Hashing It Out
Hashing It Out

Episode 32 · 3 years ago

Hashing It Out #32: Grid+ - Alex Miller & Karl Kreder

ABOUT THIS EPISODE

Grid+ is one of the most legitimate and exciting products utilizing blockchain in the space, so we're very excited to present Alex Miller (CTO) and Karl Kreder (VP Hardware) on our program. We discuss their line of blockchain appliances, how they're built, their design philosophies, and the challenges in building hardware for blockchains. We get to hear some of their thoughts on the future of blockchain and consensus protocols, and where they see the world moving into the future as decentralization becomes and adopted norm.

Entering work. Welcome to hashing it out, a podcast where we talked to the tech innovators behind blocked in infrastructure and decentralized networks. We dive into the weeds to get at why and how people build this technology the problems they face along the way. Come listen and learn from the best in the business so you can join their ranks. All Right, episode thirty two of Hashing it out coming at you, as always, on Dr Corey Petty, with my trustee cohost, Callin Cuche. Say Hello Everyone. Hello everyone. All right, we'll play. Today our episode is with grid plus. I Have Carl and Alex with us to join us to discuss all things good plus and crypto on a technical side, what problems exists, etc. I want you say hello give everybody kind of a quick introduction as to, as always, where you came from, why you're in the space and what problems are trying to solve. Hey, this is Alex. so I got really interested round two thousand and fifteen. I've been introduced actually by Carl before that, but I read upon a Theorem as it was sort of launching and I got interested in what that was sort of bringing to the space. I was working at a Fintech company and was working with a traditional payment processor and I was very frustrated with it. It was really difficult and expensive and I thought that this could solve a lot of problems in that space. So I kind of started developing never look back. Join Consensus. was working there for a while and then we spun out into good plus, where I am now. Yeah, so this is Carl. I got interested in Crypto back in the two thousand and twelve time for him. I was in graduate school at the time, working on a doctorate and material science. Number of times here in graduate school I was thinking to myself maybe I should just quit and could do crypto full time. But like two thousand and thirteen, two hundred and fourteen, it was pretty tough to find employment in the space. So, you know, as fate would have it, I introduced Alex during graduate school to Cryptos. He ended up getting a job at consensus eventually after he graduated, and then he was working on some energy projects and I had some, you know, experience and next prochiase in the area. So I ended up getting a job working a consensus and then eventually we came up with the idea of good plus and we spun as company. So now we're or group plus and group plus. Quick introduction there, I guess, is the world's first blockchain based electric utility and our customers will eventually be able to buy, sell and settle their energy and real time using blockchain. So a lot of the problems were working on is how to actually use blockchain for very practical application, but for an application where you're actually having to interact with the average sort of lady person. So we're building a set of hardware and software interfaces that abstract kind of crypto out and the security associated with crypto such that the average person can kind of interact with it easily and seamlessly without not really needing to know kind of what's going on under the hood. So that is what I would call a very difficult but necessary thing to do in this space. And that is a ridiculous smug as you just put up the Junicorn Mug with rainbows and such on them, very proper for the space. But like my and my experience so far and how I've kind of thought about this, is that like we can build all these school technology in the space, but it's so drastically different, because people are responsible for maintaining these private keys and passwords and things and, as we've seen, at least in the security field, everyone is really shitty at handling passwords, especially when they're really long and are associated with money, and a part of what you're trying to do is abstract that away, like you just said. How do you do that so that people can have all of the benefits of handling their own wealth and assets, digital assets, but also like...

...not force them to be incredibly educated to understand all the cryptography and whatnot? Yeah, so, you know, I would a hundred percent agree with you in terms of, you know, the difficulty associated with this and and sort of the average understanding of security right by the average person and kind of how they interact with it and and how that would be dramatically inadequate for dealing with any form of digital money. The interesting thing that we've kind of come to is that what it really comes down to, right, is storing a secret in physical space, as we see it, and there's an example of how that's actually done well for the average person currently in that's payment cards, right. So when you look at payment cards and you compare those to blockchain sort of how they work, you know, chip based payment cards, and how a blockchain works. It's very, very, very much analogous, right. I mean they're both, you know, private keys on the cards that makes signature when you put them in a terminal to sign a transaction. That get then gets broadcast to network. In one case it's, you know, say the beast or Master Card Network, and another case it is, you know, it's a blockchain, right. So the solution that we're developing is is actually called the lattice one from the hardware standpoint, and it's kind of like your sort of Crypto Bank, right. It looks a lot like kind of like a point of sale terminal, but it's one that you would have and own at home. So it has a native account on it. It has a secure interface so that you can interact kind of with the account that's in the device. The device itself, you know, does a lot, you know, and we can get into it in terms of how though the hardware actual with the security model, but but you have the secure device and you're able to interact with it. And then we also have the cards, which you can then use to create like many accounts. So instead of just having one account on one device that you know you could lose or break. You can back those accounts up on on pin chip cards. You can, you know, do like a too multisig. You can do hierarchical multisakes, so you do like a one card backed up by three cards sort of thing. But it all interacts kind of with that lattice. And then the lattice is cool because it allows you to then create permissions for different types of payments based off like who's requesting it. So you can pair it with a device or a service. So a device would be like an APP. So we have a what we are mobile pay up, and that pairs up with the lattice and then when you make a request from the mobile pay up, it has to pass a permission which is enforced on the lattice. So you could say your permission is, you know, two hundred per day to to any you know, paye and as long as that request passes, the lattice will then sign and some on that transaction back to your mobile pay up. So the mobile pay up itself isn't like handling keys, because it's not a good environment for handling cryptographic, you know, money. Signing keys. All of those are in the lattice and then the lattice actually does the signing. In terms of a service, what it looks like from a point point of view good plus is you could pair with your service provider good plus. Your lattice would sit there and when groot plus makes a request for payment again you'd have a permission that says good plus can can charge me a hundred dollars worth of energy per month, right, and as long as that request is under your permission, the lattic fill. Then silence on the money back to your plus. So it also creates sort of this topology of being able to do permission payments but also automatic payments, so you can kind of deal with bills from service providers kind of how you deal with them now, where you just set up your rise and account, you put it on a credit card and then just automatically pays it every month. That's the resolution of that. I'm kind of curious because one of the like the I think, for the interesting technological benefits of using crypto, crypto currency, is the idea streaming payments. So could you could do you have permissions resolution where you can say, like you could charge this amount of sense or this amount of crypto per minute or per second or something like that. Yeah, so, so we allow you to set up many permissions for many different time periods and they're sort of aggregated together. So I could say on my, you know, mobile pay APP, I could add two hundred dollars per day or thousand dollars per month. You could take that down to second level permissions. Obviously the issue with doing that is is the fees on the network, which you can get around if you do a payment channel. And there's some other interesting ways to do it that we haven't really talked about public but there's there's other ways to go about it as...

...well. One thing I'd like to add is when, you know, you talk about the fees kind of adding up if you're doing micropayments. We've designed this permission and signing system. So if you think about the grid plus Lattice, what we'd like it to be is an out of the box just just like storage facility for all of your secrets and sort of a stateless signer. So it doesn't it itself by default doesn't have a concept of like what the blockchain state is, and that's because we want it to be blockchain and really signature agnostic. So if you look at something like an emerging standard like lightning, right, so that's a that's a different, you know, transaction Schema, then you would have, with normal bitcoin, definitely different than you would have with ether, right. So we have set this up to sort of sign against a like a predetermined set of Schema. So one would be an ether transfer and in that case you would have like an etherium transaction, with the data field being blank. You can do an arc twenty transfer, which would have sort of a preconfigured, you know, data hex field that would facilitate the transfer of bit HEARC twenty token. And then you have something similar for bitcoin. And you know, in the future we could add lightning. If there is another sort of plement channel network and protocol that emerged and was gaining market share, we can easily add that. So what we've done is we want this to be extremely abstractable and we have an SDK that pairs with the device that is available, although we can't use it because haven't release the device yet. But what that I'll do is it'll basically, when you're defining the permission, you say basically what type it is and that that that relates the Schema. Yeah, so, so just you kind of add onto that. So the reason we have schemas is that, right, you can have like your key be perfectly secure, but if I can get you to sign something that you didn't intend, that's just as bad as me getting your key. So the scheme is or the mechanism by which the user defines a permission and the permission then is checked against you know, request is checked against that permission based off that Schema. Right. So in because it because if I just sort of like send down hex to people are hex into the enclave design the transaction and I don't check that hex before signing it, I could sign anything. Right. So I didn't reveal the public key, but maybe I, you know, permuted the transaction and generated the new payload design which was taking all your money. So that's kind of the mechanism and the reason that you need the Schema is to be able to check what's actually getting signed. Yeah, I got one of I got my hands on one of those things. That decomen. We talked and and something said kind of really hit me home and why I see this whole space moving forward is it's literally a personal hs of or hardware security module. So it's the right way to store very, very secure things for Crypto like private keys and and has a harper solution for doing, you know, very configurable signatures and things like that, the types of operations you do with cryptographic assets, as well as a permissions layer that sits on top and that's also highly configurable, and that's that's kind of what you want, and so you can have and then this also allows for things like multi factor authification for different permissions and allow you to treat different accounts with different levels of like accessibility and withdrawals and all that kind of stuff, and I see that's going to be very, very necessary, because people can reason about how they want to spend their money, what they think is valuable and who the WHO should have access to it, but they shouldn't have to learn very odd signature schemes and different types of software to do that themselves and all that stuff, and so I think this is this is that's why I'm so I'd so like I like this project so much. Is because the devices like this, I think, are going to end up being ubiquitous now that we've kind of unleashed the idea of digital assets. Like permission with digital assets. I certainly hope they become ubiquitous because because it's really kind of like two paths, right, when you think about what cryptocurrencies have done, you know, it's disintermediation, and that the broadest level. And you know, you you could argue it didn't disintermediation of the Monetary Authority. Right. So like the central bank issuing currency, when you start talking about disintermediation at the lower levels of the your low value added in your mediories. To actually get that disintermediation to happen, people have to actually be custodians of their air funds. Right. So it would be, you know, a sad story and Crypto if we end up with, you know, crypto becoming ubiquitous. But to do that, we've replaced JP Morgan Chase with coin days, you know,...

...or quite days. Like you know, we just have a new form of a bank, basically. So we've maybe, you know, removed the money from the central bank, but we still have banks and we still have intermediaries and we still have middlemen, but now we have them on this public ledger that's like very traceable it's so in some ways it's potentially worse than kind of what we have now because there's some sort of solid degree of privacy, arguably, but you know, I've said this a lot. I mean it's this is something I've try to harp on a lot of people, is that when you decentralize everything and remove these intermediaries, you push the risk on to the people who are now responsible for the for this information. If you're going to hold your own value and manage it yourself and not off of that responsibility to somebody else, you also have to handle the security and the risk associated with it, and we, as people building things, have to provide tools that allow them to make good decisions on their own. If you do, if they can't do that and they can never they can never handle the risk associated with the value that they're holding and they won't ever do it. They'll just use intermediaries like coin Bas and so like. You can't have like this ideal dream that that blockchain started like that like kind of a ideal was of that started bit one of the first place. Until you have tools and devices available so that people can make better decisions, and I think this is one of them. Yeah, I mean, and we absolutely see that, and that's really kind of what we're trying to address and that's really our hope that this is demonstrating at least one solution for kind of how to get your parents a mechanism by which they can understand what used to deal with, you know, blockchain based assets. Now Grit plus is was when you even said earlier. It's been kind of a decentralized market place for for energy, and we haven't talked a lot about energy up to this point. What exactly are you doing in that space and you know why did you choose Texas to be the home base for that space? Yeah, so, originally when we came up with group plus, right, group plus is this idea of blockchain energy. So when Alex and Ibrik Consensus, we were working with some large energy companies doing proof of concept demonstrations of trading energy on a blockchain. What we've realized from doing those was that all of the energy companies kind of wanted to take a top down approach. So they wanted to say, Hey, we're the big players, you know, we have these big trading desks, we're going to create a proof of authority chain and we're all going to kind of like do a demonstration to settle these things. They would create these very silent environments and they were sort of reluctant to use, you know, public block chains. But once you get off of Public Blockchain, you arguably aren't really settling value anymore. Once you're not settling value anymore, and then more are you doing? You know, replacing just bunkeeping. Yeah, it's just bookkeeping, and you don't you don't need a you don't need the blockchain at that point to do it. You could. You could use other solutions like databases. Right. So, you know, we were looking at that. We're saying, okay, how will this actually sort of get adopted? And in the road look very long, like, you know, big companies, big changes. You're talking about like decades or more. So the way that cryptos kind of work up to this point is it's not some big company comes in and says here's how it's done. It's always a grass roots thing. You're always, you know, starting from, you know, the lowest level and you know that sort of gains mass and then, you know, you get sort of higher applications of higher value with more people and you know, it's a grass roots thing. So, looking at the energy market, the grass roots thing is, instead of starting at the biggest players like, you know, you're trading desks of your large energy companies, you start with the consumer, and the consumer is, you know, getting marked out, marked up, marked up, marked up in the chain of actually, you know, getting their electricity. So if you start the consumer and use a blockchain, you give them better access in the markets, you can get rid of all of that mark up and you can provide them better service. So there, you know, a good sort of point to start and it's also a low sort of risk point to start. So in Texas, is a deraguled market, we didn't need to go and like, get buy in from the state and the legislature and all these things. We can just start a rep work with retell electric provider, work within the existing rule sets and start doing cryptobased payments and settlements. Right. The issue that you get when dealing with the individual, though, is how do you, you know, have that individual be able...

...to deal with cryptobased assets and how do you do it in a way that it's automated right, because you don't you know if a residential customer can pay for the electricity, but it's like hey man, they gotta like get Meta Bask out and they gotta, you know, get their ledger out and do that. I mean that's that's obviously not going to work and any meaningful levels. So you know, very early on we knew that there was a need for an endpoint for storing and and dealing with the automatic payments and storing the Cryptos, which we called the agent over a year ago. We call it the lattice one now. So so to kind of you and I do where we are on the energy business. We are a retail electric provider in Texas. We are serving around twenty customers right now. It's kind of like our friends and family. Within the next few weeks we're going to be rolling that out to Beta. So a number of people, a few hundred or more, have signed up on our mailing list of people are interested in Texas and the deregular region, encore center point. They can go and they can sign up and we'll open that up and then we'll start serving those customers as well. So the first thing that we're doing is, you know, delivering electricity and then allowing customers to pay monthly with Crypto. Then once the lattice rolls out, that will become an automatic payment and then sometime next spring will start to shorten the interval that you can pay on, so it'll start turning into a more apparent real time payment. So the market in Texas is a deregulator market, which is one of the reasons we picked it. It also has fifteen minute intervals, so it operates and kind of this this real time increment are near real time increment. And then, finally, smart eaters are ubiquitous in the state of Texas. So in terms of getting the data that you need to do the settlement, you know that that's also there as well. So that's those are kind of the reasons we pick Texas and Tom is aw smart beater and cope, because I dake a lot of our sorry, I think a lot of artist doesn't know what you mean, but when you say smart meter, what is that? What does that mean in is it more decentralized way of running the power group? Like, how does this work? Yeah, so a smart meter is basically a meter that reads your your usage electronically and then has a mechanism for communicating that back. So in Texas there's two different ways to deal with like communicating that back the the tdsps, or transmission distribution service providers, have a mechanism which they call a back hall. So it's this you know, proprietary RF mechanism. It doesn't have incredibly high throughput, so they only get, you know, reads maybe four times a day. The other mechanism to do it by something called Han Home Area Network, which is just a name for zigby interface on the meter. So the lattice actually has a zigby antenna and we'll be integrating those the meters such that the lattice can actually ask the meter what it's usage is kind of all the time and then, based off that usage, it'll decide, okay, how much. It'll communicate that back to good plus. Then Yourd plus will say, okay, pay me, you know that number, and then when we get numbers back from the TDSP, maybe day later will be a sort of reconciliation threw up, but it should be pretty accurate, you know, in real time. So yeah, that's that's a smart meter. And in Texas the Texas legislature kind of had this. You know, it was pretty for looking vision in two thousand and seven they passed these rules, it basically said everybody should have a smart meter, we want to run the market on a fifteen minute basis and we want it to be perfectly deregulated. So they're trying to set up like, like an efficient, competitive clearing market for electricity, and that's really why Texas was such a good choice. Yeah, that leaves you guys really right quick opportunity and for your appliances. So that's pretty cool. But what can you do with your points that you couldn't possibly maybe do with just something that you know, resolved to feat? Well, so there's there's a couple things. So the first the first one is this idea of capital and credit. So in the market you have the rep the retail electric provider. So good plus is retai electric provider. They provide access to the wholesale market for the consumer and you typically do so on, you know, a thirty day use plus a thirty day net basis. So the rap is floating. The customer essentially sixty days worth of credit and they're having to place that capital because they're settling every day in the market. So there's a non zero expense of that. There's also this concept of hedging. So most contracts...

...are fixed price. So doesn't really matter what you use, they're going to pay a certain you know, number of sense per kill a lot our regardless of what the market is doing. So what this allows is two things. One, if you can compress the payment terable, you can remove the need for capital and credit because you're actually settling in real time and that allows you to pull, you know, expense that you're passing on the customer out of the bill. The next thing that you can do is you can give the customer the opportunity to more directly participate in the market. So if they have a lattice and they decide to use that to hook up to their nest or, you know, some smart thermostat or dispatchable load like the two bigs loads in Texas for a household are going to be there a HBAC system. So their Thermostat, Oh yeah, and their pool pump. So if, if you have, you know, a lattice, you get a Thermostat for a couple hundred bucks, you get a switch put on your pool pump for like thirty bucks, you can control almost half of your load. So then, instead of doing a fixed price contract, you can tell your lattice. Hey, here's kind of like my opportunity cost in some sort of easily understandable, abstracted way. Maybe it's like, you know, I'm an ECO consumer, I'm a value consumer and I'm a comfort consumer. Right. So, based off kind of how you set your preference, it would dispatch those loads depending on the market price. So what really happens in the market is, you know, a megawatt hour, it can clear anywhere from, you know, negative up to nine thousand dollars per mega one hour in a given interval. I mean typically it's, you know, maybe thirty right. So you can get a lot of like volatility in the market during certain times in the year. To depending on how you set your settings, you could say, okay, the market price is going up, I'm not going to be responsive to that market price. I'm just a turn my thermoset off the next fifteen minutes, I'm to turn my pool pump off for the next fifteen minutes and I'm going to go to get my risk. Would that means from a consumer standpoint, though, is if you can run on a real time price and you can just chop the volatility out of it by turning off half of your load. When that happens, you'll get by far and away the cheapest price in the market that you could discover in any other way. So I mean to give an idea. Right, if you're running a real time product and you're doing dispatching in a lucky years, so to speak, you'll save another forty percent on real time over anything that we could offer in a fixed price. I think that's that's a that's something that is relatively normal, that or this monthly payment scheme that we've become accustomed to, and the reason for that is basically because like the real like. Will just take the energy market as as an example of this, because it's a wonderful one. The way the energy good works is incredibly dynamic in terms of like demand, its apply and and the costs of energy. It fluctuates quite a bit, like you said, the market, and so we didn't have the infrastructure for people to participate in that previously. So we had to build these intermediaries to kind of absorb that dynamic activity and then offer a consistent price to the in consumer, because there there was no way for it in consumers to navigate that or like, and so because, based on that infrastructure, we've just become accustomed to month of payments, but that payment gets kind of artificially inflated because that intermediary has to have operational cost. There's an overhead associated with doing that type of stuff, like you the all the stuff you just basically detailed for us. Is Why they can charge more. And and now that we're able to like build new technology that enables to build newer and newer dynamic infrastructure and allow people to directly participate in that market, we no longer need the intermediaries. And so, like, I see this as a kind of a underlying theme, and a lot of the block chain space is getting rid of the intermediary because we can now participate in dynamic markets automatically as an inconsumer, and then don't we don't longer need someone to to negotiate that for us and then pay them to do so. Yeah, exactly, I think in in this particular case, where you kind of have this like transactive sort of you know, a transaction based intermediary, if you will. The only way you can actually achieve that, though, is through custodianship. Still. Yeah, but like so moving functions for for people. Well, will correct but, like I we can achieve any efficient see unless the person is the custodian of their assets and they're able to have access and usability of those assets. So if I put them into is like a bank situation, what we're end up doing is we're going to create, you know, that bank intermediary that's in a charge fees for every transaction and percentage. So we're going to kind of maybe we'd be a little bit better, but we're still going to be not in an ideal situation because we're still going to have that intermediate between the actual producer of the good and the consumer good. So yeah, I mean it's definitely a theme and the...

...the real I think need to make that being realized is that custodianship solution. So, if you want to kind of like generalize what we're doing, we're kind of building what I would call a repless rep right, so we're we're a rep, but our goal as a rep is to like not be a render job, is to make your job obsolete. Almost. Yeah, correct, and you could think about that with other systems. Like like a super obvious one to me is like creating a carrierless carrier, so a wireless carrier. If you you know kind of underfan how the infrastructure works, you understand how sort of bandwidth agreements work. It's a very similar model to the energy business. And if you create that canstodianship solution, you could actually have a phone where you're just bidding for the cheapest tower. Or maybe it's not even a tower, maybe it's a Wi fi connection or it's something like that. So you're finding sort of in real time the cheapest counterpart. You get the little of the service and that's enabled by by having, you know, that standard blockchain to let everybody interoperate. Jeez. So something that that I don't haven't heard you talk about is you've released a token and you're funded through the ICO, I believe. So what are your intense for the token in the ICO? Yeah, so the tokens are basically a coupon and the coupon is redeemable for five hundred kill a lot hours of electricity at essentially the wholesale costs. So zero mark up between the wholesale cost and the cost that you're paying. So basically, even if we're a repless rep we still have overhead. So we have to mark up a little bit, but it's less than, obviously, a traditional record mark up. So with a token you're getting basically the lowest sort of market discovered price in the wholesome market. And so it would only work for people who have lad US installed in their house and have have been hooked up to their system. So right now it's not really viable because you're only kind of early, early Alpha stages and then you're going to get in the Beta. So so the Alphabumurs have redeemed grid and so you can redeem it on a fixed price rate to so we'll take the average of sort of the wholesale cost and will, you know, deliver that price to the and consumers. You don't have to have a lattice to use grid tokens. The you know, you could, you could be on a fixed price contract and you could still use GRIPP tokens in terms of kind of like other uses we are planning. It's not certain at this point, but we're planning to also let people use the grid tokens to get a discount on the lattices themselves. So there's there's a number of different use cases. The current one is is basically getting cheaper energy in Texas and you burned those after use. Right. Correct. So I think eventually there will be no more token correct. I remember hearing that, I think the first time we interviewed a long time ago, on block channel or something. So, God, you have all these devices and they're communicating all these transactions. How do you know what device is making that transaction? Can you marry these transactions to the devices? Is More like a technical question, like how do you know what did what necessarily? I mean you have one user with like an identity, but is there a way to tie it down to the device level or is that something that that's not necessary for the scheme? So in the context of Grid, plus the retailer, we are only concerned if we're talking about cryptopayment. It's only concerned about who's sending payments to which recipient address. So what we would do in the case of the retailers? We every customer has one or more receiving addresses and we're basically watching those. So and then if, when, if we migrated to a payment channel, it would be kind of the same deal. So with a with a device, you would typically I guess we haven't talked about this. So, so the way that you kind of set up your device as a consumer. This would be both on the energy side and then also we will sell these standalone devices that will come with you know, mobile walllet. So you have an APP and in this case it would be the mobile walllet. That would be the first kind of APP out of the gate, and the first step to getting set up would be to do something called pairing with it. And this is this is basically a diffy helm and key exchange. You generate a shared encryption key and are able to communicate with the device and once you can communicate with the device, you can request addresses and you can request signatures using those addresses. So so the keys never...

...lead the device, but the addresses will be basically received by paired applications. That makes sense. So in the future what you could do is we I mean the purpose of the sdk really is that you could have many apps that pair to your your device, and the way that they would discover that the device is via a serial number. So you would you would basically load up your APP as a user and as an owner of your device, you would type in your serial number. It would basically use a cloud proxy, kind of similar to discovery nodes in a in a peer to peer network, and it would find essentially the IP address of the network interface of the device and it would use that to initiate that key exchange. And we can we can talk about the mechanics of that if you want, but yeah, please do. Actually I want to hear the details on that. So, like, you have an IP address, but ipaddresses change all the time, so that's not marrying it to any think that's not going to be part of like a private key or anything you using. Like to correct? Yeah. So, so, taking a step back, there are there's basically two, or really three chips on the device. On the first, the outermost layers, is your network interface. So this is essentially a system on a chip that's running Linux, and that's obviously not where we store the private keys. It's not even where we build the transaction logic. So that's what you're pairing with, that's what has the IP address and that that's what allows you to basically make request to the device. Now the identifying characteristics of the device are actually the third chip, which is the same chip that you would find on like a credit card, and that's that's where your keys are store, that's where the signatures are made. That's that can only communicate with an APP through like three layers of abstraction, the first being the network interface, the second being your hsm, which is where you take requests and you bayly parse them through those permission or through the Schema types that we're talking about earlier, and only once you've built that transaction do you send it to the chip for signing. But you can think of a transaction as not necessarily just being a payment you. It could be sort of a cryptographic signature to sort of authenticate your identity or something like that. So what I would say is loosely that the concept of identity is constrained to that third chip. And what makes this device even more interesting, I think, is that the third chip also comes on smart cards that we will will independently. So if you plug a smart card in or if you go through a multisike scheme, then that that can actually take over as your identity as long as it's sort of plugged into the device. So if you want to communicate with that, you could then do that with a paired device, but it's sort of an ephemeral identity and you can think of that is, you know, in all sorts of sort of multi factor authentication schemes. Yeah, so to give a little summary of that. So there's there's the three chips, the secure computing environment, or try the general computing environments, your outermost layer, your secure computing environment, is one of these secure chips. It was originally designed for point of sale system, so it's hard and against power analysis attacks, side channel attacks, it has the ability to do anti tamper monitoring. So basically our whole device is wrapped in an electrical Mesh and that, you know, Electrical Mesh is composed of wires that are twice thickness of human hair and it's monitored from the day the device is provision to its end of life. So if anyone tries to tamper with the device, cut into a drilling to it, open it, it'll basically brick the device. And then that's that's actually that chip right there is kind of the the hypervisor of transaction. So when a request is made and the Schema, you know, is being checked against the permission, that's the chip that's actually doing the checking and then it's also the one that's actually forming the hash that then gets signed by the third chip, which is the one Alex mentioned from a smart car. We call it this Dur enclave and that's where the key is actually persistent, so that that one would actually then sign the transaction, send it back to the secure computer environment and then send it back to the general compute environment and then broadcast it out. So That's interesting to be so the second chip, the the secure compute layer, that's not general computer, has this very specific purposes. This differentiated or similar to FPGA in any way. Or is that is? Is it literally is kind of like an a sick and then it's like specifically built to do one thing or how does so it's it's not an a sick, it's a it's a it's a micro controller, but it's a hardened micro controllers. It's purpose built for kind of secure financial applications. So this this one, you know, finds its use currently in point of sale terminals, and so it's not an as, it's...

...not FGA, it's a general purpose like Plc, like a programmable logical controller that the using like industrial control systems. Yeah, it's a little bit. It's a little bit. It's more kin to that than that. They say, yeah, it has a little bit more power than a PLC, but it yeah, I mean it only has two hundred fifty six K of Ram. So it's all done in C. It's not, you know, high power thing. You know all the code that it's going on. It is something that you know we're writing and were reviewing. So it's a very constrained sort of operating set. And then the other thing that we didn't mention actually is we have a physical mailbox between the two devices. So between the general compute environment and secure compute environment there's actually it's an fram, or fram it's this form of magnetic flash memory and basically that's physically mused away from the the GCE. So the way it's kind of like an airlock, right. So the GC says, Hey, I have a message. Okay, I'm going to fill the fram or no, sorry, it says, Hey, I have a message. It tells the secure compute environment that has a message. Secure compute environment opens the airlock, right, and then the GC rights to this fram and then says, okay, I'm with the separate line. There's the one line interface. It says, okay, I'm done with with writing so then the secure compute environment then reverses the airlock, so then the gce no longer has access to the fram and the secure compute environment has access to the fram and then it reads that limited set of data out of the Fram and then can operate on it. So even that message passing interface we've kind of made like this airlock so that only a certain amount of data of like a certain type like can get to the secure compute environment when it wants it and in no other way. So you can't have like overflow errors or anything like that, because are buffer over runs because, like you physically only have you know this. You Know Hundred Twenty eight, you know, bites of memory here to write to at a time and and the general compute environment doesn't have access to it when the secure compute environment's reading and vice versa. So it's it's it's sort of like a CDC tent right where you have people coming in who may be infected the Linux trip. We don't we don't trust it. We don't trust the outside world. So we want to make sure that there's a clean way to get any anything that needs to come to the secure compute. We want it cleaned out and we want to make sure that it conforms to the Schema that we expect. I want to find interesting about all this is that, like that all sounds very complex and people may be scared about it and say like Oh, this technologies an't usable. But in the day, like if you look at what how, just like credit cards, you work right with the chips on credit cards and then be back in infrastructure associated with transporting that message and handling the the bestages is also incredibly complex. But people use the living shit out of it. Right, yeah, and they have no idea how where it like no one p wouldn't even know. They're holding keys on the on their credit cards and what the chip does? They just say, Oh, I insert this piece of plastic and money happens exactly. So of all this complexity, you're right. If for a tech person, right, we can discuss and you know, key go out on the complexity, but from a user standpoint that you say you need to know about none of it. When, when it's all put together and done, US have, you know, the magic money box that you stake the magic money card into and money magically happens, right or don't? So just to clarify one point. There is one of those are just reiterated. Rather, there is one of those smart card ships baked into the device itself. Down you don't need a smart card, but it's useful for like multi factor authentication and backups and whatnot. Yeah, that comes it's as well as like multiple identities. That imagine, if you want multiple accounts and for various things or like multiple people doing different things with different crypto do you need those cards to change through that type of stuff? Yeah, yeah, so, I mean, for example, you know, if you're in decrypt though, you like we have more than one hardware wallet, right. Yeah, I've quite a few, a different things of stored in different places. Yeah, yeah, but what this does is this allows you to kind of have like one central place for your hardware wallets and then when you want to have different, you know, identities, maybe you have, you know, a business use case for one account, you have a personal use case for another, maybe you have, you know, that use case that you don't know what the people to know about on anether, whatever that might be. And then, right, and then you also have this concept of backups, which gives you the idea of being able to store your many cards in many different places. So...

...with one device and essentially an infinitely number, an infinite number of abstractable accounts and cards, you can pretty much just have the one device and still achieve all the things that you could achieve with with, you know, your ten harder wallets that you have sitting in different places. Yeah, there's one thing I want to just kind of highlight that we haven't really talked about directly, which is that we sort of philosophically, we don't like the thirty nine and the reason we don't like it is because if you think mechanically about how you back up, basically how you use a hardware wall today, right. So, you know, you unbox it, you it generates some some randomness, and it spits that out into seed words. And what do you do? You write those down on a piece of paper and plane tag. I took a take a phone photo of it and put it in your phone control box and and back it up with your eye class like ornamentally from like a secret storage perspective. It doesn't it doesn't solve anything. It just pushes the secret to another layer. I mean, admittedly, putting it on a piece of paper may be better than putting it on, you know, your laptop, but it's not that great that it does. It can solve it, but what it does is it makes it incredibly easy to negate all of the security things you're doing by putting on a hardware wallet, and it shouldn't be that easy to screw it up. Well, and it puts the onus, on the user, and even as, like somebody familiar in the space, it's still very difficult to securely deal with sea phrases right, just just just physically so. But when you think about the cards, the cool part about the cards is you could get one of my cards with my my enterpy on it and I'd be perfectly comfortable with that. Right so, as long as I've done my due diligence and making sure that I have an admit amitigated my risk through, you know, the use of the account that I have and backups that I've made. If you get one of my cards, like I'm not going to lose any sleep at night because I know you I can be able to use it. So, unlike that piece of paper that's my backup that sort of sits on my counter, one of these ship cards, if it's sitting on my counter and you get it like it's fine and and that's that's because their pain protected me and say that's yeah, well, so they're pain protected in the other thing that they have is something called a puff. So either the secret that's on the card will be encrypted by the puff or you could use the puff directly, such that if you get your hands on the puff and you don't have the pin, you don't have the device. Like I don't care who you are, you're you know, and what technique you want to use. If you want to decap the chip, if you want to, you know, put it in a TM, you're still like getting my you're still like getting my seed rays. So it's just a very good way to keep a secret in physical space. So this is all from decentralized perspective. Like the each device has kind of its own little Wallet Unit and it contains your own stuff with this got to be some sort of centralized component if you're maintaining a market place for, say, energy or any sort of asset that you're trying to trade using this. I mean there has to be some sort of reporting features that, some way of interfacing with with with with this stuff and like, how do you know how much is going on in the grade? You can get these smart, smart devices, but I mean the smart meters. But is there some sort of like central reporting or sort of like anything about this that has like kind of a bottleneck in the central, central area? So in the in the energy use case, the centralization is good plus as a wreath, right, and that will continue to be the bottleneck untold sort of ray relation changes that allows us not to be that bottleneck. But presently there's no way for us to actually allow the customer to directly interface the market. They'll always have to go through us as a pass through until sort of the market regulations change. So in terms of the market place, yeah, where the the centralization for electricity? There is a path that you could use to decentralize that and you could use lattices and you could use one of a numerous number of, you know, decentralized exchange protocols to effectuate that. But that is a long term vision. That would require us to get kind of the rules changed within within the market place. So that makes that makes perfect sense. But so I guess you're settling on the blockchain right. So we would go through your system or with a directly interface with the blockchain themselves. You See, your block chain agnostic. If you want to be open to lightning protocol as well as just relartherium, are you settling on the device itself, or are we going through your system? You know, so the device is forming and sending the transaction. They don't. Can...

...set up with whatever node. You know, if they want to run a full node at their house, they want to, you know, connect to whatever full node. They want to run an SPV node, however. They want to do it right, they can do it. So it's the blockchain is independent of us, right. So let's talk about the happy path. Then everybody starts using your thing. How does that like? The scaling of blockchain systems as they stand right now probably wouldn't be able to support that quite yet either. You'd have to use things like Infura or set up something like plasma chain. What are your thoughts on the current state of blockchain scaling and how you guys plan on interfacing with these kind of alternative layer two solutions in the future? So going back to, yeah, what I was saying earlier about how we've designed the concept of scheme and permissions we don't want to be constrained to placing bets on which blockchains and or layer two solutions will capture majority market share in the future. We want to leave it abstract and we want to let users essentially decide what they want to sign with, be that a bitcoin transaction, a lightning transaction, plasma transaction, etc. Or a state channel or stay channel. Yeah, so I guess if you're asking me personally, I'm pretty excited about lightning. I'm I'm pretty excited about the growth of that network. I think plasma. You know, there's a lot of stuff on etherium, to Oh or whatever it's called these days. I think it's cool, but I think the plasma actually solves most of the problems are related to scaling, frankly. So it's been interesting to see them iterate on those those models as as sort of a last I don't know, eighteen months or so have gone on. I remember when when they the talk and Joseph dropped that plasma paper, I got really, really excited because me too it was, you know, sort of it was sort of an uha moment. So I think you know, I've written a few articles on this in the past. I haven't really done any work on it in the last, call it, nine months, so I am a little bit out of the loop because I've been really, really focusing hard on getting this latics out. But what I think makes the most sense from a design perspective in the plasma context is that you just have a sort of single operator who's WHO's, you know, running transactions, probably through database honestly, and then just collapsing them down into mercle trees and then committing that hash on the root chain. And I think that that is sort of the underlying theme that is persisted across all the iterations of plasma. Now you run into problems, especially in the earlier designs. You have the mass exit problem where, if you know the the opera radar transfers all the money to himself and then tries to withdraw it. You know, someone would probably challenge that, but they'll also everyone be like, I don't want to be in this chant anymore, and they would. They would all leave and then you basically blow up atherium. So the way, I think they've figured ways to mitigate that. But then you also have this other problem of if you want, if you have like a non fungable asset and actually I don't know how you would do plasma with fungeable assets but not fundable, know, with fungeable assets. So the way that the original designs, and this is this the constraint comes from the fraud proof right. So the original designs were that you take ether and basically converted into Utxos and then you track those utxos on the plasma chain across all the different mercle branches and then, if you want to withdraw, you basically select a mercle branch and make a proof that you received that that utx o. The problem with that, of course, is that if you have to trace or if you have like a, you know, a ten cent utx O, the you have to trace origin on and it's like passed through a thousand other people's wallets before it got to years, is not actually worth with drawing. Right. So I think that they talked about plasma prime as as sort of I think they're doing. Yeah, that's the kind of a release that's basically going to handle the majority of the things that they're they're gathering consensus around all of all the naming schemes were a kind of a joke that had different one offs and feature sets of some type of plasma. They're kind of now coalescing around prime as the thing they're hopefully moving forward with and stopping with the shenet against the naming. At least that was the the rhetoric around Deacon. Yeah, and I think, if I remember correctly watching that talk, I still don't look into this as I like to do this, but the they mitigated that, that problem...

...that I was just talking about of tracing the the like Longmorge, by using range proofs and by constraining these these assets. I think they're still unplungeable into like fixed mercle branches, I believe. Anyway, hold on quick question. How did they supposedly deal with the mass exit is problem? I don't remember that one. Actually, that LAF top my head. We're having we're having Georgios on the show soon to ask these types of questions and see what the current state is so people can kind of get together on it. That's my big big with plasma is that it. I mean if they've solved the massings is that that's great, but that's kind of like the I guess my my biggest catchpoint. I remember them talking about it, but I don't remember the conclusion around it. Yeah, but anyway, yeah, I think I think plas was really interesting from like the perspective of, you know, you have this state that's somewhat complicated and you want to mutate it and you want to do it or you want to change it, how you say it, you want to you know, just you want to use this thing off chain and do lots and lots of state updates. I think that makes sense. I think state channels are pretty interesting. So I think there are few projects that are working on stay channels and I'd like to see those with in the conjunction of like stable coins like die. Another thing I'm really excited about is actually the growth of die, and I think it's started off when they started, when they kicked it off in like when was that? Two Thousand and sixteen, when they when they first started. I want to say that's right. I you know, I was like, you know, they're going to launch this thing. I'm not confident ll make it like through the weekend. We'll just see it. Yeah, yeah, and it didn't. And you know, every day that goes by, I think is kind of a testament to you know, it's soundness and as the as a liquidity pool grows, then the marginal cost of like doing that price workle I think you know, drops relative to the total supply. So I think it's a really cool I'll still call it an experiment. I think it's really cool experiment and, you know, I'm excited to see where that one goes. And then I think it's great that we have these backups like, you know, USDC and whatever the other ones are. So yeah, I think there's a lot of cool stuff happening. I do think we're still a ways away, but it's fun, fun a tract the metrics. Yeah, and I think it's kind of mirrors what I've been doing. I got really excited about all these layer two solutions and stuff, but there's their their timelines are a lot longer than I thought they would be. They seemed simple on the surface, but then things started popping up like the mass exit problem. So it turns out this is hard. Yeah, right, so, even though it's Allerapoon, put this paper out, does it mean it's solved? It just means that they've got a vision. But what I like about plasmas is the architecture around it, just the fact that you can build plasma chains, under plasma chains and and or just plasma mechanisms, which is something else. I mentioned this to you before our interview started. I thought it was really interesting that you took the approach in a blog post a while ago about alternative ways of managing plasma staked value, such as coughcat streams and in my sequel and I'm you know, I'm kind of interested in how, once we solve the the general case of the chain problem, can that apply to other areas such as our dbms in like, yeah, I'm excited about those things personally. But yeah, I'm with you on that. Like I can't, I can't keep up to date with all that, as I am not a researcher. I have to actually do stuff and you know, I kind of apply these things in my real life and so it's good to keep up with when I can, but you know, real life does take over. I definitely am excited for plasma personally. So I actually one question I haven't asked in a while on the program but I really want to ask you, guys. Are you philosophically a there will be many chains, a meshnet of block chains, or or consensus mechanisms out there. Kind of person or are you? Do you think evolution of just the markets and such will lead to just people selecting one and that'll be the main source of truth for the entire globe? So I'll jump on this first. You look, for excited when you ask the question there for moment. Yeah, so I'll jump of this first. So one of the other things, besides the mass exist problem, that I have with plasma is the tragedy of the Commons problem, meaning that you don't have a mechanism by which the plasma operators have a requirement really to feedback a lot of value and fees back to the chain. And I think this ties into this concept that we have...

...many changer will we have one chain, and I think that what you ultimately have to have is we will not have a sustainable chain until we increase layer one scaling, regardless of what we can come up in layer two, and that just has to do with chain security. So I've come up with something that I kind of think of as like this economic ratio of security, and what that is is it's the market cap of a chain relative to the amount of money that's spent per a day securing that chain. So, you know, I think a reasonable number for that ratio somewhere between ten thousand and Fiftyzero, let's say. So, you know, if you have a hundred million dollar market cap, you know you have to spend at least ten million per day, up to fifty million per day to like secure a hundred billion market cap. And where that comes from is that in a truly byzantine environment. And the farious actor, if they can execute an attack, so let's say it's ten million dollars a day, and securing the network, if they can execute an attack for a hundred million dollars, which means they can roll back a chain, you know, twenty four hours later and they do a transaction with you for a hundred one million dollars, they could essentially spend a hundred million dollars get, you know what, what they're receiving from you, from for that one hundred million dollars, run off and then roll back the chain and they'll have made an extra million dollars. So that's really kind of like the definition of what security is in a Byzantine environment. We can argue, okay, maybe there's like other mechanisms for enforcing that thing, there's there's legal systems, there's nation stays, there's militaries, but all of those things should be obviated if we do our job building a truly decentralized block chains right. So to truly have security in bysinantine environment, you have to have money being generated in fees to secure the chain and if you don't do that, you basically don't have a secure chain. You don't have a busines teinae fall tolerance system. So I would argue that the chains that are going to win are the ones that can actually generate more scaling on chain such that they can generate more revenue to secure the chain, which will support a higher market capitalization and will support a larger value economic transactions actually be secure. I don't think that the we have single chain, but I do think that you'll probably have a pre to distribution, because it's sort of like a competitive evolutionary system and that's how competitive evolutionary systems, you know, manifest so you'll have, you know, four or five chains that make up eighty percent of the value, which is kind of what we already see with, you know, the market place as it exists. I think that will continue, but I think the ones that will win are the ones that will actually create mechanisms for doing layer one scaling in addition to layer two, so they can sort of achieve that economic security and that and that kind of framework you just gave. Does there have to be an external source of kind of value? That's that's securing a chain from type right now it's like it's such a cost of running miners. That's basically the the monetary value as well the overhead of operating those does mind the DASIS, and that's an external source being pumped into the securing of the chain. Yeah, so I think. I think you do need an external source of value. There's right in some of this kind of gets into sort of like some idiological arguments between proof of stake and prob yeah, for you know, one potentially, I would say proof of steak. You know, if you sort of run down it, there is value, quote unquote, being put up and that's the cost of money. But the problem is because if to change fork, you have nothing at stakes. Or really what proof of steak turns into is a social consensus, the difference being in proof of work. That if it changed forks, I have to uniquely vote with my money on where and putting my hash power, which is not true with with proop of stake. So so that's which makes it not social consensus but rather the economic consensus. So so I'm definitely kind of in the proof of work camp in terms of the external value. It can be anything, right, it doesn't have to be electricity. Right. Other people have come up with the concepts of proof of storage right now, but really a proof of storage is is there's energy that goes into making a hard drive which you then have to amortize over the life. That's a stars physical resource. That's correct. You're going to have to use some use of a fit scarce physical resource in some provable way on a blockchain to make pain economic security and not social consensus. If you think about the Federal Reserve, the Federal Reserve is social consensus. Right, it's all the big bankers with all the money got together and say hey, we're going to dictate what the money supplies. You could, you could absolutely see that devolving into the same thing under a proof of stake system on blockchain. Well, let me turn that around. Like I agree that you need to type some sort of scarce resource, but I would make the...

...argument that the scarce resource and proof of stake environment is actually labor, meaning that the applications that are built on the chain itself give that chain value and if and that social consensus is just another way of framing the scarce resource of Labor and development and use of the chain. So I would I would actually argue that both cases have some sort of scarce resource which is tied to it. But but it's not the right because if I for etherium, let's say, I can take all of that sort of work with me because you know, these are these are open source distributed systems and all those applications. I just need to convince people to come with me. So that's that's a social process, that's a political process and that's no different than convincing people to use the hash power on a different chain. No, no, it's completely different because they have to uniquely vote. Right. In am proof of sake system, I can hedge out right, I can. I can keep staking on two different chains. The cost of the cost of switching is negligible and it's proved stake. So you could buy up, you know, well, awesome, putting into the value itself doesn't hasn't the vote is the point, right? I can continue voting and staking with my with my money's from both chains. Yes, but if your user base is still stuck on this other chain, like you're going to have to make a decision like that's that's that's what it ultimately come to. is where is the value of the users if the user basis is specifically looking in one particular rush? Truth, what truth of the referring to basically value of your labor, your Labor's value is going to be in the social site? I think we're carls saying is that, as a block producer, which is the analog of a minor, right, if I'm running etherium software on my laptop, I can probably run two instances of it, right, and I can continue to produce blocks for both chains until such usership has basically chosen one and I can continue to profit off of producing potentially profit. There's no there's no there's no choice you have to make. To point your validation software, or whatever, that being a you'd whether to be an basic minor or a propostake node at one particular blockchain, because it can only do one at a time. The overhead associated with doing multiple at a time is not big enough to have to choose. Yeah, correct. So, as a rational economic actor, securing chain, unless I have an ideology or a social tendency, I will keep staking on both. Right. So, like implicit in that idea, that social consensus. It's politics again. So we're reintroducing politics into what's supposed to be a political money. It's an argument. That's a strong point. Um. Well, and anyway, I have I just have to mention something because we're getting on this path. So I published a kind of a papers outlining concept called block reduce, which is a way to scale proof of work chains to basically meet, you know, humanities transaction throughput so, you know, fiftyzero plus TPS. I would love it if one of the core deevs would would take a thorough read of it and consider looking at that for a level one solution to etherium. Well, we will use whatever weight we have to try and get that happen. I don't know how much weight that is, but yeah, it's available on archives if you just, if you just, I'll put it in the show douts about that. Google it. Yeah, but anyway, I mean that's that's right. And this comes back to the idea of like what we're doing with the lattice one to write. So, like I would love it if we could stay on a proof of work system, because I think proof of work is not like a social consensus mechanism and it will actually kind of realize like like pre economic money, right, that's, you know, some proof of work and proof of steake, in my mind, is similar to like the lattice and coin base, right. So the Lattice, if we decentralize things, we can discider me in medior is, but people are actually in control of their money. So we're moving towards that like free, you know, system. And and I would think that the same thing is true if we can scale proof of work over proof of steak. I think that's more sort of free than if we go down the proof of state path. So freedom on both sides. It's kind of what I'm shooting for. I'm curious to see how all this develops over it over time, and it's that's one of those things that I don't I don't have strong ideological reasons either way. I want something that works, that gives exactly what you're looking for, and I'm trying to find out what that's going to look like by talking to people like y'all. Yeah, anything else that we didn't get to ask you that...

...you definitely wanted to talk about? Yeah, I know. We appreciate it. Guys, I think that was a fun conversation and I do, I do really encourage people to think about like as they're building systems. I think ideally, in the world of blockchains we have to think of ourselves as a little bit differently than traditionally in business and that, you know, as the technologist, what we're really trying to do eventually is build a utility, and utility should be free and open to all rather than, you know, build this business that will perpetually take a fee. So we know however we can affectuate that as technologists. I think one it'll make you ultimately more successful, but to think it will realize the sort of vision of what we hope sort of, you know, free, fair, economic digital money can be so awesome. Thanks, guys, and for the listeners. If you like this, this subscribe button on whatever podcast platform us. We should be out all of them. Share it on twitter, share it on everything, share it everybody, tell your friends, tell everybody. Hashing it out, hashing it out dot stream, or you can go to the Bitcoin podcastcom and click on click on podcasts or shows and it'll be onto their join US slack on the Bitcoin podcastcom to talk with us, ask US questions, ask us about guests, so on and so forth. So thanks for coming on the show, guys. I greatly appreciate it and can't wait to see last ones and everybody's home. I'm going to have one. Yep, creates.

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