To Home page

Social networking

the crisis of censorship

We have a crisis of censorship. We need a pseudonymous social network on which it is possible to safely discuss forbidden topics.

We also have a crisis of shills, spamming, and scamming. So we need moderation. But to prevent censorship, we need entirely decentralized moderation.

People escape censorship to unmoderated anonymous platforms, but are driven off those platforms by shills, spammers, and scammers.

The difference between censorship and moderation is that a moderator acts to protect the discussion from shills, spam, and scammers, while a censor acts to prevent the discussion of dangerous ideas.

What the censor is suppressing is stuff that is not generally known and not generally available. What moderators are needed to suppress is stuff that is very hard to avoid, because a thousand sock puppets are robotically posting from the same script on a thousand forums.

Social net architecture

You want to be able to message everyone in the world, but you don’t want spammers and shills to be able to message you. (The difference between a spammer and a shill is that a shill is spearfishing. A shill’s script is narrowly targeted to a specific target community, like Trotsky declaring himself to be a peasant in order to kill the peasants, or the innumerable pump and dump “investment opportunities”.)

You want to be able to communicate to the broad public (equivalent of web pages) as well as specific individuals (equivalent of text messages, email), and you want people to be able to comment before the broad public on content you have communicated to the broad public (equivalent of blogs). You want to be notified when someone sends a message specifically to you, and you want to be notified when someone responds to content you have communicated to the broad public, you want to be able to turn off the ability to respond, or turn it off for any new respondents, want to be able to close comments, and you want, with considerably less urgency, to be notified when something appears before the broad public by people you are following.

Thus the social network system of followers, followed, buddies, and feeds, which combines the functionality of the web, the functionality of messaging, and functionality of the blog. We can model everything as a web, except that some parts of the web are directed acyclic graphs under some directionality criterion. A directed acyclic graph has an implicit time order, hence notifications and feeds.

if we try to distinguish between posts and comments as blogs do, there are several tricky edge cases here when we have replies to replies.

Usenet made no substantial distinction between posts and comments. Making the distinction, as blogs do, breaks the conversation and complicates the code and the interface.

Usenet died of shills, as for example the science fiction and fantasy discussion groups dying as a side effect of progressive takeover of science fiction fandom organizations. Somehow the conversation would invariably turn into attacks on capitalism, the market, family, fatherhood, and private property, which did not have much to do with science fiction and fantasy.

If fantasy came up at all, it was in a conversation that presupposed the evils of feudalism, and the Marxist history that capitalism was the successor of feudalism, rather than in a conversation that presupposed the reader’s yearning for Kingship, kinship, leadership, and the hero with a thousand faces.

In the end the conversation in the science fiction and fantasy Usenet discussion groups tended to be about the power of classes as defined by Marx, rather than about power of heroes, Kings, and vigilantes. And so the Usenet science fiction and fantasy discussion groups, and just about every Usenet discussion group, died of shills.

Conversations became one man with one microphone attached to a thousand megaphones, and replying was like talking back to the national news broadcast, because you could reply to a shill, but the man giving the shill her script was not listening, because he was running a hundred similar shills, and his shill would just stick to her script, the script he had assigned to her no matter what you replied to her script.

Her replies to your reply would be unresponsive, because they came from a script written by a man who had never thought about or foreseen your reply.

Conversations came to resemble the conversations you have with a non player character in a video game, a scripted robotic simulation of actual conversation, or the conversations on a help line with an unhelpful third world help line worker to whom English is a second language, and who is reading from a script, a script written by a man whose native tongue is English, but his script is designed to deal with certain common problems that do not in the slightest resemble the problem you have with the product, because the man writing her script did not foresee your problem.

Usenet was designed for conversations, but was hijacked by Harvard and the New York Times to give one way lectures, resembling those given in Harvard and the pages of the New York Times. Speaking back was pointless, no one was listening, and eventually everyone stopped speaking back, and Usenet died.

The conversation in the Usenet science fiction and fantasy groups died, because the shills would stick to script no matter what, providing the superficial simulation of a conversation about fantasy and science fiction without the substance of a real conversation. And the same was happening in every Usenet group, though what was being shilled varied from one group to the next, with an immense multitude of different shilling organizations running an immense multitude of unresponsive scripts promoting an immense multitude of different scams, most of them about money rather than politics.

Two real participants in the science fiction and fantasy Usenet group would be having a conversation about the hero’s journey, and the computer of the man writing the economic Marxist scripts would detect a keyword or key phrase that it had been programmed to treat as relevant to a Marxist script, and direct a shill to interject that script into the conversation, and the shill would do so, mixing the script up a little with random fragments from the actual conversation to prevent it from being too readily recognizable as the same script already posted a thousand times before in a hundred Usenet groups, and the conversation would be derailed. Or worse, a robot promoting class conflict based on sexual preference classes would be triggered on seeing the post by a robot promoting class conflict based on economic classes, and the conversation thereafter would consist of one robot pushing scripts about economic Marxist classes, and another robot pushing scripts about Cultural Marxist classes with the bored economic Marxist shill industriously interweaving random fragments from Cultural Marxist script into the economic Marxist script, and the bored Cultural Marxist shill industriously interweaving random fragments from the economic Marxist script into the Cultural Marxist script to create the semblance of a conversation where no actual conversation existed, merely random variations on scripts already robotically pushed a thousand times in a hundred places.

The real participants eventually left the Usenet group leaving the robots to robotically talk to each other.

To prevent shills, you need moderation. But moderation is apt to get centrally controlled and become censorship, shutting down vitally needed conversations. We need mandatory moderation, to prevent what happened to Usenet, but we need completely decentralized moderation, to prevent censorship.

If you don’t have a means of stopping one way broadcasts into a medium designed for conversations, your social net is going to be flooded with one way broadcasts.

The particular axe that was being ground was not the problem. There is no end of large, wealthy, and powerful organizations with axes to grind. In the Science Fiction and Fantasy group, the primary problem seemed to be organizations created and funded by Harvard and the New York Times promoting cultural Marxism and old type economic Marxism, but if it had not been them, would have been someone else promoting something else. One way broadcasts provide the opportunity for power and money.

So what should happen is that when you have a feed, and are a follower of Bob, Bob’s public posts that you have not yet seen are marked as unread in the feed, and listed by title or first line if no title. And if you look at one of them, the thing he is replying to is just a click away, and the replies he has approved are just a click away. But you don’t see, and cannot click on, the replies he has not approved, unless you are following those commenters also. Though he might give blanket approval to Alice’s feed, in which case you would also see Alice and everything she approved.

Because if you could click on them, a million shills and spammers would reply, rendering the link worthless.

If you want two way narrowcasts, you need a means to keep out broadcasts, or else narrowcast memes sent by individuals to individuals will be drowned out by mass produced broadcast memes sent to everyone indiscriminately by large bureaucratic organizations. If it had not been Harvard and the New York Times, might have been some megachurch. Indeed, in the early days of the internet, it was some megachurch.

In the early days of the internet, every group, regardless of topic, regardless of its area of interest, was full of repetitious stuff about young earth creationism, material indistinguishable from what I had seen before in every other group, with any attempt to debate the posters receiving unresponsive scripted responses to the unscripted response, responses suspiciously similar to a thousand similarly unresponsive responses in a thousand different interest groups attempting to pursue a thousand quite different interests.

If young earth creationist shilling died out, it was because bigger and more powerful organizations with more important axes to grind got in on the business of broadcasting one way broadcasts into narrowcast two way media. The old indiscriminate one way broadcasts were drowned out by new indiscriminate one way broadcasts reflecting the concerns of bigger and more powerful organizations, in the end, the biggest and most powerful organizations of all.

When you look at your set of feeds, you want to see which feeds have activity on them by real people that you are following, and when you look at a particular feed, you want to see only new activity by the person you are following, and also which items on the feed have new replies approved by the person you are following.

Which, unless the person you are following is issuing indiscriminate approvals, is going to keep out the one way broadcasts by shills, spammers, and scammers. And if he is issuing indiscriminate approvals, people will soon stop following his feed in the same way everyone dropped out of Usenet groups as the shilling of one way broadcasts became intolerable.

If Bob replied to Carol, and you are not following Carol, and you click on Bob’s post, you should see in his post a link to the post by Carol that Bob replied to, and if you click on that, you see Carol’s post containing a link that will show all the replies to that Carol approved. Which might include Dave’s reply to Bob’s reply to Carol, a reply to Bob that Carol approved, but Bob did not.

In which case, if you click on Carol’s replies link, you will see Dave’s reply to Bob in her comments page, but if you click on Bob’s replies link, you will not see it in Bob’s comments page.

What posts you can see will depend on the path by which you reached them. The mesh of reply links, reply-to links, and approval links form a graph, and when you click around the conversation you are following that graph. So people will learn to follow the paths of good moderators, and will ignore the paths of bad moderators.

The web also forms a graph. What is missing from the web whose lack makes it not a social network is the time element: feeds. You cannot have a conversation over the web. We need to support conversations, thus need to have different and distinct reply links, reply-to links, and approvals while the web only has one kind of link, losing the information that makes a conversation a conversation. A social network is a superset of the web, email, and instant messaging, and a moderated but truly decentralized social network is going to replace all of them.

So everything is a post – and a reply is just a post that has a reply-to link to the post that it replies to. And the reply-to link works both ways, in that the post with the link will appear in the comments page of the original post that it links to, if approved by the poster it links to.

So we treat replies and posts the same, everything a post. If you are following someone, you get his posts on your feed, and when you see a post that he made public, you can click on a link to the post that he replied to, and a link to any replies to him, or replies to his replies, that he approved.

So everything you can click on and read has to be by someone you are following, a post approved by someone you are following, or approved by the author of the post that you are now reading. Otherwise we get the Usenet problem of a million shills, scammers, and spammers.

So, you can navigate to whole world’s public conversation through approved links and reply-to links – but not every spammer, scammer, and shill in the world can fill your feed with garbage.

The underlying protocol and mechanism is that when you are following Bob, you get a Bob feed from a machine controlled by Bob, or controlled by someone that Bob has chosen to act on his behalf, and that when Bob replies to someone, the post that he replies to is copied onto his machine, containing a link to a feed controlled by the person he replies to, and similarly with replies that he approves. So posts and links to feeds spread around the net Usenet style, being duplicated on every machine that comments on them or approves them and every machine that follows a feed that contains them. You access a feed BitTorrent style, sharing Bob’s feed with everyone that follows Bob. Each feed is a mutable torrent, a Merkle-patricia tree with a single authority determining the current total state of that tree, with the continually changing root of Bob’s Merkle-patricia tree signed by Bob using his secret key which is kept in a BIP39 style wallet.

The metadata in the feed sharing reveals what network addresses are following a feed, but the keys are derived from user identity keys by a one way hash, so are not easily linked to who is posting in the feed.

This handles public posts.

Private messaging

Private messaging is trivial. There is no end of excellent existing software to do it, in particular Jitsi Meet and the Jitsi client. The hard problem is the public social net on which people meet so that they can then engage in private messaging and form private rooms. Our social network’s private rooms are not going to be competitive with the innumerable excellent existing systems supporting private conversations and one way rooms, except that we need to provide efficient, convenient, and secure means to launch private rooms and private conversations from our public social network, and, most importantly, because programmers need to be paid, private conversations about money and payments.

It would be good to eventually provide an interface between our secure global identities based on a BIP39 style wallet, and the XMPP identities based on Jitsi Meet servers, but what is lacking from existing private messaging and private room software is money – money being the usual reason you need private messages.

Since we are going to need a BIP39 style wallet, need to put a crypto currency in it, and the ability to have private conversations, which will typically be about orders, payments, and receipts. I just received over email in the clear a payment acknowledgment containing most of my credit card number and the three digit shared secret authorization on the back of my credit card. This is intolerably bad. Similar things are happening with crypto currency payments, linking crypto currency wallets to physical locations such that the owner of the wallet can be found and shaken down, because there is no wallet infrastructure for communicating metadata about payments, so all the metadata, such as “deliver these goods to this physical address” goes over public networks.

Jitsi is great for private human conversations about human things, but we lack an environment useful for conversations about orders, payments, and receipts, which is going to need integration with the payments and accounting system, and needs to be based on BIP39 identities. Jitsi Meet XMPP identities are not really useful for the purpose. We are at present using SSL identities based on the Domain Name System for this purpose, hence the grossly inappropriate email I received, and these are unsatisfactory, because there are a thousand certificate authorities, and any organization that has a certificate authority in its pocket can intercept and interfere with a supposedly private conversation.

This, rather than blockchain analysis, is the big problem with crypto currencies that needs to be fixed.

Hence we need human readable messages that can have crypto coins, unspent transaction outputs, and lightning network payments embedded in them.

A conversation between two people is an encrypted immutable authenticated but unsigned data structure shared between two parties,

Private rooms

The infrastructure proposed in Anonymous Multi-Hop Locks for lightning network transactions is also private room infrastructure, so we should implement private rooms on that model

Well then, as many dags as there are groups, and if someone is added, the adding party adds a reply link in the data structure of the smaller group to the larger group, and if someone is deleted, a subset of the parties to large group get invited to the smaller group, which contains a reply-to link into the larger group. Every conversation is a room, and if you buddy someone, he has authority to invite you to a room. The bilateral shared secrets that make a room possible are frequently discarded and replaced. They are not part of the immutable data structure, but infrastructure used to communicate what is in the room.

Each room corresponds to a dag, a narrowly shared and transient blockchain, so that all participants know that all participants are seeing the same conversation. But once the shared secrets have been discarded, the room can no longer get new messages, and its data can no longer be decrypted. The conversation is immutable but deletable.

Private rooms are recreated from time to time, with new transient keys, and the old transient keys lost forever. The participants may have a record of what was said in the old private room, but the old conversation is not present in the new room nor accessible from the new room, whereas a feed is around forever, and its past rendered immutable by the Merkle-patricia tree.

When you join a room, you submit a transient public key to each of the participants in the room, and they respond with a transient public key, constructing a shared secret between each pair of participants.

You then use symmetric encryption with that shared secret. And then, over the encrypted connection, set up a shared secret based on both the durable public and private keys, and the transient keys. So you now have, for each pair of participants, a shared secret that depends on both parties durable and transient keys. Possession of the shared secret proves you know the secret key corresponding to your public key, and you get perfect forward secrecy because the shared secret and the transient keys are abandoned when there is no further action in the private room.

Assume Bob’s secret key is b, and his public key is B, and similarly Carol’s secret key is c and her public key is C.

In order to support Scriptless Scripts and Anonymous Multi-Hop Locks the private keys need to be scalars of an elliptic curve of prime order, such as Ristretto25519, and the public keys need to be elliptic points on that curve.

b × C = c × B. (Lower case letters denote scalars modulo the order of the curve, upper case denote the corresponding elliptic points on the curve) So, to construct a shared secret that can be used for symmetric encryption, Bob calculates b × C and Carol calculates c × B

Suppose that Bob’s transient private and public keys are bt and Bt, and his durable private and public keys are bd and Bd, and similarly for Carol.

Then to construct a shared secret that depends on both the transient and the durable keys, and proves knowledge of the durable private key, Bob calculates (bd + bt) × (Cd + Ct), and similarly Carol calculates (cd + ct) × (Bd + Bt). (But this is only safe if both Bob and Carol have first proven that they also know the shared secret bt × Ct = ct × Bt, by first successfully decrypting and encrypting stuff symmetrically encrypted to that secret)

A bilateral pair conversation is a pair of feeds that should have identical content and hashes, and though they are not signed, they are authenticated.

A multilateral conversation is n bilateral conversations, n feeds.

For money matters, where the point is proving to third parties, we want signatures on the hashes and immutable messages, but for bilateral conversations we want authentication without signing

So the multilateral shared room is constructed through people communicating over bilateral shared secrets constructed from unilateral unshared secrets. The signed contents of the room are flood filled around the participants, rather than each participant being required to communicate his content to each of the others.

signing and immutability

For money, we want signatures, and money is the highest priority. Carol signs what she said to Bob, and she is stuck with it. Less cases to handle. When you send money, you not only sign it, thus rendering it immutable but deletable, you sign the message, thus signing all the previously mutable conversations linked in through the “reply-to” and “regarding” links in your message. The preceding conversation was authenticated but unsigned, thus potentially mutable and deniable, but becomes signed by and one party, and thus immutable, when he sends money, and signed by the other party when he accepts the money.

A message with a single recipient is always authenticated, though possibly only by a cheap readily discardable [Zooko triangle] identity. If it is about money, normally signed, and thus immutable but discardable.

A message with two or more recipients is always signed, regardless of whether it has money or not, because there are too many cases to handle otherwise, and thus immutable though deletable, and it retains perfect forward secrecy, in that if one of the recipients loses control of his durable secret keys, but all three participants keep their mouths shut, no one else can know what was in it. It also renders any bilateral messages linked in immutable, because they are linked by two fifty six bit hash, thus signing a message acknowledges sending or receiving all messages linked to by the signed message and renders them immutable by linking them into a hashdag.

The signature, however, may well be associated with an unlinkable and easily discardable [Zooko triangle] identity, rather than associated with your tax file number.

Name System

We need an unbreakable and untraceable name system like that Jitsi or namecoin, but Jitsi relies on the Ether blockchain, which is rather too breakable. and in the hands of the Social Justice Warriors. Has to rely on crypto wallet type identity keys, rather than some authority mapping names.

You need the functional equivalent of blogs, where everything published and every approved comment on a blog gets shared BitTorrent/Usenet style – so you and everyone has a copy on their hard disk of everything and everyone they are following, and shares that data with everyone who follows the same entity, with no central server.

And you need the functional equivalent of reposts and likes, so that if someone you are following endorses what someone said, it eventually gets downloaded, BitTorrent style, on your disk, and you get to see it, and comment on it, also.

One minor difference you will need is that the person who issued the thing being commented on gets to moderate the comments, though obviously this will have no effect on comments by anyone you are already following.

A repost by someone you are following should go into your feed. His likes should put links in your feed. Comments on the thing reposted should put links in your feed if they survive moderation, and the comment should go into your feed whether moderated or not if you are already following the commenter.

You need private messages, which are easy, and we have lots of systems to securely provide that already.

You need private groups that no outsiders can follow, except the moderator regularly sends them the latest keys.


You need a cryptocurrency like Bitcoin, but Bitcoin is too readily traceable. Wasabi wallet has a cure for bitcoin traceability, but it is not easy to use that Wasabi capability, and most people shill, despite the very nice user interface. The lightning network over bitcoin could fix those problems, and also overcome Bitcoin’s scaling limit, but I don’t think much of the current implementation of the lightning network, and the miners are not being helpful.

Private messages need to be able to carry the cryptocurrency embedded in them, so that the social net is useful for business, just as you can mail a check in an envelope with a document. So the lightning network needs to be an application, the primary application, of the private messaging and private room system.

The elegant cryptography of Scriptless Scripts using adaptive Schnorr signatures and of Anonymous Multi-Hop Locks assumes and presupposes a lightning network that has a private room with a reliable broadcast channel (everyone in the room can know that everyone else in the room sees the same conversation he is seeing, and a reliable anonymous broadcast channel within the private room. “We also assume the existence of a functionality Fanon which provides user with an anonymous communication channel.”

So, before we can implement a reliable anonymizing lightning network using the elegant cryptography of these papers, have to implement a corresponding social media capability, even though that capability is unlikely to be competitive with Jitsi and others for purely social purposes. Whereupon when finally we do implement a lightning network, it will work like paper payments sealed in envelopes, which are generally accompanied in that envelope by metadata about the human purpose and intent of that payment and the obligations that ensue, unlike the present lightning networks, where such metadata goes over separate and insecure channels.

Business will move to the decentralized social net to escape the increasingly disruptive social controls that are sending so many businesses down the drain. Nasa lost the ability to build rockets because of Social Justice (The SLS is built around rocket parts built long ago that Nasa can no longer make). Intel lost the ability to build CPUs because of social justice. (They now rely on a Taiwanese owned and operated chip fab), and Disney destroyed to Star Wars franchise, turning it into a lecture on social justice. Debian broke Gnome3 and cannot fix it because of social justice.

Business needs a currency and book keeping system that enables them to operate a business instead of a social justice crusade.

A blockchain is just a public ledger with an immense number of columns. Triple entry book keeping with immutable journal entries is a narrowly shared ledger with a considerably smaller number of columns. Every business needs its books on its own blockchain, to escape government regulation of its book keeping, which public regulation tends to result in the creation of holiness being recorded as the creation of value, as in the Great Minority Mortgage Meltdown and MF Global.

The disruptive interference of Human Resources in hiring and firing shows up on the books as a profit centre instead of a cost centre, and the legal and accounting departments work for regulators and the taxman similarly.


Information wants to be free, but programmers want to be paid.

An environment created to allow people to have uncensored public and private conversations can make its creators rich if it allows businesses to focus on creating value and making profit.

Its blockchain unit of value will be adopted by businesses and private individuals if it allows them to message each other securely about transactions, and if it allows businesses to keep their books in ways that reflect a focus on the creation of value and profit.

At the time I write this there is an immense amount of money in play on Taiwan Semiconductor. All the modern semiconductor fabs in the west have died, because Human Resources forces them to hire people into critical high tech positions on the basis of race, sex, and sexual preference, except for one company that is privately held by the King of Dubai, who being a foreign King with his own loyal army is in a better position than the average boss to resist political pressure. It is easier to resist demands from Human Resources when you have men at your back who will kill and die for you.

There are a lot of high tech tasks where if you have a single dud member on the team, the whole team will fail – and if you have a woman on the team, and exclude her from the stuff she is going to wreck, you are guilty of mansplaining, sexual harassment, and probably rape. There will be a big emotional scene with so much of the drama that women so love, and even though will be absolutely obvious that the woman is disruptively manufacturing drama, no one will admit to noticing her bad behaviour.

Censorship resistant social media is part of the necessary infrastructure for moron resistant high tech teams, though additional infrastructure will be needed.

To maintain technology, and for business to create value, the west is going to have to create companies that can resist political pressure. Which means that we are going to have to create software that enables companies,as well as discussion groups, that can resist political pressure, their books being triple entry accounting with immutable entries, rather than Sox, and their shares traded on the blockchain instead of the quasi governmental stock exchanges, sovereign corporations rather than state created corporations. The software will be open source, so the programmers cannot make money off it directly, but can make money from the seigniorage and implementing the lightning network where such shares will be traded in a way that gives the developers seigniorage.

Software that enables businesses that can resist political pressure is a superset of software than enables discussion groups that can resist political pressure. We start by enabling discussion groups, which will be an unprofitable exercise, but the big money is in enabling business. Discussion groups are a necessary first step.

Development sequence

First we need a replacement for Quic, TCP, and SSL. Quic and SSL encryption is joined at the hip to the quasi governmental domain name system, and if we put our custom encryption and name system on top of TCP, it is inefficient, as SSL without Quic is inefficient, and will be dependent on big quasi governmental organizations to protect against distributed denial of service attacks, which will start up as soon as the social media has important discussions, and redouble when the project starts to develop serious monetary value.

But such a communications protocol will have no value, until there is software that uses it to communicate, no value till there is a social media system on top of it.

In order to communicate, it will need network addresses, and a system to associate durable public keys with frequently changing network addresses, though these should not have any direct one to one relationship with durable public keys of humans, and do not always need to be very durable.

Initially we just use the equivalent of a hosts file, though as SQLite rather than text, but this does not scale to anything useful. For scaling, when one computer connects to another, each learns the durable public keys and most recent network addresses of those public keys from the other, and if one has connections to several others, it can perform nat penetration to allow direct connection, after the model used by Jitsi, where all participants have a durable connection to a Jitsi meet server, which enables them to form direct connections with each other. Though there is no reason why every computer should not be able to perform that role rather than just the central server as in Jitsi meet.

If a participant does not sign the network address proposed for it by its counterparty, perhaps because it thinks it is incorrect, perhaps because it thinks it likely to be far from durable, or for privacy reasons, the network address does not get propagated through network address pooling. So only participants with stable network addresses and accessible ports get propagated, get the relationship between durable key and network address widely known, so if the network address is unstable, or no accessible port, you can only contact directly if both connected to same third computer. Which drastically limits the usefulness of this protocol in general, but it works fine for propagating message pools, Usenet/BitTorrent style. At some time in the future we will address nameservers, with will serve names that are recorded on the blockchain, but at this point, we do not yet have a blockchain, and without a domain name system for network addresses and nameservers, we cannot do much with the protocol. And we cannot use the quasi state domain name system, or it is going to be yanked out underneath us as soon as we succeed.

But we can do the important things, which are social media and blockchain.

With social networking on top of this protocol, we can then do blockchain and crypto currency. We then do trades between crypto currencies on the blockchain, bypassing the regulated quasi state exchanges, which trades are safe provided a majority of the stake of peers on the blockchain that is held by peers holding two peer wallets, one in each crypto currency being exchanged, are honest.

This, a crypto currency and the capability to across blockchain exchanges on our blockdag, gives us our liquidity event, enabling investors to fund software. At which point we start plugging all the wonderful things we are going to do to make the currency actually useful in the near future. Which liquidity event will be considerably more persuasive if the system actually is useful as a censorship resistant social media platform at the time of the liquidity event.

A proof of stake blockdag is a sovereign corporation, but in order to actually function as a corporation it needs a human chief executive, corporate funds that the the chief executive can dispense, a human board of directors to keep an eye on what the chief executive is doing with those funds, and proper books so that the board can keep an eye on the chief executive, and the shareholders keep an eye on the board.

So, after the first liquidity event (cross blockchain trades on the blockdag) we implement the standard corporate infrastructure, accounting, board of directors, CEO, over proof of stake instead of under a quasi governmental stock exchange, triple entry accounting with immutable journal entries instead of [Sarbanes-Oxley] accounting, for the final liquidity event, the final liquidity event being the first sovereign corporation on this blockchain.

Information wants to be free, but programmers need to be paid. We want the currency, the blockdag, to be able to function as a corporation so that it can pay the developers to improve the software in ways likely to add value to the stake.

Many sovereign corporations on the blockchain

shares, bookkeeping, and sidechains

We then implement sidechains, so that many sovereign corporations will have some place to trade their shares and to keep the narrowly shared immutable journals for their triple entry books. The shares will be on a broadly shared blockchain, but some aspects of the books may well be very narrowly shared and selectively revealed. A total order of a sidechain will be reflected in a total state of the main chain, through the total state of peers that are also managing side chain wallets, or who have clients (or clients of clients) and that are managing side chain wallets, and each client’s total order is Merkle linked into the client’s total state, which is Merkle linked into the peer’s total state, so that the main block chain contains a Merkle link that can prove that machines operating a sidechain are in agreement about a total order for transactions that happened a little time ago. The total order of transactions on a sidechain will be the order in which they get linked into the mainchain.

If a peer on a sidechain is a client of a client of a client of a peer on the mainchain, and adds some new transactions to its sidechain wallet, the total order of those transactions within the sidechain is the order in which the main chain gives that total state of the mainchain peer, and within that order the order that the peer gives the total state of the client, and within that order …

This does not occupy mainchain space, because a single two fifty six bit hash on the mainchain can represent to the total state and total order of many very large sidechains, with the very large preimage of the hash being known to peers on the sidechain, but not to peers on the mainchain unless they are also peers on the sidechain.

A two fifty six bit hash gives unlimited compression, which is lossy in the sense that it is one way compression, but lossless in that if you know the preimage, you can always verify that the hash must have been made from that preimage, and a hash that is the root of a Merkle tree of two fifty six bit hashes gives the same, but with the added benefit that one can generate a short proof that some part of the preimage, possibly a very small part of a vast preimage, a part so small that it fits in single network packet, but part of a preimage so vast that no one possesses all of it, that no one could possess all of it, was part of the data from which that hash was generated.

The mainchain is a Merkle dag, structured in a way that makes it possible to give a single total order for the gossip vertexes of which it is composed, and every gossip vertex in the dag is a Merkle tree that reflects, among other things, a total state of two peers on the blockchain, each total state of a peer being incorporated in one and only one gossip event, and every total state of a peer contains Merkle tree that reflects the prior state of the blockchain, and the state of its clients who want their current state committed to the blockchain, and thus whenever one party wants to prove to another party that he is telling the same story to all the parties involved (has not engaged in Byzantine failure) he can generate a short proof rooted in the mainchain. Thus shares and triple entry books will be in the mainchain, even though much of the information in the books is going to be private and narrowly shared. Whenever one man’s computer presents something from the books to another man’s computer, it will present a short proof rooted in the blockchain, rooted in the same hash that everyone can see and vast numbers of people do see, that it is telling the same story to anyone it tells, even if only very few people should be told.

What should happen is that every time you make a payment to a business, you get a receipt that is connected by a Merkle chain to a Merkle tree of the business’s narrowly shared books, which is connected by a Merkle chain to the broadly shared main blockchain.

Sox bookkeeping relies on the books being widely shared among supposedly respectable and highly regulated people, which does not help you much if, as in the Great Minority Mortgage Meltdown, the regulators are engaged in evil deeds, or if, as with Enron and MF Global, the accountants are all in the pay of powerful men engaged in evil deeds. Triple entry bookkeeping with immutable journal entries works in a low trust world of badly behaved elites, works in the circumstances now prevailing, and, unlike Sox accounting, it does not require wide sharing of the books.

Corporate cohesion

The corporation exists by bookkeeping, which enables the shareholders to keep an eye on the board, and the board to keep an eye on the CEO, and our current system of bookkeeping is failing for lack of trust and honour.

Corporate cohesion is hard and apt to be fragile. You are apt to have board members that want to participate in executive decisions, want to tell the CEO what to do instead of merely evaluating how well he is doing it and making sure he is not stealing from the shareholders, and executives that have a power base external to the company. And telework and video conferencing does not make this any easier.

But while the purchasing officer who is too pally with certain suppliers is always a natural and inevitable problem, and your lawyer apt to be too well connected to the judge and the other guy’s lawyers, the big problem today with state created corporations is that the meddling of the state gives HR, accounting, and the legal department power bases external to the company, undermining corporate cohesion. If HR does not get its way, it is apt to organize lawsuits against the CEO, board, and shareholders.

Things can easily fall apart, and a cohesive group of people within the company is apt to push on those fault lines.

Corporate cohesion is hard, but the regulatory state is making it harder. Sovereignty will improve the capability of corporations to cohere, because the CEO really will be able to fire anyone, the board really able to fire the CEO, and shareholders really able to fire the board.

And, with the corporate books better connected to reality, the shareholders will have better information on whether to do so. A necessary precondition for corporations to function at all is that we fix bookkeeping to work in a world of untrustworthy elites.

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.