Exchanges are often criticized as a central point of failure of the cryptocurrency space. This isn’t without justification as, in recent years, we have seen a number of exchanges get hacked, robbed, or embezzled by their founders, which is far from insignificant. One proposed alternative are decentralized exchanges that would allow people make peer-to-peer trades using sophisticated smart contracts. However, there remains the fundamental challenge of interfacing with the legacy banking system.
Manfred Karrer joins us for a lengthy discussion on Bitsquare, a decentralized cryptocyrrency exchange which supports most fiat currencies and cryptocurrencies. Built to be a decentralized equivalent of LocalBitcoins, the Bitsquare client, which connects to the peer-to-peer network, uses Tor by default, which makes it almost completely anonymous. There are also a number of safeguards in place to eliminate the potential for fraud and theft, as well as an arbitration system to resolve disputes between traders.
Topics discussed in this episode include:
- The motivation behind Bitsquare
- The Bitsquare client and user experience
- A walkthrough of a typical trade
- The mechanics of the order book
- The fiat currency transfer mechanism
- The current and future arbitration process
- Manfred’s thoughts on DAOs
- Bitsquare’s product roadmap
Few things arouse among free market believers and enthusiasts of decentralization as prediction markets do. By allowing people to bet on any range of outcomes they promise more efficient markets and better information. Few people have worked with as much dedication on making the promise of prediction markets a reality as Martin Köppelmann.
After founding the Bitcoin prediction market Fairlay, he turned to Ethereum and started the Ethereum-based prediction market Gnosis. We discussed his views on the DAO heist, differences between Fairlay and Gnosis and their upcoming tokensale.
Topics covered included:
- How the DAO heist happened and what we should learn from it
- The Bitcoin prediction market Fairlay
- From Fairlay to Gnosis: Building a prediction market on Ethereum
- The Gnosis architecture
- Gnosis’ planned crowdsale and DAO
- Gnosis business model and what will determine the value of the tokens
- The difference between Gnosis and Augur
Security researcher and RSK co-founder Sergio Lerner joined us to discuss RSK (also Rootstock), the project to launch a turing-complete smart contract sidechain to Bitcoin. We talked about how he got into the industry, spending countless days analyzing Bitcoin for vulnerabilities and finding a few along the way. And, of course, RSK, the ambitious project to strenghten the Bitcoin ecosystem through adding smart contract capabilities.
Topics covered included:
- How Sergio initially got involved in the Bitcoin space
- His early work on turing-complete cryptocurrencies going back to 2012
- Why financial inclusion is the most important problem to solve
- Merged mining and RSK’s security model
- How RSK compares to Ethereum
- RSK’s business model
With recent news surrounding The DOA and the Brexit vote causing a stir in the blockchain world and beyond, it seems like a regulatory update is due. So we called up our favorite regulatory affairs specialist Siân Jones to enlighten us on some of the recent developments in Bitcoin and blockchain regulation.
Topics covered in this episode include:
- The Brexit and it’s potential impacts on the Blockchain and Fintech space in the UK
- The Bank of England opening its doors to more than a thousand financial institution and payment service providers
- Some of the initiatives by the UK government to potentially adopt blockchain technologies
- The recent European Parliament plenary sitting on virtual currencies and the Distributed Ledger Technology Task Force
- An update on BitLicense and its impacts a year and a half after being adopted in New York
- The potential regulatory implications of DAOs
The lack of an explicit governance mechanism has created deep problems for Bitcoin. Ethereum, with the DAO-related soft/hard-fork discussions, may face similar challenges ahead. Yet, already in 2014 Arthur Breitman quietly started working on cryptocurrency network Tezos that has an explicit mechanism to let coinholders vote on protocol upgrades.
Our discussion with Breitman centered around how explicit governance could lead to a more secure and evolutionary protocol. We also discussed Tezos’ approach to smart contract that tries to prevent bug-riddled and insecure smart contracts such as the DAO which has thrown Ethereum into a deep crisis.
Topics covered included:
- Why stakeholders voting on forks can prevent consensus attacks
- The mechanics of Tezos’ governance
- How an upgrade mechanism could allow Tezos to rapidly and radically evolve
- Why the programming language in which smart contracts are written is crucial for security
- Why a functional language that allows formal proofs such as OCaml is more suited for smart contracts than Ethereum’s solidity
- The road ahead for Tezos
For many the promise of decentralized applications and DAOs is to be beyond the limitations and rigidity of the existing legal system. There is no question that where DAOs can roam freely, innovation can accelerate. But can the law, courts and regulations be left behind so easily?
Lawyer Stephen Palley joined us to discuss what happens when the new and old worlds collide and how courts will look at what goes on in the land of DAOs and DApps.
Topics covered included:
- Whether trust is reduced, removed or just shifted elsewhere in blockchain systems
- If creating decentralized applications could create liability risks
- Why courts will impose a legal structure if a formal one doesn’t exist
- The concept of jurisdiction and how it could affect DAOs
- Why one should be careful with saying a DAO provides insurance
Raising $150m+ through its toke sale, ‘The DAO‘ has become the most notable decentralized application to date. The ambitious goal of the project is to form an decentralized organizations that efficiently makes investment decisions and generates a return for the token holders.
Computer Science professor Emin Gün Sirer and researcher Vlad Zamfir joined us to discuss the various security issues with the daring project and why they’ve called for a temporary moratorium on funding proposals.
Topics covered included:
– How the DAO works
– What the role of the curators is
– What splits are and how they became a way to withdraw funds
– Why the DAO has a bias towards approving proposals
– How attackers could ‘stalk’ token holders when withdrawing their funds
– How the DAO can be upgraded
One of the problems often cited when talking about cryptocurrencies is their level of volatility compared to traditional fiat currencies. This makes most cryptocurrencies a poor instrument for storing value, and introduces complexities when making purchases in fiat amounts. Stable cryptocurrencies include mechanisms which allow them to stay pegged to fiat currencies like the US Dollar or Euro. They present a number of advantages, and, in addition to taking the headache out of making purchases, can be used by cryptocurrency traders who need a stable unit of account for hedging their assets.
We talk to brothers Pascal and Julien Hamonic, Core Members of the Nu team about the NuBit stable cryptocurrency. Similarly to the mechanisms that keep our body temperature stable, NuBits relies upon the introduction of new coins into circulation when demand increases, and for coins to be taken out of circulation when demand drops. Shareholders (NuShareholder) vote on these measures as the network relies on custodians who bring liquidity into the market in exchange for dividends, and on speculators who “”park”” coins in exchange for potential returns when demand increases again.
Topics we discuss in this episode:
– What is NuBits and what is the goal it is trying to achieve
– The different components of Nu (NuBits, NuShares)
– The economic mechanisms behind the $1.00 USD peg
– Who are the different participants in the network (NuBits users, NuShareholders, custodians)
– The important role of custodians in providing liquidity to the network
– The consensus model used in Nu
– The initial allocation of NuBits and NuShares
– The governance mechanisms in Nu
In this episode we welcome back Stephan Tual, the COO of Slock.It, a German startup working at the intersection of the Internet of Things and the Ethereum blockchain. Slock.It’s small team also wrote the smart contracts that power ‘The DAO’, a decentralized capital management entity that recently raised north of $160 million for investing into Ethereum based projects. ‘The DAO’ has been featured in many mainstream news outlets, such as New York Times, Wall Street Journal and the Economist.
The interview explores the vision, motivation and challenges behind both ‘The DAO’ and Slock.It. Some of the topics discussed in this episode are:
– Stephan’s background and role as CCO at Ethereum Foundation.
– What is ‘The DAO’ and how it relates to Slock.It.
– DAOlink and the business opportunity of enabling interactions between DAOs and traditional firms.
– Opportunities, assumptions and challenges for ‘The DAO’.
– Vision and products of Slock It – Univeral Sharing Network and the Ethereum computer.
One of the foundational problems in payment networks is that they are mostly uninteroperable. This problem exists at all levels, from consumer payment solutions like PayPal, to national and multi-national banks. This complexity is brought on by the proprietary nature of payment networks, and moving value from one to another requires a negotiation between parties on which common payment network to use in a transaction. We saw similar problems in the early days of the Internet, assembled around protocols which allow for data to be routed and move between networks in a standardized way.
We’re joined by Stefan Thomas and Evan Schwartz, co-creators of Interledger. This neutral protocol would bring the same level of interoperability we know take for granted around the flow of data, to payments, thus allowing money to move freely across networks. A market maker, who holds accounts in both networks, would receive funds in escrow from a sender, and move funds to an escrow account with the receiver, getting paid by the sender when he shows the proof the funds were delivered to the receiver.
Topics discussed in this episode:
– What is Interledger and what problem is it trying to solve
– Interledger’s architecture
– How connectors and routing works, and how we may compare it to the way data flows on the Internet
– Cryptographic Escrow and its role in Interledger
– Requirements for payment solutions to become Interledger compatible
– Interledger’s community group at the W3C
– How Interledger applies to micropayments
– Ripple’s role in Interledger