Heather grabs coffee with Consensys Developer Christian Lundquist and discusses how Christian got involved with the Ethereum blockchain, the projects that excite him the most, and the social impact that his work might have on the world.
Why don’t you start by telling us about yourself and what you’re working on?
My name is Christian Lundquist, I currently work at Consensys and we are building decentralized applications on the Ethereum platform. Ethereum is a type of application that uses a blockchain in the backend. It can be made completely decentralized and independent of a central server.
Specifically, the platform I work on is Ethereum. But I am working on a few different projects. One project is called Balance, it’s a triple entry accounting system. A more foundational project is U-Port, which is our digital identity system.
In the case of the accounting system, we are using a concept called triple entry accounting. What this means is that instead of each counterpart having their own book, you have a “smart contract” that mediates the transaction. After the transaction is done, the “smart contract” becomes a digital receipt that both parties can reference can from their account. So it means that their accounting ledgers are somehow connected. They each have references to the same contract.
For the identity system: today, the identity systems are centralized. One example is Facebook. You can have your Facebook profile, but it is Facebook that maintains control of the architecture and your data, and you are acting through them. Just like the accounting system we are building, it’s the user instead who owns their own individual identity. Both use the Ethereum blockchain, which is a shared resource that anyone can access. The user can securely create their identity on the blockchain. Then, in a decentralized fashion, you can have other people attest to the data that you have attached to your identity.
Most of my prior experience came from working at Bloomberg as a quant developer. But even before then, I did pure mathematical research, which I eventually felt was too specialized of a field. Back then, a friend of mine started doing mathematical finance. That fascinated me because it was very rigorous mathematics but it also had very concrete applications: pricing financial instruments. From there, I started working at Bloomberg, but at the same time I developed a growing interest in the concept of money and the nature of money — this was an ongoing thought-process.
As I was doing all of this “thinking,” I came across Bitcoin. At first I was very skeptical. I saw it as some kind of gaming money. But then I learned that it wasn’t being used so much in games, but in black-markets. This was very early on. So I became fascinated in the fact that people were trusting this to promote and conduct business. Then I read the famous Bitcoin White Paper and it struck me:this is a new thing that now exists in the world while simultaneously not existing in the world. I became obsessed with the possibilities. I began, in my spare time, working on some open-source projects. I even contributed to one of the projects that Vitalik Buterin was doing. And I heard about Ethereum through that channel.
Which project did you contribute to?
Its called Py Bitcoin tools. It’s a library of Bitcoin functionality written in Python. This was my way of learning the system and I used it to build my own wallet.
This was around 2013, roughly. This was also at the beginning of Ethereum. Vitalik was still working on maintaining his Bitcoin library. I noticed how brilliant Vitalik is during these interactions with him, so I was very excited about Ethereum. It was just before they had their crowd-sale when I met Joe Lubin. He invited me to their office. I told him that I was excited about Ethereum. That conversation led me to leave Bloomberg to join Consensys.
So he enticed you away from Bloomberg?
I kind of talked myself into it. Working at Bloomberg was fun and the projects were nice, but Ethereum was something I was thinking about and playing with in my free-time. It was natural to go into it full-time.
Do you see any similarities between the Bloomberg service and aspects of Ethereum? I saw the dashboard (genesis) and it looks like the Bloomberg dashboard, but much better.
Bloomberg, of course, dates back to the 1980s and the design of the terminal is very conservative. They have customers who have used it since the 80s and are used to its workflows and that limits what they can do design-wise. I think that the UI there is mostly designed by engineers.
But there are some similarities?
At this stage in Ethereum, it’s very much a developer or engineer focused product, too.
Yes. Definitely. That’s where we need to go. At Consensys we have a really great team of designers. That’s really an essential part of the experience. That’s something that both Bitcoin and Ethereum struggle with, since they are so new. I definitely think we need to solve the user experience challenges. And that means building stuff, not just for developers, but for a wider market.
Are there any other challenges that you see to getting widespread adoption?
Definitely. One analogy that I use is that we are trying to market email for people who don’t have computers. You can talk about the value proposition of email:you can transmit between computers, etc., but its a hurdle to understand if you don’t have or use a computer. You have to go buy a computer and install the email; I have to go buy a computer and install it. It’s much easier to just write a handwritten note and put it in the existing mail infrastructure.
The analogy for us is the wallet. And we have a new problem to communicate around the private keys that you use to sign and confirm transactions on the blockchain.
Many people are talking about the Private Key challenges.
It’s definitely one of the big challenges. This kind of key-management has usually been the realm of very specialized people within IT departments. If we are now moving to the blockchain, then everyone will have to hold “private keys” and manage them themselves. That’s going to be one of the most challenging UX aspects of Ethereum. But, it is a solvable challenge.
The way I see it: it’s not exactly all or nothing. Theres probably going to be services that manage keys for people. So I manage my own keys but I have a backup service where I can go reset my key. With Ethereum Smart Contracts, you can create policies for who can reset the keys, etc. So I foresee a future where people mostly hold their own keys. And this can be quite easy. You can have this on your phone, and access via a fingerprint reader, but then as a backup you might have a company that stores the key for you, too. Or, even more secure, you can have two companies who both have one key each and you need both of those keys to recover a lost key … the point is: systems will evolve that will deal with this. But, right now, the current state of Ethereum is developer focused. We do a lot of end-user focused work, such as making it easy to have a wallet in your web browser so you don’t have to download specialized software, etc. So that’s also a way forward.
Another hurdle, on top of managing Private Keys, is that you need to purchase something called”Ether” to use the system..
Yes. And you need to purchase some Ether. That’s another hurdle.
We need products that are enticing enough for people to install the wallet and buy some Ether in order to access. But, just as when everyone got computers and connected to the internet, revolutionizing the world, once we have a critical mass of people who have an Ethereum client and a wallet and a little bit of Ether, then things will happen that we can’t even imagine now.
I think the digital identity is what I’m most excited about right now. It allows you to map or bootstrap natural interactions onto the blockchain. For instance, you can have Smart Contracts on the blockchain be triggered by certain human actions. So if you have some specialist profession, like a doctor, they can maybe sign a smart death certificate, and that might trigger something like a smart last will and testament, that will automatically disperse funds to people. Maybe that’s a morbid example
It does make one think, say you are 20 years old and you make a will, does it exist in that form forever?
That is a good question too. How long will these things last? It’s of course hard to know at this stage.
Are the files on the blockchain stored in perpetuity?
Yes. It depends. The logic is stored on the blockchain and that data has to exist everywhere that miners do computation. So as long as there are miners, the data is stored. But, it’s hard to say how 50 years in the future these things will work. There will have to be upgrade-paths as we move from one version to the next to take these smart contracts and port them over. That’s a research project in and of itself.
It makes me think of the internet archive. Will there be an archive for the blockchain? Would that be decentralized, too?
I think that’s where this other technology, IPFS, comes to help. [IPFS stands for Interplanetary File System]. IPFS replaces the current model of tying a piece of content to a specific server as it is now. For instance, when you go on the internet now and type Wikipedia.com and go to a specific article, you are telling your computer: go to this specific machine, located in New York, and retrieve this article on blockchain or whatever. When this machine in New York gets unplugged, you can’t access this content anymore. So what IPFS does, instead of saying, I want to access this machine, you say, I want to access this specific article that has this specific hash/fingerprint. You turn it around and say: instead of looking for a specific location, I am looking for a specific content. This content is distributed across the entire network, cryptographically and you can double-check against this hash to confirm you have the right content. This can dramatically help with the problem of dead links, etc.
Going back to the dramatic effects of Ethereum, what it actually is, is an evolution of the internet. The internet let everyone be their own broadcaster, which is huge and disruptive. No one in the 80s thought that would happen. Information itself became digitized. What blockchain has allowed is for things like money and value transfer to also be digitized in the same way. That was the Bitcoin paradigm. Ethereum goes even further, where you have contracts, parts of law, accounting, this can also be digitized in the same way. This allows much greater human interaction. The internet made the world smaller and blockchain makes it even smaller. You can have direct governance & value flow between parties across the world. You can have a highly distributed organization that connects online without a middleman.
Regulation goes very slowly. For instance, you have FCC regulations that govern information broadcasters and news broadcasters. The internet turned that upside down because anyone can be their own broadcaster. Right now we have a lot of regulation around money transmission, but Bitcoin allows anyone to transmit money. I think that regulation is going to have to try to catch up and adapt and I think that regulators are aware of this. Regulations were created in a certain landscape and now that landscape is shifting.
In the further evolution of Ethereum, what do you see as the next step?
There are some obvious things that need to happen: Scalability is the big one. Now we have a system where all of the nodes in the network have to process everything in parallel and they have to store the whole blockchain. Its fine, now. It’s working and doing everything its supposed to. But if many many people start to use it, it’s going to grow in size and the amount of computation is going to be too much. Ethereum 2.0 willhave scalable architecture, potentially not every node will have to store everything or compute everything in order to spread the data out while still being secure.
The other thing is shifting the consensus algorithm that operates across the network and confirms the data within the network. Right now it uses, “proof of work.” This algorithm spends a lot of computation power in order to secure transactions. This is very wasteful and will become more wasteful as time goes on. We want to switch to a “proof of stake” algorithm. This works by having a group of validators validate a block and put up money as collateral against fraud. Basically, they have a security bond denominated in Ether that backs the transaction. If they misbehave, say saying that two blocks are valid at the same time, then they can lose their security bond and other people can monitor and police the blockchain. So we envision an economic security system where the validators are economically incentivized to correctly validate blocks. This is similar to the economic incentive that has promoted the network of miners that currently run the blockchain.
Very interesting. Thank you for your time.