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Special thanks to Vlad Zamfir for his work developing many of the ideas behind prediction markets for content curation.
For the past six years, people have been searching to try to find those elusive applications for blockchain technology that could finally break out into the mainstream. As for cryptocurrencies, the applications are already largely known – although of course it remains to be seen how well they can retain their advantages as traditional payment systems continue to become more efficient. But what about smart contracts and cryptocurrencies 2.0? One way we can go is to simply look at the areas in which legal contracts are used today, and see where we can increase efficiency by “intelligentizing” as many of these contracts as possible. However, there is another way and that is Peter Thiel ian Zero to one Approach: See if these tools can be used to create industries that do not currently exist. So, let’s take a detour down this road, and see some of the more interesting and underappreciated applications that smart contracts can provide.
Hashcash meets Proof of Stake
Although proof of work is known today primarily for its function in blockchain consensus algorithms, its original function was actually something entirely different. The first major use of proof of work was that of Adam Back Hash cash, a protocol that attempts to combat spam by making it more expensive to create spam emails. Proof of Stake today is similarly known for its applications in blockchain consensus, the theory being that because of the modern way Proof of Stake works – allowing users Put to the test Large amounts of economic resources for security without, in the normal case, Actually spend them – would likely be considerably more efficient. This leads to an interesting question: Can we apply these advantages to create a more efficient version of Hashcash using Proof of Stake as well?
Let’s start by describing the problem. The basic principle behind Hashcash is based on the idea that email today tends to fall into two categories: solicited (“ham”) email, which people spend a great deal of effort writing and which people derive high value from reading, and spam. (“Spam”), which people typically put much less effort into writing e-mail than people derive from negative Value amount of reading. Hence, the theory goes, by attaching a small mandatory cost to each email sent, “pork” could pass through only a slight additional burden, while “spam” would become completely unprofitable. This “cost” is paid in the form of electricity and computational effort used to solve a mathematical puzzle that can be quickly verified by the recipient’s client before the email is shown to the recipient.
The problem with this approach is threefold. First, spammers may simply switch to a strategy of putting a little more effort into each email (for example, spending five seconds of human labor per message to increase the likelihood of catching the reader’s attention or bypassing spam filters), and the threshold for computational work. This would be necessary to actually stop the majority of spam and would be very large. Second, spammers are more professional and have better access to specialized computers that can solve these computational puzzles quickly and inexpensively, so what might cost five cents to the average user may be only a tenth of a cent to the spammer. Third like this The now famous checklist The listing of drawbacks in popular proposed solutions to spam suggests that it is highly desirable to have a system where “sending email should be free.”
So, here’s the verification alternative. When you send email, you don’t need to calculate an expensive mathematical puzzle; Instead, send a transaction to the blockchain which creates a contract containing a certain amount of money as a security deposit. As part of the email, send a private key to the recipient, which the recipient can provide in the contract to destroy the deposit (or donate it to a united charity) If they want. If the deposit is not destroyed for a number of days, it will be refunded to the sender. Note that there would be no benefit to the recipient in destroying the deposit – their only motive for doing so would be pure spite. As a result, we get an asymmetry: the average cost of sending an email to ordinary people will be small, because the recipient will only click “Report spam” in the rare case that they They are considered malicious, but the average cost to spammers will be very high indeed – and the inconsistency of specialized hardware will not help spammers at all.
One can see deposits as large as $1, and one can even adopt a tiered scheme: senders can send any deposits they want above the minimum, but Notification level What the recipient sees depends on the exact amount. if it was 1, then some phone notifications. If the amount is $500, their phone will ring at maximum volume, overriding all other settings — but the sender better be prepared to pay the price if the recipient deems the sender’s intrusion unwarranted.
One can create more advanced versions of this scheme that do not require sending a transaction to create a new deposit for each email; One can imagine a scheme in which the sender sends many keys to destroy portions of the same collateral amount, along with signatures indicating that these keys are valid, and the recipients propagate the signatures (but not the keys!) to a Whisper-like channel that allows them to sample quickly and ensure that a given deposit is not “oversubscribed” with destroy keys (one subtle mechanism for doing this is to treat only signatures with an index from 1 to N as valid, and adding a rule that two signatures with the same index can be sent To destroy the entire deposit with 10% transferred to the sender, therefore, one can be fairly certain that there are at most N signatures for this deposit). This will reduce your transaction load to approximately one transaction per email sender per year. However, smart contracts provide almost endless scope for creativity in refining the details.
Prediction markets and Reddit
One of the biggest debates in online communities like Reddit is the question of how justified centralized moderation is. One view is that the power of the Internet itself comes in large part from its decentralized, egalitarian nature, and the fact that no single party enjoys a higher layer of power than any other. Some people may be more influential than others, but (1) this is a difference of degree rather than a categorical distinction of class, and (2) influence is essentially audience choice. The other view is that without central moderation, societies will inevitably collapse into mediocrity and chaos of an undesirable kind; Basically, Eternal Septemberso ultimately having a small number of users take charge, as is the case in many places, is a “necessary evil.”
In practice, moderation in community voting is very powerful, but the central point of view also seems to have some advantages. Although comments that the community doesn’t want to see are eventually rejected, the process takes time at least on Reddit specifically, and there is still an hour or two period during which that content stays on the front page. In a voting context, this is somewhat inevitable: if a barrage of downvotes can very quickly remove content from the front page, that itself becomes a tool of censorship for vocal minorities. However, what if there was a third way to solve this problem, using our preferred management mechanism: Prediction markets?
Prediction markets have so far been presented, including by me personally, mostly as a governance mechanism that could one day be used to make very broad decisions: whether or not to bail out banks, hire or fire a particular CEO, or enter In crisis. Special commercial agreement. However, it might be better to introduce prediction markets into the world as a tool for making decisions on a much smaller, non-threatening scale – perhaps on the scale of hundreds or tens of dollars, or even a dime.
One can imagine a design that works as follows. Instead of just voting, upvotes and downvotes on a comment on a hypothetical prediction, Reddit will be betting on a prediction market specific to that comment. The prediction market will be created by a mandatory bet that must be made by the person making the comment that his comment will be accepted as good; From there, upvotes and downvotes would change the “price” of the market depending on how people voted. In 99% of cases, the market will have no effect except that comments with high prices will appear more clearly on the interface; However, the remaining 1% of the time, the comment will be sent to the meta-moderation committee, which will vote on whether the comment is good or bad (or perhaps some point in between), and prediction market participants will be compensated appropriately based on how well they predict. for this result.
The meta-supervisory committee can be very large in principle; It is likely that every participant will be included in the community, provided that there is an effective anti-Sybil mechanism. Even a Oracle Shilling Coin can be used. It is also not necessary for 99% of the market to be eliminated; One could alternatively have a model where everyone Markets are processed, but only a small portion of the meta-moderation panel sees each individual post; The number of people must be large enough so that they practically cannot collude for the purpose of insider trading in prediction markets. Another alternative is for the size or probability of supervising to be proportional to the size of the market, such that the shares that receive the most attention are those where the risks are highest. In any case, this particular means of combining Reddit and cryptocurrencies seems a little more promising than simply incorporating the ability to express condolences on someone’s death. By tipping their relatives as little as three cents.
In principle, either of these models can be scaled up to some extent: imagine ads whose maintenance costs are more inconvenient for viewers, or a decentralized search engine where anyone can “plug in” their ranking algorithms by participating in prediction markets, and only make a profit if The algorithms were effective. Oleg Andreev 2 of 2 warranty The reputation system can be enhanced by a market predicting the probability of destroying a security deposit or delaying payment. Just remember that security deposits and prediction markets are fundamentally equivalent: A prediction market is a security deposit where anyone can challenge and demand a higher deposit in response, and anyone else can support the original depositor. A security deposit is a prediction market where a certain party is forced to make a mandatory bet..
This is perhaps a big part of the potential that crypto technology 2.0 can offer: turning the Internet into something simple Information technologies to Economic information technologies This could radically increase efficiency, at least in a few sectors of the digital economy, by using incentives to more intelligently extract the information we all possess. Anyway, let’s build these tools and find out.
