Silvio Micali - Algorand - Ethereum London

thank you very much thank you very much everybody is a pleasure to be here so I'd like to tell you about an algorithm the because technology of a company be a big year ahead of engineering and our head of business development as well yes is a technology but that's behind the real business but today I'm here to tell you about the technology so blockchains have a great for Miss Wright who doesn't like you know transparency who does not like a tamper-proof database who doesn't like the ability to generate trust between two people or even more people who barely know each other so I don't need to tell you that the application and use cases are unlimited as however what I want to tell you confess is something that we all know very much the the open secret of blockchains they don't exist okay but because I everybody talks about it the centralization is here sociology anthropology steno everybody but you know where exactly are there I don't see much decentralization so I now block chains it's fair to say as a scientist and technologists we ought to be honest to one another better remain much more aspirational and it's very good as human beings to have very high aspirations on the other side if the technology does not sustain these aspirations when do we end up with a pie in the sky and in my only the one to say that the decent religious nor resist no you know buidling agrees with me in fact actually states of a famous sutra lima block control EMA which as they essentially state States on the basis of mm and plastic cryptocurrency so far and blockchain so far it is impulsive of our blockchain to be simultaneously secure decentralized in scalability really so let's understand what this means I am a blockchain by design welcome to blockchain by design so I what property you want to sacrifice for your blockchain security excellent choice you don't want to sacrifice security and if you want to sacrifice the decentralization why blockchain and if you don't want to you're secure and the centralized blockchain to scale do you plan to use it between friends and family so there are no good options here it's like if I tell you do you prefer to be shot in the left knee or in behind me so fortunately the the trilemma is not acceptable and fortunately actually is false ok so but before we tell you how is false illicit we tell you what the truth is the truth is that block chains are great and we should pursue him we want to really happen in our lives in our economy in our society but we need better technology ok all right so what is the challenge in building a blockchain you need two things a to make sure that the sequence of blocks cannot be alter the sequence and the content of the blocks cannot be altered however this is easy checkmark because if you take a parish storing cryptographic technology like miasha function one-way hash you take the hash of a people--some block you make a part of the previous block nobody can change a damn thing ok excellent what is the challenge of the challenge is choosing the next block because if you want to be decentralized our transactions are propagated for the network I tell them 10 people might element each of them turns 10 people and then pretty soon in 10 hopes we cover obey the world ten times over okay but at each point in time each one of us I see this valid transaction not yet reflected in the blockchain you see these are 2000 plus or minus or something transaction so these are valid visa valid but there was a big overlap but we're not the same should you obtain your block should I be entitled to append a block who obtains but then block that is the challenge the challenge is a common knowledge challenges are choosing challenge so how have we approached abyss charlie the first great idea I mean Victor was a genial idea of a time mr. or mrs. Nakamoto of anaka morals or many way maybe it's proof of work we all know that right so who opens the block there is a competition for solving a cryptographic puzzles who solves it first forgot to open the book great there are some cons what are the cons a is very expensive right that is a waste of electricity very explains them once you don't subsidize any more by printing bitcoins and you want to get the from fees deficit to be very high second is very slow you produce a block every 10 minutes because a rabbit is by choice but what if we reduce the way the time to solve a riddle to one minute well it is a little a minute you are going to add the forks and galore because any time the two solution to the crypto puzzles are a few seconds of each other here before any time there is a fork is not a chain and one branches to die and heaven forbid these big branch where somebody I'd get paid okay and then yet to wait but the block is six deep it's 12 deep depending on what level of a transaction is then you don't wait for 10 minutes you wait for hours and hours and hours all right so--but not good so it is expensive and it is slow by the way I understand expensive and fast expensive as law is a hard sale to me in addition to it they the fact that the system is centralized because a Bitcoin which is a continues to be a great idea but you know is in the hands of free mining pools right in criminals bulls in China control by chain they can rewrite history base award so is this decentralized no okay okay so next idea delegate a proof of stake what does it mean it's a very familiar idea right so to say we delegate to least 21 people look how bonus to the look by power to choose the next block on behalf of all of us is the centralized now and by the way even these people are honest and with all my intention to continue to be honest with everybody as of the beginning when very young and idealistic so the point here is about you know a denial of service attack you can bring them down right and these it is really a problem because if you deny the service people to look away for new transaction to put them a new blocks but if their buffers a fool by cannot see a damn thing all right next Bond Rufus take all bonded is different when delegate so bonded we allow 20 users 200 user 2,000 users as many very willing users to push in the middle of the table a bunch of money where they can not touch it anymore and the people who push the man in the middle of a table other ones who choose they block on behalf of all of us and if they misbehave their money is confiscated Wow best nails it right that's it that's more secure than basic and not get really let me ask a simpler question how much of your disposable income you can afford to put in the middle of a table not invest in anything hostage okay very very little fraction so in a system like this you make actually not only possible but actually easy for big fibs with deep pockets to put a disproportionate amount of money on the middle of the table for the pure purpose of controlling the blockchain not so what if they misbehave a Batman is confiscated huh not so fast because there is a lot of things that you can do we thought to being over your money confiscated assume you want to use the blockchain for doing an auction and I bribed and again you know what my competitive bid should not get in this blockchain confiscates if the money did not put my bid in the auctions I didn't see it so you know the things of which I've my money triggers the confiscation of the money is a very narrow band of things plenty of bad things which are no confiscated money second of all so what if you confiscate my money work is the value of a truly secure decentralized and and scalable blockchain trillions we should have trillions of dollars in assets the man is so high if I make a billion or two by misbehaving and you confiscate my ten or a hundred million dollars do you think I care I don't so all these approaches have a very strange logic the logic goes as base they all economy works and is secure if the majority of is a small corner of economy are honest you can see but the logic is a very bizarre who is a small of that small corner of the corners who's honest independent I see the Niners in Bitcoin but 21 delegates in a delegator proof of stake right okay so that doesn't work so what do we believe in we believe first of all we don't believe in punishing confiscating anybody's money not because we can't but it's a better idea to prevent cheating from occurring rather then you shall be honest otherwise I'll pursue you wherever you are and I will impose a fine on you good luck with that I think it's a better design to prevent cheating theorem and how do we went cheating if the majority of the money in the system is in honest and cheating is impossible period you mean vimanam but they both know they money wherever you want money wants to be in my wallet in my fingertips ready to be spent or wisely invested in all the financial tools that blockchain put at our disposal you count all the money wherever it is in the majority belongs to what is people done nobody can attack the blockchain I think it's a better way of designing the system and and by the way security against what against a very bad at the bursar here it is what is this guy is bad because it's soon all bad but it's also powerful and bad which is a bad combination so the system should remain secure even the bad guy can corrupt you right away instantaneously it can coordinator all the people who are corrupted by him and so on so forth and can attack oh not only the protocol by sending different messages that he should but also the very communication network on which the protocol is is run the routers the wires and can cut to our sacred he can do anything he wants the system should remain secure now should we be sawed ever serial well as a cryptographer the answer is yes okay but you should care about - if you are investors or part of blockchain because if but Barak chain is valid the trillion dollars as he showed bad actors are going to come up from the woodwork like mushrooms after the rain so the hunter is better be prepared and secure in base extreme situations let me tell you what Al Gore and the works he's by agreeing on the block just in proof of work was designed to avoid best Byzantine agreement right we instead want to agree on the block directly and what does it mean to agree Byzantine agreement is a very strong protocol he has been in power for 430 years or so essentially means look at the people in this room if the majority of us are honest the following thing happens no matter what values we have in our heads advent of a conversation we will agree on the same thing and suit it up just in case and we all started with the same value not only we agree on a common thing but we agree on the very value we same value that we started with what are these values these values are what in my mind the next block ought to be and what in your mind the next block ought to be so you see what terminology so you say well why don't we plug the Byzantine Agreement it exists yes it exists but it was extremely slow the finest law the largest applications in which buzzient Romina was was considered to be used in vision 12 users we are you know enough permission as blockchains with billions of users this can possibly work but make no mistake we will deliver Byzantine agreement in a on a planetary scale and with unparalleled efficiency and let me tell you how I'll go and works in two magic phases parentheses magic means mathematics but you know let's stick to magic forbid the remaining ten minutes maybe second so what happens in the first phase the first phase a random user is going to be selected most specifically actually random token is selected and the owner of that selected token proposes a block end of phase one all right oh you are very good so just wait a second next slide right say good-bye some magic it's the power of magic a fastening users what do they do they agree on the block proposed by the first user why do we need the second phase because let's be clear about any society as a percentage of bad actors right maybe 1% maybe 2% if you are unlucky enough to live in a very dangerous society maybe 10% I want to ruin myself maybe 20% but you know what they're never going to be in a majority why because of otherwise there would be no society I mean society is about somebody who falls over hoods and nobody forms of a gold it doesn't matter in what sense of a a society so let's assume that we live in a very dangerous society and ten percent of us are a bad actors so 1 in 10 times the person selected to propose a block can be bad and what can a bad person do you can tell you what block is excellent tell you what blocks is wise and tell somebody else what blocks is e and there is no chain anymore right there is just confusion but that's why by agreement we reduce what everything to a single block that's the power of bus until agreement where the majority of honesty yes but 90 percent of the people are honest and you choose a thousand people are random you can do the computations the probability they actually have a bad majority investor for some people is extremely small so small nobody gives a damn about it okay all right so one random person is selected and proposes a block for some people are selected and approve a block you know gcvo thank you looking at chief of this synopsis to say but I have a question okay in fact it should have thousands of questions but the one question the most popular one we just heard also to say who the hell selects the committee kuznetsova power is right who selects the committee let's assume of their own series I do boo this is the most essential eyes things or but you can think of a Yoruba center of it I'm not going to do it assume it may also be humanity discusses and after the discussion we are given a for some people who vain again the block are you kidding me you wanted it being what it is we never agree so everybody dies before we agree on anything let alone of us some people commit okay no good so what do we do we do something bizarre and you need to do a bunch of horse moves in order to get to solve a trail Emma here is one start these committee members select themselves could you repeat it so committee members select themselves so this is the worst idea right but you can think because if I'm bad I selected myself for best committee and doesn't like myself before the next committee and I select myself for their a committee as elected myself all the time but not so fast why because what does it mean that you are self selected means that you run a cryptographically fair lottery in privacy of your own computer all right in the case one if you don't win the lottery no matter what you say about the block you like it you don't like nobody pays attention to you but if you win your own individual lottery without talking to anybody then you get a winning ticket a mathematical proof that you are part of this committee and what you do you propagate from a net to work both your winning ticket listen to my opinion and your opinion about the block simultaneously right okay all right so and by the way let me now argue but this is super decentralized do we have here like many other approaches have a fixed committee that is in charge forever no there's a for some people this time are different for some people another time next time is another random person people that is really truly decentralized so let me actually now argue but this is super scalable okay how long does it take to run they kept on graphically fair lottery inside your computer a microsecond pretty good okay and because well the lotteries cryptographically they're not even a national state can improve the odds of being selected in the committee okay but is less talk so very fast okay but businesspeople they should do propagate their opinion you know it's a very short message so let me ask you something thousand people simultaneously send a short message each yes that's why scales anybody is a billion people never mind he still has some people propagating a single message and if there is ten billion people in the near future still look for some people propagating of a semester best scales period okay how finally let me argue but this is super secure okay I assume I'm the big scary powerful bad guy but I told you about and I came corrupt anybody I want whom I want to corrupt the committee but I'm a problem I don't know whom I should caveat because you ran a cryptographic fair lottery in your computer you do run it so should I go up to you you whistle idiom the street to be suffer guy in France the lady in Thailand over there I don't know however after you propagate to the network your winning ticket and you're a about the blocker haha I know it was you I'm going to corrupt you right away I guess what at this point it's too late because whatever you had to say you already said it and so your winning ticket and you're a about the block is very propagating from where I work and I do not have the power to put them back in a bottle no more than the US government has the power to put back in a bottle a message of our hearing propagated by WikiLeaks so my system at the high level is secure because beforehand I don't know who my two should corrupt an ex post is too late to go after the end okay that solves roughly material Emma so let me show how al grant works what do we have here but Genesis block remember what is hard is to choosing the next block but the first block comes for free is part of a description of a system next of a block a favor a universal symbol of lightness and effortlessness so what you want to do is bit a swiss favor effortlessly falls to the ground the chain unfolds say civil this is the easy case isn't it because there must be some soft Forks there must be proof of work now there is no proof of work and I have no Forks in our ground so let me tell you what does best mean not thoughtful work means everybody can participate so vets is a decentralized system we want to be citizens of this a new society but borderless a society by borderless economy in which everybody can participate because internet web hardware investment to you know to buy a bunch of asacs and refrigerate amendment zones of orphan or your laptop is plenty to do better at it's very very little computation and what doesn't mean vltava transaction is final because of a member if the man is seven hundred of the seven of us some people committee voted save it basis the block there is not going to be an alternative block signed by seven hundred of these other for some people because the majority is honest so every time you have a block a block see a block best block best block thank you thank you this vlog is final so you can rely on a transactions containing this block immediately if you are paid and booked in a block that appears ship the goods you have been paid it can never disappear from that from the trade so I think that is also another good poverty and by the way beyond the core technology we have a bunch of other things in particular Dutch auctions which is the way in which we are going to actually offer our currency in q2 of this year to to everybody who wants to buy them and I can tell you more why Dutch auction and so on so forth but in particular I want to say we are going to add some smart smart Contras we're going to be as innovative as about smart contracts as we have been innovative about to the consensus protocol but you know what all these things are great but I want to emphasize this this is whatever my ancestors were Roman called the conditions in agronomy left without to which nothing and what is this self-government because so it's impossible with we know today what our needs tomorrow will be right so block chains should not be ocean liners or not Oh pilot because you can trace the course decides the course the best you can but you know hopes there is an iceberg on the way oh really I didn't know they where is the part there is no pilot there is very hard over isn't organizer so we continue the course it cannot be that way life is about intelligent interpretation so we should adapt consensually and how we do bed by the same mirror so anytime there is a proposal having been living on earth for you're better off convening a committee cause nothing vote put proportionally to the money wait a bit wait and bought for money aim if you figure out to the 85% of the people they want to go left you know well even though you want to do all right it would you want to be in the small part of economy no you just go late so there is a medal of self-government a technology god of course we should choose together we are going to have a constitutional assembly to decide the rules together but you know at least we have a technological tool for realizing whatever biz this constitution would say and only if you take all this and this dot dot dots and a few other things we are going to have the borderless economy that we really need and deserve ok mates what what is going to take and so my conclusions are that by the way is a very noble cause to try to bring the centralization to the world so we should be applauded for doing blockchains and by the way I don't think it is the classical case that is a winner takes the wrong I don't believe in better believe there are many project will continue to be useful but to realize in full our aspirations we need technology ok guys so these are technological power blockchain they don't come for free they they are very very delicate technological products and speaking about technology I just wanted to leave you with the image of an old technology which served people quite well that is the Pont du Gard in San Fran France that in continual operation for over 2,000 years in continual in continual operation for over 2,000 years and enabling the people living across the river to transact to meet to make business right for 2,000 years I think half of it was a technology but it really brought us together and I believe that the blockchain technology probably constructed is going to be as useful to cement and bridge us together and it's going to be as beautiful as any physical technology we ever deployed but of course I have my own particular liking of our technology thank you very much so do you are asking two questions my first one is participation of course we need to have participation and so first of all remember one thing what we're going to do we are going to the answer is long can I be invited again I will not devote my my talk to justice topic but let me give you a flavor of whatever it is so first of all we're going to say hey everybody is welcome to participate this is English in order to say everybody's welcome you must have the technologies of it participation agreement solo it's a computation is so small but they actually came but we did but when you say thank you very much for making easy to participate but you know I don't want to we are not going to force people to participate we are going to give you an option to say declare yourself honestly to be offline okay and let other people so we don't wait for your vote because you say don't count on me thank you very much second of all why is the quickly ons are more complex because now we have to say we need to have incentives but you know what we are going to give insane where people would honestly declare we're offline and the people who are online and do we need to have them much more incentive where people are online no why because what we are doing we're not doing anything but took acquires and our energy electricity expense or anything else it's enough to have a little so you have to have you know a rather different approach but in a system which everybody's welcome this is the famous transaction fees we are shall have initially some part of a currency set aside to to represent events entity that will come when the system is in operations like a bit corners right but these fundamental and philosophically in a borderless economy who should claim ownership of this transaction fees in al-quran everybody not the Niners why not the delegates why so everybody so make is much easier the best way to start reasoning about incentive and I came full answer is one player it because I'm based upon to say okay if I got to get incentives let me honestly declare myself only offline and things to work about way okay I said everybody in the back evacuation thank you I understand skepticism within easy foundational science all right if we all believe as we don't need science which I believe but now it's not here is a science ok so the point is on this base lottery a secret piece of software Noro if you want to know this lottery is actually implemented with a verifiable random function which is something that I actually co-authored in 1999 and saying I believe but this technology will prove beautiful someday today is very ok but I want to simplify from you so let's not let's leave when all away with and function which is a sophisticated so ever so better you can see that there is no secret anything in in our garage in fact we are open-source product so what we are going to do the following mathematically more sophisticated action is to distill from the blockchain one quantity which is not malleable or controllable by not diversity coletek cube is a good name for a quantity okay if you somebody is proposed to the block you want to say if you are decided to be I want to be online and my part of this committee to approve this proposal block what do you do you digitally sign very best quantity Q who knows what digital signature base quantity Q you do do I know it no because here the secret key and I don't then you have a single signature base quantity Q right then you hash base quantity Q what do you get a random number uniquely dyed to your signature if this random number is less than a fixed threshold you are part of the committee if it is not you are not and you see but really okay what do you mean approvable work is a barrier no the hashing it I'm gonna hush randomized hush randomized hush random hash once once because the ash function is published your digital signature is unique everybody can verify your digital signature that is my proof to your winning ticket if you hold on a second I'm answering your question is is not worth it so so so you say there is a quantity Q you say I'm a comedian to prove it here is my digital signature quantity Q okay can I verify your signature yes I'm the only one now everybody can verify your quit signature done second operation that I do let me ash once is not know random anything is deterministic ash your signature what do I get a unique number and if I ask again exact the same number and if I have three times I get to the same number so after a hash it which is even a microsecond because Ashley is super fast and how were either left to do a comparison between two integers whatever I got and that expression right the end so think about it think of it if there is a million users and you want a fast people committee what is vibration is one over a thousand if there is a billion users and I want to fathom people who meet what is evaporation automatically refresh and is one over a million because of billion divided a million it's a father that's it so what if there is open source the signature scheme is open source only you can do it only had to do is to verify a signature big deal one hush big deal one comparison between two integers anyway that's scales okay but you know you know I'm here too till midnight but I want to see very somebody some other questions so just a second please yes I'm here I'm not going anywhere right I love what do you mean thank you for your question let me clarify so remember I think is it goes I'm the BOK chain block 1 block 2 block 3 blood for blood broke a million okay we created a medium block at this point in a method where they're not described from this 1 million blocks there is one quantity Q okay how there is not one for some comedian there is only one thousand committee all the people who sign in rescue and hashing has less than a facial there is a single committee on earth would win a cube no no no no I mean but no no no no so remember what I said there are two phases right the committee phases phase two in phase one is the following there is a blockchain in a single user is selected this user up to his or her pleasure selects a bunch of body transaction if I'm a bad user and I select a bad transaction nobody will approve my block okay but if I'm not good the users I select a bunch of APIs on transaction to fasten transaction whatever I happen to see and it is the block that I propose to the community then a far some people come from the woodwork because they do with a simple self selection lottery and they say Silica's proposed this transaction this is the blockchain medium block so far first transaction of Silvio he says you know that William is transferring to Nevada a Fastenal goes William has according to the blockchain a million I'll go pain is vegetable a transaction yes next thing everybody checks in the transaction on my block in by far some people even they like it too they approve it if they don't like it they don't approve it but if I am an honest person in proposal a or a set of honest transaction all there are some people or at least all the honest people among this one thousand which are in a majority anyway will approve the block p8 there is not a confusion about which there is only a single committee at every point in time once the block is appended new to materializes you know because of the blockchain is a million and one and so on so for funny story repeats yes it's a great question guys okay so when when you talk about the lottery it to be careful because I'll say I play the lottery like a slot machine is not the right analogy right because I play the lottery machine say oh I didn't win let me try again I didn't win let me try again well sooner or later I will so variable right mr. lottery stage is we use I don't want to talk about the verifiable random function because it's a complicated object I talk about a deterministic signature like RSA okay given a quantity Q how many signature Q can you produce one but if you try a game to sign what you what happens the same thing than before and hashing is the deterministic - so if you have a one signature because I should the very least agreeable one ash of your signature if you're less than a threshold you are if you are not you can repeat it again but you'll never produce you know you never produce a winning ticket because right that's better idea yes yes yes okay so there is also question in the phone okay always will give you my microphone oh great great guy so remember sibling attack I love sibling attack right because they're going to say is great to say if we have okay thank you so I remember so I'm coming if I use if I going to say there is a million public key and I select a thousand public key at random on gamma base million I can do a sibling attack because what I'm going to do say well I'm Sylvia I have a single public key you know what why don't I clone myself in Sylvia one Sylvia to Silvio a thousand and one of us wins is still me but not really because of a member but things are waited for money technically what I said before is that a thousand tokens are selected at random tokens not users okay in this of us and tokens are each owned by a thousand different users these are the winners but if somebody has more money than ours which you know in a blockchain can happen as more interest in keeping the blockchain more secure if you have a demo 10 times more money than me you should have a on average being selected 1000 your tokens may be selected in one token of mine so your vote counts then you have 10 volts right so that's why sibling attack is not possible because in our grant if I have a million al goes on one key the probability one of these al goes is selected is the same as if I chopped my mineral goes in a million pieces with one algo and the probability the one of them is selected is absolutely identical to before so that's why we prevent a sibling attack well the gentleman before was trying to raise their hand okay well that is - but I remember one thing so let me yes because you have a more interest in keeping the understand but let me answer the question so remember what what did I say when the barrage or what do we ever system do you say in this corner of economy the majority of this corner of economies are honest then the old system is honest and you say well - don't want to cheat because if they cheat they devalue the very bitcoins that they use wait a second so the question really is what fraction of the global economy is represented by the miners could you give me a a binocular I mean a microscope I cannot even see the miners if there's such a small speck so what I can do in a system like this is going to say I know that if you do strange stuff you devalue your Bitcoin but you know here's some fiat currency let me make you in fiat currency whatever you own in Bitcoin and because I like you I am going to double it up you know what you're my friend today three times what you own now the value will do all you pay you three times as much and in regular system in our system what can the system who can wreck our grant they majority of the money so if the majority of the money also Romania misunderstood yes well so we have to agree bit in in society of money they because it's not a society it is a political society which is a society of money if the the best I can do from a technology side is to make sure that there are not more precious tokens a very token has the same power but if you have ten more tokens you cannot just say right - no so if I if I have a 1 1 % of Algar and they say I've raised taxes or I do I vote for inflation you know I'm sorry but you know you have 1% of a vote we won't all go and with a fixed number of tokens so we have to listen so what I'll go on is this base table is having a lot of technology to empower the Avery token has the same power but then if somebody has more power then he has a bit more about in in conducting in securing the system because a bit more interest in keeping the system secure it is a very dangerous I think actually what I was saying before like miners who possess very little of the bitcoins even polyposis a lot so to be in power over everybody we have to agree to disagree because block chains are great for many things but they're not great for voting and so that is not a political system in a political system one person one vote as my thing but in a in a money system if somebody are in as a risk more believing more meters is only so fair but he has a little more interest in keeping the system stronger and secure and so what you have in algo and is me following even if you ever won one algo you'll be given your fair chance for one algo if you are getting ten algis you are going to have a ten chances before and this is the best we can do but but it's not good for politics I gave you a man [Applause]