5. Protocols: Foundations of Resilient Democracies - Lisbon 2022

[Applause] sorry it's it's a longer walk than I expected hi everyone uh so my name is is Kathy and I'm uh I was going to open my talk today by making a what I thought was going to be a really bold statement which is democracy is dead and we're moving towards a post democracy era and Pew research beat me to the punch because yesterday they Rel released some research which uh they released a poll which said that 70% of Americans think that democracy is collapsing and uh far more scary only 7% of those polls thought that was a problem so I I don't know what kind of era we're moving into but I was I thought I was going to be make very bold statements so um it's great to be here the the previous discussions are absolutely fantastic uh so I'm even more excited to be here but as an academic I thought I'd do something a little bit different and a little bit unusual for uh the crypto Community I'm going to talk about some ancient prehistory because it really helps us to think about where we've come from and where we're going to and I think for me ancient prehistory starts in 1999 and you know 1999 I don't know if many of you were alive or leaving uh leaving high school then um most of the crypto Community are a lot younger than I am but 19 99 it was a really brief era in history the USSR had collapsed the Berlin War had fallen we thought that democracy had won Western democracy a particular style of democracy let's be very clear and and we thought it was stable and we thought the world was going to be great and I have some evidence of this the most I um you know anarchic band Nirvana their F most famous song is about deodorant when your bands are singing about deodorant you know it's a pretty safe period of history and I was in Australia at the time you can probably hear that I'm an Australian and one of our our ministers said the greatest threat to humanity is the flannel shirt I mean this is the kind of era we were in and the other thing is climate change we still thought we had a chance to to actually roll this back and in Australia we'd had the whole over the ozone layer and successfully had treaties globally that reduced that back to zero and in all of this um that's me when I before I had gray hair I was uh getting really deeply involved in protocols and uh that's actually a photo of me uh as technical support in the North Pole uh I was technical support for climate change research and in particular those people who were drilling the ice and seeing how the big impact that climate change has had so protocols climate change and all of these kind of things have been a big part of my my life and a real driver uh the trip to the North Pole has made me Focus solely really on digital and sustainability for the rest of my my career so I was working with protocols Galore for those of you who don't know the 5G networks this is what it looks like these are all the protocols that are flying around uh your phones at the moment every single one of these protocols however sits behind the boundary of a firm so a corporation is running these protocols and and designing them and uh so I I worked on designing uh 3G 4G 5G and also Bluetooth I was originally helping to develop the the original protocols Bluetooth so if anyone has ever had difficulty connecting their Bluetooth devices that's me my apologies I I get frustrated at myself sometimes when they don't connect so my point today for today's talk is that the Rules of Engagement the rules of democracy the rules of how we interact in an environmental social and economic pattern was stable they were extremely stable all the way through until they weren't and for me my research shows that that point was 2004 and why do I choose 2004 a lot of people think many other academics think it's a little bit arbitrary but for me this is the point where we start to see the broadscale democratization of computational capacity and what do I mean by that so the on the previous slide all of those protocols were built by companies owned by companies patents patented completely patented all over the place what they have now is the democratization of compute we had enough computational power outside of the boundaries of the firm that things could genuinely start to change and you know this is this is a a slide that I usually start to teach my my students where we start at 19,000 BC and I teach them the evolution of data I won't bore you with that today but uh in 2004 we start to see the democratization of compute and eventually we see as you're all very well aware the democratization of money but democratization of computational power actually led to a lot of problems for us within the concepts of democracy ironically democratizing computation cause problems for democracy oh sorry that's where we talk about cloud computing that star my apologies for that one okay from 2004 onwards we start to see things like fake news too much data too much access to information we start to see people manipulating it we start to see an impact on Democracy if anyone has seen what's happening in the United Kingdom we can probably trace a lot of that back to the rise of ukip and their use of social media I'm not going to comment any further on American democracy see haven't spent enough time there but I think uh the poll tells us everything we need to know but we're also starting to see that climate change itself is is starting to be rapidly a big problem we have a problem of the commons which is why I was so excited to hear of funding the commons we need a way to not just create Global public good we need a way to overcome Global public bad there is global public bad as the coroller to Global public goods and I think this is a really exciting time so from 2004 onwards we start to see this explosion of different types of um problems that emerge from digital Technologies and if anyone would like to there's a fantastic book called The imagineers of War which talks about the origins of the Dara project and actually it was a social science experiment originally uh the internet incredibly interesting history to read so in 2008 we re we see the rise of blockchain so this is um a diagram that was uh a network uh graph where we uh were monitoring the Bitcoin transactions one of our Master students Imperial and they inadvertently they caught the first 50% 51% attack on on the network they caught that by accident we thought it was going to be very boring but this is the the first network attack 51% attack and it is in a new era of decentralization peer-to-peer connectivity and hopefully a new form of democratic engagement where people can coordinate with one another on a peer-to-peer basis or at least that's the story we're telling ourselves and my question today is it is it really every chance I get to talk at a crypto Community I raise this point because I really want us to understand this when we're talking about decentralization on a cryptocurrency at the moment we're talking about it on the application layer we forget there's a whole thing called the internet underneath and I don't know quick raise of hands who knows what an autonomous system is hand a couple of people okay our internet is actually formed of these orange dots represent autonomous systems and they're basically you can think of them like post office addresses or post off Office boxes each one of these is responsible for monitoring and controlling a huge number of IP addresses and in order to communicate across the internet you have to connect across all of these different um asns and they do the routing for you according to something called The Border Gateway protocol the point is this is horrendously centralized it's horrifically centralized and we're not talking about mining here because again that's still up at the application layer we're talking talking about the actual internet itself that the the decentralized networks are running on 80% of Bitcoin transactions Traverse one of 10 networks in the world ethereum is worse 90% of ethereum transactions are traversing 10 networks um and there was some fantastic work done by eth in uh Switzerland who proved that actually the this level of centralization is a fundamental problem for the entire concept of decentralization and the reason for that is you can de anonymize these transactions incredibly quickly you can dmize them very quickly if you understand the internet and that is a really foundational problem from my perspective at least but the interesting thing is of course that without all of this computational capacity suddenly being freed we would never had blockchain or Bitcoin in the F first place and so how do we think about creating to true decentralization what do we need to do for me resilient democracies need resilient protocols and by that I mean we need to create a decentralized form of the autonomous system this is a bold research claim guys so uh feel free to disagree with me afterwards this is I said I was going to be bold democracy is dead and we need to overthrow the autonomous systems um and we also however these are incredibly expensive to build an autonomous system is expensive if we want to create a decentralized autonomous system that enables people to run traffic in a truly Anonymous decentralized fashion we need to find a way to fund that so we need a mechanism to fund the creation of autonomous systems and so friendly enough we've been working on something along those lines so I'm going to talk a little bit about some of our ideas again their research we'd love feedback so please don't don't um even hesitate to give me some feedback or challenge my ideas so when we talk about resilient democracies we also need resilient infrastructure so if 7% of the people don't think that um democracy being dead is a problem where does that leave us effectively we have a lack of trust in our governments and we need to work out a way to self-govern a lot of the things that the governments are already doing and for me being an engineer as a background what I think a government does everyone else may have a different idea is provide some fundamental infrastructure to the to the to the community to the world and governments you know currently face a shortfall in available funds for infrastructure water energy transport the internet currently they're doing this through public private partnership models and basically it's a mixture of equity and debt and many of these go on massive massive 10-year life cycles the debt life cycle around civil infrastructure is is massive um and the debt is repaid to Banks basically so again there's a level of centralization there and generally the cash flow that is generated on that infrastructure goes straight back to paying off the interest in the bank the other one that we we've been thinking quite a lot about is World Bank and uh I often say that I want to overthrow the World Bank my collaborators have asked me to stop saying that because it it tends to have a bit of a strange reaction from a lot of people but let's think about the world debt or the World Bank should we say the world DEA from my perspective and from many other people's perspective as well the European Network debt and Development Fund found 563 conditions in 53 uh development policy operations or 9.6 conditions per operation on average so what does that mean effectively in order to take a loan from the World Bank they're putting quite a lot of conditions on countries they're forcing them to change how their economic structure works they're forcing them to accept a certain type of macroeconomic policy that quite often from an economist perspective those countries are not necessarily ready to embrace and and take on board board so they can undermine borrow our country ownership restrict the policy they can force policies that we have in the West on on different nations and all to often they have pretty harmful impacts on livelihoods of people and normally the most vulnerable people in the world so we've been thinking about well what if we used all of our Knowledge and Skills to rethink how we deliver debt or how we use money basically across the world and what if we challenge the notion of what is money Al together and cryptocurrency is fantastic because it actually enables us to do exactly that but more importantly what if nations were able to decide their own monetary policy using these type of Technologies as well and to reduce the burden of um you know all of these conditions being put on them and uh for for in order order to get just the basic services that we take for granted um I mean how many of you would if your mortgage lender said okay I'm going to get set 9.6 conditions on how you run your household in order to give you a mortgage would accept that I know I wouldn't but uh this is effectively what the World Bank is doing so we've been working quite extensively actually on this concept of resilient infrastructures and this is something I'm super keen on understanding if we can use this model to actually fund a new set of autonomous systems that are built with decentralization in mind and with a decentralized community in mind and if we point the liquidity well what's left of it I know it's crypto witer um in the right direction uh defi has the ability to actually make a very meaningful difference in the world for environmental social and also economic good so this is a little bit difficult to see and probably not a slide many uh crypto people have actually seen before this is an infrastructure life cycle where you move through upgrade proposed select Finance tender contract deploy operate maintain and decommission and this is the model that's used for large scale infrastructure so uh rolling out the internet uses this model when we're talking about rolling out the large ocean cables for example that link the world Bridges um buildings all of the mobile network towers that you see all use this kind of model to assess how to roll out where to roll out etc etc but also critically how to finance and so we've been working to create basically a dow which enables the creation of resilient infrastructure we've built some models around water infrastructure ironically um because we realized again my favorite enemy the World Bank um were actually they were rolling out water infrastructure but it was too big it was too centralized it was too complicated and within a year all of those water infrastructures in um some of the villages were just were just left they were no longer working um you know and and using a more decentralized model and a simpler model of water infrastructure we were able to um provide the funding mechanisms using using a dow basically to manage and control that well effectively actually it's two smart contracts that manage the financing and the Dow manages the governance because there's a huge amount of governance around the the infrastructure here so my thought is we can use this type of model to build new types of autonomous systems infrastructure so if anyone wants to join me on that Journey feel free to to give me a call oh that was the that was the end wow I've got quite a few bit of time for for questions apparently so yeah yeah the AV guys a favor um so yeah um I guess I got into blockchain years ago and when the def scene started to emerge I was like screw this it's just a zero sum game and so I I've actually taken a two-year break and fairly recently started to come back in uh I'm now seeing the emergence of refi Etc which Builds on these Primitives so there's some mistakes there but uh you point to the World Bank as World debt and that's one of the accounting errors that I see as absolutely crucial is our perception there is is not about credit or the internet's kind of riddled with these um misperceptions again it's like permissions versus capabilities but in particular when we think about Defi and funding the commons and uh governance of the commons and our economic systems um I'm curious your thoughts on credits rather than what I could see is def debt yeah so you mean when when you say sorry just leave the microphone with him just when you say credit how would you how do you differentiate credit from debt well debt is a a borrowing uh whereas the credit is the creation of something so value has to be put into the system first and so I need to provide a service upfront essentially to bootstrap this system at which point then we can redeem uh yeah so so for for the uh water infrastructure we've been working with diaspora um and also people who want to contribute uh financially to to creating good water infrastructure um so the the credit you in effect if we are enabling a mechanism for them to create the water infrastructure that would otherwise have been built by a corporation so it is I guess it's not really a form of credit but it's more a form of direct investment if that makes sense so it's yeah I mean the in our case the um diaspora investing in their home communities yeah so you mentioned importance or desability of some count being control of their own monetary policy they currently for example they have to dollarize take Lo they can't the right currency do you have any thoughts on how uh around I is this one of your objectives or is it um I mean that's not an objective I can achieve on my own right you we need to we need a big group of people who would be able to do that um I think it would be an objective uh for me yes I would ultimately like that uh every country is in charge of its own uh monetary policy that would be lovely um but of course geopolitical uh forces generally are working against us so you know for example in one of the villages where this water infrastructure the decentralized water infrastructure was going to be rolled out it was stopped because the World Bank said well we have a funer who is going to be very embarrassed if we're not you know so they actually work to to stop it so I think there's a it would be fantastic but there are a lot of forces working against us and we have to be cognizant of those and in some instances we also have to work with them because sometimes the fun they do function well in just in my opinion I think um the level of debt with foring countries in true for very basic Services is you know for me it's morally reprehensible so I actually had two questions the the first of which and I'll pause after the first one and give other the chance um protocol labs in fact run is uh is SL runs its own autonomous system in order to run the ipfs gateways effectively and so I like learned a fair amount about that we looked into trying to see if we could build a um incentive compatible replacement to bgp because we also see this as a general problem we found the need for a scalable hierarchical consensus mechanism yeah that would be decentralized and permissionless was kind of like a gating Factor on the creation of this kind of thing are there problem I'd love to hear a sentence or two about your approach and other problems especially that you think attendees or future viewers would be interested in working on that would be necessary to solve before we could have something like that that was technologically feasible which could then be potentially Deployable yeah I think there's a lot of issues with I mean there's a lot of work on bgp uh on going you know in in the what I call the normal Community um but um you know and there there are problems with bgp in and of itself right it is actually a creaking old protocol um that causes many issues um for me we started actually from a slightly different perspective which was that um in order to negotiate the peering contracts between the autonomous systems uh quite often that's done still face to face so you will have actually meetings of people who run you know they fly across the world they go to lovely places um and they basically sit and negotiating the peering contracts right so and then they sign and it's all very oldfashioned and we were originally thinking about well how do we remove that intermediary from the system and when I think one of the the problems that we ran into is the way that networks decide to Route um so they decide to route based on you know Jitter latency cost these kind of things there's there's an algorithm that they would run in order to basically decide what route is the best one for this piece of traffic that works that sort of works very well in a in a relatively analog world as in yes it's digitalized but we're still quite analog when we're moving into systems which are massively databased as opposed to just voice calls or things like that um uh we need to start routing for different things and I think that the enabling the protocol to be able to route for example why can't we route on the greenest route possible the least ghg I mean that seems like a simple request to me right um or you know why can't I route across networks that guarant meet privacy I can't I can't currently do that on the internet right you will be routed according to whatever the peering on the on the those 10 well it's more than 10 networks but the the 10 major networks decide and have decided on your behalf so I think understanding how to change the way the protocol routes would be fantastic and I'd love to dig into the autonomous system of filecoin at some point that would be that's the geek in me sorry ah okay okay all right so it would be yeah um yeah so I think there's quite a lot of work to do but if we want a truly decentralized internet I think it's a problem that need solving it might be a bit too big for this room but I just want to put the the challenge out there any other questions does anyone disagree with me feel free to disagree hi uh thanks for the talk I don't disagree at all but I I do want to point out that there's a little bit of a of a cold start or chicken and egg problem and uh I kind of think of this uh going back to the the world depth question so I come from Brazil and we uh there was a big thing in Brazil about 20 years ago when uh our president then which is uh our likely president uh our likely next president got famous for for uh paying off the debt the country's debt from with the IMF right which was you know at least a lot of people were really excited about at the time but you know they took uh they took internal debt to pay that off right and so the uh the consequence of that was that the uh the internal the the local oligarchies and plutocracies got even more more powerful and with uh consequences that one can say led to to where we are today uh in the country so uh I think that's just one example of uh the fact that you can't really just I mean these things evolve on their own and they have their their own kind of path dependency and so it's actually very hard to to uh design Technical Solutions and uh be sure that they're going to lead to the right uh social and economic outcomes right yeah I completely agree with you it takes a huge amount of effort and actually quite a lot of research right so that's why we started small on you know something like water infrastructure because that's not a national economy and exactly for that reason um but at the same time I think our understanding our knowledge of money is about 5,000 years old right you know this idea that money is debt and money is something that really you know I mean it was invented for basically for King KS to raise Wars right uh which Brazil also knows about Portugal was one of those countries um so I think that what I really would love to see and what I think would do an enormous amount of good for the world is us to use the thought experiment of cryptocurrencies to ask the question what is money because it enables us it empowers us to ask a completely different question about what money is what the storage of value is and what the exchange of value actually is of course however you know all countries need to live within the bounds of what are really difficult geopolitical um constraints right so we can see you know the geopolitics of lending for infrastructure is massively complicated so we've got the World Bank we've got China we've got all sorts of different geopolitical things playing out now as well um but I think that we should take take the time to have that thought experiment but it requires depth I mean it's not like you should say tomorrow we're going to forget the World Bank we're going to we're going to reneg on all of our debts and just use a dow um but I think there are ways also for the crypto Community to think about something slightly different which is how do we do something other than digital assets how do we do something that genuinely has an impact on the world on the real world and those are the sort of things that I think we can think about as a community um but you are right I mean yes there's been many instances where trying to reneg on your debt or even trying to renegotiate debt has led to massive problems in the country so I just have one more uh commment question on on on something you said the the survey in fact where're sort of what is it 70% people seven only 7% thought it was a problem that democracy was collapsing I mean I I my my understanding is that I mean this uh this this problem happens every so often in fact isn't been anticipated by constitutional lawyers and this is why in fact we don't have popular sovereignty where you can vote for anything we have typically constitutional democracies so you can vote for anything within uh a set of constraints and those constraints are typically very difficult to uh change some of in some countries you can't change them at all there's no legal mechanism such as some things in Germany and and and India and and in other countries typically require something like a super majority so uh this is why it's slightly concerning that in crypto they say uh you know the proof of State protocols it's basically those people are uh token holders are in control they can vote for anything uh that's not a constitutional democracy there are no constraints if a majority decides to do something they can do it almost by definition this simply doesn't work and it's been known for hundreds of years in fact I mean some of the smartest people worked on constitutional Theory uh Dows also potentially suffer from from this issue um and you know this is the precise reason I think in in many democracies there the Constitution says for example you can't vote even a majority cannot vote to eliminate democracy uh and in fact if if you're a democracy maximalist you don't have pure democracy in fact that minimum you have a constitution that says you can't vote to eliminate democracy because otherwise you would not be a fully you know you won't be as maxim of as democracy as if you didn't have that so it's quite counterintuitive but yet it's very wellknown man it doesn't seem to be integrated uh yeah I would would counter that with that I think we're actually in a in an era where we're shifting if we look at the United Kingdom which is a bit of a mess as you know but it's a unique mess and it's in a unique mess in for the first time in entire of its history nobody has voted for the last three prime ministers so you know I think the problem is that we're we're suffering from another issue which is that none of the smart people go into politics anymore only the politician now go into politics right so our smart people are now in the Dows I think there is something to be said about rethinking I don't think we we I don't get me wrong when I say democracy is dead I don't think we should end democracy what I mean is we need to give it a rebirth in the digital era in the same way that we need to give our companies a rebirth you know because corporations were came with a foundation of the industrial economy they they are 250 years out of date and I think anyone who's tried to work in a corporation over the last 10 years probably has the same reaction I do which is this is really Antiquated and it's really out of date so I think yes we we can't vote to overthrow democracy but what I think is increasingly Humanity in the average everyday citizen needs to learn how to self-govern some issues uh and I'll finish the point on for example Lisbon beautiful city I've been here for the last year and a half the average salary um is 868 a month if you are paying uh a rent in the middle of Lisbon and trying to live you are at a net loss of 1,150 a month something's got to give here in the sense that self-governing access to food access to certain types of infrastructure that are otherwise very centralized and very expensive I think I can talk about this for hours so I believe we're over time right so I'm happy to have a quick chat afterwards as well yeah I think we're out of time thank [Applause] you