Let’s imagine a scenario in which Alice did a personal attack on Bob. For simplicity, we assume that Alice is 100% guilty who attacking Bob without reason, and Bob is 100% innocent who suffering from Alice’s attack (Of course, the real scenario is way more complicated than that. It is often that Alice is not all guilty but Bob also did some wrong things). Assuming Bob knows the objective truth that Alice is 100% guilty of attacking Bob with (how Bob knows this truth is another challenging topic, and for simplicity, we just assume Bob knows it).

If only Bob knew the truth, of course, he would not get justice; Thus, he has to tell the truth to others. But will telling others ensure he can get justice? Maybe not. If Bob goes through the legal system, this is costly to Bob and Bob needs to provide evidence to prove Alice is guilty (Presumption of innocence for Alice), which is not always easy. Even if Bob is able to provide evidence, the legal system is subject to human bias and countless other factors. And if, in the end, Alice gets the punishment, there is no objective way to tell if the punishment is proportional to what she did. Thereby, justice is not always guaranteed for Alice and Bob even under the legal system.

A way worse situation is Bob speaking the truth to the public. As the public does not have the training to judge Bob’s truth, the result is uncontrollable. The public might understand that Bob is also responsible for a large part of the responsibility of the original incident, but by our assumption, Bob is totally innocent. Even if assuming the public is all super intelligent and can tell Alice is 100% guilty, such public opinion will unavoidably harm Alice. Since such uncontrollable harm to Alice, this would also create uncontrollable harm to Bob, because the public harm for Alice is from Bob’s speaking up the truth; thus, even if initially Bob is innocent, now Bob is guilty because of speaking up truth.

There might be one scenario that might justify Bob’s speaking the truth to the public for righteousness: Alice’s attack is a systematic issue. Countless Alices are using a similar method to attack countless Bobs. In this case, our Bob speaking up the truth would potentially help the system to improve, thus satisfying the interest of the public. However, there is a dilemma: the louder Bob speaks, the bigger the potential impact on the system to improve, thus potentially helping more Bobs, but more uncontrollable harm to Alice and Bob. It is then similar to the Trolley problem: will Bob sacrifice Alice and himself to potentially save other Bobs?

You might argue that Bob does not need to speak up, the system would improve itself. But this is rarely the case in human history. The system does not improve itself unless there is some triggers (usually sad triggers). Therefore, it is just a sad reality that truth and righteousness are fundamentally incompatible in a way.

Apart from the history of Spain still having some African territory, what attracts me more is the 6-meter-high double (or even triple) fences. They set up such heavy fences to prevent Africans from moving from Africa to Africa, but still, thousands of people risk their lives to try to breach this fortified border.

Why did Spain set up such heavily fortified fences? The obvious reason is to prevent African migrants from entering Europe. But there are deeper reasons for it. Where the Africans want to go in the end is the European continent, rather than two small Spanish towns located in Africa. Geographically, reaching Ceuta and Melilla does not help much since it still takes about one hour’s ferry to reach the European continent. To prevent migrants from reaching the European continent, the Spanish government could set up control to prevent any illegal person from entering the ferry, and in fact, they indeed did it. And there are more places where the distance from Africa to Europe is much shorter. So, what is the incentive for migrants to breach the border to Ceuta and Melilla after all?

The complete story lies in the fact that Ceuta and Melilla are subject to European law. The law gives any person rights (whether with or without an identity document). For example, anyone set on foot in the European territory has the right to apply for asylum, regardless of whether they entered illegally or not. Certainly, not everyone can successfully obtain refugee status, but the deportation procedure afterward may take years by the time the illegal migrant might have already integrated into society, making deportation unlikely to happen.

The paradox: what matters is the border, not human

Within the European countries, there are many laws, volunteers, and associations helping with illegal immigrants, making their lives much better than before. But all those benefits rely on one precondition: they must set their foot on European territory. This is the incentive why they will risk their lives to breach the border to reach Ceuta and Melilla. However, before they satisfy this condition, everything may go against them: no help for their living, and governments set up higher and heavier fences to prevent them from crossing the border. It is a paradox in our humanity today: what really matters is the border, not the human.

What is the incentive for someone to do that? Here is an example that explains why. Suppose a broker receives a large order from a client, say, buy 500,000 shares of a company’s stock. The order is big enough to drive up the share’s price. Knowing this information, an attacker can place his small order, say 10,000 shares of the same stock, before the large order. The attacker can sell his shares at a higher price when the price goes up after the large order went through.

The formal definition of front-running is a practice of benefiting from the advanced knowledge of pending transactions. Although benefiting some entities involved, this practice puts others at a significant financial disadvantage, making this behavior illegal in traditional markets with established securities regulations.

Front-running in Blockchain

With the ambition of the blockchain community to mimic the traditional Centralized Finance to the Decentralized Finance (DeFi), more and more financial applications appear in the blockchain world. At the same time, this creates enormous opportunities for attackers to front-run clients’ transactions to gain an unfair profit. One estimate suggests that front-running attacks amount to $280 million in losses for DeFi actors each month¹.

However, due to the open and pseudonymous nature of blockchain transactions, it is virtually impossible to rely on regulations to mitigate this issue; thus, we must rely on technology to protect users.

How front-running works in blockchain is very similar to the traditional exchange example. Instead of the broker, a blockchain miner/validator is the middleman who places users’ transactions into the blockchain. As all the transactions are in plaintext by default, anyone can observe the pending transaction and become a front-runner, including miners/validators.

Flash Freezing Flash Boys (F3B)

Our solution, F3B, mitigates front-running attacks in a very simple way. Instead of plaintext transactions, users encrypt their transactions so that no other entities can know the content of the transaction. When the encrypted transactions are firmly written into the blockchain, the consensus nodes can decrypt, verify, and execute the transactions.

We can reason why F3B mitigates the attacks from the definition of the front-running. Before the consensus group finalizes the transaction, an attacker can no longer read the content of it, thus preventing the adversary from benefiting from advanced knowledge of pending transactions.

To properly ensure no single point of failure, F3B adopts threshold encryption. A Secret-Management Committee (SMC) can generate a public key for a user to encrypt their transaction. When the consensus group finalizes the transaction, SMC releases the encryption key so that the consensus group can validate and execute it. Threshold encryptions guarantee as long as there are more than half of the nodes following the protocol honestly, F3B can successfully mitigate the front-running attacks. In practice, the SMC and the consensus group can consist of the same set of servers.

F3B unique features

Architecture level solution: F3B addresses front-running attacks at the architecture level. Deploying F3B requires a change of the execution layer, requiring a hard fork of the existing blockchain. This inevitably brings some difficulty for adoption, but the benefit is substantial: all the smart contracts on the blockchain, by default, have front-running protection with low overhead costs.

Per-transaction protection: Notably, F3B adopts per-transaction basis protection rather than per-block basis, as presented in Fairblock and Shutter. These schemes require clients to choose a future block to derive the encryption key, which raises security concerns. Suppose a transaction failed to be finalized in the client-chosen block due to, for example, a crypto mania that overwhelms the blockchain network or a deliberate denial of service attack. In this case, the transaction is undesirably revealed. F3B, on the other hand, asks clients to generate an encryption key for each transaction. This ensures that a transaction remains confidential until the transaction has received enough confirmations.

Spamming issue: As the consensus group cannot execute encrypted transactions, an adversary could, at a low cost, spam the blockchain with non-executable transactions (e.g., inadequate fees, malformed transactions), thus delaying the finality of honest transactions. To make such an attack costly, we introduce a storage deposit alongside the traditional execution fee (e.g., gas in Ethereum) and adjustable based on the transaction’s size. The underlying blockchain can deduct the storage deposit from the sender’s balance, much like paying a transaction fee. Then, the blockchain can partially refund the deposit after successful execution by the consensus nodes. This approach imposes a low-cost fee on compliant users and a penalty on those who misbehave.

Practical to deploy: Our prototype on Ethereum found only a negligible (0.026%) increase in transaction latency, specifically due to running threshold decryption with a 128-member secret-management committee after a transaction is finalized; this indicates that F3B is both practical and low-cost to deploy.

Conclusion

We have introduced F3B, a novel blockchain architecture that addresses front-running attacks on a per-transaction basis. Our prototype demonstrates that F3B can practically deploy to Ethereum. Given that the deployment of F3B would require modifications to a blockchain’s execution layer, F3B, in return, would also provide a substantial benefit: the F3B-deployed blockchain would now, by default, contain standard front-running protection for all applications in need at once without requiring any modifications to smart contracts themselves.

Project main contributors: Louis-Henri Merino (EPFL, IC3), Ziyan Qu (EPFL), Mahsa Bastankhah (EPFL), Vero Estrada-Galinanes (EPFL, IC3), Bryan Ford (EPFL, IC3).

Link to original paper

Hyperinflation

Argentina constantly suffers from inflation, and in recent years, it has become worse with a more than 100% inflation rate based on the official number (the price would double every year). I was lucky enough to observe how people live in a society with hyperinflation in Argentina.

For lucky Argentines who can save some money after paying the living cost, their strategy is to exchange their money for the U.S. dollar. As the government implemented capital control to preserve its dollar reserve, it inevitably created illegal black markets. The people who want to get dollars must pay almost double the price of the official rate. As the gap between the official rate and the de facto rate is so large, exchanging money at black markets becomes the worst-kept secret in the country: everybody knows where and how to exchange their money into dollars, and even if it is illegal, nobody seems to care.

For the unlucky majority, they do not have the privilege of figuring out how to preserve the value of their money. They must pay all their salary for living, and their living standard is constantly declining because of inflation. I once met a middle school teacher from a rural area protesting in a city park. He told me his salary five years ago was 20,000 Argentinian pesos, and now he receives 75,000 Argentinian Pesos. Sounds pretty good, right? But the Peso devalued more than 12 times in this period, from 40 pesos to 1 dollar to 500 pesos to 1 dollar¹. Thus, de facto, his salary was reduced from 500 dollars to 150 dollars. His actual purchasing power may decrease even further as the purchasing power of the dollar also decreased a lot during the last five years.

Professional Protest

What Argentines can do? In a democratic framework, they can protest and elect their preferred president, which is exactly what Argentines do. During my trip to Argentina, I observed people protest at different scales in every city. I was amazed at how professional the Argentines do the protest and how peaceful they can be.

One interesting protest that happened to me was in Jujuy Province, where local people would block all the roads. Unlike blocking indefinitely, which would cause too much influence on people’s lives, they allow cars to pass one hour every three hours intervals. This strategy effectively increases everyone’s transportation time by three times, but not infinitely. It seems to me that this strategy reaches a perfect balance point. Although the drivers and passengers are unhappy about the delay, they seem to accept the rule and peacefully wait for every blockage. From the side of the protestors, blocking roads does not need too many resources; thus the protest can last for a long time.

An issue democracy alone cannot solve: seeking short-term interest

I would argue the problem faced by Argentina is the incomplete democratic mechanism. People want to improve their living standards, which is understandable under the situation. Then, they will prefer and select the government that can promise welfare to people, and the only method the government can do is to increase its spending to provide it. However, the Argentina government already reached the point where it cannot increase its spending: It can print more Argentina pesos, but the currency will devalue even faster, leading to an even worse situation than before. At this point, Argentina is in a trap that lies more fundamentally: all entities can only seek short-term interest.

The next

Both Argentina and human history demonstrate the most likely path: the country falls back to an authoritarian or even totalitarian regime. A strong government may seek for the long-term interest with a bigger short-term pain, but it entirely depends on the mercy of the government. There is no systematic method to guarantee that the government will do the good things to society.

For other countries, the most important thing is preventing it from falling into a trap like Argentina is in now. How Argentina falls into the trap in the first place is, in fact, because the government has too much power: when the country does not have the ability to provide welfare in a sustainable way, a democratic government can still promise its people welfare. Thus, there should be a systematic framework to limit the power of the government, especially on spending. If the domestic parliament is too weak to restrict the government, perhaps such a framework should come from the international level, using agreements or monetary tools to restrict government power on spending, but it is another big topic, perhaps in another blog post.

Traditional Theory

Traditional theory suggests that wealth is accumulated from the saving of income. Image a person constantly saving a certain percentage of his income; his total wealth is his accumulated saving. Considering the country or global perspective, the sum of all accumulated saving from each entity forms the total wealth. However, this theory needed to explain the following statistical data.

Global wealth grew significantly during COVID.

COVID has become a perfect natural experiment for testing this theory. Unintuitively, global wealth grew significantly in 2020 when economic activity took a severe hit by COVID. Specifically, the global GDP went down by -3.1%¹ (suggesting the global income reduces by 3.1%, as GDP measures the total income), yet global wealth increased by 4.1%².

Figure 1 demonstrates the growth of wealth relative to GDP by country. Surprisingly, the countries most affected by COVID (measures in loss of GDP) did disproportionally well in wealth terms. Belgium, Canada, Singapore, and the United Kingdom, among the worst-affected countries with an average GDP loss of 7.1%, achieved unusually high wealth gains averaging 7.7%.

Those numbers suggest that, at least in the short run, the wealth growth can be irrelevant to GDP (income). Thus, it denies the theory that wealth is solely accumulated from saving.

Return on capital exceeds the growth rate.

How about in the long run? Thanks to Thomas Piketty, we have the long-term data. In the long run, the return on capital³ (before the tax) is always higher than the GDP growth rate, as presented in Figure 2. Although Thomas Piketty presented this historical fact in his 696 pages of the book Capital in the Twenty-First Century, he still needs to explain why the return on capital can exceed the growth rate.

Create wealth from thin air

The following explains how wealth can be decoupled from the GDP. It is worth emphasizing that I do not deny the channel that wealth is accumulated from saving but suggest an additional speculative channel creating wealth, which explains how it is possible that wealth growth can be irrelevant to GDP.

Imagine a fictional community with ten identical houses. Ten households purchased those ten houses at the price of \$100,000 initially. Assuming they do not take mortgages to buy those houses, thus \$1,000,000 is the total wealth of this community. One day, one of the households sold his house for \$200,000 to a speculator. This single transaction would influence other houses’ values: the market would value other houses at \$200,000, too, rather than \$100,000. Suddenly, everyone in the community becomes richer, and the total wealth of the community increases from \$1,000,000 to \$2,000,000. In this fictional example, the houses remain the same, but an additional \$1,000,000 worth of wealth is created from thin air.

The stock works similarly. Imagine a fictional company that went to IPO and issued 10,000,000 shares. If investors believe in the company and buy those shares at \$10 per share for 1,000,000 shares. This action determines that the company is now worth \$100,000,000. Those \$100,000,000 is the wealth created from thin air and a net wealth gain for the society.

If you think those two examples are too unrealistic, that the price changes must reflex some fundamentals of the assets, and do not believe that wealth can be created from thin air, consider the example of Bitcoin. Bitcoin, in a way, is just some digital information stored in some computers around the world. It has the intrinsic value of zero, as holding it does not generate any return. Thus, it is unsurprising that some economists predict that Bitcoin’s value will eventually become zero. Yet, we never see Bitcoin value become zero. All the Bitcoin value is created from thin air.

Through those three examples, I hope you are convinced that wealth could be created from thin air. Of course, the opposite can happen too. When the value of the assets (like housing, stock, or Bitcoin) decreases, the wealth is destroyed. When this happens, everybody feels poorer. In a fair world, speculative wealth creation and destruction should come at equal probability. However, in reality, wealth creation is far more likely to happen than wealth destruction, as we like to be richer altogether rather than poor altogether.

Proletariat vs. Bourgeoisie

We can naturally divide people into two classes: those who have the wealth to participate in the game of wealth creation (Bourgeoisie) and those who do not have wealth and have to earn a wage for a living (Proletariat). As the historical data suggest, the return on capital is always higher than the GDP growth; thus, it is not difficult for the bourgeoisie to find some good investment opportunities to benefit from the wealth creation process and use those benefits to enjoy life. On the other hand, the proletariat is in an unfair position, as they must constantly work hard to earn a wage for a living. If you want an easy life, please join the bourgeoisie group.

Everyone has the “printer” for wealth

Unlike money, which only commercial or central banks can “print”, everyone has the “printer” to create wealth. How the richest people in the world have so much wealth not because they earn a good wage through hard work but create giant amout of wealth from thin air. If you want to “print” wealth, you need to have a good story and then fictionalize the story into shares (for a company) or tokens (for a cryptocurrency project). If people believe the story and begin to buy those shares or tokens, you have successfully “printed” the wealth from thin air.

Is there a limitation to this speculative wealth creation overall? How does money influence wealth creation? The next blog post answers those questions.

This first post introduces how money is “printed” in our modern economy. I never work in a commercial or central bank. So, my understanding is solely based on reading papers whose authors researched it¹². Surprisingly, how money is issued in the modern world is not clear to the public, and even many economic textbooks do not reflex the correct view. Thus, if you are an econ or finance student, you might also find something new in this post. As usual, I try to use simplistic language to illustrate it.

Balance Sheet

To understand how money is “printed” in the modern economy, one needs to understand the balance sheet, which summarizes the financial balance of an entity. A balance sheet has two sides: Assets and liabilities. The assets side records money or any valuable things belonging to the entity, while the liabilities side represents obligations of the entity. Furthermore, we add equity to represent the value owned by the entity to the liabilities side when there is an unbalanced mismatch between assets and liabilities.

Assume that someone has some paper money in his pocket and some deposits in his bank, and he does not have any loan; thus, his balance sheet would look like Figure 1 on the left. The items on his assets are currency and deposits, while his liabilities are solely his equity as he has no debt.

Imagine that he is now taking a loan from his bank for his future house. This action would change both sides of his balance sheet. On the assets side, he has an additional deposit in his bank when the bank grants his loan, whereas, on the liabilities side, he has a loan from his bank, which is an obligation that he needs to repay in the future. His new balance sheet would look like Figure 1 on the right.

How a commercial bank creates money from the thin air

The majority of the money is created by commercial banks when making loans¹. By using the balance sheet, we can see this process. Whenever someone makes a loan from his commercial bank, he will see that his bank account is credited with a new deposit from his commercial bank and know that he has a new obligation that, in the future, he will have to settle this loan by paying the money back to his commercial bank (Figure 1 from left to right).

From the bank’s point of view, its balance sheet also changes. When the commercial bank grants the loan, the loan becomes the bank’s asset, as the bank expects the borrower to repay the loan in the future, while the borrower’s new deposit is the bank’s liability, as he can demand to withdraw his deposit, demonstrated in Figure 2 from left to right.

In this process, the money is created from thin air digitally. The borrower can consider his deposit in his banking account as his money. He can withdraw this deposit from an ATM, spend this deposit to purchase goods and services, or transfer this deposit to others.

Similarly, when the borrower repays his loan, the process is reverted, and the money disappears. Whenever the borrower uses his deposit to repay his loan, the deposit and loan disappear from the bank’s balance sheet and the individual’s, presented in Figure 2 from right to left. In practice, this process may not be symmetrical because commercial banks usually can profit from creating new money as a loan is not free: the borrower needs to repay not only the principal but also the interest.

Usually, commercial banks cannot create too much money, as there is a risk associated with it. All clients of the bank can demand to withdraw money or transfer their deposits to other banks, and if a bank creates too much money (higher leverage ratio), the client’s demands may not be satisfied. If this happens, the bank is in trouble and may need to declare bankruptcy.

How a central bank creates money from thin air (Season 1)

When a commercial bank faces a liquidity issue that it cannot satisfy demands from its client, it can borrow money from other commercial banks or directly from the central bank. Whenever a commercial bank borrows money from the central bank, the money is created from thin air, but this time, it is the central bank that “prints” them digitally.

Similar to individual borrowing, when a commercial bank borrows money from the central bank, the bank’s account in the central bank is credited with newly created money called reserve, which can be exchanged for currency in banknotes or coins. Figure 3 from left to right presents the balance sheet before and after commercial bank borrows money from the central bank.

From the central bank’s point of view, the commercial bank loan is the central bank’s asset, while the newly created reserve is the central bank’s liability. Figure 4 from left to right illustrates the changes in the central bank’s balance sheet. However, unlike the commercial bank, which needs to worry about its liabilities, the central bank does not need to worry about them, as the central bank can simply “print” money as much as it wishes in theory.

Although a central bank can create infinite money, it has consequences on the market. If a central bank creates too much money relative to the goods and services produced on the market, leading to too much money chasing too few goods and services, this will result in inflation (prices of goods and services go up). A functional central bank usually wants to control the inflation rate to an acceptable range, but history is full of failures examples.

The central bank does not set the money supply target directly but by controlling interest rates indirectly. The central bank would set up an interest rate target and control the money supply to achieve the interest rate target. If the central bank wants to decrease the interest rate, the central bank can then offer loans to commercial banks lower than the current market interest rate. By injecting more money into the market, more money supply is chasing fewer loan demands; thus, the market interest rate decreases. If the central bank wants to increase the interest rate, it can sell its loans on the market in exchange for the money the central bank created before. By withdrawing money from the market, more loan demands are chasing less money supply; thus, the market interest rate goes up.

The money created by the commercial bank and the central bank is different. While an individual can spend money created by the commercial bank (It is digital money in the form of a deposit in its commercial bank), a commercial bank can only use money created by the central bank to settle the transactions with other commercial banks or the central bank (as the money created by the commercial bank is just a digital number in its database). The money created by the central bank is called base money, whereas the money created by the commercial bank is named broad money.

How a central bank creates money from thin air (Season 2)

After the financial crisis of 2007-2008, the above method is not powerful enough to provide enough base money for the market. The central bank began using a more radical method to inject base money into the system by directly purchasing assets from the market, a process called Quantitative Easing (QE).

The central bank can purchase assets, such as government debts, company stocks, mortgages, etc., by creating new reserves. Figure 5 from left to right demonstrates this process. The money would eventually end up in commercial banks’ assets, reducing the risk of the commercial bank (reducing the leverage ratio), as it now has more base money for its settlement with other commercial banks and the central bank.

By QE, the central bank can reduce the interest rate to 0% or even negative (commercial banks need to pay for keeping their reserve in the central bank accounts) by injecting an incredible amount of base money into the market. This radical policy helped to save our economy after the financial crisis.

However, if the central bank abuses the QE by injecting too much money into the market, the prices of goods and services will increase (inflation). If the central banks want to reduce inflation, it needs to intervene by decreasing the amount of money. The central bank can then sell its purchased assets to the market in exchange for the base money it created before, thus reducing the bank’s balance sheet and withdrawing money from the market, a process called Quantitative Tightening (QT). Figure 5, from right to left, demonstrates this process.

What is wrong with our monetary system? Debt-based money

The above process is how money is created in the modern economy. What’s wrong with this system? Let’s look at the trend of the dollar’s base money supply. We can observe that the FED (Central Bank of the USA) needs to inject more base money into the market constantly, and if there are financial crises, the injections are even more tremendous. Why?

One of the reasons is due to money creation. Whenever money is created, the system also creates its by-product, liability, in the form of debt. Any entity has an obligation to repay the debt with interest. However, whenever a debt is settled, the money and the principal of the debt are canceled out in the balance sheet (money is essentially an IOU, and it disappears when the debt is repaid), but not its interest. Since fiat money is only legal tender to settle the debt, the interest payment needs future money to repay, and the process of creating the future money induces more interest needed to repay, which requires even more money to settle the debt in the future, resulting in even more interests needed to repay. This process goes forever and must go forever.

Money is not wealth

From an individual point of view, money is wealth you can directly spend. However, from an entire system point of view, money is not wealth. When we sum up the balance sheets of all the entities in the system, the money we created is canceled with the principal of debt, but not the interests; thus, the money we have today, in fact, creates the negative net value of wealth for our society.

But then, how is overall wealth created? In this series’s next blog post, we will explore it.

I am going to give a simple game theory analysis. I will use a game to model reality and use players in the game to represent the people in reality. Here are some assumptions about the game:

1. Each player is rational, i.e., wanting to maximize their reward.
2. Two actions are available to each player: against or supporting the authoritarian regime.
3. If fewer than t players are against the authoritarian regime, the transition will be failed, and players against the regime will receive a heavy penalty (perhaps many years in prison). In contrast, players supporting the regime remain unchanged (no penalty and reward).
4. If equal or more than t players against the authoritarian regime, the transition will be succussed, and everyone (regardless of against or support) will receive a relatively small reward in expectation (because everybody now lives in a democratic regime)².

We can prove that supporting the authoritarian regime by all players is one Nash equilibrium (a stable state in which no one is incentivized to change their action). When each player supports the authoritarian regime, if one player changes his action from support to against, he will receive a heavy penalty. Assuming everyone is rational, no single player would change his action.

Luckily, this is not the only Nash equilibrium of this game. If more than t players are against the authoritarian regime, it is also a (weak) Nash equilibrium. When more than t players are against the authoritarian regime, everybody receives a small reward, even though one player changes his mind from against to support.

But how can we transition from the bad equilibrium to the good one? It seems to be extremely difficult unless we have some external coordination. The key is to let more than t people change their actions altogether simultaneously to avoid heavy penalties for minorities. A leader could be the person to coordinate everyone’s actions, but he is very likely to receive a heavy penalty from the authoritarian regime. Perhaps, a better solution is to use common public knowledge to coordinate, e.g., protesting every Sunday at 10 am.

Nonviolent Protest:

The key to success is to let more than t people act altogether. Some research shows that t is 3.5% of the population³. We must attract people to join the protests as much as possible to reach this threshold. Statistic data show that nonviolent protests are more likely to attract people to participate and have a higher success rate⁴.

Tips for Dictator

To prevent your minions from overthrowing you, you need to attack the model’s assumptions or make hard changes from the bad equilibrium to the good one. You can do the following:

1. Make your minions irrational.
2. Control the information and discussion, reeducate and guide minions’s minds and interests, so your minions would not know there is a better option for them.
3. Impose heavy penalties for anyone who is against you.

Please do not overkill, as your overkilled actions might also become common public knowledge for people to act altogether.

For People Living in an Authoritarian Regime:

If you are not smart enough to know the rule of the game, you do not know that there is a better world.

If you are smart enough to know the rule of the game, your destiny is to disguise. Your inner heart knows everything, but you must act like you support (or at most not against) the authoritarian regime. You will have to face such inconstancy constantly. But please be patient; your Messiah will come (either a revolutionary leader or common public knowledge) to call you. Good Luck!

To provide a brief background, Kosovo eventually declared its independence after the breakup of Yugoslavia. However, Serbia does not recognize Kosovo as an independent country and considers Kosovo as part of Serbia. To make matters worse, some Serbs live in Kosovo. Mitrovica is the border city of the two ethnic groups that are separated by a river: the north is dominated by Serbs, and the south is dominated by Albanians (the leading ethnic group of Kosovo).

Mitrovica, thus, is usually the center of the conflict between Serbia and Kosovo. There are peacekeepers from NATO in Mitrovica all year round trying to separate them and calm any dispute. However, a tense atmosphere can happen from time to time. Three months ago, Kosovo Serbs blocked the road to the main border crossings towards Serbia in Mitrovica¹.

When crossing the river in Mitrovica, everything changes. In North Mitrovica, people believe in Orthodox, speak Serbian, fly the flag of Serbia, and use Serbian Dinar as their currency. In contrast, in South Mitrovica, people believe in Islam, talk in Albanian, hang the flags of Kosovo and Albania, and spend Euro. Ridiculously, both sides would commemorate their national heroes, who happened to be the murderers of another side in the same conflict.

Different ethnic groups can live together peacefully, just like in Yugoslavia. But after so many deadly conflicts, how should they reconcile with their enemy? Stopping commemorating those national heroes can be the first step toward reconciliation. The national heroes rarely did something good for humanity; thus, from a broader human perspective, nothing is worth commemorating them.

On my recent trip to Africa, the most common word I heard is Inshallah, an Arabic expression of “if God wills” or “God willing.” It means that what happens in the future is in God’s will. It implies that we should not worry about the future, as everything is under the control of God. However, words like this only work if people believe in them deeply, and this belief typically needs practice and training for a long time.

It turns out that, in Senegal, there is a systematic way to train children into God’s faithful followers. Many children would become talibés (meaning seekers or students) who study the Quran at a Daara (Quranic school). They receive full-time Islamic education for free, without or with little secular education in subjects like math, French (the only official language in Senegal), or English.

As a tradition, parents from villages are encouraged to send their children to urban Daaras to reduce the cost of parenting. Since religious education in Daara is tuition-free by nature, Daara has to rely on other financial methods to maintain its running. Some lucky Daaras can receive enough donations from the nearby local community, which allows them to offer their talieès free food and accommodation. In contrast, some other Daaras must rely on their talieès.

Those unlucky talieès then have to earn money for their Daaras as well as food for themselves. They usually are forced to become street beggars, constantly suffering hunger. Suppose they are lucky enough to survive until they graduate from their Daaras; the reality is still cruel to them. In lacking secular education, they are missing basic knowledge to better survive in modern society.

Even if the lives are so hard for those talieès, they have a toolset to deal with those difficulties: everything is Inshallah. The attitude of accepting reality is the exact training they receive in religious education. However, assuming receiving such religious education is why they suffer in the first place, God is facing a difficult dilemma: If God allows them to decrease religious education and emphases on secular education, perhaps, in general, they will improve their material life and likely to reduce physical suffering, but they may eventually become indifferent towards God, like what happened in Europe. Or if God maintains such religious education, God is responsible for his people’s suffering. A dilemma to be solved by God.

System Goals

Before introducing the decentralized public transportation system, we outline some goals suitable deployed in a city of low-income developing countries.

1. Low Cost: The transportation fee should be minimal.
2. Low Latency Overhead: The waiting time should be acceptable.
3. Price Flexibility: The price should be flexible enough to incorporate the changes in the operating costs.
4. Traffic Flexibility: The system can adapt the traffic demands dynamically.
5. Decentralization: There is no centralized planning or control.

Protocol Overview

We introduce the system with illustrative examples to distinguish this paper from other hard-to-understand system research papers. All the examples are real and happened on our trip to Nouakchott (the capital city of Mauritania with one million population), where there is almost no city bus available, and the only available option for local people to travel is to take shared taxis.

Example one: from nowhere to somewhere

We got off at an unknown place when we first arrived in Nouakchott and we knew the GPS location of where we should go next; however, we did not know how to take city buses to the destination (as there is no city bus), nor know how to take a taxi with the destination named in English or French rather than a pair of numbers.

We searched the nearby area to find something famous to be the name of our destination. Suddenly we found a Carrefour. We were amazed that they have the Carrefour in Mauritania, as we had not seen a single Carrefour supermarket after we left Agadir in Morocco. However, we soon realized that this is not the supermarket Carrefour, but a real carrefour as a crossroad. The carrefour is named Aziz. As soon as we were confident enough to pronounce the name, we were ready to take a taxi to our destination.

After a few failed tries, we soon realized that no taxi would take us to carrefour Aziz, which is too far (but only 7km). Instead, a local guy told us we should take a taxi first to carrefour of police routière, where we could take another taxi to carrefour Aziz. Soon, we found a taxi that took us to carrefour of police routière, and there we found another taxi to carrefour Aziz. Figure 1 presents the detailed route.

Unlike a real taxi, all taxis in Nouakchott are shared taxis, meaning one has to take the taxi with other passengers. As no shared taxis are heading toward carrefour Aziz directly from where we were (because it is not in the same direction), it is not surprising that we could not find any taxis initially.

The taxi price is amazingly low, only 10 MRU (0.28 USD as of Jan 2023) per ride per person, although we were special “treated” and asked to pay 20 MRU per person for the first ride as new foreign travelers who did not know the local price.

The system is similar to the modern metro system in that one may change lines multiple times to reach their destination, and one metro car carries multiple people. In the case of shared taxis in Nouakchott, the de facto number of passengers is six, even though the taxi only has four seats for passengers (obviously, locals are skinny).

Example Two: From Carrefour Aziz to Ouad Naga

Ouad Naga is a small town with some camels 50 km from Nouakchott. We departed for this town at 6:30 am when it was still dark. Nevertheless, the public transportation system was operating. We first took a taxi ride from carrefour Aziz to carrefour Madrid and then took another taxi ride to Toujounine where we could transfer again to our final destination, Ouad Naga. The cost within the city limit is 10 MRU per person per ride, whereas the long intercity ride costs 50 MRU (1.35 USD as of Jan 2023). Figure 2 shows the detailed route, and Figure 3 presents the transit station in Toujounine: nearly every car serves as a shared taxi.

Achieving the System Goals

1. Low Cost: The price is low and affordable by locals.
2. Low Latency Overhead: Finding shared taxis is amazingly fast, as there are many taxis with two more places in each taxi. We rarely wait more than 3 mins.
3. Price Flexibility: There is no listed price. The driver can tell the passengers if this trip would not use the conventional price (in the local language, of course).
4. Traffic Flexibility: If a driver finds out that another route is more profitable than the route they² are operating now, they can change to operate in the more profitable one immediately.
5. Decentralization: The local government or companies do not manage or control public transportation. It is decentralized and operated by each shared taxi driver.

Future work

It is unclear how to provide safety to passengers, as nobody wears a safety belt. Even if they want (as we do), a shared taxi needs more safety belts for six passengers, if it has any. Furthermore, it needs to be clarified how to apply this efficient and environmentally friendly transportation system in developed countries.

Acknowledgments

This research was not supported by any grant or fund.