An Alternative to Cloud-Based Platforms
And How Bitcoin Paved the Way
I remember the first time somebody told me about Bitcoin. My first reaction was:
“why would anybody want to get rich from something that stupid?”
I dismissed it and went on with my life.
A couple of months later, in late 2017, the hype became too big to ignore. I decided to take at least 10 minutes to educate myself on the topic.
I remember watching this video, when something clicked. I remember that I couldn't help myself from laughing, it was the most ingenious idea I’ve ever heard about.
It’s common when talking to people who ‘get’ Bitcoin that they have had this penny-drop moment at some point in their life (pun intended). It’s when they realize that it’s not at all what they thought it would be.
In a similar way, each person has their own way of describing Bitcoin. It’s one of those things that has a different meaning to different people. It’s like a mirror, we see what we want to see. It’s best described with the parable of the blind men and the elephant, it’s so different from anything we’ve seen up until now that it’s difficult to see the whole.
It took me almost five years to explain to myself why the idea of Bitcoin interested me so much. I felt like there’s something important to learn here. But I couldn’t really lay my finger on what it was and how to use it.
Now, after almost five years I am starting to grasp how the underlying technology can best be applied. But I didn’t discover this before falling into a trap, a trap that many others fell into and for understandable reasons.
The Trap
The trap called “Blockchain”. For those who don’t know (or who have been living under a rock for the past years), Blockchain is (part of) the underlying technology that makes Bitcoin work.
I say part of, because on its own, a Blockchain doesn’t do much (nothing interesting anyway). It's an inefficient database architecture that has been around since the 90’s.
And as it turns out, it IS a crucial component when you want a large group of people agreeing on a single fact, like when building a decentralized currency.
But outside of the context of this particular and very simple use case, a digital ledger, it turns out to be a lot of dead weight.
So why the hype you ask?
You need to have a Blockchain if you want to create a currency. And as it turns out, EVERYBODY wants to create a currency.
Even projects that have anything remotely to do with finances, need their own currency for some reason. Even though bootstrapping an existing currency makes much more sense, they insist that this is the only way their project makes sense.
These projects have their reasons, but I’ll leave it up to you to guess why they would want to issue their own coin.
(ʎǝuoɯ ɟo sʇol :ɹǝʍsuɐ)
Long story short, I fell into the fallacy of believing that this was the technology, the golden goose, the Egg of Columbus, that was THE part that was going to make innovation possible. As long as you had a Blockchain, you were good.
But as you’ll learn quickly enough, the Bitcoin software is like a reverse whack-a-mole, if you try to mess with one feature, you’ll lose another, and if you try to fix the lost feature, you’ll need two more to fix that. It’ll inevitably cascade into an overly complex monstrosity with unpredictable behavior.
No, the software should be left alone, we shouldn’t try to dissect it and expect that some parts have some kind of magical property.
Meanwhile, as I later found out, the real technological revolution was here all along, humming away, and we were too blind to see it.
The Silent Revolution
I’ll not draw out the answer for the sake of building suspense, so here it is: the Nodes.
For those who don’t know, Bitcoin Nodes are the servers that make the decentralized network possible. It’s the computers that run the Bitcoin application. And more importantly, it’s the combined network of these servers together that make the difference.
Almost all cryptocurrencies have nodes, but not all nodes are created equal. Some currencies have tried to increase the performance by increasing the block-size. But because each node has to save ALL the data and check ALL the transactions, this means that each 2x in performance is a 2x in storage space.
A notable example is Ethereum, a Bitcoin spin-off that has the size of its blockchain being around 2TB, the result being that 2/3rds of its 10.000 nodes is running in the cloud,
A more chilling example is Solana, which is running up to 95% of its nodes in the cloud. And legend has it that it requires 128GB of RAM to run one.
Within the Bitcoin community there has always been a strong ethos of self reliance: ‘Don’t trust, verify’. Meaning, anybody should be able to run a node and verify the transactions on the blockchain.
This prevents single point-of-failure attacks, for instance a corrupt government demanding cloud providers to shutdown or change node software. It is for this reason that the specs in Bitcoin are kept low on purpose, so anyone can run one at home.
And people have, the result of this design decision has been that over the 14 years since Bitcoin’s inception over 45.000 nodes have been created.
I’ll say it again, Bitcoin really is an amazingly well designed piece of software, but the hardware makes decentralization possible. Let me put it like this: if Bitcoin ran on a single server it wouldn’t be Bitcoin, it would be a bank.
Sure, the growth of this node network wouldn’t have been possible without the software (and with it, the spectacular rise in the price of the underlying asset). But the trail of hardware it’s left behind may become just as influential as the initial software that kicked everything off.
The amount of nodes is completely unique to the Bitcoin network and had one unforeseen side effect: never have there been more people running their own servers at home.
Any technologist, business leader or innovator should be drooling at the mouth at the sound of tens of thousands of regular people suddenly building and running their own servers at home. But till this day it’s been very quiet. We can only speculate why this is the case.. (pun intended)
Jokes aside, Bitcoin and the wider crypto sphere have been a dirty and contentious topic of discussion, perhaps because of its wild speculative frenzies, its energy consumption and its ability to circumvent government control.
Luckily for us, nodes won’t make you any money (yet), they consume very little energy and they possess the ability to circumvent government control. So strap yourself in and let’s look at some case examples of Node-Based Decentralized Applications.
Case Example: Disrupting Amazon
There’s two important things to know about Amazon’s business that has essentially made them a monopoly in online retail:
They offer a network-based service, the value of their platform grows with the number of participants and;
It’s a closed network, they own the data that’s created on their platform.
The data that Amazon owns is not just your name, phone number, e-mail address, credit card details, home address and your mom’s maiden name, but also the product information of the products that you are featuring on their platform.
They own your data, which means that you can’t just pick it up and take it to a different platform.
This is no accident, because having to upload photos, write a title and description, pick a product category, get new user reviews and getting picked up by the platform’s algorithm takes time. So better stick with the devil you know, especially as this devil has the largest retail platform in the world.
But power leads to corruption and Amazon is no exception. If you’ve got full control over what appears in people’s search results, it’s tempting to put your hand on the scale. This isn’t always best for the customers, but certainly is best for the Amazon shareholders.
How can nodes make a difference here?
Small personal servers like nodes make it possible to simply host this data yourself. You’d make the data available via an API (application programming interface) and connect it to whatever platform you like.
They can then cache your data and start featuring your products. And if you don’t like the idea of them temporarily saving your data, they can just pull it from your node every time a customer looks at your products (with a slightly higher latency).
Because you possess the data, in a neat format (json for instance), switching costs become negligible as connecting to a different platform is plug-and-play, by simply copy pasting an endpoint.
By using nodes to host this data, we’re essentially decoupling the network from the user interface. The network will exist out there in the world, independent of a platform, therefore anybody website willing to feature products is free to use it.
The websites won’t be able to compete anymore on their monopolized network size and will need to start competing on user experience, customer service and fees.
Case Example: Replacing Instagram
Instagram is another example of a platform that would benefit from de-monopolization.
It’s a great tool for models and creatives alike. It’s a place to share content of your personal life, special moments with friends, or as a way to share your creative endeavors.
Instagram has become a business for many, a communication channel for brands, for art, food and showing off your car.
Building an audience on such a platform takes time and effort. It’s painful if a platform that you rely on for your income suddenly decides to change its algorithm or user policy, leaving the professional user with little to no time to prepare.
It wouldn’t be the first time that businesses see their engagement dwindling because of unannounced changes to the software.
Instagram, like many other social media platforms, is run by a large for-profit company. Meaning that you have two options, either you pay now, or Coca Cola, McDonalds and Nike will give you a reason too.
I can speak from personal experience how they lure someone into paying money for their services. Starting an Instagram page is easily done and quickly gets you a lot of reach. You get excited. But as your audience starts to grow, your views and likes slowly dry up.
The goal, of course, is for you to pay for their services to get those precious likes again, something which is tempting to do, even if you’re not making money from your page.
This is understandable from the platform’s perspective, but it’s a system that is starting to look more and more like a pay-to-win game than a platform based on true merit.
Now imagine that the audience that you’ve built isn’t based on any platform in particular. But it’s people following you directly, getting your content directly from your node.
It’s like building an audience on MySpace and taking it to Facebook, then moving on to Instagram and finally plugging it into TikTok. An audience following you everywhere you go, because it’s YOUR audience and not the audience that the platform permits you to have on their server.
You could have specialized nodes that aggregate interesting content, or build a new type of search algorithm, everything’s possible on an open network.
Of course there’s the question whether streaming high quality videos is feasible from a home server, but maybe a better place to start is Twitter, or maybe you’ll find a completely new way to interact. There’s tons of ways to create new online communities on open standards.
Ok, But What About Computers and Smartphones?
Sounds nice and all, but don’t we already have so much tech, what’s the point of having yet another online device in your home?
Nodes are basically screen-less devices tucked away somewhere in your broom closet. It is connected to a power source and to the internet via ethernet cable.
A node differs from smartphones and PCs in that it is always on and online, it’s connected to a high-speed internet and has a good data storing capacity (often 1TB+), in addition to compute capabilities.
The ubiquitous hardware, like a Raspberry Pi, can be bought online and assembled at home, for little over $100 you can have one up and running.
The software is often free to use and open source and gives a lot of freedom, and as for most free and open source software, there’s no companies harvesting your data.
Interacting with the device goes via your computer's browser and it can be accessed from outside your house via Tor routing.
It lends itself well for hosting and receiving data and for running open-source software and applications. It’s like the Cloud, but tiny, and in your own home.
PCs and smartphones are not always on. They’re designed to be operated by a user, any program or connection is meant to work when you’re looking at the screen. It’s not meant to be open and running 24/7.
If you want to have data constantly available, for instance for a social media account or online shop, you need a third party to host it for you. Third party hosting means servers, which means overhead, which means Coca Cola and Nike will soon be coming knocking.
To Conclude..
Currently no platforms exist that are truly free and open source.
On platforms today, users exist only by decree of a large company. Platforms therefore have to be monetized in one way or another, which means that you either pay for it directly, or indirectly through your data or advertisements.
The idea of the node is not new, servers have been around since the late 80’s. What is different is that due to the rise of Bitcoin and the bitcoin network, the adoption of these kinds of devices has taken a sudden flight.
Nodes can be used for much more than just running bitcoin software and some companies like Umbrel and Start9 have caught on to this. They are creating a user-friendly way to install open-source applications.
Nodes have opened the door for doing decentralized platforms, where data is stored and transmitted between nodes, instead of within a server.
Although this might sound like social media with extra steps, it has the potential to shift the power balance to the users, instead of the shareholders of a platform. It can help break up the monopolies of some of the largest companies in the world by moving the network from their servers into the real world.
The result is that any company, small or large, will be able to make use of these open networks, which will finally allow for real competition in the platform space.
Platforms can be much, much better than what we have today, both in their usefulness, policies, pricing and data protection and with a little imagination we can make this possible.
Making it possible
If you’re interested in making this vision reality, I’ve created a Github project for a simple free and open source node application, the goal of which is to make data sharing among nodes and websites easy and user-friendly. Visit https://github.com/bureaugewas/DAMP to contribute.