EB62 – Preston Byrne & Siân Jones: Eris Industries, The Distributed Application Software Stack

Transcript

hello welcome to epicenter Bitcoin the show which talks about the Technologies projects and startups driving decentralization and the global cryptocurrency Revolution my name is Sebastian cuccio and my name is Ryan Fabian crane we're here today with two old old guests and old friends of ours so uh Sean of course everybody knows from all the episodes and wonderful interviews she's done for episode Bitcoin and one of those interviews actually was with Preston who is our second uh who's our guest today uh Preston who's a lawyer Once Upon a Time uh and now he has fully subscribed to the the gospel of blockchain not Bitcoin though and and has started his own startup

which is a which is a very interesting project I I also quite an unusual project I think so we'll have a great chance today to talk about that uh thanks for joining us today thank you it's pleasure as always hi guys so uh to get started off Sean you had some announcements to me oh yes um well I've just opened my office in the Isle of Man so now um I've got two offices one in the UK one on the Isle of Man and uh later on this year we'll be opening up in a couple of other offshore jurisdictions and I'm also spending more and more time in in Brussels where I've co-founded the European digital currency and blockchain

Technologies Forum which is a public policy platform um focused heavily on the European institutions on the parliament the commission and all the other European institutions to help them be better informed about all this crypto stuff and that's what I'm doing awesome uh congratulations uh so you're not based in the yellow of man now are you but you're still I'm spending more and more time there I I I'm sort of divided now I I I'm I'm there quite a few days every month and um who knows you know I'm gonna retire soon so maybe I'll end up herding sheep or something yes yes

decentralized sheep I mean if you're in the Isle of Man you'd probably be more likely to be like managing pokerstar servers than hurting sheep right oh no no no no no no no no no no no no I uh I think I'm going for a quieter life not the next really so exciting a life my my CIO days are well gone behind me now so Sean I also take it that means you You're Gonna Save Us from all those uh evil regulations coming like European a bit licensed or via the vat and and those things with the new uh Brussels initiative no uh well you know the the European legislators and policy

makers are being very pragmatic at the moment but they are hungry to understand what um Bitcoin and digital currencies and indeed the blockchain is all about um but they're certainly at the moment are very much more um measured in their approach than say um their colleagues in New York who've got a very different approach about which there'll be some new news quite soon um but the bit license uh proposals version two is going to come out soon but now in Europe things are much more relaxed the Isle of Man is a wonderful jurisdiction a very friendly jurisdiction for virtual currencies um very welcoming

and very easy to do business in so they'd like to do on the Isle of Man for uh virtual currencies what they have done in the past for free gaming so your your reference to PokerStars wasn't uh wasn't so far off in fact when PokerStars I think started on the Isle of Man about 10 years ago um I think there were three or four people and now they employ over 200 people and I did read somewhere that they account for about four percent of the Island's GDP now so they hope that to repeat you know to repeat that with uh with with digital currencies yeah that is impressive um

so Preston tell us why am I here how did you how did you decide to leave her job you're well paid and and well office job as a lawyer my sexy job as a securitization lawyer waiting for piles of documents well it started last year actually at Bitcoin 2014. um Sean was there when it when it All Began because a self-described Bitcoin millionaire was very annoyed with the Bitcoin Foundation he said he was going to issue a 100 000 pound bounty in Bitcoin to the team or group of individuals who could design

a piece of software that could replace the Bitcoin foundation and also promote development of the core protocol so a bunch of the sort of ethereum community enthusiasts gathered up in a Skype group and you know it's like wow 100 Grand very money wow that's two hours of your time as a lawyer isn't it yes sir well the problem is I used to do all that stuff for free which was uh which was not very remunerative but at understandably so we got together and uh and three of us a chap who then went by the name Dennis McKinnon Casey Coleman who's currently our CEO and myself I started batting some ideas around in a Google doc and then it occurred to us we could actually do it the three of us with our

respective skill sets so we didn't sleep for a month and we worked and worked and worked and then eventually we came up with a prototype Eris 0.1 which was built on ethereum and designed to replicate the functions of a trade Association on a blockchain and what it could do is some pretty interesting stuff it had a series of smart contracts about 30 or 40 of them which governed how users were able to interact with the various databases they represented those smart contracts could be changed over time because of a kernel which held the logic which allowed you to update the entire system so the first contract on the sort of cascading branch of contracts going all the way down enabled you to make a state change in any of the subcontracts and then it occurred to us

that you could actually do that with a blockchain and that's really where where Eris started this idea that if you if you take all of your blockchain logic you remove it from being hard-coded in the blockchain and you put it into a script in the Genesis block you can have a blockchain which acts a lot more like a regular piece of software in a regular database than it does like Bitcoin and so that that's how all that got started three days after we wrote Our white paper a very nice guy named Sean Park who also happens to be a VC sent us an email and said I'd like to meet you guys and uh and we started a relationship with that firm then anthemous group and uh and we've had one with them ever since and so and the company's on the move and growing and uh and building

cool so that's you know that's how it started it was a total accident my Law Firm was very good about it actually they represented us on the deal um so so big big thanks to Norton Rose Fulbright in London for that and um no they yeah I mean I I cannot imagine many law firms being that charitable to a junior associate hey guys I'd like to quit my job can you can you keep me employed while I well I said about the business of quitting and um which is exactly what they did so but you know and it's that that's how it all started credit to to you and and and the other two for having um unfortunately you didn't win this this prize but um it was so impressive

that they um a second prize was created uh specifically to to to to uh reward you guys for the Fantastic offer uh uh a fantastic uh proposal that you came up with so and we were really grateful for that yeah that that that Merit saying we're very grateful for that that was very helpful to us um so yeah and that's how it all started so where are you guys based were notionally based in London um although it's in typical fashion it's distributed we've got two guys in in Guelph Ontario which seems to be a sort of hotbed of smart contract activity a lot of ethereum people come from there and um and uh one guy in in Sweden in in a farm about five hours outside of Stockholm

um Casey our CEO is in Amsterdam and then I'm in in our busy London headquarters by myself so so we're spread out all over the place and which you know we all met on the internet and we all met um talking about blockchain stuff over Skype really and and doing projects and collaborative work with each other remotely and so we've started out with that as as the model because it doesn't make sense to move us all into one room when the team is this big you can do collaborative work um or rather when the team is small collaborative work is fairly easy to accomplish so so let's talk about this um so Harris Industries is so I I mean I I used to be a developer and it's a ux designer I used to be

quite involved with a lot of Web projects uh also as a project manager and to me this looks I mean this looks a lot like the same sort of software stack that you we see in the I guess traditional world only it's distributed um I I think you've described it as node.js for the peer-to-peer for peer-to-peer technology um can you sort of give us an overview of what Aeris Industries is uh is proposing I mean so an interview of basically what we're proposing is a software stack that uses a blockchain in a real world context um because I think a lot of people in in the decentralized Computing space or

distributed computing space particularly blockchain have tried to create a sort of Mirror Universe which is designed to replicate the functions of of whatever institution or organization that they work with with real world without necessarily needing to interact with the real world at all it's the idea for example that Bitcoin can can replicate a banking system our hypothesis is somewhat different it's that Bitcoin can't replicate a banking system because a banking system is dependent on legal relationships um legal constitution of assets and human oversight making strategic decisions so what we said is what if instead of trying to replicate the system entirely automatically you use these tools which can automate

data-driven relationships plug them in to these organizations have human Administration to a degree and realize efficiencies um when you when you deploy these these particular databases in economies of scale so it's the difference between with Bitcoin attempting to do something where you're getting Financial inclusion by having access to Bitcoin in a developing country instead we would say well that kind of would look and feel like a credit union in let's say Ghana or someplace like that but if you actually had a real Bank deploying one of these databases and doing it at very low cost you would have an actual Credit Union in that country instead of something that just kind of looked and acted and mimicked and the qualitative difference is significant because when you're

dealing with something like Bitcoin you're relying on the network effect which monetizes the token in order to move value around whereas when you're dealing with something like a banking institution you're looking at you're looking at actual obligations whether that be Fiat or a debt obligation or something else which are enforceable against someone which have a real world and legal Nexus and that from our perspective is very important because most of mainstream Finance deals in these kinds of abstractions it deals in debts it deals in obligations it deals in rights and these are not things you can pin down they only really adopt a an existence and a character when they are presented to a court for enforcement and that's what makes people follow them so on the one hand we recognize that this

is substantially at variance with the the cryptocurrency model which says that value is going to vest in a token because the token because everybody wants it and therefore you can use it for certain things we say value vests in the obligation and so it's it's kind of pulling cryptocurrency down to earth a little bit but the blockchain data structure is something which you can use in order to transfer record and manage those obligations extremely efficiently so you know and that that applies to all kinds of other things as well whether you're looking at a purely utility task like for example Version Control um you know do you really need to decentralize completely Version Control or you know if you just want a private GitHub repo can you just set up a network with five nodes in your startup

and then each person in this startup will run a node and then they'll have an extra hard drive and you won't need to pay GitHub every month and so on and so forth so the idea is that we're not trying to recreate a new order that exists outside of everything that is we're trying to create something that that works in the way that the real world works in the sense that you have applications they have developers those developers improve them and are responsible for their management and maintenance can we make developers lives Easier by and by putting in a blockchain database or any other kind of consensus database for that matter um and so that that's the core hypothesis so it's interesting that um in Bitcoin it seems the notion is very well the notion is very sensual that

it's about decentralization right and it's about disintermediating big players big companies Etc and there seems to be a completely different um philosophy and interpretation of Bitcoin and the blockchain that's going on here which is that it's just something that provides more efficiency you know it lowers costs it you know helps business and then I guess you know in in the way that lowering costs uh helps you know the third world developing countries in that way you know it benefits them but it's not sort of through this revolutionary alternative system that we're building that will displace what we have but it

depends on who you're just intermediating right so I think Bitcoin we look at Bitcoin and we see the core Innovation not the currency not anything political we look at it and say this is a clearing and settlement system sort of merged into one um which is because there's no clearing there's no Central counterparty so it's really just peer-to-peer settlement and for that particular brand of settlement it is really super efficient but why is it efficient and why is it cheap the answer is you know if you but for the fact that you're having token generation and thus you need Mining and other kinds of things to protect the chain um in terms of the pure settlement function um Bitcoin is how to describe it Bitcoin isn't disintermediating a bank it's disintermediating the labor of a bank

the overheads of a bank the costs of the bank and so you have those costs arising somewhere else in the form of database management so we said okay well what happens if you take another clearing and settlement system any any take anyone you like and then you script in the functionalities that that clearing and settlement system carries out you put an administrator in charge and then because you've set all of your input and output parameters in advance you know what's coming in is going to give rise to a certain result with a very high degree of certainty and then you say well if you're a bank you want to disintermediate your costs um if you're someone who doesn't like Banks you want to disintermediate the bank right so different users are going to have different requirements and there will be different design parameters but

we think that for both the bank and the people who want to disintermediate them each of them should have the option to set up their own system and so what Eris or rather what our blockchain design which is a very heavily modified derivative of Jeffrey Wilks go client for the ethereum protocol what that's designed to do is give people the ability to select the parameters that they want for the application they want so if you want you can go and do a Bitcoin clone you know totally distributed mining whatever shot you know shot 256 proof will work go for it all yours or in the alternative you can say well you know I'm running a clearing system for I'm running a government accounting system in a in a rural in a rural area in the middle of West Africa and I want to keep track of where money

is going to reduce corruption then I'll deploy this blockchain and I'll know that anyone who has a particular balance which they redeemed through a Gateway should I lock down and Trust very heavily um you know I'll make sure that there's no leakage and there's less that's not my idea by the way that's Zachary casares of the startup cities Institute in Guatemala he said put a blockchain in a government and then you won't have any leakage you'll have the representations of value moving around and you could even have someone in control but if they're attempting to fiddle with that database it's going to be very transparent when they do so you could have a public government account database that works in the blockchain you wouldn't want that to be fully decentralized what you'd want it to do is rest in the hands of a particular entity and then have people watch it and

see what they're doing with the funds that move in and out so yeah well I understand the reality is that you don't actually need a totally decentralized system for all applications that's the point there's been the assumption that I think you because of where Bitcoin comes from and effectively most of the the crypto Revolution that's followed from from Bitcoin there's the assumption that total decentralization is um is valid in all cases and the point is I think that it isn't necessarily valid in all cases and you guys have come up with something which addresses

that particular that particular area that doesn't need total decentralization you have a decentralized network but you don't necessarily have decentralized Administration when I read about this the the impression that I get when I first read it was that this is really just about creating using the technology that Bitcoin has brought on to create a a way to have distributed web apps that's sort of the way that we've been describing it because that or at least initially our first applications are going to be web apps we're going to have a YouTube and an interactive Marketplace

however that extent you know you can extend the analogy if you can do a web app with it you can do any other kind of data as well which is kind of the point if you can do YouTube you can do a clearing system if you can do YouTube you can do data security and file storage if you can do YouTube you can do anything and so in effect you can do DRM if you add a couple of other modules on top for example end-to-end encryption and messaging so the keys can get broadcast back and forth so we're starting with the web apps and that's to as the proofs of concept because you know as a startup we've only been Incorporated for like seven or eight months we've hustled their asses in in that time but we you know you have to start somewhere and you know you could

go and say right well we're going to design a clearing system and isn't that great and go up to euroclear and say hey guys here's a clearing system or go up and say hey guys you know Citibank here's something for your uh you know here's something for your FX trading and they'd go great you know go away we have a perfectly good system and we're not going to let a startup that's less than a year old start fiddling with our software stack so for us it was about demonstrating The Wider utility and this you know it's an open source project it's designed for people to use for their own applications so for us it's designed to make we want to make something people can see and then go you know damn I didn't know you could do that with a blockchain that's really interesting so that then they can take

their own ideas Fork pack pull request and off they go to the races building stuff of their own which is designed to utilize the distributed internet to scale their applications and challenge existing providers I mean you know why not do a distributed Uber for a particular locality if you can script it and all profits go to charity Uber has some PR problems if someone wanted to build that and do something along those lines and then create a challenger entity to Uber in a particular City by working with the state and you know they could do it if they wanted to the point is we want to allow developers to exercise their utility and control rather than serve forcing them to build on top of other platforms you know other platforms Bitcoin and ethereum in particular are going to be very useful

going forward for this kind of stuff ethereum we you know we will know and love it and it's gonna we're sure it's gonna be great but you know for us it's checkpointing and security and and hashing things into into a central chain which has a different trust profile that will be useful for many applications however for running application logic it's this distributed application where you have you know it's free to the end user to use and the cost is on the person deploying it in terms of making sure that they have the adequate server capacity or Computing capacity it doesn't necessarily need to be server capacity to roll that application and distribute the logic so right and I want to get into some of the more practical aspects of this so there are different components to what you guys are

proposing um there's a there's a sort of Sir component the which I guess would also be the The View component uh to like a web browser or an equivalent to the web so there's a blockchain there's also some sort of a framework for generating contracts and a package manager so we'll get to that in just a minute before we do that I'd like to talk about uh our sponsor shapeshift so shapeshift as many of you know is uh the fastest and easiest way to buy and sell uh altcoins um you know if you want to buy altcoins today I mean before shape just existed really it was quite cumbersome you know you had to find a replica exchange uh that supported the coin that you want to

buy or sell you've got to create an account uh give them some personal information sometimes and uh place an order wait for the order to be fulfilled it's just a long and cumbersome and it's just like not very uh streaming on cross-test and then shapeshift comes along and just makes all that completely useless I mean they're they're the best way to I mean why would you use an altcoin exchange now that you have shapeshift that you could just you know buy and sell your your coins uh instantly so let's uh let's show you how this works so when you go to shipshift.io uh you've got essentially what is a Google Translate for cryptocurrencies and uh let's get some Dosh [Laughter]

Christmas you have an address if you really quick it can be go to you I don't actually have my wallet on this computer this is uh this is I'll just send you one yeah yeah okay all my all my serious stuff I leave at home so on one side you have the currency you want to convert the other side you have the currency you want to convert to in this case door show us Brian put your address and put uh 1000 does in the amount or or not uh and then you just send the Bitcoins or in this case Bitcoins but it could be Litecoin for Doge it could be new bits for for peercoin it could be whatever you want we've been using simple examples here but uh you know you

can the possibilities are endless and then so you just need to scan that QR code send uh currency you want to convert to the address [Music] have you sent it yeah just send it now all right and there it is there you go so it's a wedding exchange so they support Bitcoin Litecoin purecoin Dark Coin Dogecoin name coin NXT feathercoin blackcoin Bitcoin dark Quark uh red coin and new bits so just like I'm not really good at doing math on top of my head but think of all the possibilities there you could do Dark Coin for name coin NXT for feathercoin black coin for cork or Bitcoin for

Dogecoin you know I I mean it's just it's just amazing and there you go so in about 20 seconds uh the order was fulfilled I've received Dogecoin on my wallet I don't know how many I've got there but I'm sure I can send lots of Reddit tips awesome well let's just hope for that Dogecoin price to go off eh um yeah so great tool it it you know it's the fastest and easiest way to buy and sell uh altcoins and uh they only take a small fee which is included in the price uh when you're when you're sending your currency so go to shipshift.io give us give it a try tell us what you think we haven't gotten any feedback yet we'd love to

hear what you think about it and we'd like to thank shapeshift for their support of every percent of Bitcoin and and the reason everybody's been smiling is because uh Preston is a well-known supporter of uh Dogecoin in favor of any other coin it really is the future of money I mean I see a future I see a future where walking through uh kibera and and and you see the little the little smiley face that little Shiba Inu staring back at you I see that in my dreams and so that that I think is really the future no I mean I I don't think any of us would disagree with delicious being the future of cryptocurrencies so uh

so yeah um so just uh uh to sort of introduce this topic there there are four components to Eris uh and I think if if you're a web developer and you read these white papers that uh you you guys have put out on your website um you you really get I mean the D server for me the D server part was was pretty uh straightforward when I first read it uh it it's the component switch allows you to create web apps uh web style data-driven distributed apps as you as you call them and there's a browser component to that as well so the question that always came to my mind when thinking about how are we going to

create this decentralized internet uh was like how do you integrate that into like a technology that we all know and use which is an open web Technologies like HTML CSS and JavaScript if you don't have a browser and you guys are solving that others are solving it too uh I mean like like ethereum um open bizarre yeah with mist um but uh so this is sort of a clever way to solve that problem is to integrate a browser yeah I mean so they're they're in any blockchain implementation there you know there are any blockchain application there are two halves to the software you have the protocol and the chain itself and then you have the implementation in the client so if you're dealing with something like Dogecoin um the future of

money and you'll have the blockchain and the protocol which is distributed and then you'll have the client which is designed to match up to that protocol if you want to make changes to the protocol you have to change the substantial changes you have to change the implementation in the client what we did is we said well what ethereum's done is they've got this very flexible and capable blockchain design so if we have a distributed component which is the blockchain and then we move a lot of those consensus parameters into a VM which is on the client side and we structure it in such a way that what the blockchain is telling the that particular VM to display through a web browser locally displayed at localhost is something which looks like a web page then you've got an application that

looks like a web page um now the way that we've done that is through something which is called the D server so if you imagine the blockchain is the database backend the D server displays all of the information and then allows a Thelonious blockchain to go talk to other protocols so what it does we started out and we have a Bitcoin module and ethereum pox 7 module and an ipfs module so you can currently write a Dap on a Thelonious chain which talks to bitcoin and talks to ethereum and talks to ipfs so and this happens through the D server is that right this happens through the D server correct so what the the technical details um you know I'm more on legal structuring than the actual technical stuff but we can we can always get Casey

or Ethan or one of the guys to talk about this sort of Deep dive on a later date but what the D server allows you to do is to talk to multiple protocols in the context of a single app so if you've got a distributed YouTube and the distributed YouTube we're building for example has a Bitcoin content incentivization function so a user will have a Bitcoin key pair which they which they upload into their particular uh client program they'll have you know the ipfs will store all of the data Thelonious will tell them what they're able to see there will be magnet links for example to BitTorrent is one thing we used with error 0.1 and all of that then displays in a consistent application and when the user sends a command to Thelonious and says well I want to watch this video if they're not

allowed to do it as as put by the poster video then they're not going to see it if they don't have access to that information then the information is not going to display on their screen so much in the same way it requires more design work felonious than other blockchains it's not something that you just roll and then all of a sudden it's designed to solve a problem it's a framework for you to put scripts in and put functionality in which you then will know will only execute on the on the provision of the relevant private Key by the relevant user who you've authorized to access that information or write on the database in respect of the particular function that that contract governs so the key go for it yeah it's just a big person so with this YouTube example right you may ancient ethereum

and this this is a sort of um you know a fork over here you could say um when when would you normally two years to work but yeah yeah so what's the advantage of doing something like this to centralize YouTube on top of ethereum versus what you guys are doing or the where's the balance here or the trade-off the trade-off is a cost trade-off so if you do something on ethereum so our original error staff costs 250 000 gas just to deploy and the other problem was the thing was huge so you might not be able to get it onto a single block the way that we've structured Thelonious is that most of the DAP logic goes into the Genesis block and then it's up to the developer to decide what parameters they want to set in terms of monetization so

if I if I can sort of rephrase that or like um interpret how I see that right so the reason why it would be hugely expensive with ethereum is because you have the security of the entire ethereum network I mean okay it doesn't exist yet but you will of the the future ethereum network uh securing that application but in some cases that makes no sense right if if the essential if this YouTube is run by a company that you sort of trust anyway then the idea is that you can do something um with a different security models different consensus model is much much cheaper yeah but it has a similar architecture is that correct

more or less I mean let's you know one example I use is is if you're looking at a financial platform so let's look at an ethereum-based Financial platform versus a bank deployed Financial platform an ethereum-based Financial platform has to contend with every user of the system being mutually untrustworthy a bank deployed system however can be designed so that you can have administrative control I mean you can secure These Chains with that mining but couldn't you do this in an ethereum contract as well you could but it would cost money so what you do with it would cost money to run all of the computation so with the felonious with a felonious chain you can structure it our default gas price is zero and the reason you can get away with that is because you simply just say in the Genesis block well the only

people who are able to write to this database are people who the administrator has pre-authorized so if you're a bank and you're running a bank platform when someone attempts to make an API call to a contract on the blockchain and they haven't got you know they either haven't got a key pair or they're trying to spam it with some other sort of things the contract is just going to bounce off because it'll say well you don't have the permissions to write so you know go to hell the idea is that when you have an application which is controlled by an entity yes you have an attack Vector which in the form of the private Keys which control the chain however you are allowing you're deploying a blockchain which is designed to protect your users from the rest of the world but not you instead of a

blockchain which is designed to protect everyone including you from everybody else and in most commercial context that's not what that's not what is required I mean if if trust were that big of a problem in everyday life then we would be seeing blockchains everywhere Bitcoin would have solved you know the commercial problem and it in fact frankly the opposite is true in most commercial relations you need to have third parties involved in order to make certain discretionary assessments as to whether facts have occurred or what the meaning of a provision was or even to constitute an asset itself so instead it's not this isn't a technical detail you know oh well we have someone administering it when you have someone administering something you suddenly have accountability you have a legal Nexus which allows you to deal in legal

obligations and that's something which Bitcoin doesn't have so you know you're dealing with a distributed Ledger but a distributed Ledger does not have agency and it doesn't have legal personality so it's going to be very hard to actually structure in legal obligations on a distributed Ledger where something that's broken cannot be fixed or cannot be Unwound or cannot be undone and so you know people say well maybe we don't want them undone but the fact is in mainstream Finance undoing transactions and amending transactions quite without the consent of the parties involved in some cases is something which happens all the time so we've structured this blockchain system from a financial perspective to deal with those considerations um and and it was something we looked at the distributed you know when I was a lawyer this is a problem I identified

how can you work with a system that you can't fix in the event of a misrepresentation or a fraud or a simple mistake you know no one is going to use that system if you have one system and this is a this is a simple question of competition if you have a system which protects your rights and is slightly expensive and one that doesn't protect your rights and is free of charge or has a different cost structure the rights themselves are very valuable and I suspect most people will go for the system and structures and their rights that's my own my own particular view on that okay um I recently saw a tweet by Peter Todd and it said something like that so the only advantage of Bitcoin and I think he talked about you know cryptocurrencies uh sort of as a class is a

decentralization now it seems here that you're sort of taking the blockchain side but then getting rid to decentralization I guess to varying degrees right in some cases maybe not at all but in other cases completely um how does that make sense because you can spread your data out without necessarily having to have it redundancies built in and security is built in so blockchain security can be achieved in in several dozen lines of code what would require servers and it administrators I mean this is what Bitcoin has proven you can deploy a database which secures itself very very simply and very elegantly in very few lines of code so whereas currently we require oversight and administrators to do that so by relying on mathematics

instead of people in oversight you're reducing a cost additionally the data itself fault tolerance is very very high if you're running 100 nodes you know one example I use if you let's say you're an International Bank right I always refer to banking I apologize let's say you're some kind of organization and you run a blockchain or a series of blockchains to administer your functions um and one of your offices suddenly out of nowhere an asteroid falls out of a clear blue sky and wipes your New York headquarters off the map well if you're running nodes in 10 other countries that have redundant copies of the same data then you know let's say it happens at night so all your people are at home the following day they just walk in download a software program plug in their private key and they're up and running just as

you know completely uninterrupted because that data store has continued to administer itself without you know it's continued to administer Itself by virtue of the way that it's structured so redundancy and fault tolerance is extremely high that's valuable currently these companies need to use data centers offshore three four five of them per corporate very expensive to administer um and that that's a cost and it's a very significant cost so from our perspective if you can just build that into a system and have it run quietly and automatically in the background that's a substantial advantage that these systems will have over existing data structures and now here's a thought that makes it difficult for uh for the purists here's a here's a product by the sound

of it that is going to be very attractive to existing mainstream Banks to implement blockchain technology to do some of the work that they they currently do and more cost effectively potentially reducing the cost for those customers um if that happens we're likely to see a greater mass adoption of crypto indirectly than directly so we're going to see people using the blockchain even though they don't realize they're using the blockchain perhaps they don't feel the confidence to use the blockchain or to use crypto

technology right now they don't trust the the trustlessness of it but in uh indirectly they may end up many more people may be using the blockchain than would otherwise have been the case if they have the direct option of participating in directly in in Bitcoin and other uh and other occurrences interesting thought Mass adoption that that's exactly the point I mean the re another reason we're going with web apps is to show that you can use a blockchain without knowing you're using it because if you if you have to know you're using it you know I you know I'm

not that you know that computer literate if I had to go in and then run everything from the command line in order to use it I probably wouldn't as would 99 you know percent of the population so the idea is that you have a data structure which brings all of these principles into a mainstream application um without anyone needing to have the technical capacity to you know to do so so I mean there's a guy named Jawad yakub who's developed a distributed desktop which has some blockchain components called dios and his thesis is you know you have a desktop which uses the blockchain to secure certain functions and people see a desktop and it's the same thing with Eris people have an interactive application and they see an interactive application they do not see the blockchain that runs in the

background um you know you know to ethereum to ethereum's great credit none of this really would have been possible without certain of the structures particularly the Patricia Merkel trade which they innovate it as part of their open source project so it you know this this is where we see the space is going and um you know entirely because of the open source model is it according you know and following that we've open sourced all of our stuff as well so assuming or Sebastian video well go ahead finish your thought I I just want to come back to the browser for a second um so assuming you know this uh finds you know it works out there's a lot of um a lot of developers start using it developing applications like that uh

what would the impact of that be like how would that change the way uh people interact with applications and in particular also from a sort of business model perspective do you think that will change the way yeah maybe monetization works as well I think that yes I mean in terms of what's had the structure of the internet might change um if this technology were widely used is that you would have users voluntarily users would not necessarily use an application because it was convenient they would also use it for other things like this particular developer respects my privacy and there would be transparency as to what a developer could do with user data um so if you had a series of distributed

social networks or twitters or reddits or God knows what else and the developer said well this is incentivized to do this and we're not going to shove advertising in your face that's something which I think people would find valuable and they may migrate over to those systems and as a result of which it would be an order of magnitude harder for corporates to sell that data or do any meaningful sales of that data and also for governments to observe that data without authorization or user consent but that's some and it would be transparent if the application changed over time how the developer was actually the difference here right because today someone could go and start an alternative social network and say we're not going to do any advertising and of course people have done that right but so the difference here would be that it

would be for everyone in the blockchain what they actually are able to do I mean consent consent would become more transparent I mean if if you structure a blockchain um so that people can't see your data um and that at a later date they would not be able to change it as to make that data readable then yeah you would have an application where you know you you cannot uh reverse that kind of consent and so that that potentially has that could disrupt a lot of business models in that you don't need advertising anymore to run an application your users use it simply because of the convenience um and let's say when you're opening the window anytime the windows open you start processing transactions that's something where I think it'll have a very substantial impact

um and in another sense you know one thing you know Version Control and GitHub I think I may have mentioned this earlier so apologies for repeating myself but we're you know we run a startup and we have to pay all manner of service providers third-party service providers for the things we use one of those is a private GitHub repo if you can script version version control and we are working on that and then have a distributed GitHub you know dap that you and your company run all the sudden that cost Falls away so you're dealing with protocols governing the way that people interact instead of servers which everybody's always querying which hold all their data off-site and frankly expose you to those servers so people will have a lot more control over the risks to which they're exposed because they're going to be able to move those

risks in-house and then distribute them in such a way that they're able to mitigate them to a significant extent so from you know there will be other considerations private key you know private Key Management is going to be a very big one but we think that that's that's the direction things are going in terms of the business model it's a free software model where Services we think that there's going to be a very big market for these Services going forward distributed database management and so we would like to be the provider of those Services um and um yeah because that's how business works so you can't patent this stuff anyway because of prior art and because no one would frankly use it because it has to be open source if it's going to be secure another Peter Todd line nothing that you know nothing that

isn't secure you know isn't open source or everything that is secure is rather so because people are able to assess it test it you know take pot shots at it and that's and use it for whatever purpose they want and um and for us that's really important so yeah it's a free software model we you know we we think that skilled labor in this space is very very thin on the ground and we would like to do the skilled labor that that helps to you know bring the blockchains into water use so I'd like to come back to the the browser for a second so I I think that the browser is an important an important component to sort of user adoption and consumer adoption and bring just regular people on like um but there there is sort of a a

problem with that as more and more of these blockchain Technologies start issuing browsers um is that you have this [Music] um uh this you know you have multiple browsers that aren't necessarily compatible with each other and which require users to have multiple well multiple browsers installed on their systems if they want to be able to do anything and if we look back in history this does resemble a little bit you know the early internet in the early 90s where you had uh AOL and Netscape and each had their own protocol implementations and each had their own websites and each had their own even like HTML implementation standard how do you think this will evolve how

will we overcome this well you know are we expecting can we expect like browse was like uh like Google Chrome and Firefox to start implementing uh these protocols or are we waiting for a new generation of browsers to to merge on this I mean really really what we've built we use chromium for for the for the D server so it actually is it's a Google Chrome browser that works best with it and and so our approach is that you can take a module wrapper for any of the other protocols plug it into the D server and then your standard Google Google Chrome web browser will be able to display whatever that module wrapper has been written for and you just access it through the VM at localhost so it's

not like we built our own browser from scratch we use Chrome um normal ordinary web browser but the D server which is sitting behind it allows that normal web browser to go talk to all of those other protocols so the D server is displaying the DAC um through Chrome or another web browser and then the D server is what sits underneath it so we can talk to ethereum bitcoin counter I mean we're really big on on cross-platform interoperability and so but your browser has to you have to have had implemented those protocols in order for your browser to become compatible with it you have to have written the module wrapper for the D server right in order and then and then have a Dap which so the application will need to be able to talk to all of the

various apis for the different protocols and if that happens then you can put them through a regular web browser so we haven't built the D server is the web browser but it's in only in the sense that it displays through a normal web browser it's not a standalone browser um so yes it's possible that that you know Google or Firefox or someone else could create a d server button and then you could have your D server button which allows you to go and do various other things at the moment you don't even need to do that just go localhost 3000 and hey Presto it your daps your you get your D server administrator screen and then your dapps are in a little box on the side so that for us is you know we didn't have to reinvent the wheel and it can talk to all of these

other protocols just you know through stuff that most people already have on their computer okay well it seems to me like like probably the next logical step is to create some sort of a standard protocol um I mean I don't know what the equivalent would be in the in the traditional web world but a standard protocol that every browser manufacturer would Implement and which would be able to talk to just about any uh any protocol I mean from our we've talked to all the protocols are different so you can't have a standard protocol for protocols I mean or you could but I think that would involve a lot of developer teams um saying well giving up on their visions of the way things should work

and so the D server is designed to let them in the way that they think their protocol should be structured then create something which allows the D server to talk to their protocol as they Envision it and as they wish it to be um I I don't think that moving to a standard just in the same way that we don't have a standard cryptocurrency we're not going to have a standard dap but we have to have a way that those dapps can communicate with each other on in a uniform way and so the important thing you know felonious is a protocol design it is not a protocol itself it can be changed by the developers um if they choose they can set any consensus parameters they want um you know we're hoping to have a variety in the kind of op codes that are available

to the end this is something where we want it to be as open as possible so that but it requires work you know you need to actually do the work write the module wrapper and then write the dab which is designed to plug one protocol you know counterparty into ethereum or Bitcoin into Dogecoin so if we don't want to we don't want to tell people how their Protocols are supposed to look we want to give them away that they can plug their protocols into other things and develop applications which are free to use which leverage the utility of all of these separate protocols and this includes BitTorrent ipfs you know distributed file stores as well um so Preston one of the things and I think this also partially comes from your background as a lawyer that you

guys have seemed to emphasize a lot is at the legal side right so uh integrating the legal system so first of all what's what's your view currently of the decentralized app space uh from sort of legal uh standpoint and how do you think decentralized apps would be implemented or let's put it so yeah first of all what's your view of international app space from my legal perspective and second of all um the crowdfunding aspect and having its own token is like very Central decentrals app so with that sort of thing also be built on top of um on top of series

I think I think we'll start with the second question before we go to the first um because it's a simpler answer um personally and we have different opinions on this in Eros Industries I'm personally not legally comfortable with the crowdfunding model um for a lot of the reasons that there's very few critics of that model have in that you're selling a what is effectively um you know you're selling something to people who are not sophisticated investors in a very high risk environment and quite irrespective of the legal niceties of that approach I don't think it's a wise approach so it remains to be seen what will happen to startups that have followed that model but I think that the more appropriate way to do it is to have an app which is free to your users where you secure private funding that knows the risk

they're getting involved in from a legal perspective more you know more generally um I think a lot of the space is looking at a legal problem which is asset transfer because assets only have existence in the eyes of the law there are legal Concepts which depend on how they were created and how they came into the hands of the person who is then trading them so and this is especially true in finance and I think that a lot of engineering Solutions have been proposed which rely on the base premise that you have a token of some kind which is of non-zero value for example Bitcoin and then what you do is you can replicate the economic substance of one of these transactions while disintermediating a

third-party provider the fact is there's a very easy there's a risk to that which is that any user who does that so you know let's say on the one hand you have dollars and on the other hand you have goals and you set up all of this Computing architecture around it and then put a token in the middle which is designed to replicate these assets and then mediate the trade with some price feeds and governs what else you were actually exposed to movements in all three of the prices whereas if you simply have a bilateral peer-to-peer trade in the real asset itself then you're only exposed to movements in the one or the life of the transaction if it's something like a derivative movements in two so it's it's using it's using something which is actually very easily circumvented by simply having an enforceable claim

um which requires the possibilities of enforcement which requires a third party administrator of the database in question in order to give effect to that enforcement so it's you know this isn't a technical thing it's it's not a it's not a Computing problem that can be solved it's a legal structuring issue and if you're going to structure it correctly you have to have the third party who can step in and amend that transaction on on the provision of a court order so that that's why we took that approach it's not something we're like yeah we think decentralization is this and decentralization is that it's a simple legal technical issue which is that if you're going to have an asset you need to have some kind of enforcement mechanism to deal with the full complexity of what that asset represents a token is maybe a representation of something but in most

cases let's say you're dealing with a debt obligation you want to move that around to the blockchain debt obligations are hundreds if not thousands of pages of paper worth of representations and obligations they're tremendously complex the placement of a comma um or a or V one word in the wrong place can change the way you interpret very significant parts of that obligation and you have two you know there are two options either you try to script at all which no one has yet done and I think would would be not worth the effort or you simply script the payment mechanics use the blockchain as the as the mechanism which renders that transaction more efficient from a cost perspective and then you incorporate all of the legal control that you need by having a third party administrator who sits outside of the transaction but has the

ability to amend the database so this is this is why we took that approach um you know it's a simple it's a simple question of how things currently work it's how it works and how it fits within a current legal framework so if you want to take advantage of of um of being able to enforce your rights then you needed to operate a system that works within the current legal system and clearly what you've come up with here makes that possible if you don't care about that and you just want to trust the trustless world then you don't need what you've come up with you can do it by one of the existing methods

and really the decision here is is um you know do you want to take advantage of the legal system if things go wrong I think that's what it boils down to and there's some things like Mike hearn's Lighthouse which are that's perfect for decentralization you can see the code you can inspect it you know that if that particular you know crowd fund and that's not a crowd sale that's a crowd fund where it's by donation if that particular project for the your improvement uh on the Bitcoin core protocol if it crosses a certain threshold the funds will move and that's okay because for that kind of a transaction you're dealing with a very simple straight absolute disposal um if you're dealing with something where obligations start going multiple directions and you have 12 15 you know

100 parties to a transaction however many and each of the cons each set of obligations between them may be materially different then you have something which is so complex that if you want to code it you can but I don't see why you'd want to so it's you know it would just you know these transactions without quite apart from um quite apart from having to translate all this stuff into code negotiating one of these deals can take a year or two years so you can imagine what creating a coded framework for them would take in terms of Labor power and you're talking about teams of people you know 10 lawyers per per rep per transaction party and 10 transaction parties per transaction this is very complex stuff so the way that you simply deal with

that is by leaving the law pretty much as it is incorporating the law into the transaction and then using the blockchain as the mechanism which carries out payment mechanics and other things which are very entitled even is very easy to quantify in England we have a we have a title database which is which is you know a central database of title it's not going to be hard to reduce all of those categories to particular num every title has a number so people who say well we've got a Quantified title this is actually already been done in a centralized context the question for us is how do we use a distributed data store to make that process more efficient and more effective and it extends to other types of functions you know querying health records that perfect application where you would want to have a database that

anyone can access but you want a very simple security logic so that only and people can access certain records I mean that a blockchain is perfect for that tied in with end-to-end encryption and a distributed data store multiple redundant automatic requires no oversight like great super go for it and so it's that kind of economy where you're going to see a blockchain being very effective um so so from our perspective that's that's how we look at it well if you want to learn more about uh uh heiress Industries and what you guys are doing you can go to erisindustries.com and what I really like about what you've done is you've actually set up uh separate domain names for all the components so it's really easy for a developer to come in and and read the white paper and actually there's tutorials documentation so I

mean yeah and very interesting blog posts as well I'm actually gonna I mean I've got some development skills so I may look into this and maybe try to okay Casey is gonna Casey is gonna love what you just said because we had a substantial discussion in the 24 hours at the launch you know how many brands are we launching Casey no press did it make sense this is how developers think I love this and I think it's really clear and especially what's really important is like the tutorials right like you know copy this line into your into your terminal and so yeah that's really great uh just before we wrap up there was one article that you wrote and so you've uh Eris Industries has a Blog called the doing business distributed or doing a distributed business rather and you wrote an article called blockchain your

business in just seven steps which is sort of like a you know you've got a traditional business let's turn it into a blockchain business here are the seven steps you need to go through can you just kind of walk us through those real quick yeah so I mean it basically this blog post is designed to get people uh you know being a business we have to get people thinking the way we do so so this was designed to do that I'm attempting to brainwash everybody um on this hangout into thinking about the world the way I do but basically the the overarching theme is that blockchain isn't a one-size-fits-all solution it's Bitcoin itself is not a one-size-fits-all solution to your problem so blockchain's a database um smart contracts um or rather adapt is an application

um but an interactive application and if you want to make use of these things you have to adopt a developer culture and and you need to start thinking about how you design interactive applications using these databases so Step One is reassess the landscape and that basically is what we've been discussing on on legal obligations and thinking in terms of distributed rather than fully decentralized um step two redefining the problem um again Thelonious uh which is our blockchain design can do some pretty interesting stuff one of those things is you can secure it without mining which means it is very inexpensive to secure and the other thing is that you can control it so you're not exposed to regulatory or operational risk in addition to that you can amend the application over time it can change its parameters without a hard fork and

getting that into people's heads they go really what you can do that yes you can smart contracts allow it so if you assume that you can amend an application you can control an application you can secure it very cheaply then start thinking about the other kinds of things you can do now that you've got one of these databases in your hands putting the user first this is really about making sure that users have a consistent and free to use internet experience you know interactive experience we haven't built a cryptocurrency the internet as it works today you know all of you know Google Hangouts what we're using right now is free if to us and it costs money for Google so in order for applications to be economically viable they will have to continue to be free and that's what Eris allows there is some cost somewhere

because the blockchain isn't a perpetual motion machine but you know that that cost will be borne by the developer and ideally it will be much lower than those costs are currently um step four uh We've open sourced it it's free software Fork hack do whatever you want that's the way it should be five this is really as a result of feedback with financial institutions and uh and and other corporates in that they're not resourcing their development forms uh they've got developed to actually go and develop and do some interesting stuff but in order to really leverage this technology you know people say so what can you give us Eris and we said we can give you a database and they go great so what will it do you know well that's something which you as an

organization need to decide it's up to you to figure out where your pain points are we don't know them you do and then get your developers on this and actually have your developers solve those pain points with an automatic database so you know people aren't thinking of it in those terms but now that they have a blockchain they can control that that's really how they need to start thinking um Step six join the open source movement and save the world that's um you know that's the point where earlier we were saying you know the difference between a Bitcoin um you know Credit Union in a developing country and an actual Credit Union in a developing country you know a legal obligation can be transferred over a blockchain and if you can get inexpensive Market infrastructure into places that don't have it um then what you're doing is you're

using the blockchain you're not relying on tokens in order to do it there is a cost that costs will be lower um finally dive on in the water's great um you know that pretty self-explanatory we have a Skype Channel Wherever Eris Industries on free node we've got a subreddit our Eris Industries and um and yeah and it's a it's an open source project and you know the more the merrier as far as we're concerned um you know this is something does this list uh I mean this uh these steps do they follow uh David Johnston's uh that uh framework do they I haven't read it oh no I mean it is a definitive framework for building depth so you know absolutely there are some amendments that need to

be done to this yeah no it's definitely a different model right because uh the David Johnson died that model whole tokenization is super key and you know he says like oh it's having it's a very different model but but this is very interesting and I think so we will put a link to this article also in the show notes and I personally I am very excited to see kind of the first project because it's and hopefully people actually uh developing applications on this soon and if we actually you know if he's particularly if you will see applications running on areas we will see applications running ethereum soon I

think that'll be fantastic to see and uh we're really interested to see what I mean the areas ethereum connection um you know there's there's no denying it and we're really interested to see how an error staff and an ethereum adapter or rather ethereum the the protocol are going to work together and what kind of added Security in particular that can provide for an error staff that's used for something so it is going to be interesting to see you know it's very early days we've only been around for two and a half weeks you know but uh but but it should be you know it should be a really exciting year and we're really looking forward to working with everyone from the various uh various distributive protocols on how we can make daps that make their protocols more valuable and more useful

yeah absolutely so if you're interested in that you know please check out the website and get in touch with him and uh so thanks so much for joining us today also Sean and thank thank you uh for joining us today you know giving us an update we didn't have so much time to talk you didn't have so much time to talk but I'm sure we'll have you back on uh you know maybe even display license thing is out or definitely when the sort of definite version of the licensing is I will definitely have to do a full episode on that um look forward to this yeah absolutely so yeah thanks so much for joining us uh if you so next week coming up we're gonna have Tim Swanson on uh to talk about I don't know he sent us like a list of 40

things you could talk about dive through and figure out that we're gonna have to figure out which ones we should cover uh so but I think it will be a great episode we've been wanting to have him on for a while um so if you if you'd like to show you know please help us out you know leave us Nitro Institute that helps new people uh support uh fight to show if you watch this Pi video subscribe to us on YouTube for the live episode as well and of course you can always give us the nation either on episode tips or you know just do it in YouTube if you're watching it so thanks so much I mean look forward to being back next week

thanks guys [Music]