There are few people in crypto who can lay claim to having founded three successful ventures in the space. Even fewer can claim to be driving the technical vision of a top project while living on a horse ranch in Boulder, Colorado.
One of the most recognisable figures in crypto, we spoke with IOHK CEO Charles Hoskinson about his remarkable story. An early Bitcoin adopter and advocate, the mathematician turned entrepreneur has been instrumental in founding BitShares, Ethereum and Cardano.
As his most recent venture approaches a critical juncture in its transition to Proof of Stake, we discussed a range of topics, including entrepreneurship, global adoption and dealing with the pressures of being a crypto personality. Here are some of the insights we gained from speaking with Charles.
On his initial attraction to crypto…
Charles describes his entry into crypto as ‘accidental’. He told us about his road from educator to founder, beginning with the creation of a popular Udemy course before starting the Bitcoin Foundation’s Education Committee. He explained what it was about this emerging industry that attracted him to devote his time and energy:
“[By 2013 it] became clear that this wasn't just a philosophical discussion about how do we rewrite the DNA of the world commercial system and our identity systems that are all these other systems. It was now actually an industry if you wanted [you could] quit your job and go work full time and start businesses and try to be on the front line of rewriting these types of things. So that's exactly what I did.”
“It had really sexy interdisciplinary problems. I mean, it’s very rare that you get to talk about distributed systems and programming language theory, but at the same time game theory and economics and monetary policy, and you get to be an armchair lawyer, talk about regulation, and KYC, and AML. So I said, ‘Wow, this is really cool all-you-can-eat buffet of intellectual challenges’”
On starting his first business...
On entering the space, Charles began networking with a number of people who went on to become well-established crypto personalities, like Andreas Antonopoulos, Erik Voorhees and Roger Ver. His first step into entrepreneurship, surprisingly, came from a Chinese venture capitalist who’d watched his videos and wanted to support him financially to build a crypto business:
“Okay, I am in an odd position where I have a half million dollars allocated without an actual business. So I have to go find a business to fetch the money. I said, ‘okay, here's what I'll do: I'll ask my students and also ask the general community’. I created a thread on Bitcoin talk called Project Invictus.”
Through this thread he met Dan Larimer, now best known as the architect behind EOS, and together they created BitShares. He ultimately left the project and went on to work with Vitalik Buterin in the early stages of Ethereum before starting his own consulting company, IOHK. He recounts the professional journey he’s gone to until today:
“I've been here [in IOHK] since 2015, basically building cryptocurrencies and advising venture capital people, doing scientific research and launching protocols on top of cryptocurrencies. It's been a very strange path; the numbers have certainly got bigger, we’ve gone from two people to 200 people and we operate in about 20 countries.”
“I've gone from knowing nothing about regulation to, in some cases, advising on writing new regulations for industry, and I've gone from knowing nothing about being an entrepreneur to now being in my third company, and all those companies have produced successful products.”
On Cardano’s progress versus other protocols…
He launched this third venture, Cardano, in 2017. The project received a lot of attention due to the rigorous theoretical approach being applied to the protocol. Two years later, the project has written several papers that have gone through peer review at major academic institutions and is now moving into its ‘Shelley’ phase of its development, which enables staking pools. Charles believes it’s already surpassing other protocols:
“The point of Cardano is to say all right, let's take a step back. And let's not be in love with past; let's use it as a as a measuring stick. And let's go to the Academy. And let's do some really rigorous foundational research into different approaches to try to achieve scalability, interoperability and sustainability, with the feature set that we got from the theory.”
“We did some internal benchmarking and we discovered that for about five to 10 kilowatts of power, you could run the entire Cardano network with a proof of stake protocol, and this network would be about 100 times more decentralized, have 15 times more throughput and settle about 12 times faster than Bitcoin settles.”
While there have been challenges, he’s ready to compete with the other popular smart contract platforms:
“We haven't moved as fast as we'd like to move. But I think we're actually moving faster, frankly, than pretty much everybody else in the space, considering the things that we're doing. Ethereum is still working on Casper, they've been doing it longer than us by a factor of about two years. Despite that fact, we’re probably more mature on the Proof of Stake side than they are; we have a fully implemented version of our proof of stake. It's been peer reviewed, theirs has not been.”
On overcoming the technical challenges…
In crypto, we often talk about the ‘trilemma’ of decentralisation, scalability and security.
Charles explained how Cardano is addressing these challenges using several protocol innovations such as Proof of Stake, interoperability with other protocols through sidechains, smart contract scripting using specially-developed languages Plutus and Marlow, along with innovation at a network level to avoid the risk of centralisation:
“If you have a million users, you're going to end up having a petabyte size blockchain. If your blockchain is so heavy the only way to successfully use the system is to have a full node, well, then you're actually going and seeing only five people or six people are going to have it – Microsoft, Amazon, Google and the NSA.”
“The problem [in existing Internet infrastructure] is those solutions tend to centralize the web around a host of powerful actors that basically are super nodes. Well, in practice for cryptocurrencies we're actually doing that - we're centralizing our ecosystem around a collection of trusted centralized actors.”
“You actually need network innovation; you need to find ways of sorting out how are we going to move from this ‘everybody's the same’ network to a system that can admit some sort of hierarchy and special actors. Yet, no one actor can shut the system down or be in control, or deanonymize transactions or use network analysis to know who sent that transaction.”
On why faster isn’t always better…
While scalability is an important goal for many projects, including Cardano, Charles thinks that security should be the critical concern when developing financial products:
“Speed is something that comes up a lot, but a lot of cases, when people talk about adoption speed, they're not really talking about sustainable adoption…What's safe software to release? Because the problem is if I make a mistake, you could lose money.”
“The market validates long term, not in the immediate, top 10 of coinmarketcap, but rather something over five years or 10 years. And actually, the slowest moving cryptocurrency is still the most successful. Bitcoin moves at a glacial pace. Yet it's here, it has a high degree of trust and faith and reliability.”
On Bitcoin Maximalism...
While Charles began his crypto involvement in Bitcoin, he’s still critical of some of the attitudes within the Bitcoin community. He explains how the staunch ‘maximalist’ position came about as the market grew, polarising those trying to innovate the space from those trying to maintain the status quo:
“Maximalism started from that perspective of people weren't innovating, they weren't bringing new ideas to the table, they were basically just rehashing old things. And they were relaunching it because they missed getting in on Bitcoin early. Then what happened was that very subtle changes started occurring, where people started exploring completely new cryptography, completely new consensus algorithms, completely new philosophies.”
Charles feels this ‘anti-altcoin’ stance, which overlooks valuable innovations in the space, is holding Bitcoin back:
“The reality is, the vast majority of legitimate projects in the space are innovating, and they're innovating much faster and bringing things to the table in a much elegant, more concise way than Bitcoin has been. Bitcoin could be a trillion-dollar cryptocurrency, it's never going to capture the core innovation - what we all signed up for - about rewriting the world financial system. It's lost that momentum.”
“Meanwhile, the rest of us are inventing entirely new protocols and utterly new ecosystems getting 10s of thousands and hundreds of thousands of users and exciting Microsoft and IBM and others to come in and do things with us. So, the world is moving on. If Bitcoin doesn't want to move on with the world, it will end up becoming basically a victim of its own success in that respect.”
On Internet trolling...
Being a well-known – and often outspoken - figure in the crypto space has both its benefits and drawbacks. Charles has often found himself a figure of derision, but tries to maintain perspective:
“The problem with cryptocurrency culture is you're taking the internet troll culture, the 4chan culture, and you're mixing that in with fanboys that are almost like soccer hooligans, and then you're taking the cult of personality, so it becomes less about the philosophy of ‘Where do we want to take the world?’ and ‘What problems do we want to solve?’”
“I have received enormous personal criticism from people. If you go to cryptocurrency Reddit and start a thread, you will probably get to 300 comments that are negative about me; everything from a sociopath to I'm a scammer. I'm a monster. I mean, I'm running around Africa dealing with some of the poorest people in the world giving away most of my products for free. But apparently, I'm right next to Satan and Hitler, and I'm a huge scammer, and so forth.”
“You know, it's the price you pay, whenever you want to change things, and you want to make the world a better place, you're going to have criticism, and you're going to have naysayers. And you're going to have people who say really harsh, nasty things about you.”
On changing the world...
Despite these negative aspects, his focus is firmly on furthering Cardano’s objectives. He has already begun to see the places where his protocol can receive the greatest adoption and have the biggest impact:
“There's almost no cryptocurrency adoption right now. But [Pan Africa and Asia is] probably the place where we're going to see the highest cryptocurrency adoption by demographic in the next 10 years. And currently, there's no competitor, we have a monopoly - we can walk in, and we can take that entire market. And we have ways of getting mass adoption.”