Epicenter - Learn about Crypto, Blockchain, Ethereum, Bitcoin and Distributed Technologies - Edmund Edgar: Reality Keys – A Certificate Authority for Facts

Episode Date: August 18, 2014

Edmund Edgar is the founder of Reality Keys. His startup won the Startup Challenge award at the Bitcoin 2014 Conference in Amsterdam. They are providing cryptographic data feeds on real-life events. This can then be used to base derivatives, contracts or insurances on. There is no question that services like Reality Keys will play a key role in crypto currency’s future. Previously he was Director of Information Technology at Princeton Review Japan and he is also a graduate of Oxford University. Read the blog post summarising this episode on Bitcoinist.net. Episode links: Reality Keys By My Coins Edmund Edgar on Twitter Codius Truth Coin This episode is hosted by Brian Fabian Crain and Sébastien Couture. Show notes and listening options: epicenter.tv/033

Hello and welcome to Epcenter Bitcoin, the show which talks about the technologies, projects, and startups driving decentralization and the global cryptocurrency revolution. My name is Sebastian Kutjur. And I'm Brian from Ukraine. Today's August 17, 2014, and thanks very much for joining us for our 33rd episode. So today we're happy to be back in our original formation after Sebastian's traveled. So Sebastian, it's good to have you back. Thanks. It's great to be back.

I'm happy to be back after, I guess, two and a minute. half weeks a holiday through the Balkans so through Albania and Montenegro and Croatia so it was great time but it's good to be back and by the way I just wanted to say that you did a really really good job on those on those episodes I listened to them as they were coming out and although I had very very limited access to internet I managed to download them and listen to them on on some bus rides in between towns so I hope it didn't ruin you No, actually, I really like the Rodko Albrecht one. I thought it was a really good introduction to...

To peer-to-peer landing. Yeah, very interesting how this is such a strangely unique fit. I wasn't aware of it before the interview, but it was very interesting. Yeah. So just as a reminder, this week, our Coin Summit episode is with all Oliver Janssen and Andrew Turner, Oliver Jansans, of course, who did the $100,000 bounty to replace the Bitcoin Foundation. So they talk about that bounty and how they issued 40% of that bounty to Mike Kern for his lighthouse project. And also, 90% actually.

90%. I thought it was $40,000. And also a very interesting interview with Michael Jackson, who is a partner at Mangrove Ventures. He's a venture capitalist. and he's the former chief operating officer of Skype. And so in the interview, he talks about how to basically go regulate disruptive technologies. I mean, so how you should or not regulate them and talks about experiences with Skype and how there are a lot of parallels with Bitcoin.

So I thought it was super interesting interview. And you should definitely check that out. It's on our SoundCloud page. Yeah. And today's episode, we're going to talk about reality keys. So yesterday is Edmund Edgar. He is the founder of the company. I met him.

Actually, I saw that he signed up for our Bitcoin Startups event this Tuesday. And I remember seeing Reality Keys before mentioned at the Amsterdam Conference because they won an award there. They won the Startup Challenge there. So afterwards, I contact him. It's like, hey, you should give a talk. So he's going to give a talk at the next meetup. And after this meet up on Tuesday, we talked with him.

It was super interesting. So I thought it would be great to have him on today. So reality keys, I mean, he's going to talk a lot more about it and go in depth about it. But they're providing a crypto graphic data feeds, real life events. And of course, this is really crucial if you want to build services on top, derivatives on top, insurance contracts. So when we often talk by the Ethereum about these kind of Bitcoin 2.0 protocols, they depend on this kind of absolutely crucial. It's like an infrastructure component of that, I would say, the future of cryptocurrency

and those applications that develop on top of it. And he was previously the director of information technology at Princeton review in Japan, and he's been out there for a long time, and he's also a graduate of Oxford. It seems somehow there's a few Bitcoin people there and came from there. So, yeah, thanks so much for joining us today. Thanks for having me on. So I would like, let's, or perhaps we can get started before we dive into reality keys.

Can you tell us about how you got involved in Bitcoin? I guess it was the same, I've heard of a lot of people got involved in the same way, which was after we heard about the WikiLeaks, banking blockade, what I thought was, well, why is it that if I want to send money to somebody, I have to go through somebody like, you know, PayPal or some bank in the middle. We know how to do, you know, cryptographic, we know how to do key pairs and things. Why do I have to depend on these guys? Isn't there a way I could send money directly to these people so that I could trade my,

my effort for something else that WikiLeaks wanted? And so I went looking for peer-to-peer currency. and then found Bitcoin, which discussed a whole bunch of other problems that I hadn't thought of, but luckily, Settle she had solved. So that's how I got into it. Oh, that's interesting. So, like, following WikiLease, if I was like, oh, what we would need is a peer-to-peer currency. That's right.

So you put it into Google and there exists. Yeah, that's super interesting. And I guess then let's get started with a... So then how did you then end up? starting reality keys, were there other projects you were involved before reality keys? Well, I mean, I worked on a couple of things to do with virtual worlds, which is another thing that I've been working in with things like Second Life and OpenSim. And I did some work on a payment module for that, which we ended up not releasing,

because there was just not very much interest in the OpenSim world right now. So I did spend some time working on that. and then started looking at this problem and kind of all kinds of areas and how you would build a prediction exchange, sorry, prediction market and how you would solve all these problems and it turned and looking at it, it just seemed like there was this big gap that nobody was filling where everybody was saying, okay, we're going to need somebody who's going to be getting real-world data and effectively connecting that data to the blockchain, somebody who's going to be getting real-world data and

translating it into a form that a Bitcoin node can understand. And everyone was kind of assuming that organization away, but nobody was actually doing it. So I thought we'd better go ahead and build it. That's what we did. And so you built reality keys. When did you launch? Let's think. We launched in, I think it was beginning of February or the end of January this year.

So we started building it about October, kind of. kind of time last year. Okay. So can you tell us about your, so the parent company is called social minds. You're based in Japan and tell us about some of the other things that you do. That's right. So, um, so a lot of our, um, revenue comes from, um, sort of consulting

and web development work. Um, then we'd be, we, we built a, um, an open, a, a 3D virtual worlds, um, platform, um, for connecting with open sim. And that allowed you to connect open source learning management systems like Moodle into the virtual world so that you could manage things like study data. You could teach inside a 3D virtual world. And all your study data and stuff would then be stored back in Moodle. And you can manage all that in your learning management system.

So that's the other project we've been working on up until now. That's still going, but a lot of our effort right now is going into reality keys. I'm always fascinated by the amount of people that I find that were involved with 3D virtual worlds and things like second life before they got into Bitcoin. Right. I mean, it was this area that before we had Bitcoin, where we had this, you know, sort of open digital currency and this sort of open scriptable world where anybody can create things. And then they can actually, you know, anybody can program those things and they'll work together. So in some ways there are kind of a lot of parallels. Obviously, the second life currency is managed by Linden Labs, this one central company.

But as a user, it's something that you can use for micropayments and something you can automate in very interesting ways. So I think it's attracted a lot of the same people who have then found Bitcoin that can kind of take the idea of an open, currency that can do micro payments and that we can very easily build APIs on, very easily script. It takes that, you know, Bitcoin takes that to a whole new level. So if you had to kind of summarize reality keys in like a few sentences for somebody that there's no idea.

And, you know, maybe I can give a try. You can improve on my try. So the basic idea is that you provide a data feed, you know, on facts. That's right. So I like to describe it as a certificate authority for facts. Certificates, like Veracine for facts. So what those guys do, somebody like Veracine, will take information about identity. So if you've got a computer that wants to know is the other computer that it's talking to really Amazon, then it'll use some cryptographic data from Verisign and your computer can look at that cryptographic data.

your computer may not know about identity, but your computer knows about cryptography, so it can check if the key matches, and it can check if that's really Amazon. Now, the fact that Veracine can do that is based on having some people who are kind of in contact with the normal human real world, right? So they can check documents, they can make phone calls,

they can do all these sort of normal things that the computer wouldn't be able to do, and then provide some cryptographic data that then the computer can use. So, well, how does that work? And you run us through the kind of technical side of how, where do you get the data from? Right. And then how do you make those facts available?

Right. So let's imagine that you want to know about a particular event, say, is the exchange rate of the, is one euro going to worth more than $1 at the end of next month? So you go to our website and you put in that information, or you can do it with our API. And we give you two public keys at that point. Okay, so we give you one public key representing, yes, it will be greater than a dollar. And one public key representing, no, it won't be greater than a dollar. Then we wait for that date that you specified to come around.

And when that date comes around, we pull from some data source to find out whether that thing happened or not. Okay, so in this case, we will pull from the European Central Bank who have a data feed. So then if there's a, there's a kind of a dispute process that maybe we'll get into in a second, but basically if it happened, we're going to release the private key for the yes public key that we gave you earlier. And if it didn't happen, we'll give you the private key for the no public key that we gave you earlier. So that's what we do. Now, in the Bitcoin context, what you could have done with those is when you got the public key, you could have made a special transaction,

a single transaction that you and some other counterparty that you have would share. And that transaction says that the yes key plus your key or the no key plus the other guy's key can unlock this money. So you'd say either of those combinations can unlock this money. So then when you get the private key, whoever's actually supposed to have won that, whether it's supposed to get paid as a result of that contract can then spend the money. So what I find is very interesting about this, and I absolutely wasn't aware that this is even possible

because it's kind of a multi, it's a multi signature transaction, no? Right. It's a different kind because you specifically specify it's those two keys together or those other two keys together, but it's not like any two of three keys. That's right. So that's something that at least doing it kind of directly as described without a clever trick, which I'll mention in a second, but doing it without a clever trick is something that right now is a non-standard transaction in Bitcoin. So for people aren't familiar with that, that means that by default most of the nodes, most of the computers on the Bitcoin network aren't going to send that,

aren't going to relay that transaction to other nodes, and most of the miners aren't going to mine it. But there are some miners that will reliably mine those transactions, so you just have to directly send them to that mine now. So that's been something that, because it's been non-standard, it's a little bit of pain to use. So that's probably why you haven't really heard of patterns like these. But most of the software that you would use, even with multi-sig, has been relying on the things that you can do as standard transactions. Now, having said that, there was a little, there is a little trick that you can use right now, which is that it's actually possible to kind of combine these keys. So you can stick, if it'd be stick two public keys together and turn that into one public key.

And then when you get the private key, you can stick the two private keys together and turn that into one private key. So if you do that little bit of trickery, then you can actually structure this. thing as a traditional multi-signature transaction which says either this one key or this other one key will be enough to money. Interesting. Having said that, so we, as I said right now, these are non-standard transactions on the Bitcoin network and you have to send them to, usually to illegal as the pool that will mine these things. But Gavin Anderson, the chief scientist, Bitcoin Foundation came up with a, has written a pull request that's been accepted in the main Bitcoin source code right now, that is going to make these transactions and all kinds of other transactions using the scripting language in existing ways,

is going to make those standard. And that's been merged into Bitcoin Master, and it should all be in the next Bitcoin release, so probably in Bitcoin 0.10. Okay. So these types of transactions will eventually become standard. What other types of transactions are we talking about here? Are there any other types of transactions that would be included in this pull request that would affect the type of things we can do with reality keys?

Well, as far as reality keys goes, I think there are quite a lot of use cases, but that's the one that we're really thinking about that will affect us. There'll be a lot of other things that will affect other people, for example, things like some really interesting use cases that aren't reality keys used. cases like doing cross-chain atomic trading so that if you want to trade your like coins for my my bitcoins can you also do things such as like you know either those three keys or at those two keys are valid you know those kind of things will be possible that's right that's all going to be possible so um the the only limitation here really is that you're limited to a maximum of of

15 signature checking operations, which in practice is usually as many keys as you can actually stuff into the transaction because there's a limit to the size of that. But that still gives you quite a lot of leeway. So I think the kind of the canonical standard transaction that's going to use reality keys is going to be if this person wins and yes wins or if the other person wins and no wins or if the yes person and the no person both agree. So those three options, you don't want to run independently and to be able to unlock your funds. You're also probably going to want to add some extra, maybe this is something we talk about later in the discussion, but you may also want to add some extra authorities. So if you don't want to trust reality keys 100%, because you never know if something's going to happen to us. You may want to add a competitor to us.

I don't think there's anyone directly doing what we do, but you may, for example, want to add a standard kind of escrow arbitration guy or, you know, and really anyone else you want to add to that as an arbiter. You could also add in different combinations. So you could have like reality and some other reality he's competitive, for example, three of them and then you'd say it has to be a majority of them. Exactly. That's right.

Or, you know, whatever pattern you want to settle there. Related to that, what's the, use case so you said one option would also be if the two parties agree yeah even if so that they can essentially I guess to whatever right the money yeah what's the idea behind that why is that necessary yeah there well there are two reasons you might want it one is that it it gives you kind of a way out if reality keys turn out to be unreliable which of course we won't but you you know you certainly want to have that one covered. So if you, and there, I mean, there are some ways of setting up these deals that don't

even have an arbitrator at all and just rely on that, you know, the two parties both having the money stuck there and having an incentive to move it. So, so, so that's one thing you certainly want to do is you certainly be able to want to both be able to move that money. Or if you guys will never believe the private key because you disappear. That's right. Yeah, that's right. And another reason you might want to do it is you might decide that you want to end that, transaction early. So you might not want to wait for that event. One of you might want to, you know, just pay,

I want to get out to that contract at a different rate. So, you know, so there are, I think there are quite a few reasons where you might end up wanting, you know, to both agree. And apart from the slightly increased sort of transaction size, there's almost, there's pretty much no downside to having that option, right? Yeah. So I'd like to discuss data a little bit. So there are a few data sources that you use.

Could you go over the different data sources that are used by realities? Yeah. So right now we pull from the European Central Bank for traditional fiat currency exchange rates. We then have Alkoyne exchange rates, which I think, I'm sorry, outcoin transaction information and Bitcoin transaction information that we're getting from blockchain info and blocker. i.o. So that allows you to do things like, well, the exchange rate thing allows you to, um, to do kind of, kind of bets on future, uh, rates and currency hedging. The transaction thing allows you to do things like say, okay, release this key if this, um, amount of money is paid. Um,

so that gives you quite, quite a lot of interesting use cases. Um, then we have freebase, which is pretty much everything in in the known universe. So this is, this monster community curated database operated by Google. It was originally a separate project that I think Google acquired, which has all kinds of data that it pulls in from all kinds of different data sources, a lot of it from Wikipedia. And that will allow you to really, and it's very well structured kind of semantic data, so you can really create kind of arbitrary propositions, right? Will Barack Obama, you know, marry Madonna?

You can say really, whatever you like. You can formulate really whatever kind of question that you want to formulate if it's about factual stuff. And we can express that in this Freebase language. And hopefully Freebase will also have the correct answer. If they don't, we'll have a solution that we can talk about. So I'm interested. I had never heard of previous before.

And so I just kind of realized that it's probably what powers a lot of the Google Open Graph stuff, right? Yeah, I think so. That's my understanding is that a lot of that information is it will be about our sort of Google suggests and all that stuff. And yeah. So who curates this data? As I understand it, it's a lot of volunteers are contributing,

and then they have their own kind of full-time staff at Freebase. That's how I understand it. So it's quite similar to the Wikipedia model, except that it's semantic, that it's structured data design for machines rather than kind of text data design for humans. humans. Okay. And so, yeah, perhaps you can go into, because obviously there's going to be errors there, and there may also be ways for people to intentionally fake the data. That's right.

So can you talk a bit about how reality keys is going to address this problem? Yeah. So the way we work is we effectively give you information in two stages. The first thing that we do is we pull from the API. So we get you an automated result. So in the freebase case, it'll be information that may have been tinkered with by somebody or, you know, it may just be inaccurate. We then publish that information on our website. And you have a certain amount of time which you can set when you create the contract or when you edit, when you register the fact with us, during which you can pay us an objection fee. And if you pay us that fee, then we will have a human, um,

just check it out and, you know, Google the result and get to the bottom of it. So what that does is in the vast majority of cases, we don't need to do anything, right? In the vast majority of cases, the API will settle the thing correctly. And we only need to get a human involved in the thing if somebody pays the fee. And they'll usually only bother paying the fee if the API is wrong. So what that gives us is in the average case, we get a very, very low cost of settlement. We only really need the human when they're absolutely required. but because there's this human kind of fallback mechanism,

you can be very, very confident that we're going to get to the right result. So sort of jumping in here, this is like slightly, well, related, but slightly off topic. So that also means that in the sort of default case, you guys don't make any money, right? That's right. That's how it's structured at the moment. I think in the future we may end up doing some kind of different levels of service. So especially if people end up putting a lot of money behind these contracts, then I think people will be willing to pay for a faster service or a better secured service.

So I think in the end we will end up charging for some things apart from this kind of human action. But I mean, we'll say out goes. if we end up that we do end up needing a lot of human interaction, then that might be maybe sufficient to fund the whole thing. But I don't think it's a problem. I think once we've got a lot of money spinning around these contracts, there will be some kind of extra service that people will be willing to pay for. So with regards to this human intervention,

can you go into detail about how that works? I can see some cases where perhaps even humans would not correctly interpret the data. I mean, say, for instance, that you're dealing with, with information that is specific to one country or, which is in another language and perhaps if they translate, I'm sorry? Ambiguous. Or ambiguous.

Right. There's a whole bunch of use cases where perhaps the data is different to interpret. That's right. And that's true actually of settling any of these contracts. And it's also true of things like betting contracts right now that there are often not ambiguous, you know, corner cases. And in that case, we'll just do what we can. So, you know, that's kind of the service that we offer.

So I would, you know, caution against people create, as I say, with Freebase, you can put in pretty much any kind of proposition. But obviously, you don't want to go putting in propositions that there's no way we can actually settle. You know, and we do want to be able to settle these things based on publicly available information as well. So, you know, not just information that we are able to get at, but information that any information that any. is able to verify so that everybody can tell that those responses that we publish are actually correct. So if somebody puts a fact in that isn't actually you can't make a decision on, how do you guys deal with that?

I mean, I... Yeah, we'll just do what we can with it. I mean, you know, we've got some stuff in there where people manage to structure free-based propositions in a way that don't actually mean anything. Yeah. And I think there is messing around with it. it's probably okay. But I mean, we'll, you know, we can...

But you can just not publish any private key, yeah, I mean, or both, I guess, I don't know. We wouldn't, we wouldn't publish neither or both. Ultimately, if somebody pays the fee, I think we're going to end up publishing one of the keys or the other key. Yeah. But whoever pays more. And, well, no, no, that's so.

I'm saying not something that we can do. Because that would shoot our reputation to hell. But what we can do is, you know, we can at least let them put their case and, you know, see what the arguments for it are. But like I say, the best way to use the thing is not to write ambiguous stuff that's going to be hard for us to settle. And that also applies for things that Freebase may actually have an opinion about, but it's kind of tricky. I would strongly advise people not to write kind of tricky contracts and then hope that they're going to, you know,

the counterparty is going to think it means something else than what it really means, you know. That's also something where, you know, there may be a legitimate API answer, but then a human answer may be different. So, you know, just don't get clever. Just stick to, you know, reasonably unambiguous factual contracts. So, I mean, I think this whole idea, especially a prediction market is very interesting. And, you know, we haven't seen it yet, but it could have huge implications in the future. But of course, it also can be very controversial. Right.

And it can lead to cases that are morally. tricky. Yeah. So, you know, specifically, you know, I could put up like a fact, you know, Barack Obama will be killed in 2015. Right. And then

some parties could create a contract based on that. And then essentially you know, you could fund the killing of somebody in a sort of decentralized way, which is a crazy idea. Yeah. So

I'm sure you don't want to your platform be used for that kind of thing. So are you going to be censoring facts? Well, right now we actually have a couple of those namespaces blocks for free base, but ultimately, my view is that we are telling you the truth about what's happening in the world. We don't know what you're doing with that stuff.

And the problem here, I mean, in the Baraco, in a lot of these cases, is that there are all kinds of legitimate things that you could be doing with that data, and we can't tell which it is you're doing, right? So we can't tell the difference between, we don't even see the contract at all, right? So we can't tell the difference between what could be a will or what could be a, you know, an life insurance contract or an insurance contract or a better what, right?

We just don't see any of that stuff. Having said that, what I would say about these illegal contracts is that our service is very, very public. And Bitcoin is also very, very public. I know there are ways to be anonymous, but Bitcoin is also, you know, public and leaks a lot of information in ways that you may not have thought of.

We also, I mean, if you read our policy, you know, privacy policy, we, you know, we do record IP addresses, which we would, you know, we would cooperate with law enforcement if there was a reason to think somebody was committing a crime. So I think that,

to be honest, if I was trying to, if I was a criminal trying to assassinate somebody, then I would probably not use a public legal service like, you know, like reality keys. I think ultimately we'll probably, the world will probably end up with. I mean, I mean, I heard there was somebody who was doing kind of escrow, was offering to do escrow for assassination contracts of politicians, which they thought was kind of a good thing in itself, you know, regardless of politician. I, you know, so I suspect that people who are interested in doing that kind of thing will use a service run by somebody who's a bit more into actually doing that, you know, and also probably,

probably, you know, an ambiguous, sorry, kind of a dark net thing on tour or something. Yeah. The other thing I'd say about it is that, you know, if you wanted to do a, if you wanted to make contracts where you were profit, if Barack Obama was assassinated, you don't need Bitcoin or reality keys to do that right now. I mean, I remember after 9-11, there was a lot of speculation that the, that about, that about bunch of stock trades had been made by somebody who knew in advance that 9-11 was going to happen. I mean, there were a bunch of stock trades that you could make, you know, follow by some

kind of instruction of property, you know, that would actually alter, you know, change the stock. So there's nothing particularly new about this. Well, it's a lot more direct, of course, if he... Well, there are certainly some new patterns that you can imagine that would have been difficult before. But the other thing I'd say, I mean, I mean, even if you wanted to bet on... the assassination of Barack Obama. Effectively, you can do that right now, right?

I mean, I don't know if anyone, if any bookmaker will offer you odds on the death of Barack Obama, but you can certainly get odds on Joe Biden becoming president. I mean, that's the same thing for a much. So, you know, it's something that in a way has always been with us. And it will certainly have some new forms as these contracts, you know, take place in the Bitcoin world. Like I say, you generally probably wouldn't be sensible to use reality keys for the kind of contracts. Maybe someone will try. Yeah, but like you said, you're just reporting the facts. That's right. We just report. You're not dealing with the contracts and so.

That's right. And yeah, and the fact of the facts. Right. Right. But that's, I, I guess that sort of also ties into the question is like, why did you choose to do it this way with using two, Bitcoin Addis system public publishing the private key instead of, I guess, being involved directly in the contracts would be one way, or maybe signing a cryptographic message, or I don't know what other options. That's right. So what a lot of people are doing in this area, certainly for these kind of arbitration type of use cases, is that you're making a transaction with that needs a certain number of signatures. and then you have an arbiter who is one of the parties to that, who is one of those signatures, or maybe multiple arbiters who give you multiple signatures. And we were a little bit reluctant to do that.

Firstly, because we really don't want to know about your contract, right? I mean, you know, it seems like people have a reasonable, you know, expectation of privacy in this kind of area. And it would actually kind of brought, on our regulatory service in a way. If we're actually involved in these contracts, there's always the possibility that you're going to get involved in court cases where somebody says, well, you know, we think maybe the kind of

the machine readable text of this contract says this, but I just want to point out that it doesn't have to be a contract. I mean, it could just be some sort of an animation. Well, that's right. So, I mean, yeah, we've been actually, the thing that I was about to say is that we've been talking about this completely in the Bitcoin context. But like I say, I don't think of us as a Bitcoin arbitrator. I don't think of us even as limited to cryptocurrency.

We're a certificate authority for facts. So you might, you know, it might be a question of, okay, you know, we've, you know, we've got, well, certainly it could be a will. That's the case that I'd love to do. Like I said, at the moment we've got this space block, but I'd love to be able to help people with wills, you know, to get quick results. So you need to have, for that to happen, you need to have a data feed on people's deaths. That's right. I need a data feed on people's deaths. But yeah, I'd love to do that one.

But also there are a lot of kind of non-cryptocurrency potential use cases that I think really haven't been explored yet because we've just never been able to do this. I mean, the one I was thinking about on the tram on the way over was, you know, if you want to know who's won a football match and you want the trophy to deliver itself, right? you know, just who's supposed to be able to control the drone? Well, you want the winner of the football match to be able to bring the trophy over by the drone, you know. I mean, that's kind of far-fetched, but, you know, all you might want to do, you know, how are the doors going to open on the stadium?

We want the losers out first because they're always in a bad mood, you know. So, you know, who knows what kind of things people are going to want to do with this? And, I mean, slightly more trivially, you can make messages of these things, right? So it's not just for signing. These keys can also be used for encrypting messages. So you can write a message. You can write, well, it was still on the death's use case. You know, you might want to write a message to somebody that says, you know, I'm your real father.

I didn't want to say, well, I'm still alive because it would be kind of weird, you know. Well, I'm not your real father, whatever it is. And then it could only be encrypted. It's encrypted with the property key that's then published. Yeah, yeah. That's a, yeah. That was a little eerie one, but I'm sure people out there can come up with, you know, I'll come up with some other examples where I think we really haven't really begun to explore this kind of space.

And also, I mean, you know, with the example of the drone and the trophy, as more and more things in the world are sort of are networked and automated, I think we'll see more and more use cases where you say, okay, has, you know, the one that Mike Hearn was discussing was something like has the, has this car had its debt paid off? Yeah, yeah, yeah, yeah, with the lease payments and the operation of the car. And he had a kind of looking at the blockchain, but you don't necessarily have to look at the blockchain. You don't even necessarily need an internet connection to do this.

You can just come in and once you've got the key, you can bring that over offline. You can communicate it, communicate it how if you like. So you could build a car in the beginning that would be unlocked, maybe month with a different private key. That's right. Has the money before hand. And each month of the lease payments, you get that corresponding private key.

Yeah. So, you know, I think there's a huge amount of kind of stuff. A lot of it very sci-fi, but the world is getting great sci-fis. I think this is probably one of the single most, like, interesting aspects of Bitcoin 2.0. And really, like we need services like reality keys to make that all happen. Right. In essence. So can you tell us about some other promising applications that could be built on top of reality?

He's like given that you have the proper data sources. What are some other types of things that would, like really far-fetched, like super futuristic stuff? Well, actually, I should tell you, oh, there's a data source I forgot to mention, which isn't that futuristic. I should just tell you about it since I've nearly finished it, which is that we pull from RunKeeper. So actually, somebody said to us that they wanted us to do the Withings API. I have one of those. You have one of those. See, I don't, which is why we didn't build me in the Wittonsafi.

But these are these, if I tell me if I've got this wrong, these are these kind of internet-connected gadgets, right? Wi-Fi scales. And they have that heartbeat things and all these other things. So they said that they wanted to be able to do basically contracts with their future selves. So rather than do contracts with some other person. And I love this idea. Actually, I love it kind of opportunity. short term because it's so easy to bootstrap, right?

You don't need to find the counterparty. You just, you know, if you know how to use it, your future self also knows how to use it. So we went ahead and built that. We've integrated with the RunKeeper API. And so we can pull from there and say, I can say, if I run, you know, 10 kilometers by next Thursday, then I'm going to get this money back.

If I don't do that run, then it's going to go to charity. how would you do that so how would so it makes sense to me how you could like paid back to yourself yeah but could you automate it being paid to charity

well we need the at least the way I've thought of doing it maybe something clever that I haven't brought up but we need to get the charity to claim it effectively because they need to know how to kind of cash in this special transaction there may be something cunning you can do involving

you know um uh sort of time Or date, yeah, I do like transactions and stuff where you should be possible. You can probably do that. But yeah, so we've actually been building that as kind of an example for people to play with. So that's actually, there's kind of a still broken notion there, but that's functional now.

And you can do some nice, like, betting thing, right? So me I and Sebastian, we could bet together, like, who's going to run more in the 30 days? Yeah, that's right. I'm not sure if you could do that on our IPA right now, but we could probably fix it. so you could do that. And you can also do the backwards version of that one, which would be kind of a sponsored. The back version of the things I suggested,

which would be like a sponsored walk, right, which is that your money to go to charity if you complete the run. And if you don't complete the run, then it goes back to the person who funded it. Yeah. So it seems to me like the opportunities are pretty much limitless. Do you intend on adding other APIs

or perhaps even opening up the platform so that other people can build in these APIs into reality keys. If you look at just like if this, then that, for instance. Like they've got dozens and perhaps even hundreds of different APIs, like those APIs for everything now. If you would somehow open up the platform so that people can code in APIs to be able to create these reality keys,

I think that would just kind of really open up to a lot of opportunity. Yeah. Yeah, so, so I guess two questions there. The first one is about adding APIs, which we certainly will. And, you know, if you look at this thing and there's something that you need and we don't have it, then, you know, let's know we're, you know, going to be adding APIs all the time. As far as opening it up goes, it's certainly something I'm interested in doing. I'm a little bit worried about whether you're, whether, I'm a little bit worried about kind of the terms of service of some of this data that people could, could set. us up to pull from. So I'm a little bit nervous of allowing you to register things that we would

then not be allowed to pull from. I mean, that may turn out to be okay, but that's a concern. The other way we might do this is to use somebody else in the middle. So there are services like Yahoo Pipes, I think, is still running, which is, yeah, which is kind of this kind of toolkit for kind of slicing and icing information from different sources. So what we might do is just do a kind of a generic API to Yahoo Pipes and then pull from that and then you can make whatever pipe you want. And I think there is also an open source implementation of Yahoo Pipes out there somewhere so that if they stop providing that service, we can still confirm those facts.

The other way this might be going is that some people are working on platforms that are really much more, that will do really kind of much more generic computation. And that's something that we're also interested in doing. I'm a little bit nervous about some of the legal implications, but it's something I'm looking into. Can you have a bit more about that? Yeah, so the recent announcement was Codius,

which I don't know if you heard of, that's by the Ripple team. So this is kind of their answer to Ethereum. So what Ethereum does is it allows you to make kind of arbitrary logic that all of the nodes, I guess in the Ethereum network are going to be able to run and validate so that you can run effectively arbitrary logic on, under these conditions, these funds or these assets should go here, and under these conditions they should go to this other person. So that's what Ethereum do.

But then if you want to do that without actually forcing all the notes in the network or even forcing the miners to all execute all these arbitrary contracts that may have loops in or other difficulties, the other way to do it is if the parties to this thing just agree on some, what are called oracles, on some authorities who are going to run that contract for them and say what the result is. So this is something that Gavin Anderson was talking about. He's written a post where he calls it Bit Ethereum,

which is this concept that you're going to do sort of key, all the key-based stuff and the kind of the property tracking on the Bitcoin network. But when it comes to actually running some R3 code and slicing a bunch of different data sources, you could have a bunch of trusted arbiters to do that. And they don't have to be that trusted because you can combine a whole bunch of different ones

and take a majority vote. So he called it Bit Ethereum and then there's this implementation called Kodias. And what Kodias do is they use the Google, what's called? Google Native Engine is it called? Google Appel. No.

It's not the App Engine. It's kind of kind of sandboxed programming, I guess it's a runtime. Anyway, if you Google NACL, that'll show up. And their project is called CODIUS. So I think they've come up with an implementation that is, right now, it's just a JavaScript sandbox, I think, rather than using NACL, they say they're going to use. But the idea is that they're going to write,

you're going to have this sandbox that a lot of different people can run, and you'll be able to write in various different programming languages, and you'll be able to pull from, you know, whatever data, sources you want and then run whatever code you want to. So would the idea be that you allow, so that either, I guess there will be two ways, if I'm correct, that this could be interface or reality keys, either that some of these code use a fact from reality keys as an input in the computations, or you could have an output of the code use, the Oracle resolve as an input.

Right, that's right. So the input thing, yeah, maybe you want to do that. That's an interesting thought. And I've been just kind of tinkering with the idea of setting up a codious node and doing that the way we do it where we just release keys. Again, you know, I'm a little bit worried, okay, all the situations where if I'm running our free financial code that people are going to be naughty things and that's my responsibility. You know, I'm not quite sure.

You know, I'm not quite sure. I don't know, the codeos team seems to think it's okay I think to be doing. So that's something that's something that we may do with reality keys. Alternatively, it may be that reality keys end up carrying on doing what we're doing for things where you need facts and then a bunch of other people are going to end up running

these codious nodes, you know, and signing. Right now they sign transactions rather than releasing keys, I think in their implementation. So I think there's definitely a lot more to talk about the application stuff and I think we should definitely do that. But I just very briefly want to ask

about one more topic that sort of relates to the technical side to this. And so obviously you're using Bitcoin. Well, sorry, just ask you a question. I think the answer is no, we're not using Bitcoin. Or are using Bitcoin addresses?

Yeah, kind of. Okay, that's right. So my question is because you are starting Ethereum and other projects like that. So if an Ethereum application wants to use reality keys, would they then use the Bitcoin public,

and become private, et cetera, and essentially tie that into an Ethereum contract, which is probably possible, right? Yes. Or would you have maybe additional ways of releasing facts, so they're more tied to an Ethereum platform. Yeah.

So, yeah, so, so yeah, we, the public keys that, that we, the key pairs that we use are, they are actually created by a Bitcoin D, but, you know, the keys that Bitcoin uses are just, you know, ECC key pairs. So they're not at all limited to the Bitcoin network. So without us doing anything, you can use those keys on all kinds of other systems.

Anything that's, you know, capable of doing, of checking those signatures, you know, using the same crypto that the Bitcoin does, can use our keys as they are. So it would be possible, I guess, once Ethereum is running, it's certainly possible to just use our keys in Ethereum contracts. And also, I think, on, you know, in Ripple and really anything else. So that's certainly possible. However, Ethereum has quite a nice way of handling this, which is that they allow you to literally publish a sign feed,

to publish data to the Ethereum blockchain. And you can then also charge for it to be read. It seems, if I understand that right, I haven't tried this. So it can be used right now, but there are probably some things that we could do to optimize for Ethereum. I'd certainly like to publish kind of Ethereum native. data feeds. So there's only something I'm thinking hard about. So that of course would also be an interesting different monetization way. Well, right. If you can charge for a reading. If you can charge for

for seeing those things. Well then I guess let's sort of dive a little bit more into the application side. So I did an interview with Gavin Wood two weeks ago, I think. It's just kind of as the ether sale was ending its two-week mark. And when I was talking to him, one area that he emphasized and that I hadn't thought so much beforehand was insurance. So, you know, because I asked him like, you know, what do you think could be like one of these big industries, first big industries that would really be disruptive insurance.

Right. So I mean, of course, very interesting use case. Also very closely related to prediction markets. Yeah. At least technically it's all the same moves, right? Technically, it's kind of the same thing, no. So, but I was wondering, what are you thoughts on that? Yeah, I certainly think it's a plausible use case.

There are some situations where I think you might actually want to know your counterparty to do a lot of insurance stuff, you know, whereas in a, you know, in a prediction market case, it doesn't really matter who the counterparty is as long as you get paid. but in an insurance case you often probably want to know about the motivations of the person you're dealing with as well as the final

financial water money so you know if you're making a contract where they're going to get paid if lighthouse gets burnt down then you would probably want to know the identity of that person but that kind of I guess depends how high

if your lighthouse is right I mean there might be situations where that's going to work So I certainly think there are some insurance use cases. I think in a way, yeah, a lot of them are just a little bit tricky in terms of getting the right sort of incentive structure. But it can certainly be done, yeah. Okay, so insurance, yes, I think it's definitely an interesting use case. I guess also a big challenge will be, I think, to just build these user interfaces on top of it,

to build, like, ways of price finding. I think that's going to be a huge challenge. That's right. There's a lot to do. We've kind of consciously taken one very small slice of this problem. We haven't tried to build, you know, a prediction market or any of the other things that we could build. With the exception of this runkeeper one,

which nobody else is going to do. Because we really just wanted to make something that people could take a look at and learn from. But yeah, that's right. We're not interested in building any of those things. we're hoping that other people will. But the great thing about working in Bitcoin right now is that there is just so much innovative talent

and so many people building any damn things that you can pretty much say that if it should be built, somebody's going to build it. So I think there's a lot of work to do to get, especially to get kind of beyond techy stuff, to get to get to the, for normal use, to be able to use this stuff. There's a lot of work to do, but there are a lot of very smart people who seem to be doing it.

Yeah, I think that's the case with a lot of this Bitcoin stuff, is just building the user experience to a level at which people can actually use it. Yeah, I mean, we had a talk on multisig, so it wasn't the last one, it was one at the previous meetup, and I thought one thing the guy said was really interesting, and he was like that the biggest challenge with Malteseech is going to be usability. Absolutely. And like user interfaces and all. Like otherwise it's pretty simple.

Understanding is pretty simple, but actually making it usable and that is a big challenge. That's right. And I suspect that we're going to end up with effectively sort of custom clients for, or at least custom kind of user interaction elements for all these different kinds of thing. So to us technically, you know, we've been talking, you know, insurance is just the same as, you know, a bet, and that's just the same pretty much as a runkeeper, you know, challenge on whether I'm going to finish this run. You know, and to Bitcoin, they all look kind of similar. But to the, to the user, they look like very different things, and they're going to need very different, different interfaces.

No, absolutely. I think, yeah, I totally agree. So I say, yeah, sorry, I was just going to say, I think there's an opportunity in pretty much every single space. That's what follows from that, you know, is that we're not going to have one person who's going to build the, you know, the contract interface. We're going to, there's a, you know, there's an opportunity for somebody to do a really interesting project on whether the futures and somebody else to do a prediction market.

What, what, so, yeah, so what are some other, uh, sectors that you think can be, um, completely disrupted by, um, the, the, the one that kind of struck, the one that I've kind of, kind of learned more about since I've been doing this has, is actually, is kind of, um, sort of financial futures where, um, I, as you've been, you know, talking to some people for, um, from the industry. So what I hadn't realized was, I mean, even things like weather futures,

you know, if you Google, okay, I want to do, as a sort of a retail customer or small business customer, if you say I want to just sort of hedge against rain tomorrow because I'm doing an outdoor event or something, there's actually not much there in terms of good options. And talking to people in the industry, it really seems like we've got all of the dysfunctionality

that we're used to in the payments, that's the same and worse in the kind of in the future space. So I think there's a huge opportunity there. And there's also a complete lack of transparency when it comes to pricing. Yeah, yeah. And by the way, this is one of the interesting things about reality keys is that you can be very transparent or very obscure, as you like. So if you use our keys, as they are, they're published on the website.

Anybody can look at the blockchain, at least once those have been settled. Anybody can look at the blockchain and see that this was a contract about this particular fact. Oh, that's true. But it's also possible, if you prefer to do it this way, it's also possible to combine our key, using a similar to the ones we discussed earlier. You can combine our key, you can kind of blind it and combine it with another key that's only known for participants. And if you do that, then nobody's going to know. We won't be able to look at the blockchain and know that, you know, this transaction in this.

Yeah, that's fascinating. So, yeah, we've kind of tried to go with the, what I think is nice about this way of doing it is that it kind of goes with the grain of Bitcoin, that it gives the users a lot of control. If you want to be transparent, you can be very, very transparent in the way that it didn't use you're possible. And if you want privacy, you can have a lot of privacy. You know, we've been, we've been used to this kind of very, kind of slightly nasty kind of half measure where you can never really get as transparent as you want or as private as you want. So what kind of timeline do you expect? Do you think we're going to see working applications that actually end users are going to use in, what do you expect?

It's going to be two years, one year or longer than that? Well, we should have the Run Keeper one out in a week or two. The things that I've heard people are building, you know, it sounds to me like, will have stuff out this year from what people have told me their building. And I mean, I just turned up at a meetup in Berlin, you know, last week and found some people were building on reality keys. So, you know, it does sound like there is stuff happening and there's going to be stuff that sounds unusable.

That said, we're in it for the long run. You know, when I went into this, it was very clear that we really have no idea how long it's going to take for this stuff to get traction. I'm perfectly prepared to wait 10 years and just carry on running the service with, you know, even if hardly anybody uses it, you know, we can just keep on providing the service, you know, until it takes route tonight, you know, we're in for the long haul ends. And speaking of the long run, like, do you think that there's any way, one of the criticisms

that you may get is that, you know, it is centralized and there's no transparency going on in the background? Do you think that those are the way perhaps decentralized reality keys in the future and perhaps have some premium services built on top of that? Yeah, so there are really, I guess there are a couple of angles to this. One is that there are some systems that are being built kind of from the ground up that are supposed to get you, sort of external information around the world, through mechanisms that don't actually require any kind of trusted arbiter.

And these are really interesting projects. So one is called Shelling Coin, another is called Truchcoin. I haven't looked much at Shilling coin, but if you read, Truthcoin has some quite an extensive white paper. And I think there's quite a lot of work going on there. I really encourage people to look at those projects, if you're interested in this area. Having said that, you know, these things, so they're allowing things like, you know, shilling points where there's this idea that it's easier to get to the truth than to say something untrue. So you can, just like we get miners to all validate these transactions, they're kind of incentivized to tell the truth, to stay in line with the consensus.

The idea is that you can do something similar with facts about the world. So this is, you know, it's a very interesting project, and it may work, but it'll be a long time, even if they finish it soon, it'll be a long time before we know whether it works, because it really needs to be tested under real world conditions. Yeah, and when real money is at stake. That's right. So the same is true of Bitcoin, and a lot of these, you know,

the new technologies in Alcoins. But, yeah, we don't really know whether they work until we've actually put some serious money behind them and giving people an incentive, you know, to try to break them. So that's one possible angle is that it may be possible to completely decentralise the whole thing,

but we don't know yet. The other angle is, okay, what can we do in the reality keys end? I mean, one thing I would say is although you've got to choose your arbiters, you can choose the many arbiters as you like, right?

as long as people actually show up to do that. So even though, I mean, we're a centralized, you can think of us as a, if we're a node in the total system, if you're making a contract, you might have, you know, seven different people and you're taking a majority verdict from them. That's not really such a centralized system, right? You know, it's, you know, you've got a majority of,

it's kind of a decentralized system, but where the nodes in the system are known. Okay, so that's where, you know, I think this thing should be going, is that we have kind of these kind of known nodes. We may end up kind of internally. Certainly if we end up with a lot of money riding on this thing, I'd like more kind of internal checks and balances. So as well as in your contract, you would be able to pull,

to get stuff from a bunch of different arbiters. our keys would also depend on some kind of semi-independent organizations agree. But even there, I think the right way to do this, at least for a lot of use cases, is to have identified trusted people. So in that sense, you know, it's not going to be a system like Bitcoin where anybody can become a node without needing to gain trust. To do that, I think you need some kind of system like, you know, Truthcoin or Shencoin.

There are some guys. There's a project called some like Orisi, which talking about themselves as a decentralized oracle. But in a way, they end up with the same thing. I mean, you get a bunch of people who are running loads and you figure out how much you should trust each of them and you combine a bunch of them. So I think that's probably going to be the model.

I suspect that, as I said, when we were talking about kind of the very illegal use cases earlier, I suspect that the market will end up producing some kind of sort of a bunch of dark net node to, you know, people who are kind of doing this fairly anonymously. But they're still going to be a little reputation, I think. Yeah, absolutely. And I guess that's also going to be a way to deal with increasing money at stake is to increase the number of services like you. Because, of course, if a million dollar... That's right.

Contract or $10 million contract depends on which private key you're going to release. It's also going to put you at risk in a sense because, of course, somebody can come and put a gun to your head, and that might be economically real risk. That's right. So if you're putting serious money in this, you know, you should be really combining multiple authorities. You shouldn't be putting huge sums of money on just our service. but at the same time we can also do the same kind of thing internally

and that we can structure our organisation such that if somebody put a gun to my head I still wouldn't be able to you know just by myself giving the key maybe they need to find three guys in three different cities and put guns to all heads and they could do it that might be a good thing to do for your personal security as long as I can actually persuade them that

you know that's what's happening so so I think we you know we probably end up going that direction but like I say, you know, for big money, you want multiple authorities. And that makes everybody safer. Well, I would say before we wrap up, so we're sort of coming towards the end. But do you want to go into very briefly your views on Bitcoin 2.0 protocols, whether it's like Ethereum or protocols are more based on Bitcoin, but trying to do the same thing?

Yeah, I can try. I'm maybe going to be a bit out of my depth here, so people who know a lot about these protocols are going to be kind of screaming into their computers how I am. So, yeah, so, I mean, yes, what we were talking about earlier a little bit was the way there are now these kind of two competing

schools have thought about how you can do complex contract logic on a decentralized platform. right so so there's this kind of gavin's and bit ethereum concept which is also what the ripple people seem to have taken up and then there's the the theorem idea that you can actually um you know run all kinds of contract logic um on the blockchain and have all of the nodes and i i i if at least i've got this right about Ethereum i hope I've got this right that you know then if you've got a transaction then all of the nodes in the network have to you know validate that trans or at least all the participating full nodes have to to validate that transaction And to run the contract code. I guess to run the contract code. Of course.

I suppose that's how it works. Of course, you could do the same thing as the B-Therian. You could also have the- That's right. You could certainly do the same thing on Ethereum, but the idea behind Ripple seems to be kind of that you can do this arbitrary contract logic. And I mean, the idea of doing arbitrary contract logic is a new thing, right?

It's an innovation. And we haven't seen it tried yet. And I don't think anyone knows if it's going to work. We all hope it's going to work and we're kind of waiting to see. But I mean, I was, I think I was saying this the other night, but I'm not even absolutely certain that the Bitcoin incentive system is going to work. I mean, you know, we know we have issues with decentralization. We don't really know, you know, it seems like the miners all kind of run for a profit motive, but we haven't really seen a majority of really nasty miners at the moment. And we haven't had a majority of really dysfunctional organizations running mining.

You know, I mean, the time we had, you know, we had that fork and everybody got onto IRC and said, okay, well, I'll give up my blocks. You know, it was all kind of run by these kind of gentleman anarchists. And then we've kind of progressed to this time. We've got kind of guys like G-Hash who, well, we don't know much about them. But, you know, at least they seem to be running with a strong profit motive. But, you know, even then what happens when we get to the next stage of any business where it's run by kind of psychopaths with MBAs, right? And, you know, in a big organization, you can get really strange dysfunctional behavior,

where even if you might think, well, this doesn't seem to be in the interests of your company because you're doing something harmful to Bitcoin and your company is relying on Bitcoin, you know, if you've got some weird organizational setup and you've given people funny bonuses, right, you know, people can do very strange things. You know, I probably wasn't in the interests of Lehman Brothers for the guys at Lehman Brothers to do what they did and to run up the debts they did. But, you know, they still did it. So I think even Bitcoin, which has had, you know, relatively a lot of kind of real world testing

and a lot of serious stress testing with a lot of serious money at stake, even there we don't quite know whether the incentives work. And Ethereum is going to, you know, is everybody really going to validate things properly? Are people going to do weird things? We don't really know any of that yet. So, you know, Ethereum, it's in a way, you know, it's a very ambitious project. So it seems like the kind of the bit Ethereum concept,

the idea of handing this thing off to trusted oracles is, seems like we can be a bit more confident that that's going to work than we can be confident that Ethereum's going to work. But obviously, if Ethereum works, that's much better. Yeah, I think it would be extremely fascinating to see how this turns out.

So we're at the end of our episode. So if people want to try out reality keys, right? So the website is reality keys.com. That's right. With the runkeeper thing, I guess you're going to have some user interface on the web that people can actually use. It's there right now, but it's a mess. You can't see it if you're invested in.

It's at buy my coins.com, as in I swear, buy my coins. Okay. But we'll do a proper announcement once. ready to use. Okay, is there some other way people can contact you or get in touch a few? Yep. So if you look at our website on the About page, we've got an email address, we're support at RealityKees.com.

There's also our Twitter handle on the bottom of that. And we also monitor the relevant thread that's linked on our site at Bitcoin Talk, if you want to talk about things there. So please don't hesitate to get to our... get in touch, you know. I mean, I met some guys in Berlin who've been kind of puzzling over some things that I could probably have helped them with. So, you know, please don't hesitate if you're not sure how something works. So I'm not sure how I want to do something.

Then please do reach out. And I hope you can make something interesting. Cool. Well, thanks so much for joining us today. Yeah, thank you very much. Super interesting. So just very briefly, as you can wrap up, we have one announcement to make. So so far, the way we've been called.

following episodes, so we've had the regular episodes that we released on Mondays and we add generally extra conference content on Thursdays. So the Monday episodes have the regular episode numbers and the Thursday episodes, we generally gave other names. And so we are kind of breaking away from that. So we also can have some more flexibility about when to release what content. So for now and we're going to number all the episodes as sort of regular episodes. and yeah so there may be some changes there but it's mainly as far as the naming goes and perhaps some of the release

schedule but not much so thanks so much for listening if you want to support us you can donate to us which is very much appreciated you can do that episode of bitcoincom slash tips and thank you to those who have donated yes thank you very much we received a few donations recently and we don't know who you $50 like recently, so that was nice. And you can also follow us on Twitter at EFSA and BTC. And if you want to subscribe to a weekly newsletter, which goes out every Friday. And you can do that at EFSAB Bitcoin.com slash newsletter. Thanks so much and we'll see you next week.