Gavin Wood is one of the co-founders of blockchain-based platform Ethereum and the founder of Ethereum client Parity Technologies. A self described ‘free trust technologist’, Gavin’s original ideas for a decentralised web date back to early 2013.
Gavin coded the first functional implementation of Ethereum released as ‘PoC-1’ in early 2014 and wrote the Yellow Paper, a technical whitepaper on Ethereum which was the first formal specification of any blockchain protocol.
We spoke to Gavin about his journey with Ethereum and his thoughts on the future of the blockchain…
Simpleweb: How has your initial vision evolved since you started working in the cryptocurrency world?
Gavin Wood: When I first got into crypto it was very much Bitcoin-centric… The biggest thing that has changed since then is how clear it has become to me that it is not a purely a finance technology.
Of course, early use cases were very much centred on finance, because it’s very simple and very important to be able to trust. But as time goes on, we’re uncovering more and more use cases, from asset tracking to the supply chain to registries and so on. That, to me, really demonstrates that the technology as a whole has much more relevance outside of the finance space.
Simpleweb: Are there any specific events that have changed your view?
Gavin Wood: What we were doing with Turing completeness, which was the grand trademark term, was comprehensive and general; it became clear to me that we were making crypto law.
It was at that point that I realised this was really going to change things. We were creating this new kind of legal system that was going to mean that, in the future, lawyers and programmers were going to be the same job… It became clear to me that this is something bigger than any of us were thinking.
What separates, or distinguishes lawyers from story writers is that story writers don’t expect their stories to be upheld by pretty much the whole of society.
If it comes down to it, the courts, government or military will back up the things they write. And who pays the military? The people pay the military. The whole of society is going to be behind the meaning of a ‘thing’ that a lawyer writes.
In the future the method of writing and interpreting new laws will be much more akin to software development than what we would normally consider legal literature
Normally programmers are the story writers, they write things and people look at them. If stuff goes wrong, it doesn’t matter because that’s not going to change how people act, at least not directly.
With this technology, it’s a little different, because what programmers write is going to be backed up with the users of this technology, the whole of society. We see a little bit of that in some of the things that have happened.
The DAO [a decentralised organisation that lost around one third of their funds to an attack in 2016] was a little taste of that, where the whole of society, or at least the principle, was backing a contract that had a bug in it. It was doing something wrong, but they were still backing the direct interpretation of that.
Eventually of course, most of the people who were backing it, around 85-90%, decided to change their mind and make an exception. But it was very much a manual thing. Normally that wouldn’t be the case.
With Bitcoin, there are transactions for very questionable purposes, but the whole of the Bitcoin network backs it up and enforces it because it’s protocol. Pretty much exactly the same way as the civil courts enforce the law books and meaning of pre-existing contracts by a case precedent.
In the future, with this system, the people who are entrusted to write new laws, and the method of writing and interpreting them will be much more akin to software development than what we would normally consider legal literature.
Simpleweb: What are your thoughts on the ability of smart blockchains to decentralise global governance?
Gavin Wood: I don’t think it’s quite as a simple as saying that lots of different nodes run the blockchain, therefore governance will automatically be decentralised. Blockchain could just appoint a single identity as being the governor, and then you’ve got centralised governance again.
Up until now, society has found it very difficult to decentralise. It’s a very difficult thing to manage… a lot of people don’t care about checking up on other people, they just want to get on with their lives.
What blockchain gives us is an extra tool in how to manage governance
Of course, we can try to create the three branches of government – the executive, the judiciary and the legislative…. But it’s very difficult and a hard problem. What blockchain gives us is an extra tool in how to manage governance. Whilst it still requires us to want a decentralised government and some democratic system, it’s up to us to define very clearly and precisely how we want the governance to work.
What we do at least have, is a way of ensuring that decisions are made in as transparent a fashion as we can imagine and as we can define.
We have this underlying toolset that allows us to ensure that votes are not easily rigged, that time limits are effectively enforced, where we can see when laws are passed and precisely which delegates voted for those laws. We can hold to account people on their previous decisions.
There are systems, of course, that can attempt to do this at the moment, but a lot of the time they succumb to incompetence and corruption, and what [blockchain] gives us is a tool that ensures us that is not the case.
Simpleweb: What do you see as the future of Ethereum and blockchain technology in general?
Gavin Wood: At the moment, Ethereum’s initial use case is the ICO. I think in the present iteration of Ethereum, that may be where it ends.
I think we have all seen a lot of scalability issues; even fast computers can barely keep up with the bloat of the blockchain. That is something that we, as technologists, are trying to mitigate as best we can with various types of optimisation.
Adoption will continue and the technology is not going away
I think we are seeing, in this current phase of the technology, some of the limitations. I think over the next two to three years we’re going to see those limitations be lifted and therefore some more use cases come in. Particularly around things that require a greater degree of social integration.
I think the adoption [of blockchain technologies] is going to continue. Whether the adoption increases with the rate of expectation from the market is a rather different question. Land registries, or vehicle registries or even registries of pieces of art are going to become more prevalent. We’re already seeing some government projects trying to manage registries on the blockchain, private blockchains of course, but it’s a beginning.
Adoption will continue and the technology is not going away, the cat is out of the bag now, so to speak, much as the internet was in 1995. Whether we’re about to see a bubble burst coming, I don’t really have my crystal ball with me. I think it’s relatively well understood that expectation and adoption rarely match up exactly.
Simpleweb: Earlier you said the ICO may become a lesser use case of the Ethereum blockchain. Will Ethereum become more useful in other cases?
Gavin Wood: I do see other use cases, there are many popping up every day, but the issue is that the Ethereum chain is becoming quite bloated and quite busy with all the ICOs. ICOs are currently, economically, the biggest drawer of Ethereum.
It’s almost as if all of the bandwidth of the internet is taken up with email
It’s almost as if all of the bandwidth of the internet is taken up with email and we have to build another internet to try and sort of reinvent the web, but I don’t think it will be as bad as that.
I suspect that Ethereum will go through a number of upgrades, both in terms of the client technology and the protocol technology. That will allow one or two other use cases to come through and dip their toes into the Ethereum main net, but I think we will see other networks take up the slack as well. I think it’s going to be a mixed ecosystem that’s for sure.
Simpleweb: Would you say we’re in a bubble right now?
Gavin Wood: It really is difficult to tell what a fair valuation will be at the moment…. We’re in such a period of uncertainty, of not knowing what the adoption will be like, and whether it will hit the mainstream any time soon or whether governments will take to it or try to outright ban it.
I would be very surprised if the price overtly goes up from now on, I think there will be some parts where markets get a little down and bearish.
That said, I also think that this technology in general is a game-changer for the global economy. It’s only a matter of time before something that gains adoption or a product that is built on [the blockchain] really demonstrates, for example, how it can revolutionise a developing country, or how it can demonstrate huge amounts of value and creation in a developed market. That’s where I would look to see this big green flag and see that this technology is really here to stay.
Simpleweb: Have you heard of any financial institutions that have created their own cryptocurrencies, or are using the Ethereum blockchain successfully?
Gavin Wood: I’ve heard of at least one case where a financial institution has created an internal currency for a project management purpose. To be honest, the creation of currencies is great and blockchain can do it really easily. But it’s something that could have been done before blockchain. If you’re going to do it in an organisation, it’s not a new technology. It’s really just something that middle and top-middle managers are wanting to experiment more in, in order to be seen as relevant.
I think in the future these internal blockchains, and private blockchains, will be seen as an important stepping stone to a new version of the economy, a new way of doing business. How long it takes for large companies to step over that stone is a difficult one to call.
Simpleweb: Have you seen any future projects on Ethereum that excite you?
Gavin Wood: Given the problem of marketing I see these days, I don’t like to call particular projects out, but I can give you some use cases.
I think asset tracking in the world of art is probably going to become a fairly important way of demonstrating the technology and how it is doing things other than just finance. Finance stuff in general, is increasingly becoming an accepted use case.
Devices can become autonomous – a device can become self owning
We’ve seen a few people suggest that blockchain technology within video games will be a possible use, and I could get on board with that.
Whether it becomes as an amazing thing for payment processing, I’m not convinced yet. I think that payment processing is going to be one of the harder things for blockchain to crack. Things like Raiden and Lightning could change some of the technical reservations that I have.
You could give your central heating system some money and it will run itself and buy electricity when it needs to
One of the biggest [use cases] that excites me is power generation and energy management. One of the big aspects of blockchain is the idea that devices can become autonomous and I mean this in the extreme sense – a device can become self owning.
The idea behind why decentralisation can help, particularly in power generation and management, is the notion of allowing loads, particularly smart loads; devices that are able to change how much electricity they use based upon some heuristics and logic.
These smart loads can become autonomous. That means they could have their own wallet. You could give your central heating system some money and it will run itself and buy electricity when it needs to. It will have AI, or some heuristics logic, in order to work out when to buy (when the energy prices are low), and not buy (when they’re high), except when the person in the house really needs to be warmed up.
Couple that with things like batteries, which need to be charged but can also be discharged. Imagine an electric car parked in your driveway, then it becomes very interesting, because the car can also have a wallet and your car can then make money by trading energy; buying it when it’s at a low price and then selling the battery back when it’s high.
We really do need to decentralise our electricity generation, not only for the environment which is obviously important, but also in terms of security. It doesn’t make sense for it all to be centralised
Aside from it being cool that your car can make money for you, this has the additional advantage of fundamentally decentralising one of the critically most centralised parts of modern society, which is power generation.
One doesn’t like to consider these things, but if a terrorist group managed to blow up a couple of nuclear power plants all at once, it would really take society down, it would be really bad.
We really do need to decentralise our electricity generation, not only for the environment which is obviously important, but also in terms of security. It doesn’t make sense for it all to be centralised.
This is why it is a fundamentally great way of doing it. It’s cool. Your car can make money, your central heating system is clever, but also the end result is a society that becomes less and less prone to attack or compromise in some way.
Simpleweb: Do you think there’s something to worry about with all the recent ICO regulation?
Gavin Wood: I think there is everything to worry about.
The government is not especially well versed in the more philosophical aspects of what it is we’re doing. That will be problematic when they try to create laws that will try to specify how people should behave. I hope that the lawmakers and regulators will become appropriately philosophical in their interaction with this ecosystem as times goes on.
If we can’t be certain, then law is simply failing
Any ecosystem, or sufficiently large group, will have malicious actors, and they have to be managed in some way. I think it’s important not to throw the baby out with the bath water. This technology really does have the power to change society for the better, to make everything an awful lot more efficient and a lot less prone to incompetence, collusion and inefficiency.
I would hope that [government] would understand where the end result could be before legislating and that they give us a bit of certainty about what we can be doing at the moment. Currently, we exist in something of a grey area with occasional groans from either side and it’s not very helpful for society in general to continue to innovate.
One of the critical things that the government needs to provide is certainty. That’s what laws are for. They need to allow us to be certain that what we do will have particular consequences and if we can’t be certain, then law is simply failing.