Cardano Summit 2021 summary: Governance is the next big thing

How do you close out an event like the Cardano 2021 Summit? With dozens of speakers, the announcement of a host of new deals, and the whole thing taking place live in six locations worldwide and watched online at more than 40 community hubs and in tens of thousands of homes, it’s certainly a tall order.

Ideally you’d want to reiterate the main points of the event, unpack the insights that emerged from getting all those brains together – and then give a clue to what might be coming next. 

The task fell to an appropriately high-powered panel, brought together on the stage at Laramie in Wyoming, the leg of the event attended by Charles Hoskinson, chief executive of IOG. As well as Hoskinson, the panel consisted of Romain Pellerin, IOG technology chief; Jerry Fragiskatos, commercial chief; Joel Telpner, head of legal; Frederik Gregaard, boss of the Cardano Foundation; and a non-IOG local hero, Caitlin Long, the founder and chief of Avanti Bank and Trust. The moderator was Rob Adams, IOG vice-president of corporate strategy. 

Panel moderator - Rob Adams, IOG vice-president of corporate strategy

Adams set the scene by saying that the panel was really about taking the blockchain industry from niche to mainstream. His skillful interjections guided the speakers through the themes of the event: utility, governance, adoption, and impact. Would one of these prove most salient in the future trajectory of blockchain, led by Cardano? Were there any clues as to where it would all go next?

One clue came from the reactions of the local audience in the US. Any point made by the speakers about preventing the infringement of individual liberty got a cheer. Stop corporations stealing our data: cheer. Educate legislators to be more blockchain friendly: cheer. Stop governments from misleading the people and make elections fair and transparent: big cheer.

You need a technology that can cross borders, and legacy systems are very slow to create those bridges – Romain Pellerin

Kicking off on the subject of adoption, Pellerin pointed out that blockchain technology had come about in response to a need. In the future, therefore, adoption and utility would remain intimately linked. ‘Blockchain is not here, you know, randomly. I think it's the technology of its own time,’ he said.

‘In a world that globalized itself, you need a technology that can cross borders, and legacy systems are very slow to create those bridges.’ He later suggested that blockchain was ‘the system’ to program interoperability, not just between chains but wherever it was needed.

If Pellerin seemed to suggest that adoption and utility would take care of themselves, Fragiskatos introduced a note of caution. Given that the coming wave of new adopters would include large enterprises and governments, extra care was warranted, he said. ‘My preference is that it continues to be grassroots – that is, powered by the individuals first – and that small businesses are built on top of them. And then enterprise and governments come last, in my personal point of view,’ he said, bringing the first big applause of the session. 

My preference is that blockchain adoption continues to be grassroots and be powered by individuals first – Jerry Fragiskatos

After all, he added, when an economy is healthy, it is consumer based and largely run by ‘small businesses first, and then enterprise and governments last. And I'd like to keep it that way.’ 

As well as the first clapping and cheering, Jerry’s comments brought the evening’s first appearance of the specter of big business, and even bigger government. Picking up on that theme, Long spoke of the ‘stunning’ backwardness of most banking technology. ‘[Larger] enterprises really do make things complicated,’ she said.

‘They don't operate by the Kiss principle: “Keep it simple, stupid.” And I think many blockchain developers do because we're operating on common, open, open-backend platforms. And the whole idea of that is so that anyone can join the networks.’

It's the classic Gandhi phrase: First they ignore you, then they laugh at you, then you win – Caitlin Long

Long was soon to raise a cheer from the local audience by alluding to the success the Wyoming community has had in shaping blockchain-related laws. Unfortunately, but not surprisingly, the breakthrough had been largely ignored by the (centralized) powers that be. ‘It's the classic Gandhi phrase: First they ignore you, then they laugh at you, then you win. I'm not quoting that correctly, but that's the idea!’

She then called on the Cardano community to hold The Wall Street Journal to account for not referring to Wyoming in its online article that day about stablecoins. ‘So by the way, I’d appreciate it if you all blow this up on social media – because they love to ignore us.’

This call to action, albeit only online, raised a big cheer. 

It looked like Gregaard, in his flat cap, might capitalize on the rabble-rousing theme. But his hour as an agent of societal change had not yet come. Instead, he made a cogent point about the difference between the first wave of adopters, such as gamers, who were ‘born digital’, and larger, older industries, most of which would remain ‘non-blockchain-enabled’ and were therefore doomed. ‘The blockchain-enabled win every single time,’ he said. 

The next wave of adoption would therefore come not from the very large (who can’t or won’t change) or the very small (who don’t need to), but from a middle ground, Gregaard said, citing the SAP and the Oracle financial systems. ‘It’s going to be parts of banking, [and companies] in the middle of the enterprise process. That’s the way I see it.’

Maybe . . . maybe not was the response from Hoskinson. No matter how well you plan, you don’t really know where the next wave will come from, he said. You can always be proved wrong by what people actually want – like people preferring cat videos to his own ‘Ask Me Anything’ sessions on YouTube. ‘Really, the key is just to be flexible and adaptive enough that whatever that future happens to look like, you'll be able to be competitive in it.’

Now it was his turn to pose a question. ‘What consumer experiences are now enabled that were not possible before?’ he asked. A great example of this was when smartphones revolutionized GPS. One day you’re having to print out a map from MapQuest; the next it’s all done for you live, right in your hand. The combination of the iPhone and Google Maps proved to be technology’s answer to the cat video which effortlessly draws everyone’s attention.

Hoskinson’s first contribution to the debate was therefore to warn against making a fetish of ‘perfect, top-down planning’. Rob then mischievously pointed out that the big wins celebrated at the summit had been with big enterprises and governments. Was this a contradiction?

No, said Fragiskatos. The point is that you’re always dealing with people, individuals.  ‘Enterprise and government serve consumers, ultimately. So I don't think it's contradictory at all. I'm just saying that the power should lie with the individuals. Enterprises have their role in that; it just has to be in the right context. And it should be from the bottom up. [This] is the ethos of our industry [and] is what makes for a healthy society . . . Our industry has a part to play to keep democracy healthy.’

Hmm, this was a great point and it really made me think, and perhaps the audience as well. Because that’s not just governance; it’s governance squared. The internal governance of blockchain makes its influence felt in the broader governance of society – government, in fact. 

Pellerin jumped on board. ‘The bottom and the top – I don’t really understand that. It's always about people,’ he said. The audience roused to his next point, about user inconvenience. This resulted from a ‘friction’ between technological ‘silos’, Pellerin said. ‘Try to move your content from Facebook to Instagram or WhatsApp – it's a pain and often it's not even possible. You have to do that manually. Right?’ 

Although networks were ultimately just people, we had become cut off from each other, ‘lost in silos’, Pellerin said, whereas what was needed was a ‘frictionless experience across businesses’.

Telpner expanded the theme to regulation generally, building on Long’s comments about banking in her home state. ‘The important thing about what Wyoming is doing is they're not saying no regulations – they're saying the right kind of regulation,’ he said.

The important thing about what Wyoming is doing is they're not saying no regulations; they're saying the right kind of regulation – Joel Telpner

With disruptive technology, ‘regulators are playing catch-up, and sometimes it's easier for them to simply say No than to understand how we take existing regulatory regimes and modify them, and do what we need to do to facilitate the new technology.’ 

Fundamentally, Telpner said, everyone agreed on the important things: ‘ideas of protecting consumers, of preventing fraud’. If most regulators in developed countries hadn’t figured out yet that blockchain was a better way to do those things, their counterparts elsewhere could see the opportunity. Smaller countries had a relatively free hand because of the lack of cumbersome legacy systems. Some of the innovations enabled by blockchain in smaller countries would be worth importing to leading nations. 

One example of this was financial inclusion; another was the question of identity. Pellerin pointed out that ID was always going to be the logical ‘entry’ into the blockchain system, with ‘selective disclosure’ coming later if you’re lucky. But Long again won the audience’s heart by making a key distinction: ‘Governments control the evidence of identity. [But] what is identity? It's the essence of your being – it's governed by natural law. It has nothing to do with any ID or a piece of paper or any other instantiation of who you are. It is who you are. And so that's important.’

When the applause died down, she added: ‘Because right now there are 15 million people who have come into the United States that do not have those papers that can provide evidence of who they are – and that's the unbanked.’

Businesses tended to do a better job than governments on this, she said, but the problem with handing over your ID to a bank is that it can share that information with other institutions, and ‘data in motion is usually less secure than data at rest’ – especially when it’s not encrypted. 

Hoskinson interjected at this point. Perhaps the governance talk was getting a bit political. ‘Just real quickly, sorry. So IO is not building any vaccine passports – just pointing that out.’ It may have received the biggest cheer of the evening, but the comment led on to a series of very serious points about the notion of identity.

‘The reality is that identity is not a singular thing. You have a person, but that person can have many different identities. They have online identities, work identity, family identity, religious identity, the identity when you go see the in-laws.’

Being able to take back control of all those different identities was the ‘magic’ of DIDs, or decentralized identifiers, Hoskinson said. ‘Reputation is what matters about identity . . . and it's always connected to a context. Do I want to hire them? Do they want them to take care of my kids after school?’

At present, whoever controls society controls people’s identity. ‘But we no longer need central authorities and institutions to be the connecting tissue to move reputation around.’

Legacy big tech groups ‘all in their own way are creating identity systems, and they're embedding them into consumer products. And they put clever little names on it, like a Google ID or Google authenticator or Apple Pay.’

Hoskinson painted the picture of a battle for identities, a battle that would be fought within a fixed time window. ‘And whoever wins that will have a profound impact on your ability to use your life . . . Controlling our own identity and having it be self-sovereign is [one of the] major challenges in the 21st century. It’s foundational and . . . [one that] this industry has to win to survive.’

Telpner added that while blockchain could provide the tools to take back personal data, it was up to the people themselves to tell the banks: ‘This is ours. This is not yours.’ It had cheer written all over it, but the audience stayed silent. Perhaps they were thinking. 

Fragiskatos knew how to engage the audience in the ID discussion. ‘I think there's business, and there's personal. This one [ID] is very personal. I am sick and tired of my accounts being compromised. Last time I checked every single one of my accounts was compromised. And then you've got companies making money from my data. It makes you feel powerless because – Oh, it's just the way it is. Right? That's the feeling we've become accustomed to. I think [blockchain] is just the better system, period. And it will ultimately be adopted everywhere.’

The crowd loved it. Gregaard then tied the question back in with blockchain’s bigger ambitions, as a corrective to state overreach. ‘I really think we're going to lose that war,’ he said with intense conviction. With his reference to war, it was clear he was addressing not just Jerry’s frustration with data compromise but also Hoskinson’s comments about a war for control of identities. 

If we cannot show meaningful participation ... and get people to really show their opinion, we're just not going to win that [battle against state overreach] – Frederik Gregaard

‘If we cannot change governments, if we cannot show meaningful participation with a non-fungible voting system and get people to really show their opinion, we're just not going to win that. The only way we can win that is to prove that we can create a trusted identity on a blockchain, which holds more trust than what the enterprises and the banks are collecting . . . And if we're not able to do that, then we lost before we even started the fight.’

The next question came from Hoskinson himself: ‘What’s the next big thing?’ It seemed to be directed at Gregaard, sitting to his left.

Gregaard said it was interoperability of existing systems, not just the chains, to make it easier to get crypto into fiat currency, among other things.

For Telpner the next big thing was clear: governance. Certainly it was the theme that kept rearing its head in almost every discussion. Fragiskatos said it wasn’t necessary to know the next big thing, but his bet was that it would be the disruption of social media. 

To finish up the conversation, Hoskinson took to the stage alone, and took us back to first principles. There was an ‘honesty gap’ in the blockchain industry, he said, which had ‘written a lot of checks’ that it had yet to cash. The focus needed to be on finishing the things that had been started. 

‘It's one of our biggest failings. We tell people, Use this application, do this thing, and then it blows up and tens of millions and hundreds of millions, then billions of dollars get lost. Yet somehow it doesn't seem to get better – it just seems to get worse.’

Surely that was a governance issue? Perhaps, but if so it was one that would require more adoption to fix.

Addressing the worsening moral hazard around promises, Hoskinson said, would require higher standards, better certification, auditing, and rigorous coding practices. To that end he was collaborating with experts in formal program verification. ‘The kind of guys you call when you want to build a train, an airplane, or a car and make sure the thing works and you live to tell the story.

Somehow, some way, we must build a government for Cardano together, one that works – Charles Hoskinson

‘How do we take these amazing innovations, born of academia and forged in industry, and bring them together and apply them to our industry in a way that scales down to an agile development team – not PhDs living in a lab with million-dollar budgets, but entrepreneurs, two, three people working together?’

The answer was one that seemed to bring together all four themes of utility, governance, impact, and adoption. ‘It turns out there's this beautiful isomorphism between certification and an open app store right now,’ Hoskinson said, with a twinkle in his eye.

An app store like this would be a world away from the ‘curation model pushed upon the consumers’ thus far, where you can only hope that if an app is in the store then someone has done the checking, and where sometimes it is decided ‘that people shouldn't be in the app store because maybe they compete with Papa Apple, or Google, or Microsoft’. 

Hmmm, was this a governance issue? No, wait: maybe it’s adoption. Utility? OK, it’s all of them. 

‘What if you create a store where it's always open, anybody can come, anybody can build? You just submit a transaction to the blockchain – it's there. But because you have the ability to certify, the way it gets visualized and presented, how it appears to the consumer, is different. The more work you do to prove the things you have are high quality, not a scam, secure, the better it appears. The less work you do, the worse it appears. Pretty simple concept, right? 

‘You preserve openness, but you leave the burden on the [app developers] to prove to the people who are going to be downloading this, using this, trusting it with their identity, their money, their privacy – you leave it to them to prove to you that they've done their homework and they've done it right. What Cardano is doing with so many great partners in the utility track is delivering that to you.’

That may have been part of the utility track, but as so often the other tracks of adoption, impact, and in particular governance seemed to peep through. And it was to this point that Hoskinson had the (almost) final word. ‘Oh, governance. This is the hardest one of all of them. Boy! Why? Because do we have a government that works!?’ 

There followed the biggest non-cheer of the night. A deafeningly silent anti-cheer. 

‘Exactly,’ Hoskinson continued. ‘The one thing I know from the 52 countries I’ve been to in the last few years, you know what? The number one complaint is: My government doesn't work. The Swiss say it, the Russians say it, the Chinese say it, the Japanese say it, the Americans, we say it. No one's happy with their government. So yet somehow, some way, we must build a government for Cardano together – that works. Good luck! And you know what? We're going to get it done.’

Reporting by Dominic Swords.