Web3, Blockchain, cryptocurrency: a threat or an opportunity? | Shermin Voshmgir | TEDxCERN

[Music] [Applause] before I start my talk I would like to show you a video and take you back in time to 1993 when we first discovered the Internet with the a and then the ring around at C that's what I said mm-hmm Katie said she thought it was about yeah but I've never heard it around and then it sounded stupid what I said it violence at NBC violence at NBC ge calm I mean what Allison should know what do you say now anyway Internet is that massive computer network the one that's becoming really big now what do you mean that's big wait how does one it nobody what are you write to it like mail no a lot of people use it and communicate it I guess they can communicate with NBC writers and producers Allison can you explain what internet is no oh I thought you're going to tell us what this was right and others can access it right she's been really handy during the quake a lot of people that's how they were communicating out to tell family and loved ones they were okay because all the phone lines were down I was telling Katie it over you meet you don't need that you don't need a phone line to operate no so I guess it reminds us of something it's very similar to the discussions we're having today about blockchain so what is blockchain anyway there's certainly a lot of hype around that technology why because there is this narrative around blockchain that it might lead us to utopia that it might resolve a lot of problems that we have today how by bringing us this next generation internet which many people refer to as the web 3 and this next generation Internet will hopefully resolve a lot of problems that we have currently in the Internet by on one hand changing our data structures and bringing much more control over our private data on the other hand by providing a governance layer for the internet that we're currently lacking enabling us to have true peer-to-peer transactions without middlemen and the third part is it could revolutionize money and value creation now let's look at all these three different promises so on one hand data structures we're moving away from a world of I would like to call a data monarchy to a world of data democracy the internet that we have today is currently built on the logic of stand-alone computers where data is stored centrally and it's processed through centralized servers why because we first had the computer and then the internet and what the internet did it provided for a communication protocol the IP protocol that allowed two computers to communicate with each other and when they did they would send data packages from one computer to the other and every time that happens a copy of that data gets created and sent to the other computer and every time that happens every time we use internet-based services we lose control and ownership of our data that's not only a privacy issue obviously it's also a huge issue in the back end of ecommerce operations along the supply chain and of goods and services because the document handling and data management along this back-end processes is tedious it's costly and it's inefficient because when we send data over the internet we lose control what happens because we cannot see what happens behind the walled garden of the server that somebody else owns now blockchain introduces a completely novel way of saving and processing data building on the idea of peer-to-peer technologies peer-to-peer technologies are not a new thing but blockchain is taking it to a new level all computers in the network have the same level of information all information all data is transparent to every computer in the network privacy is guaranteed through the use of cryptography so we have transparency while maintaining the privacy of all actors and the real game changer of blockchain here was that it introduced economic incentives to make sure that all computers in the network perform and behave correctly the blockchain protocol assumes that everyone is potentially corrupt and in order to provide for network security it incentivizes Network actor with a network token and we will look at that in the next slide so we're moving away from the centralized data structures to decentralized and distributed data structures on a second level blockchain provides for a governance tool in a novel way of organizing society it allows us to move away from the current way we organize society but we also process data and manage data in the internet from what you see on the left a pyramid to a network so first look at how society is organized today it's mostly in the form of top-down organizations where you have one legal entity which is registered somewhere so you know who to sue in case something goes wrong and the relationship of the people working for that organization is managed by contracts it assumes that we don't fully trust each other and while we negotiate our agreements verbally we write them down we sign them in the form of contracts so if anyone any party to an agreement doesn't stick to their end of the bargain we can take this piece of paper go in front of court and sue someone the relationship of these organizations with other organizations is also managed by legal contracts and the relationship of nation-states with other nation-states is also managed by legal contracts whether it's our companies or our schools or universities or our bureaucratic institutions now the Bitcoin blockchain introduced a completely novel way of managing society through the blockchain protocol and you can see that if you look on the right side of the slide behind me the Bitcoin blockchain is a decentralized autonomous organization of stakeholders who do not know or trust each other who for the most part live in different countries speak different languages and are subject to different regulation there is no centralized entity regulating the Bitcoin blockchain and everyone participating in the network and by now it's hundreds and thousands and millions of people all these people don't have any type of legal agreement or working contract with each other yet they all run in the same direction how because all the rules of who is allowed to do when and what are defined in the protocol that protocol is open-source it also defines how network actors are incentivized and disincentivized how do we make sure that network actors who do not know and trust each other all behave according to predefined rules we incentivize them with a network token and in the Bitcoin blockchain this is Bitcoin every time a network actor validates transactions according to predefined rules they perform a service to the network they keep the network safe they keep the network correct and they get rewarded with the network token which is Bitcoin so as you can see this is a completely new way of governing society without any centralized institution anyone who wants to participate in the network without the permission of a centralized entity can download the code and be part of the network at the heart of this protocol is the so-called smart contract now the smart contract unfortunately isn't very smart and lawyers would agree that it's not a legal contract what it is is what you can see in this picture it's a digital handshake it's a piece of code that defines a rule set of who is allowed to do when and what and this piece of code runs on the distributed network on a peer-to-peer network and is automatically enforced when the majority of network actors agree that the predefined conditions have been met this means that we are radically cutting the transaction costs of monitoring auditing and enforcing agreements something that we cannot do in the world today because in the world today we have contracts that while they might be written on a computer they're still printed in paper for the most part and they are still being signed by hand for the most part now a smart contract looks like this it's a piece of code where all the rules of interaction or transaction or agreement are put in code which is automatically enforced and the way you sign a smart contract is by private key now the private key obviously doesn't look like this it looks like this it's a strong cryptographic password that identifies you as you and you can use it as a digital signature on the blockchain the third game changer of blockchain seem to be tokens or cryptocurrencies what blockchain has allowed us to do through the backdoor of smart contracts is within a few lines of code create a token that can represent anything from a physical good to a digital good to an access right and mix they're off or it could even steer a decentralized network of actors if I have good games theoretical design behind it if you know what you're doing today you can create a smart contract within a few minutes with a few lines of code but what you write in to that smart contract what the what is the purpose of the token what are the governance properties of that token etc etc these are not technological questions their governance questions and just as the world wide web which was invented here at CERN revolutionized the way that websites were displayed and created within just a few lines of code smart contracts allow us to create crypto for token that can represent any asset or any access right within a few lines of code and just as it was really hard for us in the beginning of the 90s to figure out what to do with websites could we ever make money with it like we were playing around we're trying to figure out what this thing is it took us 10 years until we did and when we did the web 2 came and it would probably take us another few years to figure out what we can really do meaningfully do with this new or in this new token economy and a very good example of what we can do is for example steam it steam it is a decentralized social network that runs on a blockchain it is a combination of Facebook and reddit anyone can contribute any type of post to steam it and anyone can upload or download this post and every time you do you can earn a network token for your contribution to the network either by providing content or by curating content the data is transparent on the blockchain so everyone has full control over what happens with their data and you can earn money for contributions if you want to find out what blockchain is how the token economy works the best thing is to go on Steam it it has been operational for almost three years now it has 1 million registered users and I personally know people who make money that is the utopian part of what we can do wood block J but technology is just a tool and technology is neither inherently good nor inherently bad how we use that tool is up to us and we should be very careful how we use this very powerful tool of blockchain technology and Auto enforceable code because if we don't design these block chains properly we might design a machine that acts against us and I would like to point out two aspects one is governance who decides what the governance rules of these block chains and smart contracts are who decides what rules we write into that code because this code itself sets the technological limitation the technology sets the limitations of what is possible and what we cannot do it sets the boundaries of what we can do and while many engineers are working on this cutting edge edge technology and they're super smart there are not governance experts so we need engineers to work with governance experts to decide how we want to write this code because what this code should automatically enforce it's not a technological question only it's a governance question it's an ethical question it's an economic question it's an organizational question etc etc and what we're seeing right now is that a bunch of very very talented but still a bunch of engineers are predominantly creating these operating systems of our potential future societies and we have to make sure that we don't run into the same problems we ran in the web to creating protocol bias just as we create an algorithmic bias in the web too and one example is the incentive mechanisms behind block chains like for example the Bitcoin blockchain they're currently plutocratic if you have more money in the real world you can buy more computers you have more processing power and you have more vote in the system and you can make more money so the current block chains the current incentive is mechanisms they're like capitalism on steroids do we want this kind of system because if we don't we have to come up with alternative constants mechanisms to the mechanisms that Bitcoin and derive block chains use the good news here there are a lot of researchers already trying to figure out alternative mechanisms to the current mechanisms that are not based on plutocracy but the question of which one will really be successful has not been resolved yet and the second part is cryptography these systems are designed to be transparent and we need them to be transparent so we have full control of data trails of our private data trails but also of the provenance of goods and services but we also need to maintain our privacy and we can do that with strong cryptographic tools that we have unfortunately state-of-the-art block chains like Bitcoin are not really fully anonymous and if we're not careful we could create through the backdoor of that technology at control machine like for example the citizen scorecard that China is currently creating because bakhtin is an incentive machine you can incentivize people to do the right thing to save co2 emission reduction or you can use the same technology to control your people this is why we need to talk of about privacy privacy by design and how we can provide for it with the right cryptographic tool we do have the right technology for it and your block chains are using these alternative cryptographic tools but unfortunately through the backdoor of legislation many countries are currently passing anti-terror legislation anti criminal legislation that is kind of condemning cryptographic methods which could be a potential indicator for potential criminal activity so do we want to bang cryptography or do we consider cryptography as a digital human right that we need in the digital age just as we have introduced the right to the privacy of communication and the secrecy and of the letter or the sanctity of the home in our constitutional foundations of our democratic constitutions to cut the long story short whether we creative freedom machine or a control machine has not been decided yet as you saw in this video we're in the very very very early stages similar to the 90s for the Internet we're at the very very early stages of this new and novel technology so now is the time to contribute now is the time to take action now is the time to learn what does technology is and how you can contribute to that open-source technology so the few sure is in our hands let's make something out of it thank you [Applause]

Channel: TEDx Talks

Views: 597,870

Keywords: TEDxTalks, English, Technology, Bitcoin, Coding, Computers, Internet, Money

Id: JPGNvKy6DTA

Length: 17min 57sec (1077 seconds)

Published: Thu Dec 20 2018