We talk about proof-of-work (“PoW”) a lot within the Bitcoin SV space as a solution to the Byzantine Generals problem. For the sake of this article, I am going to assume that you are familiar with the main concepts.

If not, I recommend the PoW article written by Daniel Krawisz.

If you are familiar, I would suggest that you read it again anyways. The reason why you should read it again is because 95+% of the companies building a project on Bitcoin SV are still not getting it despite being familiar. A lot of these projects are trying to become the trusted third party that Bitcoin is designed to remove. I believe that this is due to a lack of shared conceptual framework of what a Bitcoin world based on PoW should look like within the development space projected forward into the future and that if we don’t have one in place sooner rather than later, then a lot of money and time will be wasted as people go down unproductive rabbit trails. Remember, there is a difference between malinvestment and a costly signal.

This article is going to be divided into three parts: Philosophical underpinnings, our conceptual investigation, and finally present the conceptual framework that comes out of that investigation for what a Bitcoin world will look like in the year 2040. This will allow us to have a goal to work towards in tandem.

4 philosophical underpinnings

First, we need to ensure that we have a shared consensus on the fundamental prior to our conceptual investigation in order to have credibility of the conceptual framework we will develop at the end. The reason is simple, if we don’t agree on these fundamentals then any resulting discussion will be fruitless.

1. Credibility by proxy

Back in the day of one-way communication such as TV, radio, etc. Credibility didn’t matter so much as it was a curated experience. Credibility was established through the expertise of approved communicators and the trustworthiness of hosting network (I.E. Social proof through a large investment that is at risk).

Now, on an internet of two-way communications and a low barrier to entry, there is a crisis of credibility. The large social proof of networks such as Google and YouTube allows people with no expertise on a perceived equal footing to generate misinformation (intentional or otherwise). For example, there is an implicit endorsement of any given site by Google having it as a “Number 1” result, even if that source is misleading, false, etc. This is made worse by paid results being the first four or five results, which are rarely relevant to your intent or are phishing sites sent to deliberately deceive you.

Worse, the efforts of tech giants to correct the misinformation problem hurt their credibility as a platform because they are “taking sides” in various social discussions. Their tactics of “shadow banning”, deboosting, and other suppression efforts in many cases will even lend credibility to those being suppressed as persecuted truth speakers, amplifying their messages.

We see similar issues with phishing, session hijacking, typos in domain names that allow nefarious actors to steal credibility temporarily. Even something as simple as fake Elon Musk replies to the real Elon Musk tweets promising free money if people go to a particular website or send Ethereum to a particular address can’t be prevented under this existing paradigm.

Notice the social proof of the bot likes and retweets?

Our conceptual framework for a Bitcoin future will require a methodology for determining credibility without proxy.

2. Context matters

Have you ever heard of the number stations? They were used as one way communication tool during the cold war.

These are an example of one person’s gibberish being another person’s communication. The message comes down to the relevance of meaning of communication in that it can have a literal or semantic meaning as well as a secondary or pragmatic meaning. Those layers of meaning can only be determined by the context of our relationship. If I have had a long-term personal friendship with a speaker for many years versus a stranger yelling it at a bus stop, even if the literal words say the same thing, they will have different meanings.

Now, we will always be tribal, our brains are wired in such a way that we can only form relationships with approximately 150 people at any given time (Also known as Dunbar’s number). How will that work in a peer to peer global online network where we are the same distance from our tribe as we are from complete strangers on the other side of the work? We will need a contextual stand-in to compensate as a short-cut for our small brains to verify authenticity or establish prominence.

Currently in an internet world, context is established by the “host” of the communication. That is, if you are on YouTube, it determines who is boosted/promoted on the front page, who is recommended on the side bar, etc. If you have hundreds of videos of seemingly gibberish garbage video and audio, it is likely that YouTube will delete your account as a violation of terms of service. In the absence of that corporate arbitrator, how will we determine this?

Our conceptual framework will require an understanding of context at scale.

3. Incentives are fickle

Incentives are important as we understand it in economics as higher incentives result in more effort and higher performance. It is a common understanding that Bitcoin mining wouldn’t work without miner incentives. However, we must treat them delicately because it is possible for these incentives to result in behaviors that obtain the reward without fulfilling the creator’s intent of the incentive. For example, if you are a salesperson who gets paid a commission on a signed engagement letter, you are incentivized to obtain more sales, but you are also incentivized to create fake sales orders.

Another example, our intuition on incentives tells us that paying children to read books would result in children reading more books, however, it is easy to understand that if you are paying someone to read books, it will result in them reading shorter books so they can read more in the same period of time. Gneezy’s 2011 metastudy on incentives in academics on offering an extrinsic reward often had the reverse effect where it would reduce the children’s internal motivations. Typically we don’t just want kids to read books for the sake of reading, we want them to enjoy reading and understanding the information contained within the book itself.

Incentives can also break pro-social behaviors that require trust or diminish the perception of the interaction as social. As an aside, it is an interesting paper and highly recommended if you are considering offering behavioral incentives whether it is candy, cash, or Bitcoin.

Our conceptual framework will require careful consideration of incentives and not simply pay network participants for every behavior we want on the Bitcoin network without careful consideration.

4. One universal source

Not one universal source of truth, as truth is subjective in the world of man, but one universal source of data.

There are typically three layers of communication: data, interpretation, and commentary. The data at the base layer such as the recording of an event, interpretations of that data such as a reporter writing what someone said in that recording meant, and then commentary on those interpretations such as letters to the editor or social media comments.

Three layers of communication

Traditionally, when we are provided information through a medium such as a newspaper, the data and interpretation are inseparable. That is, you never see the actual scientific study that is referenced in the article, you are just told the conclusion of the author who read the synopsis. This typically results in charges of dishonesty in the media coverage as they don’t (and can’t) present information without it going through their biased interpretation prior to presentation. There is also additional data they don’t consider, furthering this impression.

In an internet world full of SAAS (software as a service), we can separate the data from interpretation, however, due to the proliferation of sites, we end up with many different sources of data. This allows people to steal content from one source and pretend to be the creator on another data source. This allows impersonation by duplicating profile data and content, preventing attribution, proper content discovery and allowing nefarious actors.

Our conceptual framework will require one universal source of data and not the mere replication of the existing paradigm but “on-chain”.

Now that I built out the building blocks upon which we should build our Bitcoin 2040 conceptual framework, we can proceed to put some meat on these bones. We will now expand on each of these as well as conduct a survey of the current project landscape.

Credibility without proxy

As previously described, traditional online credibility is determined by a corporate or governmental intermediary that can revoke that credibility at any time. Whether it is a user account on a website or a domain address. For example, Twitter issued blue checkmarks to controversial figures to verify that they were the real individual only to remove those blue checkmarks after enough pressure from other blue checkmark accounts.

Currently within the Bitcoin space, we see a similar replication of existing technology but on chain. For example, Money Button accounts allow you to purchase a named credential for $1 on a first come first serve basis, which can then be resold. While this has allowed Money Button to raise much needed funds, it has created the same sort of corporate credentialism that already exists. I own “logan@moneybutton.com” until moneybutton.com revokes it.

As a result, there can be no global ID system as every corporation that develops such as a system will want their global credential system to be THE global credential system. While this may seem possible in the current small fish environment, I believe that is due to motivated reasoning on part of the individuals who would benefit.

The same is true for a system such as nbdomain.com, which is aiming to have domain addresses onchain. The problem is that even if all current Bitcoin domains end up using nbdomain.com domains, there will certainly be a competitor who sees such success and wants to replicate it on their own. This will result in situations where the same domain name will resolve to different IP addresses depending on which provider the browser is following at the time. Allowing for phishing, content stealing, other malicious actions to occur.

Moving beyond current players, can you imagine a world where Microsoft will defer to Google for a global identity system? No major corporation will put themselves at the mercy of another corporation like that where their global ID could be revoked at any time. This is like every bank creating its own debit card expecting that every other bank will adopt theirs. What happens is that no one can use another bank machine of a different bank. So, what is the alternative?

We need an international standard specification for a credibility protocol that can be implemented by many corporations but guaranteed to be interoperable.

The endpoint of our current dark path of global onchain identity

Simply put, if you are connecting to a node in Europe or a node in North America, your device or browser should resolve to the same expected data source or be explicitly blocked. This could only work if the protocol involved members who could certify the standard implementations.

Does this seem far-fetched or implausible to you? If so, I would like to direct your attention to the Zigbee alliance which has developed open source standards for various networks such as mesh networking. There are over 120 members who develop these standards and built over 2,000 devices to interop on these standards. Another example would be the International Organization for Standardization (“ISO”) is a non-governmental organization that consists of over 150 national standards organizations.

If there is already an international standard for global credibility, will Google, Apple or Amazon create a competing one or use the existing standard? Well Zigbee shows us that they will join the existing institution as all three of these are now members of the Zigbee alliance.

Conclusion: We need an international standard to address the issue of global credibility.

Mandatory consideration of context

As previously stated, we will always be a tribal people. This means that I don’t really need to verify the data sources of people who I know directly. For example, if a friend of mine creates a twitter account and emails me a link to that profile and says, “this is my twitter account”, I don’t need that twitter account to perform some sort of provable feat because he has already indirectly verified authenticity.

Now what if I heard about someone called “Logan” who writes really insightful articles about “Bitcoin” that I might enjoy reading so I want to connect to their twitter like account and read their insights. In the primitive internet world, I need to rely on the secret algorithms of a corporation (trusted third party) to determine who that is because “Logan” is more than one hop away from me and I will never know him without this help.

Let me give you an example. There are over 5 million John Smiths in the USA, How can I tell that I am reaching the right John Smith? Now, it is important to note that you can’t have a single global “John Smith” that resolves to one person and everyone else must go by proxy names. It must include a mechanism for settling collisions.

We need an independent measure that provides tribal tier contextual information about an individual (or a corporation, which is treated basically the same as an individual), which can be used for verification. Keep in mind that this is an adversarial environment where the likelihood of misinformation and rewards for impersonation are high. Fortunately, we know the perfect response for a traitorous environment where there is conflicting information, Proof of Work.

Now we don’t want a system for processing transactions, but we want to demonstrate that the context of the individual is worth it. So, if I am building up an accumulated PoW over time, it shows that I am the real me, who has the interests and content that other people are looking for. There is a trail of evidence that is separate from an actual transaction that can be used to indicate behavior indicative of a real person. This creates a competition whereas if I want to become the most prominent “Logan” in the world then I am going to have to have the most PoW across a wide variety of disciplines. However, we are in a finite world so this means that in any particular discipline, I wouldn’t be able to commit as many resources. A specialist “Logan” in a foreign country who is only interested in molecular biology and all his PoW is dedicated to that discipline then they would be the most prominent in that discipline. Allowing anyone looking for that Logan to follow the most PoW in the proper discipline and find that individual. This would allow people with the same names as major celebrities become discoverable again. Imagine being named “Tom Cruise” and trying to create an online audience in molecular biology?

Conclusion: We need to use PoW within our standard to verify differentiate between seemingly similar individuals in our “peer to peer” network.

Careful consideration of incentives.

Previously, I talked about how incentives can perverse our intentions, such as paying for social interactions can diminish trust between the participants. What I have noticed personally from my own interactions on ‘pay per play’ platforms is that paying to speak incentives less communication and interaction and not more. In this global network that we want to grow, we want more interactions and bridge building not less.

We also want to avoid a situation where we incentivizing “outrage porn” content where people engage in anti-social behaviors in hopes of earning money off the offended. For example, we already see people conduct activities like going into stores and spitting in or licking food in order to generate thousands of retweets.

In a world where doing so not only comes with social media attention but also tens of thousands of dollars. We would expect to see a dramatic increase in such content.

Furthermore, paying for interaction doesn’t help the content creators who are trying to build an audience and be discovered. Typically, as someone is increasing their prominence in society, they want to attract more attention and not to earn a few dollars off their limited fan base. To do so, they want people to share their content altruistically. It is only once they reach a big enough audience that they even consider monetization.

Instead, imagine instead a world whereas a prominent person, I don’t want people to pay to view my content. However, I want something that will allow other individuals to find my content. I require that my audience create a small PoW calculation that miners can redeem for a reward in order to view my content. Now if someone is looking for me, they could see the total accumulated PoW that my content has generated from readers and know that I am the real “Logan” who writes Bitcoin articles. Impersonators who might steal my content couldn’t possibly create the same level of accumulated PoW themselves over a sustained period of time.

Individual reading the content also benefits from providing a PoW calculation because this will contribute to their profile as someone who has contributed to the work of others. We are likely to believe that this person is a real individual as we can observe real behaviors that generate the amount of PoW that a person typically produces and know they are not just a bot intending to deceive us. This helps authenticate that they are not a bot, meaning we will rid the world of “prove you are not a bot” tests for interactions.This will allow us to have a low cost “cloudflare type” service on all requests as we can tell whether it is likely that the connector is an individual.

This is because bot networks can only work if there are a seemingly large number of low investment nodes to deceive us that there are greater numbers of individuals than there are. If each of these nodes have made really low PoW investment then that tells us that they are not individuals at all.

There are many additional benefits and applications for creators left undiscussed, but everything from attribution of academic works to collaborations or remixes will benefit from this sort of signaling system.

Conclusion: PoW allows us to properly incentives audiences without requiring them to pay to interact with each other and creators.

One universal source

As all PoW is created equally, there is a benefit to consolidating your PoW into a single root source as it allows you to create the most work possible, increasing your social profile. This will greatly reduce the “sock puppet” problem, because the energy of one person’s efforts will be greatly dispersed amongst each of the puppets. If you cut a foot of lumber into three pieces, you don’t end up with more.

PoW for one account versus the same PoW spread over three accounts.

However, this begs a big question. How do we know what “a lot” of work means?

For example, if we use a custom algorithm, that allows “any” CPU to provide that proof, then we don’t know what a lot of work looks like. We don’t know because there isn’t a method for detecting how much work could have been done in total or how much computing power is waiting on the sidelines. Excess processing power that isn’t already in use could be used by spammers as soon as they realize that they can use it to go straight to top of being the most work conducted.

We also want work that has a demonstrated opportunity cost, that could have been done instead. For example, you want a system where the effort is always pushing to its maximum and any effort directed away from its core purpose is to be for a comparable reward.

Most of us are familiar with how economies planned by the Federal Bank can change the money supply to change the “ruler” against which expenses and revenues are measured. If you are not, read the kingdom of Moltz by Irwin Schiff, which explains the concept nicely.

A custom algorithm makes the association defining the standard to be like the King of Moltz, who can arbitrarily change the standard to benefit the association’s members the most to the detriment of everyone else using the system.

We need a universal measuring stick that we can compare against, something that is the same for you as it is for me, even if it is in a different country on the other side of world. A ruler that we can compare the PoW of an individual versus the PoW of the entire world. We need to use double SHA256, not because it is easy but because it is hard. Because we can tell approximately how much hash power there is in the world and the price of Bitcoin is at any time, this allows us to determine a cost for doing this extra work. We all know that if I can attract 1% of the world hashing power over a substantiated period of time on a particular piece of content then that content is worth the same or more than 1% of all of the Bitcoin mining rewards over the same period for the miners to contribute that much hashing power.

Conclusion: The standard will need to use the same algorithm as Bitcoin, even if that algorithm changes, so we have a universal measuring stick.

The conceptual framework

Finally, we are at the end of our investigation and we can define what our ideal system would look like. It is an open standard defined by an association of members that uses PoW to incentive a universal peer to peer network based on the Bitcoin HASH256 algorithm.

Imagine a world where PoW is not just used to create block headers, it is used to create cooperation and foster trust beyond the tribe. If I get an unsolicited email, it isn’t a nuisance because they would have had to create a PoW that contributes to my profile by virtue of being emailed while still costing the sender something that prevents them from spamming thousands or tens of thousands of people as it will add up to a significant cost.

This will also have a positive feedback mechanism as more individuals and services using the open standard then it will persuaded others to join. For companies, they will be incentived to join the association so their services are certified, ‘ranked’, and contribute to people’s profiles which in turn may persuade people to try the new service. Individuals will be incentived as this will allow them to create a unique worldwide profile allowing people interested in them or their type of content to be found easily.

In many ways, this is true advertising. It has the same stand-out from the crowd capacity but instead of paying for adwords or a SEO consultant to tweak words or phrases, that cost supports the network via miner funding for demonstrated proof of work.

Where the OpenPGP “web of trust” ultimately failed due to the lack of a central controller, this system of a “web of PoW” will succeed as PoW was designed to solve that very issue.