Bitcoin will change money like the internet changed video

Back in the 80s, there were essentially only three modes of video distribution: TV, VHS tapes, and movie theaters. This meant that the only videos available were those produced by strangers and mostly ran in half-hour increments.

But today. Today, micro videos are wildly popular. On Vine (RIP), a six-second video of a box of squishy toys being squeezed and making sounds is probably the funniest video you've seen in years (if you haven't, you will). Even though the video wouldn't have hit the distribution networks of the pre-internet era.

Bitcoin expert Andreas Antonopoulos explains that, like videos in the pre-internet era, money has some of the characteristics of the container that holds it. For a TV channel or a videotape, a 6-second video is a bit useless in this respect and doesn't mean much. But with the Internet, videos of any length can be watched at any time. Length and time are no longer important. The video material we love today was what people would have undoubtedly wanted to see 30 years ago.

Antonopoulos predicts that the currency will also undergo this kind of transformation in the future. Cryptocurrency will be able to realize the flow of value. The Lightning Network envisions a continuous flow of transactions, even if the transaction value is far less than a cent. Last week, the Lightning Network officially entered the Alpha test.

Antonopoulos painted a vague but hopeful picture of what this new video network could mean for YouTube.

A future where cash actually flows

Most people are paid monthly after they have completed a significant amount of work.

"Why do we have to pay our salaries monthly?" he asked. "It's because money acquires the characteristics of its container." Banks often charge a lot of money to pay other people, so it doesn't do that. The Lightning Network can complete millions of transactions per second, from as small as a penny to larger than we can imagine.

Currently, each transaction on the Bitcoin blockchain costs about 5 cents, which is too expensive to process small payments (for example, to establish more reasonable fees on the network's media). The Lightning Network loads another layer on top of the Bitcoin network, which only records the final transaction log after a large payment.

“If I can do a million transactions per second for as little as one satoshi, why not get paid by the minute?” he asked rhetorically. “When you can make micropayments in milliseconds, the movement of cash takes on a whole new meaning.”

There is already a pay-per-view streaming video being tested, called Streamium. It uses a smart contract that you can sign with an industry expert to pay to watch his video, but if you find that you don’t like his video, you can quit at any time. If you only watch three minutes of the video and quit, then you only need to pay for these three minutes, not the entire video.

This is just the tip of the blockchain iceberg. What Antonopoulos wants to depict is a true Internet of Money.

Understanding Lightning Network

One way to imagine how the Lightning Network works is, for example, imagine a conference dedicated to trading some kind of collectible, like Beanie Babies (a limited-edition toy that was all the rage). Its organizers rent a huge hall in a hotel. People set up tables and bring their Beanie Babies and piles of cash. Then visitors arrive, bringing more cash and empty bags of Beanie Babies.

Inside the hall, people began transacting at breakneck speed. People were buying and selling Beanie Babies. Money was moving from left hand to right hand. The first $5 bill spent could buy dozens of items before the day was up. Transactions were happening too fast, but settlement speeds on a network like Bitcoin can be fast enough.

The huge room is a metaphor for the Lightning Network. The hallway outside the room is the Bitcoin blockchain. There are only two records needed, one for each person on the blockchain: who walked in with a large sum of money and who walked out with a large sum of money. The Lightning Network keeps track of all the thousands of transactions that took place in the room. It needs to generate reports and finally settle accounts for them.

Of course, in a real room, this is not necessary. Cash settlement relies heavily on human labor. Online, while there is no better way to do it in rapid fire, thousands of transactions can be processed very quickly peer-to-peer, for example, in a network protocol designed with encryption built in. This is how the Vision Center network in the Lightning Network is designed.

In fact, you could even extend the metaphor of the Beanie Babies themselves. Once markets for digital assets, such as smart contracts, really take shape, the Lightning Network could be used to track not only the money changing hands, but also how many Beanie Babies there are.

privacy

Antonopoulos said the privacy model of these transactions has been proven through Tor. With Tor, each node in the network only knows two ranges for each data packet, where it came from and where it is going next. It does not know where it went before, nor does it know whether the next range will be the last one.

The volunteers who participate in Tor are anonymous. They will likely get paid to be at the nodes in the Lightning Network. But they won't get paid very much. The reward for passing a transaction may be less than a penny, but there are still thousands of transactions here and still increasing.

Technical Details

For those who want to dive deeper into this topic, Antonopoulos explained that it relies on a number of new inventions, including time-lock verification checks, sequence authentication checks, multi-signature and hash-time synchronization contracts, which will allow multiple transactions to be processed over time and only considered complete when they are actually completed.

All of this is to say, Antonopoulos pointed out, there is no reason why Bitcoin must be the base layer of such a network. It could also be Ethereum, Steem, XRP or any other advanced currency. If there is a real desire for such technology, there will be corresponding derivatives in the market.

Remember, no one has ever successfully predicted what the world will look like, Antonopoulos reminded us during the talk.

New technology is a way to generate new use cases, even if it looks nothing like what came before. Imagine going back to the 70s and explaining emoji culture to the mailman. He might understand the idea of ​​an electronic letter, but hundreds of text messages a day that were all pictures? He might have a hard time believing that anyone would want to do that.

Today, it's hard to imagine what people would do differently if money actually existed online, but getting paid every day doesn't sound like a bad start.