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

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
21
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
so
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
so
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
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
so
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
so
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
to
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
so
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