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Chainlink Co-Founder Sergey Nazarov On Smart Contracts, Simulation Theory And Definitive Truth

During a recent episode of the Lex Fridman Podcast, Chainlink Co-Founder Sergey Nazarov ruminated on the future of technology and decentralization with topics including how AI can solve human trust issues and which kind of agreements can be executed by hybrid smart contracts. Before tackling the nature of definitive truth, Fridman and Nazarov dipped their toes in a bit of simulation theory.

“If you had to live only in the digital world or the physical world, which would you choose?” Fridman asked. 

Nazarov framed the question as a matter of fidelity. If a digital world could achieve a high enough degree of believability – and possibly immortality – then he would be on board. “I’m hoping somebody can copy my brainwaves onto a virtual machine and allow that consciousness to continue to exist. Whoever is close to doing that, they should contact me,” he joked.

Pop culture entertainment stemming from the work of contemporary philosophers probes people’s intuitive connection to the real world. But films like The Matrix also ask questions like “Is ignorance bliss?” and “At what cost?”

Fridman asked Nazarov, “If Morpheus came to you, would you take the blue pill or the red pill?”

“There’s a moral/ethical question there,” Nazarov said, “because, in The Matrix, they’re all enslaved. I think the moral and ethical question of that, fascinatingly enough, isn’t actually different from the moral and ethical questions we face today.” 

Nazarov was, of course, alluding to the world’s centralized financial systems, which are built on brand-based models of trust and grounded in much less than people are led to believe. 

Smart contracts offer a trust-minimized system of agreements based on math, physics and definitive truth. Definitive truth, Nazarov explained, exists on the spectrum between theoretical objective truth and something somebody just decided to make up.

“I think the objective truth definition from the philosophical world is really stringent and very hard to attain and that’s not what this is. That’s actually not what commerce or the ability of people to interact about contracts needs.”  

Definitive truth is clearly established to serve an exact purpose, as in the case of hybrid smart contracts. For example, blockchain-based weather derivatives and parametric insurance policies execute on specific conditions predetermined and agreed upon by both counterparties.   

If two counterparties agree that an insurance policy will pay out when three sensors at three different weather monitoring stations verify that there was no rain on a given day, then definitive truth is the result of those systems coming to consensus.

In Nazarov’s view, definitive truth that is “acceptable to both counterparties” is “what’s necessary and sufficient for everything to move forward in a better way” than the current status quo, where a bank or insurance company gets to unilaterally decide what happens. Therefore, one could conclude: whether we live in an organic world or a simulated reality, definitive truth is all that matters. 

Listen to episode #181 of the Lex Fridman Podcast with Sergey Nazarov.

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