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49 - Moon Math: The Bull Case for Cryptography

Guest: Justin Drake

Justin Drake is a researcher at the Ethereum Foundation and is leading the charge of the application of cryptography to Ethereum.

Justin speaks about how far with come in the cryptocurrency industry, with only two extremely primitive tools: cryptographic hashes and signatures; the fire and wheel of applied cryptography.

Justin leads us through a cryptographic-enabled world, where more recent breakthroughs in applied cryptography supplement hashes and signatures. Multi-party computation, fully-homomorphic encryption, SNARKs, verifiable-delay functions, these are all cryptographic tools that are yet-to-be harnessed by the Ethereum blockchain.

Importantly, all of these new modern cryptographic tools are developed well beyond theoretical concepts; all that is left is for talented developers to put rubber to pavement.

Justin walks the listeners through the user story of a user making a transaction on Uniswap, and discusses how cryptographic tricks can make the entire user process more secure and more trustless.

We finish with a discussion about the long term fate of the Bitcoin blockchain, and its collision course with quanton computing, which threatens to break some of the crucial features that makes Bitcoin, Bitcoin. Justin provides a roadmap for the decoupling of BTC the asset from Bitcoin the blockchain, using a cryptographic two-way bridge between Bitcoin and an alternative new host blockchain, presumably Ethereum, and how BTC can upload itself to a new blockchain, and be rid of the baggage and liability of the Bitcoin blockchain 🤯

This is truly one of the most unique pieces of content we’ve produced on the Bankless program, and Justin deserves so much credit for leading this operation!

Resources:

Justin’s Uniswap Cryptographic Mechanism Solution spreadsheet and their theoretical application to any Ethereum app.

Below are the two papers Justin mentioned on long-term Bitcoin (in)security:

* "On the Instability of Bitcoin Without the Block Reward" by Princeton researchers. There are two informal explainers here and here.

* "On the insecurity of quantum Bitcoin mining"

Transcript

Ryan

Bankless Nation, we are super excited to have on Justin Drake, who is a cryptographer. He's a researcher at the Ethereum Foundation and to say he played a key role in the development of Eth2 is probably an understatement. He's been a key force behind this. He's here to tell us all about how early we are in this crypto revolution, the advances that are coming in cryptography that are about to change everything we think we know about cryptography, crypto, and this entire industry. Justin, how are you doing today, sir?

Justin Drake  

I'm doing great, guys. Thank you so much for having me.

Ryan

You know what, I got to ask this before we get into the the moon math, and the really fun stuff Eth launched in 2020. Wow, how does that feel, the Eth2 launch?

Justin Drake  

Amazing. I mean, I spent three years of my life dedicated to this. And it was a great reward and seeing that we have you know, $3 billion staking and that we basically haven't had issues so far is is pretty astounding.

David Hoffman

Justin, this is actually kind of a unique episode, I think, that's about to come out of the Bankless podcast. because this is the first episode where you actually pitched the episode to us. And this is something that I would not have thought or have the skills or the knowledge to produce this Soylent sort of conversation. So I know that you are absolutely fired up to talk about what we are going to talk about, maybe you could kind of give us the the to the TLDR, the elevator pitch for what we're about to talk about, and why you are so stoked about this conversation?

Justin Drake  

Yeah, for sure. I mean, I was inspired by you, because you had this, this Bullish Ethereum, you know, series, and I'm just so bullish on Ethereum. And I just wanted to reflect on why am I so bullish. One of the big reasons is that the fundamentals are so strong, right, the whole space is built on crypto economics, which is, you know, part of cryptography and part of game theory and incentives. And, you know, the cryptography part in particular, we're the very beginning, there's so much room to grow. And it's a story that I think will unfold over many years, possibly even decades. And there's just so many reasons to believe that the the reality we live in today is very, very primitive. And, you know, it might sound like sci fi, but I really do believe that we're moving towards that end goal.

David Hoffman  

So where does this conversation start? One of the lines that you put into the agenda was that, you know, with regards to cryptography and crypto economics, we are just in the most primitive age, the stone age where we have like, you know, the fire and the wheel, but so much of the world's inventions are ahead of us. Where does this conversation start?

Justin Drake  

I think, you know, one interesting starting point, I think, is the cypherpunk movement, right? So they had this amazing dream in the 80s, which is, can we try and rebuild all of society on really strong foundations, and specifically cryptographic foundations, and people back then were really fired up, you know, for ideological reasons, in a similar way that some people today in the crypto space are really fired up. But to a large extent, I think that dream kind of didn't pan out the way that people hoped. And, you know, we had a few decades of, of silence there. And then we had a few clues, you know, things like like BitTorrent, which basically allowed us to have really strong foundations in the sense that BitTorrent to large extent is just cryptography. Plus, you know, peer to peer networking, and plus even a little bit of incentivization, the early days. And then we had, you know, Satoshi's big breakthrough, Bitcoin, which to me is kind of the birth of crypto economics in a really big way. And now, we're, I guess we're reaching a point where, in the in the exponential curve, it's the inflection point, everything happening quite slowly. But now we're gonna see this explosion, largely driven with Ethereum.

David Hoffman  

Where does that inflection point come from? Like, what's different about Bitcoin and crypto economics that we didn't have before? Why is why is there this Cambrian explosion going on now? 

Justin Drake  

I mean, one of the big things I guess, and it was the key innovation of Ethereum, is programmability. So now we're in a position where it feels we can absorb all the innovation that we need to absorb to solve all these problems that we have. So in the crypto space where, you know, we're starting from the foundation, so we have to reinvent the whole stack, we're reinventing the wheel to a large extent. And so even though we have lots of superpowers, such as you know, decentralization and trustlessness, and things like that, we also have a lot of trade offs. And, you know, the superpowers are so awesome that we're happy to live with the trade offs. But oftentimes, in fact, almost all the time I believe that these trades that we have relative, for example, to existing services like centralized exchanges, in the context of decentralized trading, I think we can basically fill in all the gaps that we have today and be at least as good as centralized services in every single respect. And in some sense, in some key respects, this totally outshines them, you know, by by a factor of 10 or 100 times,

Ryan  

Can we talk about this idea of crypto economics for a second in the context of Bitcoin? Because I just want to make sure that that's clear to all of our listeners, right? So the