Cryptocurrencies will create a fifth protocol layer
startupboy.com
startupboy.com
The benefits of distributed independent actors is clear in some areas such as economics, where the system is so massive and chaotic attempts to control it via machine or human intervention often fail. Even when they continually adapt their models over time, they will never be a full replacement for the consensus of a market.
While markets are efficient they famously at times have a habit of acting irrational and counter-productive to participants needs. This is where in the present times human intervention (occasionally) out-performs pure markets. In the future, most of us expect machine-optimized models to out-perform both markets and centralized systems.
That may be the differentiation in the long term for which is better, which can provide the best value? Human consensus -> human consensus via machines -> machine consensus. We'll likely keep moving farther to the right of that flow as machine learning (AI) becomes better.
I think that this happens because markets are not yet perfect. You end up with conditions where one party can gain by doing damage to the rest.
As time moves forward, I imagine that markets will get a lot better. Game theory is a growing field where people are exploring this problem. I think that in many ways, cryptocurrencies address this problem for certain applications, and will continue to improve as we figure out exactly where cryptocurrency is most useful to us.
My ISP's gateway agreements become structured around a new definition of efficiency. Extract the maximum possible toll for each bit.
This new definition means, the more spam received The more my email host can raise the tariff. It can hold my incoming mail hostage.
The logic which underpins the idea is the finite pie. It ignores the possibility that network effects offset the cost of infrastructure even though that's what has driven the internet and mobile cell networks to vast scale over the past twenty years.
But it's still a great thought provoking article
If you make bandwidth scarce and expensive, I'll come in with my own router and charge less than you. Right now that would cost me millions of dollars. But if just needed $10k or $20k in capital to start profiting from my whole neighborhood, you might see a lot more ISPs cropping up.
I also think that decentralization will start to play a much bigger role in all of this. It's hard for you to hold my mail hostage when I'm using the decentralized MailCoin to manage my email.
Right now, cryptocurrencies aren't really strong enough to do all of this. But maybe in 5-10 years they will be enough to be the fundamental 5th layer mentioned in the article.
If you make your bandwidth scarce (and expensive) someone else with a router may be incentivized to make their bandwidth slightly cheaper; so you end up with zero profit (as you have no customers). This is the fundamental reason why market-based strategies are effective; you are competing with everyone else's router, not cooperating.
The idea of micro-transaction tariffs for traffic on the internet has been around since the 1990's when people were not sure that the internet could scale using the shared bandwidth model. It did, and micro-transaction tariffs never took off because it didn't solve an actual problem.
The article doesn't mention any existing problems that micro-currency tariffs would solve. The only problem crypto-currency in its current form solves is one of the minor problems with micro-transactions - it more easily allows for very small values to be treated as integral outside the system of micro-transaction - i.e. crypto-currency in its current form might not require aggregating many micro-transactions in order to purchase goods or services unrelated to the internet.
This is a case where the public goods problem works in our favor.
Assume there are many routers, owned by different people, and lower total bandwidth increases total group profit.
If a person is providing 5% of total bandwidth and increases it to 10%, the total bandwidth only increases by about 5%, decreasing overall profits slightly. But that person's share of the profit doubles. Consequently everyone's selfish interest is to increase bandwidth.
Of course this only works out well if there's plenty of competition, rather than the local near-monopolies we mostly have now.
The analogy, I would use is banks and there reconfiguration to maximize fees. They still make money from loans, but minimum balance fees and ATM surcharges carry much less risk.
It is the fact that we always talk of machine addresses, and never of machine identities (except through DNS, but DNS is also about giving human-readable identifiers, so it cannot be decentralized <https://en.wikipedia.org/wiki/Zooko%27s_triangle>).
However, now that everyone is using public-key crypto, we should understand that a machine can be referenced by a public key, and that it can prove ownership of it to anyone who asks. (This can also be used to encrypt traffic, but this is not what I am thinking of.)
Hence, why do we connect to IP addresses, rather than connecting to public key hashes? Granted, public key hashes are not routable, but there could be a service to provide the mapping from hashes to addresses -- not DNS, because it doesn't have to give human-readable names (so doesn't have to be centralized), and because there is little penalty for receiving a wrong answer (as long as you always check the identity of who you are talking to.
I think that, had asymetric crypto been in widespread use before the OSI model came about, this would have been the natural way to do things. Now the problem is unsatisfactorily solved both in DNS (which is not the right solution, as I already explained), and in an ad-hoc way with TLS, in SSH, etc.; but this is still too high in the hierarchy, machines should be addressed with public key fingerprints unless we are concerned about actual routing.
However, the IP based protocols didn't implement that piece, but let the protocols (TCP/UDP etc.) just use the layer 3 addresses instead of having their own layer 4 addresses.
I'll try to find some references, but back when TCP was conceived, the idea was to have layer 4 addresses too, but this was dismissed for simplicity.
As I understand it, this is already an issue with the IP protocol. Here's a Google Tech Talk from 2007 discussing the issue with having both the unique ID and location identifier be a single thing (IP address): https://www.youtube.com/watch?v=QIGSMLrU4Xw and the solution: https://en.wikipedia.org/wiki/Locator/Identifier_Separation_...
"You are correct in that it’s technically another set of application layer protocols – I was just being provocative with the title..."
sigh... so it is not a "fifth column"
yes, the bitcoin protocol did provide some interesting things but is not nearly approaching the level of hype and spilled pixels lauding it
I work in the area and have probably researched it more than most... and from quite some number of angles (social, technical, regulatory, etc.). My take is that an asset-neutral, settlement-system neutral transaction layer will certainly emerge.
This layer will provide (1) a suitably generic model of transaction state (2) hooks for cryptographic, reputation and logistics/provisioning systems (3) precise but extensible description of transactions including both traditional and digital goods and services
It will also facilitate a digital market for RFQs and quotes, and become as important to the JIT/decentralized manufacturing industry, spare parts supply business and the management of power on electrical grids as it will be to general purchasing.
Our children will find it inconceivable that archaic, limited, centralized, third party, centralized trust based platforms such as Alibaba, Amazon, eBay, SAP or Taobao and their rudimentary reputation systems ever existed.
I've put some thoughts and proposals online at http://ifex-project.org/ .. some of these are in live use already .. but very interested in any feedback.
(Please don't abuse this, though; accounts that repost too much lose their submission privileges.)
I took a quick look at your account and it's fine.
HN is not a "whatever isn't explicitly prohibited is allowed" system. Instead it flows from general principles, and one of those principles appears to be that if you're caught abusing the system, there might be negative consequences because abusing the system is detrimental to its integrity and probably creates more work for somebody.
- We have a system in place that prevents duplicates.
- Except we expect you to find holes in it and bypass it when necessary.
- Except you should never delete the original before posting a duplicate.
- More?
One would think the existence of a dupe detector implied a rule against duplicates, much like a low fence still implies private property.
Good referees make the calls that need to be made at this time, in this game, with these players. They have discretion. Compare that to basketball where all fouls must be called even when calling the foul clearly rewards the team committing the foul and gaining that reward was the explicit reason for fouling.
The reason futbol can be officiated differently from basketball is because futbol has Laws and basketball has rules. The futbol referee doesn't judge events solely by the book, but also by their effect on the Spirit of the Game.
The duplicate post heuristic exists to prevent problems and maintain the general enjoyment of HN. It's not there to encourage lawyering up and arguing a case, because that's nothing but a headache.
If this is seriously likely to affect you, act on the side of caution. Act as if the rules were explicit and restrictive and the punishments severe. In other words don't try to get away with something, and if you do, don't complain if something unpleasant results.
As Thomas Hobbes theorized, the sovereign's sole responsibility is to do whatever is necessary to keep the peace and we cede some of our autonomy for the sake of that peace. It ain't a democracy.
[BTW: user 'dang' is the HN moderator]
I get that that's frustrating to anyone who would prefer a precise spec, but don't forget that there is at least some compensation for the lack of an exhaustive rule book: you can get answers to questions by asking us. Please send questions to hn@ycombinator.com.
In the short run, we're trying to answer specific questions with more transparency. Baby steps!
Good eye.
But ultimately, your argument is: if one system can be cracked, a more complex system could also be cracked.
I predict that if hashcash ever becomes widely used, people will start trading hashes for money. Ie. instead of wasting 30 seconds of battery power to create a hashcash header on your mobile phone, you'd pay 1 cent to a service that does it for it. And this is exactly what Bitcoin does already.
I'm skeptical about putting it in every conversation. If every peer has to pay to work on the internet, it will make bigger peers more important (because they have more resources) and it will force everyone to mine (instead of having only a minority of people mining today)
Concerning Tor, as far as I understand the incentive part is only active to make sure your host has a good enough average uptime, right ?