EB141 – Ralph Merkle: Revolutionizing Democracy Using DAOs

Transcript

this episode of epicenter Bitcoin is brought to you by hideout meat protect yourself against hackers and safeguard your identity online with a first-class VPN got a hideout nice lush epicenter and sign up for a free account today and buy ledger makers of the best hardware security devices have peace of mind knowing your private keys are protected by industry standard physical security go to ledger wallet comm to see the full range of products and use the code epicenter at checkout to get 10% off your first order hello and welcome to episode of Bitcoin show which talks about the technologies projects and startups writing east-central ization and global blockchain revolution my name is Brian Fabian crane and I'm a hero

today we have a very special episode because we intervene now Merkel Ralph has a list of achievements which is so long that it would take me half an hour to read it but briefly is the co-inventor of public key cryptography and was the first to publish a paper that discussed asymmetric encryption he invented Merkle trees is form a background of the Bitcoin system merkel signatures which are a signature scheme that is potentially quantum proof after his achievements in cryptography he shifted to the field of molecular nanotechnology where he worked on self-replicating machines and is

currently the co-founder at something called nano factory collaboration in addition he is also a faculty member at singularity University so we'll be talking about his latest idea called Dao democracies and how they can be used to go on countries and other organizations so before we start perhaps let's have some words from Ralph now tell us how what interests you back into cryptography and in the idea of decentralized autonomous organizations well I got interested in the whole concept of molecular manufacturing and I've been working on that now for many

years and essentially the conclusion you reach when you work in this area is that this is a very powerful technology that will have major ramifications for everybody and everything so one of the concerns that I had was I thought about where this technology was going and how it would be used was the state of governance in the world today and I invite anyone who was not concerned about state of governance to consider the presidential elections in the United States which seem to be a fairly timely topic and that should sober them up

fairly quickly the problem essentially is that democracies as they are currently defined and operated really don't have the ability to respond quickly reliably and in a sensible fashion to anything new or different it takes a long time and even on things have been around for a while democracy is often stumble rather badly so the question in my mind was was very simple how do we improve the governance process so that we'll be able to handle this new technology in a way which is sensible and leads to good outcomes and that was

the basic genesis of the whole doubt amok recei concept and it's a good idea it's has roots I think in a work that a lot of other people have done as you mentioned Robin Hansen has been doing work in prediction markets for many years and has also been looking at how to use prediction markets for better governance so it draws on those ideas and a draw the whole set of ideas that have been developed with decentralized autonomous organizations and it stirs them together and produces something that hopefully will be useful at the very least I'm

hoping that it will result in something that other people will wish to work on and improve so that it produces something that actually would be used out in the field somewhere and started in some fashion so before we gonna get into the kind of details of a democracy daos and some of the implications there so you worked very early on on public key cryptography and on some of these fundamental technologies he developed in this context can you tell us a little bit in in what kind of context and environment did you work on these things oh well I was at Berkeley as an undergraduate and I was taking a security course and one

of the requirements for the security course was a quarter project so that was back in 1974 so I thought about what projects I could do and I was up one night thinking about it and I thought well gee if you've got a computer terminal which is talking to a time sharing system the security of the time sharing system might be compromised how would you reestablish a secure link between the time sharing system and the computer terminal if you assume that all of the information has been compromised how do you reestablish security and that

problem of course is an instance of public key distribution and when I began to think about it my first thought was this must be impossible so I thought about it and I tried to do something which was rather straightforward I tried to prove that it was impossible and I found that I couldn't prove it and I worked on it for Oh several hours and then after working on it for a while I said well let's flip this around if I can't prove that it's impossible let's try to do it and see what happens so I proceeded to try that now having just spent a few hours working on proving that it was

impossible I knew where I was having problems with the proof and so I went straight to those spots to try and get something that would work and I found that it wasn't too difficult within a matter of I think was around midnight or something when I realized oh I could I could do this and I could do it using what's now called the puzzles method and the puzzles method is in some sense alarmingly simple if two communicants want to establish a key they simply generate random puzzles and the definition of a puzzle is a problem which you can solve and when you solve

that you get a bit of information out of the center of it but it takes some work to solve it and you can calibrate the amount of work so the conceptual idea is very straightforward the two communicants generate random puzzles from a confined space of possible puzzles and they exchange the puzzles and according to the birthday paradox the probability that they will have a common puzzle is amazingly high so they simply keep generating puzzles at random until they generate one in common and use that for the cryptographic key there various improvements in the final version but that's the essence of the

concept and it shows that you can get an end the squared amount of work on the part of any attacker compared with an amount of work put in by the two communicants to establish a key so that was the first public key distribution system and in fact if you fiddle with it you can turn it into a public public key system and I then spent the next several years trying to get anyone to pay attention and it was rejected and there was a reviewer who said it was not in keeping with current cryptographic

thinking which was certainly true and he wrote therefore recommend that it be rejected and it was all very amusing at least in retrospect it's very amusing and eventually after quit and Marty had completed their work why the reviewers said oh we know what this is now that we've seen someone else described it who's not an undergraduate it's a very straightforward idea which is should be published and at that point I was accepted for publication and eventually it came out in the communications of the ACM but only after it had been delayed

for three years which was amusing so that's that's the the basic story of my original tangling with sort of both the concept of a public-key cryptosystem and with the publication process which really is quite badly damaged publication and the whole review process is almost guaranteed to produce bad results when you look at it carefully and indeed you find out in a lot of sort of institutions a lot of institutions that review concepts and ideas they are

very poor doing that and that of course got me interested in prediction markets because prediction markets look like they do a better job of reviewing concepts and ideas than the traditional committee that reviews an idea and says oh we don't understand this therefore it's bad therefore we rejected did you anticipate that many in the 70s you were working on public key cryptography and local trees that these inventions would become so big well we anticipated at the time I mean it was pretty obvious that there would be a lot of applications of public key cryptography and that they

would be used fairly widely I think one of the things was at the time we were looking at a world where commercial security was simply not viewed as important so it was multiple years before the widespread use of the internet for commercial activities for transferring money financial activities and once that happened and there was a great deal of interest in improving the security and of course at that point the

public key systems were available and people began to start using music them I'm not sure if you're aware of not but there's a there's a project in ours in this space currently for ipfs which aims to build something which is called the Merkel web the basic idea is that you would take all all all kinds of data you want to put on the internet as data blobs have unique hashes reference referencing each data block and link kind of all of these blobs of data in a directed acyclic graph and this directed acyclic graph of all of the data in the world if this project succeeds would be called the Merkel web now I mean what I

wonder is like when you were when you were working on this idea of the Merkel tree what what problem were you trying to solve and like it seemed like yeah that would be the question well the original problem was was fairly focused so I had been working on the knapsack the late lamented knapsack and it was difficult to extract digital signatures from the knapsack problem in a way that seemed reasonable and secure and all of those things so I was focusing on a way to get digital signatures that had minimal assumptions about

mathematics and anything else and the use of hash functions struck me as a wonderful idea and after thinking about it for a while I realized that I needed to have merkel Trias we would call it today in order to reduce the amount of authenticated information I had to pass around but essentially it was the signature application that was motivating me at that time once I developed the concept I realized it had broad applicability to pretty much everything and so I went over to

the Stanford patenting folks and said hey here's a concept I will write up the sort of the the basic concept let's patent it and in fact there was how do i phrase it there wasn't a lot of interest so I wound up writing the claims myself anyone who looks the patent will say oh it was so sparing in the claims well the reason it was sparing in the claims as I wrote him and I simply sat down and said okay what what's important and I didn't have a full appreciation that in patenting things you generally cover the landscape in all possible ways you can

think of so I simply wrote a couple of claims let's say that seems to capture and then send it off and the guys that the technology licensing office said great and they turned it into a patent and filed it but that was the core application and after I'd as I said after I developed the core application I realized that you could do a lot of things with it and in particular that one of the properties that was fascinating was you could have the Mafia compute the tree and if you were using the tree for example to have a an authenticated list of public keys and the names of the people who owned those public

keys then literally you could have the Mafia generate it and you could still trust it which struck me as a fascinating property unfortunately I wasn't able to figure out the next step I mean it was pretty obvious that this was useful but it was fixed it was rigid you couldn't update the tree updating the route required recomputing everything and sending things around again so that looked like a difficult process and the concept of updating the route the concept of having a route of you know all the hashes and having a sum algorithm that would update it I just

couldn't figure out how to do that and of course that's that's sort of the core of the the whole Bach chain concept is you do have an algorithm which will allow you to update the route in this delightfully distributed secure fashion yeah absolutely so in reading your democracy white paper one of the things that struck me and maybe that's kind of a way to to go a little bit deeper into the blockchain topic is how you describe the Bitcoin as the first example of a new form of life can you explain a little bit why you think of Bitcoin and these systems as living organisms and

why that is important well I was trying to get across a description that non-technical people could understand and when I thought about it from that perspective and tried to strip out all the technical aspects of it the simplest metaphor that would convey what was going on was that one of these distributed autonomous organizations is a form of life and bitcoin is the first example of this new form of life it follows rules it exists as long as it can do something useful I mean there have to be

willing to set up servers and actually put in the resources to carry out the the algorithm and as long as it's performing a useful service then it will have well it can use its own cryptocurrency and it can use its own cryptocurrency to pay people to carry out the useful services it requires so it seems to satisfy sort of the core requirements of a living organism and it has the fascinating property of having radical transparency and in addition to this ability to carry out any sort of

set of rules that you want so it it seems to be a an easy way to convey to non-technical people what it is that is interesting and advantageous about daos or dows I don't I kind of like the Dow pronunciation because it has this vaguely oriental wisdom sound to it let's take a short break to talk about high dot meat you know you need a VPN provider to protect yourself against those nasty hackers trying to steal your private information without me it couldn't be easier you just install their application on all your devices iOS or Android login and you have a cushiony cozy tunnel in

which your data can move freely and unencumbered all the while protecting you from those meals hackers now that's the sign up for the free plan go-to hiked up me slash epicenter the best thing is when you use that URL if you ever go premium later you're gonna get 35% off and premium comes with unlimited bandwidth using up to five devices at the same time you can use all their servers worldwide you can pay with Bitcoin and best of all it comes with a feeling of peace and satisfaction like having tea with the Dalai Lama we would like to thank hi Tommy for their support of episode of Bitcoin do you think dowels will also have a process of Darwinian selection will there be

dominant mechanisms indeed one well clearly if you seeing that I mean obviously they're a whole raft of competitors to Bitcoin that have been growing up and pretty obviously the selection process among them is entirely Darwinian so we're already seeing that and as we we go into the future I mean again we're going to see Darwinian selection processes those dowels that are better able to carry out a useful function will survive and the ones that eventually shrink to the point where nobody's interested will vanish the last server will be shut down and that will be at it will be all over so

we're seeing a Darwinian selection process and one of the fascinating questions is what are the Dow's that are going to survive from this Darwinian selection process one of the obvious ideas would be to use a prediction market and couple a prediction market to a Dow and then have the Dow use the prediction market to for example maximize its own value so that would be an economically driven Dow and there are a lot of people who are sort of looking into this whole concept of tieing prediction markets into dows and making them work I got interested because I thought you could tie a prediction

market into a Dow and use that for governance and in particular Robin Hanson's ideas on government uses the term future key which I thought was a really terrible selection of terms I mean as a word I think it it it has all of the the wrong sort of associations and flavors with it so it's difficult to see how that particular term will get widespread usage although it's a very good concept that he's described so I grabbed his concept grabbed a global audience

purpose is to focus on how do you have a governance process which can deal with major societal changes and produce sensible decisions or hopefully sensible decisions and that looks like it's at least possible at least it gives me hope that that's possible I mean people who look around the world and ask are people engaging in sensible decision making in sort of governance often come back with the answer no the governments of the world are not behaving very sensibly so the hope is that using this mechanism we would see an improved stability in the

decision-making process and that would allow us to have a better ability to cope with very advanced technologies which will turn our world upside down yeah one description you made of the sensual kind of problem that we have with voting and what's interesting about yo-yos and using prediction markets was that you have this first of all this economic thing factor that my boat doesn't really matter right then that just statistically right you'd the chance of you changing the outcome of Elections is zero essentially so if met from a sort of rational choice Theory

perspective like nobody should have a vote and then you also have to factor right that people don't really know much about the issues that have an incentive to make up their mind and and then even when they make decisions how those were implemented is very unclear so I think he did a you know very nice job sort of at at explaining those those issues with democracy and and in today's today's world I think it has become abundantly clear to most people just how big those problems all right if we look at what's happening in the u.s. with some rather questionable people and I'm having a good shot at becoming

president or even if we have things like in the UK right we had the brexit decision which now whether one agrees with that or not is a different question but what's pretty clear here is that a decision was made with massive implications without anybody really taking those into account and like doing the kind of balanced assessment of you know is this going to lead to a better world or not but just sort of moving ahead based on instinct or a version so I think it's become very clear it's just how big those problems are so so can you briefly explain like why do you think

that future key or a democracy could solve those problems well the problem I was facing was fairly straightforward democracies as you say voting has various terrible properties and democracies make decisions where well the old joke I mean democracies are run by the majority and half the population is below average so there's that and then there's the fact that there's very little incentive to vote and people oftentimes don't spend a lot of time thinking about what's going on and then there are these people running around

who have their entire lives their entire careers focused on how does one put it influencing the voters in ways that do not necessarily involve telling them the complete truth about what's going on so you have a whole raft of factors so the question I was asking myself with this what we want to do is we want to get very smart people very bright people and we want them to figure out what it is that would make sense for the vast majority of people and we want to do it in a way so that the very smart people don't wind up saying at some point oh and by the way I can just take over

because if you look what you find is sort of previous thoughts about well you should have very intelligent people making the decision that's just an excuse for the very intelligent people to grab power and then create problems for the rest of us so the question really boils down to how do you harness the intellectual abilities of really bright people so that they will actually think about what the issues are that would make most people happy and this whole concept of prediction markets seems to do that trick in the sense that anyone can participate in the prediction

market anyone can join anyone can buy like the stock market or like any other investment if you want to buy a stock or you want to put your money on an idea you can do it and if you're wrong you lose your money so suddenly there's a very strong incentive for the individuals who are involved to get it right and now by coupling the prediction market with ideas that are important to sort of us in terms of governance you get the best and brightest thinking

about or at least you get those who have spent substantial time thinking about and are willing to put their money where their mouth is you get those people actually providing strong information about whether or not a particular idea would work whether a particular bill would work out for the benefit of most of the people in five years time whether a particular action whether a particular strategy is going to be beneficial and I hope that's not too abstract but the idea behind a prediction market is that it lets someone else worry about whether it's a good idea and it rewards them not

for what they think about the idea towards them for accurately forecasting what the great bulk of people think about it so in a sense in your in your paper you say that we rely on specialists like doctors when it comes to matters of health care specialists like pilots when it comes to matters of flying planes but in the matters of governance we kind of rely on the population to vote correctly and put the correct people in government right and this is so different from from other areas where you expect specialists to

dominate out here you want everybody to participate right and this is in in a sense like a like a principal and agent problem like all of the people in a country say are like a principal who would like their lives to improve through governance and they want to select set of laws or set of agents that could propel them in that direction so what you are essentially saying here is that you could have prediction markets to solve the agency problem that the agent sort of becomes the prediction market or the relation markets give a mechanism by which laws could be made and very highly skilled people could participate in the prediction market and

form parts of and together form this agent and then you would need a mechanism by which the let's say the welfare of the principal or welfare of the people would be taken into account by the people who are betting on prediction markets so what would that mechanism be okay so the question for example would be how do you run a presidential election and use this concept of a prediction market to improve the process so if we look at the current presidential election we see a variety of problems on parade if we use prediction markets the question is how

do we improve that process and the first thing we say is well if we're using prediction markets we have to predict something so what is it we're going to predict and the obvious thing to predict is the rating of the president four five six years from now in other words we sort of want the judgement of history so what you're trying to do is decide what the rating of the president will be and we have polls on the president's performance you know how is he doing and so forth and so on so you might do something that was stronger than that you might have after

the president has served in office you might have an election on whether the president should have served in office so in other words the idea is that well after the president has completed his term you have essentially a really good poll where you ask everyone what they thought of the president and they rank the president then what you do is you say well that information that ranking of the president is only going to be available to us in the future after we've completed the selection process so now what we do is we say let's use a prediction market to predict what people

are going to think about a particular president after he's been in office for several years now I put it to you that it's a lot easier to decide in hindsight whether you like the president that it is in foresight I mean you vote for a president and then you find out four or five six years later you didn't want to vote for him or you don't vote for him and you find out four or five six years later the other guy did a really good job and you're very happy with him so if you try to divorce the evaluation after the fact from figuring out what your evaluation

will be you wind up with a action market which tries to predict what people will think about the president after he's been in office now you can run an election and this prediction market election consists of having a prediction market for each of the candidates and then what the prediction market does is it tries to predict the rating that that candidate will have a year or two after he's completed his term now if you do that you now have a series of prediction markets one for each candidate and those prediction markets predict the ranking

that that president will get now it's a simple matter you picked the president or you pick as president the person whose prediction market says that people will rank him the highest after he's completed his term in office now that process of running a bunch of prediction markets and then picking the top-rated candidate in accordance with the prediction market has a number of obvious advantages the biggest advantage is that instead of having you know ordinary folk trying to figure out all a baffle gap if candidates are producing you have really

bright really sharp people trying to figure out what Joe Sixpack is gonna think of the guy after he's left office so now you've got people who are able to spend the time to get through the how does one phrase it delicately the the promises that politicians make they can analyze the puffery which is involved in the election process and they can cut through all of that and figure out is this guy really going to be able to deliver the goods and if he can they'll say well after the election is over

people will probably like this guy because he he's really competent and has a good track record or alternatively they'll say you know people might be wild for this guy at the moment but after he's been in office for a couple of years they aren't gonna like him because he just doesn't know how to run a country and he doesn't know how to run an economy and he's just gonna do a terrible job so that shifts the burden of evaluating all of the complex issues to a core of very bright people and leaves you with the primary result that that core of very bright people only makes money they only gain advantage by

accurately predicting what Joe Sixpack is gonna say after the election is over and that's sort of the idea and I think that's it's very interesting actually you go from from what you just described here to the concept of Dao democracy right because before you described here like one of the issues that I would for example say is well people don't tend to recollect things very well right they will have a strong recency bias or presences might have been not very good but they made some popular measures in the end and then people have a much more positive memory or people who tried to optimize specifically the thing in their polling how well they pull at the end of their at the end of their time and so

you have those kind of things right but but I think that the nice thing in this Dao democracy is the idea that people are not going to sort of evaluate the president but they're gonna evaluate their own life and how happy they are with their life you know every year and then you have any way you have this measure of how well are people doing and so if you didn't have a prediction market about how well are good people gonna do if Trump gets elected versus how well are people gonna evaluate their own life if Clinton gets elected all of a sudden right you have an very interesting basis on which to to make those decisions yeah so the example I gave was specifically oriented towards

something that people are familiar with which is the presidential election and I tried to give an example okay if you took that process and tried to use prediction markets here's how it might play out as you point out when I was thinking about it and and when Robert Hansen was thinking about in terms of you turkey the question was how do you get a broader metric now Robin wants to have voting so his slogan is voting for values but you know I forget what it was prediction markets for voting for values betting on an outcome something like that and beliefs so I think the problem with that though is

it still uses this voting mechanism and looking at the voting mechanism I really can't I can't I can't back a process that uses voting I'd rather have a process that had something else and as you say the question is what is it you're gonna predict I mean like I say the core question on a prediction market is you need to predict something so what do you predict well the thing to predict is the collective welfare of everybody and that collective welfare of everybody is perhaps best computed by simply asking everybody what they what their welfare how do they feel are they you

know are things going well and then you simply add that up and people are as you point out they're they're very well acquainted with their own laws how things are going for them whether it's going well whether it's going badly whether they would wish to see improvements so you don't ask people a complicated question like evaluating a president you ask people a question which they are very qualified to answer which is how they themselves are doing and then you summit over all of the people in the nation and you've got a collective welfare now you use a

prediction market to predict whether or not a bill or a an action will cause the collective welfare to go up or not and that really begins to give you something which i think is very good now the way the Dow comes into it is that if you want to use this concept of prediction market there's a whole lot of mechanics and you want to make sure the mechanics are carried out reliably and you want to make sure the mechanics are carried out without bias and without people mucking it up in some fashion so by using the whole Dow mechanism you can improve the

integrity and the reliability of the core governance process and make sure that what you see is what you get so to speak so that's that's where the the Dow part comes in and then you combine it with the prediction market of this core value of collective welfare and that's pretty much at today's magic where it is cryonics CR y OU and ICS head over to lenguin.com to sign in enter the magic word and claim your part of the listener award the thing that I also found fascinating about your ear paper is that

that sort of underlying structure is is of course a direct so in a way it's an implementation of a political theory called you tell utilitarianism right where you say ok the sort of good is if everybody is the sum of everybody's well being is maximized and what what struck me here is I'm not sure if I've ever seen somebody describe a sort of process of how you're gonna go from this political theory to then actually having a society taking decisions that then mark you know maximizes and

functions according to that political theory are you aware is are there other models of how that can be accomplished or is is this kind of at first I'm probably a terrible person to ask because my expertise is cryptography and molecular manufacturing and I came late to the party on this whole political process set of issues so I'm aware of sort of the the concepts and ideas that I've been directly involved in but I don't have a lot of breadth in sort of the the political concepts and ideas so I I really don't know if someone else's implemented ideas in a way that would sort of be a direct implementation of

one of the classic concepts of of societal well-being but it is interesting that this is how do I put it I mean it really it really pushes you towards the concept of as you say utilitarianism the idea that you want to maximize the well-being of everyone and what's also fascinating is I was thinking about it it turns out that if you ask people directly how they value things you get a pretty good answer and the other thing is when you think about it should you be waiting some people more heavily than others you know the

old all animals are equal but some animals are more equal than others line and it's really hard to justify and when you get into this whole process as long as you're talking about well the wise should have a greater influence okay you you you can kind of argue that but the moment you get into this process where the the hard work of an analysis is carried out by the prediction market and the core function of people when they are providing their input is to say you know yeah I like I like my life it's a good life whatever the society is doing is good or you know my life is really bad I don't like it something's wrong do

something it's really hard to justify different weights for different people when you boil it down to this level and you sort of have a a natural tendency to wind up with some sort of democratic process I don't know if I can express it any more formally than that but it it almost seems as though this is some sort of natural structure that seems to emerge from the set of concepts so in in a in a doubt democracy for the Companions of that's for example what children say about their life right like so in this

case you you go to every citizen and ask rate your life right like rate how well you are doing what we also as children to rate sure and the whole purpose of not having children vote today as we say Oh children they're not competent to vote they don't have the intelligence to understand the issues well once you've factored out the analysis process from the emotive is my life going well process then sure involve children all you have to do is be able to say you know is is this person happy or sad are they you know pleased with the way

things are going I mean the the whole purpose here is to reduce the intellectual burden on the average citizen while still honoring the emotion of the average citizen and that's the tricky part because it's really easy to get a system where the very bright people run away with a system and you don't want that you want a system where the very bright people are harnessed to the well-being of everyone and getting that structure is the tricky bit so one of the key things in a system like that is the discount factor can you explain what

a discount factor is and why it plays a role in this process well if you're dealing with the future then you have to start saying things like well the future is you know ten years in the future is farther away and it's blurrier one year from now is a lot closer it's a lot more important let's discount ten years by some amount and this is typically expressed as an interest rate so people normally say well there's an interest rate it's five percent it's four percent it's three percent and if you're dealing with this this whole decision-making process you want to have some sort of uniform way of

evaluating the sort of the future and things that are going to happen and in particular if your annually taking a poll among all of the citizens so if you're taking this annual poll and all the citizens are providing their input you want to wait the next year the next two years the next five years more heavily than twenty years well actually done but it would seem that you would want to wait the nearer term more heavily than the longer term and certainly when we begin this process it might be advisable to do that so we can gain some experience on it on short

time horizons but in some sense if people are unhappy a hundred years from now shouldn't we be concerned about that if we're making a decision where we can actually tell that a thousand years from now it will cause great suffering shouldn't we not make that decision there are a couple of issues here first off people have a hard time forecasting things you know a year two years three years from now forecasting things twenty years from now is almost uniformly terrible so if you look at 20-year forecasts

you find that there they're almost always wrong misleading punt you in the wrong direction etc and that's not so much a function of whether it's important to know what's going on twenty years from now it's a question of it's just hard to figure out anything significant about twenty years from now this is captured imperfectly by using a discount right and you can argue philosophically that you should care about a thousand years from now but the pragmatic answer is we're just not bright enough to be able to make

statements about a thousand years from now or even a hundred or even twenty and if we could do a good job of forecasting five years that would be pretty good a a lot of society would be greatly improved if we did a good job at figuring out what was gonna happen five years from now and that would allow you to deal with a lot of issues on a lot of problems a lot more effectively than we do now so that argues for discount rate on the order of five ten percent the five percent discount rate would give you roughly a 20-year sort of look ahead and I go into the math of this in the

paper but the basic idea is we use a discount rate as an imperfect way of saying we have a hard time figuring out what's going to happen in the future let's take a short break so we can go to Paris I stopped in to Lima zones between the house of Bitcoin at the larger offices and I met with ledger CEO Erica Kovac so he could tell me all about the ledger wallet chrome app the ledger wallet chrome app is a perfect companion app for your ledger hw1 or nano we are very powerful and cool feature you can use multi accounts for instance personal accounts business accounts this is very useful also when you want to make a transaction we use a

seventh to verification you can either use a physical security key or cryptographic and securely pair your android or iOS smartphone to your nano this way when you issue a transaction of payment the transaction will pop up on your Android or iOS phone and you will be able to verify the amount and destination address finally the ledger chrome app has an API with which you can easily integrate third-party applications for instance if you want to create a multi signature account with joint guide or copy it will be done using the ledger wallet chrome app ledger is making hardware wallets easy and convenient without compromising

on security if you want to get a secure setup for storing your bitcoins go to ledger wall calm and use the code epicenter to get 10% off your order we'd like to thank ledger for their support of epicenter Bitcoin the way in economics the assumption is made at a discount rate reflects a sort of time preference that people have right their prefer having something today from next year just because that's they they don't value the future as much as the present regardless of the factor of uncertainty and difficulty in predicting things now it seems to me that you know probably

you know maybe some people have moral reasons why they think a discount rate should be zero and if there's certainty then in the future you should reach a value that's just as much as today but I would assume that people are gonna have very very different views on this isn't that a massive problem for this system well I think if you start looking at it and you ask what should the discount rate be I think most people will gravitate towards something rather plausible but if your your question is hey if you implement this thing are there gonna be fights over how to implement it the answer is I would expect so and if you're talking about a mechanism of governance then there going to be a lot of things that people

are going to argue about that they're gonna have very very strong opinions in multiple ways I've tried as much as I can to reduce the range of things about which you can argue but in the end you just have to implement it and see hey what happens and that raises a number of interesting questions which is how do you go about implementing these things I think the the simplest way is to start small and perhaps start by well you can you can start using it as sort of an advisory approach in other words there is a

concept here of having a collective welfare and measuring the collective welfare and using a prediction market to predict the collective welfare depending on whether you pass a bill or don't pass a bill and evaluating your actions today of evaluating the actions today based on their predicted results predicted by the prediction market well you can do that in an advisory capacity without changing the underlying governance process so you could have an organization and could set up a prediction market and it could run the prediction market and it could just

use that as input and it could ignore the results if it thought that was appropriate but it could also use the results and say hey here's this prediction market thing it's telling us that if we you know increase our dues by 10 percent we'll lose members but if we increase it by 5 percent we won't lose as many members and our growth rate will improve or something very quantitative like that you can ask very detailed questions of a prediction market if you're trying to figure out whether or not some very

pragmatic decision you're making is going to be a good one so for a small organization you could simply adopt the concepts of prediction markets see what happens and then as you get used to it and you decide maybe it's a good idea you start solidifying the decision-making process and you start to commit the organization more extensively to actually following what the prediction market says assuming that it's producing reasonably good answers so that would seem to be a natural way of moving forward with sort of putting our toe into the waters and trying these things out so is the is a doubt

democracy as you conceptualize it keep it below for recursive self-improvement meaning I'm assuming that all of these parameters like discount factors and how we and whose opinion counts in the collective infamy metric are implemented as parameters in a cone can these be changed in the future the answer by and large is yes so in other words if you have a doubt amok recei and it's implemented using a code base then one of the allowed functions would be to ask if I make this change the code base will it improve my parameters will it improve

the collective welfare and if the answer is yes and you'd go ahead and make the change now that allows a self improving process and I think it's essential to have that on the other hand it's also clear that if you allow self improvement the Dow could change in unexpected ways and it could change in ways that perhaps are not ones that you you would want so you have to ask yourself how much flexibility should we have versus how much do we want to preserve a core set of values so you really have to start

asking yourself what are the core values that we're trying to preserve and then anything which is not a core value anything that was not a core value would be up for grabs how you propose bills the discount rate of all of that you could adjust and optimize there is an interesting question which is given that we're going to have a lot of dowels running around and given that they're going to be based on all kinds of assumptions we're going to have a

Darwinian selection process a Dow C a governance process that is based on this would also be part of this Darwinian selection process and the problem is if the DAO governance which is after all supposed to be the mechanism that's looking after your welfare and my welfare and everyone's welfare if that Dow if that Dow democracy which is looking after everyone's welfare loses in the competitive process that could be

a problem and it particularly becomes a problem as you transition to a society where the dominant actors are no longer people in all of our history we have dealt with a world where people make it run and we're moving to a point where that won't be the case where you'll have intelligent computers autonomous computers carrying out the core functions of society

if you have dows that don't care about you and me don't care about people and they out-compete the Dow which does care about you and me the Dow democracy then where does that leave us and the answer is in a very uncomfortable place I suspect so you want to have as much flexibility in the diode amah cracy as you can because you want the dow democracy to be as competitive as it can possibly be because there's an

expectation any people are already running around implementing lots of doubts so it's hard to see how we can have a future where we don't have a lot of other doubts that don't really care a lot about people they'll care about economic results they'll care about performance let's face it you and I are not going to be competitive in the future you and I are biologically based we have brains that operate on millisecond synaptic delays a few tens of meters per second propagation

velocities and using componentry which is large and unreliable compared with the kind of systems that we expect we'll be able to build so at some point we will have systems that are a lot brighter a lot faster a lot smarter a lot more competitive than we are and there are a lot of people who are perfectly happy to set up an economic system where those people who don't carry their weight don't get to be part of the system they're losers well I got news for everyone we're all going to be

losers all of us so unless we set up a system which looks after slow-moving not very bright people which is all of us we're going to create a system which will eventually simply dispose of us which is not something that as a human being I'm very happy about so one of the questions in this whole Dao governance process this whole Dao democracy process is will this system remain robust and reliable when you've got computers that are a lot brighter than we are and hopefully the

answer is yes and I think at this point the sort of the conversation and the discussion about these is just beginning there are a lot of people who write papers about super intelligence and ai's and the AI revolution and friendly eyes and all of that stuff but the hope is that a dhow democracy would be of such a nature that it would remain intact it would survive and its core function of responding to the well-being of the people who are composing it would continue to be served that's a extremely interesting point and

if one if one looks at it kind of strictly right you would think that if you're gonna have a doll who's sort of design objective and the function it's trying to optimize it's just growth right it grow from dominance and that's the only thing it tries to optimize this is another one that tries to optimize you know human well-being it seems inevitable that the latter one is going to struggle against the first one we get to set up the initial conditions because right now we're running the show so I would write suggest that we arrange the initial conditions in such a way the

we have long happy lives that's my suggestion and then as you point out if you have a dows goals are limited to simple growth then we probably want to give an edge to our Dow democracy in some fashion like it gets there first it owns most of the resources to begin with so these other dowels are smaller and littler and can be you know dealt with in some fashion there are a number of very interesting issues and I'm sure as some of your listeners will understand these issues are going to be very important for people who expect to be

alive as this transition to intelligent computers takes place which I suspect is a fair percentage of the listeners now let me die in your interest with cryogenics and life extension into this into this question bionics by the cryonics by the way just cryonics okay so so the basic idea behind cryonics is if I am suffering from a disease like that's going to kill me we're all terminal it's just a question of how long then then be and then I could either freeze my brain or my

complete body in order that in the future if there's technology if the technology level is such that the people in the future can actually resuscitate me then they would go ahead and do it right now if you had a doubt democracy system and I was in that position that I had a disease I would want a system where if I froze myself chronically then the DAO democracy would ensure that in the future if there is technology resuscitate me it would go ahead and resuscitate me is there a way I could is there a way you could tweak the system

do any blue that yeah you just keep saying hey when you're cryopreserved you continue to enter your annual evaluation of the situation and my evaluation what I'm cryopreserved is I don't like the situation very much and if I reach a point where I'm revived I'll like the situation a whole lot more so a doubt amok recei which is getting as inputs from all of these cryopreserved people that they don't like the system situation very much and it can wake them up at which point they'll like the situation a whole lot better the DAO democracy will say huh if I wake these people up they'll like the situation a

whole lot better oh I should wake them up so now you're down incentive to go ahead and wake up all the people who are cryopreserved so get that structure in place and a suddenly you've got a doubt amok recei looking after your back just so you're aware that this is a good eye by the way for those who are listening there's a really good blog on on cryonics Tim Urban wrote an article on why cryonics makes sense and he put it up on his weight but why which has gotten a great deal of popularity because he writes very well and does really good in-depth analysis of a

variety of subjects so I can encourage people to go read about cryonics there yeah and also if you're assuming that cryonics won't work guess again there's a lot of evidence which has been coming in the last couple of years it says yeah this looks like it ought to work so if you want to stay alive in the future you're a little bit uncertain about how long you might manage to make it look into cryonics and by the way yes I am signed up yeah we'll definitely oppose linkster I think also Al Khor you're on a board of if I was correct yes so one of the cryonics organizations and until the

also people who interest in that which is certainly extremely fascinating topic should should definitely look into that well anyone who thinks life is worth living should probably check it out now let us also try to tie in one of your other interests which is molecular manufacturing into into the democracy idea so for our listeners who have never heard of molecular manufacturing it's the idea that like when human civilization started we ended up playing with atoms and right now we can fabricate things using atoms but we always deal with chunks of atoms like that a micrometers big or conductors

nanometers yeah we deal with matter in great thundering statistical herds so large numbers of atoms at once and I really have a hard time sort of getting every atom where we want it to go that's that's a little bit tricky yeah and the idea is that we'll have technology that allows us to arrange atoms any way we wanted to and this would have massive consequences in the way we do pretty much everything health care computation etc right and if I might intervene for a moment for those of the less technical sort who are listening imagine Lego blocks Nature has given us a Lego set and right now we got boxing gloves on our hands and we can just

scoop up the Lego blocks into great untidy heaps if you got molecular manufacturing you can take off the boxing gloves and take the fundamental building blocks of nature and snap them together in exactly the way you want and all of you chemists out there before you kill me go read our technical articles on the subject there's a there's a whole body of literature that kind of analyzes this what molecular manufacturing starting from if you like to read about it more egg Drexler and then there are a lot of papers from last month of himself and

his I think collaborator Robert Freitas about how this could impact med and how this could lead to technologies like rejecting people from their frozen bodies right so there's there's a lot of body of work around this idea now in like I have always felt that one of the reasons why this technology has not come to fruition is that there hasn't been a focused effort to make sure we get to the point where we have molecular manufacturing because this is something that requires a lot of money and political will do you think something like add our democracy would could help

prioritize this sort of research because that could tremendously impact human wellbeing in the future well the DAO democracy obviously would have an incentive to pursue it because as you say it would greatly enhance human wellbeing and I think that as you point out a focused project to develop molecular manufacturing would be I think critical we didn't get to the moon because people sat around and said you know it would be nice to go to the moon we got to the moon because we had a project that said there's the moon we want to go there we're gonna do it and we're gonna pour in a lot of time effort and energy to make it happen and by the

way I think it doesn't require that much money to get the projects rolling and get things started so if anyone is interested in making this happen and happens to have you know a few tens of millions of dollars lying around why give me a call because how do I put it I think I know how to do it and we've got you know collaborators who are knowledgeable about all of this so if you think this is a worthwhile endeavor and you've got some money you want to put in why give us a call so you've written this white paper now on democracy it's a super exciting concept and there's certainly a lot of work to

do until that actually you know gets built and gets realized are you what are your next steps for you are you working on this so you're gonna be looking into developing some of the tools some of the code around this well I'm gonna be supportive of it I I don't think I'm gonna stay focused on the molecular manufacturing so I'm gonna stay focused on that as my primary activity but I'm certainly supportive and I think there's a marvelous opportunity for anyone who wants to to sort of leap in and make things happen to do so the simplest thing as I said is to take an existing organization and start setting up the prediction market apparatus just using

manual techniques and then using that as an advisory input the other technique of course would be to set up the code base for a dhow democracy and find someplace that really wanted to try it out and there are a couple of reasons you might really want to try it out one is you're a student organization that likes to try things out another would be that you're flat-out desperate so bankrupt cities or Somalia or someplace like that now you might want to try those a little bit after you've got the code base up and running you've tried it out with a student based organization but you get the idea find some group that is interested in

trying it out give it a shot see what happens write up some code pull it in to a student organization get things rolling and see what happens I mean we've got a lot of excitement around Dow's in general and I think this is one of the efforts where there's going to be a big payback the core question is how can we use dows to improve governance and anyone who wants to go into that area and do it I mean that's this is going to transform society so you know it's got a lot of pluses for it

absolutely and the great thing the excellent situation that we currently have is that there is a money opportunity you know so people have certainly seen that with the Dow that was a rather poorly designed attempt in many ways still there is so much money so I think it's quite obvious that there's a big opportunity in getting this right and of course that will mean a ton of people are gonna be working on this over the next year's I think we were gonna see extremely rapid process progress there and that's and the nice thing here right is that you will have this rapid progress and being done in an open-source way so even if people do it for profit reasons one will be able to

reuse a lot of that work for things such as a democracy so we're at the at the end of our show Ralph thanks so much for coming on that was extremely interesting thanks for your work and we are really looking forward to what's gonna come out of this over the democracy concept and your further creative work in this field well thank you very much for having me and I look forward to the progress in all of these areas as well I hope hopefully we'll see a follow up paper from you at some point or have another reason to have you back on the show okay well to listener as well thanks so much for coming on so absent Bitcoin is part

of the LTE network you on this show and others on less so quick kind of pump you can of course subscribe to the show on any of your podcast applications or watch videos on youtube.com slash obscenity so thanks so much and we look forward to being back next