I’ve been reading The Internet of Money by Andreas Antonopoulos recently.
You can buy the book here, it’s based on his lectures from a few years ago now!
Below I’ve selected a few quotes from chapter five which focuses on innovative and open nature of Bitcoin.
Below I’ve selected a few quotes from chapter five which is on Bitcoin in the context of the history of money, and offer a few thoughts...
Dumb Networks, Innovation and the Tragedy of the Commons
Bitcoin is a currency. Bitcoin is a network. Bitcoin is a technology. And you can’t separate these things.
You can’t just do the blockchain without a valuable currency behind it, and the currency doesn’t work without the network. Bitcoin is both. It is the convergence of a participatory consensus network and a global, borderless currency that is fungible, fast, and secure.
Another nice reminder that the innovation with Bitcoin isn’t just it as a currency, but as a global, consensus based network, I can’t get enough of this point!
Smart versus Dumb networks
Bitcoin is a dumb network, it doesn’t have lots of features built in, and that is one of its strongest features.
The phone network was a smart network, the phone was a dumb device. The phone had very few components, all the tech and features were in the network. The advantage of this was that you didn’t have to upgrade a phone to access upgraded features in the network, the disadvantage was that the network only got upgraded when it was worthwhile for all users to upgrade it, and the whole thing had to be taken down for upgrades to be installed and hey had to be upgraded from the centre out - depending on the permission of the controlling authority.
The internet is a dumb network: all it can do is move data from A to B. To innovate on a dumb network all you need to do is tag the innovation on - the network doesn’t know or care whether the innovation is text or a skype app.
Bitcoin is a dumb network supporting smart devices, it pushes innovation to the edge.
Bitcoin doesn’t care who controls a wallet address, it doesn’t care what app is built on it - build the app, connect it in the right way, and it will run on the Bitcoin network. This is innovation without permission or the need for approval from a centralised authority.
Compare this to modern day banking which is a system of smart networks - different permissioned systems for small and very large transactions, specifically ring-fenced. All you can do with your bank is access some html which outlines a limited range of services they have decided to give you access to.
_I’m not sure that calling it a ‘dumb’ network is a great analogy, maybe ‘accessible yet secure’ would be better, but I get the point: it’s like the equivalent of say the old combustion engines that anyone with mechanics skills and spare parts can fix, compared to the ‘smart’ cars which require a technician with specialist software to reboot when something goes wrong.
I don’t like the term dumb because it requires a lot of technical skill to be able to build on the Bitcoin network, and it takes being pretty comfortable with digital tech in general to be able just to use a Bitcoin wallet!
The tragedy of the commons
Bitcoin is open source, open standard and open network
Bitcoin is a common resource whose use increases the value of that resource, at the exclusion of no one. If a company builds a new feature that can be used on bitcoin under an open-source licence, that feature can then be used by everyone in the ecosystem. That means the innovation enriches everyone in the network.
It is the opposite of the tragedy of the commons where scarce resources get plundered and burned out by selfish actors.
I’m now considering Bitcoin as a ‘wisdom coin’, there is something very wise about this - a system that is open and allows access, and anything developed on it enhances it….. It’s a win-win situation
_The more I read through this book the more it’s clear that anyone who has a problem with Bitcoin has some power to lose the more people adopt it, because Bticoin and crypto more generally are empowering - because they make it easier for ordinary people to develop applications and transfer wealth between themselves WITHOUT a centralised power!
I’m thinking this is Antonopoulos’s main point, and fair play, he makes it well!
Bitcoin has proven itself secure over 13 years of continual operation, but what happens to its market share as younger smart contract platforms, with greater functionality, continue to prove themselves just as secure as time goes on?
Yes, there have been a lot of DeFi hacks. It's because these smart platforms are inherently more complex with a greater attack surface. But we learn and improve on code with each exploit that occurs. At the end of the day, a token with a max supply of 21 million can be created on any of these newer smart platforms.
In my mind, Bitcoin will always have historic and sentimental value, but will continue to lose market dominance to more advanced smart contract platforms, and the community tokens that are created upon them.
Yes fair point I think - although possibly the sentimentality alone could mean a very high Bicoin price! I mean 21 million - that's not a lot people required to want 1BTC as a status symbol!
Dumb networks may be easier to secure. I think some blockchains have been hacked via 'smart contracts'. If you provide ways to program it people will find ways to break it. I'm not sure where Hive sits on the spectrum, but I think it is fairly dumb as it just stores data rather than running code sent to it. I may be wrong of course.
Hive is a smart blockchain with smart contracts. They are necessary to run DEXes like hive-engine and games like Splinterlands. I wouldn't doubt some vulnerabilities exist right now in code operating on Hive, and as Hive becomes more popular these flaws will be exploited by hackers and we will have to iterate on the code over and over again until it's secure.
I did know it had some smart aspects, but other may allow deeper access through code. Security is largely about reducing the ways things can be attacked. I trust the Hive developers to think about this a lot, but they cannot be complacent.
I hadn't even thought about where Hive sits, interesting one to think about for sure!
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