Also see https://www.reddit.com/r/QRL/
Cryptocurrencies, Sustainability, and the Future
Many of us strongly believe in the potential for cryptocurrencies to change the world. We witness and experience the power of an alignment of incentives, and the power of the collective to set monetary policy instead of a centralized institution every day. It seems like every week, four or five new startups attempt to address a problem in a decentralized way. Because we believe that cryptocurrencies are here to stay, it’s important to consider what widespread adoption would mean and what it would look like. Additionally, we should consider what technologies might emerge within the next few decades that might threaten this golden egg of the technological era.
The case for quantum resistance: sooner, rather than later
Billions of dollars are being actively spent by very large corporations such as Google and IBM in an effort to progress the development of quantum computers. It is clear that there is intense economic interest in the proliferation of this technology, and thus we must behave in a way that reflects a reality in which quantum computing does take off at some point. I will address the question of “When?”
When Peter Waterland and JP Lomas were invited to and attended the Google Blueyard Quantum Computing Conference in Munich, Germany, they observed that many felt as if quantum computers are in the stage that conventional computers were in immediately before the microprocessor was invented.
Timelines are incredibly hard to predict with respect to the development of advanced technologies. They are even harder to predict with respect to research. Quantum computing currently exists in the intersection of both of these things, making the future of the technology highly uncertain. Thus, due to the security threat posed by the technology, we must behave conservatively. Quantum computers are likely one of the most disruptive technologies on today’s horizon, also including “trustless and decentralized” technology.
When we are in a situation where we believe conservative behavior is ideal, we must establish a reasonable time for the event we are speculating on to occur. Then we must pick what I call a “black swan factor.” That is, a factor by which our timeline is divided or multiplied to reflect a random, unexpected, game-changing breakthrough. Such a breakthrough could include room temperature quantum computing, error correction, and so on, in the “division case.” Likewise, a discovery regarding the theoretical limitations of the technology would fall into the “multiplication case.” Something that is favorable to development divides the timeline, and something that hinders development or slows it down multiplies the timeline.
There are some arguments for being a multiplicative conservative about quantum computing, but these arguments are overwhelmed by an utmost priority to keep our society safe, our economy functioning, and our assets secure against an almost existential threat. Thus, for the purposes of this article, I will write from the perspective of a “divisive conservative” with a black swan factor of 4 and a timeline of 10 years. Thus, this article is written from the perspective of someone who behaves as if there will be a fundamentally game-changing breakthrough within the next 2.5 years. The reason I pick 10 years is because this is roughly the timeline that many experts give when asked to give an estimate for mature quantum computing technology.
That means, in my eyes, we have two and a half years to get all of society on board with quantum resistant algorithms. Consider how slow the rollout of IPV6 is – now consider the fact that conversion to quantum resistant algorithms across all networks and storage devices will require a herculean amount of effort, let alone first convincing developers to put in the work required of them to do this correctly.
When I found the Quantum Resistant Ledger in its pre-ICO stage, I asked myself: “Do I trust my bank to be ready? Do I even trust my bank in the first place?” The answer was clear. I could not sit idle and put my assets in the hands of people that may or may not behave in a way that protects my assets from a quantum computing black swan. Remember: a timeline of 2.5 years does not mean “an event will occur in 2.5 years.” It means “an event will occur within 2.5 years.” That is to say: something could happen by December.
Nobody knows.
So: I decided to take the security of my assets into my own hands. I took them out of the hands of a bank that may act less conservatively, in favor of shareholders and short term profits. Instead, I put them into the hands of people who are extremely conservative, and act in my own personal interests regarding this threat, since their interests are my interests. That is: the QRL team. The amount of effort required to “get it right” with regard to securing assets cannot be understated. I want my assets to lie with a group that is working on it right now, as opposed to “too late.”
The case for proof of stake over proof of work: external scalability, less centralization of power, fairer, more sustainable
I believe there are two forms of scalability with regards to an emerging network: internal and external scalability. Internal scalability concerns things such as optimization, and network behavior under load. However, external scalability is easily forgotten when we are fixated on making a network better, faster and stronger.
External scalability refers to what I call the “network footprint.” It concerns the resources required to perpetuate a network in a secure fashion. This includes things like hardware, electricity, man-power, and so on.
Many of you already know that proof of work requires a lot of energy. As of writing this post, the Bitcoin network wastes roughly $746m per year worth of electricity in order to simply function. (http://digiconomist.net/bitcoin-energy-consumption) That is 1.7% of the entire market capacity of Bitcoin ($47B, https://coinmarketcap.com/) being outright wasted per year. If Bitcoin were the US dollar, at a $17T GDP, it would be wasting about $289 billion dollars per year in order to secure itself. This amount of money could be used to fund college education, or healthcare. Instead, it would be funneled into the hands of already wealthy and powerful energy companies. These energy companies are not going to sit on their hands if they essentially control the “fuel” for the Bitcoin economy. This level of external centralization opens doors to manipulation. This is an unacceptable level of centralization of power (literally) in the economy. It’s not good for the environment. It’s not good for the economy. It’s not good for society at large. It is an outright waste of resources. Moreover, we are headed for a future with electric cars. There will be more demand on the grid than ever before. Jevon’s paradox tells us that increasing resource efficiency does not always counterbalance increasing demand. We need our economy to function as independently of outside resources as it possibly can. It needs to be robust and resistant to a catastrophe. The survivability and resilience of decentralized systems is a large part of the reason we use them in the first place.
Even if one believes that proof of work is what fundamentally gives something like Bitcoin its value, and believes that Proof of Stake significantly dilutes this, remember: a network that is highly externally scalable is more likely to see rapid, widespread adoption than one that is only internally scalable and requires vast amounts of resources to expand. Network effects are highly valuable, and quickly dwarf any “value” provided by the waste of perfectly good electricity.
We can either live to see a world where the cost of electricity globally converges to the related value of mining coins, or we can live to see a world where resources are preserved, in favor of the knowledge that the value of a much larger network results in network effects that exceed the value of all that wasted, expensive electricity.
Here is some food for thought. I hope to see more discussion in the community regarding the external scalability of trustless, decentralized technology:
Many in the cryptographic community hope and dream that it will one day “bank the unbanked” and help bring impoverished areas into higher levels of happiness and overall productivity. How can this ever be accomplished if Proof-of-Work mining starts to influence the cost of their already sparse electricity? Do we want to live in a world where the mining efforts of the “rich few” in first world countries perpetuate an already massive, global wealth divide that we should be actively fighting? Can someone who is in a situation where he or she is unbanked and living in the third world really be expected to acquire mining hardware or the resources to run it? No. The broader first world will continue to generate income by mining while this person’s economic infrastructure is built out. He or she will “fall behind.”
We should be building economic systems that give every single person on the planet an equal opportunity to generate income and participate in the economy regardless of their geographic advantage or disadvantage – Bitcoin and other proof of work currencies do not provide this opportunity to the extent that Proof-of-Stake currencies do. Proof-of-Stake currencies are more resistant to outside circumstances, more sustainable, and more externally scalable.
I won’t act like I’m an economic expert. Please do argue with me! I want to hear your thoughts. What I do believe is this: we must consider the nuanced consequences of widespread adoption of any cryptographic currency, and ask ourselves if we are truly willing to own those consequences. If not, we must change. There is no rational second option.
Cryptocurrencies, Sustainability, and the Future
Many of us strongly believe in the potential for cryptocurrencies to change the world. We witness and experience the power of an alignment of incentives, and the power of the collective to set monetary policy instead of a centralized institution every day. It seems like every week, four or five new startups attempt to address a problem in a decentralized way. Because we believe that cryptocurrencies are here to stay, it’s important to consider what widespread adoption would mean and what it would look like. Additionally, we should consider what technologies might emerge within the next few decades that might threaten this golden egg of the technological era.
The case for quantum resistance: sooner, rather than later
Billions of dollars are being actively spent by very large corporations such as Google and IBM in an effort to progress the development of quantum computers. It is clear that there is intense economic interest in the proliferation of this technology, and thus we must behave in a way that reflects a reality in which quantum computing does take off at some point. I will address the question of “When?”
When Peter Waterland and JP Lomas were invited to and attended the Google Blueyard Quantum Computing Conference in Munich, Germany, they observed that many felt as if quantum computers are in the stage that conventional computers were in immediately before the microprocessor was invented.
Timelines are incredibly hard to predict with respect to the development of advanced technologies. They are even harder to predict with respect to research. Quantum computing currently exists in the intersection of both of these things, making the future of the technology highly uncertain. Thus, due to the security threat posed by the technology, we must behave conservatively. Quantum computers are likely one of the most disruptive technologies on today’s horizon, also including “trustless and decentralized” technology.
When we are in a situation where we believe conservative behavior is ideal, we must establish a reasonable time for the event we are speculating on to occur. Then we must pick what I call a “black swan factor.” That is, a factor by which our timeline is divided or multiplied to reflect a random, unexpected, game-changing breakthrough. Such a breakthrough could include room temperature quantum computing, error correction, and so on, in the “division case.” Likewise, a discovery regarding the theoretical limitations of the technology would fall into the “multiplication case.” Something that is favorable to development divides the timeline, and something that hinders development or slows it down multiplies the timeline.
There are some arguments for being a multiplicative conservative about quantum computing, but these arguments are overwhelmed by an utmost priority to keep our society safe, our economy functioning, and our assets secure against an almost existential threat. Thus, for the purposes of this article, I will write from the perspective of a “divisive conservative” with a black swan factor of 4 and a timeline of 10 years. Thus, this article is written from the perspective of someone who behaves as if there will be a fundamentally game-changing breakthrough within the next 2.5 years. The reason I pick 10 years is because this is roughly the timeline that many experts give when asked to give an estimate for mature quantum computing technology.
That means, in my eyes, we have two and a half years to get all of society on board with quantum resistant algorithms. Consider how slow the rollout of IPV6 is – now consider the fact that conversion to quantum resistant algorithms across all networks and storage devices will require a herculean amount of effort, let alone first convincing developers to put in the work required of them to do this correctly.
When I found the Quantum Resistant Ledger in its pre-ICO stage, I asked myself: “Do I trust my bank to be ready? Do I even trust my bank in the first place?” The answer was clear. I could not sit idle and put my assets in the hands of people that may or may not behave in a way that protects my assets from a quantum computing black swan. Remember: a timeline of 2.5 years does not mean “an event will occur in 2.5 years.” It means “an event will occur within 2.5 years.” That is to say: something could happen by December.
Nobody knows.
So: I decided to take the security of my assets into my own hands. I took them out of the hands of a bank that may act less conservatively, in favor of shareholders and short term profits. Instead, I put them into the hands of people who are extremely conservative, and act in my own personal interests regarding this threat, since their interests are my interests. That is: the QRL team. The amount of effort required to “get it right” with regard to securing assets cannot be understated. I want my assets to lie with a group that is working on it right now, as opposed to “too late.”
The case for proof of stake over proof of work: external scalability, less centralization of power, fairer, more sustainable
I believe there are two forms of scalability with regards to an emerging network: internal and external scalability. Internal scalability concerns things such as optimization, and network behavior under load. However, external scalability is easily forgotten when we are fixated on making a network better, faster and stronger.
External scalability refers to what I call the “network footprint.” It concerns the resources required to perpetuate a network in a secure fashion. This includes things like hardware, electricity, man-power, and so on.
Many of you already know that proof of work requires a lot of energy. As of writing this post, the Bitcoin network wastes roughly $746m per year worth of electricity in order to simply function. (http://digiconomist.net/bitcoin-energy-consumption) That is 1.7% of the entire market capacity of Bitcoin ($47B, https://coinmarketcap.com/) being outright wasted per year. If Bitcoin were the US dollar, at a $17T GDP, it would be wasting about $289 billion dollars per year in order to secure itself. This amount of money could be used to fund college education, or healthcare. Instead, it would be funneled into the hands of already wealthy and powerful energy companies. These energy companies are not going to sit on their hands if they essentially control the “fuel” for the Bitcoin economy. This level of external centralization opens doors to manipulation. This is an unacceptable level of centralization of power (literally) in the economy. It’s not good for the environment. It’s not good for the economy. It’s not good for society at large. It is an outright waste of resources. Moreover, we are headed for a future with electric cars. There will be more demand on the grid than ever before. Jevon’s paradox tells us that increasing resource efficiency does not always counterbalance increasing demand. We need our economy to function as independently of outside resources as it possibly can. It needs to be robust and resistant to a catastrophe. The survivability and resilience of decentralized systems is a large part of the reason we use them in the first place.
Even if one believes that proof of work is what fundamentally gives something like Bitcoin its value, and believes that Proof of Stake significantly dilutes this, remember: a network that is highly externally scalable is more likely to see rapid, widespread adoption than one that is only internally scalable and requires vast amounts of resources to expand. Network effects are highly valuable, and quickly dwarf any “value” provided by the waste of perfectly good electricity.
We can either live to see a world where the cost of electricity globally converges to the related value of mining coins, or we can live to see a world where resources are preserved, in favor of the knowledge that the value of a much larger network results in network effects that exceed the value of all that wasted, expensive electricity.
Here is some food for thought. I hope to see more discussion in the community regarding the external scalability of trustless, decentralized technology:
Many in the cryptographic community hope and dream that it will one day “bank the unbanked” and help bring impoverished areas into higher levels of happiness and overall productivity. How can this ever be accomplished if Proof-of-Work mining starts to influence the cost of their already sparse electricity? Do we want to live in a world where the mining efforts of the “rich few” in first world countries perpetuate an already massive, global wealth divide that we should be actively fighting? Can someone who is in a situation where he or she is unbanked and living in the third world really be expected to acquire mining hardware or the resources to run it? No. The broader first world will continue to generate income by mining while this person’s economic infrastructure is built out. He or she will “fall behind.”
We should be building economic systems that give every single person on the planet an equal opportunity to generate income and participate in the economy regardless of their geographic advantage or disadvantage – Bitcoin and other proof of work currencies do not provide this opportunity to the extent that Proof-of-Stake currencies do. Proof-of-Stake currencies are more resistant to outside circumstances, more sustainable, and more externally scalable.
I won’t act like I’m an economic expert. Please do argue with me! I want to hear your thoughts. What I do believe is this: we must consider the nuanced consequences of widespread adoption of any cryptographic currency, and ask ourselves if we are truly willing to own those consequences. If not, we must change. There is no rational second option.
