The second episode of the Early Days of Ethereum video series, independently produced by Victor Wong, Kieren James-Lubin and Jim Hormuzdiar, the co-Founders of BlockApps.

Transcript

Introduction and recap

[0:00] Kieren: All right. Well, welcome back, everybody. The first episode of the early days of Ethereum actually got quite good critical reception on LinkedIn and Twitter.

I have a total of nine YouTube subscribers now, which I think is not so bad for a first video. And there have been a few people who reached out who we've known a long time who really appreciated the content. One of them called it essential viewing.

So anyway, we're back for another episode. So remind everybody, I'm Kieran James Levin, CEO of BlockApps, here with my co-founders. Victor, do you want to introduce yourself quickly?

[0:48] Victor: Oh, okay. I'm Victor Wong, co-founder and chief product officer of BlockApps.

[0:55] Jim: I'm James Ramos-Diaz, or Jim, CTO and co-founder of BlockApps.

[1:01] Kieren: All right. Thank you. And so I believe where we left, so I can't watch video of myself.

So I forget exactly how we ended the last episode, but I believe we pretty much ended with the Ethereum launch. And there were some things we left out even prior to launch that we can kind of backtrack to a little bit, and then go forward to all of the kind of after launch activity. So with that said, maybe I'll hand it to Victor to talk about the first Consensus Dappathon, which was June, 2015, I believe.

First Consensus Dappathon (June 2015)

[1:38] Victor: Yeah. So that was, I think the first actual hackathon building what in those days were known as Dapps. I guess some people still call it, but that seems to go now in favor with blockchain applications.

So the first idea was to really try to build blockchain applications directly on Ethereum. And that was in the first Consensus office, which was like a very small co-working space in like Greenpoint, I think.

[2:14] Kieren: It was water in Williamsburg. It was called Green Desks, maybe.

[2:21] Victor: Green Desks. Yeah, that's right. Yeah.

[2:22] Jim: It's right next to the modern day Domino Park, maybe a block away from there.

[2:27] Kieren: Exactly. Yeah, that's right. And of course, Domino Park did not exist at that time.

In fact, Domino Park went up really quickly and took me by surprise. I looked up one day and there was like a big kind of well-manicured park there.

[2:40] Jim: Yeah. Well, they kind of walled it off. And so it just was like, I don't know, I thought it was like an abandoned site.

And then one day, all of a sudden the wall was gone and there was a beautiful park there.

[2:53] Victor: So at that event, which was, I think, two months, two to three months before the actual launch of I will say, the concepts were really interesting. People were coming up and it was mostly, I think, interns that were interning at ConsenSys over that summer. And ConsenSys at this point was only like maybe 20 people at max.

[3:17] Kieren: 20 or 30, yeah, that seems right.

[3:18] Victor: Yeah. It was really, really small. And some great concepts came up, but even with the stuff we built, we realized pretty quickly that no one could build anything in a short period of time.

It was just impossible. Very basic stuff, like reading a variable off the blockchain was kind of impossible. You couldn't read the state off the blockchain and all of this kind of stuff.

So that kind of led into, yeah, everything building in those days were incredibly hard. And that led into, so we decided at that event, we were going to, at the launch of Ethereum, we were going to do a bigger hackathon. And that became the second ConsenSys Dappathon, which kind of coincided with the launch of Ethereum.

And it was us, the Java client, which I think was called Ethercap at that time, and other tools that were kind of combined together. But what was really interesting about that one was, it was bigger. I think the first one we had six participants, the other one we had, I think, close to 30.

But it introduced a lot of ideas that would become more developed pretty quickly. The winner was a GameFi app. It really had that element of tokenized gameplay.

There was a decentralized social app, I think, called Truthr or something like that. And then there was a traceability supply chain app in those early days. And that kind of all coincided with the launch of Ethereum.

Second Dappathon and Ethereum Launch

[4:59] Kieren: Yeah. So, okay. So you're talking about the second one.

[5:03] Victor: I'm talking about the second one, yeah.

[5:04] Kieren: The second one, also the offices had shifted. So we had ConsenSys, which we were kind of working as a part of at that time, had moved to a much larger office in Bushwick, which is, I believe they still have a presence there, though they've gone mostly remote. I remember there was like a horse lineage app.

Yeah. Which was pretty interesting. And we ended up actually hiring a couple of people who participated in the hackathon, but that one was open to externals, right?

So that was the big difference. And it actually was quite well attended. The room, I think, never had the greatest air conditioning, but it was really quite hot in there, if I recall.

And I think that one was like 24 hours or it was two days. I can't remember.

[5:59] Victor: I think it was two days. And yeah, like the air conditioning thing. So we moved into that space to have the hackathon.

ConsenSys was because they had outgrown that co-working space already. And so we moved into that space, which was a reasonably sized room. Like you could probably get 80 to 100 people in that room, right?

But yes, the air conditioning was terrible. And we had to frantically, we only realized this after we got into the room. So we had to like frantically buy some and set them up.

[6:30] Kieren: Okay. I do have a memory of that.

[6:32] Victor: Yeah. I don't know if you recall that, but yeah, we were like trying to like get those air conditioning units in place before a ton of people showed up. Cause yeah, like we were sweating when there were only like five people in the room.

[6:44] Kieren: These were the scrappy days.

[6:46] Victor: Yeah.

[6:47] Kieren: Manually configuring air conditioning. I think the amount of like furniture assembly that you do is like a good proxy for how scrappy you are in your startup journey.

[6:56] Victor: There was a lot of furniture. I mean, it was basically an empty room when we moved in there. And I think we moved in there a day or two before the hackathon actually started.

So we had to get everything up and running.

[7:09] Kieren: And was this to like sort of commemorate the launch, I think, or was it like right before the launch?

[7:15] Victor: It was right. It actually, you know, if you recall at the time, we didn't know when the launch would be. The dates were always shifting.

Right. And we just said, we kind of arbitrarily chose, like we wanted to actually synchronize it with the launch, but because it was, because we couldn't know exactly when the launch was. And even when they declared the date, it was still a little bit vague.

Like we were like, is that going to actually happen? So we, we kept at some point had to arbitrarily choose the date and they, they more or less was the right date. Like I think it was off by maybe a day or two.

[7:55] Kieren: Jim, I might've asked you this last episode, but I'll ask again. Do you remember one trying to predict the launch and could you explain how, and two, there was some complicated mechanism for how the launch would actually happen. Cause it's hard for like a decentralized group to decide on a launch time.

I can't remember that at all.

[8:13] Jim: You were mentioning it in the last video and I didn't remember this, but I don't doubt it. It sounds correct. You were saying we were looking through the Git commits at the time.

Yes.

[8:22] Kieren: You know, you make, you make this plot. It was like commits by day. And as like the commits and you like extrapolated it for you, I think probably got within a couple of days of the launch date, but okay.

So I have to, yeah, I still don't know how they like set the clock on the first block, so to speak. Maybe we can like dig this up. There was something they did.

[8:44] Jim: It's probably in our DMs. I wish I thought to look between the first and second video to find the actual discussion that we had. Maybe the graph is in there.

[8:54] Kieren: Yeah.

[8:55] Jim: Yeah. That's very funny.

Post-launch period and early activity

[8:56] Kieren: The Slack is the treasure trove of interesting things. All right. So yeah, so it launched and I kind of felt like there was a sort of, and then what's going on, you know, it took a little time for things to get going.

And then, you know, it obviously it's been a smashing success, right? It's just sort of the reality of a new platform. You sort of get it out there.

You see what people do, you learn from it. And, you know, it took a minute for the activity to kick in.

[9:33] Jim: I remember like a lot of people around us at the time had been buying a lot of presale Ether beforehand. And so the day it came out, I think they were expecting it to like have a huge jump in value immediately. And when like a couple of weeks had gone by and it was only still like 20 cents in Ether.

So I remember people around us were kind of like, some of the people there were like, oh, this thing was a flop. It's never going to go anywhere.

[9:58] Kieren: Yeah. Yeah. And it's just psychologically.

Yeah. The expectations were super high. There was this concept floating around consensus of day one dapps.

Like you had to be ready right for the launch because it was a land grab and things were going to the moon. And, you know, it turned out to, you know, not quite, obviously again, smashing success, but yeah, the price was like under a dollar for a little bit and then around a dollar for like a while, I believe. And I did want to mention, so I had to look this up.

So the first ICO, whatever you want to call it, that was on Ethereum, obviously Ethereum did its own crowd sale. But it was like, you know, they took in Bitcoin and there was, it was something like 2000 Ether to one Bitcoin at the time, which I believe at the time was like 20 or 30 cents. And then it had gone up to a dollar on launch, which is already a pretty good return, you know, but that is what it is.

The first ICO apparently was Augur. And I knew the Augur guys a little bit. I was digging through the crypto economic con videos.

I believe one or two of them presented or run panels at crypto economic con. For folks who are listening to this, crypto economic con was a conference that we had in January, 2015, that involved a lot of the people who then, including Vitalik and some of the other Ethereum folks, then subsequently created really big and interesting, mostly layer one projects in the Ethereum space, but others as well. So the videos are actually up.

I tweeted a couple of them, but there was a, apparently, I think I created a YouTube channel like in 2015 and uploaded all those. I definitely remember getting them recorded. So check those out if that's of interest.

So Augur was the first, I guess, of the prediction markets platforms. There since have been a couple of new ones that have popped up that seem to be popular. There was also this sort of competing project called Truthcoin.

And I was kind of confused about how the two related to each other. I think there was no formal relation though. I remember meeting up, there's a guy named Matt Liston I met, who I checked his LinkedIn.

He's been in a couple of different places. So I think Augur, maybe we should look up who actually founded Augur. So Jeremy Gardner, I've known over the years.

And I met him in San Francisco with Vitalik, because Vitalik was staying at what was termed at the time, Crypto Castle. And it's kind of what you would imagine, sort of like a co-working, co-living crypto space. And not everyone there was working on Augur, they were all working on different things.

It's kind of a common thing to do.

[12:58] Victor: Well, I think if you hear the term Crypto Castle now, people would imagine an actual castle. What you're describing, which is more like a dormitory.

[13:09] Kieren: Yes, it was more like a dorm. I mean, it was a nice little house. I can't remember, it might've been like adjacent to the mission in San Francisco.

So Vitalik would stay there sometimes. Joey Krug, I've probably met two or three times over the years. I'm not even sure if I ever met Jack Peterson.

So those are the three founders of Augur. So I guess they were good friends with Vitalik, or just sort of had realized early on that it would be easier to develop on Ethereum than it would be to try to do something with Bitcoin, which was kind of the predominant suggestion at the time. But they did the first on Ethereum crowdfund, I guess right after launch, Wikipedia is saying August, 2015, which is really, really early.

I don't know if I believe this Wikipedia page. It says, soon after the platform launched, users had created the death pools or assassination markets on famous people. So back in 2015, every discussion about blockchain eventually led both to prediction markets, and then this sort of uncensored ability, you can't shut it down, would lead then to assassination markets.

Assassination markets being, you predict, you bet on the day someone dies, and then someone takes the other side of that bet, kills them and collects on it. So apparently there actually were assassination markets created on Augur. According to this Wikipedia page, I don't know.

I have to look into that. I'm a little bit dubious. But in any case, I guess Augur then blazed the trail, sort of after Ethereum did with its successful crowd sale, for the wave of ICOs that came later.

But yeah, so Truthcoin was also this competing project. I just remember meeting up with Matt at like a Berkeley coffee shop and talking about both Augur and Truthcoin had some sort of machine learning, slightly like computer science graph theoretic way of determining what the truth was. So you take a bunch of votes from a bunch of people, but then determine the principal components of how the voting is, then extract the truth from there.

It sounded very high end math, mechanistic, which it was very common of the space. Crypto has a lot of these, and I was in the math department at Berkeley, a lot of these mathematician types who kind of came in and wanted to create really complicated schemes and mechanisms and all that sort of stuff that had provable theoretical properties for something interesting about the space. But yeah, so they must have launched it right away.

That's very interesting.

[16:06] Victor: I remember I was talking to them at some point and they were developing that. They did want to be a day one dApp, I remember.

DevCon 1 and Microsoft announcement

[16:14] Kieren: Platform went live 2018, the Wikipedia page says, but they did the crowd sale basically right away. So should we go on to DevCon 1, which I guess I can talk about. So kind of concurrently while all this is happening, we started to work a bunch.

ConsenSys had a business development team, a little bit of a mix of marketing, BD, actual sales, et cetera, that was starting to generate interest from big companies in the technology. So for us ourselves, we definitely worked with companies far more than sort of the crypto public for most of the history of the company. Still don't really work with the crypto public today.

But ConsenSys was kind of conflicted on this front. So while they had sort of pure blockchain native projects and eventually in big numbers, they also had an enterprise arm, which is really more consulting oriented, although they kind of ended up sort of backfilling what they saw demand for with products at times. But in any case, the BD folks were reaching out to everybody and they actually got a fair bit of interest from Microsoft.

And I think Microsoft had already been kind of watching the Ethereum revolution and seeing it as something interesting, the new front of the cloud war perhaps. And so we got to working with them and actually maybe for the technical part of this, I could kind of transition. But basically, so ConsenSys had a couple of preferred projects, which had the low level, like low level, I mean like the blockchain client itself, infrastructure that could be deployed on cloud platforms.

And maybe, so that ended up being basically us and the Java folks. Vic, do you want to take any, I think you were saying before?

[18:33] Victor: Yeah, sure. So they were interested in kind of being able to deploy one of the clients that we had. We had the Haskell client and then the Java folks, they were actually more interested in the Java folks.

Wait, I should take a step back here. Just mentioning that DevCon1 almost didn't happen if you recall, right? Because it was in this low period and the Ethereum Foundation was kind of running out of money because this is why the launch had to happen when it happened.

And in that low period, they were still trying to preserve a lot of cash. And so it almost didn't happen. And I remember a lot of people inside ConsenSys were like, no, we have to bring this to kind of bring this up and make an event out of this.

I think Andrew Keyes was leading the charge in that, really saying like, we got to do this. And then this Microsoft thing kind of bundled into that, right? So it was us and the Java client.

And my background was like, my previous company, I had tried to work with Microsoft in building apps when they had their first mobile platform. And it took me like six months to get a meeting. And I had a cousin who was like a VP at Microsoft.

So it was really hard. So it was amazing to me that they were just coming to us and they wanted to launch something with us in two months. And I think at that point, we decided, okay, this is a huge opportunity.

We're going to drop everything and focus on that launch, which turned out to be the launch of Blockchain as a Service. But oddly enough, the Java guys started and then they just kind of faded away. They weren't really interested in kind of pursuing it.

They just had other things going on. So we like went over it. So by the time DevCon1 happened, the only thing that was working was our client.

It was ready on the cloud. You could download it and you could start building on it right away. And then remember, we started to get downloads immediately.

People started to get people using it immediately. But that's also, in that run-up, that was when we realized, when Microsoft realized, if we're going to make this as a developer tool, it can't connect to the public Ethereum network because people wouldn't be able to get Ether. It was quite hard to get Ether at that point.

There weren't really that many exchanges or anything to go on. So that's kind of how we kind of created private Ethereum and private enterprise, what became known as private Ethereum or enterprise Ethereum. So that kind of all led up.

And then the launch itself in London, when we got up with Microsoft, I think people were shocked that Microsoft was into it.

[21:33] Kieren: You know, so I just looked that up and didn't have in our little outline, but I had forgotten about this. So I think Coinbase listed Ether like mid-2016, right? I'm seeing May 24th, 2016.

So, and I guess like Kraken was the popular exchange at the time.

[21:52] Victor: I think it was Poloniex.

[21:54] Kieren: I'm sorry, you're right. Poloniex still exists.

[21:59] Victor: And I just remember there was like the chat function on Poloniex. Like, man, like that was like crazy. Like that was Discord before there was Discord.

[22:08] Kieren: Oh wait, hold on. Circle bought it maybe? And then it seems to have shut it down.

Anyway, I'm confused by all this. But yeah, so it was like, it was sketchy for sure. There was like a whale chat box.

I never really used it, but I would like to see it on people's computers and all that sort of thing. It was, it was difficult to get it out of Ether for a while. Jim, are you going to say something?

[22:33] Jim: I'm just kind of remembering back then. Remind me, cause I'm sort of like, not sure if I've got this straight, but I sort of, I think maybe you're downplaying the Java thing a little bit. I think if I remember right, Microsoft guys were pretty mad at that time.

Am I misremembering that?

[22:49] Victor: No, you're not. They, they, they, well, the thing is they really want something that they could pitch to companies and you know, like just, you know, companies use Java, right? So they were like, really?

And so like when we kind of like, were like, like we just dropped everything and just focused on that. And I remember like we sort of had the internal mantra, like we got to get on stage and be able to write a dap in like 30 seconds. Like that was our internal mantra.

[23:23] Jim: They had like pre-announced something or something and then the Java guys sort of disappeared or something.

[23:28] Victor: Yeah. They pre-announced that, you know, they were going to show like the Java client and the Haskell client. And we were like this, we were like the runner up.

Like they were like, I think they kind of accepted us because we were willing to work really hard. And the Java guy, like, I think they knew that they needed a backup.

[23:49] Jim: The other thing I remember about Microsoft is that there was a little bit of like a tension within there because there were the, they were just launching Azure at that time. Yeah. At the same time they had blockchain people and the blockchain people really wanted to focus on the blockchain side of it.

And the Azure people wanted to like use this as a way to, to promote the new platform. So, so there was always a little bit of friction within.

[24:15] Victor: Yeah. I mean, like, I remember like, I think the, you know, Marley Gray was really driving those efforts inside Microsoft at the time and they were like really, really pushing it. And I remember like they were trying to get people in the room to talk to us and some of them wouldn't even come in the room.

I mean, it was probably like you said, they were launching Azure. So that's a huge project. I'm sure they were just busy with other stuff, but we spent a lot of time in their New York office.

I remember we were like going there all the time.

[24:46] Kieren: Yeah. I'm thinking the Azure launch is 2010. I checked it, but it did feel much more nascent than it is today.

Like Amazon got out, AWS got out there and like took the whole market. And then Azure was kind of like in a catch-up mode, but I think it might've even like exceeded AWS revenues at some point.

[25:04] Jim: They were running around one of the conferences, I can't remember which one, handing out free passes to Azure, to everybody.

[25:11] Victor: It was that conference, DEF CON 1.

[25:13] Jim: Okay.

[25:14] Victor: Yeah. They were, they were handing it out and that's why they wanted to make sure we were on their marketplace. So like they could hand out this free pass and you could get the, you know, you could get our client up and running and start building something right away.

And that was like a revelation to a lot of people. I remember like dozens of companies were like starting in that first week.

[25:40] Jim: Their devious plan worked on us, that we grabbed a whole bunch of free passes. And then a year later we were like giving them like $10,000 a month to stay on.

[25:51] Victor: It definitely works. But I don't know if you remember like the day after the Microsoft announcement, there was a spike in the price. And we were like, I think we just did.

[26:05] Kieren: The price, you mean the Microsoft stock price? No, no, no. I meant the Ethereum price.

I think it was both actually.

[26:11] Victor: Yeah, I think both.

[26:12] Kieren: Memory of the Microsoft stock price like slightly ticking.

[26:15] Victor: Yeah. I think they both went up and we were like, Hey, I think we actually did that.

[26:19] Jim: So like either went from 20 cents to 30 cents?

[26:23] Victor: Uh, no, I think it actually went significantly up. I remember like, like it was, I think it might've like doubled for a day or something like that.

[26:33] Jim: 20 cents to 40 cents.

[26:34] Victor: Maybe, I think it was like a dollar to a dollar 80 or I don't remember the price.

[26:40] Kieren: Check it out. It's hard to see. It's funny.

The price range is like, so. Yeah. Cause the price is.

Oh, okay. So it's interesting. Right.

So, so DEF CON is like December, right? Yeah. Like that.

It's around a dollar. Yeah. There it is.

Few areas taken up like, and I think we definitely got calls related to the Microsoft announcement into January. Yeah, for sure. So we probably had something to do with it.

Yeah. You never know really what's causing price action, but.

[27:11] Jim: I I'm, I'm joking, but I just remember like sort of the mentality within was that until it was up to $20, people thought it was a flop and somehow when it hit $20, everybody around me all of a sudden got really excited then.

Corporate inbound and enterprise adoption

[27:25] Kieren: Yeah. The average person, you know, buys high, sells low. So yeah.

That's, that's pretty successful. It's funny. And it was still low.

Okay. So moving along kind of on the back of the enterprise announcement, sorry, the Microsoft announcement, we started to get customers. And a lot of it was like enterprises that were fairly early in their journey and you know, wanted just some advice on, on blockchain technology.

Some of them were actually ready to implement something. I don't know, Vic, you took a whole lot of phone calls, you know, do you want to comment on, on any of that?

[28:05] Victor: I mean, it was kind of amazing. Like, like now the numbers in relative size seem pretty small, but in the first couple of months, we went from zero to like dozens of companies calling us. Right.

And, and, and the amazing thing to me was they had actually tried our software, like they had played around. And like, I remember over and over people were like, oh, you know, like we've been working on a blockchain project for the last few years and haven't been able to build anything. And now we can do something.

Right. So I remember like we were getting them from financial companies and like, you know, resource company and mining companies. And like, it was like all across the spectrum of people trying things because I don't think they really knew what they wanted to do, but they wanted an easy way to get in.

And for the first time they had it.

[28:59] Kieren: Gotcha. Do you remember, so I believe, I'm trying to keep this straight. So I remember the, the project Slocket was sort of being marketed at DevCon1, but I believe it's a lot of the same people as the DAO.

And do you remember, like, I think they presented, but I can't, I'm having a hard time keeping it straight.

[29:25] Victor: So Slocket was this sort of IOT kind of strange thing that you could unlock a lock, but they, it was structured around what actually became the DAO. Like they, I think they invented the concept, not the concept, but I think they practically created a DAO in order to run this lock. And then they realized, well, you know, I think they realized, well, we don't actually need the lock.

Like the DAO is the most important thing and the lock, the actual lock thing is not that interesting. So yeah, it was 100% the same people. Like they were introducing both ideas at the same time.

The DAO and its hack

[30:05] Kieren: So let me, let me transition into the DAO part. I'm going to go slightly out of order here. So Victor, what was the DAO?

[30:14] Victor: So the DAO was basically, it was kind of like a investment fund on the Ethereum blockchain, right? So basically people would put like money into this contract and this contract would basically fund, the goal of it was it would fund different projects, but it started to consume a huge amount of, you know, the overall Ether supply. I think it was as high as like 20 or 25% of the entire Ether supply got locked up into this contract.

[30:51] Kieren: Yeah. I'm looking on the Wikipedia right now. So the part of the reason I thought of it in this sequence is like looking at the price action.

Part of it is that the supply, the extant Ether supply went down because, okay. So as of May, 2016, the DAO had attracted nearly 14% of all Ether tokens issued to date. So they ran a crowd sale and that crowd sale raised $34 million, $34 million by May 10th, 2016.

More than 50 by May 12th, over a hundred by May 15th. So sometimes the dynamics of these ICOs, this is one thing, one, it's kind of crazy, but like one thing that blockchain seem to do that it's really difficult to do with other technologies is to have this sort of really large scale collaboration. And in this case to pool capital, basically.

So I suppose there was some sort of virality going on. People are talking about the DAO and you just see this like enormous movement of funds sort of overnight. And so, okay.

But they end up holding by May 21st, 2016, over $150 million in Ether from over 10,000 people, which is about, it says, according to the article, about 14% of all Ether tokens issued at that.

[32:27] Victor: Okay.

[32:27] Kieren: So it was really fast, right? It took everybody's surprise. I remember, I think I had a meeting that the enterprise folks at ConsenSys had set up with, I'm going to say the people at BVVA, I'm forgetting last names, but I think it was like Scarlett and Carlos.

I don't think you went to this one, Vic, I think you were in Edtown. But they were just like, it just caught everyone's attention. It was crazy.

And we were talking a bit about operational use cases for the bank, but then there was a sense that this is where the future is. The money just moved. There were no really heavy subscription agreements and all that sort of thing.

And it was also a cautionary tale of what was to come over the next couple of years. Yeah. So by June, the people discovered that you could exploit the DAO to siphon off the funds.

Do you remember anything about that beyond? It was crazy.

[33:41] Victor: So you had all the supply locked into this contract. And I think the hack was, like, yeah, so there was this massive race between, there was a flaw in the contract logic. And because it's immutable, the smart contract couldn't be changed, right?

And when people realized there was this massive race between the people who were trying to extract the money out of the contract, and the people who actually worked on the DAO itself. So it was like and, but the people who were successful at extracting the money pulled out a lot of it. Like, I think, I don't remember the number, but I think it was like a huge amount of the value they were able to pull that out.

Yeah. Now, the ironic thing was that it got pulled out and put into an account. And everyone knew where it went, because, you know, everything on the blockchain is completely transparent.

But no one could do anything about it. Like, they couldn't take the money out. And so the money was just sitting there, basically, that got like, it was like it got stolen and left on the side of the street.

And no one knew what to do about this situation.

[34:54] Kieren: Yeah. Yeah. And so, okay.

I'm kind of looking back on it. So it was, yeah, it blew up. And it also caused the creation.

So I remember there was a, at this time, and we had to implement this in our software, a hard fork debate, because, so it's pretty early. It's like less than a year after Ethereum launched, probably a lot of the, you know, big ether holders participated in this, you know, they've lost significant funds, maybe all of their funds. And the question was like, do you make people whole?

Or do you stick true to the absolute, you know, immutability of, you know, in the classic blockchain sense where, you know, it's totally buyer beware, shouldn't have put your ether in this contract if you weren't going to, you know, if you weren't prepared to lose it. And the refund group one, you know, so in a sense, both like Ethereum, Bitcoin, really all the projects are governed to an extent, right, by the people who develop the software and kind of on an ongoing basis discuss additions to the protocol, you know, et cetera, et cetera. Right.

And, you know, even in the early days of Bitcoin, I was not really around for this, but supposedly they had to be extremely creative about having, about keeping the protocol running while not ever reverting any of the history. Right. So I don't believe

First Consensus conference and Hyperledger

[41:02] Victor: Yeah, I found it from CoinDesk. Let me see if I can still find them. But so what I remember of it is that it was, I think it was one of the first CoinDesk consensus events, which, you know, subsequently became huge.

And then, so they kind of had two events around it. One was a hackathon, which we were part of. And then, and we were running, we were like one of the main platforms that was participating in it.

And then there was the event itself, which was, I think at the Ritz, like both events were in Times Square. Like the hackathon came first at Microsoft and Times Square. And then the event was kind of, you know, a couple blocks away in the hotel.

And I remember that like during the hackathon itself, we were in, all in these like different conference rooms that, and there was, you know, like early Hyperledger and some other, I can't remember who the other clients were, but there were like competing clients that were not Ethereum based. And there was a pretty good turnout. I think like over a hundred people showed up, like a lot of people kind of showed up.

And our room got so crowded, we had to like go up to another boardroom in order to kind of like build. So like, I think we got like a significant majority of the developers building stuff on our platform, which was super exciting. And I remember kind of walking by the rooms that like Hyperledger had had, or I'm trying to remember what the other client had had.

And like, you know, there weren't very many people in there. It seemed like the people that were in there were like people who were working for them. So that was really, really exciting.

Though at the end, we didn't win, at least someone building on our stack didn't win because I think the winner was actually something that was getting built way before that hackathon existed, which was, you know, technically against the rules, but we didn't, we didn't hold anyone.

[43:17] Kieren: This is, Victor asserts, if we lost, it's because someone else cheated. So that's, that's how we feel.

[43:27] Victor: That's at least how I felt at the time, whether or not that's completely true. It's, you know, memory is subjective. That's all I'm saying.

[43:40] Kieren: And the rest of the conference.

[43:44] Victor: Oh, and then the rest of the conference. So that I think was like the first shiny big blockchain conference, right? Like, you know, you had, I remember Vitalik speaking, they launched, I think the first Hyperledger app there and a bunch of, you know, there was a bunch of activity.

Like it was a really interesting combination because most of the other conferences like DevCon are really developer focused, but this, you could really see a lot of businesses becoming interested. And the thing I most remember about that conference is that we were like pulled into a room at one point. And that room was basically, in the room was the head of Hyperledger, John Wilpert, and Vitalik were in that room.

And they were like, hey, we heard that you guys have an enterprise ready version of Ethereum that, you know, switch between the public net and like private blockchains. Right. And, and like, I remember Wilpert at the time was like, my engineers claim that this is completely impossible.

And Jim, I think you like pulled out your laptop and you're like, here it is, like, I'm going to show you like this is, this is how it works. And you know, like you can start building on it and everything. And there was this conversation going back and forth between Wilpert and Vitalik about, I think Hyperledger supporting Ethereum.

And it kind of ended, what I remember of it was it ended with, I think Vitalik was, you know, he always wears an Ethereum t-shirt. Right. And Wilpert is about three size larger than Vitalik.

But… Interesting.

[45:32] Kieren: I think Vitalik is very tall.

[45:34] Victor: Yeah.

[45:35] Kieren: And John is stockier, if they're at a bench press competition, I expect there would be a pretty big differentiation, you know, in what John could bench and what Vitalik could bench.

[45:49] Victor: Yeah. I think you're right. Like, it's not, we're not talking that John is unfit.

He's just like much larger than Vitalik is what, you know, still quite skinny. Right. So like John was like three sizes before.

And I think it was Andrew Keyes that like pointed to the t-shirt and like, Vitalik, take that shirt off and give it to John, because he was about to walk on stage. And like, it was like a muscle shirt on him. It was like so tight.

You know, it was like a compression shirt. And he went on stage and that was like, you know, people were kind of shocked that like, hey, what's going on? Like this is the head of Hyperledger and now he's wearing an Ethereum t-shirt.

And it's interesting because what eventually that led to Hyperledger actually supporting Ethereum type clients like Bera.

[46:38] Kieren: Yeah. I would add in talking to, obviously we spoke to John occasionally over the years and he actually went on to join consensus later. I don't really know what he's up to today.

I don't think he's there anymore. But he had sort of a sense of like not wanting to be on the wrong side of history. Like he always wanted to talk about, he was always talking about like IBM's embrace of Linux as a, instead of like pushing really hard on a continual basis with its own operating system.

So they just put a ton of open source software development in Linux. And of course it probably helped them, you know, have something to run on their mainframes, which is still actually a big business for them today. And so he was always like debating back and forth, like, should we do our own thing?

And it is, it was at least mostly open source. Should we go the, you know, the Ethereum way? What do we do?

And I think this was, you know, like perhaps the best illustration of that conflict. I think IBM has since, you know, it was formidable for a while and sort of scary as a competitor and all that sort of thing. And I don't hear that much blockchain noise out of them anymore.

I think they've shifted resources and all that sort of thing.

[47:57] Victor: By the way, I did find the picture from that first hackathon. So, you know, this is off the CoinDesk, but here's the picture, you know, at the, and this was one of the rooms and there was, we had to call up another room. Like this was very early in the process.

[48:15] Kieren: Yeah, yeah. I remember this one.

[48:18] Victor: And here I am sitting in the middle of it over here, but yes. But yeah, it grew really, really rapidly.

DevCon 2 in Shanghai

[48:30] Kieren: Alrighty. Close to rounding up here, but got a couple more things. So things are moving along.

2016, there's some kind of organic momentum. I know like we hired a lot of people during this time. You know, our software has been used in enterprise projects.

We're kind of like ramping up headcounts because people are using our software more. And so I'm looking at this and like, I can't believe that the timeframes were this tight. So DEF CON 2 is September 2016.

And so it's in Shanghai, right? So I do remember having to deal with all the visa stuff. The, you know, thankfully consensus dealt with that.

We were kind of doing a capital raise, sort of our first sort of seed-ish one at that time. But it was, it felt like a coming out party. I don't know.

I think, what do you guys recall? What are some of your impressions from DEF CON 2, kind of, et cetera?

[49:45] Jim: There was some big attack on Ethereum. I'm trying to remember the details right now, but I remember in the morning and lots of stuff was happening on the business front there. But I remember like waking up and suddenly I was just like completely involved in like digging in with the Haskell client and figuring out what was going on and what changes we had to make.

So.

[50:08] Kieren: I do remember. It was like transactions that slowed the clients down being created. Right.

And yeah, I think like, I guess it was like due to the way the data structures worked to some extent, it was like hard to make them process fast. I can't recall, but yeah, it was funny that it was right around that time. Also, okay, Tim, go ahead.

Enterprise Ethereum Alliance formation

[50:34] Jim: Well, the funny thing that I sort of remember is like, and maybe you're about to talk about this, but the EA was sort of formed during that conference and Victor somehow in the morning grabbed me and he's like, I've got all these meetings and I'd like you to come along too. But I was like, I had my laptop and I was like trying to dig into the tech with all the stuff that was going on there. So I sort of sat in the corner in this coffee shop and I was like a programming all day.

And then at the end of the day, I kind of was like, what were all those meetings you had? And Victor essentially is like, oh yeah, we just formed the EA.

[51:09] Victor: Well, I, yeah, it was funny. I think really it was Jeremy Miller, who I think later went on to become chief of staff for consensus really kind of drove that, like there'd been a previous attempt. I think by Matt spoke to create some sort of group of enterprises to work together on standards and that never kind of went anywhere, but then I have no memory of this.

[51:36] Kieren: So could you, you know, Matt was at Deloitte.

[51:44] Victor: Matt was at Deloitte at the time and Deloitte was early in the blockchain. Like, so they were at DEF CON one, they were really early in the blockchain and kind of building up a practice. Ironically in the Toronto office, right?

So like they're really focused on it. And so they were quite early and quite knowledgeable. And so they were trying to kind of, at some point they had started this effectively a consortium of companies who want to use Ethereum, right?

And then there was us where we were working with Microsoft that was hopping sort of organically. And, but we realized that there was the need for companies to kind of collaborate, to work together on this kind of stuff. And Jeremy Miller just thought like, this is in working, like what's happening now isn't working.

We got to get some, you know, proper structure because I think it was just an announcement on the Ethereum foundation site, but no one was really driving it. So during that day, we like kind of aggregated a bunch of people in that coffee shop. Like it was like literally all happening beside you.

And there was like Jeremy, you know, John Wheeling was there from Santander, like Matt Spohr came in. I think Marley came in at one point and, you know, Lally, James Laszlos came in and we were all kind of saying, okay, we need this organization. We need to get this together.

And it was all happening at this coffee shop that was at the Starbucks that was just like, just literally outside the conference center. And it really kind of all came together. And it was amazing to me because it was like, right, like sort of by the end of the day, we were like, yes, we're going to form this group that eventually became the EEO.

[53:30] Kieren: So I want to add some peripheral details. So we get to Shanghai, right? You get this, we're jet lagged.

It's a hefty flight, you know, you get this card and the card says something like aliens not going to hotels, aliens being like, you know, people who are not Chinese who are in the country must report to the police within 72 hours or something. And I was like, does that mean like the hotels are like part of the police? Like, like, I don't know.

I assume plenty of listeners will not have been to Mainland China. And then you kind of gets to the hotel. So it's like, it was like an hour drive whenever the main airport is to the hotel.

Shanghai is vast. Like there are high rises along the highway the whole way and they just get denser as you get close to where we, do you know, is there a name for the neighborhood where we're staying in like the old stock exchange, I believe, which has been converted to a hotel.

[54:39] Victor: Yeah, we were right downtown. I'm trying to remember where we stayed at the time. The conference was right downtown along, I think, close to the Bund.

That's the area next to the river.

[54:51] Kieren: Yeah, that's right. So the Bund is on the European side and then the other side is like brand new.

[54:57] Victor: Yeah, that's Pudong. Like that's like sort of, you know, originally was the suburbs, basically. And, you know, like I've founded two companies in China.

So I think I was like the China expert there and like taking people around. And yeah, like, I mean, you, well, if you're not staying in a hotel, the government wants to know how to reach you. And so if you're like staying in the Airbnb and stuff, you need to like, if you stay in a hotel, the hotel takes care of all that stuff for you, basically.

They just, but like, if you're staying in a hotel and we were all staying in sort of a small hotel, but I remember like taking you guys for like a Chinese breakfast and like you guys loved it. Like we went back to that same place. Like, I was like, there are better places.

[55:41] Kieren: It was really good. I think we went to like a couple holes in the wall too.

[55:45] Victor: Yeah, exactly. Exactly. So it was like this hole in the wall place and I was just kind of trying to give you the flavor and you guys really liked it.

So we kept that. The other thing I remember about that conference is that the Wall Street Journal was there. And I remember I got quoted from them as saying, I think China is going to be one of the biggest blockchain markets in the world.

You know, this is before they started their own digital currency and really kind of went in on creating their own blockchain. But I remember people thought it was absolutely bonkers when I said that, because they hadn't done anything. Like they was like so early in the journey.

But as you said, this all happened really fast.

[56:29] Kieren: Yeah. I'd also mention, so we announced a project we were working on and it was getting close to completion with BHP Billiton. So the big time project and kind of the first of our supply chain work our kind of champion at BHP is a guy named Tyler Smith, very smart guy, geophysicist, blockchain enthusiast.

And so the announcement was great. It definitely got everyone excited about the technology, helped us close the financing at that time, et cetera. So we're all on stage.

But also I want to mention that Tyler, I think he'd been to Shanghai before. And, you know, as one does when one's in Asia, you try to get some suits, you know, for lower cost. Right.

And he kind of told me like his algorithm, there's something nearby called, I believe the fabric market. Yeah, that's right. And he like, he sort of like hung out there for a little bit.

He told me and he watched where like the Chinese business people went and they all went up to like the third floor to this particular guy. And so he kind of showed us where that was. I think you got some too, right?

[57:43] Victor: I did. I did. And that algorithm worked out really well.

That is also my algorithm for finding good places to eat. Like I follow taxi, like the way I found that hole in the wall, like, you know, I lived in Beijing, so I've been to Shanghai plenty of times, but I didn't know near the hotel where to eat. And I just kind of follow where taxi drivers wind up stopping.

And if that's the place, you know, they probably have pretty good food there.

[58:07] Kieren: Yeah, yeah. And he told me also the last time he had done a China trip, he went like 10 hours by buses, trains, boats to get like the best silk blankets, which were somewhere near Shanghai. I was never able to look into this and get them back.

So similarly, he kind of, you know, followed the local knowledge will get you a long way, I guess.

[58:32] Victor: Nowadays, it's all high speed rail. Like I remember like I remember at various times traveling through China and being like, you know, having like 18 hour train rides and stuff like that, which were brutal, because like, in many times, I just had to stand during that entire time in a crowded thing. But yeah, now it's high speed rail.

It's it's it's amazing. Like it's it's faster than planes in most cases.

[58:57] Kieren: Yeah. In any case, it was it was an experience, right? So we also we you know, we did some business development there, had a lot of meetings with prospective customers, investors, all that sort of thing.

It's definitely tough to do business in China for listeners considering it and not from China, I don't recommend it unless you really know what you're doing. But it was quite the trip. Like, I actually had to leave a little bit early for some events I was doing with Intel, actually.

[59:30] Victor: Yeah, that's right.

[59:32] Kieren: But it was, you know, crazy. It made, you know, it made things for a tech project, Ethereum was actually kind of Europe centric. But I think Asia, you know, almost bigger uptake there.

So it made it feel really global. And it was just kind of funny, you know, just to see all of this happening, you know, at the same time, like, the Internet kind of works, you know, it was it was cool to hang out in Shanghai as well. And just totally different planet felt like.

All right, I think with that segue, we could probably wrap it up with the EA leading up to the EA launch. So the idea had been hatched in a Starbucks in Shanghai. And basically kind of the quote, I guess Jeremy was fond of saying is that, like, every innovation lab is using Ethereum now, they're watching us, and they're each hacking it their own way to be something they can actually use.

Right. So no one wanted to connect to the public net at that time. It's definitely changed some, you know, over the years, especially with the NFT revolution, etc.

And, you know, so there was not a lot of technological reuse going on in, you know, the the duct tape that, you know, various enterprises were putting on the software to make it work for their needs, probably most notable in that set of enterprises was JP Morgan, which we can, you know, talk about in more detail. But a lot of them were doing it, folks at the innovation lab at Santander, who we know pretty well, were doing their own thing. You know, it was quite a quite interesting to observe the goings on.

And do you remember, okay, so there were like a couple face to face meetings that were like very hush hush. I think Microsoft some of them around the launch of the EEA. So you've kind of napkinned out the idea in Starbucks, but then what was the next thing that happened?

EEA launch and closing thoughts

[1:01:55] Victor: So then there were a bunch, there were a series of meetings that were kind of really about structuring. So like, how did we want to structure this organization? And, you know, what composition should be like, should it be all big companies?

Should it be, you know, like, how much of the tech should be involved? How much of that, you know, company side should be involved? And how it should work?

Like, you know, should it be a free organization? Should we charge membership should you know, and all of that was on the table. But the amazing thing about those meetings is they did start small, but they eventually like wound up to be like 40 people in the room, like all the major clients, you know, like all of these things, because I think at the time, really where the interest was in terms of real world applications of the Ethereum blockchain was in the enterprise space, like they were willing to kind of make investments into that. So like, everyone was kind of participating into that. And so there were like these, like, really, really active discussions.

And ultimately, we just kind of had to set a line in the sand and make a launch, basically. And that kind of led to it launching in sort of early 2017. But, you know, in terms of timeframe, you gotta think that, like, it was only a little over a year when we launched with a single big company.

And then at the launch of EA, it was like 40 companies that were, yeah, I remember 28 or something like that.

[1:03:29] Kieren: There was a logo wall that they showed, you know, it was really substantial.

[1:03:34] Victor: And it was in the Brooklyn JPM office. And you know, like, it was like, a lot of big players. And this really kind of told the world, like, hey, this is serious, like, this is something that should happen.

So I, you know, it was really, really exciting. But yeah, the negotiations around it were really complicated. And in some cases, either.

I remember, like, one of the biggest negotiations was between the different clients, right? Like, there was us, and there were other clients who were trying to figure out, like, how do we share information in between us?

[1:04:07] Kieren: Yeah. I'd also add, okay, so JP Morgan, when did they announce Quora? That's a good question.

I don't, I think it was- Probably before the EA launch, but I'm not sure.

[1:04:21] Victor: Yeah, I know they had a blockchain team that ironically also were working in Haskell. So they were, and you know, eventually we wound up doing work on Quorum too. So there was like, we had been talking to them a while.

And, but I can't remember when the official launch of Quorum was.

[1:04:40] Kieren: I have some memory that they demoed something at, and consensus might have helped, like, the front end of the demo. I can't quite recall, but I believe that they demoed something at the launch, which was what, like, it was either February or March 2017, something like that. So I think they must have announced it by then.

So Quorum is, was a flavor of, Ethereum, or a flavor of enterprise Ethereum, where they'd taken the Go Ethereum client and done things like add privacy and, so that it was easier to obscure data. And there was like a messaging layer it had, you know, et cetera. And similar things we developed over the years, just as we, in response to the, you know, privacy preferences and needs of big, big enterprises, basically.

So they all wanted to use the technology, didn't want a native token. They didn't want too much detail leaking to, you know, potentially competitors, or even trading counterparties, et cetera. So they, you know, a lot of people at the same time developed kind of similar features to service, you know, the enterprise need.

The, but yeah, so, so the event, 30 big enterprises, they're, you know, or 30 companies, a few startups, a lot of big enterprises. I think the membership of the EEA peaked at, like, 500 companies or something, something really large, right?

[1:06:20] Victor: Like, It was in the hundreds, I don't remember.

[1:06:23] Kieren: 300 or something like that. So like, on the back of this announcement, the business side, you know, got pretty excited. And, you know, as later in that year, there's also crypto run-ups, kind of everyone wanted to be involved.

But I think of the EEA launch as sort of the end of the beginning. If you look back at the price trend also, oh, I'm bringing it back up, I closed it. So let's say it's February here.

It does start to really take up and hit into kind of a fever pitch 2017, 2018. Right. So, you know, it's, it's already at this time, you know, around 10 bucks.

But, you know, it really goes dramatically up. And then, you know, kind of the next phase is the, the heyday of the ICO era, which probably won't, won't talk about today. But in my mind, that was when it was a new but established platform and technology, Ethereum, kind of generally acknowledged by some of the public, but big businesses as well.

And had sort of transitioned, it was almost in the position of incumbent at that point. Now, I also, I don't quite recall, like what, you know, maybe if I flip this to market cap, like, when did a big Ethereum, you know, move up the ranks? You know, it'd be good to know the like, what was the big ranks?

Crypto coins, or however you want to call them at that time, like for a while, Litecoin was number two, right? Yeah.

[1:08:08] Victor: I think Ripple was up there.

[1:08:10] Kieren: XRP was usually three or something. And I don't even know where Litecoin is today. But it, I'd have to check when the actual crossover happened.

Ethereum would be solidly number two for a long time. But maybe we should, you know, figure that out right now. I forget how to overlay the prices on coin market cap, or the market caps rather.

So we've never seen the flip just yet. But it got close at different times in this journey. So anyway, I think we could probably leave it there, slightly shorter than the last episode, it appears.

But I don't know, any final words, Vic, Jim, from, you know, this interesting time period in many people's lives, our lives?

[1:09:06] Victor: I think it was just, like, you know, looking back, it seems that, you know, I think if you look back on successful projects, there's sort of that survivorship bias that, you know, all the elements were just there. And you can see a lot of the elements there. But I don't think in any way that success was predetermined.

Like, I think there was a lot…

[1:09:33] Kieren: A lot of coordinated effort, right? A lot of working hard on it together.

[1:09:38] Jim: Yeah.

[1:09:38] Kieren: Getting the pieces to make it happen, so to speak.

[1:09:41] Jim: I mean, it's dangerous to look back in time and say, like, I knew that was going to happen. But I will say that even before the launch, I remember feeling that I'd never seen such a large group of people so excited about a particular project as that one. So I, yeah, it felt like it was going to be successful.

[1:10:04] Victor: Yeah, I just mean that, you know, we've mentioned a bunch of the people that I, I think they all contributed to the success of the key point, even though they weren't, you know, the founders of Ethereum. Like, they made something happen that wouldn't have happened otherwise.

[1:10:22] Kieren: Yeah. It's an interesting thing. It's like, are you, are you being tossed in a great wave or can you will reality into existence?

And it's like, I tend to think of it as a little bit of both.

[1:10:32] Jim: Yeah. I mean, it's not all hot air from us because we literally… We do, we did some of it.

[1:10:38] Kieren: …saved our lives. Yeah.

[1:10:40] Jim: …successful technology.

[1:10:42] Kieren: Yeah. Anyways. All right.

Let's, let's close it there. Thanks, everybody. For listening this far, if you make it this far on the second one.

And yeah, it'd be interesting to, you know, we might continue this series. We could also kind of delve in on any particular part of it. Maybe we'll get a guest, maybe we'll, we'll, we'll do something.

So if anyone wants us to cover anything particular, please do let us know.

[1:11:11] Victor: Thanks everyone. Have a great day.

[1:11:13] Kieren: Thank you.