Transcripts

Transcript of Jed McCaleb's Consensus 2018 Panel

Post by
Kyle McCollom
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Jed McCaleb spoke on the "First the Rest, Then the West?" panel at Consensus 2018 and touched on sharding, network effects, interoperability, regulators, and the Kin fork.

Regarding Kik’s initial decision to use Stellar for Kin and their recent announcement that they will be forking Stellar:

[Kik] found out about us because they had originally launched on Ethereum and realized that’s not a good idea; it doesn’t scale very well. You actually have to have something that is able to be used. So then they were looking for alternatives. They looked at a lot and they probably thought Stellar was the right option. They are making their own fork of [Stellar] which is fine. I think the way that they are going about it is not quite right. I think they will realize that they are losing a lot of the powers of the decentralized network the way that they are doing it. We will see what they ultimately do.

Regarding interoperability:

There’s a lot of advantages to these blockchain-type technologies - it’s quicker, it’s cheaper. But one of the big ones is the interoperability piece. It makes it where you have more endpoints and more connections. It really levels the playing field and gets around the corresponding bank system which relies on all these gatekeepers that throttle all these transactions. Just the fact that you can have one API that can connect to literally everyone gives you a lot more flexibility and that’s the most compelling thing for our partners that use Stellar.

Regarding the big, established remittance players:

Everybody knocks Western Union and MoneyGram. There is this huge last mile problem, and there is a lot of infrastructure that they have to have. It’s not as easy as it seems at first; it’s pretty messy. At the end of it, people just want cash. They have to have a way to get that cash.

Regarding building network effects:

The hard part about this whole thing is network effects. Money has the strongest network effects of anything. It’s only as useful as other people will accept it. If we imagine a world where Bitcoin scales really well and everybody accepts bitcoin - that’s the only currency that people use - then all these problems go away. It’s this idealized thing. That’s the vision of the world that early bitcoin proponents wanted to see. But the problem is that it is super hard to get there because, until it’s widely adopted, what’s the point. Our approach was to have an interoperability layer where you can use any kind of asset - dollars, euros, or whatever - and then those can be converted between each other. This helps bootstrap from the old way that money moved around to this new digital way. You have to have some roadmap to get from the current way things are to the future otherwise people can’t get there.

Regarding scalability:

I don’t think there’s a clear answer yet. Lightning Network is certainly a step in the right direction. Ultimately all these things are going to have to be sharded in some way. Sharding means subdividing the load - some servers are handling some part of the load and some servers are handling other parts of the load. It’s done in centralized systems all the time. There’s a lot of details in what the actual implementation looks like, and I don't think anyone knows a clear way to do it for any of these systems yet. But for them to achieve their global vision where they want to be this universal network, they are definitely going to have to do that. There’s just too many transactions in the world to be supported by one decentralized system because these decentralized systems have really bad scalability properties. We still don’t know exactly how to work around it. That’s something that we are working on, and Ethereum is obviously working on. I think people will figure it out, it’s just going to take several years. We are working on a Lightning implementation and figuring out how to shard the network into subnetworks.

Regarding financial regulators around the world:

We talk to regulators a lot in all different countries. They have been surprisingly positive other than a handful of countries like India and China mainly. It’s just not a threat to most countries in the world; it’s actually a big opportunity. Right now, they are not the gatekeeper - the gatekeepers are all in New York. To them, it opens up this whole market and lets them do trades peer-to-peer rather than going through the US Dollar which they want to do.

Regarding regulators and lumens:

Our plan is to start engaging them more in the next year. Obviously they are looking at this whole space. Some of these things are clearly securities. There’s a spectrum from clearly not a security to clearly a security, and who knows where they are going to fall on this line. We want to start talking to them and make sure they make an intelligent decision here.

When asked to give a price prediction:

I don’t focus that much on the price. I have no lumen prediction. We are just going to continue to try to make the network successful. I don’t know what the larger cryptocurrency market will do in the meantime. It’s obviously pretty erratic and often irrational so who knows. But I know that we are going to keep moving forward.

Do you know what the price of lumens is today?

I don’t.

When speaking about adding new DLTs to their offering at BitPesa, CEO Elizabeth Rossiello said:

We’ve had a long relationship talking to Stellar who we love in our markets. It’s really just a question of time and capacity.

Image credit: TJ Abood of Access Ventures

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