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When one of the world’s most prestigious universities announces it will explore a controversial and often misunderstood subject best known for piquing the interests of thieves and speculators, people tend to take notice.
That’s what happened in July 2015, when the Massachusetts Institute of Technology (MIT) revealed it would embark on its Digital Currency Initiative (DCI) – led by a former White House advisor, no less.
Work on the multifaceted world of blockchain tech now sits easily alongside transparent robots that eat real-world fish, solar nebula research, and other imaginative, futuristic projects in progress at the university.
Part of MIT’s Media Lab, DCI now has a team of 22 people and at least seven ongoing research projects, and it nurtures three startups that use cryptocurrencies and their underlying technology in a variety of ways.
To date, the initiative has funded the work of bitcoin protocol developers, and has supported a range of research, going beyond bitcoin to partner with distributed ledger tech startup Ripple and developing enterprise data projects.
DCI research director Neha Narula, who helps drive the initiative:
“We’re doing a lot of things — too many things, arguably.”
In this feature, we look at several notable DCI projects, spanning from how bitcoin’s underlying technology can (or can’t) shape the internet, to whether it can be augmented to offer more confidential yet auditable transactions.
1. Shattering online ‘echo chambers’
Among the grand ambitions of blockchain developers, there’s perhaps no use case bigger than the idea the tech could one day reinvent the World Wide Web on which its payments now ride.
It’s no surprise then, that here, MIT is exploring how the technology might be applied to problems in online publishing, in particular, Narula said, where there has been a consolidation in who distributes content.
She noted that one estimate says that 85% of traffic to news website comes from either Google or Facebook.
“In this election, we saw what happens when people get most of their news from just a couple of sources, and those sources have a strange algorithm showing people certain things. We’re kind of living in echo chambers,” Narula said.
She and other MIT researchers have been looking into the potential impact of peer-to-peer hypermedia protocol IPFS and Blockstack – an attempt to create an internet built on the bitcoin blockchain. Both have a goal of putting control of information in the hands of users via the use of a blockchain.
Narula noted that DCI will release a paper detailing their findings on the subject “soon”.
While these blockchain-related projects could potentially ease some of these problems, she expects that they won’t be a panacea.
“The underlying problems are around the economics of the web and the way people get paid for content. It’s advertising. It’s clicks. It’s views. In order to do that well, it seems as though these mega-platforms are incentivized to get bigger and bigger, and collect more and more users’ data and not let it out,” she said, adding:
“Until we have new ways of monetizing our content, we’re going to be in trouble.”
2. Improving blockchain privacy
Yet another big topic that’s been the subject of R&D at MIT is privacy and confidentiality – long one of the weaker areas of the bitcoin protocol despite claims to the contrary.
This is because public blockchains reveal information that anyone can trace – this is great from an auditability standpoint. Anyone can verify that a transaction actually occurred, for example. On the other hand, it stokes ‘Big Brother’ worries that the same tech used by bitcoin to evade governments could become a tool for surveillance.
One DCI project, called ‘Auditable Ledger’, explores how to construct a ledger that bridges the best of both worlds in a banking context.
Narula compared it to a system like confidential assets or confidential transactions, where user privacy is preserved, but auditors can still see enough information to verify details about the system as a whole – for example, that no one is adding to the money supply, which is supposed to be fixed.
She added that the team is “expanding the concept” to cover banks using a ledger to issue their trades.
“We can ask questions about the system as a whole. If the housing market tanked 20%, we can figure out which banks would be underwater, which banks would be OK, that kind of thing,” Narula said.
3. Building central bank currencies
Another “big” project, in Narula’s words, is for a central bank-backed cryptocurrency, though it was here that she expanded the least.
DCI research scientist Robleh Ali, who formerly worked for the Bank of England, is now reportedly building a prototype for the project to see whether cryptocurrency could play a role in this arena.
Narula noted that she hopes that this will be a way to explore further how privacy and auditability might slot together.