Steven Waterhouse, CEO of Orchid Labs, on DePIN, AI, Decentralized VPNs, and Fighting for Internet Freedom | Ep. 307

Cryptonews’ Matt Zahab recently sat down with Steven Waterhouse, CEO and co-founder of Orchid Labs, an open-sourced, decentralized marketplace for Internet services that aims to provide the building blocks for a better, freer Internet.

In a wide-ranging, exclusive interview, the CEO discussed:

• ensuring decentralization as AI and Web3’s convergence grows;
• transitioning away from centralized infrastructure to leverage the full potential of Decentralized Physical Infrastructure Networks (DePINs);
• the role of Digital Resource Networks (DRNs) in the function of DePINs;
• the building blocks for a freer Internet;
• privacy in the digital age, paved by decentralization.

Watch the Full Episode with Dr. Steven Waterhouse

Or read on to learn what he told Matt.

Decentralization Precedes Crypto

The concept of decentralization or distributed systems goes back to the very early stage of the Internet, Waterhouse said.

The core routing design, infrastructure, and protocols at the lowest level, are designed to be fully decentralized. Centralization came after.

Therefore, he said,

“The actual Internet itself is decentralized architecture. It’s designed to withstand a nuclear attack.”

You could do all sorts of different applications across “big decentralized distributed clusters of machines.” The backends of Apple, Google, and Amazon, for example, are all based on these.

“So we kind of went from decentralized to more centralized, and now we’re going to decentralized again inside the data centers,” he added.

However, the companies’ business models, which are mostly supported by advertising, don’t lend themselves very well to being decentralized. It’s economic interest.

But “along comes crypto” and, with it, the idea of having decentralized architectures that are widely available – not just side data centers. “And that becomes the collection of blockchain families that we know and love,” the CEO said.

Now, people decided to “try and do what we did before with making things in data centers, not just one machine but more, and do the same across a wide area. And that’s DePIN,” said Waterhouse. “It’s like decentralized machines doing things that are connected and incentivized using crypto.”

And if you want to get somebody interested in DePIN, give them a problem to solve.

“Tell them that story and say, this is why we need decentralized physical infrastructure. So you need to be able to solve that problem that not one person controls the algorithm.”

Decentralized Virtual Private Network

Blockchain was a solution to and an improvement on a number of things. But not all.

The concept around decentralized infrastructure  – and running a service where one’s being incentivized to do so and then likely being paid to consume it – was something most people assumed had been solved by blockchain.

Per Waterhouse,

“It became very clear very quickly in the summer of 2017, that not only was it a lot of interest, but that the ideas of trying to bring the concept of decentralization as it relates to security and privacy and bringing that as kind of a core principle within the blockchain/Web3/crypto ecosystem was possibly just as important as anything we could build.”

Orchid offers its own decentralized, pay-as-you-go VPN. Orchid Global doesn’t run servers on the VPN protocol, the website says. Instead, independent providers run the Orchid server configuration and stake the native token OXT to provide bandwidth in exchange for payments directly from users via the Orchid nanopayment system.

Users do not pay for service they don’t get, it added. Nanopayment tickets travel alongside data packets to the bandwidth provider.

With a decentralized VPN, Whitehouse said, there are two nodes in the architecture. Hence, “no one can figure out what it is you’re looking for and who you are, because the two things are never connected together.”

Enter AI

OpenAI’s popular AI-powered chatbot ChatGPT has changed the AI game.

Per Waterhouse, the idea behind it was to make it open-source.

“Basically the idea was like, do a lot of research in AI, publish it all to make sure that not-so-nice people don’t get all the good AI research and do bad things, have all the power.”

Things have changed since, but Waterhouse had another thought: “let’s do that for security.” He wanted to find a way to reinvent computing with security as the default component – not an afterthought.

“What if you could rebuild things with security as a foundational principle?”

When it comes to the concept of decentralization, people can talk about privacy, he argued, but unless you really have a decentralized architecture, you can never really be sure that privacy is there.

Related to this, Waterhouse said he does not worry about AI becoming self-aware and “creating Skynet.” He is much more concerned about the human proclivity to give AIs like ChatGPT everything – happily feed it information about ourselves.

“And for it then to be able to apply very sophisticated understanding and eventually reasoning about what you’ve told it, about what other people who know you have told it and so on. And this thing is gonna know you.”

Finally, the sense of what it feels like to be very powerful will come from a convergence of a lot of AI systems working together, Waterhouse concluded.

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About Steven Waterhouse:

Dr. Steven ‘SEVEN’ Waterhouse is an active investor and builder in the crypto/Web3 space with 11 years of experience.

He is currently CEO and co-founder of Orchid Labs, advisor to various projects, including RiscZero and Squid Router, and is CEO and co-founder of Nazare Ventures, a new fund focused on crypto and AI.

Waterhouse was recently CTO & Venture Partner at Fabric Ventures and was previously a partner at Pantera Capital from 2013 to 2016. He served on the board of Bitstamp during this period.

He holds a Ph.D. in Engineering from Cambridge with a focus on speech recognition and machine learning.