What got me interested in blockchain?
It is not (just) about the money, and I only own a small amount of cryptocurrencies. The reason — besides being fascinated by the possibility of a decentralized world in the near future —is that I am attracted by the double-spending problem and how Satoshi Nakamoto solved it with Bitcoin.
In 2008, Satoshi published a paper entitled “Bitcoin: A Peer-to-Peer Electronic Cash System”. His (or their) primary aim: to establish a protocol where a system of agents are able to transfer digital money, directly and reliably, from one to another without the need for a any middleman or intermediaries. Before the birth of Bitcoin this was an unachievable goal for a long time, and the main obstacle was the double-spending problem. Bitcoin was the first peer-to-peer digital cash that solved this problem.
What is double-spending? Let’s say in a face-to-face transaction I give you a one dollar note. The moment you receive the money, I am no longer in possession of that one dollar note. Consequently, I become one dollar less rich. But what if I have the means to make an exact copy of that one dollar note in my garage? I will become as rich as I was before giving you the money! Obviously, this is something to be avoided in any proposal of money, for this will render such money meaningless and break the entire monetary system. This was why our ancestors chose things that are not easy to be forged (and rare) to be money, such as shells, diamonds, gold, silver etc. Later when we shifted to paper notes the banks have to make sure it is difficult for people to copy and print notes, and that no two notes in circulation could have the same serial number.
However, when the age of Internet arrived, the marginal cost of copying information is significantly lowered — it became practically free to duplicate and distribute digital information through the web. Here, intermediaries like the banks, PayPal etc. have to make sure that the transactions are not tampered with and money are not duplicated. We have to trust these middle man in handling our transactions, that is until Satoshi invented Bitcoin.
But there is a question people tend to gloss over when talking about the double-spending problem: WHY is the problem so hard in the first place?
This is where Physics comes in:
All classical information is replicable.
By classical information I mean the physical state of objects we encounter in our daily lives, for example, papers, rocks, balls, leaves, diamonds, gold, snowflakes etc. Yes you read it correctly, snowflakes. Due to their wonderfully complex structures, people always say that no two snowflakes are alike, and so it must be impossible to duplicate a snowflake. This is incorrect. Saying that something is unique is not the same as saying that it is not-copyable.
Given a snowflake in a certain yet-to-be-determined sate, we can always determine its state by performing measurements on it. Once we know its state to a sufficient accuracy (Physics does not put any limit on such accuracy) we can prepare the given state under suitable conditions and procedures. In technical terms, this is done by setting up the right Hamiltonian so that the system will evolve to the desired state.
The point here is that there is no law in Nature that prohibits us from duplicating the objects we see around us, or the bits inside a computer. This is why the double-spending problem is hard. Especially the bits inside a computer, as the cost of margin is close to zero.
This implies that whatever means we are using to prevent double-spending, the prevention is at a practical level. There is no in-principle prevention of double-spending. This is also why Blockchain technology is so interesting from my point of view — how a network of agents are able to maintain practically irreplicable bits of money, without any external, top-down coordinations.
This is the first part of a series of articles. In future articles I will (hopefully I have the time) explore many interesting topics between Blockchain and Physics, such as how Quantum Mechanics might provide an in-principle solution to the double-spending problem; time-stamping in Blockchain and clock synchronization in Relativity; (non-)fungibility of tokens and the concept of uniqueness in Physics.
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