’03 | It’s Karma

Photo by Brittney Burnett

Welcome here to blockwhat?, it’s awesome to see you here in all freshness and highly motivated to dive into the fascinating history behind blockchain!

We’re coming closer and closer to the peak of Mount Blockchain and looking back at the way you’ve covered so far, I have to say that I’m proud of you — we’re almost there!

Our story today offers a unique look at a truly mesmerizing guy called Emin Gün Sirer, who invented the first decentralized and distributed cryptocurrency based on proof of work — an ingenious concept named Karma. We will also explore a brief history of peer-to-peer networks and talk about the farmers with too many sheeps.

Join me for a enticing ride getting to know his journey to bring out the best in people — let’s get going!

This article is part seven of our journey. If you’re new here and want to understand what’s going on, just click here.

  1. 3000 BC | Hiking Up Mount Blockchain
  2. ’82 | The Birth Of Digital Cash
  3. ’96 | Oncologist + Gold = Revolution?
  4. ’97 | Anybody interested in some hash(cash)?
  5. ’98 | Wei Dai — Who dat?
  6. ’98 | Make It Rain (Bit) Gold!
  7. ’03 | It’s Karma (This article)
  8. ’04 | Use me baby, one more time
  9. ’08 | Bit what? Bitcoin! — Hello world.
  10. ’13 | Ethereum — The World Computer

If you’re curious to explore more blockchain aspects, including the technology behind it, fascinating use cases and great resources to learn more about this mind boggling new paradigm, click right here.


The man in the focus of our story today, Emin Gün Sirer, is a professor for computer science at the prestigious Cornell University and one of the most prolific contributors to both Bitcoin and Ethereum (articles on these two blockchains will come soon!).

Emin Gün Sirer

His journey, that ultimately led him to be one of the most influential academics in the blockchain space, started all the way back in the early 2000s, when he was writing his PhD in Computer Science and Engineering.

But this story has even older and deeper roots.

In the late 90s the explosive growth of the internet had put an enormous strain on network bandwidth. How so?

Well, the internet was originally designed as a peer-to-peer system, meaning that the different computers communicated directly with each other. During the years, this system model slowly changed and the internet became dominated by a so called client / server model though.

Instead of all the computers talking to each other directly, now there were a selected few servers to which all the computers connected in order to get whatever they wanted.

Source

This centralized architecture was responsible for the above mentioned strain on network bandwidth.

Flash forward into the early 2000s, when a revolution was happening which turned the established network model on it’s head: peer-to-peer services that turned passive users into active participants. Newly user created search engines, virtual supercomputers and filesystems like Napster where rapidly gaining popularity and traction.

While the theory behind the most of these systems sounded really nice, they encountered a big problem, also known as the Tragedy of the commons.

The tragedy of the commons is a situation, which was first stipulated by British economist William Forster Lloyd who described how unregulated grazing on common land could have diametral consequences for all participating farmers.

Let’s imagine a village with a big and lush green meadow in the middle. All the villagers who live there, have some small herds with a couple of dozen sheep each.

Photo by George Hiles

They all have agreed to limit their respective herds to 24 sheeps each, in order to stop overgrazing. One day, one of the farmers decides to add two sheeps to his herd. He was sure that nobody would notice. Now imagine what happens if every farmer starts to think like that. Slowly but surely their common resource (the meadow) will be overgrazed and become destroyed.

In 1968, the American ecologist and philosopher Garrett Hardin popularized the concept by putting the situation into a modern context, whereby commons is synonymous for public ressources, any space of public value that needs protection. Possible cases of such tragic misuses can be found in pollution of the air and water, for example, in this case reversing the logic of taking something away, but rather adding something, in this case pollutants.

The ramifications for the peer-to-peer systems were equally challenging:

“The lesson for peer-to-peer designers is that without accountability in a network, it is difficult to enforce rules of social responsibility” — Andy Oram

Karma

Photo by Nick Fewings

Emin Gün Sirer saw the enormous potential of decentralized peer-to-peer systems and was keen on finding a solution to this called freerider issue.

“It appeared that most people would just join the swarm of people sharing things. But they would take, and they would not give.” — Emin Gün Sirer

The problem in the decentralized world was, that cooperation between the different participants in a given system was very difficult. Since the computers do not have a face and no reputation in the network, malicious activity that resulted in people using other people’s resources (only downloading files on LimeWire and not hosting any!) was the greatest challenge.

Starting in 2002, Emin Gün Sirer and two fellow students, Vivek Vishnumurthy and Sangeeth Chandrakumar, started working on their ingenious idea to solve this problem for good (pun intended) — an online currency, called Karma, to incentivise people to do good.

Their goal was to build one global currency, with no inherent monetary value, which could be used to download things. Sounds somewhat fuzzy and confusing? No worries, we’ll get to the explanation in a second!

What Emin Gün Sirer and his two fellow students tried to ultimately achieve was a system which would nudge people into being good citizens by creating a nice environment, in which the participants would be encouraged to share their resources and to act on behalf of the system. (Blockchain anyone?)

And they did so by creating the first distributed mint based proof of work.

Let us explore what this means in practical terms by understanding how Karma works. In their paper , they described three important characteristics that a system needs to have in order to facilitate peer-to-peer networks:

  1. It must be completely distributed with no centralized functionality or trust;
  2. Account data needs to be replicated to insure against loss and tampering (always better to not have all of your eggs in one and the same basket);
  3. Coordination among the different replicas must be kept to a minimum (in order to minimize traffic).

Imagine you live in the beautiful little town called Sunshine. In Sunshine, you believe in the good in the people and therefore share everything. In the town center, there is a big marketplace where all the Sunshiners go to in order to get the things they need. Everybody is expected to contribute in their own way to the wellbeing of the community.

The dairy farmer fills a big tank with delicious fresh milk every morning, the local baker puts yummy freshly baked bread onto display and you, to the best of your capabilities, provide the community with awesome body paintings.

Photo by Noah Buscher

In order to prevent people from simply taking stuff and not giving back, you and all the other inhabitants of Sunshine are part of the Karma system.

Everybody of you has their own little book, aka ledger, which is used to keep track of the karma balance. How you get Karma? By providing your particular skills (your resources) to the community.

The resulting Karma balance is the indication of your standing in the community and is super helpful to see who’s participating in a good way and who isn’t.

To get back to the terminology used above, mint based proof of work means simply, that the currency which is used (Karma) is produced by proving a proof of work (computation, file sharing, etc).

Et voila, Karma was born.


The biggest difference to Satoshi Nakamoto’s invention Bitcoin was definitely the way proof of work is being used. While it was only used for minting in Emin Gün Sirer’s Karma, within Bitcoin it is also a very effective way of finding consensus among the different parties (I’ll cover this in depth in coming posts!).

In the end Karma didn’t really gain a lot of traction, since it hasn’t really been actively pushed as a practical payment system by its creators and the circumstances were simply not the same like six years later, when Satoshi Nakamoto released his legendary whitepaper on Bitcoin in the midst of a tumultuous global financial crisis.

We will end today’s story with a quote by Emin Gün Sirer, who has a fascinating ability to break down conversations and topics to their most essential core:

“What is being referred to as the blockchain revolution is really the process of figuring out how to make computers work in a setting where people distrust each other.”

We’re done! Thank you very much for the precious minutes that you’ve invested in reading this post, I thoroughly hope that you’ve enjoyed it and walk away with a more nuanced understanding of the history behind blockchain.

If you have any questions, comments or feedback, please let me know, I’d love to hear from you!

All the best and see you soon

Till

PS: if you’re looking for helpful and great resources to learn more about blockchain’s paradigm shifting technological potential, check out these awesome resources.