Hidden Forces: “Distributed Ledger Technology and the Promise of Consensus | Power, Money and Governance in the 21st Century”

Host: Demetri Kofinas
Date: December 25, 2017

Episode Overview

This special Christmas Day episode of Hidden Forces features host Demetri Kofinas sharing personal reflections and analysis (without a guest) on distributed ledger technologies (DLT), with a focus on Hashgraph—a protocol he’s covered extensively—as well as the broader context of cryptocurrencies, governance, and digital autonomy. He also discusses recent developments in the Bitcoin market, specifically the advent of Bitcoin futures on major exchanges, and offers candid thoughts about the implications of recent trends in the crypto space.

Kofinas positions the episode as a thoughtful counterpoint to the prevailing mania in cryptocurrency markets, urging listeners to focus on technological, societal, and governance implications rather than price speculation.

Key Discussion Points & Insights

1. Reflections on the Holiday, Context, and Hashgraph Content

• Personal update: Demetri shares that this episode is a Christmas present to listeners and notes his personal journey, referencing involvement in Mike Maloney's Hidden Secrets of Money documentary even during a challenging time with health issues.
  • “For those of you who don’t know Mike Maloney… I was actually in his second of the Hidden Secrets of Money series years ago, and… I had developed symptoms of dementia in 2013 as a result of (a brain) tumor... I had dementia when we did the documentary, unbeknownst to me.” (01:15)
• Hashgraph Panel and Excitement: He describes inviting Mike Maloney to a key Hashgraph panel in New York due to their shared interest in the technology, and the significant public attention the panel and documentary have since garnered.

2. Permissioned vs. Non-Permissioned Ledgers & Governance Concerns

• Crucial question: The distinction between permissioned (private) and non-permissioned (public) DLTs is identified as a central issue for the future of distributed ledgers.
  • “About after 38 minutes in [the panel], for at least 20 minutes or so, we get into the distinction between permissioned and non permissioned and questions of governance. These are really relevant...” (04:10)
• Governance Challenge: Demetri emphasizes how scaling a public ledger for global use presents immense challenges, highlighting security, throughput, and governance as key hurdles.
• Hashgraph’s approach: He lauds Hashgraph’s team for their seriousness and their openness to learning from the successes and failures of the original blockchain and Bitcoin teams.
  • “Unlike Satoshi Nakamoto, these guys have the opportunity to learn from his mistakes, from what he’s done well and what he could have done better.” (14:15)
• Patents and Open Source: Listeners have raised concerns about Hashgraph being patented—not open source—but Demetri suggests caution and patience awaiting further information, acknowledging the legitimacy of starting with protective measures for a new technology.
  • "I don’t think there's anything crazy at all about creating a brand new technology, even if it is a game changing technology that needs to scale, let's say, in a non patented open source way. I don't think there's anything wrong with having a patent on it, at least initially." (12:24)

3. The Larger Promise—Distributed Future, Not Just Cryptocurrency Mania

• Not about “crypto": Demetri clarifies that his interest in DLT is not rooted in the financial speculation or mania surrounding cryptocurrencies.
  • “For me, this has never been a conversation about cryptocurrencies. Anyone that's been listening to the show knows that I don't talk about crypto. I don't even know if I use that word. I almost find it sort of like I get a gagging reflex when I hear it...” (09:37)
• Societal implications: He frames the challenge of DLT as a question of whether we can use technology to enhance autonomy and freedom in an increasingly digital world.
  • “Can we build a distributed future so that we can maintain our autonomy and freedom in the digital age?” (08:36)
• Separating tech from hype: He expresses concern about conflating technological promise (like Hashgraph) with “mania and FOMO” in crypto trading.

4. Bitcoin, Blockchain’s Limits, and Futures Markets (29:31)

• Bitcoin’s place: Demetri turns to the recent news of Bitcoin futures beginning to trade on the CBOE and CME, noting the irony and philosophical challenges they present.
  • “I find it somewhat ironic...about a cash settled...because that's what we have with the CME and the cboe. These are cash settled futures.” (33:08)
• Asset vs. Money: He discusses the shifting perception of Bitcoin—as money or as a commodity—and how its intended properties seem at odds with how it is traded and secured.
  • “It’s ironic that you take this really cryptographically secure asset and you store it on a less secure platform, on a less secure server. I’m sure I’m not the only person that’s thought of the irony of this.” (38:10)
• Bitcoin vulnerabilities: Points out the cumbersome process of truly securing Bitcoin, which has led many to keep coins on insecure exchanges (despite past disasters), raising questions about its practical value and security.
• Speculation and bias: Demetri notes that he has never owned Bitcoin, enabling a more objective critique, and warns of the speculative mania and psychological traps among holders.
• Proof-of-work critique: Highlights environmental and scalability limits of Bitcoin’s proof-of-work system and expresses skepticism about its long-term prospects.

5. Blockchain’s Broader Problems & the Importance of Governance

• Scaling Issues: Demetri discusses the inherent challenges in blockchain technology, stressing that off-chain solutions (e.g., Lightning Network) create new security issues.
• Context of AI and VR: He argues that unless we can secure interactions and experiences digitally, then the promise of AI, VR, and other advancements is undermined.
  • “If we can’t secure where we have our experiences and how we have them, then...I don’t really want to be on any of this technology...” (47:35)
• Tax Issues: Briefly mentions plans for an upcoming episode on the practical question of cryptocurrency taxation and compliance.

Notable Quotes & Memorable Moments

• On distinguishing hype from substance:

  “Let’s separate from the craze and the mania and the hype around cryptocurrencies and the desire to make money and the FOMO and the greed and all these different acronyms that people come up with and let’s just focus on what the big opportunity here is, which is a distributed future...”
  (23:34)

• On Bitcoin’s actual use and challenge:

  “It’s ironic that you take this really cryptographically secure asset and you store it on a less secure platform, on a less secure server...”
  (38:10)

• On patents and governance:

  “What I think the Hashgraph team is grappling with internally is how to deploy this technology, this really remarkable consensus protocol that could be game changing, how to deploy it in a non permissioned way...”
  (13:15)

• On the big picture of digital autonomy:

  “Can we build a distributed future so that we can maintain our autonomy and freedom in the digital age?”
  (08:36)

Important Timestamps

• [01:15] – Personal context, involvement in documentary, health mention
• [04:10] – Importance of permissioned vs. non-permissioned ledgers, panel recap
• [08:36] – Framing the goal: distributed autonomy in the digital world
• [09:37] – Distancing from cryptocurrency mania
• [12:24] – Addressing concerns about Hashgraph’s patent
• [13:15] – Hashgraph governance challenges
• [14:15] – Hashgraph’s advantage in learning from Bitcoin’s history
• [23:34] – On separating technology from speculation
• [29:31] – Bitcoin market and the introduction of futures
• [33:08] – Irony of cash-settled Bitcoin futures
• [38:10] – Security paradox: storing Bitcoin on exchanges
• [47:35] – If we can’t secure digital experiences, AI/VR gains are undermined

Conclusion

Demetri closes by reiterating his commitment to focus Hidden Forces on the deep societal, governance, and technological implications of distributed ledgers, rather than hyping up cryptocurrencies or predicting price trends. He pledges to continue inviting thoughtful voices and tackling the practical issues—from technology to tax compliance—that matter in building the future digital society.

Tone: Personal, reflective, and occasionally sharply critical of crypto hype while remaining intellectually curious about the underlying technological possibilities.