As a result of all the craziness happening in the crypto marketplace, Charles Hoskinson, founder of Cardano and IOG, decided to make a video on May 10th, 2022 to inform the Cardano community and the public at large what he thinks about the state of our global economy, why there is no need to panic but to be alert, the real purpose of crypto in his view, how institutional investors affect the marketplace, how Cardano’s approach to developing their ecosystem may not be sexy, but it will be resilient in the long-run and that is what he wants for all of us, an alternative money system since the current one is failing.
First, is a summary of Charles’s video, written by Kate Irwin at Decrypt.com, however, there were many points Charles made that were left out so we decided to offer a transcription of what he actually said, so you, the reader, could have the complete context. (note: some edits were made in the transcription for clarity purposes, so refer to the video to get accurate quotes.)
Here is the TLDR:
Cardano founder Charles Hoskinson called the global economy a “train wreck,” but he still believes crypto can help solve that.
TRANSCRIPTION BEGINS HERE:
Charles Hoskinson: Hi, everybody. This is Charles Hoskinson broadcasting, live, from somewhere. Anyway, I just wanted to make a video about some musings on the recent events in the markets and the industry.
CRYPTO NEWBIES, ITS TIME TO GROW SOME THICK SKIN
You know, I’ve been in this space for almost a decade now, and I remember Bitcoin before it was a dollar. And then going up to $30, then down to four, then to $250, then to $80, then to $1200, then down to $250 again, then up to $20,000, then down to $4000, then the $64,000. And now we’re in the $30k. And I remember all the events, the collapse of Silk Road, the collapse of Mt. Gox, all the various interesting ventures throughout the years like Mastercoin and Colored Coins, and a litany of other things and concerns. And no matter where I go or what I do, it always amazes me that there is this constant rhyming of the attitudes.
So the old guards, nothing fazes us anymore, you know, we’ve seen everything; twice just to make sure we didn’t miss anything. The new people, the minute that something occurs, like, for example, the collapse of a stablecoin or the collapse of Bitconnect or these types of things. Then they say, “Oh my God, this is the end of crypto. Everything is over!” or “We’re all going to die. The markets are over. The dream is gone!”.
LEARN TO READ THE CRYPTO MARKET UNDERPINNINGS
You know, what’s happening right now is there’s over $300 trillion of institutional money floating around the world looking for a home. In the last 20 years, there’s been a hyper-acceleration in the printing of money. This is what Ron Paul was talking about and all the Austrians were talking about, and nobody really listened to them. America went from four and a half-trillion dollars in the national debt and a surplus to over $30 trillion, and the prospect of a 3% interest rate, meaning it cost you $1,000,000,000,000 a year just to service your debt. This is not healthy. The world economy is not healthy. And there’s now the biggest division ever between the retail investor in the institutional investor.
INSTITUTIONAL INVESTORS MANIPULATE THE MARKETPLACE
The institutional investor has basically a mandate to go and push somehow, someway with their trillions of dollars and their management, 10 to 15% returns. Now, 10 to 15% returns on top of inflation of 20%. They’re doing all kinds of monkey business and shenanigans. Why is it your homes are getting so expensive? Well, because the Black Rocks of the world, and the massive private funds of the world, are going and buying regular, every day, three bedrooms, two bath homes through big aggregators. And you wake up and you see a $250,000 home become half a million dollars, $750,000. Can you afford it? No! Because wages don’t track with that. It’s a good investment for them. It’s a good hedge at the moment for inflation, but it’s not permanent.
Last two years, we saw the greatest wealth transfer in human history from the poor to the rich. And now the rich are admitting that maybe all the things that they did, over the last two years, were not necessary. But they don’t give the money back, the property back.
GLOBALISTS IN DAVOS ARE ATTEMPTING TO USHER IN THE GREAT RESET
You see, The Great Reset “Davos”, this year, I was going to go, but out of disgust, I’m just not going to do it anymore. You know, because what they’re saying is, “You’ll own nothing and be happy”. All the farmland is going to be owned by the rich people and the big companies, multinational companies, international funds, and all of the supply chains run by a small group of hyper-consolidated entities that are transnational. They don’t give a fuck about the little person.
CRYPTO PRICES REACT TO LARGE INSTITUTIONS PUMPING/DUMPING CRYPTO
On the retail side, people are opting out. Problem is, there’s less money on the retail side now than on the institutional side. If you look at the selling rates of crypto, what’s happened over the last six months is institutions have been dumping their crypto. Some, like Saylor and others, are holding on and doing everything in their power to “Go Team Orange” (Team Orange = Bitcoin), but most are looking at it as a high risk, high return asset. And in times of recession, reallocate your portfolio. This was always the danger of inviting the Wall Street types in (to the crypto space) is that they would just simply treat crypto like any other asset and label it as an ‘exotic, high risk’ one. And when the markets go not the direction they want, they dump it.
CRYPTO IS AN ALTERNATIVE TO THEIR RIGGED AND BROKEN MONEY SYSTEM
The retail people are holding because they are opting out of a global system that’s unfair. A global system that’s frankly ‘rigged’. Seen it myself. I’ve been in the meetings, I’ve talked to the people. Everywhere I go, they don’t give a fuck about sustainability. They don’t care at all, in any way, shape, or form, about whether you live well. If your standard of living is the same as the standard of living of your parents, your grandparents, your great grandparents. In fact, quite the opposite. They’re trying to prepare the masses to accept a standard of living significantly less than the one that they inherited, the one that they grew up with. The one that their parents grew up with. This is no way to run the world. This is no way to live well. It’s because they broke the world money system.
The entire point of cryptocurrencies is to restore some trust, credibility, and stability into the world money system. That’s the entire point of the laborers of this industry, the research that we do. The reason why we keep picking up shovels and fighting the good fight.
Now, there are tons of experiments. Maybe fractional reserve things are not a good idea. Go figure. We’ve learned this again and again and again from private money in the 19th century. And again and again and again, from our banking system. And now the market is again learning the same lessons as before. Only this time is pushed by the arrogance of youth as opposed to a malicious cabal.
Maybe it’s a good idea to follow deflationary monetary policy, full or over reserve if one’s desire is to create stability.
Now, on our part, as an ecosystem, and as a community of developers and a community of people building things, we focused on first principles. Never filed a patent, never pursued intellectual property, never in any way, shape, or form, restricted the youth of things, or asserted that one or a few should have control over the many. These are basic principles that we’ve kept with us since 2015 when the initial parts of the Cardano project were created.
CARDANO’S COMMUNITY AND ECOSYSTEM IS SET FOR EXPLOSIVE GROWTH IN 2022
And every single day, what’s so frustrating to me, is we get stronger yet the markets, because of institutional manipulation, among other factors, growing weaker. Today, right now, May 10th, 2022, there are more people using Cardano than ever before. There are more transactions on Cardano than ever before, and more smart contracts on Cardano than ever before. More NFT’s on Cardano than ever before. More dApps are under construction than ever before. Next month, the Vasil Hard Fork is on schedule, which will bring the greatest performance improvement ever in the history of Cardano, alongside numerous new features for dApp development. This is just one of many events that are going to occur over the next 12 months.
DJED HAS BEEN BUILT TO BE STABLE AND RESILIENT EVEN IN BAD TIMES
In addition to that, things that built entire ecosystems, like algorithmically generated stablecoins. We have Djed coming and is already on testnet. And it has a much better design, I’d argue, than most. And it’s a testimony to the hybridization of formal methods, peer review, and good engineering practices and principles. Again, basic principles. If you’re building something for everyone and you’re building something to last, build it well, even if it takes a little bit more money and a little bit more time. Again and again, I’ve always said that “it’s not going to be first to market, It’s going to be best to market”. And those who exhibit stability and resilience in the bad times survive.
MEDIA SPREADS FUD, BUT CARDANO’S COMMUNITY STILL IS STRONG AND GROWING
That’s why today we’re stronger than we’ve ever been in the history of the project, with more people than we’ve ever had in the history of the project. Yet that will not be reflected in the media, the prices, or the current atmosphere, because it’s one of fear, and greed, and it’s one that doesn’t seem to care about basic principles. But here’s the thing, the fair-weather people in all those cycles, they get drowned out. And the people who stay behind are the people who are here for the long term. And our community, in my view, is the best because they get it. They’ve got it from the very beginning. We must do better. We have to leave behind something to those who come after us, which was better than what we found. As Augustus Caesar said, “I found Rome a city of bricks and left it a city of marble”. And we want to do the same.
CARDANO’s VC, PROJECT CATALYST, IS COMMUNITY CONTROLLED AND HAS HELPED BUILD OUR ECOSYSTEM
So we look to the future. Consensus is coming. We’re going to be there. The community’s going to be there. And we’re going to show people how strong the ecosystem is. We’re going to talk about all the things that are not only coming but are already here but are ignored. Such as, I hear people say, “Oh, there’s no VCs in Cardano”. Well, actually, we have one of the largest around; what is Catalyst? $700 million, ready to go, deployed in a responsible manner through funds. You control the community. And every single time a voting round happens, we see more participation, we see more voting. And many of the great projects from Nami on down, received funding from Catalyst to get started. It’s what keeps great companies like dcSpark in our ecosystem and gives them the lifeblood that they need for Flint Wallet and Milkomeda sidechain protocol and other things. And that’s just the beginning, that’s going to grow, especially as the voting centers come online. Participation increases. We will see thousands of projects launched in the long term every single year just from that.
Here’s the difference. Unlike the VCs of Silicon Valley, and elsewhere, that are chasing manipulation, bad tokenomics, and insider distributions. This is the people’s money, who don’t need these things. So the things that come from it are fair. They’re not sexy. They don’t get love in the media because no one gets paid in that respect. But in the end, they build a decentralized economy. That’s just one of the dozens of innovations we brought to bear, like the hard fork combinator, and the Extended UTXO model, which, by the way, continues to be misunderstood purposely or perhaps just because people don’t seem to understand functional programming; but frankly is the only way to scale long-term an ecosystem of billions of users. The global state is a fool’s errand to chase. You cannot do that. Don’t go build a replicated system. Even Ethereum is starting to admit this as they move from F1 to F2.
You see, look carefully at what people do in the code that they write, the papers that they draft. Not what they say, not what they babble on about on Reddit and Twitter and Telegram and other channels, but what they actually do, what they actually release.
You see, things like decentralization, and throughput, are deep conversations, and inclusive accountability. These are deep conversations that need to be had because right now decisions are being made in this industry and abroad about whether you’re in control or someone else is in control.
The entire point of the papers we’ve written, the code we’ve written, and the ecosystem we build is to preserve the basic principle that you’re in control. Not someone else. That’s why Mithril was created. That’s why we wrote Ouroboros the way that we did.
CARDANO IS METHODICALLY BUILDING A RESILIENT INFRASTRUCTURE
There are plenty of ways to make things artificially fast, as long as you trust a third-party server. There are plenty of ways to make things settle as fast as you can imagine. Look at the conventional banking system or Visa or MasterCard. They certainly run very quickly and they certainly process billions of global transactions. But to do this at scale, in a completely decentralized, ever decentralizing way, meaning tomorrow it’s more decentralized than today, is a hard thing requiring new research and development. This is why we invested the time to write the papers that we wrote. It’s why we invested the time to apply formal methods to those papers. It’s why we invested the time to measure twice and cut once. Whereas others did not; choosing instead to chase the gains for their VC masters. This is the difference. And it’s a time for choosing.
The institutional people have already chosen their fate. They’re playing musical chairs with a global economy that will collapse. It cannot sustain itself. If something like a conflict, a war, can break the globe. If people use the convenient boogeyman of the week to excuse inflation or recession. When they cannot possibly be intellectually honest that printing trillions of dollars every year out of thin air is not going to have ramifications and consequences. If the warfare state needs to increase and continue. Empire needs to increase and continue for all of our standards to be the same. Meanwhile, our environment is being devastated. Meanwhile, standards of living are going down.
Even though technology, social progress, and education are improving. Never has there been a time in human history where we have gained so much from the labors of those who came before us. Yet our systems are so inadequate to harness what we’ve gained. And never has there been a time in human history where we have been so blind to the long-term consequences of what we’re doing.
BLOCKCHAIN TECHNOLOGY BRINGS HOPE FOR THE FUTURE
We’re due for a system change and the institutions aren’t going to do that for us. They’re going to go down with a sinking ship because they simply have no other choice. The point of cryptocurrencies and blockchain technology has always been a different option than the dystopian future that’s being offered to us, where we own nothing and will be happy.
The point is, we get our freedom back, our liberty back. That is what we are seeking. Yet people are trained to babble on and on and on about the current state of the markets, which are caused by manipulation and outsiders. Think about it. I for one, I’m done. I know the hills I’m going to die on. I know the places I’m going to live. The things I’m going to do. The caravan moves on.
We’re going to keep beating the drum every day. Keep writing the papers. Keep writing the code. Keep building. And the difference between the days in the past and today is we got an army now. There are three and a half million people in the Cardano ecosystem. You know what? In a not-too-distant future, we’re going to wake up and that’s going to be over ten million and then 100 million. Why not? Technology will be better. It will be more decentralized. Many new actors will be in the space. And we keep doing more and more And soon enough more of the world economy can run on our system. It’s inevitable in that respect. That is where we’re going. That is what we’re doing. That’s the point of the things.
WHAT KIND OF FUTURE DO YOU WANT? ITS TIME TO CHOOSE
If you can’t see that, then you have to ask yourself what is really important to you? What matters to you? What’s the point of all of this? Don’t you see the train wreck that’s coming? Don’t you see where the world is going? And shouldn’t we do better if we can do better? Or maybe not. It’s ultimately your choice. You still ‘get’ to make one. There will come a day, if you make no choice, then you don’t get to make one. Let’s pray that that day never comes.
CARDANO ROADMAP 2022 IS ON SCHEDULE
So I will see everyone at Consensus 2022, June 9th.
We’re going to keep working. Keep writing the code. Every day. We’re still number one for GitHub Git Commits. We still have tons of great publications coming out. Everything is going according to plan and schedule. Hydra is coming along. Mithril’s coming along. The Light Wallet strategy is coming along. Catalyst is growing. Sidechains are coming. Pipelining is basically on the testnet ready to go. Can’t wait for Vasil’s hard fork. June 29th. And that’ll just be a day. And then after the next day, things like Input Endorsers. And many, many more things to come. That’s Cardano. That’s the ecosystem we’re building. That’s where we come from.
Thank you all for being part of this and thank you all for all your hard labor. The good days, the hard days, and everything in between. You all matter. You all have a voice. And we’ve seen this grow so far. And I can’t wait to see us continue to grow. Cheers, everyone.