Cardano Virtual Summit 2020 Recaps: Charles Hoskinson's Opening Keynote - 02/07/2020

Cardano Virtual Summit 2020 Recaps: Charles Hoskinson’s Opening Keynote - 02/07/2020

(Written by @Eric_Czuleger)

The following is a distilled write up of the keynote speech delivered by Charles Hoskinson at the Cardano Virtual Summit 2020: Shelley Edition.

Beginning with questions

This is a humbling moment in the life of Cardano. Over 9 thousand people have registered for this event. Almost 10 thousand people have signed up for something we pitched to the general public a month ago. It’s been a long journey to get here. We have all experienced many long sleepless nights with too much work. But after five years in the making it is worth it.

When we started this project we realized that if we wanted to do something new, exciting, and evolutionary, we had to reevaluate how the world works and look at things from first principles. As an organization we were not so happy with taking the things Satoshi or Ethereum had built and building on top of that. Instead we wanted to ask fundamental questions and see where they take us.

The down side of this approach is that it is a lot of work. It takes time. It is confusing. It is hard. But it is incredibly meaningful. Paper after paper, scientist after scientist. The dark room we chose to enter was slowly illuminated. We got more light, texture, and clarity. We started learning things along the way.

The first fundamental question we had to ask was, if we are building a cryptocurrency which can scale to billions of people, then how should that foundation work? What should be the heart of it? What should the consensus algorithm be? When we started in 2015 we decided to find out what a blockchain was.

Finding the heart

There was a wonderful paper written by Aggelos Kiayias and his friends that gave us a good security target. We started a research stream in proof-of-work and one in proof-of-stake. We went where the science took us. Paper after paper and year after year we eventually realized that Ouroboros was the horse to ride.

Ouroboros has all of the properties that allow us to build an ecosystem which is not only resilient but also sustainable. It also becomes more decentralized over time. That is the heart of Shelley, which we are releasing this month. Ouroboros is special.

As the token gains more value you gain more security. Secondly, as the token appreciates the system becomes more decentralized. This means that more small businesses and stake pool operators can compete against one another and secure the system. This is the opposite of Bitcoin which encourages vertical integration along private highly centralized pools. It is no coincidence that because bitcoin is so valuable now. Less than ten mining operations now control over 50 percent of the hash power.

Should we achieve the same market cap as bitcoin we will have thousands of pools and small businesses competing for your vote and delegation. It grows from there. More operators and capabilities. The system grows faster and better. It is an amazing model.

Better together

This is an inter disciplinary model which required the expertise of game theorists from Oxford. It required the top cryptographers. We needed to find out where to get good random numbers and where to find the synchronization model. This is not easy work. We set a very high bar. We didn’t say we would make protocols that only make sense to us. We said that we would take it to the academic community. There is a beautiful trade off here. Even though it takes more time, we get confirmation outside of ourselves that we have reasonable ideas. But moreover we create the world’s largest decentralized brain.

We believe in decentralization. We believe in moving into chaos of a world ruled by the many. This requires a great deal of care, caution, and thought. Ouroboros is unique and special in this regard. If we want this protocol to evolve and grow to meet the needs of billions of people then it will need more research and ideas. If we rely on a single set of minds and a single entity then no matter how decentralized the community is then there is a fragility there. We cannot optimize around a single actor.

From the beginning

So how do we do this? We get the academic world as a whole interested in what we do. We have attended many conferences and written over 60 papers. We are proud of the papers not only we have written but the papers that those who don’t work for us have been inspired to write about our protocols. Academics all around the world now wake up every day thinking about the problems we think about. They use them as the foundation for innovation. They will continuously develop new concepts which we as a community can adopt from the market place of ideas.

This is a beautiful accomplishment that we have achieved with Cardano. There was a Nakamoto paper which just came out from the University of Illinois and Stanford. There was inspiration there that was gained from Ouroboros. It was pushed out into the archives and we said ‘wow.’ This is a great example of what we have accomplished.

Soon there will be hundreds if not thousands of ideas which come out of this community. That is the first milestone on our road to decentralization. But we also had to write code differently. For more than 40 years there has been a movement to remember where computing came from. It is no coincidence that the foundations of computer science were made by mathematicians. They wanted to use magic machines to solve their problems. While they couldn’t quite do that they invented artifacts like the Turing Machine.

Because of this there has been a desire for more rigor in programming. We have all marveled at Space X launching rockets. In their 18 year history how did they get to the point that people would actually trust those systems with their lives? They had to think differently and write code with more rigor. We then had to ask a question:

The right way

Why is it moral for us to be in a space in which if we make a mistake our users suffer rather than us? So we said that if we were going to do this then it was not enough to just do good science. We as a company had to commit ourselves to a formal approach and the use of formal methods. This is antithetical to everything that an entrepreneur would tell you to do. It is time consuming and expensive and it extends the time to market considerably.

So we built a whole department which only thought about formal methods and how to make them more agile. This allowed us to measure progress in weeks and months rather than years and decades. This was an enormous challenge which we rose to. Now when we look at Shelley we see that the formally specified soul of Shelley is ready for release.

This gives us an agnostic unambiguous way of talking about our protocol. This allows anyone to make a go client, a python client or anything else they may want to generate. We have a specific set of tools like those used at Space X or in Pharmaceuticals to find out if what we are doing is safe and works the first time. This is a moral imperative. We are building something that we would like to last.

The long arc of history

While living in Japan, Charles Hoskinson spoke to some construction workers building the bullet train. One of the truly amazing things about this conversation was the fact that one of the worker’s grandfather’s had worked on the same train. Now, it was his grandson’s first day. Plans for the train go until 2050. This is the long arc of history that we are aiming for. We are working with care and detail.

One incredible moment in this conference was inviting internet co-architect Vint Cerf. He built something that people certainly tend to like. We invited him to come to the conference to tell us what he would do differently if he could build the internet again. If Cardano does achieve the scale of the internet then we will be on the same panel in 2050 or 2060. At that point we will talk about how we built the world’s financial operating system. People will then ask us the same question that we asked Vint Cerf.

This is why it is important to build things as correctly as possible up front. It is also important to create a process which creates as much collaboration as possible. We wanted to turn this over to the community but we had to do it in a way that was safe and responsible. That is why we created the Incentivized Testnet, the ITN.

We built it, they came

This was our ‘if you build it they will come’ moment. Once we built it, the community came to the tune of over 12 hundred stake pool operators. Slowly but surely they figured out how to create blocks and use the software. They started telling the world who they were. They created branding and t-shirts. This was an amazing and diverse crowd of people to work with.

They proved to not only us, but to the world that they could turn Cardano into the most decentralized ecosystem. To those stake pool operators we thank them from the bottom of our hearts. We could not have done it without them. We built it and they came. They made us all so proud and left us with a high degree of confidence to set difficult parameters.

Along the way we realized that we had to innovate in many different categories. We moved from a monolithic to a polylithic architecture. We had to change how we were listed on exchanges. We evolved into a framework for explorers and exchanges to have a framework for interacting with our wallet. We didn’t build this alone. We worked with exchange partners like Binance with whom we have learned a lot.

Learning and growing

This is how we have thought along the way. We didn’t get everything right when we started but we learned and grew. We are relentless in our engineering. We have an inspiring and dedicated team of engineers. The last three months have been a wild ride. So much work has been done across every part of Cardano from the product management team to the project management team even with the global pandemic in the background.

In the end we made it work through ingenuity and creativity. This is an extraordinary thing. When people are challenged they can rise to the occasion. For example, we had to invent the hard fork combinator in order to have a smooth hard fork. This is who we are as a company this is the standard that we set for ourselves as a company and a community. This is where we have been. Now, we would like to talk about where we are going.

On June 30th we launched the Shelley node. We will be updating that every week until the 29th and then the hard fork will be triggered. That’s not the end of the story though. It could be given the fact that we are the easiest to list, the most scalable and the most energy efficient. But that is not enough for us.

Building critical infrastructure

We need native assets, we need multisig and smart contracts. The beautiful thing about how we have structured this project is our parallel work streams. Our Goguen team has been working tirelessly to make a great smart contract ecosystem and experience. We are not walking in to change everything that has been done before. We are going in to change things methodically with the legacy infrastructure.

Ultimately we must ask what we are trying to accomplish. If we are attempting to change everything that came before us then we have freedom but no adoption. If we say that we are going to dramatically enhance things from the past then we become an essential part of the emerging business environment.

When we added Plutus to our extended UTXO model we recognized that the things which go on the chain are equally important to those that go off the chain. These things must have a symbiotic relationship. So, within the next 120 days the native asset standard will roll out for Cardano. This will include a great listing experience for supporting Cardano tokens.

Native assets

We will be discussing exactly why the Cardano native asset standard will be the best. We have learned a great deal from ERC20 tokens and colored cryptocurrencies with the extended UTXO model. We know that we cam make assets that are easier to issue, operate and proliferate. It will be a far richer experience. These will include security tokens, loyalty tokens and other issued assets.

We are also launching Atala PRISM at the summit. This is our identity management system. It is not enough to talk about just value and assets. People are connected to these things. Anyone using a blockchain or engaging with utility on a distributed ledger is identifying people and understanding of those people are credible actors. How is this done in a decentralized system?

That is what PRISM deals with.

Decentralizing identity

We use the DID standard to build a beautiful framework which will fit on top of Cardano. It will open up all kinds of possibilities for how people will work with Cardano. Currently, if you have an exchange account which you want to withdraw funds from PRISM will allow individuals to authenticate their identities so that they can withdraw their desired funds, this adds another lawyer of security for the user. This will also satisfy the new regulations present in the space.

We can also enhance this system with zero-knowledge cryptography. We can blend our identity stack with new tech which increases privacy while accomplishing business goals. This could be revealing age or ownership. It could also be used to establish self-sovereign identity. All individuals should be in control of their own information. PRISM will work directly with our smart contract and multi-asset standard.

Within the next 150 days Plutus Foundations will come out. This is our first entry into smart contracts for Cardano. This will bring functionality and power to Cardano. This will allow us to transcend other ecosystems by making us far more interoperable. It will also allow others to work with our ecosystem and use our blockchain as a service.

Cardano is both complementary and layered. Because we have stake pools we also have service providers. This means that we can add all sorts of layer-2 services to augment smart contracts. This could mean random number generation, oracle services, cross blockchain interoperability and hydra channels. These will be made available as APIs to all smart contracts in our system meaning that everyone can have censorship resilience and security alongside low cost and performance. Cardano will be the best of both worlds.

Encouraging developers

How will we get developers in our ecosystem though? Dapp developers are slowly realizing that there is no reason to bet the farm on the success of one platform over another. This is why we are making sure that we are included in people’s view of platforms to build on. Furthermore we notice developers who are unable to work with other major systems due to the fact that people often want to work with Haskell or functional paradigms.

What we have built with Plutus and Marlowe allows them to work how they want. This will allow them to build great Dapps and great DeFi experiences. However, we must have great incentives for them to do this. In 2007 Steve Jobs had a similar problem. He had to incentivize developers to make something on this platform, the iPhone. So they needed to give people the funds to make great experiences happen.

That is why we would like to announce that today we are partnering with Wave Financial Group to fund the development of projects in the IOHK ecosystem. IOHK will contribute 10 million dollars to this fund and Wave will match it over time. This will add up to $20 million dollars. We are going to call this the cFund. We have already begun to take pitches at We look forward to seeing all of the proposals we receive.

The purpose of the cFund is to take people at the $250 thousand to $500 thousand range to create great DeFi applications. As we get closer to the unveiling of Goguen we will announce more of these relationships but we felt it was incredibly important to fund good ideas to build out the Cardano ecosystem while giving them the support and tools they need. This will help them upgrade, augment and define where they want to go and what they want to do. We have an eclectic group of crypto professionals to offer their advice to burgeoning businesses.

Governance and the globe

We have built a passionate and interesting ecosystem of individuals that reminds us that we need to build something great every day. We know that a lot of good people believe in us and that inspires us. We recently demonstrated that governance is hard with a vote on the ITN. We then thought a lot about this and asked how we would open this up to honor the sustainability of our cryptocurrency ecosystem.

We want to allow people to decide for themselves where they will go and what has the value to pay for. Governance in the Untied States at the moment is a demonstration of how hard governance is. As we look to other parts of our ecosystem like coding or computer science or mathematics there is a great deal of certainty. However, when we look to governance there is no one case of one government that is so evolved that it is recognized as the perfect model for consent. So how can we get to Voltaire?

We launched a project on the back of the ITN using the ITN developers. They are now working on project Catalyst. This is a voting framework specifically for Cardano. They have built a cellphone application to allow others to submit ballots, proposals, and requests for funding. Ultimately, we would like to decentralize the cFund. This means that the community will be able to establish priorities and vote on proposals.

Building the ballot box

Come July, individuals will be able to submit ballots. The additional funding which comes from the ITN equals about ten million dollars. This means that there are two funds here. One controlled by IO Global and the other controlled and voted upon by the users. We have partnered with Submittable to allow everyone to submit ballots, then voting will happen in August. Individual ballots will be available on cell phones. It will allow everyone in our ecosystem to decide where it goes and what it builds next. Furthemore, it will help build up our ecosystem.

There is a lot more to do of course. We would like a two stage voting process, a first stage to ideate priorities the second will be to decide upon how to pursue these ideas. We will work through partnerships to have the best possible outcome for any ballots submitted. This will create a sort of expert class within our system.

Gaining a voice

We are often asked how someone can have a voice in the system without having a lot of ada. We believe that we will be able to build individuals within the ecosystem who can be involved in curation and innovation management. With a voting system individuals can vote for a project but also for people working for the Cardano ecosystem. One example of this is transferring the value paid to the Cardano Effect podcast from the Cardano Foundation to the Cardano blockchain itself.

As early as August, this voting begins and people can begin making work on Cardano part of their livelihood. The platform will create new jobs and different jobs. All great platforms do this and Cardano is no different. Goguen, Voltaire, and the Plutus Foundation are all rolling out. The voltaire incentivized testnet or VIT will allow us to grow the ecosystem and the voting protocol to where it needs to go.

It is not enough just to fund things. We must also discuss where the blockchain goes. We must have Cardano Improvement Proposals (CIPS). The voting system will allow us to find out which CIP should be accepted. As a consequence we have been working closely with the CF and EMURGO to create the first CIP. This will be the proposal that establishes the improvement proposal system. The same way that individuals will vote on treasury ballots, they will also vote on CIPs. This means meaningful debate on how decentralization is best achieved.

Interconnecting everything

There is a thread which runs through our entire ecosystem. Everything that happens in our ecosystem is interconnected. The fact that we have Voltaire on the way will allow us to not only discuss but to fund our ideas. Science comes in a raw form. At times more funding and discussion is necessary to get things going where they need to go. This means that our treasury system could become the largest funder of research in the world.

Our voting system places us in the realm of political science. We care about economic identity and the developing world. We care about the people who have been left behind by globalization. The point of the work that we do is building an operating system which the world can use to do things differently. They can have different concepts of property rights and different jobs. We must push power to the edges instead of siloing it at the center.

We believe that everyone around us is worthy of self governance and autonomy. We believe that when people are given power and opportunity, they will not squander it. People will rise to the occasion and surprise you. Ten years ago the cryptocurrency industry was a couple of laptops. Now there are Mongolian shepherds which own Bitcoin.

Blueprint for the future

What we have done with Cardano is laying down a blueprint for playing a different game in the world as a whole. This gives the resources necessary to the people who need them most. We know that there are those with less than nothing in the world. They have lost the capacity to rise in the world. They are most worthy of our compassion and help. We cannot achieve a better world by giving things to people. We must give everyone the tools to commit fairly. The point of crypto is to liberate all of us.

We would like to believe that if our work is successful we will look back on the present at the bad times. It has been a long road, but what gives us solace is the army which we have formed to help us along the way. We want to continue to work alongside our supporters as long as possible, not as a leader but just as another worker.

Our best years are ahead of us. Our best times are ahead of us. It is going to be a lot of fun. It will be worthwhile. We will get there.