Chinese government idolatry in a time of the coronavirus

I just found this video about some people’s initial responses to the coronavirus in China. The idolatry for the Chinese government, within China, is very remarkable: “Not afraid! We have our government, government can protect us!”

Protecting your privacy: asymmetric cryptography (part 2)

This is the second of four posts in which I discuss cryptography. If you read all four posts, you will understand the differences between symmetric and asymmetric cryptography, why the US government were against the spread of modern cryptography, how it has resulted in the first crypto war between code rebels (techno-libertarians) and the US government, and how you can easily protect your privacy using Pretty Good Privacy (PGP).

The topics of the four posts are:

  1. What is symmetric cryptography;
  2. What is asymmetric (public key) cryptography;
  3. The first crypto war between code rebels and the government;
  4. How to easily use PGP to protect your e-mail communication.

What is asymmetric (public key) cryptography

In my previous post, I mentioned four disadvantages of symmetric cryptography. These disadvantages are:

  1. The secret key must be shared between sender and receiver, before messages can be exchanged safely, preferably over a secure channel.
  2. The secret key is in two separate places.
  3. The sender of the message must trust the receiver that he will not steal or copy the secret key.
  4. It is not scalable for, for example, e-commerce.

Soon after the publication of the Data Encryption Standard (DES), asymmetric (public key) cryptography was invented by the Stanford graduate student, Whitfield Diffie, and Stanford Professor, Martin Hellman. This was a huge revolution within cryptographic research, because up until then it was thought that there should always be a shared secret key for the communication between the sender and receiver. The main question that Diffie and Hellman were trying to solve was: how can you create secure communication over a unsecure channel, when two corresponding people have never had contact with one another and therefore have not yet been able to share secret keys with each other.

The solution, public key cryptography, was introduced by Diffie and Hellman in their paper, ‘New Directions in Cryptography’ (1976). It inspired more cryptographic research outside the circles of secret agencies. Soon after the first publication on public key cryptography, three young Professors at MIT, Ron Rivest, Adi Shamir and Leonard Adleman, developed the now famous RSA public key cryptosystem in 1977.

Merkle Diffie Hellman
Ralph Merkle, Martin Hellman, and Whitfield Diffie. Merkle is known for his invention of Merkle trees, which is a tree-like structure of cryptographic hashes that organizes for example Bitcoin transactions. The public key cryptosystem, as published in ‘New Directions in Cryptography’, is mostly known as the Diffie-Hellman key exchange. Hellman, however, recognizes the contributions of Merkle for the Diffie-Hellman key exchange.
Adi Shamir, Ron Rivest, and Len Adleman. Inventors of the RSA cryptosystem.

Public key cryptography works as follows. There are two separate keys that correspond mathematically with one another: the public key and the private key. The public key is used to encrypt a message, and can be shared to other people. The private key is used to decrypt a message, and should be kept secret. Public key cryptography is hence a two way function. Just by knowing someone’s public key, it’s not possible to find out the person’s private key.

In our below example,

  1. Alice would like to send a secret love message to Bob.
  2. Bob has a corresponding public an private key, and sends the public key over a unsecure channel to Alice.
  3. Alice uses Bob’s public key to encrypt her secret love message.
  4. Alice sends the secret love message to Bob.
  5. Bob uses the corresponding private key to decrypt the message and finds out that Alice loves him.
Public Key cryptography
Alice and Bob use public key cryptography to exchange secret messages.

Doing so, you can have private correspondence over an unsecure channel. Actually, we’re using public key cryptography all the time. Whenever you see a green padlock in front of the URL bar, it means that the data you enter on the website is first encrypted before it’s sent out.

Digital Signatures

Public key cryptography is not only used for the encryption and decryption of messages, but also for message authentication. If Alice would not have encrypted her message with Bob’s public key, but with her own private key, then the encrypted message can be decrypted with her public key. If you receive a message of John Locke and you’d like to know whether it’s really sent out by Locke, then you could look up his public key and use it to decrypt his message. If the result is plaintext, and assuming that Locke is the only person in the world who possesses the only private key that can produce the encrypted message, you can be sure that the message was sent by Locke. In other words: applying a private key to a message is the equivalent to putting a digital signature.

Digital Signatures
Alice puts a digital signature on her message, and Bob digitally verifies that the message is truly coming from Alice. This is an easy way of using digital signatures. In reality, a text is hashed first with a hash algorithm, before it is encrypted with the private key. Bob then uses Alice’s public key to decrypt the message to retrieve the hash, and compares the resulting hash with the original hash of Alice’s message.

Digital signatures are particularly important, because they provide the following security aspects:

  1. Authentication: it offers proof that the message comes from the right person.
  2. Non-repudiation: we cannot deny that the signee has sent it.
  3. Data integrity: the message cannot be altered after it has been signed.

Diffie and Hellman saw great potential for public key cryptography in the coming digital age. The US secret intelligence, however, were not happy with this development in cryptography and tried to prevent public use of this new cryptosystem. The standoff between privacy advocates of whom many were cryptographers and the US government is known as the first crypto war.

In part three of this series, we will discuss the crypto war. Eventually, at the end of the post series, you will be able to encrypt your e-mails using public key cryptography.

Computational Economics is the Right Perspective

Here’s a vastly oversimplified picture of mainstream economics: We pick some phenomenon, assume all the context into the background, then build a model that isolates only the variables specifically relevant to that phenomenon.

Once you’ve simplified the problem that way, you can usually build a formal mathematical model, make a few more (hopefully) reasonable enough assumptions, and make some strong ceteris paribus claims about your chosen phenomena.

That’s a reasonable enough approach, but it doesn’t shed much light on big picture issues. I’m interested in root causes, and this “reduce things to their component parts” approach doesn’t give enough of a big picture to find those roots.

How do we broaden our perspective? One approach is to return to the more “literary” approach of the pre-Samuelson days. A bit of philosophy of science has me convinced that the primary flaw of such an approach is rhetorical. Written and mathematical arguments leave some assumptions in the background, but the latter is more convincing to a generation of economists trained to be distrustful of natural language (and too trusting of algebra).

As a pluralist, I think we should use as many approaches as we can. Different schools of thoughts allow you to build different imaginary worlds in your mind. But the computational approach isn’t getting enough play. I’d go so far as saying agent based modeling is the right form of mathematics for social science.

What does this mean? In a nutshell, it means modelling processes, simulating those processes, and seeing how interactions between different agents leads to different sorts of outcomes.

A common trope among Emergent Order folks is how ants are individually stupid but collectively brilliant. Neoclassical economics runs into the opposite problem: individually brilliant individuals who get trapped in Prisoners’ Dilemmas.

Computational economics starts with models that are more like ants than homo economicus. Agents are essentially bundles of heuristics/strategies in an out-of-equilibrium world. But these competing (and cooperating) strategies can interact in interesting ways. Each agent is a part of all the other agents’ environment, so the mix of strategies is a function of the success of the strategies which is a function of the mix of strategies in the environment.

In essence, computational economics starts from what the mainline economists have long recognized: human society is a complex, interwoven, recursive process. The world is, essentially, a sort of meta computer with a complex web of programs interacting and evolving. We don’t need to assume in any sort deus ex machina (that’s a bit of an overstatement, but we haven’t got time to explore it this week), we just need replicating entities that can change over time.

Such a view, to my mind, provides an end run around rationality assumptions that can explain the brilliance of entrepreneurship (without making heroes out of the merely lucky) as well as the folly unearthed by Behavioralist economics (without the smugness). We’ve always known it. It’s all just evolution. But the methodology hasn’t made its way into the main stream of economics. If there are any undergrads reading this on their way to a PhD program, let me know in the comments so I can point you in some interesting directions!

Supreme Court hears vital freedom-of-religion case

Today, the Supreme Court heard  the most important case on the intersection of religion and education to arise in decades–Espinoza v. Montana Department of Revenue. A few years back, Montana had passed its first school-choice program, a tax-credit scheme that allowed a small tax credit for donations to scholarship programs that helped kids afford private school.

As in any state, many of Montana’s private schools are religious. Right after the state legislature passed the tax-credit statute, the Montana Department of Revenue promulgated a rule that immediately gutted the program by forbidding students attending religious schools from receiving scholarship money.

The Department based its rule on Montana’s Constitution, which says the legislature can’t “make any direct or indirect appropriation or payment from any public fund or monies . . . for any sectarian purpose or to aid any church, school,” etc. Plenty of states have very similar “no-aid” clauses. Revenue claimed that scholarships for religious students under the tax-credit scheme violated the “no-aid” clause.

It’s worth taking a moment to consider how bizarre this argument is. These scholarships are funded by private donations–the money never enters a public coffer. Yet Revenue thinks such donations would constitute state aid to religion because the donor gets a tiny tax credit (up to $150) for the donation. Underlying this argument is the strange notion that any money the government declines to collect from you is still the government’s money.  This would mean, for instance, that every charitable donation eligible for a tax deduction would likewise constitute a government appropriation. Revenue’s argument has always looked to me like an extremely weak pretext for blatant discrimination against religious students.

So Kendra Espinoza and a few other parents with kids at religious schools sued the Department of Revenue, claiming, among other things, that Revenue’s rule violated their free exercise of religion under the First Amendment. Kendra won at trial, and then lost spectacularly at the Montana Supreme Court. In fact, the Montana Supreme Court did something even worse than the Department of Revenue–it invalidated the entire tax-credit program, such that even students at secular private schools could no longer receive scholarship assistance.

Thankfully, the Supreme Court took up the case, and they heard oral argument today. (My colleagues and I filed an amicus brief with the Court in support of Kendra).

The oral argument transcript shows a Court divided along the typical ideological lines. The liberal justices seemed preoccupied with standing–whether the petitioners had the right to sue. One justice implied that only taxpayers (who have a financial interest because of the tax credit) and schools (who receive the scholarship money) should have the right to sue. This is a weird take, given that families and students are obviously the intended beneficiaries of the scholarship program.

A number of the justices discussed a odd quirk about the Montana Supreme Court’s decision. The basic question they raised is this: since the Montana Supreme Court took the scholarship program away from everyone, are petitioners now being treated equally? But the sole reason the Montana Supreme Court struck down the program was to prevent religious students from receiving scholarship. A government action taken for a discriminatory reason is, well, discriminatory. If the legislature had excluded religious students when it enacted the program, the program would still stand. And if the legislature tried to enact the same program, providing equal treatment to religious and secular students alike, the Court would strike it down. That’s discrimination based on religious status–pretty straightforward.

One justice cited to James Madison’s famous Memorial and Remonstrance Against Religious Assessments, arguing that the founders wouldn’t have wanted public funds flowing to religious schools like this (again no public funds were flowing to Montana religious schools under this program, but why let accuracy get in the way of a good narrative). That’s a terrible misreading of Madison. The Memorial and Remonstrance was an attack on preferential aid to religion, not to a program that provided public benefits to all groups, including religious ones. The difference is vital. Can the government deny churches police protection, fire protection, sewer connections, electrical service, or any other public benefit on the grounds that the government would be providing indirect public funding to religious institutions? Surely not. In fact, that’s exactly what the Supreme Court said in a recent case called Trinity Lutheran, where Missouri denied a church daycare access to a government program that helped renovate playgrounds.

There is a difference between Trinity Lutheran and this case, arguably, which is that here the money goes more directly to religious indoctrination, not something secular like playground materials. But at bottom, public funding is fungible. Providing police protection and other general public benefits obviously makes it easier for a religious institution to fulfill its religious mission.

This case should be an easy one. The government offered a benefit to all private schools. To include religious schools doesn’t “establish” religion. It just treats religious groups equally, as the Constitution requires.

The veil of nostalgia

In article for Worth, titled “A new wealth gap is growing – attention inequality,” authors Joon Yun and Eric Yun of the Yun Family Foundation, an institute dedicated to “transforming the way people think,” argued that “attention inequality” is having a destructive force on society and expressed nostalgia for the days of “monoculture.” They defined this idyllic time as one where all attention was focused on one or two people or groups, e.g. the Beatles, and on no one else. The idea expressed by the Yuns is that the new internet world where everyone may take his best shot at fame is unfair, and a veil that should not have been lifted has been removed. In the meantime, everyone, described as “the heart-broken masses,” wanders through the selection at will, as customers as well as fame-seekers. The Yuns’ complaint is very similar to a running theme in the works of Michel Houellebecq: the free market of choice has created winners and losers and in doing so has destroyed the dreams and self-respect of the last group.

Perhaps the question is whether existing in a world of dreams, one in which a person could feel good about himself using the “might have been” fantasy, is an acceptable burden to thrust upon society. After all, in his short story “The secret life of Walter Mitty [which the Ben Stiller film butchered],” satirist James Thurber’s point was that living in dreams replaces action, allowing people to imagine themselves as people filled with unrecognized abilities. Even Thurber’s picture of the type for whom such an existence is necessary was probably accurate: a passive middle-aged man who had missed opportunities in his youth (implied WWII vet, so both chances to be a military hero and cash in benefits to start a business, further education, etc.) and resents his wife as the cause and the personification of the mediocrity of his existence.

But are we better off with the veil of mediocre monoculture lifted? Is the fact that revelation may not be pleasant for those who discover that they are unappealing to the modern market really a justifiable cause for concern? Is the old world of “monoculture” really something to look back upon with nostalgia?

My former composition and counterpoint teacher was also a concert pianist, who trained at The Juilliard School. While still a student my teacher was signed by a major record label. One of the tidbits I learned from him was that back in “those days (mid-20th century)” practically the only way a young (classical) artist had of obtaining notice was to be at an elite conservatory since that is where the scouts went almost exclusively.

The MO for finding the “latest new thing” made perfect sense for the time period. There was (and still is) a tremendous amount of investment on the part of the label that went into publicity for and grooming of a young artist. Further, in my teacher’s case, the label handled studio and recording expenses, created and booked concert tours, and handled venue costs. The artist did not have to repay the funding; however, total expenses would be deducted from any royalties should he/she become successful. The investment risk meant that going to places where the already-succeeding were clustered was the safest bet for the big labels. There was very little room in the equation for a person who was not already positioned to join the upper professional echelons, or someone who had no insider access.

Was a situation where the major labels acted as gatekeepers and only considered people who fit a certain profile really better than the current one where the internet and digital tools allow artists to perform directly to the audience? The nostalgia for a time of “monoculture” speaks to a yearning for a closed, stratified world. The world where my teacher grew up and worked was a world in which someone with big dreams could imagine himself as simply undiscovered, an unrecognized talent whose gifts would never benefit society. There is some security, a perverse comfort, in such a dynamic. A person never has to confront the idea that maybe he has no talent, maybe his music is not good enough, maybe what he does is something no one finds interesting, perhaps there is no market for him to fill.

The breakup of the “monoculture” has forced average Joe dreamer to confront these possibilities. Instead of only playing and dreaming in his garage, he can now release his own albums on iTunes and Prime Music, upload videos to YouTube and Daily Motion; he can have his own website and create his own publicity. He can wait to see if his work is accepted and if there is an audience for it. The Yun family has argued that the process of exposure and competition is cruel, that it breaks up human contact, that it consigns the vast majority who desire to be part of the “culture” to being part of the “heartbroken masses.” But the real question is: How is average Joe dreamer any better off under the old system? Isn’t a situation in which he at least has a chance to be seen, to make it big, better than one in which he is simply locked out? 

The Blockchain Basics Book has been published and is available for free

Our Blockchain Basics book (Blockchain Basisboek in Dutch) has just been published on January 17th. You can download it here for free. The book will be used in classrooms across more than 8 local universities in the Netherlands. Hopefully, other universities will follow soon.

In this post, I’d like to discuss why I started the initiative to write the ±550 pages book, and what other project I have in mind to further improve blockchain education in the Netherlands.


The current state of blockchain education in the Netherlands

After two months of teaching blockchain at a local Dutch university, October 2018, I realized that blockchain education in the Netherlands (probably in most parts of the world) is still lacking.

I have identified the following 7 issues with our blockchain education in the Netherlands.

Blockchain education in Netherlands
Issues in the Dutch blockchain education space.

  1. Few Dutch class material. Good blockchain content is mostly written in the English language. My required reading list therefore consists mainly of English material, which proves to be a high barrier for Dutch-speaking students that are not at all familiar with (a) the technology and (b) the technical jargon used in the blockchain space.
  2. Dutch content is dispersed. Good content in Dutch is very dispersed among many different websites.
  3. Current Dutch books are not very useful for educational purposes. The books available on the Dutch market are not comprehensive enough and are not suitable for students.
  4. There is no standard for good blockchain education. Most universities are developing curricula on their own and there’s no standard on what good blockchain education consists of.
  5. Few sparring partners. Most universities don’t share their class materials or experiences teaching blockchain. Fortunately, the Dutch Blockchain Coalition is trying to change this, but we need to put much more effort to do cross-institutional sharing. Many universities also want to develop blockchain education, but lack the expertise. It would be good if these universities jointly develop their blockchain curriculum with other universities and share teachers.
  6. Knowledge is dispersed. Different faculties within a university are developing blockchain education in isolation and have their own blockchain experts who don’t know that some of their colleagues are also working on blockchain. Someone who’s working on the legal side of blockchain may not know that there’s someone at another faculty who is working on the technical or ethical side of blockchain. Bringing knowledge from different people together can lead to interesting and surprising new perspectives.
  7. Not enough diversity in perspectives. Blockchain can be approached from many different perspectives. Most classes only focus on a limited number of perspectives. A business department may heavily focus on blockchain applications and little on the technical side. Not knowing the technical side of blockchain, a business teacher may talk about potential blockchain applications and develop business models that are technically unfeasible.

I wrote the Blockchain Basics book, together with my colleague Arthur Janse, to tackle the first 3 issues (in green).

Main topics of the book

The book comprises three parts:

  1. Part I contains the technical side of blockchain and relevant innovations. Topics that we discuss are Bitcoin, current payment systems, consensus protocols, mining, nodes, forks, cryptography, smart contracts, governance, cryptoeconomics, and self-sovereign identities.
  2. Part II contains the economic and philosophical background of the Bitcoin blockchain. It discusses the different economic schools and in particular how the Austrian School of Economics and libertarianism, crypto-anarchism and cypherpunk have influenced Bitcoin.
  3. Part III contains topics revolving around enterprise blockchain. It discusses decentralized business models and enterprise applications.

What’s next?

While writing the book, I came up with the idea to create an organic community based open access digital knowledge platform that anyone can join for free. I pitched the idea in September 2019 at a Dutch Blockchain Coalition (DBC) event for all universities in the Netherlands. The DBC and other universities responded enthusiastically. Four months later, we have a proposal ready to develop the platform with 6 universities and the DBC.

We would like to use the Blockchain Basics book as the foundation of the platform, and – acknowledging that knowledge is decentralized – give all users the right to add new or revise already existing content. A public reviewing feature and a reputation system will be put in place to make sure that wrong content becomes corrected and to incentivize users to add good content. Students can also submit their Bachelor, Master and PhD dissertations and researchers can submit their papers on the platform. 

I think that the multidisciplinary and cross-institutional cooperation will structurally improve blockchain education in the Netherlands. Doing so, I think we can tackle all the other issues (issues number 4 – 7).

Be Our Guest: "Suing Juul Won’t Solve Anything"

NOL‘s “Be Our Guest” feature is as popular as ever this year. Here’s John Lancaster with the latest:

Peer driven rumors, videos of experimentation, forums, news, and entertainment sources provide nigh infinite opportunities for young ones to pick up on vices. The appeal of vaping would’ve caused widespread exposure through said channels anyway. The most marketing does at that point is convince the willing participants to choose a particular brand rather than take on the act itself.

Juul is a company that sells vapes, which are those cigarette replacements that have been so popular lately. Please, read the rest, and shoot us an email if you want your voice heard!