Underflow | 1

Meet Mr Peters, who is checking into the Four Seasons Hotel in Boston with Mr Lipp, his personal assistant. Mr Peters has made a small fortune from the sale of a messaging app. He is considering a move into artificial intelligence. But on this particular evening he is putting the final touches to one of his many side-projects, an experiment in game theory which will succeed beyond his wildest expectations.

September 2008 — Boston, Massachussetts

MR PETERS stands a touch over six feet tall, has a marathon-runner's spare but confident frame, and is probably about thirty years old.

He sports three or four days' stubble beneath his mop of dark-brown hair. He wears jeans, a lumberjack shirt and trail boots. But for all his air of dishevelment, everything about him is clean, or new, or laundered. He seems indifferent to the grandeur of his surroundings, a hotel lobby tricked out to resemble a 1920s Beaux-Arts mansion. "Tech", thinks the hotel receptionist, whose name is Cornelia West, as she watches them approach. She pulls up the daily arrivals file on her computer and sees that she is, as always, right. 

Trailing Mr Peters is a younger, shorter man, with the same casual-yet-purposeful air. This will be Lars Lipp, Mr Peters's personal assistant, who made the reservations. It is Lipp who now shows the IDs, fills in the forms, and confirms the necessary details.   

Peters's sole contribution to the conversation is a practised half-joke. "It sounds like Tor-Mass", he says to Cornelia as she opens their passports. A moment later, bang on cue, Cornelia smiles. She has seen that Peters is explaining the pronunciation of his first name, Toomas. 

The passports confirm the two men to be Toomas Peters and Lars Lipp, both Estonian nationals. Their bill will charge to a corporate Amex account. The hotel has annotated their reservation with a note saying that Peters is a company director and that Lipp is his personal assistant. Peters rates as a "four" on the hotel's VIP-scale. A "one" is a walk-in with a functioning credit card; a five is Bono or Bill Gates.  

West sees an additional note appended to Peters's file which she reads to herself and then decides to read aloud to her guests:

"We are advised that Mr Peters prefers to avoid casual conversation and is of a generally reserved disposition. This reserve is characteristic of Estonians, and should not be mistaken for lack of appreciation or gratitude. Please refer all calls and callers to Mr Lipp." 

Peters nods his approval. The note is one that Lipp drafted a few months back when people started recognising Peters in restaurants and hotel lobbies. Now it goes ahead of Peters to every place and event on his schedule.

With a polite smile and no further comment West gives Peters his key-card and his passport. When Peters gets up from his chair she follows him with her eyes just long enough to be sure that he knows where to find the elevator lobby. 

She touches her lapel, murmurs the words "Mr Peters" into a pinhead microphone, then touches her lapel again. Catching Lipp's eye, she explains that she is alerting the butler on Peters's floor. Guests on VIP floors are usually escorted by a valet who introduces them to the floor butler on arrival. 

Lipp, though by nature as laconic as Peters, has accustomed himself to small talk as part of his work. He reaches into his soft leather messenger bag and pulls out a copy of Wired magazine from three months earlier, a prop which he carries around with him for moments like this. On the cover of the magazine is a photograph of Peters captioned "Billion-Dollar Brain".

"He made a messaging platform called Lynxite", says Lipp, showing the cover to West. "Most people call it LX. Do you know it?" 

West certainly does know LX. With LX and an internet connection you can make video calls to other LX users anywhere in the world at no cost. LX is the most-used program on most people's home computers, including her own. The LX tag-line, "Can you see me? Can you hear me?", has entered the language. 

A couple of months ago, Lipp continues, Peters sold LX to Yazoo, the Internet search giant. The deal got a lot of notice, including the cover story from Wired. So now lots of people want face-time with Peters. They want to pitch investments to him, to ask him for money, to add him to the advisory boards of their start-ups. That is why Peters wants the hotel to shield him from callers. He doesn't have delusions of grandeur, he just wants privacy.    

West nods sympathetically. The Four Seasons in Boston is well used to handling self-conscious tech billionaires. But she keeps that thought to herself. At a Four Seasons hotel, every guest should feel unique.

Secure in his suite on the 22nd floor, Peters lies down on his bed and sets the timer on his watch. He will spend one minute relaxing the muscles in his body, then five minutes thinking silently about a problem which has taxed him for the past year and to which, he thinks, he has found a solution.

The problem is commonly called the "byzantine generals" problem. In its classic form it posits a dozen or so generals encircling a besieged city. The generals can send despatches to one another. But since they do not fully control the intervening terrain, a despatch might be intercepted and falsified by the enemy.

At some point, a co-ordinated attack on the city will have to be launched. Is there any way that the generals, despite the insecurity of their communications, can confidently reach a consensus decision on the timing of the attack?

When coders and cryptographers discuss the problem on the Cypherpunk forum, to which Peters subscribes, most of the proposed solutions are technical in nature: checksum indicators, public-private encryption, and so on. Peters has hit on a different approach. He thinks that the problem can be solved well enough by a form of majority voting.

If, at pre-arranged intervals, each general in the field sends an identical despatch — "attack" or "do not attack" — to every other general, then each general will have an updated record of the majority view among the generals, which can be treated as binding on all of them. Even now, some of the despatches may have been falsified by the enemy, but the enemy's task will have been made as difficult as is logically possible.

This would be a disastrous way of co-ordinating action on a real battlefield, but Peters thinks it should work well enough in situations where the over-riding requirement is to have a final decision, even more than a true decision.

The use-case which Peters has in mind is that of finalising transactions in a digital currency which is traded anonymously on the internet. The answer, he thinks, is for a record of every transaction to be generated and circulated to all users of the currency, and for every transaction to be considered final once the record of it has been circulated to, and accepted by, a majority of computers on the network. A bad actor might try to reject or falsify a record, but the true record would have a head start, and the bad record could prevail only if the bad actor controlled a majority of the network.

Peters decides that his solution should work in practice. He goes over to his desk, opens his laptop and adds a few final lines of argument to the draft-paper which he plans to share with a select group of Cypherpunks.

He will circulate the paper under a pseudonym because he is not yet sure that his logic is bulletproof, and because he dislikes attention of any kind. With the help of a Japanese-Estonian dictionary he has invented a nom de plume which alludes to his byzantine-generals solution. In English, the name means "Smart Basic Relationship". In Japanese, it is Satoshi Nakamoto.

Peters spoofs the address field in his email client, then hits "send". The paper is called Bitcoin: A Peer-to-Peer Electronic Cash System.

To be continued ...

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