Exclusive: co-founder Frederieke Ernst on building Gnosis and bringing cypherpunk ideals to real life

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As a seasoned crypto investor with a keen interest in the intersection of technology and finance, I find Frederieke Ernst’s journey from academia to co-founding Gnosis incredibly inspiring. Her background as a physicist and her fascination with cryptography since childhood have undoubtedly played a significant role in shaping the innovative solutions she’s brought to the crypto landscape.

In a special conversation with crypto.news, Frederieke Ernst, one of the founders of Gnosis, shares her insights on the evolution of money and the ongoing influence of the cypherpunk philosophy on cryptocurrency advancements.

In the vibrant world of cryptocurrencies, Frederieke Ernst, a co-founder and COO of Gnosis Pay and Gnosis Safe, has made a distinct niche for herself. With her background in semi-retirement from physics and a passion for coding and cryptography, Ernst’s transition from academic life to co-founding one of the most broadly utilized decentralized payment systems reflects her innovative mindset. In a recent interview during the Emergence Conference held in Prague on Dec. 6, Ernst offered insights into the development of Gnosis Pay, Gnosis Safe, and Circles, explaining their origins, workings, and influence on the Web3 community.

Ernst’s curiosity about cryptography was ignited during her childhood, triggered by a book given to her by her father titled “The Code Book” (1999) authored by Simon Singh. In her own words, she shares, “At the age of 12, I was the kid who established my own PGP server. Although no one else was using it at the time, I still had a great deal of fun.

Following her education in physics and neuroscience, split between London and Berlin, Ernst pursued a career within academic institutions. This included postdoctoral research at both Columbia and Stanford universities before securing a professorship in Hamburg. In 2017, Ernst opted to depart academia and collaborate with Martin Köppelmann and Stefan George to establish Gnosis, the creators of an onchain wallet.

Originally developed as a prediction market within ConsenSys, Gnosis later established itself as a crucial foundation for Ethereum‘s ecosystem. As Ernst explains, “Our initial aim was to construct a platform for prediction markets.” The framework for conditional tokens, launched around 2019 or 2020, served as the underlying structure for projects like Polymarket.

Recognizing the payment sector as less challenging than the prediction market landscape, Gnosis ultimately broadened its business scope, developing essential tools and infrastructure for Web3. This encompasses Gnosis Safe, the leading non-custodial smart wallet handling over $100 billion in assets, and CowSwap, a platform that unites users to directly exchange buy and sell orders, aiming to minimize fees and slippage.

Over the past few years, Gnosis has been working hard to simplify the use of blockchain technology for ordinary people. To achieve this goal, they introduced Gnosis Pay – a payment system designed specifically for blockchain – which aims to connect digital assets on the blockchain with traditional banking and finance systems.

In simpler terms, Ernst mentioned that we opted for the payments industry because it’s less complex than others. He pointed out that payments revolve around balances that adjust based on clear and predictable rules.

As an analyst, I’d put it this way: “I work with Gnosis Pay, a platform that bridges the gap between the digital crypto world and traditional finance by connecting with systems like SEPA and VISA. This means you can use your cryptocurrencies in everyday transactions at places like Aldi, just as if you were using cash or a credit card. Our aim is to ensure that the value of on-chain assets can be utilized seamlessly in real-world scenarios.

Ernst emphasizes the significance of a user-friendly experience, pointing out that the conventional process for onboarding into cryptocurrency is excessively complicated. She argues that the 24-word seed phrase is a poor design choice from a user experience perspective. “To make crypto as effortless to use as PayPal or Gmail,” she says, “we’re utilizing modern cryptographic technologies such as biometric authentication and social recovery.

Furthermore, Gnosis Safe, introduced in 2017, is now a crucial resource for handling digital assets safely. Unlike conventional wallets, Gnosis Safe provides multi-signature capabilities, enabling several individuals to verify transactions.

Ernst explains that Gnosis Safe isn’t simply a wallet, but rather functions as a secure digital safe. It’s trusted by Decentralized Autonomous Organizations (DAOs), institutions, and individuals who value both security and transparency in their transactions.

Through connections with the decentralized finance (DeFi) and Non-Fungible Token (NFT) communities, Gnosis Safe now serves as a pillar of reliability within the Web3 environment, protecting vast amounts of wealth.

Building a more equitable money supply

One aspect Ernst is particularly enthused about is the project called Circles, another endeavor by Gnosis. This project offers a unique perspective on Universal Basic Income (UBI) through an innovative method. Based on the Gnosis Chain, a sidechain of Ethereum, Circles empowers users to create and trade custom currencies with their network of contacts.

Ernst clarifies that the aim is to establish a local, community-driven financial structure. This setup prioritizes trust and solidarity, thereby making Universal Basic Income (UBI) more long-lasting and expandable.

The idea behind Circles is to create an economy that runs parallel to fiat, nation-state backed forms of currency, an alternative form of exchange meant to unlock communities and cooperation, peer-to-peer. 

At the latest ETH DevCon held in Bangkok, Circles 2.0 was revealed, featuring upgraded protocol enhancements designed to foster stability within communities by enabling them to establish and control their unique community-centric cryptocurrencies.

Members of a group can securely deposit their own CRC tokens as collateral into a communal vault to create a shared currency known as Group Circles. These Group Circles function identically within the group and can be exchanged among its members. At a later stage, these Group Circles can be converted back into any CRC in the vault, ensuring a consistent supply while nurturing community-led economies.

This new development intends to give power to local communities so they can establish their own complementary currencies, as well as businesses that wish to develop internal economic systems. It further assists various groups in sharing and handling resources within shared economic environments. Circles 2.0 introduces several technical enhancements such as Personal Circles based on ERC1155, Group Circles using ERC20, improved interoperability, and a more efficient transaction route finder for greater scalability.

MiCA and the regulatory climate

Concerning the present regulatory environment in Europe, Ernst openly discusses the challenges that the crypto sector encounters, notably within Europe under the Markets in Crypto-Assets Regulation (MiCA). “Regulators tend to be cautious by nature, seeking to avoid financial crises,” she points out. “However, this strategy can frequently hinder innovation, potentially placing Europe at a competitive disadvantage.

Ernst suggests a thoughtful method of regulation, striking a balance between nurturing innovation and managing risks. He contends that technologies capable of significant disruption, such as AI and blockchain, demand careful supervision. In his view, excessive restrictions or prohibition will simply encourage the growth of these innovations elsewhere.

Moving forward, Ernst imagines a time when decentralized technologies become an effortless part of daily routines. “It’s crucial to incorporate genuine worth and actual users within our system,” she emphasizes. “In other words, we must find ways to connect digital assets on the blockchain with real-world assets.

Following the fundamental principles of decentralization – collective ownership, personal autonomy, and unrestricted creativity – Ernst believes there is ample opportunity for further development and novel ideas.

Ernst mentioned that the cypherpunk movement has consistently aimed at empowering individuals by returning control to them.

“We’ve built the pipes; now it’s time to put the drywall on.”

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2024-12-07 02:12