Risk-minimization & Trustworthy Technology
Newcomers often say “trust-minimization” sounds daunting at first. Trust-minimized technology actually automates trust between parties, functioning as a trustworthy medium that even strangers can use to cooperate.
Minimizing the amount suspicion needed to conduct business frees up a lot of scarce mental energy that would usually need to be dedicated to maintaining security. When security and trust are automated, deals happen with less effort.
- “Firm belief in the reliability, truth, ability, or strength of someone or something.”
- “Acceptance of the truth of a statement without evidence or investigation.”
Risk is remarkably reduced when reliance on blind trust (2nd definition) is minimized or replaced within commerce by computationally provable verification, as the quote below describes:
The Dawn of Trustworthy Computing: “With current web services we are fully trusting, in other words we are fully vulnerable to, the computer, or more specifically the people who have access to that computer, both insiders and hackers, to faithfully execute our orders, secure our payments, and so on. Trust-minimized code means you can trust the code without trusting the owners of any particular remote computer.”
Proper security precautions cannot be disregarded when designing trustworthy systems. A fully automated system must be safely designed, securely programmed, and have a history of immutability in order to be classified as Trustworthy Technology.
Why would creating an immutable (unchangeable) system ensure that it is trustworthy?:
If the rules of a well designed system cannot be altered, then the system will be completely shielded from the exploitative nature of man. Immutability prevents attackers and malicious insiders from tampering with the data integrity and engineered synchronization of a blockchain.
America’s founding fathers applied the principle of immutability when drafting the real-world constitution. Likewise, the immutable consensus rules are the digital constitution of a blockchain.
Instead of relying on the ever-changing and unpredictable nature of people or mangers, risk is reduced by utilizing unchanging Trustworthy Technology (a legitimate blockchain) to unforgeably enforce smart contracts and a completely predictable monetary policy.
Smart Contracts:
If you’re transacting with a person or group you don’t fully trust, consider smart contracts. Secure smart contracts ensure that both parties will follow through on their contractual promise, else the dishonest party will automatically lose their digital collateral or deposited cryptocurrency.
Social Implications and Themes:
Bitcoin and smart contracts allow for strangers or enemies to conduct business with each other more safely.
The “Bitcoin is money used between survivalists” theme will always be around, and that’s okay, it was part of the foundational perspective that conceived the technology underlying Bitcoin’s strong security after-all.
The “Trustworthy Technology and Risk-minimization” theme is simply a different cultural lens nations, institutions, small businesses, and newcomers can look through to better understand the value and utility of a secure, globally seamless blockchain.
Although, this does not mean the term “trust-minimization” needs to be abandoned by cryptocurrency developers or security professionals. People from all cultures and genetic backgrounds may use “trust-minimized computing” aka Trustworthy Technology to cooperate across boundaries, reducing the time and mental energy needed to facilitate trust in impersonal business relationships.
Prioritizing and maintaining relationships is a significant aspect of everyday life, especially because the size of each human brain’s frontal lobe limits our ability to trust. Humans can only trust approximately 150 people at a time (Dunbar’s number).
If economic interactions require strong relationships, then the amount of people we are capable of trusting and personally doing business with will be limited by the neuroscience underlying Dunbar’s number. If computers can be trusted to secure economic contracts, then everyone will be able to increase the reach of their businesses without needing to expend as much time and energy sustaining the trust of impersonal business relationships. The saved time and energy may be redirected into more useful or personally meaningful relationships.
“Trust minimization frees up an extremely scarce resource, human connection.” ~@naval
Emotionally meaningful and optional social bonds (freedom) > Social bonds established and maintained for the sake of business (survival)
New (globally spanning) relationships might form more often due to less economic risk increasing the likelihood of interaction. Even if the trust is temporary or situational to money and contracts only, the overall likelihood of interacting and transacting increases.
Psychology of Normal Transactions: Risk Assessment → Trust → Interaction → More Trust → Transaction
Psychology of Smart Contracts: Less risk → Higher likelihood of interacting → Higher likelihood of transacting → Higher likelihood of increased economic velocity
Trustworthy Technology acts as a superconductor for scaling economic velocity and societal expansion.
Monetary Policy:
In regards to predictable and fully automated monetary policy vs. humanly controlled minting strategies:
Excessively minting money always leads to the devaluation of that money. The depths of history repeatedly demonstrate how dangerous it is to combine the greedy and power-hungry urges of humans with the ability to print money.
Do you trust the ever-changing tendencies of seemingly trustworthy strangers or an immutably scarce monetary policy?
It’s quite clear which is more trustworthy.
“Socially Scaling is a driving urge and process underlying humanity’s history of advancement and evolution.”
The paraphrased excerpts below, from Nick Szabo’s Social Scalability essay, is evolutionarily insightful writing that inspired this article.
“Social scalability is about the ways and extents to which participants can think about and respond to institutions and fellow participants as the variety and numbers of participants in those institutions or relationships grow.
Social scalability is the ability of an institution — a relationship or shared endeavor, in which multiple people repeatedly participate, and featuring customs, rules, or other features which constrain or motivate participants’ behaviors — to overcome shortcomings in human minds and in the motivating or constraining aspects of said institution that limit who or how many can successfully participate.
One way to estimate the social scalability of an institutional technology is by the number of people who can beneficially participate in the institution.
Another way to estimate social scalability is by the extra benefits and harms an institution bestows or imposes on participants, before, for cognitive or behavioral reasons, the expected costs and other harms of participating in an institution grow faster than its benefits.
The cultural and jurisdictional diversity of people who can beneficially participate in an institution is also often important, especially in the global Internet context.
The social scalability of an institutional technology depends on how that technology constrains or motivates participation in that institution, including protection of participants and the institution itself from harmful participation or attack.
A wide variety of innovations reduce our vulnerability to fellow participants, intermediaries, and outsiders, and thereby lower our need to spend our scarce cognitive capacities worrying about how an increasingly large number of increasingly diverse people might behave.
Without institutional and technological innovations of the past, participation in shared human endeavors would usually be limited to at most about 150 people — the famous “Dunbar number”. In the Internet era, new innovations continue to scale our social capabilities.
Most institutions which have undergone a lengthy cultural evolution, such as law (which lowers vulnerability to violence, theft, and fraud), as well as technologies of security, reduce, on balance, and in more ways than the reverse, our vulnerabilities to, and thus our needs to trust, our fellow humans, compared with our vulnerabilities before these institutions and technologies evolved.
All these kinds of innovations have over the course of human prehistory and history improved social scalability, sometimes dramatically so, making our modern civilization with its vast global population feasible.
Reverse-engineering our highly evolved traditional institutions, and even reviving in new form some old ones, will usually work better than designing from scratch, than grand planning and game theory.
In most cases an often trusted and sufficiently trustworthy institution (such as a market) depends on its participants trusting, usually implicitly, another sufficiently trustworthy institution (such as contract law).
These trusted institutions in turn traditionally implement a variety of accounting, legal, security, or other controls that make them usually and sufficiently, at least for facilitating the functionality of their client institutions, trustworthy by minimizing vulnerability to their own participants (such as accountants, lawyers, regulators, and investigators).
When we can secure the most important functionality of a financial network by computer science rather than by the traditional accountants, regulators, investigators, police, and lawyers, we go from a system that is manual, local, and of inconsistent security…
…to one that is automated, global, and much more secure. The more an institution depends on local laws, customs, or language, the less socially scalable it is.
Centralized root-trusting security scales poorly. As the resources controlled by computers become more valuable and more concentrated, traditional root-trusting security becomes more like the “call the cop” security we are used to in the physical world.
Fortunately, with blockchains we can do much better for many of our most important computations. Trust in the secret and arbitrarily mutable activities of a private computation can be replaced by verifiable confidence in the behavior of a generally immutable public computation.
The characteristics most distinctively valuable in blockchain technology in general, and Bitcoin in particular — for example
• independence from existing institutions for its basic operations
• ability to operate seamlessly across borders
come from the high levels of security and reliability a blockchain can maintain without human intervention. Without that high security it’s just a gratuitously wasteful distributed database technology still tied to the local bureaucracies it would have to depend upon for its integrity.
Even though social scalability is about the cognitive limitations and behavior tendencies of minds, not about the physical resource limitations of machines, it makes eminent sense, and indeed is often crucial, to think and talk about the social scalability of a technology that facilitates an institution.”
