Eric Dixon (YLS 94), Legal Advisor at Blockchain Technologies Corporation, Blocktech, and Zap Utility Token
How and why did you get involved in blockchain?
Today we have computers in our cars. I remember having my first car 25 years ago. It was an old car built in 1983, and everything was manual. Nothing was automated, nothing was electric.
When I started at Yale, it was the Fall of 1991, the year of the Clarence Thomas nomination to the Supreme Court. Both he and his accuser, Anita Hill, were YLS graduates from the 1970s, so many of their professors were our professors. YLS became a press campground for quotes. You’d walk through YLS and you’d walk past 100 national reporters, and you’d start to recognize famous reporters from the major networks. They wanted to interview students, and it was a surreal experience. Some of us knew enough to run away from reporters. Now it’s just so much easier, the change is that now everyone’s got a phone, everyone’s got a gadget, and if someone comes up to the street, and you don’t know that you’re being live streamed.
Back then, you could talk to a network correspondent for 10 minutes, and you have no idea (and you wouldn’t necessarily be worried) if you’d be on TV. Then you’d find out when someone would come up to you and say, “I saw you on TV last night.” Now, you find out in seconds and sometimes it’s not welcome, from what people tell me.
How does that tie into crypto? The way I got started, interestingly enough, wasn’t because I was a lawyer. And it wasn’t because it was so kind of alternative currency or means of exchange or store of value, it had an appeal to me because it could preserve data in its original state. And at some point, you couldn’t have subsequent holders or users fudge or alter or somehow obfuscate part of what existed earlier. The value to me was whether you’re a student or a post-doctoral student or anywhere in your arc of life, you create something and you can prove that it’s yours and you created it at a certain time. You get a satisfaction and pride in creation, the “proof of invention.” There’s a time stamp. It’s on this blockchain, and this is mine. Proof of ownership, proof of expertise. It’s a great database. Heck, it’s great evidence. Today, there are people who can create great forgeries, not just photoshopping, they can invent audio and video and fool a lot of people without the proper forensic training (and resources).
That hits home for me today. My partners and I have one of the very first “blockchain technology” patents ever issued, for a multi-branched, customizable blockchain called a “slidechain.” (U.S. Patent 9,608,829). We had to go through the patent application process and take years. With a blockchain, you have mathematical proof of your work. It makes it easier for creators to prove what they did and debunk false claims from imposters.
In your mind, what’s the value proposition to cryptocurrency?
While I think of the technology, almost everyone thinks of Bitcoin as a currency substitute. How Bitcoin is used doesn’t change the technology underlying it. If you really think of how blockchain works, you don’t have a single representation, there’s no metaphysical equivalent to a coin with Bitcoin or the other protocols. It’s like you take one of those old-fashioned, yard long measuring tapes that an old-style tailor might have when he’s measuring you for a suit jacket, and you’ve got all these alphanumeric characters (e.g., 0xc41dadb) on that measuring tape. Those characters all represent each network member’s data. For you, it might be how much Bitcoin you own. For me, it might be a doctorate thesis I just wrote.
The difference between Bitcoin today and Bitcoin last month (or, BTC T-minus 30) is there’s a change in this ledger that’s represented on this big, long tape. That change on your account would signify how much more you own, whether that’s 22 Ether, 12 Bitcoin, or 370 of Dash, whatever these protocols might be. The industry is called “Cryptocurrency” but the protocols, the codes and instructions, are more than currency. That’s maybe the most prolific use currently for the space, they’re stores of information.
That’s how I got involved because back then, the idea of preserving the “original state” of information really interested me. But my objection was how this could be treated as money, given the unpredictability and volatility. I used to think (and still do): why would I want to buy a slice of pizza now with Bitcoin, because if this Bitcoin is as valuable with its underlying blockchain technology, it will be worth much more and I will be overpaying for this pizza. Why would I pay US$3 for a slice of pizza because a Bitcoin might be worth… When I said that five, six years ago, I wasn’t off the mark. I got involved when Bitcoin was $100, and it’s now gone up 100 times (it’s now US$10,000). If I bought that slice of pizza six years ago, that’s a pretty expensive slice of pizza or cup of coffee.
But here’s what people don’t get about the early cryptocurrency community. We aren’t spenders. We conserve, we save, we believe in authentic data and, to the extent we are in “crypto” for an alternative to fiat means of exchange, we want sound money. Bitcoin, and its foundation of blockchain technology, represents a mathematic, algorithm-based decentralized consensus relying on demonstrated computational effort to verify all historical information in each component block in the chain. There’s a built-in re-verification of data that offers a cumulative protection.
Maybe that doesn’t mean much in societies like the United States or Western Europe, where we have a system of the rule of law, of accountability, of relatively trustworthy institutions, but in most of the world, people don’t know what a trustworthy institution is. They prize what we take for granted.
With all the skeptics, it’s amazing how we’re seeing the same skepticism (“Bitcoin is dead, it’s worthless”) now that we saw in 2014-15 when Bitcoin was worth literally two percent what it is trading at now (in 2014) and the value is exploding. The volatility is like nothing I’ve ever seen in any other market. The price-volatility actually drives the trading, but realize that most crypto, most protocols, never gets traded. The velocity of what’s moving, being sold, that whips around the world several times a day, but most Bitcoin (and even most “altcoins”) never moves. That tells me most holders understand the value, they see it as a store of value – if not necessarily a currency.
You mentioned the appeal of preserving data in its original state. Did that attract you to the space for any personal reason, or was it more of an abstract interest?
It’s funny, that use as an alternative currency is not the reason that sparked my interest. I guess I had skepticism about its use as a currency given its volatility. At first, I was a skeptic not of the technology in 2013 but rather its level of popularity. However, many of us in various industries, the realities of plagiarism is evident. When you get really good at something, people are going to copy your stuff. They say imitation is the sincerest form of flattery, but in this case… I’ve had people flat out copy court papers that I’ve filed, and their attitude has been once you’ve filed it’s public. That’s not really the case, but nonetheless there’s a lack of respect. The fact is that, unlike 20-30 years ago, with the great accessibility to information, the cost of acquiring information is so much lower than it was 10-15-20 years ago. The difference is unreal, and because of that, expertise that used to cost a lot of money and take years to amass it, now people have the sense that they can access in literally minutes a volume of information what used to take years.
The cost of information is down in terms of money and the cost is down in terms of time. Consequently, the downside is that in societies where information is equated — incorrectly — with expertise and judgment, there’s a lot less respect for those who have amassed and accumulated information over a long period of time. That’s related to the issue of plagiarism. It’s a case where the apparent value seems to have gone down, and your ability to defend your expertise may not have gone down, but it’s much more vulnerable.
Many people have the attitude embodied in that Leonardo DiCaprio’s movie title: “Catch Me If You Can.” That’s the attitude that many people have. “Try to stop me.” I think blockchain can be very, very effective if you think about all the artists and musicians, songwriters, and it’s common. They’ll come out and say, “such and such pop star has a song out… I wrote this 17 years ago.” I’ll tell you something not off the mark. I hate to say this, and especially when you go to a great university, you have people thinking this is just a shortcut to getting where I want to go in life. It’s just endemic, and you have to realize this is human nature– it’s never going to end. But I think there’s an appeal to the sanctity of info.
A lot of people are concerned that there’s no real value to cryptocurrency in the real world– that it could just disappear. What do you say?
That’s the appeal, and it’s going to sound ridiculous because you’ve spoken to hundreds of people, but my skepticism was “what do you mean I’m going to have money on my phone.” All I could think of was this image of dropping my phone in the toilet. It’s silly now that there’s waterproof phones. You’ve got to have this backup, a private key, and really that gets to the issue of convenience versus security. You can have convenience but you don’t have convenience and vice versa. If you make a mistake, the fat finger mistake, and you press one alphanumeric character wrong on a huge private key, if you’re typing each character so you’re not copying and pasting each string to a particular space, to send Bitcoin, boy that stuff is just irretrievable if it goes to the wrong address. It’s in outer space. You can’t get it back. It’s gone.”
Here’s how I would explain the issue of value. You’re an American. I’m an American. I shouldn’t take that for granted because a ¼ of all graduate students (at Yale) are foreign-born. Even the law school has had a significant number of students foreign-born.
The reason why I point out the issue of whether we’re Americans or not, for the average American or really any American, we have faith in institutions whether they’re the large universities, the large medical centers, the government, the financial institutions, the banks, the rating institutions, the news– there’s an institutional credibility. We trust the people implicitly. We assume that the institution has credibility, accountability, and we take comfort (often mistakenly) in that.
We believe the other people on the other side of the phone are credible, knowledgeable, and trustworthy. The rest of the world does not share that belief. The institutional comfort that the average consumer might have. That’s not present in 90% of the world. They don’t trust institutions, whether it’s the state, the church, any big company, even the taxi driver. Corruption is commonplace, but in the West we think we are enlightened and have safeguards, so we think we are safer, or better able to sniff our fraud. We have a vulnerability, a comfort level that isn’t necessarily warranted. But the developing world, they’re in touch with human nature and how evil we can be.
Any final thoughts?
How does Bitcoin tap into these viewpoints? In the West, if you assume the legitimacy of institutions, you may think Bitcoin is not necessary. In a developing country, where there are no trusted organizations, and your money isn’t “sound,” Bitcoin might be your best – your only store of value. The appeal is clear to anyone who’s grown up in a culture of corruption. You don’t have to trust the media, the third-party middleman, you’re doing a transaction directly, and you can see for yourself whether the transaction goes through or not. That’s the example of Bitcoin.
With Ethereum, that’s a smart-contract platform. It’s a case where the appeal of the smart contract was that you at least minimize the danger of one party to a contract reneging or simply breaking the contract, trying to pull a fast one. If people are honest, the contract will be fine. If people are dishonest, the contract is going to provide limited… the regular contract will provide limited protection. With a smart contract, you can’t get your goods and pull out and pull a fast one. The smart contract is already activated. That’s the appeal of the Ethereum platform. That’s the ideal of assuring performance on both sides. That uncertainty is appreciated by people in non-industrialized countries much more than American sensibilities would have.
I think the issue I’ve been saying for years is that if you want to understand Bitcoin, you have to think of someone from a third world corrupt regime, where there’s no institution that’s trustworthy, where everything is turned completely on its side, and where everything is totally different from the average American experience. The rest of the world “gets it.” The United States and the West, the legacy institutions, are already playing catch-up.