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Arthur Breitman likes things on the QT. “I don’t like the whole big announcements thing,” says the co-founder of Tezos, one of the world’s biggest blockchain projects. “Some people don’t even know that Tezos is launched because everything was very low key.” With a barely perceptible, but unmistakably mischievous, chortle he adds, “I like low key. It’s a cultural thing, a very French thing. American culture is different. American culture is known for bragging, whereas in France, you brag as little as possible.”
We’re sitting on one of the window sills in a lobby of the Funkhaus, Berlin’s erstwhile broadcasting center and the venue of last month’s Web3 Summit. Sunlight streams in through the windows and a coffee machine whirrs in the background, making it difficult to make out some of the mathematical terms that Breitman elegantly and occasionally drops into the conversation.
While Breitman might be coy about his, and Tezos's capabilities, he has plenty to brag about. Billed as one of the early 'Ethereum killers' and declared the world’s first “self-amending” cryptocurrency--one that could continuously update itself and assimilate the best new ideas--is doing rather well. The value of the token is on the up, thanks in part to its recent listing on the Kraken exchange, and there are now rumors of a Coinbase listing. Ledger, the hardware wallet, is now supporting the token and the Tezos Foundation recently announced over $30 million in grants to build tools and services for the platform, with extra funds for 1,000 blockchain engineers to focus on mobile development. But things weren’t always this dandy.
The politics of being apolitical
In February 2018, Tezos was mired in the murk. The management team had descended into a bitter civil war and a SEC announcement had labeled the $230 million it had raised the previous summer as a security--meaning only accredited investors could buy shares in the company--which pushed the company close to collapse. While they survived the SEC's regulatory axe, the origin of this turbulent period started much closer to home.
Foundations are used as a popular framework for launching an ICO, especially in Switzerland. As the Breitmans didn't have much experience in that field, they brought in Johann Gevers, the founder of the digital compliance association in Switzerland. The three of them set up the Tezos Foundation to support and promote their open source software platform and ensure that the tokens would not, technically, constitute securities. The idea was that, instead of asking people to buy a token, the entities could instead solicit donations, which would go directly toward the platform’s development costs, with donors subsequently receiving their tokens as a thank-you gift.
Although they were the technology’s inventors and would play a key role in getting the platform off the ground, the Breitmans’ relationship to the foundation was contractually set at arms-length. It was Gevers who controlled Tezos’ rapidly appreciating assets. When Gevers allegedly refused to disburse funds to developers, awarded himself a bonus worth millions and accused the Breitmans of improper influence in the foundation’s affairs, they were powerless to act. The couple spent in excess of $1.5 million in lawyers fees--some of the cash was also used to keep the project's development on track--but he refused to budge.
The subsequent battle raged for months. The very public fallout was not only between the Breitmans and Gevers, but also within the Tezos community and Breitman’s firm, DLS. The press caught wind of the infighting, with Reuters painting the project as an unmitigated disaster. Lawsuits by concerned token buyers swiftly followed; Tezos investors, sick of holding their breath, brought a class action lawsuit against the Breitmans, charging them with the sale of $232 million in unregistered securities and throwing in securities fraud, false advertising, and unfair competition on top of that.
In February 2018, whilst Gevers still reigned as foundation president, Kathleen Breitman gave an interview to Wired, cataloging a horror story of emails demanding transfers of crypto and threats to poison her if she didn’t comply. Fortunately, no one was poisoned, and Gevers stepped down after accepting a $400,000 severance fee.
It’s a credit to the Breitman’s resilience that they kept going through all of it. Breitman has spoken of the anxieties the ruckus induced but he insists that platform development continued throughout: “The victim of this thing is really the technology, because people spoke so much about Tezos,” he says, adding that the project already had a testnet that was up and running as early as February 2017. He concedes that all the fuss “was an unwelcome distraction but the platform never stopped advancing.”
Which explains how, just six months after the crisis reached its peak, the Tezos mainet launched, with a minimum of fanfare. It was intentionally low on the radar, in stark contrast to headlines the company had garnered just months before.
Bakers who bake
A self-confessed nerd, Breitman was born into the French intelligentsia. His father is playwright and actor, Jean-Claude Deret. Preppy, in the European fashion, he speaks rapid English, with some charmingly idiosyncratic phrases thrown in.
Fascinated by bitcoin almost from its start, Breitman's approach to the technology was to methodically pick out all its flaws, as is evident from the content of two pseudo-anonymous papers outlining his early ideas. Published in 2014, the year after he married Kathleen, the papers anticipate the issues of scalability that now plague Ethereum and predict the massive popularity of cryptocurrencies. His solution would eventually go on to become Tezos.
The network has been described as akin to “bitcoin and ethereum but with political theory baked into the protocol.” Based on smart contracts, the emphasis of the platform is on providing a decentralized democracy via proof of stake (PoS) consensus. All stakeholders participate in an on-chain governance protocol, so they control the direction of the network.
PoS is seen as a bit of a Holy Grail among a number of blockchain developers so Tezos is widely seen as an experiment, an opportunity to see how the process does in the wild, and how users respond to different forms of delegation. Because, in the Tezos model, you can participate in consensus, but only if you have 10,000 tokens or more, which is called a roll. If you don’t have enough, or you’re not interested, you can delegate your tokens to another party.
So here we come to the tasty bit, because instead of miners who mine blocks, Tezos has bakers who bake them (or validate them, to use less arcane language). So, if you have a roll and your roll is chosen to make a block, you earn rewards in the form of new tokens issued by the protocol. Breitman has written plenty more on baking here (did we mention he was French?).
It’s all starting to look a bit much like Maurice Sendak’s “In the Night Kitchen,” but at least here, things appear to be running smoothly to date. Breitman reports that they currently have 400 bakers validating blocks and the project’s received a lot of industry support, putting it “beyond tribalism.” It’s also given rise (eek) to some collaboration with competitors, such as Cosmos, with the two projects often sharing validators.
The realm of governance
Any talk of blockchain these days has to include the dreaded g-word, and Breitman has a LOT to say on the topic. Worth knowing beforehand is that there are two camps: off-chain and on-chain governance (both believe they are right). The former is what most projects currently use, i.e. there’s a bunch of people connected to the project who steer the ship as and when. On-chain governance meanwhile is a very different beast: the rules for instituting changes are encoded into the blockchain protocol and take place automatically.
Breitman is keen to stress that on-chain governance is super important as a driver of innovation in blockchains and that Tezos was the first to really push the idea. “Then the block size debate happened and the DAO happened. And then everyone started talking about governance,” he says.
He sees on-chain governance as by no means the easy option. “I see [it] as more conservative than what you can do with a fork… I don’t want to make it easy. I think for me, the point of governance at Tezos is to follow the proper process, that’s public and decentralized, before making any sort of decision.”
The whole point, he believes, is to have a “solid, safe ledger,”--something you can’t achieve if there’s only one person in charge. Voting is the best solution, but that isn’t always the case.“Voting is a defense against bad proposals. That doesn’t mean that they will always pick the best solution but good solutions and bad are usually identifiable. We will see once we have more history of voting. It’s very new.”
He doesn’t believe, for instance, that governance need enter into every corner of the process. “I don’t think it’s there to fix mistakes that happen in smart contracts,” he says, citing the crisis that engulfed Parity last year (when a bug in a smart contract led to a vote among the community as to whether it should fork in order to recover lost ether).
Despite all his “beyond tribalism” rhetoric, in a recent Hashcode AMA, he didn’t hold back from digging further into his rivals’ projects. Speaking of Parity’s Polkadot protocol he said: “The cyclical viewpoint is that pushing for interoperability is a bid for dominance disguised as a blue ocean strategy.” While professing admiration for both Polkadot and Cosmos, he noted that the two projects, which both address interoperability, have no plans to link to each other's chains--so won’t be mutually interoperable. But there are some projects he is a big fan of.
Dfinity’s system of adopting a random number of validators has caught his eye. But before such a thing can be implemented at Tezos, it must be put to the vote. Does he think it would pass? “I’ve yet to meet someone who thinks it’s a bad idea, or should not be done,” he says. In fact, I’d be interested to hear arguments against it.”
The end game
Breitman believes that whether cryptocurrencies take off or not is very much a question of convenience. He thinks it’s wrong to focus so much on scalability, instead, he says, the energy should be directed into using the technology for what it can already do. Paying for coffee, for instance, would be better left to Visa. A better home would be in finance, in particular countries or areas choked by hyperinflation. We need to “play to its strengths.” But there’s much work to be done.
Breitman thinks there are three areas that the community needs to improve. Number one is: “We have a good consensus algorithm, let’s get a great one.” Number two is bulletproof privacy around transactions, which he believes are key to business adoption, and the third is to get people thinking about what else is possible when it comes to governance.
But it’s not all work, there’s also fun and games. One game in particular.
Now that the Gevers crisis is over, Kathleen has decided that she’s going to start a new venture: a video game that uses the Tezos blockchain. Both Arthur and Kathleen see huge possibilities for blockchain-enabled gaming, which can not only better develop the user experience of the technology, but can also enable it to benefit from the expertise “digital natives” have accrued, having grown up with bitcoin.
But surely, there must be some moments that the Breitmans don’t devote to blockchain? It must be hard when he says he lives on a plane and she’s usually in either New York or California. Breitman says they do set time aside but he also admits that Satoshi has played a prime role in their relationship, almost from the start: “I did bring the source paper on our honeymoon, that’s true.”
As you do.