Oracles and the Expansion of Blockchain Utility

Published on
October 16th, 2020
66 minutes

Oracles and the Expansion of Blockchain Utility

The Interview - Crypto ·
Featuring Sergey Nazarov

Published on: October 16th, 2020 • Duration: 66 minutes

Sergey Nazarov, co-founder of Chainlink, joins Ash Bennington, Real Vision senior editor, to discuss smart contracts, Chainlink, the oracle problem, and the future of crypto. Nazarov explains what smart contracts are, why they are important, and how Chainlink can expand functionality of smart contracts. He touches on the challenges of providing secure data and how Chainlink handles these problems. Nazarov and Bennington cover the wide array of international applications that can be enabled by oracles, which was previously not possible. Nazarov then walks viewers through the current state of crypto and various potential future scenarios, describing both fast case and slow adoption scenarios. Filmed on October 6, 2020.



  • AM
    Avici M.
    14 January 2021 @ 12:56
    Sergey is awesome!
  • bp
    brent p.
    10 January 2021 @ 16:09
    Interesting how he talks a lot about Chainlink having the potential to offer so much value to emerging markets while Raoul is saying the next play after crypto is likely to be an emerging market play. Will Chainlink play a role in making this emerging market play that much stronger?
  • JP
    Jim P.
    9 January 2021 @ 05:58
    I enjoyed the talk. I own LINK. But I am always annoyed by how these engineers lack an understanding of politics of law. Equating or conflating legal systems backed by political force with rules enabled by code, and saying the latter gets rid of the problems associated with jurisdictional differences is such a childish mistake.
    • JP
      Jim P.
      9 January 2021 @ 05:59
      politics *or* law
  • PK
    Philipp K.
    20 October 2020 @ 21:17
    I thought the interview was pretty bad. Everything was explained in the most complicated way, when it is quite simple. I have never heard a more complicated explanation of what a smart contract is. The descriptions of how stuff works was unreal and cloudy. A smart contract is super easy to explain, its a program that runs autonomously. You could then explain how that is made possible via the blockchain. If you get a guy from chainlink have him explain what chainlink is and how it works. Listening to this interview made me feel like Sergey Nazarov is a scammer since everything was mad so cloudy and just sounded like he is trying to sell a ponzi scheme and his mother. Please try to stay focus on teaching and communicating real information vs just clouds of buzzwords that make no sense and have little to do with reality. I hope this feedback is productive.
    • LK
      L K.
      21 October 2020 @ 13:04
      Further to this, it would be helpful if it could be clear explained why platforms like this benefit or need freely floating tokens instead of something with a fixed price. The interview mentioned that the token is used as part of a compensation mechanism for service providers. It is unclear why volatility would be desirable for this purpose. Moreover, some of the commenters mention they are token holders. What benefits does this confer - ownership of the company, dividends etc?
    • CW
      Chris W.
      26 October 2020 @ 14:49
      Agree that the definitions are long winded and the questions to this guy should be primarily about ChainLink. Smart contracts, oracles and tokens are pretty simple at the conceptual level. The incentive systems that tokens define are the subtle parts. Who buys the tokens? What advantage does that give them over governance etc.,? Can it be gamed or what attack surface does it attempt to protect against? This are questions that can be understood without getting technical so are worth exploring in a video.
    • AC
      Andrew C.
      12 December 2020 @ 17:49
      @ L K. The tokens are there to guarantee valid truthful data to unlock the smart contracts. So for instance if 10 nodes are used to verify the data and one of those nodes is giving false data then that node will be penalised. Usually a smart contract offers a reward to the node operators, but for a node to except the job it has to stake some Link to get the reward. If their data is wrong they will lose the stake. Now imagine when each Link is worth $1000 and the node needs to stake 100 link. If that node was giving false data then it would lose $10,000. Link is a token for staking to get truthful data. The more nodes operating means the price of Link will get valuable... there is 1 billion of them - no more can be made. When D-Fi replaces our current financial system there will be millions of data nodes and Links' price will go up. Anyway, that's the basics of why a token is needed.
  • EF
    Eduard F.
    7 December 2020 @ 03:49
    Thank you for this - learned loads, Sergey is brilliant.
  • PR
    Peter R.
    28 November 2020 @ 15:01
    Nice interview, he does a good job of trying to explain consensus and the deterministic nature of smart contracts within the permissionless (public/open) technologies. Gets tricky when you want to bring in information from the outside world. This what Chainlink is providing a solution for. There's also a parallel chain of projects which are looking at enterprise "permissioned" DLT technologies to improve their business transactions in areas such as trade finance, supply chain, and many more. Here's an overview from the WTO --> Actually heard the term "legacy blockchain" a few days ago....
  • IB
    Iain B.
    20 November 2020 @ 15:43
    56 mins Where does the money come from to pay the interest ? When fiat is loaned into existence by the commercial banks they don't also create the funds that will constitute the interest due. There is always more owing than exists, Cryptos with finite supply can never support interest payments. If I own 1,000,000 coins which is the total supply and lend you 100,000 at 10% interest. I now hold 900,000, you hold 100,000 but own me 110,000. That 10,000 will never exist. No one will earn 8% interest. How will peasant farmers be able to pay insurance premiums that are high enough to provide profit for the insurance sellers to insure them against events which are certain to occur ??.. I think a lot of this stuff is pie in the sky
  • JS
    Jim S.
    9 November 2020 @ 00:18
    Great Interview, I had to watch it again to see how he tried to walk back his statement about being in the blockchain industry for 10 years. I had no idea who I was listening to the first time but went back and did more digging after tumbling into the rabbit hole. Super interesting and I disagree with the cursory comments below as well as the ones asking him to sum it up... honestly, would you invite Feynman to sum up quantum electrodynamics or Page and Brin to come and sum up google. In hindsight - awesome interview and I can't believe you got him on. There are some serious theories that he should know satoshi, since he been in the field for 10 years and bought the smartcontracts domain back in 2008 - check it out if you have time
  • RH
    Ron H.
    28 October 2020 @ 00:51
    This was very interesting, though it could stand some “summing up” into takeaways. One such takeaway for me is that these processes enabled by blockchain technologies will connect the internet of things and robotics to financial systems and microeconomic frameworks. I read that in economic language as ‘productivity’.
  • MD
    Matt D.
    17 October 2020 @ 23:36
    Nope - I understand the point you are trying to make by using the idea of maths and physics, but that is just not a legit analogy. Firstly, the context is finance and banking, and traditionally it is not a logo that is making the system work - it is a rule of law! It used to be trust, and a militia to back up the institution/country (still is), and that has evolved to a rule of law and trust. Not the building with the big pillars/columns. So the algo operating at the moment is the rule of law. Take a safety deposit box - that is secured by the laws of maths and physics, however safe you want to make it. A simple key and lock is secured by the laws of physics. Plus you have the key to your safety deposit box just like BTC has a public ke - you could have a system (an algo ie. set of instructions) where the safety box requires two keys to use - different keys. You keep one and make lots of copies of the other, and give them away. I mean I am making this up, and my example is not 100% perhaps, but it illustrates that while BTC is very advanced, conceptually you can't put it out there as immutable due to maths and physics compared to traditional methods. The issuance of currencies is a new aspect of BTC, and that in my opinion is where is started (conceptually) as a anarchists tool. I just see Mr Bob B has already said similar things so will continue watching and reading the comments.
    • MD
      Matt D.
      18 October 2020 @ 01:56
      To add - my fiat is upheld by the laws of physics. It doesn't require gigawatts of power to keep it alive. Likewise, the laws of quantum mechanics makes it pretty tricky to make an exact copy... Bitcoin is good for what it is intended to be good for. No need to give it a mystique by bringing in maths and physics to legitimise it (and instantly 95% say (made that % up - could be more or less??) of people will accept what you're saying as they are ignorant of the laws of maths and physics). Your idea itself is interesting nevertheless - Oracles.
    • GB
      Graeme B.
      18 October 2020 @ 06:52
      He explains that rule of law isn’t enough. In banking crises, banks can stop you accessing your own money. Or if a government wants to stifle dissent, they can stop flow of funds in traditional banking. Whereas Bitcoin / Ethereum are independent, and that independence is secured by thousands of computers around the world, such that shutting down many is not enough to stop the network. No one can stop me accessing my money short of physically arresting me and removing my access points. Laws exist to enforce agreements between people, organisations or states. This is because they need to trust each other. But in an independently secured financial system, this is no longer the case. I just have to trust the maths. This then leads to an explosion of innovation as the barriers to entry are removed, and digital corporate and national money borders no longer mean anything. The world becomes one financial space, just as the internet did the same for information. The internet is such a clear example of this. I am amazed that people struggle to see how applying the same principles to money isn’t even more revolutionary.
    • MD
      Matt D.
      19 October 2020 @ 03:23
      @Graeme B You miss my point. I was stating laws to contradict his use of "big columns" - ie a logo. I wasn't talking about these laws failing or being violated. And no, you are not guaranteed by the maths. You are guaranteed by the network playing by the rules of BTC - ie the "laws" of BTC (which CAN be violated - it is a consensus at the end of the day). The maths is a tool. The analogy of maths and physics is just plain wrong, and to me is unecessary. Gold exists because of the laws of physics. You don't hear gold bugs having to say their asset is upheld by the laws of physics. I hope you don't have a false sense of security with BTC because you believe it is backed by maths/physics. The BTC algorithm is maths backed, the crypto. But that doesn't mean the network is infalible - they are two different concepts. I am not talking down BTC either - I'm keeping it real. Don't use incorrect concepts to sell it.
    • CC
      Christopher C.
      20 October 2020 @ 04:46
      Matt, my take is that the argument is simply that a smart contract will execute when it's conditions have been met and that nobody can really stop that from happening, just like nobody can stop gravity. It is censorship-resistant.
    • MD
      Matt D.
      20 October 2020 @ 22:55
      @ Christopher C - totally agree mate. That's all that had to be said - and you said it well: it is like gravity - but that is different from saying it is upheld by gravity or a law of physics. I said it above, but his Oracles idea is a good one to have a hopefully objective, fair means of determining whether the smart contract transacts or not. I am all for it - as dangerous as it is going to potentially be. No one will be reading this - but I have a pet theory that we will have more machine rage (not the legendary Rage Against the Machine) - or mental health problems, where a machine will just stop as its algo is stuck. Already at self-serve checkouts at supermarkets I see the same thing. Detour. But anyway.
    • PK
      Philipp K.
      27 October 2020 @ 10:31
      He is just saying very simple things in an obscure way, which you rightly reject. The security in real life comes from rule of law. In bitcoin this is automated away, which is done via an incentive structure that is automatically enforced via software and works instantly to the effect that one cannot even break the rules. Instead of explaining this he just uses "math" a million times and hopes u get it. It was just bad and way to cloudy. As someone that understands how this works, i get where he is coming from but if i wanted to learn anything new this would not help. And overall this was just a waste of time and blabla blub. I personally learned as much from him as from a sales person telling me how great his product is but when I ask why he would say: "because amazing tech". I agree no need for mystique but clear education how stuff works. Back to the rule of law. Crypto is powerful because it digitzes what we used to need rule of law for. Rule of law is manual and 300 years old. Crypto replaces that whole technology by a digital version which is more effective and efficient: it cannot be broken and works instantly and automatically. Additionally new functionalities will emerge that we cannot even imagine.
    • RH
      Ron H.
      28 October 2020 @ 00:42
      The rule of law is, under authoritarianism, little more than a system of oppression. Even in “democracies” like in Europe, negative interest rates are starting to be passed through to bank depositors. Hard to believe anyone would “vote” for that.
  • DO
    DIOGO O.
    24 October 2020 @ 12:28
    superb interview! cheers!
  • DC
    Daniel C.
    23 October 2020 @ 12:52
    TLDR: Smart contracts are code that excudes inside of a block chain. They need inputs (asset prices) and outputs (interact with external services, e.g. PayPal). Smart contracts require trusted, reliable, secure ways of interacting with inputs and outputs, which is the problem Chainlink solves. The end.
  • DB
    David B.
    20 October 2020 @ 23:29
    Wow, tough crowd. I thought this interview was awesome. I learned a lot and at least now i understand what an oracle is and the purpose.
    • DC
      Daniel C.
      23 October 2020 @ 12:30
      He rambled a lot about things that are generally understood. This could have easily been edited down to 30 minutes
  • CV
    Collin V.
    17 October 2020 @ 18:42
    Any chance we can get Charles Hoskinson for an interview? He's bar none the best speaker in the space.
    • LK
      L K.
      20 October 2020 @ 15:35
      Ask him why a censorship-resistant, decentralized smart contract platform needs a government bailout.
    • TO
      Truls O.
      21 October 2020 @ 15:36
      They need a bailout?? Plz elaborate
  • OK
    Onat K.
    19 October 2020 @ 20:04
    People who didn't get this interview or found it too 'vague' likely would not get Bill Gates & Steve Jobs in the 90s and find them too 'vague'.
    • LK
      L K.
      20 October 2020 @ 17:48
      Not saying you are wrong, but you could also add Elizabeth Holmes to that list. Such is the uncertainty inherent in new, esoteric technology.
    • CC
      Christopher C.
      21 October 2020 @ 04:49
      LK, unlike Holmes, Sergey has more than a decade of expertise in this field and has already shipped a working service, in production, used by hundreds of decentralized applications, securing billions in transactions. Not that hard to tell when you look at actual results instead of hype.
    • LK
      L K.
      21 October 2020 @ 12:44
      The first blockchain (bitcoin) launched in January 2010. So was he one of the first bitcoin devs? That information would certainly be useful for the less technical among us. My own research only revealed the current project began in 2017 following a $32 million ICO and grew out, launched in 2014 with the aim of developing centralized oracles. Thanks.
  • CD
    Christopher D.
    20 October 2020 @ 13:31
    The math based guarantee is great for those who understand code to check the smart contract logic. That won't tell them whether that logic has unintended consequences. Taking the example of bitcoin, of all the ppl i know in crypto i can think of 2 who actually implemented a chain (one was FBA based) and not many more who even know the general concepts around RSA cryptography. So most users will be blissfully ignorant of the fine details, ie the mathematics. And that's just fine, there is ample proof that something is working though. Trust is an emerging property of the tech, and it is trust placed in the crypto 'brand'. Because on-chain transactions are too complicated, the next step is for nearly everyone to jump on an exchange to trade crypto. Trustless now has become traditional trust and has a brand name: coinbase, gemini, kraken, etc. One such brand name used to be MtGox. So I respectfully disagree with the whole "pure mathematics" argument insofar as it is disconnected from reality. Even remaining at a theoretical R&D level discussion, we haven't started talking about unintended consequences, of uniswap AMMs say. Early days.
    • LK
      L K.
      20 October 2020 @ 17:45
      Agreed. There are doubtlessly interesting experiments going on, some of which could lead to valuable technologies. But given the high failure rates, whether the yields mentioned justify the risks involved seems very questionable. I thank the speculators who are prepared to lose money in order to accelerate technological progress here. Additionally, while black market digital money (bitcoin, monero) has been shown to have some utility with darknet markets, it is difficult to imagine real businesses using contracts that are only protected by math unless those logos with guns permit it.
  • DP
    Duane P.
    19 October 2020 @ 19:45
    As a holder and believer in Chainlink, I found this to be rather boring and uninformative. I'm getting bored with the same of jargon and theoretical overly verbose crypto pablum that goes on in these interviews. This isn't specific to the people on RV but a lot of "leaders" in the crypto space in general. This is long winded and repetitive. -Give me the practical, specific real-world use cases for Chainlink today and tomorrow. -What are the possible pitfalls? -Why are other similar platforms inferior? How will Chainlink remain the the dominant platform in this space as it grows? -What is keeping Chainlink today from being the globally adopted platform it is being heralded as for the future and what will change this? -How dependent is it on the success of Ethereum and the successful switch to PoS? Sergey Nazarov is clearly ultra bias toward the platform, which is not per se a bad thing but some tough questions and push back and not an hour long tour of "the future is crypto wonderland" would be much more productive.
    • NB
      Nikhil B.
      20 October 2020 @ 00:49
      I completely agree. The interview was a bit disappointment for me. I was expecting to get answer on the questions such as Why Chainlink? Why is it on ETH chain? its reliance on ETH? what about moving to alternative chains such as ADA or DOT? How Chainlink will remain relevant across competition? It was a verbose and same rhetoric in terms of whats smart contract and nature of Math and mathmetical proof. Not much of case study in real life example.
    • SK
      Stephen K.
      20 October 2020 @ 03:45
      Thank you. You sir articulated what i was thinking perfectly. I would have liked to walk away feeling great but alas i was left unsatisfied and intellectually deflated. Im also somewhat annoyed.
    • BL
      Benoit L.
      20 October 2020 @ 04:26
      Along the same lines, I think this is a very promising area. However there should have been more challenges on the insurance test case discussed in the interview. Set aside the occurrence of an event (quake, hurricane, death, etc.), insurance requires insurable interest, indemnity (ie the insured received no more and no less than the loss incurred), subrogation (for recoveries), etc. . Basing the payment triggers solely on the occurrence of an event is really just gambling. For the concept to work as insurance, the oracle will need to gather much broader information. So Sergey is really just scratching the surface of a very complex process. That said, you have to start somewhere. Data related to events is a good starting point.
    • CC
      Christopher C.
      20 October 2020 @ 04:41
      Nikhil, Chainlink already integrates with several blockchains including Polkadot. They are not exclusive to Ethereum, but most of the interesting developments in the DeFi space are occurring on Ethereum due to network effects, ubiquitous ERC20 standard, ecosystem, etc. Sergey has done many interviews and speeches explaining the basic why's of Chainlink. Some of the best coverage on Chainlink comes from anonymous contributors on Twitter:
  • CN
    Christopher N.
    19 October 2020 @ 18:25
    Great interview by Ash! Sergey shows a knack for explaining crypto concepts in a way a layman can start to understand and he gives a real feel for the potential and power of smart contracts and the oracle concept. I have listened to 5 or 6 RV shows on crypto and this one has added the most value to my understanding of the space. NICE JOB! Look forward to having Sergei back.
  • DC
    Derek C.
    18 October 2020 @ 23:19
    Great interview Ash. The first part of the interview gives a nice interview of crypto in general.
  • MH
    Mark H.
    17 October 2020 @ 01:29
    Smart contracts, in my opinion already exist. They are code. Smart contracts are software. What Sergey is trying to do with chainlink is to decentralize it. But why would I want to decentralize data coming from weather sensors? I agree that if I had a choice between a trusted decentralized network vs a centralized company, I would chose the trusted network. But at what cost? On top of all these questions, why does the premined token LINK need to be at the center of this system and how do I determine it's value?
    • LS
      Lewis S.
      18 October 2020 @ 08:44
      Hehe, individuals don't determine value.
    • bw
      brent w.
      18 October 2020 @ 22:14
      Because if you have lots of money riding on the contract, the data sources become worth gaming/hacking.
  • DW
    Dean W.
    18 October 2020 @ 17:11
    I think that there may actually be a role for brands going forward for smart contracts. Consider for example in the future when multiple entities are offering similar smart contracts. Let’s say I can choose between entering into a smart contract being offered by Fidelity and can review the credentials of their contract programmers (let say they’re Stanford PhDs in computer sci) and the high quality of their oracles versus some other firm offering a more favorable contract but there’s little or no info available about who’s doing the programming or the quality of their oracles. Being personally unable to read smart contract code and having to TRUST in the programming skills of the smart contract writer I know which firm I would likely sign a contract with.
  • SS
    S S.
    16 October 2020 @ 16:29
    Great interview. The Chainlink story is amazing and to get Sergey on is great. LINK is a top 10 crypto in terms of market cap. Now we just need the following please RV: Vitalik - ETH Gavin Wood - Polkadot
    • SM
      Sebastian M. | Real Vision
      16 October 2020 @ 18:08
      We have a lot of big names coming up 😁. And we always appreciate suggestions.
    • PD
      Peter D.
      16 October 2020 @ 21:59
      Get Chris Dixon A16Z.
    • PD
      Peter D.
      16 October 2020 @ 22:01
      Oh, and if you have the guts ... Get Satoshi. I dare you...
    • DJ
      Daniel J.
      16 October 2020 @ 23:00
      Loong Wang - CTO of REN (bridging BTC to ETH and cross-chain liquidity in general)
    • VK
      Ville K.
      17 October 2020 @ 13:51
      Kasima - OMG Network
    • DH
      Derek H.
      18 October 2020 @ 15:21
      David Schwartz!!! Guarantee would bring many new subscribers to the platform!
  • CS
    Chuck S.
    17 October 2020 @ 19:24
    That was the best interview on crypto, use cases, and the future of blockchain that I have ever seen, bar none, including all of the many excellent videos on Real Vision!
  • JG
    JC G.
    17 October 2020 @ 19:24
    wikipedia: “Nick Szabo (a polymath) is a computer scientist, legal scholar and cryptographer known for his research in digital contracts and digital currency. The phrase and concept of "smart contracts" was developed by Szabo with the goal of bringing what he calls the "highly evolved" practices of contract law and practice to the design of electronic commerce protocols between strangers on the Internet. Smart contracts are a major feature of cryptocurrency[citation needed] and the programming language E. Szabo influentially argued that a minimum granularity of micropayments is set by mental transaction costs.” The rest are speculation by programmers / mathematicians / etc. desperately trying to bend reality around their perception of the world.
  • KF
    Kim F.
    17 October 2020 @ 17:53
    Ash, you are my favorite interviewer. Always the right questions and asked in a way that we can all understand. Keep it up. Thanks
    • AB
      Ash B. | Real Vision
      17 October 2020 @ 17:57
      Thank you, Kim. I appreciate the kind words.
  • MH
    Muddshir H.
    16 October 2020 @ 18:10
    Thank you Ash, As always the best
    • AB
      Ash B. | Real Vision
      17 October 2020 @ 04:23
      Thanks, Muddshir. Always appreciate it.
  • BK
    Binyam K.
    17 October 2020 @ 01:40
    Excellent Discussion! Thanks!
  • BB
    Bob B.
    17 October 2020 @ 01:28
    While i am excited by smart contracts within an encrypted blockchain, it's hugely overly simplistic to equate the process to fundamentals of physics and math. Reality suggests to me smart contracts dis-intermediate the trust and interpretation mechanisms of traditional contracts. Nazarov's comparison to Brand is part of the traditional trust mechanism. Smart contracts do not guarantee fulfillment. Eventually smart contracts need to interface with the objective world. Rule of law helps address the objective reality and the rule of law is as fluid as the laws forming the rule of law framework. Smart contracts are huge step forward but not omnipotent and certainly subject to human frailties. I do like his "High Standard" labeling. My concern also revolves around the the increased speed of executing the contract coupled with complexity will become black box laws. For slow humans we will not be able to comprehend and respond in realtime in the hyper transaction world. Heavens we might be there now even without smart contracts. Think of the volatility dynamics in today's markets and events such as Longterm Capital Management, 2008 Credit Crisis,...
  • MJ
    Mark J.
    17 October 2020 @ 00:18
    Great interview, crash course, articulate. Question re: savings contracts: how does the other side of the contract earn the interest they are paying you? How does the smart contract eliminate this risk?
  • DM
    Dominic M.
    16 October 2020 @ 23:09
  • Md
    Matthew d.
    16 October 2020 @ 22:37
    Would highly recommend you get Anatoly Ressin (from Parsiq) on RV. He’s doing something similar but different to LINK and would be a great guest (he’s super humble as well).
  • jG
    james G.
    16 October 2020 @ 21:14
    Great interview. . Chainlink is such a fascinating concept
  • KB
    Kirk B.
    16 October 2020 @ 20:35
    Excellent subject matter, content and interview. It furthered my understanding of oracles and their role within the crypto space, as well as the potential future of Chainlink in particular. This type of interview is what makes RV Crypto unique. The mainline financial media seem to focus only on the latest guru price projections of selected coins/tokens, while the popular digital asset sites seem to focus on the latest news, and on technical aspects of digital assets.
  • OV
    Olav V.
    16 October 2020 @ 18:22
    Great interview! Chainlink and Sergey are solely responsible for the DeFi boom, but of course he is too humble to bring it up. If anyone is interested to learn more about Chainlink I suggest you look up their YouTube channel.
  • EB
    Emrah B.
    16 October 2020 @ 18:12
    Good questions, the world of smart contracts once it takes off will be a defining moment, where trust is no longer an issue. That Chainlink solves this problem in terms of the real world and putting the real life dynamic variable data in to the smart contract, speaks to the level of vision of Chainlink. Thank you.,
  • MB
    Miguel B.
    16 October 2020 @ 17:30
    excellent interview.
  • DJ
    Delano J.
    16 October 2020 @ 16:58
    Great guest. I hope we see more projects leveraging oracles on the show to help illuminate how powerful this space has become.