Honourable Chair, thank you for having me, and thank you to the esteemed committee for its efforts to understand blockchain tech. I know that it can seem a bit daunting and mysterious, but I hope we're able to help.

My name is Ethan Buchman. I'm the co-founder of the Cosmos Network, which is the largest blockchain platform after Ethereum and is used by over 50 public blockchains collectively worth billions of dollars. I co-founded Cosmos in Canada in 2016 and have been building it ever since. I'm now CEO of Informal Systems, a Canadian company structured as a worker's co-operative with 16 member employees in Canada and 60 worldwide. We work on open source software to support the Cosmos Network and what we call the “Internet of blockchains”, or the interchain.

We believe the interchain brings the accessibility, transparency and verifiability necessary to upgrade the quality standards and protections provided by critical institutions in society. For instance, we're building solutions to help real businesses improve their cash flow, reduce risk and collaborate to grow.

My background is in biophysics, artificial intelligence and distributed systems. Recently I have been studying political economy and economic history. I completed a master's degree in applied science at the University of Guelph, which started in AI and pivoted to blockchains. I saw first-hand the potentials and the dangers of AI.

I know that this committee is investigating the risks of blockchains, but AI plays a key role in my story because of the risks it poses. These powerful AIs, and the data streams that drive them, are owned and controlled by large U.S. multinationals that are highly unaccountable and extractive. We have seen continuous evidence of how big tech may compromise the very foundations of our democracy—most recently, for instance, in Elon Musk's acquisition of Twitter.

Blockchains allow Canadians to dethrone U.S. tech monopolists like Elon and others by providing infrastructure that empowers individual Canadians to participate in the governance and ownership of their technology platforms. It enables them to control their own personal data instead of having it sold off by the likes of Google and Facebook. Blockchains make this possible by enabling the coordination and transfer of value at a previously unimaginable scale.

This threat of unaccountable monopolies is part of what led me to embrace blockchains and to pivot my master's thesis to focus on a new consensus mechanism. Published in 2016, my thesis has been cited over 400 times and is widely regarded as an essential introduction to blockchains and proof of stake.

One way I like to think about blockchains is as a kind of computer, but instead of the personal computers we all carry in our pockets and in our bags, a blockchain is what I call a community computer. Logically speaking, a blockchain operates as a single, verifiable computing device, even though it happens to run across many physical computers distributed around the world. What's unique about blockchains is the way those computers all around the world stay in sync with each other, or in “consensus”, as we like to say, providing a single, verifiable source of truth. This is the power of the blockchain consensus. It provides a new kind of compute infrastructure for communities.

There are countless use cases of blockchains in health care, food security, supply chain, ecological health and many more, but I have also heard this committee ask about the use cases of cryptocurrencies. Cryptocurrencies have seen increasing adoption by those living under more authoritarian or inflationary regimes. They offer support for immigrants and for the 15% of underbanked Canadians. They allow Canadians to participate in new kinds of global organizations that can share value more equitably.

I have been building companies for over eight years. I'm an angel investor and an associate at the University of Toronto's Creative Destruction Lab. I know first-hand the kinds of uncertainties that plague entrepreneurs, especially in this industry, as they try to innovate, create new jobs and grow the Canadian economy. We need clarity and support from the government so that we don't, as a country, miss this opportunity for growth.

There are a few areas of regulation I might highlight. First, we need a federal blockchain strategy that provides clarity for regulators and for entrepreneurs. Today it's not clear which regulators have jurisdiction over which blockchains and blockchain products. This is a huge problem for entrepreneurs, who can't possibly know the rules of the road. Too much friction and restriction can greatly inhibit opportunities. A national strategy that's providing significant room for innovation while also thoughtfully balancing regulation is critical for the success of our domestic industry.

The second area is taxation. This industry has created significant new wealth, but the tax code imposes friction and complexity in using cryptocurrencies for payments, donations and other use cases.

The third area is financial services. This technology allows users to engage in non-custodial ways, meaning they don't need to trust a service provider with their data or their value. We need protections for the rights of Canadians to build and use non-custodial wallets and the open source cryptographic software that underlies them. These software tools have become critical in the preservation of international human rights. Cryptocurrencies are extensions of these tools.

Canada has a unique opportunity to be a leader in this field as it spreads across every sector of our society. I'm grateful to offer my help and to answer any questions today or in the future.

Thanks so much for your time.

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