# Fireside Chat - Brendan Blumer @ TOKEN2049

- Channel: [TOKEN2049](https://streameth.org/token2049)
- Date: 2018-10-09
- Watch: https://streameth.org/watch/yt-hvegop6C7hs
- YouTube: https://www.youtube.com/watch?v=hvegop6C7hs

## Transcript

[Music] thank you very much so my name is Pat Lowry I'm the CEO of iconic lab and I would have gone into an introduction of Brendan here but I guess at this point there's really no reason to so actually I feel as though Brendan that there's a announcement that we would kind of like to make today just hit the news why don't you tell us a little bit about what is going on if yo sand block one so obviously my name is Brendan bloomer thanks for that overly kind introduction I'm the CEO of a company called block one and we are the publisher of a decentralized infrastructure for centralized applications called AOS if a couple months ago we announced a program called eos vc in that we were dedicating a billion dollars to partners or funding partners who would then in turn fund projects being built using yeoseo innovation a few a few weeks ago or initially we announced a group led by Eric Schmidt's Derek rondelle from tomorrow ventures a group called tomorrow BC that was established that would be our first u.s. VC partner and then several weeks ago we announced Mike Novogratz from galaxy digital joining that today we'd like to announce our third partner a group called Finn lab AG they are listed a group in Germany who specialized in taking not just investing in start-up organizations but helping them build the infrastructure they need to grow into healthy larger organizations so we're very excited to have them as part of the EOS VC group and we just wanted to share that information from you it's just kind of going live on a global basis now so Before we jump into it I wanted to get that out there yeah and we're really excited to be a part of this EOS ecosystem and really help contribute to the development of the projects within your group now before we really kind of dive into this I really wanted to ask more sort of generic questions more related to the blockchain itself because everybody seemingly has a very different definition for the blockchain and what it is do you view the blockchain and what is its role in our society and in the ecosystem well my my background is not a hardcore technologist obviously I'm a serial entrepreneur that's been involved in a lot of technology companies but I like to look at blockchain and what's going on in a very macro perspective and the way that I see that is that blockchain is really introducing scalable secure data transfer whereas the internet revolution was a similar type of revolution but it didn't have that secure word involved didn't it wasn't what we couldn't rely on data getting from point A to point B without it being intercepted or needing to be guarded and so that really created or set the table for the landscape on how business is developed within the whole internet ecosystem and that's changing and so now that we have secure data transfer whether it's money or value or anything that's important to people the whole thing can be architected very differently so we don't need a middleman to send money we don't need PayPal we don't need counterparties like governments in order to issue currencies that we can then transfer and so what's really happening is that communities combined with open-source technology and the ability to transfer data securely are coming in and are they're starting to disrupt the traditional corporate structure the technological revolution of blockchain is leading to a structural revolution and that's going to be this community led movement that's going to start to introduce more efficient business models and start to drive more value back to the users and end users of the product opposed to shareholders that may not add as much value as as we'd like it's very interesting you say that because a lot of people envision this as being web 3.0 in the sense that this is the very first opportunity that we have to have secure data transactions on the blockchain now in this light how does what you're developing a TOS differentiate itself from some other public law chains or private chains that are currently existing so a lot of people ask you know last year haha what's happening to the market where is all this going the big concern that I've had over the last year year and a half and originally why I got involved with cos and Dan Larimar business partner our CTO in the first place is because I felt like there was a big gap between what we knew was possible with this technology and what the existing platforms could perform we're still at a stage in this space despite all the things we talked about disrupting Facebook and uber and all these companies where the largest platforms can only process sub-20 transactions per second despite the fact that we're paying 10 to 20 billion dollars a year to run them and this is a big problem this is a problem that must get addressed before we can move forward because not only does it limit what we can use the blockchain for and how much we can process but it puts huge constraints on the system in terms of how we're using our resources can you imagine if you went back to the early 90s in the internet revolution and a mathematician looked at everything that was going on and said hey 15 billion dollars of new capital coming into the system is being burnt right on copious amounts of electricity or hardware that aren't directly related to performance so I think that a lot of the fundamentals of the industry have to change in order for us to realize the full potential of it and that's what Yeo's is focused on doing Yoast relies on proven computing principle concepts cluster computing you know fiber-optic cables connecting all the block producers and it aligns the interests of all the parties involved one of the things that we've struggled with in proof-of-work blockchains or proof-of-work consensus mechanisms like Bitcoin like aetherium at this point is that the people that control the network the miners themselves right are not aligned enough with the token holders they're not they continually make decisions that are not necessarily in the best interests of the token holders themselves for example or they make a decision that is relative to one camp and the only way that we can make changes to these platforms is to fork them or divide the community in half so the block producers for example in bitcoins say let's not increase the block size meaning we can't put more transactions on the chain and so they move one way while the token holders in order to free themselves they cannot fire the miners right so they have to create a whole new coin and now you've divided the community in half and they're competing or fighting based off of which they think is the best way forward proof of stake aligns all the parties so that if a block producer or a miner is making decisions that the token holders do not like they can be replaced right and that starts to look more like aligned democracy that we've seen in the past one example I always say of when the people controlling it are not aligned with the actual people paying the bills the inflation of the tokens the transaction fees I call it taxation without representation right and that's how America was created so I think that there is some flawed concepts on the governance level of proof-of-work blockchains and also on the economic level that is greatly limiting our ability to move forward from an efficiency standpoint performance standpoint and throughput standpoint and so uses is is really looking at the whole thing holistically creating a different product but trying to solve those things while truly decentralizing power and how is it that u.s. is accomplishing this I know that EO Sozzani delegated proof of concept preferred state concept perhaps you could talk about this and the merits that this system brings relative to the proof of work and the proof of stake yeah absolutely so delegated proof of stake relies on instead of having hundreds of thousands of miners distributed all around the world or people processing the same things the token holders can elect 21 block producers and those block producers can change literally on a per second basis so it's a continuous election if there's any type of malicious activity they can be immediately pushed out and there's people in line to come take those places now I always say one of the criticisms and I want to just jump right into it because this is the interesting stuff is oh well that sounds centralized right you only have 21 block producers whereas in Bitcoin aetherium anyone can mine anywhere well the reality the reality of these things the problem with proof of work is that electricity is cheaper in bulk and so is hardware so what you end up getting is that big the people that buy lots of hardware or build things on hydroelectric dams they can manufacture bitcoins and a theorem cheaper than the average individual so it quickly centralizes and now there's less than three pools mining pools right that resell mining a capacity to other people that control both networks so we've seen the result is what we actually end up with his delegated proof of work because the individual cannot compete on a proof-of-work basis with the large suppliers and so delegation is necessary as long as you've established that the person that votes may not be the person running the hardware themselves and so I always look at those 21 block producers elected in a OS as the same as the mining pools that you have established in a lot of proof-of-work networks right and so what it really does is it distributes the control to the token holders and from a geographical basis it uses just 21 nodes to process transactions and that allows us to achieve a completely different degree of efficiency in performance because all 21 nodes are not only supercomputers right it can go into cluster computing these types of things but they're also connected to each other and very low latency ways so you've got fiber-optic cables and that's the difference between three transactions a second with one hour Confirmation times to millions of transactions per second with horizontal scalability and one-second irreversibility and that's a really important number because when we get into the the next stage of building consumer products on the blockchain right that's that what I call finality how long does it take for a transaction to reach finality well even if you're dealing with something you know theorem brings it down to in the minutes can you imagine putting a like on the on on social media and having to wait several minutes before it confirmed that it had gone through right so as we're moving into development environments for consumer products we need speed we need lots of transactions we need the ability to do parallel processing we need horizontal scalability and we need one second confirmation and transactions need to be a millionth of a cent and if we can't get there right then we're gonna continue dreaming about what's possible with blockchain without ever actually building it and that's the biggest problem with a space right now that couldn't agree more the biggest issue with blockchain is of course its inability to scale in its current iteration and it seems that AOS you're working on that solution to be able to bring that scalability to the marketplace addressing the use cases for retail individuals as well as larger institutions themselves how do you envision AOS positioning itself in the future related to this processing of transactions and bringing these different key stakeholders together well yo this is an open source architecture that you can use to launch a blockchain whether that's a private blockchain or a public blockchain we spend a lot of time and we're gonna be putting a lot more information about this out soon trying to work backwards from what we think the landscape of of the future landscape of blockchain looks like we do not believe that all transactions will run on one blockchain right we believe that there will be many public block chains they will tend to have different governance and there's things you're gonna want to be putting on a public block chains there's things you're gonna want to put on private blockchains and they need to be able to interoperate with each other in a way that the consumer knows what assurances they're getting through the environment that it's built on and so the eos or you know every at the core of any blockchain ecosystem is a public blockchain which is going to be important for things like identity settlement layer for money and these types of things but what you're gonna have is you're gonna have a whole ecosystem of private or partially private blockchains that stem off of that core blockchain and it's all going to interoperate together in a way that the important assurances for the community and for users of that are preserved even if privacy ends up being achieved through privacy or some type of privately controlled blockchain so thank you very much for your insights on blockchain so I'm gonna switch gears a little bit and look more at the ico in the token space as you're probably one of the largest icos that has ever been completed it's an ongoing two billion ico that will be launched actually last June but is going to be continuing until this June what from your perspective is the use case for these icos and the tokens that are being issued in them and what do you believe is the long-term evolution of the crypto economy related to this that is a great and very large question so tokens themselves are just a unit of account right it's like an excel file to database the transferable portion of a database so it can be used for anything and so there isn't one purpose for whether you call it a token cell and ico tokens can be used to fundraise they can be used to sell products they can use the account for invitations or they can be used for anything anything a unit of account or an Excel spreadsheet can be used for and I think we're still constantly seeing new innovative innovative ways to sell tokens themselves when you get into what is the purpose of token then you need to really look at what the underlying product is when you're dealing with something in like a os's case the value proposition of every public blockchain is entirely the community we can go and we can recreate Bitcoin in 10 minutes and distribute all the tokens to ourselves the technology has no proprietary value so you can't value that in any way shape or form it's really the only the community that it sits on top of Bitcoin that makes it have any value whatsoever so that means that the value is the distribution of the community and what we're seeing is that certain types of distribution end up with more value than others it needs to be fair alright people can't get something for nothing and so when you would take a look at what the EOS token distribution was really trying to achieve it was trying to create a virtual mining process that accomplished two things that it made more fair so that if you had a lot of money and you could buy lots of electricity and hardware it wasn't cheaper for you to get control over the network than it was for somebody that was only going to buy a little bit right and the second thing is is that we wanted to not waste resources I think that in ten years we will look back and say remember when the way that we've got tokens was we basically lit money on fire in that that's really what's going on here as as we continue to go forward and the price of Bitcoin goes up more people plug machines in more hardware goes in and we end up paying more for the exact same performance okay it becomes a mechanism to acquire tokens instead of adding practical value to society so those are what we really tried to accomplish when we set out with that virtual mining process and now what we've done is we've taken a billion dollars put it into eos vc so money that would have been created burning on resources and potentially arguably affecting the environment right is now being put back into the hands of the entrepreneurs that are going to be building the innovation of tomorrow which is a perfect segue into the next topic the development of this vc platform that you've created I mean us at fin lab we're very excited to collaborate with AOS financing the companies that will be looking to issue tokens on your platform building their own block chains etc what to your mind is the value add that you've created by harvesting this VC network for the EOS community that's a great question as as the developer of the underlying protocol we wanted to be very careful that we didn't start jumping into the investment space without thinking it through very well in the sense that we didn't want to be competing with people building on our product we didn't want to invest in one project in logistics and and other competitors feel that we had chosen a winner and so what we've done is we've started deploying capital through partners the people that are already investing in companies and we are not even part of the investment committee right which means that they are solely able to make the decision on what to invest in and they're competing with each other all right and so what we wanted to do is make sure that there was a level playing field that got the mind share of the people that are already in the deal flow so that they could start to educate those that were looking for financing that EOS might be something that was interesting to them so what we're trying to do at es VC is distribute that capital and that power that decision making power in terms of which companies are going to be receiving funding arm's length from the organization so that you could create a natural funding ecosystem that's in line with what the with what the community is already working with in some regards though some critics might look at this and say well you're kind of just resent realizing the investment process what we currently have on aetherium is it's fully decentralized anybody can participate in these icos and what you've effectively done is taken money in your own token sale distribute it to a fund or multiple funds and then you're kind of resent relies entire investment ecosystem on a OS under these VCS do you have any sort of response to this or do you have any great question great question if we were able to do things however we wanted right we may have ended up with something that looked kind of like the Dow right and then we may be in jail but the problem is is that there is limitations in what you can do with regulation today and what we're trying to achieve is distributing it through the entities that we can in a way that's also scalable we have a lot of capital that we need to deploy and we want to make sure that capital gets to the projects themselves in the future I think as regular regulation evolves and consumers have the ability to get involved more easily with securities and investments and stuff that those types of things that even more amounts of decentralization would be possible or even looking into what the future of OCC looks like and how the community could become involved in that vehicle in a regulatory compliant way itself this also talks it on a question of well is it VC or is it icos which are the future and I actually think that they solve very different functions as somebody who's been on both sides of private equity my entire life there's things that private equity groups really just do bring you sometimes they have established experience and connections and contacts that they can lend the organization that you just can't get from public crowdfunding right on the flip side there's things that public crowdfunding does for an organization that VCS definitely can't do they can bring in larger amounts of Capital on better terms and all sorts of things I always a credit part of block 1 success to leveraging the combination of both right we went through the traditional VC route long before we were involved in a token sale funded the technology that we needed to build built that ecosystem up as far as we could and then we introduced a token sail to bring in the community as well and I feel I still think that that model is is is hard to beat so I think that they're different I do not think that venture capital is dead I think that it will change drastically because of tokenization I think that is it will make it more competitive because now they need to compete with the the public capital as well but I do not think they are the same and I do not think one is completely replacing the other you could almost look at it in this capacity that through this fund network you've created it effectively is an investment delegated proof estate concept in the sense that you have experienced professionals individuals that are trusted with in this community to source and identify those earlier stage companies that would merit some sort of investment to then bring them onto the EOS platform providing additional sort of quality insurances over the tokens that would be issued for AOS it really kind of creates a sort of opportunity to kind of decentralized higher quality investment opportunities within your own ecosystem absolutely we wanted to be as decentralized as we could in terms of giving the capital out to the different market leaders but also it needed to have a certain degree of scalability so that we could actually deploy this amount of capital but we're always very conscious of the word centralization and that's why we've architected everything from a OS the way that we have to use VC and we're always thinking about what the future of it is it's not unrealistic to assume or - it's not unrealistic to work back from a scenario in which a OS VC could be a listed vehicle and a permanent capital vehicle where money was coming back and the shareholders were then electing the custodians of who were actually distributing money these are all options that we have going forward in the future the point we're extremely conscious of true decentralisation we're very conscious that before a community or a decentralized group takes over a network it must have the governance to operate it you can't set it up for failure and we're always looking at what we can do to make it as decentralized as possible and I think what's going to become a common theme in companies that are doing things sustainably in long term is what is the path to decentralisation because we're moving from an era where people would build and nurture trees for 50 years and extract as much money as you could out of it - now we're planting seeds and distributing a community and then watching it grow I think one of the problems is that projects are being dumped onto the community too quickly and the communities don't have the tools to manage them so they get this is something more competitive next year that pops out meanwhile the community doesn't have a prayer to assemble themselves and compete with the new innovation so I think that we need to be strike a balance between immediate decentralisation right because every decentralized Network must start from a centralized nucleus and how that transition happens in a healthy way that allows the network to remain competitive for a long time so we're kind of running out of time here so just maybe some final thoughts really quick 2017 for me was all about transfer of value it was really kind of an exploratory phase for the blockchain for Bitcoin for I SEOs token sales themselves now this could be a very open-ended question where could talk about this forever what do you think the future holds in 2018 and maybe rather than focusing on regulation Bitcoin aetherium AOS maybe pick the top two things that you see will happen in our space in 2018 yes I will focus on one that is big and very specific I think that the long term excitement of blockchain has allowed the vast majority of all networks and new projects that are still being released today to ignore completely economic fundamentals I think that in the future those are going to become require in order to sustain value over long periods of time people are relying on some factors to drive the success of their projects that are not realistic for them to rely on for a long period of time the future tokens are going to be something that competes with Facebook where communities are being issued tokens based on the content they provide and the advertisers need to buy those tokens and stake them in order to get advertising on the network and now you have you've taken essentially something a proven multi-billion dollar annual revenue stream and you've driven it into the token network so that the users themselves can realize that value that is the kind of model that will dominate coin market cap in two to three years time right now it does not but I think that as those things start to come out and we see more examples of them being possible it is going to change the way we look and value existing tokens so I'm very bullish on crypto currencies as a whole but I think nearly all of the value of the future will replace the value of today well thank you very much for your time Brendon we're really looking forward at fin lab and iconic lab to move together with block one an EOS thank you very much for your time and I guess at this point we're just doing a kickoff and then everyone gets to go to happy hour so bully for you thanks everyone thank you very much everybody [Applause] [Music]