Bitcoin Use-cases: Turning Bitcoin, Cryptocurrency, and the Blockchain into a Fully Functional Peer-to-Peer Internet
A lot of non-Bitcoin investors and people with little knowledge of Bitcoin are freaking out right now about the fall of Bitcoin’s value in the last 24 hours due to China forbidding deposits into their main Bitcoin exchange. I’m actually kind of excited about it, because I think of Bitcoin as more a protocol than I do a currency. This means it has long-term sustainability. It also means my investment into it is a much more long-term investment into the future of the internet, as a whole. It means I now have an even greater opportunity to buy until the world grasps onto this concept. One of these use-cases is the possibility of completely replacing the internet as we know it. Let me explain.
Let me start with an example. An exact duplicate of the Bitcoin protocol with a separate blockchain, Namecoin (read all about it here), was created to prove some of the points I’m making here. Namecoin was invented to allow the use of its own Blockchain (remember, the worldwide, public accounting ledger for tracking transactions) to track ownership of domains on the .bit namespace.
Domains and DNS are in essence based on a peer-to-peer network of their own, with one major flaw. They rely on a central authority called the Internet Consortium for Assigned Names and Numbers (or ICANN) to tell other DNS nodes who owns the domain being queried. When you type in a URL into your browser, it likely searches your ISP’s DNS servers (your computer is in essence itself a DNS node that knows to talk to your ISP and other DNS nodes on the internet). Those DNS servers communicate with other DNS servers and so on until they find out who the owner of the domain is. Once the owner is determined through ICANN, your browser knows to pull content from “X Server” and you are delivered a webpage from that server. With Namecoin, however, ICANN isn’t needed because the ownership is recorded on the blockchain.
Namecoin, in essence, is replacing the need for ICANN in domain distribution for the .bit top level domain. They do it by storing the domain names in digest form on the blockchain (and suggest you can do this with other types of documents and text, as well), giving a permanent place to look up ownership with guaranteed authenticity. Currently they’re integrating this with existing DNS architecture, providing translation of those blockchain records in a way ICANN can understand, but in the future, the DNS protocol could be updated to accept blockchain records as sufficient ownership as well. This could be done with something as simple as a browser extension or plugin on most current browsers that overrides the browser looking at DNS servers for ownership, instead looking at the blockchain for ownership.
This is a powerful concept, which shows one use-case in this potential “internet replacement”. And it’s already in place, and it’s already working! You can invest in Namecoin now, and even convert your Bitcoin into Namecoin through exchanges like btc-e.com. (and guess what, the Chinese now don’t have this opportunity, at least not to the scale they used to!)
So now we have a way to tell where to retrieve content on the internet through a peer-to-peer, Bitcoin protocol-based architecture. Now we just need a way to deliver that data in a distributed manner. What if you could use Bittorrent as the storage for a Bitcoin-powered internet? We’re already headed there.
As for a database, there are already distributed, file-based databases (see Hadoop, for instance). Instead of owning your own servers to store those files, why not store them across the P2P Bittorrent, or similar network? There are details to be worked out, but the technology is definitely almost there.
The Network Infrastructure
Now the only thing left is the ISP, and infrastructure for giving you bandwidth and access to your internet. What if we made this peer-to-peer as well? There are already many plans in foreign countries for “mesh” wireless networks. What if we took a concept like this, allowing anyone who wanted internet access to set up a wireless receiver of some sort, and that receiver would “pay” into the network to get access using Bitcoin or similar. These payments (this would be the equivalent of “mining” in current Bitcoin) would then go to those willing to provide longer distance wireless access using things like Ham Radio towers and the like to provide access over this entirely wireless, peer-to-peer internet. The bandwidth each node provides to the network would in essence “mine” new tokens and recycle those paid into the network in the process.
Of course, details of how all this can work still need to be worked out. Hopefully now you can see the potential though, and we’re really not that far from something like this happening with very little needing to be done by any central entity (perhaps wireless laws in the USA and other countries would need to be opened up a little to the public). Many of these protocols are already being used. But once they’re all put together, we have an internet that works without central authority, no need for ISPs, no need for server hosting. The entire internet experience is 100% controlled by the user, and companies will need to adapt to this.
This will all lead towards new forms of commerce. My friend Jeremiah Owyang talks about “The Collaborative Economy“, which is already occurring. The idea is that the future of commerce is moving towards more social, consumer-to-consumer models instead of business-to-consumer. Businesses now become facilitators of these transactions instead of sellers of a single product that a consumer can buy.
In “The Chain” era it works the same way – no longer will we need DNS, hosting, or even storage. Ownership records will all be stored on “The Chain”, all delegated to the proper owners of the content and storage and names. Businesses will need to start preparing for this in order to adapt to this new model – I’m actually seeing some of the smart ones do this now, which I’ll talk about later on this blog.
Bitcoin is not just a currency as you can see. If you’re seeing it as just a currency that goes up and down, you’re looking at it wrong. Instead, you should be looking at it as a new paradigm. It’s a paradigm shift in not just currency, but the entire internet as we know it, and you should be looking to hop on, pay in, and get on board. Those that do so now will be the leaders of this new era in the next 5 years.
My company helps businesses adapt to these new paradigm changes such as Bitcoin, strategizing new innovation and marketing shifts to gain an edge on their competitors. If you think we can help, contact us (email@example.com) – we even take Bitcoin!
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