[Recommend my two-volume book for more reading]:
BIT & COIN: Merging Digitality and Physicality
Losing fidelity in human information
Humanity faces a growing danger of losing fidelity in human information. What is even more alarming is that the loss increases with the scale of human information, rendering the entire digital humanity nonscalable.
A significant reason why human information loses fidelity with scale is precisely because of, not in spite of, the fact that digital data is loosely scalable.
We have already experienced human-generated junk data (for example, it costs nothing to send out a million copies of automated spam emails).
Now with AI, the situation is going to be much worse.
I believe that adding physicality to digital data is the most fundamental way to make information fidelity scalable without losing data scalability. In my book BIT & COIN: Merging Digitality and Physicality, I explored the concept of digitality and physicality.
Attestation and witnessing
With a scalable blockchain, we can record verifiable data either directly on-chain or indirectly anchored on-chain. We have previously discussed automated integrity and attestation, and concluded that a Layer-1 (L1) blockchain must be scalable in itself and, at the same time, based upon a physical human layer, which we can call Layer-0 (L0).
Now we come to the following question: exactly how does the blockchain L1 Interact with human layer L0?
This question is about “oracle” in the lingo of blockchain, but more fundamentally is a question about “witnessing”.
Proper oracle or witnessing is necessary to ensure trustless and decentralized data verification supported by smart contracts.
Economically incentivized truth
It is worthwhile to continue to explore the idea of using economic incentives to ensure the reliability of information. Implementing mechanisms like paywalls can create a system where individuals are more likely to provide truthful information. The rationale is that when people have to pay for access or contribute financially, they are less likely to spread falsehoods, as the economic cost acts as a deterrent. This concept aligns with Satoshi’s broader views on how economic principles can influence behavior and decision-making, particularly in the context of decentralized systems like Bitcoin.
The Optimistic Oracle designed by UMA, or Universal Market Access, is an example of such a protocol. It allows anyone to propose a data value in response to a request. If no one challenges this value within a set period, it’s accepted as true. If challenged, the dispute escalates to the Data Verification Mechanism (DVM), where UMA token holders vote to determine the correct value. This voting uses a commit-reveal mechanism to prevent manipulation, and voters are incentivized through staking, with rewards for correct votes and penalties for incorrect ones.
It is an interesting way to solve the oracle problem. Very different from Chainlink’s approach. UMA uses incentivized active voting, while Chainlink relies on passive decentralization.
In this sense, UMA is interesting because it introduces an economic element to witnessing.
I don’t know how well UMA is going to work, but it would at least be a very good experiment.
Scaling witnessing
The oracle problem fundamentally relates to attestation or witnessing.
Human society has always relied upon witnessing. Witnessing naturally works within the context of the community. The court system is an extension.
But traditional witnessing is fundamentally nonscalable.
Should witnessing be scaled?
If yes, how?
This is a hard question.
However, no matter how hard this question is philosophically, we practically have no choice now but to scale. The rise of AI has made the situation very clear. With the threat of AI, the option is not whether to scale or not, but whether to scale falsefully or to scale truthfully.
The last century has given us an experimentation of using media and social opinion to scale witnessing. The result is horrendous. Popularity has turned out to be an extremely unreliable “scaled witnessing”.
There should be no surprise there, considering the fallen human nature. Human history has proven that neither centralized dictatorship nor seemingly decentralized demagogue or anarchy is conducive to truth. (Both demagogue and anarchy are different forms of centralization in reality, albeit more deceptive than dictatorship.)
But this also means that it is increasingly important to find an alternative and more reliable way to scale witnessing.
The need for a scalable blockchain
Unfortunately, UMA is based on Ethereum, a nonscalable blockchain. Limited by the Ethereum blockchain’s low TPS and high cost, UMA can only target high-value data entries or attestations. The data proposed through the Optimistic Oracle must involve a kind of economic stake that provides enough room for contesting economics.
This would render UMA, at its best, an enhancement tool for the financial elites, rather than a broad solution to humanity.
If everything is automated, the same concept may also work for low-value data entries or attestations. In that case, the underlying blockchain needs to be highly scalable and efficient. Any blockchain that is neither scalable nor efficient is a wrong choice for broader applications.
The ideal choice for scaling witnessing in digital humanity is Bitcoin Satoshi Vision (BSV), which has unbounded scalability, extremely low transactional cost, and full smart contract capability (practically Turing complete).
[Recommend my two-volume book for more reading]:
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