The impact of Bitcoin thinking on the world of the next ten years

Abstract: Editor's note: Famous investor Fred Wilson's colleague Joel Monegro recently attended the New York Bitcoin workshop Hackbit gathering, during which they discussed the impact of Bitcoin's thinking on the world over the next decade, which is contributing to the new Internet world

Editor's note: The famous investor Fred Wilson's colleague Joel Monegro recently attended the New York Bitcoin workshop Hackbit gathering, during which they discussed the impact of Bitcoin's thinking on the world over the next decade, a influence that is contributing to the emergence of a new internet world structure. Not long ago, we also reported Fred Wilson's idea of "Color a Bitcoin", we can use the advantage of Bitcoin to transform the original industry. Now, Joel Monegro and others try to push the way of thinking of Bitcoin to the extreme. Let's first take a look at Fred Wilson's comments:

The chunk chain of Bitcoin not only changes the way money works in the internet world, it is changing the way the Internet is constructed. We've been trying to understand how the world changes over the next 5-10 years, and our company's Joel Monegro has been thinking about guiding us.

We have never thought of closing our insights, and we have encouraged Joel to disclose his insights. Today, Joel has released a fairly important insight that deserves to be understood by every internet/mobile entrepreneur, investor, and analyst.

This is the cascade structure of the block chain (blockchain stack):

The most important thing to understand about this cascade structure is the overlap of the various networks (most of which are emerging), the shared data layer, and the protocol layer. Please read Joel's detailed description of them carefully.

In Joel's words, this emerging cascade structure is most important:

This presents a number of interesting challenges for developers, entrepreneurs, and investors, as the current cascade structure of the Internet is commercialized by the hierarchical structure of the block chain above.

In this new structure, it is more difficult to obtain fine differentiation, defensive and network effects. Most things will work like emails, bringing your password from one app to another, all of your data and relationships.

Now we can read Joel Monegro's interpretation of the picture:

Cascade Structure of block chains (blockchain stack)

The basic idea of this picture is that the contents of each rectangular bar are centralized and open source. I call it "shared data layer and protocol layer". No one can control any part of the system, which is open to all individuals and businesses. In the case of Bitcoin, the chunk chain is the shared data layer, and the Bitcoin protocol is a centralized protocol that is part of the shared protocol layer.

In this diagram, the more each layer is thinner, and the shared data Layer and protocol layer account for 80% of the entire cascade structure. Today's Internet applications are based on an open, centralized technology such as TCP/IP and HTTP, but if you describe the current Internet application in this image, the central technology only accounts for 15%, because those applications are basically not open, but centralized.

1. Miners and block chains

Each miner is a node in a computer-made network that forms a whole to authenticate all bitcoin transactions. In each transaction, the algorithm rewards them in Bitcoin, because Bitcoin is valuable in the real world, and the operators of these machines have the incentive to keep the machine running.

A block chain is a public book that holds records of all transactions, and blocks are maintained by miners, which are not exclusively controlled by an entity and are open to all.

2. Overlapping coverage of various networks

Developers start creating networks that are parallel to the Bitcoin block chain, which they can do to accomplish tasks that the Bitcoin network cannot accomplish, but use block chains, such as timestamps or confirmations of work.

For example, counterparty (it is a free and open financial instrument platform in the Bitcoin network), such as "side chain". Regardless of the form that these networks use to overlay overlap, one thing they have in common is that they are all linked to the Bitcoin block chain, and the network effect they derive from it is liquidity, without using their encrypted currency as a helper, or as an alternative to the block chain required by Ethereum.

3. The agreement to be centralized

Thanks to the block chain, we can develop a set of open-source, centralized protocols, as well as built-in data, validation and trading systems, without a single entity to control. This is where the traditional software industry begins to crumble. The best example is Bitcoin, and we are aware of its impact on money and finance.

Ebay, Facebook and Uber are valuable because they can benefit enormously from the network effect, which comes from the fact that they focus their data on their own and benefit from a deal. A hub-and-spoke protocol built on a block chain may cancel each individual part, for example, by creating a shared, centralized set of data that anyone can use and that supports Peer-to-peer transactions based on Bitcoin.

As a matter of fact, there are already potential teams that are doing this, and they are creating new deals that could turn those companies upside down. One example is Lazooz, which is a real-time carpool agreement, and a OPENBAZAAR protocol that supports a free, centralized peer-to-peer market.

4. Open source and commercial APIs

It's hard for a typical developer to build a deal, but it's a chance to make it easy. The question of whether the industry will develop well in the long run is debatable, but I think the industry is an important part of the whole hierarchy. In these go-to-centric protocols, it is critical that any developer can quickly create new applications or experiments.

This can be a commercial service or open source project. A good example of this trend is the Chain.com API and the Coinbase Open Source node tool Toshi. The two goals are the same, but Chain is a business service and Toshi is open source.

5. Application

This is the part of this structure that is shown to the user. Most of the time, the application based on this is the same as the way we are now, just as Coinbase and PayPal operate in similar ways. But for users, a big difference is that these applications are based on a centralized protocol, and each application can be docked to other applications, just like different email applications and bitcoin wallets can interoperate.

One of the things I like about this hierarchy is that it grows up from the bottom up, and at first we have miners, blocks and bitcoin, and now we're creating something else on that basis. I believe that the most important change in technology is built in this way.

This presents a number of interesting challenges for developers, entrepreneurs, and investors, as the current cascade structure of the Internet is commercialized by the hierarchical structure of the block chain above. But the best part of the structure is that users will benefit more because of the conversion rate, the cost of transfer, the individual's ownership of the data and the dominance of the market. I'll write another article about that.