Governance through Crowds, Consensus and P2P Networks

This session will continue with our building blocks of crypto infrastructure. Here we will explore governance regimes (protocols) that leverage Crowds, Consensus and Peer to Peer Networks.

Transcript

1. @ computational professor daniel martin katz danielmartinkatz.com BLOCKCHAIN, CRYPTOCURRENCY AND LAW professor nelson rosario GOVERNANCE THROUGH CROWDS, CONSENSUS AND P2P NETWORKS nelsonmrosario.com @ nelsonmrosario BLOCKCHAINLAWCLASS.COM
2. DANIEL MARTIN KATZ E D U | I L L I N O I S T E C H + S TA N F O R D C O D E X B LO G | C O M P U TAT I O N A L L E GA L S T U D I E S . C O M PAG E | DA N I E L M A R T I N K AT Z . C O M C O R P | L E X P R E D I C T. C O M NELSON ROSARIO B LO G | L AWO F C RY P TO C U R R E N C Y. C O M PAG E | N E L S O N M RO S A R I O . C O M F I R M | S M O L I N S K I RO S A R I O L AW P. C . BLOCKCHAINLAWCLASS.COM L A B | T H E L AW L A B . C O M E D U | I L L I N O I S T E C H - C H I C AG O K E N T L AW
3. BLOCKCHAINLAWCLASS.COM GOVERNANCE IS A CHALLENGING IN ANY SOCIO, POLITICAL OR TECHNO SYSTEM
4. BLOCKCHAINLAWCLASS.COM FOR CORPORATIONS, GOVERNMENTS, AND OTHER ORGANIZATIONS
5. BLOCKCHAINLAWCLASS.COM QUESTIONS OF HOW TO OPTIMALLY DESIGN AND DEPLOY VARIOUS INSTITUTIONAL FORMS
6. BLOCKCHAINLAWCLASS.COM HAS BEEN A SUBJECT OF INTEREST IN MANY FIELDS OF HUMAN ENDEAVOR …
8. BLOCKCHAINLAWCLASS.COM CRYPTO INFRASTRUCTURE OFFERS A UNIQUE GOVERNANCE STRUCTURE
9. BLOCKCHAINLAWCLASS.COM THAT NOVELLY CONFIGURES SOME KEY BUILDING BLOCKS
11. BLOCKCHAINLAWCLASS.COM AS A REMINDER FROM OUR LAST SESSION …
12. BLOCKCHAINLAWCLASS.COM WE REVIEWED THE FIRST THREE BUILDING BLOCKS OF CRYPTO INFRASTRUCTURE
13. SO NOW … THE BUILDING BLOCKS OF BLOCKCHAIN TECHNOLOGY (PART 2) BLOCKCHAINLAWCLASS.COM
14. LEDGERS CRYPTOGRAPHY NETWORKS + + CONSENSUS + } BLOCKCHAINLAWCLASS.COM BLOCKCHAIN APPLICATIONS = INCENTIVES + {
15. LEDGERS CRYPTOGRAPHY NETWORKS + + BLOCKCHAINLAWCLASS.COM LAST SESSION
16. THE BUILDING BLOCKS OF BLOCKCHAIN TECHNOLOGY BLOCKCHAINLAWCLASS.COM NETWORKS - ALLOWS US INTERACT / COMMUNICATE LEDGERS - LET US TRACK THINGS CRYPTOGRAPHY - HELPS US SECURE THINGS (*NOTE* NOTHING CAN EVER BE PERFECTLY SECURE)
17. LEDGERS CRYPTOGRAPHY NETWORKS + + BLOCKCHAINLAWCLASS.COM LAST SESSION THIS SESSION CONSENSUS INCENTIVES + +
18. LEDGERS CRYPTOGRAPHY NETWORKS + + CONSENSUS + } BLOCKCHAINLAWCLASS.COM BLOCKCHAIN APPLICATIONS = INCENTIVES + {
20. BLOCKCHAINLAWCLASS.COM LETS TAKE A BIT OF A DEEPER DIVE
21. BLOCKCHAINLAWCLASS.COM CONSENSUS JUST MEANS AGREEMENT
22. BLOCKCHAINLAWCLASS.COM BUT IN THIS CONTEXT IT TAKES ON A SLIGHTLY DIFFERENT MEANING …
23. BLOCKCHAINLAWCLASS.COM ALSO WE WILL USE A RETROFITTED DEFINITION OF ‘INCENTIVE’ AS WELL
24. THE BUILDING BLOCKS OF BLOCKCHAIN TECHNOLOGY BLOCKCHAINLAWCLASS.COM CONSENSUS - METHODOLOGY FOR REACHING A COORDINATED DECISION IN A GROUP DECISION MAKING PROCESS INCENTIVES - MECHANISM(S) FOR ENCOURAGING PARTICULAR FORMS OF PARTICIPATION IN SOCIO- TECHNICAL SYSTEMS
26. BLOCKCHAINLAWCLASS.COM CONSENSUS
27. BLOCKCHAINLAWCLASS.COM INSTITUTIONS (POLITICAL OR OTHERWISE) EXIST IN PART TO REACH CONSENSUS ON ONE OR MORE TOPICS
28. BLOCKCHAINLAWCLASS.COM NOTE: CONSENSUS NEED NOT IMPLY UNANIMITY AMONG THE PARTICIPANTS
29. BLOCKCHAINLAWCLASS.COM CONSENSUS COULD BE REACH BY RULE OF A DICTATOR OR SINGLE DECISION MAKING AUTHORITY
30. BLOCKCHAINLAWCLASS.COM WITHIN THE LAW WE USE CONSENSUS MECHANISMS TO MAKE DECISIONS
31. BLOCKCHAINLAWCLASS.COM WITHIN THE LAW WE USE VARIOUS CONSENSUS MECHANISMS TO MAKE DECISIONS
32. BLOCKCHAINLAWCLASS.COM THESE INCLUDE DIFFERENT FORMS OF INSTITUTIONAL DECISION MAKING PROTOCOLS SURROUND DIFFERENT FORMS OF DECISION MAKERS
34. BLOCKCHAINLAWCLASS.COM JUDGES JURIES ADMINISTRATORS LEGISLATORS EXECUTIVES ETC.
35. BLOCKCHAINLAWCLASS.COM BOTH DIRECT DEMOCRACY AND JURIES ATTEMPT TO LEVERAGE THE COLLECTIVE WISDOM OF THE GENERAL PUBLIC
36. BLOCKCHAINLAWCLASS.COM IN OTHER REALMS, THIS IS CALLED ‘CROWDSOURCING’
37. C R O W D S O U R C I N G I D E A I S T H AT T H E R E I S A L AT E N T ‘ W I S D O M O F C R O W D S ’ AVA I L A B L E T H AT M I G H T M ATC H O R E XC E E D T H E ‘ P E R F O R M A N C E ’ ( H O W E V E R D E F I N E D ) O F I N D I V I D UA L D E C I S I O N M A K E R
38. C R O W D S O U R C I N G C R O W D S O U R C I N G D O E S * N OT * R E F E R TO A S P E C I F I C T E C H N I Q U E O R A LG O R I T H M
39. C R O W D S O U R C I N G G E N E R A L LY R E F E R S TO A P R O C E S S O F AG G R E G AT I O N A N D / O R S E G M E N TAT I O N O F I N F O R M AT I O N S I G N A L S
40. S O H O W D O I CO N ST R U C T A C R O W D ?
41. I N T H E C L A S S I C CO N D O R C E T J U R Y S E T T I N G , M O D E L S TY P I CA L LY U S E P R E D I C T I O N S F R O M A L L PA RT I C I PA N T S
42. H O W E V E R , M O D E L S CA N A L S O TA K E I N TO ACCO U N T I N F O R M AT I O N ( S I G N A L S ) F R O M S O M E S U B S E T O F PA RT I C I PA N T S ( D E F I N E D U S I N G E I T H E R I N C LU S I O N R U L E S O R E XC LU S I O N R U L E S )
43. VA R I O U S S I G N A L TY P E S T H E I N P U T S I G N A L S CA N A S S U M E M A N Y D I F F E R E N T F O R M S I N C LU D I N G F R O M M O D E L S O R I N D I V I D UA L S O R S E N S O R S ( O R S O M E CA S E S E V E N OT H E R C R O W D S )
45. S O M E E X A M P L E S
46. CROWD OF INDIVIDUALS The most well know approach involves extracting ‘wisdom’ from crowds where crowds are built from individual people
47. CROWD OF SENSORS Note crowds need not be composed of humans but could be networked IT systems Decentralized Distributed Ledgers -or- Oracles -or- IOT sensors with Crowdsourcing Validation #Blockchain #InternetofThings #Crypto
48. #CRYPTO CROWD Thanks to Team Augur for the Shoutout
49. CRYPTO CROWDS? For most applications, crowdsourcing could produce *better* performance but the biggest challenge is the coordination costs
50. CRYPTO CROWDS? Sometimes getting even a second opinion in medicine (or any professional service) is very challenging — obtaining a 100th opinion is practically impossible
51. CRYPTO CROWDS? Among other things Crypto Infrastructure (Blockchain) might provide the mechanism necessary to lower the coordination costs in crowd construction
52. Random Forest Model Breiman, L.(2001). Random forests. Machine learning, 45(1), 5-32. Grow a set of differentiated trees through bagging and random substrates (predict using a consensus mechanism) C R O W D O F M O D E L S
53. CROWD PREDICTIONS Thanks to Team Augur for the Shoutout
54. C R O W D O F M O D E L S Each Poll has a slightly different methodology and historic performance (can be aggregated in various ways )
55. crowd of signals does not always yield success aggregation of similarly biased signals does not work
56. Poll Aggregation (note not always successful) C R O W D O F M O D E L S Each Poll has a slightly different methodology and historic performance (can be aggregated in various ways )
58. S O H O W D O I CO N ST R U C T A C R O W D ?
59. C R O W D S O U R C I N G T H E R E A R E VA R I O U S R U L E S T H AT M I G H T B E CO M B I N E D I N O R D E R TO ‘ CO N ST R U C T ’ A C R O W D
60. BLOCKCHAINLAWCLASS.COM THROUGH SOME PROCESS (PROTOCOL) WE WILL SEEK TO OBTAIN CONSENSUS REGARDING SOME EXTERNAL ‘TRUTH’
61. BLOCKCHAINLAWCLASS.COM IN CRYPTO (AND IN OTHER APPLICATIONS) CROWD CONSENSUS IS DERIVED FROM PEER TO PEER NETWORKS
62. BLOCKCHAINLAWCLASS.COM MOST CRYPTOCURRENCY BLOCKCHAINS ARE PEER TO PEER NETWORKS
63. BLOCKCHAINLAWCLASS.COM PEER-TO-PEER NETWORK
64. BLOCKCHAINLAWCLASS.COM PEER-TO-PEER NETWORKS EXAMPLES THE FIRST WAVE OF PEER-TO-PEER APPLICATIONS WERE FOCUSED ON FILE-SHARING NAPSTER BITTORRENT GROKSTER
65. BLOCKCHAINLAWCLASS.COM PEER-TO-PEER NETWORKS EXAMPLES THE SECOND WAVE OF PEER-TO-PEER APPLICATIONS ARE FOCUSED ON ALL SORTS OF TOPICS FINANCE COMPUTING FILE STORAGE
66. BLOCKCHAINLAWCLASS.COM NODES ON PEER TO PEER NETWORKS SERVE AS THE CROWD SOURCED VALIDATORS OF ‘TRUTH’ / ‘TRUST’
67. BLOCKCHAINLAWCLASS.COM HOW DOES THE BEHAVIOR OF INDIVIDUAL FACELESS, NAMELESS NODES IN A NETWORK YIELD ‘TRUST’ ?
68. BLOCKCHAINLAWCLASS.COM IN OTHER WORDS, HOW DOES TRUST EMERGE FROM THIS CROWD?
69. BLOCKCHAINLAWCLASS.COM AGAIN REMEMBER VARIOUS FORMS OF CRYPTO INFRASTRUCTURE OFFER NOVEL COMBINATIONS OF DIFFERENT INGREDIENTS
70. BLOCKCHAINLAWCLASS.COM THE FINAL INGREDIENT IS THE CLEVER IMPLEMENTATION OF ECONOMIC INCENTIVES
72. BLOCKCHAINLAWCLASS.COM MICRO INCENTIVES AND MACRO TRUST
73. BLOCKCHAINLAWCLASS.COM IN THE CASE OF CRYPTO CURRENCY THIS IS WHERE POW VS. POS ENTER THE PICTURE …
74. BLOCKCHAINLAWCLASS.COM PROOF OF WORK VS PROOF OF STAKE https://blockgeeks.com/guides/ proof-of-work-vs-proof-of-stake/
75. BLOCKCHAINLAWCLASS.COM WE WILL TALK MORE ABOUT ‘MINING’ IN THE NEXT MODULE …
76. BLOCKCHAINLAWCLASS.COM BUT THE *KEY* IDEA HERE IS THAT WE USE MICRO LEVEL ECONOMIC INCENTIVES
77. BLOCKCHAINLAWCLASS.COM IN ORDER TO BUILD MACRO LEVEL TRUST …
78. BLOCKCHAINLAWCLASS.COM FOR MORE MODULES VISIT
80. DANIEL MARTIN KATZ E D U | I L L I N O I S T E C H + S TA N F O R D C O D E X B LO G | C O M P U TAT I O N A L L E GA L S T U D I E S . C O M PAG E | DA N I E L M A R T I N K AT Z . C O M C O R P | L E X P R E D I C T. C O M NELSON ROSARIO B LO G | L AWO F C RY P TO C U R R E N C Y. C O M PAG E | N E L S O N M RO S A R I O . C O M F I R M | S M O L I N S K I RO S A R I O L AW P. C . BLOCKCHAINLAWCLASS.COM L A B | T H E L AW L A B . C O M E D U | I L L I N O I S T E C H - C H I C AG O K E N T L AW
81. @ computational professor daniel martin katz danielmartinkatz.com BLOCKCHAIN, CRYPTOCURRENCY AND LAW professor nelson rosario nelsonmrosario.com @ nelsonmrosario BLOCKCHAINLAWCLASS.COM GOVERNANCE THROUGH CROWDS, CONSENSUS AND P2P NETWORKS