Decentralization is the New Encryption - Dr. Steven Waterhouse

coming up next seven we'll be back to talk a little bit about how decentralization is the new encryption this is a very big topic um and it's one i'm really glad we're covering today we talk about identity um we're talking about privacy you know what's next in this logical narrative well seven uh dr stephen waterhouse has a lot more to add and he may tell a little bit more about what was happening with orchid too so seven i'll let you take it from here hey everybody um i'm just gonna try and figure out actually how to share a screen which hopefully i can do [Music] um screen sharing works best with two monitors oops uh that's gonna challenge me um oh i see application window and this is like east denver so i'm just going to keep it really real uh and um let's see i think this works is this working does that work okay pretty much all right so it's kind of a provocative title um [Music] but i'm not we're not trying to say like decentralization is a new kind of encryption it's kind of like more like in the in the spirit of how we think about encryption and how the sort of battle for encryption today end-to-end encryption what you want to say is that there's something new and it's not that new it's just new to a lot of people um so let's just try and get into what do we mean by encryption um most of you hopefully giving me a hackathon on someone encryptionist uh this talk is designed to be given at many different levels um i was just fascinated by the idea of encryption as a child and uh it's not a child with a teenager and just constantly digging into cryptography books and trying to understand and make my own codes um but we're trying to keep things secret that's the basic concept it's obviously a key component of privacy and it's actually a um it's such a powerful thing that the basic aspects of photography and the mathematics behind cryptography and the code that was developed for entire cryptography was classified as a munition it was classified in the same category as nuclear weapons and was prohibited from being exported from the united states for um for many years um actually to the point of which a friend of mine started an encryption company um for web technology in germany because of this issue that she couldn't actually export united states crypto so they uh they went and built the same crypto somewhere else and um very successful so we think about encrypted services um it's it's very interesting to think through the fact that when the web started um it was uh encryption was not a by default part of it um initially it was http only and the idea of https which is as you see on the kind of top of my screen here is um http plus encryption it's uh it was originally ssl tls it's the um it's a technique which is used to encrypt the traffic between my browser and the server um there are many encrypted services today that we think of and when we throw this content around whatever encryption is it can get kind of confusing um nonetheless despite the confusion governments are trying to crack down on this general concept of encryption they look at things and say we're gonna we're gonna get rid of encryption because we found that there are some bad people out there and legitimately there are some people out there doing things and they're using encryption to do it so what do they really mean by this and why are they going after this set of mathematics and this uh this code that does it well whatsapp is uh an example here um and whatsapp is now like under under a lot of scrutiny by people um nothing's really changed i'm gonna gonna poo poo this a little bit but nothing's really changed in what whatsapp's doing as far as its protocol is concerned uh the new thing that happened with facebook was that whatsapp business accounts were allowed to share information with facebook the actual protocol itself hasn't really changed much but obviously there is this general concern that part of um facebook now what what's going on whatsapp which is which is you know i use whatsapp a lot of issues signal and when you're looking at a messaging application you really want to be thinking through what am i using here like how how uh how does this thing really work and um the cool thing about whatsapp and signal and similar things this is the idea that they use end-to-end encryption um and other applications like uh facebook messenger telegram and so on they don't necessarily do end-to-end encryption meaning that the messages are getting stored on a server somewhere you notice when you join a telegram channel and you group you can go back and you can scroll through messages it's because the message is actually sold on the server and go back and see these things so you want to think through these things kind of what sort of encryption you're using what is the actual mechanism behind these things and one of the problems in today's world is that a lot of the stuff is quite opaque or confusing to the user um this kind of concept of privacy is really very fundamental as obviously a lot of people fighting for it we we tend to think now that um being private is uh is a very important thing for us it's very it's sort of like we believe it's a right um the idea of privacy as a right is is kind of it's kind of a new idea um when we lived in villages the idea that you'd be private was just sort of like ridiculous i mean like of course everyone knew what you were doing it was kind of just part of life as we scaled out to cities and and uh you know larger global communities um we started thinking through like what does it mean to be private and we started putting these things in constitution and european uh kind of bill of rights and now we think of privacy as especially on the internet as something that we really need to protect well how do we get into this council of decentralization because we we think about decentralization a lot well i think about decentralization as one of the most important things about it is the idea of permissionless systems so uh i've been working in decentralized systems actually since the early 2000s and distributed storage more like distributed versus decentralized um decentralized when it came to bitcoin the real concept here what was permissionless was the the permissionless way that you could store money you didn't have to open a bank account you still don't you just create a bitcoin wallet and put something in it and you're okay um with ethereum you didn't have to get permission to go raise money from the silicon valley boys club of the seas and angels you just put something out there on a white paper and money came to you sometimes it was a good day or something once to go there now with d5 no one has to give you permission to take a loan you just go do it and this concept of changing the structure of permission in these systems we think is very powerful now in orchid what we're doing is um is focusing on communications with bitcoin we've been focusing on store value filecoin is now interesting because we're focusing on storage the theorem obviously is a much larger computing framework and that kind of the whole space of smart contract platforms we can we can talk about these for days and we have been talking for days without killing what we're focusing on is communications now why should we focus on communications as being permission as well because people want to stop you talking people want to stop you saying things um they certainly want to stop um former presidents um from speaking we see you know former president trump being de-platformed good thing bad thing we could debate that all day but um it certainly got a lot quieter when he stopped talking but um just this this general idea that there's people out there trying to stop you talking and if you live in china you're very familiar with us you're very familiar the idea that people don't want you to access information and they don't want you to say things they don't want you to talk about viruses there's now like a big campaign inside china trying to stop covert from being associated with china like trying to say actually this thing came from the united states so they're kind of rewriting history and maybe maybe that was the case maybe somebody went over to a market in wuhan and gave some pangolin a uh uncovered and then it spread from there but i think it's more likely it probably came from china um but the uh the doctor who originally discovered covered and tried to one of the doctors just to try to warn everybody um he was detained arrested you know probably beaten up and unfortunately died of kobe quite early on so we think that the idea of being able to open this network of communication up so that it's much easier to communicate and you're not being surveilled and it's private it's very important so one thing we have is we have a bunch of apps we have these apps what they like to do is build circuits the circuits are essentially connected to different providers the providers are uh vpn if you like somewhere essentially like vpn nodes um they do a little bit more than just a vpn network no no it does um interesting about this is that in a similar spirit to uh other onion routing technologies um that we've been seeing in the wild before we're enabling you to construct custom circuits from different nodes in the network and each node is paid using a cryptocurrency and the cryptocurrency we're using and in this case is the rxt uh token oct is also used to actually stake against these um providers since the amount of stake that that each provider has corresponds to the amount of traffic that that provider is going to receive so one of the things people often say is well how do you make this thing scale using ethereum well we use ethereum because it's the most decentralized smart contract network and obviously the tooling around it and the size of this thing is makes it very attractive to build things towards it how do you get this thing to scale we're all quite familiar of course with speed and cost and so on well we have a layer two scaling solution and that we built we don't often talk about it as a latex kind of solution but basically it is it's um we call it probabilistic nanopayments um the uh the concept here is is that instead of sending um a whole amount of oxt each time you want to do a transaction each time you're sending a packet of data to another node and then it's going to be sent on to some spreadsheet another node and so on until it finally gets its destination with each of those packets we associate a certain amount of payment now we could send oxt with that but then that would need to be transacted and moved and so on and the speed that we could move the network out would be limited by the speed that we could do that on ethereum problem is we want to do this at data networking speeds we want to do this at speeds that you're used to streaming a movie from hbo and so on so we want to pay the providers in between all the time um so what we do instead is that we send essentially like the chance of a payment these nano payments are each represents essentially kind of like a ticket now the ticket uh most of the time loses but occasionally it wins and when it wins it wins big it wins a whole pot of money that's associated with effectively the expected value of the payment spread across over time so kind of get the idea here this is very efficient and it means we can scale our speeds to orders of magnitude faster than we can do on any layer one that we build on so whatever layer one it is we can scale it orders of magic faster it's very interesting we let me actually write quite a bit about this soon to kind of compare it to different um scaling techniques we've not only got a whole bunch of crazy tech behind this thing we've also tried to abstract it so it's easy to use and um one of the things we've done actually is adding in-app payments so you can just pay with a credit card um what happens here is you're not actually paying and getting rxt actually paying and getting a smart contract not a payment um pool uh which allows you to start using it immediately um oh jump to your head too fast there uh we're on a bunch of platforms ios mac os androids we also release linux we have a windows command line and uh here the community is working on getting the windows out there fairly quickly um we're connected with a lot of the big wallets obviously and uh we now i believe are on all the major exchanges in the world um and kind of just like closing i think i've got a few minutes left make some questions at the end um kind of wrapping this concept up let's focus on protecting encryption enter encryption is very important and we should really like i said in the previous comment comments it's not just about building the code we have to build a society and we have to care about this stuff and make sure that it's it sticks around um it's fragile the technology's not fragile but the the use of it can be fragile in addition i believe that the combination of strong encryption and decentralization is going to give us something that's not only private but also resilient and this is how you can find us i'm good if we have any questions i'm happy to to go with that david well seven actually the the crowd did have some fantastic questions for you um i'm gonna answer all right right now one of them is ask me the odd ones beyond vpns what are the uh good use cases for nano payments that's a good question um so it doesn't work quite so well if you've got something like um i want to pay you right i want to pay you something and you're like well yeah i you paid me but i didn't get it i was like oh well if we do this payment enough times eventually you'll actually get what you're looking for because it's probabilistic right so that doesn't work so well but if you were providing me with like a video stream right and i was like okay i'm just going to pay you these little nana payments the advantage of having this micro mechanism is that i don't have to agree that i'm going to watch it for 10 minutes and then at the end i'm going to pay you or i'm going to give you the payment first and then you're going to give me 10 minutes to stream i can just pay you by like the packet right and at any point in time because you're going to have enough packets over time you're going to get basically the same the same value so we think that that's one interesting application um just the general concept of providing content um so like long-lived services many to many connections uh we think there's a bunch of applications we're in the process of we've been very very focused on this original use case but we're in the process of um developing documentation and uh kind of getting the community more involved um we actually had a kind of a hackathon project almost ready for this particular um ether session but i think we're gonna do something we'll be back next year hopefully in person to do one uh but uh we'll be doing doing some specific focus hackathons around orchid um quite soon excellent and orchid of course started with some of the best known and actually trustworthy vpn services uh and a lot of people have been talking about kind of its eventual pathway one that's been talked about before and letting more and more people participate um kind of where do we stand right now with working yeah so um you get this question a lot is like sort of when staking well when staking we already we already do something the whole system is built around staking um uh there's a couple interesting things here one is one of the concepts of delegated staking and um that's now uh it's not ready um and the question is now like well when you've got a system that has this many nodes and the station's working okay and the economics are kind of just about okay for the thing how do you add more people well as you add more people this is not like sort of regular like proof of stake you need more traffic so one of the things we've been really working on a lot recently is making sure that the client is very solid and um has it's been kind of a number of payment challenges that we've been sort of wrestling with as a result of like gas costs going up right you know all the d5 dj guys have been like forcing gas prices up so it's been making life very difficult on nano payments scales for speed but like any layer 2 scaling you have to buy into it and unfortunately each person has to buy in each time and so the cost of buying in has just been going up and up because the contract is a certain size and gas prices go up so we've been working on some techniques to fix that um and we believe that once we release that then we'll get some significance growth in adoption of the other client which will lead to more traffic which will lead to more demand for providers and then more staking so it's kind of like a bit of a chicken and egg and building these networks um to like really get them to work properly excellent well seven thanks so much for giving us uh not only history lesson on uh decentralization in a lot of ways and in encryption but of course giving us an update on orchid as well thanks so much for being here thanks just