What’s New at MIT’s Digital Currency Initiative

Many of us work in technology because we think it is the best lever we have to effect change in the world. For example, the internet and its underlying protocols have changed our lives immeasurably. In combination with free and open source software like Linux, this has empowered low-cost communication and global collaboration. This technology allows me to publish this blog post, and a few seconds later anyone around the world can read it, and perhaps more importantly, can contribute to the discussion.

But the full potential of the internet has yet to be realized. Instead of an interoperable data fabric, we have data silos. Instead of freedom and access, we have gated app stores. We’ve experienced large shifts in power online, with a few organizations now wielding uncomfortable amounts of control.

Addressing these problems is vital. Perhaps surprisingly, I think that cryptocurrencies may offer the best chance to do so. That’s why I’m excited to be expanding my role within the MIT Digital Currency Initiative as its new research director. Recently, TED gave me the opportunity to share how cryptocurrencies work and what I think is so powerful about them:

Last summer, after finishing my PhD at MIT (before that I was a software engineer at Google), I started reading about Bitcoin. I had friends who got excited about Bitcoin in its very early days, but it wasn’t until last year, when I realized that Bitcoin was the world’s largest consensus algorithm[1], that I began to understand its potential impact. Everywhere I looked, I found a need for a way to reach agreement with parties who don’t necessarily trust each other.

I spoke to people across industries who felt that an open, interoperable, censorship-resistant[2] platform for data agreement could help solve many of their problems–and these were real problems: micropayments to support content producers, digital identification to help refugees, and services like credit and cheap money transfer for the unbanked. Though the solutions are far from obvious, even the possibility of making a dent in these problems is worth exploring, and surprisingly, the people involved seem to think an open-access, cryptographically signed log could help. It became clear to me that not only is the world ready to embrace building more open, interoperable systems, but doing so could lead to solving a wide variety of problems.

MIT has a long history of supporting the development of technologies that provide freedom and privacy to users, along with useful features and strong guarantees of stability. At the Digital Currency Initiative, we want to leverage this talent base and bring people together to create the necessary trust paradigms required. As it turns out, this is a very challenging domain of research, and a large part of the community has given up on the possibility for these technologies to be truly open and decentralized. We want to serve as a balance to that viewpoint and engage in research that paints a path forward.

This area is especially interesting because it doesn’t fall entirely in any one academic discipline. Expediting the future of open, interoperable systems requires work across many different fields–distributed systems, cryptography, game theory, security, programming language design, databases, finance, behavioral economics, law, and more. This area is a great example of the “antidisciplinary” work that the Media Lab strives to foster–the space between the dots of traditional academic departments. This is exciting, but makes our job harder.

The past year was about learning, becoming part of the cryptocurrency and blockchain communities, and establishing a point of view. The next will be about building a strong research group, grounded in creating practical solutions. Right now, our group is working on projects that:

  • use novel cryptographic primitives for computation with privacy and auditability,
  • create decentralized monetary policy through techniques like decaying assets and in-protocol inflation,
  • examine bias in newsfeed algorithms and consider censorship-resistant mechanisms for publishing on the Web,
  • securitize smart property to enable new models for funding in the developing world, and
  • explore new ways of mining cryptocurrencies to ensure fairness and more open access to the system.

We want to continue this existing research and expand it: We run classes on cryptocurrencies, and host weekly open research meetings to bring together cryptocurrency researchers in the Boston area. We fund a residents program to bring noted experts in the space to MIT to give talks and teach workshops. We co-chaired a W3C workshop to bring the community together to discuss standards. We help support international conferences like Scaling Bitcoin, and we financially support open source developers to help them maintain their independence. We also want to expand the community working in this space, and make the cryptocurrency community more inclusive for women and underrepresented minorities. To help with that, we sponsor students to attend important conferences like Consensus and Scaling Bitcoin, and just last month we ran a week-long cryptocurrency bootcamp where we gathered students from across the country. You can learn more about all of our activities on our new website.

Our future work is going to be about research, but also convening. This week, we’re gathering members of the healthcare industry for a life sciences and healthcare workshop. We will bring together experts in areas like monetary policy to think about a new financial architecture. We will work towards building out this open, interoperable data fabric in a way that provides security, privacy, and integrity to its participants, in order to support a new application paradigm.

I can’t wait to see what the next year will bring.

[1] It’s almost misleading to call Bitcoin a consensus protocol, because “consensus” has a very specific meaning in distributed algorithms, and Bitcoin’s properties do not fit in the model this definition requires. This probably means the model needs to expand. Bitcoin and other cryptocurrencies are very clearly useful, and we need the tools to analyze them.

[2] One of the most fascinating properties of Bitcoin is its censorship-resistance. This is accomplished in conjunction with security because although anyone can participate in the protocol, it’s very expensive to compromise the network. No one dictates who can or cannot be a part of the network, and if you want to process transactions, you can install some software on your computer to do so. Bitcoin is run worldwide, with no single point of failure. The past six years and 10 billion dollars are evidence that it is somewhat resilient–it’s a massive target for attackers, but no one has compromised it as a whole (yet). We shouldn’t get too complacent though; Bitcoin’s model is based on making attacks very expensive, but there might be bugs in the protocol or actors who have enough money to attack, but just haven’t done so yet.