ASH BENNINGTON: The future of finance or forgettable fad?
Digital assets like Bitcoin are divisive, but some of them
have made their founders incredibly rich.
This series gives you a chance to hear
from some of the most influential people
in the crypto world.
And in this episode, you'll hear from Charles Hoskinson, one
of the founders of Ethereum.
He explains what the process of creating
one of the world's most important cryptocurrencies
was actually like.
CHARLES HOSKINSON: The venture I'm usually
most known for is Ethereum, which I started shortly
after setting up Invictus innovations with Vitalik
Buterin and several other people.
To understand Ethereum, and you have
to understand Bitcoin and what problem Bitcoin solves.
So Bitcoin is all about saying, can I create a money system
where Alice and Bob can transact with each other
in a trustless way and with a decentralized database
recording all those transactions?
So in other words, when Alice sends that transaction,
it gets recorded in some magic ledger in the sky,
like a giant spreadsheet in the sky, that once it's in there,
can never go out.
It's tamper-resistant and it's immutable,
and it's time stamped and auditable.
So that's a wonderful concept.
And that alone, with the notion of digital scarcity,
allowed a currency to form.
But the minute that you have a currency,
people immediately start saying, well,
what else can I do with it?
Is it just the ability to move value between Alice or Bob?
What about the story behind that value?
The metadata, the context, the contractual relationship.
For example, what if Alice says, I'll
mow your lawn if you pay me $100?
Well, that's a contract.
So what if Alice mows the lawn and Bob doesn't pay her?
That can't be reflected in a system like Bitcoin.
So what we wanted to do, is add a programming language
to a blockchain, so that these bespoke custom transactions
could be coded much the same way someone would write JavaScript
in a web browser, and that in turn, would allow people
to have any type of financial relationship
that they wanted to have.
Very simple relationships to arbitrarily complex
relationships.
So this was kind of the naive notion that we had in 2013
for Ethereum is, can we had a programming language
to a blockchain so that we can then
allow people to facilitate more complex commerce, known
as smart contracts?
The best projects are projects of frustration.
So most of the people who started
Ethereum, they didn't start and say,
hey, we're just going to go build some magic new blockchain
and it's going to have all these capabilities and they
did this in a clean room in a very academic way.
They all started working on other projects.
For example, Jeff was working on Mastercoin.
Vitalik was working on Colored Coins.
I'd been working on BitShares.
And each and every one of us had the same scenario,
where there was something we wanted to do,
but the nature of blockchain technology
or the nature of blockchains that had already been deployed,
made it very difficult and time-consuming
and expensive to do these very simple things.
So we had to say, there must be a better way.
So what occurred was that Vitalik
started aggregating really good ideas, ideas that he learned
from Sergio Lerner, ideas that he learned while working
on Colored Coins and Mastercoin, and kind
of stitched them all together into an initial white paper.
Then, all open source projects, that attracts attention
if it's a good idea.
And so we started appearing out of the ether
and discovering hey, this is an interesting thing.
I'd like to help and collaborate.
And then somewhere along the way,
we decided that it was a good idea for everybody
to meet each other.
So really the turning point between this
is a discussion about a cool thing we could
do to something that we actually wanted
to devote time, money and effort to, was in January of 2014.
Most of the Ethereum founders met up
in a beach house in Miami for the North American Bitcoin
Conference.
It was a wonderful trip.
And we had an opportunity to really seriously discuss
not only the technology and what it would require,
but also the philosophy.
What are we actually trying to do?
Now from that, we had reached an internal consensus
that this is something we'd like to pursue.
But you can't just build a product in isolation.
You have to actually go show it off and see if anybody cares.
So we thought we were all crazy.
We'd show the world and they'd say,
ah, we don't care about this stuff,
and there'd be no interest and we'd just all go home
and go do something else.
Maybe start a bakery in Hawaii or something.
So what we did, is we went to the conference,
we did some presentations.
Vitalik presented at the conference
and I did a debate with Dan Larimer and David Johnston.
David represented Mastercoin, Dan
represented BitShares and I represented Ethereum.
And we got almost like a Mick Jagger-esque rock star
reception to our presentation.
Vitalik, for example, right after he presented,
was mobbed by people.
And it took nearly an hour to pull him out
of that circle of people who had questions.
So we realized that we had something very, very special.
The problem is then, now we have momentum,
we have something special, we have
a group of people that are willing to do it,
you very naturally go to the next question, which
is, how do you do it?
Where do we do it?
How do we execute?
And that was the hard part, the devil
in the details behind Ethereum.
ASH BENNINGTON: So, Charles Hoskinson
describes Ethereum as a project of frustration.
Looking to do more with blockchain technology,
a team headed by Vitalik Buterin,
created a coin that facilitated so-called smart contracts.
In other words, what they created
was a method for tying transactions
to real world outcomes.
The creation is called Ethereum.
And it has become one of the most valuable cryptocurrencies.
For Real Vision, I'm Ash Bennington.