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Blockchain e Crypto dietro le quinte


Well, at the moment there are differences
even among bitcoin absolutists.
It’s like those feuds, I remember,
between Microsoft, Linux, where you said: “No.” It’s like that,
it’s very … – that’s right …
why is it so passionate? – Because fundamentally
it all stems from a strong ideology.
A determined attempt to regain
freedom. Financial freedom is the first freedom, so
people began thinking about
how can I regain freedom at a time
when internet on one hand seems to be democracy
but on the other can lead to mass surveillance.
Right.
So they say: which is the most important freedom
to manage, to conserve? Financial freedom
because how you spend your money reveals everything about you.
Your illnesses, your lovers,
your political preferences.
Sure.
So from there they began thinking about what could be done.
There were a load of experiments
which led to bitcoin.
And from there a load of clones
although they have different characteristics.
Right. And a different purpose.
Different purposes. – Sorry,
but what sort of research do you do at Blockchainlab?
Basically, we do two things,
because we’re very ideologised,
on one hand we do pure research,
which we fund with consultancy work
which we do for the incumbents.
Pure research, for example, now we’ve thought of
how to exchange different types
of assets on the blockchain. So we’ve invented
RGB, for which we’re writing the code
with the whole community, everything we do
for ourselves is open source, so we debate with the community,
we discuss things. – What’s RGB?
Basically it’s the possibility to exchange
different types of coin, not just bitcoin
on the bitcoin blockchain.
This is our ambition
and that’s what we’re working on. This is the pure research.
Okay.
Experimental, it may work, it may not.
Right. We fund it with private donations
and with our consultancy work
on full profit. What do we do for
the incumbents, for companies? We provide all those
services they need to work with cryptocurrencies.
In simple terms, a fund that buys and sells cryptocurrencies
needs a safe place
to keep their private keys.
But it does so inside an organisation,
where on one hand the business unit that buys
is different from the business unit
that receives the orders, for reasons of security,
so a complete system of private keys
has to be set up, so the keys aren’t lost,
aren’t subject to attack vectors
by hackers. Or by insiders, because …
– of course. – fine
so we do this type of work
or activities that are completely experimental.
For example, bitcoin is, was, extremely volatile.
So we try and find …
Why do you say “was” extremely volatile?
Because you used to wake up in the morning,
up thirty, down thirty.
So now you say it’s calmed down
and stays calm for some reason
or it’s just like that now
and then it will start up again.
I have to say that technologists are the worst traders.
Because we only evaluate the technology
and not the emotional component. At the moment
there are a lot of coins, there’s the new wave
of stablecoins and this is directing resources
from other areas. Then there’s another thing,
the price you see is the trade price on the exchange.
Yes.
The exchange is only one third of the total traded volume,
because people who want really big orders
go OTC, over the counter,
there are markets,
it’s the same with securities, large orders
never go through the Nasdaq.
They are done OTC. Over the counter exchanges.
For example, one is Big Mac.
Okay.
And the price isn’t registered, you take
the exchange price, so the real price of bitcoin
or ethereum or whatever
isn’t the real price you see on the exchange,
but it’s the big one
exchanged OTC, which is usually two thirds.
Wow, okay.
You can see it from Twitter. The medium used
by the community for external communication is Twitter.
Very often from private or public messages,
there are whales around,
either in the Middle East due to economic instability.
There was a surge in Turkey when
the currency fell. Or in Asia,
where they’re trying to stockpile, because bitcoin
or currencies similar to bitcoin are considered
more a store of value. When …
So I buy, I hold on to them
and I wait for the value to go up.
HODL, as we say, HODL. Not HOLD.
Okay.
The guy was drunk when he wrote it
so it’s HODL.
Let me go back a moment to the really interesting question,
I’d never thought about it, but
you always decide based on the value, let’s say,
what the media report, on the value
of the exchanges, but part of the value
which instead … – two thirds of the market
goes elsewhere and you don’t see it, and it goes through
other channels. I was thinking about the fact
that if a fund moves so much money, perhaps
it’s moving 100 million or half a billion,
it can’t sit there with its wallet and say:
“Hang on, I’m trading, I’m buying”.
So it needs a whole security system
which used to be the banks, but now
all that stuff, you have to sort it out for them.
You have to build it for them, because it’s very
counter-intuitive compared with bank processes.
The first thing the bank says is: “How much does it
cost to transact on the blockchain?” And you say: “It depends.”
The bank says: “I want to sell 100 bitcoin,
or 100 million”. It doesn’t depend on the price.
On how many bytes you put inside a block.
The weight is what your transaction depends on,
so how you build it, and this is already
very unsettling for them. – Of course.
Then they say: “Where do I put the point of custody
for the trade?” You need this …
Sorry, why does it depend on the weight?
Because basically,
well, first of all:
how did bitcoin come about? Bitcoin is the response
to the possibility of having hard money
that can’t be inspected. How can you have something
that can’t be inspected?
If you have one company, any government,
any hacker, anybody
can come to you and you import anything.
Right.
Or one of your employees can do this,
in your place.
If you have millions,
of nodes scattered around, it will be impossible.
Napster versus Torrent. Why is Torrent
still around? It’s impossible, there are millions
that can spring up anywhere.
But to have millions of nodes, you have to have
an extremely light weight
for that computer, that node to be able to hold.
To manage.
So the blockchain, which is a ledger,
a chronology of all the transactions from the beginning,
has to be light, it can be
two giga, not more. So each little block
that is produced has to be very light.
The more you enlarge the block, the more you increase
the weight and reduce the people
who are willing to do it.
Who are able to manage that type of transaction.
So it’s always a trade-off which bitcoin tries to resolve
through the development of certain technologies.
This is why bitcoin is not
truly anonymous. Because you would have to increase
the weight of the block and therefore reduce
the number of nodes and so reduce decentralisation,
and then it loses its purpose. – Right.
– Its meaning. – The enjoyment.
Sure. But is it true that today only a few
people actually control
mining for example of bitcoin,
so in fact it’s not as decentralised
as it seems, or is that just a myth?
It’s a myth, misinformation,
with a “but”.
The miners certify a block,
the nodes validate.
Only if the miners
all get together,
more than 51%, because we always say 51%,
an attack at 51%, you need a lot more to be able
to review blocks, not accept them.
They can double spend their money,
not your money. But they can’t do anything else.
So, Bitman, the famous Bitman,
has more than 51%, because with his companies
and the companies he controls, he has a lot more than 51%,
but it has been impossible for him to perpetrate any attack.
Last year, two years ago,
we suffered a major attack
on the independence of bitcoin, perpetrated by Bitman
and others. They didn’t succeed,
despite having a majority, because basically
the nodes and the developers didn’t accept
the re-writing of certain rules. So it’s the node
that validates, that says: this thing can pass
because it complies with this rule, this second rule,
this third rule.
Okay.
From a technological viewpoint
it’s complex, accepting SegWit, which would then have led
to something else which means having
a very fast way of spending bitcoins, which is Layer 2,
the Lightning Network. However, if we want to have
a simple chat, these are
fairly complex technological problems. So,
it’s true, even with 51%, miners
can’t be a danger up to a certain point.
So, sorry, the fact that someone says: “But in China
there are a load of mining companies”.
Or, there’s a concentration of bitcoin miners,
you say that that alone is not enough
to influence the overall ecosystem.
As long as you have the so-called “full nodes”,
in other words, every computer, every person
who decides, has the entire blockchain history.
But when for the sake of simplicity, you
want something much lighter,
you want it on your phone, it’s called SPV …
What’s SPV?
It’s an extremely light version
of the node, with just a snapshot
of the past, joined together.
You get this from the miners,
if all or most of us
embraced this solution, miners
could do whatever they like.
So this is the “but”.
So, if you go on Twitter now
and look at the tweets of the so-called maximalists,
that is, Zucco, Pouliot, Adam Back,
they’re all saying: “Be a full node”,
and they’re all pushing for
lightness for the full node, so that
you avoid this danger.
Otherwise it could happen.
But physically where are the nodes?
The nodes can be at my house.
Ah okay.
You only need to download …
To be a node I don’t need
to have all my servers
and do everything … – No, absolutely not,
you simply have to download the complete
blockchain from the web.
It’s only space, it’s only a question of space …
– okay, okay – a powerful computer.
– Right. – But you don’t need anything else.
Obviously you’re consuming electric energy,
a minimum. – Right.
You’re consuming your hardware, so yes, you do have a minimum.
Now, on this question of consumption
of electric power, what comment would you make?
Obviously, mining
the way coins are mined now,
which is the most secure way, through proof of work,
uses power.
Fairly significant power, but let’s draw
a parallel. How much power
or carbon footprint
does it take to keep
physical money inside banks
and their security. Maintenance
of the databases of virtual money,
because when you have fiat money,
a currency, 10% tends to be physical,
90% is virtual.
Okay.
From a legislative viewpoint,
you also have to keep physical documents
in protected structures. I used to work
with traditional payment systems,
so I know what goes on behind the scenes.
The cost of this is very high …
Right.
it has a very high energy cost, so
the bank’s IT system too, it has 3 redundancies,
because this is required by law,
because it protects …
So you have 3 back-up systems.
Studies by MIT
and other universities show that they are
comparable and that the bank system is higher.
Okay.
So yes, it does consume energy,
but at a comparable level. The point is
this energy is meaningful
to the extent that it meets a need which for you
is really important. I think it’s really absurd,
and here I’m talking from a personal viewpoint,
in order to avoid being fired by the company,
the use of blockchains
permissions of the federated systems,
which consume a lot of energy, imply
very great expertise, and above all heavy
use of energy, when you could manage
exactly the same thing with some encrypted
databases. This is something I’ll never understand.
Does it make logical sense? No,
but it’s possible.
Okay.
So you’re saying, it’s consumption
of energy similar to current energy use in
traditional systems, so it’s acceptable.
But is it possible to go further,
for example, proof of work
is one type, but perhaps you could find other
types.
There are various types of proof,
the point is, what guarantee you want
and what you want to achieve.
Because proof of stake, which implies
much less energy, is being championed by Ethereum,
and still has to be implemented,
even just the research part.
Let’s imagine that this research is implemented …
What is proof of stake?
Basically, you demonstrate possession,
without resolving the mathematical puzzle,
which is very difficult to resolve, very easy to control,
of proof of work, invented by Adam Back,
which consumes a lot of energy.
It has security,
a trust that is not mathematically
infallible, like bitcoin’s.
So it’s the usual trade-off, what do you want?
Less energy, but less trust.
Less trust, less security. The point is this:
if you are happy about trusting
a central third party, who could be
a foundation, it could be a person,
it could be a state, the best system
and the most effective one, is the central system.
Centralisation is the fastest system,
the most effective, the least energy hungry,
the least expensive. But, you have to trust a third party.
Right.
And obviously the third party is large,
is well known, and if I am ill-intentioned,
what is known in cryptography
as a mallory, a malicious attacker,
then I’m going to attack that.
I’m not going to attack hundreds of nodes
when I don’t know who they are.
Right.
Security is anything.
You also have a training section,
an academy, connected with this subject,
because in the end we always talk about
these questions and then, in the majority of cases,
you don’t understand a thing.
There’s a total lack of information,
so people say: “It may be true, it may not”,
it’s extremely complicated, unless you really go
into it in depth. What does this academy do?
To start with, the Rec Academy, a name that comes from slang,
brings together
the entire cryptocurrency eco-system.
We believe in bitcoin,
but we also consider other things.
You really consider them, but laterally.
We consider them because, technologically speaking,
to debate something you have to know it.
Sure, you have to know the enemy.
So it’s intellectual honesty.
The trading part, because it’s fairly counter-intuitive,
fundamentally it’s difficult to understand.
And trading is much less frequent.
I was talking to Tone Vays recently,
to Izzi, to WebPanda,
who are considered the most reliable
traders, the ones who foresaw
the various trends, and they said:
“I don’t do much trading”, because you need
less frequency. The development part
inside the blockchain and above the blockchain,
because you can have a load of applications
that use it. The security part,
because in the end, until now any crypto
are your private keys. Your private keys,
if you lose them, unfortunately, sorry for your loss.
Right.
So we are building
a divulgatory, informative component,
operating at various levels.
It depends which level you’re at.
Even for the developers, the
advanced level covers notions in economics.
Because in the end the starting point is
an economic need, Games theory concepts.
Because it’s not just technology.
The system works because technological
solutions have been introduced based on incentives,
so that if you cheat, if you want to con someone,
it’s not worth it. So
it’s very, very disciplined, that’s why it’s complicated.
If you like, this part corrects
a cognitive symmetry.
But underneath it all there’s a serious problem
of information asymmetry.
Most of what you read
is wrong, not, I think, because
people want to be malicious, so
it’s a campaign of misinformation,
but because they really don’t understand.
You say: the blockchain.
You haven’t said anything.
The bitcoin blockchain
is completely different to the Ethereum blockchain,
or Ripple, Stellar, and they have completely
different trade-offs.
So, when you said “blockchain is good” …
Sure, I used a term that in fact …
No, it’s a password that says nothing.
In fact, I criticised
Rubin recently on Twitter,
and he was courteous enough to reply,
because he said: “The blockchain”,
you’re not saying anything at all.
Sure.
Tell what you’re talking about and at that point
I can reply from a …
– Right – psychological viewpoint
tell me which blockchain, tell me what you’re talking about.
As regards security,
I was thinking: it’s crazy that
today you can sit down and say, well, I’ll write
the 12 words on a piece of paper,
which I divide into 4 pieces
and give one of them to a solicitor. Really,
it can’t stay like that for much longer,
even the Winklevoss brothers
who say: “We have a mega fund which
collects mountains of money and then we have
our pieces of paper here and there, in case
something happens”.
Well you can never have
100% logical security.
Any system subject to
an attack vector, which you can only reduce …
What do you mean by attack vector?
An attack vector is the perimeter
in which you can be attacked.
What we were talking about earlier, it could be
an external hacker,
internally an employee
who may be malicious or incompetent,
there it’s the failure of the actual hardware.
Okay.
When you develop a storage solution,
private keys for a financial institution,
first you study the financial institution
or the exchange, because we do this for exchanges too.
What attack vectors
and trade-offs do you want?
Because you can say to me: I want to be able
to move funds every hour. Heavens.
That means I have to move
those keys quickly,
so I have to develop a system with 90% security …
Right.
85%, you have to be prepared to support
that level of security or insecurity.
So already there’s a built-in percentage
of insecurity that you have to accept.
And what we advise is this: first, play with it yourselves
and lose some money. And have your employees lose too.
Because that’s the only way to learn.
Okay.
I don’t how much they’ll like hearing you say that.
That’s how we learned.
Look, I’ve been there for 3 years.
And I work there because I embrace an ideology.
But I began moving something
independently only a very few months ago, because
I didn’t trust myself.
Okay.
Because, sorry for your loss.
Then there are monitoring systems too.
Because you also need to be able to monitor.
Right, right.
So there’s a whole complex structure.
But what did you do before you joined?
I worked for IDC,
IDC is a technology research forcast
company, at world level.
I was the European head of financial services,
but payment systems were my passion.
Ah, okay.
So my area was banking,
capital markets, and also —
So I worked with numbers, where the market was heading.
My team and I assessed the various solutions,
the various innovations.
The fascinating part was payment systems.
That’s what I was mad about.
Over the next 2 years,
I won’t say 5 years, because I asked about 5 years earlier,
it seemed too long.
Two years, what do you expect, look into your crystal ball
and say: okay, in 2 years time, bitcoin will have disappeared, or
it’s the dominant currency, or has something else emerged?
What do you think?
– Well … – What’s the direction?
At the moment we are
at a certain level of the battle,
which is this.
There’s a speculative phase, a phase when
a lot of money is being made with certain cryptocurrencies,
with certain types of coin.
– Okay. – Okay.
This phase will continue for a while.
Then there’s bitcoin,
which we said is like hard money.
It’s resistant, it tries to keep up with the new technological
developments to reach 100% privacy
and fungibility, which means that one thing
is the same as another, it doesn’t come along
with the history of what it was used for.
– Okay. – Okay.
It loves decentralisation and is in contrast with
third-party surveillance.
This is irreconcilable with the sort of
social government system we have now.
So in two years time, the bitcoin project
will either have established a niche,
and become a store of value …
a real commodity like gold used to be,
but it can’t be inspected,
or it will have imploded.
Ah okay.
Because it’s incompatible with the government.
Unless we accept
the conspiracy theory, which I think is mad.
Let’s go with the conspiracy theory,
That’s something I didn’t know about.
– Well … – Okay.
You know that basically bitcoin was
invented by Satoshi Nakamoto
and no one knows who he is.
It’s Trump, I think, it’s Donald.
No, I don’t think it’s
that Trump and his red hair.
Some people think it’s the plan B
of the NSA, for when the dollar fails.
Okay.
Because, in fact, there’s only one element
that can support this theory, which is mad,
partly because it would mean that the state knows how to manage
technology. Generally speaking, states don’t know how to manage
technology, they are complete sloths,
so I think this idea is pretty irrational,
but anyway the only thing that could support this idea,
this conspiracy theory some people uphold,
is that an elliptical curve has been used,
which is something from the military world, very little
used in cryptography, which underlies
proof of work and private keys too,
strangely, this was used
and, strangely, this elliptical curve,
was reviewed by the American national body
that reviews all technologies,
that gives them a definition,
the NIST.
– Okay. – Okay.
That’s the only element,
that it could be plan B, if
the dollar flops, oops …
In any case, it’s very highly indebted,
we have something which is a store of value.
We’ll see what happens, we’ll meet up in 2 years
and see what’s happened.
Thank you, thank you.
Thank you, fantastic.
It was a real pleasure.
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