Kind: captions
Language: en
the following is a conversation with
sylvia mccauley a computer scientist at
mit
winner of the touring award and one of
the leading minds in the fields of
cryptography
information security game theory and
most recently
cryptocurrency and the theoretical
foundations
of a fully decentralized secure and
scalable blockchain and
algorand a company of cryptographers
engineers and mathematicians
that he founded in 2017.
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at lex friedman
and now here's my conversation with
silvio
mccauley let's start with the big
and the basic question what is a
blockchain
and why is it interesting why is it
fascinating why is it powerful
all right so a blockchain think of it is
a
is really a common database distributed
think about is a ledger
in which everybody can write an entry in
a page
you can write i can write and everybody
can read
and you have a guarantee that everybody
has the same
copy of the ledger that is in front of
you so if
whatever you see on page seven anyone
else is on page seven
so what is uh extraordinary about this
is this a common knowledge thing that i
think is a really
a first for humanity i mean if you look
at communication
like right now you can communicate very
quickly
images of thoughts or photos but do you
have a
certainty that whatever you have
received has been received by everybody
else
and not really and so there's a
commonality of knowledge
and the certainty that everybody can
write nobody
has been prevented for having whatever
they want nobody can erase
nobody can tear a page of a ledger
nobody can swap
page nobody can change anything and uh
that is an immutable coma record is uh
extremely powerful and uh there's
something
fundamental that is decentralized about
it so at least in spirit
uh some degree against maybe a
resistance to centralization
absolutely if it is not decentralized
how can it be common knowledge if only
one person or a few people are villager
the only way you don't have villager you
have to ask you know what is on page
seven
and how do you know that whatever they
tell you is on page seven
they tell the same thing to everybody
else and so
that is this commandant is like
extremely
powerful just uh um just to give you an
example a sumo beta
you do an auction okay you have uh work
very hard you build a building and now
you want to auction off
make sense because uh you want to
auction
worldwide better yet you want to
tokenize the building and sell it you
know
in parcels now
everybody sees the bids and you know
that everybody sees the bids you and i
see the same and so does everybody
else
so you know that the fair price has
reached and you know
who owns what and who has spent how much
and if you do it instead of advising on
a centralized system
i put a bid say oh congratulations alex
you won
and your prize is 12 570 dollars
how do you know so if instead there is a
common knowledge is a very powerful uh
tool for humanity so we'll return to it
from
a bunch of different perspectives
including like a technical perspective
but
you often talk about blockchain
and some of these concepts of
decentralization
scalability security all those kinds of
things
but one of the most maybe impactful
exciting things that leverage
the blockchain this kind of ledger idea
of common knowledge is cryptocurrency
so the fight in the financial space so
is there
can you say in the same kind of basic
way what is cryptocurrency in the
context of this common knowledge and
context of the blockchain
great cryptocurrency that is a currency
that is on such a ledger so imagine that
on vallejo right initially you know that
somehow
say you and i are the only owner each
one
let's give it our ourselves a billion uh
each or whatever this unit then i start
up
writing on the ledger i give a hundred
of these units to my sister
you give i give this match to my end and
then
and then now because it's written on
belgium and everybody can see
my sister can give 57 of his units that
she received from me
to somebody else and so and and that is
money and that is money because
you can see that somebody who
tenders your payment has really the
money there right you don't have any
more of a doubt when you want to sell an
item
if i got your check is the check covered
if
right or um do i have the money at the
moment of a transaction
you really see because the ledger is
always operated what you see
is what i see what the merchant sees you
know where the money so is
the most powerful money system there is
because it is totally transparent and so
you know that you have been paid
and and you know that the money is there
you have not to second guess anything
else
so the the common knowledge applied
there is
you're basically mimicking the same kind
of thing you would get in the physical
space which is
uh if you give a hundred bucks or a
hundred of that thing whatever
of that cryptocurrency to your sister
the actual
transfer is as real as you giving like
a a a basket of apples to your sister
because that uh so in the case in the
physical space
the the common knowledge is in the
physics
right of the atoms and then it's digital
space the common knowledge is in this
ledger
and so that transfer holds
um the same kind of power but now it's
operating in the digital space
correct again i apologize for a set of
ridiculous questions but
uh you mentioned cryptocurrencies of
money
what what is money why do we have money
do you think about this kind of from
this high philosophical level
at times of this uh
tool this idea that we humans have all
kind of
came up with and seem to be using
effectively to do stuff
money is a social construct okay in
my opinion and this has been somehow
people always felt that somehow money
is a way to allow us to transact
even though we want to different things
so i have
two sheep and then you have
one cow and i want the cow but uh you
are looking for blankets instead you
know
so to have money it's really simplifies
this but at the end of and that's why
a bit was invented and you started with
gold you started when the
corny edge when you started with czech
but at the end of the day
money is essentially a social construct
because
you know that what you receive you can
actually spend with somebody else
and so there is a kind of a social pact
and social belief
that that you have at the end of the day
even a barter is of requires
um beliefs that other people are going
to accept
the quote-unquote currency you offer
them
because if i'm amazing and you asked me
to build a wall
in your field then i did and you
in exchange you give me a thousand ship
what am i going to do eat them all
now i to feed them and if i don't feed
them they die and i
my value is zero so in receiving visa
livestock i must believe that somebody
else
will accept them in return for something
else
yeah so money is a social belief
social shared belief system that makes
people transact
that's fascinating i didn't even i
didn't even think about that that you
you're actually
uh you have a deep like
network of beliefs about how society
operates
so the value is assigned even to sheep
based on that everyone will continue
operating how they were previously
operating yeah somebody will feed the
sheep
i didn't even i didn't even think about
that that's that's fascinating so
that directly transfers to uh
to the space of money and then to the
space of digital money cryptocurrency
okay
does it bother you sort of
intellectually
when this money that is a social
construct is
not directly tied to physical goods like
uh
gold for example not at all because
after all gold has some
industrial value nobody delights it it's
a it's a metal
it doesn't oxidate he has some good
things about it
but uh does this industrial value really
represent
the value at which it now is trading no
so
gold is another way to express our
belief i give you an ounce of gold
you treat her like oh somebody else will
want to miss
for doing uh something else so it is a
really
this notion of this money is a mental
construct
it's really uh and is a shared is a
social construct i really
believe and so some people feel that
it's physical so therefore gold
exists then as you know now
we countries more sophisticated
countries right now they print their own
money
and you believe that they are not going
to exaggerate it with inflation
not everybody believes in what i'm
saying there is at least
not we are not going to exaggerate it
bludently
and uh and therefore you receive it
because you know that uh
somebody else will accept it will have
faith in the currency and so on so forth
but the weather is gold whether it is
livestock or whether whatever it is
money is really a shared belief so there
is something
you know and i've been reading more and
more about different cryptocurrencies
there is a kind of uh belief that
the scarcity of a particular resource
like bitcoin has a
limited amount uh in its tied to
physical
you know uh to to proof of work so it's
tied to physical
reality in terms of how much you can
mine effectively
and so on that that's an important
feature of money
do you think that's an important feature
to be a part of whatever the money is
that is certainly a very useful part so
um at some point in time you know assume
a veteran or
money something that all of a sudden we
say this is money i have a currency
then uh you know i offer you 10 days is
in payment of
whatever goods and services you want to
provide but but
at the end of the day if you know that
uh you can cultivate it and generate
them um
at will then perhaps you know you should
not accept
my payment in uh here is a
a bouquet of basis so you need some kind
of a scarcity the inability to create a
sudden layout or nothing is uh is uh is
unimportant
and uh um it's not an
intrinsic necessity but it's much easier
to accept once you know that there is a
fixed number of units or whatever
currency there is and therefore you can
mentally
understand i'm getting you know this
much of this piece of a pie
and therefore i consider myself paid i
understand what i'm receiving
you describe the goals of a blockchain
you have a nice presentation on this
as scalability security and
decentralization
and you challenge the blockchain
trilemma
that claims you can only have two of the
three so
let's talk about each what is
scalability in the context
of blockchain and cryptocurrency what
does scalability mean
so remember if we said that the
blockchain
is a ledger and each page receives that
gets transaction and everybody can write
in this
in these pages of a ledger nobody can be
stopped for writing and everybody can
read them
okay scalability means how fast can you
write just
imagine that you can write an entry in
this uh
special shared ledger once every hour
well you know what you're going to do if
you ever know one transaction per hour
the world that doesn't go around so you
need to have scalability means here that
you can somehow write a lot of
transaction
and then you can read them and everybody
can validate them
and that is the speed and and this
and the number of transactions are per
second and the fact that they are shared
so you want to have this
this uh the speed not only in writing
but in in
sharing and uh and uh an inspection for
validity
this is scalability the world is big
the world wants to interact with the
people want to interact with each other
and you better be prepared to have a
ledger in which you can write lots and
lots and lots of
transactions in this special way very
very very quickly
so maybe from a more mathematical
perspective or
can we say something about how much
scalability is needed
for a world that is big well it really
depends
how many transactions so you want but
remember
veteran um i i think you know i'm right
now yet to go into
at least thousands of transactions are
per second even if you look at the norm
credit cards right you know we are going
to go from
an average of 1600 to peaks over 20 000
or
40 000 something like this but
but remember it's not only a question of
the transaction per se but
the value is that the transaction
is actually been shared and visible to
everybody and the certainty that that is
the case
i can print them on my own printer
way more transactions but nobody has the
time to see or
to inspect that doesn't count right so
you want
scalability at this common knowledge
level that is the challenge
i also meant from a perspective of like
uh like a complexity analysis
so does it you know when you get more
and more people involved
doesn't need to scale in some kind of
way that uh
like do you do you like to see certain
kind of properties in order to say
something is scalable
oh absolutely i took a little bit
implicitly that
the people transacting are actually very
different
so if there is a two people who can do
uh
fast and satisfaction per second with
each other this is not so interesting
what do we really need is to save
billions of people and at any point in
time you know thousands and thousands of
them
want to transact with each other and you
want to support
that so algorand uh
it solves so that's the the the company
the team
of cryptographers mathematicians
engineers so on that challenge the
blockchain trilemma
so let's break it down in terms of
achieving scalability
how do we achieve scalability in the
space of blockchain in the space of
cryptocurrency
okay so uh scalability security remember
and the decentralization nice so
that's what they want what's the best
way to approach can we break it down
let's start with scalability
and think about how do we achieve it
well to achieve it
one at a time is perhaps elise even
security if nobody transacts
nobody loses money so beta is secure but
it's not scalable so let me tell you i'm
a cryptographer
so i try to fight the bad guys
and what what you want is that a vessel
ledger that we discussed before
uh cannot be tampered with so you must
think of it avetta
is a special link that nobody can erase
okay then
it has to be everybody should be able
uh to read and not to
alter the pages or the content of the
pages
that's okay but you know what that is
actually
easy cryptographically easy
cryptographical means you can use
tools invented 50 years ago which in
cryptographic time is prehistory okay we
are
cavemen working around and solve their
problem in cryptography land
but you know but there is really a
fundamental problem which is really
almost a social seems a political
problem is to say
who the hell chooses
or publishes the next page of villager
i mean that is really the challenge this
ledger
you can always add a page because more
transactions to be
written on there and somebody has to
assemble with
this transaction put them on a page and
under the next page
who is the somebody who chooses the page
and adds it on who can be trusted to do
it
exactly assume it is me for what i'm
being not that i want to volunteer for a
job but
then i would have more power than any
absolute monarch in history
because i would have a tremendous power
to say these are the transactions that
the entire
world should see and whatever i don't
write
this transaction will never see the
light of day
i mean no one had any such a power in
history
so it's very important to uh to do that
and that is the quintessential problem
in a blockchain
and uh people have thought about it to
say it's not me it's not you but
for instance in uh proof of work
what people say is to say okay it's not
me it's not you you know what it is
we make a very difficult we invent an
a cryptographic puzzle very hard to
solve the first one to solve that
as the right to add one page to the
ledger
on behalf of everybody else and that's
now is
seems okay because you know sometimes i
solve a puzzle before you do sometimes
you solve
before i do or before somebody else
somebody else solves it
it's okay and presumably the effort you
put in
is somehow correlated with how much
trust
you should be given to add to the ledger
yeah so somehow you want to make sure
that you know you need to
work because you want to prevent you
want to make sure
that you know you get a one solution
every 10 minutes
say like in particular example of
bitcoin
so that is very rare but two pages are
added at the same time
because if i solve the puzzle at the
same time you do
you could happen that if it happens once
or twice we can survive
it but if it happens you know every
other page you know
is a double page of when uh which of the
two is the real page it becomes a
problem
so that's why in bitcoin it is important
that to have
substantial amount of work so that no
many how many people try
on earth to solve a puzzle you have
one solution out of how many people are
trying every 10 minutes
so that you have you distantiate this
pages
and you have the time to propagate for
the network resolution
and the page attached to it and
therefore there is one page at a time
that is added
and they say well why don't we do that
we have a solution
well first of all a page every 10
minutes
is not fast enough it's a question of
scalability
and second of all to ensure that no
matter how many people
try you get a one page generator minutes
one solution to the riddle every 10
minutes this means
that the riddle becomes very very hard
and to to have a chance to solve it
in within 10 minutes you must have such
an expensive
apparatus in terms of specialized
computers not
one not two but thousands and thousands
of them and they produce a tons of heat
okay these
they dissipate it like maniac and you
need to refrigerate them too
and so then now you have air
conditioning uh galore
to add to the thing it becomes so
expensive
that fewer and fewer and fewer people
can actually
compete in order to add to the page and
the problem becomes a so some
crucial vietnam in in in bitcoin um
depending on which day of the week you
look at it you are going to have
two or three mining pools are really
the ones are uh capable of controlling
the chain
so you're saying that uh that's almost
like uh
at least a centralization right it
started being
decentralized and uh but the expenses
become
higher and higher and higher when the
cost becomes higher and higher fewer and
fewer people can afford them
and then you know it becomes you know de
facto centralized right
yeah and uh in a different type of
approach
is instead for instance a delegated
proof of stake
which is also very easy to explain
essentially boils down to to say well
look at these 21 people say okay
don't they look honest yes they do in
fact
i believe if they're going to remain
honest for the foreseeable future so
when do we do ourselves a favor
let's entrust them to add the page
on behalf of all of us to the ledger
okay
okay but now we are going to say is this
centralized or decentralized well
21 is better than one what to say is
very little
so if you look at uh when people
rebelled to centralized power i don't
know the french revolutions okay
there was a monarch and the nobles yes
were there 21 nobles
no there were thousands of them but
there were millions and millions of
disempowered citizens so one is
centralized
21 is also centralized right so that's
delegated proof of stake
delegate kind of like a representative
democracy i guess
yes which is good working great right
there's problems there are problems yeah
and
and so we were looking for a different
uh
um when thinking about algonquin for a
different approach
and so we have a man approaching retinol
is really really decentralized because
essentially um
it works as follows so you have a bunch
of tokens right these are the tokens
and that have equal power and you have
to say 10 billions of tokens distributed
from um
to the entire world and the owners
each token has a chance to add value
equal probability driver everybody else
in fact actually if you want here is how
it works
so think about you know by some magic
cryptographic process
which is not magic it's mathematics but
think about the magic
assume that you select a thousand tokens
and so sometimes a random okay and you
have a guarantee that were handled
selected
and then this the owners of this 1000
tokens
somehow agree on the next page they all
sign it
and that's the next page okay
so it is clear that you know nobody has
the power but you know
once uh up in a while one of your tokens
is selected
and you are in charge of this committee
to select the next page but this goes
around
very quickly so and if you look at this
the question really is that is not
really centralized
and because of what for for agreeing on
the same page it is important that
the 1000 tokens that you're randomly
selected
are in honest ends the majority of them
so which if the majority of the tokens
are in honest ends that is
essentially true because if the majority
of the tokens are in honest ends
if you select say 90 percent of the
people
are 90 percent of the tokens are in
honest hands
so can you randomly select a thousand in
this thousand you find the 501
tokens in bad ends very very improbable
so
basically uh when a large fraction of
people are honest then you can use
randomness as a powerful tool to get
decentralization
so what does honesty mean and uh now
we're
into the social side of things which is
uh
how do we know that
like the fraction a large fraction of uh
people or participating parties are
honest
that is an excellent question so by the
way first of all we should
realize that the same thing is for every
other system when you look at proof of
work
you realize that the majority of the
mining power
is in honest hands yes when you look at
a delegated proof of stake
you realize that the majority of these
21 people are honest
what is the difference the difference is
veta
in these other systems you soon to say
the whole economy
is secure if the majority of this
small piece of economy are honest
and that is a big question but instead
what
in our grand in our approach we say
the whole economy is secure if the
majority of economy
is honest in other words who can subvert
all grant is not a majority of a small
group
but is a majority of the token holders
had to conspire with each other in order
to think of a very economy for which
they own the majority of yes but i think
it is a bit
harder too like a self-destructive
majority essentially
and you're also making me realize that
basically every system that we have in
the world today
assumes that the majority of
participants is honest
yes the only difference is the majority
of whom
and in in some cases the majority of a
club and in our case is the majority of
the old system
the whole the whole system okay so
that's that's fast so through that kind
of uh random
sampling you can achieve
decentralization
you can achieve so the scalability
i understand and then the security that
you're
referring to basically the security
comes from the fact that
the sample selected would uh likely
include honest people
so it's very difficult to so by the way
the security as you
as you mentioned that you're referring
to is basically
security against dishonesty right or
manipulation or whatever yes
yes so essentially when what you're
going to to do is to be following and
say say well
silvio i understood what you're saying
but somebody has to randomly selected
with tokens when i believe you so then
who does this random selection that's a
good point
and uh in uh in algorithm we do
something a little bit
unorthodox essentially is
the token choose themselves
at random and you say if you think about
it that seems to be a terrible idea
because if you want to say choose
yourself at random and whoever chooses
himself is a fuss and people committee
you choose the page for for the rest of
us
and because if i'm a bad person i'm
going to select myself
over and over again because i want to be
part of the committee every single time
but not so fast so what do we do
in algon what does it mean that i select
myself that each one of us
in the privacy of our own computer
actually a laptop
what you do is that you execute your own
individual lottery and
uh think about that you pull a lever of
a slot machine
you can only pull the lever once not
until you win
not enough times until you win and when
you pull the lever
case one either you win in such a case
you have a winning ticket
or you lose you don't get any winning
ticket so
if you don't have a winning ticket you
can say anything you want about the next
page in village nobody pays attention
but
if you ever winning ticket people say oh
wow this is one of the 1000 winning
tickets we better pay attention to what
he or she says
and that's how it works and the lottery
is a cryptographic lottery which means
that even if i am
an entire nation extremely powerful with
incredible computing powers i don't have
the ability to improve even minimally my
probability
of one talking winning the lottery and
that's how it happens so everybody pulls
the lever
the 1000 random winners say oh here is
my winning
ticket and here is my opinion up or down
above the block these are the ones that
count
and if you think about it while this is
distributed because there is
in the case of argon there is a 10
billion tokens and you select a
1000 of them more distributed than this
you cannot get
and then why is this you know scalable
because what you have to do okay yeah to
do the lottery
how long the lottery takes it takes
actually one microsecond
whether you have one token or two tokens
or a billion tokens is always one
microsecond of computation
which is very fast we don't hit the
planet with a microsecond of computation
and and finally why is this secure
because even if i were
a very evil and very very powerful
individual
i'm so powerful that i can corrupt
anybody i want
instantaneously in the world
whomever i want to corrupt the people in
the committee
so that i can choose the page of the
legion but i do have a problem
i do not know whom i should corrupt
should i corrupt this lady in shanghai
the sovereign guy in paris
because i don't know i should the
winners are random so i don't know whom
i should corrupt
but once the winner come forward and say
here is my winning ticket
and you propagate your winning ticket
across the network
together with your opinion about the
block now i know who they are
for sure i can corrupt all thousands of
them given to my
incredible powers but so what whatever
they said they already said and they're
winning tickets and their opinions
are virally propagated across the
network and i do not have the power
no more than the us government or any
government has the power
to put back in the bottle a message
virally propagated by wikileaks
so everything you've just described is
kind of it's fascinating
a set of ideas and you know online i've
been reading quite a bit and people are
really excited about a set of ideas
nevertheless it is not the
dominating technology today so bitcoin
in terms of cryptocurrency is the
most popular uh cryptocurrency and then
ethereum
and so on so it's useful to kind of
comment we already talked about proof of
work a little bit
but what in your sense does bitcoin get
right
and where is it lacking okay so the
first thing that bitcoin got right
is to understand that there was the need
of a cryptocurrency and that my opinion
of
trumps would deserve all the success
because they said the time is ripe from
this idea yes because very often
is not enough to be right here to be
right at the right time yes
and uh somebody got it right there so
hot off to bitcoin
for that and um and so what they got to
write
is they make that is make if it is hard
to subvert and change value to to cancel
a
transaction it's not impossible that is
very hard
what they did not get right is
somehow is a great story of value
currency wise
but money is not only a question that
you store it
and you put under the mattress money
wants to be transacted
and the transaction in bitcoins are very
little
so if you want to store value everybody
needs a store value might as well
use a bitcoin i mean it's the brand but
if you are don't look at that for a
moment
at least is a great store of value and
everybody needs a store
of value but most of the time we want to
transact we want to interact we don't
put the money under the markets right
so we wanted to try and bet they didn't
get it right that is
too slow to transact to too few
transactions scalability basically the
issue
is it possible to build stuff on top of
bitcoin
that's uh sort of uh fixes the
scalability
i mean this is the thing you look at
there's a bunch of technologies that
kind of
hit the right need at the right time
and they have flaws but we kind of build
infrastructures on top of them
over time to fix it as opposed to
getting it
right from the beginning or is is it
difficult to do
well that is difficult to do so you're
talking to somebody
that when i decided to throw my heart in
the arena
and i decided first of all i as i said
before i much admire
my predecessors i mean they got it right
a lot of things and i
and i i really am admired for that but
you know
i had a choice to make either high patch
something with other holes all over the
place or i start from scratch
i decided to start from scratch because
sometimes it's a better way so what
about
ethereum which looks at proof of stake
and a lot of different
innovative ideas that kind of improve or
seek to improve on some of the flaws of
bitcoin
etio made another great idea so they
figured out if it was
that money and payments are important as
they are
they are only the first level the first
stepping stone
the next level are smart contracts and
they were at the vision to say
the people will need smart contract
which allow me and you to somehow to to
transact securely without being shopped
around by a trusted third party by a
mediator
by the way because the mediators are
hard to find
and in fact maybe even impossible to
find if you live in thailand and i live
in um
in new zealand maybe we don't have a
common person that we know
and trust and even if we find them
guess what they want to be paid so much
so right that uh
six percent of the world uh gdp is
uh goes into financial friction which is
essentially third party
so the headed right of the world needed
that
but again the scalability
is not there and the system
is of smart contracts in the is slow
and expensive and and i believe
is not enough to satisfy the appetite
and the need
we have for smart contracts well what do
you make of just as a small sort of
a side in human history perhaps it's a
big one
is the nft the non-fungible tokens do
you find those interesting technically
or is it more interesting on the social
side of things
well both i think you know i think it's
um
nfts are actually great right so you
have always um
you're an artist to create a a song or
you could be
um a piece of art
he has many unique representation right
over
of unique uh uh a piece whether he's an
artifact of uh
uh something dream napa by you and uh
and as unique representation but now you
can trade and allow
in the important part is that now you
have a visa
not only the nfts themselves but the
ability
to trade them quickly fast securely
knowing that who owns which rights and
that gives a totally new opportunity for
content creators to be remunerated for
what they do
so but ultimately you still have to have
that scalability security
and decentralization to to make it you
know
to make it work for bigger and bigger
applications
correct yeah yeah i still wonder what
kind of applications are yet to be
like enabled by it because so much the
interesting thing about
nft is you know if you look outside of
art
is uh just like money you can start
playing with different social
constructs is you can start
playing with ideas you can start playing
with um
with uh even like investing somebody was
talking about almost creating an economy
out of uh
like uh creative people or influencers
like if you start a youtube channel or
something like that
you can invest in that person and you
can start trading their creations
and then almost like create a market out
of people's ideas out of people's
creations out of
the people themselves that
generate those creations and there's a
lot of interesting possibilities of what
you can do with that i mean it seems
ridiculous but
you're basically creating a hierarchy of
value
maybe artificial in the digital world
and are trading that but in so doing are
inspiring people to
create so maybe uh
as a sort of our economy gets better and
better and better
where actual work in the physical space
uh becomes less and less in terms of its
importance maybe we'll completely be
operating in a digital space where
where these kinds of economies have more
and more power
and then you have to have this kind of
blockchains
to uh the scalability security and
decentralization
and decentralization is of course the
tricky one
because uh people in power start to get
nervous
absolutely once in power you always
never
be supplanted by somebody else but this
is your job
see you congratulations you don't have a
job the top job and now everybody wants
it
well what is your sense about our our
time
and the future hope about the
decentralization
of power do you think that's something
that we can actually achieve
uh given that power corrupts and
absolute power corrupts absolutely and
it's so wonderful to be
absolutely powerful well good question
savage
so first of all i believe by the way
there is a
um it's a complex questions uh lex um
um uh and like uh all the rest of your
questions
i'm so very sorry it's okay i am
enjoying it
so but uh so there are two things first
of all
power has been um centralized for
various reasons
when you want to get it is easier for
somebody
even a single law person to grab power
but there is also
some kind of a technology lack thereof
that justified having power because
in a way in a society in which even
communication never
mind blockchain which is common
knowledge but even simple
unilateral communication is hard it is
much easier to say
you do as i say because the alternative
but as so there is a little bit of a
technology barrier but i think of it
and and now to get to this common
knowledge of it is a totally different
story
now we have finally the technology for
doing this so
that is one part but i really believe
that you know not
by having a distributed system not only
you don't have a
you have actually much more stable and
durable system
because not only for corruption but even
for things that go astray and you give
it a long enough time
by stranger version of murphy's law
whatever goes wrong goes wrong
and so and if you the power is diffused
you actually are much more stable if you
look at uh
any any living uh
complex living being is distributed i
mean um
uh i don't know if somebody is a okay
tell silvia now it's time to eat uh
right so you have millions of cells in
your body you have billions of bacteria
exactly help me in the guts everything
you know we are in a soup of it somehow
it keeps us alive yes it is uh and
so and strange enough however when we
design systems
we designed them centralized we
ourselves are distributed beings
and when we plan and say okay i want to
create
an architecture how about i i make a
pyramid
i put west on the top and
the power flows down and um and so again
it's a
little bit perhaps of a technology
problem but now the technology is there
so that is a big challenge to rethink
how we want to organize power
um in very large system and uh
and and and distribute the system in my
opinion are much more resilient
let's put this way there was a mine of
my
[Music]
italian competitors right you know
machiavelli who
looked at the time there was a big there
was a bunch of a small state
democratic republic of florence of
venison and the other thing
and there was the ottoman empire that at
the time was an empire and
assad and was very centralized and he
made a political observation
that goes roughly to say whenever you
have such a centralized thing it's very
hard
to overtake but that former government
is centralized
but if you get it it's so easy to keep
the population
one instead with other uh with other
things a much
more resilient time
when the power is distributed is much
more it's going to be
lasting for much longer time and
ultimately maybe
the human spirit wants that kind of
resilience wants that kind of
distribution
it's just that we didn't have technology
throughout history machiavelli didn't
have
the computer the internet and uh
certainly part of a reason yes you've
written an interesting blog post if we
take a step
out of the realm of bits and into this
the realm of governance you wrote a blog
post about making algorand
governance decentralized now can you
explain what that means the philosophy
behind that
you know how how do you decentralize
basically all aspects
of this kind of system well the
philosophy
and the how let's start with the
philosophy so i really believe
that uh nothing fixed
last very long and and so i really
believe
that life is about intelligent
adaptation things change and we have to
be nimble and adjust to change and
when i when i see a lot of of a
crypto project actually very proud to
say it's fixed in stone
um right you know code is law law is
called a verify of the code that will
never change
you go wow when i'm saying this is a
recipe to me of disaster not immediately
soon just imagine you take an ocean
liner and you want to go
i don't know from lisbon
to new york and you set the course
iceberg no iceberg tempest not tempest
and all
it doesn't matter you keep on going but
it's not the way you need
a teal you need to correct you need to
adjust
and um and so on um by the way we design
algorithm with the idea
that the code was evolving
as the needs and of course however is a
system
in which and every time there is an
adjustment you must have essentially a
vote
that right now is orchestrated
at 90 percent of the stake they say okay
we are ready we agree on the next
version
and we pick up this version so we are
able to evolve without
losing too many components left and
right but i think without evolving
any system essentially become aesthetic
and that is going to shrivel
and die sooner or later and and so that
is
uh is needed and what you want to do
under the blockchain you have a
perfect platform in which you can log
your wishes your votes your thing so
that you have a guarantee that
whatever vote you express is actually
seen by everybody else
so everybody sees really the outcome or
call it of a referendum
of a change and veto is uh in my opinion
a system that wants to live long as to
adapt
there is an interesting question about
leaders i've talked to vitalik buter and
i'll probably talk to him again soon
he's the
one of the leaders maybe one of the
faces of the ethereum project
and it's interesting you have uh uh
satoshi nakamoto who's
the face of bitcoin i guess but he's
faceless
he she they
it does seem like in our whatever it is
maybe it's 20th century
maybe it's machiavellian thinking but
we seek leaders leaders have value linus
torvald
the leader of uh of linux
um the open source development a lot i
mean there's no
it's not it's not that the leadership is
sort of dogmatic
but it's inspiring and it's also
powerful in that through leaders
we propagate the vision like the vision
of the project is more stable
maybe not the details but the vision and
so do you think there's value
to because we're there's a tension
between decentralization and leadership
like in visionary yes what do you make
of that attention
okay so i really believe that if it's a
another good question i think of it you
know
um i really believe in the power of
emotions i think the
emotion i have a creative impulse of
everybody else and very
very far is very easy for a leader to be
a
a physical person a real being and uh
that interprets our emotions and by the
way
this emotion has to resonate and what is
good is that
the more intimate our emotions are the
more universal they are
paradoxically more personal the more
everybody else yes somehow magically
agrees and feels a bit the same
and so and it's very important to have a
leader in the initial phase that
generates out or nothing something that
is important leadership
but then the true tested leadership is
to disappear after you led
the community so in my opinion the
quintessential leader
in my
according to my vision is george
washington he served for one term
for another term and then all of a
sudden he retired and became a private
citizen
and 200 and change years later
we still are we send the facts but we
have done a lot of things right
and we have been able to evolve that to
me is success in leadership
when instead you contrast our experiment
with a lot of experiments i've done
so much so well that i want another four
years
and why shouldn't i be only a four and i
have another eight
why should be another eight give me
sixteen and we'll fix all your problem
and now then is the type in my opinion
of failed dealership
leadership ought to be really lead
ignite
and disappear and if you don't disappear
the system is going to die
with you and it's not a good idea for of
everybody else
is there so we've been talking a little
bit about cryptocurrency but
is there spaces where this kind of
blockchain ideas that you're describing
which i find fascinating uh do you think
they can revolutionize some other
aspects of our world
that's not just money a lot of things
are going to be
revolutionized is uh is uh independent
of finance
by the way i really believe that um
finance is uh an incredible form of
freedom i mean
if i free to do anything i want to but i
don't even mean to do anything that's a
bad idea so i really think the financial
freedom
is very very important but you know but
you just i can say that you know
against you know censorship you write
something of a chain and now nobody can
take it out you can't
take it out that is a very important way
to
express you know um
our view and um and then the
transparency that uh
that you give because everybody can see
what's happening on the blockchain
so transparency is not money but i
believe
the transparency actually is a very
important
ingredient also of finance let's put it
this way
as much as i'm enthusiastic about
blockchain and
decentralized finance um
and we have actually our expression
we're trying to be creating with the
future five because
as much as we want to do we must agree
that
the first guarantee of financial growth
and prosperity are really the legal
system
the courts because we may not think
about them and say oh the courts are
kind of a bunch of boring lawyers but
without them
i'm saying there is no certainty there
is no um
notion of equality there is no notion
that you can resolve your disputes
thing that's what thrives the commerce
and things and so what i really believe
that the blockchain
actually makes a lot of this trust
essentially automatic by making it
impossible to cheat in the way you don't
even need to go to court
if nobody can change a villager right
so essentially is a way of
you cannot solve and the legal system
reduces to a blockchain
but what i'm saying a big chunk of it
can actually be
guaranteed and there is no reason why
technology should be antagonistic
to legal scholarship it could be
actually coexisting
and one should start to doing the
interesting things that the economy
alone cannot do
and then you go from there but but i
think that is uh
essentially is uh blockchain can affect
all kinds of our yes in some sense the
transparency the required transparency
ensures honesty
prevents corruption so there's a lot of
system that could use that and the legal
system is one of them
there is a little bit of attention that
i wonder if you can speak to
where this kind of transparency there's
a tension with privacy
is it possible to achieve privacy
if wanted on uh on a blockchain
do you have do you have ideas about
different technologies that can do that
people have been playing with different
ideas
so absolutely the answer is that yes
and um but by the way i'm a
cryptographer
right okay so i really believe in
privacy and i believe
in and never devoted an um
a big chunk of my life to guarantee
privacy even when it seems almost
impossible to have it
and and it is possible to everything
also in the blockchain too
and however i believe in timing
as well and i believe that the people
have
the right to understand
their system we live in and right now
um people can understand the blockchain
to be
something that is not con cannot be
altered
and is uh transparent and that is good
enough and right now
any way to add and there is a pseudo
privacy for the fact that
who knows if this keys belong publicly
belongs to me or to you
right and i can when i want to change my
money from one public key
i split it through other public keys go
on to figure out which one is silvio
all of them are sylvia or only one of
sylvia who knows so you get some vanilla
privacy no
no not the one i created and i think
it's good enough
because and it's important for now that
we absorb the best stage
because in the next stage we must
understand the privacy tool rather than
taking on faith
when the public starts saying i believe
in the scientist and whatever they say
i swear by them and therefore if they
tell me private is private
and nobody understands it very well we
need a much more
educated about the tools we are using
and so i look forward to deploying
more and more privacy on the blockchain
but we are not i i i will not
rush to it until the people understand
and are behind whatever we have right
now
so you build privacy on top of the power
of the blockchain you have to first
understand
the power of the blockchain yes so
algorand
is like one of the most exciting
technically at least
from my perspective technologies ideas
in this whole space
what's the future of algon look like uh
is it possible for it to dominate the
world
let's put the best way i certainly
working very hard with a great team
to give the best blockchain that
one can demand and enjoy
and they said i really believe that
there is going to be
it's not a winner takes them all so it's
going to be a few blockchains
and each one is going to have its own
brand and it's going to be great at
something
and sometimes is a scalability sometimes
is uh
is your views or sometimes is uh thing
and and
it's important to have a dialogue
between these things and
i'm sure and i'm working very hard to
make sure the underground is one of them
but i don't believe of it you know he's
even uh
desirable to have you know a winner
takes all because we need to express
different things but the important thing
is going to have enough interoperability
of our systems so that you can transfer
your assets
where you have the best tool to service
them whatever your needs are at the time
so there's a idea i don't know they call
themselves
bitcoin maximalists which is essentially
the bet that
uh the philosophy that bitcoin will
eat the world so you're talking about
it's good to have variety
their claim is it's good to have the
best technology
dominate the the medium of exchange the
the medium of
store value the money the digi you know
the
the digital currency space what's your
sense
of the positives and the negatives of
that
so i feel people are smart and it's
going to be very hard
for anybody and to end going a man
to win and because people want more and
more things
and there is an italian saying that goes
as
translates well i think uh it goes the
appetite
grows while eating okay i think you
don't understand
what do you mean yes so i say yeah i'm
not hungry okay food
let me try so we want more and more and
more
and when you find something like a
bitcoin which are really
very good things to say but it does
something very well
but is a static i mean store value
yes i think it's a great like
you know it would be a sad world if the
world in which we are so anchoring down
some and defensive that we want to store
value and higher than the matters
i i long for a world in which is open
people want to transact and interact
with
which way and therefore when you want to
store value
one perhaps one chain when you want to
have a transaction maybe
is another i'm not saying that you know
when chain cannot be stored of value of
everything but i really believe
i believe in the ingenuity of people in
in the
innovation that is intrinsic to the
human nature we want always different
things so how can it be something
invented whatever it is decades ago is
going to fulfill the needs of our future
generations
i'm not going to fulfill my needs let
alone
one of my kids or their kids
we are going to have a different world
and uh
things will evolve so you believe yeah
so you believe that
life intelligent life is ultimately
about adaptability
and evolving so static is
static loses in the end yes
let me ask the well first the ridicul