{"id":23124,"date":"2017-10-09T16:48:02","date_gmt":"2017-10-09T16:48:02","guid":{"rendered":"http:\/\/ci027cfe65c0062697"},"modified":"2017-10-09T16:48:02","modified_gmt":"2017-10-09T16:48:02","slug":"interview-cryptographer-silvio-micali-bitcoin-ethereum-and-proof-stake","status":"publish","type":"post","link":"https:\/\/bitcoinmagazine.com\/business\/interview-cryptographer-silvio-micali-bitcoin-ethereum-and-proof-stake","title":{"rendered":"Interview: Cryptographer Silvio Micali on Bitcoin, Ethereum and Proof of Stake"},"content":{"rendered":"
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Silvio Micali is an MIT professor and Turing Award\u2013winning cryptographer known for his work in technologies that form the bedrock of blockchains today: public-key cryptosystems, digital signatures, pseudorandomness and multiparty computations. He is also the co-inventor of the zero-knowledge proof<\/a>.<\/p>\n

In the \u201990s, he worked on Byzantine agreement<\/a>, a protocol for getting nodes in a distributed system to agree on a state change. And in 2012, he and long-time collaborator Shafi Goldwasser were co-recipients of the A.M. Turing Award, essentially, the \u201cNobel Prize in computing.\u201d<\/p>\n

Upon learning about Bitcoin three years ago, Micali turned his attention from mechanism design, which had consumed him for the previous seven years, and dove headlong into creating a proof-of-stake algorithm. His project is called Algorand<\/a>.<\/p>\n

Put simply, Algorand relies on a novel form of Byzantine agreement with only nine expected steps. In each step, committee members, chosen at random in a private lottery, are replaced. The result is a high-security system with a negligible risk of forks.<\/p>\n

According to Micali, recent tests show Algorand can process 2 MB blocks in 17 seconds, compared to Bitcoin, which produces a 1 MB block every 10 minutes. (A paper on these results will be presented at SOSP<\/a>, the biennial ACM Symposium on Operating Systems Principles, later this month.)<\/p>\n

In an interview with Bitcoin Magazine, Micali explained why he thinks proof of stake is superior to proof of work, the consensus algorithm that underlies most cryptocurrencies today, including Bitcoin and Ethereum. Although Ethereum, more often viewed as a smart contract platform, aims to transition to proof of stake next year. <\/p>\n

Unnecessary Evil<\/h3>\n

Micali thinks proof of work was a great idea when it first came out, but now that we have seen the consequences, he calls it an \u201cunnecessary evil\u201d for several reasons. <\/p>\n

\u201cThe first time I heard about Bitcoin, I saw all the difficulties. To me, the main difficulty is the waste of computational resources. That is really appalling,\u201d he said. \u201cIt drives up prices and depletes the planet of resources.\u201d <\/p>\n

Second, he sees miners as \u201ca new center of power\u201d and an orthogonal force to the real users of the system: the coin holders. <\/p>\n

\u201cIf five mining pools<\/a> can control what goes in or does not go in a block, in what sense is the ledger decentralized? You don\u2019t want miners having control over the ledger, particularly when they have low margins, are far away and accountable to no one. I think it is a recipe for disaster,\u201d he said. <\/p>\n

Finally, transaction ambiguity does not sit well with him. In Bitcoin, occasionally two blocks are found at roughly the same time, creating a temporary fork in the chain. When that happens, the branch with the greater hash power is elongated, while the other and its blocks \u201cdisappear.\u201d If your transactions happened to be in an orphaned block, it will eventually get picked up again in the main chain, but for Micali, the idea is unsettling. <\/p>\n

\u201cEvery time I see my transaction is in a block, I worry the block may disappear. But never mind anxious people like me; banks may not be willing to take on the additional risk,\u201d he said. \u201cCan you imagine a financial world where wire transfers could be taken back?\u201d <\/p>\n

Natural Democracy<\/h3>\n

Micali thinks proof of stake is a better option. In proof of stake, there are no miners, just the coin holders. Further, a coin holder\u2019s ability to create or validate a block is based on how many coins in the system he or she owns. <\/p>\n

\u201cThis is a natural interpretation of democracy,\u201d Micali said. \u201cYour influence in maintaining the integrity of the system is based on how much you are really invested in the system.\u201d <\/p>\n

But there is a catch: creating a proof-of-stake algorithm is hard to do. While several projects claim to have come up with a secure protocol, Micali thinks some of those claims are questionable. \u201cThe fact is, people can claim anything they want,\u201d he said. <\/p>\n

One of the biggest challenges in proof of stake is the \u201cnothing at stake\u201d problem. If the chain forks, the optimal strategy for any coin holder is to extend both chains to earn additional block rewards or to double spend. That goes against the central design goal of all blockchains: getting users to converge on a single chain. <\/p>\n

Some projects are looking at ways to sculpt their proof-of-stake protocols by adding perks or punishments to get coin holders to abide by the rules. As part of that, some proof-of-stake systems require users to put up a type of security deposit or bond.<\/p>\n

Micali feels a well-designed proof-of-stake cryptocurrency should stand on its own, however, without extra measures. He thinks bonding opens doors to bad actors. <\/p>\n

\u201cLet me ask you, what fraction of your disposable income can you put on the table and not touch?\u201d he said and suggested that honest people will put up only a small amount, ceding control to bad actors with big pockets. <\/p>\n

\u201cThe danger is that only bad people will give up control over a large amount of money to manipulate the system. And if they earn much more money by misbehaving, they will be happy to lose what they put on the table,\u201d he said.<\/p>\n

He also disagrees with the idea of using punishment to get users to fall in line. <\/p>\n

\u201cA weak state rules through threats and fear,\u201d he said, comparing the practice to barbaric punishments used by some nations to fight crime. Why do they do it? Because criminals are so rarely caught, he said. \u201cSo once they catch one, they disembowel the poor guy.\u201d <\/p>\n

He continued, \u201cDo you want to oust somebody who misbehaves? Of course. But a well organized system is one in which you don\u2019t need to punish people.\u201d<\/p>\n

Bitcoin and Ethereum <\/h3>\n

Most people view Bitcoin solely as a cryptocurrency, but Micali thinks the greatest value of Bitcoin and Ethereum are as enablers of smart contracts, in which users can stipulate if-then conditions around payments. <\/p>\n

\u201cAt the end of the day, doing only payments is easy,\u201d he said, adding that he did not want to trivialize the problem. \u201cOf course, decentralized payments are better than centralized payments, but what really differentiates a cryptocurrency from any other form of money is that you can actually do a smart contract.\u201d <\/p>\n

Based on that, he thinks that both Bitcoin and Ethereum would benefit from implementing the best consensus algorithm available. Currently, both systems are \u201chuffing and puffing,\u201d he said. Bitcoin is constrained to 7 transactions per second, while Ethereum can process only 15 per second, compared to Visa\u2019s 2,000 per second. <\/p>\n

\u201cIf the blockchain scales, isn\u2019t it better for Bitcoin and Ethereum? If the blockchain has a [mathematical] proof of security, isn\u2019t it better for its users?\u201d he said. \u201cIf the blockchain cannot be hijacked by miners who are accountable to nobody and live in some faraway jurisdiction, isn\u2019t that a plus for all users?\u201d Micali thinks so.<\/p>\n","protected":false},"excerpt":{"rendered":"

Silvio Micali is an MIT professor and Turing Award\u2013winning cryptographer known for his work in technologies that form the bedrock of blockchains today: public-key cryptosystems, digital signatures, pseudorandomness and multiparty computations. He is also the co-inventor of the zero-knowledge proof. In the \u201990s, he worked on Byzantine agreement, a protocol for getting nodes in a […]<\/p>\n","protected":false},"author":3488,"featured_media":23125,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[329,621,1455,1220],"class_list":{"0":"post-23124","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business","8":"tag-cryptography","9":"tag-ethereum","10":"tag-interview","11":"tag-proof-of-stake"},"author_data":{"id":3488,"name":"Amy Castor","nicename":"amy-castor","avatar_url":"https:\/\/bitcoinmagazine.com\/wp-content\/uploads\/2024\/12\/amy-castor-promo-image-96x96.jpg"},"featured_image_url":"https:\/\/bitcoinmagazine.com\/wp-content\/uploads\/2024\/11\/interview-cryptographer-silvio-micali-on-bitcoin.jpg","_links":{"self":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/posts\/23124","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/users\/3488"}],"replies":[{"embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/comments?post=23124"}],"version-history":[{"count":0,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/posts\/23124\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/media\/23125"}],"wp:attachment":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/media?parent=23124"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/categories?post=23124"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/tags?post=23124"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}