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 one of three).
“Saito has a transient chain. How can it be a blockchain when the ledger isn’t permanent?” — Julian
Richard Parris: The important thing about a blockchain is that verifiability from one block to the next. The ‘genesis block can be moved forward over time – so long at the process for doing so is in the consensus layer. People can keep records going back as far as they like – including all the hashes of previous blocks. A transient chain has massive advantages, particularly with automatic rebroadcasting. In that the chain can stay a sustainable size, while important data can be rebroadcast, forever, if desired.
David Lancashire: Hey Julian — thx for the question. permanent ledgers with bad economics are transient, because they get big and collapse. Look at BCH and BSV — people are already straight-up admitting the network won’t store data and admitting that people will have to pay separately for that. Saito guarantees immutability for as long as people have money to pay for it. That is what matters. Anything else is a bait-and-switch. Right now people are paying for “forever” and pretending they are getting forever. Meanwhile the network nodes are deleting as soon as they can get away with it.
“What are ‘incentive mechanisms’ in blockchain?” — Peter G
Richard Parris: Incentives are critical to blockchains. The genius of bitcoin was not consensus, we had that, it was in being the first network every that could autonomously pay for its own survival. This is possible becasue of inentives. If a miner leaves, another will join. Their incentive to do so is the block reward and the transaction fees. At Saito we believe that incentives are critical not just to ensuring people secure the network but also run nodes and do the heavy lifting of moving transactions.
David Lancashire:re: incentive mechanisms — blockchains get what they pay for. POW pays for hashing so we get a lot of that. POS pays for staking. But we don’t want hashing or staking. We want the network to deliver value for users. Paying for actual “value” isn’t something that POW or POS can do, which is one reason there are so many debates about how to get “decentralization” or “funding for development”. With the proper incentive mechanisms in place, we don’t need to worry about that. Saito is designed so that all of that stuff gets paid for organically, because we pay the people who collect fees (i.e. deliver value to users)
“How do you define a successful blockchain? What are the most important challenges for becoming a successful blockchain?”— £~%¤
Richard Parris: To me a successful blockchain is one that maintains open access and is useful. Scaling is critical in this. This is the biggest challenge we take on at Saito, and why we concentrate so hard on paying the network for the work, read value, it brings to users.
“Where is the line where keeping the blockchain network secure costs too much that the efficiencies of centralization are more worthwhile, and how does this calculation differ across the various industries (e.g. energy, finance)?” — Michael
David Lancashire: Hi Michael — thanks for the question. Two thoughts here.
1. All blockchains are secured by transaction fees. Bitcoin miners will not spend more money on energy that they collect in fees, for instance, so we need massive scale to have a secure network. Saito also allocates 100% of fees to securing the network (there is no 51% attack).
2. Also — Saito does not have the problem you describe — paying more for bandwidth can increase the decentralization of the network and the security of the blockchain simultaneously! The idea that “centralization” is acceptable because it provides “security” is something that POW people tell us. It isn’t true.
“With some EU countries banning Libra and rumors about China getting more strict about mining, are you optimistic about the regulatory environment of blockchain businesses? How do all these affect Saito?” — Elyas
Richard Parris: I am optimistic about the regulatory environment. I think governments are tightening up on cryptocurrencies, definitely. This has two important effects. It clarifies the situation for people working on all kinds of blockchain projects. It also makes access to crypto much more important to more and more people. General tightening of financial regulations is forcing ever increasing numbers of people into positions where they need crypto or it is far more convenient. For Saito, greater clarity will be helpful. Regulation will be unhelpful if it is blunt and broad. We are seeing much more enlightened regulation from smaller nation states: Switzerland, Malta, Singapore… as this gives them a commercial advantage, I hope this extends to other countries.
“Is Chinese regulation on crypto making it more complicated to implement Blockchain solutions in China versus other countries?” — Karim
David Lancashire: Hey Karim — thx for the question — I’m torn on China. Being in China is a huge liability on the ideas-front if you aren’t in the Chinese establishment or connected to the government. We’ve had people dismiss us because they think everything in China is a scam. So it is uphill getting people to take ideas seriously. On the other hand, we have got a lot of leeway in terms of just being able to *do* stuff since no-one in China really cares about anything that is flying below the radar. So there are less problems with regulatory oversight until you are huge.
On a technical level, our networking code got decent pretty quickly just because of having to handle firewall issues. But it’s definitely a negative. Your networking stuff is harder and I don’t think the Chinese community really makes up for it in passion for crypto projects either — most of our really enthusiastic users and devs are actually in Venezuela now.
“Besides finance, what other industries do you see the most potential for blockchain in the short term?” — Ana Deveza
Richard Parris: The obvious candidates for Blockchain are Fintech, Logistics/Transport, Ticketing and Collectibles. These are all great areas. But the big uses for blockchain will be as a general use public key infrastructure. This will be useful in decentralizing, and creating level playing fields in areas like IoT and Social Media, which are currently centralised into very few hands.
Blockchain as PKI network will be the ‘next big thing’…
“Blockchain has the potential to solve problems such as trust — what are some less obvious/well-known problems that blockchain has created, or you foresee blockchain to create in the future?” — Yuqian
David Lancashire: this is a really great question. First of all — most blockchains just want to be money. And then a lot of the “applications” people are building on chain are getting put out on smart contract systems. I think this will be maybe 5% of all blockchain applications in the future, and that most of the really exciting things are not on people’s radar. Let me give some examples though:
1. Saito is a PKI system. So everyone has the ability to securely communicate with everyone else without Man-In-The-Middle Attacks. This is a huge deal, especially when we start using the blockchain to do things like “diffie-hellman key exchanges” I think in 10 years all of these centralized chat applications will be gone. We won’t need to deal with wechat or telegram or instagram or anything because — screw that — we can just send a message on the blockchain saying, “this is my IP address” and our friends can connect to us that way.
2. Centralized web applications like Facebook, Yelp, Twitter etc. are directly threatened because their entire business model is locking content down and forcing people to watch advertising. But on Saito advertisers can give you tokens directly, and the applications are decentralized. So there is no Facebook.
3. The new monetization methods in Saito-class networks mean that routers in the network make money. So people will COMPETE to offer you Internet access as long as you use them to send Saito transactions. There are entirely new business models that will be built on this. The ISP model will go away once we get massive scale.
“In what ways can Blockchain be implemented alongside other deep-tech like AI and deep-learning?” — Yong Jie
Richard Parris: Thanks Yong Jie. We have a great example of this in the Cortex project (friends of both TIBA and Saito). What they are doing is using blockchain to provide trust and verifiability around AI assessments. Which is really important because it allows for the owner of the data that was analysed to own the result of the analysis. i.e – if you provide medical data to deep learning toolkit to check for likelihood of getting a certain disease. They are working on having the result blinded from the AI but signed in such a way that the owner can provde the assessment is genuine. This can overcome a lot of privacy issues, and mean that we, as patients don’t have to give up ownership of our medical data to get treatment. This is a small example, but I think we are only starting to see the start of this kind of thing.
Read part two here.