Hedera Hashgraph – NYC Meetup – April 12, 2018 (Presentation by Jordan Fried)

– My name is Kyle Armour, this is Jordan Fried, from SWIRLDS. You might know us from Hashgraph Hedera, how many people know
much about the algorithm? Raise your hands. Okay, we got some new people as well, so we’re going to run
through from the beginning. – You guys!
– Hey! You guys wanna come over? We’re going to start real quick, thanks. So again, my name’s Kyle Armor, I am a general admin, I kinda do all sorts of different things,
heavily involved in marketing and also fundraising for our company. This is Jordan Fried, VP of
Global Business Development, who will be kind of
running through some slides and telling you about
the Hashgraph algorithm, and kind of what we’re doing with Hedera. So over to Jordan, a big
mentor and inspiration of mine. – Thank you. (applauding) – Thank you everyone for being here. Before we kick things
off, I want to bring up some folks from our community. So, let’s give the
folks from Carbon Money, Carbon Money is a, I’ll let
them tell you what they are, but they’re working
building on our platform and we’re super excited to highlight them. – So, we’re two of the team
members from the Carbon team, and we’re working on a
stablecoin on their hashgraph. Kyle’s actually from their
hashgraph team leaders, but we opted to build on Hadera Hashgraph because we believe that two big problems in the cryptospace right
now, the two things in the cryptospace right now,
two things in crypto path are expanding the general (mumbles). We believe that Hashgraph is
the best solution we’ve seen so far in (mumbles) and we’ve kind of got (mumbles) and so Carbon
is kind of doing the three main traces of money, as
being the medium of exchange, a store of value, and so
far, cryptocurrency has really only done two of those things. We’re hoping to kind of be
the first cryptocurrency to hit all three of those
as well as kind of add the fourth trait, programmability
to the definition of money, because we believe especially
as more economies get more complex, that programmability
is going to play a much larger role in value
transfers going forward. And we’re hoping to kind
of be the nominator for the future of value transfer. – If you want to learn
more, you can check out our whitepaper at Carbon.money
and feel free to join our Telegram group. (applauding) – Argon also just announced
that they closed a seed round of funding, they just
raised two million dollars, so congratulations, guys! And I don’t mean to put you on the spot, but Brad, do you want to
come up and say a few words on behalf of Open Crowd? So, Open Crowd is one of
our system integrators, they help do solutions and
they built some stuff out, I think they’re working on a
few Hashgraph projects now. So, Brad can tell you
more about Open Crowd. – So, Open Crowd is a
designing technology, solutions company, so a lot of times
people come to us with their ideas, their whitepaper, or
an enterprise and we help to shape and build their
solutions for them, in a very iterative matter with them. We’ve been working closely
with the Hashgraph team and are very, very excited
about this platform. – Awesome, thanks for being here. If you guys have questions
on Hashgraph, you can talk to Carbon, you can talk to
us, you can also talk to Open Crowd, the developers
have some really unique experience about their
SDK, so definitely go to OpenCrowd.com, check them out,
sorry for the shameless plug. But who here, I want to measure
the level of understanding you have about Hashgraph,
in the room tonight, actually I’ll also give a
shout-out to someone else in the room before we start,
Demetri, Demetri Kofinas, from Hidden Forces podcast. (applauding) He’s one of the people
who really broke the story on Hashgraph back when
no one really showed up to our meetups except us. And Demetri was a big part
of that, so thanks for being here, Demetri, if you
guys have any questions, he’s had, what, three, four,
five hours lead in time, which is intense. Exactly, so I’d consider
Demetri one of the experts on the project as well,
so thanks, Demetri. – What’s the name of the podcast? – HiddenForcespod.com. – [Demetri] Just Google Hidden Forces. – You can also watch it on any
of the United Airlines flight as well, they’re writing me (mumbles). (laughing) But okay, so back to metric,
what’s the understanding of Hashgraph here, so who
here feels like they have a pretty good understanding of
how the Hashgraph consensus algorithm works? Okay, good. Who here has known about the
project for more than three months, all right, cool. So what we’re gonna do is
we’re gonna run through some slides, talk about the
consensus algorithm, but that’s really technical and for
those that don’t want to talk too technical, we’ll
really quickly get to, I’m gonna blow through
these, we’re gonna quickly get to what we’re doing with
this consensus algorithm and why we think it’s gonna
change the entire internet and subsequently the
entire world as we know it. So that’s a big, bold claim,
but we think that Dr. Bern has really made a fundamental
in computer science here and I’m really excited to
share this all with you guys and really dive into detail on
how it’s actually being used. So, first, we can’t talk about Hashgraph before we talk about SWIRLDS. SWIRLDS is the company
that patented the Hashgraph consensus algorithm, SWIRLDS
was created by Dr. Leeman Bern, he’s the brilliant
computer scientist and inventor. He holds I think the fastest
PhD ever from Carnegie Mellon university, I believe you can verify that, two years and nine months. He’s a remarkable individual
that holds many patents personally, (mumbles)
is also very remarkable. More in 20 years in the
deep-tech leadership skills, Manson and Leeman met,
this is an incredible story for those who don’t know it, Manson and Leeman met back
in 1993, working for the senior scientists in the
United States Air Force, doing research on machine learning. So these guys met back 25
years ago and have been working together ever
since, the way they really got to know each other,
got really close was by building what’s now known
as the missile defense simulation program where
we, the United States and our allies simulate
intercontinental ballistic missile attacks with the
system they worked hard at creating, so there’s
a good movie about that called War Games, you
guys can check that out. But that’s Manson Leeman,
really special individuals. They did co-found two
companies, one was acquired by Sybil technologies,
subsequently acquired by Motorola, the other was acquired
by a private equity firm, both in the identity
space, inside company, we call them the (mumbles). Just because they know so
much and are so passionate about identity, I think
this is a really important point forward of self-sovereign identity and what people want to use ledgers for. So, that’s a little
bit about our founders. The technology, and going
into the technology, I realize I also didn’t
introduce myself properly, but yes, I do run Global
Business development for the company, what that
really means, guys, is developer advocacy. So, we build rapport
and trust with companies and help educate them on
what our SDK can do for them and we help theme integrate
them into their technology stacks, so we have team
of developer advocates that’s on the business development team, and that team is building a
suite of self-serving tools and resources like the curriculum platform which I think I can announce
now, that we’ll be releasing in the middle of May where
you can become Hashgraph certified. We made it so even my
grandmother can go get Hashgraph certified, so
really anyone can do it, even the non-technical people
out there, learn how to use the platform. We’re really excited about
that, it’s completely free for anyone to use and for anyone to become what we deem as Hashgraph certified. We also have this huge
developer community and discord, you can jump into that. Previously, what I did
is I started a software company in central Europe
which was a VPN service and I got into this
space when our customers wanted to anonymize
their VPN transactions, VPN is for those that don’t
know, helps you unblock the web, our customers
wanted to by anonymous while using that. Sounds pretty nefarious
and it probably was, and they would pay us in
Bitcoin, and we were one of the early companies to
integrate BitPay as a payment processor and that’s
the story of (mumbles) and then sold this company and then joined this team full time. Back to the technology. The technology, what
Hashgraph is, it’s literally not blockchain. So all together, we’re gonna
make a path to each other, and when we talk about
blockchain, when we talk about what is now today known as
blockchain, we’re gonna call it distributive ledger
technology, right, because it’s really not blockchain. A lot of what you’re hearing in the space, IOTA is not blockchain,
IOTA is a DAG, right, there’s a lot of other
data structures out there, a block is literally a chain of blocks, Hashgraph is literally not that. We are a graph of cryptographic
hashes, it is a simple and elegant algorithm,
it’s mathematically proven. What that means, is we have
a proof of what it means to have fairness and
asynchronous key-fault tolerance and security, the best you
can do in a distributed architecture on a network. It is patented, this is
the elephant in the room, you can ask me as many
questions as you want after the presentation on
this, we do not hide behind this fact, we think it
makes this project better and I’ll talk about why. And nothing we talk about
today is theoretical. Everything is implemented in software. You can go and download this
right now and you can use it, for those that know how to, if
you don’t know how to use it, you can still use it because
you can download the SDK and we have demo apps,
including a game, and for those that are interested, I’ll
show you the game later. So, I think that’s pretty
cool and pretty exciting. We’re gonna talk about categories
of consensus real quick and I’ll just blow through these. There is leader-based systems,
there is Proof-of-Work blockchain, economy-based
and then there is category that we call voting-based systems. These are our terms. When we talk about leader-based
systems, I am referring to PBFT, and Paxos and RAFT,
we can jump into why they’re leader-based and will in a second. Proof-of-Work, everybody
should know PoW, that’s Bitcoin and Ethereum. Economy-based, this is
what the market is trying to move towards, scaling
proposals like Casper. Voting-based, these are
30-year-old algorithms which are really cool. This was the light bulb
that sparked the innovation of Hashgraph consensus algorithm. We’ll do a quick slide on each of these just so you guys know
what we’re talking about and I think all of you will
be sufficient blockchain experts after this and can
go school your friends on the marketplace. So this is kind of exciting. Hyper Ledger Fabric,
they’re IBM’s product, R3s Quorum, this is from the R3 company, EEA, Ethereum Enterprise Alliance, quorum, when we talk about leader-based
consensus algorithms, these are what these systems are using. There’s a leader in the
system, there may be variations in this, there may be a round
robin, where the community comes to consensus on who’s
the leader, but they’re still a leader for a point
in time, maybe it will only be 20 seconds and maybe two
minutes, they’re still a leader, and so long as there’s
a leader in the system, all the members, the
minimum requirement here is all the participants,
all the nodes on the network must know the IP address of the leader. This causes a really big
problem because a disgruntled employee or a hacker or someone
that has access to a node with bad intentions could
easily disclose the IP address of the leader. Anyone an their mother
can go to Digital Ocean and get a bunch of droplets
and create a botnet and DDOS this network and
take this network down. It’s fairly trivial to a
directed denial of service attack today, it’s actually
much less expensive than it used to do. So, send a bunch of data
packets here, take the network down and then the network
will respond by electing a new leader, but of course, you
have to tell every node in the network the leader’s IP
address and this would be an arms race, this would be
a constant fight to keep the network up. This is very inefficient,
this is very vulnerable, but it does better throughput
than proof-of-work blockchain, you’re gonna do Microsoft
Coco, it’s based on this, IBM’s fabric, Hyper Ledger
Fabric, it can do a couple of thousand transactions per second, really cool actually,
really cool for POCs. I think it’s great stuff. Proof-of-work blockchain,
this is what the public network space is really
dominated by in terms of market value and the way
this works, the minimum requirement here is that every
participant in the network needs to receive every transaction. It’s also really inefficient. What we’re actually fighting
for is we’re solving all these complex
mathematical equations to win the right to add the
new block to the chain. Now, a couple of things
happen when you win that right, one, when Kyle wins
the right to add the block to the chain, Kyle gets
to set the total order of transactions in that block
and add it to the chain, do we trust Kyle? He’s a pretty good guy,
I happen to trust Kyle, but many other people in the world won’t, knowing that he’ll put
Jordan’s transactions or Manselina’s transactions
at the top of that block and probably not yours, right? And that’s not good because
we won’t have fair order or total order of transactions. The other thing is that
this is really inefficient in that I may still be
trying to solve the same computation that Kyle has already solved, but Kyle has already won
that right to add his block to the chain, so there’s
an inefficiency here. It’s massively expensive
in terms of the electricity requirements represented
by the infographic up there and it’s also scalable to
an extent, but even Ethereum today is capping out when
enough people are not playing CryptoKitties, you can
get maybe 17 transactions per second on the network. So, limitations, much more
resilient to DDOS attacks, you DDOS one of these
nodes, you will not take the network down, that’s
great, but it’s not fair and it’s not scaling really well which creates problems in the marketplace. So, that’s proof-of-work. We have economy-based
systems, this is our turn, it’s not the market’s turn,
we call these economy-based systems and we do it because
these systems rest on a very important assumption which
we also happen to think is a flawed assumption,
and I’ll talk about why. The assumption is that
all of these nodes will do what’s in his or her best
interest to maximize the amount of money they can earn by
participating in the network, in Casper, as a validating node. But the reason that’s a
really bad assumption is that software or a virus
can easily force or compel a node to do something irrational. The real question we want to
answer, distributed ledger systems, or distributed networks, is can one compromised computer
disrupt consensus on the network? This does not sufficiently answer that. Leeman has done a great
video at UC Berkeley where he talked about the class
of the tax and he goes into a lot more detail on why
this class of economy-based has still many security vulnerabilities, it’s also not asynchronous
Byzantine fault tolerant, we can talk about why, they’ve actually made up a
new word for many of these economy-based systems which
always starts with probabilistic and ends with some connotation
that means that’s it’s really not a good idea. That’s economy-based, I
won’t dwell too much on this because this isn’t even
deployed in the marketplace yet, we can also talk about why we
don’t think this will scale after Q&A, but I want to talk
about voting-based systems. Where if you go back 30 odd
years, Dr. Bear found this whole class of academic
research, it was actually quite of bit of thought
leadership in the academic space on voting-based systems which
fundamentally have the best security possible in a distributed system. The requirement here is that
every node on the network submits a vote, it’s as simple
as that, including the nodes that are offline. The problem with it is that
it has unrealistic bandwidth requirements, no one’s ever
deployed a voting-based system, literally, no
one’s ever deployed it, you’ve never come to
consensus, but it has the best security properties. Theoretically, this is the
way we can have it work if everyone had the best
bandwidth in the world and everyone were always
online and connected, this is something that
you would want to use. So the question became how
do you get the best security in the marketplace without the
impossibility of unrealistic bandwidth requirements
which make this impossible to deploy and that’s where
the breakthrough came, where Dr. Bear back in 2015
realized that by adding two small hashes to every
event or every transaction on the network, those two
transactions are who you last spoke with, the last
transaction you received from this other participant
on the network and the last transaction in your local
copy of the database. Okay, if you have these
two cryptographic hashes, we would know what everyone
else on the network knows, and we have this immutable
audit trail of everyone that’s talked to everyone else
throughout the history of time. Thus, I would not need to
ask Kyle from just joining the network, Kyle, what
are you voting on this day of consensus, is this
true, is this not true, I don’t need to ask that
yes or no question to Kyle, I already know everything Kyle
knows because I know the last digital signatures in his
local copy of the Hashgraph. By adding these two cryptographic hashes, really cool things happen. Number one, there is no
need to submit a vote across the network, so we achieve
the very best bandwidth we believe is possible because
you’re literally only sending two bytes of information, that’s it. So we’re really capping
out in terms of bandwidth, bandwidth was really the bottleneck here, Better bandwidth, the Hashgraph
is gonna go faster, okay? So, I’d start with that. We’re talking about half a
million TPS, transactions per second in a single shard on a network, don’t know of any other
project in this space that can claim that without
some side-chain scaling solution or some ultra sharding proposal. That’s with 3.6 seconds
of consensus latency and yes, we are digitally
verifying our signatures, it wasn’t in the whitepaper,
we’re updating the whitepaper, we did not have the
performance results there, for those that are interested,
with digital signature verification, where you validate
every digital signature. What that literally means is
every time Jordan talks to Kyle or Kyle talks to Brad from Open Crowd or Brad talks to Miles
from Carbon, we memorialize those events. We memorialize those events
and those events need a digital signature, they’re digitally signed. Those need to be settled on
the GPU, that’s what we’re doing, we’re doing 1.18
million of those every second, so that’s as huge. Really, we go back to consensus
being the bottleneck here but still half a million
TPS is gonna do pretty much anything you want it to do at this stage. You get your firewall
resistance, and what you also get is you get fairness. Inside the (mumbles) we have
something called the timestamp, but it’s not your timestamp
because we don’t trust you, we don’t trust Jordan to
submit a fair timestamp, because I’d never lie to you
and tell you that I submitted my transaction before everyone else, right, you have an economic
incentive to do that, but what we have is we
have a median consensus timestamp where it’s when the
median is when most people, the median of what most people
in the community receive that transaction and by working off that, we’re able to enable a whole
new genre of applications like stock markets and
auctions and things where you need to know that total order. What I think is cool as gaming, MMOs, really rely on heavy,
centralized infrastructure today, some of the game companies
have 100 million dollars plus investments in data
centers and that’s a tremendous cost just keeping those things
online, in the peer-to-peer web, you’d be playing
peer-to-peer, there’d be no need for a game company to get
all that infrastructure, that’s really gonna lower the
barrier for entry for people that want to join this
competitive game landscape and make these casual things. So I think that’s pretty cool. This is the summary of the
security we talked about, peer-based, voting-based, economy-based, what else is in the
market, you still want the immutability, we actually do want better, we’ll talk about controlled
immutability in just a minute. We have DDOS resistance, huge, I mean DDOS attacks exists, we cannot
operate businesses or platforms on the
assumption that they don’t, DDOS attacks took Netflix
down, they can take CDNs down, we need to accept
that DDOS attacks exists, it’s really important that
we resist it, and for those, we have a fair order of transactions with fair timestamps. So let’s talk about where we
came from so we know where we’re going for those of you
that were at the launch event, you heard this already,
but we always, at Hashgraph talk about collaboratively
about the ecosystem. And we think a lot of the
other projects in the space, that’s something we can
compete with and that actually added a lot of value to the space. Whoever Satoshi Nakamoto is,
he or she or a collective of people have done the world
a service by that scale, introducing us to the
concept of distributed trust. Before Bitcoin, we really
didn’t know what distributed trust was, at least it wasn’t
deployed at this scale. My favorite example of this
was, I think it was back 2012, there was some kid
who got on college game day, for those that don’t watch
sports, Saturday morning, ESPN, on college game day,
huge poster that reads, Hey, Mom, send Bitcoin and a QR code. He’s waving this thing frantically. Someone on reddit saw,
reddit is the best community on the planet, right,
someone on reddit saw, optimized this image and
this kid gets $32,000 sent to his Bitcoin wallet address. That’s back in 2012, I
hope the kid kept some of that Bitcoin, right,
that’s a lot of Bitcoin. When you look at what
really happened there, that’s a fun example, but
let’s really talk about what happened there. We have people, complete
strangers, perhaps on opposite sides of the globe, maybe
in Dubai, or in China, were watching college game
day and sending a complete stranger money without going
through any intermediaries. No need to get out of
your house, get in a car and go to Western Union or Money Gram. No need to talk to your bank
and pay the wire transfer fee, no need to use PayPal, no need to do any of these
things and still send money. No need to use Wenmo, it was
huge in New York, no need to use any of this and send
money to a complete stranger on the opposite side of the planet. The ramifications of that
are earth-shattering. Sending money to people
without having to give it to the Red Cross, who,
yes, they do a lot of good, but they also take 10 cents
of every dollar donated to them or something like that. But instead of going
through these organizations, we can donate directly to people behind enemy lines who need it. If North Koreans would
give us their QR codes, we could send them Bitcoin
and maybe they could use that to buy food because this
is already happening in Venezuela where people are
making border runs to Columbia to buy stuff. Really good deal, so distributed
trust, we cannot discount that. What happened next is people said, what is this Bitcoin thing? It’s an application on top
of this underlying technology that’s really a ledger, what
else can we do with ledgers? Turns out people are doing
some really cool shit with ledgers. Sweden is trying to move
tittle deeds to any property in Sweden onto a ledger. The republic of Georgia over
here, is doing the same thing, that’s actually kind of
groundbreaking too because for those that have bought or sold
property, it can take 40 to 60 days in some countries, even longer to get ledgers to prove
that you even have the right to sell that house and
no one has a lead on it and anything like that. So moving this on ledgers,
we’ll be able to program a smart contract with a digital token that represents a tittle deed, we can program an atomic
swap on the smart contract to say I’m gonna send
Bitcoin at this address, you’re gonna send your
tittle deed to this address and we’re gonna swap, that’s
gonna change a lot of real estate transactions, that’s
gonna be a multi-trillion dollar industry in long term as well. Lots of other cool
stuff is happening here, intellectual property
rights, stock certificates, guidance, providence of
stuff that we want to track over time, we have regulation
coming sometime in 2020 here in the United States
where pharmaceutical companies are going to
need to attest to every drug or every ingredient
that’s in their products and prove the origin of it. That actually also works in
their favor so they can prevent counterfeiting or black
market pharmaceuticals which represent in some
countries more than 40% of pharmaceutical sales. So really good deal, other
people using these ledgers for other stuff, I just
talked about smart contracts, but I would say that’s
generation three of distributed ledger technology, we
don’t trust each other, you have Bitcoin, I have
a tittle to the property, we can now transact with each other. Before you probably
need a real estate agent or a broker or a middle man of some sort, escrow, you don’t need
that in a smart contract. Today, most people use these
things for ICOs, right? Can’t hate on that, it’s
really disrupting finance, the way people are raising
money, equity fund raising is a pretty cool thing,
but there’s a lot of other really cool applications
for a smart contract and I think we’re just
getting to see those. And then the fourth generation,
we say we’re ushering in the fourth generation and
immediately after we said that, telegram says they’re
now the fifth generation. I say okay, but let’s see
the open network deployed, but that’s neither here or there. The fourth generation, we
believe will be characterized by the fair ordering and fair
matching of transactions. How do we transact with
each other with trillions of dollars actually coming onto
these network, how do we transact fairly with each
other, we need commodities markets that are distributed,
we need stock markets and we need auctions that
are gonna help you sell tittle deeds, all of this
is gonna happen in fourth generation, which is exciting. So just some use case that
we’re already starting to see form because this is possible,
we have people on our ecosystem building markets. One day those markets could
resemble stock markets, like NASDAQ, you can do
micropayments, micropayments is a killer application
and I can jump into a whole bunch of reasons why, but
micropayments enable you to do all sorts of stuff so that
Jimmy Wales, Jimmy Wales is the guy that started
Wikipedia, every six months he’s probably asking for
two or three dollars, right, if we had micropayments
enabled natively in the browser, he could simply
deduct a fraction of a penny and you could pay him to
read a page on Wikipedia and not even know, not even feel that, it’s a hundredth of a
cent, what do you care, but aggregate, over the hundreds
of millions of page views that Wikipedia has, that
actually keeps them in business. So micropayments could disrupt
what we think as a publishing model, that’s just one example,
maybe you don’t like that example, but Jimmy Wales at
least wouldn’t have to ask us for funds. What else did I want to say on this point, micropayments, I’ll be good on that, ’cause I don’t want to
reveal too much on that. Public ledger improvements
with timestamps, we’ve got that here, time-limited
business transactions, you can do that which is great. Identity and session
management, we’ll talk about how we can enable that on our platform, games as we talked about. A lot of this stuff is
actually already built or in development right now, you’re only now hearing
about some really exciting companies like Carbon that are
coming out of the ecosystem and building some really
cool stuff, but some of this was built in 24 hours at the Hackathon, actually Solomon, Solomon,
the guy that won our tech crunch disrupt showed
up, you remember Solomon, he showed up to our San
Francisco meetup we did last Friday and Solomon built
in 24 hours, I thought he was out of his mind,
he was never gonna finish, but he integrated
Hyphenate which is SMS API and create a distributed
crispies or (mumbles) so all of us could be at home
and you could be watching this auction on TV and
you could send an SMS and you could send a bid to this auction and the network comes to
consensus when the bids were received and closes the auction. It was remarkable, he
built that in 24 hours and we’re like, holy shit, that’s so cool. It was great, so I think that’s like, we got to introduce you
to the crispies guys, if anyone knows anyone from Crispies, tell them about that. There’s also collaborative
apps, you can also use Hashgraph to build a better Google docs or Slack or something like that. That’s the technology, the
sexy thing to talk about now and of course, I’d be
remiss not to talk about it is the public ledger space. Those of you that are
familiar enough with Hashgraph know that on March 13th
here in New York city in Times Square, Play Station
Theater we made a really big announcement that we’re
gonna address what we see as problems in the marketplace
that make public ledgers pretty difficult to do today
because there’s tremendous problems, although the market is rallying, so for those of you that
have been around for a while, it’s been a pretty day for all of you. But Hedera is our governance
council and our solution to what we see happening
in the marketplace and why we think you need
to solve these problems I’m gonna talk about
before you release a public network, I also want to point something really important out. For the last three years,
we’ve been primarily focused on building an enterprise company, we focused on building technology, getting enterprise
traction and then going out into the public marketplace,
we think that’s the right way to build a company, instead
of just being hypothetical or releasing ideas in the form
of a whitepaper and raising, this is real tech and
you all can download it. I think that’s an important point. So what are the market
requirements for public network adoption, how are public
networks and let’s be real, we’re gonna be really introspected, I assume all of you are
a part of this blockchain DLT community at large, but
if we really want mainstream adoption if you want
grandma to use it and mom and aunt that barely
knows how to use Facetime, how are we gonna get mainstream
adoption of this technology? We have to solve a lot of problems. First we have to solve
performance, Bitcoin, if everyone on the planet
used Bitcoin today, you’d never be able to
send a transaction across the network, fact. Let’s just take Venezuela, if
Venezuela became the shadow currency at CNBC earlier
this year, it would take you a month to send a transaction
across the network. That’s just Venezuela, every
family can go buy groceries once a month. We must accept as fact that we
need to get better technology in the space, lots of people
are trying to address that, including us. So, you also need security. You’re never gonna get
trillions of dollars of value onto these networks when
it seems like every week we hear about some hack
or some vulnerability or some back door to some
exchange or some code, but more importantly, the security of your own assets. Security of the fundamental
properties of the network, we need deterministic
platforms and there’s no deterministic platforms
in the space today, everything is either
non-deterministic or probabilistic or something that doesn’t
have asynchronous Byzantine fault tolerance security
as we learned 30 years ago, is the best you will ever achieve. So, security, governance
and when I say governance, I want to be really clear here,
I’m talking about the legal and the technical controls
required to keep a stable platform, that’s governance
and of course stability, I’m gonna talk about the past, okay. Open Source communities
are great, we believe the fundamental value
of open source community is the economic incentive,
is if we’re all developers in this room, everyone
in this room contributes their best lines of code and
the whole community benefits, the high tide raises
all ships, it’s great. Open source technology is great, when you combine it with a cryptocurrency, everything gets flipped back on its back, the economic incentive is for
all of us to come together, create Bitcoin nomad, right
here in this room right now, we should do this actually
as an experiment, we’re gonna create Bitcoin nomad, we’re
gonna do an online hackathon and in the morning, we’re
gonna fork the Bitcoin main chain, we can do that,
we can do that tonight, we can fork the Bitcoin main
chain and in the morning, we’ve got Bitcoin nomad and
we’re public on the market place hijack the brand, claim that
we are Satoshi’s vision, what he always wanted or
she always wanted, whatever, that’s what we’re seeing
happening in the marketplace. This is the problem with open
source and cryptocurrency. I fundamentally believe in
the value of cryptocurrency and the ethos of the
problems with big government, we get that, but we also
need to grow up and accept that while anarchists are
great catalyst for change, we need proper governance in this industry if we expect grandma and mom and aunt to come forward and use this technology and that’s what we’re trying to solve. So with this, our solution
is the Hedera council. Which is the Hedera Hashgraph council, it’s a geo-distributed body, that’s geo-distributed
across the entire planet, every continent will be
represented on this council, every major industry vertical
will also be represented on this council. We have representation from FMCG companies and TelCos, some of the
largest financial services organizations, some of the
largest law firms on the planet, a couple of the big four
consultancies, we are completely distributed across the planet
and completely distributed across every industry vertical. This is the council that
instills the trust in the mainstream, the other thing I mentioned about these companies, who are they? They’re best in their respective classes, best in class in terms of
revenue, they’re global giants of their respective
industries and they all have thee blue chip brand names
that if we were playing one of those logo quiz
games that you often see people playing in the
airplane, where they show you cargo logo and you’re
like, you got to guess it, you would all and everyone
in this room is gonna know the names of the companies. We find it highly
unlikely that an Australia food manufacturer would
collude with a European TelCo company, they’ve got
no incentive to do that, this is the purpose of the platform. Now, what is the platform actually doing? In terms of this, they are
enforcing a set of legal and technical controls. What are those? They are votes on when do
we upgrade our wallets? So who makes that decision? Let’s talk about this, is
it a benevolent dictator? Is it Dr. Leeman Bear? Is Dr. Leeman Bear the new
benevolent dictator of the blockchain space? Dr. Bear has made a
breakthrough, we’re upgrading our wallets, well I think
if Dr. Bear were here, he’d be first to admit that
you shouldn’t trust him to make a really great software
updates when he’s 99 years old and we should
probably have a governance body in place. What about continuity? What about the real
process for all of this? The members vote on that,
the members have their experts on the technical
council, they contribute the best developers, they
look at the source code which is open for all to
see, I’ll talk about that in the next line, but they
vote on when do upgrade our software updates, this
is a really cool part about Hashgraph, we all decide
that on this Friday, at 9 p.m. eastern time, we
all upgrade our software. The upgrade gets gossiped out to everybody across the planet, at the
same moment, on the same day, at the exact same moment
in time, we all upgrade our wallets and you prevent
a fork by doing that. Anyone without upgraded
software is not gonna be able to rejoin the network and
earn money by participating in consensus. That’s a really good deal
and no one is doing this in this space, so that’s kind of cool. That’s as technical control, the other legal controls, the
patent is open for you to use, here’s the catch, you cannot
use the patent and deploy your own public network. Okay, we are not hiding
behind the patent, there is, not hiding, there is no
license required to use Heder Hashgraph, Carbon,
did you guys see a license from us? – [Man] No. – Great, happy to hear it. Open Crowd, have we ever
had to give you a license to build something? Great, there is no
license, you just go build, go build, what you build, you
own, it’s your source code. Our platform is completely open
source for review purposes. You can see the source code,
you are never making an API call against a black
box, you will always know what that algorithm is
doing and where it’s sending your API call, you will
even know who’s settling the transactions, all of
this is possible so you don’t even need to talk to us,
the software you develop is yours. That’s kind of cool that
you never have to talk to us ’cause probably you
don’t want to talk to me as I talk a lot. So, that’s also really
exciting, just go build and we’re building the self-service suite so you’ll be able to just
go ahead and do that. So I mentioned this is
a really important point and the other is the
transparency of the code base. It’s completely open review,
we have code bounties now, people in our developer
community just recently found bugs in it, fixed it, the new SDK has this bug, in the
changelog has this log and those guys in the
Discord community found and that’s handled. We will be taking this to Hackathon, there will be many eyeballs on codebase, you can go so far as
to say that if you have a pull request, a developer
has this really great piece of code, they want
to merge it to codebase, great, send it to us,
the governors will decide if that gets merged, not
Leeman, not me, not Kyle, real experts on the
subject matter that know what they’re talking about. So, there’s that. The Hedera public services, what is Hedera, Hedera is
literally a chaotic organization, it is a for-profit company
that is owned by 39, SWIRLDS is just one of 39. Hedera sells a set of services,
okay, that’s the business, the business is we sell services. Here’s the cool part about
this business, this business allows all of you to get
paid by running this business and here is how it
works, it’s kind of cool. You all have an economic
incentive to put a node on the network, Hashgraph
is completely open consensus and you will be able to
throw a node on the network, including a stay-at-home
mom down in Sydney Australia and she will probably be
able to make her car payment or maybe even more,
rent, every single month, I don’t know real estate
prices in Sydney, Australia, but I think the car
payment, that’s pretty safe. You’ll be able to make
some good amount of money, you scale up the number
of GPUs you have and the number of machines, you’ll
be able to make money by gossiping about gossip on Hedera. Here is how you’re
compensated, you’re compensated for help for your node to
be providing this set of services, you are also
compensated by lending your CPU cycles to the network, your
bandwidth, your storage, and that’s what you’re compensated for, your bandwidth, your
storage, your CPU cycles. Now, you’re compensated as
a function of how many coins you have in your wallet. Yes, Hedera is a proof-of-stake
public network and the way we do proof-of-stake is
obviously the more coins you have in your wallet, the more
money you’re gonna make, if you don’t have any
coins in your wallet, you’re probably not
gonna make a lot of money and then also, I’ll talk
about why, because that’s a security property that gives
you (mumbles) in a public network. So, your cryptocurrency, I don’t like to think of
it as a cryptocurrency because I think that
confuses a lot of people, people just want to speculate
and just want to say, cool, let me go buy this new Bitcoin. How about we talk about
micropayments as a service, that you can send someone across the globe a fraction of a penny, you’re
never gonna be able to do that in Bitcoin, with transaction
fees of 20 bucks. So why would I send Kyle a 10th of a cent, when it’s gonna cost
me 20 bucks to send him a 10th of a cent, so we’re
ruling out a whole genre of use cases. There’s a lot of reasons
why we’d want micropayments in the future. Maybe your electricity company,
instead of charging you monthly or charging you
the time you flick on and off your switch,
although that would be really annoying, but just crazy
things that will happen, when your robot vacuum
cleaner wants to talk to the microwave, I don’t know, maybe there’s some micropayment
you need to change. There’s lot of actual
cool use cases besides those silly ones I just
mentioned, but I think that would be really groundbreaking. File storage, we have a
distributed file storage, you’re compensated or you
pay through the buyer, you pay a provided percentage,
that’s how it works. I like to think of it not as a file store, but as a file directory where
what you’re really storing is a cryptographic hash
that recognizes as file that could be stored on a
CDN, content delivery network or somewhere that’s not on a ledger. It could probably get
pretty expensive if you had really big files on here, but
if you want to use it that way, you could. You could also encrypt
everything you put on here and when this gets sent out to the nodes, we all gossip it out, does
Kyle have enough money to pay for the second, great,
we all update our state, we all update the state of the ledger. Cool, so that’s the file store. There’s a lot of groundbreaking
things about this and I’ll tell you the biggest one now, is our revocation service. Has anyone here heard of GDPR? The new identity regime? Great, so you heard of
GDPR, let’s talk about GDPR because many of you didn’t
seem to know what that is, but that’s okay. It’s in Europe so it
doesn’t affect you yet, but it’s a regime that is general
data protection regulation and this is part of the reason
why Zuckerberg is in congress right now, testifying in
front of the house and the senate, what has he done with
all of our personal data. The European Union have
started making laws about everything, right, this
is what you can and cannot do with someone’s data, they
are actually more forward thinking than United States
on this, I think we’re way behind the times. In Europe, you have the
right to be forgotten, in Europe, you can go
to Facebook or Google and say delete everything
you ever knew about me, and that’s kind of cool. If someone publishes
something really bad about you on Google or you want
to see a search result on this, you could probably
get Google to take that search result down and just
have yourself completely forgotten which there is a
lot of reasons why you want to do that. In identity, you need a revocation
service, so I don’t want to scare anyone here, our
cryptocurrency application, people are storing the
local record of that, and have complete immutability. Probably for cryptocurrency
we want this immutable audit trail of every
time anyone’s ever sent money dating back to the
genesis of the network, that’s good, okay. And identity, personal data, we
probably don’t want that. That’s a really bad idea. What if someone stores child
pornography on the network, you probably want to
delete that right away, right, right away. And you want to prove that it’s deleted. We have a system for doing
that, we have this revocation service where what the buyers put there, you’ll be able to
actually revoke that data. Let’s talk about identity too, let’s say a DMV wants to
have a DMV application on top of their Hashgraph,
not saying they’re doing this by the way, but it
would be a pretty good idea. They issue you a credential,
the credential comes from these KYC/AML certificate authority, in this case, the DMV is
the certificate authority and Kyle is belligerently
driving down the road, neglecting people’s lives
and he gets pulled over and we’re probably gonna
revoke his driver’s license or at least freeze it. You’re gonna want to
revoke that credential, someone tries to scan it and
reference it in a ledger, it doesn’t exist, you
shouldn’t be driving, that’s revoked, if he
gets caught driving again, they’ll know if he has
a suspended license. There’s really practical
ways to do things like that, and revoke the credential
and I think that’s really important for identity. So these are the services. This is familiar to all of
you because this we borrowed from the marketplace, the
market has adopted a set of solidity standards where
people are using ERC-20 tokens, where people are
using solidity scripts. I actually got a demo of
this working the other day, it is mind-boggling, it
actually works through a Rust API, which is
just a browser interface where you can copy and
paste a CryptoKitties ERC script and execute it on Hashgraph. No need to worry that
you’re gonna suck 30% of the entire network
utility that’s available or congest the network,
you can use solidity and execute your scripts
and get all the properties of Hashgraph running through
solidity virtual machine here. So that’s an open source code
base, if there are solidity developers in the marketplace
today that know how to code ERC-20 tokens, they can take
those ERC-20s and execute them here, so I think that’s kind of cool and kind of groundbreaking. All of this sits on top
of the Hashgraph SDK and this is on top of the internet TCP/IP and what we’re exposing
is a set of public APIs where you pay much like an API business, you pay to use these services. So you want to send money
to someone, you want to send a token to someone, you
would pay the gas price as it’s called in Ethereum,
you pay the micro-transaction, and here’s a cool thing
about it on Hashgraph, micro-transaction, the
network is as cluster free to use as possible where
you are literally talking about fractions of pennies,
you are paying as the gas price to execute the network. And even if the price of
the native platform token increases by orders of magnitude,
that is still negligible when you’re paying a millionth of a penny or some fee that unless
you were doing millions of TPS, you’re really not gonna feel. So, all of this is really
kind of cool in the future that there probably
will be other services, but this is what we have today. And that really wraps up
Hedera and Hashgraph SWIRLDS. So, I think we should
open it up to questions or I’m happy to shut up.

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5 thoughts on “Hedera Hashgraph – NYC Meetup – April 12, 2018 (Presentation by Jordan Fried)

  1. GG, do you know the URL of Jordans PowerPoint presentation? Is it in github? Can you get it from Jordan and put it on this video URL session? Thanks. Amazing meetup video.

  2. Carbon team, not comfortable in front of an audience, but that's okay. We don't need PR, we need a good tech so I'm all good here. 🙂

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