[#KeynoteSpeech]Blockchain as a platform for building- #VitalikButerin #Ethereum #KBW2019 #kbw2020

[Music] hello everyone good morning a new message oh so I guess since I have 15 minutes I will we're going to get right into things so who here is familiar with blockchains who here's not familiar with blockchains okay who here is heard of Bitcoin if yeoreum name service any of the blockchain applications of looking to use blockchain store data on block chains to verify that things like certificates haven't been revoked yet okay fewer but these things are happening right there's universities in places like Switzerland like Singapore other places that are kind of increasingly looking at basically kind of putting data on the blockchain and to verify that some certificate has been issued and that there is not a record saying that some certificate has been revoked um blockchain spur be for remittances and for and if giving out money to people like refugees so lots of good and happy stuff happening recently but for this presentation I wants to kind of zero in on one particular category of happy stuff that has been happening quite a lot in the last year and like I think we're going to see more of and I would really love to see more of so it's not just the AOS but let's start by talking about da Oz so Dao is a decentralized autonomous organization it's this kind of term that we came up with back around 2013 it's this thing that a lot of people have been excited about since then so what is a Dao basically it's a smart contract so basically meaning a computer program running on a blockchain that directly controls digital assets and like but this is just the definition of a smart contract in general right idea yo is a smart contract that it holds assets that meant to last and continue running for a long time which represents the rules by which some group collectively manages their assets so then this dealios could be used for many things right it could be used to UM run decentralized grant giving them organizations they can be used to run negative decentralized investment funds they can be used to govern the parameters of some decentralized organization he can be used for lots of things now who here has heard of the very first Dow V Dow so as we know like this experiment scene turned out to be a lot bigger than we expected and then it turned out fail a lot more quickly than we expected and back in 2016 and the technology behind blockchains the technology behind smart contracts writing code was still in a very immature and people hadn't yet kind of thought hard about game theoretic issue is about re-entrance e attacks differ about how to write secure smart contract safely and this proved to be a big learning experience that led to a huge amount of improvement in things like the solidity language and the viper language many kind of tools best practices around how people use and write smart contracts and very understandably for a couple of years there was a period where people were generally and of afraid to stick lots of money into smart contracts for a very good reason right if there is a bug then your money might disappear tomorrow now over the last year we've been starting to see this kind of Dao and smart contract the Renaissance right what we have over 200 million dollars inside of maker Dow we have things like Eragon that are developing more and rising to prominence more we see the Moloc Dow which is a Dow within the etherium ecosystem that is basically of coordinating donation to public good projects that benefit the ecosystem and and we're seeing lots and lots of these things and if starting to be developed starting to see more attention and more adoption right so a lot of people are using in diego's but it's not just VA o--'s so let's talk about rules right so any kind of formalized institution that we have today so we have a lot of institutions that are informal as well but we have we have many institutions that are formal so money corporations political systems even like social media like Reddit and Twitter I call it a formal institution you write things you get points you get uploaded you get down voted you get you get karma yay and we have like some kind of basically what formalized institutions can be described as some set of rules that define how individual actions affect some common shared state so if we look at money as a formalized institution for example it is basically a database right money is a database that has one rule for how you update it and the rule basically says if the number beside my name is like some space some value like X then I have the ability to at any point reduce my value to some number Y that's between 0 and X so I can shrink my balance and at the same time I can increase some other person's balance by basically the same amount by which I've decreased my own right so you have a kind of zero-sum rule whatever amount I lose is the amount someone else gains whatever amount I gain is email someone else loses and you also have this but can't go below zero rule so money basically just is this in a system that has a state and that has rules for how individuals can update it corporate governance four of seven people can vote to make a decision when you have a meeting 2/3 quorum must be present decisions must must be your published one for one week Papa blah blah blah you know there's lots of and of rules that you can have in how corporations say in a govern themselves and this is also an institution and and it defines a kind of mechanism by which the actions of individuals can and have come together and create actions that represent actions taken by the corporation and it is in institution in the same way social media voting if I have an account I can increase the score of someone else's post by one and if it's reddit I can also decrease the score of someone else's post by one I can make my own posts and their scores start at one so all of these things are different kinds of systems of formal rules that kind of help people cooperate and much of our ability to organize in large groups is based on mechanisms of this type right so if you have a smaller group so maybe less than about 150 people the kind of commonly cited Dunbar's number then you can generally kind of do what you want with informal mechanisms but once you go above that and once a large portion of interactions are between people who don't directly know each other then the formal systems can really help to kind of guide and a lot of align people's behavior toward shared objectives now what block chains do is they create room for kind of rapid experimentation building deployments and innovation for mechanisms of this type right like formal and of systems of rules in general and these mechanisms can be used for lots of things they can be used to reward contributions to public goods they can be used to decide how to allocate some limited resource they can encourage economic activity between participants govern systems and resources other than coins like domain name systems for example so systems of rules can be used for many kinds of purposes and hwachun's are a pretty good way to build these kinds of things so what's a look at ENS ENS is the decentralized that domain name system on top of areum now if we look at ENS more what you see is that what ENS is is it's this fairly complex system of smart contracts that live on the etherium watching that manage things like registering domains so if some domain has not been registered then I have the right to register it transferring domains if some domain is assigned to me I have the right to change the assignment to someone else and expiring domains if the fee has not been paid then the domain expires then someone else can register it again and ENS also includes a very simple kind of proto Dao basically just in multisig and a four out of seven people for managing upgrades right so ENS itself the system for managing and the dot eth domains on the inside of etherium is itself a decentralized watching based institution that's in a very non-trivial in its complexity and it is being used in practice today Malak now so this is the CIO for funding public good projects in the etherium ecosystem and Moloc dal of course being named after the rationalist god of coordination failure who was in turn named after the Canaanite god of child sacrifice and Milwaukee I was basically kind of about overcoming Moloch right it's about I mean if me stopping us from and if self-destructively doing things that are bad for each other and encouraging us to do things that are good for each other and in this case this means and if collectively funding public projects that benefit the imperium ecosystem altogether Moloch Dale has this a unique mechanism called ragequit and the idea here is basically like what if the Moloch tail gets and have taken over 51% attacked by some set of malicious actors then if you per have participated in Moloch tell then you at any time have the ability to basically take your share of Milwaukee tales resources and kind of pluck them out and just take your share and go away and do something else with it and so this way if you have a 51% attack and you try to attack Moloch now then you basically you're not going to actually be able to and have grabbed a control of other people's money so this is one kind of innovative and really nice mitigation against what's really and if big in fundamental problem in corporate governance harberger taxes so this is this interesting idea that's been kind of proposed over and over again in the last century and it's this form of an impartial property ownership so the idea here is it's this property tax system where for any asset that's covered by harberger taxes the current owner of the asset must set and have published some price at which they're willing to sell that asset and whatever price they publish anyone has the ability to buy the asset at that price now why not just set the price to infinity well basically because whatever the price is that you said that's the price on which you have to pay a property tax so whatever amount you said that's the amount by which you have to pay say one one to five percent of that amount every year so this does a few things really nicely I mean one is they can raise ongoing revenue that could be used to fund these other public in projects and another thing is it also does this without without requiring a centralized mechanism to figure out how valuable everything is and the third thing is it also enough mitigates some monopoly problems and increases market efficiency because like if you have something that it turns out to be a kind of much more valuable than expected then and if it encourages you to set prices that are lower and so increase the chance that objects go to kind of become used by whoever can you actually can use them to create the most value now what we have on the right is this experiment by someone in the hiriam community assignment of a revere and what he did is he created this kind of online digital artwork and he basically created a smart contract to implement harberger taxes so right now whoever owns the thing set a price of two hundred and forty yes and he basically has to pay twelve e's per year to kind of keep ownership and at the same time if you want to buy the thing then you can go ahead and pay 240 East right now and then you're free to set your own price for it badges so another kind of a kind of more social incentivization so the idea here is it's an Unchained non-transferable token and if certifying that you did something could certify that you attended a conference could certify that you donate it to charity it could certify that you contributed to open source software this over here is a picture of a P path that's this kind of decentralized Twitter clone and one of the nice features that they have is this in a badge system where if you donate $25 to the against malaria foundation then you get a nice little mosquito picture beside your profile yay so community savings insurance so basically here you have applications but this is a common idea that's exist and exists in many developing countries where and if groups of people come together and sort of pool their money together so they can more effectively save it cancer also serve as an insurance system so if you suddenly have a big kind of unexpected expense some medical expense something else then like there's a pool of money that you can that you can take out from this can be used for savings credit mutual insurance that have a lot of different things and there's projects that are trying to implement this as a smart contract system on top of aetherium so watch incentive make it much easier to build all of these things the right block chains make it very easy to create these smart contracts these computer programs that just implement the logic for all of these mechanisms now why Bachchan's so first of all block chains have first-class support for user account security they are first-class support for cryptography and so these programs actually can be directly controlled by the actions of users in a very secure way first-class support for digital assets first-class support for this idea of kind of global shared State and things that we save that we all agree on in general watch hands avoids centralized dependencies very important if you want to create applications that kind of span wide social distances where there isn't necessarily a single centralized provider that everyone trusts and very permissionless global platform that anyone can participate in yay so if this interests you then I encourage people to start checking smart contracts out and link start the building things or if you can't stand in join a tea and see you it contribute to existing projects that are building things there's a lot of and of cool things happening in the etherium ecosystem these days thank you [Applause] [Music]