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Cryptography is Not Enough - Gigi @ Baltic Honeybadger 2022

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cryptography

is not enough

a longish speech on paradoxes and

antennamace

before i start with the speech

let's get one thing

out of the way

code is speech and speech is code

and if speech isn't free as in freedom

then we'll run headlong into censorship

and tyranny

privacy is not secrecy cypherpunk's

write code and running the numbers is

not a crime

numbers

i'm going to talk about three numbers

today

because this is going to be a

presentation in three

acts

black on white

white and black

and in the third act we're gonna add a

little bit of color

the three numbers

are 12

and 10.

number 12

act one

let's begin

bitcoin as we all know

bitcoin is code

it's computer code but in my opinion

more importantly it's a moral code

and this moral code is deeply embedded

in bitcoin and in the creation thereof

and the moral code in essence

says you shall not inflate you shall not

confiscate you shall not counterfeit

in short

you shall not steal

that's what bitcoin is saying basically

i will say something to you now that

might

sound outrageous

at first namely bitcoin

is knowledge

and i mean this literally so bitcoin is

literally knowledge and as another guy

who is long dead

said at one point in time knowledge is

power

of course we all know knowledge is power

was said by francis baking

and if we can equate that knowledge is

power and francis baking and bitcoin is

knowledge then we can easily deduce that

bitcoin is baking

bitcoin is banking

i mean that literally and you might

think has this guy lost his mind

no that's not the case because bitcoin

literally is baking

because 24 times the word baking is a

valid bip 39 seed phrase which is a

valid bitcoin wallet so you can verify

this yourself

download something like blue wallet

enterprising 24 times and you will have

a valid bitcoin

wallet so

baking

times 24 that's bitcoin

and this works with many different words

flag gas grade slice solution summer day

tray

trap zebra and there are others in total

there are

241 of these

special words

that work if you just repeat them often

enough some words

you have to repeat 12 times

some others will have to repeat 24.

so 12 words

12 words in your head 12 magic words

this is what bitcoin

is and this is what bitcoin can be

funnily enough

12 times word

also works and is also a valid bitcoin

wallet so this literally is bitcoin

and anyone can use this you should not

use this these are terribly insecure

wallets but nevertheless this is how

bitcoin works bitcoin is just 12 magic

words

how

how in the hell does this work how can

this ever be secure why is this the way

that bitcoin

works

so bitcoin finds strength in numbers

strength in large numbers and your 12

magic words they have to be 12 random

words for them to be secure if they are

truly random

then they

then they are as secure as anything can

be all cryptography is rooted in

randomness or in a concept that we call

entropy

if they are random

then your wallet is secure

if they are not random then they are

terribly insecure that's why you should

never use the banking wallet or the word

wallet or what have you so 12 valid

words

this is what bitcoin is it can't be any

old random words they are very special

words and there are jacksons involved so

they have to be 12

valid words and if they are valid then

you have a valid bitcoin wallet

funnily enough 12 and valid and word

are one of these valid 12 words so if

you enter 12 12 times or valid 12 times

or word 12 times this will work too

so this is what bitcoin is essentially

from a user-facing perspective again if

you want to try this out download blue

wallet or something similar

anything that

can recover a wallet from a p39c phrase

and enter 12 12 times or valid 12 times

or worth 12 times or baking 24 times or

what have you

all right this is what bitcoin is

which brings us

to act two

act two

black and white

number 21.

so bitcoin is paradoxical and

unintuitive

you might have heard of the story of the

sage in india that went to a king and

wanted to play a game of chess against

the king and the king loved jess so he

graciously accepted the offer

but the king

he wanted to repay

the sage in case he won so he told his

age

what do you want is a payment on the off

chance that you win against me in chess

and to sage he was a very humble

character he just wanted one grain of

rice that the king was to place on one

square of the chessboard and

just double the grain of rice for every

square on the chessboard so it's

one on the first one two on the next one

four on the next one eight on the next

one and so on and the king obviously

accepted and of course

as luck would have it the sage one and

thus the king began to put rice on the

chess board and

if you ever dealt with exponentials or

large numbers you might know this story

and you might know that this is a lot of

rice that the king has to put

on the chessboard so it's a very

unintuitively large number it turns out

that these are 18 quintillion grains of

rice so that is indeed a very very large

number if you calculate how much rice

this actually is it's 210 billion tons

of rice

so this is enough rice to cover all of

india one meter deep in rice

so it's a literal metric for ton of

rice it is a lot of rice back to the 12

magic words what you can do with the 12

magic words is you can open up a box in

cyberspace keep in mind that all

metaphors about bitcoin break down at

one point in time so if you want to

understand bitcoin deeply you actually

have to look at the code understand the

code and so on so all these metaphors

are imperfect nonetheless i believe that

they are useful so you can think of the

12 words as opening up a paradoxical box

in cyberspace

and of course you can put bitcoin in

this box and these 12 magic words of

course we talk about these things as a

private key and you can think of the box

as being locked and the key is what

unlocks the box and then you can move

bitcoin around and so on but also keep

in mind that bitcoin bitcoin only exists

inside these boxes there is no such

thing as you know like opening the box

and taking bitcoin out

all you can do is move it to a different

box

so let's say you put a million sets into

this box

which is also why we say not your keys

not your coin because

your keys are equivalent to this value

that's the neat thing about bitcoin is

source value in bits and bytes directly

it's not a password to anything that is

separate the value itself is stored in

the information itself so if you have 12

words in your head you literally have

bitcoin in your head it's not a password

or anything like that it is the value

itself that is stored in your head

and so that's why the keys are

equivalent to the coins

so let's say this key these 12 magic

words control a million sets and let's

say

just for the sake of argument you put

the million cents into this magic box so

if the key is random and if you manage

to keep it private then everything is

good but if you do something stupid and

let's say you put the 12 magic words

onto a public presentation

then it's very unclear who

owns these kind of bitcoins like it's

million sets five minutes ago

it was my million sets

who owns them now it's a very difficult

concept to pin down in bitcoin the

concept of ownership so if we look at

this magical box

there's a million sets in there

and now we can say with 100 guarantee

that this box is now empty and the

million sets are 100 percent gone i can

say this with confidence because i

tweeted this out not too long ago and

you know some of the people on twitter

they're probably way quicker than you

watching this presentation after the

fact so

i know for a fact that these are 100

gone

so 12 magic words again how can they

ever be secure

we spoke about randomness and we spoke

about

these

non-random wallets like baking and word

and so on and so forth and how you

should never ever use them

so the security again comes from a

strength in that is embedded in large

numbers

we have

2048 of these special words and if you

take 12 word seat phrase this is 2048 to

the power of 12 which approximately is

128 bit security

which is this very large number if you

ride it out and if you remember the

story about

the grains of rice on the chessboard

that's a way large number that 18

quintillion so the quintillion are you

know somewhat in the middle so we have

many orders of magnitude larger than the

chessboard story

and just to remind you 18 quintillion

was enough to

cover all of india one meter deep in

rice and

to guess a private key you would have to

like one specific one

you would have to pick out one specific

grain of rice out of this

out of all of india that is covered

very deep in rice with bitcoin it's even

more involved so you can think of it as

the whole visible universe covered in

grains of rice and you would still have

to pick out one grain of rice to

break open a wallet so to speak

all right so if

the 12 words are random

then you're more than reasonably secure

and if you manage to keep your keys

private

then

again you're secure and you have nothing

to worry about so

you have to check both these boxes

we spoke about

one paradox already i want to rattle off

um some

of the paradoxes that come to mind when

we speak about bitcoin so again keep in

mind all metaphors are imperfect these

are various things that people have said

over the years what bitcoin is and how

it works and what the implications are

don't take any of these too seriously

but still i think it's interesting to

think about these things

all right

the paradigm the paradox of possession

we saw this already very clearly that

you can't really possess bitcoin so

bitcoin is secret knowledge but you can

definitely be possessed by bitcoin as is

evidenced by a lot of people that seem

to be literally possessed by bitcoin so

bitcoin is everywhere bitcoin is nowhere

bitcoin can't be copied yet every part

of bitcoin can be copied

bitcoin is always changing yet it is

unchangeable so no single line of code

in bitcoin is the same as it was when it

was first

created by satoshi nakamoto but

it's still unchanging in essence i would

like to say that bitcoin soul has an

unchanging

character bitcoin is digital yet this is

cars digital scarcity used to be an

oxymoron but now we have something that

is digital and that is cars bitcoin is

dead as the mainstream media pundits

will always tell you yet bitcoin is

alive bitcoin is a bubble yet bitcoin is

the pin bitcoin is simple yet bitcoin is

complicated bitcoin is elegant yet

bitcoin is complex bitcoin is ugly yet

bitcoin is beautiful bitcoin is worse

it's better it's a great article by

guern written a couple of years ago

bitcoin is worthless yet bitcoin is too

expensive bitcoin is finite yet bitcoin

is endless bitcoin is private yet

bitcoin is transparent bitcoin is energy

intensive yet bitcoin is insanely

efficient at what it does

bitcoin is slow yet bitcoin is fast as

lightning bitcoin can't be confiscated

yet bitcoin can be lost bitcoin is taxed

but bitcoin is money bitcoin is time and

bitcoin is energy bitcoin is savings and

bitcoin is streaming money bitcoin is

conservative yet bitcoin is progressive

bitcoin is political and bitcoin is

apolitical bitcoin is lawless and

bitcoin is still all when it comes to

transactions everything that happens

internally in bitcoin bitcoin definitely

is the law bitcoin is math and bitcoin

is physics bitcoin is religion and

bitcoin is atheism bitcoin requires

randomness yet bitcoin creates order

bitcoin price is important your bitcoin

price is terribly unimportant at the

same time bitcoin pays people yet

bitcoin can't go bankrupt bitcoin is

intangible yet bitcoin is incorruptable

bitcoin has rules but no rulers bitcoin

is love and bitcoin is you money

bitcoin is a chain yet bitcoin and

slavery head tip to ben gunn who brought

this to my attention on twitter this is

the one that i really like the most um

after studying bitcoin for many many

years it seems

that

this is very much very much true

so bitcoin is 12 words in your head and

bitcoin is 21 million

bitcoin is knowledge and knowledge is

power

so where does bitcoin derive its power

from bitcoin derives its power from the

asymmetry of knowledge knowledge

asymmetry information is symmetry all of

cryptography is rooted in information as

symmetry and bitcoin as we will see in

bitcoin cryptography is not enough so

you need different kinds of

asymmetries for bitcoin to work

so one of these asymmetries is

this is true for multiple things but one

of these asymmetries is that things need

to be hard to produce and easy to verify

this is both true in money and in

cryptography

money needs to be hard to produce and

easy to verify

for good money to emerge this is this is

always true like if you can't verify the

money then it's terrible money is it's

easy if it's easy to produce then again

it's terrible money for cryptography as

well the solution to a crypto

cryptographic puzzle has to be hard to

produce

and it has to be

easy to verify as well so bitcoin again

checks both of these boxes

it is very hard to produce and is very

easy to

verify and to understand this more

deeply we will have to look at two of

the building blocks of bitcoin which are

signatures and blocks so to interact

with bitcoin

to use bitcoin in a meaningful way

you need to have a valid signature and

someone needs to find a valid block

these are the two very essential things

that make bitcoin tick

valid signatures and valid blocks so if

you want to do anything with bitcoin you

need to be able to produce a valid

signature and someone needs to be able

to produce a valid block so signatures

are private blocks are public

signatures are created locally

blocks are created globally

signatures deal with secret information

blocks deal with public information

signatures relate to the 12 words

and blocks relate to the 21 million

i know this was a very

general overview of those two things of

course it's nuanced and i'm glossing

over many many details but still the

important thing is that the 12 words in

your head and the 21 million there are

two sides of the same coin so they're

like the two pieces of yin and yang that

you need to put together for bitcoin to

emerge one of them is not enough you

need both you need the private

information which are your 12 words and

you need the completely public and

publicly verifiable information and the

publicly verifiable history of the

blockchain of

the thing where the 21 million emerge

out from

to make bitcoin work and to use bitcoin

in a meaningful way so let's put the two

together

and as we all know bitcoin is not black

and white so we need to add some color

to it as we all know bitcoin is orange

which brings us to

act three

bitcoin is the orange tree

to understand this tree we'll have to

look at the

root problem that bitcoin solves

and there is no better person to ask

what the root problem is that bitcoin

solves then its creator satoshi nakamoto

so satoshi famously said that the root

problem with conventional currency is

all the trust that's required to make it

work so trust is the root problem and

the problem with trust is the trust can

be abused

so he famously also said

somewhere else that in bitcoin we do not

have to rely on trust

we can use crypto proof

those were his words

instead of relying on trust

i i would like to show you that

this is not enough the crypto proof

alone

is not enough

and to understand this we have to look

at how the trust problem

was solved historically so how was the

trust problem solved historically

very easy

we always had some people that were

dressed

very nicely with a very nice smile on

their face and they would say

well just trust us we will take care of

everything and you can just put all your

trust in us and we will solve the

problems for you and this is how the

world works so we always had authorities

that we had to trust and now supposedly

we can replace this with cryptography

but what happens if we do this does this

really work so

we have a face of cryptography

unfortunately but there we go

that is the face of cryptography it

seems it is definitely the face of

crypto

and so

the situation doesn't really change if

you know the people are a bit younger

and a bit more technologically involved

and so if the trust does comes from the

crypto bros nothing really change

changes the the crypto bros just become

the new politicians and that's what we

want to move away from don't we like we

always had politicians tell us just

trust us this is the current state of

things so the state would always

say trust us and we will figure it out

and you the plebs have no say anyway

and bitcoin bitcoin is not about

trusting the state bitcoin is about the

separation of money and state

and for the separation of money and

state cryptography is not enough

if cryptography

would be enough we would have had

something like bitcoin we would have had

cryptographic money for a long time

already so we had keys and ledgers and

those kind of things for a very very

long time

this is a cryptographic device that is

very very old this is a ledger that is

thousands of years old

and

we can't magically put them together and

have something like bitcoin

because cryptography alone does not

provide integrity cryptography alone

does not provide legitimacy

and to understand like i choose these

words very carefully

and to understand why this is the case

we have to

at least you know like do a little bit

of political philosophy and speak to

that guy and this guy is thomas hopps

and he famously said that authority not

truth creates legitimacy

and he said this about state power and

as we all know bitcoin changes changes

you in a massive way

so now we have our own

kind of political philosophers and

thomas hobbes turns into eric cason and

what eric cason says

about bitcoin power is the truth not

authority creates legitimacy and that is

exactly correct that is exactly right

the authority in bitcoin comes from

truth itself it does not come from any

external source

it's a closed loop system that builds up

its own truth that anyone can verify you

don't have to trust anyone

and again cryptography is not enough for

that you need something else you need

something else so i highly recommend to

read eric casin he is on a mission to

reclaim the word crypto

and you can read his writings on

cryptosoverity.org and we're gonna talk

about

crypto and cryptography

next so when i say crypto here in this

context time most of the time i mean

cryptography

and again

i i would like to show you

that cryptography is not enough

because cryptography requires secrecy

cryptography requires secrecy

always

which means

automatically cryptography does not

provide legitimacy

because cryptography is not necessarily

tied to reality

cryptography also

doesn't automatically provide any type

of scarcity if this would be the case we

would have we would have had scars

digital things for a very long time we

would have had it before bitcoin but we

don't like we didn't we need we needed

something else

so crypto most definitely

provides like crypto does not provide

the scarcity period we have over 9 000

coins listed on coin market cap

and so it's very very clear that crypto

does not equal scarcity

if you hear crypto just think rockpools

that's way more accurate don't think

scarcity don't think you know quick

riches or anything like that just think

rockpools you will have an easier life

which brings us to the next section of

act three which is the great rug

here's the problem with rockpools

it ain't what you don't know that gets

you into trouble it's what you know for

sure that just ain't so

mark twain famously said this about

rakpos

and satoshi also had something to say

that he basically said where there is

trust in others there's a rock

i'm obviously paraphrasing but i can

highly recommend you read the books of

satoshi all his writings it's a

compilation

of all his writings online in

chronological order and he was talking

about trust a lot

and how trusted third parties are

security holes

again a great piece by sabo that

everyone should read

and of course

the great drug

bitcoin fixes this

because bitcoin is not crypto bitcoin is

not a rock pool bitcoin in fact is

anti-ruckball technology bitcoin

provides legitimacy and it provides

legitimacy by combining reality and

cryptography it combines also physics

and math which a lot of people don't get

and it combines cryptography with

another kind of proof

it's not only cryptographic proof there

is another kind of proof involved

it combines

keys with work and most importantly keys

and work are not the same thing they're

truly not the same thing they're they're

very different just like reality and

theory is different and one

one way to think about reality

is that reality is that which survives

and my friend ellen farrington

he wrote a great piece only the strong

survive again everyone should read it

and so we have to talk about strength

for a little bit

this beautiful image

i call it adam's back

for obvious reasons because adam beck

is the inventor of proof of work

and the beautiful thing about

proof-of-work

is that it is self-evident

proof-of-work is completely self-evident

you don't need any

external source of truth for

proof-of-work to make sense so

proof-of-work is self-evident and proof

of work always deals in transformation

so proof of work is always about

transformation it doesn't matter if it's

the pyramids

that transformed stones into

large pyramids it doesn't matter if it's

the

ripped guy in the gym

proof of work always deals in

transformation and if all we have is

data

then all we have is computation

so we only have data information

and the transformation of this

information which is computation and of

course to do compute we require

electricity and to generate electricity

we require energy

and energy of course is costly we cannot

print more energy and this is where the

integrity of proof of work comes from so

proof of work provides integrity without

authority without crypto keys and

without relying on secrecy so the

difficulty adjusted proof of work in

bitcoin truly is the solution to many

many many problems

and the more people understand this and

the quicker they understand this

the easier it is to figure out why

bitcoin works and why other solutions

failed and why moving away from the

difficulty adjusted proof of work is a

terrible idea you reintroduce all the

problems that bitcoin actually solves

and one of these problems

is the problem of time

so you all remember the story of the

sage

visiting the king in india to play a

game of chess which had a very

unintuitive outcome

i want to tell you a bitcoin riddle you

all probably know a little bit about

bitcoin otherwise you wouldn't watch

this and you probably know that bitcoin

has a block time of 10 minutes so every

10 minutes a new block comes in

and this is my favorite bitcoin riddle

kind of for one of my favorites because

it will tell you how

much someone

knows about bitcoin how deep they how

deeply they looked into it already so

let's assume

again every 10 minutes a new block comes

in that's the way things are in bitcoin

and let's assume that the last block

came in nine minutes ago when will the

next block come in

most people will say something like in a

minute or maybe a little bit longer you

know two minutes something like that

and

the correct answer very

counterintuitively is always 10 minutes

so if you said something else than 10

minutes then

you basically

you made the gambler's fallacy so the

principle behind this is very similar to

you standing at the roulette table

and red came

you know red came in for like 15 times

in a row and now i ask you what are the

chances that red comes again or what are

the chances the black comes and if you

say anything else than 50 50 then well

you're committing the gambler's fallacy

so 10 minutes this is the magic number

this is the duration that it is about

and every 10 minutes reality asserts

itself in bitcoin every 10 minutes truth

emerges every 10 minutes past becomes

stone and every 10 minutes information

is reified

so it's about this duration of 10

minutes this is the constant in bitcoin

this is more or less the only constant

in bitcoin almost because everything

else emerges out of that and you could

say that bitcoin measures duration via

computation like this is not terribly

inaccurate and further bitcoin bitcoin

not only measures duration via

competition it also settles 10 minutes

of history every 10 minutes so it is

about these 10 minutes of history but

it's not only about the past it's also

about the future and we that's

that's such an important concept to

understand that bitcoin bitcoin it is

fixed in time it's not it's not really

tied to energy or like

mining bitcoin doesn't require energy in

the sense that the more energy you put

in the more bitcoin our mind and

everyone is just greedy and uh you know

like we want to produce more bitcoin

that's why we that's why we use more

energy for it no energy relates to

security and energy relates to the

distribution of the 21 million

it does not create more bitcoin and the

reason why we know this is that we have

bitcoin supply curve so bitcoin has a

predetermined supply it has an emission

schedule so the supply is emitted over

time and that's why we know in the year

approximately 2140

all 21 million

bitcoin will be mined and this is

obviously linked to duration because

with every valid block new bitcoin are

emitted and this is how satoshi solved

the problem of bringing new coins into

circulation which is an insanely

difficult problem to solve without any

authority so it is like a natural

process a natural growing thing that

emits

that emits new coins to all those who

who choose to secure it

and this is this is why the genesis of

bitcoin is so important and it's so

beautiful and it's the only way to do

any fair distribution everything else

falls back to authority

that's what i mean when i say bitcoin is

time

i mean these 10 minutes and the past at

the future and how the past is settled

and how the future is predetermined

so the difficulty trusted proof of work

is what creates an unfortunate history

nick sabo talked about unfortunate

costliness

i think in bitcoin we should talk about

unfortunate history because the ledger

is just that letter is a history of

transactions who owes what to whom and

it has to be unforgeable for it to be

good money otherwise it will always be

manipulated and bitcoin creates this

unfortunate history

the difficulty adjusted proof of work

solves the root problem a lot of people

when they start talking about the root

problem they mean the double spending

problem but we framed it

as trust and integrity so the difficulty

adjusted proof of work provides trust

and integrity most importantly without

relying on secrecy without relying on

authority

so the difficulty adjusted proof of work

solves all the problems of manny's past

and i mean that literally it solves the

problems of gold it solves the problems

of fiat obviously it solves the problems

of all the digital monies that we tried

to create in the past so bitcoin has a

very rich history

of like you know it depends on how long

you want to go back but bitcoin did not

appear out of nowhere like people ever

since the internet emerged people tried

to do money on the internet that they

always failed

and

people say they failed because of the

double spending problem and so on and so

forth but there's a lot of things

wrapped up in the double spending

problem so we already talked about

trustless issuance

we didn't really talk too much about

decentralized time stamping but if you

want to read about that please read

bitcoin is time we also didn't talk too

much about crypt analytics stability

that's one problem that nick sabo tried

to solve for the longest time the

problem is that you cannot define

a cryptographic puzzle or any

computational problem where you can be

sure that any computer will solve it

below a certain threshold of time so

let's say pick any supercomputer and it

will take this super computer at least

five minutes to solve this problem you

cannot do it

you just can't

that was a that was a big problem of

digital monies because you you you

cannot know the breakthroughs in

computing you cannot know if someone

comes up with a new architecture or a

better way faster computer there's like

10 trillion times faster and suddenly

you can solve this problem in like a

millisecond and so this crypt analytics

stability the problem of cryptanalytic

stability was a really hard problem the

difficulty adjusted proof of work solves

it digital scarcity again it used to be

an oxymoron now thanks to bitcoin we

have it

and data integrity that's what i want to

talk about next and of course the

computer scientists listening to this

they will have big question marks in

their mind because

they all know that we were able to do

data integrity before bitcoin like we we

had had multiple ways of doing data

integrity but i'm here to tell you no

that's actually not correct because for

data integrity to work you always needed

to have keys so how do you do any type

of data integrity without secret

information without relying on private

keys what if all you have what if all

you want to have is just public

information what if authorities are not

allowed what if key holders are not

allowed

what if we must not have a quorum of

people that sign off on the on the

integrity of the information

all the other things all the other

systems that want to remove proof of

work from the equation automatically

fall back to a quorum of people to key

holders that sign off on information

it's very much a fiat move where where

we have authorities to say this is the

reality this is the gold in the vaults

just trust us we are we sign off on this

all the gold is there just trust us and

you're dealing with paper notes

removing proof of work

it's an absolutely horrible idea that

reintroduces all the problems that

bitcoin solved so how can you do data

integrity

how can you do data integrity without

any private keys how can you do it it's

a really hard problem

to understand

how data integrity works we will have to

take a closer look at this orange again

and we'll split it up again so we're

back into yin and yang and we're going

to talk about integrity and validation

we're going to talk about the 12 words

again and the 21 million and about

private keys and public ledgers

very briefly if you have keys and you

want to prove the integrity of the keys

it's very easy because you can do key

pairs and asymmetric cryptography

then we have private keys and public

keys and

with one or the other you can check the

integrity of the other and just you know

this is well known this is nothing new

this is all

fine and nice and that's very very easy

if we have keys data integrity and

validation is very easy

what if we don't have keys what if we

don't have any private part at all what

if all we have is public data

what if we

what if we must not have any keys this

is so important like how to do this

without any keys at all how to do it

well

the answer should be obvious but it

wasn't obvious for the longest time it

was only obvious to satoshi and the

answer of course is proof of work

adam back and so on and so forth because

the nice thing about proof-of-work again

is that you only have to look

you only have to look proof of work is

self-evident

everything you need for verification is

publicly available nothing is hidden no

private keys are needed there is no

authority there is no secret secrecy

there's just truth there's truth

embedded in the data itself

and that's why it's so beautiful you

just can look at it

and without any use of any private keys

you can verify that everything is

correct in the data itself and you can

go back to genesis and see

that

no one was able

no one was able to modify this data in

any shape way shape or form

and you do not need to trust anyone you

don't need to trust any quorums any key

holders any external sources the truth

is self evident in the data itself

that's what nvk meant when he said the

map is not the territory like in bitcoin

in bitcoin the map is the territory in

bitcoin the map is the territory there

is no differentiation you just look at

the map you look at the data

and there is no external thing the truth

is self-evident

in the data itself in bitcoin truly the

map is the territory

so this was the big brain invention of

satoshi nakamoto because satoshi was the

first person that was able to

think decentralized completely about

issuance about security about time

itself the timing problem is such a such

a difficult problem to solve as well

like i encourage anyone who is

interested in other systems to always

look at the timing problem we don't have

a fixed time in our universe

and this is why it's such a difficult

problem just because of relativistic

effects alone together orderly sequence

of events in decentralized computing

it's it's it's a borderline impossible

problem and only the difficulty adjusted

proof of work solves it completely

so satoshi knew this satoshi knew that

he had a breakthrough because he said he

said

i think this is the first time we're

trying a decentralized non-trust-based

system

so he realized that with

crypto proof

and the reification of information which

is a phrase i really like which i stole

from adam gibson

we can

create digital scarcity we can create

sound money in cyberspace and he also

knew that crypto proof was not enough he

knew that cryptography was not enough

he mentioned in one of his posts that

we we can't just

we we have computational proof of the

past computational proof of the sequence

of events that's what he said

and it's this computational proof

computational proof is different from

cryptographic proof

because in computational proof in the

difficulty or just a proof of work

there are no private keys involved

it's just pure computation

pure raw energy if you will

this is absolutely required to have

publicly available information that is

consistent in itself that anyone can

validate

so bitcoin is knowledge

it is literally true that bitcoin is

knowledge

anyone

anyone can have the knowledge of the

integrity of the system it's

a completely open system it's completely

transparent

you can yourself

convince yourself of the 21 million

you can check bitcoin's monetary policy

you can check the integrity of the

system

but the opposite is also true that

knowledge is bitcoin as we saw bitcoin

it's just 12 words in your head

that's why i believe that

trying to you know

outlaw bitcoin in any in in any way is

equivalent to thought crime

because all that bitcoin mining does for

example is trying to find random numbers

all that holding bitcoin entails is

having 12 words in your head so if your

government tells you that you're not

allowed to hold bitcoin that's what they

are saying you cannot think of baking 24

times you cannot think of word 12 times

you can't have 12 random words in your

head that's what anyone is saying when

they forbid you to use bitcoin it's of

course

not enforceable but

that's a different kind of

that's a different kind of speech

knowledge in bitcoin

bitcoin

is private knowledge 12 words in your

head

bitcoin is public information public and

transparent information which leads to

the 21 million

it's private keys and public letters

and the s at the end of lectures is

important because we have many many

ledgers all over the world and you need

have your own

valid copy that you in the best case

validate yourself

and if you want to use bitcoin in any

meaningful way you have to put those two

together and if you put them together

then the orange emerges and just as a

very quick example let's say

alice wants to send bob

some sets so alice needs a private key

and she needs a copy of the public

ledger and in private she uses her

private key to sign a message which is a

transaction and let's say this message

says i alice wants to send 21 sets to

bob and she signs it with her private

key

if everything checks out

and if the signature is valid then the

transaction gets broadcast and if the

transaction is valid the bitcoin network

will accept it and the transaction will

land in the manpool

which is what connects the private world

of private keys with the public world of

public ledgers it connects the 12th and

the 21 it is the link between the past

and the present and if everything checks

out and if the signature is valid and if

a valid block is found after

approximately 10 minutes

then the transaction is confirmed which

is what bitcoin is saying all the time

every 10 minutes but it it is saying

more than that with every transaction

that is confirmed with every valid block

that is coming in it also self confirms

its own integrity always all the time

the beautiful thing about the difficulty

just the proof of work in bitcoin is

that it's accumulative over time it's

like layers of amber that solidify the

past

and with this solidified past bitcoin

also says moral code confirmed

and as we heard in the very beginning

the moral code of bitcoin is you shall

not inflate you shall not confiscate you

shall not counter fate in short you

shall not steal

and that's what bitcoin is saying

every 10 minutes without relying on

trust

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YouTube Transcript:Cryptography is Not Enough - Gigi @ Baltic Honeybadger 2022

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Cryptography is Not Enough - Gigi @ Baltic Honeybadger 2022