An ‘AMA’ with the Tsinghua International Blockchain Association (part three)

We were recently invited to take part in an ‘Ask Me Anything’ with the blockchain folk at Tsinghua University — during which time we took questions on everything from consensus mechanisms to the future of bitcoin. Here’s the full transcript (part three of three).

“You guys have a blockchain-based gaming platform. Could you please tell us about this? Why are so many blockchain companies focusing on gaming?” — Peter H

Richard Parris: Games are a great proving ground. Our reasons for putting games on testnet are probably quite different from other projects. We are really keen to demonstrate Saito’s ‘industrial strength’ and simplicity of development. Games like Twilight Struggle are incredibly complex and require interactions that would melt the vm on smart contract systems. It also contains every kind of interaction that might be needed in enterprise software. Coding games like that let us build a community with something they really value and is fun, test our testnet, and demonstrate just how powerful Saito is.

“Consensus mechanisms: proof of work/stake/authority/time etc. Which ones do you think are most promising and which do you think will not be relevant in the future and why?” — Tristan

Richard Parris: There is a lot of work going into new consensus. Unfortunately, I have not seen any that are grappling with the fundamental issues for blockchain. PoW and PoS, Avalanche for that matter, can gain consensus. The issue is paying everyone in the network for the value they provide proportionately. Some Proof of Space protocols are concentrating on paying for storage, but fail to pay for bandwidth to access etc. Most ignore the problems entirely and concentrate on an optimisation of the ‘scaleability trilemma’. Long term proof of work can be supported by a volunteer network — as is the case with BTC — but will always have a limited capacity.

“You are involved with both Chinese and overseas blockchain communities (industry, academia, investors, users). What are the main differences? — Peter G

Richard Parris: My blockchain life started in China, and it was amazing when I started traveling for Saito to conferences in the US and Europe how different things were. To caricature things: the US is ‘land of ETH’ certainly of PoS. Everything is a development problem waiting to be solved and blockchain will take over the world. How blockchain can be used to help people. Concerns are around privacy and social good. Asia, and particularly China is very pragmatic. Finance driven, but interested in how blockchain works, and exploiting that. Ever since my first Beijing Bitcoin meetups in 2013/14 when visitors from the US were stunned at the number of attendees that actually worked in bitcoin, I have felt that the rest of the world is catching up.

“In your opinion, what will it take for blockchain to gain widespread acceptance & implementation?” — Yuqian

David Lancashire: This will sound totally self-promoting, but I think Saito will make blockchain mainstream. First because we are seeing actual adoption from people who want to use the applications we have (mostly the games) and who don’t know that we are even a blockchain, or care. We are trying to double down on that sort of development. So … we know it is possible to do stuff that isn’t just “King of EOS” gambling games that cater essentially to fake transaction volume and bored people pumping bad crypto projects. Second because “smart contracts” are not suitable for most apps, and they require people to buy tokens to use them, and regulatory barriers are massive here. You can’t get someone to buy tokens to use your service unless you have a really compelling service, and most business cases that can do that exist off-chain.

In Saito, the token distribution happens through use though — people will earn tokens JUST USING the network. So we have an economic model that will pull in users and pay them for adoption. The fact that the network also pays for routing means there is a great business model for developers too — people who build applications that people want to use can get paid with the tokens they are getting issued. 

So — what will it take?

1. applications that people want to use who are normal non-crypto users
2. an economic model that puts tokens in people’s hands
3. a great developer experience (working on this!)

“How to prevent a large group of people/bots with similar intentions controlling block chain branches and change/erase/edit the chain?” — 张心旭

Richard Parris:Saito’s approach is changing the definition of work. In PoW it is possible to brute force take over the network with hashpower. Because, as I mentioned above, in Saito, transactions that are not included in a block can be included in the next, censoring transactions becomes exponentially harder. As you have to keep _all_ valid work off the chain. Re-writing the chain is similarly difficult. Rewriting history means creating a chain with more value than what you are replacing. And any transaction that is excluded is still valid, so can be added to the end of the chain.

David Lancashire: I’d suggest thinking about why this problem exists, because it goes to the heart of one of the most important things that makes Saito different from any other blockchain out there.

1. POW and POS chains make it “difficult” to produce blocks, and then give all of the money and power to whoever can produce 51% of the blocks. So the networks incentivize collusion. And we have problems if they conspire.

2. Saito recognizes that, “all forms of difficulty can be reduced to spending money, so what we do is just make sure it is ALWAYS EXPENSIVE” to attack the network. Attackers need to spend their own money to attack the chain. BUT this property holds above the 50% mark.

Attackers will always lose money through the payment lottery. So if a node or group of nodes does 80% of the routing work, it will still cost them 20% of the network’s transaction fee volume with every block they produce.

That guaranteed loss is what creates the “cost” of re-writing the chain — but is also means that there are no incentives for collusion like in POW or POS, where a big enough group can attack the network for profit.

Essentially, by solving a different problem than POW and POS, Saito provides the same guarantees without the 51% attack. We can calculate the cost of attacking the chain, and wait the appropriate number of confirmations. The network is way more secure though, since it doesn’t fall apart once you have 50% of block production capability.

“I’m gonna have to spend some time to digest all that” — 张心旭

David Lancashire: maybe think of it this way — bitcoin uses SHA256 for “difficulty” and “cost”. It is difficult to make a lot of blocks because… sha256. And it is expensive to produce a lot of blocks because… sha256. Except that it isn’t really difficult, it is just expensive. This is why the first step in the Saito solution is not giving all of the money to the block producer. Dividing up the block reward is how the network makes sure attackers always lose money. Because we pay for work they cannot fake.

Last question: where does the name Saito come from? 🤔— Peter G

Richard Parris: Saito is one of the leads in Christopher Nolan’s masterpiece Inception.

Here we see an example of how Mr Saito solves a problem at a deeper level. That’s what we are all about.

David Lancashire: There are a lot of interesting parallels too, not least of which the plans for global airline acquisition. One of the things I really like about the film is that it teaches us that you have to solve problems on the deepest level. And that is what Saito does. Most blockchains don’t try to fix the economics. People just give money to block producers, tweak that process, maybe add some volunteers somewhere (validators! masternodes!) and call it a day. Saito looks at the economics and says, “the problems are that we’re not incentivizing and valuing the right things.” And then it fixes those issues. It’s like fixing things on the lowest dream level. the stuff that is “higher up” just starts working, and problems like the 51% attack melt away naturally.

Also, Inception is a great film.

“That’s all the time we have for now. Thank you for the insightful answers and thanks to our community for the great questions! Our guests tonight were Richard and David from Saito, thank you!” — Tsinghua International Blockchain Association.

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Start from the beginning with part one here.

Or take a Nolan-esque approach to deconstructions of linear narrative by jumping back to part two here.

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