The power struggle of centralisation versus decentralisation in the world of finance has a long history. The pendulum of power swings between the poles of one central institution to rule them all and the dispersive network, in a movement spanning over centuries. The rise of the mammals of crypto is the inevitable next step in the evolution of the global economy.
Knights Templar and Knights Hospitaller
In the thirteenth century, the knights Templar and Hospitaller set up one of the first modern decentralised banking systems in Europe. Anyone who had deposited a sum with a member of this banking community, say in Cologne, could retrieve the money at another office, for example in Constantinople. The pope viewed the power of the knights Templar with growing unrest. In liege with the French king, who was in urgent need of money to pay for his wartime exploits, the pope organised the arrest of over two hundred knight-bankers, had dozens executed and their wealth confiscated, thus centralising financial power in the Vatican, with France as the new military defender of the Holy Roman Empire. One example of the swing of power from decentralised to centralised rule.
In the 1770's, American patriots wanted to bring into circulation their own coin, the dollar, to replace the centralised loans from the British Crown. This way, the wealth of the colonies would remain in the regional economy, instead of disappearing into a black hole of interest and tax payments to the centralised Empire. The British refusal to allow this decentralised currency sparked the American war of independence. This time the pendulum swung from centralised power to a more independent form of economy.
The Gold Standard
However, freedom won must be defended or face reversal. During the 1930's, Roosevelt uncoupled the dollar from the gold standard, replacing the physical standard with a central bank, that could control the money supply as the economy expanded or contracted. Leveraging the power of inflation, loans made in dollars would gradually lose value, and savings earned worth only a fraction once retirement age is reached. Under the Central Bank system, saving is punished, while lending is stimulated. These measures were taken to give the central bank the power to solve the large problems of debt in the early American consumer society.
Centralisation in modern times
In the decades after the first global economic crisis, subsequent crises were mitigated by injecting huge sums of created money into the economy. Smaller banks were rapidly bought up with every wave of crisis, leading to a small number of mega-banks deemed 'too big to fail'. The resulting worldwide system of loans between national governments and central banks further centralised the global economy, by indebting all citizens collectively to the central banks, the IMF and the World Bank. National governments are forced to implement policies spelled out by the institutions that provide these loans, thus undermining their autonomy. We can see the pendulum has come full-swing at this point in time.
Current national and international banks are huge conglomerations of intransparent loan constructs, where a bank can have up to forty times as many debts outstanding as in-house assets. In the end, the biggest banks join hands with the central bank and dictate the bottom line of all economic policy. Democracy is shackled by the demands of the financial institutions.
Reptilism in the world economy
Current mega-banks have come to resemble huge dinosaurs, ferociously feeding on available resources only to maintain body temperature. When some phenomenon reaches an extreme, like the huge reptiles that populated our world in ages past, nature often finds a way to correct extremities and the waste of resources. In the prehistoric playing field, it was the rise of mammals in a cooling world that hastened the extinction of the great wyrms. Because the forebears of rat, deer and monkey were much more nimble, agile and efficient than the lizards of yesteryear.
Decentralisation will be the new standard
In the current financial world, a mass extinction is about to take place. Due to the cooling of the world economy, the large lumbering leviathans that once ruled the financial system have become overly expensive to maintain, and slow to respond to change. The large centralised institutions will find their central amassing of resources is no longer the most effective way for the global economy to move forward. Instead, decentralised crypto-technologies, public ledgers and blockchains will form the transactional model of the future. Rather than a centralised monetary system, peer-to-peer wealth distribution will form the cornerstone for economic prosperity in the near future. Banks that adapt and adopt the decentral cryptosphere will survive, like crocodiles and iguanas survive in our world. Those banks and governments that try to cannibalise the new species will be remembered as the tyrannosaurs and kronosaurs of the late plutocratic era. The scene is set for the mammals of crypto to burst into the limelight and take the initiative.
Why centralised initiatives fail
The acceptance of alternative coins as a valid means of payment is an evolution, of which the implications have not yet become fully visible. The decentral crypto-economy has grown spectacularly in the last decade. But also within the cryptosphere we see the competition between centralising forces and fully decentralised and autonomous models of exchange. These new centralised crypto-institutions are again vulnerable to hacks, corrupt management and inefficient use of resources, much in the way centralised banks are.
The future, in the hands of the tiny
The future of finance falls to the small mammals of crypto, cooperating in novel trickle flow cooperative economies of rapid exchange, innovation and wealth distribution. The adaptive capacity and collective intelligence of this grass-roots, decentralised network is far greater than any single institution can ever hope to mobilise. This is why the dinosaurs of the old economy will die out, while the mammals of crypto will take posession of the brave new world that dawns upon us in this new age of digital finance.
Exciting new developments like Distributed Autonomous Corporations and the Internet of Coins seek to strengthen the autonomy of citizens worldwide to freely invest and maintain their hard-earned wealth, by delivering the infrastructure for an economically healthy cryptosphere. Protected from the control and disturbances by the old order, that seeks mainly to protect the interests of those privileged members at the top of their pyramid schemes. But also shielded from predatory mammals that would seek to hamster or control more than their fair share of resources.
The Internet of Coins development team is proud to help further these innovations.
Today, the Internet of Coins consortium is proud to announce it has come to an agreement with service provider Bitalo for an initial funding investment and development collaboration. The Internet of Coins developers are constructing a cross-blockchain solution using hybrid assets without the need to update or adapt existing blockchains. Fully open source and fully decentralized.
Martin Albert, CEO of Bitalo believes the open source technology developed by the Internet of Coins team can benefit future cryptorelated initiatives for the community: "The Internet of Coins is the perfect project to ultimately establish the ideals for the exchange of value: decentralized technology, voluntarily, gives you the freedom of choice and is highly innovative."
In the past months, founders Joachim de Koning and Robert de Groot have been presenting the system throughout Europe. Joachim: "The Bitalo partnership will allow us to continue development of the decentralized prototype. With the initial risk of alpha development covered, we are now confident we can invite users to take part in the project while already working on its delivery. More information can be found on the website, in our whitepaper or ask us anything on Bitcointalk." Robert: "Since our first hybrid asset went online in June we have seen similar projects successfully emerge, each with their own advantages, interpretation and form of governance. We focus on the technology only and want to build an open source standard, to allow the cryptocommunity to become fully integrated, decrease fragmentation and most importantly: develop itself without dependence on third parties. Other initiatives may freely use it or fork it to advance this evolution."
THE NEXT STEP Joachim: "We have gradually expanded our devteam and will continue to do so. The golden rule is: only people we've previously met and know to trust. Aside from the Bitalo support from Finland, our own team now consists of developers in The Netherlands and Germany. Of course anyone will be able to contribute via GitHub." Robert: "As a pre-launch investor, Bitalo will be among the first companies to receive cross-blockchain trading implementation support. Participating companies receive a stake in the project’s future success. Individual users have the chance to take part in the public sale on January 3rd 2015, when we have made further progress in the development of the software."
The original document including contact information for both organisations can be downloaded here.
There are mainly two contrasting approaches when it comes to inter-blockchain connectivity; high-level and low-level. Both are equally important, but approach either the fundamentals or numerics of blockchain conglomeration. To create something like an Internet of Coins, we need to use both approaches concurrently and eclectically. (also featured on De-centralize).
It could be compared to the way Michaelangelo worked to create one of his artful statues. Some of the chipping of the stone had to be done with large chisels and firm blows of the hammer. A high level approach to result in the basic and recognizable shapes of the rock being hewn. Yet simultaneously, he had to work with the utmost caution, scraping out the tiniest details to accentuate the shape of muscles and hair. The results of this combination are an artwork.
High-level connectivity focuses mainly on the controlling aspect of value trading. To make sure that one transaction finishes before sharing the access keys to another initiation for transaction can essentially be done from a high-level protocol. For example, it could be an RPC calling script that controls two daemons for different cryptocurrencies to make an allocated trade between them possible. Low-level connectivity delves down to byte-level transactions to make atomic cross-chain trades possible.
In this case two transactions are meticulously crafted using advanced cryptographic programming, by which an atomic script ensures instantaneous escrow between blockchain constructs. Assembly-like language is used to describe this process. Both approaches contain very useful and some deterring aspects, and thus must both be held up to scrutiny. Combining them in tandem is even more of a challenge, as it requires an eclectic overview and understanding of different technologies, their strengths and weaknesses, and how they may by combined most securely and efficiently.
In another comparison it is creating a thing of architectural beauty, like for example the Obuda Synagogue, St. Nicholas Cathedral Kronstadt, or the Taj Mahal. Any one of these three architectural beauties has taken great skill in prestigious, high-level architecture as well as patiently crafted, low-level ornamental detail. Many high-level solutions are potentially compatible even towards systems that very much differ in their underlying implementation.
However, the high-level approach is difficult to properly secure, and needs a parallel cryptographic network to function safely. It also leaves open security holes in every gap between the high-level construct itself and its controlled daemon subject. Perhaps it is also easier to infuse with malware, as high-level programming is often more easily understood, and agile to work with.
The low-level approach is most robust when applied properly, besides being light weight, and can outlast high-level systemic changes. Even so, it requires very skilled programmers and presents tough cryptographic puzzles to solve. In some cases it can lead to a quest for a holy grail that is most difficult, if not near-impossible to reach in a timely manner. And if a vulnerability is ever found at a later stage, it may be very difficult to find those qualified to repair such a weakness. To make an internet of coins possible, we need both approaches, and we must patiently find the way for us as craftsmen to all build it together.
Time for an update! First of all, say hello to some new faces on our Team page. Systems architect Amadeus and mathematician Jelle have joined our cause for integrating digital value systems. Now that we are growing, it is time to give the cryptosphere a peek at what we're doing. So we are taking the Internet of Coins to new places.
First off, we will be presenting the Internet of Coins this Friday the 17th of October at the start-up show of the Bitcoin 2 Business event in Brussels. Next will be the Ethereum & Bitcoin meetup, November 4th in Amsterdam. Wednesday November 5th (remember, remember...) we will be present at Bitcoin Wednesday Amsterdam. November 28th we will be visiting Arnhem Bitcoin City. Also, this week we received confirmation that we can take part in the Virtual Bitcoin Expo in January where we will be showing where we are heading in our developments. Take a look, visiting the virtual event is free. Interested in what we are doing, but not around at one of these events? Feel free to contact us.
The word revolution comes from the latin revolutio, meaning a turn around. It could mean a modification of an existing constitution, or a complete change of it. However, revolution is almost always understood as a quick change. And that is exactly where my pitfall detector starts ringing.
In recent months we have seen many claims of "revolutionary" developments and technologies in the crypto scene. Next to a plethora of new coins being announced, there are also organizations claiming to have “the next big thing”. The many new hypes are often flashy enough to woo a great amount of users of cryptocurrency into investing their coins into these ventures.
Along with many revolutions that have happened in human history came not only rapid, significant changes in (geo)politics and social situations, yet most often also systemic instability and insecurity, loss of cultural identity, and destruction of value. Pitfalls, many of them historically documented, that come back with every revolution. And these mass-behavioural cycles, in circling back to zero, oust unwanted elements out of a system. What can we deduce from this? Revolution also means reinvention and reset, and the effects of this are not solely beneficial.
Evolution, on the other hand, is less often highlighted in social and cultural contexts. And yet in a manner of speech we often refer to positive development processes in society and in our cultures as evolutionary ones. Nature itself contains many forms of evolution and progression, and it forms a prime example for our own development.
When weighing evolution versus revolution, the Internet of Coins team has decided on attempting to navigate a more long term route. Instead of simply declaring another revolution, they seem to rather declare an evolution aimed at augmenting technologies that are already out there. It is the announcement of a project that is aimed at organic growth. Not reinventing wheels, but rather enhancing the current state of money-like informational commodities we call crypto currency.
It is possible to bring change step-by-step. To replace the current financial structure all of the crypto currency enthousiasts together need to create something so useful that it makes the current systems obsolete. This movement and the work it encompasses are of such magnitude that it cannot be done overnight. So we may want to choose our positions wisely
With the Internet of Coins project and the other decentralized options out there it may become realistic to start adding stability and overall constructive development to the cryptosphere. Together making strides towards being evolutionary, instead of just revolutionary.