EVOLUTION TO THIRD GENERATION BLOCKCHAINS & BEYOND

By: Viren Gandhi

Presentation: Blockchain Conference May 23rd, 2018

INTRODUCTION1.) WHAT IS A 3RD GENERATION BLOCKCHAIN …. WHY IS IT IMPORTANT?

3rd GENERATION BLOCKCHAIN DEFINED:

1. SCALABILITY – Bottleneck Disasters…

2. INTEROPERABLITY – Talking to legacy / what’s already out there

3. SUSTAINABILITY - Voting & Governance (my focus)

2.) GOVERNANCE AND DECENTRALIZATION: Are governments and banks truly evil, Why IS IT necessary TO NOT BE CENTRALIZED?... (Hybrid DLT)

3.) WHAT IS THE BEST 3rd GEN BLOCKCHAIN?

WHY IS THERE SO MUCH ATTENTION ON EOS, at the MOMENT, AND

FUTURE BLOCKCHAINS will integrate: A.I. Machine Learning & Augmented Reality, AUTONOMOUS MACHINES, IoT: Internet of Things

SHIFT TO PEOPLE: MORE USER DRIVEN

APPS TO DAPPS EVOLUTION

REPLICATED NETWORKS

Digital Ledger Technolgy

NEW Apps are RUNNING ON THE BLOCKCHAIN

2018 is theYear of the Dapps

deep learning to machine learning, artificial

intelligence and even the emergence of the

Internet of Things (IoT),

• Blockchain itself is an evolution of the internet – transfer of Data … and Value

• BLOCKCHAIN CAN TRANSFER VALUE AND “INTELLIGENT” INFORMATION

EXAMPLES: 1GEN, 2GEN, 3GEN BLOCKCHAINS

1st

Gen: Bitcoin 2nd

Gen: Ethereum 3rd

GEN: EOS

Announcement 2008 2014 2017

Launch 2009 2015 2018

Creator “Satoshi Nakamoto” Vitalik Buterin Dan Larimer

Team Decentralized Ethereum Foundation block.one

Ledger Blockchain Blockchain Blockchain

3RD GEN BLOCKCHAIN CHARACTERISTICS: SCALABLE, INTEROPERABLE, SUSTAINABLE

• SCALABILITY: not just speed, which varies. Ability to scale with new users.

• INTEROPERABILITY: cross-chains, legacy standards, future use.

• SUSTAINABILITY – To ADAPT TO CHANGING in society … voting systems for mining, treasury asset for development, Ensuring Fairness for the digital currency community (Egalitarian Opportunity vs. Elitists)

• Examples: Cardano, EOS, NEO, STELLAR, TRON, Zilliqa, AION, IKON, LINK, Dragonchain, Telegram, AURAE, IOTA, etc.

PROOF OF WORK MINING … IS A PROOF OF WASTE

PROOF OF WORK MINING: Bitcoin, Ethereum and many others…

EVOLUTION in 3RD Gen Blockchains is to forms of POS (Proof of Stake)

DESIGN TRADEOFFS

Privacy Vs. Speed

Security VS. Ease of Use

Public Vs. Private: DLT vs Blockchain (Hashgraph,

NANO and peaq are DLT)

Voting Vs. Crypto-economics

Usability Vs. Performance

PHYSICAL NETWORKS PUBLIC VS PRIVATE BLOCKCHAINS

COINMARKET CAP LIST MANY 3RD GEN BLOCKCHAINS…

WHO WILL REIGN SUPREME?

(ICX, AION, ARK)

BLOCKCHAIN COMPARISONS

Bitcoin Ethereum EOS CARDANO

Block time ~10 min ~15 s ~0.5 s ~20 s

Consensus Proof of Work Proof of Work Delegated Proof of Stake Ouroboros Proof of Stake

Distributed POS

Transactions per second ~5 ~10 > 3000 (or unlimited) 200 (lab test)

Smart contracts No Yes (Solidity) Yes (C++) Haskell

SOLVING THE SCALABILITY DISASTER

• KEY DLT CHALLENGE Too many users. ledger just keeps getting longer, making things slow, inefficient and expensive!!! New Features and Dapps keep increasing… Bottleneck.

SOLUTIONS

• LAYERING (transactions, Control, etc.)

• SHARDING (atomizing), HYBRIDS,

• ELIMINATION OF MINING, OFF-CHAIN ASSISTANCE

EXAMPLES:

• CARDANO: 2 Layers (Crypto Settlement Layer + Smart Contract Control Layer) Haskell programming language advantage

• EOS: Horizontal and Vertical Integration

• NANO: Block Lattice (without mining), instant, no fees

1. EVOLUTION OF SCALABILITY

• 1st GEN: Bitcoin – a Store of Value Upgrade to Lightning Network (Does it work?)

• 2nd GEN: Ethereum - Smart Contracts / ICO Launchpad for DApps Upgrade with Plasma Chain Multiple protocols needed to bring Ethereum to the 3rd Generation: (3 to 5 years timeline to scalability) … path to centralization… (Frankenstein Monster). Transition Ethereum from Proof of Work to Proof of Stake in future?

• 3RD GEN: HIGH SCALABILITY * HIGH SPEED Infinitely Scalable Architectures:

• Eg.: Cardano, Nano & TRON targeting ability to handle large network volume, with near instant, free transactions.

2. INTEROPERABILITY: WILD WEST = NONSTANDARDIZED

CHALLENGE: Interchain communication with ON-CHAIN SCALING at high speeds...

• PROBLEM 1: Too many protocols to translate (Legacy and New)

• PROBLEM 2: Currently, there are no overarching technical standards for blockchain, and it is unrealistic to think we will get them soon across all use cases., except some business standards for specific uses, such as cross-border transactions and smart contracts.

• PROBLEM 3: Banks & Govt roadblocks

PROBLEM 4: connecting two blockchains is much harder than

connecting two networks. Why? Because with blockchain integration,

you are connecting two value networks that may not necessarily talk

to each other.

3. SUSTAINABILITY

• GOVERNANCE: VOTING … or FIXED CRYPTO-ECONOMIC RULES?

- ARE WE AGAINST REGULATORY GOVERNMENTS or ONLY ABUSIVE CORRUPT ONES?

• USABILITY – User Friendly Features: Lost Pass word, Hacked password recovery

• FUTURE PROOF: Hack Resistant, Fraud Resistant, Adaptability, Scalablity

• RESISTANT TO CENSORSHIP (Regulators and other Govt bodies)

• GROWING CONSUMER DEMAND

ARISTOTLE & GOVERNANCE ADVICEBitcoin and Ethereum communities have experienced

devastating schisms on the question of how to upgrade their

networks… Leading to Forks and other issues …

AD-HOCRACY VS. DEMOCRACYMAJOR CHALLENGES…

GOVERNANCE – VIRTUES & DECISIONS THAT AFFECT PEOPLES LIVES

• GOVERNANCE KINGDOM:

1. PHYSICAL NETWORK Governance: Master Nodes, etc.

2. Governance of Development: (Code Updates, changes, roll back if possible, infrastructure, password recovery)

3. POLITICAL Governance: How to Achieve Consensus?

Mining Problems, Wholesale Changes vs Forks, New features…?

BLOCKCHAIN GOVERNANCE

Who Governs LEGITIMATE OR

CORRUPT???

… Governance by:

One guy:

Vitalik Buterin

VITALIK BUTERIN decides!

Ethereum Foundation

Few: Partly

Centralized

EOS Voting, BlockOne

+ DAC: Decentralized Autonomous

Community

Many: Bitcoin AUTONOMOUS

Full Decentralized

AUTOMATIC. Fixed Rules

BITCOIN.ORG ensures any Developer can

volunteer

CONSUMER INFLUENCE: Digital currencies, token systems allow consumers to vote with their feet…

THREE AREA OF GOVERNANCE: 1. PHYSICAL NETWORK, 2. DEVELOPMENT 3. OVERSIGHT AUTHORITY

THEORY OF DECENTRALIZATION

NETWORK

MANAGEMENT:

DECENTRAL VS Central

GOVERNING DECISIONS (VOTING) …

DECENTRALIZED?

NEW DEVELOPMENT of FEATURES,

UPGRADES: Code

DECENTRALIZATION

INTELLIGENCE TYPE: LOGIC EMOTIONAL PRAGMATIC

MANIFESTATION NETWORK ARCHITECTURE GOVERNANCE

(Libertairan, vs Democratic,vs

Egalitarian)

DEVELOPMENT is In-House

(Central) VS

Community Foundation

Who Decides? Few or Many One person vs Many Closed Insiders or .Org Open

Source Coders

Corrupt Individual Infrasctructure Tampering Leaders, or rigged voting, Bribery. Corporate Interest

Govt Regulators

Corrupt System Hack Passworld Rigged Voting GitHub, or Foundation Flawed

GOVERNANCE OF CYRPTO-MININGMINING RIGHTS - The ability to create money from nothing was the original problem of Central Banking, now repeating itself in digital

currencies…

CONSENSUS MECHANISMS INFLATION GAS FEES

PROBLEM: Cartel / Dictaotors Crypto-Mining Elite Profiteers

An original intent of blockchain was to break inefficient government monopolies t new power structures have ben created

• Ethereum is majority controlled 2 mining pools

• Bitcoin is majority controlled by 4 mining pools (51 percent control)

• EOS has 11 of 21 blockproducers to control.

How can we entrust the cryptocurrency creators with arbitrarily selected rules for digital mining? What about EGALITARIAN OPPORTUNITY TO MINE?

3RD GEN: GOVERNANCE EXAMPLESPROGRESS OF A KIND…

CARDANO has created a TREASURY for future development: a little piece of each transaction a small portion is

deposited into TREASURY in an unowned wallet, and governed by smart contracts. On each transaction… and

stored for future developmental payment. Users vote on which features need to be most urgently upgraded.

EOS: Community votes on who mines (DPOS) and there are only 21 MasterNodes voted in at one time to produce

blocks (mine EOS tokens).

FUTURE OF BLOCKCHAINGOVERNANCE… AND BEYOND

A. MASSIVE CENTRAL POWER TRANSFERS TO THE PEOPLE FORMING NEW ELITE GROUPS BUT BALANCED BY REQUIREMENT FOR SOCIAL CAPITAL, and EGALITARIANISM.

B. DIRECT DEMOCRACY: Referendum Voting, UNIFYING COUNTRIES (less important) and citizens.

C. EDUCATION: Edification of society to where more free time will be available to contemplate public good, philosophy, and the evolution of thought… a Utopic vision…

D. PROSPERITY INCREASE OVERALL. BALANCING OF CLASS DIVISIONS

SECURITY CRYPTO-SAFETYAND THE LOADED GUN

RED ALERT:

• Crypto Passwords are lost regularly. Just recently someone lost 90% of his Altcoins because he generated a very strong password and by technical/user error the password was not saved

• If you handle significant amounts of value in bitcoin you have to treat it like handling a loaded gun!

RECOMMENDATIONS

• Make regular backups of your crypto wallet! strategy is the 3-2-1 strategy: 3 Backups on 2 different media (e. g. external Hard Drive and USB stick) and 1 of these offsite, like at a friends house.

• “seeds” or “private keys” – Please use a “hierarchical deterministic wallet” (HD/BIP32) so you only have to perform a single one-time backup which consists of 12 or 24 human readable words that you can write down and keep in a safe place. No regular backups needed!

• Hardware wallets like the Trezor make it easy for the average user to keep their coins secure.

CONCLUSIONS

It is difficult to determine the best 3rdGen Blockchain because it is based partly on PERSONAL PREFERENCE:• IDEOLOGICY (Politics)

• PERFORMANCE Needs

• SECURITY and USABILITY features.

DESIGN TRADE-OFFS make it complex & to find the optimal solution… but can improve Scalability, Interoperability, Sustainability.

FUTURE BLOCKCHAINS will integrate: • A.I. Machine Learning & Augmented Reality, Quantum Computing

• Cooperating AUTONOMOUS MACHINES, IoT: Internet of Things

• Mass Market Adoption

EOS CREATED BY DAN LARIMER3RD GEN BLOCKCHAIN EXAMPLE:

• 2013 - ProtoShares

• 2014 - BitShares

• 2016 - Steemit

• 2017 - EOS (whitepaper and token)

• 2018 - EOSIO

EOS RECENT RISE Wrote Whitepaper last year

2017 and it Currently is #5

cryptocurrency!

#1 among tokens

Traded on Binance,

Bitfinex, Kraken...

EOS

Market Cap: $11,195,216,465

PRICE: $12.82

Daily Volume: $878,116,000

Tokens: 873,105,173 EOS *

April appox $5 … then $20 … now$13

EOS ADVANTAGESDELIVERING ON SOME OF ETHEREUMS’ PROMISES

• No Transaction Fees (Ethereum uses Gas)

• Smart Contracts programmable in C++ and other languages

• Scalability

• Interoperabilty

• Democratic Governance (Voting on Block producers (mining) and other elements in a constitution of user community consensus.

EOS DAC

• DAC is the Decentralized Autonomous Community / Cooperative: Its all about automatic self governance. Small Group, Large Group Collectives of all kinds, a vibrant communities of self-governed organizations working together (without a centralized control). “DACs” can easily be built, launched, to empower communities.

• EOS DAC: One of the most exciting developments in blockchain and smart contracts is the advent of DACs and DAOs these decentralized autonomous communities have transparency and clearly defined sets of rules encoded into smart contracts. There is no clear legal identity for these DACs and DAOs a recent proposal for the Government of Malta identified the need to define identities within the scope of AI systems.

GRAND LAUNCH PARTY – EOS4US

EMPOWERING COMMUNITIES

TO SELF-GOVERN

A SOCIAL MOVEMENT FOR PROSPERITY INVOLVING ALL CLASSES OF PEOPLE

A mighty technological awakening is in bloom. A dismantling of entrenched powers with new opportunity for the greater public good. There is a feeling in the air of change, that the inevitable blockchain evolution is not merely a

disruptive insurgency, but a “foundational” technology, set to transform entire industries and economies, with formidable staying powers.