The real Bitcoin and blockchain
Blockchain was invented 14 years ago in the form of Bitcoin. As designed by its inventor Satoshi Nakamoto[1], it is a law-abiding dis-intermediating Peer-to-Peer cash payment system built on an IP-to-IP decentralized protocol compatible with IPv6, with unbounded scalability and extremely low transaction costs. Its native token, bitcoin, is meant to be a commodity traded in the market purely for its actual utility instead of a vehicle of speculative investments.
The usefulness of the electronic Peer-to-Peer cash system comes from its having a unique combination of two seemingly contradictory properties at the same time, namely physicality and digitality, which were previously thought not possible to be combined at the base system-level:
(1) Physicality: physical cash-like instant settlement (versus the other account-based financial assets that require a long and costly process of settlement), and
(2) Digitality: digital convenience and traceability which paper cash and physical coins do not have.
But the Bitcoin blockchain is more than just a Peer-to-Peer cash system. The fact that the IP-to-IP decentralized protocol of the original Bitcoin is compatible with the updated Internet Protocol IPv6 has far-reaching implications well beyond bitcoin and cryptocurrencies.
The Bitcoin system makes the integration of the Internet of Data (IoD) and the Internet of Value (IoV) not only possible but in fact a natural fit with both backward and forward compatibility. The integration of IoD and IoV will constitute the New Internet, on which not only will the exchange of data be further improved, but also will the exchange of value be conducted as an intrinsic part of the Internet base protocol (rather than a mere application added upon the Internet).
This will bring about profound changes to the human society for the better, including the ability to avoid the current entrenchment with the centralized Big Tech controlling people’s data and opinions, and the serious problem of the entire financial industry having been corrupted to a gigantic bloodsucking parasite.
The Great Diversion that led the entire field to a wrong direction
But what we have today in the mainstream of the blockchain and cryptocurrency industry is not what Bitcoin was designed to be.
What we have today, whether it is BTC or the collective crypto world, cannot do any of that described above, and particularly cannot solve any problems discussed in section ‘What problems can the New Internet with blockchain solve? ‘.
It wasn’t that Bitcoin blockchain has turned out being unable to deliver, but that the real Bitcoin blockchain was mutilated and disabled intentionally to fit a certain narrow narrative. The changes were promoted as improvements, even the next-generation blockchain, but in reality, it was a corrupt movement from the norms of business and law into greedy short-term interest schemes and lawlessness.
From the very beginning, the real Bitcoin faced pervasive influence of antigovernment, anti-law, anarchy, and communism ideas, even criminal acts.
Although Satoshi himself deeply believes in the rule of law and other traditional Western faith, culture and values, he was almost an isolated lone case among the early community of Bitcoin developers and enthusiasts due to the community’s unique origin.
The others wanted to build a system that is beyond the reach of the government and law enforcement.
And they did. United under an antigovernment/anarchy ideology, BTC developers and their behind-the-scenes sponsors fundamentally changed Bitcoin from a utility-based productivity system to a vehicle of speculations. In the process, Bitcoin was corrupted from the original utility system to what we know today as Bitcoin under the ticker BTC, which is purely a vehicle of speculative investment largely based on antigovernment and even anarchy ideologies.
Satoshi himself was so disappointed that he decided to leave the BTC development at the end of 2010, only two years after the creation of Bitcoin blockchain.
Among the alterations made contrary to Satoshi’s design, the following are the most consequential:
(1) removed all the useful features of the original Bitcoin including most operation codes (OP_CODEs) which are foundational primitives of Bitcoin to formulate advanced functions and transactions including all smart contracting capabilities offered by Ethereum and all other hundreds of blockchains can offer together, only with a far superior UTXO model with unbounded scalability (yes, it is a fact, Bitcoin had most of the fundamental utilities from the very beginning, but they were removed intentionally, contrary to what most people know), and
(2) limited the block size to a meager 1 M.B., thus creating a hard mathematical ceiling of transactions per second to 5-7 TPS (a deliberate restriction in order to achieve the kind of illusionary decentralization for an antigovernment and law-resistant purpose); and
(3) changed transaction data structure by separating the signature data from the main body, effectively breaking the signature chain and removing the tracing capabilities of Bitcoin.
All above restrictions, disabilities really, were deliberately and carefully designed to promote the ideology of ‘the code is law’, the narrative of ‘power in millions of nodes is beyond the reach of the government’ and ‘digital gold’ moniker to draw money into the system by taking advantage of people’s greed and propensity to make speculative gamblings.
All are necessary to lend technological support and philosophical support to the BTC ideology and narrative. Why that is so may require a separate discussion and will not be covered here. But See BTC and BSV what is the real difference?
In what it was designed to do, the alteration had a huge success, but only to the benefit of a small number of people, not the society at large. The system is not designed to create value and add it to the economy, but to only absorb value from the other parts of the economy. See Why BTC is a value absorbing system while BSV is a value creating system?
At the same time, removing the smart contracting capability of Bitcoin opened the door and paved the road for another influential platform namely Ethereum, from which almost every other blockchain evolved.
The Ethereum platform, despite its copying much of the Bitcoin, was based on a fundamentally unscalable design (most of due to its founder’s lack of understanding of economics) and is likewise only good for price speculations, instead of real economic utilities[2]. See More proof that UTXO is superior to account-based systems; and Switching to PoS – Ethereum’s predicted corruption.
The diversion of BTC from the Bitcoin protocol is not merely a difference on the technicals, but represents a fundamentally different outlook of what kind of society one wants to have. It is ideology and value beliefs embodied and manifested in technological movements but with hidden political and social agendas—a social engineering phenomenon quite new, started less than two decades ago, but is coming with full force in the realm of blockchain and cryptocurrencies.
Within the industry itself, the diversion has resulted in an anomaly in which a severely manipulated version under the ticker BTC is passed off as the real Bitcoin, while the true Bitcoin and its inventor became an object of various attacks including libel and defamation (see The defamation case Wright v. McCormack is telling).
The public is essentially blocked from the truth by social-engineered obfuscation.
Meanwhile the wasteful and misleading trillion dollar movement has continued in the general crypto world. With the majority of developers being brought into a nonproductive field not knowing the underlying economic and legal implications, the real development of the real utility-based productive blockchain is ignored and sidelined, even actively suppressed.
As a result, the field of blockchain and cryptocurrencies has been reduced to a shop promoting coin prices, not creating economic values.
Although there are many intelligent groups working on good ideas of blockchain applications, these ideas are being built on a wrong foundation without a scalable and uniting base layer blockchain. Besides, the severe temptation of creating one’s own tokens and coins have drawn the energy to short-term focuses, further depressing the quality of the developments.
The ship can still be steered into the right direction
Despite the above described dire condition, the blockchain ship can still be steered to the right direction, with the proper recognition of the true values and utilities in a productive economy ranging from consumer to enterprise.
First, Satoshi left BTC but didn’t quit from Bitcoin. He continued to devote himself to making the real Bitcoin and Bitcoin Blockchain work for the benefit of the world. He has invented the subject matters of hundreds of patents and patent applications for technologies related to or derived from the original Bitcoin. He leads a team of over 200 researchers and engineers building the only platform in the world that is truthful to the original Bitcoin whitepaper.
Second, the anomaly in the crypto world wasn’t all deadly, because it unintentionally created a condition that, although adverse, allowed the real Bitcoin to grow healthily outside of the toxic Ponzi environment. The real Bitcoin Blockchain did grow in such a disciplined condition, steadily building a global ecosystem of entrepreneurs, developers and products that are remarkably uninfected by the get-rich-quick pandemic suffered by others. See The moral sentiments of Bitcoin.
Third, steering the ship toward the right direction does not mean throwing everyone else off the deck. It is to lay a better foundation for all developments in the field. There are many intelligent groups working on good ideas of blockchain applications. If these ideas are built on a correct foundation, they can be truly useful and productive. All applications on Ethereum, the biggest smart contract platform, can easily migrate to the base layer Blockchain of the New Internet. Migration has been made easy using a Transpiler that converts Solidity to Bitcoin scripts automatically. The innovative Transpiler makes the refactoring many times easier than re-coding.
Even BTC, Ethereum, and some other existing blockchains may find their own usefulness with the New Internet (see below), benefiting from a much broader, more efficient, and more productive new environment. Although they are not capable of forming the base layer of the New Internet, they may be either absorbed into the unified IoV and become overlay networks, or they may each find a place on an application layer to continue to serve its own purpose and customers. Such questions will be naturally answered by the market itself, not politics, although the law will always play a role.
The technology is ready for the New Internet (see below). People need to open their eyes to see what opportunities lie ahead.
But people also need guidance. In this, the leadership at the national level in the United States can again make a large difference, as it did in the 1980s and early 1990s to the Internet.
The New Internet
Based on the dedicated work of near two decades by Dr. Craig S. Wright (a.k.a. Satoshi Nakamoto, the inventor of Bitcoin and blockchain), and over six years of intensive research by over 100 top researchers at nChain (a top ranking innovator headquartered in London), the New Internet integrating IPv6 and blockchain is finally emerging. See the first publication through ETSI (European Telecommunications Standards Institute): IPv6 Enhanced innovation (IPE) – IPv6-based Blockchain.
Specifically, we introduce the New Internet that has the following characteristics:
(1) integrates IPv6 and blockchain with unbounded scalability, able to scale thousands, millions and even billion times that of the current BTC and Ethereum blockchains;
(2) has extremely low cost, cheaper by tens of thousand times compared to BTC and Ethereum;
(3) supports unlimited number and varieties of applications; and
(4) offers cybersecurity that is vastly better than the existing Internet.
This is not a mere vision. It is not even all new. It is exactly how Satoshi designed the Bitcoin blockchain 14 years ago. Despite the overall hostile and suffocating conditions created by the get-rich-quick atmosphere, the real Bitcoin blockchain has not only survived, but in fact has been steadily developed globally, only not highly visible because it did not join with the global crypto speculation craze.
Now is an opportunity for the United States to be actively involved in developing a healthier utility-based, productivity-enhancing, value-appreciating, and freedom-promoting New Internet.
The New Internet is going to be based on blockchain, but it is not about blockchain, nor is it about cryptocurrencies (coins and tokens).
It is the New Internet, integrating IPv6 and blockchain at the unified base protocol layer, supporting all kinds of applications including micropayments, payment-streaming, value-streaming, tokenization, smart contracting, Peer-to-Peer financing, smart business structures, and Metaverse. It is bound to happen. And after 14 years of maturing behind the crypto noise, it is already happening.
See, One blockchain as the base layer of IoV, and The Smart Business Paradigm.
We describe the capabilities of the New Internet below.
What problems can the New Internet with blockchain solve?
The New Internet integrated with blockchain on the base layer will solve the following problems:
(1) Cybersecurity and data integrity. Today’s data security is based on shell-firewall model, akin to securing a hazardous material in a safe box that is placed conspicuously in a public place. Everything depends on a lock of the safe box. If the lock is picked, everything contained therein is lost, and all harms are out of control. Besides, despite the centralized models, the custodian of the data has no effective way to monitor and detect data breaches even after the breach has happened (the reported average time for a business to detect a data breach is over 200 days, but the reality is much worse because the estimate does not include a much greater number of breaches that are never even discovered or reported).
The New Internet will vastly improve data security and data integrity with both IPv6 and blockchain. It will have IPv6-based cloud with session virtualization, each session with a new I.P. address. Rather than a limited number of session ports in IPv4, IPv6 addresses for sessions will be so numerous that the knowledge of an I.P. address itself is a security measure because it is impossible to randomly guess the address, or to scan the network using brute force. But the security goes beyond the gateway. Data itself can be always encrypted from end to end without requiring complex configurations nor inherent contradictions to the centralized ‘data mining’ business models (see below, ‘Data entrenchment with the centralized Big Tech’).
Further, Internet data transport will be integrated with the Internet of Value which not only works as a payment services but also a ‘truth signal layer’ to make attacks such as DDoS expensive and economically prohibitive.
Finally, with a scalable blockchain maintaining immutable truth records, real-time cybersecurity monitoring and auditing becomes a reality.
(2) Data entrenchment with the centralized Big Tech which controls people’s data and opinions. Although this is the promise of the so-called web3, but the current web3 implementations simply do not have the capacity to solve this big problem. We now have hundreds of blockchains, but none capable of being integrated with the Internet at the base protocol layer, but instead are all placed on top of the Internet as applications. The result is not only these blockchains are unscalable, but are also unsafe because they require compromises in order to develop interchange solutions which automatically destroys the blockchain security. See Web3, NFT’s and DeFi are a sham without a blockchain scalable at L1.
The New Internet is the only solution to this big problem. See One blockchain as the base layer of IoV.
(3) The problem of unbalanced economic participation. Today’s economy is extremely unbalanced in terms of participation. Much political and social discourses focus on the distribution of wealth at a superficial level, but are unable to see that a broader and deeper problem is in participation. People are increasingly economized by centralized participation models, and few have the freedom to economize their own activities. This is a broader and deeper problem than just the ‘unbanked’, which refers to the fact that many people in the world do not have access to banking services, and as a result are cut off from the benefit of the modern economy.
Even in developed nations, the imbalance of economic participation exists in another form, which is a direct result of the extremely centralized business models that are designed (and enabled by previous and existing technology) to maximize the benefit to the center of the control using elaborate platform’s network lock-in effects, and treat participants as mere resources and products.
The New Internet will connect people not only to exchange data but also to directly change economic values. This goes beyond the ability to exchange the existing values, but more importantly, to create an environment and mechanism where new values can be more easily created with real people’s economy without relying on large corporations. See The structural impact of the cost of transaction.
(4) The problem of the parasitic financial industry. The need for multilayered intermediation has resulted in a corrupted financial industry that exists as a gigantic bloodsucking parasite[3]. The system destroys more value than it creates. See Value – creation, definition & transaction.
Note[3]: With foreign exchange turnover alone reaching over $7 trillion per day, plus all other kinds of financial transactions, the problem is worse than what most people are aware of, and growing worse daily. This is mostly generated by intermediaries who do not participate the actual productive economy. They not only take a cut in every transaction needed by the economy, but also invent new transactions not needed by the economy but only for their own gains, often multiple times.
The current solutions such as DeFi built on an unscalable blockchain add an app-level not only have failed to solve this problem, but in fact hves made it worse by introducing even more dubious parties into intermediation. At least the traditional financial industry is regulated. See Web3, NFT’s and DeFi are a sham without a blockchain scalable at L1.
The New Internet will bring fundamental disintermediation at the base Internet protocol layer to create an ecosystem that is universal, standardized, frictionless and low cost.
(5) The problem of the current cryptocurrency market, exchanges, and DeFi. It is not only that people lost money making speculative crypto investments, but also the most unfair manner in which they have lost money by subjecting to unbridled scams using the most appealing covers.
Only a blockchain integrated on base protocol layer of the Internet with unbounded scalability can fundamentally solve these problems, bring the market to utility and real economic value-based commodity trading. After all, it is the lack of real utility and high-efficiency of a base blockchain that has caused the existence of the cryptocurrency market with the insecure exchanges. See Speculative asset trading on insecure exchanges.
(6) The problem of unsafe cryptosystems that are highly susceptible to hacking, which has made North Korea the biggest beneficiary for stealing billions of dollars. The crypto industry makes it appear it is normal computer system insecurity that is unavoidable, but the fact is that all these insecurities arise from the existence of hundreds of blockchains requiring all kinds of re-intermediation, re-centralization and unsafe interchange solutions such as bridges and sidechains. Almost all incidences of hackers stealing a large amount of money in the recent years are related to this problem.
With the New Internet that has a unified base protocol blockchain, these would not have happened or existed.
(7) The dilemma between ‘openness’ and ‘security’ of the information systems. Under the current Internet framework, open systems are more vulnerable, thus creating an asymmetrical advantage for nations that are internally closed but externally prying.
The New Internet will not only make the open systems far more secure but will also create a wide and deep advantage in value exchanges of the open systems over the closed ones. See more in section The global competition below.
Cutting edge yet with hidden maturity
The New Internet with blockchain integration is not a new development based on the current blockchain and cryptocurrencies. It is the most mature because it is based on the original Bitcoin blockchain with all proven properties sans corruption.
But the crypto market is not only clueless but, in fact, acts as an obstruction to true productive developments, both in terms of capital flow and information flow. It is a trap multi-trillion-dollar deep and wide, ensnaring the mainstream media with a populace down with it and probably taking many lawmakers and policymakers as well.
On the other hand, despite the crypto problem, there are many intelligent groups in the private sector working on projects based on some smart, even great ideas. But the trouble is that these projects are all at application levels and are being built on a wrong foundation, and few seem to be aware of it. Besides, the severe temptation of creating tokens and coins to make money easily has drawn the creative energy to short-term focuses.
The New Internet with blockchain will remove the wrong incentives, attract more capital and creative energy, and bring a more mature purpose to the whole industry.
The global competition
Ultimately, the New Internet is global at scale. But a first-mover nation has an advantage to shape the direction and the standards according to the domestic and global model it believes in. It is more than just technology and economics.
Largely due to the thick smoke of cryptocurrencies, no nation in the world is paying serious attention to the New Internet, yet. But India is leading in the awareness and knowledge, thanks to certain fortuitous personal connections as well as the nation’s open-mindedness. Although still in a very early stage, India’s effort on the New Internet will probably draw public attention within the next few years.
The New Internet will also be a significant part of the tech competition between the U.S. and China. This is a widely discussed topic, but the discussions have been so far focused only on branches such as artificial intelligence (A.I.), wireless networks (5G/6G), semiconductors, quantum computing, biotechnology, and manufacturing, with very little attention to the next generation Internet, the New Internet, which underlies every other tech areas.
Our hope is that all nations should have an opportunity to enrich their own citizens and to also collaborate and compete with other nations on a peaceful and fair basis. At the same time, it is also an insight learned from the past that when it comes to technology, a nation has a choice of what type of it to implement, and that choice has not only economic consequences but also social and political ones.
The U.S. and China have diametrically different systems. There is some truth in saying that the U.S. is governed by lawyers, while China by technocrats. The two nations’ approaches to blockchain technology and cryptocurrencies illustrate these different compositions/dispositions with a shocking contrast.
It may be too early to say which approach is superior, but there is no question that the two countries will battle on this front for the next few decades.
It is our view that China is doing the right thing with a wrong method; but the U.S. is doing the wrong thing with no clear method at the present time.
This shouldn’t be the case. With a market economy and the rule of law, the U.S. has far superior tools available. The U.S. may be governed by lawyers, but with lawyers who also understand science, technology, economics, business, and finance, good things can happen.
The New Internet will be a place where the U.S. and China have far-reaching competition, and what each nation chooses to do now will be critical.
It’s not about IPv6 itself. China is already ahead of the U.S. in IPv6 adoption. The U.S. will need to catch up in IPv6 adoption, but we do not believe the IPv6 adoption itself is a serious challenge for the U.S. despite the temporary lag.
But the integration of IPv6 with blockchain is a different matter. IPv6 itself can be implemented regionally without other places feeling a direct pressure, but the integration of IPv6 and blockchain will immediately have a global effect.
This is because, with the current Internet, a national Internet system that is highly closed and centralized can do relatively well, but it will unlikely be the case with the New Internet. With the current Internet, a closed and centralized system may suffer some disadvantages in terms of public information availability, but it can be considered as a relatively small cost compared to what it has gained in national political and social stability. In fact, as long as other advanced nations have an open system, a closed system even enjoy an asymmetrical advantage in information flow.
But the New Internet will drastically change that.
First, with the New Internet, the open system becomes very secure, thus the openness is no longer a disadvantage in terms of national information security.
Second, the integration of blockchain with IPv6 at the base layer to form a Peer-to-Peer or IP-to-IP IoV will have profound implications on every nation’s monetary and financial systems, as well as its I.T. stacks themselves. With the New Internet, the most basic value transactions happen at the base layer from the ground up, making it much more difficult to keep closed monetary and financial systems while still enjoying the benefits of the New Internet.
The New Internet thus creates pressure for all nations to adopt a system that is more open and to connect (collaborate or compete) on an equal basis.
For countries that have benefited from an asymmetrical advantage in the past, the New Internet will pose a dilemma. In contrast, an open system is naturally far more compatible with the open architecture of the New Internet and is thus better positioned to take advantage of the new system without fearing losing control.
Let’s help build a better future for the world than to devote one’s life on some ‘crypto’ coins whose sole justification of existence is in a temporary market price derived from speculations upon other people’s speculations.
