Joi Ito's Web

As Bitcoin continues to gain momentum and capture the interest of entrepreneurs, hackers, businesses, policymakers, and academics, we have decided to launch an Initiative at the MIT Media Lab, with participation from faculty and students from across the Institute, focusing on Bitcoin and more generally cryptocurrencies.

The Initiative will explore vital research topics that our faculty and students will engage in with the support and participation of some Media Lab member companies. The students running the MIT Bitcoin Club, the MIT Bitcoin Project, and the various events including the Bitcoin Expo have been a key part of getting this initiative started. The MIT Bitcoin Expo, which was hosted by MIT Bitcoin Club President Jonathan Harvey-Buschel and Wellesley Bitcoin Club President Jinglan Wang this year exemplified the kind of interscholastic collaboration and excitement over Bitcoin research that we want to see going forward.

The Media Lab has hired former White House senior advisor for mobile and data innovation, Brian Forde to lead the overall effort along with MIT CSAIL's Nickolai Zeldovich, a highly distinguished professor in security and distributed systems, who will be coordinating the research and academics. Jeremy Rubin, an undergraduate who helped run the MIT Bitcoin Project, will coordinate communications with the broader developer community and MIT students and will also work on research projects. More details on other MIT participants can be found in Brian's blog post.

The Initiative's focus will be heavily informed by the work done by the Bitcoin community, as well as by companies and forward-thinking policy makers. We hope to be able to contribute academically and technically to the field, following the great example set by Princeton and others. This is more about rallying interest within the MIT community than forming a general long-term solution for Bitcoin development and governance.

As I've said in a previous blog post and my talk at the MIT Bitcoin Expo, I do think there is a real need for a coordinating function around standards and policy. I believe that this effort must be multinational and multistakeholder. Continuing discussion with the Berkman Center at Harvard, Stanford Center for Internet and Society, and Oxford University will, we hope, contribute to the broader conversation on this matter.

See the post by Brian on the Media Lab blog for more information about the Initiative. We've set up an IRC channel irc.freenode.net/#mit-dci, where we will be hanging out. We look forward to your feedback and ideas for collaboration.

In the post that follows I'm trying to develop what I see to be strong analogues to another crucial period/turning point in the history of technology, but like all such comparisons, the differences are as illuminating as the similarities. I'm still not sure how far I should be stretching the metaphors, but it feels like we might be able to learn a lot about the future of Bitcoin from the history of the Internet. This is my first post about Bitcoin and I'm really looking more for reactions and new ideas than trying to prove a point. Feedback and links to things I should read would be greatly appreciated.

I'm fundamentally an Internet person -- my real business life started around the dawn of the Internet and for most of my adult life, I've been involved in building layers and pieces of the Internet, from helping start the first commercial Internet service provider in Japan to investing in Twitter and helping bring it to Japan. I've also served on the boards of the Open Source Initiative, the Internet Corporation for Names and Numbers (ICANN), The Mozilla Foundation, Public Knowledge, Electronic Privacy Information Center (EPIC), and been the CEO of Creative Commons. Given my experiences in the early days of the net, it's possible that I'm biased and everything new looks like the Internet.

Having said that, I believe that there are many parallels between the Internet and Bitcoin and there are many lessons from the Internet that can help provide guidance in thinking about Bitcoin and its future, but there are also some important differences.

The similarity is that Bitcoin is a transportation infrastructure that is decentralized, efficient and based on an open protocol. Instead of transferring packets of data over a dynamic network in contrast to the circuits and leased lines that preceded the Internet, Bitcoin's protocol, the blockchain, allows trust to be established between mutually distrusting parties in an efficient and decentralized way. Although you could argue that the ledger is "centralized", it's created through mechanical decentralized consensus.

The Internet has a root -- in other words, just because you use the Internet Protocol doesn't mean that you're necessarily part of the Internet. To be part of THE Internet, you have to agree to the names and numbers protocol and root servers that are administered by ICANN and its consensus process. You can use the Internet Protocol and make your own network, using your own rules for names and numbers, but then you're just a network and not The Internet.

Similarly, you can use the blockchain protocol to create alternative bitcoins or alt.coins. This allows you to innovate and use many of the technological benefits of Bitcoin, but you are no longer technically interoperable with Bitcoin and do not benefit from the network effect or the trust that Bitcoin has.

Also like the beginning of the Internet, there are competing ideas at each of the levels. AOL created a dialup network and really helped to popularize email. It eventually dumped its dialup network, its core business, but survived as an Internet service. Many people still have AOL email accounts.

With crypto-currencies, there are coins that don't connect to the "genesis block" of Bitcoin -- alt.coins that use fundamentally the same technology. There are alt.coins that use slightly different protocols and some that are fundamentally different.

On top of the coin layer, there are various services such as wallets, exchanges, service providers with varying levels of vertical integration -- some agnostic to whichever cryptocurrency ends up "winning" and some tightly linked. There are technologies and services being built on top of the infrastructure that use the network for fundamentally different things than transacting units of value, just as voice over IP used the same network in a very different way.

In the early days of the Internet, most online services were a combination of dialup and x.25 a competing packet switching protocol developed by Comité Consultatif International Téléphonique et Télégraphique, (CCITT), the predecessor to the International Telecom Union (ITU), a standards body that hangs off of the United Nations. Many services like The Source or CompuServe used x.25 before they started offering their services over the Internet.

I believe the first killer app for the Internet was email. On most of the early online services, you could only send email to other people on the same service. When Internet email came to these services, suddenly you could send email to anyone. This was quite amazing and notably, email is still one of the most important applications on the Internet.

As the Internet proliferated, the TCP/IP stack, free software that anyone could download for free and install on their computer to connect it to the Internet, was further developed and deployed. This allowed applications that ran on your computer to use the Internet to talk to other programs running on other computers. This created the machine-to-machine network. It was no longer just about typing text into a terminal window. The file transfer protocol (FTP) and later Gopher, a text-based browsing and downloading service popular before the web was invented, allowed you to download music and images and create a world wide web of content. Eventually, permissionless innovation on top of this open architecture gave birth to the World Wide Web, Napster, Amazon, eBay, Google and Skype.

I remember twenty years ago, giving a talk to advertising agencies, media companies and banks explaining how important and disruptive the Internet would be. Back then, there were satellite photos of the earth and a webcam pointing at a coffee pot on the Internet. Most people didn't have the imagination to see how the Internet would fundamentally disrupt commerce and media, because Amazon, eBay and Google hadn't been invented -- just email and Usenet-news. No one in these big companies believed that they had to learn anything about the Internet or that the Internet would affect their business -- I mostly got blank stares or snores.

Similarly, I believe that Bitcoin is the first "killer app" of The Blockchain as email was the killer app for the beginning of the Internet. We are in the process of inventing eBay, Amazon and Google. My hunch is that The Blockchain will be to banking, law and accountancy as The Internet was to media, commerce and advertising. It will lower costs, disintermediate many layers of business and reduce friction. As we know, one person's friction is another person's revenue.

One of the main things we worked on when I was on the board of ICANN was trying to keep the Internet from forking. There were many organizations that didn't agree with ICANN's policies or didn't like the US's excessive influence over the Internet. Our job was to listen to everyone and create an inclusive and consensus-based process so that people felt that the benefits of the network effect outweighed the energy and cost of dealing with this process. In general we succeeded. It helped that almost all of the founders and key technical minds and technical standards organizations that designed and ran the Internet worked together with ICANN. This interface between the policy makers and the technologists -- however painful -- was viewed as something that wasn't great but worked better than any of the other alternatives.

One question is whether there is an ICANN equivalent needed for Bitcoin. Is Bitcoin email and The Blockchain TCP/IP?

One argument about why it might not be the same is that ICANN fundamentally had to deal with the centralization caused by the name space problem created by domain names. Domain names are essential for the way we think the Internet works and you need a standards body to deal with the conflicts. The solutions to Bitcoin's centralization problems will look nothing like a domain name system (DNS), because although there is currently centralization in the form of mining pools and core development, the protocol is fundamentally designed to need decentralization to function at all. You could argue that the Internet requires a degree of decentralization, but it has so far survived its relationship with ICANN.

One other important function that ICANN provides is a way to discuss changes to the core technology. It also coordinates the policy conversation between the various stakeholders: the technology people, the users, business and governments. The registrars and registries were the main stakeholders since they ran the "business" that feeds ICANN and provides a lot of the infrastructure together with the ISPs.

For Bitcoin it's the miners -- the people and companies that do the computation required to secure the network by producing the cryptographically secure blockchain at the core of Bitcoin -- all in exchange for bitcoin rewards from the network itself. Any technical changes that the developers want to make to Bitcoin will not be adopted unless the miners adopt them, and the developers and the miners have different incentives. It's possible that the miners have some similarities to the registrars and registries, but they are fundamentally different in that they are not customer-facing and don't really care what you think.

As with ICANN, the users do matter and are key for the network effect value of Bitcoin, but without the miners the engine doesn't run. The miners aren't as easy to identify as the registrars and registries and it's unclear how the dynamics of incentives for the miners will develop with the value of bitcoin fluctuating, the difficulty of mining increasing and the transaction fees being market driven. It's possible that they will develop into a community with a user interface and a governance function, but they are mostly hidden and independent for a variety of reasons that are unlikely to change for now. Having said that, one of the first publicly traded Bitcoin companies is a miner.

The core developers are different as well. The founders of the Internet may have been slightly hippy-like, but they were mostly government-funded and fairly government-friendly. Cutting a deal with the Department of Commerce seemed like a pretty good idea to them at the time.

The core Bitcoin developers are cypherpunks who do what they do because they don't trust governments or the global banking system and are trying to build a distributed and autonomous system, one that is impervious to regulation and meddling by anyone at any time. At some level, Bitcoin was designed to not care what regulators think. The miners have an economic interest in Bitcoin having value, since that's what they're paid in, and they care about scale and the network effect, but the miners probably don't care if it's Bitcoin or an alt.coin that ends up winning, as long as their investments in hardware and plant don't disappear before they make a return on their investment.

Regulators clearly have an incentive to influence the rules of the network, but it's unclear whether the core developers really need to care what the regulators think. Having said that, without some sort of buy-in by regulators, it's unlikely to scale or have the mainstream impact that the Internet did.

Very much like the early days of the Internet, when we saw the power of Internet email but hadn't yet invented the Web, we are just imagining the potential uses of concepts such as crypto-equity and smart contracts ... to name just a few.

I believe it's possible that over-regulation could cause Bitcoin or the blockchain to never achieve its full potential and remain a feature of the side-economy, much in the same way that the Tor anonymizing system is extremely valuable to people who really need privacy but not really used by "normal people"... yet.

What helped make the Internet successful was the lack of regulation and the generally inclusive and permissionless nature of innovation. This was driven in large part by free and open source software and the venture capital community. The question I have is whether the fact that we're now talking about "money" and not "content," and that we seem to be innovating at a much higher speed (venture capital investment in Bitcoin is outpacing early Internet investments), the dialog in popular media is growing, and governments are very interested in Bitcoin makes this a completely different game. I think ideas like the five-year moratorium on Bitcoin regulation proposed by US Representative Steve Stockman are a good idea. We really have no idea what this whole thing is going to turn into, so a focus on dialog versus regulation is key.

I also believe that layer unbundling and innovation at each layer, assuming that the other layers will sort themselves out, is a good idea. In other words, exchanges and wallets that are coin-agnostic or experiments with colored coins, side chains and other innovations that are "unbundled" as much as possible allow the learnings and the systems created to survive regardless of exactly how the architecture turns out.

It feels a lot to me like when we were arguing over ethernet and token ring -- for the average user, it doesn't really matter which we end up with as long as in the end it's all interoperable. What's different is that there is more at stake and it's moving really fast, so the shape of failure and the cost of failure might be much more severe than when we were trying to figure out the Internet and a lot more people are watching.

This year's annual Edge question was "What do you think about machines that think?"

Here's my answer:

"You can't think about thinking without thinking about thinking about something". --Seymour Papert

What do I think about machines that think? It depends on what they're supposed to be thinking about. I am clearly in the camp of people who believe that AI and machine learning will contribute greatly to society. I expect that we'll find machines to be exceedingly good at things that we're not--things that involve massive amounts of data, speed, accuracy, reliability, obedience, computation, distributed networking and parallel processing.

The paradox is that at the same time we've developed machines that behave more and more like humans, we've developed educational systems that push children to think like computers and behave like robots. It turns out that for our society to scale and grow at the speed we now require, we need reliable, obedient, hardworking, physical and computational units. So we spend years converting sloppy, emotional, random, disobedient human beings into meat-based versions of robots. Luckily, mechanical and digital robots and computers will soon help reduce if not eliminate the need for people taught to behave like them.

We'll still need to overcome the fear and even disgust evoked when robot designs bring us closer and closer to the "uncanny valley," in which robots and things demonstrate almost-human qualities without quite reaching them. This is true for computer animation, zombies and even prosthetic hands. But we may be approaching the valley from both ends. If you've ever modified your voice to be understood by a voice-recognition system on the phone, you understand how, as humans, we can edge into the uncanny valley ourselves.

There are a number of theories about why we feel this revulsion, but I think it has something to with human beings feeling they're special--a kind of existential ego. This may have monotheistic roots. Right around the time Western factory workers were smashing robots with sledgehammers, Japanese workers were putting hats on the same robots in factories and giving them names. On April 7, 2003, Astro Boy, the Japanese robot character, was registered as a resident of the city of Niiza, Saitama.

If these anecdotes tell us anything, it's that animist religions may have less trouble dealing with the idea that maybe we're not really in charge. If nature is a complex system in which all things--humans, trees, stones, rivers and homes--are all animated in some way and all have their own spirits, then maybe it's okay that God doesn't really look like us or think like us or think that we're really that special.

So perhaps one of the most useful aspects of being alive in the period where we begin to ask this question is that it raises a larger question about the role of human consciousness. Human beings are part of a massively complex system--complex beyond our comprehension. Like the animate trees, stones, rivers and homes, maybe algorithms running on computers are just another part of this complex ecosystem.

As human beings we have evolved to have an ego and believe that there such a thing as a self, but mostly, that's a self-deception to allow each human unit to work within the parameters of evolutionary dynamics in a useful way. Perhaps the morality that emerges from it is a self-deception of sorts, as well. For all we know, we might just be living in a simulation where nothing really actually matters. It doesn't mean we shouldn't have ethics and good taste. I just think we can exercise our sense of responsibility in being part of a complex and interconnected system without having to rely on an argument that "I am special." As machines become an increasingly important part of these systems, their prominence will make human arguments about being special increasingly fraught. Maybe that's a good thing.

Perhaps what we think about machines that think doesn't really matter--they will "think" and the system will adapt. As with most complex systems, the outcome is mostly unpredictable. It is what it is and will be what it will be. Most of what we think is going to happen is probably hopelessly wrong and as we know from climate change, knowing that something is happening and doing something about it often have little in common.

That might sound extremely negative and defeatist, but I'm actually quite optimistic. I believe that the systems are quite adaptive and resilient and that whatever happens, beauty, happiness and fun will persist. Hopefully, human beings will have a role. My guess is that they will.

It turns out that we don't make great robots, but we're very good at doing random and creative things that would be impossibly complex--and probably a waste of resources--to code into a machine. Ideally, our educational system will evolve to more fully embrace our uniquely human strengths, rather than trying to shape us into second-rate machines. Human beings--though not necessarily our current form of consciousness and the linear philosophy around it--are quite good at transforming messiness and complexity into art, culture, and meaning. If we focus on what each of us is best at, I think that humans and machines will develop a wonderful yin-yang sort of relationship, with humans feeding off of the efficiency of our solid-state brethren, while they feed off of our messy, sloppy, emotional and creative bodies and brains.

We are descending not into chaos, as many believe, but into complexity. At the same time that the Internet connects everything outside of us into a vast, seemingly unmanageable system, we find an almost infinite amount of complexity as we dig deeper inside our own biology. Much as we're convinced that our brains run the show, all while our microbiomes alter our drives, desires, and behaviors to support their own reproduction and evolution, it may never be clear who's in charge--us, or our machines. But maybe we've done more damage by believing that humans are special than we possibly could by embracing a more humble relationship with the other creatures, objects, and machines around us.