That’s where the emerging cryptocurrency ecosystem takes a leap forward: The ecosystem itself creates the currency. The central bank is replaced by the decentralized crowd of miners; and the banking system’s private ledgers are replaced by the public block chain.
In addition to the more infrastructure-oriented information mentioned in this article’s sidebar, Bitcoin-related domain name activity more generally continues to increase. In the first year following the publication of Satoshi Nakamoto’s paper, only eight domain names containing the string “bitcoin” were registered, and in the second year only 295. The number of registrations has grown steadily since then with more than 15,000 in the .com and .net domains from January to August 2014 alone. This rate is on par with the pace in 2013 that produced more than 23,000 registrations. High-value domain name sales have been taking place as well, with BTC.com selling for $1 million.
Although it’s still unclear how much impact Bitcoin and other current cryptocurrency systems will ultimately have on the “real world” of finance, what is clear already is that Internet-based applications – enabled by ubiquitous networking and computing – are a powerful force for financial innovation. Whether a block-chain-based decentralized cryptocurrency, digitally signed transactions attached to an account at a central bank, or something else entirely, the future of money is in Internet-based transactions. It will be interesting to see where the emerging blends of new currencies and old, decentralized and delegated, anonymous and branded, take us next.
Commonalities with the DNS
Around the same time that Diffie, Hellman and RSA introduced their cryptosystems, and Chaum pioneered digital cash, Paul Mockapetris set forth the design of the Domain Name System, described in RFC 882. E-commerce as we know it today may still have been more than a decade away, but Mockapetris foresaw that any application in the rapidly expanding Internet would need “a consistent name space which will be used for referring to resources,” one that “must be maintained in a distributed manner.” The result was a system that is both centralized and distributed. The central root and consequently the single global name space of DNS ensure consistency, but the name space can be delegated into independent subspaces, operated by multiple parties all over the world.
That global, distributed name space has proven to be fundamental in numerous Internet applications, and shown again to be so in the cryptocurrency ecosystem, where although the currency itself requires no central authority, the operation of the ecosystem is based throughout on navigation to resources through DNS. For example, the Bitcoin Community Foundation makes its home page at bitcoin.org; system specifications are maintained at bitcoin.it; source code and improvement proposals are distributed via github.com; and block chain information is made available at blockchain.info. DNS is also the mechanism by which nodes in the Bitcoin peer-to-peer network discover each other via the “bitcoin-seeder” network crawler. Moreover, even though Bitcoin addresses are anonymous, any organization that’s invested in building a brand will draw people to its website, identified by domain name, if it wants to accept Bitcoin payments – rather than just advertise a numeric Bitcoin address. The Bitcoin address, like the website’s IP address, remains behind the scenes.
Finally, although source code and other documentation could conceivably be published by putting “anchors” into the block chain (and there are promising proposals along these lines), the reliable and confident way to make Bitcoin resources available to the public today is to build on what the public already trusts. People can then navigate to the information in which they’re interested the same way they get to everything else on the Internet: domain name to IP address to resource.
Even a decentralized ecosystem needs a trusted, neutral way to connect back to the rest of the world.