The Exchanges

Q And what, and how, what was your association early on with Ethereum back in 2014?

A So I joined, yeah, summer, um, as a lead tester. So I was responsible for writing tests and all the clients would run those to see if they are true to the protocol. Because if you think about what Ethereum actually is, it's just a protocol. You define how people interact with each other. And I would write those tests and see, we call them consensus tests. So to see that all the client implementations, like the C++ client, Python client, Go client, Rust, Yep, JavaScript, and so on. They all would follow the same rules. So that's what I did. I did work very closely together with Vitalik Buterin, Kevin Wood, and Sheffy Wilker to ensure that all their clients were in sync.

AI assessment note: “So I joined, yeah, summer, um, as a lead tester.”

Q I mean, these are, these are like, we won't get into specific names and people, but there are people with large amounts of resources in Asia that have set up mining farms basically, right? And they, they do, whether you want to admit it or not, have, Control over parts of this ecosystem because of the power of the mining operation they've built.

A Yes, and no. No, because if the user would say we fork off and do switch to a different consensus algorithm, let's say proof of stake, they don't need miners anymore. As long as most of the users are in this system, then you don't mind about the miners. I see. So the miners, they serve the blockchain, and yes, therefore they do have some control of it, but at the end, my opinion is, and everyone will give you some different opinions on this, is that the users are really in charge. If the users say, I will switch to this blockchain or to this Fork of a blockchain. Then it will force the services such as exchanges and other services to use this, and to use this coin and give this coin a value. This, what we saw with the DAO was, like, after the DAO failed, there was a big discussion about what should be done, and in the end, we did a so-called hard fork, saying, we split the chain into two, and the new version, we give everyone their money back. In the old version, the hacker, or the thief, still has the money.

AI assessment note: “Yes, and no. No, because if the user would say we fork off”

Q And why, Christoph, why do it that way? If you're so upping on blockchain, one of the things people are saying is like Bitcoin and blockchain is going to take power away from VCs. Why not eat your own dog food and do a token issuance instead?

A Because first I think a lot of those ICOs are actually not legal. So from a legal point of view, you're actually like issuing securities, some of them, not all of them. So it depends a lot on what you're doing. And The second thing is we see money for blockchain startups there, and I don't say we will never do something like this, but I think a lot of the ICOs we see right now is people who do not understand what they are doing getting convinced by marketing people to put money into something they don't understand, and then those startups raise much more money than they actually need. And often it is that you cannot do another token sale. You do a token sale once for a company. So you could compare it a little bit, like doing a seed round, And selling a hundred percent of your shares, something you usually should not do. Um, but of course, every ICO is different. There is an ICO of Gnosis. You only sold 4.7, something percent of their, of their shares. There are others who sell 50 or 80% of their tokens. So you cannot really say every ICO is the same.

AI assessment note: “Because first I think a lot of those ICOs are actually not legal.”

Q You mean like if I want to take my ether or my Bitcoin and put it through like Coinbase to make it real dollars I can spend, it's expensive?

A If you make a real transaction on the real blockchain, so in Coinbase, often they're just having numbers in their database saying who owns what. It's not always a real transaction on the blockchain, but if you would do so on a real transaction, you would pay on Bitcoin quite a lot right now. Ether much less, so it's much better, but Ether is very volatile as Bitcoin. So it is nice for some things, and I hope that it would become a currency in the future. But if you go to your tax account, and if you go to your notaries, all those services, you have to pay in euros, and they don't know what to do with Ether or Bitcoin, anything like this. If you are a complete anarchist.

AI assessment note: “if you would do so on a real transaction, you would pay on Bitcoin quite a lot”

Q But Christoph, just to dive deep on that for a second, what you're saying is, well, Nathan, if you're frustrated that you can't get in because the glass is almost Full on a token issuance. What you could do is just become a minor, right? There's anyone can participate, but, uh, actually you gave me a confused look when I said that. Is that wrong?

A Yeah. So you could become a miner for the Bitcoin blockchain, for example, but this wouldn't change anything in terms of capacity. It can still only do one megabyte blocks. And of course what you could do, although it's not very profitable to say, I will mine my own transaction. If I have enough mining power to at least mine a block a day or so, yes, then you can get in your transaction for cheap, but you would pay a lot for this because you're the only one. You're the only one. And you would rather say, I take in other transactions and get their money and That's much, much more profitable. So it doesn't make sense from an economic point of view, let's say it like this, but you could, people create their own blockchains, but of course they are missing the network effect like Bitcoin two point or whatever. And there's a lot of so-called altcoins or alternative coins, um, because they want to improve on certain, certain things on the existing protocol and they say, um, people started calling it out coin, but I would not call it so because it was really developed from scratch. It's a different purpose. Unmined. What it is there for, basically to build decentralized applications. And I still think it is decentralized, but maybe not as decentralized as many people think, because there's, yeah, there is a couple of dozen of Bitcoin miners who basically control, could control the whol…

AI assessment note: “this wouldn't change anything in terms of capacity. It can still only do one megabyte”

Q And then I recently had on the, the, the guys behind, it was this big gaming crypto company, uh, and the name is escaping me right now, but they, I think, did the same thing and issued back Go Mobile tokens, which, and it was like a fifty three million dollar, uh, kind of token issuance. What was that? Do you remember the name of the guy behind that again?

A Or the company? There have been a lot of ICOs recently. ICO stands for initial coin offering, and there are very different opinions about if this is legal or not, or good or bad, but that's one of the main applications currently of Ethereum, I would say, in terms of what people use it for. But that's also what differentiates Bitcoin and Ethereum. Bitcoin was always meant for being a virtual currency. Currency meaning you exchange it to trade goods or something else. Ethereum, on the other hand, does have a virtual currency named Ether, But its purpose is to be an open source platform in order to build decentralized applications, what we call DApps. That's the purpose. And people just used a very simple DApp, which is just issuing a token, which you can do best on the Ethereum blockchain, to fund their projects. And we have seen a lot of ICOs, and some claim even to say the DAO was an ICO, but it actually really wasn't. But the DAO collected a hundred fifty million dollars worth of Ether, so it was the largest crowdfunding back in its time. And after this, there have been a lot of ICOs, basically crowdfunding, getting ether, and in the beginning, they had kept their contract, saying, I do not want more than 5,000,010 1,000,012 million, and they increased the cap over time. So one very, one example would be the BAT token for the Brave browser. They raised, I think it was thirty-f…

AI assessment note: “Or the company? There have been a lot of ICOs recently.”