Since I will delete my current X account or stop using it and it is an article that I put a lot of effort into, I would like to move it here. I participated in the 3rd anniversary event โ๐๐ฏ๐ฌ๐ข๐ก๐ ๐ง๐๐ ๐๐๐ข๐๐๐๐๐๐๐ก: ๐๐๐ฃ ๐ง๐ต๐ถ๐ฟ๐ฑ ๐๐ป๐ป๐ถ๐๐ฒ๐ฟ๐๐ฎ๐ฟ๐โ held at X. Now that the winners of the event have been decided. I donโt know who they are, but not me. This is a category about general topics, so I probably wonโt have any problems writing it here.
Mathematics forces everyone who believes in axioms to trust everything built on the axioms. Blockchain works like math. It forces everyone who trusts the code to trust the information stored on it. And the code is proven by math. (Iโm not talking about giving meaning to data, but about bits. The meaning of bits is more subtle.)
ICP is the only chain that can build full stack end-to-end dapps, so I am quite optimistic. In order to differentiate your dapp from existing services, you can take advantage of the benefits of ICP: end-to-end trustless trust. I hope to see more incredible dapps on ICP. Good luck.
Original post in X:
This is why I have participated in the Internet Computer Protocolโs journey. I hope you will find the approach in this article interesting to you. I will focus this article on the oracle problem. This is mainly based on my old notes and Dominicโs recent two blog posts([1], [2]). Iโm so sorry for the inability to find exact numbers for some points.
The trust issue in information is undoubtedly as old and important as the economic and political history of human society. Everything in the economy, including finance, relies on trustworthy records. And also politics. If there were no records of how much money was lent to whom or what rules were set by political power, the economy and politics would not have developed. Trustworthy records, thus, are essential to human society. Before the invention of Bitcoin, trust in records had to rely on a centralized agent. Government has perhaps been the most trustworthy agent in recent hundreds of years. This is because they could collect the most extensive information and have the most power.
Bitcoin solved the trust issue without authority or force. Blockchain implements Trustless Trust using a Byzantine Fault Tolerant protocol. Trustless means trusting mathematics and logic rather than someone; or programmers say trust the code. As the governments use their power to force you, it uses math to force you. But it is more capable than the government. If you believe in math, you have no choice but to trust the information. Since blockchain only provides information that must be trusted, a new type of problem has emerged: The Oracle Problem.
Everyone has probably heard of the oracle problem. There have always been the problem, but mixing two reliable information has generally been fine. Itโs also reliable information. However, 100% trustworthy information cannot guarantee integrity anymore, when 99% reliable information is added. An entire chain becomes useless when only one weakest link breaks. There is a huge difference between information that must be trusted and that can be trusted. Letโs divide oracle problems according to the source of data. Letโs assume that you trust the code of blockchain A, and you want to build your project on the chain A.
- Information generated on blockchain A
- Information generated on another blockchain B
- Information generated on a general server; as known as web2
- Information generated from the physical world
First case is not the subject of the oracle problem. You can trust the information generated on blockchain A. To retrieve data from blockchain B, you must trust both of chain Bโs algorithm and the bridge code between A and B. ICP solves this using chain key technology. It simply connects directly to other blockchains using ICPโs smart contracts. In other words, it implements trustless here too. This is my first time quoting Dominicโs writing. See the section 3, Trustless World Computer Multi-chain, of his writing โ10 Reasons The Internet Computer Will Winโ. In a chain, as I mentioned above, the weakest link always breaks first. Even if all other parts of a service use blockchain, one untrusted link can destroys trust in all services. This is why we need an end-to-end trustless dapp. Current Defi services can become end-to-end trustless services by building their web2 elements on ICP.
But for the third and forth cases, it can only be alleviated. Most solutions proposed so far focus on mitigating the problem. In my opinion those are essentially unsolvable and actually ICP does not resolve case 4. But It can make magic for the third case.
Whatโs really interesting is case 3. ICP is eliminating the problem, instead of solving it. It is magic. If the Internet is built on ICP, the oracle problem disappears. But well, if digital data is truly created on a blockchain from the beginning, there is no oracle problem! To paraphrase Dominic, smart contracts will eat the world. Although it seems like logical magic to me, I know how it seems to you; just nonsense.
Because it requires that ICP beats cloud services like AWS. Letโs see how it can go beyond web2 clouds. Good service must guarantee high quality at low cost. Therefore, we will first analyze from a cost perspective, and then analyze the benefits it provides to developers and end users.
I prefer to hear bad news first, so I will tell you the bad news first. ICP requires duplication of operations. In other words in ICP term, replicas are necessary. This increases costs as multiple nodes repeat the same operation, but is a necessary expense to implement Byzantine Fault Tolerant.
The good news, according to Dominicโs tweets and articles, is that it can save tremendous cost. The market size is enormous:
- Around 2 Trillion dollars of IT personnel cost every year. Since most of their time, Dominic said 95%, is spent chasing complexity of the field. ICP simplifies the development environment so that they can spend their time where it really needs to be spent.
- Dramatically reduce the cost spending on security. Because smart contract software runs without the need for additional cybersecurity protections. And if you think about the global cost of cyber crime, that Dominic mentioned, is 10 trillion dollars in 2025โฆ
- For-profit businesses need to make additional money. In the most recent announcement, Q4 2023, AWSโs operating margin was nearly 30%. Azureโs was higher. However, Dfinity is non-profit.
In my view, it reduces overall costs whether visible or not. Additionally, ICP increases the value of applications and convenient user experiences:
- The reverse gas model. Everyone knows it, right? It gives an edge compared to other blockchains. The reverse gas model is necessary for a seamless user experience.
- Autonomy and resilience provide predictability. It means it can be used as a backend because the smart contract software will never be interrupted.
- Utopia Project. This is a general solution. As it becomes more commonly used, network effects kick in, reducing costs and providing a more integrated user experience.
- Trustworthy and privacy protection for every service. Of course, also for AI.
- Clear ownership. Service Nervous System(SNS) DAO allows it to derive new value.
Letโs take a closer look at the possibilities of AI and ownership. As you may know, on-device AI is getting increasing attention due to low latency and privacy. ICP cannot reduce latency, but it provides greater transparency than AI services provided on servers like ChatGPT. We cannot trust that such AI services running on servers are safe, even if they say โwe do not see, collect, and train your chatting record.โ It is because they cannot prove their claims, and you cannot verify their claims. However, on web3, you can show that your AI agent will not use any usersโ data without permission. You donโt have to make meaningless swears. You can simply prove using smart contracts that bad deeds are impossible. ICP can serve larger AI models than the on-device AI models; each canister smart contract provides up to 400GB of memory, which is obviously bigger than any mobile phones or personal PCs. Of course, as I mentioned earlier, the AI would be just as secure as on-device AI.
Looking at DAO only as economic ownership is narrow and insufficient, but letโs give it a try. I borrowed this argument from Hernando de Sotoโs book โThe Mystery of Capitalโ. Itโs an old book, but gives great insight. The main argument of the book is that if the ownership of capital is clear, it can create new value. The key is crystal clear and predictable ownership. Real estate is a representative capital. The owner can borrow money and start new businesses. Stocks, the ownership of a company, are also capital, which also makes it easier to receive investment. The book describes how living capital creates new capital. Service Nervous System(SNS) DAO on ICP clarifies the ownership of any services. This turns niche services as living capital that were previously difficult to get value. This makes it easier to attract new funds and provides incentives to create new and creative services.
ICPโs smart contracts will create a new paradigm through decreasing cost, increasing service quality, and even creating new value. When smart contracts eat the world, there will be no oracle problem in the digital world. What do you think?
I canโt show you the numbers, but I canโt leave out the excellence of the community. You probably know that Sam Bankman-Fried tried to kill ICP. Yeah, there were difficult times. But his attempt failed mainly because ICP was not a flywheel project. It rather showed ICPโs excellence. I was very impressed by the atmosphere on the Dfinity forum. They worked hard to achieve their goals even in the middle of difficult days.
I will end the article with a part of a song, which is one of my favorites. Florence, from the musical Notre-Dame de Paris. The English title is: Talk To Me Of Florence.
They tell me ships have sailed, upon the ocean sea.
For new ways to the east, wherever they may be.
Luther will give the world, the true New Testament.
The old world falls apart, mankind learns discontent.
The new will kill the old.
The new will kill the old.
The ship has already departed and the storm could not sink the ship. So it would soon arrive in an unknown world. I donโt know what we will discover on our journey. But the change has already begun and cannot be reversed.
Thanks for reading it. I hope you find it interesting. While writing it, I also came to love this expression; smart contracts will eat the digital world. Pretty similar catchphrase, right?