Making Sense of Crypto with Kent Langley
What do community leaders need to know about Crypto?
On this episode of the Cohere podcast, technologist and co-founder of OpenEXO Kent Langley makes a second appearance on the Cohere podcast to discuss the current realities of crypto.
Kent and Bill cover a range of topics, starting with a baseline definition of “blockchain”, the origin of blockchain technology, a discussion of how blockchains actually work, and current misconceptions about crypto. They then delve into questions about the relationship between crypto and communities and networks.
In this episode, we discuss discuss a range of questions related to crypto, including:
What is a blockchain?
Are there different types of blockchains? Do they share any protocols or interoperability?
How does the distributed part of a “distributed ledger” work?
What is the inherent value of a given cryptocurrency?
How do tokens play a role in crypto?
Centralized vs decentralized governance
The debate about the environmental impact of crypto
Key Quotes:
“Deep in the heart of what a blockchain is, it’s the simplest thing you could imagine. It’s literally a list of transactions bundled up into little data packets where the next is always connected back to the one before it and thus a chain.”
On Proof of Work vs. Proof of Stake
“In both cases (proof of work and proof of stake), you're seeking consensus that the block of transactions that's being saved to the chain permanently is correct and therefore you can trust that that immutably stored data (meaning it's permanent) can't be changed, has the veracity of consensus. So it doesn't matter which set of algorithms you use.
That's still the goal on the proof of work side. Maybe a misconception that it's a really difficult math problem. It's not so much that it's difficult. It's that it's hard for a computer to compute. The reality is it's just an intensive problem. It's like having to run really fast for a long time and uses a lot of energy.
Proof of stake replaces that need for what we would think of as CPU or GPU, a hard math problem with a situation where people take the tokens that they have, the coins that they have, they put them on the network in a bonded scenario and then used by a different algorithm to find a fair way to decide which members that are staking, get to say that there is consensus.
So it's just two different ways. The latter way, proof of stake uses far less actual electricity than the proof of work model, but it is not a full replacement for proof of work and its total capabilities.” - Kent Langley
On the Inherent Value of Crypto
“You cannot argue that it (crypto) does not have value. If you extrapolate that across all of the 8 billion or so people alive, if enough people are willing to take this thing that I call money and give me back some kind of value for it. It's money. It is. There's no way to argue against that. Now, does Bitcoin have inherent value?
Well, this is what we call utility in the blockchain. Did you know that one company called Binance is settling something between two and four trillion dollars a month. Okay? Binance one company in this space is settling between two and $4 trillion a month.
Visa settles around three or $4 trillion a month, MasterCard and visa together settle around 7 trillion. So one company trading cryptocurrency exchanging value using these funky digital coins that (supposedly) have no value, is now approaching what you would never argue had no value, which is the volume of transactions over the visa and MasterCard network.” - Kent Langley
On Decentralized vs Centralized Governance
and the ”We recently saw a situation where a bunch of NFTs were hacked on Open Sea. Open Sea, it turns out is effectively capable of reversing certain types of transactions because of the way they handled their data layer, their own application on top of a blockchain. So they were able to recover some of those.
But now what you're doing is you're trusting Open Sea. They're the arbiter, right? They're centralized.
So there was a lot of pushback to that from the de-centralized fans saying “oh, this is terrible! It's not decentralized!” We didn't realize just how strange this was.
The people that got their NFTs back probably didn't feel bad. Now the reality hits that that's happening. To me, right? If you think you're in a de-centralized space and then all of a sudden you find out it's centralized and things can be reversed, well, now you don't have the permanence or the immutability at all.” - Kent Langley
Resources from this episode:
Arbitrum https://offchainlabs.com/
Polygon https://polygon.technology/
The debate about crypto energy consumption:
‘Nothing positive’: Salvadorans struggle to adapt to Bitcoin - Politico
State of Crypto Report - A16Z
