Show HN: New Foundations for Permissionless Byzantine Consensus [pdf]
Hi HN,<p>Lead author here. The mods have graciously given me permission to announce some computer science work as a Show HN. It concerns permissionless Byzantine consensus – the notoriously difficult problem of how to securely replicate a state machine in the absence of a reliable identity system, which is the underpinning of Bitcoin and other decentralized ledgers.<p>By copying the signaling techniques used by animals, my co-author and I have achieved a 40,000x improvement in security and performance over the prior state of the art. This vindicates a prediction made 10 years ago by a Chinese researcher, one of the world&#x27;s rare dual-PhDs in biology and computer science, who believed that reverse-engineering animal-communication networks could produce a consensus-protocol breakthrough similar to the invention of public-key cryptography.<p>The parallel between asymmetric encryption and our discovery goes beyond the scale of the advancement. It actually concerns the mechanism that our protocol uses to protect itself from pseudo-spoofing or &quot;Sybil&quot; attacks, in which an entity uses sockpuppets to hijack consensus by casting extra votes. Existing technologies, like Proof-of-Work and Proof-of-Stake, are <i>symmetric</i> in the sense that they require correct agents to &quot;outbid&quot; the adversary by verifiably expending more money or computing power. If the adversary&#x27;s budget for an attack is greater than the security budget of honest protocol participants, then the entire system collapses.<p>Our paper introduces the first <i>asymmetric</i> system, Proof-of-Balance. It guarantees that honest protocol participants will remain in control of the consensus protocol, even if their security budget is many times smaller than the adversary&#x27;s budget for an attack. This verifiable asymmetry yields not only an exponential improvement in security, but also a corollary increase in performance: because the adversary&#x27;s maximum fraction of total voting power is tightly constrained, transactions can be processed on the open internet using speeds that were previously possible only on permissioned networks.<p>Asymmetry is nothing new in access control – e.g., a lock increases the security of a house by more than its purchase price, so homeowners aren&#x27;t forced to &quot;outbid&quot; burglars to keep their families safe. However, it has been ignored in resource-weighted consensus, because the field has been guided by the  &quot;handicap principle&quot; – which claims that the reliability of a signal depends on its verifiable cost to the signaler. Bitcoin enthusiasts often expressly invoke this principle to justify the waste inherent in Proof-of-Work, claiming that it is a universal law of nature, which applies with equal force to biology and computer science.<p>Not so. That is close to what biologists believed in the 1990s, when formal game-theoretic modeling first substantiated the concept of handicap-authenticated signaling. However, subsequent work revealed that it is actually the verifiable cost of <i>faking</i> a signal that determines whether information can be transmitted reliably. If the cost for a dishonest entity to spoof a signal is sufficiently high, then honest agents can transmit reliable signals at zero cost. This is known as cue-authenticated signaling, and it is the key to our protocol, KRNC (&quot;Key Retroactivity Network Consensus&quot;).<p>An intuitive example of the difference between handicap-authenticated signaling and cue-authenticated signaling is how male peacocks and tigers signal their fitness to potential mates. Male peacocks waste resources growing oversized tails, a handicap that proves their fitness based on the amount of self-inflicted punishment they can endure. Male tigers compete with one another to grow as large as possible to gain an edge in lethality, and their size happens to have the added bonus of providing a cue of their fitness.<p>We adapt the &quot;cue principle&quot; to obtain a novel solution to Goodhart&#x27;s Law, the adage that a measure ceases to be accurate once it becomes a target. Our rejoinder: if whatever you measure will become a target, measure the thing that is already a target. (The math confirms this.)<p>For human agents, the universal economic target is money, so that is what Proof-of-Balance uses to assign weights in a consensus protocol. Specifically, it uses mean bank-account balances during a specified window of time in the past – analogous to a &quot;hard fork&quot; of the data in the commercial banking system onto a new cryptographic protocol. Everyone with online banking can unlock their pro rata share of voting power for free. No buying stake, no wasting computing power.<p>The other major upside to this approach is that it eliminates the need to introduce a new currency, like Bitcoin. Instead, cryptographic weight functions in a similar way to a &quot;symmetallic standard,&quot; in which the base money is a meta-resource derived from gold and silver in a specified ratio. In KRNC, base money is a combination of an original fiat unit of account like a U.S. Dollar, plus the corresponding quantity of cryptographic &quot;weight&quot; needed to &quot;back&quot; that dollar.<p>The difference from the gold standard is that the &quot;backing&quot; isn&#x27;t entrusted to a Central Bank, which can renege on its word. It&#x27;s held by the actual users of the money, who transfer both the original dollar and its backing to one another in each transaction. This provides inflation-protection like Bitcoin, but it&#x27;s added to the world&#x27;s existing money. No pyramid-scheme like distribution, no risk of technological disruption destroying innocent people&#x27;s savings.<p>Formalizing the discoveries in this paper has been, by far, the hardest thing I&#x27;ve ever done. I&#x27;m nervous but excited to share the results with the world. I believe they can be used, not just to build faster distributed ledgers, but to protect humanity from the risk of a global monetary crisis. If anyone would like to get in touch, I&#x27;ll be around to answer questions in the comments, and my email is footnoted on the first page of the paper.<p>p.s. I&#x27;m patenting the technology as part of getting the protocol off the ground, but it&#x27;s not my goal to be the next Mark Zuckerburg or Larry Ellison. I got involved in this because I freed an innocent man from prison and wanted to see how much more good I could do in the world. If KRNC succeeds on the scale I think it could, I want to use the money for effective altruism and existential-risk reduction. It&#x27;s the right thing to do.