This is epicenter episode 365 with guest Martin Coleman. I am Sebastian with you and you're listening to epicenter the podcast where we interview crypto, Founders, Builders and thought, leaders. All this show, we dive deep to learn how things work at a technical level, and we fly high to understand Visionary, Concepts, and long-term trends. If you like epicenter, the best way to support us is to leave a review on Apple podcasts if you're on a Mac or iOS device.
The easiest way to do that is to go to epicenter dot rocks /. Apple Today, our guest is Martin Coleman, Martin is the CEO of gnosis and he's been on the show. Well, this would be a third appearance. He was on the show way back in the early days of gnosis, and about two years ago to talk about d x. Dou. Well, he's back on today to talk about another project on which he's working, and that is circles. Ubi. Now, you may have heard of circles.
Ubi, I believe it's one of the most serious attempts in the space to create Universal basic income based economies. On on a blockchain, and does a couple of really unique things about it. First, it's fully decentralized. So it doesn't leverage kyc or any form of identity to prevent against Sybil attacks and they built in this really interesting and robust trust mechanism where you essentially kind of create webs of trust within the circles Ubi ecosystem.
The other interesting thing about it is that it's built on the PO a network which is an ethereal side. And there's several benefits to doing this one. Well, the transaction fees are very low there, nearly zero and transactions, settle very fast and it leverages X Dy which is 12 1 Peg of die on POA to achieve stability. Lastly, what I like about this project is the way it's
positioned. It doesn't Market itself specifically to anyone in crypto but rather it tries to to position itself as an ecosystem and a protocol that can help anyone create and promote a local economy within their community. And I think this is very powerful and especially in the current context of covid, where lots of local businesses are hurting and depending on their neighbors, and people in their Community to shop and consume in
their business. So, having this available, Bowl as a tool at our disposal at societies, disposal is really powerful in France. There are several local currencies that exist all across the country in different communities. There's one here in the Paris area, but a lot of times, I don't think these are very attractive for people to use because their paper based mostly very few of them have digital payments.
And I think for a lot of people, the probably isn't very much of an incentive to use them save for, perhaps a discount at local businesses. But you have to buy these currencies here with a circles Ubi, those are huge incentive to use it because you're essentially get this currency are dropped to your account at a fixed interval.
So, I'm really glad, we finally got Martin on to talk about this and I hope you enjoy it. Before we go to the interview, I'd like to tell you about the webinar that Al Gore and is hosting next week. It's on Tuesday, November, 17th. And here, you'll learn all the basics of building your own defy application on Al Gore. And what's great about a Legrand is that they've built a lot of The Primitives that you need to build sophisticated defy apps right into the protocol.
So, I'll tell you a little bit more about that later on during the interview. But if you'd like to sign up, go to Al Gore and.com epicenter. And sign up for the webinar next week and with that. Here's Brian and sunny. Interviewing, Martin compliment. Hi and welcome. We are here today with Martin Copper Mountain Resort on the show. I think for the third time he's of course the founder of gnosis the prediction markets company that we've also had on the podcast before.
You know he's worked on some other things like the X down to trading decentralized exchange Technologies. With closest, they've worked on the save. So really quite a lot of different stuff. And he's been part of the theorem Community for a long time. I know him from the Bitcoin, Minos back in Berlin in 2013 when we started those. And so today, we are going to speak about another project that Martin has been working on for a long time.
I remember talking with Martin about this, I don't know, probably three years ago or something. So a long time ago and you said you circles It's and circles is the idea for having a decentralized basic income project and yes, it's something you've been working on for a
long time. I remember working here, at full node with some people small team that has been working on that, like two years ago, maybe so it's been germinating for a long time, but now circus is kind of launched and is getting, you know, some traction, some usage. And so yeah, we wanted to have mine on to dive into Ubi And you know, circles in particular and how to project aims to you know, create a new economic system. So thanks so much for coming on Martin.
Yeah, thanks for everything. Me, looking forward to the conversation. So let's start at the beginning. Like why do you find this idea of basic income? Interesting? There are really, really many reasons. There are many reasons why you can find basic income. Interesting it's enabling human potential. I guess making the world a better place. Making the world a safer Place, making the world more technologically advanced days, make the world, a more culturally Rich place.
So yeah, the idea is, if people don't have to worry about their very basic needs are not trapped. Kind of being afraid to not being able to pay their food and their rent that people can unleash their potential and Ubi just seems the best way. And the most efficient way to do that, just set this basic floor where everyone can can stand on
and contrived above that. Yeah, you can have you can have a competitive economy or you can have market-based Economy but but yeah there's this this basic floor where no one can fall below that floor. That's roughly the idea of epi So could you explain the, what is a Ubi in the first place? And how is this different than, you know, welfare systems that we already have today and looks countries? Yeah, no. I think I think Universal basic
income Ubi the core ideas. The car idea is that simply everyone gets it, and it's independent of of your personal situation. So it's not that makes it all so very To implement it because you don't need any burocracy to decide is this person, legible, you don't have weird rules that sometimes create perverse incentives. So if you have some welfare sometimes it's a problem to start earning money or start working because that it's the same time with kind of cut your welfare.
And it's actually then, potentially not even worse it. So, and Ubi is just very, very simple concept of saying, Seeing everyone gets a specific amount. Probably a month or week, that, that doesn't really matter, but it simply continuously paid out to every. Yeah. Usually, citizen as long as they are alive, I feel the way you've
described like the need for you. Bi comes off as a very sort of utopian vision for it. I say this in the comparison to, you know, I think you bi has become Wait a, you know, everyday term now thanks to like you know the u.s. presidential candidate, Andrew Yang kind of like bringing it into the commonplace at least here in the US.
But his approach his seems almost like a more dystopian like or like we need Ubi because like this automation is taking our jobs and like we need this to like survive a society. Well you seem to take a much more like possibly even if it's automation wasn't an issue. Like even in today's world, World where there is an abundance of jobs. If you still think that the Ubi is like a positive force. And so what is the talk a little bit about this?
For sure? I mean, I see the the automation as wonderful things so I mean basically means that people are free to do something else. It's to me absurd that we that creating jobs is a goal. I mean, like, our goal should be to get rid of jobs too. Great of work.
I mean like there is no. I mean like the idea that we need to find something that people can work, that seems absurd to me. We need to find, we need to make sure that that we can produce stuff and that we that we get things done, that we need to get done. But the explicit goal to say, well, we need that human has something that they can spend their time on. That hip seems absurd to me. Of course, I understand, I understand where it's coming from, it's coming from.
Well, if people don't have easy or kind of straightforward way to get income and so on. So I understand that logic but if you zoom a little bit out, it seems really, I mean crazy to say, we need to make sure that there is stuff to do if we can organize society that lets people into work and everyone gets what they want. That's that should be great.
Yes, I saw this video by Bruce, Fenton, like the other day on Twitter where he talked about Ubi, and he thought it was like such an absurd idea because, you know, it would mean giving money to, like, lazy people or people who are not talented. And it struck me such a like, where's this coming from? Because it seems like it's strange idea to me on some way, but I think if you're, you know, if you see it as maybe there's more dislike Zero Sum game, and there's a limited amount.
And, you know, if you give it to the wrong people, then you kind of end up in this bad situation, then I kind of understand how this makes sense, but if you if you think of the world more one where there is this like abundance and there is actually enough then it just seems like it would be such a great thing if you can have this basic level sort of distributed to everyone. So yeah, I think it's it's such a great vision.
I mean, also one way to look at it is what I mean, if you, if you say well, you shouldn't give it, you shouldn't give it to those people. So, what is the consequence? I mean, like, let's be ready. Cool here in our thoughts, at least and say what should be the consequence for those people died. Then, I mean, of course, no one should die. And no one should they will not, no one will disappear. No one, no one should die. No one should not have enough to eat.
So somehow, and it does this but true already. So Everyone obeys, almost everyone living in the years living in Europe, somehow has an income. So it is already whatever the source is, but but people are usually not starving and are usually not dying because they can't get an income. So they, they, they get an income. So the difference is, of course, not unconditional. So right now, to get this income, you need to do things, you need to to work.
And basically, What a basic income is doing is it's not even changing the fact that everyone gets at least, it's just your basic income. It just changes. The fact that they get it, everyone gets it unconditional. So yes you are indeed taking away power from people who have
money. So they have obviously everyone who has money has now less power over people who have no money because now everyone Some money and basically the basic income gives you the option to say no. So it gives you the option to be if a job is offered to negotiate, you have better better bargaining position. But yeah, again the the people
have incomes already. One of the like, very interesting things about UB is it seems to have ethical political goal as a team, to have pretty wide support from like all different. And sot, like spectrums of the political Spectrum, like, you know, libertarian, see it as like this way of like, simplifying, the welfare system. I feel like a lot of free market people see this as a way of like
encouraging entrepreneurship. So I think it's a very interesting like being that the kind of breaks past the traditional, like, socialism capitalism divide that we normally see in like, political debates. And what's with you, bi, of course often right been like, you know, often people think of it in the context of like a
nation-state, right? And where it's going to be funded through taxation you know like what do you think are the pros and cons of that versus you know this more circles approach of trying to build something that's, you know, Global and decentralized and where you kind of like printing this new coin. Exactly. So I have definitely no issues with the nation Nation issued Ubi and of course, I would
encourage that. And luckily several states are humming softly moving in this direction, or at least talking about it. So it's not not anymore, something that's Unthinkable, but at the same time, yeah, I mean, it's exciting that, well, we have no technology to coordinate humans and Yeah, do things without nation-states. So one way to look at circles is simply to say, well, we can get there quicker, we can just do it ourselves in a way.
But another way to look at it is also the I do have my skepticism towards nation-states, so kind of at least my my personal experience, the way my life Works States play only, probably a weird growth because kind of my connections are Not long
nation's borders. So the way I the people I interact was are definitely not kind of only people in Germany or something like that so it does make sense to me to also organize to organize something like a Ubi across those personal connections that exist instead of those artificial nation borders, Algorithms running our free webinar to teach developers, how they can use the platform to build sophisticated applications for use cases, like crowdfunding asset tokenization
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you. Visit aljazeera.com, epicenter sign up. Once again, it's free and it's happening on November 17th. But if you're listening to this after that date, no worries, you can still go to that page and watch the replay. We'd like to thank Al Gore and for those support of the podcast. So maybe before we go into like understanding circles a little bit and you know the I the circus heavier you know what do you hope will be the on the kind of like the broadest level.
You can think like it and if circles like fully succeeds what do you hope to impact on the world will be? Well, the hope of you bi are the hopes of you bir. Well, get rid of poverty again, have technological advancement advancements because more people can I can kind of take risks be entrepreneurs. So yeah, I think the the picture you could paint is is pretty, it might be pretty amazing. What could come out of your bi Cool. Okay, well then let's let's dive into Circle.
So like how I mean the idea of course, is to reach many people here and so many, of course, also means many like non crypto people and blockchain systems often hard to understand for non-capital people. So, like, in your efforts, to, like, on board people, on two circles. Like, how do you explain the system? Yeah. I mean that is indeed something that varies very much from from who you are talking to. But one way is to describe circles as a tool to give
communities or groups of people. Yeah. This tool to give each other Ubi to organize. Yeah. Within a group Ubi. That's one way to describe it. Another way to describe it is to say, let's look at money and Let's say we can take an existing money system. Yeah. The dollar, the Euro, whatever, and build a Ubi on top. So we could have a state. Yeah. The state organizers and build the UI on top or if we want this Ubi anyhow, we could already baked it into the money system.
So we could just have a money that has the eye. Yeah, directly implemented and that and then the third narrative is from probably those who come more fun From the Bitcoin world, for example, or that at least, no Bitcoin. Here's the story goes, well, Bitcoin showed it is possible to to, to design money, I guess or Bitcoin show to the world that money in itself is not a neutral thing. Instead money is something with choices and kind of work.
Well, there is an agreement about how it works, and, and that is not neutral. So the money system contains specific values, or potentially, Is some people over others. And that is the third way to look at circles to say, just we want money, but we want to Design Fair, we want to design the money, that no one is specifically preferred, and I think Bitcoin did that already to a large degree, in the sense that it took away a lot of, almost all political power from,
from the money system. So no one in Bitcoin has political power over Bitcoin, but you can argue in a specific sense. It was not very fair. It heavily heavily favored. Early adoption. So like if you look globally at Bitcoin, or if you would see well, let's let's imagine. There's an island and there are hundred people on this island and they kind of somehow agree
to what money should we use. And let's say, to people on this island, have an acid and only they have it and they say, okay, look everyone, there's only a limited Supply and no one controls it let's use this asset. The money and they tried to convince the other 99, this is it. I mean, that's basically how the situation today globally is on bitcoin.
So there is so as opposed to people like on the global scale, basically the one those who hold Bitcoin today and they are trying to convince the other 98. Yeah. That's Eddie also choose by the way, we already hold 90% of the tokens but well still, when you had your chance you you could have joined earlier. So in a way circles that again, third way to Look at circles, is to say, well, we want to spare money, but we want to make it also fair in in more Dimensions.
So process of minting, new money is, first of all, yeah, everyone benefits from that. And not even just like in space, so kind of cross like, across the whole world, and not just in one area, but also in time. So also kind of the Next Generation or people who are born tomorrow, they also Yeah, kind of benefiting from, from this money creation process, or the yeah, money, minting in a way. Yeah, that's another way to look at circuits.
How do you drive adoption here? Like you know, I without naming names, you know, I kind of asked one of my friends like, hey, have you checked out circles yet a couple weeks ago and he's like, you know, can I make up a lot of money off of this? Not really. So I'm not really, you know, I'm not really good at bother and so the money-making opportunity for like early adopters of cryptocurrencies was a large part of its like rapid adoption. And so how do you do that in
here in circles? Out, that sort of property. Yeah, I mean, there are two sides to circles. So the one side is somewhat fairly easy to say. But I also want free tokens or free money. So that doesn't require a big big, kind of yeah, convincing people. But of course, that's not it. The second step is absolutely required.
That there are people who give offer something for circuits and Basically, in a way, take on risk with circuits by like, if you give out stuff and you can accept, then this currency of course or just whatever you call it. Of course, you then have the risk. Well, is this anything worse? Can I can I get something back in return? And here, the idea is that you
yourself have to some extent. The very, very clear interest to signal that your personal currency and we were, I guess we will come into this but not every circle is equal. But that at least yours is worth something and that because if that is not the case, you will have issues that people will trust your money. And that will also mean that you
cannot spend your money. So you need to be, to some extent credible in the other people would need to think that you also willing to potentially give something for the money. Otherwise, they will not trust your money and not accept it. Okay, so I think maybe to understand this better, we need to start to dive deep into the technicals of house or both work. So can you explain to the you know, you mentioned this personal money and stuff could you talk us through how this works?
Right. So, exactly. So circuits is, yeah, we be a calling the whole system circles but there is no such thing as one Circle coin or kind of token or but instead everyone individually. Yeah, kind of issues their own personal personal tokens. So, as soon as you join the system, you can immediately start issuing your Your own personal tokens, but let's call mine margin circuits, and you are constrained in like, how
fast you can issue them. So that is the same for everyone to probably issuance rate is fixed on a specific schedule, right? But but, but then, they are, everyone has their own to, but then, for the user, or we largely abstract away from that. So, kind of, if you are not Not super difficult. Don't want to understand it. Fully circles will look like in many cases that they are. You don't need to think about those differences and that comes
from the trust networks. So what does it means of people can trust each other and if they trust each other they yeah. In a way verify each other or kind of agree with each other that they are both. Yeah using circles and on a Clever trusting. Someone means you are willing to exchange their circles for your circle 121 and real technical trustees, is directional, so that does need to go both ways but in the normal case, it would go both ways. So, if I trust brine, it means again.
I accept his circles in exchange or I'm always willing to exchange mine and that is also How the system can scale? So our first of all in general, the idea is that you only accept circles from people you trust talking later.
This is also how we address the similar Tech problem, but yeah, you'd only accept circles from people you trust, but it doesn't mean you can only interact with people or I mean there that would be a shitty money system if you can only like buy a coffee from someone where there is already a trust connection. So what those trust connections allow Are transitive connections. So yeah, if I trust Brian and we trust each other and then Brian trust again.
Someone and again someone and then there's someone is running a coffee shop and I go there and want to buy the coffee. The idea is, well, I paid them with circles and they would not accept mine because they don't know me. They don't trust me, they don't accept my circles. But again, there is this path so I can or under the hood again, this is all abstracted from the user. Can be extracted. I sent my circles to Brian can
exchange them for Brian circuit. Brian forwarding or without his interaction because he already generally agreed to. This trust connection is forwarding his tokens and again
is forwarding his token. So as long as there is a trust connection and disconnection needs to be liquid, that's small detail, that's important, then I can pay ya whomever and this whoever is Then receiving circuits from someone, they directly know or they directly trust and analogy here, you know, maybe to for people to understand, it's similar to lightning Network and that's like this like trust Network where but instead on lightning and every channel as the same
token, which is Bitcoin here, it's every channel is about a personal token, essentially exactly. But but yeah, it's a concept is the same Or for people who are even longer around or Ridge, the original concept of Ripper was also very, very similar. I'm not sure kind of how much rip the today has but yeah, until that you're sort of this, I think the continuation of that original Ripple, that idea. Also there's a project trust lines in the urban space.
Exactly. I think what's an interesting another way to think of it in the Ripple or Crush Klein's context is, inter Ledger Ripple or two about taking Debt in intellect her. It's basically we keep this channel open between us where we say, hey, I owe you point one, Bitcoin, IOU point to bitcoin IOU, .3, Bitcoin. And then we can settle up at some point in the future here. It's almost like everyone gets the right like as a human being.
You get the right to issue a certain amount of unbanked debt per time period for the rest of your life. Life. Exactly. So so I mean there are also voices to say circuit is a Mutual Credit system and it is like it is it would be a different way to look at it. So if I have 100 circuits or let's say that's purely my Ubi that was issued to me.
So my as you called it, my right to produce that I could also say this is actually 0 so everyone is at zero in the beginning but everyone has a specific Credit limit and let's say it's 100 units so everyone would be at zero and as soon as well but but I can go up to -100 so I can also or one way to look at it is I have hundred units at this moment that I can spend.
And well now I spent 400 units now I'm at - hundred and you might be a plus 100 and it's just in a way a different view on the same data to say everyone is at 100. And now I'm at zero. You and you are at 200. What's? Of course, the difference is how to what extent is there is the expectation from me. If I'm at either 0, or minus 102 to pay it back. And if if I met - hundred that the - already expresses these expectations that eventually I should go go back to zero with
circles. Then expectation is to a lesser degree there and that's really also about The the social contract of Ubi so in general you be I says yeah you can it's unconditional so Universal so you don't have to do anything but of course the whole system can only work. If enough people but do something or give value into the system, question is just does it help to to kind of have the traditional Financial system to have the obligation to pay back.
The debt and kind of worst-case. You need to go to jail or stuff like that. Or is there enough intrinsic motivation from people too? Well later produced just out of their intrinsic, motivation value and Deuce do things. And of course then offers those things to circuits also for circuits or for money in general. One question that kind of came up for me, thinking in this, like, trust context. So if you be, I wonder if the ideas of Ubi is also that you, you know, like everyone has
access to it, right? And in this case, you have this requirement that you actually have existing people trusting you first. So do you think this discriminate? So is this like a problem for people who are like more marginalized or is it just that? Okay, you have to cross this low threshold but, you know, once it's crossed Sort of people are kind of equal. Yeah, I mean that's that's that is a good point and that is a
fair criticism. We are sometimes facing and it really depends on. Yeah, I guess the social consensus of how this plays out so it did it could play out that people only trust each other or kind of in a way enters this agreement where you can see circuits as some form of of agreement and you could imagine a world where people only do that. I only trust people wear No. OK, they are I don't know wealthy and they will very likely produce something. Yeah, something valuable.
But there is also this element if the social consensus shifts towards more UPI so than the Ubi narrative prevails or kind of. Yeah winds and it becomes just the default Behavior. If you say yeah, they are human and they are in my network and I trust them or that That's why I trust them, it others do this as
well. Then the tokens the individual tokens become much more fungible because if if many people or at least within and was in a kind of was in a specific area or wizard kind of locally bound but if many people like just have to gather the default behaviors, they trust everyone. Who is also part of this social network or part of this place or
group then. Yeah, again, the tokens become much more fungible because now I suddenly have some, some tokens, let's say, like just go the example from this whatever poor person that I never expect, to to provide anything useful. But since everyone else, in my group is also trusting them. Those circles are not only backed by this person individually, but by its Network.
So, so if everyone can for Greece to this scheme in a way, well, Yeah, that is money and I can spend it within this network then I don't care too much. What this was specific person might offer or not offer its really, then the network that yeah kind of carries people along with in their Network. Can you talk a little bit about how Sybil accounts are dealt with or handled in the system? Yeah, exactly.
So that is again. Another another perspective or to look at circles is that there are actually Plenty or at least five to ten blockchain, you bi projects that all have that shared goal. Let's just issue tokens and give it out per person. And as you're hinting And your question is hinting to the big problem each of those projects face is simple attack, or kind of who decides who can, who can
join the network. And how do you prevent someone from just creating a hundred accounts in some or the other some of the other project, then try to come up with? Yeah, you need to kind of upload your photo or do some, some kyc or whatever, but circles, tried to stay completely decentralized. So I No, no Central Authority whatsoever that kind of decides who can join. But again relies on, on this trust Network. So again, how is it solved or how it is?
It rests the Sibyl problem? It boils down really to the social consensus that you only should trust the person once.
So if I kind of somehow, well, potentially go on Twitter but or just in my network to People, I know the social, the strong sort of consensus needs to be, I can create circuits account but only one and as soon as someone would ya would misbehave people should not trust that person or it's very least, well, kind of only only one of those accounts what happens if someone does that.
So, or let's say I'm trying to cheat, so you guys are trusting me was with It was my real account and that's all fine but then now I cheat an addition so I create a hundred hundred circles account and I trust all of them and kind of those hundred, they trust all each other and so on the important thing now to understand is as long as no real person is trusting those those hundred fake accounts.
Those hundred fake accounts can spend a small amount UND with in the real Network let's say was with Sonny because they are connected to me and I'm connected to Sunny so this fake person can take their fake tokens, send them to me and I sent the real tokens, my real tokens to you and you are happy accepting them but that only works until I run out of real Martin tokens because then the fact opens. Yeah. I mean, there is no so no liquid Trust. Anymore.
So, all I got was that I now have the fake token from from my own fake accounts and they are not worth anything. So I didn't got any advantage by doing that and again the system boils down to as long as people don't trust fake accounts. They are not affected by fake accounts, right? So basically you have almost if you think of it in these terms in this network topology, right? Let's say you are a real
account. Count and then you're connected with other real accounts and you're connected with like some fake accounts that then, you know, maybe there's a big swarm of lots of fake accounts, the thing, when they kind of they can only go through you, exactly. And sort of like steal money through this, you know, this one channel there is and that has this throughput limit right which is kind of the circles you have. So yeah. That makes a lot of sense, right? And I think that's it's a very
elegant. Yeah. Say elegant. How do I detect that there? Are like someone out of several accounts. So, let's say I have like, you know, multiple groups of friends that are somewhat, you know, isolated I go with my, you know, football friends and, you know, I make an account with them, get them all to trust me. And then I go with my leg crypto friends and have them make an account. And I'll trust me. How would these two groups even
be able to realize that their? I have a duplicate account? Yeah. I mean I think I wouldn't, I wouldn't make the claim that that is impossible. Specifically if you indeed would have kind of two completely distinct or like a completely non overlapping networks, but I would claim a most people kind of did the networks are somewhat overlapping. They're not kind of clearly separated. That's point. A and point B most people don't screw or don't want to screw the
kind. There people there, they have a personal and direct relationship or the kind of kind of their friends. So, yeah, I mean, s does assume some form of honest, Behavior within friends. But that being said that the damage that like, if one out of 100 people are one out of a thousand people does that anyhow and kind of might even succeed with that, the damage to the whole system is, I mean that would be a Problem. It's basically like a like maybe half a percent of all money is
counterfeit. What would be helpful though to do something? Like if let's say my address on the Chain was like the hash of my yeah legal name plus my birthday or something so that way when you know Brian comes along and says like hey here's this new.
I just made a new account I can take his name and his birthday hash them and see if hey why is there already An account here, that is something we left open to a large degree because we think those are social norms that will evolve and we don't exactly predict how they evolved. So currently we see really different behaviors of one.
Is obviously like your Twitter account is like if you tweeted publicly, then it's well then it's already harder for you to if you use your normal normal like face and normal name on Twitter than it's already pretty hard to say to kind of do. Neither that or to, then create a second account, that's one way. But in other way is again there are those much more local in much more non blockchain or very
specifically in Berlin? We have we have groups where people just meet in person and it's much more personal and and yeah, there is this community where people know each other, and again, I think the likelihood that someone tries to fraud that door. Brought really the people, they are directly interacting with seems reasonably low. Regarding this throughput notion I mentioned before.
So is it the case that basically you know, this throughput limit, that each user has then also grows proportionally because they get, you know, every day they get more circles and do you think that's a significant factor or yeah? I mean, the throughput limit, I mean, the again, lip different ways to look at it. You couldn't say the total amount of circles you get or is sunny mentioned earlier, the total amount That you're allowed to create.
Yeah, of course. The idea is that that continuously increases over time, one thing to note is trust connections, or if we again, looking at this attack scenario, well, you can cancel dressed connect trust connections so, well, if you feel like you are kind of drained, the circles are just always drained immediately as As the throughput or kind of as a new secretary issued, for some reason, you always end up with those circles and you can never spend them anywhere.
Then it might happen that you kind of talk to the person. Well, why can't I spend them anymore? Anywhere is why is no one else trusting you? Why are you not offering anything? You know, an earlier version of the paper I remember there was like this concept of validators and it really different than like not. It's not like the Things like proof of stake validated, it's a very, but then I noticed it was actually removed in the latest version of the paper.
So could you tell us a little about what that was and why that was removed? Yeah, so so those are things. So there were two concept of validators in groups. Those were just two things that are possible to build on top and we just decided, okay. Let's let's have the pure the purest kind of basic version and and If needed or if wanted, we can build those things on top and those are ideas to make it more practical for businesses to get some in some form except
circuits. So if we look at the business, it's not obvious like even if they want to accept circles and let's put for, for a moment aside, why would they want? And so on? But if they want to accept circles, then the question is what circles do they actually accept? They could say, yeah, only the circuits of the business owner. Well, I mean, that, that would be problematic because there are only so many circuits.
So kind of the total, the total amount of seconds, they could even potentially receive is limited. So, somehow they need to decide what circles they they accept. So maybe even in other words, whom step they are willing to to accept. And and here, yeah, there is the the concept or the can be a concept of. Of of validators or you could even call it like lists or
something like that. So somehow there is a process to to get onto a specific list and the list or one list could be maintained by. Well you need to show your real address. You need to live in a specific country or in a specific area and you need to to show your ID or whatever and if you do that, you are on this list and then kind of a business could subscribe to such a Start validator and say, well everyone, everyone who's part of this list, all of those circuits, I accept.
And again, The Next Step, that wouldn't mean that only people who are on those on this list, can can buy, or can spend their circles. But at least you need to be connected. You need again to have this liquid connection to someone who's who is on this list. So, yeah, I do actually imagine that. Yeah, that those those concept will or that, that will happen. Another way to think these lists would be where they kind of be like these giant curved Finance style pools.
Like you know here's a list of all these people who are approved and you know it's this and you can just Swap and any of them for any of them that can kind of like massively increase the ability to pay for anyone that's on that list, right? Who said that cool. I mean, the way the trust network is already this kind of what gives you already the ability to exchange across a pool or a graph.
So circles should or can in a densely connected in a densely connected Network. All circuits are basically equal because you can exchange or you find a path from any circles to every other circuits. But but if there are kind of models so slow Groups that are not in the graph. Is more Loosely connected. Yeah. Then then some connections might try out of try out of liquidity but 24 from from the business perspective.
It's not. Yeah really about it's not really about being able to exchange those but it's just a question which are they willing to hold? So which what in a way again depth or what what risk or to some extent you can say holding money is a risk. The risk of will you ever get something Thing in return for it. I mean, this is also it's amazing how much trust we have today in our dollars or Euros.
So we don't even think about that, that way that if we are selling something, we are already taking the risk because we are already giving away the good and we just received this as paper or maybe not even paper in the hope that that we will eventually get something for it. Of course we have so much trust in money. That we don't perceive it as a risk to sell something and to receive money, but, yeah, in principle it is that risk to accept money.
Now, you know, kind of speaking of a M&M's, like so far, we've been kind of assuming that anyone who's like on a trust path is willing to do a swap like 121. Like, you know, I'll take margin token and send Brian some Sunny token 121. Like so far, there's been this assumption that trust is like a very binary. Anything in the real world. I feel it's not always as binary. Like you know if there's one token that I'm accepting you know, maybe that's okay.
But then if I'm expected to extend 10,000 dollars that you know, there's a higher default risk and stuff and so does it make sense to like have some sort of these people who are along the payment path, they take fees and like using some sort of like bonding curves or amm kind of stuff too like account for this. Default risk as the amount to go up. Yeah. So that can make sense you can one way to look at.
It is also to say if they are like three or four different passes, you should choose the shortest shortest and currently there is not really a I mean, currently it wouldn't matter. Even a long pass doesn't really cost you anything.
So there are arguments clearly for such a system but there is at least at one point where I would argue against or at least that's not my idea of circuits is one way to interpret circles could be. Yeah, it's releases personal, personal tokens and that's it's almost like equity in that person. So you say, kind of well, how much will this person probably kind of produce or do in the future and kind of depending on how educated or whatever kind of
that could be one way to look. Circles, but it's definitely not the way I look at S 0 I would like to see Circle. So I would definitely like to see more of this perspective of UPI. And in that sense a trust is fairly binary because you can fairly binary say is that a real person or not? There's not too much room in between. Here's a little bit of a weird
question which is so far. We've talked about, you know, we've determined that this system is good in both are over time because that's people are born. You know. They can join the system. What happens when people die if I died tomorrow? Sunny tokens are already all throughout the network and more Sunny tokens are keeping minted because my account is still existing on chain. So how do we deal with this? Yeah, yeah I know, I'm a good person so there can be
different. So social consensus around how to deal with that. But the idea I would strongly advocate for is, first of all, of course, your minting should stop. And we have already implemented that to some extent in circles because they are simply two statements, which or kind of this this concept that if you don't poke your account, at least every three months, then it will stop or then you will not be able to any yeah, you would basically need to create a new account.
After that. So that problem is to some extent solved. That means like I have this circle account. You know, I'm accumulating my circle, I have this like trust Network. Then I'm going six months on, I don't know, backpacking around the world and then my account is, is gone right now. Yes. So right now it means that if you, if you for three months don't do don't do anything. Yeah, again, your account is not gone but it can't issue.
Issue any anymore circuit. So what you would need to do is you would need to create a new account and basically tell all your friends, sorry, you can see here's my own to all the count, it's frozen. So, you can now securely trust a new account and no, I you can still trust the old account and you should because those brine circles should still be valid but they would then also need to trust the new account if they want to. Give you while you can. Yeah, except you're going forward.
Okay, so so I would still have two coins, the old coins. I would like that. Would need to create a new account, to, like start printing again, or maintain. Yeah. I mean, like, like technically speaking in the count is well, smart contract wallet and it's just enough to say factually, but so they're dead. You still have access to access to and all the all the tokens that are in there. You still have access to.
But again, the the yeah, The minting contract will simply not allow any meeting in the future more anymore, why not just let people kind of like reactivate your account to some extent addresses Sonny's question about? Like, what, what is if people die, but to some extent, it also deals with the problem. What if I lost my account? So if I if I just lost my key, I mean kind of any form of reactivation is of course problematic because I mean who Who is allowed to do that and so on.
So if you lost the key in, there is no Central Authority, well General problem, but in circles is simple, answer would be. Well, you should create a new account, and now, but you now, you need to go to to the people that previously trusted you and say please. Now trust my new account.
And to do that, it's kind of necessary or it almost a necessary condition that they can be assured that your Previous account, cannot be there look-alike suddenly suddenly mint tokens again and now you get it twice. So for you to kind of Clearly say, see it safe. This old one is deactivated, please do new one, it's yeah.
So, one of the things about the economics of circles is that the, you know, we have this sort of, I forgot what the exact rate was, but I'm getting like, you know, maybe 200 circles a month or something as this more circles being printed, this is sort of causing this inflation. And that means like the real value of the Ubi over time is actually decreasing, because if there's only 200 circles being printed per month, how do we make sure that you bi keeps up? You Pace with like inflation.
Yeah, so exactly. So there is. So if the if the issuance rate would be fixed and currently it starts at eight circles day. So yeah, 240 roughly a month, believe that would be fixed. Then indeed, as you said, kind of the total amount of money in circulation giving a constant population. What? Yeah, continuously. Increase over time. But you could then argue the relative amount that's kind of
newly minted. Or given out as you bi would relative to the total amount actually converge over a long time towards zero. So, in a way, you could argue the flexion would go towards Europe. That could potentially mean that the FBI also the value of the Ubi goes towards zero at least over a long, long time scale. And it would also raise. Again, this is fairness point, so like future Generations would say, well, why would I kind of accept all Those old circles compared to me getting getting
getting very little. So like taken to the extreme, let's say 200 years. Why should I kind of be it relevant? That the two hundred years ago. Someone lived, and issued circles, and why should I kind of Honor that in a way? So circles addresses this? And, and there's a nice concept behind it from another project
called donator relative thing. You have money second suppresses that by simply increasing the the Ubi by 7% by 7% a year so in year one and eight units per day and year to its eight units plus seven percent and so on and so on. So that means that the rate of new Ubi will actually stabilized compared to the existing total. Yeah, money Moss.
Given a given a fixed population at by the way, more or less exactly those those seven percent that number is actually not too far away from from money, we are very used to and that is the US dollar. So if you simply look at at the monetary Mass M1 and you look at the last 50 years, I think the the the increase of monetary Mouse. We're total dollars in circulation. Increased roughly by that 7%. I think it's slightly less 66
percent per year. Cool. Well, question that kind of relates to this topic of, you know, how much is this money worth and maybe how does it relate to like, you know, different people in any different times in context. So a lot of these graphs right? Are kind of going to be local. I mean it It seems like that from the way you envision it. It could turn out that way at the same time, there's this idea that, you know, like one Circle. They all have the same value. So how do you see that like
playing out? If you're going to have, you know, like some circles, you know, Network that, you know, trusting each other in, in some may be poor place in Kenya versus, you know, in Berlin, some communities, you know, will those sir? Circles. How do you think they will have different values in their local context? Yeah, so that really depends on how strongly they are two graphs or two two graphs are connected.
If there are 100 people in one, let's say in Berlin and everyone is connected with everyone there, it clear that all those circuits are basically fungible and and will have same value. Now in another place again another People are all connected with each other. It within this context within the space, although circuits are will have the same value. Now, let's assume just one or just out of out of those two groups, there's 11 trust connection.
So, kind of out of this one group and out of group to those two people trust each other. So now for a very, very limited capacity, there is the capacity to flow for Value to flow one-to-one. But then of course, It could happen that this flow kind of dries out and that would be simply if any one out of this group makes a purchase or kind of in the other group. Then. Yeah, money flows out of this group to the other group.
But then this connection is yeah, dried out or any more money cannot flow and with which effectively means that the two groups are basically disconnected at this point. So and if they are disconnected, of course. And then value or then, of course, they would have effectively different values. If the groups are like more and more than somehow somehow connected and more and more people connect with each other. Again, the value would also then
equal one question. I'm curious about, you know, you've worked a lot on dolls and you know, the of the, these ideas of dolls. So, you know, enable, Like Mass collaboration, if like many, many people. Now, of course, this in a way, is about creating this web community of people always, you know, cryptokeys. So do you see circles turning into like some kind of doll and like how what potential outcomes there?
I would not necessarily say circuits itself, would turn into a doubt, but clearly, we are already working on the are basically a circuit style. Basically, a dial that has the goal to, to bring bring circuits forward, but I would be very, very cautious or simply. That's the direction. I would not want to give that Dow in some form power over circles. So it's a core element of circuits that it is, that there is no no governance.
So you see that's like it's a protocol that's like defined and that's not going to change. Well, I mean I mean, there is a lot of going to change in at the edges. So basically, in the kind of all the parts that is part of the social consensus of, should I form a trust connection or not? That is largely undefined. And that is, that is part in a way where, where, governance happens, the very core rules are
really minimal. Probably the only Parameter that is that is something that is kind of worse. Discussing is the, they could be a thing where people might have different opinions about this. This is 7%. Other than that, for example, whether the issuance rate is eight or are 100, that doesn't really matter because you can, if you say the issues raised should be one will just create an interface and call it one or a base.
Really just create an alternative interface where you where you say kind of this is one unit you get per day. It's just a different view ones on the same graph. Yeah, I think that's really cool. When will comment it is indeed a nice side effect of circles. Also, to towards your Dow question, it is Annie a nice side effect of circuits that you suddenly create. So this Public public peer-to-peer graph where everyone has a price. Key that alone is is something useful? Yeah.
That's powerful. Yeah, exactly. Exactly. So, there are plenty of applications that can benefit or that that could kind of use this trust graph. Yeah, I kind of as a basis to get started so you could imagine a rating system so anyone can kind of add a rating to the system, but of course then you have the Civil attack problem and I think that is a real
problem. Today in today's world was comments with ratings, whatever they get spammed by Bots, but if you if you filter it through this trust graph and say basically yeah just just I follow the edges from from. I have this local view or this relative view from from my own perspective and I kind of weight ratings, comments, whatever it is based on this graph. Yeah, that that is a powerful
powerful tool in itself. Yeah, this is Really cool because there are actually going to ask just about that next and how I actually first Came Upon circles. Two years ago was exactly that, I wrote a rating system for open bizarre, that used like a web of trust reputation system and on ethereum. And then one of the problems was, how do we get, how do we incentivize people to actually
like make the trust connections? I couldn't see any reason why people would be incentivized to do that in the first place. But what scoop then I About circles and I'm like, oh wait, this is so cool because this has this is basically incentivisation for building up a social graph and then I can my system can like bootstrap off of that social graph and so backdrop, that kind of got me super excited and like you know these kind of trust graphs can be used for like pgp.
Like all sorts of cool things that like I'm a big fan of like reputation systems and web of trust that's like probably one of the most secure civil resistance It's probably even more so than like proof of stake. So yeah, I'm pretty excited about this kind of stuff. So, the next question though is like taking it to the real world side is how do we like Drive demand for this? And when we say this is a Ubi, this is meant to be this like
sort of parallel economy. We're not going to see like hyper or Circle ization or anything. If I'm a merchant how do I even know how to start accepting circles on how to price my things and sir? Goals. The best route will be, and that is what we are. Currently preparing, is have local groups, it does, for sure, make make make most sense in a local context to have a group of people in the same physical place that together want to start circuits. And by the way, we already have that.
We are starting this list and we I think we have 80 or 90 people are places that said, yeah, I want to start circles in Venezuela. I want to Circuits in Buenos Aires, in Shenzhen and whatever, really, really all all over the world. So it's way to go to kind of organize locally or slogan is also kind of build your local
economy. One really nice story I already have or we already have was someone who said, yeah, I'm small landlord in Cadiz in Spain and I have here, a few shops in my building and because of Corona, they are struggling to pay the the rent. So what I did is I said, okay, you can pay part of of the rent in circles under the condition that you then in your shop except circuits and of course those are kind of the perfect. Yeah what kind of stories are ways? How we how we could imagine
circles getting bootstrapped. And we're trying to develop this Playbook of how to locally get community going that again. In a way, is giving each other this basic income because that's what, what circuits is. So the basic income will, of course not come from, kind of out of nowhere. It will come from the people that are using using circuits and they would in a way if someone is receiving the basic income. Of course, they are receiving it from their network, from their Community.
What is your take away from like the, you know, it's about what three or four weeks in now about the initial show? Social graph bootstrapping, is it a healthy like natural graph? Or is it like barking and his friends right now? Well, it's definitely well beyond my friends. I think it's currently 40,000 40,000 accounts. It there were two parallel. Fairly disconnected graph. So we actually started it at a local event here. In Berlin, we had, we had a meeting or a Meetup or in.
There was already a process of months before that, we like talked to very different entities here and there was There was an event was 50/50 people. And that was really kind of the at the moment circles Network. The contract was deployed technique. Technically speaking, the circuits launch and those are people that are really not on crypto Twitter and kind of not really at all into crypto. And then at the same time or if you like maybe 12 hours later, of course, it went somewhat
viral on Twitter and their. Yeah, I mean they're the graph was formed. In a quite different way. So they're the graph formed still, I think, largely Still Still across people that know each other, but of course, knowing each other. From from Twitter is, I mean the date was a much more International graph or kind of a graph where people that were physically in the same place. So, yeah, that will be interesting how that will play out and kind of how meaningful those connections.
So I guess Twitter. You can be first the the things that can be sold. Yeah. Traded or exchanged digitally. I mean, there is, of course things and one experiment I will do soon as selling an N of t or like digital art or whatever for S. So, of course, there are things. You can also, there's also route for circuits to go, but we are definitely very much also into the Very local, very concrete, very down-to-earth like stuff like Urban gardening or farming, or yeah, that world.
One of the most common things that have been said about like, you know, circles after the launch was the ux issues right now currently like you have to like to like write down their seed phrase and stuff and it feels like using crypto from like 2016. Again, what was the reason for not like integrating with like, you know, Common web three. Act and think like that. Yeah, I mean, I think I think it really depends from what perspective you are looking.
So for someone who is already in crypto, it was weird that we would not have whatever metal mask support and so on. But the reasons not to do that was exactly because we were targeting primarily the non trip to users. So what we were what we would, our goal was that in a user that hasn't heard about crypto and has a phone can pay their coffee with circles with with phone. So it was absolutely not an option to kind of require them to have met a mask.
Then to send some X Dy where I mean actually like fund your account so that you that you do not pay your gas costs and so on. So on this node circles is running on X Dy. It's basically an etherium clone or it's basically the same as Theorem. But with a simpler proof of authority consensus algorithm, who's paying the fees right now? Yeah, so the fees are actually paid. We have a relay relay Network so transactions are relayed and yeah, kind of a circle circles.
Wallet is paying those gas fees in X time, but are actually refunded in circles. So, the user is paying the, some circuit, some tiny amount of circuits to the relay service and the relay service is paying the fees next day. Luckily fees on next day are basically close to zero. So it's not not really a concern. But again, talking about the ux perspective.
Yeah. I mean, you can I mean I of course, if we got the the messages from from the crypto world that they would prefer a kind of the metal mask proud, but again, I would argue ux in a way Is made made made quite some steps. So, because we are again, abstracting all this signing of transactions. We are basically using this burner burner style wallets of your private key is in your browser. So you can just press regular buttons in the the app basically to send transactions without any.
Yeah. Pop-ups metal mask pop-ups or stuff like that. One last question for my side is, how does this work on like layer to system? So, Circle system is like existing on X Dy. You know, it's funny. Usually we think of aetherium as the layer 1 and then like, actually I would be like a layer 2, but let's say I wanted to move some of the circles onto a theory on. How do I make a payment? If all the like social graph Pathways and everything were
still stuck on the X Dy chain. So how do I do that or like, how would I do this? Mike payment channel that have you thought much about layer two systems? Yeah, so in general I would say circulars can scale quite well because you don't need the global State, you only care about your local state. So there are indeed scalability Solutions like, lightning or yeah. Equivalent would be Raiden that would somewhat Naturally Fit fit
for circuits. The question of whether you can move your circles to other blockchains. Well, I think that is not fundamentally. From any other token. So yeah, you can like wrap it or lock it on the one block chain and then issued on the other Block Chain, of course potentially, it does make it more complicated. That you have so many different, different circuits and indeed. The circuit are, of course, much
more helpful. If you, if you have, if you can exchange them, if you can do them along the cross connection. But it's, of course, not Unthinkable that that you have some. I mean, even even frog from a user perspective, that they have some tooling to just take all their trust connections and kind of copy them to another system and say yeah, I don't care if I exchange the circle to 1 to 1 here and this system or on that other system.
Cool. Well, thanks so much for coming on Martin. Maybe your final thing. If people want to get involved, when I like help out a lot of this vision. And, you know, when I went to bring it to reality, what are the best ways to get involved? Oh yeah, but that is super important because also for people to know, circles is to this point has very small core team, so it's a project that kind of was described all Really think the first the oldest description is seven years old.
But so there is, I guess, a wider community of people who somehow followed it and then somehow are like, I guess like it, but the core team was actually, is actually very, very small or people who are working full-time. So it's just five people and doesn't have any funding. And also doesn't have the interest to kind of go Venture funded route. So yeah, Chuckles will very much depend on more people getting Both the options are numerous so cards. Everyone who is a developer is
very welcome. We are or there is already the process starting to started to create alternative. Wallets. Probably also wallets that are more crypto kind of more towards the crypto users. So of course, it's principle, of course, possible to use circles with Smita mask, or with other wallets. Yeah, that's number one. Number two, is Again, we are.
There's this process of finding local communities and ideally there will be local meetup groups that yeah, explore the option to start a local circles economy, so that that will be number two. Number three, is we, for sure, our for will start launching circles.
Dow just as another yeah. Entity to follow and support and kind of Yeah, basically take place in shaping shaping development around in circles, and then of course, there is, there's plenty of things, kind of social norms that need to be developed or kind of, basically just discussion around. What is The Right Use? And and number a number five? Just just be experimental, so they are, there are people that said, okay, let's start round of Poker.
ER, with circles, I remember in the old in the old kind of Bitcoin days, you had those people who did this experiment, I want to live one week, only on bitcoin the eventually. It was then a month and eventually it was the whole year traveling around the world. Kind of those things happened. And, of course, then this element of is there anything I
can offer for circles. So, what we already saw is just telegram groups where people similar to Craigslist or Or Ebay would sell their used, probably some use stuff. What I could very well, imagine is an Airbnb alternative that you say. Yeah, I rent out my apartment over the weekend for circles. And by the way, here, also, this kind of idea of the trust line might be interesting because at least, there is the connection that if a person comes, you can kind of through the circle payment.
See how How you are, it can to some extent established in some form of initial trust. If you have those, okay, I know them over them over them, but but yeah. So basically just find creative ways to to use circles. Cool. Well, thanks so much for coming on Martin and I'm excited to see how to projects going to
develop. I've also like signed up today and I actually just now, finally, the, I think some of these trust authentication sweet like, stock for a while but finally, that SRI now, so I'm excited to like, try it out and play around with it. Yeah, thanks for having me. Thank you for joining us on this week's episode. We release new episodes every week. You can find And subscribe to the show on iTunes Spotify, YouTube SoundCloud or wherever you listen to podcast.
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