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Keith Kowal Of Swirlds Labs On Accelerating Hedera’s Bright Future, Plus: Dominique "Mitch Mula" Mitchell Of Lil Bitcoin / Crypto Money Records, And More…
The use cases of NFTs are expanding every day and a time may come where identification will become purely digital. Keith Kowal, Director of Product Management at Swirlds Labs, catapulting development and progress for Hedera, the world’s most used sustainable enterprise-grade public network created to make your digital world exactly as it should be—yours. In this episode, he joins hosts Jeff Kelley, Eathan Janney, and Josh Kriger to discuss what they’re doing to create a decentralized digital identity and the potential threats and solutions that come along with it. Keith also talks about how they’re implementing a carbon neutral baseline and other environmentally sustainable efforts to help preserve the planet. Plus, stay tuned for our Hot Topics discussion with Dominique Mitchell Co-Founder of Crypto Money Records and Lil Bitcoin, a decentralized avatar rapper. Don’t miss out!
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Keith Kowal Of Swirlds Labs On Accelerating Hedera’s Bright Future, Plus: Dominique “Mitch Mula” Mitchell Of Lil Bitcoin / Crypto Money Records, And More…
NFT curious readers, stay tuned for this episode and find out how our guest is working on making your future digital identity as safe and secure as Fort Knox, what foreign substance powered our guest through the most intense dev sprint of his entire life, and how Lil Bitcoin and Crypto Money Records are making sweet Web3 music with some of the most iconic players in hip-hop. All this and more on this episode.
Don’t forget that we put together a gathering at NFTLA that brought out thousands of the world’s most innovative doers in the NFT space. Head to NFTLA.live to get tickets to our bigger, bolder, and better but just as intimate and impactful event happening in Los Angeles from March 20th to 23rd, 2023. See you there.
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This episode features Keith Kowal. He’s the Director of Product Management at Swirlds Lab with a focus on supporting the development of Decentralized Identity on Hedera. For those who aren’t familiar, Hedera is a proof-of-stakes, sustainable, and enterprise-grade public network for the decentralized economy that is dedicated to building a trusted and secure online world that empowers people. Prior to joining Swirlds Labs, Keith produced Decentralized Identity at Workday and Trusted Key.
Before that, Keith held product management roles at Dolby and VIA Technologies, making him a key player in rallying teams to create successful and top-tier product life cycles in tech and beyond. Hedera is owned and governed by 25 companies, including Google, IBM, LG, Ubisoft, and Deutsche Telekom. It calls itself a third-generation public ledger that builds on the ideas and technologies of those other systems and has its own features. Keith, welcome to the show.
Thank you very much, Eathan.
If we could jump right in here, I want you to explain what Swirlds Lab is for the reader and how it is related to Hedera. It would be great.
Swirlds Labs was spun out from Hedera in May of 2022. The main mission of Swirlds Labs is to propel the Hedera network. We support the maintenance and development of Hedera and growing that ecosystem. In the future, we will also be developing public open-source libraries to also support the development of ecosystems on Hedera.
One of the things we always like to understand is how folks got to work with these amazing organizations and what that path looked like. One of the things that stood out to us about Hedera that we value very highly within our organization is core values. Things like integrity, ethics, service, excellence, and teamwork are some of the core values of Hedera. I’m curious about your journey to Hedera. We would like to learn about that. How do these core values play in? Is this something that was on your mind as you were thinking about working with such an amazing organization?
My journey speaks to a lot of the things that are so great about Hedera. My journey on this started when I was living in Hong Kong. I joined a startup called Trusted Key that was working on Decentralized Identity. That was Ethereum-based, smart contracts, and all that great stuff. This was before the time of even some of the new standards we see. I worked for Trusted Key for about two years and transferred to California, and then they were acquired by Workday.
I spent the next three years at Workday building out Decentralized Identity. For those of you who don’t know, Workday is a large HCM provider. For the backend, they do things like payroll, HR, hiring, and all those backend systems for companies. Workday is one of the largest company providers. I worked for them for three years building out Decentralized Identity and integrating that with the Hedera backend. In that journey, I was building out Decentralized Identity both on Hyperledger Fabric and then later on Bitcoin.
My perception always was is that for a company building out technologies that are anchored on blockchains or distributed ledgers, which is very fundamental to the needs of decentralization but often, it was heavy lifts. Building out those stacks on ledgers took a lot of resources and effort. Often I felt like it was a distraction to probably the core products that a company like Workday or other companies building Decentralized Identity want to build, which are usually around things like issuing services, verifying services, wallets, and the consumer or the customer side of it.
When Hedera approached me, they were already aligning to my value proposition in that I always saw that the need for a large enterprise was more like blockchain or distributed ledger as a service. Large companies want this as another piece of infrastructure. A large company uses AWS or Azure. Often they don’t want to have to learn a whole new technology stack. They don’t want to be having to hold crypto. That’s a big problem for a lot of companies. They want the value of distributed ledgers or blockchains.
I saw the opportunity because I thought, “Hedera is a service where you have all the fundamentals in place. You have a network with great performance, uptime, and governance layer. It’s environmentally sustainable.” It was all the checkboxes that enterprises are looking for. I thought, “If my vision is correct that this is what companies, large enterprises, or medium-sized enterprises are looking for, Hedera seems to be the right network for that type of requirement.”
I can relate. You bring me back to my consulting days. I can think of so many companies that have this guy that is the only guy left that knows this old system from years ago. He’s a curmudgeon at this point. He gets to do whatever he wants because he is the only one who knows how to do this little bit of programming. That type of legacy cost gets expensive. It gets in the way of them focusing on their core business, which is what they all want to do.
Companies want the value that they can get from distributed ledgers and technologies like NFTs. They don’t necessarily want to have to ramp up an entire engineering team on it. They don’t want to deal with holding crypto. That’s a big problem. They don’t want to deal with some of the pain that’s so outside of their normal IT mindset for IT infrastructure.
There’s a lot of governance there. There are a lot of barriers to using this technology that intrigues them. When you look at the future of Hedera recognizing that a lot of NFT communities are adopting it as one of the faster-growing areas of adoption, where do you see Hedera and NFTs going? To what extent are they aligned?
Hedera has been working on NFTs for quite a while. It started using NFTs you could mint on our Hedera Consensus Service but more recently, we did launch the Hedera Token Service. We are also having broad compatibility with EVM networks, which allows things like wrapping more standard Ethereum tokens. From our customers, we hear that there’s a very strong path forward and a lot of amazing use cases for NFTs.
The requirement becomes around from a Hedera perspective, “How do we create the best network for minting NFTs and managing NFTs, the entire lifecycle of an NFT, and all the other third-party services that go along with that? How do we create the best network to create those ecosystems, whether they are around the tokenization of assets, gaming, or whatever you can imagine? What are the base-layer infrastructure requirements to make all of those ecosystems happen?”
What’s your outlook on NFTs in general? You chose Hedera because you saw the long-term potential. What’s the potential you see with NFTs that is additive to what Hedera brings to the table from a token blockchain perspective?
The core of Hedera is Hashgraph, a consensus service, but then we have built many services on top of that like our consensus layer, which allows you to do immutable messaging or the crypto service. We have a file service, most excitingly our Token Service, and also our Smart Contract Service. These are all different ways that you can leverage the core Hashgraph consensus but it’s not just offering a token service.
We also realize that there are a lot of pieces that go with that. There’s support from wallets. You have to create a whole ecosystem of support around that to make it as easy for developers to develop on that side. It’s a package of stuff that you need to deliver but it’s ultimately deriving from the core value of the Hashgraph consensus layer.
It’s interesting to hear your perspective on how everything is integrated and also how the intention here is to support the infrastructure and help people do what they want to do. That’s the main goal. You pick the best tools. That makes a lot of sense. We have been talking about it in the show a little bit and hearing about this buzzword Web3 identity of Soulbound tokens. We have heard a little bit about it. Tell me about Soulbound tokens, any debates around that product, and what that has to do with Decentralized Identity.
Maybe I’ll back up and talk about a little of the history of Decentralized Identity on distributed ledgers. Years ago, some of the core technologies that started to be developed around Decentralized Identity were things called DIDs or Decentralized Identifiers, which were ratified as a new standard. The last identifier to be ratified was URL. It was pretty momentous.
You have this thing called verifiable credentials. The last few years of my work have been focused on those types of standards. Those all revolve around you having an identity wallet, receiving credentials in that wallet, and then being able to share those credentials with anyone you want but all in a very privacy-preserving way.
We have heard this new buzz around Soulbound tokens. Some people don’t like that naming. It was coined by Vitalik pertaining to a gaming reference. It was then expanded upon in a white paper called Finding Web3’s Soul. Other people called that nontransferable and non-fungible tokens because that’s what they are. They’re an NFT that’s not transferable but it’s a cool name attached to it. It has created a lot of discussions.
When I think about Soulbound tokens, and I wrote some notes on this on our blog, the number one thing I think about is privacy. A Soulbound token, typically in most instantiations, is something that you’re attaching to your account. It’s publicly discoverable on a chain. That has certain implications. To me, that puts it in the realm of your LinkedIn profile or your Facebook. The information that you would want to put into a Soulbound token then aligns with that. I personally would not put my driver’s license on my Facebook feed. Maybe some people would. I wouldn’t.
Hedera: Large companies want this as another piece of infrastructure. They don’t want to have to learn a whole new technology stack. They don’t want to hold crypto.
There’s a scale there of people that are happy to share everything about themselves on the internet and some people that live in a Faraday cage and want to share nothing. Where do you fit on that scale? That’s my first analysis point about Soulbound tokens. These are, at least in their current form, public displays of information. As an individual, what are you comfortable with being out there on a public chain?
Here’s a quick interjection there. When we talk about Soulbound tokens, we know there’s a token that’s associated with one individual. By that definition as well, you wouldn’t have multiple Soulbound tokens. Is it different Soulbound tokens for different systems? What would you think about that?
This is where we get into some complexity with the terminology of Soul. At the end of the day, these are nontransferable and non-fungible tokens tied to an account you have. In this world, you could have one account or many accounts. You could have one nontransferable token or many nontransferable tokens. The vision that most people have is that you have many of these tokens.
If you go into some of the thoughts on Decentralized Society, the way I understand it, you would have maybe thousands of tokens, which creates other kinds of problems around discoverability, how you manage them, and how someone can find something but that aside, the vision as I understand it is that you would have potentially many tokens tied to probably a single account. That account is your identity. You have many tokens associated with that identity but people do have multiple accounts, so that makes things more complicated.
Let’s talk about that implementation. What do the actual implementation, uptake, and use of Soulbound tokens look like in your eyes?
When thinking about the implementation of the token, we can leverage a lot of the past work done on Decentralized Identity to describe the steps. This does not need to be Hedera-specific. This could be generic. The first thing you would want is that somebody could issue you a token or something that says something about you. You are a podcaster on Edge of NFT. Someone would issue you that token.
The next step would be that the receiver of that token would need the ability to either claim that token or reject it. Maybe I want to issue you a token that says you’re a member of the Mickey Mouse club but you have no interest in that token. You don’t want that associated with yourself. You need the ability to either accept it or reject it. Once you’ve accepted it, then potentially that token could have an expiration.
Maybe someone issued you a Costco card that has a one-year life. Your membership expires in one year. You would also want the ability to disassociate that token from your account. You accepted a token that said you’re a member of the Mickey Mouse club but then you’re embarrassed by that. You want to get rid of it. You want to disassociate that token from your account.
This is where you get into a more controversial territory depending on who you talk to. Typically, you also want the ability for the issuer of the token to be able to take back their token, burn it, or wipe it from your account. That’s because often this is the issue where we’re making an assertion about you. If they later find out that assertion was not true or was made under false pretenses, typically an issuer wants the ability to remove that token from your account.
That gets more controversial. Should issuers have that ability? You probably want discoverability so you can scan a chain and see who has that token. That makes an identity assertion. You also want someone to make a query on your account to see what Soulbound tokens you have. That’s the holistic feature set that I see for Soulbound tokens regardless of what chain they may be implemented upon.
On the security front, we talked about some of those elements there but it seems like that’s a pretty big bridge we still have to cross around security features that make people comfortable that their digital identity is safe.
Privacy is one of the concerns. Overall, one of the largest issues facing NFTs, whether they’re nontransferable tokens like Soulbound tokens or not, is key management. In my life when I worked in a Decentralized Identity, that was my biggest headache in having wallets, when you’re talking to a Web3-native audience, they’re much better about key management, yes and no. You can find many examples of not but they’re more willing to put a securely-stored seed phrase or something like that.
Tokens, at least in their current form, are a public display of information. Click To Tweet
I found personally that when we got into more generalized consumer environments, which is where we see things going, team management becomes much more difficult. It’s one thing to be issuing someone identity assertions. It’s another thing for them to lose control of their key material, and then they lose control of their account. What happens to those identity assertions? Someone hacks them and somebody takes over their identity assertions. That’s all problematic. I bet that all comes back to, in my mind, how you deal with key management.
To a large degree, it’s making it easy to use because that’s the problem with the mass populace that isn’t as familiar with key management, “What am I doing with that? Where am I storing this?” The next thing you know, it’s exposed to the internet, and they’re compromised. An easy button would help.
There are a couple of paths that we see. There’s the path where users manage their keys. I’ll let each of you weigh in on what you think of that. There’s a model that’s gaining popularity around social recovery in that if I lose control of my key material, I can reach out to X, Y, and Z people in my community, and they can support me in recovery. That’s a model.
The third model, which I don’t think is talked about as much, is something like custodial key management. You delegate a trusted entity. In this world, that might be a bank or something you trust. They can recover your key material on your behalf. You show up at their office, go through a KYC process, and show your driver’s license. They’re able to restore your keys for you. Those models are needed. When people talk about Soulbound tokens, they have recognized that like a lot of NFTs, we see the grand vision but this is certainly one of the problems that we have to confront.
I couldn’t help as you’re talking about receiving these tokens and wanting to reject all of the gifts that Vitalik has received over the years. He suddenly becomes a key stakeholder in a project that he has nothing to do with. There was a meme coin phase back in early 2021 where all these famous people were inheriting large portions of token allocations. Suddenly, they’re a key voter in a bad wedding gift or anything. You want that ability to say no. It’s important.
You could take the Tornado dusting, which is very similar. This could go from being humorous to being very malicious if you don’t have the ability to control what you want or don’t want to be associated with your account.
It still comes down to self-sovereignty, which is important. One thing that I learned from having you at NFTLA, thanks for being part of that, and getting to know you is the astoundingly low carbon footprint that Hedera has. Tezos seems to get a lot of the spotlight time but according to a study from the University College of London, you are leading the charge here. Congrats on that. I would love to understand where you see this ESG or environmental sustainability side of things going with cryptocurrency, especially in light of the changes to the Ethereum network.
Let’s go.
What is a fence rail? What does that mean?
It sounds like Keith has given us his truck.
Lil Bitcoin** along with the meta label, **Crypto Money Records
Thanks for having me.
I appreciate it.
That was a limited edition comic that sold out.
It will be on our list.
It’s about opportunities.
That’s true. I stand by that.
Thank you for having me. I appreciate it.
Thank you.
Important Links
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Crypto Money Records - Instagram
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Tillavision - Twitter
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@MitchMula - Instagram
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@MitchMulaCMR - Twitter
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Discord - Lil Bitcoin
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YouTube - Crypto Money Records
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Spotify - Lil Bitcoin
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iTunes - Edge of NFT