Rethink Trust 2018: Kristen Stone, Forks Eroding the Trust Infrastructure of Blockchain
Recording: Rethink Trust 2018: Kristen Stone, Forks Eroding the Trust Infrastructure of Blockchain
so before we kick it off today I would love all of your participation to just give a round of applause to everybody who had to put work and effort into making this conference as beautiful as it is today could we give them louder I [Applause] know it's the afternoon we can do better yes a huge thank you to everybody who put this conference on it is beautiful and it's really been an incredible day so thank you I'm Kristin stone and I've been at coinbase for about four years now I currently serve as the product manager for our back-end technical team which connects the coinbase applications to the blockchain for a user this looks like if you were to send Bitcoin it's gonna be executed through our system so when rethink invited me here I started thinking about trust in a decentralized world I've been interacting with this technology for four years and as enterprises work to bring decentralization and blockchain technology to improve their trust what are some of the challenges that might occur what ways might trust be eroded through decentralization well I've experienced these personally and so what I'd like to talk about today is a key functionality of blockchain it's called Forks and the way that these Forks evolve trusts and the implications of Forks and their complexity if we do not protect customers so let's begin with the promise of blockchain decentralization provides power to customers in the financial system it gives them the ability to audit to modify and to execute a financial system this is incredible that doesn't exist in the traditional financial world if a bank who has code that was written over a decade ago if that code is unsecure or unfair to a customer there's nothing a customer can do they have no power there centralization creates this lack of trust and it extends beyond banking institutions it extends to people who hold your data we've experienced these data breaches they're becoming almost commonplace especially in America Target Equifax Chase they've lost customer information they spent years these enterprise companies spent years to build customer trust and they received 143 million customers who trusted them and whose data they lost and and let's really think about the gravity of that 143 million people that is the population of Russia as though Russia every person in Russia lost their credit history had it stolen from them that information taken with centralization these Hawks are inevitable it's already becoming the rule it's no longer the exception this is commonplace but blockchain has unique functionality so with blockchain it's open source this is their github repo so with blockchain you can audit their code you could modify it you have that ability as a customer imagine a traditional financial system where you could change the technology that powers it where you could create a copy not just of the technology because it's open-source and anyone can download it but also the history every balance that has ever existed every customer in that in that system you can create a copy and you can add new functionality to it so that now it operates in a new and unique way that's in line with your belief systems in blockchain we call this Forks and a fork if you're not familiar it's basically taking one database one system and now creating two so the largest fork was Bitcoin cash what happened is that there were a number of people who wanted to increase the quantity of transactions which could be processed in a period of time and there was another group of people who didn't like the trade-offs that that would make so the first group said alright we'll take your technology we'll implement these this new functionality will create a fork a second system people can come to choose to be a part of ours if they like our idea but they didn't just clone the database they didn't just clone the technology they took the history the balances everything that had happened previously up until that moment of time they copied that information as well and since then we've seen a handful of other Forks more people more good ideas all happening in the same way and these Forks will evolve trust because they give customers an opportunity to stand up for what they believe in to participate in the system that they believe in and to modify the code of a system that they don't believe in and this is where it gets tricky because Forks are technically complicated and the confusion can also erode trust to make a fork to make a second balance to make an entire new system as easy as an icon on a webpage you have to face significant technical challenges and I'd love to share with all of you today some of the challenges I've encountered over the last year as these have gotten Forks have become more prominent diving into how we can protect customers so we'll talk about balanced integrity talk about fund movement and finally and most importantly customer safety so what do I mean by balanced integrity here we're talking about determining the funds the balance that a customer has at the time of the fork imagine quoting an entire banks balances at a specific moment in time and then needing to connect in the backend to an entire new network an entire new payment system and display those balances to customers and this challenge becomes exponentially harder when you deal with smart contracts where the balance may not even be finalized yet the other difficulty with balances is what we call cross chain sins and this is a very unique feature but because these two blockchains have a shared language a customer may accidentally send money from one blockchain to an account number that exists on the other blockchain and when they do that this blockchain will not recognize that sin and it won't move it anywhere else so the customer they won't receive an error their money will just be lost can you imagine what that would feel like a user error and your money's gone I'll talk more about cross-chain sins in a minute but I want to cover fund movement as well so what does it look like to access funds in the moment of a fork a fork is an opportunity for you to vote on what you believe in for you to go and participate in the system you believe in but up until that moment well it's sort of like right before Christmas when everyone's trying to shop it's chaotic you're moving your money you're trying to get it there and this creates burst scaling issues both on the network level and on the website level people are trying to get their money to the right place so that they can participate in the system that they want and often these Forks have very limited lead time it's pretty easy to create a fork actually there's even a website for it now they've really taken off and that that's that's great but if you don't have time to prepare for these scaling issues it's a challenge at the customer level and at the organizational level and the final challenge is customer safety above all else at coinbase our mission is to be the most trusted but with Forex some of the issues they go beyond just database records they are value they are money money that can be lost one one challenge it's called replay attacks so on a replay attack you have two chains and if a customer is sending money on this chain it may also be valid on this chain because they have a shared history so that first transaction you do when the network split you may think you're sending money here and inadvertently also be sending money here the second challenge another way that money can be lost that customer trust gets lost is with untested code some of these Forks they don't have the rigor or the size that that the the current networks do and so the code may not be secured coinbase audits all of their underlying protocols it takes us a while to integrate with a new blockchain and the reason is we want to make sure it is safe for our customers in addition some of these block chains some of these Forks they can be outright scams the same as you would have in a traditional financial industry if we don't handle these challenges it's going to create confusion and it's going to erode trust it takes an opportunity and it just throws it away so I want to talk about an example of how coin base has helped to mitigate these challenges I spoke about cross chains sins so here we have a fork Bitcoin was the original chain it continues up at top and then underneath it you see the chain split Bitcoin cash now a customer could send funds from their Bitcoin address to an address in Bitcoin cache but it won't be valid in the Bitcoin cash chain because it's not in Bitcoin cash currency so coinbase in order to resolve this issue for our customers we sync addresses we sync the account information between the two we're monitoring is someone sending this to the wrong chain on accident and then we're forwarding the information to the correct chain so it ends up where the customer intended it to be we are making sure that customer doesn't send money and their mistake costs them we're ensuring that trust is maintained these customer considerations their requirement if we're going to bring this technology to what it can be if we can give this to everyone being able to protect your customers from complexity will unlock the benefit of forks the ability for us to control and change our financial system for us to have power in the financial system it gives us an opportunity to make a fork some complicated technical jargon as simple as an icon an opportunity for customers like this one to say I made a mistake and coinbase coinbase really helped out I didn't have to mark it up to the risk of using crypto because there's no way we can obtain mass absorption there's no way we can leverage this and bring it to everyone if there is a risk inherent in it if we can overcome these challenges and this won't be the last one blockchain is a new technology will face a lot more but if we can overcome them it will evolve trust thank you and I think I have plenty of time for questions or sometime yes how you going good thanks he has a shirt it says institution of crypto anarchy it's a good one just some stuff that you kind of went over so you were speaking about the danger of centralization that was a bit confusing for me because coinbase is a centralized exchange so coming from that perspective I was very surprised that you would point out centralization to be a danger yet you are one of the biggest centralized exchanges on the planet then you went over Forks and you said they're becoming more prominent bitcoin has been thoughts for years prior to a Bitcoin cache I mean most of the old coins are for bitcoins code and you said big blockchain is open source that's not also true that's also not true because you also have private blockchains so you would have to specify which blocks chinese-speaking about to kind of indicate which one is open or not so I'm just curious you know based on those three points it's nothing personal it's about your organization not you I'm sure your lovely person so I'm just I'm just curious based on those points what comments you would have yeah first I am a lovely person thank you thanks for raising that actually it is it's a great question um and you made a lot of points so let's start with coinbase being centralized it's true we are there's a difference with the financial systems that we have versus coinbase so coinbase is an entity it is centralized and we had to make that trade-off it was actually a huge challenge for us we had a sort of internal identity crisis a couple of years ago because we were built on this idea of decentralization and here we were a central company it was tough we spent a long time thinking about it and the challenge is that six years ago when this company started it was confusing to interact with a central lot with a decentralized technology the user experience wasn't easy so we had to make a trade-off do we become centralized in the near term in order to allow better access to this technology to this infrastructure or do we become decentralized and shut people out so we chose in the near term to be centralized but the difference is that the technology were interacting with it is global it is decentralized and you can read our CEO has incredible posts about this we we do not want you to stay on coinbase we want you to go to the network's we want you to get get onto the technology interact with the decentralized system all we are is a bridge and because we're interacting with banks and financial institutions it's a requirement that we are centralized that is how the world is organized today does that answer your question we can't and it as a matter of fact we have a product that allows that it's called toshi it's a user controlled wallet and it's interesting it's a great point and I so appreciate that as far as the forks existing that a lot of this is where your language gets confusing force have existed for a long time a lot of them are clones of the database they're not forking the history along with it so there's that that piece to keep in mind Bitcoin cash really made this prominent and then as far as it being open-source correct some probably private blockchains are not open source I'll caveat the entire presentation when I said blockchain I'm in public block chains all through the past so I'm gonna change the past on that one awesome any other questions come on yeah thank you for that that's okay I actually I really appreciate the hard questions and I appreciate everyone who has the courage to speak up and ask them because the nothing's perfect and so if we can address and be open like our industry is if we can be transparent about the challenges I think we'll all be better off so addressing why it takes us so long for Forks to implement a fork two pieces one is concerns around security so Bitcoin gold if you're familiar was another Fork they recently had experienced 51% attacks if we had implemented Bitcoin gold it would have eroded trust for our customers so in that sense we want to make sure that network is secure and safe and we realize that it's a large challenge for our customers and we're really where we're trying to work on how we provide that information and really allow people to understand some of this newer technology the second challenge is around technical technical difficulties so what I spoke about here at a high level we want to implement cross-chain sins so customers funds are not lost we want to ensure balances are correct and all of those take time especially if you're doing testing and Drayson Antonopoulos gave he has a great video and he said people wonder why it takes coinbase so long to do things when you have millions of customers the time and quality assurance testing it all is significantly higher and the repercussions are significantly worse so from our side we just want to be entering this technology in a way that is safe for our customers any other questions yes yes so I have a question reference to the cross train cross chain transfers obviously people can lose money with that you guys step in and redirect the payments to the proper accounts so that is a function that pretty much every financial institution does at some level and there's very in-depth processes and regulations around that so what actually applies to you guys in reference to that sorry what well for example when you have payments that occur and then there's an issue within that and then you have to make a decision as to where that then has to go after that it probably kurz you usually there is a large framework of confirmations third parties have be contacted client data privileged information all sorts of things and so from your standpoint not being a financial institution by regulation where do you fit in there that's a big gray zone so I was very surprised to hear that you guys take that actual step and commit to saying yes we do do this actively yeah so in this situation it is an additional feature and you wouldn't encounter it if you didn't make a mistake so one point we are regulated in America as a money service business with FinCEN we have money transmission licenses additionally in the UK we have licenses as well so we do we do really attempt to provide trust to our customers in the way that we understand it today by these just licenses and things of that nature so cross-chain sins are slightly different in that we knew where the customer was intending to send their money so the address exists in below of both places and what we're doing is saying all right we see that you sent it more or less denominated in the wrong currency so what we're going to do is move over here and forward that onto the into the place with the new information if we don't know we'll stop and contact the customer but from a tech technology and technical point of view it's actually there are no risks associated with that and as a result there's no framework necessary I think we can probably dive into this one part that that's challenging here is that cross-chain sins are confusing so if you didn't understand it if you didn't understand replay it attacks that's okay it took a lot of experts in the space a long time to understand it to give it language to explain it myself included I'm still working to actually explain it in a way that that fits in our current mental model and you can understand how it's absolutely not intuitive to customers if it's a challenge for people with experience to explain it but let's connect afterwards because I'd like to sort of walk through how the technical pieces work awesome okay there's time for one more question so try to answer briefly hi Kristin thanks for your brief discussion and I would like to erase a point yeah you're kind of arbitrating what coins are becoming more or less popular by accepting them or not and I guess this is a good thing as well but it's a big big power wielded responsibly and how can you use this to help other types of projects we do not involve trading so much yeah hmm that's a good question it's funny I remember our CEO getting up in front of the company and we said every time we add this new currency it's everybody gets excited the industry were sort of this leading company that everyone trusts and so they trust what we do and he was like that's not what I want that's not why I came here I'm here to let customers have a choice the challenge is we want to be the most trusted and we want to make sure this technology gets rolled out in a way that people can continue to trust it over time so we think about that every time it is a current challenge it's something that none of us want we want competition we want other people we want customers to make their choice and I think in time we'll see we'll see the industry move in that direction as the technology becomes more understood how can we help other other projects that's a great question so a few things we've done coinbase now has a ventures team so we are able to provide sort of seed funding to these new startups that we really believe in and that's a way that we think about helping the community another option another thing and actually we announced it yesterday we've is a website called give crypto dot-org so for people who've been in the space for a long time may have made a lot of money you know really how can they give back how can we bring this technology into what it was intended for to help the unbanked to support economic equality and so we think about really all realms and where we can support what we can do both for projects from a venture perspective but also for individuals that may be unbanked or underbanked was that brief enough yes perfect okay please another round of applause for Kirsten okay the next speaker