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.
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?
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.
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.