The same people who today preach the future will hold hundreds of competing cryptocurrencies, any of which can pass Bitcoin in importance, resolutely echo yesteryears prophets of speculatory network infrastructure bubbles. During the last few centuries, mankind has consistently found ways to transfer value more efficiently by opting  into distributed networks, protocols, and standards governed by their  own incentive structures. Each time a major technological breakthrough  is made, it has been followed with a period of recklessly wasted  capital, fraud, scalability arguments, and eventually the collaboration  of mindshare and capital onto a single platform. These platforms are most revolutionary when they are open, permissionless and innovate on  transaction costs in a revolutionary manner.​

Understanding a Network

It  is the great multiplication of the productions of all the different  arts, in consequence of the division of labor, which occasions, in a  well-governed society, that universal opulence which extends itself to  the lowest ranks of the people.

  • Adam Smith

A network  is a group of intersected people or things. The aim of a network is to  decrease friction and transaction costs by working on standards  promoting interoperability and exchange. These standards are no  different than the dimensions of a workers wrench, or the rules of an  assembly line. The division of labor has made it possible for people to  specialize and work together. In Adam Smith's pin making example, the  protocol was followed to pass the product between the different stations  so the operation was smooth and consistent. Labor was incentivized to  work together, allowing individuals with different incentives to work  together symbiotically under standardized rules to maximize efficiency.

A revolutionary new network often represents a Schelling Points- a solution that people tend to use in the absence of communication.  Schelling points are a vital part of the social externalities that  surround networks, promoting cooperation, natural organization and the  consolidation of the protocol. In the words of Mark Zuckerberg, the goal  of a network is to "make sure there's as little friction as possible to  having a social experience".

If some sailors viewed the Juliett (on fire, keep clear) as others viewed Golf  "want a pilot" it would be disastrous. In another light, networks can  be described as the most efficient form of bureaucracy; promoting "precision,  speed, unambiguity, knowledge of files, continuity, discretion, unity,  strict subordination, reduction of friction and of material and  personnel costs". (Max Webber)

Revolutionizing Transaction Costs

Transaction Costs encompass all measurements of negative externalities beyond the end result of value transfer. This  starts with the aforementioned consolidation of protocol around a  single playing field, the most prominent of which share the  characteristics of being open and permissionless. Whether that be multiple implementations of Lightning Network consolidating around the interoperable BOLT specifications or language within a society- value  transfer finds ways to decrease friction via incentives shaped toward  consolidation.

Another area of transaction costs to be innovated  upon is risk mitigation. What percent of the time will the ship you  release from the harbor make it through the permissionless waters, past  the pirates, around the weather, and to its final destination? Even over the last few years, the total loss of value sent over the open ocean registers in the trillions.

Sending transactions  through ungoverned Bitcoin follows the laws of cryptography, mathematics  and incentives structures, not any single individual entity. It can be  visualized at a high level as a two-lane highway. The more  transactions are routed through the network, the more this highway  begins to grow crowded as demand fills blocks with transactions quickly,  pushing the price of space on a block higher.

To some, like early adopter Roger Ver, Bitmain, Coinbase, and now known fraudster Craig Wright, the solution was simple: make bigger roads -  double the block size. Many of the largest companies in Bitcoin  supported this change, fearing retail customers would grow tired of the  slow speed Bitcoin transactions. The majority of the Bitcoin community  supported second layer scaling development through the addition of  transaction malleability with a segregated witness soft fork.

In  an effort to maintain a single vision for Bitcoin, a closed-door meeting  was held with a few Bitcoin developers, mining pools and notable  institutions. In the end, the New York Agreement was formed, as the  participants signed a document to support a buggy network fork  "compromise" called Segwit2x. Many developers and community members saw  it as neither an ethically viable option for Bitcoin nor the technically  sound approach to take for the longevity and future success of the  network.

Despite nearly 80% of miners supporting the change,  independent validating nodes rebelled, refusing to accept these  transactions. Without these validations, it became economically inviable  for miners to produce segwit2x blocks and they returned to the status  quo. In the process, Bitcoin Cash, today a dying low-security Bitcoin  knockoff, was created via network hard fork.

These network rebels  who spurned the Bitcoin blocks of Segwit2x were not the first to act in a  similar manner. The proliferation of the rails for Bitcoin payments -  the internet - has a very similar story underlying during its early  days.

Other "Attacks"

When  Segwit2x was rejected, Bitcoin Cash once again hard forked creating  Bitcoin SV and Bitcoin ABC. This Bitcoin Cash SV (Satoshi's Vision) is  led by Australian computer scientist Craig Wright who claims to be the  reclusive Satoshi Nakamoto. Despite this, Craig Wright has refused to  sign a message with the public key of Satoshi Nakamoto's wallet that  would be an elementary solution to proving he is conclusively Satoshi.  In response, major crypto exchanges Binance, Kraken, ShapeShift have  promised to delist Bitcoin Cash SV.

​Bitcoiners  have not forgotten who supported the contentious Bitcoin Cash Fork.  Many continue to view Bitcoin Cash and Craig Wright as an attack on  Bitcoin, and the decisions by many exchanges to delist begins to bring  resolve.

Do Revolutions Really Eat Their Own? (Maybe Too Quickly)

While  the formation of tight interindustry bonds to dismiss fraudulent claims  are positive, it still begins to link institutions with incentives that  may be different from the greater network together. It is inevitable  that at different points, the condition of the network will be at odds  with the incentives of at least individual exchanges, miners, and the  actual human users committed to Bitcoin's solid foundation and value  proposition.

Recently, this was illustrated when the Binance exchange saw 2% of its Bitcoin drained in one transaction of 7074 Bitcoin. At  some point, thoughts of a transaction recall began to play out at  Binance with a few other exchanges in support, hoping to disincentivize  something similar. While CZ eventually shut it down, the question  permeated around crypto twitter for some time, causing much unrest. What  happens in the future when exchanges with strong bonds are unanimously  motivated to pay miners to undo transactions?

​The Border

Another  potential security vulnerability for Bitcoin comes through regulation  of the periphery. While this can still be a powerful censorship threat,  it is ultimately an omission that what lies in between is too  challenging to control.

Creating arbitrary rules on the  borders of great networks has some impact, but also leads to a savvy  generation of smugglers. Hungry entrepreneurs, taking advantage of the  oceans vastitude using security through obscurity to minimize  transaction costs and promote market-oriented commerce. A smuggler that  has recently been etched into history is Sir Davos Seaworth, the Onion  Knight in Game of Thrones. Davos represents a character fundamentally  reminiscent of other notorious smugglers from history such as Thomas  Cromwell.

In smuggling, Davos found the opportunity to slip  between the law to utilize a permissionless network, sparking rags to  riches story of upward mobility in the process. Though Davos is  considered a "criminal", he was really the product of an opportunity and  is an excellent fictional example of technology leading to upward  mobility.

It  is deeply ironic that the Onion Knight shares a name with The Onion  Router, a network of servers allowing you to access the internet  anonymously.Network²

While  networks tend to condense how they can, they also have the tendency to  promote the creation of auxiliary networks, built alongside or on top of  the infrastructure laid out by the previous. This new network must have a unique reason to exist fulfilling a different value proposition.

This  does not mean that altcoins will cease to exists. Internet money is not  the "move fast and break things" mantra that many associate with  cutting edge technology. If ungoverned money is compromised, there is no  one way to undo it. Altcoins will always exist, providing value that is  fundamentally different from that of Bitcoin. A competitive group of  "hedge" coins, offering security from different threat vectors is sure  to continue to separate from the pack in the coming years. Bitcoin  itself competes directly with a global network of central banks, not  with Ripple or even a trendy quantum resistant fork of itself.

Trade  networks are often able to incentivize new standards and protocols,  built on top of the existing infrastructure utilizing newly accessible  incentive structures. For example, Bitcoin is the network of replicated  data centers across an encrypted peer to peer broadcast system. This  broadcast system has limited space which is extremely expensive and  unnecessarily secure for some transactions. On top of Bitcoin sits  Lightning, a mesh network with unlimited scaling potential, sending  unfairly cheap microtransactions of value through HTLC channels at near  zero counterparty risk. Lightning  offers a unique value proposition through a mesh-network, with each  individual node, interoperable with the main network as the ultimate  source of truth.

Bitcoin itself is one network that  capitalizes on the infrastructure of another network. The vast majority  of Bitcoin and subsequently Lightning network transactions are sent  through legacy rails on a partially open sourced internet and through  border patrolling internet service providers.Mesh Nets?

A  "flat"/non-hierarchical Internet has superior potential to the  centralized one that exists today. Because of current infrastructure,  the internet relies on a few internet service providers like AT&T  and Verizon to patrol the edges of the network. This makes user  onboarding easier, but the design allows the internet to be regulated at  the point of access, similar to how a government might stop smugglers  at a regulated mercantile port.

A Mesh network is a network  topology in which individual nodes connect directly and  non-hierarchically to the internet. End-to-end encryption is the  standard on meshes, meaning nobody along the route of your transaction  can scrape it for privacy compromising metadata. However, to truly  create a decentralized network it will also have to be a manner, capable  of finding other routers regardless of their ever-changing geolocation.  Today,  companies like GoTenna are unlocking the power of your mobile phone to  harness standardized mesh radios for Manets like their Gotenna,  using each individual communication method when conditions favor them.  This begins to loosen the grip of gatekeeper ISPs and could return it to  individuals with lower barriers to entry, creating a more fair, free  internet.

Because large towers are unnecessary, a mesh network has  the potential to be far more inexpensive in upkeep and more resilient  to the incremental weather that causes expansive network outages. A Mesh  network can represent a better, more free and resilient internet. The  first key roadblock lies in the ability to incentivize individual users  to share their bandwidth. The solution to this may be found in a proposal for a soft fork of Bitcoins lightning network called Eiloo;  providing programmable currency capable of performing private, final  and instant microtransactions for the mesh network. A decentralized permissionless internet incentivized by decentralized permissionless money.

When Blockstream launched  its satellite into space, the most secure network on the planet became  accessible to nearly anyone on the globe with access to a cheap  satellite dish and open source communication software. This has become  even more important with the steady working of BIP's meant to add  greater functionality for supporting a mobile full node with partially  signed Bitcoin transactions. With Bitcoin's blockchain and the ability  to support a mobile full node, second layer routing also becomes  possible. Effectively, mobile phones should be able to route and request  data from one another while sending microtransactions of Bitcoin to  each hop as a reward for routing. The potential for these two  technologies to exist in a symbiotic relationship may be the single  greatest human achievement towards freedom ever conceived. This  is not a project that can be completed by one team, but only by the  consolidation of mind share working together, committed to open  standards.

To Come?

When  the internet was most needed after disaster struck Puerto Rico, there  was nothing that could be done to alleviate the system because power  lines and internet towers had come crashing down. A Manet for secure  communication and sound payments rails could have mitigated much of the  effects of the disaster as the mobile apparatus is far less susceptible  to inclement weather than a tower. Instead of waiting for internet  towers to re-emerge (and finding ways to afford it), lightweight clients  simply connect to each other wirelessly. It took 11 months to bring connectivity back to every Puerto Rican following the disaster — with a mesh network, it would take unconditionally less time for a fraction of the cost.

This  network can globally allow for some — especially those without a sound  financial system at hand — to make non-cash transactions and  communication in any location, at any time, with a lesser fee. This is  the new age of information, and it fulfills the promise of a  permissionless and non-hierarchical network for information that the  internet failed to; potentially reducing the grip of traditional choke  points in the path.

One such place where this is likely to occur is on top of stranded energy resources. Whether it be "Venezuelan oil as a way to subvert sanctions, Indonesian coal as its export market shrinks",  or some clever entrepreneur camped out in a totally uninhabited area of  the world making use of stranded energy with a satellite dish and a few  Bitcoin miners, the satellites open up a new opportunity. Communities  can even grow off of these mining networks, using the dish to broadcast  blocks and participate with local mesh manets to pay employees. The  potential for upward mobility in unconnected areas of the world is  inspiring.

Serious obstacles exist in seeing a full proliferation  of this technology. If friction, usability, and speed are not to par  with legacy systems it will never be adopted. Additionally, the  throughput of information necessary to support a mesh network is  substantial and would require a significant decrease in the weight of  the information being relayed. Data validity, zero start, and other  barriers make this a difficult yet ultimately rewarding path to follow.

To  get to the point where such value transfer can even be considered,  networks have evolved throughout history to find unhindered connection,  creating a more free world full of opportunity. Every technology and  network in existence has its advantages and drawbacks, but they all  exist as a pressing enough initiative that humans can be incentivized to  work together through spontaneous governance. The promise of networks  with these degrees of importance, are readily palpable and create a  flurry of emotion as people attempt to inorganically foster a network  that can only be produced organically. However, schemes are played out,  fake Linkedin's are banned and bank accounts run dry, enough mindshare  has condensed on a single protocol committed to open, permissionless  standards governed by the free market.

by Francis

Share this post