Duckbucks: You once described Ethereum as “one computer for the entire planet.” Yet we still lack standardization of protocols. What are the greatest obstacles still in the way for blockchains to become a mainstream technology and the backbone of Web3?
Gavin Wood: When I gave this image, I was really trying to help people understand what it was that we built — what Ethereum was — rather than proclaiming that there should only be one computer. It wasn’t a vision for what should be. It was that we’ve moved beyond a blockchain, we’ve moved beyond trying to get people to understand blocks and transactions and cryptographic hashes and so forth. Which is how Bitcoin is often understood; if you look at, for example, Andreas Antonopoulos’ book, “Mastering Bitcoin” [2014], this is what it talks about.
What we built with Ethereum back in 2014-15 was a single compute resource. It doesn’t mean that there should only be one, but it was one, and it was one that was ubiquitous over the internet. I don’t think there is an endgame here where there is only one computer in the same way there is one internet. The internet has an extremely low barrier to entry. Anyone with a mobile phone and a 3G subscription is on the internet: they are a node on the internet, they have joined the internet. It really is open for everybody. Countries like Iran, Russia, China, North Korea aside, it knows no barriers and no boundaries. You can to a large extent communicate with whoever you want and say whatever you want. It’s not quite the same as in the 1990s, but it’s still very much a low-barrier-to-entry, pan-national phenomenon.
The same can in part be said about blockchains. They are internet-native and so they do take on these properties, but what is crucial to understand, at least with all blockchain systems thus far, is that they have a token. And if they have a token, it means that they have people that are more invested and people that are less invested — people who have a deep interest, who are the ones that have all the tokens, and people who have no interest, or in some cases, if they have a lot of tokens in some competing system, they have an anti-interest. And this means that — just like with nation states, it’s going to be very hard to reduce the world to a single nation state. It’s going to be very hard to reduce the internet world to a single global computer.
‘We will find that these systems are increasingly less relevant as the world goes through these difficult throes of disruption.’
Most likely, we will just see several global computers that will probably have some standards that help them interoperate, but they will each have sovereignty over themselves. They’ll have their communities, they’ll have their bylaws, they’ll have their expectations and they’ll have their trade-offs. And in periods of certain socio-political environments, some will grow and others will wane; and in other environments, we’ll probably see the opposite happen.
So this is more where I see things going, and of course there’ll be a bit of a consolidation — at the top at least, we’re not going to see 10,000 equally-sized global computer networks. I think we’re going to see, maybe five, ten, twenty that are of substantial size, and probably a long tail. And probably one or two very big ones — more or less what we’re seeing.
DB: What is the impact of policymaking and regulation on these issues — as well as geopolitics, which you alluded to — given the varied approaches of different countries and markets?
GW: When we talk about regulation, we can of course talk about Western regulation: the Financial Action Task Force, and the US Securities and Exchange Commission, and the US-dominated political mindset over crypto. That probably accounts for more or less the majority of economic activity in the world, but that proportion is getting lower and lower. And as the world becomes ever more multipolar, we are seeing the political machinations of Russia, China, the Global South and so forth actually matter to a significant extent on what is ultimately a pan-national technology of blockchain and crypto.
The former still matters to a large extent, because a lot of the development — particularly the L1, core development — does happen in Western countries. Most of the really big chains have been launched from Western countries. And we are seeing a much friendlier narrative starting to come from the political world, with Trump’s election, for example. And this will probably relax a lot of aspects of being in blockchain, particularly at the core level and at the tech level. This is where, speaking personally, we’ve traditionally tried to put a big emphasis on decentralization in order to make the case that it’s similar to Bitcoin in this way — so it therefore doesn’t make sense to try to regulate the entity that launches the protocol, because the protocol is decentralized. That’s inherently unregulatable.
But we’ve seen a fair amount of centralization creeping into the industry over the last few years. And I think this centralization is now likely to go sort of unpunished, as the political apparatus in the US moves toward a mindset of accepting crypto whatsoever, whether it’s centralized or not. This is probably going to result in the more centralized projects gaining somewhat, or retaining their positions. And the true Web3 centralized projects, like Polkadot, Ethereum and Bitcoin, not being too afraid of having centralized elements.
DB: What consequences will this have?
GW: The trend in and of itself, the consequences are probably not particularly substantial because much of the industry was really betting on this — on, essentially, regulators not having very sharp teeth.
When you look at the actions of EOS, TON, Solana, NEAR and all the various
VC coins that were pretty heavily marketing into retail — it bestowed an assumption of lawlessness, in terms of securities regulation and money transmission regulation. You never can tell with Trump, but it looks to me from what’s coming out of the administration, in dramatic contrast to the Biden administration, is a very light-touch approach.
So realistically, not that much change is going to happen on the ground. That bet paid off. But I think a bigger change will probably be coming from the broader socioeconomic, sociopolitical environment of the world — an increased amount of disruptions of the international order. And this underlines the need for a decentralized base-layer protocol; a decentralized way of interacting as tensions increase. If a majority of the tokens are held in American hands, for example, then as a Russian, Iranian or Chinese startup, do you really want to risk building on this system, given that there’s every chance that your interests and your property could be frozen at any time? And likewise, vice versa.
If we want to build this kind of pan-national digital services platform, which is essentially what Ethereum is, then we really do need to take a robust approach to ensuring that no particular interest in this world that full of increasing tension will be able to nobble someone who they decide is not in their interest.
DB: Indeed, that was one of the dreams of the early web — everybody was thinking of democratization of access, but we ended up with some platforms that were very centralized, as well as the ICANN system, which also brought much of the political influence to the US. Do you see that new protocol layers, with Ethereum and other blockchains, can really limit the influence of the US and other Western countries?
GW: This is certainly the natural repercussion of building a resilient, decentralized, accessible Web3 system. It’s accessible not just to some particular subset of humanity; it should be accessible to everybody and it should be general so that one can do anything on it. And it should be resilient, so that if someone somewhere doesn’t like it, it becomes very difficult to stop. These are sort of the basic tenets of this Web3 concept.
This is indeed what we’re trying to build. And I think this is why I say that these systems that have relied on centralization in order to get so far — whether it’s a centralized marketing agency, centralized communication, centralized technology, centralized server farms — we will all find that these systems are increasingly less relevant as the world goes through these difficult throes of disruption. If I were in Ukraine and I needed to build a payment system for some agile military purpose — edge-of-network trading, machine-to-machine — would I build it on Solana? No, I don’t think so. Would I build it on Telegram Open Network? No, I don’t think so. I’m going to build it on a system that I know is robust, that I know is decentralized, that I know isn’t controlled by a particular company or a particular set of VCs or a particular polity. I’m not going to build it on something that is only decentralized in name.
DB: What does the most recent crypto hype mean for the future of blockchain? And how do you see hype as a factor in driving the technology?
GW: It seems to be part of the life of the industry. I cannot deny that out of hype, the Polkadot project is reasonably well-funded. By judging when to go to the market, we are in a healthy financial position. This is good for getting what work we need to get done, so I can’t really say that it has no place. If I could possibly have a stable market without a hype cycle, would I? Yes, probably, because then it reduces one potential point of failure, which is that you misjudge the market.
But I don’t think it’s that important; I think it is a bit of a distraction. Hype can have a useful effect. When there is no hype, which seems to be the case about three-quarters of the time, then the people you’re going to be working around are there for the real reason, for the mission — because they believe what they’re doing is actually going to benefit the world, rather than necessarily for the money, because they’re taking a very high salary. It can, in some sense, be helpful if you know how to ride the ups and the downs. In the downs, you build and you hire, and in the ups, you take from the market in order to fund the downs. It’s a game, and it’s one that you just have to play.
DB: The financial sector has been early in adopting blockchain technologies. Where do you see the greatest potential in the future?
GW: Much of this stuff has been talked about for some time: We’re going to see much more agile finance, we’re going to see much lower margins. We’re going to see much lower barriers to entry. I think everything falls into this general model of more agility and lower barriers. In terms of specifics, back last summer [Parity Technologies CEO] Björn Wagner announced the Polkadot Pay app, which I think is one of the most interesting things that we have coming in the ecosystem, which essentially allows you to trade crypto for vouchers. And the vouchers are instantly usable at merchants across the US brick-and-mortar merchants. And then by trading for the right amount of vouchers, you can essentially pay for your groceries. What this amounts to in terms of user experience is a payment system.
But it’s a payment system that works entirely outside of the banking system. There is still a backend somewhere, but for the purpose of the customer in crypto, it works outside of the banking system. And this means that you have the potential to repurpose the 5 to 25% that is normally taken by credit cards and banks and do something with it, whether it’s to give it as a cash-back or make it some sort of crypto asset, or what have you. And this is, I think, emblematic of a new world of finance that brings it to the individual and gives them much more choice and value. Because at the moment, the value is to a very large extent captured within institutions. The only way that you can really get access to that value as an individual is by, say, buying shares in a bank.
DB: Tell us more on the latest at Polkadot — what’s happening now and what you’re excited about looking ahead.
GW: One of the biggest elements is JAM, which is the next-generation Polkadot technology. We’ve got 35 tech teams implementing the spec, this gray paper, released 10 years after the Ethereum Yellow Paper, and a real push for technical decentralization within the ecosystem.
There are a lot of different people who now know and understand the Polkadot protocol, the JAM protocol, and are able to build on it effectively. There’s a lot more to it than that, but it’s essentially that Ethereum delivers a sort of world calculator that everybody can use. JAM is the protocol that Polkadot is going to be transitioning to, which changes this little world computer into a world supercomputer. How do we define a supercomputer? Well, it’s basically a computer that can do a lot more stuff.
Normally, with computers these days, you measure how much they can do in terms of how much memory they have, how many cores, how many CPU cores they have and how fast those cores go. And JAM improves on all of this from Ethereum, which effectively has one core that doesn’t go very fast with very minimal amounts of data, bandwidth, memory, etc. JAM multiplies the amount of compute — the amount of stuff like processing power — by about a million. It does so by having about 350 cores, little compute elements, and having a huge amount of memory with very fast interconnects. JAM is a blockchain but what JAM brings about is this virtual supercomputer, that just lives on the internet.
Again, JAM is a protocol. It needs a token to be secure — or a trusted authority, which obviously we don’t want to do — and this token is the DOT token. In principle, it then becomes this sort of internet-based supercomputer that’s available for anyone to use, and that can be bridged into other internet computers like Ethereum and so on. What we can start to imagine in this new schema is a sort of internet world in which there are computers that are connected to each other in parts.
Some of them just stand alone; Bitcoin is very difficult to connect to anything else. It sits at the side alone and it doesn’t go very fast, it’s the dinosaur. But it’s the dinosaur that has an awful lot of value attributed to the token, so it sort of sticks around. And then we have all of these others. Many of them are just sort of piddly little things that sit on their own and don’t do much. But some of them are significant. And it’s this world in which we want to contribute our big JAM supercomputer.
‘We’ve seen a fair amount of centralization creeping into the industry over the last few years, and this is now likely to go unpunished.’
This really folds into the Polkadot 2 narrative. What people are very familiar with, if they know about Polkadot, is parachains, and these can talk to each other, and there’s some form of shared security. They sit under the same staking mechanism somehow. This is what people understand. And Polkadot 2 is really moving beyond this into a different narrative, one where the distinguishing features of these parachains is less emphasized, and what’s emphasized much more is the fact that they can interoperate. And it brings about this two-concept framework of the Polkadot hub and the Polkadot cloud. The Polkadot cloud is basically the raw power that Polkadot brings, what we call cores — these little compute elements on the Polkadot supercomputer, if you like.
It’s a bit like the AWS cloud or the Google cloud or Microsoft Azure cloud; it’s basically like compute power that you can rent out. The difference with this compute power compared to Amazon’s compute power is, well, you don’t have to trust Amazon. It always works. It’s resilient. It’s secure. This is Web3 compute power. And, in principle, it’s compatible for using with other blockchains L2. So if you want to use Polkadot’s compute power to run your Ethereum L2 distributed
availability system, like data storage system or compute system, you could do that. And that’s the cloud element, the raw grunt that Polkadot brings with its protocol.
Then on the other side is the Polkadot hub. This is the community element of the blockchain: It’s the currency, it’s the community, it’s the governance, it’s the treasury, it’s the smart contract platform that is now being rolled out into Polkadot, a native smart contract platform. And it’s everything else that brings people and projects and capital into a single place so they can interact in a useful fashion. This is quite different. To continue with the Amazon example, whereas the Polkadot cloud is like AWS, the Polkadot hub is much more like the Amazon marketplace. It brings people to a matchmaking area where we can throw together potential matches that might want to do business or interoperate in some other way. That’s now how we’re thinking of Polkadot and Polkadot 2.
This has really gotten us to think about what is really needed to bring this about. We’re looking toward teams to get them as set as possible in terms of integrations, in terms of interoperability, in terms of development, developability, developer experience, deployability, maintainability — all of the sharp edges that we didn’t pay too much attention to in Polkadot 1 because we were so busy actually building the technology.
Now it’s about honing the technology, tweaking the technology, and, when necessary, pivoting slightly so that the technology makes for a better market fit. One example of that is Agile Coretime. As opposed to Polkadot 1, where people probably would have understood things like crowd loans and slot auctions; basically where teams would bid for a parachain slot. Now this has been replaced by what’s called Agile Coretime, which is a very easy marketplace for buying time in Polkadot on a core, like as an L2 chain, as a parachain, or as whatever else. This is one of a number of things that we’ve done to try to make it more accessible, to make it more relevant, and to optimize the market fit for what is, at the end of the day, an incredible resource that we’ve built — massive amounts of trust-free computing.
