21co Is Up To Something Huge
21Co has been ridiculed quite a bit in the discussions recently around their plan to “put a bitcoin miner in every device”. I believe they are up to something really great, and while I have absolutely no insights into what they are up to, I have some ideas how this could change the internet. But not only that, I believe 21Co is intentionally misleading us, and only serving us the bites that we need. They don’t want to have too much pressure or attention, because much of what they need for their master plan hasn’t been built yet, and being the first one is the only opportunity to set the standards/protocols they need around Bitcoin and see them succeed on a large scale. But not only that, they might very well be up to something that not just the public, but also the uninformed political establishment could get a little bit too upset about.
Shortly before the medium article was released, people were widely sharing this WSJ article which given its timely release likely had exclusive information. It might have been a hastily written article, but it also might have been a deliberate campaign to play the announcement down, knowing that all further analysis would be less likely to reach the front pages of reddit or be widely shared by more than just the most enthusiastic bitcoiners.
It’s All About Micropayments
It’s not so much about the miner. It’s about the micropayments. Payments that might one day be even smaller than a satoshi, and for which going to the bitcoin atm downstairs would already be a huge waste of time. The hardware that 21co is building is foremost a wallet, not a miner. It’s aimed at creating the standard for what a hardware wallet should be like, and that all wallets should be hardware wallets. You can’t trust the device, and the user enough. For some applications, the satoshis mined will not be enough to pay for the services they need, but they might also receive satoshis as income, and if that is not enough, charging the wallet up manually is feasible.
I Believe With 21co We Are About To See The End Of Net Neutrality
I believe net neutrality is a great thing, and without it we would not have seen the internet becoming such a democratic and individualistic tool that levels the playing field for companies, political candidates, artists or education. The fact that everyone can freely build on top of the internet is awesome, and much of what happened in the past 20 years wouldn’t have happened without it.
But net neutrality is also expensive and inefficient. It means that my phone calls are treated the same by the internet than my torrents, and whether I want to consume the torrented data immediately or within a few hours is not taken into account. Cables, especially across oceans can be congested, and who makes that decision of which packages to reroute and which not? With a good protocol for micropayments, and a bitcoin wallet in every computer, phone, router, switch, etc, each application can itself decide how much to pay for what, and while all of it will likely stay tiny amounts, it will be enough to create a market place in which users and applications are incentivized to self-identify how important the data is for them. They won’t lie too much, since they eventually need to pay for their lies.
This Can’t Be Done Today
All current proposals to end net neutrality are troubled by the payment problem. Who should pay for faster services, and what data should be faster? We can’t easily charge the consumer the cost, because we have no efficient way of billing them. And we can’t let the consumer self-identify how much data is important to them because they would end up claiming it is all equally “ultra super important”. And what payment system do we use anyway? Would Europe, the US or China every agree on something as important as that? And why would we allow Visa or Mastercard to scrape 2% off the world’s internet economy?
So currently we aim at companies paying for faster speeds, like Netflix or Skype. This is obviously a horrible solution as well, because the cartel of Internet Service Providers and Corporations would use their power to bar the future competitors of Netflix and Skype from the internet by slowing down their speeds, and it’s easy to imagine how a startup could be blackmailed into paying huge sums, extorted into bankcrupcy the second they raise their first round.
Micropayments made by the application, the user, the device via Bitcoin will solve that.
This Is The Beginning Of A Better Internet
This kind of net prioritization will not end the internet as a hotbed for innovation, startups and individualization. Those that request a service pay, not those that deliver a service. I won’t end up paying more for fast online storage just because I request it from Dropbox versus Mega, and an Iranian company will still (or for other reasons, the first time) be able to compete with an American one.
This creates the incentive to make infrastructure better. It creates the incentive for you to share your wifi, to let others into your bluetooth mesh network, to build public wifi, it will make it more difficult to abuse public wifi, to slow down internet speeds in libraries, it will even mark the end of the DDoS attack. Suddenly running a single fiber cable to an outlying island will become a feasible busines model, without complicated negotiations or regulations. Plug in and get paid.
This is amazing, and it’s probably only a small part of what we can do. How about we do the same with electricity? We can already turn money into electricity, but now we can turn electricity into money. If electricity becomes cheap in some part of the world, for example because in a sparsely populated area strong winds and sun create a surplus of energy, the miners turn on and make money. If in some other parts of the world electricity becomes to expensive, you use your bitcoins to buy some gas, and burn the gas to warm your water or sell the electricity.
If not 21co
then somebody else.