Fireside Chat With Diego Gutierrez and Kartik Talwar

Time to jump into our next fireside chat and this is with Diego from Rootstock. So we're going to talk about how things Bitcoin and what's happening with the programmability side of things. So please give Diego a big round of applause.

Thank you. Thank you. Thank you very much. So welcome. Here we are.

Here we are.

I told it was not programmable enough.

It's not yet.

Well, we're fixing that. I think you're fixing that.

There we go. Um, one of the kind of reasons I'm interested to talk to you about today is um is the fact that you actually grew up here. This is your home and uh you've been part of being in which part of the artist community is specifically. Um, I'd love to kind of learn about how being here has influenced your thinking about what crypto and blockchains can do.

Yes, I I think we we started I started in Bitcoin in 2012. So, back in the day it was only Bitcoin and I started creating the Bitcoin communities in 2013 and uh from those communities the the whole crypto uh community started building. No. So you know for example Manuel from opening started in those meetups. So so many of the core developers of the I introduced Charlie Hawinson to to the first um teams development teams here in Argentina at the end of 2015 uh in the Espasio Vitco.

And so I think you know that community like was the crowd where you know

so the small group that kind of started everything. Yeah.

So we are friends among all of us. It's like we we we go back to 12 13 years of building together communities and that's why I always say community is essential. It's like the communities are where things are built where ideas are shared, discuss and then the startups uh arise from that. No. Um yeah and is still one of the one of the top

in way a prime example of showing the value of of kind of crypto and just having access to to capital that's trusted by you

and and that is a key element no is like in Argentina you don't need to explain why crypto is relevant it's like we know it's like we understand that

you've seen every possible crisis [clears throat]

exactly so so we have experienced every crisis you can imagine. So for us, you know, crypto was a necessity. Bitcoin was a necessity. It was not something that you know, it was not just a new nice technology or you know something exciting only from a technological perspective for us was a tool to escape hyperinflation, capital controls, corrupt governments. So it it takes like it gives a complete different meaning to the technology when you understand that yeah this is escape hatch from a system that is collapsing you know

is that what made you start root or what was kind of the origins of 10 years ago that you published the white paper. Yeah, I I think of course when I started in 2012, it was an intuition. My intuition that was Bitcoin was the the beginning of a bigger movement of a new innovation cycle. Uh I so for I always like my main interests in life were like technology and social transformation. So I started programming at at 11 and I started doing social activist at 12.

So that it's like many many years. And what I find out first with the internet with in the dotcom days I find out you know that technology could be a tool for social transformation and empowering of individuals. So when I got in touch with Bitcoin, for me it was like my intuition was okay, this was going to be the the foundations of a system that would change the power dynamics in society not only on economic uh on an e economic level but also in a social level. So for me, I was talking back in 2013 that we were going through waves of disintermediation and we disintermediated access to knowledge to opinion in our society with the social networks with the com then with bitcoin started disintermediation of the financial system and uh and at the same time more or less with 3D printing cheap robotics uh also the means of production we started to decentralize iz and eventually would get to a point where you know the political structures were also going to be dis disinterminated or decentralized. No.

So, so for me those waves of in you know of disintermination are still going and and now composing. No. So now we see composability of those different lanes.

Exactly. Um obviously uh especially 2012 all we had was Bitcoin but um you've definitely been also part of the Ethereum ecosystem from down here in the states where and I think you've talked about having conversations with Xavo and just kind of evaluating what Ethereum was as an idea. Tell us about that time and kind of how that changed your thinking.

Yeah, absolutely. It's a you know one thing is like I realized Bitcoin alone was not enough like the layer one of Bitcoin was not enough uh around 2014 because we started doing meetups and inviting social entrepreneurs from the slums of Buenosiris and um what we realized is they could not handle the volatility of Bitcoin. So you needed to have what now has the name of a stable assets. So a lot of things I imagine but it didn't have a nice marketing name but but basically now it's a stable assets but I didn't want to do stable assets with um depending on governments or or financial institutions because I wanted to keep the ethos of Bitcoin alive. So, I wanted to create a my idea was how we create a peer-to-peer monetary system backed by Bitcoin like going back to the for no model and Ethereum was announced in in January 2014 at the North American Bitcoin conference.

I was there talking about Bitcoin in Latin America. It was very like very there's an image in my head that is like imprinted like for her seeing Vitalik in the corridors walking and a lot of people behind him because he was about to announce Ethereum. So very power I say there's something special great moment in time. Yeah, there's something special. But at the same time, I was, you know, sad that Ethereum was being built as a separate network and and also in my view it like bootstrapping a new network and creating acceptance, global acceptance for a new currency like Ether, ETH was going to take a long time.

And I knew that by 2020 half of the unbanked population, which was one of my main goals back then, is like how we serve the people unbanked, the people outside the financial system. We knew that half of that population was going to have a smartphone in their hands. So I said well that's okay that they they build a new network but it will take very long and maybe we cannot serve we we don't get on time and then people is the money is digitized and people is on boarding to centralized money digitalized money systems which actually is happening now. So so I was not that wrong in that sense. So in at the end of 2014, I was uh fundraising for another company I built called um Coax and a friend of mine introduced me to Nixawo.

He wanted to to know what we were doing in Latin America with Bitcoin and I was sharing my you know this urge I had like you know if we can expand Bitcoin capabilities you know we can basically create a financial system that can serve people excluded from the financial system and and anybody else. No, of course. Um, and then in that discussion, the name of Sergio Learner appeared. Sergio was the first one to create a tour incomplete cryptocurrency in 2013 called Quickscoin that then he was evolving into another one uh called Nimblecoin. Uh he's an Argentinian as well.

He he find out the Bitcoin pattern the the of the Satoshi coins and he shared that at La Vitcoms the the Oh, nice. the other the conference started founded yes in 2013 that

now now it's uh still running um

and um and then we reached out to Cir and said you know with Nick we were like talking a friend of like about why don't we expand Bitcoin capabilities and I think you have the capability would you be willing to to do this and then we started talking with Sergio and but we we all had too many projects and things. So, it took us a while until we recon converge like a year later and uh and with this idea of like first building a peer-to-peer monetary system backed by Bitcoin and on top of that creating what now has the name of DeFi like

yeah the also did not exist

the basic primitives of that financial primitives um and we choose Ethereum the EVM as the language because Cirio was one of the three security auditors of the Ethereum virtual machine. So he knew it inside out and he said you know this is very good technology very good. So we decided instead of like reinventing the wheel

just use it.

Yes. And also we saw that the Ethereum community was like starting to build a great community of developers. So we say yeah why don't we connect indeed when Nick received the white paper he tweeted around like saying uh rooto the best of Ethereum and Bitcoin combined

in the sense that we were like using all the good things that the Ethereum community was building plus all the good things that Bitcoin had in terms of solid monetary system and high security network and that's how it started.

That's awesome. I mean that's a it's like a interesting story because you only usually hear about other people's perspectives but never like the picture from outside of those things and all the other projects they were looking at looking at both the Bitcoin Ethereum ecosystem back then. So I'm actually really glad that you told the story. Um my kind of followup question to all those things is that um one of the things that also I think is uniquely true and there's even fewer companies in this category is not a lot of crypto companies last 10 years or more. Um, and with the exception of some exchanges, there's not a lot of examples and largely because it's also how long the the space has been around.

Um, and I'm kind of curious to hear your perspective on like what do you think has made it so that good stock has been around for a decade. I think it's a mixture of things because we were at the beginning BC based then the whole company was acquired by the rooto infrastructure project that was uh did a TG so also we were like part of the ICO era in that sense of course the TG of Rooto was done in Rooto so it was a little bit different in that sense but conceptually I think that is a great innovation cycle of course there was like people who didn't want to they were just money grabbing and everything but you know out of everybody that was in the TG era a lot of the core protocols that we have today for DeFi was emerging no so so I think you can tell that we disrupted the VC world in that in that phase all all of us no it's like rooto Ethereum everybody that was doing that and although like 97% of the projects as you say eyes disappear

because of different reasons. Some they never had the intent to really build things but uh the 3% that remain was extremely powerful and it's the the unis swaps the like all the core protocols that that are running the defy ecosystem. Uh so I think we managed to understand that like because I was part of the dotcom era I already knew this was going to be a marathon from the beginning and I knew we had like this excitement cycles and then depression cycles and so we handled to manage you know the timing of cycles properly and understanding like managing our resources and going like fast enough but not too fast that will take us out of the race. And to be honest, it's like 10 years later, although now I think we have enough knowledge where I think we are finally uh and you know getting the the in

things are kind of just in momentum going.

Exactly. We are getting momentum but it was a lot of learnings. No, it's like bootstrapping an ecosystem is not the same as building an application. It's like exactly different because also it's not dependent on you

entirely. It's like you need the the will of others to to align with what you're building. It's similar to setting a new city if you want. It's like you you say, "Okay, this is great ground to set this city." No, we have these mountains protecting us.

We have access to the water so we can create a great port. But at the beginning is like for pe people who get there and say, "Well, this is kind of like an empty terrain. It's like this is not a city yet. And then you start doing that like setting up the grid, setting the power lines, the the seage, the water distribution systems, building a small port at the beginning, then you know big ships cannot come. So only small ships.

That's a great analogy actually. I like that.

And then and then you convince the first pioneers and they come and then you know the first settlers come because the pioneers are good. the quality of their products like you have a good black spin, you have a good like but but um but that's a process.

It takes Yeah. You have to start from beginning in zero and then grow it over time.

We we we have now seven years because Rooster was launched in production in 2018. So we have seven years and a half of like building that and finally we have that momentum. Finally, we have all the core elements that a decent city needs to have in order to operate.

Um, no, that's Yeah, I guess also one of the things that um to me is interesting is that because of how like early this entire ecosystem is usually the companies that have been around the beginning are the ones that people usually copy from cuz they want to see how somebody else before we do it and that's usually the framework. So being first actually ends up being uh not an easy thing because uh you have to set the standards and you have nothing directly to uh

Yes. And being first is like you either you know uh you have great

way on this side or the other side of

you you have amazing hindsight or you are crazy. So, so it's like

or both or so possible

very likely but but um but what happened also in the recent years is that in the last 2 3 years like

a lot of Bitcoin tools started to emerge. No, that's actually exactly where I was moving next to, which is uh we're obviously kind of at this point where we see DeFi work really well. Uh and uh I feel like it makes a lot of Bitcoiners a little bit jealous uh because they have a non-productive asset. Um and kind of saw the massive uptick of Bitcoin L2s. Um, and I'd love to get understand how do you think about adding programmability to Bitcoin and just actually making it more revenue forward.

Um, anywhere from kind of making it productive or breaking people or just actually supporting more applications on top of Bitcoin and and kind of what are your opinions on just that as a category? I think you you mean in in our case or

in your case we can answer both but starting with maybe your and then generally kind of how do you think about what everybody else is doing

direction things are going in general what it means to have an L2 is basically you want to expand capabilities of of the L1 or the core system and that's what everybody's doing in the L2 with different approaches no it's like um and but specifically be our goal was always like make Bitcoin you know valuable and and and usable for for for everybody because if you think of Bitcoin layer one because of the volatility and how it's modeled it's like you know in this trillemma there's the academic trilmma and I have my trillemma for blockchain so basically in my trillemma it's like security is at odds with scaling and is at odds with function funality. So, Bitcoin decided to maximize security and sacrifice the scaling and and functionality. So that's awesome for store of value. But from a perspective of you know who you can serve with that model is basically you can serve the 15% the wealthier 15% of the population who can you know store value for two to three years or more. And you can serve the people who lives in, you know, in dictatorships in in societies that have hyperinflation that where the instability of the local econom is bigger than the volatility of Bitcoin,

right?

Or the insecurity of the soc. So my goal was always how we make Bitcoin work for everybody else. No, it's like to to make it work for the 85% in between or the 83% in between.

So, so where does EVM kind of come into this vision?

Well, I think EVM is an envir as I said the the technology we analyze it in was very solid and but the importance of EVM is that by having a touring complete environment and I think Vitalik always said that EVM is a red herring. is not the the revolutionary element of Ethereum and I agree it's like for me what Ethereum brings that is completely novel is basically statefulness is the ability for a script to basically make decisions based on past decision on other scripts and variables that remain over time. So that for me is the revolutionary step and that in my vision was layer two of the model we were building. So layer one was historical value, layer two was economic coordination and for economic coordination you need that is a you need a state

you need to have history. Yeah.

Yes. And you need of also what now is emerging as a hot topic that is data availability. No that is like having those contracts or agreements available 100% of the time. No. Um and then for me the scaling layer that is layer three in our model is an offchain layer that uses economic coordination for basically settlement and dispute resolution.

With that you have a layer that is scalable and very cheap to operate because it's peer-to-peer you know encrypted data or private you know s signed data with your private keys. So that's very scalable, very cheap and everything and you only use the economic coordination layer. So that's a little bit of the model. So for me EVM to wrap your

thing out there.

I I think the importance of EVM is like because you have a complete programming language that enables experimentation. So that's what enables the Cambrian explosion of protocols that Ethereum have. uh and over time what you will have is oification. So you will lend that I mean you know the only way you can harden like harden uh protocols on an EVM environment is basically through time and money at stake. You know, so so

this history of things is the best part.

But eventually you will find you know that you once you have a lending system that sorts out all the different possibilities of lending. What you want is to oify it. Oify it. It's not that you want to keep like building thousand lending protocols is you want one lending protocol you can trust

liquidity too. Yeah. and then a lot of operators on top of that like providing the liquidity packaging this for different regions and and so on. So for me the value of EVM but also at this point in time it's like the other value uh is protecting your investment on technology because EVM became the standard in the industry.

Yeah. Um it's like you know you'll have enough programmers that you have a community of developers that will support that standard and that your investment will be protected because if the primary network where you deploy your systems goes out or becomes too expensive or whatever problem happens you have other networks where you can port and move your portability

your protocols portability is key. No

amazing. Um so maybe my last question to you is is how can people get involved with rootstock? You have a DAO, you have institutional approach, you obviously have a consumer product.

Yeah.

When do you want people to take it as a question?

Absolutely. The the I think the the best place to go in RTO if you are a developer is the RTO collective. Uh that's a DAO where basically you have the OGs the the OG builders of RTO engaged there. So when you come with your proposal, you will get grants uh to to bootstrap your project. But also what you get that for me is very valuable is feedback from people who has been building in the system for many years that will allow I mean will avoid you from making the same mistakes and hitting the same walls.

So, so what I like about the collective is like now it's it's a very nice launch pad to start testing the ideas getting like the initial the seed capital to start your ideas. Uh but also you have like a initial user base where you can test and and they will you know make

feedback from a small community.

Exactly. It will be meaning what you build there. If you follow the advice, it will be something that is meaningful and then you know you can be part of that community and the collective eventually will evolve into a place where you will have also governance to manage your protocol. So part of the collective in the

help the protocol kind of offering governance as a service for decentralized protocols. So, so that's something that will be very interesting to see happening in the future.

Amazing. Diego, thank you so much for an amazing conversation and please give him a good round of applause. Thank you.