Thread by @bquittem

1/ Just condensed The Internet of Money Volume 2 by @aantonop into 45 tweets.

PART 1:

2/ Children born today will likely never:

1) Have a bank account
2) Have a driving license
3) Use paper money

3/ Before Bitcoin…

-You didn’t care about securing your photos
-Didn’t care that your location was tracked everywhere you went
-Didn’t care about posting your life on Facebook
-You used the same password “password 123” for all 17 accounts
-You didn’t know what 2FA was

4/ Blockchain is NOT the technology behind Bitcoin. It is ONE of the FOUR foundational technologies behind Bitcoin, including: Proof of Work, p2p networking, Blockchain, and Cryptography. Blockchain cannot stand alone.

5/ "Blockchain" is the clean cut technology you share with your boss when you don’t want to scare him with actual disruptive technology.

6/ Bitcoin is decentralized security through computation. It represents a new model of security with no authority in the center. It’s based on market forces and game theory - using incentives and punishment to control the outcome.

7/ How to tell the difference between Blockchain & Bullshit?

-If you can replace “blockchain” with “database” - then it’s business as usual
-If it’s not decentralized, borderless, censorship resistance - It’s not innovating
-If it reestablishes trust in intermediaries - bullshit

8/ Private, consortium, permissioned, distributed ledger “blockchains” discard POW as wasteful because all it allows you to do is create: decentralized, borderless, neutral, censorship resistance networks.

9/ Private consortium chains will get hacked (like always). They cannot keep information secure, no one can. What happens when they concentrate all banking information in the hands of 5 participating banks - and then it gets hacked?

10/ Mass adoption takes time… For the first 15 years of the internet, the application was EMAIL. It wasn’t until everyone had it, had to have it, and needed it for work. Currency is the email of blockchains.

11/ The vision is far beyond “money” - we'll see voting, real estate titles, and c2c markets. But first we need to build the “money” part. Payments are the fundamental infrastructure to enable the density of adoption leading to advanced uses. Money funds the entire ecosystem.

12/ The era of fake news: the people who read the most news and headlines are the least informed among us.

13/ We outsource fact finding to the tribe we belong to. Trump tribe, Andreas tribe, Left wing, Right wing… we all do this.

14/ Dichotomy of fake new started when their advertising revenue was undermined… media had to change their approach to re-adjust to a new level of income. Cue the removal of fact finding, investigatory journalism, the foreign affairs desk

15/ Real money vs Fake money… The outcome of a market is to discover the truth. Go out on the street and ask the market. In Venezuela, the Bolivar is being sold for 5x less than the “official rate” — while Bitcoin is being sold for a 20% premium against the Bolivar.

16/ In India the rupee is being sold for a 22% discount against bitcoin. Because the rupee cannot be moved outside of India. Whereas bitcoin can settle arbitrage globally. The Rupee lost an important tenant for sound money - “portability”

17/ Immutability is on a scale. From “easy to change” to “most unchangeable thing” (immutability). Bitcoin marks a new maximum for immutability in a digital world. Bitcoin redefines immutable. Anything to the left of BTC is immutable-ish kinda like saying I’m “pregnant-ish”

18/ Why is Bitcoin immutable? Not bc of blockchain, tampering just leaves evidence (tamper evident). There is a higher security standard (tamper proof) meaning it cannot be changed. POW makes BTC immutable (tamper proof). This is a historic monument of our human achievement.

19/ POW was not created by Satoshi. POW is common to the human civilization. The great pyramids are an open display of resources. There is no way to cheaply achieve this, you need time/money/men. Pyramids stand today as a POW of the Egyptian civilization doing something great.

20/ Bitcoin is the first planetary scale, digital monument of proof of work — In the future, people will marvel at Bitcoin for its immutability built over decades, the definitive source of history that cannot lie, they will marvel at it’s function and elegance. POW secures this.

21/ The purpose of mining is not to create new bitcoin. The purpose of mining is to provide security (through economic incentive and game theory) according to the consensus rules.

22/ POW is also POS… but POS is not also POW. This is really important. Each time a miner creates a candidate block and hashes it through POW, they are staking an enormous cost of electricity. If they didn’t do it right, they lose their stake of electricity (which costs money).

23/ POS only risks the intrinsic currency which tomorrow may be worth nothing. This means the value of your “stake” may also be worth nothing. POW forces you to stake something that has universal value on our planet — electricity.

24/ Our ancestors said “it’s as good as written in stone." Our grandchildren will say: “it’s as good as written on the blockchain”

25/ We only need 1 POW immutable ledger. It's probably too expensive to have 2. Other applications can run a lighter weight POS while referencing the immutability of Bitcoin.

26/ History is written by the victors. But not on the Bitcoin blockchain. Now, history is written by the expenditure of real world energy - and there is no cheap way to forge that history.

27/ Blockchain substitutes authority for autonomy.

"Order through authority” leads to chaos, corruption, and often violence.

"Order through autonomy” gives us predictable outcomes that are not subject to the whims of authority - this maximizes order in an unprecedented way.

28/ Bitcoin is an opportunity to “opt out” of your national currency. Opt out of currency wars… the war on cash, bank bail-ins, negative interest rates, shadow tax (inflation), and financial surveillance.

29/ Bad money chases out good money (Gresham's law). The more valuable currency disappears from circulation because people hoard good money (bitcoin) while spending bad money (fiat).

30/ Permissioned blockchains are the "bubble boy” of blockchains. They’re like children who grew up getting showered in Purell every time they touch a germ. Problem: when sheltered children grow up they have no immune system, they'll be killed by the first germ they’re exposed to

31/ Bitcoin is like a swarm of NYC sewer rats. A sewer rat will not sneeze when it’s exposed to a germ. The rat says “come and get me” and after 9 years it still refuses to die.

32/ Bankers and central authorities think building walls around their data makes it secure. They insist on putting KYC/AML on all their data. Inevitably this "rich data" will leak and all their dirty secrets will be exposed with perfect clarity.

33/ Security is a process of openness and exposure. A process of continually adapting to new attacks. And in that process, dynamically being more robust and less fragile.

34/ Bitcoin doesn’t compete against banks. Bitcoin adapted to a new (bigger) environmental niche. Banking/borders are irrelevant. BTC focuses on the grey market, the developing nations, cash economies, those without bank accounts nor access to traditional financial instruments.

35/ 2009 marked a new era in the Evolution of Money. It evolved to live on the internet, decentralized, borderless, etc. Used to have 194 “species of money,” now thousands. Most will die, some will thrive - filling new ecological niches where money couldn’t exist before Bitcoin.

36/ Streaming music changed the nature of music. Streaming video changed the nature of video. What about streaming money? Your salary can be paid by day, minute, millisecond. Say goodbye to “quarterly accounting.” Pay your internet bill by usage in kb.

37/ The more disruptive a technology, the harder it is for the creator to predict it’s outcome. The internet is: a military network designed to allow the continuity of data routing in the event of a nuclear attack. OR the internet is the worlds largest repository of cat videos.

38/ Technology (especially when decentralized, open) is a tool that is guided and evolves based on how it’s used. Bitcoin today is not just a p2p electronic cash system. Bitcoin in the future = ?

40/ BTC (lion) vs ETH (shark): two systems with different goals.

BTC (not Turing complete) = limited in it’s flexibility which enables robust security.

ETH (Turing complete) = flexible, fast programing, more complexity which leads to unintended consequences, and less security

41/ I’m a Maximalist: for Open, Borderless, Decentralized, Permissionless systems that allow us to solve problems in society with technology that is open for everyone. Doesn’t matter if this happens in Bitcoin or Ethereum.

42/ Imagining BTC or ETH’s killer app requires us to consider timing. A better question is: What is the killer app (right now)? To answer this… What requires the least density of users? The least infrastructure?

43/ What is Bitcoin’s killer app [for now]? Something that doesn't require much infrastructure or density of users... Remittance / banking the unbanked is the obvious one. Only requires sender/recipient, no infrastructure needed, just need to be faster/cheaper than the banks.

44/ Ethereum’s ultimate killer app: smart contracts used for governance of DAOs.

Ethereum’s killer app today: token sales with questionable legally

45/ Ethereum Alliance: A group of companies who just want to fork your code and put walls around it. They’re not actually interested in disrupting themselves.

46/ FINISHED. I hope you enjoyed this tweet storm. Thank you @aantonopolos you make complex topics easy to understand.

In the process, I learned

-Taking notes while reading = more understanding
-Forced brevity requires focus on the essence
-I will refer back to these notes