The following is a conversation with Silvia 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 at Algorand, a company of cryptographers, engineers, and mathematicians that he founded in 2017.
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Let's start with the 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 a... It's 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 a really a first for humanity. I mean, if you look at communication, like right now.
you can communicate very quickly images or thoughts or 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 commonality of 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. that is immutable comma record is uh extremely powerful and uh there's some
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 commonality is like extremely powerful just
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 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.
If you do it instead of acquiring an essentialized system, I put a bid, say, oh, congratulations, Alex, you won, and your prize is $12,570. How do you know? So if instead there is a... Common knowledge is a very powerful tool for humanity. So we'll 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 ledger idea of common knowledge is cryptocurrency 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.
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 ourselves, a billion each of whatever this unit. Then I start writing on the ledger. I give 100 of these units to my sister. I give this much to my aunt 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 that is money. And that is money because you can see... that somebody who tenders you a 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 you a check, is the check covered?
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 they have the money, so it's 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 100 bucks or 100 of that thing, whatever, of that cryptocurrency to your sister, the actual transfer.
is as real as you giving a basket of apples to your sister. So in the case, in the physical space, the common knowledge is in the physics. Right. Of the atoms. And in its 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 the digital space. Correct. Again, I apologize for a set of ridiculous questions, but you mentioned cryptocurrencies and 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 seemed 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 different things. So I have two sheep and then you have one cow.
And I want the cow, but you are looking for blankets instead, you know. So to have money really simplifies this. But at the end, that's why a bit was invented. And you start with gold, you start with cornage, then you start with 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... requires these beliefs that other people are going to accept the quote-unquote currency you offer them. Because if I'm a mason and you ask me to build a wall, in your field. And I did. And you, in exchange, you give me a fuzz and sheep.
What am I going to do? Eat them all? No, I have to feed them. And if I don't feed them, they die and 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 a social belief, social shared belief system that makes people transact. That's fascinating. I didn't even think about that, that you're actually...
You have a deep 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 think about that. That's fascinating. 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 metal. It doesn't oxidate. It has some good things about it.
Does this industrial value really represent the value at which 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 really this notion of money is a mental construct. It's really... and is shared, is 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 sophisticated countries right now, they print their own money and you believe that they are not going to exaggerate it with inflation. Not everybody believes it. There is at least a... We are not going to exaggerate blatantly. And therefore, you receive it because you know that somebody else 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 uh and it's tied to physical you know uh to to proof of 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 part of whatever the money is? That is certainly very useful. So. And at some point in time, you know, assume that, you know, money is something that all of a sudden we say daisies are money, are the currency. Then, you know, I offer you 10 daisies 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 them at will, then perhaps, you know, you should not accept my payment. Here is a bouquet of daisies. So you need some... kind of a scarcity, the inability to create it suddenly out of nothing is unimportant. And it's not an intrinsic necessity, but it's much easier.
to accept once you know that there is a fixed number of units of whatever currency there is and therefore you can mentally understand i'm getting you know this much of this piece of a 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? Remember, we said that the blockchain is a ledger and each page receives a transaction and everybody can write 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 spatial shared ledger once every hour. Well, you know, what are you going to do if you have one transaction per hour? the world that doesn't go around. So you need to have scalability means here that you can somehow write a lot of transactions 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. The 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, I think I'm right now yet to go into at least thousands of transactions. per second. Even if you look at credit cards, we are going to go from an average of 1,600 to peaks of 20,000, 40,000, something like this.
But remember, it's not only a question of a 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, right? So you want scalability at this common knowledge level. That is the challenge.
I also meant from a perspective of like a complexity analysis. So when you get more and more people involved, doesn't you just 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 transaction per second with each other, this is not so interesting.
What we really need is to say there are billions of people and at any point in time, you know, thousands and thousands of them want to transact with each other and you want to support that. So Al Grand... 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 in that decentralization, right? 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? To achieve it one at a time is perhaps easy, even in security. If nobody transacts, nobody loses money.
So that is secure, but it's not scalable. So let me tell you, I'm a cartographer. So I try to fight the bad guys. And what you want is that vessel ledger that we discussed before. cannot be tampered with. So you must think of it as a special ink 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 prehistory, okay? We are cavemen working around and solve their problem in cryptography land. But, you know... 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. With ledger, you can always add a page because more and more transactions have to be written on there. And somebody has to assemble this transaction, put them on a page, and add to 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'm being, not that I won't volunteer for the job, but then I would have more power than any absolute monarch in history.
Because I would have the 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 a 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, we invent a cryptographic puzzle, very hard to solve. The first one who solves it has the right to add one page to the ledger on behalf of everybody else. That now seems okay because, you know…
Sometimes I solve a puzzle before you do. Sometimes you solve it before I do or before 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 need to work because you want to prevent, you want to make sure that, you know.
You get one solution every 10 minutes, say, like in particular example of Bitcoin. So it 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, it becomes a problem. So that's why in Bitcoin...
It is important to have a 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 they say well
Why don't we do it? 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...
in terms of specialized computers. Not one, not two, but thousands and thousands of them. And they produce tons of heat, okay? They dissipate heat like a 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 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 you 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... 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, you know.
it becomes, you know, de facto centralized, right? 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 say, well, look at these 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 why don't 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, but I have to say it's 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. Yes. Were there 21 nobles? No, there were thousands of them, but there were millions and millions of disempowered citizens.
One is centralized, 21 is also centralized, right? So that's delegated proof of stake. Delegated proof of stake. 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 single monarch, right? There's problems. There are problems. And so we were looking for a different, when thinking about algorithms, for a different approach.
And so we have an approach that is really, really decentralized because essentially it works as follows. You have a bunch of tokens, right? These are the tokens. and that have equal power and you have to say 10 billions of tokens distributed to the entire world and the owners each token as 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 cryptographic process.
which is not magic, it's mathematics, but think of it as magic. Assume that you select a thousand tokens and so sometimes are random, okay? And you have a guarantee that they're random selected. And then the owners of these 1,000 tokens somehow agree on the next page. They all sign it. And that's the next page. Okay? So... It is clear that nobody has the power, but 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 they...
1,000 tokens that you randomly selected are in honest hands, the majority of them. So which, if the majority of the tokens are in honest hands, that is... essentially true, because if the majority of the tokens are in honest hands, if you select, say, 90% of the people are, 90% of the tokens are in honest hands, 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. which is how do we know that a 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 put for work, you rely that the majority... of the mining power is in honest hands 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 seem to say the whole economy is secure if the majority of this small piece of economy are honest. And that is a big question. But instead, in Algorand, in our approach, we say, the whole economy is secure if the majority of the economy is honest. In other words, who can subvert Algorand? It's not a majority of a small group. but as a majority of the token holders had to conspire with each other in order to sink the very economy for which they own the majority of.
But I think it is a bit harder to. 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 case, it's the majority of the whole system. The whole system. Okay, so through that kind of random sampling, you can achieve decentralization. You can achieve...
So the scalability, I understand. And then the security that you're referring to, basically the security comes from the fact 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 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. 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 Algorand? What does it mean that I select myself? That 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 1,000 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 tokens winning the lottery. And that's how it happens.
Everybody pulls the lever. The 1,000 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 there is, in the case of Algon, there is 10 billion tokens and you select a thousand of them more distributed than this, you cannot get. And then why is this, you know...
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 comes forward and says, here is my winning ticket, and you propagate... You're winning tickets across the network. Together with your opinion about the bloc, now I know who they are. For sure, I can corrupt all thousands 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. Varially propagated by WikiLeaks. So everything you've just described is kind of, it's fascinating, a set of ideas and, you know.
Online I've been reading quite a bit and people are really excited about those set of ideas. Nevertheless, it is not the dominating technology today. So Bitcoin in terms of cryptocurrency is the most popular cryptocurrency and then 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, Trumps, they deserve all the success because they say the time is ripe for this idea. Because very often, it's not enough to be right yet, to be right at the right time.
Somebody got it right there. So hot offer to Bitcoin for that. And so what they got right is that it is hard to subvert and change the ledger too. to cancel a transaction. It's not impossible, that is very hard. What they did not get right is somehow that is a great store 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, might 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? And that, they didn't get it right. That is too slow to transact. Too few transactions. Just scalability. 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 hat 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 and I really admire for that but you know I had a choice to make either I patch something that has holes all over the place, or I start from scratch. I decided to start from scratch, because sometimes it's a better 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 it 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 that 6% of the world GDP goes into financial friction, which is essentially third party. So the headed 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 that 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 aside in human history? Perhaps it's a big one.
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 NFTs are actually great, right? So you are an artist to create a song, or it could be... a piece of art. He has many unique representations of a unique piece, whether it's an artifact of something dreamed up by you, and there's a unique representation that now you can trade.
And the important part is that now you have not only the NFTs themselves, but the ability to trade them quickly, fast, securely. knowing 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.
Yeah, I still wonder what kind of applications are yet to be enabled by it because so much, the interesting thing about NFTs, if you look outside of art, is... Just like money, you can start playing with different social constructs. You can start playing with ideas. You can start playing with even like... Somebody was talking about almost creating an economy out of creative people or influencers. 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 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 the digital space where...
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're always nervous to be supplanted by somebody else, but this is your job. 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, it's a complex question, Lex. 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 having a 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 is much easier to say, you do as I say. Because the alternative is... So there is a little bit of a technological barrier. But I think that, and now to get to this common knowledge, it is a totally different story. Now we have finally the technology for doing this.
that is one part but i really believe that you know not by having a distributed system not only you don't have a way you have to actually much more stable and durable system Because not only for corruption, but even for things that go astray and give it a long enough time by strange version of Murphy's law, whatever goes wrong. goes wrong. And if the power is diffused, you actually are much more stable. If you look at any complex living being is distributed.
I mean, I don't know if somebody is, okay, tell Sylvia 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. I think, you know, we are in a soup. us alive. 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 this on 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 do we want to organize power in very large system? And distributed system, in my opinion, are much more resilient. Let's put it this way. italian compatriots right you know machiavelli who who looked at that time there was a big
There was a bunch of a small state, a democratic Republic of Florence, of Venice, and the other thing. And there was the Ottoman Empire, that at that time was an empire, and Assad was very centralized. And he made a political observation. That goes roughly to say whenever you have such a centralized thing, it's very hard to overtake that former government is centralized. But if you get it, it's so easy to keep.
the population, while instead these other things are much more resilient. When the power is distributed, it's going to be lasting for a much longer time. And ultimately, maybe the human spirit wants that kind of resilience, wants that kind of distribution. 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 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 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 a crypto project... actually very proud to say it's fixed in stone. Right, you know, code is law, law is code, therefore the code will never change. You go, wow, when I'm saying this is a recipe to me of disaster, not immediately. 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, no tempest. It doesn't matter. That is not the way. You need a till. You need to correct. You need to adjust. And so, by the way, he would design an algorithm with the idea that the code was evolving as the needs. 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 becomes asphatic and is going to shrivel and die sooner or later. and and so that is um is needed and what you want to do under 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, of a referendum, of a change. And that is, in my opinion, a system that wants to live long as to adapt. There's an interesting question about leaders. I've talked to Vitalik Buterin. I'll probably talk to him again soon.
one of the leaders, maybe one of the faces of the Ethereum project. And it's interesting, you have Satoshi Nakamura, 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... of Linux, the open source development a lot. I mean, 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. 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. 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. By the way, these emotions have 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 it's very important to have a leader in the initial phase that generates out of nothing something. That is important leadership. But then the true test of leadership is to disappear after you lead 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 sound effects, but we have done a lot of things right. And we have been able to evolve. That to me is success in leadership. But instead, you contrast our experiment with a lot of experiments. I've done so much, so well, that I want another four years.
And why shouldn't I be only a four and I have another eight? Why should be another eight? Give me 16, I will fix all your problems. 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. 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 are going to be revolutionized. It's independent of finance. By the way, I really believe that finance is... an incredible form of freedom. I mean, if I'm free to do anything I want, but I don't have the means to do anything, that's a bad idea. So I really think financial freedom is very, very important. But, you know, just I can say that, you know... against censorship. You write something on the chain and now nobody can take it out.
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. 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, of course, they're 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 dispute.
thing 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 but make it impossible to cheat in very a way. You don't even need to go to court if nobody can change the ledger, right? So it essentially is a way of...
You cannot solve an illegal system that 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 coexisting and one should start to doing the interesting things that the technology alone cannot do and then you go from there. But I think that is... 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. 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 blockchain. Do you have ideas about different technologies that can do that? People have been playing with different ideas. 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 have 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. 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 public key belongs to me or to you, right? And 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 Silvio. Are all of them of Silvio or only one of Silvio? Who knows? So you get some vanilla privacy, not the one I can talk about. 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 to say, I believe in the scientists, and whatever they say, I swear by them, and therefore if they tell me it's private, it's private, and nobody understands it very well, we need 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. 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 Algon 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 with said, I really believe that there is going to be It's not a winner takes them 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 scalability, sometimes it's your views, sometimes it's a thing. And it's important to have a dialogue between these things.
I'm sure, and I'm working very hard to make sure that Nagrande is one of them. But I don't believe of it at all. is even desirable to have, you know, a winner takes all because we need to express different things, but the important thing is going to have enough interoperability with 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.
They call 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 of 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 to win.
People want more and more things. There is an Italian saying that translates well, I think. It goes, the appetite grows while eating. Okay? I think you understand what he means. So I say, I'm not hungry. Okay, food. Let me try this. So we want more and more and more. And when you find something like Bitcoin, which are already very good things to say, but it does something very well, but it's static. I mean, store of value, yes. I think it's a great way.
The rest, you know, 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 under the mattress. I long for a world in which it is open. People want to transact and interact with each way. And therefore, when you want to store value, perhaps one chain,
where you want to transact maybe is another. I'm not saying that, you know, one chain cannot be stored of value or another thing, but I really believe, I 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, let alone one of my kids or their kids. We are going to have a different world. Fingers will evolve. So you believe that life, intelligent life, is ultimately about adaptability and evolving. So static loses in the end. Yes. Let me ask the, well, first the 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, you know, if I were Satoshi Nakamoto, I would have not found an algorithm. It takes totally different principles to approach to the system. But the other thing, with Satoshi Nakamoto, you know what the right answer is?
It's not him or her or them. Satoshi Nakamura is Bitcoin. Because to me, it's such a coherent proof of work that at the end... the creator and the creation identify themselves. He says, okay, I understand Michelangelo. Okay, he did the Sistine Chapel, fine. He did the St. Peter's Dome, fine. He did the Moses of the Pietra statue, fine.
Besides this, who was Michelangelo? That's the wrong question. It's his own work. That is Michelangelo. So I think that when you look at the Bitcoin, it's a piece of work that... As it defects, yes, like anything human. But it was captivated the imaginations of millions of people as subverted the status quo. And I'm saying, you know, whoever this person or people are.
He's living in this piece of work. It is Bitcoin. The idea of the work is bigger. We forget that sometimes. It's something about our biology. 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, Steve Jobs or somebody 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, pales in comparison to the creations of the man. aesthetics that has brought to the daily lives. And very often aesthetic wins in the long end. And these are very elegant.
designed 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, in addition to the technological aspect of the other thing, and I think, yes, that is...
Yeah, as Dostoevsky said, beauty will save the world. So I'm with you on that one. Great. It currently seems like cryptocurrency, all these different technologies are... gathering a lot of excitement, not just in our discourse, but in their scale financial impact. A lot of companies are starting to invest in Bitcoin. Do you think that the main method of store of 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 he has... a lot of momentum behind it and it's not only static as this programmable money, as I think... Smart contracts. Smart contracts. It allows a peer-to-peer interaction among people who don't even know each other, right? And they don't even...
They 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. That 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 uh 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, 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 Turing Award. You have a bunch of ideas that are seminal ideas. 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, there are a few contenders. Either your work or other work. Let's leave my work aside. But one powerful idea, and it's both an old idea in some sense and a very, very modern one. And in my opinion, it's this idea of a one-way function. So a function that is easy to evaluate. So given x, you can compute f of x easily. But given f of x... it's very hard to go back to x okay think like breaking a glass easy reconstruct the glass harder
Frying an egg, easy. From the fried egg to go back to the original egg, hard. If you want to be extreme, killing a living being, unfortunately easy. The other way around, very hard. And so the fact that a 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 it 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 cryptography. And let me tell you, it's 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 opposites 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...
But 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. They said, gee, it doesn't look the same. One is xf of x, going from xf of x to xr, what does it do with predicting bits? By a magic of reductions in mathematical apparatus,
This simple function morphs itself into pseudocandom generation. This simple function morphs itself in digital signature scheme in which digital resigning should be easy and forging should be hard. Again, a digital signature is not going from X to F to X, but the magic and the richness of this notion is that it is so powerful that it morphs in all kinds of incredible constructs.
And in both, these two opposites coexist, the easy and the hard, and in my opinion, it's a very, very elegant notion. That simple notion ties together cryptography, like you said, pseudorandom. number generation, you have work on pseudo random functions. What are those? What's the difference between those and the generators, pseudo random number generators?
How do they work? Let's go back to pseudorandom number generation. Yes. First of all, people think that the pseudorandom number generation generates random number. Not true. Because I don't believe that from nothing it can get... You can get something. So nothing from nothing. But randomness, you cannot create out of nothing. But what you can do is that it 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 quadrillions, 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 produced so far, if you were to...
But given all the beats produced so far, what is the next beat 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 it is de facto random. So that is a sort of random generator of these expanders of secret randomness, which goes extremely fast.
Expanders of secret randomness. Beautifully put. Okay. So every time somebody who, if you're a programmer, is using a function... that's not called pseudorandom, 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 to make 300.
uh real seed random number and uh 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. He 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 if the universe has 300 random bits, whether it 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 inferences you could do, all the things you could do, you will not be able to distinguish them from truly random. So if you are not able to distinguish truly random... From this super-duper pseudo-randomness.
Are they really different things? That's what I want to say. So then it will 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, 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 maybe this is a philosophical question. Is there such a thing as true randomness? Well, the answer is actually maybe, but if they exist, most probably is... expensive to get. And in any case, if I give you one of mine, 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 sort of is this experience that we have, like we're making choices.
Even though it appears that, you know, the world is deterministic at the core. I mean, that's against the debate. But if it is, in fact, deterministic at the lowest possible level. at the physics level, how do you make, 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, okay? So it's very important for our social apparatus, for our sense of idea of ourselves.
that it exists. And the moment in which, you know, 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. 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 pseudo-random is as good as random... vis-a-vis lifetime of the universe, our experience, when it doesn't really matter. So, we're talking about randomness. I wonder if I can weave in. uh 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, not because I think it matters, but it's important to say the record, there are people who continue to contend that quantum mechanics exist, but it has 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 is a cryptography. So does quantum computing challenge? The one-way function. Essentially, you can boil it down to, does quantum computing find a one-way function? What is a one-way function? Easy in one direction, harder than the other. Okay, but if quantum computing exists, when you define what 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 hope because you can absorb if one computing really realizes and becomes available and uh according to the promises
then you can use them also for the easy part. And once you use it for the easy part, the choices that you have, a one-way function, they multiply. So, okay, so they particularize candidates of one-way function. may 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 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, that is easy to produce, hard problem. That's my opinion is why life is interesting, because hard problem pop up at a really, relatively 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, that's funny. It does seem like the one-way function is fundamental to all. 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 it's- A very simple-
It's almost a very simple illustration of starting out with simple rules in one way, being able to generate incredible amounts of complexity. But then you ask the question, can I reverse that? And it's just surprising how difficult it is to reverse that. It's surprising even in constrained situations, it's very difficult to prove anything.
It almost, I mean, the sad thing about it, 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, where 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 here.
You're seeing the result of the complexity and you're trying to come up with some universal law that generated 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 gets it's difficult But there is also some poetry of the fact that it's difficult, because it gives us a mystery to life, without which, I mean, it's not so fun. Life will not be less fun.
Can we talk about interactive proofs a little bit and zero-knowledge proofs? What are those? Okay. How do they work? So interactive proof actually is... is a modern realization and conceptualization of something that we knew was true. That, you know, that is easy to go to lecture. In fact, that's my motivation.
We invented schools to go to lecture. We don't say, oh, I'm the minister of education. I published this book. You read it. And this is 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 the teacher, 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
to do the following. Rather than doing 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. Why should I believe you? So, okay, let's play.
So, and if I prove that I have a strategy and I win the first time and I win the second time, then I lose a third time, but I win more than half of a time or I win, say, all the time if the theorem is true and at least at most half of the time if the theorem is false you statistically get convinced you can verify this quickly and and therefore is a much
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, so to speak. Or I've been very, very unlucky because it's like if I had a hundred 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 how many times you win is one of a big conquest of modern complexity theory and in fact actually has highlighted the notion of a proof really give us a new insight of what to be true means and what truth is and what proofs are. So these are legitimately proofs. So what kind of...
mysteries can allow us to unlock and prove? 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, the classical way of proving things was extremely inefficient from the verifier point of view. Yes. Right. And so therefore, there is so much proof that you can take. But in this way, you can actually very quickly, in 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, it's a proof. Proof can be beautiful, should be elegant, but at the end, it's...
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 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 why this is so. And so people felt to say, if you want to verify something, you have to... To have the proof. Once you have the proof, you know why it's true. You have the proof itself. So somehow you can totally differentiate knowledge and...
and verification, validity. So totally, you can decide if something is true and still have no idea. Is there a good example in your mind? Oh, actually, you know, at the beginning, we labor 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...
explain in a zero-knowledge way. Okay? So it's not a class of theorem, but old theorems. And it's a very powerful thing. So we were really, for thousands of years, But this identity between knowledge and verification had to be hand-in-hand together and for no reason at all. I mean, we had to develop a way of technology. As you know, I'm very big on 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. Yeah. 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. Exaggerating. Self-interest. Self-interest. In whatever way. 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 way to analyzing the games that need to be broader. And I think 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 is 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 technical solution concepts, the way to analyze the game, like... Dominant strategy equilibrium is something that 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. It's a very specific kind of games, and the rules are set, the constraints are set, the utilities are all set. Yes, so if you want to reason, if 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? Then 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... I was doing some exoteric things, I'm sure in the space that were not exactly mainstream. And then I changed my interest and now I do 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 that...
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, or 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 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 has a bigger radius, so it reaches more games, more classes of games. And after that, we had 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 the kind of game that you're basically mechanism design, design the game such that it's scalable, secure. Pure and decentralized, right? Yes, yes. And very often you have to say, and you must also design so that the incentives are, and tell you the truth, 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 the algorithm is a totally different way, essentially with no incentives, essentially. But technically speaking, there is a notion that... It's actually believable, right? So that to say, people want to maximize their utility. Yes, up to a point. 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? Be 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 that's what we design. Essentially means that there is having no incentives. is actually a good thing because it prevents people from reasoning how else I'm going to gain the system. But why can we achieve in Aragon 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. But if I'm going to say,
You have to add 2 and 2 equal to 4. How much do you want me to pay for this? If you don't give me this, I don't add 2 and 2. I would say you can add 2 and 2 in your sleep. You don't need to be paid to add 2 and 2. 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 take some microsecond of computation, I might as well.
not 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 is the last day, You get to be alive. You shouldn't have trusted me. You never know with a Russian whether you're going to make it out or not. If you had one last meal.
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. This is 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, okay? And had this very traditional... food. As you know, the very traditional food are great for a reason, because they survived.
hundreds of years of culinary innovation. And there is one very laborious thing, which is, you heard the name, which is this parmigiana. But to do it is a piece of art that requires so many hours that only my mom could do it. If we have one last meal, I'm on top of parmesan, okay? What's the laborious process? Is it the ingredients? Is it the... the actual process? Is it the atmosphere and the humans involved? The latter. The ingredient, like in any other, in 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... Overpower everything. And then you have to... to do either two schools of thought, parmesan or pecorino or a mix of the two. I mentioned six ingredients. That is typical Italian. 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 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. You have to find a few ingredients, but the right ingredients to create something so in parmigiana the ingredients are eggplants they are tomatoes they are basil but but how to put them together and the process is uh is an actual or love okay labor and love is that uh you can spend uh the entire day when i'm exaggerating but the entire morning for sure to do it uh 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 Jiro Dreams 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 that 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 gets into a crisis, personal crisis. And then...
Out of this crisis, he purifies, when it's a catharsis, he purifies himself more and more and more until he's become capable of actually meeting God. Okay? And that is actually a complex story. So you have to get some very sophisticated language, maybe Latin at that point that we are talking about 1200s. Italy, right? In Florence. And this guy, instead, he chose his own dialect, not spoken outside his own immediate circle, right? Florentine dialect. And actually...
Dante really made Italian, Italian. And so how can you express such a sophisticated things and so this? 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 things. And turns out that...
By getting meaning from the things that you rhyme, you essentially guess what the word means, and you invent Italian, and you communicate by almost osmosis what you want. It's a miracle of communication. in a dialect, a very poor language, very unsophisticated, to express a very sophisticated situation. I love it. People love it, and Italians are 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 using a hyper-sophisticated literary language with lots of resonance from the prior books 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. So limitation is a 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 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 that level and uh and it was also a sacrifice because uh 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 in a new tongue, a new language. And then what people think of you in the new language, because of the precise expression of things, it generates and all. He shows elegance, or he shows knowledge, or he shows a census, or he shows 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 back up. But what I'm saying, I go back to that. Their limitations are actually our strength. In fact, it's 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 invade Mexico, he has, what, a few hundred people with him? and he has 100,000 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 at that point, he actually managed to come up victorious. 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, I'm 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, because 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 was 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. English express like that melancholy feeling of like the people. And so combining those two, I'll somehow. Beautifully said. Thanks for sharing. This is great. Yes, I totally understand you. Yes.
You've accomplished some incredible things in the space of science, in the space of technology, in the 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. 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 tired because you want to solve all these emotional knots that have always intrigued you from the beginning. And I really believe that, you know, to... 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.
to the extent possible. Sometimes emotions can be overbearing, and my device is try to express them with more and more confidence. Sometimes it's hard, but you are going to be much more fulfilled. than 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, right? It's a lot of vulnerability that comes with love, but there is also so much, you know... energy and power and love in all senses and in the traditional sense but also in the sense of a broader sense for humanity. compassion that makes us one with other people and the suffering of other people. I mean, all of this is... It's a very scary stuff, but it's really the fabric of life. Well, 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 the up and the down. And the down seems to come always with the up. But the up 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.
And I do. Because, I mean, 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 that unless I got something that I wanted to do, I don't know why I got this idea that I had 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, fortunately, death is there. So you better get up and do your thing because that 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. And so I really feel that, you know, there is on one side is my biological legacy and that is my two kids, right?
and their kids, hopefully. And that is one thing. And 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, are metaphorical. to say, I want to give you the ability to interact more and take more risks and reach out to more and for more people, as difficult and dangerous as it may seem.
but my whole scientific work is about to to guarantee privacy and and give you the security of interaction and 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, and I think that these are the problems I want to tackle. Yeah, and ultimately, privacy and security is freedom.
Freedom is at the core of this. It's dangerous. It's like the emotion thing. But ultimately, that's how we create all the beautiful things around us. Do you think there's meaning to it all? This life? accept 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. Great. This is great. 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. And I think that is... a journey and is, 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 I think it, you know.
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. Thank you, Alex. It's been really special for me to be interviewed by you.
Thank you for listening to this conversation with Sylvia McCauley. And thank you to our sponsors, Athletic Greens Nutrition Drink, the information in-depth tech journalism website. Four Sigmatic Mushroom Coffee, and BetterHelp Online Therapy. Click the sponsor links to get a discount and to support this podcast. And now, let me leave you with some words from Henry David Thoreau. Wealth is the ability to fully experience life. Thank you for listening and hope to see you next time.