Bruce Schneier: Security, Trust, and Blockchain | RR: Understanding Crypto 6

Welcome back to another episode of our limited addition Crypto Series on the Rational Reminder Podcast, a weekly reality check about sensible investing and financial decision-making. Are cryptocurrencies and the associated technologies beneficial? Could they change the world for the better? There is a lot of controversy surrounding the use and application of cryptocurrencies and the associated technologies. Some say the innovation is ultimately useless while others think it is the answer to society’s problems. To help us unpack this complicated and hot-button topic is Bruce Schneier, an internationally-renowned security technologist, author, and educator. The focus of his work is the intersection of security, technology and people. Bruce also has an immense passion for educating people about cryptocurrencies. Examples of his well-known books include Liars and Outliers and Data and Goliath, which provide much-needed insight to readers about DeFi technologies and big monopolies. He also lectures in public policy at the Harvard Kennedy School and is a fellow at the Berkman Klein Center for Internet and Society. In our conversation, we discuss the debate surrounding cryptocurrencies such as privacy concerns of digital cash, what makes Bitcoin different from earlier digital currencies, aspects of public blockchain technology, the misapplications of crypto technology, the different forms and approaches to cryptocurrencies, and whether DeFi technologies can be beneficial to society, and what the biggest concerns are regarding cryptocurrencies. Join us today as we take a detailed look into the value and drawbacks of crypto and DeFi technology with Bruce Schneier!
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Books From Today’s Episode:
Liars and Outliers: Enabling the Trust that Society Needs to Thrive - amzn.to/3bSA0p7
Data and Goliath: The Hidden Battles to Collect Your Data and Control Your World - amzn.to/3yg701V
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Bruce Schneier - www.schneier.com/

[@williamcruz5869]

Best episode in this series so far.

[@andrejoseph8004]

Bruce is a legend. Kudos on getting him to do a sit down with you guys

[@aaronmathias6739]

Holy smokes!!!! One of the BEST discussions that I have come across. Keep up the good work, fellas!

[@piranhaa2]

Really amazed (but not totally surprised) that you were able to get Bruce Schneier on the show. Keep up the amazing work guys!

[@whatisheartscont2be645]

Very interesting.

[@bjohns347347]

Initially I found crypto interesting because although I think government is good and necessary, leaders sometimes make mistakes and catastrophes sometimes happen. Crypto could be a sort of useful version of digital gold that would enable people to hold a store of value during unstable financial episodes. Now I understand that the technology is inefficient and prone to vulnerabilities so it will probably never be a suitable store of value. VT is probably a better store of value anyways.

[@thomas6502]

Love Bruce. Thank you for this episode! That said, this (imo) was like watching a preacher, who once he/she gets started down a discussion path, gaining spiritual momentum--doesn't notice that it's not spiritual energy, its inertia. (Incidentally, I've heard this phenomenon is present with some academics as well... which may be why a sublime professor/mentor is so valuable compared to an icon/celebrity in that same space.) It may well be that everything he said is completely true... and yet I was left wondering if everyone else is just too stupid to notice that this thing they've been participating in has no value. It's a curious conundrum. Great discussion, and I really can't say thank you enough to you Ben and Cameron. Really appreciate the show!

[@Omar-et7sb]

The second part... So many people have been swept up on the fallacy of crypto/web3/blockchain/buzzword that they don't realize how stupid it all is.

[@alfredo8431]

Wasnt interested in crypto until I started watching these You guys are awesome

[@fib6156]

Some other specialists would argue that miners canto engage in fraud as there would still be the nodes checking the system

[@DC-nj8kv]

I like this guy. Confirmed every concept I had of the crypto/nft space.

[@len_maximilian]

Obviously haven't heard the episode yet (released 6 mins ago), but as I am so early, just wanted to say thanks for this special series. enjoyed it for many holidays now, sitting at the beach and listening to this podcast! THANK YOU!

[@ThomasSlaney]

Love the podcast, and another great interview. Just FYI, I’ve heard the key to KZbin algorithm success is to enable ads, as KZbin will only seriously promote videos they can make money on. I mention this because your content is so much better than other KZbin “investment advice” channels that get millions of views.

[@PullUppHD]

Papa smurf for president lmao

[@Dwightchang443]

perhaps asking Kevin olearly or Greg foss to come onto to the show ?

[@brybryBillions]

+1 Greg Foss

[@Dwightchang443]

@@brybryBillions they won't bring him on ..he's too controversial and tbh I think they're scared of him ..the guy is smart and has a fantastic resume ..he knows his finance

[@brybryBillions]

@@Dwightchang443 yea he does. It would be really interesting because of his former bond background. This would be a good discussion. Bruce here is clearly a pro government policy prof teaching at Kennedy school - he favors US government monopoly and some monopoly over others. Like Visa > Apple.

[@Dwightchang443]

@@brybryBillions and I think that's also they don't want olearly... olearly and foss have strong personalities and have strong onscreen presence and they'll likely overpower the hosts

[@brybryBillions]

@@Dwightchang443 You might like reading "The Sovereign Individual" ~ evolution of nation-states, and role of technology to enable a sovereign individual. Provide competition to monopoly governments and choice for citizens. The transition from "the Church" was interesting and correlates with information distribution like printing press. The argument is we can have a digital money to provide alternatives from Government monopolies today. Doesn't eliminate government, but keeps them in check.

[@alext1723]

15.3K persons are subscribed to this channel. 15.3K that are well informed of on the issues with crypto and nfts and won't fall to this trap. 7+ billions to go!

[@Nabeelco]

I think it's really interesting that most of his criticisms of crypto can just as easily be found in cash. "Oh you can lose it" you can lose cash, "Oh the transaction isn't reversible" you can't force someone to give you back your cash, "Oh it can be used for illegal activity" Cash is MUCH harder to trace and gets used in illegal activity FAR more often. There are legitimate issues and criticisms with crypto, but at least half his points were specious at best. These arguments always ring familiar to the same kind of debates people had about whether flight was possible, or space travel, or autonomous vehicles, etc, etc, etc...

[@chainringcalf]

What's with the redefinition of words to make a point? For example, in what way is a system where if you make a mistake you lose all your money "untrustworthy"? You can call it difficult, risky, or stupid, but "this thing executes exactly what you tell it no matter what" is the definition of a trustworthy system.

[@fiartruck0125]

It's neat to have simple definitions from first principles. But the hard work is meeting those definitions with people's actual expectations. Computer languages aren't ambiguous for *skilled* programmers. But for the *average* programmer, it occasionally *feels* a bit like a Monkey's Paw. (The Monkey's Paw also "does exactly what you tell it no matter what".) Now, yes, it isn't the *program* that was unreliable in those cases, it was the programming *process* that created the "bugs". But at the moment you can't have programs without programmers, so the distinction is arguably (on a systemic level, at least) immaterial, for the time being. You make a fair point though! In fact, I think understanding the distinction *is* important if we're thinking long-term because it hints at several possible solutions: AI code-checkers, to name an easy one.

[@hairychris444]

​@@fiartruck0125 Oh, it's even deeper. You need to trust the compiler/interpreter, the operating system, the hardware.... The trustworthy meaning is a bit different. If the system is 100% logically correct, coded properly, etc and I still could lose my entire savings on a forgotten password or mistyped address - or an address that was maliciously altered - I absolutely would not trust it. More to the point I would not trust myself to use it. Even if the code is trustworthy it interfaces with actual people who are not. Fundamentally 'code is law' does not map to how humans actually do things in real life. FWIW I have a CompSci degree, program computers (in a corporate environment), and the biggest problems are usually located between the seat & keyboard....

[@slyanover]

Libertarian crypto bros is one of the reasons I'm staying out of this.

[@titusandronicus5975]

Thank you for yet again an interesting interview. This made me think about a couple of things, however I have a few comments (some are minor, no particular order): 1. Bruce says email is decentralized, which is clearly wrong. It does not even conform to the characteristics of decentralization he lists at the beginning, for example - that everyone has a copy. Example: if I send you a bitcoin as a payment, but you claim otherwise, everyone can check that it's not the case (the transaction is saved on the blockchain). If you send me an email, no one can prove that it happened - only the sender, receiver and the server hold the contents. If email was decentralized, everyone would have to hold every email ever existed, but everyone knows the information is stored on a server of your company, email service provider like google etc. 2. He mixes the terms "immutable" and "write only". Indeed, blockchain is immutable, but the term "write only" does not make much sense from the technical point of view. What would that mean? That I cannot read the data on the blockchain? This is also not true. Maybe he means you cannot edit the data. And he mentions that a couple of times throughout the interview which is very bothering from a person that has a technical background. 3. He says that one coin is minted every 10 minutes. This is a minor comment, but it's not a fixed amount and it decreases with time, which limits the supply. 4. He claims that bitcoin is centralized to a large extent. I can agree, that large miners make it less decentralized, but mentioning centralized exchanges does not make much sense. How do they add to centralization if they do not provide additional computing power? It's like saying that USD is decentralized, because of stablecoins like USDC. 5. He says that whatever uses blockchain is worse. That's a broad and bold statement. I'm not arguing neither for nor against it. It's just a meaningless claim without any proof that I don't really want to hear from an academic professor. Broader adoption would invalidate that, but we'll see what the future brings :) 6. Bruce said "If energy got suddenly 10x cheaper, it would equally suddenly cost 10x the energy to mine a new bitcoin". I would say it's a deep lack of understanding of PoW consensus if I heard it from a layman. But here maybe it's just an oversimplification. 10x cheaper energy *might* incentivize miners to scale the mining process, but since the reward is constant for a particular block, that would make bitcoin 10x more expensive energy-wise. But that is just a (rather not probable) scenario. It doesn't account for scaling the computing power. To be clearer, if suddenly the computing power increases tenfold - the mining difficulty adjusts to account for that and keep the block time roughly constant. But energy is not equivalent to computing power. 7. He says PoW is wasteful and the computation is totally useless, which is not true. The computation secures the network. You cannot pass a fraudulent transaction through without recomputing the hash function. This should be especially important for a security expert and I must admit I'm disappointed it wasn't acknowledged. 8. Last thing he said that somehow bothers me is "There's no such thing as green crypto". This is also misleading. I agree, that the computation is necessary in PoW, bitcoin is as clean as the energy you put into it. You can use renewable energy sources to mine bitcoin in the same way you can charge your tesla with a gas generator. Disclaimer: I'm trying to stay as objective as possible. To me some of the claims (especially 5.) are very subjective. I'm an enthusiast of technology, a software developer and I hold bitcoin as part of my portfolio.

[@austingonzalez1148]

Regarding 7. Wasteful may still be an appropriate term if the security is costly and doesn't protect against the most common types of fraud. Which is true.

[@austingonzalez1148]

6. I'm not sure why you say might. Miners move across the globe in search of cheaper electricity. If electricity were cheaper they would scale. I don't know why this is improbable.

[@austingonzalez1148]

5. Is quite bold. But the onus is on Blockchains to find a scenario where the energy cost provides a benefit over the databases we use everyday. It could be decentralization, could be security, but I'm not aware of any industry that has radically adopted Blockchain bc it would more inefficient than what currently exists.

[@austingonzalez1148]

4. You can decentralize data while centralizing access

[@titusandronicus5975]

@@austingonzalez1148 4. but exchanges are separate from bitcoin; they do not make bitcoin centralized themselves

[@mac2105]

Matter of fact you can not only "not fix this" (electricity waste) but the waste also needs to go up as the line (BTC price) goes up to secure the now more valuable network (using the term "valueable" very loosely, this entire crypto thing is a complete shitshow).

[@QuaaludeCharlie]

Characteristics of sound money , You know where your Gold is .You cannot speak butterfly language with caterpillar people. Xx Put your Home and Portfolio into a Trust inside an LLC and then Blackrock will never own it. Digital Money on a Ledger is dystopian, draconian, disturbing digital slavery.If you care about any other issue more than this, it won't matter, because you'll succumb to everything. At Least Buy a Metal detector , Maybe you can feed your family. Crypto needs Electricity and the Net , it can Never be Honest Money on a Scale like Silver and Gold , Not Real Money If you care about any other issue more than this, it won't matter, because you'll succumb to everything. Any type of Digital Passport . The Queen has 0ver 5000 Years of Wealth , and None of it is on a Public Ledger . Abolishment of Digital programable Money . Blockchain was Made to Keep the Wealthy holding Real Wealth and The Undereducated thinking they have Something of Value and They Don't Digital Money , They can Shut that down There’s this dumb, naive, complacent culture that says That couldn’t happen.. WRONG. accepting complacency that in this time the population will doom themselves to their own digital enslavement Satoshi Nakamoto Means your Death , Your wealth is at the Whim of Others Blockchain was Made to Keep the Wealthy holding Wealth and The Undereducated Broke Do you want to be the reason your grandkids get Killed by Digital Programmable Money ? Digital Programmable Money . CBDC's like China , Everything like China for your descendants .your fault ? Digital Money is a threat to Mankind , The End Result is we die leaving the children with their Doom and Demise Commodities are one of the most attractive sectors to invest in at the moment.

[@siraatmedia8348]

Good arguments, but most of which have be rebuted before, and none of which change the investment thesis that this sector is being adopted at an exponential rate and the use cases and surrounding tech are growing similarly. Although its still speculative, the risk-to-reward perspective is probably the best long term bet of this decade. Not having some exposure of your portfolio to aleast to the blue chips of crypto would be a missed opportunity

[@rationalreminder]

Please elaborate on the exponential adoption and tech use cases. We have been searching for good information on those but have only found "fiat currency" conspiracy theories and anti-government sentiment. -Ben

[@BatisteBieler]

> this sector is being adopted at an exponential rate and the use cases and surrounding tech are growing similarly .. > blue chips of crypto Hilarious...

[@siraatmedia8348]

@@rationalreminder See Raoul Pal - Intro to the Exponential Age, he covers growth of active wallets about 30 mins in. One of best use cases I've come across is Chainlink and their incorporation of Data Signals into ETH contracts. Decentralised Storage / Computing seems promising aswell, and shifts away from the current monopoly of AWS / Azure

[@Dwightchang443]

@@rationalreminder i like how I can send a stablecoin across the globe cheaply and instantly. the receiver can either use it directly or convert to fiat; Kevin olearly uses this example often. olearly also talks about the potential (not rn) of using nfts to authenticate real goods.

[@NatWongsaroj]

​@@rationalreminder Ben, why not have reasonable voices from the other side like Lyn Alden on your show? She can definitely offer good counters to many points your guests made. Bruce wrote a textbook that I used in college but I disagree with a lot of what he said here.