all engineers try to make technology
perfect if you’re an aeronautical
engineer your goal is to build planes
that will never crash or if you’re a
biomedical engineer your goal might be
to develop vaccines that have 100%
efficacy cryptographers are engineers
whose goal is to reduce how much trust
we have to place in other people and we
usually replace that trust with
technology there used to be a saying
gentlemen don’t read each other’s mail
but if you use cryptography you can
encrypt your letters you can write them
in code and then you don’t have to trust
that your mailman is a gentleman because
you can’t read your mail even if he
tries so over the years cryptographers
have expanded this idea of reducing
trust to all sorts of other applications
so forget about just not trusting your
mailman what if you didn’t you trust
your bank or what if you didn’t need to
trust the government what if you never
cryptographers have actually been
imagining this for decades now and in
the past few years we’ve started working
on the technology that might make it
happen someday maybe you’ve heard about
this technology under the name
blockchains or maybe bitcoin which is
the first cryptocurrency made using
blockchains
I’m not going to talk about bitcoin too
much today and I’m not going to give you
investment advice and I’m also not going
to talk about all of the technical
challenge all of the technical
challenges that are facing us will this
technology be secure how much energy
will it use how will it compare with the
law instead I want to talk about what
would the world look like if blockchain
technology actually works and if it
worked perfectly so let’s start by
talking about what block chains are and
why they’re being hyped as possibly the
biggest thing for computers since the
internet the concept I promise is
so we’ll start with a pretty small
example playing a game of Monopoly
probably one of the first board games
that you learned as a kid and maybe one
of your first introductions to
capitalism in monopoly the goal is to
acquire money and property to trade with
the other players and to not go bankrupt
to play Monopoly we all need to agree on
the current state of the game who owns
what where all the pieces are on a given
turn in the game your state might be
something like holding $200 having two
of the read properties and your pieces
on Marvin gardens we also all need to
agree on the rules of the game which
govern how that state can change the
rules of Monopoly are really precise if
you pass go you get $200 and if you land
on boardwalk and there’s a hotel you owe
the owner $2,000 you don’t have an
option to stay in an Airbnb so it’s easy
to play Monopoly with a group of family
or friends we all gather around a table
and we use a physical game board we move
plastic pieces around and we exchange
paper money to track the state of the
game and to make sure that the rules are
enforced we trust each other not to
cheat but imagine trying to play a game
of Monopoly against a group of strangers
from around the world who you didn’t
know and you didn’t have any reason to
trust you might try using a computer to
track the state of the game but if that
computer crashes you’ll lose the state
or even worse if one of the players is
able to hack into that computer
then they can cheat in the game so using
a single computer is what we call a
centralized approach which means you’re
putting all your trust in one place
maybe you’re putting your trust in a
computer instead of a person but
computers can still fail so what if
instead of using one computer we use
three computers and we had them vote on
the state of the game now if any one of
those computers is compromised that’s
not enough to cheat in the game and if
three computers is better than one why
stop there we could use five computers
or a hundred computers and if you follow
this thinking through you end up with a
decentralized system which means that
your trust is spread across thousands of
computers that are all around the world
so blockchain is probably the buzzword
that you’ve heard about
but decentralization is really the big
idea here ball chains are really just a
means to achieve decentralization or
more specifically block chains or how
all those thousands of computers can
talk to each other and agree on what the
state of the game is so to play Monopoly
using a blockchain every time it was
your turn you would announce what move
you wanted to make to those thousands of
computers and they would all check to
see that it followed the rules and if it
did they would vote to update the state
and they would publish a new block so
that all the other players could see
that the state of the game had changed
so each block in a blockchain
is a snapshot in time showing what the
world looks like the most recent block
is what the world looks like right now
and the entire chain gives you a
permanent record of how we got there so
tracking a Monopoly game might not seem
very revolutionary but notice something
interesting tracking a game of Monopoly
requires tracking a currency and the
currency and monopoly has the same rules
as any other currency you can’t spend
money that you don’t own and you can’t
spend money twice so
if we got rid of the board and the
pieces and the properties and just
focused on the currency and tracked the
currency using a blockchain that’s
basically what bitcoin did and with
Bitcoin first came out the currency was
like monopoly money and that it wasn’t
worth anything but over time people
started to appreciate the value of
Bitcoin and being able to send money to
anybody anywhere in the world
anonymously and securely so people
started to value the currency and
merchants even started to accept it as
payment and today it’s worth over a
hundred billion dollars so this actually
was revolutionary it was the first
currency to gain significant value
without any government standing behind
it you think about that for a second
because it’s something that a lot of
economists thought and some economists
still think shouldn’t be possible and
since then we’ve realized that currency
is just the beginning with more powerful
block chains you can do a whole lot more
with recent systems like etherium you
can actually program any application
that you’re able to write the rules for
so you could play Monopoly but you could
also run a Stock Exchange or you could
hold an auction instead of tracking the
state of the game on the blockchain you
track who owns which stock or who’s bid
how much in an auction so imagine doing
all of that without having to trust
anybody
that’s really why block chains might be
the next big thing for capitalism they
open up a whole new world of potential
transactions that can be done between
any two people anywhere in the world
without any government in between them
and this could go much further than
money in the future we might track who
owns physical objects using a blockchain
cars might be built to scan the
blockchain to see who their owner is so
if Alice sells her car to Bob for ten
thousand dollars the car will see that
transaction on the blockchain and since
we’re in the future and it’s a
self-driving car it will back out of
alice’s driveway after they’ve agreed it
will back out of Alice’s driveway and
head over to Bob’s and you can also do
contracts on the blockchain so maybe Bob
agrees to pay Alice a thousand dollars a
month a month for each of the next 12
months in exchange for that car
so once they both agreed that contract
will be recorded on the blockchain and
once again the car will see it and
automatically go to Bob and if Bob
doesn’t make one of those payments the
car will see that and it will see that
Alice is its owner again and it will go
back to Alice so notice that this
contract is self-enforcing Alice didn’t
need to sue Bob and she didn’t need to
call the police the effect of her
getting her car back just happened
automatically so you might be asking how
is this different we’ve tried to replace
humans with machines for centuries
what’s different is that block chains
aren’t really about making things
cheaper or faster or even more
convenient we can already do digital
payments today using computers if you
trust your credit card company this is
where block chains are different they
ask the question what if we didn’t need
a credit card company a big corporation
or courts or governments to exchange
property or agree to business deals
what if technology could enforce all
laws and all contracts to the letter
with block chains a judge can’t freeze
your bank account and the government
can’t seize your property what bought
chains give us is the promise that once
we all agree to the rules the blockchain
can enforce those rules perfectly
forever so if your goal is limiting
trust this technology sounds perfect but
I want to tell you why if we ever
achieve this goal
I think we find that we couldn’t live in
a world with perfect security where
every rule was completely enforced first
however we wrote down the rules
we’d make mistakes so what if there was
a mistake in that contract between Alice
and Bob a typo that said Bob would pay
for 120 months instead of 12 months
courts today would look at that and they
would try to judge the original intent
but with blockchains there’s no such
thing as original intent if you make a
mistake you’re stuck with it computers
will interpret the contract exactly as
it’s written every time that’s great
because it means you have predictability
and certainty but you don’t have very
much nuance and we’ve already seen this
happen on a huge scale with the first
really popular application that was
built on top of aetherium it was a
crowdfunding platform called the towel
and it turned out it had a loophole that
led an anonymous individual transfer 50
million dollars from the fund to their
own account now is this person a hacker
or a thief well they exploited a mistake
to take money that wasn’t theirs but
according to the system they followed
the rules they the way they were written
in the contract so it was okay second
the world is just too complicated for us
to create rules for every situation
we’re learning this already with
self-driving cars it turns out if you
program a self-driving car to follow
every rule of the road driving becomes
and it’s not just because you have to
actually follow the speed limit what
happens if you’re stuck behind a car
that’s double-parked on a two-lane road
you’d probably check to see that there
was no car coming in the other Lane and
then you would cross the double yellow
line past the car and continue on well
that’s technically illegal but you’re
very unlikely to get in trouble because
it’s a reasonable thing to do with block
chains there’s no such thing as
technically illegal or looking the other
way about a minor violation if
something’s against the rules you just
can’t do it third technology will change
and today’s rules won’t always make
sense in the future this is also
something that our legal system is
constantly faced with when the FBI asked
Apple for help
decrypting the iPhone that belong to the
San Bernardino shooter there was a
dispute about if this request was lawful
was it like asking the company to hand
over some data about a customer that it
already had or was it like asking the
company for help breaking into the
customers home it wasn’t clear because
the law was written before the
technology existed finally and most
importantly our values will change since
we’re talking about property and
ownership we should remember that only a
few generations ago in America it was
legal to own another human being as
property what would have happened if box
chains existed then an enforced slavery
forever property is never as simple as
just tracking a history of buyers and
sellers our concept of who owns what and
what you’re allowed to own our Nagri
Minh that we all make as a society which
reflect our values if we allow computers
to decide who owns what we turn over
control of our values to computers so I
don’t want to overshadow that
blockchains have really tremendous
potential for good they can help us
fight corruption they can fight abuse of
power they can provide transparency into
what our governments are doing and how
they’re operating and we should aim to
limit the amount of trust that we have
to place and largeness
tuitions so I think we should absolutely
keep building this technology but let’s
not be so focused on the question of
whether or not we can get the technology
to work or the question of how much
money we can make from the technology
that we don’t ask what would the world
look like if the technology worked
perfectly I think a world with fixed
rules would be a very difficult place to
live without flexibility or nuance it’s
a world where our values are fixed in
stone and we have no room to grow as a
society and a world where you never have
to trust another person sounds to me
like a dystopia so I think
cryptographers need to redefine
perfect-perfect shouldn’t mean that
technology replaces all trust it should
mean that we use technology to moderate
trust to find the right balance between
precision and compassion and perfect
shouldn’t mean ensuring that rules can
never be broken sometimes we need to
trust each other just a little bit and break the rules thank you
perfect if you’re an aeronautical
engineer your goal is to build planes
that will never crash or if you’re a
biomedical engineer your goal might be
to develop vaccines that have 100%
efficacy cryptographers are engineers
whose goal is to reduce how much trust
we have to place in other people and we
usually replace that trust with
technology there used to be a saying
gentlemen don’t read each other’s mail
but if you use cryptography you can
encrypt your letters you can write them
in code and then you don’t have to trust
that your mailman is a gentleman because
you can’t read your mail even if he
tries so over the years cryptographers
have expanded this idea of reducing
trust to all sorts of other applications
so forget about just not trusting your
mailman what if you didn’t you trust
your bank or what if you didn’t need to
trust the government what if you never
cryptographers have actually been
imagining this for decades now and in
the past few years we’ve started working
on the technology that might make it
happen someday maybe you’ve heard about
this technology under the name
blockchains or maybe bitcoin which is
the first cryptocurrency made using
blockchains
I’m not going to talk about bitcoin too
much today and I’m not going to give you
investment advice and I’m also not going
to talk about all of the technical
challenge all of the technical
challenges that are facing us will this
technology be secure how much energy
will it use how will it compare with the
law instead I want to talk about what
would the world look like if blockchain
technology actually works and if it
worked perfectly so let’s start by
talking about what block chains are and
why they’re being hyped as possibly the
biggest thing for computers since the
internet the concept I promise is
so we’ll start with a pretty small
example playing a game of Monopoly
probably one of the first board games
that you learned as a kid and maybe one
of your first introductions to
capitalism in monopoly the goal is to
acquire money and property to trade with
the other players and to not go bankrupt
to play Monopoly we all need to agree on
the current state of the game who owns
what where all the pieces are on a given
turn in the game your state might be
something like holding $200 having two
of the read properties and your pieces
on Marvin gardens we also all need to
agree on the rules of the game which
govern how that state can change the
rules of Monopoly are really precise if
you pass go you get $200 and if you land
on boardwalk and there’s a hotel you owe
the owner $2,000 you don’t have an
option to stay in an Airbnb so it’s easy
to play Monopoly with a group of family
or friends we all gather around a table
and we use a physical game board we move
plastic pieces around and we exchange
paper money to track the state of the
game and to make sure that the rules are
enforced we trust each other not to
cheat but imagine trying to play a game
of Monopoly against a group of strangers
from around the world who you didn’t
know and you didn’t have any reason to
trust you might try using a computer to
track the state of the game but if that
computer crashes you’ll lose the state
or even worse if one of the players is
able to hack into that computer
then they can cheat in the game so using
a single computer is what we call a
centralized approach which means you’re
putting all your trust in one place
maybe you’re putting your trust in a
computer instead of a person but
computers can still fail so what if
instead of using one computer we use
three computers and we had them vote on
the state of the game now if any one of
those computers is compromised that’s
not enough to cheat in the game and if
three computers is better than one why
stop there we could use five computers
or a hundred computers and if you follow
this thinking through you end up with a
decentralized system which means that
your trust is spread across thousands of
computers that are all around the world
so blockchain is probably the buzzword
that you’ve heard about
but decentralization is really the big
idea here ball chains are really just a
means to achieve decentralization or
more specifically block chains or how
all those thousands of computers can
talk to each other and agree on what the
state of the game is so to play Monopoly
using a blockchain every time it was
your turn you would announce what move
you wanted to make to those thousands of
computers and they would all check to
see that it followed the rules and if it
did they would vote to update the state
and they would publish a new block so
that all the other players could see
that the state of the game had changed
so each block in a blockchain
is a snapshot in time showing what the
world looks like the most recent block
is what the world looks like right now
and the entire chain gives you a
permanent record of how we got there so
tracking a Monopoly game might not seem
very revolutionary but notice something
interesting tracking a game of Monopoly
requires tracking a currency and the
currency and monopoly has the same rules
as any other currency you can’t spend
money that you don’t own and you can’t
spend money twice so
if we got rid of the board and the
pieces and the properties and just
focused on the currency and tracked the
currency using a blockchain that’s
basically what bitcoin did and with
Bitcoin first came out the currency was
like monopoly money and that it wasn’t
worth anything but over time people
started to appreciate the value of
Bitcoin and being able to send money to
anybody anywhere in the world
anonymously and securely so people
started to value the currency and
merchants even started to accept it as
payment and today it’s worth over a
hundred billion dollars so this actually
was revolutionary it was the first
currency to gain significant value
without any government standing behind
it you think about that for a second
because it’s something that a lot of
economists thought and some economists
still think shouldn’t be possible and
since then we’ve realized that currency
is just the beginning with more powerful
block chains you can do a whole lot more
with recent systems like etherium you
can actually program any application
that you’re able to write the rules for
so you could play Monopoly but you could
also run a Stock Exchange or you could
hold an auction instead of tracking the
state of the game on the blockchain you
track who owns which stock or who’s bid
how much in an auction so imagine doing
all of that without having to trust
anybody
that’s really why block chains might be
the next big thing for capitalism they
open up a whole new world of potential
transactions that can be done between
any two people anywhere in the world
without any government in between them
and this could go much further than
money in the future we might track who
owns physical objects using a blockchain
cars might be built to scan the
blockchain to see who their owner is so
if Alice sells her car to Bob for ten
thousand dollars the car will see that
transaction on the blockchain and since
we’re in the future and it’s a
self-driving car it will back out of
alice’s driveway after they’ve agreed it
will back out of Alice’s driveway and
head over to Bob’s and you can also do
contracts on the blockchain so maybe Bob
agrees to pay Alice a thousand dollars a
month a month for each of the next 12
months in exchange for that car
so once they both agreed that contract
will be recorded on the blockchain and
once again the car will see it and
automatically go to Bob and if Bob
doesn’t make one of those payments the
car will see that and it will see that
Alice is its owner again and it will go
back to Alice so notice that this
contract is self-enforcing Alice didn’t
need to sue Bob and she didn’t need to
call the police the effect of her
getting her car back just happened
automatically so you might be asking how
is this different we’ve tried to replace
humans with machines for centuries
what’s different is that block chains
aren’t really about making things
cheaper or faster or even more
convenient we can already do digital
payments today using computers if you
trust your credit card company this is
where block chains are different they
ask the question what if we didn’t need
a credit card company a big corporation
or courts or governments to exchange
property or agree to business deals
what if technology could enforce all
laws and all contracts to the letter
with block chains a judge can’t freeze
your bank account and the government
can’t seize your property what bought
chains give us is the promise that once
we all agree to the rules the blockchain
can enforce those rules perfectly
forever so if your goal is limiting
trust this technology sounds perfect but
I want to tell you why if we ever
achieve this goal
I think we find that we couldn’t live in
a world with perfect security where
every rule was completely enforced first
however we wrote down the rules
we’d make mistakes so what if there was
a mistake in that contract between Alice
and Bob a typo that said Bob would pay
for 120 months instead of 12 months
courts today would look at that and they
would try to judge the original intent
but with blockchains there’s no such
thing as original intent if you make a
mistake you’re stuck with it computers
will interpret the contract exactly as
it’s written every time that’s great
because it means you have predictability
and certainty but you don’t have very
much nuance and we’ve already seen this
happen on a huge scale with the first
really popular application that was
built on top of aetherium it was a
crowdfunding platform called the towel
and it turned out it had a loophole that
led an anonymous individual transfer 50
million dollars from the fund to their
own account now is this person a hacker
or a thief well they exploited a mistake
to take money that wasn’t theirs but
according to the system they followed
the rules they the way they were written
in the contract so it was okay second
the world is just too complicated for us
to create rules for every situation
we’re learning this already with
self-driving cars it turns out if you
program a self-driving car to follow
every rule of the road driving becomes
and it’s not just because you have to
actually follow the speed limit what
happens if you’re stuck behind a car
that’s double-parked on a two-lane road
you’d probably check to see that there
was no car coming in the other Lane and
then you would cross the double yellow
line past the car and continue on well
that’s technically illegal but you’re
very unlikely to get in trouble because
it’s a reasonable thing to do with block
chains there’s no such thing as
technically illegal or looking the other
way about a minor violation if
something’s against the rules you just
can’t do it third technology will change
and today’s rules won’t always make
sense in the future this is also
something that our legal system is
constantly faced with when the FBI asked
Apple for help
decrypting the iPhone that belong to the
San Bernardino shooter there was a
dispute about if this request was lawful
was it like asking the company to hand
over some data about a customer that it
already had or was it like asking the
company for help breaking into the
customers home it wasn’t clear because
the law was written before the
technology existed finally and most
importantly our values will change since
we’re talking about property and
ownership we should remember that only a
few generations ago in America it was
legal to own another human being as
property what would have happened if box
chains existed then an enforced slavery
forever property is never as simple as
just tracking a history of buyers and
sellers our concept of who owns what and
what you’re allowed to own our Nagri
Minh that we all make as a society which
reflect our values if we allow computers
to decide who owns what we turn over
control of our values to computers so I
don’t want to overshadow that
blockchains have really tremendous
potential for good they can help us
fight corruption they can fight abuse of
power they can provide transparency into
what our governments are doing and how
they’re operating and we should aim to
limit the amount of trust that we have
to place and largeness
tuitions so I think we should absolutely
keep building this technology but let’s
not be so focused on the question of
whether or not we can get the technology
to work or the question of how much
money we can make from the technology
that we don’t ask what would the world
look like if the technology worked
perfectly I think a world with fixed
rules would be a very difficult place to
live without flexibility or nuance it’s
a world where our values are fixed in
stone and we have no room to grow as a
society and a world where you never have
to trust another person sounds to me
like a dystopia so I think
cryptographers need to redefine
perfect-perfect shouldn’t mean that
technology replaces all trust it should
mean that we use technology to moderate
trust to find the right balance between
precision and compassion and perfect
shouldn’t mean ensuring that rules can
never be broken sometimes we need to
trust each other just a little bit and break the rules thank you
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