
Cryptocurrencies will create a fifth protocol layer - tikhon
http://startupboy.com/2014/04/01/the-fifth-protocol/?q=1
======
dmix
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
>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
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".

~~~
runeks
I don't think this is about human rationality, or a lack thereof. It's a about
whether individual rationality leads to group rationality. Whether the
interest of the individual is also the interest of the group. This story is a
good example:
[https://www.youtube.com/watch?v=sb5hr-f3Tfg#t=95](https://www.youtube.com/watch?v=sb5hr-f3Tfg#t=95)

~~~
dmix
This sums up my original comment perfectly, thanks.

------
brudgers
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
> 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
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.

------
a3_nm
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
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?

~~~
a3_nm
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).

~~~
dogem
And with this identity it is easier to track you.

~~~
a3_nm
Nothing prevents a machine from having multiple identities.

~~~
p4bl0
Or for an identity to "jump" from machine to machine at times.

------
lingben
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

------
higherpurpose
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/)

------
contingencies
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.

------
jc123
repost
[https://news.ycombinator.com/item?id=7506812](https://news.ycombinator.com/item?id=7506812)

~~~
dang
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
This is some refreshingly pleasant transparency as to the spirit of the rules.
Thanks!

~~~
dang
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
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
What do you mean by "writing these down somewhere"?

I took a quick look at your account and it's fine.

~~~
sirsar
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.

~~~
brudgers
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.

~~~
dang
This is exactly right.

~~~
sirsar
I disagree that the rules stem naturally from common courtesy.

\- 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.

~~~
brudgers
An analogy to futbol:

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]

~~~
sp332
At least in futball, you know who the refs are (hi dang!), what the rules
_are_ , and you know whether you've been red-flagged. On HN, the mods are new,
the rules are unknown, and the default behavior seems to be not to tell anyone
when they've been penalized.

------
adamgravitis
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
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.

------
rubyfan
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.

------
spb
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
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
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
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
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 ?

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

