Blockchain DAppsEthereum

Nick Szabo on the History of Blockchain

Last Friday, at the Devcon 1 conference in London, Nick Szabo took the stage to talk about blockchain, smart contracts and Ethereum.

Szabo, a blockchain pioneer who some believe to be the man behind the creation of bitcoin (although he has denied this), gave a presentation on the history of the blockchain entitled ‘Smart contracts and Ethereum’. Although it was introduced as the history of blockchain, it might have been better described as the origin of the ideas of blockchain, the historical processes it has revolutionized and why we need it (less catchy but more accurate).

Beginning with the philosophical origins of the systems, Szabo looked at Ayn Rand, Freidrich Hayek and Tim May. He discussed the idea of forming independent communities free from corrupt societies – in fiction by Rand or in cyberspace by May. Rather than just using cryptography to protect yourself, as May suggested, Szabo focused on Hayek’s idea of securing anything that underpins a free market society, like property and contracts. Szabo explained how the goal was to take advantage of technology to provide security. There was a possibility to apply computer science to minimize the vulnerability we have to others: how to privatize money and enforce property and contracts without resorting to violence. This led to the development of smart contracts, blockchains and cryptocurrency –the opportunity to protect a large number of things rather than the traditional narrow approach of cryptography.

Expanding on the development of securing money, Szabo explained that simply encrypting it wasn’t enough; decentralization was needed to have security. Using the example of historically centralized industries such as news, radio and railways, Szabo discussed how people wishing to take over a place or system only needed to hold a few, key, centralized parts to have control. Furthermore, he pointed out physical wealth, that is traditionally thought of as safe, is not in fact secure; gold is at at risk of being stolen, confiscated or having its distribution restricted. This, Szabo pointed out, was the reason there needed to be a decentralized system to allow the transfer and recording of money, contracts and information. However, the independence of the nodes of a decentralized network, Szabo claimed, was more important than just the raw number of nodes.

Following this, Szabo went on to discuss the differences between ‘wet’ and ‘dry’ protocol (traditional law and computer code respectively). Criticizing the law as being flexible and open to interpretation, he noted that the only reason the law works is the threat of punishment if it’s broken, which leads people to rely on outside forces like the police and lawyers. This can prove expensive unreliable. Rather than traditional law, Szabo promoted the values of using software which uses logic and is rigid in its application. Although the relative newness of this ‘dry code’ was shown on the slides, compared against the established multitude of cases for traditional law, Szabo skipped over this area, noting instead the independence and reduced costs it could offer.

Returning to the theme of mirroring-but-improving historical processes, the next thing Szabo discussed was using a seal to ‘sign’ documents and show they had not been tampered with. In modern times we use serial numbers but Szabo promoted the possibility provided by blockchain of storing the serial numbers, dates and information as an online record, accessible by all and secure.

Szabo finished off by discussing some projects he had worked on previously. Firstly he showed an example of his ‘Proplets’ scheme for smart property which can check the blockchain to see who owns them and their instructions to follow. This can be used for automatic repossession of collateral that people use as loans and helps prevent assets being ineffectual in transferring their value. Next, Szabo mentioned a current project – centered around financial assets on the blockchain – for trust-minimized cash flows, a development of one of his earlier projects of trust-minimized token transfer. Lastly he introduced a social network/Etherium project to allow interaction with the blockchain through social networks.

In his closing remarks, Szabo encouraged the audience to think more broadly about security instead of thinking of just encryption or token transfer. He concluded by saying we should try to secure everything that is important to us, as much as we can. The full video of his speech can be found on youtube.



Based near Windsor, England, Matthew Warner is an enthusiast for innovative, cutting edge technologies. He is a B.Eng. graduate in engineering with honors from the University of Warwick and also holds an PGCE in education degree. Matthew is a member of Mensa.
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