Code is Law

Hi, this is Charles Hoskinson broadcasting live from warm, sunny Colorado. It's about 10:30 at night, and I'm just about to go to bed, but I wanted to make a quick video. This is kind of a postmortem to the postmortem. As many of Cardano has had a hard week. We've recovered, and now we're in cleanup mode.

One of the things I didn't think would be controversial at all, but has become almost a mocking point right now, is the whole conception of the involvement of law enforcement when bad things happen. First and foremost, code is not law in Cardano; the constitution is law. The Cardano community came together, wrote a constitution, and that constitution is on-chain. It has been ratified and approved. The Constitution of Cardano outlines the intended use of the network.

There's always going to be a difference between code and intention. The reason for this difference is that code is imperfect; it has bugs and problems. Intention, on the other hand, is aspirational. We say things like "freedom of speech" and "life, liberty, and property." What we tried to do in Cardano was evolve beyond the mindset of "if there's a bug, there's a bug; you deal with it.

" Instead, we wrote a constitution to endow and empower an on-chain government. This on-chain government will have the ability to do things that impact every single person in the Cardano ecosystem. For example, they can hard fork the network, withdraw money from the treasury, raise and lower the rewards stake pool operators get, and modify the fundamental properties of the ledger in ways far beyond other blockchains. That's why we have a constitution. Is this lawful?

Yes, because it's the consent of the governed; every user of Cardano is agreeing to the terms of the constitution. This means there is an intended fair use of the system. If something happens that violates the intended fair use of the system, you could call it a violation of everybody in the system. Despite the existence of this constitution, some people argue that the code will supersede it. They suggest that if there's a bug or a design flaw, we should just throw away the entire constitution and go with the buggy code inside the system.

This raises the question: what's the point of having an on-chain constitution? What’s the point of building a government, and where does the legitimacy of that government come from, especially if there are things in the constitution not yet reflected in the code? We call this constitutional debt. If we say certain things in the voting system must be apparent, but the code doesn’t reflect that yet, then those things don’t exist, and they never will. There's a world of difference between saying the government should operate Cardano and saying the users of Cardano who live in certain countries have rights from those countries.

There’s not a single person in leadership or anyone serious about building Cardano who asserts that the government should have control over the ledger, run the ledger, or be involved in its operations. No one has ever said that. No one calls any government to say, "Come save us." Most of you listening live in a society. You have renter contracts, cars, homes, and jobs.

Do you live in a lawless society? If someone steals your car, will you just say, "Well, that is what it is"? If someone breaks into your home, will you say, "That is what it is"? If someone does physical harm to you, you would call for help because you live in a society with laws. You have life, liberty, and property as the basic foundational concepts of all constitutional republics.

You have property that the Cardano network manages for you. If that property is stolen, adulterated, or damaged, or if someone attempts to steal it, that’s likely a crime. You have the right, as a user of that network, just you have the right as a renter of an apartment or an owner of a car, to gain protection of life, liberty, and property. What we’re saying is that despite having a constitution, despite having an intended use of the system, and despite not talking about the government intervening, running, or saving the system in any way, if something occurs that deprives you of your life, liberty, or property, you should have the right to file a complaint about it. I don’t know how to build a society on a blockchain where that’s not the standard.

I have a healthcare clinic, and I want to put the medical records of my clinic somehow into or adjacent to the blockchain industry. How do I do that? I would like to see national infrastructure run in the blockchain industry. How do we run public infrastructure if there’s no understanding that the users of this infrastructure have protections of their life, liberty, and property? Furthermore, it’s a double standard that I can’t understand.

I have to accept the Genius Act and the Clarity Act. I have to accept when the SEC sends subpoenas to people. I have to accept the laws of the land and be regulated by them as a company in this ecosystem, or else I go out of business. I could get sued into oblivion or put in handcuffs like Roger Ver and CZ did, and so many others who got arrested. But when something bad happens, I’m not allowed to report a crime.

If we were talking about a world where I could sign a waiver saying you forfeit all your constitutional protections to life, liberty, and property if you use this system, it would be like Mad Max. It’s a demilitarized zone. It’s international waters. No one is going to save you. But on the other hand, you don’t pay taxes, and you have no regulation.

That would be one thing. Then we could say, "Okay, there’s a carrot and a stick." No one can tell you what to do, but no one can help you when bad things happen. What I’m basically told by all these people commenting, who I just don’t understand, is that when bad things happen, we can’t have any protections of life, liberty, and property in our jurisdictions, but we still have to comply with the government’s mandates. We get all the downside but none of the upside.

It’s extraordinary. People have to acknowledge there is a constitution on Cardano that clearly articulates and defines the intended use of the system that supersedes the code. That’s the whole point of an on-chain constitution. It’s the highest law in the system. The code should reflect the intent of the constitution, and the governance of Cardano and the treasury of Cardano is to remove the constitutional debt and get the code closer to the intent of the constitution.

That’s why we spent two years on CIP 1694. When someone exploits the system and deprives users of their life, liberty, and property, denying them access to their ADA and damaging the reputation and brand of the system, that person is equivalent to someone who has damaged public infrastructure. There is no real difference, philosophically speaking, between that person and a hacker who exploits broken code to shut off the power grid or disrupt traffic, resulting in crashes. This is public infrastructure in the commons. It has an intended purpose, and that purpose is explicit.

The code tries to live up to it, but no code can be perfect. I’ve spent ten years of my life with AGDA, Haskell, formal methods, and peer review. One catastrophic bug every ten years is pretty good. No one else in this industry has a record that good. But I’m told, "It is what it is.

Somebody screwed up. We all just have to accept it." You forfeit your life, liberty, and property by using Cardano. If someone does harm maliciously to you, you do not have the right of recourse. You can’t sue anybody.

You can’t use law enforcement. We’re just completely divorced from it. But pay your taxes, be subject to the Clarity Act, and comply with the law. They can tell us what to do, but they deny us any due process or representation. We have taxation without representation.

And exactly where is the FBI saving me, you Twitter trolls? They’re not saving anybody. They’re not running the Cardano network. We did this ourselves as an ecosystem. We have the right, when property is damaged, to ask for recourse.

It is not the job of the Cardano ecosystem to do that. How exactly would it? The Cardano ecosystem has no access to your personal information and records to conduct an investigation. The Cardano network doesn’t have access to your money sitting in your bank account. It can’t detain you in a jail cell.

We have no tools in this system, just the electric grid doesn’t have tools to punish a person who hacks into it. That’s the entire purpose of law enforcement and the courts. How do we drag that into the cypherpunk world? Am I just supposed to program humanoid robots and have the on-chain government deploy them to go kill someone? What fantasy world do you live in?

It’s the least adult thing. When I was in a debate with Anatoli, I asked a very direct question that he could not answer because he knew the answer and couldn’t say it. He’s pandering to the cypherpunk crowd for a few cheap wins, which is absolutely morally and philosophically bankrupt. They celebrate when regulated financial institutions come onto their infrastructure, but then they say if someone exploits their network and causes harm to those institutions, those institutions do not have the right to report a crime. Everybody in Solana land is excited about all these payment providers and real-world asset providers joining their network.

But if their network goes down and someone is responsible for it using an exploit against the intention of the system, they’re telling those regulated actors they have no economic rights. Buyer beware. If you lose any money, you’re not allowed to go to the FBI and report it. It’s extraordinary. We all know that they will, and we all know the requisite jurisdictions will investigate.

We all know it’s an actual crime, and we all know the people who did it, if caught, will go to prison. So why are we having this debate? Why are we babbling like incoherent children about this? It’s one conflation, one straw man, one low-effort pathetic attempt at arguing over another. There’s no philosophical core to this; it’s bankrupt at its core.

Are you advocating for a world with no laws? Are you advocating for a society where once we step into the crypto world, we cede all our rights? What exactly are we advocating for here? And why do you consent to surrender your crypto rights? You take your cryptocurrencies and send them to exchanges.

Now they have custody of your assets. Are those exchanges cypherpunks? Do they comply with this bizarre ethos? If they get hacked, will they just not cooperate with law enforcement? I’m not advocating for government control of cryptocurrencies.

These systems are independent of governments. They really are. They’re global in nature. They don’t care what the United States, Europe, or China has to say; they just run as they run. You users are not independent of the government.

You live somewhere. You have to eat, sleep, and drink water. Wherever you do that, you are under the jurisdiction of that place. You can’t walk up and say, "I’m not subject to the laws of the land I’m under." You can try.

Sovereign citizens do it, and every time they try, they end up in handcuffs or worse. That’s the reality of the world. So, somehow you think that when you use cryptocurrency, you can magically escape being a human being in a physical world with laws. You can try, and for a while, you might get away with it, but eventually, you’ll end up in handcuffs because that’s just how humanity works. You can’t escape; you can’t be an island.

The whole point of blockchain technology is not to get rid of the government; it’s to augment and replace the corrupt and broken parts of it. It adds integrity, transparency, auditability, and immutability to every transaction. It gives you the ability to know that the votes are the way they say they are, that people spent the money on the things they said they spent it on, and that the government can’t come in and edit or censor the records. The whole Epstein thing about Trump trying to prevent the release of the Epstein files—if they existed in the commons of the blockchain space, there would be no possibility to confiscate or hide them. Not to mention the thousands of other whistleblowing concerns that exist.

When you have constitutions, you now know the intent of the system. In the absence of it, the best you can hope for is the code of the system, but it’s primitive. What if the code has an obvious bug? What do you do? The real world is different.

You live in the real world. You eat, sleep, and breathe in the real world. There are other people there, and there are consequences to your behaviors. If you go around just setting fires to people’s homes, stealing everything that’s not bolted down, or causing harm to human beings, there will be consequences. Crypto can’t protect you.

It really can’t. All these people are dogpiling on; we have to grow up. I’m sorry, crypto is not going to reach 10 trillion if we keep living in this childish fantasy. There are all these childish fantasies in the memecoin space. If I buy it, it’ll go up 100x.

The whole degening of everything is guaranteed to get a 10x, and if it’s not a 10x, it’s a scam immediately. The whole point of the technology we build is to transform and innovate society so that we can live in a more free, transparent, and honest society—not so that we can live in a society without any rules whatsoever where it’s survival of the fittest. You don’t judge the justness of a society based on what it does for the strongest and smartest; you judge it by how it treats the weakest and least capable, the most vulnerable people. If you’re proposing this survival of the fittest mentality, you’re basically saying the strong will prey upon the weak. How is this any different than barbarians raiding the countryside?

This is the digital equivalent of barbarism at its highest pursuit. I’d like to live in a world where we care for each other, where we have rules and constraints, and where every person is equal under the law. I’d like to live in a world where we use tools for collaboration instead of destruction. If all the cryptocurrency space is is a sandbox for scoundrels to do scoundrel things, we already have that. It’s called Eve Online, and it’s a fun game, but it doesn’t have human stakes.

The Cardano network has stake pool operators. It has DeFi. It has people who derive their entire livelihood from the operation of the system. You cannot tell me it is the intent of the system to allow people to come in and arbitrarily disrupt the entire system, depriving all those people of their life, liberty, and property. Because of a code bug, they should just get away with it.

There’s always going to be a code bug. There’s always going to be a zero-day exploit. This is software; it will always happen at some arbitrary point. Maybe once every five years or ten years, like Cardano, if we’re super good at what we do. The next time it happens, it could be so catastrophic that people could die.

Your standard is, "Well, that’s what the code says." It violated the constitution, which is the highest law of the system, but everyone just gets away with it. All those people are narcs if they go to the FBI or other authorities and complain about their rights being violated. Let’s make Charles the big Karen. Honestly, man, grow up.

Crypto’s got to grow up. We have to get real about this. Do you want a 10 trillion dollar industry or not? Do you want an industry being adopted by governments, banks, and Fortune 500 companies? Do you want us to have a seat at the big table, or do you want us to be this weirdo cult that is philosophically and logically inconsistent and utterly incompatible with anything but roving sociopaths and barbarians?

I didn’t sign up to enable and empower endless theft. I didn’t sign up to enable and empower a joke. That’s what this industry is becoming if you embrace this mindset—a joke where the leadership are a bunch of carnival barkers filled with inconsistencies. They wear the hat of cypherpunks while they suck up to BlackRock and other large institutions, handing their networks over to them to be run by them. You think code is law when all your validators are under OFAC compliance and can censor transactions?

That’s what these large networks will do with their Faustian bargains as they collect their silver. But then they lecture us about the code being law and the cypherpunk ethos so the people in the stands can clap. You want to get real with it? Write a constitution. Have a decentralized government.

Have a decentralized ledger, as we do. Cardano didn’t stop; it encountered the worst thing that could ever happen to a blockchain—a hard fork resulting in a long-chain reorganization. Normally, with proof of stake, it’s game over. You have to stop the network, manually reconstruct it, checkpoint it, and hard fork every single client meticulously. Instead, both chains operated at the same time, came back together, and it never stopped.

It was done in a totally decentralized way. That’s the first time in history any proof-of-stake protocol has ever done that. Only proof of work can do that. Ethereum cannot do this. Solana cannot do this.

Avalanche cannot do this. Only Cardano could, and it did it in a totally decentralized way when the whole community came together. That’s a triumph. That’s a testimony to great engineering. That’s a hallmark of a protocol aspiring to be worthy of running the world.

Part of that is growing up enough to realize these childish fantasies and selfish desires of saying that everybody’s in it for themselves and preying upon the weak and vulnerable. We should have a system that respects everybody and integrates into society, and we’re mocked for that. When did we start listening to these people? When did they gain so much power and sway? Why do they get to decide this world?

Have we become so cynical that we just say everybody’s in it for themselves? We have to grow up as an industry. We really do. We have to become better. The reason why the price is low is that institutions got what they wanted.

They pumped and dumped the assets. They sucked out tens of billions of dollars. They pumped it up, shorted it down, and made both sides of the trade. The market makers got squeezed, and the greedy people took money from the president on down. That’s why the markets are in the toilet.

We should tell retail to come buy that, participate in that, and pump our bags. That's what you want; that's what you're creating with this mindset, and it's not real. So get serious. Honestly, get serious. Yes, the code will run as intended, and that's the point.

No, governments don't get a say on how that code runs, but absolutely, the users of the system live in jurisdictions, and in those jurisdictions, they are entitled to life, liberty, and property. That is a fundamental right we fought and bled for for hundreds of years, and it will not be surrendered. Not today, not tomorrow, not next year. It is the most foundational right of a free society, and those rights must be protected—absolutely protected. People have died in wars to ensure that those rights don’t get violated.

They will be protected. If someone steals your life, liberty, or property, you have recourse. It is not the business of the blockchain to address that; it's the business of the society that you live in. That's the separation of concerns. If you can't get that, go figure it out.

You're choosing not to understand because you benefit from that asymmetry, and you're just as bad as all those people causing harm. Any society that doesn't embrace that is not worthy of being a great society. We have to get serious. The next five years are the most important years in the history of this industry. These are the years when all the people are going to come in, and they’re either going to come into Google Chain, which has already made that decision, Microsoft Chain, which has already made that decision, and Apple Chain, which has already made that decision, or they’re going to come into the cryptocurrency space.

If you decide to live in this fantasy land, then guess what? They’ve already won the Mag 7, and everything we’ve built over the last 15 years means nothing—nothing at all. No sane person would want to be part of this. If you decide, "Yeah, what? We need to figure this out," then let’s do it in a way that preserves what makes cryptocurrency special: the transparency, the immutability, the decentralization, the lack of middlemen inside the system, the censorship resistance.

All of that can be preserved, but you have to also accept that people are people, and they live in societies. We have to put these two pieces together and figure out the middle ground for it. It’s hard; you have to write constitutions and do all kinds of things. We did a lot of that hard work in Cardano, and it shows with the strength of the community, the decentralization of the community, and our ability to recover from the worst hack in the history of proof of stake and still be here today without having to shut off the system. Okay, so I’ve made my decision.

I’ve made my choice. If you want to mock me for it, and if that is just what crypto Twitter is, I’ll just spend less time on it. But I’m not going to change my opinions, my mission, or my advocacy—not one bit. I’ll just know who the bad people are, and I’ll know who I can’t trust. If you advocate preying upon the weak, I can’t trust you.

I can’t work with you. You’re a sociopath, a psychopath, a horrible human being. You don’t deserve success or business; you deserve a cage because no civilized, free society tolerates those who prey upon the weak. We’re past that as humans. We should be.

Anyway, I figured I’d make a video to talk about it. This one—it’s not the difficult things I expected people to chew us out for, like getting hacked and having a problem. Sure, we wrote the bug; we earned that. We own that. That’s fair game.

I didn’t expect people to get so bent out over the life, liberty, and property thing. It’s pretty insane to me. It honestly is. It makes me look at this industry in a slightly different light from time to time. It’s been a long time, guys, and I’m tired.

I’m just tired. It’s circular. It’s like dealing with an alcoholic that just keeps relapsing. It’s like dealing with a drug addict who goes to rehab, gets a little bit better, promises they’re going to be better, and then you find them on the side of the street with heroin sticking out of their arm. At some point, you just have to say, “I can’t do this anymore.

I want to move on. I want to move to a different system. I want to move to a different state in the evolution of this system.” We’re frozen right now as an industry. We shouldn’t be here.

We should be growing, evolving, and cooperating. We need to leave this nonsense and mess behind us. It’s childish. We have a small window of time to change the world and do something special. I’ve been here for 15 years, pushing hard.

I’ve been through every generation of the blockchain space: the first, the second, the third, the fourth. I’ve built four blockchains now. BitShares was the first algorithmic stablecoin and the first DEX in 2013. Ethereum—everybody seemed to like that one. Then Cardano, and now Midnight.

Every step of the way, they’re radically different. They brought new ideas that have never been seen before and new ways of doing things that have never been seen before. Having been in the room for all of these things, I can give you some of that insight and wisdom that I’ve gained. What I’m trying to tell you is that despite the fact that the technology is evolving, the culture is not. We have to grow up.

We have to learn, grow, change, and accept that we live in a society. We have to ask ourselves how we bring what’s best from us and how they bring what’s best from them. How do we work together as one society? That’s the whole point of the fourth generation. If we’re unwilling to do that, we’re like that perpetual bachelor who never gets married, never has kids.

You stay frozen in your 20s. You’re still in your 20s when you’re in your 30s, still in your 20s when you’re in your 40s, and still in your 20s when you’re in your 50s. All your friends change; they have kids, they get married, and their lives are radically different. They don’t hang out the way they used to. You ask them to, and they say, “Can’t, got to do something else.

” what happens? You end up alone. You’re stuck. That’s where we’re at as an industry, and we wonder why the price isn’t going up. It would go up if we didn’t do these things.

So, it’s a choice we have to make. We have to change. We have to grow up as an industry. We have to change the mindset, the culture, and the mentality. Or else we’ll just repeat the same mistakes until the value dwindles away and everything collapses.

There’s nothing worth saving in a system that’s survival of the fittest and where the strong prey upon the weak. No just society will invest in that or push for that.