We have prepared an exclusive interview with Professor Emin Gün Sirer, a revered and highly educated personality in the digital currencies sphere since its beginning.
His work has been on our agenda for quite some time now and we were looking forward to get an exclusive approach with him; his remarkable work in peer-to-peer technology and the hacking scene has not come unnoticed. Also, his articles over the digital currency field are indeed a reference. He has been in the front of Bitcoin discussion and his opinion is of great importance for the community.
Now, for the interview:
When did you were first acquainted with digital currencies?
I first heard of digital currencies back in the 1990’s, when various research groups were developing what were then called “micropayment systems.” One of the better players in this space was Millicent, and I was first exposed to the idea of online payments when I was an intern at DEC. Micropayment systems did not take off, I suspect mostly because people found the cognitive load of having to make payment and budgeting decisions as they browsed the web to be too onerous. And they all relied on a centralized bank.
Then in 2004, my research group developed the Karma system, the first peer-to-peer currency, to my knowledge, that was completely trustless — both the minting of the currency and the tracking of account balances were distributed across a peer-to-peer system.
Can you tell us what your personal opinion on Bitcoin is?
Bitcoin is a both a technological breakthrough and a fascinating social phenomenon. On the technological side, the blockchain idea is very exciting: it has the potential to serve as a platform for many other interesting applications. On the social side, I’m amazed at how Bitcoin ended up building an energetic and devoted following. I’m incredibly excited about this combination. At the same time, I am very worried about Bitcoin’s future. The currency faces challenges at the protocol-level and at the systems-level. In addition, it needs to have the kind of social structures in place to address these challenges. I don’t know if Bitcoin will be around in 10 years, but I do know that digital currencies will thrive, and many of the ideas pioneered by Bitcoin will be embodied in those currencies.
Since the appearance of Bitcoin we have seen a mass number of Altcoins making their entrance in the digital currency markets. The market today is over flooded with copycats, yet, there are some interesting projects coming out. What can you tell us about the crypto currency environment nowadays?
We’re living in the age of cryptocurrency innovation. I am most excited about the efforts to build new value-added services on top of the Bitcoin blockchain. Because Bitcoin was the earliest and remains the most valuable coin, we now have a significant investment in Bitcoin mining equipment worldwide. Services that build on top of this foundation tap into the level of security that the Bitcoin ecosystem provides. And people are doing all kinds of innovative and interesting things on top of Bitcoin. I hope that the Bitcoin core can evolve to support new extensions that enable these value-added services — this is where we have to rely on the Bitcoin developers to exercise good judgment, subscribe to a proactive long-term vision, and build new features to grow the ecosystem on top of Bitcoin.
Altcoins are useful as testing grounds for new ideas. Ideas that are deemed too risky or too unknown to integrate into Bitcoin can be tried in the smaller universe of an altcoin.
Sadly, however, most of the altcoins in existence do not actually have sufficiently innovative ideas at their core. In many ways, they are reactions to the distribution of wealth in the Bitcoin blockchain — latecomers to the Bitcoin scene typically copy the code, change a few parameters, introduce new branding, and hope to get rich off of the people who buy into their new altcoin. Such efforts provide little value to society at large, and are therefore doomed to fail in the long term.
Bitcoin has endured some severe crack outs and some hard blows; nevertheless it has shown strong resilience against all adversities. What do you see as the future for Bitcoin?
I believe that Bitcoin faces three kinds of challenges: protocol-level, system-level, and social. I am perhaps least worried about the protocol-level challenges. With Dr. Ittay Eyal, I’m a co-discoverer of “selfish mining,” the biggest protocol issue that involves a rogue miner. There are other known issues involving maximum transaction rates, the health of the peer-to-peer network, transaction and block propagation times, and the like. All of these are relatively well-understood, and we either have patches for them (e.g. Dr. Eyal and I have a fix for selfish miners below 25% in size, should such a selfish miner ever emerge), or we understand how to fix them. The number of people involved is small, and changes can be rolled out on relatively short notice.
I am much more worried about system-level issues. In particular, I believe that our current computer systems, both clients and servers, are nowhere near safe enough to handle valuable digital assets like Bitcoins. Our clients and servers are subject to hacking, and adequately securing Bitcoins remains difficult. Trustworthy computing techniques can help, but are rarely used or deployed. Much more importantly, the technologies that people use to build Bitcoin exchanges are incredibly weak. In particular, most popular NoSQL databases used in Bitcoin exchanges are inconsistent, non-fault-tolerant, and perform terribly in the face of concurrent clients. Many smaller exchanges use first-generation NoSQL systems. As a result, people have actually crashed exchanges by simply submitting hundreds of withdrawal operations to an exchange, and getting the exchange to overwrite the operations. Millions have been lost, and at least one exchange, Flexcoin, went bankrupt as a result of a very simple issue that every programmer is taught to avoid in their junior year (in their defense, if you use a first-gen NoSQL data store, it is not easy to avoid these kinds of errors). We have much better technologies, e.g. the HyperDex next-gen NoSQL database from my group, but educating people so they can adopt better infrastructure is a slow process.
Finally, there are the social challenges. The narrative and behavior of some of the Bitcoin zealots might, in fact, be a turnoff for wider adoption by the general public. For instance, we want people to not just hold, but also transact Bitcoin. We need to come up with effective techniques for self-governance, lest regulators come in with heavy-handed blanket regulations. We need the community to be able to acknowledge, discuss, and rationally react to weaknesses in the Bitcoin ecosystem instead of attacking the messengers and trying to bury genuine problems, or their heads, in the ground. These social issues are outside my expertise area, but there are genuine risks on this front.
Overall, the core technology remains very exciting, and the Bitcoin’s future potential is enormous. As a techie, I am confident we can handle protocol-level issues, and I know that we have the technology to address system-level challenges. As an educator, I do believe in people’s ability to reform, to act rationally, to transcend their short-term interest and work to bring about a better world, so I’m even optimistic on the third issue. Bitcoin will certainly evolve and change, but digital currencies are here to stay.
Even though, we have been progressively seeing Bitcoin reaching mainstream acceptance, there are still a series of impositions and restrictions in many countries while others still ignore it. What do you think about such reactions?
It’s not surprising that the state apparatus wants to have a role in how financial transactions are conducted. Many people in the Bitcoin community attribute this to a desire to protect the incumbent players. I disagree with this view — I believe such regulations stem from a desire to protect people from malfeasance. We have seen some really large scale failures in the Bitcoin space. Mt.Gox’s unexplained bankruptcy certainly affected a large number of people and almost half a Billion dollars. And by no means was Mt. Gox was alone: many other exchanges have gone bankrupt, and CEOs have absconded with Bitcoins. The regulators naturally feel the need to step in whenever there is rampant misbehavior. I dislike excessive and heavy-handed regulation as much as everyone else. The way to avoid government regulation is not to attack public officials who are (perhaps heavy handedly) trying to protect the public, but to come up with effective self-regulation mechanisms.
If the Bitcoin community could come up with guidelines for exchanges, we’d be operating in a different world. I have no option but to fully trust the say-so of an exchange implemented by a team of 3-5 developers, using mostly broken, old technology. There is no guideline that outlines best-of-breed practices (such as open audits, proof-of-solvency, operational procedures for the cold vault, etc). The invisible hand of the market works too slowly, and at too great a cost, to identify bad behaviors. We need the exchanges to proactively sign onto such practices if we want to avoid having regulators enforce them, such as what Mr. Lawsky tried to do with BitLicense.
Recently, Cex.io, the largest Bitcoin cloud mining service and owner of ghash.io the leading mining pool, has introduced Fiat to their exchange. Ghash.io mining pool has been the leading pool for some quite time now, and recently has reached almost 51% of the Networks mining capacity, which caused many concerns among the Bitcoin community. We know you are quite an expert on this matter an even wrote an article, along with Ittay Eyal, entitled “Bitcoin is Broken” which is one of the most revered articles over the issue. Following this recent events, do you think that Bitcoin is still very exposed to the 51% attack, or do you think that the Bitcoin community will consensually avoid this from happening? Do you think that this bug could ever be fixed?
Yes, Bitcoin is very exposed to a 51% mining pool. There is nothing in the protocol that might deter large pools from forming. Once a pool has 51% of the hashing power, the Bitcoin value proposition collapses, the currency is no longer trustless, it becomes difficult to bring new people into the Bitcoin ecosystem because it’s, at that point, no different from any other currency issued by a single entity. Bitcoin’s incredible promise disappears the moment there is a 51% miner. And of course, a 51% miner can launch 51% attacks at any time, but he doesn’t have to, the damage is done even without any attack.
It’s foolhardy to rely on the Bitcoin community’s consensual behavior to ward off such a disaster. For the community doesn’t actually know which entity has how much mining power — what we have are estimates, mostly based on self-reporting by the miners. If a miner wanted to be particularly devious, they could easily hide their tracks and their true mining power.
Dr. Eyal and I have proposed a change to Bitcoin’s proof of work algorithm to ward of truly large mining pools. Our proposal is called 2P-PoW, for Two Phase Proof of Work. In essence, we propose to keep the first phase of Bitcoin as is, and to add a second phase of work that cannot be effectively outsourced. So the size of a pool is then limited by the amount of hash power that a single entity can amass solely on their own. The nice thing about this proposal is that it allows small and mid-size pools to form, while prohibiting the really large players.
To find more about EMİN GÜN SİRER work please visit:
Nuno Menezes is a Portuguese Bitcoin Entrepreneur and a crypto currency’s enthusiast supporting the Bitcoin Portuguese Community. He is an Anthropologist and a Writer and his current field of work is virtual currencies. Complementing his Social Sciences Master degree with a Professional background in telecommunications along some experience in Computer Science, he intends to bring knowledge and understanding about the impact of crypto currencies in society.
1 Hova Villas Brighton & Hove
BN3 3DH United Kingdom
All rights reserved by Bitcoinist Ltd. | 2016.