The following is a conversation with Silvio McCauley, a computer scientist at MIT,
winner of the Turing Award, and one of the leading minds in the fields of cryptography,
information security, game theory, and most recently, cryptocurrency and the theoretical
foundations of a fully decentralized, secure, and scalable blockchain and Algorand,
a company of cryptographers, engineers, and mathematicians that he founded in 2017.
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with as little ego as possible, and yes, with love. I hope you go along with me on this journey,
and don't judge me too harshly on any likely missteps. As usual, I will play devil's advocate,
I will, on purpose, sometimes ask simple, even dumb questions, all to try and explore the space
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at Lex Freedman. And now, here's my conversation with Silvio McCauley. Let's start with a big
and the basic question. What is a blockchain and why is it interesting? Why is it fascinating?
Why is it powerful? All right, so a blockchain, think of it, is really a common database
distributed. Think about it as a ledger in which everybody can write an entry in a page, you can
write, I can write, and everybody can read, and you have a guarantee that everybody has the same
copy of the ledger that is in front of you. So whatever you see on page seven, anyone else
sees on page seven. So what is extraordinary about this is this common knowledge thing,
that I think is really a first for humanity. I mean, if you look at communication, like right
now, you can communicate very quickly images of thoughts of photos, but do you have a certainty
that whatever you have received has been received by everybody else? Not really. And so there's
a common knowledge and knowledge, and the certainty that everybody can write, nobody has been prevented
from writing whatever they want. Nobody can erase, nobody can tear a page of a ledger,
nobody can swap page, nobody can change anything. And that is a immutable common record is extremely
powerful. And there's something fundamental that is decentralized about it. So at least in spirit,
some degree, against maybe a resistance to centralization. Absolutely. If it is not
decentralized, how can it be common knowledge? If only one person or a few people have a ledger,
they only, you don't have a ledger, you have to ask, you know, what is on page seven, and how do
you know that whatever they tell you is on page seven, they tell the same thing to everybody else.
And so that is this common knowledge is extremely powerful, just to give you an example, assume
that you do an auction, okay? You have worked very hard, you build a building, and now you want to
auction off. Makes sense, because you want to auction worldwide, better yet, you want to
tokenize the building and sell it in all parcels. Now, everybody sees the bids, and you know that
everybody sees the bids, you and I see the same bids, and so does everybody else. So you know that
a fair price has reached, and you know, who owns what, and who has paid how much. And if you do
it instead of a price in an essentialized system, I put a bid, say, oh, congratulations, Alex, you
won, and your price is $12,570. So if instead of a common knowledge is a very powerful tool for
humanity. So we return to it from a bunch of different perspectives, including like a technical
perspective. But you often talk about blockchain and some of these concepts of decentralization,
scalability, security, all those kinds of things. But one of the most maybe impactful, exciting
things that leverage the blockchain, this kind of ledger idea of common knowledge is cryptocurrency,
so in the financial space. So is there, can you say in the same kind of basic way, what is
cryptocurrency in the context of this common knowledge and in the context of the blockchain?
Great. Cryptocurrency is a currency that is on such a ledger. So imagine that on the ledger,
right, initially, you know that somehow, say, you and I are the only owner, each one, let's give it
to ourselves, a billion each of whatever this unit. Then I start writing on the ledger, I give 100
of these units to my sister, you give my, I give as much to my end. And then, and then now, because
it's written on the ledger, and everybody can see my sister can give 57 of these units that
she received from me to somebody else. And so, and that is money. And that is money because
you can see that somebody who tenders your payment has really the money there, right?
You don't have any more of a doubt when you want to sell an item. If I write your check,
is the check covered? If I write or do I have the money at the moment of a transaction? You really
see, because the ledger is always updated, what you see is what I see, what the merchant sees,
you know that the money, so is the most powerful money system there is, because it is totally
transparent. And so you know that you have been paid, and you know that the money is there,
you have not to second guess anything else. So the common knowledge applied there is,
you're basically mimicking the same kind of thing you would get in the physical space, which is,
if you give a hundred bucks or a hundred of that thing, whatever, of that cryptocurrency to your
sister, the actual transfer is as real as you giving like a basket of apples to your sister,
because that, so in the case in the physical space, the common knowledge is in the physics,
right, of the atoms, and then it's digital space, the common knowledge is in this ledger.
And so that transfer holds the same kind of power, but now it's operating in that digital space.
Okay. Again, I apologize for a set of ridiculous questions, but you mentioned
cryptocurrencies of money. What is money? Why do we have money? Do you think about this
kind of from this high philosophical level at times of this tool, this idea that we
humans have all kind of came up with and seem to be using effectively to do stuff?
Money is a social construct, okay, in my opinion. And this has been somehow, people always felt
that somehow money is a way to allow us to transact even though we want to different things.
So I have two ships, and then you have one cow, and I want the cow, but you are looking for blankets
instead, you know. So to have money is really simplifies this. But at the end of, that's why
a bit was invented, and you started with gold, you started when the coinage, when you started
with the check. But at the end of the day, money is essentially a social construct because you
know that what you receive, you can actually spend with somebody else. And so there is a kind of a
social pact and social belief that you have. At the end of the day, even a barter is of requires
these beliefs that other people are going to accept the quote unquote currency you offer them.
Because if I'm amazing, and you ask me to build a wall in your field, and I did. And you, in exchange,
you give me a fuzz and ship, what am I going to do? Eat them all? No, I had to feed them. And if I
don't feed them the dye, and I my value is zero. So in receiving this livestock, I must believe
that somebody else will accept them in return for something else. So money is this social belief,
social shared belief system that makes people transact. That's fascinating. I didn't even,
I didn't even think about that, that you're actually, you have a deep like network of beliefs
about how society operates. So the value is assigned even to sheep, based on that everyone
will continue operating how they were previously operating. Somebody will feed the sheep.
I didn't even, I didn't even think about that. That's fascinating. So that directly transfers to
to the space of money and then to the space of digital money cryptocurrency. Okay. Does it
bother you sort of intellectually when this money that is a social construct is not directly tied
to physical goods like gold, for example? Not at all. Because after all, gold has some industrial
value. Nobody delies it. It's a, it's a metal. It doesn't oxidate. It has some good things about it.
But does this industrial value really represent the value to which it now is traded? No. So
gold is another way to express our belief. I give you an ounce of gold. You treat it like, oh,
somebody else will want this for doing something else. So it is a really this notion of this.
Money is a mental construct. It's really, and it's a shared, it's a social construct, I really
believe. And so some people feel that it's physical, so therefore gold exists. But then, as you know,
now we, countries, most of us, they get a country right now, they print the wrong money and you
believe that they are not going to exaggerate it with inflation. Not everybody believes what I'm
saying. At least they are not going to exaggerate it blatantly. And therefore you receive it because
you know that somebody else who will accept it will have faith in the currency and so on and so
forth. But whether it's gold, whether it's livestock, whatever it is, money is really
a shared belief. So there is something, you know, and I've been reading more and more about different
cryptocurrencies. There is a kind of belief that the scarcity of a particular resource like Bitcoin
has a limited amount in its tied to physical, you know, to prove for work. So it's tied to physical
reality in terms of how much you can mine effectively and so on. That that's an important feature
of money. Do you think that's an important feature to be a part of what are the money is?
That is certainly a very useful part. So at some point in time, you know, assume that money is
something that all of a sudden we say, days is our money, our currency. Then, you know, I offer
you 10 days in payment of whatever goods and services you want to provide. But at the end of
the day, if you know that you can cultivate it and generate it at will, then perhaps, you know,
you should not accept my payment. Here is a bouquet of days. So you need some kind of a scarcity
of inability to create it suddenly out of nothing is an important. And it's not
intrinsic necessity, but it's much easier to accept once you know that there is a fixed
number of units or whatever currency there is. And therefore, you can mentally understand,
I'm getting, you know, this much of this piece of pie. And therefore, I consider myself paid.
I understand what I'm receiving. You described the goals of a blockchain. You have a nice
presentation on this as scalability, security and decentralization. And you challenged the
blockchain trilemma that claims you can only have two of the three. So let's talk about each.
What is scalability in the context of blockchain and cryptocurrency? What does scalability mean?
So remember, if we said that the blockchain is a ledger, and each page receives that
gets some transaction, and everybody can write in this, in these pages of a ledger,
nobody can be stopped for writing and everybody can read them. Okay, scalability means how fast
can you write? Just imagine that you can write an entry in this special shared ledger once every
hour. Well, you know, what are you going to do if you have one transaction per hour?
The world doesn't go around. So you need to have scalability means here that you can somehow
write a lot of transaction, and then you can read them and everybody can validate them.
And that is the speed and the number of transactions per second and the fact that
they are shared. So you want to have this speed, not only in writing, but in sharing and an inspection
for validity. This is scalability. The world is big. The world wants to interact with people,
want to interact with each other, and you better be prepared to have a ledger in which you can
write lots and lots and lots of transactions in this special way very, very, very quickly.
So maybe from a more mathematical perspective, or can we say something about how much scalability
is needed for a world that is big? Well, it really depends how many transactions you want.
But remember that I think right now you have to go into at least a thousand transactions
per second, even if you look at credit cards, we are going to go from
an average of 1600 to peaks of 20,000 or 40,000, something like this. But remember,
it's not only a question of the transaction per se, but the value is that the transaction
is actually being shared and visible to everybody, and the certainty that that is the case.
I can print on my own printer way more transactions that nobody has the time to see
or to inspect that doesn't count. So you want scalability at this common knowledge level,
that is the challenge. I also meant from a perspective of like a complexity analysis.
When you get more and more people involved, doesn't need to scale in some kind of way that...
Do you like to see certain kind of properties in order to say something is scalable?
Oh, absolutely. I took a little bit implicitly that the people transacting are actually very
different. So if there is two people who can do fast and slow transactions per second with each
other, this is not so interesting. What we really need is to say there are billions of people at
any point in time, fast and slow transactions of them want to transact with each other,
and you want to support that. So Algorand, it solves... So that's the company, the team of
cryptographers and mathematicians, engineers, so on, that challenged the blockchain trilemma.
So let's break it down in terms of achieving scalability. How do we achieve scalability
in the space of blockchain, in the space of cryptocurrency?
Okay. So scalability, security, remember, and decentralization. So that's what you want.
What's the best way to approach? Can we break it down? Let's start with scalability and think
about how do we achieve it? Well, to achieve it at one at a time is perhaps easy, even security.
If nobody transacts, nobody loses money. So that is secure, but it's not scalable.
So let me tell you, I'm a cryptographer, so I try to fight the bad guys,
and what you want is that the vesselager that we discussed before cannot be tampered with.
So you must think of it as a special link that nobody can erase. Then it has to be,
everybody should be able to read and not to alter the pages or the content of the pages.
That's okay. But you know what, that is actually easy cryptographically. Easy cryptographically
means you can use tools invented 50 years ago, which in cryptographic time is pastry, okay?
We are cavemen working around and solve their problem in cryptography land. But there is
really a fundamental problem, which is really almost a social, seems a political problem, is to say,
who the hell chooses or publishes the next page on the ledger? I mean, that is really the challenge.
The ledger, you can always add a page because more and more transaction had to be written on
there and somebody has to assemble this transaction, put them on a page and add the next page.
Who is the somebody who chooses the page and adds it on? Who can be trusted to do it?
Exactly. Assume it is me for what I am being, not that I want to volunteer for the job, but
then I would have more power than any absolute monarch in history. Because I would have tremendous
power to say, these are the transactions that the entire world should see. And whatever I don't write,
this transaction will never see the light of day. I mean, no one had any such power in history. So
it's very important to do that. And that is the quintessential problem in a blockchain. And people
have thought about it to say, it's not me, it's not you. But for instance, in proof of work,
what people say is they say, okay, it's not me, it's not you. You know what it is?
We make a very difficult, invent a cryptographic puzzle, very hard to solve. The first one to
solve it has the right to add one page to the ledger on behalf of everybody else.
That's not always seems okay, because, you know, sometimes I solve a puzzle before you do. Sometimes
you solve before I do or before somebody else, somebody else solves it. It's okay.
And presumably the effort you put in is somehow correlated with how much trust
you should be given to add to the ledger.
Yeah. So somehow you want to make sure that, you know, you need to work because you want to prevent,
you want to make sure that, you know, you get to one solution every 10 minutes to say, like in
particular example of Bitcoin. So that is very rare that two pages are added at the same time.
Because if I solve a puzzle at the same time you do, it could happen that if it happens once or
twice we can survive it. But if it happens, you know, every other page, you know, is a double page,
then which of the two is the real page becomes a problem. So that's why in Bitcoin, it is important
that to have substantial amount of work so that no many, how many people try on earth
to solve a puzzle, you have one solution out of how many people are trying every 10 minutes.
So that you have, you distanciate these pages and you have the time to propagate through the
network a solution and the page attached to it. And therefore there is one page at a time that is
added. And you say, well, why don't we do that? We have a solution. Well, first of all, a page
every 10 minutes is not fast enough. It's a question of scalability. And second of all,
to ensure that no matter how many people try, you get one page every 10 minutes,
one solution to the riddle every 10 minutes. This means that the riddle becomes very, very hard.
And to have a chance to solve it within 10 minutes, you must have such an expensive
apparatus in terms of specialized computers, not one, not two, but thousands and thousands of them.
And they produce tons of heat. These dissipate heat like maniac. And you need to refrigerate them
too. And so then now you have air conditioning galore to add to the thing. It becomes so expensive
that fewer and fewer and fewer people can actually compete in order to add to the page.
And the problem becomes so crucial that in Bitcoin, depending on which day of the week,
look at it, you are going to have two or three mining pools are really the ones
capable of controlling the chain. So you're saying that's almost like
at least a centralization. Right. It started being decentralized. But the expenses became
higher and higher and higher. When the cost becomes higher and higher, fewer and fewer
people can afford them. And then it becomes de facto centralized. And a different type of
approach is instead, for instance, a delegated proof of stake, which is also very easy to
explain essentially boils down to to say, well, look at this 21 people say, okay,
don't they look honest? Yes, they do. In fact, I believe that they're going to remain honest
for the foreseeable future. So when do we do ourselves a favor? Let's entrust them
to add the page on behalf of all of us to the ledger. Okay. Okay. But now we are going to say,
is this centralized or decentralized? Well, 21 is better than one, I have to say, is very little.
So if you look at when people rebelled to centralized power, I don't know, the French
revolutions, okay, there was a monarch and the nobles. Were there 21 nobles? No, there were
thousands of them, but there were millions and millions of disempowered citizens. So
one is centralized, 21 is also centralized. So that's delegated proof of stake. Delegated
kind of like representative democracy, I guess. Yes, which is good. It's working great, right?
It's working great. Well, it's better than a monarch, right? But there's problems.
There are problems. And so we were looking for a different, when thinking about Algorand for
a different approach. And so we have an approach in that, you know, is really, really decentralized
because essentially it works as follows. You have a bunch of tokens, right? These are the tokens
that have equal power. And you have, say, 10 billions of tokens distributed
to the entire world. And the owners, each token has a chance to add the ledger,
equal probability like everybody else. In fact, actually, if you want, here is how it works.
So think about, you know, by some magic or graphic process, which is not magic, it's mathematics,
but think of it the magic, assume that you select a thousand tokens.
And so sometimes a random, okay, and you have a guarantee that the random selected. And then
the owners of these 1000 tokens somehow agree on the next page. They all sign it. And that's the
next page. Okay. So it is clear that, you know, nobody has the power, but, you know,
once in a while, one of your tokens is selected and you are in charge of this
committee to select the next page. But this goes around very quickly. So and if you look at this,
the question really is that it's not really centralized. And because for agreeing on the same
page, it is important that the 1000 tokens that you randomly selected are in honest ends,
the majority of them. So which if the majority of the tokens are in honest ends, that is
essentially true, because if the majority of the tokens are in honest ends, if you select,
say 90% of the people are, 90% of the tokens are in honest ends. So can you randomly select a thousand?
In this thousand, you find the 501 tokens in bad ends. Very, very improbable.
So basically, when a large fraction of people are honest, then you can use randomness as a
powerful tool to get decentralization. So what does honesty mean? And now we're into the social
side of things, which is how do we know that like the fraction, the large fraction of
people or participating parties are honest? That is an excellent question. So by the way,
first of all, we should realize that the same thing is for every other system. When you look at
proof of work, you rely that the majority of the mining power is in honest ends. Yes. When you look
at a delegated proof of stake, you rely that the majority of these 21 people are honest. What is
the difference? The difference is that in these other systems, you should say the whole economy
is secure if the majority of this small piece of the economy are honest. And that is a big question.
But instead, in our approach, we say, the whole economy is secure if the majority of the economy
is honest. In other words, who can subvert all ground is not a majority of a small group,
but is a majority of the token holders had to conspire with each other in order to think the
very economy for which they own the majority of. That I think it is a bit harder. Like a
self-destructive majority, essentially. And you're also making me realize that
basically every system that we have in the world today assumes that the majority of participants
is honest. Yes. The only difference is the majority of whom. And in some cases, the majority of a
club. And in our cases, the majority of the whole system. The whole system. So through that kind of
random sampling, you can achieve decentralization. You can achieve the scalability, I understand.
And then the security that you're referring to, basically the security comes from the fact that
that the sample selected would likely include honest people. So it's very difficult to. So by the way,
the security, as you mentioned, that you're referring to is basically security against dishonesty,
right? Or manipulation or whatever. Yes. Yes. So essentially, what you're going to do is to
the following. You say, well, Silvio, I understood what you're saying, but somebody has to randomly
select these tokens. Then I believe you. So then who does this random selection? That's a good point.
And in an algorithm, we do something a little bit unorthodox. Essentially is the token
choose themselves at random. And you say, if you think about it, that seems to be a terrible idea.
Because if you want to say, choose yourself at random, and whoever chooses himself is a
thousand people committee, you choose the page for the rest of us. And because if I'm a bad person,
I'm going to select myself over and over again, because I want to be part of the committee every
single time. But not so fast. So what do we do in algorithm? What does it mean that I select
myself with each one of us in the privacy of our own computer, actually a laptop? What do you do
is that you execute your own individual lottery. And think about that you pull a lever of a slot
machine, you can only pull the lever once, not until you win, not enough times until you win.
And when you pull the lever case one, either you win, in such a case, you have a winning ticket,
or you lose, you don't get any winning ticket. So if you don't have a winning ticket, you can
say anything you want about the next page in the ledger, nobody pays attention. But if you have
a winning ticket, people say, oh, wow, this is one of the 1000 winning tickets, we better pay
attention to what he or she says. And that's how it works. And the lottery is a cryptographic
lottery, which means that even if I am an entire nation, extremely powerful with incredible computing
powers, I don't have the ability to improve even minimally my probability of one of my talking
winning the lottery. And that's how it happens. So everybody pulls the lever, the 1000 random winners
say, oh, here is my winning ticket. And here is my opinion, up or down about the block.
These are the ones that count. And if you think about it, while this is distributed,
because in the case of Algon, there is 10 billion tokens, and you selected a thousand of them,
more distributed than this, you cannot get. And then why is this scalable? Because what do you
have to do? Okay, you have to do the lottery. How long the lottery takes? It takes actually one
microsecond. Whether you have one token or two tokens or a billion tokens is always one microsecond
of computation, which is very fast. We don't hit the planet with a microsecond of computation.
And finally, why is this secure? Because even if I were a very evil and very, very powerful
individual, I'm so powerful that I can corrupt anybody I want instantaneously in the world,
whom would I want to corrupt? The people in the committee, so that I can choose the page of the
ledger. But I do have a problem. I do not know whom I should corrupt. Should I corrupt this lady
in Shanghai, this other guy in Paris? Because I don't know. The winners are random, so I don't
know whom I should corrupt. But once the winner come forward and say, here is my winning ticket,
and you propagate your winning ticket across the network, together with your opinion about the block,
now I know who they are. For sure, I can corrupt all thousand of them given to my incredible powers.
But so what? Whatever they said, they already said, and their winning tickets and their opinions
are virally propagated across the network. And I do not have the power, no more than the US
government or any government has the power to put back in the bottle a message virally propagated by
WikiLeaks. So everything you just described is kind of, is fascinating, a set of ideas.
And, you know, online, I've been reading quite a bit and people are really excited about the
set of ideas. Nevertheless, it is not the dominating technology today. So Bitcoin in terms of cryptocurrency
is the most popular cryptocurrency in the Ethereum and so on. So it's useful to kind of
comment, we already talked about proof of work a little bit, but what in your sense does Bitcoin get
right and where is it lacking? Okay, so the first thing that Bitcoin got right is to understand
that there was the need of a cryptocurrency. And that, in my opinion, they deserve all the success,
because they say the time is right from this idea. Because very often, it's not enough to be right
here, to be right at the right time. And somebody got it right there. So hard to offer to Bitcoin
for that. And so what they got the right is that it is hard to subvert and change the ledger to
cancel a transaction. It's not impossible. That is very hard. What they did not get right is
somehow that is a great story of value, currency wise. But money is not only a question that you
store it and you put under the mattress. Money wants to be transacted. And the transaction in
Bitcoins are very little. So if you want to store value, everybody needs to store value,
matter as well, use Bitcoin. I mean, it's the plant, but if you don't look at that for a moment,
at least it's a great store of value. And everybody needs a store of value. But most of the time,
we want to transact. We want to interact. We don't put the money under the mattress, right?
So we wanted to, and that, they didn't get it right. That is too slow to transact. Too few
transactions. Just scalability. Best scalability issue. Is it possible to build stuff on top of
Bitcoin that sort of fixes the scalability? I mean, this is the thing. You look at,
there's a bunch of technologies that kind of hit the right need at the right time. And they have
flaws, but we kind of build infrastructures on top of them over time to fix it as opposed to
getting it right from the beginning. Or is it difficult to do? Well, that is difficult to do.
So you are talking to somebody that when I decided to throw my heart in the arena,
and I decided, first of all, as I said before, I much admire my predecessors. I mean,
they got it right, a lot of things. And I really admire for that. But I had a choice to make.
Either I patch something that holds all over the place or I start from scratch. I just start
from scratch because sometimes it's a bit of a way. So what about Ethereum, which looks at proof
of stake and a lot of different innovative ideas that kind of improve or seek to improve on some
of the flaws of Bitcoin? Ethereum had another great idea. So they figured out that money and
payments are important as they are. They are only the first level, the first stepping stone.
The next level are smart contracts. And they were at the vision to say the people will need
smart contract, which allow me and you to somehow to transact securely without being
shopped around by a trusted third party, by a mediator. By the way, because mediators are hard
to find. And in fact, maybe even impossible to find if you live in Thailand and I live in New
Zealand, maybe we don't have a common person that we know and trust. And even if we find them,
guess what? They want to be paid. So much so right that 6% of the world GDP goes into financial
friction, which is essentially third party. So the head of right of the world needed that.
But again, the scalability is not there. And the system of smart contracts in Ethereum is slow
and expensive. And I believe is not enough to satisfy the appetite and the need that we have
for smart contracts. Well, what do you make of just as a small sort of a side in human history?
Perhaps it's a big one is the NFT, the non fungible tokens. Do you find those interesting
technically? Or is it more interesting on the social side of things? Well, both. I think it's
NFTs are actually great. So you have this, you are an artist to create a song or you could be
a piece of art. He has many unique representation right over a unique piece where there is an
artifact or something dreamed up by you. And as unique representation, but now you can trade
and allow. And the important part is that now you have this, not only the NFTs themselves,
but the ability to trade them quickly, fast, securely, knowing that who owns which rights.
And that gives a totally new opportunity for content creators to be remunerated for what
they do. But ultimately, you still have to have that scalability, security and decentralization
to make it work for bigger and bigger applications. Correct. Yeah. I still wonder what kind of
applications are yet to be enabled by it because so much the interesting thing about NFTs,
you know, if you look outside of art is just like money, you can start playing with different
social constructs is you can start playing with ideas. You can start playing with,
with even like investing. Somebody was talking about almost creating an economy out of
like creative people or influencers. Like if you start a YouTube channel or something like that,
you can invest in that person and you can start trading their creations and then almost like
create a market out of people's ideas, out of people's creations, out of the people themselves
that generate those creations. And there's a lot of interesting possibilities of what
you can do with that. I mean, it seems ridiculous, but you're basically creating a hierarchy of value,
maybe artificial in the digital world and are trading that. But in so doing are inspiring
people to create. So maybe as a sort of our economy gets better and better and better,
where actual work in the physical space becomes less and less in terms of its importance,
maybe we'll completely be operating in a digital space where these kinds of economies
have more and more power. And then you have to have this kind of blockchains to the scalability,
security, and decentralization. And decentralization is of course the tricky one because
people in power start to get nervous. Absolutely. Once in power, you always
never say you'll be supplanted by somebody else, but this is your job. So congratulations,
you got the job, the top job, and now everybody wants it. Well, what is your sense about our time
and the future hope about the decentralization of power? Do you think that's something that we
can actually achieve given that power corrupts and absolute power corrupts? Absolutely. And it's
so wonderful to be absolutely powerful. Well, good question. So first of all, I believe by the way
there is a complex questions, Lex, and like all the rest of your questions. I'm so very sorry.
It's okay. I am enjoying it. So there are two things. First of all, power has been
centralized for a variety of reasons. When you want to get it, it's easier for somebody,
even a single person, to grab power. But there is also some kind of a technology
lack thereof that justified even in power. Because in a way, in a society in which even
communication, never mind blockchain, which is common knowledge, but even simple unilateral
communication is hard, it's much easier to say, you do as I say, because the alternative is.
So there is a little bit of a technology barrier. But I think that now to get to this
common knowledge that is a totally different story, now we have finally the technology for
doing this. So that is one part. But I really believe that by having a distributed system,
not only you don't have a way, you have actually much more stable and durable system.
Because not only for corruption, but even for things that go astray and you give it a long
enough time by strange version of Murphy's law, whatever goes wrong, goes wrong. And so
and if the power is diffused, you actually are much more stable. If you look at any
living, any living complex living being is distributed. I mean, I don't have somebody
who says, okay, tell Silvio now it's time to eat. You have millions of cells in your body,
you have billions of bacteria. Exactly, help me in the guts of the thing, you know, we are in a
soup of it somehow. It keeps us alive. And so it's strange enough, however, when we design systems,
we design them centralized. We ourselves are distributed beings. And when we plan to say,
okay, I want to create an architecture, how about I make a pyramid, I put the top and the
power flows down. And so again, it's a little bit perhaps of a technology problem. But now
the technology is there. So that is a big challenge to rethink how we want to organize power in very
large system and distribute the system, in my opinion, are much more resilient.
Let's put it this way. There was a wine of my Italian compatriots, right, you know,
Machiavelli, who looked at the time, there was a big, there was a bunch of small state
Democratic Republic of Florence of Venice and the other thing. And there was the Ottoman Empire,
but at the time was an empire and a certain was very centralized. And I made a political observation
that goes roughly to say, whenever you have such a centralized thing is very hard to
overtake that that former government is centralized. But if you get it, it's so easy to keep
population. One instead, these other, these other things are much more resilient.
And when the power is distributed, it's much more, it's going to be lasting for much longer
time. And ultimately, maybe the human spirit wants that kind of resilience, wants that kind
of distribute. It's just that we didn't have technology throughout history. Machiavelli didn't
have the computer, the internet, and that is certainly part of a reason. Yes.
You've written an interesting blog post. If we take a step out of the realm of bits and into this,
the realm of governance, you wrote a blog post about making Algorand governance decentralized.
Can you explain what that means, the philosophy behind that?
You know, how do you decentralize basically all aspects of this kind of system?
Well, the philosophy and the how let's start with the philosophy. So I really believe that
nothing fixed lasts very long. And so I really believe that life is about intelligent adaptation.
Things change, and we have to be nimble and adjust to change. And when I see a lot of
of a crypto project, actually very proud to say it's fixed in stone.
Right, you know, code is law. Law is code. I very fond of a code that will never change.
And you go, wow, when I'm saying this is a recipe to me of disaster, not immediately,
but soon. Just imagine you take an ocean liner and you want to go, I don't know, from Lisbon to
New York, and you set a course, iceberg, no iceberg, tempest and no tempest and all. It
doesn't matter. But it's not the way you need a till you need to correct, you need to adjust.
And so by the way, we design Algorand with the idea that the code was evolving as they need.
And of course, a waiver is a system in which every time there is an adjustment,
you must have essentially a vote that right now is orchestrated with 90% of the stake.
They say, okay, we are ready, we agree on the next version, and we pick up this version.
So we are able to evolve without losing too many components left and right.
But I think without evolving, any system essentially become asphatic,
and is going to shrivel and die sooner or later. And so that is needed. And what you want to do
on the blockchain, you have a perfect platform in which you can log your wishes, your votes,
your things, so that you have a guarantee that whatever vote you express is actually seen by
everybody else. So everybody sees really the outcome, call it a referendum or a change.
And that is, in my opinion, a system that wants to live long as to adapt.
There is an interesting question about leaders. I've talked to Vitalik Buterin.
I'll probably talk to him again soon. He's one of the leaders, maybe one of the faces
of the Ethereum project. And it's interesting. You have Satoshi Nakamoto, who's the face of
Bitcoin, I guess, but he's faceless. He, she, they, it does seem like in our whatever it is,
maybe it's 20th century, maybe it's Machiavellian thinking, but we seek leaders. Leaders have value.
Linus Torvald, the leader of Linux, the open source development a lot. I mean, there's no,
it's not, it's not that the leadership is sort of dogmatic, but it's inspiring. And it's also
powerful in that through leaders, we propagate the vision, like the vision of the project is more
stable, maybe not the details, but the vision. And so do you think there's value to, because
there's a tension between decentralization and leadership, like in visionaries?
Yes. What do you make of that tension? Okay, so I really believe that, that's another
great question. I think of it, you know, I really believe in the power of emotions. I think the
emotions are the creative impulse of everybody else. And therefore it's very easy for a leader
to be a physical person, a real being, and that interprets our emotions. And by the way,
this emotion has to resonate. And what is good is that the more intimate our emotions are,
the more universal they are, paradoxically. The more personal, the more everybody else.
Somehow magically agrees and feels a bit of the same. And so, and it's very important to have a
leader in the initial phase that generates out on nothing something. That is important leadership.
But then the true test of leadership is to disappear after you led the community.
So, in my opinion, the quintessential leader in my, according to my vision, is George Washington.
He served for one term, he served for another term, and then all of a sudden he retired and
became a private citizen. And 200 and change years later, we still are with some defects,
but we have done a lot of things right. And we have been able to vote. That, to me,
is success in leadership. Well, instead, you contrast our experiment with a lot of our experiment.
I've done so much, so well, that I want another four years. And why should I be only a four?
And I have another eight. Why should there be another eight? Give me 16 and we'll fix all your
problem. And now, then is the type, in my opinion, of failed leadership. Leadership ought to be
really lead, ignite, and disappear. And if you don't disappear, the system is going to die with you.
And it's not a good idea for everybody else.
Is there, so we've been talking a little bit about cryptocurrency, but is there spaces where
this kind of blockchain ideas that you're describing, which I find fascinating,
do you think they can revolutionize some other aspects of our world that's not just money?
A lot of things that are going to be revolutionized is independent of finance.
By the way, I really believe that finance is an incredible form of freedom. I mean,
if I free to do everything I want, but I don't even mean to do anything, that's a bad idea.
So I really think financial freedom is very, very important. But you just can say that
against censorship, you write something on the chain and now nobody can take it out.
That is a very important way to express our view. And then the transparency that you give,
because everybody can see what's happening on the blockchain. So transparency is not money,
but I believe that transparency actually is a very important ingredient also of finance.
Let's put it this way. As much as I'm enthusiastic about blockchain and decentralized finance,
and we have actually our expression, we're creating this future five, because as much as
we want to do, we must agree that the first guarantee of financial growth and prosperity
are really the legal system, the courts. Because we may not think about them and say,
oh, the courts are a bunch of boring lawyers, but without them, I'm saying there is no certainty,
there is no notion of equality, there is no notion that you can resolve your disputes.
Think, that's what thrives the commerce and things. And so what I really believe that the
blockchain actually makes a lot of this trust essentially automatic by making it impossible
to cheat in very way. You don't even need to go to court if nobody can change the ledger, right?
So essentially is a way of, you cannot solve an illegal system reduces to a blockchain.
But what I'm saying, a big chunk of it can actually be guaranteed. And there is no reason
why technology should be antagonistic to legal scholarship. It could be actually
resisting. And one should start to doing the interest things that the technology alone cannot
do. And then you go from there. But I think that essentially is blockchain can affect
all kinds of our behavior.
Yes, in some sense, the transparency, the required transparency ensures honesty
prevents corruption. So there's a lot of systems that could use that and the legal system is one
of them. There is a little bit of attention that I wonder if you can speak to where this kind of
transparency, there's a tension with privacy. Is it possible to achieve privacy if wanted
on a blockchain? Do you have ideas about different technologies that can do that?
People have been playing with different ideas.
Yes. So absolutely. The answer is yes. And by the way, I'm a cryptographer.
So I really believe in privacy and I believe in, and I've devoted a big chunk of my life
to guarantee privacy, even when it seems almost impossible to have it. And it is possible to
have it also in the blockchain too. And however, I believe in timing as well. And I believe that
the people have the right to understand their system they live in. And right now,
people can understand the blockchain to be something that cannot be altered
and is transparent. And that is good enough. And right now, anyway, and there is a pseudo
privacy for the fact that who knows if this key belongs to me or to you, right? And I can,
when I want to change my money from one public key, I split it to other public keys going to
figure out which one is silver or all of them are silver or only one of silver. Who knows?
So you get some vanilla privacy, not the one acryptor. And I think it's good enough because
and it's important for now that we absorb this stage, because the next stage, we must understand
the privacy tool rather than taking on faith. When the public starts say, I believe in the
scientists and the whatever they say, I swear by them and therefore if they tell me this private
is private, and nobody understands that we need a much more educated about the tools we are using.
And so I look forward to deploying more and more privacy on the blockchain. But we are not,
I will not rush to it until the people understand and are behind whatever we have right now.
So you build privacy on top of the power of the blockchain. You have to first understand
the power of the blockchain. Yes. Yes. So Algorand is like one of the most exciting,
technically at least from my perspective, technologies, ideas in this whole space.
What's the future of Algorand look like? Is it possible for it to dominate the world?
Let's put it this way. I certainly working very hard with a great team to give the best blockchain
that one can demand and enjoy. And they said, I really believe that very is going to be,
it's not a winner text from all. So it's going to be a few blockchains. And each one is going to have
its own brand and it's going to be great at something. And sometimes it's a scalability,
sometimes it's easier views, sometimes it's a thing. And it's important to have a dialogue
between these things. And I'm sure and I'm working very hard to make sure that one is one of them.
But I don't believe that it is even desirable to have a winner text all because we need to express
different things. But the important thing is going to have enough interoperability of
various systems so that you can transfer your assets where you have the best tool to service
them, whatever your needs are at the time. So there's an idea, I don't know,
that calls themselves Bitcoin maximalists, which is essentially the bet that the philosophy that
Bitcoin will eat the world. So you're talking about, it's good to have variety. Their claim is
it's good to have the best technology dominate the medium of exchange, the medium of store value,
the money, the digital currency space. What's your sense of the positives and the negatives of that?
So I feel people are smart and it's going to be very hard for anybody and to win because
people want more and more things. There is an Italian saying that goes as translates well,
I think. It goes, appetite grows while eating. I think you understand what he means. So I say,
I'm not hungry. It's okay, let me try this and that. So we want more and more and more.
And when you find something like Bitcoin, which I already had very good things to say,
but it does something very well, but it's static. I mean, store value, yes, I think it's a great
way for the rest. It would be a sad world if the world in which we are so anchoring down,
so on the defensive, that we want to store value and hide it on the mattress. I long for a world
in which it is open. We all want to transact and interact with this way. And therefore,
when you want to store value, one, perhaps one chain, where you want to have to transact,
maybe is another. I'm not saying that one chain cannot be store value or other thing,
but I really believe in the ingenuity of people and in the innovation that is intrinsic to the
human nature. We want always different things. So how can it be something invented whatever it is
decades ago is going to fulfill the needs of our future generations? I'm not going to fulfill my
needs. I don't know my kids or their kids. We are going to have a different world and
things will evolve. So you believe that life, intelligent life is ultimately about adaptability
and evolving. So static loses in the end. Let me ask the first ridiculous question.
Do you have any clue who Satoshi Nakamoto is? Is that even an interesting question?
Well, your questions are very interesting. So I would say, first of all, it's not me,
and I can prove it because if I were Satoshi Nakamoto, I would have not found an algorithm
that takes totally different principles to approach to the system. But the other thing,
who is Satoshi Nakamoto? You know what the right answer is? It's not him or her or them.
Satoshi Nakamoto is Bitcoin because to me, it's such a coherent proof of work that at the end,
the creator and the creation identify themselves. So he says, okay, understand Michelangelo. Okay,
he did the system chapel fine. He did the St. Peter's dome fine. He did the Moses of the
Peter statue fine. But besides this, who was Michelangelo? That's the wrong question. This is
his own work that is Michelangelo. So I think that when you look at the Bitcoin is a piece of work
that, as it affects, yes, like anything human, but it was captivated the imaginations of millions
of people as subverted to the state of school. And I'm saying, you know, whoever this person of
people are, he's living in this piece of work. I mean, it is Bitcoin. The idea of the work
is bigger. We forget that sometimes. It's something about our biology once likes to see a face and
attach a face to the idea. When really the idea is the thing we love, the idea is the thing that
impact the idea is the thing that ultimately we, you know, Steve Jobs or something like that, we
associate with the Mac, with the iPhone, with just everything he did at Apple. Apple actually,
the company is Steve Jobs. Steve Jobs, the man is a pales in comparison to the creation.
Correct. And the sense of aesthetics that has brought to the daily lives. And very often,
when aesthetic wins in the long, in the long, in the long game, these are very elegant design
product. And when you say, oh, elegance, very few people care about it. Apparently,
millions and millions and millions and millions of people do because we are attracted by beauty.
And these are beautifully designed products. And, you know, and they've, in addition to
ever the technological aspect of the other thing. And I think, yes, that is,
yeah, as the Stievsky said, beauty will save the world. So I'm with you on that one.
Right. It currently seems like cryptocurrency, all these different technologies are
gathering a lot of excitement, not just in our discourse, but in their like scale financial
impact. A lot of companies are starting to invest in Bitcoin. Do you think that the main
method of store value and exchange of value, basically money will soon or at some point
in the century will become cryptocurrency? Yes. So mind you, as I said, that the notion of
cryptocurrency, like any other fundamental human notion has to evolve. But yes. So I think that
has a lot of momentum behind it. And it's not only static, as this programmable money, as I
think smart contracts, all the time. It allows a peer-to-peer interaction among people who don't
even know each other, right? And they don't even very far cannot even trust each other just because
they never saw each other. So I think it's so powerful that it's going to do this said again,
a particular cryptocurrency should develop and cryptocurrency, they will all develop.
But the answer is yes, we are going towards a much more unless we have a society,
a sudden crisis for different reasons, which nobody hopes. There's always an asteroid,
there's always something. Nuclear war and all the existential crisis that we kind of think about,
including artificial intelligence. Okay. It's funny you mentioned that
Michelangelo and Steve Jobs, you know, a set of ideas represents the person's work. So we talked
about Algorand, which is a super interesting set of technologies. But, you know, he did also win
the Touring Award. You have a bunch of ideas that are seminal ideas. So can we talk about
cryptography for a little bit? What is the most beautiful idea in cryptography or computer science
or mathematics in general, asking somebody who has explored the depths of all?
Well, a few contenders.
Either your work or other work.
And let's leave my work aside. And so but one powerful idea and is a both an old idea in some
sense and a very, very modern one. And it might be known as this idea of a one way function.
So a function that easy to evaluate. So give an X, you can compute f of X easily.
But given f of X is very hard to go back to X. Okay. Think alike,
breaking a glass easy, reconstruct the glass harder.
Frying an egg easy, from the fried egg to go back to the original egg harder.
If you want to be extreme, killings a living being, unfortunately easy, the other way around,
very hard. And so the fact that the notion of a function, which you have a recipe that is in front
of your eyes to transform an X into f of X. And then from f of X, even though you see the recipe
to transform it, you cannot go back to X that in my opinion is one of the most elegant and momentous
notions that there are. And there is a computational notion because of the difficulties
in a computational sense. And it's a mathematical notion because we were talking about function.
And it's so fruitful because that is actually the foundation of all the cryptography.
And let me tell you is an old notion. Because very often in any mythology that we think of,
the most powerful gods or goddesses are the ones of X and the opposite of X, the gods of love and
death. And when you take opposite, they don't just, you know, erase one another, you create something
way more powerful. And this one way function is extremely powerful, because essentially becomes
something that is easy for the good guys and bad for the bad, hard for the bad guys.
So for instance, in pseudo random number generation, the easy part of the function
corresponds, you want to generate bits very quickly. And hard is predicting what the next
bit is. It doesn't look the same. One is Excel for X, going from X for X to XR, what does do
predicting bits by a magic of reductions and mathematical apparatus. This simple function
morphs itself into pseudo random generation. This simple function morphs itself in digital
signature scheme in which digitally signing should be easy and forging should be hard.
Again, a digital signature is not going from X to F for X. But the magic and the richness of
this notion is met that it is so powerful with morphs in all kinds of incredible constructs.
And in both these two opposites coexist, the easy and the hard. And in my opinion,
there is a very, very elegant notion. So that simple notion ties together cryptography.
Like you said, pseudo random number generation, you have work on pseudo random functions. What are
those? What's the difference in those and the generators, pseudo random number generators?
Okay. Let's go back to pseudo random number generation.
Yes. First of all, people think that pseudo random
number generation generates a random number. Not true, because I don't believe that
from nothing, you can get something. So nothing from nothing. But randomness,
you cannot create that on nothing. But what you could do is that you can be expanded.
So in other words, if you give me somehow 300 random bits, truly random bits,
then I can give you 300,000, 300 million, 300 trillions, 300 quad trillions,
as many as you want random bits. So that even though I tell you the recipe by which I produce
these bits, but I don't tell you the initial 300 random numbers, I keep them secret.
And you see all the bits I produce so far. If you were to bet, given all the bits produced so far,
what is the next bit in my sequence? Better than 50, 50. Of course, 50, 50, anybody can guess, right?
But to be inferring something, you have to be a bit better. Then the effort to do this extra bit
is so enormous, that is the factor random. So that is a pseudo random generator,
are these expanders of secret randomness, which goes extremely fast. Okay. Let's say what is
expanders of secret randomness beautifully put. Okay. So every time, every time somebody,
if you're a programmer is using a function that's not called pseudo random, it's called random
usually, you know, these programming languages, and it's generating different. That's essentially
expanding the secret randomness. But they should. In the past, actually, most of the library, they
used something pre-modern cryptography. Unfortunately, they would be better served
300 real seed random number, and then expand them properly, as we know now.
But that has been a very old idea. In fact, one of the best philosophers have debated
whether the world was deterministic or probabilistic. Very big questions, right?
Does God play dice? Exactly. Einstein says it does, it doesn't. But in fact,
now we have a language that even at the Albert time was not around, but it was this complexity
theory, modern complexity based cryptography. And now we know that in the universe, as 300 random
bits, whether where is random or probabilistic or deterministic, it doesn't matter. Because you
can expand this initial seed of randomness forever in which all the experiments you could do,
all the influences you could do, all the things you could do, they are, you are not
be able to distinguish them from truly random. So if you are not able to distinguish truly random
random from this super-duper pseudo-randomness, are there really different things? That's what
I'm saying. Some may need to become really philosophical. So for things to be different,
but I don't have in my lifetime, in my lifetime of the universe, any method to set them aside,
well, I should be intellectually honest to say, well, pseudo-random in this special
function is as good as random. Do you think true randomness is possible? And what does that mean?
So practically speaking, exactly as you said, if you're being honest, the pseudo-randomness
approaches true randomness pretty quickly. But is it, maybe this is a philosophical question,
is there such a thing as true randomness? Well, the answer is actually maybe, but if it exists,
most probably is expensive to get. And in any case, if I give you one on mine,
randomly, you will never tell them apart by any other shape, no matter how much you work on it.
So in some sense, if it exists or not, it really is a quote philosophical sense in the colloquial way
to say that we cannot somehow pin it down. Do you ever, again, just to stay on philosophical
for a bit, for a brief moment, do you ever think about free will and whether that exists? Because
ultimately, free will is this experience that we have, like we're making choices, even though it
appears that the world is deterministic against the debate. But if it is, in fact, deterministic
at the lowest possible level, at the physics level, if it is deterministic, how do you make
sense of the difference between the experience of us feeling like we're making a choice and the
whole thing being deterministic? So first of all, let me give you a gut reaction to the question.
And the gut reaction is that it is important that we believe that there exists free will.
And second of all, almost by weird logic, if we believe it exists, then it does exist. So it's
very important for our social apparatus, for our sense of the day or ourselves, that it exists.
And the moment in which we so want to, we almost conjure it up in existence. But again, I really
feel that if you look at some point, the space of free will seems to shrink. We realize how
more and more, how much of our, say, genetic apparatus dictates who we are, why we prefer
certain things than others, right? And why we react to noises of music. We prefer poetry
or everything else. We may explain even all this. But at the end of the day, whether it exists in a
philosophical sense or not, it's like randomness. If you can, if pseudo-random is as good as random,
vis-a-vis lifetime of the universe, our experience, then it doesn't really matter.
So, you know, we're talking about randomness. I wonder if I can weave in quantum mechanics
for a brief moment. There's a, you know, a lot of advancements on the quantum computing side.
So leveraging quantum mechanics to perform a new kind of computation, and there's concern
of that being a threat to a lot of the basic assumptions that underlie cryptography.
What do you think? Do you think quantum computing will challenge a lot of cryptography?
Will cryptography be able to defend all those kinds of things?
Okay, great. So first of all, for the record, because I think it matters, but it's important
that the record, there are people who continue to contend that quantum mechanics exist,
but that's nothing to do with computing. It's not going to accelerate it. At least, you know,
very basic, you know, hard computation. That is a belief that you cannot take it out.
I'm a little bit more agnostic about it, but I really believe going back to whatever I said
about the one-way function. So one-way function, what is it? That's a cryptography. So does
quantum computing challenge the one-way function? Essentially, you can boil it down to,
does quantum computing find one-way function? What is one-way function? Easy in one direction,
hard in the other. Okay, but if quantum computing exists, when you define what it is easy,
it's not easy by a classical computer and hard by a classical computer, but easy for a quantum
computer, that's a bad idea. But once easy means it should be easy for a quantum and hard for also
quantum. Then you can see that you are, yes, it's a challenge, but you have a hope because you can
absorb, if quantum computing really realizes and becomes available according to the promises,
then you can use them also for the easy part. And once you use them for the easy part,
the choices that you have for one-way function, they multiply. So, okay, so they particularly
in candidates of one-way function, they not be one-way anymore, but quantum one-way function
may continue to exist. And so I really believe that for life to be meaningful with one-way
function had to exist. Because just imagine that anything that becomes easy to do. I mean,
what kind of life is it? I mean, so you need that, and if something is hard, but it's so hard to
generate, you'll never find something which is hard for you. You want that there is abundance,
there is easy to produce, hard problem. That's in my opinion is why life is interesting because
hard problem, pop-up, not really relative speed. So in some sense, I almost think that I do hope
they exist if they don't exist. Somehow life is way less interesting than it actually is.
Yeah, it does. That's funny. It does seem like the one-way function is fundamental to all of life,
which is the emergence of the complexity that we see around us seem to require the one-way function.
I don't know if you play with cellular automata. That's just another formulation of...
I know, but you had a very simple... It's almost a very simple illustration of starting out with
simple rules and one-way being able to generate incredible amounts of complexity,
but then you ask the question, can I reverse that? And it's just a surprising how difficult
it is to reverse that. It's surprising, even in constrained situations, it's very difficult to
prove anything. The sad thing about it... Well, I don't know if it's sad, but it seems like we
don't even have the mathematical tools to reverse engineer stuff. I don't know if they exist or not,
but in the space of cellular automata, when you start with something simple and you create
something incredibly complex, can you take a small picture of that complex and reverse engineer?
That's kind of what we're doing as scientists. You're seeing the result of the complexity and
you're trying to come up with some universal law that generate all of this. What is the theory of
everything? What are the basic physics laws that generate this whole thing? And there's a hope that
you should be able to do that, but it's difficult. But there is also some poetry on the fact that
it's difficult because it gives us a mystery to life. It's not so fun. Life will be less fun.
Can we talk about interactive proofs a little bit and zero-knowledge proofs? What are those?
How do they work? Interactive proof, actually, is a modern realization and conceptualization
of something that we knew was true, that is easy to go to lecture. In fact, that's my motivation.
We invented schools to go to lecture and we don't say, oh, I have the Minister of Education,
I published this book, you read it. And this is a book for this year, this book for this year.
We spend a lot of our treasury in educating our kids and in person, educating, go to class,
interact with each other on the blackboard and chalk on my time. Now we can have a whiteboard
and presumably you're going to have actually these magic pens and a display instead. But the
idea is that interactively, you can convey truth much more efficiently. And we knew this
psychologically. It's better to hear an explanation than just to belabor some paper.
Right? Same thing. So interactive proofs is a way to do the following. Rather than doing
in some complicated, very long papers and possibly infinitely long proofs, exponentially
long proofs, you say the following. If this theorem is true, there is a game that is associated
to the theorem. And if the theorem is true, this game, I have a winning strategy that I can win
half of the time, no matter what you do. Okay. So then you say, well, is the theorem true? You
believe me? Or why should I believe you? So, okay, let's play. So, and if I prove that I have a
strategy that, and I win the first time, and I win the second time, then I lose the third time, but
I win more than half of the time, or I win, say, all the time if the theorem is true and at least
at the most half of the time, if the theorem is false, you statistically get convinced. You can
verify this quickly. And therefore, when the game typically is extremely fast, so you generate a
miniature game in which if the theorem is true, I win all the time. If the theorem is false,
I can win at most half of the time. And if I win, win, win, win, win, win, win, win, you can
deduce either the theorem is true, which most probably is the case on this week, or I've been
very, very unlucky because it's like if I had 100 coin tosses and I got 100 heads, very improbable.
So that is a way. And so this transformation from the formal statement of a proof into a game
that can be quickly played, and you can draw statistics, or many times you win, is one of a
big conquest of modern complexity theory. And in fact, actually, as highlighted,
the notion of a proof has really given us a new insight of what to be true means, and what
what truth is, and what the proofs are. So these are legitimately proofs. So what kind of mysteries
can it allow us to unlock and improve? You said truth. So what does it allow us? What kind of
truth does it allow us to arrive at? So it enlarges the realm of what is provable, because in some
sense of the classical way of proving things was extremely inefficient from the verifier point of
view. And so therefore, there is so much proof that you can take. But in this way, you can actually
very quickly, minutes, verify something that is the correctness of an assertion, that otherwise
would have taken a lifetime to belabor and check all the passages of a very, very, very long proof.
And you better check all of them, because if you don't check one line, an error can be in that line.
And so you have to go linearly through all the stuff, rather than bypass this. So you enlarge
a tremendous amount, what the proof is. And in addition, once you have the idea that essentially
a proof system is something that allows me to convince you of a true statement, but does not
allow me to convince you of a false statement, and that at the end says the best of proof,
proof can be beautiful, should be, should be elegant, but at the end says is true or false,
if you want to be able to differentiate, it is possible to prove the truth, and it should be
impossible or statistically extremely hard to prove something false. And if you do this,
you can prove way, way more, once you understand this. And on top of it, we got some insight,
like in this zero-knowledge proofs, that is in something which you took for granted were the
same, knowledge and verification are actually separate concepts. So you can verify that an
assertion is correct without having any idea of why this is so. And so people felt to say,
if you want to verify something, get to have the proof. Once you have the proof, you know,
why is true, you have the proof itself. And so somehow you can totally differentiate
knowledge and verification validity. So totally you can decide if something is true and still
have no idea. Is a good example, your mind? Oh, actually, you know, at the beginning,
we labored to find the first knowledge, zero-knowledge proof, then we found a second,
then we found a third. And then a few years later, actually, we proved a theorem which
essentially says every theorem, no matter what about, can be explained in a zero-knowledge way.
Okay. So it's not a class of theorem, but all theorems. And it's a very powerful thing. So
we were really, for thousands of years, bought this identity between knowledge
and verification, had to be handed in together. And for no reason at all. I mean, we had to
develop a way of technology, as you know, and very big technology, because it makes us more human
and make us understand more things than before. And I think that's a good thing.
So this interactive proof process, there's power in games. And you've recently gotten into,
recently, I'm not sure you can correct me, mechanism design. So it's, I mean, first of all,
maybe you can explain what mechanism design is and the fascinating space of playing with games
and designing games. Mechanism design is that you want to, you want a certain behavior to arise,
right? If you want to organize, you know, a societal structure or something, you want to have
some orderly behavior to arise, right? Because it is important for your goals. But you know that
people, they don't care what my goals are, they care about maximizing their utility. So put it
crossly, making money, the more money, the better, so to speak. But I'm exaggerating.
Self-interest in whatever way then. So what you want to do is, ideally,
what you want to do is to design a game so that while people played,
so to maximize their self-interest, they achieve the social goal and behavior that I want.
That is really the best type of thing. And it is a very
hard science and art to design these games. And it challenges us to
actually come up with a solution concept for a way to analyze the games that need to be broader.
And I think the game theory has developed a bunch of very compelling
ways to analyze the game. That if the game has a best property, you can have a pretty good guarantee
that it's going to be played in a given way. But as it turns out, and not surprisingly,
these tools have a range of action like anything else. All these so-called
technically solution concepts, the way to analyze the game, like
dominant strategy, something comes to mind to be very meaningful.
But as a limited power, in some sense, the games that can be
admit such a way to be analyzed.
There's a very specific kind of games, and the rules are set, the constraints are set,
the utilities are all set. So if you want to reason, there is a way, say,
that you can analyze a restricted class of games this way. But most games don't fall
into this restricted class. Then what do I do? You need to enlarge away what a rational player
can do. So for instance, in my opinion, at least in some of my, I played with this for a few years,
and I was doing some exoteric things, I'm sure, in the space that were not exactly mainstream.
And then I changed my interest and blockchain. But what I'm saying for a while, I was doing,
so for instance, to me, is a way in which I design the game, and you don't have the best move
for you. The best move is the move that is best for you, no matter what the other players are
doing. Sometimes a game doesn't have that, okay, it's too much to ask. But I can design the game,
such of it, given the option in front of you, say, oh, these are really stupid for me,
take them aside. But these, these are not stupid. So if you design the game, so that in any
combination of non-stupid things that the player can do, I achieve what I want, I'm done. I don't
care to find the very unique equilibrium. I don't give a damn. I want to say, well, as long as you
don't do stupid things, and nobody else does stupid things, good social things outcome arise,
I should be equally happy. And so I really believe that this type of analysis is possible. And as a
bigger radius, so it reaches more games, more classes of games. And after that, we have to enlarge
it again. And it's going to be, we are going to have fun, because human behavior can be conceptualized
in many ways. And it's a long game. It's a long game. Do you have favorite games that you're
looking at now? I mean, I suppose your work with Blockchain and Algorand is a kind of game that
you're, you're basically this mechanism design, design the game such that it's scalable, secure,
and decentralized, right? Yes, yes. And very often yet to say, and very, and you must also design
so that the incentives are, are, are, and things tend to be too for whatever little I learned from
my venture in mechanism design is that incentives are very hard to design, because people are very
complex creatures. And so, and so somehow the way we design Algorand is a totally different way,
essentially with no incentives, essentially. And, and, but, but technically speaking,
there is a notion that is actually believable, right? So that to say, people want to maximize
their utility, yes, up to a point. Let me, let me tell you, assume that if you are honest,
you make 100 bucks. But if you are dishonest, no matter how dishonest you are,
you can only make 100 bucks and one cent. What are you going to be? I'm saying, you know, what,
technically speaking, even that one cent, nobody bothers and say, how much am I going to make by
honest 100? If I'm devious, and if I'm a criminal, 100 bucks and one cent, you know, I might as well
be honest, okay? So that essentially is called, you know, epsilon utility equilibrium, but I think
it's good. And, and, and, and that's what we design essentially means that, you know,
there is an, having no incentives is actually a good thing because to prevent people from
reasoning, how else are you going to gain the system? But why can we achieve in Algorand
to have no incentives and in Bitcoin instead yet to pay the miners because they do tremendous
amount of work? Because if you have to do a lot of work, then you demand to be paid accordingly.
Because you, right? But if I're going to say, you had to add the two and two equal to four,
how much you want to be paid for this? Or if you don't give me this, I don't add the two and two.
I would say you can add two and two in your sleep. You don't need to be paid to add the two and two.
So the idea is that if we make the system so efficient, so that generating the next block
is so damn simple, it doesn't hit the universe, let alone my computer, let alone it takes a
micro-segano computation, I might as well not be, being received incentives for doing that
and try to incentivize some other part of the system, but not the main consensus,
which is a mechanism for generating and adding block to the chain.
Since you're Italian, Sicilian, I also heard rumors that you are a connoisseur of food.
If I said today's the last day, you get to be alive. You shouldn't have trusted me.
You never know whether you're going to make it out or not. If you had one last meal,
or you can travel somewhere in the world, either you make it or somebody else makes it,
what's that going to look like? All right. If it's one last meal, I must say in this era of COVID,
I've not been able to see my mom, and my mom was a fantastic chef,
and had the best very traditional food. As you know, the very traditional food are great for a
reason because they survived hundreds of years of culinary innovation. There is one very laborious
thing, and you heard the name, which is Parmigiana, but to do it is a piece of art
for quite so many hours, but only my mom could do it. If I have one last meal, I want Parmigiana.
Okay. What's the laborious process? Is it the ingredients? Is it the actual process?
Is it the atmosphere and the humans involved?
Valader. The ingredient, like in any other Italian cuisine, believes in very few ingredients.
If you take, say, quintessential Italian recipe, spaghetti pesto, okay? Pesto is olive oil,
very good extra virgin olive oil, basil, pine nuts, pepper, a clove of garlic, not too much,
otherwise you do overpower everything. And then you have to do either two schools of thought,
parmesan or pecorino or a mix of the two. I mentioned six ingredients. That is typical Italian.
That is, I understand that there are other cuisines, for instance, a French cuisine,
which is extremely sophisticated and extremely combinatorial, or some Chinese cuisine,
which has a lot of, many more ingredients than this. And yet the art is to put them together
a lot of things. In Italy, it's really the striving for simplicity, yet to find
few ingredients, but the right ingredients to create something. So in Parmigiana,
the ingredients are eggplants, they are tomatoes, they are basil, but how to put them together
and the process is an act of love, okay? Labor and love is that you can spend
the entire day when I'm exaggerating, but the entire morning for sure, to do it properly.
Yeah, it's a Japanese cuisine too. There's a mastery to the simplicity with the sushi.
I don't know if you've seen Georgians of sushi, but there's a mastery to that that's propagated
through the generations. It's fascinating. You know, people love it when I ask about books.
I don't know if books, whether fiction, nonfiction, technical or completely non-technical,
had an impact in your life throughout, if there's anything you would recommend,
or even just mention as something that gave you an insight or moved you in some way.
So, okay. So I don't know if I recommend, because in some sense, you almost had to be
Italian or to be such a scholar, but being Italian, one thing that really impressed me
tremendously is the divine comedy. It is a medieval poem, a very long poem, divided in three parts,
hell, purgatory, and paradise. And that is the non-trivial story of a middleman man
gets into a crisis, personal crisis, and then out of this crisis, he purifies,
when he's in a catastrophe, he purifies himself more and more and more until
he's become capable of actually meeting God. Okay. And this is actually a complex story.
So you had to get some very sophisticated language, maybe Latin at that point,
that we were talking about 1200s Italy, right, in Florence. And this guy instead,
he chose his own dialect, not spoken outside his own immediate circle, right,
a Florentine dialect. Actually, Dante really made Italian. So how can you express such a
sophisticated things and so forth? And then the point is that these words that nobody actually knew
because they were essentially dialect, and plus a bunch of very intricate rhymes in which they had
to rhyme with the things, and turns out that by getting meaning from the things that rhyme,
you essentially guess what the world means, and you invent Italian, and you communicate
by almost osmosis, what you want, is a miracle of communication. In a dialect, a very poor language,
very unsophisticated, to express a very sophisticated situation. I love it. People who love it,
and Italians and not Italian. But what I got of it is that very often, limitations are our strength.
Because if you limit yourself at a very poor language, somehow you get out of it, and you
achieve even better form of communication, if you're using a hypersophisticated literary language
with lots of resonance from the prior books so that you can actually instantaneously quote,
he couldn't quote anything because nothing was written in Italian before him.
So I really felt that limitations are our strength. And I think that rather than complaining about
the limitations, we should embrace them. Because if we embrace our limitation, limited as we are,
we find very creative solutions that people with less limitation we have, we would not even think
about it. Well, the limitations are kind of superpower, if you choose to see it that way.
Is there, since you speak both languages, is there something that's lost in translation to you?
Is there something you can express in Italian that you can't in English? And vice versa,
maybe? Is there something you could say to the musicality of the language? I mean,
I've been to Italy a few times, and I'm not sure if it's the actual words, but the people are
certainly very, there's body language too. There's just the whole being is language.
So I don't know if you miss some of that when you're speaking English in this country.
Yes. In fact, actually, I certainly, I miss it. And somehow it was a sacrifice that I made
consciously by the time I arrived, I knew that this I was not going to express myself.
At a better level. And it was actually a sacrifice because given you have also your
mother tongue is Russian. So you know that you can be very expressive in your mother tongue,
and not very expressive as a new tongue, a new language. And then what people think of you,
the new language, because when the precise of expression of things, it generates,
you know, it shows, you know, my elegance or it shows, you know, knowledge or it shows as a
census or it shows as a caste or education, whatever it is. So all of a sudden, I found
myself on the bottom. So I had to fight all my way up back up. And but what I'm saying,
I go back to the limitations are actually our strength. In fact, is a trick to limit yourself
to exceed, right? And, you know, there are examples in history, if you think about, you know,
Hernán Cortés, right, goes to in Mexico. He has what, a few hundred people with him.
And he has a hundred thousand people in arms on the other side. First thing he does,
he limits himself. He sinks his own ship. There is no return. Okay. And I'm very
happy to actually manage that. That's really profound. I actually,
first of all, that's inspiring to me. I feel like I have quite a few limitations,
but more practically on the Russian side, I'm going to try to do a couple of really big and
really tough interviews in Russian. Once COVID lifts a little bit and traveling to Russia.
And I'll keep your advice in mind that the limitations is a kind of superpower. We should
use it to our advantage because you do feel less like you're not able to convey your wisdom
in the Russian language. Cause I moved here when I was 13. So you don't, you know, the parts of life
you live under a certain language are the parts of life you're able to communicate. You know,
I became, I became a thoughtful, deeply thoughtful human in English. But the pain from World War
II, the music of the people, that wasn't instilled with me in Russian. So I can carry both of those
and there's limitations in both. I can't say philosophically profound stuff in Russian,
but I can't in English express like that melancholy feeling of like the people. And so combining those
two all somehow. Oh, beautifully said. Thanks for sharing. This is great. Yes. I totally understand
you. Yes. You've accomplished some incredible things in this space of science, in the space of
technology, space of theory and engineering. Do you have advice for somebody young,
an undergraduate student, somebody in high school, or anyone who just feels young?
About life or about career, about making their way in this world?
So I was telling before that I believe in emotion and my thing is to be true to your own emotion.
And that I think that if you do that, you're doing well because it's a life well spent.
And you are going never tire because you want to solve all these emotional knots of it.
I was intrigued you from the beginning and I really believe that to live meaningfully,
creatively, and yet to live your emotional life. So I really believe that whether you're a scientist
or an artist even more, but a scientist, I think of them as artists as well. If you are a human
being, so you are really to live fully your emotions. And to the extent possible, sometimes
emotions can be overbearing. And my advice is try to express them with more and more confident.
Sometimes it's hard, but you are going to be much more fulfilled by suppressing them.
What about love? One of the big ones. What role does that play?
That's the bigger part of emotions. It's a scary thing. It's a lot of vulnerability
that comes with love, but there is also so much energy and power and love in all senses
and in the traditional sense, but also in the sense of a broader sense for humanity,
feeling this compassion that makes us one with other people and the suffering of other people.
All of this is a very scary stuff, but it's really the fabric of life.
The sad thing is it really hurts to lose it. Yes. That's why the vulnerability comes with it.
That's the thing about emotion is up and down, and the down seems to come always with up,
but the output only comes with the down. Let me ask you about the ultimate down, which is,
unfortunately, we humans are mortal or appear to be for the most part. Do you think about
your own mortality? Do you fear death? I hope so. Because without death, there is no life,
so at least there is no meaningful life. Death is actually, in some sense, our ultimate motivator
to live a beautiful and meaningful life. I myself felt as a young man unless I got something that
I wanted to do and I don't know why I got the idea of something to say. If I'm not able to say,
I would suicide. Maybe it was a way to motivate myself, but you don't need to motivate it because
in some sense, unfortunately, death is there. You better get up and do your thing because
death is the best motivation to live fully. What do you think, what do you hope your legacy is?
You mentioned you have two kids. Yes. I really feel that on one side is my biological legacy
and that is my two kids and their kids, hopefully, and that is one fine. The other thing is
this common enterprise, which is society, and I really feel that my legacy would be better by
providing security and privacy. Actually, for me, our metaphorical to say I want to give you the
ability to interact more and take more risks and reach out to more and more people as difficult
and dangerous as it may seem. My whole scientific work is about to guarantee privacy and give you
the security of interaction. Not only in a transaction, like it would be a blockchain
transaction, but that is really one of the hard core of my emotional problems. These are the
problems I want to tackle. Ultimately, privacy and security is freedom. Yes. Freedom is at the
core of this. It's dangerous. It's like the emotion thing. Ultimately, that's how we create all the
beautiful things around us. Do you think there's meaning to it all, this life, except the urgency
that death provides and us anxious beings create cool stuff along the way? Is there a deeper meaning
and if it is, what is it? Well, meaning of life. Actually, there are three meanings of life.
One, to seek. Two, to seek. And three, to seek. To seek what? Or is there no answer to that?
There's no answer to that. I really think that the journey is more and more important than the
destination, whatever that would be. I think that is a journey and in my opinion, at the end of the
day, I must admit meaningful in itself. And we must admit that maybe whatever your destination
might be, we may never get there, but hell was a great ride.
Well, I don't think there's a better way to end this, Silvio. Thank you for wasting your extremely
valuable time with me today, joining on this journey of seeking something together. We found
nothing, but it was very fun. I really enjoyed it. Thank you so much for talking to us.
Thank you, Alex. It was really special for me to be interviewed by you.
Thank you for listening to this conversation with Silvio McCauley and thank you to our sponsors,
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