"After a couple of years of Ethereum, it became clear what was missing," Wood said in an interview at Unfinished Live

Half a decade after launching Etherum, Gavin Wood is still convinced that blockchain technology has the power to transform the world. “Blockchain is one of these very, very few technologies, I can’t really name very many others at all, that directly serves to dilute power,” he said during a conversation with journalist Manoush Zomorodi at Unfinished Live.

But he admits that he didn’t get everything right the first time. “After a couple of years of Ethereum, it became clear what was missing,” Wood said. “There needs to be clear governance.”

Wood, who also founded The Web3 Foundation, is now working on a new project called Polkadot, which connects different blockchains together. Each one is free to design their own governance mechanisms. “So maybe it’s voting, maybe it’s people that have locked themselves into the system long term get a bigger voice,” he said. “There are all sorts of ways how we can create these very agile governance apparatuses.” 

Gavin said Polkadot also addresses one of the biggest issues cited by critics of blockchain and cryptocurrencies: their negative impact on the environment. “We make sure that we use a super efficient way of generating consensus,” he said. “Where we don’t waste real resources, but we just tie up virtual resources.”

Watch the full conversation below, and scroll for a written transcript. The transcript has been lightly edited for clarity. Statements by these speakers have not been fact-checked by Unfinished and represent their individual opinions.

Manoush Zomorodi

So here we are. Can you raise your hand if you feel like, “Blockchain, I totally get how it works.” Raise your hand if you’ve ever said that. Okay. So not a lot of us. I have been working really hard over the last three years to try to understand how blockchain works, what it is, if it’s not just a sort of fantasy. And I think what we’ve heard so far on this stage are a lot of big ideas, a lot of lovely ideas, but not a ton of brass tacks about how this technology actually gets built and puts those ideas into reality, and potentially into our pockets. That’s why Gavin Wood is sitting across from me right here, to hopefully try and shed a little bit of light on what the technologists who maybe aren’t as good at explaining it — but are really good at building it — what that looks like, how it actually can be made accessible to all of us in some ways. 

So, Gavin, I just want to ask you, you were not a blockchain person to begin with, but a decade ago something happened and it kind of changed the world of technology for all of us, for everybody, whether we know it or not. Can you talk about the time that you met a guy named Vitalik? 

Gavin Wood

Yeah. Wow. It was a while ago now. Eight years, I guess — early 2013. I was reading an article. The article was describing this thing on the internet, this kind of oddity, It’s called Silk Road. And it was this thing that they couldn’t do anything about. And one of the reasons they couldn’t do anything about it was this thing called Bitcoin, a currency that was used on this website. Now it got me thinking, it got me thinking why can’t they do anything about it? This was the first time that I’d heard of the notion of technology being used to do something that human structures couldn’t do.

So I looked into Bitcoin, I actually met the guy that was featured in the article guy, the guy called Amir Taaki. He was living in a squat at the time. It was the first time I’d been to a squat, so that was a learning experience in of itself. And he introduced me to a couple of guys, and one of the people that I met through one of these introductions was Vitalik, who was working on Bitcoin at the time, and was wondering how maybe Bitcoin could be extended to be made a little bit more general, and take on some different functionality beyond just being a currency. So Vitalik eventually published this idea paper at the time. Although it was reasonably technical, it was clear that parts of it weren’t super well defined, or weren’t really going to work. And yeah, through this common friend, I basically told Vitalik, “Look, I’m happy to have a go actually implementing this thing if you want.”

Manoush Zomorodi

And so the group of you started to build one of the biggest blockchains, which we’re going to talk about in just a second, but I want to get into how blockchain actually works, or how we can explain it more simply. So in 2018, I was part of a very unusual project, a multimillion dollar project, that was trying to use blockchain to save journalism, called Civil. Anybody remember that project? Yeah. So we documented the entire experience in a podcast that I made called Zigzag, and part of what we tried to do was explain to people what the hell is blockchain? And so we thought a song would help, and so I’d like to just play a quick clip if that’s okay. Can we play the clip? It’s three things you need to know about blockchain.

The song plays. Its lyrics are as follows:

Number one, something you need to know about blockchain. Blockchain is related to something you probably have heard of. Bitcoin.

Bitcoin is blockchain’s baby. Bitcoin is blockchain baby.

Great. Cool. Okay, good. So got number one. Ready for number two. Blockchain is a new way for humans to make deals.

Transactions, Trading, taking care of business on the blockchain.

Great, yeah. I like that. Okay. And number three, blockchain requires a collective spirit. Think lots of people and computers, all working together.

All my friends are computers, and we’re working together on the blockchain.

Excellent.

Manoush Zomorodi

So extremely simplistic definition. But catchy! I still have people who see me and start singing it to me. What do you want to add to that, Gavin? [The audience laughs.] Hey, we’ve got to start somewhere! Because it is really confusing. The necklace of computers is how I like to think of it. Does that speak to you in any way?

Gavin Wood

Okay. Yeah. I mean, there’s nothing particularly wrong in the words of that song. So definitely a good starting point.

Manoush Zomorodi

Journalistically sound.

Gavin Wood

Yeah. I mean, as a technologist, someone has implemented quite a few blockchains now, it’s very easy to get into the technical details, and I think that’s probably not going to be super useful. But we can think of it in another way as basically digital service provision without the service provider, right? So when we go to use Facebook, or Google Search, or whatever, we’re actually going to an organization that is owned by a person, usually it’s run by a CEO, and there’s a bunch of shareholders that make the decisions, and we’re wanting to access their services, and they’re providing those services back to us. But crucially, there’s always this service provider involved, right. And that service provider has absolute control. So if we imagine the internet as kind of a big country, and this country is actually run by a bunch of dictators, each with their own plot of land, almost feudalism.

And the reality is that we need to move beyond this very feudalistic system, because as we found out in the past, it’s not the greatest for innovation. It’s not the greatest for the lives of the population, and it’s generally a bit useless.

Manoush Zomorodi

But you did start out with Bitcoin, which I do think we’ve seen as the best use case scenario to begin with, right? And you also talked about Silk Road, and essentially we know that dark money and a lot of criminals, and those sorts of things, like this idea of a place where no one’s in charge, because they can create transactions, monetary transactions, without anybody, in theory, being able to trace it back to them. But back to Vitalik, you and him and a bunch of other guys, decided well, actually let’s create a blockchain that does more than just exchange a currency, right? And that is Ethereum. Is it okay if I play one more clip to explain Ethereum? He’s reluctant. I’m going to do it anyway. Can we play the next clip, which is about Ethereum.

The song plays. Its lyrics are as follows:

Ethereum is the kind of blockchain software, a protocol. And this is really important. Anyone can use Ethereum to build apps on the blockchain. Blockchain apps. Think of it as the iPhone and apps. Apple lets developers use their iPhone software to make all kinds of apps. Anyone can use Ethereum software to build blockchain apps, except they call them dapps [pronounced “D-apps”]. I thought they were called “dapps,” but they’re not, they’re “D-apps” because they are decentralized.

Decentralized!

Manoush Zomorodi

Technically sound, come on, mostly right, though, right? Okay. So this idea of using blockchain to do different kinds of transactions, that’s what Ethereum’s big promise was. There also is ETH, of course, which is the cryptocurrency that’s attached to it, I suppose, is the best way to put it.

Gavin Wood

Correct.

Manoush Zomorodi

But you have created now another blockchain, as it were, Polkadot. Tell us why you decided to do that, and how you see that being used in new and different ways.

Gavin Wood

Yeah. Okay. Well, Polkadot came about as a desire to radically iterate upon what I’d built before. So yeah. At the time, of course, we knew that Ethereum, the Ethereum that we built, was not going to be the final blockchain, but it’s great to prototype things. It’s great to deliver an MVP as fast as you can. But after a couple of years of Ethereum, it became clear what was missing. 

One of the things was missing was actually, it’s what [Unfinished creator] Frank [McCourt] was talking about a lot earlier, governance. There needs to be clear governance, and we have this great tool for forming consensus amongst the crowd of people who use it, the crowd of stakeholders, but what we haven’t really done with blockchain is explore the decisions that a blockchain needs to make outside of its direct application. One of these decisions is how the blockchain should evolve its technology, how it should it, whether it should, fix certain bugs. Now these are decisions that are, for example, bailouts or rescues. These are things that you can’t program into a blockchain on day one, they are decisions that have to be made as and when you come to need to make them. And so this is something that we built into Polkadot from scratch.

Manoush Zomorodi

So you’re saying that, when you say fixing a bug, you’re saying you can program the code to say, “If there’s a disaster, here’s the plan.”

Gavin Wood

We can program the code… It’s very difficult to define a disaster before it happens.

Manoush Zomorodi

Yes, as we all know.

Gavin Wood

But what we can do is we can say, “Well, if enough people believe that this is a disaster, according to our metric of governance,” so maybe it’s voting, maybe it’s people that have locked themselves into the system long term, get a bigger voice than those who are just short term in the system, there are all sorts of ways how we can create these very agile governance apparatuses. But we need to think about this, and we need to build it in from the beginning. It’s not something that you can retrofit, because of course, if there is no way of making a decision to up upgrade to the governance in the first place, then how do you decide to actually retrofit it?

Manoush Zomorodi

So the project that I was part of tried to have governance as well. There was actually, there were humans. [Former Civil head] Vivian [Schiller] was the head of the humans who would actually make decisions, that was the idea. There was also a token system where regular people could in have their say, depending on that. Can you talk about some of the examples, like you said, it’s great to prototype. So how are you using any of the blockchains that you’re part of to actually do things on the ground? Are there real life examples that you can give us?

Gavin Wood

Yeah, sure. So one of our earlier projects was we worked with one of the agencies of the United Nations to deploy a kind of food voucher scheme for people who have been sort of the victims of the various global upheavals that we’ve seen. In this case, it was refugees who are in the camps in Jordan, and using the blockchain technology that we’d built, we were able to really help together with some of the means of optical identification, we were able to get food to the people who actually needed the food in a super low cost, super low margin fashion.

Manoush Zomorodi

And that was using mobile technology? Like mobile phones essentially?

Gavin Wood

Yeah. I mean, basically it was QR codes, so paper tokens, and in addition to mobile phones, some optical recognition, it’s like retina—

Manoush Zomorodi

Iris scanning?

Gavin Wood

Iris scanning, that’s right, and in addition to that, blockchain.

Manoush Zomorodi

Okay. So it’s ironic to me that in a trustless idea that we’re talking about, you got to have a lot of trust if you’re handing over like the iris scan to somebody, right? The privacy implications are pretty huge, in a project like that. We’ll set that aside for now, because we only have six minutes and 30 seconds left, but the project that I was part of, Civil, failed very dramatically, and a lot of journalists were pretty gleeful about it. Many of you are here in the audience actually, and there’s a lot of skepticism out there about technological solutionism that, tech problems got to be solve with tech, that techies love to say that because it keeps them in a job and actually makes them a lot of money. How do you assuage the critics sitting in front of you?

Gavin Wood

Well, I wonder if I really need to make the argument that the world was not a better place to in the 1600’s, right? Technology has, broadly speaking, made long term the world a better place for most people to live. People don’t generally die in their mid-thirties of preventable disease anymore. But yeah, for sure, the problem that I see with technology in general, it does tend to be a power concentrator, right? The reason that technology tends to happen is because people in power want to consolidate their power further. So they pay for technological development. It’s very easy to see examples of this. Look at Facebook, it pays for innovation into AI in order to sell more adverts, make more money in that direction, but they sell more adverts and make more money if this AI causes a greater amount of divisiveness in society, and there are academic studies demonstrating this, and that’s a very unfortunate side effect of technological development, and I think occasionally you need overhauls.

There needs to be pushback, but it does, I agree with Frank, it does need to be a pushback technologically. There is no arguing with technology. There is no arguing, generally speaking, with systemic or structural power. So you need to create a means of diffusing that power, and blockchain, the funny thing is, one of the sort of first Eureka moments that I had way back in 2014, was that blockchain is one of these very, very few technologies, I can’t really name very many others at all, that directly serves to dilute power. And that’s a very strange thing to want to do, but yet I think the world has gotten to the place where there is so much concentration of power in what I would call trust structures. Basically institutions and corporations that operate based upon a widespread trust that they act in their clients and consumers favor, when in fact, a lot of the time they really don’t. The society has so many of these trust structures that we’re finally getting tired of using them. See the Snowden revelations that led me to sort of put forward the concept of web three, back in 2014, and the 2008 banking crisis, as two clear examples of that.

Manoush Zomorodi

I’m totally on board with that, but my sort of conclusion when the project failed was whoa, it is so early in this technology, the idea of deploying it to the point that the average consumer could actually take part… I mean, I dedicated an entire episode to explaining what a wallet was, a crypto wallet, and how you work it, and I just don’t know, are we at a place where we actually think that we will be able to build, potentially, a new way of transacting digitally in our lifetime?

Gavin Wood

Well, one of my goals with Polkadot is to remove the need for the mainstream adopters to use crypto at all. And this is something that’s dramatically different between Polkadot and the smart contract model that we saw that was introduced with Ethereum. Fees for Ethereum have to be paid by the users, and this means that users need to hold ETH, it means they have to have an Ether wallet. This is almost like requiring you to pay for your slice of Google’s electricity bill, when you use their search facility. This simply wouldn’t work in reality. So I think the platforms, smart contract platforms like Ethereum, are going to have a hard time reaching that real mainstream adoption, that sort of billions of users adoption.

And it’s not simply because of the scalability problem, but it’s also because users have to hold Ether. They have to hold this crypto. So with Polkadot, the applications buy almost a job lot of consensus bandwidth, they buy a job lot of transactions, for their users, and then they, as their applications, in the same way that Facebook, and Google, and Twitter kind of decide who and when they allow to use their services, these applications would do the same thing without the need of those users necessarily paying any kind of tokens, or even being exposed to the concept of cryptocurrency.

Manoush Zomorodi

Okay. That actually made sense to me. So yay. The last three years weren’t a total waste. I don’t know if it made sense to any of you, but you have to get people to be willing to try. They have to be putting in the time. And right now there’s a big PR issue when it comes to blockchain, and of course it’s climate change, right? Can you, in a very basic way, explain the difference, how there is an attempt to use these different blockchains, the ones that aren’t like Bitcoin and other cryptocurrencies, from proof of work to proof of stake? Basically changing what needs to be done for the blockchain to continue to function and make transactions.

Gavin Wood

Sure, so very quickly—

Manoush Zomorodi

You’ve got 45 seconds.

Gavin Wood

I’ve got 45 seconds. The way that Bitcoin and Ethereum work, the way that they allow for this service provision without service providers, is by having the people, the operators of these computers, to prove that they are worthy of progressing the network along and processing transactions. This proof is called a proof of work. Also known, I actually introduced this term, I will have you know—

Manoush Zomorodi

Claim it.

Gavin Wood

Proof of waste, right? They are proving that they are wasting energy to do this. Now that’s a really dumb idea, right? It’s like the fossil fuels of blockchain. And if anyone tells you, “Oh, well look, it’s okay because we’ll build green power plants for this wasted energy.” That’s really dumb. What we do with Polkadot, and what we do with some of the other blockchains is we make sure that we use a super efficient way of generating consensus, where we don’t waste real resources, but we just tie up virtual resources. Resources that don’t really exist, and therefore don’t really matter if their opportunity is wasted for a while.

Manoush Zomorodi

Okay. We need another session for that one, clearly. But I think we’re getting there. We’re getting there. I really hope that this helped you grasp onto the technology a little bit more as we go into the afternoon and feel empowered, because I do think that’s the right word, to ask the right questions of the people who want to build this new future. Thank you so much for having me Gavin. You’re the best. Thank you for being here.