This is an opinion editorial by Korok Ray, an associate professor at the Mays Business School of Texas A&M University and Director of the Mays Innovation Research Center.
Since the announcement of its inception in October 2008, Bitcoin has reached a market capitalization of over $1 trillion. Its growth has drawn both retail and institutional investment, as the financial community now begins to see it as a legitimate store of value and an alternative to traditional assets like gold. Innovations in second-layer settlements like the Lightning Network make it increasingly possible for bitcoin to serve as a medium of exchange.
Yet, Bitcoin has a precarious and somewhat checkered history in academia. Curricula in universities are largely devoid of any mention of Bitcoin. Instead, the teachings are often left to student clubs and nonprofits. Over time this may change, as Bitcoin and the entire cryptocurrency market continues to grow, attracting attention from top talent in both engineering and business. Bitcoin’s absence from university is not a problem with Bitcoin itself, but rather the academy, with its insufficient embrace of innovation, its emphasis on backward-looking data analysis and its excessive preoccupation with individual disciplines rather than collective knowledge. Bitcoin can serve as an inspiration for what academic research can and should be. In fact, it presents a roadmap to change higher education for the better.
Similarities With The Academy
One may wonder why anyone should even assume a relationship between Bitcoin and universities. Technologists are in constant contact with real needs of customers today, while faculty develop basic science that (may) have application far into the future. After all, innovations like Facebook, Microsoft, Apple and even Ethereum were launched by young men who didn’t graduate from college. Yet, it’s no accident Silicon Valley and Route 128 both emerged in proximity to our nation’s greatest coastal universities. So, there’s certainly a correlation between universities and the tech sector. Even so, Bitcoin is different. Bitcoin has an even tighter relationship with its intellectual and academic roots. To understand this, we must peer into Bitcoin’s history.
At the turn of the century, a ragtag band of cryptographers, computer scientists, economists and libertarians — the cypherpunks — exchanged messages over an internet mailing list. This was an obscure electronic gathering of a diverse cadre of scientists, technologists and hobbyists who were developing and sharing ideas of advancements in cryptography and computer science. Here’s where some of the early giants of applied cryptography spent time, like Hal Finney, one of the early pioneers of Pretty Good Privacy (PGP).
It was on this mailing list that the pseudonymous creator of Bitcoin, Satoshi Nakamoto, announced his solution for an electronic payment system. After that announcement, he began to field questions from the forum on both the concept and its execution. Shortly thereafter, Nakamoto provided the full implementation of Bitcoin. This allowed participants of the forum to download the software, run it and test it on their own.
The Bitcoin white paper bears similarity to academic research. It follows the structure of an academic paper, has citations and looks similar to what any paper in computer science may look like today. Both the white paper and the conversations around it reference prior attempts at implementing the proof-of-work algorithm, one of the core features of Bitcoin. For example, the white paper cites HashCash from 2002, also part of the corpus of knowledge that preceded Bitcoin. Adam Back came up with proof-of-work for HashCash while trying to solve the problem of eliminating spam in emails.
Thus, Bitcoin didn’t fall out of the sky, but emerged out of a long lineage of ideas developed over decades, not days or weeks. We tend to think of technology as operating at warp speed, changing rapidly and being driven by ambitious, young college dropouts, but Bitcoin wasn’t based on “move fast and break things.” It was and is the opposite: a slow, careful deliberation based on decades of real science practiced not by kids, but more like their parents. The cryptography forum was similar in nature to an academic research seminar, where professional scientists politely but insistently attempt to tear down ideas to arrive at the truth. Though the concept of a white paper is now all the rage among alternative cryptocurrency coins and tokens, it’s the hallmark method of communicating ideas among the professional research community.
Even though the cryptocurrency economy today occupies center stage in the financial press and a growing share of national attention, when it emerged Bitcoin was as far from this as possible. It was obscure, technical and very fringe. In its long gestation from ideas that had been around for decades but unknown except to a small circle of cryptographers, economists and political philosophers, Bitcoin shares more in common with other radical innovations, like the internet, the transistor and the airplane. Just like those innovations, the story of Bitcoin is the triumph of individual reason over collective misperception. Just as the Wright brothers proved the world wrong by showing man could fly even though physicists claimed it was mathematically impossible, so too did Bitcoin confound the naysayers by building digital scarcity for the first time ever.
Why should we focus on Bitcoin rather than some of the other cryptocurrency tokens, like Ethereum? If you look under the hood, the majority of the innovation of cryptocurrency came from Bitcoin. For example, Ethereum relies on the same elliptic curve as Bitcoin, utilizing the same public key cryptography. Bitcoin emerged over a long gestation period and secret development by a pseudonymous applied cryptographer and was released and debated in an obscure mailing list. For this reason, Bitcoin shares many similarities to the arcane academic circles that occupy modern universities. No professional cryptographer made Ethereum; rather, it was a teenager who even admits he rushed its development. Thus, it’s only Bitcoin that has deep connection to the academy, whereas the more incremental innovations crowding the cryptocurrency space now are more similar to the small advances taken in the modern technology sector.
Differences From The Academy
Bitcoin differs from the academy in important ways. Most significantly, Bitcoin is fundamentally interdisciplinary in a way universities today aren’t. Bitcoin fuses together three separate disciplines: mathematics, computer science and economics. It’s this fusion that gives Bitcoin its power and shatters traditional academic silos.
Public key cryptography has been the major innovation in applied cryptography and mathematics since its conception 50 years ago. The core concept is simple: Users can secure a message with a private key known only to themselves that generates a public key known to all. Therefore, the user can easily distribute the public key without any security consequence, as only the private key can unlock the encryption. Public key cryptography achieves this through hash functions — one-way transformations of data that are impossible to reverse. In Bitcoin, this occurs through elliptic curves over finite fields of prime order.
But public key cryptography isn’t enough. Because Bitcoin seeks to serve as an electronic payment system, it must solve the double-spending problem. If Alice pays Bob using bitcoin, we must prevent Alice from also paying Carol with that same bitcoin. But in the digital world, copying data is free and therefore, preventing double spending is seemingly hopeless. For this, Nakamoto utilized the blockchain, a construct from computer science. Cryptographer David Chaum laid the groundwork for the concept of a blockchain as early as 1983, in research that emerged from his computer science dissertation at Berkeley.
The blockchain is a linked list that points backwards to the original (genesis) block. Each block contains thousands of transactions, each transaction containing the ingredients for transferring bitcoin from one address to another. The blockchain solves the double-spending problem because it’s distributed, i.e., publicly available to all nodes on the Bitcoin network. These nodes constantly validate the blockchain with new transactions added only when all other nodes on the network agree (consensus). In our prior example, when Alice pays Bob, this transaction enters the blockchain, which all nodes observe. If Alice tries to use those same bitcoin to pay Carol, the network will reject that transaction since everyone knows that Alice has already used those bitcoin to pay Bob. It’s the distributed, public nature of the blockchain that prevents double spending, a problem unique to electronic payments.
Indeed, Satoshi designed the blockchain specifically as a solution to double spending. It’s inherently inefficient, as it requires the entire network to constantly validate and reproduce the same data. This is also why most applications of blockchain technology outside of Bitcoin make little sense, as it forces an inefficient solution custom-built for electronic payments onto other applications that would be efficiently solved with central databases. The notion of a blockchain as a reverse-linked list by itself is not revolutionary in computer science, but its distributed nature specifically designed to prevent double spending is.
Even so, cryptography and blockchain aren’t enough. There needs to be a reason for the network to secure the blockchain. This is where the economics of Bitcoin shine. Nakamoto proposed a group of computers that would prove that the history of transactions did in fact occur. This proof requires costly work to be done. Nakamoto solved this by setting up a tournament in which individual computers (called…
Read More:Bitcoin Could Never Be Invented In A University – Bitcoin Magazine
2022-08-21 02:00:00
