6 ms·

Cryptocurrencies will create a fifth protocol layer

214 points by tikhon 12y ago

jc123 12y ago
repost https://news.ycombinator.com/item?id=7506812 https://news.ycombinator.com/item?id=7506812
- sirdogealot 12y ago
  I was wondering why it had the ?q=1 values added to a blog URL. Good eye.
- dang 12y ago
  A couple reposts or so are ok, if the article hasn't yet received significant attention. That's one reason the dupe detector is deliberately left porous: to give good stories multiple cracks at the bat. (Please don't abuse this, though; accounts that repost too much lose their submission privileges.)
  - mquander 12y ago
    This is some refreshingly pleasant transparency as to the spirit of the rules. Thanks!
    - dang 12y ago
      Clerical staff at your service. While I'm at it: please don't delete and then repost a story. That's an abuse of deletion and we penalize accounts that do much of it. Instead, use a different URL.
      - sp332 12y ago
        Would you mind writing these down somewhere? I've done that a few times and now I have no idea if my account is penalized.
        dang 12y ago
        What do you mean by "writing these down somewhere"? I took a quick look at your account and it's fine.
        eof 12y ago
        I'm sure sp332 meant having a centralized place to understand the intricacies of HN mechanics.
        greatsuccess 12y ago
        dont make me laugh
        dang 12y ago
        We'll certainly add to the HN guidelines over time—and "please don't delete and repost" is the sort of thing we'll add. We probably won't try to make a complete list, though; I doubt that's even possible. In the short run, we're trying to answer specific questions with more transparency. Baby steps!
        sirsar 12y ago
        Your "while I'm at it" comment contained one rather specific rule that can penalize accounts. I (and presumably the parent) would much prefer a centralized list of guidelines, rather than trying to remember tidbits of advice sprinkled throughout threads.
        deleted 12y ago
        [deleted]
        brudgers 12y ago
        Striving to behave well is pretty much the best guideline, and if you incur some punishment unjustly or accidently, then contact the HN moderators. 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.
dmix 12y ago
Interesting read. I'm all for decentralized systems but one important consideration which will likely be different for each scenario: is whether distributed consensus in x (ie. traffic lights, water, power) is more valuable to the participants than a statistical machine-learning based approach. The latter is optimized towards some predefined metrics (minimizing total average wait times in traffic), whereas a cryptocurrency approach is distributed to the whims/needs of independent actors ("I want to cross the street now"). 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.
- Taek 12y ago
  >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. 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.
  - vidarh 12y ago
    Markets can not change the fact that humans are not rational, no matter what assumptions people like to make about that. Game theory is littered with examples where the rational behaviour is X, but where humans largely favour decision Y because X rubs us the wrong way in some way or other. E.g. humans are in some cases perfectly content to put our lives at risk out of sheer stubbornness if someone has annoyed us enough - accounting for that in systems aiming for perfection is at best incredibly hard, but far more likely pretty much impossible. You won't see perfect markets. There is no "yet".
lingben 12y ago
From the comments section the author writes: "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
brudgers 12y ago
Economically, adding such a layer creates perverse incentives. My router becomes profitable when I make its bandwidth scarce. The same incentive applies to everyone else with a router. 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
- eof 12y ago
  > My router becomes profitable when I make its bandwidth scarce. The same incentive applies to everyone else with a router. 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.
  - brudgers 12y ago
    In a finite pie model, yes, there's a Hobbesian war of all against all. Another model has Apple and Google agreeing not to poach each other's employees. 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.
- higherpurpose 12y ago
deleted 12y ago
[deleted]
higherpurpose 12y ago
Ethereum is planning to build a whole turing complete platform for new coins and other kind of P2P apps and services. https://www.ethereum.org/ https://www.ethereum.org/
adamgravitis 12y ago
This is a very good summary of a future, but I don't think any sort of coin system will be particularly effective at mitigating either the spam nor DDoS problem for the wide variety of cases: if a botnet captures a computer, I expect it would equally capture whatever coin-wallet is being used for default mail transfer and network access.
- bdan 12y ago
  It would, but switching the use case from a 'normal' pattern to a hijacked pattern may need an order of magnitude more traffic and as such, more coins. But coins (or mining resources) are a limited supply, so this means the DDoS or spam could only work if the botnet will keep the volume of illegitimate traffic equal the replaced 'legitimate' traffic. This may cause some alarms. But ultimately, your argument is: if one system can be cracked, a more complex system could also be cracked.
hosh 12y ago
Yeah, Brian Roemelle had talked about this on a podcast several months back.
spb 12y ago
If you need proof-of-work for value to not reject an interaction as automated / meaningless, just use a Hashcash header, which is where Bitcoin got started anyway.
- runeks 12y ago
  The problem is that the cost of a hash is several orders of magnitude more expensive on a mobile phone, than when using a specialized chip. Money, however, costs the same to everyone. 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.
rakoo 12y ago
Note that this already exists in the form of Bitcloud [0]. 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) [0] http://bitcloudproject.org/ http://bitcloudproject.org/
- Ihmahr 12y ago
  I hate to bring it to you, but bitcloud doesn't exist and probably never will, for good reason. The gnunet is very similar to what bitcloud would like to be, and it already exists for something like 10 years. Bitcloud.. is just a fantasy at this point. And i2p also works similarly. In i2p you need to have shared some bandwidth in order to get higher speeds. And there is also Tor, which runs on altruism. Bitcloud is just trying to attach mining and coin like properties to something that doesn't need it. If you want to add incentivesed routing, why not fork one of these projects and add it in? Lastly, there is no idea yet from the bitcloud community on how to securely add and integrate incentivesed routing.
  - rakoo 12y ago
    I didn't know I2P also had some incentive system attached, but it doesn't sound like it's going as far as what the post is describing. I was just mentioning bitcloud because that's what they propose to do, I haven't followed their actual progress (maybe because there is none ?) 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 ?
a3_nm 12y ago
This reminds me of a very tangible shortcoming in the OSI model that <https://en.wikipedia.org/wiki/Host_Identity_Protocol> https://en.wikipedia.org/wiki/Host_Identity_Protocol> is trying to address and which is, in my opinion, far more important that exchanging value. 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> 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.
- panic 12y ago
  What happens if the private key is compromised, and you have to switch to a new one? Does the identity of the machine then change too?
  - StavrosK 12y ago
    Necessarily, I would imagine.
  - a3_nm 12y ago
    Yes, but with IP addresses your identity changes whenever your connection changes, which is much worse. When using fingerprints, instead, the machine identity stays the same (and conceivably you would just have to ping a decentralized repository of "fingerprints => IP" mappings).
rubyfan 12y ago
Certainly not a new idea, this approach was discussed in the early 2000s but instead using pennies. I've always been a skeptic of this approach as anything that has value will inevitably be traded for money making it entirely possible for organized actors to create inequity in the system to their own ends.
contingencies 12y ago
Yes. 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/ http://ifex-project.org/ .. some of these are in live use already .. but very interested in any feedback.

214 points by tikhon 12y ago

jc123 12y ago

repost https://news.ycombinator.com/item?id=7506812 https://news.ycombinator.com/item?id=7506812

sirdogealot 12y ago
I was wondering why it had the ?q=1 values added to a blog URL. Good eye.
dang 12y ago
A couple reposts or so are ok, if the article hasn't yet received significant attention. That's one reason the dupe detector is deliberately left porous: to give good stories multiple cracks at the bat. (Please don't abuse this, though; accounts that repost too much lose their submission privileges.)
- mquander 12y ago
  This is some refreshingly pleasant transparency as to the spirit of the rules. Thanks!
  - dang 12y ago
    Clerical staff at your service. While I'm at it: please don't delete and then repost a story. That's an abuse of deletion and we penalize accounts that do much of it. Instead, use a different URL.
    - sp332 12y ago
      Would you mind writing these down somewhere? I've done that a few times and now I have no idea if my account is penalized.
      - dang 12y ago
        What do you mean by "writing these down somewhere"? I took a quick look at your account and it's fine.
        eof 12y ago
        I'm sure sp332 meant having a centralized place to understand the intricacies of HN mechanics.
        greatsuccess 12y ago
        dont make me laugh
        dang 12y ago
        We'll certainly add to the HN guidelines over time—and "please don't delete and repost" is the sort of thing we'll add. We probably won't try to make a complete list, though; I doubt that's even possible. In the short run, we're trying to answer specific questions with more transparency. Baby steps!
        sirsar 12y ago
        Your "while I'm at it" comment contained one rather specific rule that can penalize accounts. I (and presumably the parent) would much prefer a centralized list of guidelines, rather than trying to remember tidbits of advice sprinkled throughout threads.
        deleted 12y ago
        [deleted]
        brudgers 12y ago
        Striving to behave well is pretty much the best guideline, and if you incur some punishment unjustly or accidently, then contact the HN moderators. 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.

dmix 12y ago

Interesting read. I'm all for decentralized systems but one important consideration which will likely be different for each scenario: is whether distributed consensus in x (ie. traffic lights, water, power) is more valuable to the participants than a statistical machine-learning based approach. The latter is optimized towards some predefined metrics (minimizing total average wait times in traffic), whereas a cryptocurrency approach is distributed to the whims/needs of independent actors ("I want to cross the street now"). 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.

Taek 12y ago
>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. 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.
- vidarh 12y ago
  Markets can not change the fact that humans are not rational, no matter what assumptions people like to make about that. Game theory is littered with examples where the rational behaviour is X, but where humans largely favour decision Y because X rubs us the wrong way in some way or other. E.g. humans are in some cases perfectly content to put our lives at risk out of sheer stubbornness if someone has annoyed us enough - accounting for that in systems aiming for perfection is at best incredibly hard, but far more likely pretty much impossible. You won't see perfect markets. There is no "yet".

lingben 12y ago

From the comments section the author writes: "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

brudgers 12y ago

Economically, adding such a layer creates perverse incentives. My router becomes profitable when I make its bandwidth scarce. The same incentive applies to everyone else with a router. 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

eof 12y ago
> My router becomes profitable when I make its bandwidth scarce. The same incentive applies to everyone else with a router. 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.
- brudgers 12y ago
  In a finite pie model, yes, there's a Hobbesian war of all against all. Another model has Apple and Google agreeing not to poach each other's employees. 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.
higherpurpose 12y ago

deleted 12y ago

[deleted]

higherpurpose 12y ago

Ethereum is planning to build a whole turing complete platform for new coins and other kind of P2P apps and services. https://www.ethereum.org/ https://www.ethereum.org/

adamgravitis 12y ago

This is a very good summary of a future, but I don't think any sort of coin system will be particularly effective at mitigating either the spam nor DDoS problem for the wide variety of cases: if a botnet captures a computer, I expect it would equally capture whatever coin-wallet is being used for default mail transfer and network access.

bdan 12y ago
It would, but switching the use case from a 'normal' pattern to a hijacked pattern may need an order of magnitude more traffic and as such, more coins. But coins (or mining resources) are a limited supply, so this means the DDoS or spam could only work if the botnet will keep the volume of illegitimate traffic equal the replaced 'legitimate' traffic. This may cause some alarms. But ultimately, your argument is: if one system can be cracked, a more complex system could also be cracked.

hosh 12y ago

Yeah, Brian Roemelle had talked about this on a podcast several months back.

spb 12y ago

If you need proof-of-work for value to not reject an interaction as automated / meaningless, just use a Hashcash header, which is where Bitcoin got started anyway.

runeks 12y ago
The problem is that the cost of a hash is several orders of magnitude more expensive on a mobile phone, than when using a specialized chip. Money, however, costs the same to everyone. 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.

rakoo 12y ago

Note that this already exists in the form of Bitcloud [0]. 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) [0] http://bitcloudproject.org/ http://bitcloudproject.org/

Ihmahr 12y ago
I hate to bring it to you, but bitcloud doesn't exist and probably never will, for good reason. The gnunet is very similar to what bitcloud would like to be, and it already exists for something like 10 years. Bitcloud.. is just a fantasy at this point. And i2p also works similarly. In i2p you need to have shared some bandwidth in order to get higher speeds. And there is also Tor, which runs on altruism. Bitcloud is just trying to attach mining and coin like properties to something that doesn't need it. If you want to add incentivesed routing, why not fork one of these projects and add it in? Lastly, there is no idea yet from the bitcloud community on how to securely add and integrate incentivesed routing.
- rakoo 12y ago
  I didn't know I2P also had some incentive system attached, but it doesn't sound like it's going as far as what the post is describing. I was just mentioning bitcloud because that's what they propose to do, I haven't followed their actual progress (maybe because there is none ?) 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 ?

a3_nm 12y ago

This reminds me of a very tangible shortcoming in the OSI model that <https://en.wikipedia.org/wiki/Host_Identity_Protocol> https://en.wikipedia.org/wiki/Host_Identity_Protocol> is trying to address and which is, in my opinion, far more important that exchanging value. 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> 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.

panic 12y ago
What happens if the private key is compromised, and you have to switch to a new one? Does the identity of the machine then change too?
- StavrosK 12y ago
  Necessarily, I would imagine.
- a3_nm 12y ago
  Yes, but with IP addresses your identity changes whenever your connection changes, which is much worse. When using fingerprints, instead, the machine identity stays the same (and conceivably you would just have to ping a decentralized repository of "fingerprints => IP" mappings).

rubyfan 12y ago

Certainly not a new idea, this approach was discussed in the early 2000s but instead using pennies. I've always been a skeptic of this approach as anything that has value will inevitably be traded for money making it entirely possible for organized actors to create inequity in the system to their own ends.

contingencies 12y ago

Yes. 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/ http://ifex-project.org/ .. some of these are in live use already .. but very interested in any feedback.