Digital Transactions Authoritative, insightful and timely information for payments professionals
As human civilization migrates to cyberspace, we run into a big problem. Unlike the migration of the Israelites from Egypt to the promised land—where they took along all their belongings (however few they had)—cyberspace migration does not allow us to carry along our material assets. The gatekeepers are quite adamant about it. So what do we do?
We tokenize!
Tokenization is a means to refer to our non-digital assets with digital expression. Tokenization in full force is carried out via randomization. A pebble you hold in your hands is materially different from the next pebble, though they are generally quite similar. The difference is in minute variances in shape, little protrusions, tiny dents,
and colorization.
The material world is variety rich, and, by contrast, the digital realm is variety finite. There are only 32 distinct bit strings comprising 5 bits. If more variety is needed, then more bits must be lined up. There are 33,554,432 distinct strings when 25 bits are lined up. The greater the variety, the more difficult it is to guess or say, the more difficult it is to fake and cheat. There is only one Mount Everest that is as high as the Everest, is located where the Everest is located, and has the shape of the Everest. Alas, a bit string that represents the Everest can be duplicated easily, if one can guess the bit identities.
If the identities of the bits we use to represent non-digital entities are determined by a formula, then a hacker can be smart enough to use the same formula and generate a fake identity. Our common solution for this today is to use a formula, an algorithm smarter than the hacker. It works as long as smarter hackers don’t attack us. John von Neumann, the greatest mathematician of the 20th century, said: “If you use an algorithm to manufacture randomness then you understand neither algorithms nor randomness.” We need to do better.
Cyberspace security is a mathematical battlefield. The best mathematician wins. We cannot defeat a single smart mathematician with a thousand not-so-smart mathematicians. This alarming risk moves us to non-algorithmic tokenization. We can do this by extracting tokenization from the very material entities not allowed in cyberspace. A new technology called “The Rock of Randomness” uses a lamp of matter carefully constructed from selected polymers infused with a variety of metal atoms, amounting to a source of randomness that is immunized against advanced mathematical insight, and that protects our tokens from an attacker smarter than we are.
Tokenization technology is advancing fast. We already use it to generate digital money with material-like identity, allowing cash-like payment from payor to payee and not going through an overriding control (whether centralized or decentralized). Cash-like payment relieves central computation load and exploits phones as computers. Tokenization 2.0 is now ready to achieve high-resolution money-flow tracking. No more need for Elon Musk to raid the bureaucracy—tokenized money cannot be camouflaged. The tokenized bitstrings are already transformed into “digital spaces,” which are being shaped to become AI-ready and Internet-of-Things compliant.
The more we rely on tokenized entities, the more vulnerable we are to glitches, mistakes, electromagnetic warfare, and ill-randomized production. Recovery plans are increasingly necessary, and that is why, at BitMint, we built a cyber-chemistry recovery vault. Tokenized data are kept in a nano-chemical structure, which is immunized against cyber warfare.
Paper money abstracted metal coins. It freed the world from the limitations of the Middle Ages and ushered in the Renaissance. Tokenization is a similar step in abstraction. What a new, yet unimaginable, world awaits us!
—Gideon Samid gideon@bitmint.com
