The Pomp Podcast - Silvio Micali, Founder of Algorand: The History of Cryptography

Episode Date: August 12, 2019

Silvio Micali is the founder of Algorand, and an Italian computer scientist at MIT's computer science and AI laboratory. In this conversation, Silvio and Anthony Pompliano discuss the origins of cryptography, why a blockchain is so important, what Silvio thinks about Bitcoin, why he created Algorand, how the system works, and what's in store for Algorand moving forward. CRYPTO.COM-----Crypto.com is a pioneering payment and cryptocurrency platform that seeks to accelerate the world's transition to cryptocurrency. With the vision of "cryptocurrency in every wallet", the Crypto.com App offers a full range of financial products with competitive pricing, well designed UX and high security. It is the best place to buy, sell and pay with crypto. COINMINE-----The Coinmine One is like an Xbox that turns your electricity into Bitcoin. You just plug it in, connect to wifi, and tap on the crypto you want. It’s so easy anyone can do it. Everything is controlled from the Coinmine mobile app and the Coinmine keeps getting better with over the air updates that add new coins, features and services to your Coinmine.  Visitcoinmine.com/pomp to get a Coinmine and earn crypto for powering a new world.

What's up, everyone? This is Anthony Pompliano. Most of you know me as Pomp. You're listening to Off The Chain, simply the best podcast in crypto. Let's kick this thing off. Silvio Macaulay is the founder of Algorand and an Italian computer scientist at MIT's Computer Science and Artificial Intelligence Laboratory. In this conversation, we discuss the origins of cryptography, why a blockchain is so important, what Silvio thinks about Bitcoin, why he created Algorand, how the system works, and what is in store for Algorand moving forward. I really enjoyed this conversation, and I hope you do as well. Skrt, skrt! Want to know who has the best URL? Crypto.com. That's right, Crypto.com. They're a crypto platform with one goal, motherf***ing mass adoption.

That's why we're all here. We're trying to get crypto in every wallet. Crypto.com is helping people do that through buying, earning, lending, and card payment. Everything you could want at Crypto.com. Go help your boy out. Tell him Pomp sent you. Download the app or visit Crypto.com. Pomp's got you, always.

Ever wanted to get into mining and didn't know how? Don't worry, your boy Pomp's got you. everybody got some electricity and wi-fi all you got to do is go to coinmine.com you buy a coin mine it's like an xbox or a playstation that helps you turn your electricity into bitcoin that's right you purchase it it shows up at your doorstep you pull it out of the box you plug it in connect to your wi-fi five minutes or less you're mining bitcoin all you have to do is control it from the mobile app they provide and then you receive over-the-air updates that add new coins and new features on a consistent basis. Kind of like how Tesla does over-the-air updates and updates the

car software. Just you're updating your CoinMine. Consumer mining made easy. That's right. Go to CoinMine.com, tell them Pomp sent you, and thank me later. Anthony Pompliano is a partner at Morgan Creek Digital. All opinions expressed by Pomp or his guests on this podcast are solely their opinions and do not reflect the opinions of Morgan Creek Digital or Morgan Creek Capital management. You should not treat any opinion expressed by Pomp as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. This podcast is for informational purposes only. All right, guys. Bang, bang. Super excited about this episode. I've got Silvio here. Before we get started, he's a real Italian.

I'm only an Italian-American, so he immediately wins, but Silvio is also known as the father of cryptography, and so I'm super excited to kind of get through this, so thank you so much for taking the time to do this, sir. Thank you very much, Anthony. It's a pleasure to travel together tonight. Absolutely. Let's go through your background first. you were born in italy and kind of walk us through how you eventually get to the united states all

right so i was born actually in sicily spent uh 12 years uh the first 12 years of my life there then the whole family moved to rome another 12 years there and i i decided to to study mathematics so i got my first degree in math and then towards the end i was exposed a little bit to computer science and then i say so gee that i think is the new math and i think i really wanted to study that and uh so i looked around and uh and and found the berkeley on the map as a really the place to study a computer science theoretical computer science and by the way i was not wrong anthony because uh among my professors there were uh not one but three future touring award winners so i you know my analysis was right on the money so i moved to uh to berkeley

i spent this amount of the first six months you know learning enough english to communicate and to understand what was going on and then i started diving into research and uh on algorithms and uh and discrete math and then I found a course from Manuel Blum which was computational number theory with application to cryptography okay and so at that time there were no academic cryptography courses there was the RSA was encryption system was invented but there was maybe one more subject that was about it so i followed this course and the last three lectures were about cryptography that i must say opened my mind and uh somehow uh i don't know how these things happen you know i got uh into me and with a a lifelong friend and our shafiq al-dawasser uh the notion that

you could play a poker over the telephone i had to say so gee i think that is a challenge that I want to take. So we started working towards that. And somehow we found the first type of a solution, the right encryption to enable to play poker by phone. And then we solved the problem actually a few years later. It was a tough nut to crack. But I was hooked.

And then I stayed in cryptography for a long time. And I found that it's a wonderful field with a lot of application that can really help humanity to transact way more than before by keeping things private, what you want to keep private, keeping things transparent so that you can prove that things are correct without revealing why. All kinds of marvelous things. And I've been loving it ever since. Got it, man. Look, you've got an awesome story. And obviously the uh the move from uh italy to uh berkeley ended up proven to uh to be pretty powerful for your career maybe help us understand um for those that don't know uh what exactly is cryptography uh from

your perspective oh all right so first of all let me tell you classically what the cryptography means is a greek word right and uh essentially means a secret of writing because uh the original and only application was to transmit a message so that only the intended recipient can understand what the message means and an interceptor of the message, whether it is you intercept a courier on a horseback or if you catch something over a modern computer network, if you're not the recipient, you should understand the least as possible.

But then I started working on different angles of cryptography and pseudo-random number generation and interactive proofs, zero knowledge, and essentially is being morphing into adversarial computing. So in other words, any computation in which you have an adversary that you want to defeat, I think is a fair game for cryptography. So who is the adversary in an encryption? Well, if I want to send you a message,

the adversary is somebody who intercepts it and it should understand nothing. Assume that you want to prove to me that something is true, we want to prove a theorem, then the adversary is somebody who impersonates you and tries to convince me of a falsehood. Assume that you want to somehow to speed out, to output a pseudo-random bit sequence,

like zero and ones generated by the computer, so that they are de facto totally unpredictable, the adversary is somebody who would like to buy your sequence, right? So, and on and on and on. So, and very often, you know, adversarial computing is very powerful because, by the way, you don't need to be a cryptographer to believe that adversaries are everywhere. They are, and you need to be secure if you want to transact more,

expose yourself more uh with uh with security and and very often the first uh the best way to model a complex system is to assume that uh sooner or later is going to be seized by an adversary because anything complex enough will start behaving as if there is a very determined adversary if you wait long enough and the system is complex enough so it really is a way to help us to construct much more reliable and large systems. To me, cryptography is adversarial computing. And so walk us through kind of from a historical perspective, what are some of the hard problems that cryptographers have been struggling with over the years

that now are starting to get solved and unlocking some of the beauties of what we're seeing with blockchain and cryptocurrency? Well, you know, the first problem, as I was saying, was encryption, right? And because encryption, you want to hide a message. But very often, encryption was like oil and vinegar, right? You shake them for a while. They seem to be that they are well mixed. But then you wait a second, and the oil separates from the water, right? And I think at that time, it was a mouse and cat game.

So somehow people felt that something was pretty good to encrypt. Then the bad guys figure out how to catch up. Then you do a little bit of step ahead. Then the bad guys catch up. And so the first problem to solve is about making sure that no matter, nothing can be leaked about the message. And that actually is very hard, Anthony, because very often you don't need to understand the entire message. It's enough to understand if it is a praise or an insult, right? It's enough to understand that somebody is upset in this message because it conveys a lot of information.

So how do you know that you can hide all kinds of partial information in a message? That was the first breakthrough. And after that, it was an avalanche of all kinds of things. A second breakthrough was, you know, zero knowledge. so let me tell you what the zero knowledge is in the simplest form is that assume that i know something is true and i wanted to prove it to you right but uh but i don't want to show you the proof and you don't want me to say believe me this is true so i wanted to prove it to you in such a way that at the end of our conversation you know that whatever i'm saying is right but you have no idea

why okay and um you say gee uh sylvia that is a very esoteric stuff who cares about this well you know let me tell you that uh anytime that you use you know an ideal password system is something that you know you want to be able to make sure to prove it is you that to have access to say to a a database and um and you don't want to uh that when you authenticate yourself an adversary learns to impersonate you so you really want to verify that is you and not however learn how to impersonate and to learn to prove your identity but you don't want to enable an investor to do your identity i think that was another breakthrough and um i would say you know i was fortunate enough to be part of this uh the original probabilistic encryption which is uh this way to encrypt the data with

and absolutely without leaking any information. And I was also involved in the development of zero-knowledge proofs. And the other thing which actually played a role in whatever we are doing right now in blockchain right now was pseudo-randomness and somehow verifiable random functions, right? So the idea is that, you know,

i want to have a function in which if you give me a number x the function is associated to this x associates to this x a random number and you give me y and i give you a random number so much so that nobody can learn what then after asking what is the number associated to x what is the number associated to y you give them the answer all along and nobody can predict even better than random guessing what the function evaluated a never asked number like say z is going to be and um and so and that is true even if i specify compactly what the number is so i cannot change my mind um about the value of this function and uh and yet every time that i give you the value you you say oh gee that is the correct value and gee i have no idea that this was going to be the

correct value so this is going to be pseudo randomness and not zero knowledge probabilistic encryption so we're really the the the main engines of this revolution in cryptography yeah the way that i always describe the zero knowledge proofs is uh especially to americans is when you're walking in a bar normally they ask for your id and when you show them the id to prove that you're 21. They get to see your address, your age. They get to see your hair color, your height, your name, all these other aspects of your personal information. But really, all they want to know is that you're above 21. They don't even need to know when your birthday is, right? They could just say, hey, yes, over 21. And so it's the difference between revealing

all of your personal information or just revealing the fact that, yes, this person is over 21, but they don't even have to tell you when the birthday is, right? And so you can imagine and applying that to a whole bunch of different problems could become very interesting. Oh, absolutely. I think it's a wonderful example. If you don't mind, I'm going to use it, okay? That is from now on. And yeah, here is another example of it. So assume that you are a regulator, right? And then you want to make sure that some of the financial institutions of the country are not overexposed on a single asset, right? But how do you know?

You can say, hey, I need to have, as a regulator, I need to know, show me your portfolio of investment, what you're doing. Bank one, bank two, financial institution one, financial institution two. But that is too invasive, right? All of a sudden, all you need to care, or you care about really is, are we overexposed?

Is there a systemic risk? Yes or no? And if I can prove it to you that I'm not overexposed on any asset, that is good enough. And why should I reveal the rest? Everybody has, you know, zero knowledge enables you to, exactly as you say, to customize the amount of information that you need to reveal to be believed and move on.

For sure. And so, look, you've been a computer scientist at MIT's Computer Science and AI Lab. And then you've been a professor of computer science in their Department of Electrical Engineering and computer science for a really long time walk us through a little bit of the work at MIT and kind of you know what's the state of AI machine learning encryption cryptography etc today like where in all of that work that you've done over the last almost 30 years do you really see the

kind of ground truth today versus maybe some of the dreams that people you know would like to think that we are well you know first of all you know once you mention at MIT let me tell you that is really a fantastic place and is really like a chamber of resonance. It really made me a better scientist. He emphasized my work in so many directions. It's really, the Institute has been a wonderful place and the students are really what to make even more so.

I mean, everybody's very experimental, allowed you to teach new courses that previously never existed before. And I think that, you know, if you want, all these things are really synergistic because at the end, if you don't have, if you don't have, you know, algorithms and if you don't become very sophisticated in algorithms

and where Mattia has been a really world leader, you cannot have a cryptography either, right? And also, machine learning has helped cryptography quite a bit. Cryptography has helped machine learning by providing actually an example of what cannot be learned and so forth. So I think that everything is really synergistic. And so you need an institute like MIT to make sure that everybody contributes to everybody's field. And so somehow, you know, in my own work, which finally led me to blockchain, I was, I look at the blockchain as an intersection of three things. One is, of course, cryptography.

Another one is distributed computation. And I was able actually to, because I worked in both fields, given my colleagues and the particular interactive environment at MIT, and I really put one and one together in my work on blockchain. So you need very often, we are in a world, the world is becoming, Anthony, more and more complex, And you cannot expect solution from a given single field. So you need to have a magmatic, volcanic environment, a very creative environment where many fields emerge and to find a real solution to our more complex problems of today.

And blockchain is one of them. For sure. Maybe tell us a story about the first time that you came across, whether it was Bitcoin, blockchain, crypto. right like you've been so deep in the cryptography and encryption world and then you kind of find this other application of it talk a little bit about the first time that you came across today what we think of as the crypto industry from a cryptocurrency standpoint blockchain or bitcoin all right so as i've been a cryptographer for decades and then and distributed computation to by something agreement and things like that and then for the last few years i was doing

mechanism designs like auctions or designing auctions or special properties and then and then these are all ingredients of blockchain but i didn't know so finally i came across you know the famous uh paper right then i come out of paper and i said you know gee wow that is i think that uh what do we have here now we have been the reinvention of gold okay i very nice also the terminology, mining I thought it was right on and I said, gee, that is a really

digital gold, that's fantastic, I think however, the gold is going to be enhanced if you allow actually to have more meaningful and nimble transactions with it, so I decided to say, hey, I want to help this ecosystem and to add

also a way of making more sophisticated transactions on the blockchain. And so I decided, you know, I closed, locked myself for a few months and just asked my wife, says, what are you thinking all the time? So, and I come up with a new design

and that was the algorithm, the way of doing things. And what I did, taking a page from Nakamoto's book, I just put the paper right out, a white paper out on Crypto Archive, which I've given my repository for things like this. Let's see what the community thinks.

And one of the first answers that I got was actually from a colleague of mine in the system security, Nikolai Zelzovich. And he told me, gee, Silvio, I think that it's too good to be true, okay? Do you mind if we test it? You know, I tell you, no scientist should say,

yes, I do mind, don't test it. So we ran a very rigorous experiment together with another postdoc who is now also in Algorand and another student also in Algorand. And we rented a thousand big servers from Amazon and we tried to simulate what was going on. And my oh my, you know, the theory was proven correct and the system really scaled as we thought it would. And so all of a sudden, I felt, hey, we had the technology, now we have an experiment. How about making a company? So I looked around and I found that some friends that actually have co-invested in the first round, which was Pillars and Jamie Goldsing, a very old VC friend of mine. And then he was joined by USV Ventures from New York.

And we raised them a series A and then we put together a team. And of the original 11 members of the team, you know, eight were from MIT. So it was actually, I really felt at home. And then we were introduced to Stephen Kokinos, who is now our CEO. And Stephen was great. And so all of a sudden, we started developing the team, not only for the research arm, not only the engineering arm, but also the business arm.

And so at this point, when we raised more money, we did not want to do an ICO because, as you know, the legality of an ICO is in question. So we raised our money the good old-fashioned way by equity financing. In total, we raised some $66 million, take it or leave it. And so we had all the money to develop the network and then just after developing all the network, testing extensively by ourselves, with our partners, and then the public testnet for a few months. Then last June, Algorand Foundation launched the Algo from Singapore, and here we are.

Got it. And so let's walk through a little bit with what exactly Algorand is and how it works. Okay. So the way I see it is the following. So there are two aspects to build a blockchain, right? One is to make sure that you have a sequence of blocks and nobody can tamper with the content of the blocks and nobody can tamper with the order of the blocks. Okay, so the blocks contains the new transaction. But you know what the problem is?

All blockchains, they do the chain in the same way. They organize the untamperability of the blocks and the order of the blocks in the same way. The only problem is who decides what the next block should be. And that is really where a blockchain differs. And by the way, because if I would say in my blockchain, I decide the next block all the time. And therefore, I have a tremendous power because I'm going to dictate what transactions are the only transactions that really ever happen in the world. And so, proof-of-work does it in a way that, as you may know, was the first way, was a great way, but it consumes a lot of electricity. And when it requires a big investment to now in hardware and great consumption of electricity, when the cost gets very high, the system becomes more and more centralized.

So proof-of-work generates, typically, you have three mining pools who control the chain, which is not distributed enough. And in fact, the notion of scale, security, and being distributed, they were considered unsolvable at the same time. So the famous blockchain trilemma that Buterin, the founder of Ethereum, made famous was saying that in any blockchain, you can enjoy at most two of security, decentralization, and scalability. Now, if this were true, let me tell you, blockchains could not be that helpful, right? because if i'm a new firm say blockchain by design and you're a customer and say oh welcome to blockchain by design so you want a blockchain sure just let me know which of these free properties uh you don't want so you don't want security is excellent choice really i mean if you have a security without security we have nothing so okay maybe i want to throw out uh

scalability what do you want to do with a blockchain you know uh to have a run a private club with friends uh and family no and but you cannot throw out a decentralization either right otherwise we have the world has plenty of centralized solution to to almost everything so the idea is to try to solve these three problems simultaneously and that's what uh algorand does and um and that is actually to do so you need to put together this verifiable random function that I told you about the idea is the following

algorithm block is decided think of it in two magic phases where the magic is replaced by mathematics and in phase one somehow by magic for now, right, because by mathematics we can talk about it later

a token among the circulating tokens is by magically selected and the owner of this token proposes a block. End of phase one. Phase two now starts. Let's say 1,000 tokens are randomly selected in the network. Their owners, they form a committee

who agrees on the block proposed by the first person. And they digitally sign that their agreement on the block has been reached. So that's how it works. And so you're going to say, by the way, why do you want to have two phases? Because when you select a token at random, I mean, we all know that there are some percentage of bad actors in society. And I don't see why a blockchain should be deprived of them. They have them too, and they own some token too.

So let's say even if perhaps 1% of people are bad actors, it may be an exaggeration, but let's say that even if we live in a very dangerous society, maybe 10% of the people are bad actors. If you select a random person to propose a block, one in 10 times a random person can be a bad guy. And what can he do? He can tell you the block is X.

He can tell me the block is Y and can tell somebody else the block is Z, thereby generating confusion, right? You don't have a chain anymore. You have something ill-defined. So that's why you need the second phase because now you select somehow, think of it like a committee of a thousand people.

Now, if 10% are bad people and you've selected them a thousand, the probability that you have a dishonest majority among these thousand, if you do the computation, is extremely small. so you are almost guaranteed that there is you know a an honest majority in this 1 000 randomly selected people and therefore if say you see that 700 of these people digitally signed the next block is x then you know that the next block is x okay that's how it works so one person is randomly

selected and to propose a block and a thousand people are randomly selected to agree on the block Now, the next question is going to be, say, gee, but in Algorand, who the hell selects this committee? Because the power of the security of Algorand comes from the fact that in this 1,000 randomly selected people, there is an honest majority. But who selects this 1,000 people? Certainly, Anthony, it's no secret that I don't select it, nor do we have all the users of Algorand give a big party where they try to select collectively a thousand people who then in turn select the block.

We can talk and talk and never finish this task. So the strange thing is that in Algorand, these 1,000 people select themselves. Now, if you say, gee, if 1,000 people select themselves, that is a big idea, that's a terrible idea, right? Because if people can select themselves, but people will select themselves all the time and be part on any committee, but not so fast, because in order to select themselves, people must essentially win an individual cryptographically fair lottery, and that's where verifiable

random function come in and somehow 15 years later to say essentially i have you have each one of us has a very simple lottery that you can run in the purpose of your computer and if you win you are part of the committee and you can say your opinion about the block up or down if you don't win whatever you say about the block nobody cares about your opinion So the idea is that if you win, you actually get a winning ticket, namely a mathematical proof that you are part of this committee, and therefore what you do, you propagate through the network the proof that you're winning ticket proving that you're part of this committee

and simultaneously your opinion up or down about the block. That's how Algorand works. Now, let me argue that this actually is both scalable, decentralized, and secure. So first of all, about scalability. How much does it take to run this lottery? And the answer is a microsecond. So that is very fast. In a microsecond, you know if you won or not.

And if you won, you are one of the 1,000 winners. You just propagate your opinion about the block. And that's it. That scales. Now let's argue that this is decentralized. Notice, Anthony, that the winners are not just a thousand random people every single time for every single block. It's not that I put in charge or Algorand put in charge a thousand people who are in charge of figuring out the next block time and over and over and over again. It's just this block, one thousand people, next block, a different one thousand people randomly selected.

So more distributed than this, you cannot get. and now when you talk about security well assuming that i am a bad and very powerful guy i am so powerful that i can corrupt any one thousand people around the world i want okay i would love to correct corrupt the one thousand people committee for the next block but guess what i have a problem i don't know who this committee is because they are the winners of of a lottery that has not even that i don't know about it so i don't know whom i should corrupt whether i should corrupt you or some lady in paris or another guy in thailand i have no idea however once the committee winners come up and say here is my winning ticket and here is my

opinion about the block and they propagate the despair now i know who they are and i can corrupt them immediately, given my great powers. However, what do I gain by corrupting at that point? It's a bit too late. Whatever they had to say, they already said it, and their winning ticket and opinion about the bloc are virally propagated across the network. And as powerful as I am, I don't have the power to suck out from the network their virally propagated messages, no more than, say, the U.S. government can take out from the network messages verbally propagated, say, by Wikileaks.

So the system is secure because beforehand I do not know whom I should corrupt and after the facts, it's too late to corrupt them. Skrt, skrt! Want to know who has the best URL? Crypto.com. That's right, Crypto.com. They're a crypto platform with one goal.

Motherf***ing mass adoption. That's why we're all here. We're trying to get crypto in every wallet. Crypto.com is helping people do that through buying, earning, lending, and card payment. Everything you could want at Crypto.com. Go help your boy out. Tell him Pomp sent you. Download the app or visit Crypto.com.

Pomp's got you, always. Ever wanted to get into mining and didn't know how? Don't worry, your boy Pomp's got you. Everybody got some electricity and Wi-Fi. All you got to do is go to CoinMine.com. you buy a coin mine it's like an xbox or a playstation that helps you turn your electricity into bitcoin that's right you purchase it it shows up at your doorstep you pull it out of the box you plug it in connect to your wi-fi five minutes or less you're mining bitcoin all you have to do

is control it from the mobile app they provide and then you receive over-the-air updates that add new coins and new features on a consistent basis kind of like how tesla does over-the-air updates and updates the car software just your update in your coin mine consumer mining made easy that's right go to coinmine.com tell them pomp set you and thank me later what when you look out at um the other blockchains that are out there and somebody says to you well you've got bitcoin that's got kind of the longest history you've got another a number of other blockchains that exist, why is Algorand better or why go and spend your time building something new rather than working on one of the existing projects?

How do you kind of think through on a framework basis, spending your time building something new versus trying to improve one of the existing blockchains? Well, first of all, in our ecosystem, in Algorand, Bitcoin is going to play a role, right? But the architecture is such that it does not allow you to do all kinds of things and other sophisticated transactions as well as you want to do it. First of all, it produces a block in every 10 minutes. And if you want to make sure that there is no fork, you must wait for six blocks. So six times 10 minutes times six is an hour. So you don't have the speed to have, you know, as gold is great, but, you know, the world is a big place.

And if you want to transact, seven transactions per second is not going to cut it. So you need to have a different technology. And the other technologies that are out there are very centralized. So if you – there is a technology which is called the delegated proof of stake, which essentially means that you find, you know, some 21 people who we consider them honest and we hope they will continue to be honest. And you entrust them to select the next block for a long time. And is this decentralized? I claim it is not, right? So I think that if you believe that decentralization is crucial, you need to have a different approach.

And that is somehow the approach we are going to do it. And by the way, we are focusing actually on democratization of finance. And Algorand is the first permissionless blockchain, which is a member of ISDA. And so we want to make, develop financial instruments that can be used with great ease by financial institutions and really the common man, right? That I think is really what we need. And let me give you one example. One is a very simple, but yet up to now unsolved problem. Like if you want to run a Dutch auction, the Algon Foundation has actually auctioned off at launch just five weeks ago 25 million tokens with a Dutch auction on-chain.

So everybody, thousands of bidders all across the world posted their bids. You can see your bids on-chain, great transparency. You can see also the bids of your competitors, and everybody realizes when a fair price is reached, when you have really a price, the first price that clears the auction. So Dutch auctions are not a novelty, right? But right now, when are they run? Well, every government, including ours, right, the Fed, uses Dutch auction to auction off, you know, bonds, U.S. bonds. But usually the people who participate to these auctions are, you know, very few in numbers and pretty much the same. You know, Goldman Sachs, JP Morgan and so on and so forth.

And so in some sense, is it fair that they really snatch all these bonds and then they sell it to all of us later at a higher price? I don't think so. But you need technology because it's very easy in a single room where the players convene to see what everybody sees the price goes down and everybody sees the bids coming in. But if you want to do a Dutch auction on a massive scale, then you really need a very decentralized technology. And decentralization is actually crucial because if the auctions were somehow organized, say, by one or two or a few mining pools or a few centers of power, then I could, in principle, I could corrupt them not to put bids above mine and snatch, you know, whatever is auctioned for a very low price. and nobody even could notice that there has been a foul play because these people could always deny not to have seen any higher bids. So I think that the ability to run the Dutch auction on chain

with transparency, decentralization on a massive scale bodes well if you want to tokenize an asset. Maybe you're a built constructor and you want not to sell your new office building somehow to a few billionaires who specialize in real estate because otherwise they can make your price their price what you want to do is you want to allow for fractional ownership and you want to sell it as a dutch auction allowing me or other people from uh even from abroad to bid somehow ten thousand dollars or whatever to in the hope to get a small piece of a building so the bidders

that they can directly access the auction are very happy because this is the first time that this opportunity is given to them and you as the owner of the building are super happy because that is the time in which you are going to really realize the value of whatever you have created right so that's one aspect more sophisticated things we are going to add to our platform now So essentially, atomic swaps, we call them actually atomic square swaps. And these are atomic swaps, which are really atomic. So let me break it up. Maybe in a swap, you have an asset that I want, and I have an asset that you want.

Maybe you have money, and I have a building, and we want to swap, or an apartment, right, or something like this. In a blockchain, I can transfer my asset to you very quickly. In Algorand, we produce a block every 4.5 seconds. So in 4.5 seconds, my asset is transferred to you right away. However, after I do so, then I have to say, Anthony, could you please so kind to now put on the chain and transfer to me the assets that I want? So when you want to do things simultaneously,

it's much more complicated. And another blockchain have atomic swaps, which were not atomic at all. They were multiple steps. And very often think of it like a baby step in which I take a little step because I'm afraid you're going to cheat me. You make a very small step

because you're afraid I'm going to cheat you. One step at a time, time locks, hash locks, a lot of complication to prevent that they can be cheating. We succeeded in doing it in a single transaction. So if a transaction gets on chain, we swapped. If the single transaction doesn't get on chain, I'm free to sell the asset to somebody else and same for you. So these are tokenization is one example, which I think I believe the ecosystem needed that. And to have atomic square swaps is another example that I felt that the ecosystem would be enriched if we have this.

So essentially, if you ask my, among all various applications that I have for Algorand, the democratization of finance is one. And you may think of it like Wall Street 2.0 or Wall Street at every corner. You don't need to go. You can have, you know, all these sophisticated transactions available ubiquitously to everybody. I think that is that is the vision I have for Algorand. Got it. And so what's the what's like kind of the next two or three milestones that you're trying to hit here as you move forward towards that vision? What are the things you're looking forward to? So, well, one is a way to do name token and sub chains in a way that makes much more sense. One is smart contracts, which are very nimble and not the way they occur in other chains.

And another thing, by the way, is something that you don't think of right away, but is a way to somehow compactify the chain. Because as the blockchain keeps on evolving, somehow the size of the chain becomes huge. And at this point, very few people are able to store the chain. So if a chain is a terabyte, right, and you say, I'd like to join the blockchain and say, yeah, please join. I'd like to contribute to generating the new block because in a decentralized and really democratic way, everybody should be able to help in generating the new block. They say, well, download a terabyte of chain and then help us. You go, well, download a terabyte of chain isn't that easy. and it's going to take three months

and then I have to download a little bit more because I have to download whatever the chain has gone to during these three months. So I think that storage of the chain is another problem that needs, it starts screaming for solutions very quickly. So I think that is another thing that we are going to do and we have a system called Vault

that allows you to onboarding new people to grow the chain very fast by giving you a very compact piece of information that allows you to grow the chain with the same power as somebody was there from the very beginning and has been storing the chain all along. So you receive a compact piece of information

and you're ready to go. And by the way, you not only receive a compact piece of information, but also a mathematical proof, very easy and compact too, that the piece of information that you got is actually correct. Because otherwise you have to worry about it, right?

And so that's, I think, what we need in the chain. Got it. And so as you look out, what do you think is the most important company in crypto other than Algorand? Well, if you ask me, I think I have to say it's Bitcoin. Absolutely. I mean, that was the main innovator. That is the one that really plotted the vision for all of us. I mean, I have a tremendous respect for Mr. or Mrs. or Ben Acamoros, and I think that is the one that we should build on and improve upon.

For sure. What's the one regulation that you would change or improve if you could? Well, to tell you the truth, I think that we all love regulation and clarity on regulation, right? I think, you know, I don't mind regulation at all. I think regulation helps the market, but we need the clarity. Somehow the Algorand Foundation launched it from Singapore because Singapore had a very advanced legislation and gave us a complete set of requirements

that to be met to be a currency. And we checked all the boxes and therefore we launched it from Singapore. In the United States, regrettably, we are not there yet. so cryptocurrency are not barred but the regulation is not complete once in a while we know if you do x then you are a security okay we don't do x by the way if you do this other thing you are also security we don't do that thing either but we do not have a complete list of whatever we need to do and that is uh is problematic because i really believe that blockchains are There are very sophisticated technological products done right.

And the United States is a marvelous place, and particularly Boston, the ecosystem, MIT, Harvard, BU, and all the other 20 universities we have around here to do it right. So it's a bit of pity, and I really hope that the situation changes and we are going to have a clear clarity in the regulatory environment in the U.S. Got it. What is your most controversial thought in crypto? I really think that somehow the fact that you really have to have what is considered a little bit too libertarian is the fact that I really believe that we should lower the technology bar and the computational effort so that everybody can participate. I really think that this is really, in my opinion, what we should do.

I think that, you know, we cannot live in a system in which everything is central, essential and central. And then very often, you know, people abuse of their power, whether they intended to or somehow it happened to be. Somehow distributed systems are inherently fairer and they are inherently more secure. is enough of excusing that, oh, we messed up with our customers, we abused of our centralized power, we promised not to do it again, and then, you know, there is going to be a next time, and then there is going to be another next time. I think we need the technology, but with the right technology,

you really can allow to have this universal participation, which really is a country like ours, certainly something we should aspire to. What's the most important book you've ever read? ah the most important book i ever read i must say is uh um euclid's uh book on on geometry okay i think that was really what what fascinated me it brought him into the field uh and you know i must i must tell you because i didn't get into this i was convinced that i wanted to be a humanist and i attended a classical high school and uh so i learned about philosophy aesthetics art latin greek and everything else and um but at some point

maybe because it was greek all of a sudden they sneaked into the curriculum euclidean geometry okay i must say i was fascinated by the fact that actually you could prove something from basic principles. And if whatever was true in your mind, you didn't even need to go out and measure it in the real world because you already knew what it was going to be. I thought to say that, gee, that is a fantastic way, the power of thought and the power of clear thinking. I think that was my book. I love that answer. That might be one of the best answers we've ever had. Before I finish up and let you ask me a question to end it, we always talk about aliens and given your uh your history and and uh frankly all the work that you've done on the um cryptography and

encryption side i'm super interested in your answer uh believer in aliens or no i believe that um is a very poetic uh part or and both a poetic and and uh and uh and and and religious um thought of it they really coincide here i think that you know life cannot be contained and life always wins. And so I believe that we are really part of the big world of life. And I'm sure that there are other forms of life as well. And we really hope, by the way,

that as we should be, that we are all respective of all forms of life, evolved or not. And because we never know, We may not be as evolved as we may hope to be, right? And so I think that, you know, we are not alone and we've never been. I love that answer. That's a great answer.

What one question do you have for me to finish this up? Well, Anthony, you know, you are really an expert here. You have been a great shepherd of opinion. You're creating a marketplace of ideas here. So in crypto, how do you think the crypto market evolves? What is the way it evolves according to you? Yeah, I think that there's two main investment pieces that I've personally held pretty much from the beginning. One is that Bitcoin is a very interesting and valuable store of value.

And the idea behind that is really that people trust algorithms in almost every aspect of their life. And so the idea of trusting an algorithm or software with your wealth, at some point in the future is going to happen. And I think that Bitcoin is probably the best chance that we've seen so far for that to be pervasive globally. So that was kind of investment thesis one. And then two, probably a little bit more related to Algorand, is that every stock, bond, currency and commodity would eventually be digitized. So this idea that we were going to change the way that we settled transactions and govern transactions on a global basis, I think a lot of people look at blockchain and they're kind of caught up in the, I'll call it 1.0 applications, right? the, oh, I can use a blockchain to do X or Y. But to me, the really big value creation is if you can disrupt the way that transactions are settled across multiple industries on

a global basis. And so if you think of those units of value or units of account for stocks, bonds, currencies, and commodities, if we are able to change the way that market participants settle those transactions, I think that's a really, really big disruption to the world that we know today. And that's the part where, you know, I'm cautiously optimistic, meaning that I think there's a lot of people working on it. I think there's a lot of people who are working on like 1.0, 2.0 type solutions. There is likely to only be, you know, call it three to five players today that end up surviving over the next 20 to 30 years. But I think that if you can get behind one of those three to five survivors, they're going to be worth a lot of money. And I think

they're going to be pretty disruptive to the global ecosystem. So I'm super excited about it. Thank you very much, Anthony. I like your vision. Thanks. Absolutely. Well, listen, Silvio, you've spent literally almost the last 30 years of your life working on a number of different aspects of cryptography, encryption, et cetera, that myself and everyone else listening to this has benefited from. So from all of them, just one, thank you for all the work that you've put in. I think that you'll probably never get the credit that you deserve um but but from all of us definitely thank you uh and then thank you again for taking the time to record this it's been super fun um i really appreciate the explanation of

algorand uh and i hope that we can do it again in the future and kind of get caught up on updates as you guys can continue progressing thank you very much anthony it's been a pleasure talking to you and to your audience hey everyone pop here if you like this episode of off the chain and want to help us take crypto to the top of the apple spotify and other podcast charts please do us a favor and rate review and subscribe to review simply go to the off the chain homepage scroll down until you see the five blank stars taking 15 seconds to fill those stars in and leave a quick review goes a long way in helping us take the entire crypto ecosystem to the top of the charts i appreciate you listening and see you next time on off the chain