. Basically, this is not a company that’s trying to like do financial services, this and that, it’s a company that believes it’s possible to build a new architecture for data effectively. Is that overstating it? And communications.

Steiner: I think that’s true. So that’s what we started to—although I must say like we’re not the only ones. Like there is a bunch of other projects in this space that we’re working with, collaborating with on making that happen. Like basically building that new web stack for future internet that’s much more decentralized and it’s kind of, like many of you maybe have heard of blockchain but there’s actually a bunch of technologies that are finally coming together. Like I think we’ve seen that early on with like BitTorrent and like sort of a different way of making data accessible on the web and there’s like evolutionary improvements of that project called IPFS that tries to change that as well or like improve that as well. But then there’s also technologies like zero-knowledge proofs that will make it possible—one of the things that are currently not possible with blockchain is anonymity and that’s a really interesting and cool technology that will bring that to this web stack and we’re seeing this confluence of different technologies being developed at the moment and which we believe will accelerate the adoption.

Kirkpatrick: So we could have transparency and what’s the other term that you used, but also anonymity.

Steiner: Authenticity? I don’t know.

Kirkpatrick: But I get, I’m not good at all the terminology around this area but also have anonymity. That could be quite powerful. Because obviously the auditability, the shared—the consensus really, it’s consensus-based technology meaning that whatever happens in the data can be confirmed independently from many vantage points, but it’s also transparent in that we sort of see how things are being moved around but your belief is that that can actually give control back to the user in a way that we have lost in the current architecture. Am I over exaggerating?

Steiner: Mhm, So one of the interesting things you could do for example with zero-knowledge proofs on blockchain is, I mean a lot of financial services or governments are also concerned with regards to blockchain, but one of things you could for example do is in a financial transaction you could prove that you paid the tax but you don’t have to expose who you actually interacted with. Like there could be the certain things that you do expose because that’s relevant and that’s also okay to share but certain things that don’t have to be shared and at the moment there’s just no other way than giving like blanket trust, blanket access to everything and we hope to come to a place where these technologies basically allow to make trust in particular much more granular but also like all this information sharing that is relevant to certain parties much more granular and therefore give much more control to the user.

Kirkpatrick: I should mention that Jutta wrote a piece on the Techonomy website that we just published in the last couple days. But you know, I wrote down a few things that I thought we were here to describe and I think you’ve already begun on all of this but the central problem that I see is who owns the data as we move to a data society, right. At the moment it’s not us. That’s the problem, right? And that’s essentially the problem that you’re setting out to solve, right?

Steiner: I mean yeah, that’s one of the problems we’re hoping to solve by using blockchain so that you come to a place where data can be controlled and access to data in a much more granular, just in time fashion. So I can decide who I share my Fitbit data with. Like I do think there is a use in sharing data but it should be always in my control and always along the way it should stay in my control so that we come also not just to a place where all the wrong things, all the things that are wrong at the moment that like we can overcome them, that also to a place where we can make like constructive data sharing actually possible and people retain control on their medical data. They transparently see who has access and who hasn’t.

Kirkpatrick: Well, one of the things that came up a lot with Cathy Bessant of Bank of America before is this issue of trust. And another thing I wrote down as a result of our preparatory conversations was this idea of hardcoding trust into the regulations that govern the internet.

Steiner: Yeah, I think there’s a lot of, like a lot we’ve said about trust, obviously everyone has their own association of what trust actually means, but one of the things—like in the crypto community, a lot of people talk about trustless applications. That’s actually not how I think about it these days. They’re not trustless. But instead they let me trust at the point where I’m happy to trust and where I can actually make that much more granular. So I’m happy and I do trust that Google has like really high performance infrastructure to do fast computations, like that’s fine. But I don’t trust them with my personal data and I want to retain control between which services is that data shared and so on that level hardcoding like when access happens and seeing logs of when all the different parties access my data. That’s the point where we want to get to. And it’s not just like a dream, we’ve built early prototypes of that where we combine blockchain with these new cryptographic primitives like decentral private key sharing and what not that make it all where we can already see how such an infrastructure can work.

Kirkpatrick: Let’s talk a little bit about the chronology. So you’ve got two technologies that you’ve pretty much built or finishing, just describe what those are.

Steiner: So there’s two projects we’re working on. They’re connected, Polkadot and Substrate. So Polkadot is basically the next step in blockchain technologies. So think of like bitcoin could to payments, ethereum brought us the first idea of a decentralized platform for applications and now we’re trying to fix a bunch of issues, shortcomings of ethereum and bitcoin at the moment. Like one is scalability, interoperability between chains because we’ve seen like what’s been called in this space maximalism between the chains and so it’s important to connect them otherwise you end up sort of with this digital nationalism, like people just believing in bitcoin or just believing in ethereum. And we actually think the future is going to be like domain specific chains that interact for scalability reasons and whatnot. A big one—

Kirkpatrick: Polkadot enables that interaction.

Steiner: And Polkadot would enable that. So in a way we’re also like now coming to a point where we’re providing like toolkits to make innovation much, much easier to achieve for other development teams that build on top. So making much more boilerplate. Like before it was all very bulky and difficult and you needed to do everything and so we’re finally coming to a point and that’s this development kit Substrate that you mentioned where you don’t like, I mean obviously you still need to be an engineer but you don’t have like write all the code for a new blockchain if you want to experiment with a domain specific chain but you can leverage all the learnings that we’ve had in that toolkit in order to innovate on certain levels like where you’re like, “Oh yeah, I’ve heard of this zero-knowledge proof that might be interesting for my banking applications so that’s what I want to play with.”

Kirkpatrick: So Substrate is kind of a platform that enables the more easy creation of new blockchains.

Steiner: I think I mentioned like a WordPress for blockchains.

Kirkpatrick: WordPress for blockchains, that’s a good term to use. And Polkadot is kind of like a connective tissue that allows multiple blockchains to essentially interoperate and also I suppose has other qualities which we don’t need to get into now.

Steiner: Another image we also use sometimes is Substrate is sort of the new operating system for blockchains and Polkadot’s the networking card to interconnect all these different blockchains, so that’s also a way of looking at it.

Kirkpatrick: So if the vision that Parity has were to really be fulfilled, how soon would those innovations begin to impact the lives of the people in this room?

Steiner: Hopefully fairly soon in the next, I don’t know. I mean it’s hard to predict the future but three, five years hopefully. As I said, I think we are coming to a point where finally the hopes that people have with blockchain can actually be achieved. Like we’ve used it, we have actually certain applications in deployment. I mean very early versions but that show there’s like a huge benefit of having these open source, open commons protocols instead of like closed server applications running. We work with The World Food Programme for example. In Jordan, they use like a stripped down version to distribute aid to refugees and for them it’s incredibly helpful because they have like lots of different parties that they need to coordinate, like payment providers and like the vendors and whatnot. And instead of like using third parties, they can just use this open protocol and that has brought costs down. It makes it now easier for different parties within the United Nations also use that system because it’s open, nobody owns it, and therefore much less political disputes.

Kirkpatrick: I’ve heard a lot about that U.N. world food program example. So do they use Substrate and Polkadot or is that primarily Substrate that enabled that?

Steiner: So they actually still use the earlier version that we had within ethereum but like they’ll be moving, I’m pretty sure, to the new systems as well.

Kirkpatrick: Okay. In this world, and I want to get to the audience because I know there’s some people that have better questions than me in the room, but in the world that you envision is there still a role for the Facebooks and the Googles to function? Would they be able be entities anything like they are now if the world were to emerge that you envision?

Steiner: So I mean what we’re doing doesn’t necessarily immediately destroy what’s there. I think there’s like still a lot of thinking needed in terms of business model. Like in the end there are choices that we make. Like we can still continue and unless there’s regulation like it’s probably hard to break that monopoly up but like it’s a completely different paradigm and I hope that—basically if regulation and tech and legislation work well together that this can be like the building block for these future applications and future systems that are much more a public commons than like a monopoly that we have right now.

Kirkpatrick: Okay. Why don’t we get the lights up? I want to hear anybody in the audience that has interesting reactions to this or comments or questions. Okay, back there. Can we get the mic there? Identify yourself, please.

Kumar: Hi, I’m Levine Kumar from Accenture. What is the best monetization process you suggest for decentralized kind of application?

Steiner: There’s, I mean, as I said business models is probably the most complicated thing or at least where a lot of innovation can happen. I mean early on what we’ve seen now is basically people trying to formalize cooperative models like user reward models where you contribute your data and you get rewarded. And how far that—it’s really a tough question. Like how these systems are going to look like is the biggest question in blockchain at the moment I think but that’s where people are exploring at the moment.

Kirkpatrick: That was a good answer because I was trying to explain at lunchtime one of the things we try to do here is just have so much coming at you, that you start to see connections you might not have seen before. If you think about Scott Heiferman talked about cooperativism and you’re going to hear Doug Rushkoff tomorrow morning, it’s one of this main things. Not capitalism, not socialism, but cooperitivism. So she actually is trying to build something that can technologically is hoping to enable that. That’s what makes this so interesting for us. There really are common threads here that many people are seeing the need for something different and it’s quite interesting to us journalistically. So, I just wanted to comment.

Steiner: And really on that technological level where it like fundamentally can’t be coopted by a single party because it’s not owned by a single party and I think that’s the key thing.

Kirkpatrick: Well also anyone who was at Half Moon Bay at our last conference Tim Berners-Lee was there talking about his Solid program. Which is very similar in its intent to put power back in the hands of individuals because he similarly believes that data has gone out of our control and that’s fundamentally untenable as the inventor of the internet. But he’s not using a cryptographic approach. But it’s very interesting another parallel thing. Okay.

Brownberk: Craig Brownberk. So I’m a partisan of blockchain and crypto, worked with them for the past two years so this is coming from a friendly place. But most of the companies that are working on blockchain, new blockchain development are fundamentally still oligopolies. Whether it’s DPOS, delegated proof of stake or proof of stake, there’s validators, witnesses, we can call them whatever they are. Can you talk about how the governance characteristics of Polkadot and Substrate are designed to actually work with some of the issues around this oligopolistic interest in the governance space? And you may need to unpack that for the audience.

Steiner: Yes, I think so. So there’s I guess several different answers and maybe I start with the one. So one of the biggest problems that we have at least right now with the systems that we see in bitcoin and ethereum that governance was an afterthought. So everybody was just excited about, “Oh yeah, we have that system.” But nobody thought about like—and I guess some people from open source might have because they’ve seen similar issues, but how do you govern that? Like how do you deal with upgrades? How do you deal with issues and whatnot?

And like on a technological level one of things that Polkadot does, it has a technological way for upgrading so you don’t have hardfork, which is a way of upgrading but is like a hard to coordinate way and you don’t know the outcome basically. So that’s on a fundamental level but then like we’re looking at various ideas also like from liquid democracy and what not. I think that’s also the interesting thing that now we have frameworks for experimenting with these things. So we have like a council stakeholder model in Polkadot initially and then we’ll see how it evolves basically over time. But the ideas also like how to pull in like other stakeholders in to such a thing also an automated way be it like sensing the community and user opinions and what not. I mean to be honest we also don’t know.

Kirkpatrick: But it is, one of the things we didn’t, okay—Tony, real fast. Let’s go.

Tony: Just to pick up on that.

Kirkpatrick: This is only going to be quick so real quick.

Tony: Just to pick up on that, if we have a trust protocol layer and there’s many eyes looking on it so you can validate, you know, that piece of land is mine and I bought it in 1962 blah, blah, blah. It still needs to be acknowledged by some other entity and be recognized. Do you know what I mean? So there’s the governance inside a blockchain and how you update forks and everything else, but then there’s the real world how do you stake claim? You might have evidence to stake claim but you still have to go to some police officer and say that’s actually my land and this person took it away. Have you given thought to going beyond just the technological capability to have trust as a Substrate to actually how governance outside of that technology main works?

Steiner: You mean how that ties in like—?

Tony: With society.

Steiner: Yeah, I mean, yeah we have. But so I mean there’s also like various different answers like where it starts, like how does information get in. And there’s like technological solution also to remove trust, like you don’t trust a single party for putting information for example so think of you need a what’s called an oracle that puts on weather data into such a system and you want to make sure you have like several in order to not depend on a single one. I mean in terms of adoptions and whether like governance will recognize that, that’s a—I mean, we’ll see. We’re seeing it with bitcoin now, it’s being adopted by more and more institutions and there’s a recognition. I guess like there’s this fundamental fear that sort of governance loses complete control and I think it’s our duty as well to make sure we work together to show also where the benefits are to build in end better institutions for everyone. I mean that’s my fundamental hope that also public institutions will become better and more transparent through using these technologies.

Kirkpatrick: Well you know there’s an entire week of discussions about blockchain underway right now. So obviously a lot of ideas have come out in the firehose and Jutta happily speaks quickly because so she got a lot out in relatively short time. We didn’t even talk about the fact that Polkadot also is a coin that’s helped finance the company that has many of the top ethereum coding community working on its tools right now. So this is a very real thing that she’s doing and I think it’s, to me it’s just really emblematic of the most positive side of the whole crypto community which is why I wanted her to come here and talk to you about it and I think it’s likely to amount to quite a bit more going forward, so thank you Jutta, for coming and talking about it.

[APPLAUSE]

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