[Applause]
before I start my talk I would like to
show you a video and take you back in
time to 1993 when we first discovered
the Internet
with the a and then the ring around at C
that’s what I said mm-hmm
Katie said she thought it was about yeah
but I’ve never heard it around and then
it sounded stupid what I said it
violence at NBC violence at NBC ge calm
I mean what Allison should know what do
you say now anyway Internet is that
massive computer network the one that’s
becoming really big now what do you mean
that’s big wait how does one it nobody
what are you write to it like mail no a
lot of people use it and communicate it
I guess they can communicate with NBC
writers and producers Allison can you
explain what internet is no oh I thought
right and others can access it right
she’s been really handy during the quake
a lot of people that’s how they were
communicating out to tell family and
loved ones they were okay because all
the phone lines were down I was telling
Katie it over you meet you don’t need
that you don’t need a phone line to
operate no so I guess it reminds us of
something it’s very similar to the
discussions we’re having today about
blockchain so what is blockchain anyway
there’s certainly a lot of hype around
that technology why because there is
this narrative around blockchain that it
might lead us to utopia that it might
resolve a lot of problems that we have
today how by bringing us this next
generation internet which many people
refer to as the web 3 and this next
generation Internet will hopefully
resolve a lot of problems that we have
currently in the
Internet by on one hand changing our
data structures and bringing much more
control over our private data on the
other hand by providing a governance
layer for the internet that we’re
currently lacking enabling us to have
true peer-to-peer transactions without
middlemen and the third part is it could
revolutionize money and value creation
now let’s look at all these three
different promises so on one hand data
structures we’re moving away from a
world of I would like to call a data
monarchy to a world of data democracy
the internet that we have today is
currently built on the logic of
stand-alone computers where data is
stored centrally and it’s processed
through centralized servers why because
we first had the computer and then the
internet and what the internet did it
provided for a communication protocol
the IP protocol that allowed two
computers to communicate with each other
and when they did they would send data
packages from one computer to the other
and every time that happens a copy of
that data gets created and sent to the
other computer and every time that
happens every time we use internet-based
services we lose control and ownership
of our data that’s not only a privacy
issue obviously it’s also a huge issue
in the back end of ecommerce operations
along the supply chain and of goods and
services because the document handling
and data management along this back-end
processes is tedious it’s costly and
it’s inefficient because when we send
data over the internet we lose control
what happens because we cannot see what
happens behind the walled garden of the
server that somebody else owns now
blockchain introduces a completely novel
way of saving and processing data
building on the idea of peer-to-peer
technologies peer-to-peer technologies
are not a new thing but blockchain is
taking it to a new level
all computers in the network have the
same level of information all
information all data is transparent to
every computer in the network privacy is
guaranteed through the use of
cryptography so we have transparency
while maintaining the privacy of all
actors and the real game changer of
blockchain here was that it introduced
economic incentives to make sure that
all computers in the network perform and
behave correctly the blockchain protocol
assumes that everyone is potentially
corrupt and in order to provide for
network security it incentivizes Network
actor with a network token and we will
look at that in the next slide so we’re
moving away from the centralized data
structures to decentralized and
distributed data structures on a second
level blockchain provides for a
governance tool in a novel way of
organizing society it allows us to move
away from the current way we organize
society but we also process data and
manage data in the internet from what
you see on the left a pyramid to a
network so first look at how society is
organized today it’s mostly in the form
of top-down organizations where you have
one legal entity which is registered
somewhere so you know who to sue in case
something goes wrong and the
relationship of the people working for
that organization is managed by
contracts it assumes that we don’t fully
trust each other and while we negotiate
our agreements verbally we write them
down we sign them in the form of
contracts so if anyone any party to an
agreement doesn’t stick to their end of
the bargain we can take this piece of
paper go in front of court and sue
someone the relationship of these
organizations with other organizations
is also managed by legal contracts and
the relationship of nation-states with
other nation-states
is also managed by legal contracts
whether it’s our companies or our
schools or universities
or our bureaucratic institutions now the
Bitcoin blockchain introduced a
completely novel way of managing society
through the blockchain protocol and you
can see that if you look on the right
side of the slide behind me the Bitcoin
blockchain is a decentralized autonomous
organization of stakeholders who do not
know or trust each other who for the
most part live in different countries
speak different languages and are
subject to different regulation there is
no centralized entity regulating the
Bitcoin blockchain and everyone
participating in the network and by now
it’s hundreds and thousands and millions
of people all these people don’t have
any type of legal agreement or working
contract with each other yet they all
run in the same direction how because
all the rules of who is allowed to do
when and what are defined in the
protocol that protocol is open-source it
also defines how network actors are
incentivized and disincentivized
how do we make sure that network actors
who do not know and trust each other all
behave according to predefined rules we
incentivize them with a network token
and in the Bitcoin blockchain this is
Bitcoin every time a network actor
validates transactions according to
predefined rules they perform a service
to the network they keep the network
safe they keep the network correct and
they get rewarded with the network token
which is Bitcoin so as you can see this
is a completely new way of governing
society without any centralized
institution anyone who wants to
participate in the network without the
permission of a centralized entity
can download the code and be part of the
network at the heart of this protocol is
the so-called smart contract now the
smart contract unfortunately isn’t very
smart and lawyers would agree that it’s
not a legal contract what it is is what
you can see in this picture it’s a
digital handshake it’s a piece of code
that defines a rule set of who is
allowed to do when and what
and this piece of code runs on the
distributed network on a peer-to-peer
network and is automatically enforced
when the majority of network actors
agree that the predefined conditions
have been met this means that we are
radically cutting the transaction costs
of monitoring auditing and enforcing
agreements something that we cannot do
in the world today because in the world
today we have contracts that while they
might be written on a computer they’re
still printed in paper for the most part
and they are still being signed by hand
for the most part now a smart contract
looks like this it’s a piece of code
where all the rules of interaction or
transaction or agreement are put in code
which is automatically enforced and the
way you sign a smart contract is by
private key now the private key
obviously doesn’t look like this it
looks like this it’s a strong
cryptographic password that identifies
you as you and you can use it as a
digital signature on the blockchain the
third game changer of blockchain seem to
be tokens or cryptocurrencies what
blockchain has allowed us to do through
the backdoor of smart contracts is
within a few lines of code create a
token that can represent anything from a
physical good to a digital good to an
access right and mix they’re off or it
could even steer a decentralized network
of actors if I have good games
theoretical design behind it if you know
what you’re doing today you can create a
smart contract within a few minutes with
a few lines of code but what you write
in to that smart contract what the what
is the purpose of the token what are the
governance properties of that token etc
etc these are not technological
questions their governance questions and
just as the world wide web which was
invented here at CERN revolutionized the
way that websites were displayed and
created within just a few lines of code
smart contracts allow us to create
crypto
for token that can represent any asset
or any access right within a few lines
of code and just as it was really hard
for us in the beginning of the 90s to
figure out what to do with websites
could we ever make money with it like we
were playing around we’re trying to
figure out what this thing is it took us
10 years until we did and when we did
the web 2 came and it would probably
take us another few years to figure out
what we can really do meaningfully do
with this new or in this new token
economy and a very good example of what
we can do is for example steam it steam
it is a decentralized social network
that runs on a blockchain it is a
combination of Facebook and reddit
anyone can contribute any type of post
to steam it and anyone can upload or
download this post and every time you do
you can earn a network token for your
contribution to the network either by
providing content or by curating content
the data is transparent on the
blockchain so everyone has full control
over what happens with their data and
you can earn money for contributions if
you want to find out what blockchain is
how the token economy works the best
thing is to go on Steam it it has been
operational for almost three years now
it has 1 million registered users and I
personally know people who make money
that is the utopian part of what we can
do wood block J but technology is just a
tool and technology is neither
inherently good nor inherently bad how
we use that tool is up to us and we
should be very careful how we use this
very powerful tool of blockchain
technology and Auto enforceable code
because if we don’t design these block
chains properly we might design a
machine that acts against us and I would
like to point out two aspects one is
governance who decides what the
governance rules of these block chains
and smart contracts are
who decides what rules we write into
that code because this code itself sets
the technological limitation the
technology sets the limitations of what
is possible and what we cannot do it
sets the boundaries of what we can do
and while many engineers are working on
this cutting edge edge technology and
they’re super smart there are not
governance experts so we need engineers
to work with governance experts to
decide how we want to write this code
because what this code should
automatically enforce it’s not a
technological question only
it’s a governance question it’s an
ethical question it’s an economic
question it’s an organizational question
etc etc and what we’re seeing right now
is that a bunch of very very talented
but still a bunch of engineers are
predominantly creating these operating
systems of our potential future
societies and we have to make sure that
we don’t run into the same problems we
ran in the web to creating protocol bias
just as we create an algorithmic bias in
the web too and one example is the
incentive mechanisms behind block chains
like for example the Bitcoin blockchain
they’re currently plutocratic if you
have more money in the real world you
can buy more computers you have more
processing power and you have more vote
in the system and you can make more
money so the current block chains the
current incentive is mechanisms they’re
like capitalism on steroids do we want
this kind of system because if we don’t
we have to come up with alternative
constants mechanisms to the mechanisms
that Bitcoin and derive block chains use
the good news here there are a lot of
researchers already trying to figure out
alternative mechanisms to the current
mechanisms that are not based on
plutocracy but the question of which one
will really be successful has not been
resolved yet and the second part is
cryptography these systems are designed
to be transparent and we need them to
be transparent so we have full control
of data trails of our private data
trails but also of the provenance of
goods and services but we also need to
maintain our privacy and we can do that
with strong cryptographic tools that we
have unfortunately state-of-the-art
block chains like Bitcoin are not really
fully anonymous and if we’re not careful
we could create through the backdoor of
that technology at control machine like
for example the citizen scorecard that
China is currently creating because
bakhtin is an incentive machine you can
incentivize people to do the right thing
to save co2 emission reduction or you
can use the same technology to control
your people this is why we need to talk
of about privacy privacy by design and
how we can provide for it with the right
cryptographic tool we do have the right
technology for it and your block chains
are using these alternative
cryptographic tools but unfortunately
through the backdoor of legislation many
countries are currently passing
anti-terror legislation anti criminal
legislation that is kind of condemning
cryptographic methods which could be a
potential indicator for potential
criminal activity so do we want to bang
cryptography or do we consider
cryptography as a digital human right
that we need in the digital age
just as we have introduced the right to
the privacy of communication and the
secrecy and of the letter or the
sanctity of the home in our
constitutional foundations of our
democratic constitutions to cut the long
story short whether we creative freedom
machine or a control machine has not
been decided yet as you saw in this
video we’re in the very very very early
stages similar to the 90s for the
Internet we’re at the very very early
stages of this new and novel technology
so now is the time to contribute now is
the time to take action now is the time
to learn what does technology is and how
you can contribute to that open-source
technology so the few
sure is in our hands let’s make
something out of it thank you [Applause]
before I start my talk I would like to
show you a video and take you back in
time to 1993 when we first discovered
the Internet
with the a and then the ring around at C
that’s what I said mm-hmm
Katie said she thought it was about yeah
but I’ve never heard it around and then
it sounded stupid what I said it
violence at NBC violence at NBC ge calm
I mean what Allison should know what do
you say now anyway Internet is that
massive computer network the one that’s
becoming really big now what do you mean
that’s big wait how does one it nobody
what are you write to it like mail no a
lot of people use it and communicate it
I guess they can communicate with NBC
writers and producers Allison can you
explain what internet is no oh I thought
right and others can access it right
she’s been really handy during the quake
a lot of people that’s how they were
communicating out to tell family and
loved ones they were okay because all
the phone lines were down I was telling
Katie it over you meet you don’t need
that you don’t need a phone line to
operate no so I guess it reminds us of
something it’s very similar to the
discussions we’re having today about
blockchain so what is blockchain anyway
there’s certainly a lot of hype around
that technology why because there is
this narrative around blockchain that it
might lead us to utopia that it might
resolve a lot of problems that we have
today how by bringing us this next
generation internet which many people
refer to as the web 3 and this next
generation Internet will hopefully
resolve a lot of problems that we have
currently in the
Internet by on one hand changing our
data structures and bringing much more
control over our private data on the
other hand by providing a governance
layer for the internet that we’re
currently lacking enabling us to have
true peer-to-peer transactions without
middlemen and the third part is it could
revolutionize money and value creation
now let’s look at all these three
different promises so on one hand data
structures we’re moving away from a
world of I would like to call a data
monarchy to a world of data democracy
the internet that we have today is
currently built on the logic of
stand-alone computers where data is
stored centrally and it’s processed
through centralized servers why because
we first had the computer and then the
internet and what the internet did it
provided for a communication protocol
the IP protocol that allowed two
computers to communicate with each other
and when they did they would send data
packages from one computer to the other
and every time that happens a copy of
that data gets created and sent to the
other computer and every time that
happens every time we use internet-based
services we lose control and ownership
of our data that’s not only a privacy
issue obviously it’s also a huge issue
in the back end of ecommerce operations
along the supply chain and of goods and
services because the document handling
and data management along this back-end
processes is tedious it’s costly and
it’s inefficient because when we send
data over the internet we lose control
what happens because we cannot see what
happens behind the walled garden of the
server that somebody else owns now
blockchain introduces a completely novel
way of saving and processing data
building on the idea of peer-to-peer
technologies peer-to-peer technologies
are not a new thing but blockchain is
taking it to a new level
all computers in the network have the
same level of information all
information all data is transparent to
every computer in the network privacy is
guaranteed through the use of
cryptography so we have transparency
while maintaining the privacy of all
actors and the real game changer of
blockchain here was that it introduced
economic incentives to make sure that
all computers in the network perform and
behave correctly the blockchain protocol
assumes that everyone is potentially
corrupt and in order to provide for
network security it incentivizes Network
actor with a network token and we will
look at that in the next slide so we’re
moving away from the centralized data
structures to decentralized and
distributed data structures on a second
level blockchain provides for a
governance tool in a novel way of
organizing society it allows us to move
away from the current way we organize
society but we also process data and
manage data in the internet from what
you see on the left a pyramid to a
network so first look at how society is
organized today it’s mostly in the form
of top-down organizations where you have
one legal entity which is registered
somewhere so you know who to sue in case
something goes wrong and the
relationship of the people working for
that organization is managed by
contracts it assumes that we don’t fully
trust each other and while we negotiate
our agreements verbally we write them
down we sign them in the form of
contracts so if anyone any party to an
agreement doesn’t stick to their end of
the bargain we can take this piece of
paper go in front of court and sue
someone the relationship of these
organizations with other organizations
is also managed by legal contracts and
the relationship of nation-states with
other nation-states
is also managed by legal contracts
whether it’s our companies or our
schools or universities
or our bureaucratic institutions now the
Bitcoin blockchain introduced a
completely novel way of managing society
through the blockchain protocol and you
can see that if you look on the right
side of the slide behind me the Bitcoin
blockchain is a decentralized autonomous
organization of stakeholders who do not
know or trust each other who for the
most part live in different countries
speak different languages and are
subject to different regulation there is
no centralized entity regulating the
Bitcoin blockchain and everyone
participating in the network and by now
it’s hundreds and thousands and millions
of people all these people don’t have
any type of legal agreement or working
contract with each other yet they all
run in the same direction how because
all the rules of who is allowed to do
when and what are defined in the
protocol that protocol is open-source it
also defines how network actors are
incentivized and disincentivized
how do we make sure that network actors
who do not know and trust each other all
behave according to predefined rules we
incentivize them with a network token
and in the Bitcoin blockchain this is
Bitcoin every time a network actor
validates transactions according to
predefined rules they perform a service
to the network they keep the network
safe they keep the network correct and
they get rewarded with the network token
which is Bitcoin so as you can see this
is a completely new way of governing
society without any centralized
institution anyone who wants to
participate in the network without the
permission of a centralized entity
can download the code and be part of the
network at the heart of this protocol is
the so-called smart contract now the
smart contract unfortunately isn’t very
smart and lawyers would agree that it’s
not a legal contract what it is is what
you can see in this picture it’s a
digital handshake it’s a piece of code
that defines a rule set of who is
allowed to do when and what
and this piece of code runs on the
distributed network on a peer-to-peer
network and is automatically enforced
when the majority of network actors
agree that the predefined conditions
have been met this means that we are
radically cutting the transaction costs
of monitoring auditing and enforcing
agreements something that we cannot do
in the world today because in the world
today we have contracts that while they
might be written on a computer they’re
still printed in paper for the most part
and they are still being signed by hand
for the most part now a smart contract
looks like this it’s a piece of code
where all the rules of interaction or
transaction or agreement are put in code
which is automatically enforced and the
way you sign a smart contract is by
private key now the private key
obviously doesn’t look like this it
looks like this it’s a strong
cryptographic password that identifies
you as you and you can use it as a
digital signature on the blockchain the
third game changer of blockchain seem to
be tokens or cryptocurrencies what
blockchain has allowed us to do through
the backdoor of smart contracts is
within a few lines of code create a
token that can represent anything from a
physical good to a digital good to an
access right and mix they’re off or it
could even steer a decentralized network
of actors if I have good games
theoretical design behind it if you know
what you’re doing today you can create a
smart contract within a few minutes with
a few lines of code but what you write
in to that smart contract what the what
is the purpose of the token what are the
governance properties of that token etc
etc these are not technological
questions their governance questions and
just as the world wide web which was
invented here at CERN revolutionized the
way that websites were displayed and
created within just a few lines of code
smart contracts allow us to create
crypto
for token that can represent any asset
or any access right within a few lines
of code and just as it was really hard
for us in the beginning of the 90s to
figure out what to do with websites
could we ever make money with it like we
were playing around we’re trying to
figure out what this thing is it took us
10 years until we did and when we did
the web 2 came and it would probably
take us another few years to figure out
what we can really do meaningfully do
with this new or in this new token
economy and a very good example of what
we can do is for example steam it steam
it is a decentralized social network
that runs on a blockchain it is a
combination of Facebook and reddit
anyone can contribute any type of post
to steam it and anyone can upload or
download this post and every time you do
you can earn a network token for your
contribution to the network either by
providing content or by curating content
the data is transparent on the
blockchain so everyone has full control
over what happens with their data and
you can earn money for contributions if
you want to find out what blockchain is
how the token economy works the best
thing is to go on Steam it it has been
operational for almost three years now
it has 1 million registered users and I
personally know people who make money
that is the utopian part of what we can
do wood block J but technology is just a
tool and technology is neither
inherently good nor inherently bad how
we use that tool is up to us and we
should be very careful how we use this
very powerful tool of blockchain
technology and Auto enforceable code
because if we don’t design these block
chains properly we might design a
machine that acts against us and I would
like to point out two aspects one is
governance who decides what the
governance rules of these block chains
and smart contracts are
who decides what rules we write into
that code because this code itself sets
the technological limitation the
technology sets the limitations of what
is possible and what we cannot do it
sets the boundaries of what we can do
and while many engineers are working on
this cutting edge edge technology and
they’re super smart there are not
governance experts so we need engineers
to work with governance experts to
decide how we want to write this code
because what this code should
automatically enforce it’s not a
technological question only
it’s a governance question it’s an
ethical question it’s an economic
question it’s an organizational question
etc etc and what we’re seeing right now
is that a bunch of very very talented
but still a bunch of engineers are
predominantly creating these operating
systems of our potential future
societies and we have to make sure that
we don’t run into the same problems we
ran in the web to creating protocol bias
just as we create an algorithmic bias in
the web too and one example is the
incentive mechanisms behind block chains
like for example the Bitcoin blockchain
they’re currently plutocratic if you
have more money in the real world you
can buy more computers you have more
processing power and you have more vote
in the system and you can make more
money so the current block chains the
current incentive is mechanisms they’re
like capitalism on steroids do we want
this kind of system because if we don’t
we have to come up with alternative
constants mechanisms to the mechanisms
that Bitcoin and derive block chains use
the good news here there are a lot of
researchers already trying to figure out
alternative mechanisms to the current
mechanisms that are not based on
plutocracy but the question of which one
will really be successful has not been
resolved yet and the second part is
cryptography these systems are designed
to be transparent and we need them to
be transparent so we have full control
of data trails of our private data
trails but also of the provenance of
goods and services but we also need to
maintain our privacy and we can do that
with strong cryptographic tools that we
have unfortunately state-of-the-art
block chains like Bitcoin are not really
fully anonymous and if we’re not careful
we could create through the backdoor of
that technology at control machine like
for example the citizen scorecard that
China is currently creating because
bakhtin is an incentive machine you can
incentivize people to do the right thing
to save co2 emission reduction or you
can use the same technology to control
your people this is why we need to talk
of about privacy privacy by design and
how we can provide for it with the right
cryptographic tool we do have the right
technology for it and your block chains
are using these alternative
cryptographic tools but unfortunately
through the backdoor of legislation many
countries are currently passing
anti-terror legislation anti criminal
legislation that is kind of condemning
cryptographic methods which could be a
potential indicator for potential
criminal activity so do we want to bang
cryptography or do we consider
cryptography as a digital human right
that we need in the digital age
just as we have introduced the right to
the privacy of communication and the
secrecy and of the letter or the
sanctity of the home in our
constitutional foundations of our
democratic constitutions to cut the long
story short whether we creative freedom
machine or a control machine has not
been decided yet as you saw in this
video we’re in the very very very early
stages similar to the 90s for the
Internet we’re at the very very early
stages of this new and novel technology
so now is the time to contribute now is
the time to take action now is the time
to learn what does technology is and how
you can contribute to that open-source
technology so the few
sure is in our hands let’s make
something out of it thank you [Applause]
Please follow and like us: