Automated Network Investment Contracts: Ownership in the 21st century.

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The past year, I’ve delved deep into the blockchain rabbit hole, exploring all the opportunities (from building on payment channels, launching an altcoin to starting a payment search engine).

A lot of the ideas I worked on (from tipping, to creating new networks of value, to thinking about personal currencies and VR in the blockchain) has collided, and eventually lead to something new I want to introduce.

It’s called an Automated Network Investment Contract (tentative name). Other phrases could be: Automated Profit Share Contracts, Networked Investment Contracts, Automated Networked Sustainability Incentive Contracts. This is a continuation of CPDAOs I posted about previously.

It comes down to the following: automatically generating new wealth from being involved in different networks. The term “network” is purposefully open to interpretation as it can be anything: from people, to ideas, to companies, to cities, to artists, to fans, to nature, anything. Anything that has a network effect. And that is myriad. For the most part of our history, we’ve only really managed to capture networks of value in terms of a company (property is another). That made the most sense. We construct a set of rules to allow ownership in companies, so that the owners can generate income from it. What essentially happens is, is the value flows *through* the company and some of that profit is distributed to the stakeholders. As we know, very, very few people have access to enough capital to own parts of companies unless they eventually go public. Even then, the people that require ownership stake in things that produce “profit share”, won’t be able to buy any of it. While a person in a poor, rural community CAN buy public stock, they often don’t have enough wealth/money/knowledge to do that.

We’ve built monolothic institutions to maintain this, because that’s all we’ve known and *could* build.

But with cryptocurrencies, we can remove all the cruft and risk and generate automated investment contracts: allowing ownership in a lot of things not possible before.

One of the problems I’ve had with the idea of 7 billion personal currencies is the concept of liquidity between all the different networks of value. Exchanging large amounts of value between low liquidity networks introduces a lot more risk. The maintenance of all these tokens would be a UX nightmare. Not even mentioning the possibility of people to prematurely short a famous person’s stock just before they assassinate them. Or, for that matter, the possible embarrassing scenario where a person’s stock loses value and they don’t want to be involved with it anymore (ie, no “sunsetting” possibility). 

An Automated Network Investment Contract does away with a lot of these problems, doesn’t require new tokens and allows any network to be quantified (its up to the imagination of the people). Here’s how it works. It is surprisingly simple.

When you send money to the owner of the ANIC, part of the money goes to the owner, and part of the money goes straight to the stakeholders. You then automatically become a stakeholder. You then earn revenue from any subsequent payments to the ANIC up to a certain point.

It is thus collapsing the usual actions of having an ownership token (“stock”) and distributing “profit share” to it, in one action. There are thus no concept of a “stock” or a “token” of ownership. You are involved only as much as the contribution you make to the ANIC. Depending on the timeframe of the contract (depth of allowed stakeholders), you automatically leave it after some time, which represents your involvement with it. If you go the ANIC again for something, you re-enter your involvement.

This is a much more natural order of things. We ALL contribute to networks of value simply by “being”. By posting on this blog, I promote Tumblr and its success, however I’m not getting any profit share from it. Suddenly, in a world where we thrive on the value being produced by the zero marginal cost society, we become the products and we have to rely on something like advertising to sustain a network. Additionally, all the value that’s being created is only captured by a select few, which is completely lopsided. We are becoming the most creative society in history. We value a great tweet. We value a great photo on instagram. We do on some level understand that what the person has contributed should probably be correlated to a social IOU they should use to sustain themselves (rent, food, etc). But the current networks of value just doesn’t add up to that.

So, to go more in depth, here’s an example.

You frequent a coffee shop every day. Every time you buy a cup of coffee you pay the coffee shop. They take say 90% of the money, and the 10% gets distributed to the previous stakeholders (people who bought coffee before you). As you usually would, you tell your friends about the place, because it has great coffee (note: there would still be incentive to be honest as lying to get a return reduces the impact of your recommendations). The network of the coffee shop grows, and new payments to the ANIC of the coffee shops produces value for you. In some cases, you could generate the coffee you bought back. If you bought a meal, your investment would be automatically bigger (but only in relation to the fact that people mostly buy coffees there). It’s a relative difference to the usual payment amounts stored in the ANIC.

Similarly, an ANIC could be used for *any* payment endpoint, which can catalyse ideas & movements because people can get involved and share ownership where it wasn’t possible before. For example: tipping. If you like a piece of content, you can tip said creator. They receive 90% of it, and you will receive returns in the near future from subsequent tips. So, in other words, it creates incentive for value to flow simply to ideas. It can be a way for us to pull ideas more quickly into reality and give rise to movements automatically without any required existing tools.

For example. An ANIC can automatically send any funds it generates to a multi-sig address controlled by say 5 people leading an agency to promote the emphasis on sustainability.

An ANIC could even pay out automatically other ANICs to create smaller pockets/networks of value. For example, a band could release and album, and that album would have its own ANIC. Payouts to it will automatically flow into the band’s main ANIC (to promote ownership in both).

Similarly, someone can create only an *idea* for an ANIC. The ANIC would be a catch-all contract. An “environmental” umbrella ANIC would automatically split the revenue to several other ANICs. So the owners of that ANIC won’t generate any value from it. They simply helped to combine smaller networks into a bigger one.

Following on from this. Something we already take for granted and know. Our reputation is becoming more and more important… but we simply can’t buy a beer with a “chunk” of our reputation. The thing about an ANIC system is that your OWN network effect becomes a tool to create value. Simply by being involved with a lot of things, you can create value for yourself.

So, hopefully this creates a lot more liquid world where ownership is possible (and unlocked) for everyone. A local corner store. A person. An idea. Anything.

Ultimately. What it comes down to. To explain it in more understandable terms. We create “companies” of everything. We remove the organisational complexity of “stock” and collapse it into a simple automated contract for sharing ownership. To create the most wealth in this world will still be the domain of the creators as it always have (because an ANIC pays out constantly to the owner of it). Except, we unlock new networks of value that simply wasn’t possible before.

How will this work technically? Here comes the fun part.

I’ve given some thought about this. Currently, I’m having trouble thinking of ways to do this in Bitcoin. However, with the upcoming Ethereum platform, where “contracts are 1st-class citizens” it is much easier.

In short. The basic idea and parameters are as follows: There is a depth of how many stakeholders are in the contract at the same time. 10. 100. 1000. 10000, etc. It is a queue (first-in-first-out). If you pay, you get in at the top. Depending on your proportion relative to others, you receive income from each new payment through the ANIC.

The ANIC owner can set the percentage difference. 10% revenue share to 90% revenue share. Whatever works. I suspect an optimum will be found (might be different depending on different concepts). A marketplace could also exist. A new coffeeshop might increase their revenue share portion of it to attract new customers. Another thing to consider is liquidity. If you pay a popular ANIC contract you generate money quite quickly. This means popular contracts will attract more people. Marginally you want to promote people finding new things (with lower liquidity). Either that will be solved by market behaviour (owners of ANICs set depth and percentage), or the ANIC automatically adapts over time (smaller depth with higher liquidity for example).

Since Ethereum allows contracts to store information, this concept seems relatively trivial to implement. I just need to get around to learning the ropes.

Conclusion:

At the end of the day. This seems like a definite possibility to allow people to automatically partake in revenue sharing in every network they form a part of.

A lot of my thinking this year has mostly been looking at what potential the blockchain has to increase agency of people, especially in a world where “software is eating the world”. We need to invent new ways to represent social debt to each other.

Thanks to the people from The Cypherfunks, Humint (see Spinjar) & Ethereum for all the epic brainstorming over the past year.

P.S. Perhaps I should call this the “Web of Wealth”, both in reference to WWW and Dogecoin (which started a lot of all of this thinking).

The blockchain’s ultimate frontier: virtual reality.

I’ve had the privilege recently to discuss with amazingly smart people about the combo between cryptocurrency/blockchain + VR. The more I think about it, the more I’m sure that once VR hits the mainstream, the blockchain will almost suddenly thrive much more in VR than in real life.

Here’s why.

With the Oculus Rift (and other upcoming VR devices), it has come of age. When immersion is this *real*, it reaches new territory. As I’ve previously said, once virtual reality feels so much like real life, we’ll start looking at it differently than a normal game. It’s status as a reality becomes a 1st-class citizen next to real life. In other words, experiences in virtual reality won’t be seen as “lesser” experiences to real life.

The worlds that exist in virtual reality are currently all either “local”, single-player experiences, or worlds run, recorded and maintained by a 3rd-party (such as the Elite Dangerous MMO).

Centralized virtual worlds will for some time proliferate… but, the same problem will rear its head as with centralized systems today. You have to trust the maintainers. What if a game developer (for greed), decides to change a virtual reality? An experience that was so meaningful to you, is altered. What if the game developer goes bust and the virtual reality needs to be shut down? As you can see, over time a desire will exist to create a decentralized virtual world for people to engage with. The distinction between games (as it is now) vs virtual worlds, is that we will demand decentralized alternatives, because it will be so important to us. For the same reason that we demand decentralized finance (it’s a huge part of our lives), the same reason people will demand decentralized VR worlds.

Different variations will come to exist over time… until technology (& science) has reached a point where completely decentralized virtual worlds will exist. There’ll be worlds with centralized maintenance, but decentralized commerce (through using Bitcoin as its currency and a service like OpenBazaar as its marketplace). Then, there’ll be worlds where all interaction is mediated through smart contracts. BitNation is striving to create smart contracts for all types of governance (not discriminating on any type of law). In other words, these smart contracts will be “backed by math”, and voluntary. It’s a way of saying: “Look, I’d rather use this smart contract for registering my land, than a nation state.” It’s audacious, and it is something that will happen: creating an alternative (that obviously won’t initially be recognised by any nation state). The great thing about ALL blockchain tech is… it just immediately works in VR as well (given sufficient changes to UX).

In the real world, we have a lot of services already that works well enough, eg Ebay or nation states (law). But these things can’t be ported to VR as easily. It’s a bizarre strategy for Ebay to want to be the main “marketplace” in Eve Online. It doesn’t fit: for several reasons. Becuase 1) Eve Online’s universe doesn’t fit the “real world”, 2) Why would I give a cut to them for that?, 3) Why would CPP make a marketplace with extra fees IN the game? and 4) Various legal issues that could arise.

In a virtual world, its reality is first-class, so paying for something with Bitcoin in the real world won’t be weird in VR. It’s not escapism, it’s just another “place” in reality. So plugging in blockchain tech into VR worlds will work really well, because they exist. If a new VR world is designed and people in that world needs to trade with each other, why reinvent all the wheels? Just use Bitcoin + OpenBazaar.

No one entity will have eventually have any jurisdiction over it (not even nation states). It is infinite. And it is limitless. It is anti-fragile (all the buzzwords!). This means that we are going to experiment with all the variations of it. Different laws. Different currencies. Different smart contracts, etc. Virtual worlds can die (and are allowed to die). With VR + Blockchain tech, it *can* become a survival of the fittest reality. We can experiment, and we can actually “live” in those realities since porting over value to the real world (to buy food) will be easy. Value will only be ported over if constraints are properly in place so that the system can’t be exploited (but that’s just a system/tech design issue).

What this means is actually quite crazy. We can architect worlds for a lot of things. We can do scenario planning for example. Simulate a VR Mars colony and ONLY use smart contracts for a new governance model. Ask real people to “live” there as a full-time job and see what happens. (Hey Elon Musk, try this. ;).

Furthermore… as the puzzle pieces fall in place. If we can create a more free. A more fair. A more equal virtual world, what would that say about our current reality? If you can “earn your keep” in bitcoin in a virtual world, governed by incorruptible smart contracts, and it is a world you want to live in and cooperate in more than the real world, what would that do to us? I suspect we will most definitely see a new surge of people demanding exactly that reality into the real world. Down with corrupt governments. Down with archaic governance. Down with intolerance. Down with all the bullshit.

And so. Once both VR & blockchain come of age (could be as soon as 2015 with Ethereum and Oculus Rift launches), it will proliferate in VR worlds… and then ripple over into the reality at a breakneck pace.

The possible effects will create a new freer, open, global world, and rapidly so. If not, and our most wonderful realities will end up (only) being virtual, we are a fucking sad bunch.

Richard Linklater’s Boyhood.

For something different than cryptocurrencies and the future. ;)

I’ve always been a Richard Linklater fan. I first discovered his work when as a teenager I stumbled upon “Waking Life”: the dream-like movie where philosophical ramblings are front & center. As a teenager, discovering your brain (“surprise”), it was a wonderful foray into intellectual & philosophical discussions. I remember certain scenes sticking with me for years (and still do). I think I figured out the answer to this scene in which the character asks: “Which is the most universal human characteristic - fear or laziness?” However, my opinion has changed over the years, so I’m not sure I’ve hit the right answer yet.

Over time, I discovered his other movies and then actively started seeking them out. The incredible “Before” series, which captured the wonders (and troubles) of a romantic relationship. Or my favourite: Dazed & Confused. A movie about the last day of school… in which nothing particularly happens, but the moments.

Over the years, different moments would stick with me… and come back. Like Suburbia, where almost the whole movie happens at night: which captures the sort of depressing feel of small-town life. Dazed & Confused, during some tougher times during university, became my solace: an escape. I don’t really like doing things more than once due to wanting to experience more of the world, but I’ll always have a soft spot for watching Dazed & Confused again.

It was with great excitement that about 5 years ago I heard Richard Linklater was working on Boyhood: a movie shot over 12 years with the same actors chronicling the life of Mason during his childhood. Knowing Richard Linklater’s knack for capturing moments, I anticipated its release for years. And I must say: what a fantastic movie. It had the hallmarks of all off Richard Linklater’s style. The great thing about it, is that it feels like a fantastic summation about Richard Linklater’s exploration in story-telling. The random philosophical ramblings relate to Waking Life. The random moments of high-school life feel like Dazed & Confused. The romantic love feels like Before Sunrise. The bickering feels like Tape. The meandering walks through the cities reminds of Slacker.

Because Richard Linklater’s movies were such an integral part of who I am growing older, Boyhood hit another (meta) chord. My brother (Niel) and I would love watching his movies in high school. To experience this sense of growing older as I had about a movie about growing older, and Richard Linklater’s emphasis on capturing the moments that in retrospect are not supposed to be monumental (but leave a lasting impact on your life), was amazing… and led me to the introspection that his movies often evoked.

What he gets right, effortlessly, time and time again, is his capability to capture moments that are mundane, but feel profound: finding ways to make stories feel monumental, while they are not. We remember often the mundane moments, because everyone goes through love, life and death… but the mundane moments are distinctly ours. I remember in primary school, a kid dropping his pencil leads, and trying to pick them up and put them back into his case, trying to hold several in his mouth. Why do I remember that? No clue. But see. That’s what we remember: the moments that flesh out and make the journeys through the usual milestones richer.

If you have a chance to see Boyhood: go do it. Then go watch the rest of his stuff!

Towards content-producing decentralized autonomous organisations.

Imagine if you could build a Tumblr that runs itself and pays the people that write blogs on it? The bigger the site becomes, the more worth your contributions become. It also means no ads need to be run on the site.

This is the concept of a content-producing decentralized autonomous organisation (CPDAO). The Cypherfunks was an early attempt at that (which we are still busy with), but I believe the parts can be improved to more succinctly introduce feedback loops. I’ve spoken to various people (The Cypherfunks, guys from Ethereum and Wendell from Humint), and have put together some thoughts on how this could work. There is still a part or 2 missing, but I feel if I write this up, and get more minds onto this, we move towards making CPDAOs. Organic, emergent networks that don’t require a central entity to run and pays out the whole ecosystem, instead of one company that captures all the value.

The basic features of a CPDAO is that it should host the content, distribute it and incentivise people to contribute to it. CPDAO’s content is dependent on how the tech is set up & how the network expects to interact with the content. In other words, different CPDAO’s could eventually be built for various content. A group of people making music together (The Cypherfunks) or people working together on a blogging network (ala decentralized Tumblr). A blockchain (not necessarily, it could work with something like Ethereum hypothetically) along with a token forms the core of the system. The token serves several purposes: as quantification of the network (like Bitcoin), payment to keep it running and is required to add content to the CPDAO. Additionally, a “voting” system seems like it is required to incentivise content that isn’t bullshit.

So. I’ve thought 2 ways this could possibly work. I hit a technical roadbloack, so I’m not even sure if it is possible. I need to do more research, but hopefully if someone more technical reads it they can add their ideas.

Version 1 (New coins go to hosters of popular content).

The important part of a CPDAO is: who gets the new coins? And how can you do it cryptographically unbreakable? In version 1, the new coins go proportionally to the hosters of popular content. You become a hoster, by voting for the content you like. Voting for content is a tip to the content-producer. By tipping, the software takes the content and you help store & serve it from your computer (as a usual p2p network).

This means. If you tip the right content (content you think is good and popular for the network), you host & store it. If you serve the most content, you get the biggest reward (from the issuance). This means: Content-producers gets rewarded through tips as the “hosters” want to make money as well. The hosters thus play the role of curators as well: hoping to find good content to host, as serving the most popular content, nets the biggest rewards. Becoming a larger hoster (hoping to get more new coins), involves finding new content, tipping said content-producers, and growing the content you host.

The technical problem here, and I need to read up on how things like Ethereum’s Swarm, MaidSafe, Filecoin, Storj, etc reward storage hosters. If it is simply by size, then it becomes a bit more of a difficult feedback loop. As you can see, this technical part is still hazy. But if you can cryptographically issue new coins proportionally to people that host the most popular content, and they can only get new content to host by paying content-producers, it feels like it is getting closer.

Problems:

- BuzzFeed, race to the bottom, Upworthy-style. What’s considered “good” for the CPDAO, might not be the most “popular”. A meme CPDAO might work with this version.

- If you have a lot of money, you can tip all content, and overpower the network by hosting most of the content.

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So, to divorce the form of content (size, amount, etc) from the equation, I thought up a second way.

Version 2 (New coins go to voters).

This version works by hopefully employing a modified form of proof of stake. Some parts work similarly to above.

If you like content, you tip it (giving content-producers money). That tx then gets a special tag (it’s a special form of transaction). The tag is based on a specific address you own. You still then duplicate the content to your local drive to host and distribute. Instead of somehow being paid proportionally to how much content you serve, instead that special transaction becomes a record of a tip. Over time, each tip has a chance to solve a block (and like proof-of-stake, it accumulates over time). If those special tx solve it, then at that point, you still have to prove you host the file. If you don’t host the file anymore, that special tx you’ve done won’t be able to solve a block anymore. That’s the premise.

However, again, I’m not sure if that is possible. I’m thinking hash challenges could work, but hash challenges won’t be verifiable by the rest of the network. Or maybe it is possible?

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So based on the above 2 versions, the basic formation of a CPDAO is as follows:

- New coins are issued to content hosters & curators.

- New users discover content of the CPDAO and want to to be a part of it.

- Content-producers buy coins to post new content to the CPDAO (hosting it themselves first). Content grows.

- Content hosters & curators can get new coins if they tip content-producers. Because when they tip, they agree to host the content.

- Go back to the top.

So, as you can see. The following incentives need to be created:

- Content relevant to the CPDAO, because hosters/curators that tip content that don’t fit the paradigm, won’t get more coins (this works better with v1 than v2). But not perfect yet. It still seems possible to create a scenario where people “attack” the network by tipping blog posts containing “aaaaaaaaaaaaaa”. To mitigate around this, a tip could be turned into a “follow”, so if you do try to game it by tipping purposefully poor quality content, your stream will be full of shit. It won’t stop it, but I don’t think the point will be to stop garbage, rather like in Bitcoin, make it so that there’s spam control. This where the purpose of requiring the coin to add content comes from. But guessing what that fee should be is difficult. You want it to be high enough so that people don’t spam blogs such as “aaaaaaaaaa”.

- Content is hosted &distributed through the p2p network. This incentivised by new coin issuance in the blockchain.

Other possible problems: If content-producers get rewarded through votes, there is possibly manipulation possible. Stealing content and passing off as your own becomes an incentive. Don’t think reputation has to be dragged into a CPDAO, but perhaps it must, to make sure people don’t steal content?

So, theoretically, the feedback loops seem to work okay (can need some refinement). It’s just solving the problem of proving that hosting/curation worked of content that fits the paradigm of the CPDAO.

Perhaps it won’t be so farfetched to think that one day in the future we will all live alongside “CPDAO”s and working with them will be our “keep” (perhaps “keep” is an outdated word in this context). Bitcoin is already a DAO and absorbing loads of talent & mindshare from all over the world.

EDIT—

So, I recently found that Filecoin does proof-of-storage through hash challenges. However, more exciting is proof-of-custody that uses both private key + storage elements. So technically, it *does* seem like it is possible. If you are interested in working on this, find me on Twitter (@simondlr)

An intro to DNSChain: Low-trust access to definitive data sources.

I recently discovered DNSChain. It seems a bit more complicated than it really is, so I’ll try and explain what it is & why it is a novel solution to resolving DNS.

The (simplified) “old” model:

When you type in “facebook.com” into your browser, it queries the root DNS and “cascades” down the hierarchy to find who owns “facebook.com” and then returns the IP address.

This systems requires trusted 3rd parties during the process on several levels. The first is: institutions such as ICANN are responsible for maintaing the root ledgers. Secondly, DNS can be “spoofed”, in other words, someone could intercept the request to the authoritative servers and give the browser the wrong results. In other words, if not properly secured, typing in tumblr.com might give you a completely different IP. That’s why companies like Thawte & Verisign came along. They became “certificate authorities”, another 3rd party responsible for maintaining this infrastructure. A certificate authority (in simple terms), is responsible for making sure that if you type in tumblr, that you actually *are* receiving traffic from Tumblr.

It’s not too secure. A CA has been compromised in the past, in which case although everything “looks” secure, traffic could be redirected or intercepted.

Now, this is simplified way of how it works, but what’s important here: 1) DNS is currently 3rd-party based hierarchical system that 2) has security holes from the fact that we need to trust a set of 3rd-parties to act in authoritative manner to keep us secure.

Famously, Zooko’s triangle explains the problem with this: Decentralized, secure & human-readable. Pick 2. You can’t have all 3.

DNSChain model:

Namecoin is a blockchain that allows key-value storage. It’s been used to store identities (onename) or domains (.bit). It defies Zooko’s triangle.

Namecoin is decentralized (it’s a blockchain), it’s “secure” (or at least more secure and will get more secure into the future than current DNS infrastructure) and allows human-readable domain names that ends in the .bit extension. So you if have the appropriate measures set up (adding proxies or additional DNS server to resolve to), you can view .bit domains.

Currently it is a bit cumbersome. There’s currently no incentive really for the average web user to add the features. The other problem with this is, is the same problem that plagued the original DNS setup. If you have a proxy or different IP set up to view .bit domains, how do you know someone isn’t serving you the wrong IP addresses? You have to maintain your own Namecoin to check, which is cumbersome.

So: DNSChain comes along and allows an HTTP & DNS interface to the Namecoin blockchain (or any other blockchain you’d want). Additionally, each DNSChain server signs (upcoming feature) traffic it sends, so you can verify along with its fingerprint that it DID come from that DNSChain server.

In other words, instead of someone else running a proxy or a DNS server, DNSChain makes it easy for anyone set up a DNS resolver for data in the blockchain (if you add a DNSChain server you trust to your computer’s DNS settings). So, if I type in <domain>.bit, it will check with your DNS settings, find one that resolves .bit. This is of course a DNSChain server you trust. Since you trust that DNSChain data, you know, along with proper verification that the IP address is the correct one.

The great thing about this, is that because the datastore is decentralized (unlike the current authoritative infrastructure), there’s no real limit to how many DNSChain server can be run. Ideally, you’ll only need 1 DNSChain server for yourself, as that is the one you’ll trust the most. However, it doesn’t seem reasonable to expect every web user to have their own DNSChain server set up. It’s too complicated. So, the middle ground is to have a user add either a friend’s DNSChain server, or a more public one. But to forego the need for 7 billion DNSChain servers, the middle ground to me seems like having a set of many (don’t think you need a lot) DNSChain servers whom you trust (but not entirely). So if you have a friend’s DNSChain server, but you know he is a shit sys-admin, then it might be compromised. So, just to be safe, you have an additional DNSChain server of your other friend. Having 2 means you can “cross-check”, in the scenario that you don’t really trust either of them 100%.

So IF you worry that one of your DNSChain server could get compromised, or its Namecoin data could get sybil attacked, you need to simply add more DNSChain servers you trust. I’m not entirely sure if this is possible, but you could additionally (with a small overhead) add a *trust* probability to the data. In other words, when querying a .bit it checks ALL your DNSChain connections. If 99% of them return the same IP, you are pretty sure that’s the legit one.

The beauty of the DNSChain system is that also works for *other* data as well, not just IP data. Services like onename store BTC payment information.

However, currently for services to use onename in their products, they need to have the overhead of maintaining their own namecoin blockchain so they can check the data. However, if I visit a site that uses onename, there’s no way for me to easily to verify that they went direct to the source or through other services (such as block explorers). Additionally, even IF they did go direct to the source, there could be malicious extensions or MITM attacks that alters the payment address.

So as a way for your browser to verify that the address you see (that has been retrieved from onename) IS the address in the actual Namecoin blockchain, it needs to in a secure & low overhead manner query the Namecoin blockchain. So now, you can simply add, say 5 DNSChain servers you trust to get back results from all 5 to make sure that any address information ARE correct.

You don’t need DNSChain (you could simply find several namecoin exposed IP’s), but DNSChain helps in that it exposes it more easily (it comes with a HTTP resolver too) and signs the traffic.

So what we now need is a browser extension that maintains a public list of all DNSChain servers, and maintains the security of the network (throw out DNSChain servers that reply with fraudulent data). This list, like Bitcoin’s seed lists, develops a trust percentage over time so that we always have a pretty decent snapshot of data in the Namecoin blockchain. Of course, if you ever think that’s a bad idea, you can just always run your own DNSChain server. ;)

The end-goal however is to have a DNSChain server in every home (synced up to a relevant decentralized data-store)… Perhaps on the router?

I think DNSChain is such a quick, easy & novel way to secure a lot about the internet and that is relatively simple to implement. Bravo.

P.S. It’s important to note that DNSChain can be implemented with any type of decentralized data-store. It doesn’t have to be Namecoin. It could be other chains, such as NXT, or Ethereum contracts.

Here’s a video showingcasing DNSChain & OkTurtles project.

Thanks to Greg (@taoeffect) from DNSChain for fact-checking and reading through this before posting!

Enkore

As with anything creative, sometimes things don’t work out. We’ve had some product vision differences with Cheers [easily tip musicians] that unfortunately didn’t resolve itself.

Justin & I have decided to each take different approaches to this problem of tipping creators. Over time, since I first mailed Justin & Rich, my thoughts around it have changed a lot, and for some reason (as I’ve discovered when thinking about problems), is there are sometimes even more problems deeper down that first need to be solved [it’s like I can’t get out of academic thinking since I finished last year. ;)].

The first alpha part of Enkore will launch in the next week or so. It won’t be the tipping service, but it will enable people to more easily tip or pay anyone in the world (without middlemen). This backbone will form a core of Enkore that will be small at first, but hopefully over time extend to be the ONLY backbone. You will see what I mean when it goes live. Enkore will essentially be 2 parts, both independent, but feeding into each other. It answers the question: how do you reward creators in a world where everyone will have instant p2p payments in the next 10 years?

At the end of the day, if I don’t succeed in helping creators, then I hope Justin succeeds, because then the world will be better off for it!

Check out Enkore & Huzzah.

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Thoughts on Ethereum.

“Don’t ask yourself what the world needs. Ask yourself what makes you come alive and then go do that. Because what the world needs is people who have come alive.” Howard Thurman

Mihai Alisie (from Ethereum) nails it with post: dreaming with open minds. Lots of awesome nuggets in that post.

Back in December when I was researching personal coin ideas, just like Vitalik, I discovered that, at that stage, doing any kind of colored coin system on the Bitcoin blockchain will be possible, but very, very ‘hack’-y. I even came up with an overly complicated decentralized altcoin process (that probably has millions of holes). It was spammy and didn’t really feel like it would fit. And the odd combination of having to keep normal btc to transfer colored coins. It’s messy.

I was glad to discover that Vitalik started Ethereum: solving exactly those problems. And it is on the surface, a simple proposition: move the ‘unit of account’ to a processing unit. Ether, is the ‘gas’ to process multitude of smart contracts.

In Bitcoin’s case, the ‘transaction fee’ was what was paid to change state of the currency unit, processing a relatively simple contract on the ledger.

In Ethereum, this contract can become much more complex and a lot more can be changed in the state besides a “currency unit”. But now, a transaction fee in the case of Bitcoin won’t suffice [pay per kb], as more complex contracts would not match linearly with increase in size. And thus, ‘ether’ is used to process these contracts and state changes.

If you are up for some reading on this fine Thursday, do read the white paper: https://github.com/ethereum/wiki/wiki/%5BEnglish%5D-White-Paper.

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The potential this has is immense. I’m especially looking forward to working on decentralized reputation systems (so you could hopefully tap it more easily into systems such as OpenBazaar), and again working on personal coins.

But, that’s probably just low hanging fruit with Ethereum. I’m so so excited about what will happen, and what will be created. Here’s even a basic experiment in defining art with a dash of behavioural economics in a contract (by Rob Myers): http://bitcoinagile.com/5E897/ethereum-art-is_stream. Because why not?

The jury is still out on the economics of this system [including the concept of a pre-sale of ether]. But to able to figure it out is a really, really difficult problem.

At the end of the day, I take my hat off to the Ethereum guys. I like supporting people who create, and are passionate about what they are creating. Doing something so monumental is no easy task. There’s technical, economical, cryptographic & legal problems, and then you have to deal with the haters as well [don’t be a hater, be a creator].

As humanity, we are paving our way to defeating the entropy of large social systems, and whether Ethereum fails or succeeds, it’s a historical step.

I bought some ether so I can do some cool contracts when it launches and saying thanks to the hard-working team for doing epic shit. Not much, as I need to still bootstrap this new company I’m busy with. ;)

The blueprints for a decentralized Uber.

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Uber recently received $1.2 Billion in investment at a $17 Billion valuation. Kudos to them. Fundamentally, they provide a great service. They could become much bigger, filling into the niche of every “transport as a service”. If so, $17 billion is still low. Even though it is only just 4 years old, it already claims huge revenue.

It comes down to our revenue numbers, the growth of those numbers and our business model itself. … The [numbers] are incredibly compelling.

But. And here’s a thought experiment… We have a company in the business of market-making: matching up people to transport. They provide additional services that make it a more compelling experience: a reputation system for drivers, decent cars, vehicle tracking & instant payment through an app.

Like Michael Arrington states in this 2010 post about Uber, it solves the following annoyances:

In my order, that’s flagging one down, finding the cash to pay, and being in a sometimes disgusting car.

It brings the hallmarks of the ‘sharing economy’ to the transport industry: identity/reputation systems, and ease of transferring value. The same with Airbnb. Bringing in an ID/reputation system with the ease of value transfer. Apartment/home rentals abroad were often confusing & unorganised.

Fundamentally though, the services these companies provide alleviate some of the inefficiencies in bringing it all together: tying in reputation to a specific subset of a market (past time/space constraints), being a trusted brand & being the payment processor. Rightfully so, they take a cut for their services.

On a smaller scale, you wouldn’t require a third party, as the market would be efficient enough. There’s enough trust between participants so that people would be content to use normal means of “market making”. Take the example of a small seaside town. If you have friends that want to come visit you over the holidays, local knowledge, know-how and connection to the locals in the area is enough to find out who has a place free for your friends to come and stay. Once the scale becomes larger, and larger, these efficiencies become too large, and internet-scale services such as Airbnb & Uber are required.

So, what it it comes down to: when the scale becomes larger, we need third parties such as Airbnb & Uber to help us in market making… and we pay them for it.

There thus exists a hole in the market. An internet-scale decentralized, reputation-based marketplace (for everything). Immense costs will be cut. A more globally efficient market.

Ever since, I heard Mike Hearn talk about the possibility of a “TradeNet” (slides), I’ve been keeping an eye on this problem. A decentralized marketplace for everything (including machines posting jobs for machines). I’ve been slowly educating myself in the esoteric parts of how such a system could function, reading up things like Kademlia DHTs. By no means am I equipped yet to understand how it would work technically, but thankfully there’s people considerably smarter than I am!

And it is coming. It’s called OpenBazaar. OpenBazaar is a fork of DarkMarket. DarkMarket’s slant is decidedly more political. I’m much more a fan of the neutral-sounding OpenBazaar. It’s not just about being to sell anything, it’s also about solving efficiencies in global scale market making. It’s not just about being to able sell drugs. The media already looks at DarkMarket like it is only for that.

Brian Hoffman, current lead dev on the project, puts it succinctly:

“The goal is not to make it simple to find drugs or guns. Period. I am not spending my time contributing to something to help others buy drugs, I’m trying to help sellers save money on transaction and payment processing costs, and open up new customer bases. There’s a lot more here than drug or gun sales.”

OpenBazaar

In short, it is a p2p market. Cut one part of the hydra off, and it remains alive. It will have secure p2p merchants, anonymous rating systems & 3rd-party arbitration.

Without going into too technical detail, it will hopefully be possible for someone to build a global reputation for a specific market need (driving people around), and won’t require a third-party to bring it together.

A decentralized Uber could thus use OpenBazaar as its “back-end”, and then someone would build the additional features such as tracking of taxis. Others could use the same back-end and innovate. It could all be open-source too.

Of course, this would be simplifying parts of the process, and perhaps it wouldn’t necessarily be as close to Uber, but it is definitely possible, and it is definitely coming. If market efficiencies make it better for the driver and the passenger: cost cutting & saving on fees, it could be adopted like wildfire. It could also mean that markets could become more efficient. Uber’s top-down “surge pricing” might not be the most efficient.

It’s going to create rippling ramifications in the political/legal sphere. Uber & Airbnb are already bashing against them. But what will happen when all this gets decentralized? And what happens when not only humans start using this OpenBazaar, but autonomous agents as well [self-driving cars picking up packages and delivering them]? Also, imagine a permissionless, global marketplace? “Permissionless innovation” is a buzz-word, but seriously, imagine the possibilities?

All I know is, it will most likely create a world that will be more cost effective, and bring people closer. And that’s an experiment worth trying. Now, I just need to copy myself, so I can work on more of these awesome projects!

Thoughts?

Systems, trust and the blockchain.

(Some background music for this post. Click play).

For my masters degree that I finished last year, I decided to research something that’s always interested me: group dynamics (and specifically the concept of ‘critical mass’). I wanted to know what happens with groups of people, as they grow larger. I ended up finding a niche in this, but it still came from a curiosity in terms of how humanity functions together.

I’m particularly fascinated by the research of the Robin Dunbar, a British anthropologist that correlated the size of the prefrontal cortex in relation to size of groups in primates.

What he discovered (and it’s just a well substantiated hypothesis) is that the size of the prefrontal cortex does in fact correlate to larger group sizes. Later on, he went on and postulated the idea of the “social brain hypothesis”. There is safety in numbers, and the primates that managed to be able to group together in larger numbers, survived. One of our greatest assets is the extent of social capability.

In a sort of fibonacci manner, these groups extend in size by increasingly larger factors. Here’s an in-depth post on it looking deeper into these delineations. 

This picture says a lot:

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Have you ever been to a social gathering, where there is 5-7 people? Everyone has fun together, but once you add the 8th person, it’s too much and the conversations splinter.

You’ll also agree that that you probably have 5-7 really close friends/family. Then after that it starts branching into close acquaintances (and friends you don’t see often), up to about 50 people. Then it goes onwards until 150, which according to Dunbar is the limit of people with which we can have “stable” relationships with.

Each new delineation means a new kind of relationship. In humanity’s history we’ve consistently found ways to extends these groupings. With each new technology (as part of our system), as individuals we’ve managed to collectively put faith in it so that we can function better together: the sum is greater than the parts.

If you look at innovations such as agriculture, sewage systems, rail, cars, internet, etc. Each time we can let go of some “trust” in others, but put faith in the “technology” so we can ALL be better off. If we are only primates in the wild, we required the trust of others in the group: which limits us to 150. But NOW, we don’t. We can arbitrate the trust through the extra pillars in our systems.

Now we manage to collectively hold faith in systems such as democracy, capitalism, policing, nation states, etc to able to function at “higher levels” of organization.

I mean. If you think about it. Isn’t it a bit weird that another individual has the authority to lock you away? Or isn’t it weird that we stop for red robots, which is just a red light? Isn’t it weird, that on some pieces of land I can walk freely, but then suddenly walk into artificial boundaries? We, however agree to work with this, because for the most part, it enables other things. We are all cogs in an increasingly larger machine (not implying the negative connotation here): allowing us to enjoy things like Game of Thrones thousands of kilometres away, allowing us to enjoy the Internet, communicating with fascinating stranger in different countries.

It’s a growing, complex system. The parts become larger, creating smaller autonomous pockets within the larger whole. Currently the escape velocity of these systems seem to get stuck at nation states. We’ve tried creating systems of international (and wordly) agreement, but it still sometimes fails. We unfortunately must still have  an hegemony to act as the world’s “police” (aka USA). Nations (*cough* Russia) continuously test their geopolitical influence, and international agreements often fizzle out.

The benefit of the Internet has made nation states more intertwined, which is good. We seem to move towards the right path.

Now: if you catch where I’m heading towards. In terms of humanity, trust and systems, technology enables us to trust the people less, because we can put trust in the system. As time went on, we put more and more trust in the “black box” of the systems we’ve created. To use a crude example, I can swipe my credit card at a shop in Amsterdam, and everything *should* be okay, because we can put trust in the systems behind it. I don’t have to worry that the waitress behind the desk has any incentive to suddenly whip out a knife and kill me for my clothes. I don’t know her… from anywhere. But I don’t need to. And that’s the beauty of the wonderful systems we’ve created. Some are still flawed, but we’ve managed to do a really great job so far, thanks to our prefrontal cortex.

We understand the concept of “police”, blackboxing it in our minds, that allows us to go along with the collective “illusion” that another individual can lock us away.

To sum up thus far: better systems require less trust -> enabling us to achieve more. (I generally don’t need to worry that my chair that’s keeping me steady is going to break). In the center of this is technology/innovation. In terms of complexity theory: it’s the rock solid foundation that allows creativity and innovation to exist at the “edge of chaos”.

Now comes the most fucking mind-blowing part: the next step. The almost perfect trust-less system. A cryptocurrency’s blockchain.

Humanity, in the guise of a group of people (or individual) created Bitcoin: Satoshi Nakamoto. A system that propels humanity aeons ahead. Through clever exploitation of numbers, verifiable by the laws of the universe we inhabit, we can establish consensus. Just think about it: a verifiably secure, global, nearly instant public ledger. That’s unfathomable.

The blockchain becomes the foundation for a system in which humanity can organise in a much larger fashion: continuing our walk to trump Dunbar’s Number.

Think of it as a pillar - a strut - propping up humanity. A “large city” attracting people from neighbouring towns. A star, attracting celestial bodies to form a solar system. The blockchain’s “systemic gravity” is incredibly strong.

Like agriculture, sewage systems, the automobile, the pc & the internet, we’ve reached a new substrate in complex systems that will help us withstand the entropy of large social systems.

It’s going to a really awesome decade or 2 ahead.