Trust Me, I’m A (Block Chain) Computer

Noted polymath Nick Szabo published a new article yesterday, “The Dawn of Trustworthy Computing“.

Celebrated within the Bitcoin community, he’s the guy that came up with the concept of BitGold before Bitcoin and has written some of the most significant essays in the field over recent years (see ‘Shelling Out – The Origins of Money’ and his seminal paper on Smart Contracts, ‘Formalizing and Securing Relationships on Public Networks‘).

There are a few points from this new piece that really drive home the power of the technology that underpins the system. I recommend that you go and read it yourself (here) but given its importance, I thought that for today’s post, I’d try to give a high level summary of what is invariably, yet again, another excellent piece of work.

Szabo starts by pointing out that we currently rely on a system that is designed in such a way that the ‘other end’ of our computers (i.e. the web servers etc) has to be run by an individual or collection of people that we are required to trust. The system simply could not work unless you did. This has a significant downside as it means that no security measures will ever be able to prevent the data that you share in this way from being hacked or leaked if it is sufficiently valuable to someone else.

But think of how commerce operates. When you pay to see a film at the cinema, you simply hand across the money. We benefit from controls embedded within the system (the guy behind the desk checks you’ve paid the right money and gives you a ticket without asking your name). OK, so the process may be slow if there’s a queue but we receive a ticket and the cinema can control how many people get into the screening. However, compare that with an online transaction online. As we’ve established, the system of computers that we currently rely on is not very trustworthy, given that it is liable to hacks or leaks. However an online transaction will usually force you to fill out forms containing additional valuable personal data. We are forced to accept the risk of this data being lost because the time-saving from having computers involved (rather than requiring all customers to visit a shop to pay in cash, for example) is so significant.

But block chain computing changes all of this.

In this new system, a virtual computer that is protected by cryptography and consensus technology is now shared across many computers. It is a system in which each computer is required to check the work of the other computers in the network. The result? We can now explore interactions that were just too risky before this system was invented. We no longer need to place our trust in an individual or group on the other end of our computer.

The use of the word trust can often be confusing. For newcomers who are confused by people talking about ‘trustless’ systems, Szabo suggests ‘trust-minimised’ would be more accurate.  So instead of having to rely on (i.e. trust) unknown third parties to do what they’ve promised, each computer will reliably execute the instructions that we provide (subject to the 51% issue of course). Within this new network, we couldn’t trust the computers if we relied on them as individuals. But together, when all of the computers are constrained by mathematical rules, the end result is a reliable and secure network.

This is a powerful concept. Initially, we’ve seen block chain computers have been used primarily to develop a currency solution, namely Bitcoin. But now we are faced with an unforgeable record of transactional data being recorded in the block chain, we’ve can start to accelerate the development of further applications.

One area that fascinates me in particular is that of smart contracts. As Szabo writes:-

“The block chain can also make the search, negotiation, and verification phases of contracting more reliable and secure. With on-chain smart contracts we will be able to buy and sell many online services and financial instruments by button and slider instead of by laboriously filling out forms that disclose our private information.”

It’s worth noting that in order to achieve such powerful advantages of security and reliability, the decentralisation inevitably costs more (in terms of both money and time) when compared directly with the current system in which you rely on one web server alone. However, those advantages outweigh the negatives by an order of magnitude. Be careful however not to assuming that it is merely the fact that this improvement is simply because of the fact that the system has been decentralised:-

“It’s actually the protocol (Nakamoto consensus, which is highly distributed) combined with strong cryptography, rather than just decentralization per se, that is the source of the far higher reliability and and much lower vulnerability of block chains.”

It appears to be Szabo’s intention to follow up in the future by really digging into some of the applications are now possible on top of such a trust-minimised block chain. I can’t wait to see what he comes up with. In the meantime, if you’re more interested in the computer science behind the block chain itself, check out this handy list of papers.