I read all the best Bitcoin content out there so that you can listen. This is a crypto. Kana me quick read with guys swan. Welcome back to the crypto Cana me. This is guys Swan and I hope you guys had a wonderful weekend where you're jumping right back into it and we're going to start the day off with or start our week off with a piece a historical piece on bitcoin that I think is going to help us kind of uncover the design philosophy in the engineering philosophy behind what Led to this incredible technology and that starts with the worse is better design the New Jersey style, which there are a number of different pieces we've talked about and we'll go and I'll go into it a little bit more specific specifically after we finish this piece, but this is from a Gorn dotnet gwe are in.net. It is written in 2011 and it is titled Bitcoin is worse. is better We will talk about this one after we do the read but let's go ahead and jump in. Bitcoin is worse is better a 2011 essay on how Bitcoins long gestation and early opposition indicates. It is an example of the worse is better Paradigm in which an ugly complex design with few attractive theoretical properties compared to Pure competitors. Nevertheless successfully takes over a niche survives and becomes gradually refined. The Genius of Bitcoin in inventing a digital currency successful in the real world is not in creating any new abstruse mathematics or cryptographic breakthrough, but in putting together decades-old pieces in a seeming novel, but extremely unpopular way everything Bitcoin needed was available for many years including the key ideas. However, the sacrifice Bitcoin makes to achieve decentralisation is however Practical a profoundly ugly one early reactions to bitcoin by even friendly cryptographers and digital currency enthusiasts were almost uniformly extremely negative and emphasize the perceived in efficiency and relative to most cryptography weak security guarantees critics. Let perfect be the enemy of better and did not perceive Bitcoins potential. However, in an example of quote worse is better the ugly inefficient prototype of Bitcoin is successfully created a secure decentralized digital currency, which can wait indefinitely for success in this was enough to eventually lead to adoption Improvement and growth into a secure Global digital currency. What is the great accomplishment of the idea of Bitcoin in discussing Bitcoins recent rise to 8 dollars and Ten Cent per Bitcoin in 2011 many have been wondering who is the real man under the Satoshi Nakamoto mask a hard question. How many genius libertarian cryptographers are there? But the interesting thing is Satoshi could be anybody and I believe this gives us an interesting clue to how Coin has been able to bootstrap itself from nothing Satoshi could be anybody Bitcoin involves no major intellectual breakthroughs of a mathematical or cryptographic kind. So Satoshi need have no credentials in cryptography or be anything but a self-taught programmer. prerequisites Satoshi published the first public version of his white paper on November 1st 2008 after earlier private discussions and the white paper was further edited afterwards, but if you look at the cryptography that makes up Bitcoin they can be divided into public key cryptography cryptographic signatures cryptographic hash functions hash chain used for proof of work a hash tree and Bickel. cryptographic timestamps resilient peer-to-peer Networks dates quote. So the first answer to why now is simply because it's time I can't tell you why it took this long for web blogs to happen as it did except to say it had absolutely nothing to do with technology. We had every bit of Technology we needed to do web blogs the day mosaic launched the first forms capable browser every single piece of it was right there instead. We got Geo cities. Why do we get Geo cities and not weblog We didn't know what we were doing in quote clay shirky from 2003 S A group is Its Own Worst Enemy. The interesting thing is that all the pieces were in place for at least eight years before satoshi's publication, which was followed more than half a year later by the first public prototype if we look at the citations in the white paper and others and then order the relevant Technologies by year in descending order 1 2001. Sha-256 is finalized. To 1999 to present Byzantine fault tolerance pbft Etc. 3 1999 to present peer-to-peer networks, excluding early networks, like Usenet or Fido net Mojo nation and BitTorrent Napster Nutella edonkey freenet i2p Etc. For 1998 way die and be money. 5 1997 hashcash 1998 Nick Szabo bitgold mm Mojo nation and BitTorrent 2001 to 2003 Karma Etc. 6 1992 to 1993 proof of work for spam 7 1991 cryptographic timestamps 8 1980 public key cryptography and nine from 1979 the hash tree. This lack of novelty is part of the appeal the fewer new parts of a cryptosystem. The less Danger All That was lacking was a Satoshi to start a Bitcoin. delay What would the benefit of this hindsight one can wonder why this delay if the idea is relatively easy to understand and uses basic ideas. If it is very far from The Cutting Edge of cryptography. There's no reason it would not be seriously tried certainly the cypherpunks of the 90s were wildly creative inventing everything from cypherpunk Mixmaster to Mojo Nation to assassination markets to data Havens. He depicted in crypto, Nomicon. We have already seen two of their proposed cryptocurrencies and proof of work was one of the most common proposals to deal with the rising tsunami of spam. Why did Bitcoin take a decade to be born the problem of timing nags at me similar to the historical question of why England experienced the Industrial Revolution and grew to Empire and not China which seems better equipped in every respect where does innovation come from? There must be an answer and it may be similar to VR. impractical Is the problem one of resources in the white paper Satoshi remarks quote a Blog header with no transactions would be about 80 bytes if we suppose blocks are generated every 10 minutes 80 bytes times 6 times 24 times 365 equals four point two megabytes per year with computer systems. Typically selling with 2 gigabytes of RAM as of 2008 and Moore's Law predicting current growth of Gigabytes per year storage should not be a problem. Even if the block headers must be kept in memory in quote. Well, that's fine to say in 2008 after many doublings would memory be a problem in the 1990s? It doesn't have to be the difficulty of Bitcoin mining is adjustable. So the problem boils down to one disk usage with a smaller hash like sha-1 the 80 bytes can be shrunk. Ten minutes is not Graven in stone. Why not 20 minutes right there? We have halved the transaction overhead. The hash tree can be garbage collected and shrunk. It is only necessary to maintain a full hash tree. If one is paranoid in practice like many programs of the era such as male or Usenet clients the default could simply be to hold on to the last n blocks or hashes Satoshi estimates 12 kilobit per day. This would consume a limited amount of disk space. And to network connectivity is solvable by solutions to number one first a function of the existing hash tree size and second frequency of new transactions. It's worth pointing out that it's generally expected that at some point ordinary desktop users like you or me are expected to stop being full-fledged nodes and Bitcoin miners will instead make use of some specialist service running powerful servers of its own in a counter. Actual Universe where Bitcoin was begun in the early 1990s, the changeover would simply have occurred sooner and with all the investment money desperately investing in the first internet level. It would be quite easy to start such a service regardless of the technical demands. contemporary objections as well few of the objections to cryptocurrencies seem to have been quote computers which can run it are fantastically expensive in Computing applications and techniques are often invented many decades before Moore's law makes them practically useful, but this does not seem to have happened with Bitcoin a similar objection obtains with patents or published papers if Bitcoin was a known idea, where are they? I have yet to see anybody point out what patents might have deterred cryptography researchers and implementers. The answer is that there were none because there was no investor interest not that Satoshi needed investors, but there were a tremendous number of online payment services started in the 90s each searching for the secret sauce that would let them win mindshare and ride Network effects to Victory. Did you cash again comes to mind even in the 90s when? The internet seems embryonic to us of the 2010 s there were still many millions of people on the internet who could have used a digital cash. So if the basic idea is accessible and it's useful on consumer grade hardware for the last 20 years or so in what's the problem? photographers objections I think it's instructive to look at satoshis and thread on the cryptography newsgroup and mailing list particularly the various early criticisms. And this starts a list of linked to responses and discussions on the cryptography mailing list, but I'm actually going to read the first one in full because it is actually the first response on the Bitcoin mailing list to the release of the Bitcoin white paper. And I think it's historically fascinating that the first response is essentially about bandwidth in the inability of this system to scale. It's just amazing to me to see that the very first response the very first Issue brought up when Bitcoin was publicly conceptualized was about the scaling issue. So let's start with this list. criticism the disc in bandwidth won't scale response on November 2nd 2008 to Satoshi nakamoto's peer-to-peer electronic cash system by James a Donald quote. We very very much need such a system. But the way I understand your proposal it does not seem to scale to the required size or transferable proof-of-work tokens to have value. They must have monetary value to have monetary value. They must be transferred within a very large Network. example of file trading Network akin to BitTorrent to detect and reject a double spending event in a timely manner one must have most past transactions of the coins in the transaction, which naively implemented requires each Pier to have most past transactions or most past transactions that occurred recently if hundreds of millions of people are doing transactions, that is a lot of bandwidth each must know all or a a substantial part thereof in quote Satoshi's response was that he expected most Bitcoin users to eventually become second-class citizens as they switched to the Thin Client scheme. He outlined in the white paper for only keeping part of the blockchain and delegating storage to the real peers. This doesn't seem ideal. Criticism proposal is under specified omitting all the possible race conditions and desynchronization attacks and scenarios in a distributed system and details available only in ad-hoc code. criticism conflating transactions with Bitcoin creation requires constant inflation Criticism it is very difficult to achieve consensus on large amounts of distributed data even without incentives to corrupt it or attacks. Criticism domination of the hash Tree by fast nodes in Starvation of transactions in lastly pseudonymity and linkable transactions irreversible transactions. Also implies double spend must be very quickly detectable. Nick Szabo summarizes the early reaction quote Bitcoin is not a list of cryptographic features. It's a very complex system of interacting mathematics and protocols in pursuit of what was a very unpopular goal while the security technology is very far from trivial the why was by far the biggest stumbling block nearly everybody who heard the general idea thought it was a very bad idea. Myself Wade, I and how Finney were the only people I know of who liked the idea or in dies case his related idea enough to pursue it to any significant extent until Nakamoto. Assuming Nakamoto is not really Finney or die only Finney with our pal and Nakamoto were motivated enough to actually Implement such a scheme. end quote As well, let's toss in some blog posts on bitcoin by the cryptographer bin Lorry and Viktor gerashchenko. Lari particularly criticizes the hash contest which guarantees heavy resource consumption. Here's just a link to numerous other post very early on that were criticizing and trying to poke holes in the system of Bitcoin and how it worked. Those are Bitcoin Bitcoin to bitcoin is slow motion decentralize currencies are probably impossible. But let's at least make them efficient and lastly Bitcoin by Viktor gerashchenko. What's the common thread? Is there any particular fatal fall of Bitcoin that explains why no one but Satoshi came up with it? Aesthetics know what's wrong with Bitcoin is that it's ugly. It is not elegant. It's clever to Define your Bitcoin balance as whatever hash tree is longer has won more races to find a new block, but it's ugly to make your network security depend solely on having more Brute Force computing power than your opponent's ugly to need now and in perpetuity at least half of the processing power, to avoid double spending It's clever to have a peer-to-peer Network Distributing updated blocks, which can be cheaply and independently checked but there are tons of ugly edge cases, which Satoshi has not proven in the sense that most cryptosystems have security proofs to be safe. And he himself says that what happens will be a coin flip at some points. It's ugly to have a hash tree that just keeps growing and is going to be gigabytes and gigabytes in not terribly many years. It's ugly to have a system which can't be used offline without proxies and workarounds which essentially relies on a distributed Global clock unlike charms elegant solution. It's ugly to have a system that has to track all transactions publicly. Even if one can use Bitcoins anonymously with effort. That doesn't count for much a cryptographer has learned from incidents like Anand pin a DOT Phi in decades of successful attacks on pseudonymity. And even if the money supply has to be fixed a bizarre choice and more questionable than the irreversibility of transactions. What's with the arbitrary looking 21 million Bitcoins limit couldn't it have been around her number or at least a power of two? Not that Bitcoin mining is much better as it's a massive giveaway to early adopters cosas theorem may claim. It doesn't matter how big coins are allocated in the long run but such a blatant bribe to early adopters rubs against the grain again ugly and inelegant Bitcoins can simply disappear if you send them to an invalid address and so on. the basic Insight of Bitcoin is clever, but clever in an ugly compromising sort of way Satoshi explains in an early email the hash chain can be seen as a way to coordinate mutually untrusting nodes or trusting nodes using untrusted communication links and to solve the Byzantine generals problem if they try to collaborate on some agreed transaction log, which permits some Actions and forbids others as attempted double spins naive Solutions will fracture the network and lead to no consensus. So they adopt a new scheme in which the reality of transactions is quote. Whatever the group with the most computing power says it is in quote the hash chain does not aspire to record the quote true reality or figure out who is a scammer or not. But like Wikipedia the hash chain, simply mirrors one somewhat arbitrarily chosen groups consensus Quote it has been decided that anyone who feels like it will announce a time in whatever time is heard first will be the official attack time. The problem is that the network is not instantaneous and if two generals announced different attack times at close to the same time some they hear one first in others hear the other first, they use a proof-of-work chain to solve the problem. Once each General receives, whatever attack time he hears. He sets his computer to solve an extremely difficult proof-of-work problem that includes the attack time in its hash. The proof of work is so difficult. It's expected to take 10 minutes of them all working at once before one of them finds a solution. Once one of the generals finds a proof-of-work he broadcast it to the network in everyone changes their current proof-of-work computation to include that proof of work in the hash that they are working on if anyone was working on a different attack. Time they switch to this one because it's proof of work chain is now longer after two hours one attack time should be hashed by a chain of 12 proofs of work every general just by verifying the difficulty of the proof of work chain can estimate how much parallel CPU power per hour was expended on it and see that it must have required the majority of the computers to produce that much proof of work in the allotted time. They had to all have seen it. Because the proof of work is proof that they worked on it if the CPU power exhibited by the proof of work chain is sufficient to crack the password. It can safely attack at the agreed time. The proof-of-work chain is how all the synchronization distributed database and global view problems. You've asked about are solved end quote. How worse is better? In short Bitcoin is a perfect example of worse is better link to the original essay. You can see that the trade-offs that Richard P Gabriel enumerates Bitcoin has many edge cases. It lacks many properties one would desire for a cryptocurrency. The white paper is badly under specified much of the behavior is socially determined by what the miners and clients collectively agree to accept not by the protocol. It's a quote the worst is better philosophy is only slightly different. Completeness the design must cover as many important situations as he's practical all reasonably expected cases should be covered completeness can be sacrificed in favor of any other quality. In fact completeness must be sacrificed whenever implementation Simplicity is jeopardized consistency can be sacrificed to achieve completeness if Simplicity is retained. Actually worthless is consistency of interface. The MIT guy did not see any code that handled this Edge case and asked the New Jersey guy how the problem was handled. The New Jersey guy said that the Unix folks were aware of the problem. But the solution was for the system routine to always finish, but sometimes an error code would be returned that signaled that the system routine had failed to complete its action a correct user program then had to check the error code to determine whether to simply try the system routine again. The a mighty God did not like this solution because it was not the right thing. It is better to get half of the right thing available. So did it spreads like a virus once people are hooked on it. Take the time to improve it to 90% of the right thing in quote. Guarantees of Byzantine resilience Loosely sketched out and left for future work incentive compatible. Well, maybe anonymity punted on in favor of pseudonymity. Maybe someone can add real anonymity later guarantees of transactions being finalized none. The user is just supposed to check their copy of the blockchain. Consistent apis forget about it. There's not even a standard. It's all implementation defined if you write a client. It better be quote bug Word compatible with satoshi's client. Moon math. Nah, it's basic public key crypto plus a lot of imperative stack machine bit twiddling space efficiency a straightforward blockchain and on disk storage takes priority over any fancy compression or data structure schemes fast transactions, you can use zero cough and if that's not good enough for buying coffee, maybe someone can come up with something using the smart contract features and so on. But for all the issues, it seems to work just like eunuchs there were countless ways to destroy your data or crash the system which didn't exist on more proper os's like openvms and there were countless lacking features compared to systems. Like I TS or the list machine os's but like the proverbial cockroaches Unix spread networked survived and the rest did not and as it survives and involves gradually it slowly becomes what it should have been in the first place or HTML versus project Xanadu Paul Ford in 2013 had stumbled onto a similar view of Bitcoin quote. The internet is a big fan of the worst possible thing many people thought Twitter was the worst possible way for people to communicate little more than discourse abbreviated into tiny. little chunks Facebook was a horrible way to experience Human Relationships commodifying them into a list of friends whom one pokes the Arab Spring changed the story somewhat BuzzFeed is another example, let them eat cat pictures one recipe for internet success seems to be this start at the bottom at the most awful ridiculous essential idea and Own It promote it breathlessly until your acquired or you take over the world Bitcoin is playing out in a similar way. It asks, its users to forget about Central Banking in the same way Steve Jobs as iPhone users to forget about the mouse end quote. But he lacks the worse is better Paradigm despite being a programmer and doesn't understand how Bitcoin is the worst possible thing. It's not the decentralized aspect of Bitcoin. It's how Bitcoin is decentralized a cryptographer would have difficulty coming up with Bitcoin because the mechanism is so ugly and there are so many elegant features. He wants in it programmers and mathematicians often speak of taste and how they lead. Into better Solutions a cryptographers taste is for cryptosystems optimized for efficiency in theorems. It is not for systems optimized for virulence or for their sociological appeal centralized systems are natural solutions because they are easy like the integers are easy, but like the integers are a vanishingly small subset of the reals so to our centralized systems a tiny subset of Centralized ones did you cash and all the other cryptocurrencies startups may have had many Nifty features may have been far more efficient and all that jazz, but they died. Anyway, they had no communities and their centralization meant that they fell with their corporate patrons. They had to win in their compressed timeframe or die out completely but quote that is not dead which can Eternal lie end quote. And the race may not go to the Swift as how thin he also pointed out early on quote every day that goes by and Bitcoin hasn't collapsed due to legal or technical problems that brings new information to the market. It increases the chance of Bitcoins eventual success in justifies a higher price end quote. It may be that Bitcoins greatest virtue is not its deflation nor its microtransactions, but it's viral distributed nature. It can wait for its opportunity quote. If you sit by the bank of the river long enough, you can watch the bodies of your enemies Float by end quote. Objection Bitcoin is not worse. It's better. Nick Szabo and Zuko Wilcox O'Hearn disagree strongly with diseases that Bitcoin is worse is better. They contend while there may be bad parts to bitcoin. There is a novel core idea, which is actually very clever. The hash chain is a compromise which thinks outside the box and gives us a side step around classic problems of distributed computing which gives us something similar enough to a trustworthy non centralized Authority that we can use in practice quote Burns post fails to appreciate the technical advances that Bitcoin originated. I have been trying often home to invent a decentralized digital payment system for 15 years since I was at did you cash I wasn't sure that a practical system was even possible until Bitcoin was actually implemented in became as popular as it has scientific advances often seem obvious in retrospect and so it is with Bitcoin. end quote Nick Szabo thinks that the main blocking factors were one ideological beliefs about the nature of money liberals not interested in non-state currencies and austrians believing the currencies must have intrinsic value. To obscurity of the big gold like ideas three quote requiring a proof-of-work to be a node in the Byzantine resilient peer-to-peer system to lessen the threat of an untrustworthy party controlling the majority of nodes and thus corrupting a number of important security features end quote. For some simplification not markets for converting old and harder to mine Bitcoins to new and easier to mine Bitcoins but a changing Network wide consensus on how hard Bitcoins must be to mine. My own belief is that number one is probably an important factor, but questionable since the core breakthrough is applicable to all sorts of other tasks, like secure Global clocks or time stamping or domain names. Number two is irrelevant as all digital cryptographic currency ideas are obscure to the point where for example satoshi's white paper does not cite bit gold. But only be money yet way die does not believe his be money actually influenced Bitcoin at all. And number three and four are Minor Details which cannot possibly explain why Bitcoin has succeeded to any degree while ideas like bitgold languished. And we will stop there. This is technically the end of the article to some extent there is an appendix and a ton of if you've never been to grown dotnet to actually look through this piece there has never been I don't think anything we have covered on the show has a larger collection of links to other historical pieces on any and you'll notice that I like I said this Is written in 2011, but it's been updated numerous times most recently in November of 2018. So there have been continuously like new details new links new footnotes and side notes added to this thing and it is genuinely a notion of stuff. We are were not even know that a third away down the page before we start see also Silk Road time Loop time-lock cryptography external links on big coins Theory and the Byzantine generals problem and Beyond and a lot of these are like historically very important and fascinating discussions that happened on the Bitcoin talk forums on the cryptography mailing list. If you want to get a broad scope of how everyone was looking at this thing in 2010 and 2011, like very early on this is going to be a huge huge resource for that on but for right now, let's go ahead and hit our sponsor and then I'll try to get some In before I am out of time, let's go ahead and take a break and then we'll talk about this piece. For anyone who has a podcast anchor cannot be beaten particularly for trying to get off the ground their entire platform is free. This includes unlimited hosting both in audio that you upload and how much your listeners download. I have uploaded an incredible library of audio now and I've never paid anchor a dime. In fact, they connect me with other sponsors and have run an ad consistently on my show. So they've paid For exposure to my audience that's really hard to beat even if we ignore that I can record directly in the app or my browser. I don't need any other software. If I don't want it I can edit at sound effects clips and they automatically publish to all of the top podcasting platforms. I never had to do a thing. So if you were thinking of starting a show or already have a podcast, there's no better platform out there check out anchor by downloading the app or go to Anchor dot f FM today One of the things I love most about this piece is just the perspective on bitcoin and how it shows how things have changed over the years and it really is a huge collection. I've every time I go through it I end up stopping and reading one of the links in full that I either skim the last time or you know just jumped over and I also just read through every one of the footnotes this Pastime and there's so much gold in there. For other people's perspectives quotes on other people who were criticizing Bitcoin in numerous different ways. And when you really look at it this one of the key aspects of the design is that it is as simple as it can be to solve the problem that it is solving and it doesn't It's so hard the so worse is better is a piece that I highly encourage. If you really want to dig into this concept and the whole engineering mindset behind it is to read or listen to the iterative capital thesis that I've got on my show and I intend to have a full page for that one specifically just on the crypto economy.com. I don't have it yet, but you can find it in the Episode list and I think it's on the verge of somewhere around 4 hours. If I'm not mistaken, it's a long piece, but it's so good and it details so much of the history of this thing and the the the philosophy essentially that started decades and decades ago that began to diverge the managerial in the engineering class kind of the different goals set out in those classes and but worse is better or the New Jersey style is essentially the idea of its kind of like a minimum viable product in a sense. Is that as simple as you can solve a large chunk of the problem solve half of the problem now solve the most difficult half and make the core of the system as simple and as Correct as possible with everything for correctness consistency and completeness are traded off for Simplicity. As long as it does the one essential idea and it and it doesn't compromise on that. Well, then you can compromise on all of those other things. It might not solve it as beautifully as it could it might not solve it in all the various ways it Might not have all the features that you would want with something to solve this problem. But it solves it good enough that it can then take hold it can then latch onto a network effect and other people can iterate and improve it and and then eventually make it the right thing and that's the difference was the the is it the is it the worse is better or is it the right thing quote unquote? The idea that we should engineer the perfect solution rather than engineering something that solves the Crux of the problem the core of the problem that we can then continue to iterate on until it is 90% 95% of the thing that solves all of the problems that we would want in a system that is doing exactly that and that's exactly how the internet was like that was TCP IP and SMTP FTP HTTP all of these things built. On top of something that just solved the core problem Unix another great example, and I love that this whole thing is really framed in a Unix versus the other operating systems and obviously Unix is the clear explosive winner in that context. And for those of you who don't know Mac is based off of Linux. Android is based off of or excuse me. Unix Android is based off a eunuch. Linux is based off of Unix. So it is really the foundation of the internet and it was it truly embraced the New Jersey. It was really kind of the birth of the New Jersey style. I kind of as a philosophy and it's just that something that is small and does one job like that. That's kind of the key. Is that every programmer every piece of software make it do one job really really well and make it do that job as well as it can. Bitcoin makes so many trade-offs and I love that the first literally the first criticism the first response on the mailing list was yeah, this is great. But this is not going to scale as soon as you get a hundred million, you know users on this thing as falls apart not every user can actually keep up with all of this and it kind of shines a light on how much we've learned and how much we realize was important. And was not important in the security profile of this thing because this is a sociological that's this another really fun section in it was just that cryptographers are interested in Technologies in something that's like an efficient cryptographic system. They weren't interested in programs or software that were about virulence or or like sociological systems, and that's what Bitcoin is is it's a way to organize people into a like a setup or a system of cooperation as opposed to being adversarial to each other and by necessity doing that in a decentralized manner must be necessary must be messy because it is a sociological system. It's one that is organizing humans and there is nothing nothing in print about humans like nothing is objective. In the sense that you can count on exactly this sort of response. It's all messy. It's all subjective. So there's this there's this huge gap. There's this bridge between trying to find some objective truth to trust each other on and the constant subjective interpretations of all of that of everything that we have are our maps for what is and isn't in the world. And obviously we have so so many like social and cultural divides that make trust across standards like that incredibly difficult to achieve. So because of that you run into all these maybes scenarios you run into all these situations where it's like we don't really know whether or not it works. We just kind of have to let it live and see if it continues to work properly and it would seem like like there's the list of criticisms that start like a towards the beginning and I read the one on disc and bandwidth of the the original post. And there's a lot of other great ones and a by Lori and Victor that were linked to that. I said, I definitely encourage you to go read them. But there's a number of different subjects ins like just the seeming Ridiculousness of having a hash tree that just endlessly grows and that's all it does. But as time went on even even with satoshi's quote like so she said that he expects for most people to be second-class. Essence essentially and that eventually you wouldn't need everybody could just run thin clients and you wouldn't need people to store the entire Block Chain, but we find out that that's not actually sufficient because the double spending problem is not the only problem being sort out sorted out. There is also consensus in defensibility in the actual rules. So like double spending is a problem that occurs within the set of rules, but if you're only keeping the headers we now know that the an adversary could just as easily attempt to dominate the hash power and force a change in the rules Fork the actual Network and thin clients do not have any protection against this thin clients are worried about their transactions and checking that they are they exist inside the block header, which means that there is no Market Force pushing back on what essentially becomes a a group of as Said like relatively arbitrarily chosen group of minors. And that doesn't mean that they know what's best for Bitcoin and it is not about trusting someone else is about defining Bitcoin for yourself and staying within consensus is actually achieving consensus within the rules of the network. So proof of work is a means of finding some objective reality, which is not necessarily the truth it is it does Don't try to way it ignores all of the human problems and just let's core incentives Drive the likelihood of Truth the likelihood of honesty which none of that can be guaranteed because it's a system of humans and so like, you know, Bitcoin itself does not care and does not try to figure out who the scammer is in a double spin situation. It's simply tries to allow the System itself and the people utilizing it to find a single reality to agree on and and that's why it's soon as you get like subjective. You push something subjective back into this some some determination as to who was the scammer who was the honest double spender and the versus the evil double spender. Now, you've got human judgment you've eliminated the one thing that is so powerful about this. Technology that it does and I think also is there's a bit of misunderstanding as to exactly what the problem was to begin with because and I think it leads to why there was such a delay in creating a system like this is that people thought that the problem was payments and I think it's pretty obvious. Now that that wasn't ever the problem payments are easy. We got payments all over the place. I'm like Parker Lewis said in Was it going fixes this man? I'm not I'm not gonna remember but it's one of the Unchained Capital gradually didn't suddenly sets our series or it talks about payments are a 1 to n Innovation. Like you can just infinitely increment and make that better and better but the discovery of a decentralized consensus around the scarcity of something that is digital was a zero to one Discovery and it is not that you can just pack a bunch of it makes perfect sense that people would think that that they be like, oh, we just need to add all these features to it because then it's the perfect digital currency will just copy it and make all these changes to it. Add all these features and then fix it quote unquote and that's just not that's not how this is going to work in this not how it's going to survive because you sacrifice so much other it is This is not all just code. This is not just code. There is so much more at play in the social organization and the system itself and how it achieves the one essential idea. The solution to the one is Central problem that must be fixed and that is trust in the broadest of sense between uncooperative parties in parties. The explicitly do not trust each other or explicitly We at odds with each other and that's why there's a there's a section down at the end that I like because this is something that I thought for a long time and took a really try to wrap my head around why these things weren't working but that Nick Szabo talks about why he doesn't really think Bitcoin is worse is better was number one. And I think this is the most powerful piece of his points as well. Is that ideological beliefs about the nature of money is a huge Barrier Liberals are not interested in non-state currencies and austrians believe that currencies must have intrinsic value or be, you know a physical good thing. And and then go earn says down at the bottom my own belief is that number one is probably an important factor, but questionable since the core breakthrough is applicable to all sorts of other tasks like secure Global clocks or time stamping or domain names yet. Those things don't work. Those things have not been able to It's the same themselves with the system's we've got something we got things like namecoin. This is something that I was actually really excited about namecoin came out in 2011. I think it was and so it was it was like the original all coin and it was in a legit attempt to take this decentralized consensus and putting it into an explicitly different application and storing a different sort of Ledger, but I think it fell apart and ends continues to not really have any value because it's not really it's not really giving any security and the the market itself is not powerful enough is not significant enough to command those level of resources for consensus insecurity because part of the consensus mechanism the idea of proof of work is that you cannot reverse this transaction Ledger that you you have unbelievable cost in extending and creating this asset in order to make sure that you know, these are not fraudulent assets that these that the cost is incredibly high in attempting to move backward in time. And the only thing that makes n it is incredibly quote-unquote inefficient. It's not an efficient in the goal that it's trying to achieve but is it is incredibly inefficient in the seeming Simplicity of just using a centralized institution just using a couple of people that Can trust for the the idea of the truth, but it it immediately negates what the solution what the problem was which was we didn't have to trust somebody we didn't have to know and agree on which person was the one to trust on what the truth is, which person is the one who knows properly whether or not it was a scam double spend or a honest double spend that was the issue and it is immediately not solved as soon as you would. Try to make it efficient in the sense of putting it on a central server and just having us refer to that Central server. So it does take an enormous amount of energy and that there is only one problem that is significant enough to command that amount of energy expenditure for it. And that is a problem that causes Wars that is a problem that destroys or makes societies. That is a 1020 hundred trillion dollar problem and Is the problem of money is the largest total addressable Market of anything in existence within the economic framework of humanity, like humans have a scope of what is economic and that is that is a everything that we do to better our lives that we have as goals that which we try to enact in the world. It is The Realm Of Human Action and cooperation. That is the economy money is the best part of that structure everything that exists within that realm is connected to deeply connected to money. That's why something that is this inefficient may actually only work to solve that problem specifically, but that's the most important problem. So it is this is where if worse is better is correct if the New Jersey style really is the the underlying I guess I guess philosophy engineering philosophy that will work best in this sort of atmosphere that will command the most resources in the long term. The the network effects be the most viral if that is the case then it applies in the same. It replies relatively which means that it's even more important for something that is more important. So if if worse is better or the New Jersey style works when it comes to operating systems. And it's going to be orders of magnitude more important for something as critical and foundational as money. We need to solve the core problem. We need to solve the essential idea at the heart of money the Hedge against uncertainty the tool to cooperate among disparate cultures and conflicting ideologies and philosophies. What is that? What is that core idea? And it's the ability to not have to trust someone else to know beyond question that you are on the same page that there is no one with any other authority. Outside of what what you have like, we're truly an undeniably on an even playing field and that can only be accomplished with a full audit with a messy and unbelievably inefficient hash tree that grows in perpetuity that in 10 years. The one of the person who adopts Bitcoin will still have to download 20 years worth of History to know without question that he is on the longest chain of Bitcoin. And from its original history that are from its origin block. I'm from its Genesis block that has followed the rules and has been unquestionably compatible with Bitcoin from then to now or to 10 years from now and that means that that person never has to trust anyone that person has the ability to verify and know beyond a question for themselves. Did they are part of Bitcoin that they are using Bitcoin and per the rules that make Bitcoin? And while it was always a concern that minors would double Smite double spend that it may be that we need mining to and proof of work in order to agree on what the final page of this Ledger is and the state of this Ledger. We also need the network to define the rules which this incentive system lives inside of it is the rules and the consumers and the market itself that defends against any alteration of this and and we learned that years after this was created. We've slowly learned these things over time and adjusted accordingly and it has been made more efficient. It has been that's been the huge engineering philosophy. For so long it's how do we make this thing? So good at consensus that nobody can stop it that we don't even have orphan blocks anymore that it gets across the Great firewall of China that it can run entirely over tour that it can run entirely over satellite in lobe and low Wave radio and if we do that job that good that it can it can withstand the greatest of adversaries and that's another thing about money. Is that money by definition being the most significant and important good in all of economic activity. It is also that which must stand up against the greatest adversaries and the greatest attacks. Therefore again, the system must be as absolutely focused in every possible way on solving the the essential problem here and making sure that in the face of all Double adversaries in all possible competition it still does that job better and faster and that job is not payments for coffee. That is not a hundred trillion dollar problem. That is a 1 to n Innovation. We can do all kinds of stuff with payments after we solve the trust problem and we can leverage that solution to trust to build an entire ecosystem on top of it. And that leads us back to what we read last week about the Bitcoin is a monetary system. It is not just it is it is an issuance system. It is a Consensus system. It is a monetary policy that is agreed upon by the market. These are the Crux of the system these this is the core of what makes this an unbelievable breakthrough transactions are practically just a consequence of the fact that ownership is based on Exchange. So transactions are just kind of a consequence of the system rather than the core idea. There are so many pieces of this. This that we're never achieved before we've never had a decentralised monetary policy. We never had a decentralized monetary issuance. We've never had a decentralized monetary Ledger. We've never had any of these things and they were all solved in one. This is a monetary system that can now be applied to an entire ecosystem on top of it. And again the this this is my favorite paragraph of the whole thing. Just how we solve these things good enough and it's what we'll start here is quote guarantees of Byzantine resilience Loosely sketched out and left for future work incentive compatible. Well, maybe anonymity punted on in favor of pseudonymity. Maybe someone can add real anonymity later guarantees of transactions being finalized none the you Zur is just supposed to check their copy of the blockchain consistent apis forget about it. It's not even a standard. It's all implementation defined and if you ride a client, it better be buggered compatible with satoshi's client Moon math. Nah, it's basic public key crypto plus a lot of imperative stack machine bit twiddling space efficiency a straightforward blockchain and on disk storage takes priority over any fancy compression or data structure schemes fast. And well you can use zero comp and if that's not good enough for buying coffee, maybe someone can come up with something using the smart contract features and so on. What we had is a 40 to 50 percent solution to the most essential problem. All of these things can be sorted out because we've got a protocol that will not die and one that solves the core problem that gives it an unbelievable amount of value and with the core tools with those those fundamental. Rip's not not an Endless Sea of features that we want in the perfect money, but the just enough features to do something powerful with it and to build on top of it in the most secure and uncompromising way with that. We will build everything. It's not gonna be easy. It's not going to be any easier than it was to build out the internet. In fact, it'll probably be harder because there's more at stake because there are greater adversaries in the most insane of ways. Our adversary are the adversaries for Bitcoin essentially are the most powerful institutions in the world today and is down and that is not something to take lightly that is not something to put, you know crypto kitties on at risk of it being able to survive. It's the environment that it's attempting to create or the environment that it's pushing on the pressure that it's creating on the ecosystem that already exists by forcing. It to readjust to reality to a market reality. This being manipulated has been corrupted for centuries essentially and it really is it's it's such a fascinating concept. I love the whole worse has better stuff and the New Jersey style. It's such an interesting idea and it really wasn't until Bitcoin that I stumbled upon this concept and I like I said another one of the wonderful pieces to read or listen to him. This is the iterative. Of capital thesis I highly recommend it really gives a broad history of this thing and does a really good job of defining the New Jersey style, which this piece kind of assumes knowledge of just because you know, it's a prerequisite and this is a piece. They've got the the rise of worse is better by Richard P Gabriel, which I considered reading. Maybe we will maybe we will read it possibly. I don't know this week. Maybe we'll do it later. Sure. I've got a lot of stuff lined up right now and a lot of things that we just recently started. So again, if you guys want to dig into this so much to explore. Like I said, this thing has so many I've never seen anything so packed with sources and links and further reading and it's even really cool too because like while you're going through it all the links are all the little they appear to be links and obviously they are but it pops up so you can Really just read it. So if you slowly, excuse me, if you slowly go through this thing and just hover over stuff you'll see the response from the crypto the cryptography mailing list it they're referring to and you hover over the next one. Then it will show you the side note and you hover over the next one will show you the Wikipedia entry of the little history blob. So gotta gotta recommend go to go earn dotnet and I will have the link its Bitcoin - is - worse is is better. And obviously though I would just have the link available so that you can get to it either from the Twitter post or the show notes. I think that's all I wanted to say. I don't know there's so much to dig into this piece. I could I could read another hour just on other stuff that I clicked on and read through this this this time. I was reading a good chunk of the day yesterday and all this morning on all this stuff because I just love this. But either way we will we'll just drop this one here. We will leave it off for tomorrow got other things to cover. Thank you guys so much for listening. Don't forget. We got bit block Boom coming up this year and I will be a speaker. So if you want to come hang out with the Bitcoin maximalist conference and hear me speak and hang out and drink have a good time. Don't forget to get your tickets ASAP that's bit block boom.com offer. Road CC will save you 30 percent off those tickets. Don't forget about the recent audio book that I completed with the mini awesome authors of the little bit coin book. I love that book. So happy that I was able to do the audio book for it and that is available on Audible. We've got canute's found Holmes sovereignty through mathematics, which will be available on Audible soon. Fingers crossed having a little bit of issues there. But it is also obviously available for free on this show if you have not listened to it and then it seems it looks like everything is good to go and we are going to be doing yawns amazing little book inventing Bitcoin and I love this one. I think you guys are going to love it. So I will let you know when I get that one finished as well so much other stuff coming and working like crazy and getting a little bit overwhelmed right now, but I think it's going to be really really exciting stuff. Announcements to come so stay tuned do not forget to subscribe to the crypto economy with guys Swan. That is me. The guy who has read more about Bitcoin than anybody else, you know, and thank you for joining me on this bat shit crazy ride into the future to discover this thing to dig into this the history of Bitcoin and why something so, Conspicuous some something that looks so bad in so many context. It looks incomplete and doesn't seem to fit the bill. Somehow does somehow gets just gets in there and and creates a gravity that cannot that you cannot pull away from and I think it's only going to get more and more obvious and we're only going to discover more and more about ourselves and about these systems and about Bitcoin. As we move further into the future and solve more improv more and more problems with it and truly create the 90-95 percent right thing. The currency that does solve all of the problems from the base the Crux the fundamental idea of solving the trust and that's where I think we are and I think we are moving at an unbelievable Pace into that future and it is so exciting. So thank you for being here with me. I love you. Oh all this is the crypto economy. If you would like to support my work, you can become a patron at patreon.com the crypto Connolly. I will have the link with all the other good stuff in the show notes. So you could check that out and also you would get you can get access to the crypto economy crew telegram group got a lot of stuff going on the week. It's always have some fun as conversations in there. So it's a good time and we'd love to have you but if you can't do that. You can always share the crypto economy out with all of your friends in the Bitcoin and crypto Konami space or who want to learn more about this crazy new technology and the future that we are headed toward. So thank you. Again. This is guys Swan and I'll catch you all next time. Take it easy guys.
Is Bitcoin the perfect money, or is it the worst money that solves the most essential problem, as simply and reliably as possible? In true "New Jersey” style, Bitcoin doesn’t attempt to be everything, it attempts to do ONE thing as beautifully, & as unambiguously as possible. Today we read a fascinating piece from Bitcoin’s rich history, originally published in 2011, and edited, added to, and updated for years since. At Gwern.net, Bitcoin is Worse is Better: https://www.gwern.net/Bitcoin-is-Worse-is-Better Don’t forget to check out the original piece with a literal ocean of links and further exploration. As a great (& short) read to accompany this on the “Rise of Worse is Better” philosophy, check out the original post by Richard P. Gabriel below: https://dreamsongs.com/RiseOfWorseIsBetter.html For more on the history of Bitcoin, the open source movement, and the “worse is better” design philosophy, I highly recommend the Iterative Capital Thesis on The Cryptocurrency Phenomenon: https://anchor.fm/thecryptoconomy/episodes/Whats-Really-Driving-the-Cryptocurrency-Phenomenon----The-Iterative-Capital-Thesis-e2u7qq  If you want to support the show and join the Cryptoconomy Telegram crew, become a patron below! https://www.patreon.com/thecryptoconomy  ---   This episode is sponsored by  · Anchor: The easiest way to make a podcast. 