Exclusive Interview with CHAINLINK Co-Founder Sergey Nazarov | KBW2023

[Music] I think in South Korea there's a huge amount of people that are interested I think some of the banks are still interested um I think there's a lack of legal Clarity that makes some of the bigger institutions worried but I still see them some of the biggest institutions um here biggest companies making nfts um looking to do onchain uh blockchain things as big companies so I think there's clearly a big Market here because when those big companies decide to do things like make nfts or offer blockchain products they always research very heavily and they have very big user bases and so these are like the biggest banks and the biggest you know consumer companies and I and I'm I have meetings with them and I can see that they're continuing to do things um I think gaming is very big big in Korea I think Korean games are great and I think it's a big part of the culture and I think blockchain gaming has all these unique properties where you can actually make a living playing blockchain games and that's because the the activity in the game can create real value and then you can you can have a job playing the game because the things you do in the game create real value which I think a lot of people here will find very attractive and then I think you also asked about Asia I think generally speaking in Asia I see a huge amount of growth and a lot of openness um I think different places have different uh degrees of legal clarity about how much bigger companies can be involved but I I still see a huge consumer and institutional Market uh both in Singapore and China well more more Hong Kong than China but that area and and now in [Music] Korea I think blockchain things will just be added to those big games I think blockchain things are basically about economics more than they are about the game and I think that a lot of games will find it attractive to add blockchainbased economics because it'll attract more players and frankly frankly it'll attract more value into their game ecosystem they'll have to give up a certain degree of control they'll have to give up a certain degree of ability to control the economic system in their game but if they end up getting a 10 times larger 100 times larger economy in their game then I think a lot of game creators will really prefer that because frankly controlling the economy also takes a lot of effort and uh you don't always get it right and I I think eventually where where you arrive whether you're a big game or a small game is that if people spend thousands of hours what's called grinding um you know various activities in the game and then at the end of all that grinding with one game like that one game is 20% better than the other game but you spend thousands of hours in this game and you can't pay your rent but in this game you can buy a house but it's it's only 20% worse you're going to play the game where it's it's like 20% worse but after grinding grinding like thousands of hours of gameplay in that game you you're able to buy a house like th those simple economics I think at some point will take hold and that'll be um it'll be inescapable right so that's that's actually the power of this industry I think is that it's inescapable uh it's inescapable for the banking sector it's inescapable for the gaming sector because the economics of of of what this place this industry provides is so attractive that you're you're you're not going to you're going to end up not being super competitive as a game or as a bank or as an insurance company if you don't provide these capabilities so ccip is is pretty low-level infrastructure so it's it's like you know I understand why some people don't fully fully understand all of it um it's similar to something that's also pretty esoteric tcpip so tcpip is a messaging system it's an information transfer protocol that creates the internet so the whole internet runs on tcpip it basically connected all of these different internet Technologies into one network called the internet and so we all use the internet which is run by tcpip it's actually a very similar situation to what you see with chains where there's these siloed separate ecosystems and ccip the cross chain interoperability protocol seeks to connect those separate chains and ecosystems into one network and so the the experience that you should end up having is similar to The Experience on the internet like you use one application using one technology and and one set of cloud providers or something which you don't even know what those Cloud providers do or who they are and then your application using one set of Technology can you can connect to another application using a completely separate set of Technology because those two applications can communicate right and you don't even know that that's going on because tcpip is doing all of that in the background so that's the world that we should arrive in the blockchain world that'll create what what I call an internet of contracts where regardless of which blockchain you start on so you can start on blockchain A or B or C you'll be able to equally easily use everything on blockchain a and b and you won't even have to think about it you won't even say I want to use blockchain a or b you'll say I want to use application X and Y and application X is on blockchain a and application Y is on blockchain B but you won't even be thinking about what blockchain do I want to you won't you're not going to be just like you don't think what uh server technology does this uh app I use run on you don't know or care you just know you want to use the app so ccip seeks to unify the public chain world into a single internet of contracts and then it also seeks to unify the bank chain world because there's these two separate worlds actually um there's the bank chain world and the public chain world and they have this big legal wall in between them and that legal wall is slowly Brick by Brick coming down and if both the public chain world and the bank chain world run on a single messaging standard then their ability to communicate when that wall goes down is going to be very um natural because they've already been communicating within their specific networks uh with each other using that messaging system so it's it's both getting public chains hyperconnected so you can use an application on another chain regardless of where you begin your journey or whatever token you buy you can use it somewhere else Banks need to connect and transact with each other and then the third step is actually getting the bank chain universe and the public chain Universe to transact and that's the thing that was I was briefly explaining in the talk and that's um that's worth tens to hundreds of trillions of dollars in value flowing into the blockchain industry which I think will be quite meaningful if it happens predicting uh predicting is tough um I can just say we're working on it very hard there's a lot of people in the community a lot of people spending a lot of time on it I'm meeting with a lot of great people um what I'm seeing so far is that everybody needs to connect in those two separate worlds and their need to connect is once again based on very fundamental economics right if you're a bank chain if you're a bank and you issue a real world asset token on your chain and then that real world asset token wants to get purchased somewhere else by another bank in another bank chain if ccip doesn't connect your two chains you can't conduct a transaction which is a problem that I think people in the banking World understand and then in the defi World um they just want more access to more users and so right now it's pretty it's still pretty siloed there's a couple of thousand users here couple of 10,000 users there but if you just make a single system where all the users can flow into your application through that one system then um everyone just wants more users so it's it's pretty obvious in that sense it's it's going to be a lot of work there's a lot of complexity there um I think the more value that flows over C CIP and the more messages that flow over ccip um the more it's going to need to scale but we spent over 3 years building this and it's gone through a multitude of audits security audits um like like everything else that we build and we um from what we can tell of all the other Bridges and all the other Alternatives this is by far the most secure one and the one that has the most uh features and the most ability to actually give people connectivity in both of those places so I I predict that that'll be useful to people and then and then we'll see what happens next I think defi is always an Ever presentent ecosystem that has a lot of very smart people working on more and more advanced things so I think defi will continue to shape the blockchain industry and as more value Flows In it'll be the place where you have markets where people can get Returns on that value and can participate in basically Financial products um so defi is definite I think the gaming sector especially in places like Korea um and places where where the gaming industry is very Advanced and people are competing and they're pushing the limits of what they want to do with gaming um I think gaming is going to be an important thing um I think nfts will will roll into gaming um in in a big way and then I would say the final one um I do think there will be a lot more activity by Banks even if whether that activity happens with US Banks or european Banks or Asian Banks um I don't know that but I'm I'm pretty sure that there a lot more activity between Banks and I think you'll also see activity by banks on public chains so that will will be quite important because Banks and their brand do appeal to users and do appeal to the quality of their real world assets and then I think the challenge for us is going to be making sure that the technology forces a certain amount of clarity so that the brand of uh the bank or the defi protocol or an exchange isn't what's driving usage so what should be driving usage of the def protocols the game protocols the bank uh connection into our industry should be their ability to prove reliably consistently prove cryptographically prove that their system works as expected as it as it's been defined for people and I think once people realize that there's this alternative where you can have a very clearly defined relationship with a game with an insurance company with a bank those those are the people that you know I actually want to see do well because it it means there's been a mental shift in how people evaluate applications and this mental shift is is what I think is going to take our industry into its its rightful place as as powering all value and all transactions and all relationships that need to be made reliable which is you know the vast majority of them I think AI is is a risk and an opportunity generally so I think there's a world where AI becomes difficult to control and then cryptography and encryption and blockchains become a resource to to to control Ai and limit the actions it can take so in that scenario I think blockchains can have an important purpose assuming that AIS can't crack the encryption of blockchains but if AIS can crack the encryption of blockchains we have much bigger problems frankly if you think about it actually in that world the AI you have a trust problem right so you don't trust the Ai Ai and you need to define the conditions under which you relate to the AI right so you allow the AI only to do these things and you know due to the blockchain security and the Oracle network security and all the other systems and cryptography in our industry that the AI cannot step outside those parameters so in that sense our Industries useful when if if I don't know when but if AI becomes a risky uh technology that people want to create controls around and there's actually a very interesting series from HBO called Westworld if you're interested in Ai and uh spoiler alert by the way but in like one of the later Seasons the whole point is to get a private key because the private key controls the AI and so like that's I think that could be a real thing that like if you have a private key you control an AI and guess where that private key like lives it lives in like it lives in a blockchain system right because that's one of the that's one that's like the best place to have private Keys um in existence so that's one world the other world that we're looking at and working on and thinking through as well is how do AI provide inputs into contracts so how do you tell from a smart contract to an AI hey AI tell me when I should sell my Bitcoin in this protocol and then the AI says yeah sure I'll let you know and then our system kind of sits there and takes the results from the AI um maybe you would want to run some kind of AI computation in an oracle Network that's a possibility um if for some reason you wanted to guarantee that the AI computation was immune to manipulation Oracle networks could achieve that um but it's it's it's still pretty early I think