Home / Blockchain / Edward Snowden explains Blockchain to his lawyer – and the rest of us

Edward Snowden explains Blockchain to his lawyer – and the rest of us

[Questopezzoèstatooriginariamentepubblicatoin[Thispieceoriginallyapprearedin[Questopezzoèstatooriginariamentepubblicatoin[ThispieceoriginallyapprearedinThe new issue of McSweeney, The End of Trust, a collection of over 30 screenwriters who study surveillance, technology and privacy, with special advisors from the Electronic Frontier Foundation.]

Over the past five years, Edward Snowden and I have continued an almost daily conversation, most unrelated to his legal problems. Sometimes we meet in person in Moscow for vodka (me) and frappe (him). But our friendship was mostly carried out on secure messaging platforms, a channel that for him was comfortable and intuitive, but it took a bit of time to get used to. I learned to type with two inches while discussing politics, law and literature; family, friends and adoptive dogs. Our sensibilities are similar but our visions of the world are very different: sometimes I accuse him of a technological solver; accuses me of fearful incrementalism.

Thanks to all this, I have discovered that it is the explanation of the clearest, patient and less condescending technology I have ever encountered. I often thought that I wanted more people – or maybe different people – to eavesdrop on our conversations. What follows is a very light transcription of one of our chats. In it, Ed tries to explain "blockchain" to me, despite my best efforts to cling to my ignorance.

Ben Wizner: The Electronic Frontier Foundation has recently joked that "the amount of energy needed to download tweets, articles and instant messages that describe what" blockchain "is and how" decentralized "currencies are" the future "will soon eclipse the total amount of energy used by the country of Denmark. "It is true that there are many" blockchain pushers "out there. Yet I am ashamed to admit that I still do not understand it.

Edward Snowden: Are you asking for another math lesson? I've been waiting for this day. Remember that it's a cryptographic hash function, right?

BW: This is where I should make a joke about drugs. But no, I do not do it now, nor will I ever remember it again.

ES: Challenge accepted. Let's start simpler: what do you know about these mythical blockchains?

BW: What could I have been rich if I had listened to you four years ago? But really, I felt a lot and I understood little. "Decentralized". "Ledger". What the hell is a blockchain?

ES: It's basically just a new type of database. Imagine that updates are always added at the end of it rather than messing up with the old preexisting voices – just like you could add new links to an old chain to make it longer – and you're on the right track. Start with this concept and we will complete the details as we go.

BW: Ok, but why? What is the question for which blockchain is the answer?

ES: In a word: trust. Imagine an old database where any item can be changed simply by typing it and clicking Save. Now imagine that the item contains your bank account. If someone can arbitrarily change your balance to zero, that kind of disgusting, right? Unless you have student loans.

The point is that every time a system allows someone to change the chronology with a sequence of keys, there is no other choice but to trust a huge number of people to be perfectly and good and humanity not has a great experience in this. Blockchains are an effort to create a story that can not be manipulated.

BW: A story of what?

ES: Transactions. In its most ancient and best known conception, we are talking about Bitcoin, a new form of money. But in the last few months, we've seen efforts to put all kinds of records together in these stories. All that must be memorized and immutable. Health records, for example, but also deeds and contracts.

When you think about its most basic technological level, a blockchain is just an elegant way of punctuating things in a way that you can demonstrate to posterity that has not been tampered with after the fact. The very first bitcoin ever created, the "Genesis Block", has notoriously one of those "general certificates" attached to it, which you can still see today.

It was a scrambled take on the old practice of taking a selfie with the newspaper of the day, to show that this new bitcoin blockchain had not been created secretly months or years before (which would have allowed the creator to give himself an unfair advantage in a sort of lottery which we will discuss later).

BW: Blockchains are a history of transactions. It is such a disappointment. Because I've heard extravagant statements like: blockchain is a response to censorship. Blockchain is a response to the monopolies of the online platform.

ES: Some of these are the hype cycle. Look, the reality is that blockchains can theoretically be applied in many ways, but it is important to understand that mechanically, we are discussing a very, very simple concept, and therefore the applications are all variations on a single theme: verifiable accounting. Hot.

So, database, remember? The concept is to group small data packets, and this can be anything. Transaction records, if we are talking about money, but just as easily blog posts, pictures of cats, download links or even moves in the most oversized chess game in the world. So, we print these documents in a complicated way that I'm happy to explain despite the protest, but if you're afraid of math, you can think of this as the high-tech version of a notary public. Finally, we distribute these notarial records to network members, who verify and update their independent copies of this new history. The purpose of this last step is basically to ensure that no one person or small group can merge the numbers, because too many people have copies of the original.

It is this decentralization that some hopes can provide a new leverage to overthrow the status quo of rooted censorship and monopolies. Imagine that, instead of today's world, where publicly important data is often held exclusively with GenericCorp LLC, which can and does play God with it at the expense of the public, it is in a thousand places with a hundred jurisdictions. There is no removal mechanism or other "Let & # 39; s Be evil" button, and the creation of one requires a global consensus, generally, at least 51% of the network to support the change of rules.

mechanically, we are discussing a very, very simple concept, and therefore the applications are all variations on a single theme: verifiable accounting. Hot.

BW: So even if Peter Thiel had won his case and obtained a court order that an article on his vampire diet should be removed, there would be no way to strengthen it. Yup? That is, if Blockchain magazine republished.

ES: Right – so long Blockchain magazine he is publishing on a decentralized public blockchain, he may have a judgment ordering them to set their office on fire and it would not make any difference to the network.

BW: So, how does it work?

ES: Oh man, I was waiting for this. You're asking for funny things. Are you ready for an abstract math?

BW: Ready as I'll ever be.

ES: Let's pretend to be allergic to funding, and start with the example of an imaginary blockchain of blog posts instead of going to the normal examples of Bitcoin. The interesting mathematical property of the blockchains, as mentioned above, is their general immutability shortly before the initial publication point.

For simplicity, think of every new published article that represents a "block" that extends this blockchain. Every time a new article is sent, another link to the chain is added. Even if it is a correction or an update of an old article, it goes to the end of the chain, deleting nothing. If your main concerns were manipulation or censorship, this means that once it's active, it's all. It is practically impossible to remove a previous block from the chain without destroying even all the blocks created after that point and convincing everyone else on the network to accept that the alternative version of the chronology is the correct one.

Let's take a second and explain why it's difficult. Thus, blockchains are maintained by a fictional mathematics. Great. What does this mean? What prevents you from adding a new block somewhere beyond the end of the chain? Or change one of the links that are already there?

We must be able to crystallize the things we are trying to account for: usually a record, a timestamp and a sort of proof of authenticity.

So, on a technical level, a blockchain works by taking data from the new block – the next link in the chain – by printing them with the mathematical equivalent of a photograph of the immediately preceding block and a timestamp (to establish chronological order of publication), so "we chop it all together" in a way that shows that the block qualifies for adding to the chain.

BW: Is "Hashing" a real verb?

ES: A cryptographic hash function is basically just a math problem that transforms all the data that you spend in a predictable way. Whenever you feed a hash function in a particular cat photo, you will always get the same result number. We call that result "hash" of that photo, and feeding the image of the cat in that mathematical problem "let's leave" the image. The key concept to understand is that if you assign the same hash function to a slightly different cat image, or to the same cat photo with even the smallest modification, you will get a different WILDLY number ("hash") as result.

BW: And can you put any kind of data in a hash function? You can hash a blog post or a financial transaction or Moby Dick?

ES: Right. So we have deleted these different blocks, which, if you remember, are only glorified database updates regarding financial transactions, Web links, medical records or other. Each new block added to the chain is identified and validated by its hash, which was produced by data that intentionally includes the hash of the block before it. This uninterrupted chain leads up to the first block, which is what gives the name.

I'm saving you some technical nuance here, but the important concepts to understand are that the blocks of the chain are designed to be verifiable, strictly ordered by the chronology and immutable. Each new block created, which in the case of Bitcoin occurs every ten minutes, effectively testifies the precise contents of all those who have come before, making the older blocks increasingly difficult to change without completely interrupting the chain.

So, when our Peter Thiel catches the wind of history and decides to kill him, the chain has already built a thousand links of history confirmed and published.

Money is, of course, the best and most famous example of where the blockchains have made sense.

BW: And this is going to … save the internet? Can you explain why some people think that blockchain is a way around or overwhelming huge monopolies of the technology platform? How could weaken Amazon? Or Google?

ES: I think the answer is "wishful thinking". At least for the foreseeable future. We can not talk about Amazon without going into the currency, but I think blockchains have a much better chance of stopping trading than publishing due to relative inefficiency.

Think of our first example of a bank balance in an old database. That kind of installation is fast, cheap and easy, but it makes you vulnerable to failures or abuse of what engineers call a "trusted authority". Blockchains eliminate the need for trustworthy authority at the expense of efficiency. At this time, old authorities like Visa and MasterCard can process tens of thousands of transactions per second, while Bitcoin can handle only seven. But the methods to compensate for the disadvantage of efficiency have been worked out and we will see that transaction rates for blockchain will improve in the coming years to the point where they are no longer a central concern.

BW: I avoided this, because I can not separate the cryptocurrency from the image of a group of technological bros living in a building in Puerto Rico as the company crumbles. But it's time for you to explain how Bitcoin works.

ES: Well, I hate being the bearer of bad news, but Zuckerberg is already rich.

Money is, of course, the best and most famous example of where the blockchains have made sense.

BW: With the money, what is the problem that the blockchain solves?

ES: The same that solves everywhere: trust. Without becoming too abstract: what is money today? A little cotton paper at best, right? But most of the time, it's just that entry in a database. Some banks say that today you have three hundred rupees and really hope that tomorrow they will say the same or the best.

Now think of access to that reliable bank balance – that magic number that floats in the database – as something that can not be taken for granted, but is instead transitory. You're one of the people not assigned to the world. Maybe you do not qualify for an account. Perhaps the banks are not reliable where you live, or, as happened in Cyprus not long ago, they decided to seize people's savings to save themselves. Or maybe the money itself is not right, like in Venezuela or Zimbabwe, and your balance from yesterday that could have bought a house today is not worth a cup of coffee. Monetary systems fail.

BW: Wait a moment. Why is a "bitcoin" worth something? What generates value? What does the currency support? When I own a bitcoin, what do I really own?

ES: Good question. What makes a small piece of valuable green paper? If you are not cynical enough to say "men with guns", which is why legal tender currency is treated differently from Monopoly money, you are talking about scarcity and shared conviction in the utility of the currency as a reserve of value or means of exchange.

Let's move away from paper currencies, which have no fundamental value, in a more difficult case: why is gold worth much more than its limited but real uses in industry? Because people generally agree that it is worth more than its practical value. This really is. The social conviction that it is costly to dig from the ground and put on a shelf, along with the expectation that others will also appreciate it, transforms a boring metal into the world's oldest depository of value.

Blockchain-based cryptocurrencies like Bitcoin have a very limited fundamental value: at most, it is a token that allows you to save data in the blocks of their blockchain, forcing all those participating in that blockchain to keep a copy for you. But the scarcity of at least some cryptocurrencies is very real: to date no more than twenty-one million bitcoins will ever be created, and already seventeen million have been claimed. The competition to "extract" the few remaining involves hundreds of millions of dollars of equipment and electricity, which economists love to support are what really "backs" Bitcoin.

Yet the harsh truth is that the only thing that gives value to cryptocurrencies is the belief of a large population in their usefulness as a means of exchange. That belief is how cryptocurrencies transfer huge amounts of money across the globe electronically, without the involvement of the banks, every single day. One day the capital-B Bitcoin will go away, but as long as there are people who want to be able to transfer money without banks, cryptocurrencies are likely to be evaluated.

BW: But you? What do you like about this?

ES: I like Bitcoin transactions because they are impartial. They can not be stopped or reversed, without the explicit and voluntary participation of the people involved. Let's say that Bank of America does not want to process a payment for someone like me. In the old financial system, they have a huge amount of influence, like their peers, and they can make it happen. If a teenager in Venezuela wants to be paid in a strong currency for a web development concert he has done for someone in Paris, something forbidden by local currency checks, cryptocurrencies may make it possible. Bitcoin may not yet be private capital, but it is the first "free" money.

Even Bitcoin has competitors. A project, called Monero, tries to make transactions more difficult to track by playing a small shell game every time someone spends money. A more recent academic, called Zcash, uses new mathematics to enable truly private transactions. If we do not have private transactions by default within five years, it will be because of the law, not the technology.

As with all new technologies, there will be interruptions and there will be abuse. The question is whether, on balance, the impact is positive or negative.

BW: So if Trump tried to cut your livelihood by blocking banks from linking your rates to talk, you could still get paid.

ES: And all he could do was tweet on it.

BW: The downside, I suppose, is that sometimes governments' ability to track and block transactions is a social asset. Taxes. Sanctions. Terrorist finance.

We want you to make a living. We also want sanctions against corrupt oligarchs to work.

ES: If you fear that the rich can not avoid their taxes without Bitcoin, I'm afraid of having bad news. Seriously, this is a good point, but I think most would agree that we are far from the mark of governmental power in the world today. And remember, people generally have to convert their magical money into the internet in another currency to spend it on high quality items, so the days of real government concern are far away.

BW: Explore this for me. Does not the need to convert Bitcoins into cash will also affect your Venezuelan boyfriend?

ES: The difference is the scale. When a Venezuelan teenager wants to exchange a month's wages in cryptocurrency for his local currency, he does not need an identity check and a bank. This is a level of money that people swap every day, especially in developing economies. But when a corrupt oligarch wants to commission a four hundred million dollar pleasure yacht, well, yacht builders do not have that kind of liquidity, and the existence of invisible internet money does not mean the cops will not ask how you paid it.

The off-ramp for one is a difficult requirement, but the other can opt for a path.

Likewise, it is easier for governments to work collectively against "real" criminals – think bin Laden – that it is their task to repress dissidents like Ai Weiwei. The French would work side by side with the Chinese to follow Bin Laden's Bitcoin wallet, but hopefully not the case for Ai Weiwei.

BW: So basically, you're saying that this will not really help the powerful bad actors very badly.

ES: It could actually hurt them, to the extent that relying on blockchain will require them to prove their bad actions on computers, which, as we learned in the last decade, government investigators are extraordinarily adept at penetrating.

BW: How would you describe the negative sides, if any?

ES: As with all new technologies, there will be interruptions and there will be abuse. The question is whether, on balance, the impact is positive or negative. The biggest disadvantage is the inequality of opportunities: these are new technologies that are not so easy to use and even more difficult to understand. They require access to a level of technology, infrastructure and education that is not universally available. Think of the disruptive effect that globalization has had on national economies around the world. The winners have won for miles, not centimeters, with the losers damaged to the same extent. The advantage of the first mover for the mastery of the institutional blockchain will be similar.

BW: And the internet economy has shown that a platform can be decentralized while money and power remain very centralized.

ES: Precisely. There are also other technical criticisms to be made here, beyond the scope of what we can reasonably enter. Suffice it to say that cryptocurrencies are normally implemented today through one of two types of lottery systems, called "labor proof" and "game testing", which are a kind of necessary evil arising from the way they protect their systems from attack . It's not fantastic either. The "test of labor" rewards those who can afford most of the infrastructure and consume more energy, which is destructive and inclines the game to the benefit of the rich. "Pole Test" seeks to eliminate environmental damage by simply giving up and delivering the reward directly to the rich, and hoping that their unlimited greed and looking for rent will keep the lights on. Needless to say, new models are needed.

BW: Say more about environmental damage. Why does making magic money on the Internet use so much energy?

ES: Ok, imagine deciding to go into "mining" bitcoins. You know there are a limited number up for grabs, but they come from somewhere, right? And it's true: the new bitcoins will continue to be created every ten minutes for the next two years. In an effort to distribute them fairly, the original Bitcoin creator has devised an extraordinarily clever scheme: a sort of global math competition. The winner of each round of about ten minutes gets the reward of that round: a small casket of new bitcoins never used, created by the answer you found in the mathematical problem of that round. To prevent all the coins in the lottery from being won too quickly, the difficulty of the next math problem increases according to the speed with which the last ones were solved. This mechanism is the explanation of how the rounds always last about ten minutes, regardless of how many players participate in the competition.

The flaw in all this brilliance was the failure to take account of Bitcoin's success. The reward for winning a round, once worth only a few cents, is now about a hundred thousand dollars, making it economically reasonable for people to divert huge amounts of energy and data centers full of computer equipment, to maths – or "mining" – competition. Godzillas of city-sized calculations are poured into this competition, bringing down the difficulty of the problems beyond comprehension.

This means that the biggest winners are those who can dedicate tens of millions of dollars to solve an endless series of problems without any significance besides extracting bitcoins and making their blockchain harder to attack.

BW: "An endless series of problems without meaning" sounds like … nihilism. Let's talk about the bigger picture. I wanted to understand blockchains because of the incessant clamor. Some governments think that Bitcoin is an existential threat to the world order, and some types of venture capital swear that the blockchain will usher in a transparency gold age. But you're telling me that it's basically a fantasy database.

ES: Technology is technology and is fundamental. These are the applications that count. The real question is not "what is a blockchain", but "how can it be used?" And this returns to what we started: trust. We live in a world where everyone is lying about everything, with even ordinary teenagers on Instagram who are agonizing about the best way to project a lifestyle that they do not actually have. People get different search results for the same query. Everything requires trust; at the same time nothing deserves it.

This is the only interesting thing about blockchain: it could be that little gear that allows us to create systems that you do not have to trust. You learned the only thing about the blockchains that matter: they are boring, inefficient and expensive, but, if well designed, they are practically impossible to tamper with. And in a world full of shifty shit, being able to prove that something is true is a radical development. Maybe it's the value of your bank account, maybe it's the origin of your Nikes couple, or maybe it's your permanent record for the real time in the principal's office, but the records will turn into chains that we can not easily break, even if they are open to anyone in the world to watch.

The hype is a world where everything can be monitored and verified. The question is whether it will be voluntary.

BW: It became dark fast. Are you optimistic about how the blockchains will be used once they have left the experimental phase?

ES: What do you think?

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