Last updated April 24, 2018 at 10:00 am
The spectacular rise of cryptocurrencies such as bitcoin has often been dismissed as a storm in a teacup. Now it appears the critics were more accurate than they knew.
If you can model an actual storm in an actual teacup, it turns out, you can use pretty much the same equations to control virtual coins. That’s the novel conclusion of pf physicist William Gilpin of Stanford University in the US, published in the journal Proceedings of the National Academy of Sciences.
Cryptocurrencies are free economic agents – money systems not regulated by any single nation state. They acquire their value, and security, through a mathematical function called a cryptographic hash.
The hash is essentially an algorithm that takes input data of any arbitrary size and converts it into uniform-length string of bits. At the same time, the crypto hash function obscures all identifying features of the input data – its origin, for instance – in a way that cannot be reversed.
These functions make the hashes ideal for cryptography, but it is important to realise that the conversion from input to output is not based on a random function. Two identical inputs will result in two identical outputs. However, even the tiniest difference at the front end results in massive disparities at the back.
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It was this phenomenon that drew the attention of Gilpin. Thinking about the way bitcoin transactions behaved led him to ponder the fluid dynamics involved in stirring a liquid. From the point of view of the physics, he realised there were some similarities.
“I figured there’s probably some analogy there that was worth looking into,” he explains.
He zoned in on a principle of fluid dynamics called chaotic mixing, which describes the way fluids churn together. If an initial liquid – black tea, for instance – is at rest, and another liquid – say, milk – is added to it and stirred, chaotic mixing occurs.
Just as with cryptocurrency transactions, Gilpin realised, if exactly the same amount of milk were added to exactly the same amount of tea, in the same configuration, and stirred in exactly the same way, then the end result would be the same. However, in practice, differences, even very small ones, in any of those values results in a very different outcome.
“Having an actual physical model and showing that this is a naturally occurring process might open up new ways to think about those functions,” says Gilpin.
In another similarity, the end result of a storm, or at least a whirlpool, in a cup of tea is the same as the end result of a crypto-hash, insofar as there is no way to undo the process, nor identify the initial conditions that started the event.
To test his insight, Gilpin took the equations that describe chaotic mixing and used them as a hash function. They worked almost perfectly.
“I wasn’t expecting it to perform that well,” he notes.
“When it looked like it satisfied every property of a hash function I started getting really excited. It suggests that there’s something more fundamental going on with how chaotic math is acting.”
Gilpin’s discovery, indeed, has the potential to reinvent some aspects of computer science. More profoundly, it suggests a previously unsuspected link between cryptocurrencies – which are the result entirely of human activity in the digital realm – and the natural world.
“Something as ordinary as a fluid is still performing computations,” he says.
“It’s not something only humans tell computers to do. It’s something that nature does and it shows up in the structure of how things form.”