What I wanted to talk about today is the concept of
a “killer app,” and how we will find it in this space. It is a topic that also comes up with Bitcoin. One of the most common questions
I am asked is, “What is the killer app?” “Do you have some thoughts about
what the killer app in Ethereum is?” “Replacing Bitcoin” isn’t the correct answer, by the way.
[Laughter] This is an interesting question. When people look out at all the possible applications
that might exist, whether in Bitcoin or Ethereum, you map out what you think
might be a [development] space. That is not always the first thing to happen.
Some applications require prerequisites: infrastructure, a concentration of users in a
specific geography, an industry working together… to adopt a technology. You won’t [build] the same applications in the beginning
as you do after it has matured for a while. Think about the internet for a while and look back.
I was around in the early days of the internet. I remember that in 1992, everybody knew that
video-on-demand would be an app; it was a no-brainer. You [didn’t] need to know a lot to figure out
that video-on-demand would be a killer app. I remember the first video conferencing
demonstration that I participated in. It involved two rooms, about
£2 million worth of equipment, and a connection over fiber between the University
of London and a university in the United States. The culmination of a two-year project was pretty
much what you would do today on a Skype call. Video-on-demand was obvious, but not yet [viable].
A Netflix would certainly not happen any time soon. When you are thinking about the killer app, it is not simply the set of possible applications
that could be implemented, but it is also… what can be implemented with what you have today? What requires the least infrastructure
investment, the least density of users, and yet provides a viable solution to a real problem? That is the question I spend a lot of time thinking about. In Bitcoin, we [already] kind of
see where that question will go. There is an intersection of high-value, cross-border
payments that are particularly difficult because… there are currency controls, your government
is nuts and printing $100 trillion-dollar bills. Difficult because you have very high fees or
low opportunities for banking. That is a sweet spot. It is a sweet spot because it doesn’t
[really] take much [effort] to be better. You can be slow, and all you [need]
to do is not be as slow as the banks. You can be expensive, and all you [need]
to do is not be as expensive as the banks. Then you have a viable solution to a real problem. All it takes to adopt that solution is
a sender and recipient [participating]. You don’t need massive infrastructure to do that. So what is the killer app for Ethereum? In Bitcoin, we have gone off the rails.
Everybody has gone “blockchain” crazy. “Let them call it blockchain,” says the t-shirt,
making fun of this idea that everything is a blockchain. Anything that used to be a database is now “blockchain”
and magically it acquires these capabilities: immutability, censorship-resistance,
neutrality, borderless operation, etc. which are not really characteristics of a blockchain. They are characteristics of
specific types of blockchains. if you just take a database and shove some hashes in it,
that does not an immutable blockchain make! But it makes so good money for consultants…
Everything is a blockchain, right? What is happening in Ethereum? Everything is a DApp!
An app plus ‘D’ equals a DApp! [Laughter] Let’s DApp this, DApp that, DApp the next thing,
DApp everything, everything DApp, DApp the world… which [creates the same problem] because
it attracts the wrong kind of attitude, the wrong people. The sharks start circling, [seeing] money in the water. [Venture capitalists] are throwing money at stuff they
don’t understand. Start a hype tournament. Web 2.0! Let’s run for it! Take what we were doing before,
slap “blockchain” in front, and now it is cool. Most importantly, fundable. Take what we were doing before, slap “DApp”
in front, and what we are doing is now fundable. There is danger there and you are seeing it already. I don’t want to be too harsh on the Enterprise Ethereum
Alliance, but these are not your friends. [Laughter] The idea that all of these enterprises will bring their
magnanimous attention down to your technology… and make it suddenly shine in
their enterprise applications… For the most part, they are just interested in forking
the code and creating closed, boring versions of it… that they can sell to management. As long as you are not doing anything disruptive,
they will ride the Ethereum pony for a while. Eventually, mark my words, there will be a time when
you do something disruptive and interesting enough… that they will say the magic words: “We are interested
in the technology behind Ethereum, not Ethereum itself.” Sound familiar? [Laughter] Mark my words, that will
happen… unless you don’t do anything interesting. But if you do, that will happen.
Again, where is the killer app? It is not a DApp. I think it is the DAO. The DAO. TheDAO is dead? Long live the DAO!
[Laughter] What is the essence of Ethereum? To me, it is smart contracts.
Where do people usually use contracts? Most of the contracts that I have ever signed
or written are business-to-business interactions. Yes, I sign some contracts as a consumer,
but I sign far more contracts through my business. Contracts are what make businesses run.
There is a particularly interesting aspect to that. Private commercial contracts between two
businesses are not [really] subject to regulation. I can choose which jurisdiction
[and legal system] I want to operate in. As long as it is an affair between my
corporation and another corporation, it is nobody’s business what we write in that contract. That is a wide-open space. It doesn’t offend
regulators, get into the side of governments. It is kind of [a neutral space]. It is nice. There is a particular type of contract that is the
most interesting, which is the very basic contract, the first contract you should [create] in any business.
What is the first contract you do in any business? Articles of organization, the “hey partner, don’t screw me
over and run away with all the money” contract. It is how you make sure that the people forming this
association, this venture, this vehicle, will behave… the way you expect them to behave. That is the first contract; the corporation itself
is a contract, the most critical contract. That is where Ethereum can re-invent what
it means to be a corporation in the modern world. The very essence of a corporation, the Decentralized
Autonomous Organization (DAO), is the killer app. It is a space that regulators
don’t care about, for the most part; a space where you have the greatest freedom to
invent completely new systems in which humans can… organize on a massive scale. It is Ethereum’s moonshot, the possibility of taking this
to a whole new level… into a moon orbit, if you like. But there is a problem.
Going into a moon orbit requires rocket science. Writing smart contracts to organize
corporations is rocket science. What is the essential understanding of rocket science? Fundamentally, there is very little difference
between a rocket and a bomb… [Laughter] In terms of chemistry, a rocket is
a very large exothermic reaction. The difference between a rocket and a bomb is that
a rocket is a controlled exothermic reaction, where output is [funneled] in a very specific direction. Think of [the funnel] as governance.
A rocket is a bomb with governance. That is the difference. [Laughter] A rocket is what
happens when you do governance on explosives. The problem is, when people see
the awesome power of a rocket, most of the time they are excited for the big
‘boom’ possibility, the explosive side of things. This also applies to smart contracts. In smart contracts,
money is the fuel and the contract is governance. The rocket science of a smart contract manages the fuel
of money [to ensure] it doesn’t blow up in your face. When you are doing rocket science, it is very disappointing when your neighbor Stevie
decides to strap a lawn chair onto 150,000 kilograms… of highly explosive fuel and [shout], “I shall
conquer human space flight!” [Laughter] They don’t think that governance is important.
And what happens when they blow up? It will forever mar the idea of human spaceflight. From that moment on, anybody searching for
the term “human spaceflight” online [will see]… a YouTube video of Stevie [blowing] a crater in their
backyard and turning into Stevie Mist. [Laughter] While he had the [potential] energy captured in
150,000 kilograms of highly explosive fuel, he forgot about the governance. Governance is the killer app,
how you take funds and manage them; how you take the energy of a community and
manage it; how you reinvent the corporation. Every time you think about writing a DAO,
there will be this little siren call that says, “We could raise a lot of money with this thing!” Resist that call. The way you achieve the awesomeness
of a moon orbit with Ethereum is by very careful, very conservative governance that iterates
and matures over a long period of time. That is a killer app that can change how we do
corporations, but in order to it, you must make sure… to not put too much fuel [in it too fast]. If you try to build [a full app] on day one,
you will make a big crater [in the backyard]. You will keep doing that for as long as you
[believe] that the first step is moon orbit. Let’s not do moon orbit. How about low-earth orbit?
How about just [lifting off] the launch pad? How about a horizontal harnessed engine test?
That is the challenge with Ethereum right now. But there is also tremendous opportunity. The killer app is smart contracts that
re-define the modern corporation. Right now, if you search [online] for the DAO,
the Decentralized Autonomous Organization, what do you find? Stevie blowing himself up in a giant crater. [Laughter]
Ruining the opportunity to do the killer app. Putting a lot of fuel into that engine [makes you]
overlook the maturity of the governance. What we need is a lot more work
on the maturity of the governance. For those who will do that work, it may take
twenty years to [create] an overnight success. But one day, that vehicle will go into a moon orbit.
Thank you. [Applause]