Charles Hoskinson on Cardano’s Future, the state of crypto & AI

Oh, doing quite well. It's been a very eventful year.

Well, I I mean the problem with channels is that every channel it gives you a benefit and it takes something from you. And so X is built for basically low information, uh, 200 characters or less, instant rage, instant emotion. You can't have a philosophical debate, a governance debate, or a nuance conversation there. It's also a misinformation amplifier. Um, you know, you mentioned I box with Cointelegraph. Um, they're complicit and liable. Uh, let's just be blatantly clear about that. It's objectively true. They there's some random guy who has no material connection to stuff that happened in Cardano 10 plus years ago. He made allegations of mass fraud. Uh there was an independent audit by MWE and GDO completely exonerated and cleared us on that and Cointelegraph covered the allegation but refused to cover uh anything uh about the exoneration. Um it just journalistic misconduct. Um and they didn't even reach out to me when they covered the allegation. basic journalism 101. If there's somebody being accused of a felony, let's contact the person and get their side of the story. Didn't even do that. Didn't even publish the correction. Why? Because they're tuned to X and they're tuned to social media. And the goal there is controversy, ragebait, division. Uh, and you can't make any meaningful progress there. And the people who succumb to it, they've become over time highly partisan and highly hated, especially among certain demographics. So Elon Musk is the canonical example. Uh when you look at that, you know, he has 140, 150, I don't know, millions million, massive Twitter following. And uh by all rights and means, he's a very productive human being in his personal and public life. Uh he's able to juggle having more than a dozen kids. He's a trillionaire. you know, he's he's taken us to Mars. I mean, there's very few people that have ever achieved the success, if if anyone, that uh he has uh but yet half of America thinks he's the world's worst human being and he's a force of destruction and negativity, principally because of his conduct on Twitter. So, it's a net negative for public figures after a while.

That's to Dr. Hbert, right? You know, after I own 5% of the steakhouse, I don't think there's any problem. [laughter]

Yeah. Well, it's also hard to know how much is it actually CZ versus a group of people handling the account. Look, you don't abandon these when you have a million followers in my case and I think he has more. You don't abandon these platforms. What you do is you curate them and manage them differently. So, there's a heavy amount of AI now that I use in the curation of my Twitter feed and for the vast majority of the days I I don't do anything with it.

Yeah. Yeah, they just don't want to talk about stuff. Uh, and you get a completely different view of the world from the news streams of X versus the curated news of mainstream media. Like we we wouldn't know Henry Noak at all. He just wouldn't exist and he wouldn't be a person in the UK uh had X not existed. But he's, you know, now now that X exists, we know that story. So, it's valuable from that perspective. But the problem is that it takes from you. So every time you go there, part of your soul starts, you know, getting sto drained away and there's no empathy and everybody loves the controversy. So they take things and they don't use basic critical thinking. Like if somebody makes an allegation with 11 Twitter followers who has no material connection to the principle or or inside knowledge, that's baseless. And normal people would say, well, hang on a second here. How do you know that? But on Twitter, it can go viral and then magically it it turns into a thing and then everybody's, well, this person sent this thing. What is your commentary on that? It's like, I don't know. When'd you stop beating your wife? I I never bet beat my wife. Well, that's what I heard on Acts, you know. So, you got to prove that you didn't do that, right?

Yeah. Yeah. Exactly.

And shame on you for asking it. Do some basic [ __ ] research. It's been 12 years and I've answered the question 400 times in every goddamn interview. Imagine my life experience every interview. Hey, you worked at a place 12 years ago for 6 months and books have been written about it. Can you go back to that and walk me through step by step everything that happened? You're lazy, dude. In any basic research, it is lazy in any basic research. There are hundreds of interviews where I spent 30 minutes, an hour, two hours talking about it, going back and forth about it. It's so what are we going to gain by rehashing the Miami house and then the Swiss ides of June and all these other things. What are we going to gain from that?

No they have. And if they haven't heard it tell them to go to YouTube and search for it. It's boring. Next question. Move on.

that I've already talked about 200 times 300 times 400 times

I don't care and let's move on. We're not talking about it. Small part of my life and Cardano is the big part of my life. Midnight's the big part of my life.

Very nice. Again, if if a traumatic event happens in your life and you're done talking about it, you've said what you've wanted to say, it's not appropriate. Just keep badgering people after 12 years about the goddamn thing. I'm so tired of talking about Ethereum, you know? I'm so tired of it.

I mean the challenge with any decentralized ecosystem is people want contradictory things they want the comfort of a leader a clear road map a clear direction and centralized product development but then at the same time they want total decentralization and nobody's in control and so Cardano has been the only project outside of I'd say Tasos and a handful of others that have tried to figure out a way to square that circle where what we've done is we built an onchain governance system and it took years to do this. We created a constitution had a constitutional convention. It was an enormous amount of effort. We had people from 50 countries participate. We have an onchain governance system with DREPs where you can delegate to them similar to delegating to a state pool. We have constitutional committee members. And what we've been systematically doing is building a government. Governments typically have three branches. is they have a legislative judicial and they have an executive branch. Well, we built the legislative and judicial branch and uh we did that very deliberately because if you start with the executive branch, you continue having too much executive function, too much power nested in one person. Well, the consequence of not having a strong executive function is you don't have that singular roadmap north star as you call it um vision and uh direction and it makes a lot of things really hard like commercialization and marketing because uh it it becomes very difficult to know what the protocol is about if there's 400 different people saying 400 different things all the time with it. um you know and so what we've tried very deliberately to do is create a systematic process where we actually can get to a strong executive function with checks and balances so it doesn't become a dictatorship and it doesn't create an overreiance on a singular person or entity for the ecosystem. This is ridiculously hard in practice. You have to decentralize the development. You have to decentralize the financing of things. Uh but we already have some big competitive advantages. Uh, you know, if you look at Cardono, despite the fact that we're only $6 billion and we've fallen out of the top 10, there was still enough money in the Cardano onchain treasury from the revenue and inflation of the system to pay over a hund00 million budget this year to finance operations uh for the entire Cardono ecosystem and more than three four dozen companies have received funding. So very decentralized from that perspective. Want to contrast that with Ethereum because they don't have an onchain voting system or onchain treasury. Um, the Ethereum Foundation's laying people off and it's trying really hard to find out like where do we get our funding from and they're starting to descend into a plureaucratic oligarchy where wealthy benefactors will say, "Oh yeah, we'll cover the development of the protocol." But they forget there's the golden rule, which is he who has the gold makes the rules. Uh, so if you have these wealthy benefactors, they're never going to tell you to do things that are contrary to their best interest as an operating business. So you basically get a ruling council of of benefactors. So and what's sad is if Ethereum just took 5% of their pro protocol revenue and gave it to the Ethereum Foundation, that'd be $390 million a year of funding that they would have to advance and grow and thrive the protocol. So onchain treasuries, onchain voting, I think are just a no-brainer and they get you there, but they're useless unless you have executive function because you have to know what is the strategy, what is the vision, what are the KPIs that we're chasing, what is this about? People very rightfully, your listeners and others would ask, okay, in 2030, if Cardano wins, what does that mean? You know, where are they taking this protocol? How are they evolving this protocol? That's really the important component of all of it. Uh so we're trying uh to build that executive function now and that's the last stage of the decentralized governance. And so how that's going to be done is there's going to be an update to the Cardono constitution. People will vote on it and then we'll nominate elect a uh a group of people to basically get a roadmap done and uh get a stable budget process done. uh and then we'll have um a a unified front and so you will feel like the development of a centralized company uh but we'll be able to make meaningful progress on the decentralized front. By the way, you've frozen. Um are you still there?

Oh 100%. So uh we've been doing that for actually three years now. Uh so the first step was contractor subcontractor. So input output was at the top. We had dozens of developers in different areas um doing various things and then we would augment them with subcontractors and those subcontractors would build up a a corpus of of expertise. And now we've gotten to a point where we're able to to actually turn over uh the projects to those subcontractors in their own right. We did this very deliberately because we wanted to have many different independent geographically diverse uh firms working on Cardano uh and also multiple nodes on Cardano. So everybody's oh Cardono's Haskell and Haskell is a weird language so let's not use it. Well there's also a Rust implementation of the node and a Go implementation of the node. Uh so uh a lot of people they just know about Cardono from a very particular snapshot in a very particular period of time and they just completely write off the project if they didn't like that snapshot. It's a living project. So you have to increase the diversity of the code, the diversity of specification, the diversity of the open source project governance. There's two MPOs for that intersect and Pragma and then also the diversity of the development firms themselves working on it. So what we're going to do at IO is kind of move into two different directions. One, we're going to do basic research and applied research. So, we're going to figure out the big hard protocols because we're super good at that and we have a massive army of scientists and we've always been very good at that. And the other thing we're going to work on is new venture development. So, commercialization of Cardano and we already have several ventures uh that have come out or are coming out that are at Cardano launched. Um, for example, Realy is a micro finance platform on Cardano. Pogan is a Bitcoin DeFi play on Cardano, which these both will directly massively increase the TVL of Cardano, which has always been a weak point. We're going to start using some of those integrations we have with Cardano like Circle for USDCX and build that up and get a lot more stable coin issued so those metrics can look better. And then obviously we launched Midnight, which is our largest bet uh that we've had and that's directly connected to Cardano as well. And it's growing and thriving like a weed. It's a very successful project. So that's what input output is focused on right now. Uh maintaining the hasll node it's important but it's a economically neutral thing whether we have a phenomenal node or the node's not so good it doesn't really have any impact on the growth of the ecosystem and there's now diversity there. There's a Haskell node, a Rust node, and a Go node. And part of this transition was getting those developers into the right structure so that they can continue delivering that consistency and security that people have relied on because we tend to stay up 24/7. For now, eight years it's been running. Um, but uh but allows us now to go and focus on commercialization and growth and so we can solve that next problem because no one has a problem with the decentralization of Cardano or the reliability of Cardano or security of Cardono. never typically a criticism we get. The criticism we get is nobody's using the chain. Uh and there there's it's somewhat fair in certain dimensions. And so we said let's go solve that problem as input output and actually directly go into the arena and build consumer products and DeFi products and other things get people excited about them and then that'll increase the adoption of the chain.

yeah, and actually some of the technology or has a unique capability that I don't think people fully understand. So we can do Bitcoin mirroring. So what we can do because we're a UTXO system and Bitcoin's a UTXO system and we figured out the zero knowledge side of it is that you can take your Bitcoin on tap routt and through a zero knowledge transaction you can mirror it into Cardano in a non-custodial way. So you're not using a conventional bridge. Now there's two advantages. First, you're in control of that. Okay? it doesn't get hacked. And the second advantage of this is it's tax neutral. You're not creating a new asset. You're mirroring your asset in a non-custodial way somewhere else. So you don't have a tax event when you use that. And there's some jurisdictions that including the United States potentially that believe bridging may be a tax uh event. So you have capital gain or loss whenever you bridge over. Um so uh we're building those capabilities and have been for a while. We actually even some of the people on the core bit VM design work at our research lab and so we've invented a lot of stuff and we've been able to actually successfully move Bitcoin from the Bitcoin network into Cardano. Step two is giving people the ability to lend their Bitcoin collateralized lending to a stable coin. So you have this non-custodial collateralized lending to a stable coin from a non-custodial bridge system um mirroring system. Uh and when you put those two pieces together then your Bitcoin produces stable coin. Then what you do is you deploy the stable coin into uh DeFi and you get a yield. Um so the idea is that you can just click a button in your Bitcoin wallet if you're a retail user or you can make a deal if you're an enterprise user or institutional user and you just basically choose your risk profile of of the DeFi you want to be in and then you start generating passive yield and what's really cool is then you can convert the yield back into Bitcoin. So then suddenly you start getting like almost like staking rewards you know you get you get payments to your bitcoin and uh the underlying security is the underlying security of the bitcoin network not the cardano network in many cases. So that's a really powerful play and it's very different uh from the prior Bitcoin bridges that have been proposed because they're only about four and a half billion dollars worth of bitcoin that is utilized in defi at the moment. It's a huge mismatch. this trillion dollar ecosystem and like less than 5% has been deployed in any meaningful way um historically in in any D5 protocol. So uh it's a huge market opportunity if you crack it and we have a lot of people in the OG Bitcoin space that are extremely excited about the prospect of especially with Midnight because they can do this privately. they can lend their Bitcoin to a private stable coin and then place that private stable coin in bunch of yield products and there's no linkability back to the old Bitcoin. Uh it's uh pretty exciting. The other thing is security has to be right. Every day there's a buck and bridge hack somewhere or some and it's just so frustrating and we're all tired of it. It happens no matter what ecosystem it is. So you really need somebody who knows what they're doing to build these capabilities and uh audit these capabilities um and make sure that they work. and you really want to anchor as much security as possible to a big network like the Bitcoin network to keep it secure. So, uh the goal right now is is get the company out. It's called Pogan and uh the next step is to get, you know, some reasonable amount of Bitcoin into the Hopper. So, probably around 100 $200 million worth of it, which by the way is DVL. and uh and then uh go and get that deployed and then walk the ladder up to a billion and then start uh institutional adoption and create products where they can get reasonable yields on treasury Bitcoin. So, you know, you have a little bit of Bitcoin in your balance sheet, you're a CFO and you want to find a path to get some yield. Well, you'd like to be in the driver's seat of that and you can layer it with all kinds of products to manage it, manage the risk. Uh and then suddenly it starts generating a nice little return. So you get the appreciation of the bitcoin and you get the return on top of that. Uh and it creates a beautiful lending market. It issues stable coins at the same time because you don't want to sell the bitcoin. You just want to lend it uh in a tax neutral way to a stable coin and then you want to place the stable coin. So Omar Hassan is the um is the CEO of that company. We incubated it in our venture studio. We've been thinking about it for years and it was more complex than just building a bridge. We we wanted to build something that was tax neutral, non-custodial, and ultimately used as much of the security of Bitcoin as possible. Uh and we wanted something where uh it could scale from an everyday web 3D gen user all the way up to an institution in terms of its design. Uh so we had a lot of fun working with the bit VM side of the house and these other things and figuring out how to get zero knowledge proofs to work on Bitcoin using tap routt. It was an enormous effort uh because originally they were horrendously expensive like thousands of dollars for a single transaction. So obviously that drives out the retail consumer. So we had to get it to a reasonable cost and latency and uh we figured out how to do that. We're very excited about it and it's a product that's coming very soon actually. It's just about spin out of input output. Um and uh they're getting all the pieces put together and the technology is nearly done. You know we're being very methodical with the auditing because Dr. Claude is so powerful these days, you know, [laughter] it's pretty scary out there, you know, for anybody deploying public software where everybody can read your code. Claude is brutal. Uh so we're definitely uh taking it in a systematic way, but uh we think it's going to be a great product, especially in 2027.

So, the problem with Bitcoin and I was starting Bitcoin. I've been in the industry for 15 years. So, I'm I'm I should have retired a long time ago and I'm just that grumpy old man who's here and you know, you keep building. But, I started with a Bitcoin education project and uh back in the day there was only Bitcoin and Bitcoin was under a dollar. No one cared about price because there was no price. You had to be in it for the philosophy because there was no money. We had to pay for our own coffee at the San Jose conference when they first did that in 2013. Um so Bitcoin um the issue with Bitcoin is it it's frozen in time and it's very difficult change anything. When we were doing Ethereum in the early days all the Ethereum core people started in the Bitcoin space and uh they left out of frustration. Uh so Vitalik was a mastercoin colorcoins guy. A air chitri was he was the person created by mastercoin.com you know there's there's dozens of of founders or founder adjacent people who had started trying to make bitcoin better and I had my own blockchain that I built uh called bitshares and I was trying to solve the exchange problem. So I built the first decks with Dan Lurmer and the first algorithmic stable coin. You know we had bit USD and the and the onchain decks with it. We wanted these things in Bitcoin, but there was no path forward to make these things work. I mean, it's like hour-long finality window, seven transactions per second, uh really expensive for the transactions, no programmability, no userisssued assets. You can't even do basic things like pull payments. So, you have a credit card subscription, $29.95 per month. Well, how do you do a pull payment? Can't do it. you know, so so you couldn't do all the basic things that you'd need to have a financial operating system. So we were saying contradictory things in the Bitcoin space. We're saying Bitcoin is the standard and Bitcoin's going to take over the world and Bitcoin's going to replace the banks and Bitcoin's going to do all these things, but you can't even do something as simple as credit and you can't even do something as simple as issuing your own asset. You have no value stability. And and so we're like, well, there's a mismatch here. And you know we tried for two years as an ecosystem to build overlay protocols that could fix that but there was no appetite to evolve Bitcoin to accommodate the overlay protocols. If the programming model of Bitcoin script was just expanded a little bit to what Russell has created at Blockstream with simplicity, uh probably Ethere all the people would have stayed there and they would have put some things in. But there's no appetite to evolve this and and the evolution happens every 5 years. So you get SegWit, then you get Taproot. Well, now with Taproot, there's enough programmability that you can do all the interesting things somewhere else. But we've never lost the recognition that Bitcoin has 550 million holders. It has a great brand. It's a very stable asset. And if you want to create a currency, you typically do it from commodity money. So goldbacked dollars, right? So you can create Bitcoin backed assets. And when you create Bitcoin backed assets, they they feel like they ought to be more stable and secure. So I'm neutral to all of it. You know, Cardano is in many ways a spiritual successor. It reflects correcting a lot of things that I think that Satoshi couldn't get around to because of expertise or time but was directionally moving there and had he stayed around would have would have flirted with and as the founder would have the power to actually implement those things. Like we took UTXO and we fixed it. We turned it to extended UTXO to make it programmable. But also we recognized I was around during the inflation bug. There was a time when billions of Bitcoin were actually printed out of thin air because of an inflation bug back in 2010. and it scared everybody in the core development of Bitcoin. So they uh they decided never change that. You know, it's just like Bitcoin script can never be touched. So by doing Plutus and all the other things we did for the programming model of Cardano, uh we kind of fixed those types of issues and made sure they wouldn't happen. So if you look at extended UTO and Plutus now to me it feels like an evolution of where Satoshi started. Color coins, our asset issue standard is an evolution of the color coins standard. So when you look at Cardono native assets, they work in many of the same ways. It's just the color kernels are built into the blockchain itself and recognized that way. Hydra is kind of a spiritual successor of lightning and we added all these things into Cardano to to basically make it efficient. But now you have that channel isomorphism that the lightning people have always been chasing. So you can do smart contracts and payments and you get all these super high performance uh capabilities. So it's been really a lot of fun to kind of take the original Bitcoin road map and push it in a certain direction. But then there's this other road map Ethereum and they've always been kind of evolving in their own way and they're very different project. Uh and we kind of sit in the middle between the two and so on one hand you know are we better Bitcoin or the other hand are we like the world computer or the world financial operating system like Ethereum and that identity has always been uh challenging for us because there's different things you do. So my compromise was the partner chains model with Cardano where you can embed other networks on top of Cardano and uh they have their own consensus and network and transaction logic. Uh and Midnight is a great reflection of that. And now that we have that capability and it's starting to grow rapidly and evolve rapidly, we don't have to actually choose between the two. You can mix and match and pick the best things. And we're getting to a point of abstraction where nobody really cares about the asset anymore. When you look at intense and multi-chain signatures and the ability to pay in whatever currency you want or pay in a stable coin, the token wars are effectively over. They're they're still there for, you know, old old guys like me and maxis. But normies don't care. They just want it to work on their credit card or on their phone and they don't really want to care if they're on infrastructure A, B, or C or D. We're kind of past that as an industry. But but Bitcoin the reason it doesn't change is it became a religion and when it became a religion I lost all interest in trying to influence and grow it. We couldn't even we because we have one of the largest research groups in the world and we still do proofof work research. We created something called Nepapow's non-interactive proofs of proof of work and it basically is the mathematical primitive to solve the side chains issue for uh for Bitcoin. we couldn't get it into Bitcoin. And even though it doesn't require anything, it didn't require a hard fork or any of this other stuff, it's very easy to push in the same way they pushed in tap routt. And it would massively improve the light client experience, massively improve lightning, massively improve everything else. And it's an emergent property of proof of work. You notice that certain blocks that are made are more rare than other blocks. And you can use that to create a recurve structure to prove the history of Bitcoin in a logarithmically scaled way. So very very small proofs. Uh so so we're like wow there's this amazing property that Bitcoin already has. Can you just make Bitcoin aware that it has this property? So then you can use it for all these incredible applications. And there was absolutely no appetite to adopt that bit. So so when you have an environment where the all external ideas are rejected, everything but Bitcoin is a shitcoin and it's become almost a quasi religion. It's not a place of innovation. It really isn't. So, uh, we look at it from afar and, you know, we do our part in Bitcoin, DeFi, on Cardono, but we don't try to get involved at all in in any of the governance or ideas to fix problems, especially this coming quantum apocalypse that it's going to steal all of Satoshi's coins and all the dead Bitcoin and these types of things. It's a it's a huge issue for them. And we have solutions for it. They're not very good, but, you know, at least we have some ideas, but we don't even get involved in conversation because there's no benefit. It's it's a dead.

move on and and kind of reach some sort of goal uh you know as um peer-to-peer electronic uh money philosophy of Bitcoin is you are your own bank and you can safely uh self-custody and if an a flaw exists where an external person can steal your funds that you're self-custodying. It functionally destroys the entire value proposition of Bitcoin. There's really two anchors to Bitcoin. There's one is there's only ever going to be 21 million

Bitcoin and there's a deflationary monetary policy. So, if people adopt it, it gets naturally more valuable over time. So, it's basically the gold argument, finiteness. And then the other argument is self-custody and self-control. So, this is a foundational existential thing and most people when they're looking at say is this a viable money system, part of this is saying when a threat emerges, is the system capable of clearing that threat? What made Bitcoin so strong is it survived external threats. It survived China banning it, Mount Gox collapsing, the collapse of Silk Road, and hundreds of events throughout the years, including the loss of its founder. So quantum computers are yet another threat. There's an expectation that somehow Bitcoin is just going to figure it out and the crown jewels of Bitcoin will be protected. If Bitcoin's governance is such that it's impossible to actually make meaningful progress or they compromise the core reason to use Bitcoin, I don't think Bitcoin is going to stay as the number one cryptocurrency. You're going to have to move somewhere else. And you know this is why I put governance on Cardano because every now and then you come into a deeply philosophical and uncomfortable question and it's really hard to decide that and you don't want it to be decided in some random ad hoc way or decided by powerful people behind the scenes like a Michael Saylor and a BlackRock. You want it to be decided out in the open as a society as a whole. So, with Cardano, we're going to have to make some decisions about what to do with quantum vulnerable infrastructure. And if there needs to be a migration, we can have a vote and then there could be an onchain function to do that. We can hard fork in a particular direction. We've done 11 hard forks in Cardano and they're all seamless. Where Bitcoin, there's no governance system to converge to a decision what to do, whether to freeze assets, steal coins, just leave it as it is and let them be stolen and recycled through the system, it's really hard. The other thing is there's no way to get rid of legacy bad decisions. There's a multi-sig bug in Bitcoin script that can never fix there. Greedy mining is a thing with proof of work. There's hundreds of figured out bugs and issues in the software that would require a hard fork to resolve. And if you say our policy is never hard fork, well then what you're basically saying is you forever have to live with the mistakes of a single person. Could you imagine a governance system that works that way like George Washington screwed something up in 1789 and then I'm sorry man you just got to live with what George did. We can never change it. That feels fundamentally antihuman. We get because humans are about progress. We grow. We get smarter. We get wiser. We realized that maybe the opinions of our fathers and grandfathers were not as good as they should have been and we are going to be better than them. So saying you're going to have a money system where you can never change anything with it. That's like saying gold you're only ever allowed to use it for jewelry. You know, you can find all the time new use cases for stuff. Oh, we're going to use it for this radiation shield or we're going to use it for fusion. We're going to use it for this or that. Well, that's cool that we figured out a new use case for it. Well, if the problem with Bitcoin is every time you figure out a new use case, they ban it. They say, 'Oh, well, we can't have runes and ordinals on Bitcoin. This is toxic waste and it's destroying the protocol or we shouldn't connect Bitcoin to layer twos or we shouldn't do this or we shouldn't do that.' You know, it wasn't Satoshi's intent.

Okay. Well, I'll throw back at you, ask you a question. You know, do you want all your bank transactions and your PayPal transactions and your Amazon shopping cart to be publicly known by everybody in the world forever?

Yeah. Not at all. What about all your Google search history? What about all your text messages? You know, so obviously people, it's self-evident that people have an expectation of a private life and a public life. And the Bitcoin thing, it opened up this world of auditability, transparency, and immutability. But the cost of it is publicity. You have to know everything. You have to see everything. That doesn't work for real life. It doesn't work for business. It doesn't work for governments. It doesn't work for education. It doesn't work for health care. It doesn't work for any real thing. There's always a private side. There's always a public side. And what you want to do is extend the concept of self-custody to selective disclosure. So what you do is instead of saying somebody else is going to make a decision how much privacy you're allowed, you make that decision. Just like you self-custody, you self-custody your information and then you have tools to selectively disclose. And when you add a ZK system into it, those tools are very powerful. So what can you do with them? Well, here's an example. You can prove your age. You can prove your country of origin. You can prove if you're an accredited investor. You can prove if you're a member of an organization like an employee of a particular company or a member of a government agency, but you don't reveal who you are. So say yes, this person is an FBI employee. Yes, this person is a trusted traveler. Yes, this person is a resident of the state of New York. Yes, this person's rent exempt. I have no idea who the hell it is. And so when you have a system built like that then what you can do is you can finally start holistically merging the web 2 world with the web 3 world we call web 2.5 and if you look at the last two years almost all the growth in crypto has been in web 2.5 the Binances, the Tethers, the Ripples, the Circles, the Canton. These are the people where they take they have cryptocurrency products they run on crypto rails but they usually have an ownership company that is regulated and it lives in a jurisdiction. Okay, so when you put it together as a square and there's four sides to the square. It's fourth generation. There's four sides to the square. Okay, so you have to have all four of these sides and if they all work together, you actually have something new and different in cryptocurrencies and you can bring billions of people in and trillions of dollars in. It's why everybody cares.

So first, privacy is one component and more broadly we call PET, privacy-enhancing technologies. So you have zero knowledge and that's what Zcash does and Monero does and all these other guys are doing. But you also have trusted execution environments, multi-party computations and dozens of other things. So the first thing about Midnight is we're building a framework for kind of a universal PET framework. So when you're a developer, you have all these different tools and you can decide how to put them together so that you can figure out what your privacy regime is going to be for your application on an application by application basis. Then the second thing is abstraction. Okay, so you want all these things to work everywhere. You have to meet the users where they're at, not where you want them to be. So there's 550 million users on Bitcoin. There's about 200 million users on Ethereum. There's over a 100 million, we think, that have used Solana throughout the years. Okay, so there's lots of people floating around there. Don't say, 'Oh, well, everybody has to migrate over to my system and use my token and then everything's perfect.' You use multi-chain signatures and intents and other things and then they could pay in SOL, they can pay in ETH, they can pay in Bitcoin, they could pay in ADA and they don't particularly care that they're using the Midnight infrastructure. So abstraction is a big thing. Near protocol was one of the big things that was able to push that message out and they invented a lot of great technology. But when you combine abstraction with zero knowledge, you gain read and write capability. With ZK, you can prove properties of all blockchains you interact with. So you can trustlessly interact with very similar that bridge question. And with multi-chain signatures, which is enforced by MPC, multi-party computation, you're able to write to all those different systems. And with intents, you can tell me what you want to do. And then a network of people in a marketplace can come together, figure out how to do that on your behalf. So then you have smart compliance. That's the third thing. Okay. And smart compliance is that selective disclosure realm, but more broadly, it's about putting into the transactions your legal intent. And you start seeing big entities coming into the blockchain space like the American Arbitration Association with the legal context protocol. And they say, 'Hey, let's get the contracts in.' Because it's not good enough to say, 'You sent me a Bitcoin. Why'd you send it to me? Did you send it to me to buy a Lamborghini? Did you send it to me to buy a house? Did you send it to me to pay for your exotic once-in-a-lifetime trip to South Africa? I mean, like, why did you send me this Bitcoin? What was your commercial intent behind it? What were the terms and conditions? Why that's relevant is for adjudication. Another great example would be a wallet hack. So, let's say you run a non-custodial wallet company, your MetaMask, and you discover some terrible flaw in MetaMask, and then you this black hat is taking advantage of it. You can front-run the black hat, white hat, and take all the funds. Well, hang on a second here. Do you have the legal authority to do that as MetaMask? Like did anybody consent to that? What if there was a white hat license? And when you have a selected disclosure regime, what you can do at the time of the creation of the wallet, you can check the box to give MetaMask the right to do that. Now, nobody knows your identity. It just looks like encrypted noise on the blockchain. But when the event happens, a zero knowledge proof can selectively disclose which set of people are in the white hat, which set of people are not, and then you'll be able to pull all of those wallets accordingly. And you have the legal authority to do something like that. Solves a humongous problem. And there's thousands of things like that, like all these RWAs are coming out in the United States. They blacklist it. They say, 'Well, you can't do a US resident.' Well, I'd like to be able to do that in a completely automated way where if the transaction just simply won't settle or contingent settlement is another example of that. So, you send me some funds. Well, hang on a second here. I'm not going to just go take a million dollars of your Bitcoin that came from North Korea. No, I don't want that. I'm a regulated entity. I would like it to be a partial transaction. It's pending and I have to review it and sign it too for it to settle. So, both the sender and the receiver have to do that. We have a selective disclosure regime. You can do all those transaction logics. You can even do proxy wallets and give people the right to pull a certain amount of money out of your accounts every so often. So you have subscriptions and these types of things. So that's the third corner and it's what makes regulation work.

And the final is agents. You know this little corner here and they're the grand simplification of the cryptocurrency space. If I've been in 15 years and every time I talk to people and every report I've ever read, the number one problem with cryptocurrency is, 'I don't feel safe and I'm gonna mess it up.' That's the number one thing that consumers say. It's like, 'Yeah, you know, I used that crypto. I lost my wallet. I lost all my money and I just I'm gonna mess it up.' Or people trade and they're like, 'Yeah, I tried trading and I lost all my money. I tried DeFi and I lost all my money.' I mean the vast majority of people they have some negative experience that's connected to it. So you have this agentic revolution. You got open claw, AI maze, and all these things that are coming and agents are super powerful but they need two things to make them high fidelity. One you have to unambiguously be able to tell them your intentions what you want and number two they have to prove to you and to themselves that what they're doing follows your intentions. It turns out the same math for that ZK component can prove to an agent that what they're doing is there and that intent for abstraction that we just talked about previously can unambiguously say what you want to do. So actually cryptocurrencies are the best regulation layer for agents and if you have agents you can give delegated authority and wallets to an agent, identity to an agent and the agent can go and trade on your behalf or use DeFi on your behalf or use crypto on your behalf and it could be there and do all kinds of things like for example you say hey if I don't use my wallet every 180 days go ahead and sweep all my money into this KYC custodial address. People say oh why would you do that? say, 'Well, if I don't use it every 180 days, I'm either dead or something's happened, and I want my loved ones to be able to get access to my crypto, so it's not lost forever.' Agent can do that. It'll never make a mistake if it's structured correctly. So, we built Midnight to basically be the unification of those four things. It's a true fourth generation cryptocurrency. The goal is for it to work everywhere. So, it doesn't care if you're coming from Ethereum or coming from Cardano or somewhere else. It has a framework for privacy and a beautiful SDK for it. It's built for agents and it's built for identity and selective disclosure. And then the idea is we can merge the web two and web three world together and put into a kind of a web 2.5 world. And this can bring in the next two billion users and 10 trillion dollars of assets and suddenly you can just have one unified market. And what's really cool about it is that the core can stay with Satoshi's vision of self-custody and we just extend it to have transitive reflexivity and to have self-sovereign identity and selective disclosure and it's also decentralized. You know all these other networks what they're doing because they want to trade regulated products is they're actually putting at the node level invitation only and OFAC compliance and all these other things. They're basically creating a club and they audit the mempools and everything and they decide who's there and not and they put escrow keys inside the system so a certain special people group of people can unblind all the transactions. You can't do that. It's not private because then who gets to see it? China, United States, there's nation state gets to see it and then everybody else doesn't want to use it. You got to have open infrastructure and it has to follow those principles of decentralization and you allow basically sovereign subnets to form within it. They have their own terms and logic at the subnet or DApp level and they can do all these selective disclosure and invitation-only things and they're held up by an open protocol. So it's been the most complex thing we've ever done because this is the hardest technology to work with. But it's time has come. Folding of recursion are here. The proof efficiencies here, the AI revolution has massively simplified a lot of stuff for us. And then ultimately the identity standards caught up. We can create a single passport that unifies identity wallets. You're in control of it. And then you just use it to build a web of trust and prove all kinds of properties about things. And then once you have that, you can make cryptocurrency safer and much easier to use. And then products like insurance can come in for insuring wallets and ensuring bridges. And you can have hundreds of new DeFi products that come in. And they can trade everywhere. They can be on Hyperliquid or Solana or Bitcoin or wherever. And Midnight can be kind of that coordination and orchestration layer to get you where you need to go. And it's nobody's business that you're doing these things.

No, I mean I work like 12-hour days and so I tend to work like four to six hours a day on Midnight. I write a lot of code for Midnight. It's thousands of commits. Right now working out actually a database for Midnight called Umbra DB. So I, you know, there's a lot I do for Midnight and I'm very deeply involved in the product development, the roadmap and some of the foundational technology. I still spend a huge amount of time on Cardano especially because we have to get this executive function done and get LeE shipped. You know Cardano is going to go through its biggest upgrade ever the end of the year. We're going to be 60 times faster. So it's a huge huge lift and we can't just be asleep at the wheel for that. And remember we're also a venture studio. So we have Realfi and Pogan. Probably our most exciting product is Midnight City. You know that's an agentic civilization that we created that we're using the Midnight blockchain for and it's super cool. You create your own agent and they just go about and do their own thing. Eventually they'll form their own government and religion and it's completely autonomous and so you just come back and crazy things have happened. So if you go to Midnight City you can see the madness there. So we really enjoy that. And then I also have companies outside of the blockchain space. You know, I have a bison ranch up in Wyoming and, you know, I also have another company that does synthetic biology and we've been genetically engineering plants to do some certain things. We'll be able to finally announce that probably this year and it's going to be super exciting and mind-blowing for people and do a lot of work in healthcare as well. So, it's a busy life. But Midnight is probably the biggest time commitment of all the things right now because we're in that golden year between when the mainnet has launched and when the product market fit solidifies and everybody's starting to realize that it's something real and they're starting to realize it's not a Cardano thing per se. It's like, oh, it's just Cardano project, whatever. You know, it's actually this big thing for everybody, including Cardano. And its whole point is to work with Hyperliquid and Ethereum and Solana, Avalanche and BNB and many other places and to bring these capabilities to the industry as a whole and make them simple and safe for people to use. Our tagline is Midnight fixes it. You know, oh, I have this terrible problem. Oh, Midnight fixes that. Like we want to be that annoying guy.

Yeah. I want to get them on market before the end of the decade. And absolutely. And then you can connect it to the blockchain because every one of them will probably be an NFT. And then, Oh, wow. And then with selective disclosure, you can keep privacy in that whole system. But you can prove how much carbon you've sequestered and all the properties of the plant have leaderboards for the biggest one. You can do all kinds. You can gamify gardening. You know, good GG. If we do that, it's over. We've won the game.