The 1st BSN Global Tech-Innovation Summit | Silvio Micali: Blockchain Technology, the Past, the Present, and the Future Full Script

On November 27, 2020, Silvio Micali, Turing Award winner and MIT professor, delivered a keynote titled Blockchain Technology, the Past, the Present, and the Future at the 1st BSN Global Tech-Innovation Summit in Wuhan, Hubei Province.

The full script is organized as follows (some minor edits were done):

Algorand 2021. Hello Wuhan! Thank you very much for organizing this important conference.

No pandemia should stop progress or international cooperation. I’m here to share with you the latest Algorand blockchain technology. But first, I’d like to reassure all those who are suffering from Covid-19 today, in China, in the United States, in Italy, all over the world. I’d like to tell them and reassure them technology is on our side. Our blockchain technology is on our side. We are our own technology, and our technology is at our service. This pandemia we learned, and then with our sacrifice, our cooperation, and our technology will make our world better and more just.

Now for Algorand technology, Algorand is an alternative blockchain, build from first principles. Because sometimes we should start from scratch rather than touching something that does not quite work, and develop with advanced technology. For what? For all the aspects of the blockchain. The consensus, the smart contracts, the interoperability between chains.

Let me start by recalling Algorand consensus technology. First of all, it solves the Trilemma faults by ensuring security, scalability, and decentralization altogether. Thanks to two key technologies of Algorand: Cryptographic Sortition and Verifiable Random Function. Second, our consensus has no forks. It enjoys Immediate Transaction Finality. Every block that has appended to the Algorand chain is guaranteed to stay on the chain forever, and therefore, you can start relying on the transaction of these blocks right away. This is thanks to Algorand unique Byzantine Agreement protocol.

Moving onto Algorand’s smart contracts. We must admit the traditional layer-1 smart contracts are more aspiration than technology. As humans, we should have always higher and higher aspirations. But, at some pointing time, we should support our aspirations with real technology. Otherwise, our aspirations will remain a pure illusion. With traditional layer-1 smart contracts, the problem is it will obstruct the blockchain critical path. And they are very expensive, very slow and very fragile. Thus, Algorand is taking a different approach to smart contracts, layer-1 smart contracts, and smart2 contracts.

Let me start with layer-1 smart contract. What are layer-1 smart contracts? First of all, they are smart contracts. They are executed at the consensus level, which is the most secure in every blockchain. But we found slowing down block generation. Algorand layer-1 smart contracts guarantee the same efficiency and security as ordinary payments. Let me give you an example. Simultaneous exchange: I have an asset “x” that you want, and you have an asset “y” that I want. How do we swap them? Should I send the first my asset? Should you send it first your asset? And how about the trusted mediator? No, thanks. Trust mediators are costly and rare. If you live in China and I’m in the United States, we may not know anybody, any 3rd party, both of us trust. Then what? Traditional smart contracts? I just said that they are slow, they are costly, they are fragile. Forget it! How about Hash-Time-Locks? Never mind what they are, but they are also slow. And by the way, they are vulnerable to denial-of-service attacks. And then what? Then in Algorand we do some alternative exchange, as a single transaction as a layer-1 contract in a few seconds, and without even you having to write any new line or software. As simple as “123, swapped!”.

Next, correlated payments. I pay you, but maybe simple. But what if we have linked correlated payments? I pay you only if you pay her, only if she pays him, etc. Such correlated payments do occur in the supply chain. They are very hard to implement. Nobody wants to be my first to send their money. In Algorand, we allow as many as you want correlated payments in a single transaction in a few seconds and with zero lines or codes.

Next, asset tokenization. You have built an entire office building. Now you want to tokenize it to enjoy immediate liquidity. You can do it in a single transaction in a few seconds by writing zero line or codes. And you specify who is very sure how many initial programs, how many future tokens, who has the right to freeze these tokens, and so on so forth. And how about auctions. On a planetary scale, conducted transparently so that everybody can see what the bids are. And everybody realizes that the fair price has been reached, and who won what. And collateralize loans, where the transfer automatically collateral in case of default, etc.

Layer-1 smart contracts satisfy 80% of our needs for smart contracts. But not all. There is still a lingering long tail of smart contracts. Contracts that are too big, like for data-intensive applications. Contracts that are too long, like for Computation-intensive application. Contracts that are too weird, like Crypto Kitties. Complex contracts that are too complex. For all these, Algorand has architected smart2 contracts. What are they? They are layer-2 smart contracts that are finally really smart! Smart, smart contracts. And how do they achieve that? By separating the consensus protocol from virtual machine execution. Smart contracts essentially execute complex user-defined computation off-chain speculatively. They have built-in layer-1 smart contract structure for atomic state transition and use programming languages with built-in security features for modular structure. And where architecture is virtual machine agnostic for great flexibility. They are coming to our trade in 2021.

And now to Algorand’s interoperability technology, why we want blockchain interoperability? Because no blockchain should be an island. The world outside is always larger than the world inside. If you build a blockchain that is incapable of interoperating with other blockchains, you’ll be the first prisoner of your own castle. The aspiration behind chain interoperability is very clear. Everybody enjoys the freedom of movement or moving assets from one chain to the next. In fact, assets want to go to the blockchain where the best tool to transact them. Blockchain interoperability allows you to enjoy the best from each blockchain because different blockchains will be better at something. There are unlimited benefits of blockchain interoperability.

Unfortunately, again, there is a big difference between aspiration and real technology here. And chain of interoperability has been more aspirational than technological right now. Today, such interoperability is slow, is costly, is complex, and is even dangerous. That’s why Algorand as architecture, a 2-prong approach. First, allow interoperability among chains that use Algorand as their consensus mechanism. And these are the Algorand Co-Chains. Second, we are going to allow interoperability between totally different chains of totally different consensus mechanisms. And this mechanism is Algorand’s Decentralized Token Bridge.

Let me start with Co-Chains. What is an Algorand Co-Chain? First of all, it’s an independent chain. It is private and is permissioned, it can choose its own validators, it runs its own consensus and talks to the main chain. Second, use Algorand as the consensus protocol, as the main chain does. And why? What do you mean why? Because a co-chain of Algorand enjoys the scalability, security, and decentralization of Algorand. Enjoys the layer-1 smart contracts, enjoys the transaction finality, and no forks, and enjoys actually interoperability.

Interoperability between, say, in this example, a blue co-chain in the black main chain, you have an asset “a” in the blue chain, and you want to transfer to the main chain. Why? Oh! Because you want to sell it on auction. And everybody knows that the more bidders participate in an auction, the higher the price. So, you make sense to transfer where I have most builders to open to the entire world if you want, and then repatriate to your blue chain the money that you generate.

Here is another example of interoperability between a blue chain and a red chain. The blue chain has a blue asset “a” and the red chain as a red asset “b”. They want to exchange. They transfer immediately two the main chain. Here they are. Thanks to layer-1 smart contracts in one transaction, they exchange. And then they repatriate the new assets to their own respective chains. There is no double-spending. Why? The blue chain cannot any longer exchange the blue asset “a” because “a” is no longer blue. The main chain remembers, but asset “a” is now with the red chain. Okay! I got it. The main chain is a hub for all its co-chains. Wait a minute. Our blockchain hubs, a new idea? No. In fact, everybody talks about hubs hubs hubs, blockchain hubs, all over the place. If you really want to stand in line, you’d better take a taxi because it is a long line.

But the main important question is, are all blockchain hubs, all these hubs equal? The answer is no. The truth is, whether the hub is only as good as the benefit it offers to its own users. Let me take an example of airline hubs. There is a big difference between an airline hub that offers free ice cream to crews and to passengers. And the hub that allows you to have mechanics to serve your planes, hangars to store your planes, restaurants, hotels for your crew and your passengers. That is really the hub that you want.

So, in the blockchain space, which hub do you want? My take is where the technologies. In my case, the technology is cryptographic sortition, layer-1 smart contracts, smart2 contracts, etc.

Now for the second prong, Decentralized Token Bridges. That is, Algorand answers two main chains with different consensus. But we want to interoperate. How different these chains can be? Very different. Remember, we have proof-of-work chains, delegated proof-of-stake chains, bonded proof-of-stake chains, pure proof-of-stake chains are like Algorand. And that creates a problem. And the problem is, it becomes hard to interpret each other’s blocks. We essentially speak different languages. What to do? Unfortunately, the first sensation, changing something complex is centralize everything.

So, all of a sudden it says, dear blue chain, dear main chain, and dear red chain. Do you want to interoperate? I’m here for the best. Trust me and allow you interoperability. Let’s start right away. I am trusted. And I’m telling you that a blue asset “a” has been transferred from the blue chain to the red chain. Now that you know, you can start bidding on the assets, bidding starts a hundred million dollars. Really? Before I trust you and start bidding for me — bid of a hundred million dollars. I want to make sure that this asset where it now has really been deleted from the blue chain. And unfortunately, I cannot see the blue chain. And even if I see it, I don’t know how to interpret what is going on. To me, it looks like a very black mysterious cloud. What do you dare to distrust me? Yes, I do distrust you. Centralize scrapy. Thanks, but no thanks.

The first temptation should of centralization, pure and simple, should be dismissed out of ends. Second temptation. It’s okay. You don’t trust me, what about you must trust five of us. Because if three people out of five tell you that the blue asset is now becoming a red asset, now you surely trust us. And by the way, here we post our little money to make sure that we are punished. If something strange, something false was declared. Really? Give me a break, a truly functioning, decentralized blockchain is going to secure trillions of values, in dollars, in Yuan, in Euros, is a big thing. So, when you have deals of this possible size, what the hell can guarantee can you get from five people with very little pocket money there? Nothing at all. So, the Algorand philosophy here is very simple. She who transfers assets from a blue chain to the red chain first must trust the blue chain. Of course, because she keeps her assets there. Second, she must trust the red chain. Of course, because she wants to transfer assets to the red. The philosophy is, she should not trust anybody else. Only the chain themselves. And that is my philosophy. But this philosophy is backed in Algorand, as usual with technology. The technology here is compact chain certificates. These are militarized, very small certificates, and are interpretable possible by anybody. And they represent the will of the entire chain, not what a witness or two or five say about what the chain wants. It is the will of a chain in his entirety, compact if I to something small and easy to interpret. Coming to you in 2021.

Let me sum up Algorand today. We have been launched and is in operation since June 2019. We have more than 6 million wallets. We have more than 9 million blocks. In fact, 10 million blocks right now generated. We have 500,000 real transactions per day, not I transfer from my left hand to my right hand to make sure that it looks like a lot of transactions. 500,000 real transactions per day. Today, more than 400 companies leveraging the platform. And Free main technology releases once every six months. And one such release was in fact, layer-1 smart contract. I find that’s very important. Because life is about intelligent adaptation. The same is true for Algorand. When we stop evolving, we are essentially dead because life is continuous change. What you see is what you get is immobility, and immobility is death. We have to evolve Algorand protocol to satisfy not only the immediate needs of our community today but the needs of our community tomorrow.

Finally, let me say that we are very proud to be part of the BSN project. We are very proud to be one of the first eight blockchains to come to the BSN, we are proud to bring to China our layer-1 smart contracts. We are proud to bring to China our co-chains and decentralized token bridge, and we are proud to bring to China our smart contracts. In all our technology we are developing, my take is that blockchain will improve the world. But our sophisticated mechanisms require sophisticated technology. And technology is essentially human, ever since, we come down from the trees, to develop our first tool, we became more human, not less human. Technology is the realization of our aspiration, technology is our response to the increasing complexity of our world, our legal world, our financial world, even our physical world, our ability to survive will depend on our ability to produce ever more sophisticated technology. Technology has been our past, is our present, and will be our future.

Long live blockchain technology, and long live international cooperation. Thank you very much and see you in person soon.