cryptography, repercussion, registry, immutable, vendor, node, escrow, unforgeable, custodianship, attestation, portable, renege, collateralize, counterfeit
Institution Change Theory：制度变迁理论，演讲中多次提到的institutions就是指这一理论中的制度，提出者为道格拉斯·诺斯。他强调，技术的革新固然为经济增长注入了活力，但人们如果没有制度创新和制度变迁的冲动，并通过一系列制度（包括产权制度、法律制度、习俗、宗教等）把技术创新的成果巩固下来，那么人类社会长期经济增长和社会发展是不可设想的。总之，诺斯认为，在决定一个国家经济增长和社会发展方面，制度具有决定性的作用。
A is the grease that allows B's wheels to function：A是B有效运转的润滑剂，非常形象的表达。
cryptography：密码学，文中特指运用于区块链中的非对称加密算法。非对称加密算法需要两个密钥：公开密钥(private key)和私有密钥(public key)。公开密钥与私有密钥是一对，通过它们实现机密信息交换的基本过程是：甲方生成一对密钥并将其中的一把作为公开密钥向其它方公开；得到该公用密钥的乙方使用该密钥对机密信息进行加密后再发送给甲方；甲方再用自己保存的另一把私有密钥对加密后的信息进行解密。因为消除了最终用户交换密钥的需要，非对称加密算法的保密性非常好。
有不少technical details来不及反应，所以在涉及原理的地方，并没有严格的字对字翻译，但前提是我了解区块链的原理。比如smart contract是我加出来的，但她就是那个意思，比如escrow我是解释的，但她就是那个意思。
Economists have been exploring people's behavior for hundreds of years:how we make decisions,how we act individually and in groups,how we exchange value.They've studied the institutions that facilitate our trade,like legal systems,corporations,marketplaces.But there is a new, technological institutionthat will fundamentally change how we exchange value,and it's called the blockchain.
Now, that's a pretty bold statement,but if you take nothing else away from this talk,I actually want you to rememberthat while blockchain technology is relatively new,it's also a continuation of a very human story,and the story is this.As humans, we find waysto lower uncertainty about one anotherso that we can exchange value.
Now, one of the first people to really explore the ideaof institutions as a tool in economicsto lower our uncertainties about one anotherand be able to do tradewas the Nobel economist Douglass North.He passed away at the end of 2015,but North pioneered what's called "new institutional economics."And what he meant by institutions were really just formal ruleslike a constitution,and informal constraints, like bribery.These institutions are really the greasethat allow our economic wheels to function,and we can see this play out over the course of human history.
If we think back to when we were hunter-gatherer economies, we really just traded within our village structure. We had some informal constraints in place, but we enforced all of our trade with violence or socialrepercussions. As our societies grew more complex and our trade routes grew more distant, we built up more formal institutions, institutions like banks for currency,governments, corporations. These institutions helped us manage our trade as the uncertainty and the complexity grew, and our personal control was much lower. Eventually with the internet, we put these same institutions online. We built platform marketplaces like Amazon, eBay, Alibaba,just faster institutions that act as middlemen to facilitate human economic activity.
As Douglass North saw it,institutions are a tool to lower uncertaintyso that we can connect and exchange all kinds of value in society.And I believe we are now enteringa further and radical evolutionof how we interact and trade,because for the first time, we can lower uncertaintynot just with political and economic institutions,like our banks, our corporations, our governments,but we can do it with technology alone.
So what is the blockchain? Blockchain technology is a decentralized database that stores aregistryof assets and transactions across a peer-to-peer network. It's basically a public registry of who owns what and who transacts what. The transactions are secured throughcryptography, and over time, that transaction history gets locked in blocks of data that are then cryptographically linked together and secured. This creates animmutable,unforgeablerecord of all of the transactions across this network. This record is replicated on every computer that uses the network.
It's not an app. It's not a company. I think it's closest in description to something like Wikipedia. We can see everything on Wikipedia. It's a composite view that's constantly changing and being updated. We can also track those changes over time on Wikipedia, and we can create our own wikis, because at their core, they're just a data infrastructure. On Wikipedia, it's an open platform that stores words and images and the changes to that data over time. On the blockchain, you can think of it as an open infrastructure that stores many kinds of assets. It stores the history ofcustodianship, ownership and location for assets like the digital currency Bitcoin, other digital assets like a title of ownership of IP. It could be a certificate, a contract, real world objects, even personal identifiable information. There are of course other technical details to the blockchain, but at its core, that's how it works. It's this public registry that stores transactions in a network and is replicated so that it's very secure and hard to tamper with.
Which brings me to my pointof how blockchains lower uncertaintyand how they therefore promise to transform our economic systemsin radical ways.So uncertainty is kind of a big termin economics,but I want to go through three forms of itthat we face in almost all of our everyday transactions,where blockchains can play a role.We face uncertainties like not knowing who we're dealing with,not having visibility into a transactionand not having recourse if things go wrong.
So let's take the first example, not knowing who we're dealing with. Say I want to buy a used smartphone on eBay. The first thing I'm going to do is look up who I'm buying from. Are they a power user? Do they have great reviews and ratings, or do they have no profile at all? Reviews, ratings, checkmarks: these are theattestationsabout our identities that we cobble together todayand use to lower uncertainty about who we're dealing with. But the problem is they're very fragmented. Think about how many profiles you have. Blockchains allow for us to create an open, global platform on which to store any attestation about any individual from any source. This allows us to create a user-controlledportableidentity. More than a profile, it means you can selectively reveal the different attributes about you that help facilitate trade or interaction, for instance that a government issued you an ID, or that you're over 21, by revealing the cryptographic proof that these details exist and are signed off on. Having this kind of portable identity around the physical world and the digital world means we can do all kinds of human trade in a totally new way.
So I've talked about how blockchains could lower uncertainty in who we're dealing with.The second uncertainty that we often faceis just not having transparency into our interactions.Say you're going to send me that smartphone by mail.I want some degree of transparency.I want to know that the product I bought is the same one that arrives in the mailand that there's some record for how it got to me.This is true not just for electronics like smartphones,but for many kinds of goods and data,things like medicine, luxury goods,any kind of data or product that we don't want tampered with.
The problem in many companies, especially those that produce something complicated like a smartphone, is they're managing all of these differentvendorsacross a horizontal supply chain. All of these people that go into making a product, they don't have the same database. They don't use the same infrastructure, and so it becomes really hard to see transparently a product evolve over time.
Using the blockchain, we can create a shared reality across nontrusting entities. By this I mean all of thesenodesin the network do not need to know each other or trust each other, because they each have the ability to monitor and validate the chain for themselves. Think back to Wikipedia.It's a shared database, and even though it has multiple readers and multiple writers at the same time, it has one single truth. So we can create that using blockchains. We can create a decentralized database that has the same efficiency of a monopoly without actually creating that central authority. So all of these vendors, all sorts of companies, can interact using the same database without trusting one another. It means for consumers, we can have a lot more transparency. As a real-world object travels along, we can see its digital certificate or token move on the blockchain, adding value as it goes. This is a whole new world in terms of our visibility.
So I've talked about how blockchains can lower our uncertainties about identity and how they change what we mean about transparency in long distances and complex trades, like in a supply chain. The last uncertainty that we often face is one of the most open-ended, and it'sreneging.What if you don't send me the smartphone? Can I get my money back? Blockchains allow us to write code, binding contracts, between individuals and then guarantee that those contracts will bear out without a third party enforcer. So if we look at the smartphone example, you could think aboutescrow. You are financing that phone, but you don't need to release the funds until you can verify that all the conditions have been met. You got the phone.
I think this is one of the most exciting ways that blockchains lower our uncertainties, because it means to some degree we can collapse institutions and their enforcement. It means a lot of human economic activity can getcollateralizedand automated, and push a lot of human intervention to the edges, the places where information moves from the real world to the blockchain.
I think what would probably floor Douglass Northabout this use of technologyis the fact that the very thing that makes it work,the very thing that keeps the blockchain secure and verified,is our mutual distrust.So rather than all of our uncertaintiesslowing us downand requiring institutionslike banks, our governments, our corporations,we can actually harness all of that collective uncertaintyand use it to collaborate and exchange more and faster and more open.
Now, I don't want you to get the impression that the blockchain is the solution to everything, even though the media has said that it's going to end world poverty, it's also going to solve thecounterfeitdrug problem and potentially save the rainforest. The truth is, this technology is in its infancy, and we're going to need to see a lot of experiments take place and probably fail before we truly understand all of the use cases for our economy. But there are tons of people working on this, from financial institutions to technology companies, start-ups and universities. And one of the reasons is that it's not just an economic evolution. It's also an innovation in computer science.
Blockchains give us the technological capabilityof creating a record of human exchange,of exchange of currency,of all kinds of digital and physical assets,even of our own personal attributes,in a totally new way.So in some ways,they become a technological institutionthat has a lot of the benefitsof the traditional institutions we're used to using in society,but it does this in a decentralized way.It does this by converting a lot of our uncertaintiesinto certainties.
So I think we need to start preparing ourselves,because we are about to face a worldwhere distributed, autonomous institutionshave quite a significant role.