1. The Keynote Speech: Hard Truths with Hope
As soon as Andreas Antonopoulos took the Chicago stage, he wasted no time and dove into the 3 essential components of the crypto world: technology, economy, and community. These inter-connected elements are responsible for everything from greater adoption to more efficient user interfaces for wallets, and all the way to new all-time highs.
When questioned on the current bubble he acknowledged that cryptocurrencies are in a bubble... and one that is no different from the "sub-prime auto loan bubble, stock bubble, real estate bubble, student loan bubble, foreign exchange bubble, the tech bubble, and the everything bubble".
Furthermore, some jokes were told about entering the market at the all-time high when the coins are obviously in a bubble, but a comparison with the stocks listed in the S&P Index Funds is made in order to suggest that there's nothing new in this kind of speculation.
There’s a repetitive cycle of crashes and all-time highs which affects all of us in a social and financial way, and it can be funny how misinformed and misguided individuals can act.
A great analogy to express the current state of Bitcoin is further expressed: if you go to the farmer’s market during winter and observe how all the products are imported, you will wrongly assume that the market is dead. And if news channels decide to cover the issue, they can deceive and mislead a large number of people who wouldn't do their own research on the matter.
Community and technology lag economy, meaning that it takes great growth and development in order to attain sustainable new heights. Also, we’re in a phase where 99% of the activity is pure speculation.
Most people investing are only interested in the price and honestly don’t care about debanking people in order to bank the other 6 billion in a universal decentralized way. Freeing the world from the “terrifying oppression of the old banks” or returning to the gold standard. To many members of the community, it’s all about going to the moon and buying lambos.
95% of people who came in during the boom have never done a single cryptocurrency transaction. Their only experience is doing a transaction to a custodial exchange which only provided a number on the computer screen without actually using the cryptocurrency properly. The golden rule with these exchanges is “not your keys, not your coins”.
The question about the key situation is “Who’s going to teach them the right way to use a cryptocurrency?”. Investors need to understand why we use cryptocurrencies, and the best way to understand is for the community members to spread their knowledge to their peers with enthusiasm and authenticity.
Now is the time to educate, support, and expand the vision. If they came for the price action, they can stay for the principles.
And those who have learned enough about Bitcoin and are able to educate others may find in this activity a great idea for their next start-up. Qualified and competent people from different fields are going to be at your local meet-up, and the next period of time is going to be all about local communities getting together to work on the greater dream of decentralization.
Through communities, cryptos can become more secure and easier to use. This phase is equivalent to the pre-DNS age of the internet. Today’s cryptocurrency industry is too clunky, too complicated, too difficult to understand, not too intuitive, and can lead to lots of human errors and mistakes.
Innovative and brilliant minds in the space will soon build better Lightning wallets, more advanced decentralized apps, and improved Ethereum smart contracts. But the focus should be on eliminating the divisive points and seeking common ground. “I don’t care what you’re working on, just build something and make something better!”.
While everybody thinks that the cryptocurrency market died in January 2018, there is plenty of stuff happening in order to improve the technology and bring it to new heights. And when the community joins in to provide support through a plethora of ways and skills, the information gets spread and the adoption grows just like it should.
The ending of the speech reiterates the focus on technology, community and finances as inter-related components, and then the segment involving questions from the audience begins.
2. The Questions from the Audience
1. What are your thoughts about Proof of Work, as opposed to Proof of Stake?
One of the historical facts that’s really quite interesting is that PoW was invented after PoS. Satoshi Nakamoto invented PoW because other systems hadn’t been able to work before. Mr. Antonopoulos isn’t sure if PoS will work now, but declares himself “actually optimistic”. Consensus algorithms can actually be done in interesting ways via PoS.
There are some really bright minds working on the implementation of PoS in several cryptocurrency projects, and it would be foolish to underestimate their abilities and vision. Naysayers often end up on the list of amusing personalities, and it’s thanks to them that true innovators can get motivated to prove everyone wrong.
Then there is a fundamental qualitative difference between PoS and PoW. There is something really special about having an extrinsic investment in energy that you absolutely can’t get back, which creates a thermo-dynamic guarantee of immutability (and this immutability is based on the physics of expanded energy). This process makes the game theory very painful if it’s gotten wrong. Nevertheless, PoW does have a major drawback: it’s expensive (but not as expensive as fiat or gold).
The more controversial opinion presented in the answer is that the world needs one PoW blockchain to operate, and it will most likely be Bitcoin. With other blockchains harnessing the security of the Bitcoin PoW.
2. Is ASIC resistance futile or do we all have to buy a Bitmain Antminer to have a say in the network?
ASIC resistance is both futile and undesirable. Resetting the PoW algorithm is dangerous because people can use botnets to recruit other internet user’s computers to mine. This side effect is not worth it, and there is also the argument that you can build an ASIC for anything and do more efficient work.
Trying to create resistance creates centralization and leads to a scenario where the excluded ASIC manufacturer is replaced by another which enters the system with different specifications but a similar effect.
Furthermore, due to Moore’s law reaching a point of stagnation where processors can no longer get 10x or 100x faster in a short amount of time, the lifespan of ASICs is going to become longer and even reach 2-3 years of profitability.
3. What is the roadmap for regulation to change in order for cryptocurrency to be used the way that we like it?
Mr. Antonopoulos is not very optimistic about the way the situation is going to turn out in the US where it’s a nightmare to do your taxes lawfully and pay them as you should. He knows about it because he has to do it, and it’s a “huge reporting burden”.
“When you have to do a 20-page tax return in order to report $35 in gains, something is fucked up with the system.”
Accountants are going to make more money from capital gains than the IRS, just for doing the work of reporting. The case is messed up, and it can only lead to two scenarios: stop Bitcoin in the US or stop the US in Bitcoin. “You can get your country out of Bitcoin, but you can’t get Bitcoin out of your country.”
Money launderers, criminals, and congress people don’t report capital gains. The fact that cryptos are getting pulled back by regulatory policies is a bailout for the banks that’s going to keep happening and fail. To Mr. Antonopoulos, this is a losing battle for governments and centralized authorities.
Regardless of the restrictions and regulations, governments cannot stop this technology.
4. Do you think the Lightning Network is going well as of now? What is your vision for a third-layer solution that would get built on top of Lightning?
LN is going well, even though the development is not easy and the work speed had been accelerated within the Lightning community. However, we are going to see more and more applications, as we’ve barely scratched the surface.
Atomic multi-path routing which allows you to use several small payment channels to create one aggregate payment which is routed over many different paths but is atomic – which means now that you don’t need to create 8 channels to make the transaction you want.
One of the biggest criticisms of the Lightning Network, which might turn into a strength, is that it doesn’t specify routing algorithms. Right now, the network is flood-based and utilizes a basic algorithm that’s called “source-based routing”. This method means that every node creates its own route to make a payment. If the source creates the route, then that gives the users a lot of privacy.
Mr. Antonopoulos goes on to compare LN routing with the early days of the TCP/IP protocol (which were terrible in technical terms). But in a network of blockchains, routing can be done at multiple layers, using multiple different algorithms simultaneously.
Not adding routing into TCP/IP has created an easier and more basic protocol that was the third layer. Andreas’ own ideal situation that he would love to see involves routing on metrics that don’t involve channel fees. If selecting privacy as the metric was possible, then the protocol would greatly improve.
Inventing efficient routing for this medium is a challenging research project that’s being approached by researchers from many universities, and the future shall reveal the true innovations in the blockchain space.
Image Credit: Quartz Media