Cloud Computing
One of the philosophical innovations of Bitcoin is the greater control of individual property rights. In traditional finance, ownership of assets is outsourced to third parties like banks. The cryptography underneath Bitcoin gives users direct ownership of their assets and money in a way that cannot be confiscated by third parties like governments, corporations, or other people.
This primacy of property rights is a hallmark of Bitcoin’s design, and runs through much of its implementation. For example, anyone running a full node has their own copy of the Bitcoin blockchain on their local hard drive. Users need not rely on internet APIs or websites to verify their funds, but can simply search data on their own local disk. This is a substantial change from the current dominant paradigm of cloud computing, where most data has shifted to third-party platforms like AWS or Microsoft Azure.
There is an admittedly small technical barrier to running your own Bitcoin node. You’ll need to acquire the hard drive, download the software, download all the blocks, and sync it on a regular basis. It’s not a huge amount of effort, but enough to prevent most people from doing it. The company Start9 solved this problem by giving you a turnkey package, in which you simply plug the unit into your router and connect directly to that unit from your computer. Think of it as a hard drive plus dedicated machine all-in-one, which is constantly synced to the Bitcoin blockchain, not requiring you to run a full node separately on an existing PC.
The convenience of a dedicated machine is attractive. However, I believe the real value of sovereign computing will grow as the Bitcoin ecosystem develops. As the second and third-layer applications come alive on Bitcoin, all of these will benefit from running off of local machines. More importantly, it’s a reminder of the principle of property rights, which is existential to the Bitcoin ethos.
Cloud Computing
Sovereign computing is actually a throwback to the past. Two decades ago, everyone used to store their own data on their own server. If you wanted to launch your own website in 1999, you would keep all your files locally. The problem was that this required every individual in business to develop some expertise in network management. Amazon and Rackspace figured out that most users don’t want to do this and built out the server-as-a-service business model, which became spectacularly successful.
This was the birth of cloud computing. Later, the cloud held not only data but ran entire applications as well through startups like Heroku. Cloud computing works if your data consists of movies and even general business documentation. But when the data is money itself, like it is with Bitcoin, outsourcing to third parties is a security risk. Satoshi designed the nodes to be the ultimate arbiters of truth, with no reliance on central parties of any kind. So, cloud computing does not play a role in a fully decentralized network. The only ground truth is what your node sees and knows, which is the chief model that will survive under a fully trustless paradigm.
The Mempool
One of the coolest features of the Start9 device is running mempool.space off of your own machine. Even though I run my own full node off my PC, every time I use mempool.space, I utilize their web interface. But remember, the mempool is not a single place. Each node has its own mempool, since each node sees the transactions in its neighborhood on the Bitcoin network. A mempool on a full node in Tokyo will have a different view of the network than the mempool on a node in Houston. Each full node broadcasts transactions on the network, and because of network latency, the view of the Bitcoin blockchain from different nodes will vary.
You can see this in real time with the Start9 device. You can compare the view of the mempool from mempool.space accessed through a web browser, against mempool.space running directly off your Start9 machine.
When I did this, I saw that the confirmed blocks in the blockchain were identical. This is how it should be, as the chain has now been mined, and their data propagates around the whole network. But the blocks that are not yet mined, the ones that miners are currently assembling, will vary. These blocks have different transactions and different characteristics. In mempool.space, these future blocks are brown/green, and they are different on the Start9 device versus from the website.
It was nice to see this difference. It shows that the mempool that I am accessing through my own node in my house in Texas will differ from the mempool that accessed through the website mempool.space, which is referencing some node on some machine somewhere else.
The Future
One question for the future is whether there is some middle ground between sovereign and cloud computing. I am open to this idea, but so far, I have not seen any technology that achieves this. Cloud computing operates on a model of full trust, and sovereign computing on a model of zero trust. The real world is somewhere in between, where most businesses exist most of the time without security hacks on a daily basis.
But this brings up a more existential philosophical question in cybersecurity. Is it better to build a model around a worst-case scenario or an average-case scenario? Bitcoin is based on a worst-case analysis, which lends it its high security. This may be necessary for base-layer money but perhaps less so for higher-level applications. There is always a tradeoff, as security has resource and opportunity costs. So, one area of innovation for the future is to strike the right balance between security and usability on the application layer on top of Bitcoin.
