Arthur Breitman, Tezos: Blockchain Governance | Marc Stiegler: The Digital Path

7:58AM Apr 5, 2021

Speakers:

Keywords:

blockchain

contracts

governance

people

discuss

smart contracts

bitcoin

mediator

book

property rights

ledger

pay

cryptocurrencies

dollars

fork

technology

enforcement

transaction

currency

digital

Welcome everyone to our posit intelligent cooperation group. This is one of our keynote meetings. And so to give you some context, every first Thursday of the month, we have our keynote meetings, even though we have many more meetings in between, because many of you are producing really amazing technology that we just want to make sure that there's some flow of that in the group. And we have those monthly keynote readings to really hone in on the chapters that we will pop out. And so the chapters are always connect the red thread throughout that kind of like, guide the whole program throughout the year. And so this is, again, one of those meetings. And so again, we just released a chapter that will be guiding us not only for this meeting today, but that is also kind of inspirations for the meetings in the following two months. And so this is, I think, I guess, particularly interesting month for you guys, because we really want your feedback, because many of you are working on the technologies that we're now getting to. And so just to kind of hit the ground running, I want to maybe for 10 minutes or so just tell you a little bit, give you some context on where we are right now. And then we'll move to our presenters. Okay, so I will share my screen. So this is what you should see, if you open up the

book draft that we sent you. And I think you should be able to have that in your you should have. You should have found that in your email. If not, I'll share it again in the chat. Or someone else can share the link that will also work. But basically in a nutshell. We have started this year with chapter one with the first meeting that was Marquess Dean and I just discussing, okay, why the hell are we having this group? Why the hell are we writing this book, I'm giving a little bit of an introduction. And then in February, we had chapter two, which was on value diversity to voluntary cooperation. And you could say that was a little bit more of a basis for both the group and for the book. And we basically said, Hey, values differ tremendously already in civilization, likely, we won't converge anytime soon on the one path to go. In fact, we see values drift a lot. So instead, maybe we should have a cooperative architecture and civilization as the thing to be striving for, rather than striving for some kind of like alignment on on the perfect value set. And so here we had Robin Hanson, we had Robert Axelrod as big on political polarization. So really, like a few fantastic speakers that drove the point home. And then in the last month, we had this open up the crazy bucket of Okay, where, how did we already get you in our default world of cooperation? What made civilization so successful? And here we discussed a few drivers with Vernon Smith, we had Andrew McAfee, we had Tyler Cowen, we had the largest universe and to just discuss conflict, how did we get here as a civilization? And how is the relation already a super intelligence that is increasingly serving our interests. And we have discussed a few of those drivers such as property rights, and different ways of writing more complex contracts, how they already allow us to cooperate across humans, across computing entities, and more and more across human and computer entities. So that many of you will know that from the gory papers still, but basically, we arrived at Okay, we're doing pretty well, how can we further strengthen the paradigm of of cooperation? Moving along? And so now we're arriving finally, at the technology with that I think many of you have been waiting for. And so now we're trying to see, okay, now we have a few tools we have we know a little bit about what we did, right? It's a civilization, how can we port those cooperative tools into a crypto commerce sector? And how can we not only emulate the tools that we already have, but how can we actually use our new tools, from the crypto commerce sector to improve on the ways in which we cooperate. So this is what we're going to do for the next two months. And so this is where we really really want your help, because that's the technologies that many of you are building. So to give you a little bit of kind of, like just background of what to expect, in this month, I made a comment here that we would really really love your input. So if you comment something on the document, you're building technologies that we really cannot have our tabs on. If you think that any of the technologies really should be in there, or you want to perhaps propose a meeting on those, then just comment there and I will reach out to you okay, so this is us soliciting feedback feedback from you guys. You know that much better. It's your space. So basically what we say is, okay, let's support those. That's what this cooperative help we have into crypto commerce, and we divided up into three different layers. First, we have the internet layer that granted as an inalienable right to information with the second layer of cryptography that introduced monetary sovereignty in the form of cryptocurrency currencies and now we're arriving slowly but surely in the crypto commerce within more and more inalienable right of contract. And we know in each of the layers we kind of divide it into how did we get to you and then what's possible? And what's possible section is really where we want you to help in just kind of like brainstorming a few bits in which innovators can start thinking about building the technology infrastructure of tomorrow. And so from the internet we discuss, okay, how do we get from jurisdictions to the current internet? And then we say, Okay, well, even in the internet, we currently have pretty broken cooperation brokers that are again reemerging the same centralization dynamics, what can we do better here, and we discuss Xanadu, which many people in this call have have actively worked on as an inspiration here, we discuss different types of decentralized social media. For example, Chris Weber, from activity pub will join us for a discussion on that. We are discussing ideal futures and prediction markets. We already had Robin on future key join us here. But you know, there's many, many more that you are working on. So please help us by commenting so that we don't drop crucial ones. Second society layer is cryptography, introducing monetary sovereignty, specifically in the form of cryptocurrencies, again, we discussed how do we end up here and then also, very importantly, what specific function did cryptocurrencies serve there. And here, again, many of you work in the space, please add your examples and your bids and your use cases, this chapter is really trying to make a very active and kind of reality relevant use case for this. And then we discuss what's possible. So currently is one of the institutions that we want to make better, but there's many, many more. And so please help us collect examples here, we're really happy to have Zuko present on do knowledge proof in the next one. But you know, we also discussed blockchain based property rights, we discussed how self sovereign identity could potentially be used for decentralized health comments, and how's your knowledge proofs could potentially be useful financial risk mitigation, again, those are our first best guest guesses and you have better ideas. So please add your use cases. And now we're finally arriving in open society layer three, crypto commerce introducing an ad and a vote right of contract. And this is the one I think, which is really fun. And we're going to be spending much of our time, in the next two months, we introduce different types of contracts. So templates, blue contracts, video contracts, mix contracts. And this is I think, where we really really want your help, we have seven, standing there right now. But there's many more different types of complex, complex, complex contract arrangements that we can come up with, and that really drive home the kind of Britishness that we can recreate. And so again, you're we have smart contracting template that we start with, then we go into split contracts. So half pros have automated contracts and why they are exciting. We particularly discuss the Army's information exchange, which many of you here again, have worked on and contributed to, as a particularly interesting example case, and it's a beautiful example, we discussed that was video contracts and how that can inform legitimacy. And we have Mark diggler, today who co authored the digital path. And so he will be discussing a little bit the idea of video bag split contracts for legitimate title transferability. And then we really quickly move on to Okay, what if we could use contracts not only between smart contracts, pros, but could also add reputation in the mix as a new technology of commitment, or as a very, very old technology of commitment. And then we have Alex Hamburg, I think was also here today on dominant assurance contracts, who came up with it way, way, way before Kickstarter. And so he'll be he'll be discussing those and for what kinds of public goods, we may be able to use them if you have specific public goods. And let's just test out and see if we can, if there was a way to fund them with dominant insurance contracts, we have glenvale, come present. And he's mentioned here with pathetic funding. And then we have engineer a year as anonymous assurance contract proposal foot specifically for whistleblowing. Again, if you have specific use cases here, let us try it out, see if we can prototype something. And finally we arrive at Dallas. And this is really just seven, seven ideas, but there could be many more, we have Matan fields was in this booth with his house deck. And then today with other, of course, you know, Jesus is much more than just than just take it out. But I'm hoping that perhaps you'll address that too. This is where we mentioned, were mentioned tables as well on blockchain governance. So again, this is just an invitation from me to all of you to please let us know that technologies that you're working on, we don't know. And they're probably much more relevant than the ones that we that we were trying to add to grok by just looking at the work that you that we think you do. Okay, lovely. So this gives me really good segue back into introducing author, our first speaker. And so thank you so, so much for joining. I remember the first time I met you was actually with as you put together, I think four or five years ago now in San Francisco. And it was really in the early days. I think of crypto we had a really wonderful, wonderful conference there and and and since then, really Jesus has done a tremendous amount of work. And I think you're really I think at the, at the most basic layer, I think the problem of security holds and how to prevent centralization or undue centralization. And so thank you so, so much for for doing that work and for joining us today to talk about it. We're super, super excited. And yeah, the stage is yours. And then afterwards, we go to mark, and we'll collect questions in the chat. I'll be in the chat from now on for any of the questions that you have. After the whole meeting, I'll be on gather if you guys have feedback on the book or on any of the technologies that you want us to include, after the status use. Thanks for joining.

Thank you so much for having me. Um, yeah, so I don't have flies. But I, I prefer to, to do to just present this directly. I'm going to talk a little bit about governance and blockchains. And why I mean, why it is for a while people think that didn't really have anything to do with each other. I think that the idea of governance in, in blockchain Rajan project is now fairly mainstream. But when I first started working on it, it was it was very much not mainstream. So the first thing is, why do people think that governance and blockchain don't really match and so and also, what is governance? My general definition is that governance is a set of rules that you follow when you have a resource that needs to be shared by multiple people. And you don't have a good way to divide it up. So the simple governance rule that I would say the non governance really is property rights. And so you know, if you own a, if you own a piece of fruits, and I own a, and I own a piece of rock, then the government is very easy. I have full control of my rock, and you have full control of your piece of fruit. And we don't need any governance because I can do whatever I want, you can do whatever you want. That gets complicated when we have to have a shared resources. And it would be great if we could prioritize everything, but some things just can't easily be privatized. So a good example is let's say you own a apartment and an apartment building, that's great, it's your apartments, you can make holes in the wall to attach stuff that's up to you, no one's going to bother if you drill. Unfortunately, there is an elevator in the building, and there's a heater in that building. And it's convenient to have a single heater for the building, it's more efficient than have one per unit. So someone needs to pay for that for that heater. And there needs to be some procedure for designing how people are going to pay for it. So typically, you'll have some sort of homeowner association or condo association, and you'll have some rules about who gets to pay for it. I grew up in a building which for some reason the limiter didn't stop on the first floor. It's in France is the first it's zero based so the first floor is the second floor for Americans here. And there was always a debate on whether or not they should pay for the maintenance of the elevator. So that's generally why you need governance rules. And when we are in the role of blockchain especially if you're looking at the first blockchain that were created like Bitcoin you don't really think that you need governance because well Bitcoin is all about property rights. You know, I own a Bitcoin, you own Bitcoin? You know, you Everyone was your Bitcoin? I do whatever I want with my Bitcoin. So why the heck do we need governance here? You know, it's, it's a separate thing. Oh, before I continue, how long do I have? Is it 1020 minutes I so that I can pace myself?

Well, 10 was the proposal but if you take longer to make it, alright, I'll do it. That's up to

you. No worries, no worries, no worries. So um, you know, why do we you know, this is all about property rights. Why do we need even governance but there is a form of governance in Bitcoin there is there are some share resources. And one of these is security. Everyone who's using you know, everyone who's using Bitcoin needs to have social security. And whether this is done in Bitcoin is was inflation you have lots of cities have been created every single block, and that pays people to mine and secures a chain. So you have one, minimal, very, very limited, but it's still a form of governance, we all agreed that or precious Bitcoins are going to be diluted by miners over time as it provides theory. And, you know, I speak about inflation. Most of my people will say, well, Bitcoin only had what 21 million corn, but that's exactly the problem is actually if you look from an economic standpoint, once you issue a 1 million coin, you are dependent on people making transactions on the chain to pay for that security. And now you're back with a free rider problem. It's mainly that there's just so much use agent. It's not a prominent practice. It may not be we don't we don't know for sure, but at least he knows a subsidy model works. And for a while. This is the only thing that was considered and possibly the only comments that was considered to be part of the blockchain security. But you can think of many other comments for a blockchain in one of these, for example, is paying for the development of the chain. So as Zuko here So one example is z cache and z cash chain in the first four years. There was part of the block reward that went to the development team initially, build the software because having a team of cryptographer actually come together and writes difficult cryptography is a comment. It's something that's useful for the chain and so you decide that you're going to take a little bit of dilution. You take some of the budgets that we have done for security and you lock it to two to developers, so that's one option. The other thing, so there's a common that I found very interesting, which is evolution of protocols. If you were looking, if you're in living circles around, I would say 2012 2014, a lot of people were talking about alternative designs, you know, could be going to sing differently would be going to get a form of privacy with Bitcoin, a smart contract with integrated use a proof of stake algorithm on all these different ideas. And then you were starting to see different points. And the general accepted principle was that, you know, fundamentally, this is just a ledger, you have an algorithm behind it, the algorithm is here to secure the ledger with what it is, is a ledger is the only thing that matters. If you replace the ledger, then you can replace the algorithm so long as you keep the ledger and it keeps its identity. And you know, sure, there may be other experiments, and maybe there's all coins, but if they do anything that's ever worthwhile, we can take these ideas and put them into bitcoin. And there's a bit of a gap here, which is that, okay, sure. So maybe you've identified a great idea, how do you actually move it into your vertical? How do you actually change your protocol? How do you coordinate around this, and that is not a that is not a trivial problem. And in the open source world, typically the form of government that we've had in open source is forking. And so you have an open source code base. And since it's open source, in some sense, it's not cars, right? Anyone can have a copy of their open source and have the right to work on it. So you don't really need governance, in a sense, you know, you, you want to use x ray g sex, I want to use x org. So you know, we reformed the code, and now we have like, different versions, and you can use whatever version you want. There's no problem. You know, there's no scar city, you can work on either version. And if you use one version for a while, and it doesn't work out for you can use the other version. That doesn't work as well for things like cryptocurrencies, because like we said, it's a ledger. So the problem is that if you fork your open source code base, you know, you will have two code bases, which is fine. But now we have two Ledger's, and you don't want to have two Ledger's. And typically, because these things derive almost the entirety of their value from network effects. What's going to happen is that one of them is simply going to win. And you might say, well, that's great, that's a free market at play, people are going to pick whichever one they want to use. We'll use this one, and so they'll get to decide. So what's the problem? Well, the problem is people are not going to pick the one they want to use, people are going to pick the one they expect other people are going to use. So the winner and a fork is going to be the winner of a beauty contest. And you can look at it and the winner of the contest is going to be based on social expectations. And social expectations can be very circular. It can be based on very weird things like clouds, and it can be sometimes determined by very, very small minority, it's not a very good procedure. So clearly, we need to gardens procedure to if we if we are to make any change, you know, one form of governance is to say, we're never going to change anything, how? And that's been where most of the Bitcoin thinking has been evolving. You know, it's just like it's set in stone. Bitcoin is not a ledger, it's a ledger plus an algorithm. And that's that, I shall say that, you know, this is not a point of view such that you're by everyone in the Bitcoin space, you know, by all means, but it is. It feels like the dominant trend, culturally,

and the webinar, but the other approach is that if you are going to have some change, I think it's important to have the governance procedure to decide on what the changes might be. How are you? How are you going to change it? If you're on change issuance? How are you going to change it? So this is the basic idea behind this is, by the way, which is to have a governance procedure for upgrading your entire protocol, including your governance procedure itself. So it's fully it's fully introspective. So that's actually the remote principle behind governance. That's why it used to be considered so weird. Because people look at this as well. These are purely Property Rights Network. So why do we need any governance, but they are in fact several comments that make it interesting enough that they, you know, that they benefit from some form of governance in order to, to evolve. The The other thing is that if you look at current currency today, a lot of instability comes from the fact that it's embedded in a web of contract. So the stability of something like the US dollar, is you know, there's a network effect of forces affecting everyone devalues the US dollar so valuable. There's also the fact that your rankings in US dollars, so you need US dollar because that's what you're reading is that intermediate in then you need to pay it. So when COVID crisis hits, a lot of people are going to sell that, you know, other people might say, Hey, wait a second, I might lose my job. I mean, I have income, I'm going to use dollars to pay my rent. So they're going to sell other assets they haven't, they're going to buy US dollars. Likewise, you need to pay employees or you receive your salary. So being embedded into web of contracts brings a lot of stability to a currency, and because we the currencies are still very new, there are very, very few contracts today which are being emitted in cryptocurrencies, but as that happens, forks become a lot more problematic, because now all these contracts need to decide, well, which one is the canonical version of the ledger, you cannot just go willy nilly and say, Well, you know, we'll fork and people use whatever they want. And in some sense, you know, the dominant contracts are the people who can choose how these contracts are, who didn't know where's the contract are going are going to have a lot of the impacts. You already see it in a network, for example, like a cerium. So on aetherium, you have a lot of financial contracts, and usdc. And usdc is a big, big part of all the trading going on in aetherium. And, you know, if there's a fork, then basically, circle, and I think it's the set of consortium around usdc, is in a position to decide which fork, they're going to accept redemption. And if you're in a fork, where the redemption is not accepted, then all of a sudden, all your contracts are broken. So this gives a lot of power to weird actors, if you if you kind of go in with this informal model of like, who picks up what, anyway, that's about 10 minutes. And that's my presentation of why governance is useful, especially if you want to ever change the protocol behind your your blockchain.

All right, next up, we have Mark Diller and Mark, I'm very happy you were able to join, I have to say that, and when, when they announced this talk, I immediately got an email saying like, Oh, my God, I cannot believe it, you have having the author of gentle seduction, and come and speak. And so I think that, you know, in addition to the many hats you're wearing, and one of his fantastic work with an on computers is also your really fantastic science fiction author. And I think gender selection is really one of the stories that holds really dearest and in terms of long term visions for the future. And I think I'm not the only one. So. So I'm anyone who doesn't know about that second head of marks, please go check out that story. All right. But now here you are today, here to discuss and work that you've done with Mark Miller on the digital path. And quite a while back, actually, and particularly to discuss video contracts and how they could be implemented with with smart was big contracts, and to infer more legitimacy. And I already saw your slides, you have quite a wild, wild presentation. And you'll be discussing a few of your books too, and hoping to cook a few people into smartport as macro endeavor here, so we have a lot to learn from your presentation. Thank you so much for joining. And yes, they just Yes, please go.

Now, Okay, very good. I'm recording Hang on a second. I've got bad news, everybody. Yes, I'm one of these people who does PowerPoint slides. So here we are. I was asked to talk about the digital path and the blockchain for title registries. Everybody knows what a blockchain is, but I can hear you all cry. What is the digital path? The idea was originally invented by Mark Miller, and it was described in an academic paper of the same name. You might ask why am I presenting it then rather than Markham? And the answer is in addition to being marcomms, co author, I also took it to the next level. In a in a I use the digital path as the basis for a subplot in a series of science fiction novels. So in some some sense on the world's first implementer of the digital path, at least as a thought experiment. So the series takes place in an alternate future in which the American president for life expels all the immigrant engineers from Silicon Valley. These one percenter engineers and scientists moved to a fleet of oversized cruise liners off the coast, giving birth to the last home of the creative human spirit, the brain trust. As you can see in the slide, more than one technology interesting to this group, is, is is present in the series in which one book is devoted to the global a global pandemic. I wrote it back in 2018. And the one book after that one is devoted to the global financial collapse that follows. Anyway, a little background is needed to make the digital path concept meaningful. The name of the paper is a riff on the name of the book The other path by Hernando DeSoto, a remarkable Peruvian economist who realized that the poorest people in the world have trillions of dollars of debt assets. But because these assets many of which are tied up in real estate were not formally recognized by local corrupt governments, they could not be used as collateral for loans to make wealth generating investments. DeSoto thought the solution was to go through the process of dragging those assets into the formal economy against all obstacles. Though these efforts were low, labourious and too often sabotage by local officials, it was nonetheless a startling success. But it was still too slow and unreliable to truly advanced human civilization. So Markham took the next step, and proposed bypassing the local governments and enabling third world people to directly engage with actually trustworthy organizations from Western nations where such trustworthiness is so commonplace, we don't even see how radically and improves our lives to establish the title rights of the people of a village. Using the cell phones that were not yet commonplace among poor people that we predicted they would be. The villagers would video a shared agreement about who owned the different parcels and buildings in the area. disputes would be at jet adjudicated by mediators in America or Britain or Germany or any place with good institutions. With such international backing. We hoped that village properties could then be used for mortgages and other financial instruments to create a virtuous cycle of investment, and the creation of even more goods that could be registered to transnationally.

Part of the proposed proposal use smart contracts to implement the exchanges of registered items, thereby removing even trustworthy human mediators from the equation as much as possible. The smart contracts which would be computer programs with access rights, access to the rights being exchanged, would allow the title registry to do a transfer only when the preconditions for the transaction were completed. smart contracts used to be almost impossible to write. Because of these security considerations. If a hacker could breach the contract, he could acquire all the assets under the contract control. Fortunately, a GoreTex has developed object capability security programming languages that allow one to inter stitch Oh cat modules with few concerns that the resulting composition will be reachable. Perhaps the most important modularization of gore tex has invented is offer safety. Using offer safety even a 13 year old can construct contracts safe enough to manage millions of dollars. And using this compositional safety means that the contracts can grow ever more sophisticated and cover evermore complex situations. In the brain trusts such contracts are hooked up to the outside world, so that changes in external financial conditions can trigger the contracts to either exploit the unlikely opportunities, or protect the contract holder from disasters. In the example on the slide, the smart contract detects the global financial collapse, initiated by the White House Riot and adjusts the customer's portfolio in this case, by shifting to smart coin denominated assets. This picture by the way, is not true to the book. This is a photo from the real capital riot, not the brain trust White House riot. In a correct picture, the leader would be carrying a pitchfork, not a flag. Anyway, let's talk briefly about how this relates to blockchains. In the days when we were visualizing the digital path the blockchain had not yet been invented. Once you have a blockchain, then of course, it seems likely that that's where you would want to store the titles and the smart contracts using the blockchain to further minimize dependence on trusted third parties. Here's an example of how the digital path smart contracts on the blockchain work together in the novel, a village in the small African nation of benen uses a cell phone to create a video socially agreed upon property lights which is uploaded to the blockchain. Now all normal transactions and most disputes are resolved directly by the smart contracts stored along with the property titles. But once in a while a dispute arises that requires human intervention, at which point the resolution is kicked to a mediator who lives on the brain trust. A few miles off the coast. When the mediator renders a decision, the enforcement of the result is typically fulfilled via social pressure from the local community. Now, when we wrote the paper that was the only enforcement mechanism we envisioned, I thought at the time it was weak. But the success of the Grameen Bank using social pressure to guarantee loan repayments suggests that this approach works better than I would have guessed. Anyway, in situations where this kind of enforcement fails and the novel's the mediator, the mediator brings in the elite Amazon women warriors who live in Benton and work with the brain trust. The story of the Amazons most of which is real life history is amusing, but irrelevant. I will talk I will end this talk with a short discussion of the blockchain and the digital path in the far future. But first, please indulge me for a short excursion into a different aspect of blockchains, namely cryptocurrency. For the brain trust, I worked with a cohort of economists and cryptocurrency engineers to create smart coin, which saves the world in book five.

The special feature of smart coin is that it's this is specifically designed to flatten to the Keynesian boom bust cycle found in primitive 20th and 21st century technological societies. The basic idea is to use the information available in the blockchain, notably the transaction velocities and transaction size sizes, to create and remove currency to maintain nominal prices. Let's look at an example from from the book. Here we see a rising and falling economy for a major nation. When the smart corn algorithm sees a combination of falling transaction rates and falling transaction sizes. It infers that deflation has begun and prints currency, distributing it to the current currency holders. On the other hand, when a decrease detects in increasing transaction rates and rising transaction sizes, in interest infers we are facing inflation and sucks currency out of the system by auctioning zero coupon coupon bonds, which it redeems the next time it detects deflation. Why am I telling you all about this? I mentioned it just in case someone out there might be interested in implementing this beast just to see how it works. If any of you are interested, please let me know. My last observation is about the issues with enforcement of the digital path into the far future. Other people will be talking in other presentations about distributing property rights for the planets and the stars to all the people of Earth. I have no idea where you could reasonably hosts such a title registry, except on a far advanced derivative of an interstellar blockchain. But the social pressure used for enforcement by the brain trust in binnen is not going to work across light years. And we're unlikely to have a proper legion of interstellar Amazon's available to maintain property rights, though there are interesting science fiction stories in that approach. So how do we enable enforcement across the galaxies? To answer this, we must go back to 1951. If you haven't seen the black and white version of the day, the Earth Stood Still by all means make the time in the movie The Gort robot enforces peace throughout the galaxy. Now I've always had some heartburn when I thought about the underlying algorithms for a gourd style robot, because there are a lot of edge conditions and gray areas, some of which were explored by Isaac Asimov in his robot stories, would a gorge really be possible? I couldn't for the life of me see how then about a decade after Mark introduced me to mark contracting. And I spent that decade thinking about its relationship to Gort. I finally figured out what would work. Obviously, gork is the physical enforcement component of an interstellar smart contracting system. As the module compositions and algorithms for smart contracts grow more sophisticated, Gort can handle more and more disputes on his own. And if a court runs into an edge condition, he just kicks it over to a mediator the same way they do on the brain. Trust, what could be more obvious? Anyway, thank you and klaatu Barada nikto