Pontem Community Livestream Aug 19, 2022 Recap

This week we’re going to talk about Aptos, where our home is. We want to make sure that we’re providing the best user experience to our users and that our applications are fairly simple. We have a wallet and we have liquidswap.com where you’re able to trade any two assets on a simple bonding curve. The real innovation here is honestly Aptos. This idea of a high throughput blockchain that can essentially manage the bandwidth of millions, if not billions, of people is very promising.

The Early Beginnings of Blockchain

Especially with bitcoin starting in 2008, it’s kind of crazy that we’re still not at the point of having high-throughput chains. After bitcoin came Ethereum, which was definitely a sideways leap in innovation as we are now able to have a swiss army knife of applications. You can really only do about 10-15 different things on bitcoin. But a platform for applications, the idea of a world computer with one state running distributed across the entire world, is really powerful.

We know that it’s possible now. We’ve proven it with Ethereum. You’re able to run any application really. You can do lend/borrow, swaps, and even more complex applications like potentially a decentralized streaming Netflix. But then you have to look at the logistics of hosting something like that on the blockchain.

Netflix has millions of users who all use the platform at the same time. What does it look like when 20 million people are trying to watch the premiere of a really popular show at the same time? Ethereum can’t handle that. Would you be willing to pay $40 to $50 in gas fees just to watch one episode of a popular show? Probably not.

That’s where these scaling solutions come into play, layer-2 side chains. But then you start to get away from the principles of why we’re even here. Decentralization, security, and trust (or trustlessness really, as you don’t need to rely on any other third party) are the reason for blockchain, and once you start to go into these side chains, these qualities start to become a little bit more opaque. These side chains need their own set of validators, they need to be bootstrapped and incentivized independently of Ethereum.

Scaling Issues

That’s why this idea of a layer-2 that essentially checkpoints security onto the layer-1 is very powerful. And this is Vitalik’s [Buterin] vision to scale onto layer-2s. It’s also his vision that you could potentially go into layer-3’s. You can go up to infinity with the number of layers and abstractions, and you can create this multi-dimensional hypercube of recursive layers that can even be graphed out efficiently. It really and truly is just paradigm shifting innovation. That’s what Ethereum created in 2014.

We’re coming up on ten years now and we’re still somewhat getting there. Ethereum has proved that yes, it works, but it’s having scaling issues. It’s not just magic. It’s servers running on computers all over the world trying to do really complex computations. Ethereum, unfortunately, is having issues with scalability and because of that, people are looking for other places to go. You know that the demand is there. There’s definitely millions, potentially billions, of people that are aware of Ethereum and bitcoin and that these cryptocurrencies exist, and they’re curious.

We were all probably there at some point, and now we need to figure out how we get this next wave of people on board. They’re likely put off by implosions like Terra or 3 Arrows Capital, but those things were broken and they were not transparent.

Terra, in a way, is similar to bitcoin. It was founded on the belief that this thing has value, but at least bitcoin has value in maintaining an instant settlement layer for money and a finite supply digital asset. It can’t be printed to infinity like Terra was. All it’s doing is trying to be a standard protocol layer for value that's becoming the backbone and store of value of this giant economy that’s trillions of dollars, but has the potential to be hundreds of trillions of dollars - if not quadrillions.

The Importance of Value

This store of value that has a finite supply only exists on the internet, in the metaverse, in our shared collective consciousness that we plug into online every day. Not through chips in our brains, not yet at least, but through our eyes, ears and fingers. We’re in this metaverse everyday and it’s real to us. For people to deny that is just self-delusion. We’re already in the matrix, we might BE the matrix. This all might be a stimulation that’s just recursively happening but there is real value in a finite supply thing!

Gold has been gold for thousands of years, if not longer, because we understand that something is valuable when no one else can make more of it, or no one else can find it on the ground because it’s scarce. This concept of money is very abstract because it really is just intangible. We all have value in ourselves, we all have output. We work every day and we get paid for that value. We get paid in money, which is then put back into businesses to continue creating more value.        

But what is value? What is money? It’s just the output of our work, our collective organization of doing things. Someone built Discord, someone built my phone, someone built my house. And how was this all organized? Through money. Money is a core primitive of the social fabric between humans. We have to figure out a way to evolve that to the digital age.

Think of how dated money is. We’re still literally passing around pieces of paper while at the same time, we’re connecting through the metaverse into each other’s heads through computers and phones. That is outdated. The reason it’s called the wire is because they literally have to send it via a telephone wire or internet software that still takes 3 days to settle because you need to make sure that spreadsheets, different banks and third parties are in sync. Then there’s different time zones and people only work 9-5. So that’s why it takes potentially 3 days to send money from A to B.

How the Internet Changed Technology

The internet was a paradigm shift in technology. It really wasn’t that long ago if you think about it. It started in the 50s, and then in the 70s it really started developing and started to get adopted. So the fact that it’s been about 10 years since bitcoin was created and it’s only now starting to get adopted makes sense. I see Web 3, bitcoin, Ethereum, and all these money infrastructures as simply an evolution of the internet. This is why they call it Web3, you’re adding in a native value transfer protocol onto the internet.

Previously, if I wanted to send you money, I had to maybe send you some cash in the mail. Put it in an envelope and hope that someone doesn’t figure out that it’s cash and steals it. And then you have to think about things like what is the cash from my country worth in cash from your country? There is no exchange. So then you need to involve a middleman in that exchange who takes a huge fee.

That’s when we started to put credit cards online and people were very skeptical about that working. But unfortunately, that still locks out most of the world. Let’s say someone creates value, maybe an image or a website, in Southeast Asia and they want to be compensated for it. There’s still no easy way for them to do that without there being a huge amount of value extracted in that journey. And that person is just as well connected to me as anybody else, so it doesn’t make sense for that money layer to still not be native to the medium. The medium here being the internet.

How Bitcoin Changed the Internet

Satoshi, through a very ingenious, beautiful, and elegant design that was relatively simple, was able to convince people to come to consensus on one spreadsheet that shows that Alice owns one coin, Bob owns 20, Satoshi owns 37. Now we can all agree that that’s the state of things. How do we prevent spam? We allow people to pay for transaction fees, and then you need to incentivize the miners, which are the people that maintain the safety of the network. Then you convert electricity into security, which is pretty crazy.  

The reason that bitcoin is safe, you know it can’t experience a 51% attack, is because you literally need so much electricity that it’s nearly impossible to get. You’re converting electricity into security. Satoshi figured out that this was a way to maintain this very fine balance between the adversarial parties that are trying to maintain this spreadsheet in order to track value, and the system which needs the security of energy and electricity in order to stay alive.

The Evolution of Blockchain

Then it kind of all evolved from there. Vitalik was like, “oh this is cool. We can build logic on top of this so we can create smart contracts, software that executes itself, and it’s immutable.” The reason it’s called a contract is because you can’t change it. Code is law in a way. It may not be under your jurisdiction but on the blockchain, in this like cross-jurisdiction, frictionless, borderless place - the metaverse - code is law.

If something happens, it happens. For example, if someone steals or hacks a contract, they technically went through the right way. They figured out how to get it out in a way that was intended in the contract. So technically, they didn’t break the code contract. They might have broken local laws for stealing money. That’s why it’s called a smart contract. It’s no different than any other software.          

If you’re familiar with Solidity or Move, it looks just like a javascript or typescript-like language. So you can very easily create websites, the back end to websites with java, and you can create smart contracts very intuitively. If you’ve never done it before, it’s actually really accessible. You’re not going to have to be a very skilled developer. I would just recommend going through some of the Ethereum tutorials like the zombies or crypto kitties ones just to understand how powerful yet simple this stuff is, and what it means to actually plug into a native money protocol on the internet. That’s super powerful and paradigm shifting.    

The Evolution of the Internet

It’s just an evolution of the internet right now. I don’t even know if the internet is even complete. I think we still need AI to plug in. Maybe that’s also part of Web3. We can search for and find anything right at our fingertips. We’re getting recommendations on every website so maybe AI is already there. But pretty soon you’re just going to be able to say, “hey this is exactly what I’m looking for, or this is what I want to do,” And it’ll be executed.

Maybe you want to send money to your cousin on the other side of the world, you just speak that into your computer and it’ll do it. How does it do it? AI and algorithms that are optimized to listen to your voice to convert that into logic to then implement that on machines or algorithms that then send the money.  

Potentially we could have some self-recursive ones that help optimize this process. For example, it knows that you do this every Monday. So when you wake up on Monday, it asks if you still want to do this and you can say yes, and then nothing more. But that’s Web 3: AI plus crypto. Crypto kind of enables it because now you can allow value transfer between algorithms. This wasn’t possible before because we didn’t have a native way for algorithms to collaborate like humans do via money.

The last piece is IOT devices. Web 3 is crypto, AI, and also devices. We’re all on devices right now, whether it be your phone, your computer, your watch, your glasses, even your fridge. We’re all connected. More and more of the world is coming online.

There are probably more phones in the world than there’s humans, and we can literally give a phone to every human and connect them to this metaverse. That plugs the humans into the AI and machines that are self-optimizing into the native internet layer. Then you start to have the singularity of humans and machines blending.  

Will Aliens and Robots Take Over?

This is kind of crazy to think about, aliens and robots taking over our brains, but this is literally what’s happening. Look at what Elon [Musk] is doing. He’s trying to make us an interplanetary species, but he’s also trying to merge human brain interfaces to computers. Neuralink is a real thing. Pulled from the website: “Developing ultra high bandwidth brain-machine interfaces to connect humans and computers.”

So it’s like “yes, we ARE putting chips in your brain, it’s happening.” Just like you put chips in your hands, pretty soon you’re going to be comfortable putting them into your brain. Honestly you probably don’t want Apple or Google or any of those companies doing it. I don’t even know if you want Neuralink doing it. You want to own your own privacy and data. You don’t need to upload your thoughts to Google so they can create the singularity with their chat bots that already ingest the whole internet.

But this is where we’re headed. Some people might not believe in evolution despite the clear evidence, but we were monkeys not too long ago. Thousands of years ago we were monkeys, and the fact that we’re now humans is pretty crazy. There’s several theories on how we got here.

There’s the stone age theory, which is personally my favorite one. I think it makes the most sense. We’ve had psychedelic mushrooms, psilocybin, as well as DMT receptors for millions of years. Over time, these psychedelics might have mutated our brains to increase our cognitive function for communication, abstract thoughts and ideas, and helped us evolve into the humans that we are today.

And now we’ve created, and are still creating, tools that help us communicate and collaborate with each other. They allow us to blend with these machines and these tools start to think for themselves because they’re optimizing with single goals in mind, similar to how an animal would. We’re creating them, and now we’re implanting them into our brains.      

I think that the next evolution of humans as we evolve as a species into something different is likely going to be a very humanoid form. This idea of aliens being little gray men, it might just be that we figure out how to make robots and then start sending them to other places and we put them into shapes that look more like the native species. It’s probably just machines though.

So anyways, that’s how we get to being aliens and robots and blending with machines, but how do we get here to Aptos, which is the topic of this conversation. Hopefully this podcast is just as fun as it is informational, and hopefully we bring on some guests soon to make this more fun and interesting.

How Did We Get to the Creation of Aptos?

But how did we get here? We’re at the forefront of blending humans and machines. Ethereum was not able to scale to the point of this singularity. If we’re running millions or billions of transactions of value per second between all these machines and humans, 14 transactions per second just doesn’t work. Blockchain technology is not too dissimilar from cloud computing, you’re just running execution and storage on a shared state. It’s one state maintained by various servers and that’s essentially your cloud.

We’re just building blockchain clouds that create one world computer, one state. It’s genius! But it doesn’t really work yet. We’re migrating to proof-of-stake so that you don’t need as much electricity. I’m not the biggest fan of proof-of-stake personally, but it seems to have worked in some experiments. We haven’t really tested it in a real environment of value, which is also why Ethereum’s moving very slowly.          

I think proof-of-work is honestly the safest thing. I think generally we should not move away from the proof-of-work algorithm that bitcoin created as it’s been tested and proven trustworthy. People argue that it’s bad for the environment, but it really isn't. You’re able to transmit the value of the electricity efficiently from anywhere in the world. So if you have excess output of hydroelectric, solar, wind, or whatever form of electricity, you can convert it into bitcoin and then use that bitcoin to buy whatever you want.        

The Craziest Idea Ever: Mine the Sun

This is a crazy idea, but I think it’s totally possible: We can create a Dyson-sphere. How do you mine the sun? People have been asking this question. It’s how we evolve as a society. You can mine the sun with bitcoin. Just create giant solar panels and start wrapping them around the sun and putting bitcoin miners behind those satellites, and then send the bitcoin value back to earth. You create this giant space station that’s just mining the sun for bitcoin. It’s literally generating security and real-world value. There’s no CO2 emissions into the atmosphere, you’re just mining solar energy.

Yes it’ll be expensive to take people up there and fix the miners. You could set something up like how we have an international space station and just literally mine the sun for bitcoin. That’s what we need to do in order to solve the energy crisis. Mine the sun for bitcoin and then convert all of that value and money into subsidized renewable energy back home. You could even set up more solar panels at home, but it’s not effective because it’s subsidized by the bitcoin miners. You wouldn't have to worry about proof-of-stake, since there’s nothing at stake where there could be death spirals and people lose faith in your coin.  

Creating a High-Throughput Blockchain

But circling back to Aptos, we’re evolving. Proof-of-stake, high-throughput chains, and parallel transactions are all part of that evolution. These are, again, just cloud servers. We can make transactions parallel, horizontally scaling them through server infrastructure. You run cloud servers across several nodes, which is the same thing we’re doing here.    

We’re making transactions, and the storage of them, parallel. We’re creating more efficient cloud computing servers because we already did that. AWS, Google Cloud, all these systems exist. A lot of these giant companies like Meta have their own internal systems that are running and need to be coordinated and in sync. So this technology is not entirely new, and now we’re just upgrading it and applying it to blockchain.    

Ethereum grew a little bit too quickly before it merged into high throughput. As we’re seeing with Ethereum 2.0, it’s not that easy to upgrade it. So a highly upgradeable chain that is still immutable and uncensorable that can now scale to thousands of transactions per second is necessary.  

To be honest, I’m not entirely sure that 100,000 transactions per second will scale, which is why we also need to distribute bandwidth across several layer-1s and Ethereum layer-2s. This will allow people the choice of where they want to checkpoint safety, but also whether they want to trade off between price and decentralization or safety.

This is why I think you need an omni chain app, which is our long term vision. You need to distribute the bandwidth of the billions of users that will be coming to your app. If you have a billion users trying to send a transaction at the exact same time, that’s going to be way more than 100,000 transactions per second, and it’s going to drag gas fees up. So those same issues that are impacting Ethereum at 14 transactions per second will also impact Aptos or any other high-throughput chain at thousands or hundreds of thousands per second.

You need to create scalability layers, but you also need to distribute the trust across the L1s. I think you need a state connected through interchain protocols like layer-0 to enable this omni-chain future that’s multi-cloud across the safest L1 infrastructures. I think that’s what the future is going to look like. I am relatively bullish that it is going to be multi-chain or omni-chain, especially because we haven’t reached scalability yet.  

Aptos, so far, has proven to be the most likely to work. This is obviously on paper because it still needs to launch though. But this is awesome because if we do reach thousands of transactions per second at low fees, that’s going to enable so many users to come on board.  

If you're buying an NFT that is $5 to $10, you’re not going to pay $14 or $15 in transaction fees. It just doesn’t make sense. It limits the velocity and the value of these things as they now have to be worth a lot in order to just pay the transaction fees.    

Aptos is coming out very soon, likely within the next month or two. We can all see their progress live on AIT, the Aptos Incentivized Testnet. They just finished AIT-2 and are now going into 3. AIT registration is open until August 25. Go register and help stress test the system! It looks like mainnet launch is going to be in autumn as AIT-3 concludes September 9, and they’re going to continue testing on AIT-4 in the winter.

You’re really early on. You’re basically at the grassroots of potentially something huge. We’re just innovating on this cloud infrastructure and we’re building applications to enable billions of users to be able to access this new layer of the internet. Which is value transfer, coordination between machines and humans, and which will enable the singularity. We’re not going to leave anyone out. If the robots and the aliens are taking over, we’re bringing everybody along with us. You can choose to stay out of it but you’ll at least have the choice to join the robots.

Thank you for joining this conversation and we’ll be back next Friday. Join us on our livestreams where we’ll continue to talk more about Pontem Wallet as there are more updates: Discord, Twitter or YouTube.