Why Bitcoin is and isn't like the Internet

Why Bitcoin is and isn't like the Internet
2015-01-21  7:35 ` Aaron Voisine
  2015-01-21  8:20 ` Alon Muroch
  
From: 21E14 @ 2015-01-21  6:07 UTC ( / )
  To: Bitcoin Dev;  joi



This is a response to a wonderfully insightful recent post by Joichi Ito,
the Director of the MIT Media Lab. In it, Dr. Ito, notably a former Board
Member of ICANN, offered his thoughts on "Why Bitcoin is and isn't like the
Internet" and asked a most pertinent question: "Whether there is an ICANN
equivalent needed for Bitcoin." As suggested in recent posts to the mailing
list, I believe there might be, but for a reason that may not seem obvious
at first.

Alan Reiner expressed the need this way: "I think one of the biggest issues
facing Bitcoin right now is not the lack of a 'killer app.' It is lack of
insurance options. Early adopters would like to believe that the majority
of users will hold their own Bitcoin, but I believe that is not a realistic
option when life-changing quantities of Bitcoin are involved. We should not
trust Grandma to secure her own retirement savings via complicated computer
maneuvers. More to the point, she should not trust herself or anyone else
(sic!) to hold it unless there is a strong protection against loss events.
Right now the solution is for Grandma to avoid keeping her money in
Bitcoin. Bitcoin needs a strong backbone of insured storage options so that
Grandma can confidently participate in this new technology." This is
certainly an observation to take heed of coming from the founder of Armory
Technologies.

The protection against loss events ought to be understood in the broadest
sense. What is needed is a disaster recovery mechanism. Andreas
Antonopoulos remarks expressed this candidly last year: "Bitcoin doesn't
have a middle of the road mediocre growth model. It basically either dies,
because of a fundamental flaw in the Bitcoin system. Not an external
factor, an internal factor: We blow it up by accident. And that could
happen... Bitcoin will play out in the next three years. In the next three
years we're going to see Bitcoin arrive on the global stage and make a
substantial impact, both in financial terms and in political terms. It will
happen. Or it will die. Either way. I'm not sure. In which case we'll
reboot another currency."

A body, not entirely unlike ICANN, can manage the nexus to the physical
world, and help address Bitcoin's catastrophic failure modes. Bitcoin's
coin ownership protocol would thus join the ranks of its payment protocol,
coin issuance protocol, consensus mechanism and inflation control that pose
no lethal threat to the ecosystem. In addition to their coin-agnostic
nature, I suspect the high valuation of large Bitcoin hubs relative to
Bitcoin's market cap at this stage in its lifecycle is partly reflective of
the sneaking suspicion that a custodial bitcoin (a bitcoin attached to an
identity) may be worth more than a non-custodial one. With this in mind,
I'll pitch in for the ticket should Dr. Ito decide to join the next month's
DevCore Boston conference aimed at supporting the future development of
Bitcoin. It's an hour's walk from MIT after all.
2015-01-21  6:07 [Bitcoin-development] Why Bitcoin is and isn't like the Internet 21E14

  2015-01-21  8:20 ` Alon Muroch
  
From: Aaron Voisine @ 2015-01-21  7:35 UTC (permalink / raw)
  To: 21E14, Bitcoin Dev;  joi

Ultimately the only way to insure bitcoin holdings is with an insurer
who themselves holds enough bitcoin to cover replacement of insured
funds. In the existing insurance industry, this is handled through a
system of re-insurance, where smaller firms are themselves insured
against catastrophic events that might cause a large number of
simultaneous claims. At the top of the chain sits super-cat insurance
firms like Berkshire Hathaway who do actually have the reserves to pay
out in case of such a super catastrophy. This is one of the most
lucrative businesses in the world, and one that today's very large
bitcoin holders will find themselves uniquely positioned to engage in
as bitcoin grows into a major global currency.

Aaron Voisine
breadwallet.com


On Tue, Jan 20, 2015 at 10:07 PM, 21E14 <21xe14@gmail•com> wrote:
> This is a response to a wonderfully insightful recent post by Joichi Ito,
> the Director of the MIT Media Lab. In it, Dr. Ito, notably a former Board
> Member of ICANN, offered his thoughts on "Why Bitcoin is and isn't like the
> Internet" and asked a most pertinent question: "Whether there is an ICANN
> equivalent needed for Bitcoin." As suggested in recent posts to the mailing
> list, I believe there might be, but for a reason that may not seem obvious
> at first.
>
> Alan Reiner expressed the need this way: "I think one of the biggest issues
> facing Bitcoin right now is not the lack of a 'killer app.' It is lack of
> insurance options. Early adopters would like to believe that the majority of
> users will hold their own Bitcoin, but I believe that is not a realistic
> option when life-changing quantities of Bitcoin are involved. We should not
> trust Grandma to secure her own retirement savings via complicated computer
> maneuvers. More to the point, she should not trust herself or anyone else
> (sic!) to hold it unless there is a strong protection against loss events.
> Right now the solution is for Grandma to avoid keeping her money in Bitcoin.
> Bitcoin needs a strong backbone of insured storage options so that Grandma
> can confidently participate in this new technology." This is certainly an
> observation to take heed of coming from the founder of Armory Technologies.
>
> The protection against loss events ought to be understood in the broadest
> sense. What is needed is a disaster recovery mechanism. Andreas Antonopoulos
> remarks expressed this candidly last year: "Bitcoin doesn't have a middle of
> the road mediocre growth model. It basically either dies, because of a
> fundamental flaw in the Bitcoin system. Not an external factor, an internal
> factor: We blow it up by accident. And that could happen... Bitcoin will
> play out in the next three years. In the next three years we're going to see
> Bitcoin arrive on the global stage and make a substantial impact, both in
> financial terms and in political terms. It will happen. Or it will die.
> Either way. I'm not sure. In which case we'll reboot another currency."
>
> A body, not entirely unlike ICANN, can manage the nexus to the physical
> world, and help address Bitcoin's catastrophic failure modes. Bitcoin's coin
> ownership protocol would thus join the ranks of its payment protocol, coin
> issuance protocol, consensus mechanism and inflation control that pose no
> lethal threat to the ecosystem. In addition to their coin-agnostic nature, I
> suspect the high valuation of large Bitcoin hubs relative to Bitcoin's
> market cap at this stage in its lifecycle is partly reflective of the
> sneaking suspicion that a custodial bitcoin (a bitcoin attached to an
> identity) may be worth more than a non-custodial one. With this in mind,
> I'll pitch in for the ticket should Dr. Ito decide to join the next month's
> DevCore Boston conference aimed at supporting the future development of
> Bitcoin. It's an hour's walk from MIT after all.
>
> ------------------------------------------------------------------------------
> New Year. New Location. New Benefits. New Data Center in Ashburn, VA.
> GigeNET is offering a free month of service with a new server in Ashburn.
> Choose from 2 high performing configs, both with 100TB of bandwidth.
> Higher redundancy.Lower latency.Increased capacity.Completely compliant.
> http://p.sf.net/sfu/gigenet
> _______________________________________________
> Bitcoin-development mailing list
> Bitcoin-development@lists•sourceforge.net
> https://lists.sourceforge.net/lists/listinfo/bitcoin-development
>



 permalink raw reply	[|nested]
2015-01-21  6:07 [Bitcoin-development] Why Bitcoin is and isn't like the Internet 21E14
  2015-01-21  7:35 ` Aaron Voisine

  2015-01-21 19:44   ` odinn
  
From: Alon Muroch @ 2015-01-21  8:20 UTC (permalink / raw)
  To: 21E14;  Bitcoin Dev, joi

[-- Attachment #1: Type: text/plain, Size: 2236 bytes --]

Bitcoin has a major crossroad ahead regarding a suitable platform for the
average non technical main stream user. Until now the majority of the
available solutions were at two extremes, or DIY your security and privacy
*OR* let a 3rd party service do it for you. The DIY solution is obviously
not scalable, but it seems that 3rd party solutions are not scalable as
well. If we compare for a second a 3rd party services with traditional
banks, it seems banks have two major "advantages" over them. Entry costs
for creating a bank are HUGE so a priori very few people can actually
create such a service, second, their physical and IT security
infrastructure are heavily regulated which insures a minimum of security
level to the end user (and even so money is stolen frequently). Entry costs
and regulation do not exist in the bitcoin space, meaning two programers in
their spare time can create a wallet/ platform and the non technical end
user cannot know if his money is safe, did they hire the right security
expert, did they invest enough in protecting and backing up his keys, etc.

Many services tried to tackle those problems with multisig (2 of 2 and 2 of
3) to create a syntactical 2 factor authentication/ authorisation mechanism
but in reality those solutions didn't really increase security and their
failure point is always a single device. Coupling those said problems with
the fact that bitcoin transactions are irreversible and are a scarce
commodity, trying to insure them the way our money is insured by the
government when we deposit it in the bank becomes a huge problem. Premiums
will be very high and will only grow as the appetite of hackers to steal
coins increase.

I personally believe we have the tools for creating a platform that is both
secure and private but most importantly it does it in a decentralised way.
Creating true 2 (or more) factor authentication/ authorisation schemes can
improve dramatically personal security to a point where 3rd party wallet
services will become a thing of the past. Succeeding in that will mean the
next billion non technical bitcoin users will have a platform to use
securely and a base line for building cool services on top.

Alon Muroch
bitcoinauthenticator.org

>
>

[-- Attachment #2: Type: text/html, Size: 2815 bytes --]

 permalink raw reply	[|nested]
2015-01-21  8:20 ` Alon Muroch

  
From: odinn @ 2015-01-21 19:44 UTC (permalink / raw)
  To: bitcoin-development

-----BEGIN PGP SIGNED MESSAGE-----
Hash: SHA512

3rd party / web wallets are no longer viable except as means to burn
customers and divulge (or be forced to divulge) their data to
governments and corporations.

Rather than restate what I have already posted on this matter I'll
leave it there. It's time also for those who are managing bitcoin.org
to reconsider what's posted there (the criteria for what's posted there

 - at present the "web wallet" section should be excluded, that is to
say, Removed! from bitcoin.org

 with the possible exception of CoinKite to remain, which has a
reasonable argument for having made such privacy advances as to merit
usage by people (and to remain at bitcoin.org)

Additionally, I see no point in recommending any of the other wallets
except Electrum, Mycelium, Core, and in the hardware side, the ones
that appear (Trezor and HW1).

Furthermore, I believe those of you who are working for Coinbase
customer operations or Bitpay (I will not name names, you know who you
are) should resign from your employment.  I will bring this point up
regularly.  You can easily find employment elsewhere, your skills are
in high demand.

- -O

Alon Muroch:
> Bitcoin has a major crossroad ahead regarding a suitable platform
> for the average non technical main stream user. Until now the
> majority of the available solutions were at two extremes, or DIY
> your security and privacy *OR* let a 3rd party service do it for
> you. The DIY solution is obviously not scalable, but it seems that
> 3rd party solutions are not scalable as well. If we compare for a
> second a 3rd party services with traditional banks, it seems banks
> have two major "advantages" over them. Entry costs for creating a
> bank are HUGE so a priori very few people can actually create such
> a service, second, their physical and IT security infrastructure
> are heavily regulated which insures a minimum of security level to
> the end user (and even so money is stolen frequently). Entry costs 
> and regulation do not exist in the bitcoin space, meaning two
> programers in their spare time can create a wallet/ platform and
> the non technical end user cannot know if his money is safe, did
> they hire the right security expert, did they invest enough in
> protecting and backing up his keys, etc.
> 
> Many services tried to tackle those problems with multisig (2 of 2
> and 2 of 3) to create a syntactical 2 factor authentication/
> authorisation mechanism but in reality those solutions didn't
> really increase security and their failure point is always a single
> device. Coupling those said problems with the fact that bitcoin
> transactions are irreversible and are a scarce commodity, trying to
> insure them the way our money is insured by the government when we
> deposit it in the bank becomes a huge problem. Premiums will be
> very high and will only grow as the appetite of hackers to steal 
> coins increase.
> 
> I personally believe we have the tools for creating a platform that
> is both secure and private but most importantly it does it in a
> decentralised way. Creating true 2 (or more) factor authentication/
> authorisation schemes can improve dramatically personal security to
> a point where 3rd party wallet services will become a thing of the
> past. Succeeding in that will mean the next billion non technical
> bitcoin users will have a platform to use securely and a base line
> for building cool services on top.
> 
> Alon Muroch bitcoinauthenticator.org
> 
>> 
>> 
> 
> 
> 
> ------------------------------------------------------------------------------
>
> 
New Year. New Location. New Benefits. New Data Center in Ashburn, VA.
> GigeNET is offering a free month of service with a new server in
> Ashburn. Choose from 2 high performing configs, both with 100TB of
> bandwidth. Higher redundancy.Lower latency.Increased
> capacity.Completely compliant. http://p.sf.net/sfu/gigenet
> 
> 
> 
> _______________________________________________ Bitcoin-development
> mailing list Bitcoin-development@lists•sourceforge.net 
> https://lists.sourceforge.net/lists/listinfo/bitcoin-development
> 

- -- 
http://abis.io ~
"a protocol concept to enable decentralization
and expansion of a giving economy, and a new social good"
https://keybase.io/odinn
-----BEGIN PGP SIGNATURE-----

iQEcBAEBCgAGBQJUwAGjAAoJEGxwq/inSG8CJoAIAMDR0h40IhFQNa8BW4AFeKUR
7tg84e752c7wY153GY/P7MOFL6w3E9h4tXzxdohTMMfF5Q6Ip6HaaifYmMpegFSS
WEHK0a3C2F+4sQMmMBtWbfyPsG5sJYtldY5hboSbh/6vXJJLXLSd+Sz3WHYx1Qjs
qn6sw5CA2Q0fborTxcsNZixUXD/OF5tTjDozp+KfnZ0imvBoKfhfJFlaNUXNon7U
zdPfahOrRIM5o70pjo6VwoutKRXr49JIoi47r9Uc3ujckUbLA5CVBApj4FApayb5
sXk8Ks+p6IvBr6Q0ycxXOKmPwbSALC5pLa7Ncb1MFFBGzxKFsMjoRwOLTXHlLUE=
=WgO4
-----END PGP SIGNATURE-----



 permalink raw reply	[|nested]