Wednesday, September 26, 2018

The last mile problem in trust

Blockchains are supposed to solve the trust problem. But blockchains attack only the easy part of the trust problem, and avoid the hard part. The easy part is to store the transactions in a tamper-resistant database. The hard part is to attest to physical world actions and state.

The blockchain is a database technology and it does not attempt to attest to physical world actions/state. It solves the problem of tamper-proofing the state after it is added to the database. It doesn't attempt to validate/test/certify if the state is correct as it is added to the database. If humans create the state, there is inherently a trust problem: Were the lettuce bad before it was loaded to the trucks, or are the truck conditions to blame? Did the farmer or the trucker lie?

If sensors create the state, this is still a very hard problem, but not because the sensors may have been tampered with ---that is a relatively easy problem to solve in hardware. The problem is hard because of the corner-cases involved; how do you even start to pretend that the sensors have complete coverage (or good/fair sampling) and the detection/verdict is accurate? It is really a very complex and messy problem. As far as complete coverage of food supply-chains are concerned, you need DNA-sequencing and metagenomics.

This is a classic last mile problem. The last mile problems are always hardest to solve because of the massive fan-out both in terms of scale and in terms of corner cases to handle. The last mile problems haunted many domains, most notoriously the telecommunications and transportation domains.

Walmart, Lettuce, and Blockchains

A couple days ago there was a lot of hype about Walmart starting to use blockchain in its supply chain, to pinpoint where the lettuce come from in an E.Coli contamination event.

Ok, let's get to the bottom of this. "Walmart, Lettuce, Blockchain." It felt very weird to type this in Google search, but I did it anyways... for science.

See, I knew there was a lot of hype: "The giant retailer will begin requiring lettuce and spinach suppliers to contribute to a blockchain database that can rapidly pinpoint contamination."

De-hyped, this just says Walmart wants the farmers to record transactions in a database.  And actually the article makes sense if you replace blockchain with database:  "Walmart says it now has a better system for pinpointing which batches of leafy green vegetables might be contaminated. After a two-year pilot project, the retailer announced on Monday that it would be using a blockchain, the type of database technology behind Bitcoin, database to keep track of every bag of spinach and head of lettuce."

I blame IBM's over-excitement in blockchains for the hype in the article. Supply-chains is a very complex topic, and this use of a database to record information doesn't come close to scratching the surface of it. There are many automation and logistics problems that remain to be solved. And the dreaded last mile problem of course.

MAD questions

1. What is the nature of trust?

What or who do you trust?

Trusting a deterministic machine with few inputs/environmental-parameters is reasonable. Especially if you verified and validated it, and tested it extensively.

But what would make you trust humans? Humans are complex nondeterministic beings, and the input and environment surrounding humans are also very complex.

Reid Hoffman defines trust as consistency through time. But this is assuming the conditions don't change. If conditions change, that is the inputs/environmental conditions change, the other side can change its actions.

The answer to the trust puzzle has got to do with "consequences", right?

It is easier to trust in a situation where you have little to lose, but the other side has a lot at stake. And ironically, this makes the other side have problems trusting you, since you have little at stake, and she is risking a lot. For mutual trust and better collaboration, all parties should have skin in the game.

So what is at stake? This can be reputation, if reputation is a currency valued by the individual and his environment. What is at stake can be jail time, if one breaks laws and get caught. This is assuming one doesn't enjoy jail. Under certain conditions, people commit crimes to get into jail to get fed and have reliable healthcare, and even not to feel lonely.

I think trust is not complicated, rather the calculation, alignment, and managing of consequences/incentives is complicated. And this again harkens back to the last mile problem in trust.

I believe the parties involved are going to push the limits of what they can get away with as long as the deterrents do not outweigh the incentives.

I don't know if there is a technology solution here.

At a recent A16Z podcast, one speaker was rightfully complaining that we have a lot of trust issues and fight among complementary business rather than substitute/alternative business. For example even though iphone apps and iphone platform are complementary businesses, there is a lot of fight there. Or consider the Yelp versus Google fight. Or the fights Facebook, the platform, picks with the applications it enables. The speaker was implying that with the right incentivization and cuts from cryptocurrencies like ethereum gas, the parties will actually synergize and grow together rather than fight.

This sounds nice and simple, but I don't think I buy this. The fights are due to the greedy nature of humans and companies. To repeat what I said said above, I believe the parties involved are going to push the limits of what they can get away with as long as the deterrents do not outweigh the incentives. Even if cryptocurrencies and Ethereum gas is used between platforms and applications enabled, next we will see fights over how much of the payment is fair etc. I don't know if technology can fix that. Maybe this is supposed to be a dynamic equilibrium with constant push-backs and small-battles erupting from the parties involved.

2. What is the verdict?

I don't hate/despise blockchains, as I have seen some colleagues do. That is a radical and unreasonable position. There are many smart people working on this domain, they cannot be all and completely wrong.

I am still ambivalent about blockchains. I believe there is still a big contribution potential coming from blockchains and smartconracts. But the hype news make things harder to see.

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