Aug. 28, 2019

In November 2015 Nick Szabo gave a talk on the history of the blockchain which was dense with useful ideas.

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Here are some notes I took on his talk:

  • Philosophical inspiration to Cypherpunks who invented Cryptocurrency:

    • Ayn Rand: Galt's Gulch - independence from corrupt institutions.
    • Tim May: "protect yourself with cryptography" (cyber Galt's Gulch.)
    • Friederich Hayek: Institutions of property, contracts, money are actually important to human freedom.
  • Use computer science to minimize vulnerability to strangers.

  • Non-violently enforce the good services of institutions.

  • "Try to secure as much as possible" not just communication.

  • Cryptography: only secures communications from 3rd parties.

  • David Chaum: let's apply this to money too.

  • Centralization problem remained in digital cash startups.

  • Bad assumptions in computer security: trusted third parties like certificate authorities are secure.

  • Trusted third parties are security holes.

  • Centralization is insecure.

  • E.g. Communists were able to get stranglehold with just control of railroads, newspapers, radio.

  • Gold is insecure

    • Spanish looted Aztec gold, pirates looted Spanish gold.
    • Part of end of gold standard was German U-boat threat to British gold transportation.
    • Franklin Roosevelt's government confiscated gold.
    • In modern times xray machines detect gold easily.
  • Decentralization per computer science is much more automated & secure than traditional security.

  • CS decentralization can only replace small fraction of traditional security but with very high cost savings.

  • Traditional security isn't the protocol itself, requires strong external law enforcement.

  • Computer security can be secure across national borders instead of siloed inside jurisdictions.

  • Cryptocurrency helps solve this through decentralization.

  • Separation of duties: several independent people to perform a task to get it done.

  • Each node as independent as possible.

  • E.g. crude measure of independence: geographic diversity of nodes.

  • Number of nodes is only a proxy measure of decentralization.

  • Smart contract:

    • Long lived process or "distributed app".
    • Acts like a contract.
    • Performance, verification etc.
    • Generally 2 parties + blockchain (replacing TPP).
  • Wet code = traditional law. Dry code = smart contract.

  • Law is subjective, enforced with coercion, flexible, highly evolved.

  • Smart contracts are mathematically rigorous, cryptographically enforced, rigid, very new.

  • Law is jurisdicionally siloed, and expensive to execute.

  • Smart contracts are super-national & independent and low cost.

  • Seals in clay/wax were important when writing was invented: signature + tamper evident.

  • Modern seals at e.g. crime scenes: sealing door, evidence bag with numeric identifier.

  • Blockchain can keep secure log with both semantics (serial number) and proof of evidence (photo hash).

  • Put proof of evidence on blockchain as well as semantic reference for contract code to interface with.

  • Can secure physical spaces with same mechanism.

  • Proplets: blockchain can tell them which keys have which capabilities.

    • For almost any valuable property that can be controlled digitally
    • Example: Auto-repo collateral upon contract breach.
    • Example: creditors without access to offshore oil rig used as collateral.
  • Recent project:

    • Trust minimized token: secure property titles, colored coins. Securing transfer of ownership.
    • Trust minimized cash flows (dividends, coupons, etc).
  • Idea: social networks for blockchains. Execute payment swaps & smart contracts after linking social accounts together.

  • Let's try to think about security more broadly instead of only encryption.

  • Let's try to protect everything that's important to us, without centralization.