Week 9 - Algorithms, Milkshakes, Invisible Cash,

 and Expensive Monkey JPEGS

Created Tuesday 22 February 2022


Pseudo-randomness is easy:
"Multiply big'ol numbers a bunch and chop off the beginning of them"

TRUE Randomness is surprisingly hard


In a sense, you can't do it "inside" the computer.



Yep, they're going to KEEP TRYING THIS MESS.


DON'T ROLL YOUR OWN...better yet


DEMAND only free and open source here, confirmed by e.g. NIST

Anything else is almost CERTAINLY compromised in real life.


All software is imperfect and may have bugs;
..watch out as they may try to use this against you.


Don't fall for the "Security through Obscurity" trap
(as in, actually reinforce, don't just hide)


- OR for the "Security through Obscurity trap" trap
(additional hiding to reinforcement isn't bad, aka someone might seriously say, DONT PAINT THIS CAMO.)

Rubber Hose Decryption

Watch the endpoints, this is where the vulnerabilities are

Finally - encrypted AGAINST WHOM?

You'll have to do a fair bit of "game theoretical" thinking here,
when you're dealing with "black-box" encryption.
E.g. Whatsapp claims to be end-to-end encrypted?
I legit don't know.

What else

Hey, so these hashes
They look like--

What are the odds that it would look like, say..

You could get your computer to guess them.

Political Science and Economics tend to suck

Political Science and Economics tend to suck, esp when

they ignore each other.

Politics people ignore "It's the economy stupid."

Economists ignore 'Power'

Economists ignore power:

Aka, if the other guy has a sharp stick or a big gun,

the terms of the negotations change a lot.

Hey, so, what is money anyway?

A reasonable idea

The cavemen had trouble 'trading' stuff, so they started using shiny rocks.

A reasonable idea

that's mostly wrong.

The cavemen had trouble 'trading' stuff, so they started using shiny rocks.

A bit on banks and money

What is most money "made of?" How is it stored? Coins and little green pieces of paper?

A bit on banks and money

What is most money "made of?" How is it stored? Coins and little green pieces of paper?


Nope. Remember the beginning.

What matters is what's written down.

Power, rules, and lists and IOUS came before "money"

Money comes later.

Political Science and Economics both kinda suck

Political Science and Economics both kinda suck

BECAUSE THEY OFTEN they ignore each other.

Political Science is most useless when

Politics people ignore "It's the economy, stupid."

(IMHO, this is pretty much most times when
everyone's analysis is off)

Economics is useless when

Economists ignore 'Power'

None of your nerd models mean anything when
the power structure is off

Economists ignore power:

Aka, if the other guy has a sharp stick or a big gun,

the terms of the negotations change a lot.

This runs deep:

- Why did Jesus flip the tables?

Again, lists are older than "money" itself.

Not dollars, but a list somewhere that says
"Ug owes Oof two cows"
"Oof owes Grok a stick"
or more accurately..

"Give the King all the Taxes because he's basically a god"

Lists can do all the work.

A quick illustration:

Imagine the "coffee jar" at work that everyone puts into..
..along with a board on the side


Lists can do all the work.

Eventually, the board can do "all the work"

A big immutable list of transactions

This is what the banks do, as well.

They count internal transactions and trade information, even to each otther

This is what the banks do, as well.

They're really not trying to do this all day
(that is AWFUL trigger discipline, btw)


forgive the language

But, you also might want "pieces/tokens"


(wait, seriously. Why are diamonds more expensive than water?)

So then, the internet, money.

Right now, there's always "middlemen"

But with dirty green pieces of paper, there isnt.

Can we do that over the internet?

We need two things, looks like

The list


What else?

Aha: Give people gold to keep it running.

Bitcoin and most other "Cryptocurrencies"

(note, some others don't work exactly this way)
A huge encoded/distributed online ledger/list, also called a "blockchain"

Powered/driven by "mining" (which is more like a slot machine, pull the lever, power the thing, and see if you "win")

Mining Bitcoin?

Randomly trying to find "nice looking" hashes.

......4E9BB99 nope.

.......000000 yep! $$$$


When you download a bitcoin (full node) wallet program, you literally have to get a copy of every single transaction ever.

Transactions are computationally expensive.
The "Mining" also powers the "hashed transactions..eg."

02b23 gave bf239 .005 bitcoins. I can prove it because the hash of this transaction is =>

Add this to the chain and spread it around.

Bitcoin transaction.

You "add your new or old hash movement" to the ledger. By making another special hash. Which is "expensive."

This work powers the blockchain and "proves" that you've put in work. By design, the system "rewards" you for it.
Bitcoin transaction.

Now, why is it valuable?

Because people believe it is.

See also: gold, beanie babies, crappy companies, virtual swords, pokemon cards, sneakers, whatevs.

Now, why is it valuable?

Specifically, because you can get people to trade you something for it.

Lets mess up your head more.

How do real banks work?

A reasonable idea

"Fractional Reserve Banking."

You give your money to the bank to hold on to, and then they lend some of it out.
The amount of your money they lend out is the interest rate.

A reasonable, but not quite accurate idea

More like
"Fictional Reserve Banking."
amirite lol

Not quite. FIAT Money.

You invest your money in the bank system, in the reasonable hope, backed by law and guns,
that you can have it back when you ask for it.

Not quite. FIAT Money.

The Federal Reserve, based on looking at stuff (including but not limited to this),
using your money as part of the leverage, DECLARES an interest rate
(i.e. decides how much money to make out of thin air)

It does use "how much money did we all put in the bank"
as PART of the calculation...but

Not quite. FIAT Money.

Different from the first thing because it's not limited to the money you all put in.

I.e. it's not "Scrooge McDuck gold in a vault"
it's "America has guns and we SAY so"

Don't know about y'all

But this kind of made crypto EASIER to understand,
because crypto (and all money type things)
does the same thing.
You can issue all the coins you want,
but they're only worth what other people will trade for them.


and tunafish sandwiches
and books.

(honestly, Video Games made this click for me)

Bitcoin transaction.

PS: Crypto addresses? Just numbers in different bases (sometimes with a prefix):

ETH: 0x19C653CB3D30EeEe2F99f9f4B987E3b22880FFCF

(100% real, please feel free to send me money :)

Oh hey, wait: is that a Public Key?


No one much cared about
"Put up your public key
and I can send you an encrypted message
that only you can see."

Oh hey, wait: Public Keys?

But turns out we care a lot about:
"Put up your public cryptocurrency address
and I can send you money
that only you can use."


It's a large public database, in which everyone can see every transaction. That's all.

Now give me a bunch of money because I just said "blockchain" :)


"Non Fungible Tokens"

Okay, FUNGIBLE means, they're all equal, like the dollars in your wallet. None is different from the other


Basically — a serial number or a url
That is movable, that THEORETICALLY SAYS
"You own this thing."

They seem very silly now

But perhaps they might be useful for anything that could use:
"A public record of ownership,"

Like House deeds, etc.