A Matter Of Trust

Every time I talk about Bitcoin I get a few Tweeters who either attack outright (“Good luck with your fake money, moron!”) or are incredulous. I like the incredulous ones the best because we can have a discussion.

For instance, I posted this tirade last weekend and I got an email Steve Wilson of Lockstep. He seemed surly on Twitter but was actually just curious and was very courteous in his email. I asked if I could answer his questions publicly. He agreed. He wrote:

I’m an independent researcher and analyst, covering blockchain. I was interested in your post and the future of blockchain. What interests me the most — technically — is that as far as I can see, all the hybrids have the effect of re-introducing trust (which blockchain was expressly getting away from) and/or shrinking the size of the pool (eroding security). It seems to me if Nakamoto had different, more enterprise-oriented design objectives, he would have designed something quite different from proof-of-work. So some questions arise. If you have any thoughts I’d appreciate it. I’m very much focused on the How not just the What. Your post has a lot of aspirations for the future of blockchain etc but how do we get there?

Here are my answers.

Q. Are the worlds of business and cryptocurrency really incompatible?

A. No, they are not. First, let’s remember that a blockchain (or block chain) is a distributed database. That’s it. To ascribe any special magic to it beyond being a hyperpowered version of a linked list with a very powerful confirmation engine and control algorithms attached is not helpful nor is it helpful to call it an Oracle database in the cloud. The blockchain is a separate beast, created initially to pass trusted transactions between untrusted parties — in its cryptocurrency implementation — and is slowly being morphed into multiple forms, from a contract manager to a programatic cryptocoin.

To say that these are incompatible with business is to suggest that business cannot benefit from a method for remotely agreeing on terms, sending money, and using a connected network to do powerful work. Further, bitcoin is the future of value-sending over the Internet. It may be hidden behind brand names like Visa and Mastercard but make no mistake: when the time comes the COBOL code humming away at the National Automated Clearinghouse will be scrapped to support proprietary cryptocurrency transactions just as Ma Bell et. al upgraded our telephone systems to digital without our tacit knowledge. Technology, like water, finds the path of least resistance.

Q. What do you make of the disharmony in the Core dev team? If the blockchain world Balkanizes, do we lose security with the pools shrinking?

A. I think there is a lot of context in the disharmony that we don’t know, especially given Hearn’s original depth charge and the various “he-said-she-said” stories on BTC focused media. I think this back and forth is blown out of proportion primarily because there is actual money involved mostly in the form of costly mining hardware and the investiture of millions of dollars into the BTC network. But the Internet has always been a hotbed of debate. Take this paragraph from Bruce Sterling’s Short History Of The Internet.

The discussion groups, or “newsgroups,” are a world of their own. This world of news, debate and argument is generally known as “USENET. “ USENET is, in point of fact, quite different from the Internet. USENET is rather like an enormous billowing crowd of gossipy, news-hungry people, wandering in and through the Internet on their way to various private backyard barbecues. USENET is not so much a physical network as a set of social conventions. In any case, at the moment there are some 2,500 separate newsgroups on USENET, and their discussions generate about 7 million words of typed commentary every single day. Naturally there is a vast amount of talk about computers on USENET, but the variety of subjects discussed is enormous, and it’s growing larger all the time. USENET also distributes various free electronic journals and publications.

It bears noting that Godwin’s Law was formulated in 1990 to describe debates of the early USENET era. To coin a new corollary, then, we can say that any the relative importance of a technology can be identified by directly measuring the amount of debate regarding its use and development when compared to similar technologies. This doesn’t answer the question but we all know the block size has to increase and there are a number of methods to do that. One will be chosen. It will only get better.

Bears noting…

Q. Is the disharmony as serious as people say? Is there some way to inject more discipline into the dev process?

A. In my view, no. To inject the improper discipline into the process will kill it. Discipline will be grown organically through market forces — popular implementations will win — and as we move forward a natural structure will form that may or may not resemble the original.

We must also remember this is very early. I’ve seen tech fads come and go from WAP to Flash and I can generally tell when something isn’t a fad. The discipline of a thousand amazing minds working towards a goal will prove that.

Q. Final fundamental question about trust. It seems to me that nothing is ever “on” the blockchain except BTS themselves. “Putting something on the blockchain” requires binding an asset and ownership of that asset to a token in a blockchain entry. The binding requires trust. Not just trust in the user’s control of the wallet but also, trust in the extra step of binding an asset to the user. That happens off the blockchain. If trust is inescapable, then isn’t blockchain over-engineered for all non BTC use cases? It’s a lot of work to go through if you have to trust the asset-to-token binding anyway.

A. This is a bit muddled but what you seem to be asking is why would you put stuff into the blockchain if you can’t trust the stuff you put in. That’s a Garbage-In-Garbage-Out question. The only thing the blockchain does is prove, immutably, that a specific thing is authentic or, more precisely, has been written down at a certain time. My friend Jameson Lopp wrote “I think that what they are talking about is that if you’re building a protocol on top of a blockchain (like a colored-coin asset) then you have to agree with other people that it represents what you believe it represents.” That’s part of the system. The only thing the blockchain can do is prove, irrefutably, that you wrote piece of data X at time Y with the identifier of Z. This means someone can’t claim you didn’t digitially sign a document when you did or your digital asset doesn’t belong to you when it’s been noted that it does. It’s up to you and your partners to decide what that content is in a very specific and protocol-oriented way.

In the end we are looking at a protocol. It is, on its surface, surprisingly simple and extensible and it will expand into some amazing implementations. I also believe it is a new way to transfer value around the world. It is as important as TCP/IP and it will only get better. To ignore or deride either is a fool’s game.