Podcast Summary
Creating decentralized networks and protocols for a better internet infrastructure: Protocol Labs develops IPFS and Filecoin to distribute content in a decentralized, secure, and permanent way, upgrading the internet's infrastructure and giving users control over their data.
Protocol Labs, founded by Juan Bennet, is an organization dedicated to creating and deploying decentralized networks and protocols, such as IPFS and Filecoin, to improve the internet's infrastructure and rebalance power regarding data and information. IPFS, the Interplanetary File System, is a large-scale, peer-to-peer protocol for distributing any type of content in a content-addressed and cryptographically verified manner. It's used in various sectors, including blockchain networks, for more efficient and permanent data distribution. Protocol Labs aims to upgrade the software and protocol machinery of the internet, focusing on improving how information moves around it, giving users sovereignty over their data, and making the internet more resilient against censorship and attacks.
The internet's shift towards content addressing and the role of human-readable names: The Falcone project, using Filecoin, incentivizes distribution of content in IPFS network, enabling decentralized and efficient data storage and access on the internet.
The internet is moving towards content addressing from location addressing, and human-readable names are an important but complex aspect of this transition. Consensus protocols are necessary for human-readable names to have meaning, but they can be limiting and may require hierarchical systems or blockchain-based solutions. The Falcone project, born out of IPFS, aims to incentivize the distribution of content in the IPFS network by introducing a currency called Filecoin. This currency mediates the market by allowing those who provide storage to have influence over the network, using proofs of storage and a new proof of replication system to verify the correct and independent storage of content. The ultimate goal is to create a more efficient and decentralized way to store and access data on the internet.
Decentralized storage network Filecoin solves data management issues using Git and BitTorrent principles: Filecoin, a decentralized storage network, combines Git and BitTorrent principles to incentivize users to mine currency and sell storage capacity, addressing poorly managed data sets and offering an alternative to centralized models
Filecoin is a decentralized storage network powered by blockchain technology, which aims to solve the problem of poorly managed scientific data sets by combining the principles of Git and BitTorrent. The founder, Juan Benet, identified this issue back in 2013 while working on knowledge tools and noticed the potential of peer-to-peer networks, which he had studied during his time at Stanford. He recognized the importance of usability in distributed systems and was inspired by the success of centralized platforms like YouTube. However, he believed that there was potential to improve upon existing models economically. The period from 2003 to 2009 saw a decline in peer-to-peer technologies, which Benet referred to as the "peer-to-peer winter." Despite the challenges, Benet saw the potential in creating a system that incentivizes users to mine the currency and sell their storage capacity on the network. This approach addresses the issue of poorly managed data sets and offers an alternative to centralized models.
Building decentralized applications from scratch: The creation of Protocol Labs and IPFS/Filecoin addressed the engineering complexities and lack of tooling for building decentralized applications, focusing on data movement and versioning challenges.
The success of peer-to-peer technologies like Skype and BitTorrent in the early 2000s was not just due to their innovative applications, but also the deep understanding of their underlying benefits and challenges. The engineering complexities of building peer-to-peer systems from scratch were significant, and the lack of established tooling and libraries made progress slower than expected. This is why Protocol Labs was founded with a mission to create a comprehensive toolkit for building decentralized applications, including IPFS and Filecoin. The founders recognized the importance of addressing long-standing issues in data movement and versioning, which required exploring well-trodden ideas and overcoming the limitations of centralized systems. This journey led to the development of IPFS and Filecoin, and the creation of Protocol Apps as a company to support their growth. The challenges faced in this field were not unique, as seen in the case of Mojo Nation and other groups, but the determination to push forward and overcome these obstacles has been a driving force behind the advancement of decentralized technologies.
Revisiting Peer-to-Peer Networks: As technology advances, peer-to-peer networks are being reconsidered due to better tools, improved hardware infrastructure, and accelerating returns in computing and storage. However, the challenge lies in the disparity between decreasing storage costs and increasing bandwidth costs.
During the late 1990s, there was a significant shift towards building large-scale distributed systems and peer-to-peer networks. However, the rise of the cloud and the lack of digital currencies, trustless transactions, and suitable hardware made peer-to-peer structures less appealing for certain use cases. Now, as technology advances, these ideas are being revisited, with better tools, improved hardware infrastructure, and accelerating returns in computing and storage. The challenge lies in the fact that storage is decreasing in cost at a much faster rate than bandwidth, leading to a feeling of internet saturation and the potential future need to ship data directly to consumers instead of relying on bandwidth for transfer.
A new era of decentralized technology: This era focuses on complex applications, trustless systems, and decentralized businesses, unlike the previous wave driven by consumer demand for free music.
The current blockchain and decentralized technology wave is vastly different from the previous peer-to-peer technology wave, such as Napster, due to advancements in infrastructure like smart contracts and decentralized computing power. The use cases and goals are also different, with a focus on more complex applications and trustless systems. Unlike the previous wave, which was mostly driven by consumer demand for free music, the current wave is not primarily driven by consumer demand but by the potential for decentralized businesses and solutions. The earlier wave lacked the infrastructure for trustless and verifiable computation, which is a crucial component of the current technology wave.
Financial incentives drive blockchain solutions beyond consumer needs: Bitcoin and Ethereum created financial instruments cheaply and securely, while Filecoin incentivizes people to add storage to the network
The blockchain industry offers various solutions beyond just consumer needs, primarily driven by financial incentives. Bitcoin and Ethereum enabled the creation of financial instruments cheaply and with secure verification. Filecoin, for instance, focuses on utilizing latent storage and incentivizes people to add it to the network for monetary gain. The decentralization aspect is a bonus, but not the primary motivation. The innovation lies in the financial instruments and the massive networks they can organize, solving multiple problems for businesses and consumers alike.
Blockchain Disrupts Industries and Creates New Applications: Blockchain technology leads to decentralized power, creation of new applications, and smart contracts offering efficient financial transactions and asset management.
The emergence of blockchain technology has disrupted traditional industries like finance and law in unprecedented ways. This digital revolution has led to the creation of numerous applications that were previously unimaginable or impractical. The blockchain world is focused on decentralizing power rather than resources, as seen with projects like Filecoin. Incentives for participating in these networks come from earning tokens, like Mojo, which can be spent on various services. The early days of blockchain saw a lot of experimentation and hacking attempts, much like the early days of the internet. Smart contracts are a significant part of this disruption, offering a more efficient way to create and execute financial transactions. They can represent real-world assets and enable the creation of complex financial instruments, saving time and resources for businesses. Industries like insurance are particularly well-suited for smart contracts, as they can simplify and automate processes, reducing costs and increasing efficiency. The potential applications for smart contracts are vast, and they represent a major shift in how we conduct business and manage assets.
Revolutionizing industries with smart contracts: Ethereum and other blockchains enable creation of smart contracts for financial instruments and insurance policies, bypassing traditional companies, with potential for mainstream consumer use surge in next few years due to emerging technologies and user-friendly applications.
Ethereum and other blockchain technologies are revolutionizing industries, particularly finance and law, by enabling the creation of smart contracts. These contracts can be used to create financial instruments and insurance policies with relative ease, bypassing the need for traditional companies and their associated complexities. However, there is a significant barrier to consumer adoption due to the difficult user experience of blockchain systems. As the space matures, we can expect to see more consumer-friendly applications and interfaces, making blockchain technology more accessible to the masses. The potential for disruption is enormous, and the next year or two could see a surge in mainstream consumer use. The motivation for this wave of innovation comes from the emergence of Ethereum and other related technologies, which have opened up new possibilities and use cases.
Overlooking foundational work in blockchain for quick gains: The focus on financial gains from ICOs overshadowed the importance of foundational work in blockchain projects, potentially leading to a controlled and centralized version of the technology. Long-term, research-driven funding is necessary to support infrastructure projects and ensure a free and open version of blockchain technology.
The interest in blockchain and cryptocurrency projects, particularly in the San Francisco and Silicon Valley areas, was largely driven by the massive amounts of money raised during the ICO craze. However, this focus on quick financial gains overlooked the foundational work and potential value creation that had been happening for years, particularly with Ethereum. The underlying differences and contrarian ideas that questioned consumer assumptions about data, trust, and transactions were disregarded in favor of convenience. Traditional VC firms are not built for long-term, high-risk investments in deep foundational technology, leaving a gap in funding for large-scale infrastructure projects. This gap could result in a highly centralized and controlled version of the technology, rather than the free and open version we have today. To address this, there's a need for funding sources that can support long-term, research-driven projects, as demonstrated by the success of companies like SpaceX and Tesla, which faced significant funding challenges despite their potential impact.
Long-term funding from monopolies fueled research labs' success: Monopolies' stable funding enabled researchers to focus on open-ended problems, leading to groundbreaking discoveries
The success of research labs like Bell Labs was largely due to the significant financial resources and long-term perspective of their funding sources, which were typically massive monopolies. These entities, such as Bell or the US government, had the ability to invest deeply in research over decades to achieve large-scale innovations driven by cost reductions. This predictable funding allowed researchers to focus on open-ended problems and eventually produce groundbreaking discoveries, like the transistor. However, the dismantling of these monopolies and the rise of alternative funding models, such as Silicon Valley's use of stock options, ultimately led to the decline of research labs like Bell Labs.
Bell Labs' Massive Research Budget Led to Groundbreaking Discoveries: Despite having a massive research budget, Bell Labs' financial structure became unsustainable. Today, organizations invest large sums but focus on shorter-term goals, while the internet has become a platform for open-ended innovation.
The research organization at Bell Labs was a massive operation with a significant budget, equivalent to 1.5 billion in today's dollars. This funding model allowed for groundbreaking discoveries, such as the invention of the transistor. However, the financial structure became unsustainable in the late 20th century due to a combination of factors, including the departure of researchers for other organizations and the breakup of Bell. Today, organizations like Google Brain and X are investing large sums into research, but they focus on shorter-term goals and cannot yet match the long-term, open-ended research that characterized Bell Labs. Instead, the internet has emerged as a new platform for open-ended innovation, leading to the creation of technologies like Bitcoin, Ethereum, and the Linux kernel.
Funding Long-Term Infrastructure Projects with Protocol Apps and Services: The use of native tokens in protocol apps and services allows for ongoing funding of long-term infrastructure projects while keeping builders closely tied to the protocol.
The Linux kernel serves as an excellent example of long-term infrastructure projects on the internet, but funding such open-ended endeavors presents a challenge. Bitcoin and Ethereum offer one solution through their native tokens, which can be used to fund development while keeping builders close to the protocol. This model, known as protocol apps and services, relies on the continued usefulness and growth of the protocol to maintain funding. The success of Ethereum, for instance, could potentially lead to significant wealth for early investors, making it a valuable and risky investment. The future of this funding model remains uncertain, but it offers a unique approach to building and sustaining valuable network services.
Approaching Cryptocurrencies with a Long-Term Perspective: Invest and contribute to cryptocurrencies with a focus on the underlying value and potential impact, rather than short-term gains. Approach projects with a startup-like mindset, considering their potential for innovation and value creation. Distinguish between projects with short-term and long-term perspectives.
The current excitement around cryptocurrencies and related technologies presents a valuable opportunity for investors and contributors, but it requires a thoughtful and long-term approach. The speaker emphasizes the importance of understanding the underlying value and potential impact of these technologies, rather than just focusing on short-term gains. He compares this to the dot-com boom and suggests that those who approach cryptocurrencies with a startup-like mindset, considering the potential for innovation and value creation, are likely to be rewarded. The speaker also differentiates between projects with short-term and long-term perspectives, such as Filecoin, which has a more immediate goal of becoming a successful and valuable service, and IPFS, which is an infrastructure project that may not be directly monetized. Overall, the speaker encourages a thoughtful and informed approach to investing and contributing in the cryptocurrency space.
Decentralized Research Labs in Blockchain Industry: Decentralized research labs are emerging in blockchain, driven by individuals and teams focused on solving long-term problems. The importance of addressing the credit assignment problem in the industry was emphasized, with potential solutions having significant implications for incentivizing and rewarding research and development.
The blockchain industry is witnessing the emergence of decentralized research labs, driven by individuals and teams who are focused on solving large-scale problems with long-term implications. The speaker, who has been involved in the development of Falcon, a blockchain project, shared their experience of investing deeply into research and development, resulting in significant upgrades to the protocol. This decentralized approach to research and development is akin to the traditional Bell Labs model but with a more distributed and autonomous structure. Moreover, the speaker highlighted the importance of addressing the credit assignment problem in the blockchain industry. This problem revolves around the fair distribution of rewards to agents involved in creating or destroying value. Currently, equity and investments serve as the primary means of reward propagation in the market. However, in other domains like science, academic credit and credibility act as alternative forms of reward. In the context of open-source projects like Linux, the speaker pointed out that the majority of contributors did not receive adequate recognition or financial rewards for their contributions. To tackle this issue, the speaker suggested that a solution could have significant implications for the world, potentially revolutionizing the way we incentivize and reward research and development in the blockchain industry.
Fairly distributing rewards in open-source projects: A solution is needed to fairly distribute rewards to open-source contributors, potentially using algorithms and human intervention to gauge value and minimize manipulation, leading to a more engaged community.
There's a need to find a solution to fairly and accurately distribute rewards to individuals contributing to open-source projects, especially those who rely on day jobs to pay their bills. This problem is not limited to one project but extends to all projects interconnected within the open-source community. The proposed solution involves finding a way to gauge the value of each contributor's work, potentially using algorithms inspired by methods for fairly dividing resources. However, it's important to consider the potential for manipulation and ensure the system is not easily gameable. Human intervention could be incorporated to provide valuable feedback while minimizing the opportunity for manipulation. The ultimate goal is to create a system that allows for fair and accurate distribution of rewards, reducing the need for individuals to rely on day jobs that don't align with their passions. This could lead to a more engaged and dedicated open-source community.
A potential solution to the current economic model: The speaker proposes an algorithmic system to determine worth and value, allowing individuals to invest time in what they find valuable, potentially leading to new economic models or versions of capitalism, but getting people to trust and accept such a system is a challenge.
Our current economic model, which relies heavily on jobs and external rewards for survival and value creation, may not be the most effective or fair way to allocate resources and recognize significant contributions. The speaker suggests a potential solution could be the implementation of an algorithmic system to determine worth and value, allowing individuals to invest their time in what they find valuable, and potentially leading to new economic models or versions of capitalism. However, the challenge lies in getting people to trust and accept such a system, as it could call into question notions of self-worth and the role of markets in determining value. The speaker compares this to the gradual acceptance of self-driving cars, which were once seen as incapable of matching human abilities but are now seen as having the potential to save lives and improve efficiency. The ultimate goal is to create a fair and provably fair system that can accurately recognize and reward significant contributions.
Cryptographically verifiable transactions for fair value distribution: Implementing a system where every transaction is cryptographically verifiable would reduce biases and allow for a more equitable distribution of value in the crypto space and beyond.
The current distribution of wealth and value in the crypto space and beyond is far from fair and transparent. The speaker argues that a better solution would be to implement a system where every transaction or evaluation is cryptographically verifiable, producing a proof of correctness and traceability. This would reduce biases and allow for a more equitable distribution of value. The speaker also highlights the issue of capital accumulation in the hands of a few, who can then manipulate the system to their advantage. The speaker believes that this issue is a significant problem in the pre-companies or pre-capitalism stage, and if solved, could lead to a fundamental shift in how we think about value and resource allocation. The speaker also acknowledges that there are experiments, such as Ethereum, that are moving in this direction, but it's a work in progress. The speaker also acknowledges that there are cases where a few people have made significant contributions and ended up with a disproportionate amount of value, but also highlights cases where many people have contributed significantly to the creation of value and have not been fairly compensated. The speaker argues that the current model is not figured out yet and needs to be improved.
Exploring the potential of decentralized networks while addressing challenges: Decentralized networks have the potential to create massive value and open integration, but addressing issues like wealth distribution and speculation could lead to a quantum leap in their development, allowing for direct sharing of value with contributors. Starting a research group to incentivize engineering work is a long-term innovation project.
The speaker is passionate about the potential of decentralized networks, like Ethereum, to create massive value and open integration, but is frustrated by issues such as wealth distribution and speculation in the crypto space. They believe that addressing these issues could lead to a quantum leap in the right direction, allowing for the direct sharing of value with contributors. However, they also recognize the risks and the need for careful experimentation. The speaker is considering starting a research group to help solve the problem of incentivizing engineering work in decentralized networks, which they believe is a long-term innovation project.
Rewarding contributions to decentralized networks: Decentralized networks like IPFS and Filecoin should share value with contributors, incentivize early work, and reward long-term investments to recognize valuable contributions.
The value created through decentralized networks like IPFS and Filecoin should be shared with the open-source community that contributes to their development. The speaker emphasizes the importance of rewarding early contributors and researchers, as seen in the success of Ethereum. He also highlights the challenge of incentivizing valuable contributions from individuals who cannot work for companies in the same space due to conflicts of interest. The speaker believes that cryptocurrency networks, such as IPFS and Filecoin, have the potential to better reward knowledge work and long-term investments than traditional salary structures. Ultimately, the goal is to create a system where valuable contributions are recognized and rewarded, regardless of employment status or personal wealth.
Filecoin's Resilience to Disasters and Network Failures: Filecoin, a decentralized data storage network, uses IPFS's fully distributed nature to ensure communication between nodes even during disasters and network failures. It also uses erasure-coding and high replication to maintain data resilience.
The Filecoin project, which is a decentralized data storage network built on IPFS, is designed to be resilient against natural disasters and network failures. The nodes in the network can continue communicating with each other even if the rest of the network disappears, thanks to IPFS's fully distributed nature. Filecoin is also working on solutions for clearing transactions even when a subset of the network is isolated. Data is erasure-coded and split into pieces, allowing for a high replication factor and resilience to failures. Regarding the Filecoin sale, details will be released soon, but an exact date cannot be given yet due to some unpredictable processes. Additionally, Filecoin is partnering with CoinList on a token sale platform to help token project creators launch their networks and comply with securities regulations.
Helping Investors Identify High-Quality Blockchain Projects: Coinless is a platform filtering out noise in blockchain space, implementing quality checks, focusing on signal, and exploring crowdfunding options for non-accredited investors to invest in high-quality projects.
Coinless aims to be a platform that helps find and promote high-quality blockchain projects by acting as a filter for the noise in the space. They plan to do this by implementing some quality checks and creating a network that focuses on signal rather than just noise. While they don't want to act as gatekeepers, they also don't want to host outright scams. They're working on ways to help projects highlight their technical strengths and value propositions, and they're exploring options for involving non-accredited investors in the investment process through crowdfunding. Not all sales on Coinbase will be limited to accredited investors, and they're also looking into enabling sales that combine both accredited and non-accredited investors. Overall, Coinless aims to make it easier for investors to identify and invest in high-quality blockchain projects.
Decentralized marketplace for storage: Filecoin offers a decentralized marketplace for unused storage, potentially driving down prices and providing better economies of scale
Filecoin is not just another cloud storage provider, but a decentralized marketplace for storage. Its unique features, such as decentralized data and market dynamics, differentiate it from traditional providers like Dropbox. By enabling unused storage from individuals and groups to be sold to the rest of the world, Filecoin aims to drive down prices and provide better economies of scale. This marketplace model could potentially offer better unit economics and optimization points than traditional providers, making it an attractive option for certain individuals or groups. The growing need for cloud storage and the exponential growth in data make Filecoin a promising solution. Investors should focus on the differentiated features and market dynamics of Filecoin rather than comparing it to Dropbox as a replacement.
Decentralized Storage Marketplace with Filecoin: Filecoin offers a decentralized storage marketplace, eliminating lengthy sign-ups and legal agreements, while offering unique guarantees and allowing users to mine on multiple networks.
Filecoin aims to revolutionize the storage market by shifting from a centralized system of hiring storage providers to a decentralized marketplace where storage is bought and sold algorithmically. This process eliminates the need for lengthy sign-ups and legal agreements, allowing users to purchase storage from reliable providers at the cheapest possible price. Filecoin plans to differentiate itself from competitors like Sia by offering unique guarantees and operating in a fundamentally different way. Users may even mine on multiple networks, and some data may be cross-accessible between them. IPFS, a related project, aims to prevent DDoS attacks by ensuring data is uniquely stored and replicated across the network, although it cannot mitigate all possible attacks.
Decentralization offers benefits in industries where centralized infrastructure is a bottleneck or point of failure: Decentralized systems enable access to content from multiple sources, making it harder for attackers to DOS or silence content, and allow for seamless data flow between users, reducing the need for data to flow through centralized servers and increasing productivity.
Decentralization offers significant benefits, especially in industries or use cases where centralized infrastructure can be a bottleneck or a point of failure. Decentralized systems, like IPFS, enable users to access content from multiple sources, making it harder for attackers to DOS or silence the content. Decentralization also allows for seamless data flow between users, enabling them to work together even if some centralized servers are down. For consumer applications like Slack or Google Docs, the reliance on centralized servers can result in downtime and hinder productivity. Decentralization empowers users to interact directly with each other, reducing the need for data to flow through centralized servers and data centers. In essence, decentralization offers a more robust and resilient infrastructure, enabling users to work together more efficiently and effectively, regardless of the status of centralized servers.
Decentralized systems offer advantages in massive scale optimization problems: Decentralization allows for anyone in the world to contribute optimizations, making it more efficient in solving complex problems compared to centralized organizations. Examples of decentralized projects include Ethereum, Open Bazaar, Zcash, and others.
Decentralized systems, like Ethereum, offer significant advantages over centralized services when it comes to optimization problems at a massive scale. Decentralization enables anyone in the world to bring in optimizations, such as cheap power or storage, making it more efficient in solving complex optimization problems compared to a centrally planned organization. Markets, as a fundamental way we operate, allow individual actors to leverage optimizations, even if they may not be optimal for everyone. Examples of decentralized projects to pay attention to include Ethereum, Open Bazaar, Zcash, and projects like ZeroX, Live Peer, and TASOS. These projects bring new properties to the world and offer exciting developments in the decentralized space.
The future of programming and decentralized systems: provability and decentralized data modeling: The future of programming and decentralized systems is focused on provability and decentralized data modeling, with potential applications in finance and machine learning.
The future of programming and decentralized systems is focused on provability and decentralized data modeling. The idea of having everything in a program be provable might be unrealistic, but the potential for a network where everything is provable and still useful for computation is intriguing. A project called Numeri, which decentralizes data modeling for hedge funds, is an interesting application of this concept. Numeri allows individual participants to contribute algorithms to improve the predictive power of the models, fostering both competition and collaboration. The proof of stake line of work in the blockchain space is also progressing, with several provable protocols already in existence. Researchers are encouraged to follow this area as we get closer to a successful and scalable solution. Overall, the intersection of provability, decentralized systems, and machine learning holds great potential for the future.
