Bitcoin: A secure method of transaction based on a widely public and decentralized ledger on the internet. In contrast, credit card systems are built on confidentiality, centralization, and the use of protected networks and firewall data centers. These data centers accumulate a large amount of personal information from traders.
Bitcoin collects public transaction ledger information approximately every 10 minutes. The collection starts from the current block and traces back to the "genesis block" created by its anonymous inventor Satoshi Nakamoto. Its verification process requires at least half of the participants ("miners") to perform mathematical operations on the current block using all previous blocks starting from the genesis block. Therefore, to change or reverse a transaction, more than half of the computers in the system must agree to recalculate and re-declare and confirm all transactions since the genesis block.
Bitcoin is not a coin, but a registered value and measure of transaction rights permanently recorded in the blockchain.
Blockchain is a type of database. Similar to a real estate title deed, it includes matters, contracts, patents, licenses, or other permanent records. Each record is distributed and made public from the origin of the series and decentralized network nodes, mathematically hashing everything together.
Boltzmann's entropy: Heat (the total energy of all molecules in the system) divided by temperature (the average energy of the molecules). Ludwig Boltzmann (1844—1906) linked the uncertainty of molecular arrangements to the missing information, paving the way for Claude Shannon and information theory. There are two forms of entropy, both of which are disordered. Boltzmann's entropy is simulated and controlled by the natural logarithm e, while Shannon's entropy is numerical and controlled by logarithm 2.
Chaitin's Law: Gregory Chaitin is the inventor of algorithmic information theory. He believes that a static, eternal, perfect mathematical model cannot simulate a dynamic creative life. The mathematics of determinism traps mathematicians in mechanical processes that cannot produce innovation or surprise, nor can they generate learning or life. Therefore, it is necessary to transcend Newtonian mathematical methods of physics and follow the postmodern mathematics pioneered by Gödel (1931) and Turing (1936), which is the mathematics of creativity.
Economic growth: Learning detected through falsifiability or potential banking failures. This understanding of economic growth stems from Karl Popper's insight that scientific propositions must be framed in a falsifiable or refutable manner. Government guarantees hinder learning, thereby obstructing economic growth.
All growing businesses and industries follow a learning curve, where for every doubling of total sales, costs decrease by 20%-30%. The classic learning curve is Moore's Law in microchips and Metcalfe's Law in networks. Raymond Kurzweil summarized this concept as the "Law of Accelerating Returns." This was introduced by Henry Adams in "The Education of Henry Adams" as a learning curve chart and applied to analyze the phenomenon of energy production increases.
Unless processed signals are interpreted by humans, economic growth as a learning process will not directly benefit from "machine learning." Expansionary fiscal and monetary policy: Central banks stimulate economic activity by selling government securities to pay for government deficits.
Keynesians (mainly leftists) believe that central banks can implement fiscal stimulus by selling securities and increasing government spending. Monetarists (mostly rightists) believe that central banks can stimulate economic activity by creating money to purchase government bonds.
New funds flow to the previous owners of purchased securities, mainly banks. In recent years, banks have used such funds to purchase an increasing amount of securities from the fiscal sector. Keynesianism and monetarism converge on the power to expand government spending. In the information economy, both measures attempt to leverage government power to drive growth. However, economic growth is a form of learning (gaining knowledge through repeated reflection), and learning cannot be forced.
Gödel's Incompleteness Theorem: Kurt Gödel (1906—1978) discovered in the logic of mathematics that any formal system sufficient to express arithmetic truths is incomplete and relies on axioms to the extent that it cannot be simplified to the system itself—truth cannot be proven within the system. In the process of proof, Gödel invented a mathematical machine. This machine uses numbers to embody axioms, thereby predicting discoveries in computer science. By proving that mathematics is neither closed nor determined by physics, Gödel paved the way for postmodern mathematics—the mathematics of software and creativity. Gödel proved in 1931 that mathematical statements can be true but unprovable. John von Neumann (1903—1957) was the first to appreciate and promote the importance of Gödel's viewpoint.
As von Neumann saw, Gödel's proof relied on the mathematical "machine" he invented. This machine encodes and proves algorithms using numbers and also uses numbers to represent proof results. The inventions of von Neumann and Alan Turing propelled the development of computer science and information theory, advancing the internet and blockchain.
Gold: A monetary element with atomic number 79. After centuries of scrutiny, it has become a unique currency. The five precious metals on the periodic table are rhodium, palladium, silver, platinum, and gold. Rhodium and palladium are rare elements discovered only in the 18th century. Platinum has a melting point of up to 3000 degrees Fahrenheit, making it nearly impossible to obtain without advanced technology. Silver's luster is dull and easily corroded, and its reactivity makes it more suitable for most industrial uses than gold. Only gold can serve as a durable, unchanging measure of value. Gold is considered money because it is a useful commodity—beautiful, shiny, divisible, portable, scarce, and convertible into jewelry. Gold has no other use; it is essentially a monetary element. Money has no value because it is merely jewelry. Jewelry has value because it is real money. Gold is a valuation metric based on the time taken to extract incremental ounces. This metric has changed little over centuries. Extracting gold from deeper and more dispersed veins is a challenging task. Therefore, the gold standard is not a function of technological and industrial progress but a pure measure of value.
Hash: Converting a variable-length digital file into a fixed-length string—secure hash algorithm (SHA-256 used for Bitcoin's blockchain encryption) outputs are always 32 bytes (256 bits). Hashing is difficult to reverse. Knowledge about hashing does not imply knowledge about the file, but it can easily convert file knowledge into a hash. Any change to the file will completely alter the hash result. Therefore, hashing shows any tampering with the hashed data. The most common hash is the checksum at the end of each internet packet. Hashing is the technical underpinning of blockchain and hashgraphs.
Hashgraph: Using chain blocks in a tree structure (called rounds) and a clever "virtual voting" algorithm to reach consensus without actual voting or proof of work. This is a complex and labor-intensive process that should be avoided as much as possible. The system is likely to be promoted as the foundation of blockchain.
Hypertrophy of finance: The growth of finance exceeds the growth of the business it measures and regulates. For example, international currency transactions are about 73 times the total global trade in goods and services and 100 times all stock market transactions. Oil futures trading has grown 100 times over about 30 years, rising from 10% of oil production in 1984 to 10 times that in 2015. Real estate derivatives are now 9 times global GDP. That is not capitalism; it is financial hypertrophy.
Information Theory: Proposed by Kurt Gödel when applying logic to functional mathematics and algorithms, developed on the ideas of Claude Shannon (1916—2001) and Alan Turing (1912—1954). Information theory describes human creation and communication as a result measured by "news" or "surprise" (defined as entropy, which is knowledge) in the face of the power of noise.
The level of entropy depends on the sender's free choice, making it a libertarian index. The larger the alphabet that constitutes symbols—that is, the larger the set of possible information—the greater the choice of the person synthesizing the information, the higher the entropy of the information, and the more information there is. Information theory both supports and describes the digital and simulated world we live in. Main Street: A symbol of the real economy where workers are paid hourly or monthly, isolated from the fast-paced money-making activities of Wall Street. Main Street may be the street you live on, representing local businesses and workplaces.
Metcalfe's Law: The value and power of a network grow with the square of the number of compatible nodes it connects. This law is named after engineer Robert Metcalfe (1946—), one of the inventors of Ethernet. The law is merely a rough index, counterintuitive (the value of the internet is far less than the square of its 6 billion connected devices), but it applies to smaller networks. Companies like Facebook, Apple, Google, and Amazon dominate the current stock market capitalization. Metcalfe's Law explains the value creation vehicles of these companies. It is likely that Metcalfe's Law also applies to new digital currencies and ultimately ensures the success of the new transaction layer of the internet software stack.
Moore's Law: The cost-effectiveness of the computer industry doubles every two years. This pace corresponds to the number of transistors produced at a faster rate, represented as a learning curve. Inspired by the research results of Caltech professor Carver Mead, Intel founder Gordon Moore (1929—) proposed Moore's Law. Initially, this law described the principle that the density of transistors on silicon chips doubles every two years. Now it mainly relies on other learning vehicles, such as parallel processing, multithreading, low voltage, and three-dimensional chip architecture. As a learning curve, Moore's Law is an important principle of information theory.
Noise: Interference in information. Noise is any effect of the pipeline on content: unexpected interference present in the communication channel. The generation of noise is often due to content distortion caused by its pipeline. High-entropy information (full of surprises) requires low-entropy channels (without surprises). The unexpected in signals is information; the unexpected in pipelines is noise.
Peirce's Triad: The theory of mathematician and philosopher Charles Sanders Peirce (1839—1914) posits that for all symbols and symbol systems (such as software and mathematics), there is no meaning without an interpreter. The triadic system consists of symbols (or images), objects, and human interpreters. Without the interpreter, the triad is left with only ideology and technique (such as "machine learning" and "artificial intelligence").
Public Key Cryptography: Most cryptography is symmetric: messages are encrypted and decrypted with the same key (or digital string). Of course, if you can personally hand the key to the other party, there is nothing wrong with that. But the internet economy relies on ongoing transactions with people you have never met. The answer is asymmetric key pairs. They are generated together, encrypting messages with the public key that cannot decrypt, while the private key is used for decryption. The blockchain relies on public keys as transmission addresses, which can be completed by their private keys.
One important use of the private key is to encrypt files that can be decrypted by the corresponding public key. This process allows for digital signatures of message sources to verify identity. You know the message comes from a unique private key, which was generated in pairs with the public key you hold. This means money can be signed like a check to ensure authentication without revealing the source of the signature.
This technology reconciles two seemingly conflicting goals of cryptocurrency: privacy and authentication. It achieves fully trusted transactions without exposing personal data while allowing access for legal purposes and displaying reliable property and historical records. Thus, when responding to inquiries from courts or the IRS, we can have cash-like transactions (avoiding secret disclosures) and robust, reliable, immutable records. Identities and properties can be hidden when appropriate but can also be proven when needed. This is entirely different from the current system. In the current system, identity and property information is continuously exposed to untrusted outsiders, and proving this cannot be done without relying on potentially corrupt or false third parties or prosecutors.
Real money: A measure, a standard of value reflecting the scarcity of time and the irreversible passage of it. Cash is evenly distributed on the basis of entropy, built on the physical limits of the speed of light and lifespan. In this sense, both Bitcoin and gold are cash. But government-monopolized money is not.
Sand Hill Road: A haven for California venture capitalists and various "unicorns." Stretching from Camino Alto near Stanford to Highway 280, and extending into the clouds and wealth of Woodside and Silicon Valley. This luxurious market is filled with lawyers and politicians. Sand Hill Road has lost its leadership position in the venture capital market, handing it over to initial coin offerings (ICOs) and other fundraising websites around the world.
Shannon Entropy: The simplest way to calculate Shannon entropy is to encode a piece of information using binary digits. It is calculated as the sum of the logarithms of the probabilities of the components of that information. The logarithm of the probability between 1 and 0 is always negative. The entropy in this sum is represented as positive with a negative sign. This negative sign has led some prominent theorists to mistakenly propose the concept of negative entropy, which is a contradictory concept—exceeding 100% probability. Contrary to intuition, surprising information is a form of disorder. Alphabets are ordered, crystals are ordered, snowflakes are ordered. "Hamlet" and Google are beautiful and unordered, conveying surprising information.
Turing Machine: Inspired by Gödel's proof. Turing envisioned an abstract universal computer model consisting of a control unit that manages a set of instructions, including reading, writing, and moving back and forth within a pipeline at a given time. The length of this pipeline is infinite and divided into as many squares as possible. He proved that this hypothetical machine could perform any computational function. Since then, Silicon Valley has begun to cheer. Although he further proved that most numbers cannot be generated through computational processes. Turing's universal computer cannot compute whether any specific program will halt. It is a universal computer that contains infinite time and space. Real computers differ from brains and are necessarily limited to certain specific purposes.
Wealth: Knowledge that has been tested. Physical laws state that matter is conserved—material resources have not changed since the Stone Age. All lasting economic progress comes from knowledge increased through learning.
In 1992, the depiction of "virtual reality" in Neal Stephenson's novel "Snow Crash" marked the beginning of everything. That was the virtual world visible from the pinnacle of the real world. Twenty-five years later, it still inspires geeks with musical prophecies, exciting them:
Ten years ago, when Hiro first saw this place, the monorail software was not yet complete. To facilitate travel, he and his friends had to develop software for cars and motorcycles themselves. They brought out their respective software and competed in the black desert of electronic night.
Muneeb Ali quotes this passage in his authoritative paper "A New Internet Design Based on Trust," co-authored with Ryan Shea and Jude Nelson, along with their mentor Michael Friedman at Princeton University. This team entered the electronic night, attempting to illuminate the darkness with some architecture, making it a different internet—a world of meta-trust that transcends seven layers of communication technology.
Ali, the key figure of this bold project, calls it Blockstack. Since first encountering the internet at the age of 12 in Pakistan, he has made significant progress in this field. Due to his excellent performance in school, with straight A's, his mother bought him a computer as a reward, filling the young boy's heart with gratitude and excitement. Although his father was the head of the national military intelligence agency, the family was not wealthy, and buying a computer meant delaying the purchase of a washing machine.
"What model of computer was it?" In 2017, 15 years later, I asked him in the Blockstack office, located near Jones Street close to the Powell district.
"Oh, it was an Intel 386."
"Yes," I said, "that's the microprocessor. I mean, what brand of computer was it? Which company made it?"
Ali looked confused and then replied, "Oh, I don't know. I assembled the computer myself."
I realized we were talking about a 12-year-old tech genius from Pakistan. In the slides of his TED talk presented in Manhattan in 2016, there was a photo of him from 15 years ago, a little boy wearing a uniform shirt with a badge and red shorts, with his right arm around his brother, standing on a wooden railing by a murky river in Pakistan. This is a bridge between different cultures and technologies in the world, filled with metaphorical meaning.
That little boy who once assembled a computer could now reimagine a global network. However, breaking free from it requires courage and wisdom. Just like the new "trust-based" internet model he has established, there are no guarantees at the other end of the bridge, nor any safe havens.
In 2005, Ali obtained a degree in computer science from the Lahore University of Management Sciences. However, he saw almost no opportunities in Pakistan, so he devised a bold plan to obtain a scholarship from the Swedish Institute of Computer Science in Stockholm. The Swedes were willing to admit him but did not provide financial support. Without money or a job, Ali felt very frustrated. He considered retreating from the bridge, but his stubborn nature pushed him to keep moving forward.
He came up with a scheme—a transitional loan that might help him move forward. He assured the Swedes that he had received a scholarship to study abroad in Lahore, which they respected greatly. Then, he went to a bank and obtained a $1,000 loan based on his Swedish "scholarship." This finally set him on his journey to Stockholm, with only a vague idea of the city and its food and accommodation costs.
The academy admitted Ali, and he finally settled down, but food remained a daily challenge. The $1,000 dwindled, and he had to walk to a nearby McDonald's every afternoon at 5 PM to buy a fish sandwich and some fries to fill his stomach. Every morning, he would just chew a few muffins provided during coffee time at the academy and drink a little beverage.
Ali grew increasingly thin, and his parents noticed and worried, but geniuses always stand out, especially when they are still hungry. His work on computer interfaces left a deep impression on the professors. He recalled that the three months in Stockholm were his most productive period, during which he wrote three important research papers, received significant recommendations, and gained some precarious control on the other side of the bridge.
Just as the $1,000 was about to run out, Ali found a research job in the Netherlands. He worked as a co-chair for the European Community Standards Organization, specializing in the then-futuristic "Internet of Things" (IoT). The medium access control layer he focused on necessarily involved security issues when "things" connect to the network. After receiving more enthusiastic recommendations, he reached the pinnacle of computer science research in the U.S.—pursuing a Ph.D. at Princeton University during the semester and doing research at Stanford University in the summer.
Ali's mentor at Princeton, computer scientist and cryptographer Michael Friedman, had worked for 20 years on the theory and practice of peer-to-peer networks. He co-authored two chapters in the standard textbook "Peer to Peer" with Martin Casado. Today, he is the Chief Technology Officer of a well-known open-source time-series database. Ali is grateful to Friedman for "taking me through every detail of thinking about various distributed system issues. By observing him design and optimize systems, I realized that doing system research is an unparalleled art."
At Princeton, Ali followed Jennifer Rexford to study network processors and virtual machines, and in the summer, he followed Martin Casado to learn about software-defined networks. This made him a serious researcher with both practice and philosophy in the fields of fixed hardware and programmable software. Casado also founded the industry-leading network virtualization company Nicira, which was eventually sold to VMware for $1.2 billion. Ben Horowitz, the son of David Horowitz, who loves to expose destructive truths, made a fortune by inventing VMware software. Later, Casado also joined his company, becoming a venture capital partner at Andreessen Horowitz.
Whether in software-defined networking or network function virtualization, Ali was deeply immersed. The network has transformed from a seven-layer structure dominated by hardware functions to a two-layer structure primarily defined by software simulating hardware functions. Just like Hiro in Stephenson's writing and those pursuing Satoshi Nakamoto, Ali lives in an era where one can break free from the limitations of the material world and enter the electronic night, thus creating "virtual reality" that allows dreams to come true.
The seven-layer model consists of a hierarchical stack, where lower-layer functions are controlled by higher-layer functions. At the bottom is the physical layer, including fiber optic lines, microwave oscillators, mixers, 1550 nm and 900 nm lasers, photodetectors, silicon routers, erbium-doped amplifiers, and an infinite array of twisted pairs, antennas, coaxial cables, etc. Under the command of the upper layers, they carry data packets through the network. Since these are difficult to design and produce, this layer of hardware is at the core of modern electronic wonders. However, when Ali was studying at Princeton, most people in the industry overlooked hardware, all focusing on how to produce Turing machines in Ethernet.
To understand today's internet, you must take these hardware wonders for granted and build castles with key "stacks." In computer language, this means being able to mimic hardware and surpass it in virtual threads, cores, and chains. However, the evolution from micro-matter to virtual reality began with the seven-layer network structure of the Open Systems Interconnection (OSI) model proposed by the International Organization for Standardization (ISO).
In the Open Systems Interconnection stack, above the physical layer is the data link, which serves as the medium for hardware to become "firmware." Software defines electronic specifications, timing rules, and electronic-photon conversions, enabling information to be transmitted over links between nodes or computing addresses. The operation of switches occurs at the second layer, where the function is merely to pass data packets to the next node. Local networks, such as Ethernet or Wi-Fi functions, are realized at this level. If you bypass high-speed internet, you can transmit bits and bytes over the second layer data link.
The third layer is the network layer, the domain of routers, which, together with the transport layer (the fourth layer), establishes and constitutes the end-to-end connection of the TCP/IP Internet protocol. This includes the IP addresses and transmission control protocols of the entire system, connecting the network end to end.
The third layer is the header of packets, identifying and addressing the packets. The fourth layer is responsible for the actual transmission and reception of packets, traffic management, load balancing, and command acknowledgments (ACKS) (received) and negative acknowledgments (NAKS) (waiting), ensuring the realization of connections. The third and fourth layers are often fortresses of central power. Here, the Internet Corporation for Assigned Names and Numbers (ICANN) and even government and intelligence agencies like the International Telecommunication Union (ITU) focus on tracing domain names and addresses. When they discover URLs of black market shopping sites like Silk Road or "dark web" sites like Alpha Bay, they can find them through the third layer.
Above the fourth layer is the fifth layer. This is the most important session layer. It controls specific bidirectional communication from start to finish, whether it is video streaming, Skype calls, session initiation protocol meetings, message exchanges, emails, or any transactions that require verification.
The sixth and seventh layers are the representation and application schemes—user interfaces, windows, formats, operating systems, etc. These can be reduced to clever schemes of hyperlinks (clicking on a word to enter a new page) and universal resource locator (URL) addresses. Tim Berners-Lee at CERN in Geneva invented this system in 1989, making it part of the World Wide Web he created. Berners-Lee wanted to connect all data to a network, becoming a toolbox for easily establishing a network "that everyone can use together, becoming a shared creative collaborative space."
Since now 70% of links are processed through Google and Facebook, Berners-Lee cannot help but worry that the network he invented is fading away. Thus, he has become an advocate for Blockstack. "When he heard what we were doing, he was so happy that he even jumped for joy," described Jude Nelson, the software director of Blockstack.
To describe the Open Systems Interconnection stack in the book "Telecosm," I use the example of making a phone call. Picking up the phone and hearing the dial tone (physical layer signal) is often presented in analog form now. Then dialing (each digit moves to call another link to the destination), hearing the ringing (indicating network connection and signal transmission). When you connect the call, it means you have passed through the first four layers of the Open Systems Interconnection stack. Then you say "hello" to start the conversation; choosing English means you choose a certain presentation form. The session constitutes the application layer, and hanging up ends the call.
Materialists may think the physical layer is everything, while software supremacists believe everything is in their heads, but the brilliance of the network lies in its duality. Driven by trillions of microchip transistors, voice interference analysis devices (VIAS), and traces, the physical layer ultimately becomes as clever and indispensable as it is opaque and unfathomable. Software logic proliferates and defines hardware functions in the upper hierarchy.
As the speed of each component conforms to Moore's Law, many special-purpose devices (application-specific integrated circuits, network chips, network processors, transmission control protocol accelerators, traffic managers, and routing lookup table content-addressable memory) are no longer so essential. With increasing speed and density, programmable general hardware is becoming more prevalent, achieving a replacement effect.
Replacing custom devices in routers, switches, and other network equipment are powerful servers, produced based on multi-core general microprocessors from companies like Intel, Cavium, and Mellanox, linked together by increasingly complex and integrated software. General hardware has become faster and cheaper, controlling a vast market across the industry, including businesses like billions of smartphones and video game consoles. Over time, the expensive hardware that originally operated on the internet at trillions of operations per second will be replaced by this software.
With good software, Intel Xeon microprocessors on fast servers can perform routing and switching functions. Previously, achieving these functions required carefully customized hardware from Cisco, such as Tiger and Quantum's streams, or the fiber-speed network processors produced by Israeli EZchip/Mellanox.
Turing machines and Turing's thoughts are as intangible and mutable. Implementing routers, computers, switches, or the internet can be "virtualized"; they do not need a specific hardware form to manifest.
Leading this change are Casado, Rexford, Friedman, Horowitz, and hundreds of other researchers in the industry, guiding Ali and other blockchain inventors to study blockchain engineering based on these principles. They carefully separate the control plane at a higher level from the data plane at a lower level. This design ensures that these architectures have unique streamlining and scalability.
All of Ali's achievements began with that first computer in Pakistan. It was his reward for mixing and matching electronic components and assembling them into a computer. He recalls feeling very confused after assembling the computer. In early 21st-century Pakistan, computers were like "cars in the jungle," as the proverb goes. "A car might have some eye-catching features—lights, heating, air conditioning, shielding, and protection—but a car only becomes truly exciting when it drives on the road." Ali was completely captivated by that computer, and when he went online through the Netscape browser, his life changed forever. Through the World Wide Web that covers the entire world, he became a part of the global information economy, even while in Pakistan.
As Ali realized, the rise of Netscape marked a turning point in the history of the internet—providing new accessible channels for data. Its browser offered interactivity, text, images, security, and the possibility of cross-network conversions. It embedded the interpreted scripting language invented by Brendan Eich into dynamic web pages and transaction forms. This was a secure nested layer that enabled secure business links over the network. Through a Java virtual machine, applications could be ported from any operating system's Babel.
The founders of Netscape viewed the web as a place for creative expression of various interrelated elements, from photos to videos, encompassing everything. Its founders, Marc Andreessen and investor Jim Clark—the inventor of Silicon Graphics' 3D "geometry engine"—predicted that 3D virtual reality would appear in games and virtual worlds. With the help of Netscape, Andreessen, Eich, Clark, and their colleagues, Ali gained the ability to animate web pages and share them with the world, creating wealth.
Netscape's IPO in 1995 also marked the beginning of the internet's distribution of returns. On the first day of trading, the company's stock price nearly doubled, with a market capitalization exceeding $3 billion, benefiting many and greatly motivating entrepreneurs to challenge the computer industry at the time. In the following five years, Google, Amazon, and nearly 1,000 internet companies launched IPOs, effectively driving the prosperity of distributed internet applications. Under what I call the "micro-world law," innovation decisively moved into all aspects of the internet.
This was the peak of tech entrepreneurship. However, after 2000, the number of startups stagnated. Almost no companies, except for the largest tech firms, successfully went public. Following the Enron scandal, the Sarbanes-Oxley Act's regulatory provisions required about $2 million to enter public markets and implemented strict accounting practices in paperwork, lowering the threshold for trust, which was detrimental to entrepreneurial culture and finance.
Such typical nonsense made the cost of going public prohibitively high, characterized by the legal requirement of "fair disclosure" for all company communications. If everything must go through lawyers, you might not say anything interesting at all. Except for the largest companies, others became almost zero-entropy communication fields. All data could be traced back, with no internal details, diminishing the importance of the data.
By the time Ali arrived at Princeton University in 2012, Netscape had gone bankrupt, replaced by the free version bundled with Windows 95, Microsoft's Internet Explorer. Microsoft initiated the trend of internet giants acquiring innovation by purchasing the Spyglass browser, thus quelling the challenge from Netscape. Coincidentally, the main designer of Spyglass was Netscape's Andreessen and Eric Bina, who developed the basic concept of Mosaic at the University of Illinois' supercomputer center. Microsoft acquired an elegant modular browser while pitting Netscape's inventors against each other.
The phenomenon of insufficient IPOs persisted for over a decade. In the first nine months of 2016, there were no IPOs in the U.S. Instead, venture capitalists kept hundreds of "unicorns" in their "pens." Led by Uber and Airbnb, almost all these companies had market valuations higher than Netscape's at the time of their IPO. Compared to mergers with giants like Google/Alphabet or Facebook, most companies showed little interest in going public. Unlike the valuations of early internet companies like Microsoft and Netscape, the valuations of "unicorns" primarily do not benefit the public; returns (and burn rates) mainly flow to the venture capitalists holding these stocks and the wealthy individuals who purchased some of these stocks.
In 2012, Ali and his friend Ryan Shea joined the Princeton Entrepreneurship Club and launched new internet applications together. In the spring of 2013, they found themselves in a puzzling predicament. The internet path they had taken was now flowing toward those massive data center hubs, which could hardly provide any security or privacy protection. Apart from a few internet giants, the internet had lost its economic viability.
This was a severely flawed enclosure movement. An insecure network cannot protect property rights, cannot safeguard privacy, cannot host security, cannot discuss efficient transactions, cannot allow micropayments to prevent spam, and cannot establish reliable identities. Companies like Google, Facebook, Amazon, Apple, and others responded with their own "secure spaces." In this way, they could lock in target customers and provide corresponding commercial services.
As Ali wrote: "Currently, with the frequent use of online services, user data is locked in 'data silos' like Facebook and Yahoo, and Google and other systems cannot achieve service migration. This has led to the emergence of an intensive data model; inevitably, these 'data silos' will eventually be breached. The recent theft of information from 5 billion Yahoo users is evidence of this."
These silos, or "walled gardens," are precisely what frustrate Berners-Lee; they serve their owners while undermining the global consistency of the network and leading to increasing fragmentation. In these fragmented markets, companies like Google, Apple, Facebook, and Amazon collect more and more private data and hoard this information through firewalls and encryption, but over time, they find that centralization does not work. The internet has become a flawed, leaky plan. In this plan, most funds and power can be absorbed by the top applications of companies like Google. We need a Blockstack that can securely and immutably store key addresses, personal data, and pointers to storage addresses on the blockchain.
As Ali and Shea understood, security is not an application or a video game; it is an architecture. To design such a structure, Ali became a U.S. citizen and, along with Brendan Eich, Vitalik Buterin, and other pioneers, led a movement to rebuild the internet based on decentralized, peer-to-peer principles.