Centralism vs Decentralism: the new Left vs Right — Part 4 (Decentralised Blockchains)
Future and History of the Web
Information is shared on the “web” (World Wide Web) and URLs of webpages are connected using a protocol (HTTP). The “web” is part of the Internet, Industry 4.0, and the interconnected Internet of Things (IoT).
Decentralisation today is the politically driven transformation and redistribution of power that is mutually beneficial and complements established traditional centralised entities into modern technological equivalents to drive efficiencies and autonomy.
read-only web —medium privacy, web pages without user interaction
read-write web —low privacy, high spying, user-app/app-app interaction, centralised “trusted” authorities (i.e. banks)
- Internet — Decentralised data postage service Internet Protocol (IP) that follows transmission control program (TCP) rules.
- Email — Decentralised email postage service protocol (SMTP). Centralised dominant email providers.
read-write-execute — high privacy, high anonymity, anonymous interaction, decentralised “trustless” blockchains vs centralised “trusted” authorities
- Decentralised cryptocurrency mining was enabler of voting level and influence of miners on the state of the blockchain, but instead it’s perceived as “negative externality” (power wastage unless they solve a puzzle search space that offers meaningful value to society as “proof of useful work”)
- Centralised concentration of power due to high capital cost of mining
- Decentralised currencies minted and controlled
- Centralised cryptocurrency mining — concentration of power due to high capital cost
- Centralised regulation to prevent “market failure” (i.e. “lemons market”) through trade-offs in buyer and seller reputation, and in transparency of quality levels
- Centralised “non-profit” governance that gains advocacy and funding through negotiating with various profit-based governments.
Law and Order
- Decentralised distributed “consensus” protocol of rules and transaction history for security, stability, and reliability by broadcasting block transactions. Node listeners in the p2p network validate the integrity of transactions and their order, and then the consensus chain (i.e. of miners) reaches an agreed upon global “ledger” and updates the transaction history
- Decentralised risks — network latency, malicious nodes, lack of global time
- Decentralised “impossibilities” (i.e. “Byzantine Generals Problem” model where of all the nodes only some are loyal and some aren’t, and if >30% are bad then it’s impossible to remain unified)
- Decentralised mitigation measures — overcome using an “incentivise” mechanism to encourage participants (i.e. miners) to be trustworthy when creating blocks (i.e. providing “block reward” and “transaction fees”). “random” timeframes are used for processing consensus
- Decentralised “Proof of Work” —by selecting random nodes in proportion to resources with the least chance of being monopolised (i.e. through compute power) by using “hash puzzles” and verifying the miners are working legitimately
- Decentralised “Proof of Stake” — selecting random nodes in proportion to resources with the least chance of being monopolised (i.e. by extent of ownership of the currency)
- Other “know your customer”
- Secure history (where no adversary has >50% power to create new blocks, i.e. “51 percent attacker”) of each transaction (such as purchase of a “coin” or “smart contract” i.e. cash/credit-equivalent) in an ordered chain of blocks (blockchain).
- Architecture of the chain of “blocks” (“blockchain”) is similar to a linked-list data type (using “hash pointers” to validate/secure the header of the previous block instead of using ordinary pointers). The value of each element in the list is a “block”. Each “block” contains a “merkle tree” (i.e a “binary tree” where each child leaf “branch” uses a “hash pointer” to validate/secure its previous parent transaction). The “merkle root” is the root of the “merkle tree” and provides cryptographic proof of which transactions are in the block and their order (i.e. “Proof of Membership”) and includes hashed evidence of this in both its “block header” and that of the next block in the blockchain (to validate integrity by checking for “double-spend attacks” or “forking attacks”). Each “branch” is a “transaction”. Each “transaction” is identified with an unforgeable digital “signature” that anonymises its owner (i.e. “pseudonymity” in Bitcoin).
- Hashes may be generated from a SHA256 “collision-resistant” Hash Function (“compression function”), which allows the passing of inputs of any length using a method called “Merkle-Damgard Transform”
- Decentralised blockchains with embedded artificial intelligence (AI) that use long short-term memory (“LSTM”) recurrent neural networks (RNN) to support machine learning for use with “prediction market arbitration” using real-world “data feeds”
- Decentralised economic protocol “Peerism” autonomously routes available work to commons-owned bots that have the required skills
- Decentralised economic protocol “Peerism” autonomously routes work to a people with the required skills as a fallback when no commons-owned bots are available
- Decentralised joint ventures — mitigation measures are required to prevent any peer in a join venture from launching a Denial of Service (DoS) attack on a protocol that prevents a transaction from being published on the blockchain
- Decentralised illegal trade — mitigate illegal trade by incentivising miners
Products and Services
- Decentralised apps (DApps) are built on various blockchains, DApp-DApp interaction (i.e. automated voting, mediation, and legal consensus)
- Decentralised Internet of Blockchains (IoB) and cross-chain swaps are where “SPV proofs” are performed using Simplified Payment Verification (SPV) of the block headers of side-chain p2p networks — (i.e. polkadot.io, cosmos.network)
- Decentralised cryptographic protocols (i.e. Bitcoin, Ethereum) have blockchain “application layer” over TCP “network layer” with their peer-to-peer (p2p) network of nodes. “Network effects” occur as a result of competition. Hybrid currency exchanges and wallets exist, with a low barrier-to-entry for user client nodes (i.e. Parity).
- “Decentralisation through disintermediation” is where the “level of decentralisation” such as with “smart property” may replace the traditional real-world transfer of property titles (without requiring intermediaries)
- “Decentralisation through competition” is for dispute resolution that allows entities to choose from intermediary arbitrators that each compete for your trust
- Centralised interfaces between cryptocurrencies and fiat currencies is regulated and not anonymous
- Decentralised transactions may be susceptible to “Taint Analysis” by using machine learning “deanonymisation algorithms” that monitoring and score the extent different clusters of public addresses on the ledger that are related and then predict future transactions and attempt to identify the actual real-world users.
- Decentralised transactions may be broadcast by an origin user to a network where many nodes collude or are controlled by the same malicious overarching adversary (i.e. a “Sybil attack”), where to determine the identity of the origin user, they simply match the IP address of the origin users’ transaction node to its real-world user. Potential mitigation measure for users is to use Tor for anonymity over the network-layer.
- Other “anonymity technologies”
- Video of how do Cryptocurrencies work https://www.youtube.com/watch?v=bBC-nXj3Ng4
- Draft Book on Bitcoin and Cryptocurrency Technologies https://d28rh4a8wq0iu5.cloudfront.net/bitcointech/readings/princeton_bitcoin_book.pdf
- DApps for beginners https://dappsforbeginners.wordpress.com/