We can’t compare apples to oranges, we have to establish a common parameter to compare. The 1st parameter is the energy that is required to grow, distribute 1 fruit from farm to table. The 2nd parameter is the shelf life or the decay time & the time to grow each fruit. Thus we can establish 2 common parameters that is energy & time.

Amount of Energy Spent

Now let’s equate energy required to create & mine 10 gms of g☉ld to 1 ₿itc☉in, as I have equated 10 gms to 1 ₿itc☉in approx based on current market price of both g☉ld & ₿itc☉in.

Based on the current understanding of science we have to operate Large Hadron Collider approx 100 million years to create 1 gm of g☉ld by bombarding Bismuth atoms. The type II supernova & neutron star collisions does’’t account for the % of g☉ld in the universe.

To mine & refine 10 gms of g☉ld we know precisely how much energy is required.

Even with the common parameter established we cannot compare g☉ld to ₿itc☉in bcoz, it’s takes trillion trillion giga watts of energy to create 1 gm vs giga watts for cumulative 20 million Bitcoin created till now.

Hence i am analyzing this as a thought experiment to get across my point. The intrinsic value of 1 ₿itc☉in is based on the cumulative energy required to create till now.

Value of 1 ₿itc☉in = Total amt of energy spent for developing, mining & running nodes / 20 million ₿itc☉in (approx)

Time Factor

Time factor in terms of decay or corruptibility it is established beyond doubt 1 gm of g☉ld is always was, is & will be 1 gm. The value appreciates bcoz of the currency decay & debasement.

There will be no decay of ₿itc☉in but in terms of corruptibility it is at high risk bcoz it relies on software updates & developers.

1 ₿itc☉in was,is 1 ₿itc☉in till now but will it be 1 Bitcoin in the future?

Summary

• In terms of energy ₿itc☉in is not comparable to g☉ld.

• ₿itc☉in has intrinsic value bcoz it’s a distributed triple accounting ledger backed by energy & 1000s of node operators.

• Corruptibility of the ₿itc☉in in future will be based on the extent of debasement or corruption of the software & its developers. It depends on the deviation from pure P2P m0netary network to just any other data st0rage network.

References

https://en.bitcoin.it/wiki/Block_size_limit_controversy

https://en.bitcoin.it/wiki/Gavin_Andresen

What is entropy?

Entropy is the ratio of order:disorder @ any given point in time, during the initial stages of any new creation order is maximum & disorder is at it’s minimum. As the creation ages order gets minimal & disorder gets maximum & eventually it dies.

As the blockchain protocol’s data bloat & complexity grows over time, it results in increased entropy. It will eventually lead to aging & death as every other living organism in this planet.

Bloat & complexity happens as historical data accumulates & as new feature upgrades.

Historical data: any transaction made and any account created at any point in history needs to be stored by all clients forever, and downloaded by any new clients making a full sync to the network. This causes client load and sync time to keep increasing over time, even as the chain's capacity remains the same.

Protocol features: it's much easier to add a new feature than to remove an old one, causing code complexity to increase over time.

Let me give an example the taproot script feature upgrade resulted in an unintended consequence of the memecoin bloat.

If ₿itcoin has to survive as a store of value like gold across space & time it has to minimize complexity & bloat without comprising permanence. It can be achieved by minimizing client storage requirement of every node & by minimizing protocol complexity by keeping features simple & minimal.

Divine simplicity is the staircase to immutability & immortality.

Reverse Entropy

Reverse entropy is the technique employed by a mythical bird Ph0enix. As the bird ages it purges itself with fire & it’s reborn from its ashes.

If ₿itcoin has to survive across space & time it has it employ reverse entropy by purging itself of arbitrary data blobs as time progress & by keeping an immutable copy of Unspent UTX0s.

References

https://vitalik.eth.limo/general/2024/10/26/futures5.html

https://en.wikipedia.org/wiki/Entropy

It is a state machine which can crunch numbers either sequential or parallel.

If it is sequential it is general purpose (cpu), parallel it is graphical (gpu), parallel matrix multiplication is neural networks & inference (npu).

Let me give an analogy if we manufacture all the car parts from scratch in a single factory & assemble it in the same factory, the process is relatively sequential. But if we manufacture all the parts in 10 different factories in the same city & assemble in a single factory it is parallel.

What is qUantUm c0mpUting?

It is a state machine which can crunch numbers not in sequential or parallel but parallel & multidimensional.

If we manufacture all the car parts in 10 different countries where they can directly s0urce the raw material & assemble the car in the 11th country which initiated the car manufacturing, It is qUantUm manufacturing.

The advantages of qUantUm c0mpUting is the speed & efficiency, the time to manufacture the same car can be brought down for example from 12 months, 6 months to 1 month.

The disadvantages are two fold high rate of error & syncing (c0hesion) issues, the chance of manufacturing defective car parts are very high and durable cars are very low.

qUantUm c0mpUting is only good @ linear functions but not non-linear functions, same as not all programs can be handled efficiently by gpu or npu.

Another issue is that the start of car manufacturing & finished car should be initiated from the same dimension that is the 11th country, its because of the quantum wave function collapse.

C0nsci0Usness

Quantum c0mputer entangles qbits & branches the computing to parallel dimensions known as sUperp0sition & assembles the final result to this dimension as wave function collapse, so does our awareness.

Our awareness exists entangled & superp0sed in parallel dimensions and when we observe or focus it collapses to this dimension. The perception of our reality expands as our awareness gets expanded to many parallel dimensions.

₿itc0in & qUantUm c0mpUters

Bitcoin is a non-linear function except the asymmetric encryption, which is easily replaceable to quantum resistant encryption.

• Hash fUnctions are relatively secure from qUantUm c0mpUters because it is non-linear & also sha256^2 in Bitcoin.

• Some Bitcoin address are at risk to qUantUm c0mpUters because of P2PK & P2PKH addresses.

• POW cannot be solved efficiently by qUantUm c0mpUters.

Summary

qUantUm c0mpUting is the evolution of computing which goes beyond 1nm & multi-dimensional. There are lot of Unknowns to be addressed before it can be very pragmatic.

Any resource that has utility, relatively scarce & difficult to produce is an asset. For example g⊙ld has unique properties like malleability, incorruptibility etc. Also it has lot of utilities & aesthetic value.

It is also used as money for ages because it’s relatively scarce & someone have to put a lot of effort in mining & to purify which is a proof of work (POW).

Space based Asset

G⊙ld is an example of space oriented time unbound asset because you can mine, purify and issues physical tokens as coins and its not bound by time. 1 gm of g⊙ld is always 1 gm of g⊙ld immaterial of time like past, present & future.

Characteristics of space based Assets

• Not very liquid such as g⊙ld & land.

• Very tangible & physical.

• Very trustworthy but not very secure.

• Value appreciates over time.

• Long term asset.

• Tends to be centralized because of security.

• Negates time but bound by space.

Time based Asset

Time is a concept which has high entropy & non-reversible resulting in impermanence. In time based assets its mostly information about physical objects that moves in the time domain.

Time based asset is based on information about some physical object. Credit is an example of time based asset, those who give credit to you will be based on your future 5 years proof of your work. It’s based on the information about you that you are fit & will be able to work for next 5 years. That’s why old people don’t get any credits easily unless they are filthy rich with lots of other assets to back their credit as collateral.

As time passes the asset value depreciates, for example automobiles. Since time is involved the asset becomes non-trust worthy as time passes by and has to be validated by a third party. We have to trust somebody for a time based asset, this is a 35 trillion dollar American economy problem. The assets are not trust worthy, ages & corrupts with time. There is no silver bullet to fix the problem.

The only viable solution is to migrate to a trustless space-time based asset and completely negate the third party.

Characteristics of time based Asset

• Very liquid like credit & cash.

• Very intangible, abstract & information oriented.

• Relatively secure.

• Value depreciates.

• Short term.

• Asset ages & corrupts as it’s bound by time.

• Works only with centralized institutions & with counter party risks.

Space-Time based Asset

Space-time based asset have both the advantages of time based asset & space based asset. How to create space-time based asset is to move quantum computing & energy from space in time and link them together like a thread of a tapestry.

Quantum time is the time to mint 01 block & in space the quantum energy & computation needed to find a solution to POW puzzle to mint that 01 block is linked by causality hash tree & previous block POW solution.

High entropy hash tree link creates the causality & the list of potential txs in mempool is finalized in 01 Block time by the random POW solution.

The crux of the bitcoin network is the time stamping of the causality based hash chain with a quantum energy & computation that’s needed for 01 block time. Every 01 block time the destiny of the hash link chain is etched in stone with the solution of the POW puzzle by a free will laser mining pen, that’s the beauty of Bitcoin.

Map is not the territory, menu is not the meal & cryptocurrencies are not the money without reverse reification except bitcoin.

Any other cryptocurrency other than Bitcoin cannot be classified as a space-time asset as its an example of abstract power without reverse reification because it lacks the physical energy from the space component which is the proof of work. And thus can only be classified as time based assets like any other stocks & securities with all of its drawbacks not nullified but just toned down to some degree.

Characteristics of space-time based Asset

• Very liquid like time based asset.

• Very tangible computing hardware & power with intangible information.

• No counter party risk & it’s trustless.

• De-centralized with distributed nodes.

• Very Secure.

• Ages but not bound by time.

• Negates space & time, it can be moved across space-time in an instant .

• Value appreciates.

• Losses & mistakes are irreversible

  Summary

  If computers are state machines, money is abstract time & energy and bitcoin is the reverse reification of our time & energy in space, a space-time asset that maintains a distributed ledger by a distributed state machine.

REFERENCES:

https://dergigi.com/2021/01/14/bitcoin-is-time/

A small utility program called cat was part of a Unix version 1 released in 1971 to concatenate any number of text streams and print to the terminal or output as a file to the disk.The utility was written by Dennis Ritchie and Ken Thompson.

After 50 years the utility is so versatile that it can join any data streams like audio, video etc. It is a very minimalist, modular and multi-functional.

₿Itcoin OP_CAT

Satoshi implemented the same functionality in bitcoin script as OP_CAT. He disabled in 2010 because of the potential abuse of the OP_CAT such as DoS (Denial of Service) attacks.

OP_CAT is just 10 lines of code that can be used as a multi-functional Swiss knife for both good and bad. But it is not complete in itself as it needs it counterpart OP_SUBSTR to splice. it can enable functionalities like Bitcoin Virtual Machine and Layer 2 solutions.

OP_CAT & OP_SUBSTR are nature’s language of programming our DNA, our source code. The mere fact that we exist as we are genetically is because of splicing and concatenating of our parent’s genes.

Summary

The advantages of Unix design principles are that the utilities are very lean and powerful but very secure and manageable. Even after 100 years from now the program will not be bloated and it’s utility value will morph and persist like a spark or a wheel.

On the contrary if a program is a monolith and multifaceted, the entropy will creep in as a better version with bells and whistles. It will bloat towards the abyss after crossing the point of no return.

The disadvantage of a multifaceted monolith is a security nightmare because of two factors. The density of security bugs and the attack surface is directly proportional to the complexity of the source code.

Reference:

https://spectrum.ieee.org/lean-software-development

512 eth 16 Validator$, 8 tx$, 2$ Million liquidity, 1 eth block .

The Plan

Hack the centralized MEV (Most Extracted Value) network of bots that bundles the transaction from the mempool to validate.

MEV (Most Extracted Vaue) Origin

Most Extractable Value is the profit to be made by including, excluding, or reordering the transactions in a block.

MEV is the result of complex transactions involving smart contracts that facilitate lending, borrowing like DeFi (Decentralized finance), and trading like DEXs (decentralized exchanges).

There are 3 types of MEVs front buy a big buy order. or back sell a big buy order or do both.

Evidence of MEV dates back to Bitcoin. In 2013, Bitcoin Core developer Peter Todd offered bounties for any user able to show a hash collision against a number of cryptographic algorithms, particularly SHA-1. The bounty for SHA-1 reached 2.48 bitcoin, to be collected by any user who signs a transaction on Bitcoin demonstrating the collision attack.

We advise mining the block in which you collect your bounty yourself …. If the bounty value is sufficiently large other miners may find it profitable to reorganize the chain to kill your block and collect the reward themselves.

— Peter Todd’s Bitcointalk forum post

The purpose of decentralized network is to negate middleman but MEVs are the digital middleman and whoever controls the MEVs control the decentralized network. Its the emergent bug of complex smart contracts.

Process

Place 8 txs as a bait for the MEV bots, then unbundle the MEV bots txs, rebundle with new custom txs. search and propagate the new bundle.

It’s technically front running the front running MEVs bots just for 12.1s for 1 block. It is like digital Robin Hood (smarter thief outsmarting other bot thieves).

Smart Contract Hack Overview

Block Address: 1696466

Block User address: 0x3c98d6

Place 8 bait txs so that MEV bots place a sandwich MEV txs.

The proposer built a custom block that destroyed the sandwiches of the sandwich bots and effectively stole their money.

In order to make it appear like a transaction that would never be sent as a broadcast block, the proposer set the parent root and state root to zero.

They made a large profit by claiming liquidity from MEV bots.

Summary

The weakest link is the centralized infrastructures like infura, MEV boost relays, MEV bots that provide service like APIs, Builders, MEVs to the decentralized networks like ethereum, the centralized infrastructures can be hacked, colluded or censored by entities with vested interest that have enough resources to pull it off.

One important question to be asking is: are we building towards the right goal?  This is a recent series of tweets from the long-time Geth core developer Peter Szilagyi:

Convert state currency to casino tokens backed by nothing but by giving people hope that they eventually will become millionaires and marketing the belief in movies.

Let people speculate with tokens and eventually will lose their state currency.

Control tokens by restricting conversion back to state currency if they mange to beat the system and by stealth manipulation of the casinos machines.

Free test bed for wall street’s speculative derivatives backed by nothing to manipulate the price of physical assets and commodities.

Pump dopamine and negate ownership of assets and resources (Possession is nine-tenths of the law).

Billion Dollar industries backed by shunya and based on beliefs

1. Las Vegas - People will eventually become millionaires by speculation.

2.Astrology & New Age Spirituality - People can negate their past karma by gazing the stars, just meditating and paying cash to fake gurus.

3.Celebrity Cult - Celebrities and the Billionaires are the happiest people on this planet.

Utility based tokens & its value proposition

Any smart contract based blockchain backed by POS (Proof of stake) and software is a utility based token. Ethereum is an utility token because of its smart contract .Few examples of its utility are pegging national currencies as stable coins. providing name service and funding new and open source projects.

On the other hand stocks are backed by physical goods . For example apple stocks are backed by the production of iphones and macbooks & their utility. Amazon stocks are backed by warehouse, data centers, delivery fleets & their utility.

Since the stocks are floated by centralized entities they are considered as securities and regulated. The reason for regulation is that central entities can’t be trusted and rate of collusion is very high.

Let us analyze how the utility that creates value of a so called decentralized utility coin in the early phases erodes its value proposition in the long run.

1.Ethereum enabled the stable coin tether now the 24h trading volume of tether is 3x that of ethereum.

2.Ethereum enabled funding for a new project called binance chain because transaction costs on ethereum was too high now the 24h trading volume of binance is 10% that of ethereum.

3.Ethereun enabled Defi like uniswap which enabled speculative derivatives, front running bots and zooming MEVs (Most Extracted Value for miners).

4.NFTs & Memecoins (speculative, pump and dump tokens). Let’s say x memecoin is $1000 during pump phase, the entities who mint these tokens convert 10% of these tokens to ethereum and leave the rest 90% to be dumped eventually. These tokens are backed by nothing and in the long run it debases the utility and value of ethereum. Cryptokitties backed by AI generated images and digital degens.

In Las Vegas if we enter a casino we have to get tokens that cannot be used outside that casino because it is centralized and controlled by a corporate entity. But in a de-centralized casino anybody can create any speculative token or meme coin backed by nothing and convert it into a security or an asset.

Funds hacked from smart contract compatible Blockchains

Timeline of DEFI exploits is over 4 Billion Dollars till now.

Hacks in 2024 alone.

Summary

In the long run utility based coins eventually erode the value proposition of the entire utility based smart contract eco-system and its credibility proving that it will become more fraudulent than the centralized state based fiat currency.

The trajectory we are following is migrating from a centralized evil with a state and names accountable to some degree to a Decentralized evil (Devil) with no name, no state and accountable to no one under the providence of AI.

Let me discuss a concrete example, taproot was activated in 2021 with the objective of progressively upgrading to covenants. We all know the unintended consequences of ordinals and BRC20 on the ₿itcoin. ₿itcoin was not designed for smart contracts unlike Ethereum. Ethereum was designed for smart contract, they decoupled nfts and storage by design to avoid on chain data bloats.

During the last 7 years of Ethereum how many unintentional design bugs, smart contract bugs and intentional bugs that we have come across . Every smart contract hack in Ethereum is a bug.

It is estimated that the total amount of value stolen or lost due to security bugs in smart contracts is over $1 billion. Some of the high-profile hacking, such as the DAO hack (3.6M ETH stolen, worth over $1B in today’s prices), Parity multi-sig wallet hack ($30M lost to hackers), and the Parity frozen wallet issue (over $300M in ETH locked forever).

If we retrofit NFTs in the ₿itcoin blockchain without decoupling storage and without enabling proper guard rails in ₿itcoin, it will destroy de-centralization and destabilize ₿itcoin network in the long run.

1.Transaction rate Constraints

The average tx per hour for ₿itcoin = 18000

The average tx per hour for Ethereum = 49000

The avg tx cost for covenants will be 3x more expensive.

2.Space Constraints

The average block size for ₿itcoin = 1000Kb / 10 mins

The average block size for Ethereum = 5,000Kb / 10 mins

The avg tx cost for Covenants will be 5x more expensive.

3.Decoupling of Smart Contract & Monetary Transaction

Monetary tx cost = 21,000 gas

Contract tx cost = 200,000 - 500,000 gas

The contract tx are 100x more expensive in Ethereum without data.

How expensive are NFT tx cost in ₿itcoin?

4.Portability of Smart Contracts to L2 Layers

Ethereum started smart contract on main chain but because of transaction cost and on chain bloating it is migrating to L2 like optimism, zk rollups and zk EVMs. Ethereum main chain and L2 chains are POS based but that’s not the case for ₿itcoin most of the L2 chains are POS like Stack.

How compatible will be ₿itcoin Network in terms of portability of smart contracts like L2 rollups?

5.Transaction Cost Spikes

How to prevent transaction spikes that are very frequent in Ethereum chain.

Similar transaction spikes are occurring in ₿itcoin chain after the launch of Runes. It is going to recur quite often what is the defense mechanism in place to deter recurrence?

6.Decoupling NFTs & Storage

How to decouple and migrate NFTS and Fungabile tokens to L2 storage. If we implement covenants without L2 storage in place we will bloat ₿itcoin blockchain.

7.OP_Codes Variable Cost

Ethereum has built in variable cost of OP_codes like SLOAD, SSTORE that deals with on chain storage and for exponential operations.

How feasible will be the variable cost for recursive covenants and on chain storage in ₿itcoin Network?

8.₿itcoin vs Bitcoin Token

₿itcoin is property backed by energy where as fungible tokens are just IOU Notes promising higher returns as a means of crowd funding and an instrument facilitating interest free loans. Also tokens can be programmed as various derivatives, it has no utility value per se.

More than 90% of the tokens are nothing but speculative nonsense, rug-pulls and derivative casinos. Only very few projects like Uniswap, ENS, Gitcoin have evolved utility over time. On the other hand Non-Fungible tokens are just digital collectibles backed by digital degens.

9.Process to deal with emergency bugs vs emergent bugs in the network

There is a precedent in ₿itcoin network regarding emergency bug forks but not a precedent or process for emergent bugs.

10 years back the ₿itcoin community was relatively small consensus was straightforward. That’s not the case anymore ₿itcoin has become a trillion dollar industry and lot of entities with vested interest have got a finger on the pie.

Now it is impossible to come to consensus weather it is emergent bug or a feature. Ordinals is a classical example of this scenario. In Covenants there will be emergent bugs and emergency bugs, how are we going to come to consensus? There is either no precedent or a viable process to reach consensus. The various actors in the ₿itcoin ecosystem does’’t share the similar values and ethics of the early community.

Summary

There is no proper rail guards or defense in depth in place for handling bugs caused by covenants in ₿itcoin network. The network for the last 10 years has been acid tested only for monetary transaction as peer to peer electronic cash.

₿itcoin network is not designed or tested for smart contracts. It is wise to migrate the covenants to L2 layers like lightning network. This is the best way that everyone involved in Bitcoin can express their gratitude to Satoshi Nakamoto for his gift to humanity in the dawn of digital era.

+K!

NFTs can be created for anything that can be encoded into a digital format.

NFTs can either be minted as ERC 721 or ERC 1155. ERC 1155 standard was developed by the gaming company Enjin and was released in June 2018. It was specifically designed for GameFi, a web3 based Decentralized gaming ecosystem.

Some of the pros of ERC 1155 tokens are as follows:

• Semi-Fungible token which can be converted from a fungible token to a non-fungible token.

• Multiple token types can be deployed in a single contract.

• Batch token transfer and transaction reversal.

Soulbound Tokens (SBTs) are a new variant of NFTs that are non-transferable and non-fungible whch can be used by web3 users to verify and trust each other based on their affliliations and credentials.

Soulbound tokens were first mentioned in a paper published by Vitalik Buterin and others on May 11th, 2022. In the paper, Buterin suggested that, until now, web3 is focused on “transferable and financialized assets, rather than encoding social relationships of trust”. SBTs would form an essential building block for the Decentralized Society, or DeSoc building a tangible social asset.

Some of the Use Cases of NFTs

• Ethereum Name Service (ENS)

• Digital Art Assets

• Collection of Memorable Events & Event Tickets (POAP)

• Decentralized Gaming Ecosystem (GameFi)

• Decentralized Society (DeSoc)

Ethereum Name Service (ENS)

The primary role of ENS is to map unique identifiers on web3, such as ethereum addresses, hashes, and metadata, to readable names like domains, which is then registered on the Ethereum blockchain.

The difference between ENS and DNS is the architecture. ENS is built on top of the Ethereum blockchain a decentralized network with no central entity controlling it. Also ENS replaces manually operated, centrally managed systems with automated smart contracts. Every ENS Name that exists today is minted as a ERC 721 NFT by an ENS contract.

Since the ENS Domain names are based on a decentralized infrastructure, they are censorship-resistant, secure and private. No state entity like any government can ban your .eth domains in any of their jurisdiction.

Digital Art NFTs

Non-fungible tokens caught the world's attention after the $69 million sale of a digital artwork by Beeple at a Christie's auction.

Permissionless creativity empowers the artists with the freedom to make choices and decide what to create. One of the advantage with NFTs is a game changer for artists that they can continue to earn a percentage of the resale of their works in perpetuity.

This differs from the traditional art market, where artworks are sold through auction houses and galleries to collectors, who can then resell them for much higher prices without having to give artists any percentage.

Collectable Events & Event Tickets

Consensys minted a commemoraive NFT called Regensis collection for 72 hours to celebrate the achievement of Ethereum core devs, client teams and researchers. The Regenesis collection was the first public NFT mint on Proof of Stake Ethereum blockchain.

NFT tickets are digital assets that hold your access credentials to an event. They can also offer ticket holders additional perks such as meet-and-greets, exclusive merchandise etc. The event organisers can afford more control over primary and secondary ticket sales by setting the sale or auction price, of the tickets.

A real-world example of NFT tickets in action was Binance's partnership with Southern Europe's largest music festival Primavera Sound.

Decentralized Gaming Ecosystem (GameFi)

Massively multiplayer online role-playing games (MMORPGs) feature micro-transactions, where a player would use debit or credit cards to purchase an item like weapons, dress etc.

There are two drawbacks in this model the companies have full control and ownership of all those in-game items and these items cannot be sold at any point in time for cash and get stuck in it forever.

NFTs changed the ball game it gave players in-game ownership. Players could essentially tokenize anything, including any item that could be exported as an image, video, or sound eventually.  Companies started developing their games around this business model known as play-to-earn (P2E) gaming.

The P2E game’s underlying blockchain will typically run through the utilization of a decentralized network of nodes, or miners, all of which might store a full copy of the entire blockchain, and this will ensure that whenever a single miner or even full miners or nodes go offline, the blockchain can live on, and the player can, at any point in time gain full access to all of their items as NFTs.

Decentralized Society (DeSoc)

1/ A first sketch of Decentralized Society (DeSoc): https://t.co/rdTSL8QpJP…

Honored to have collaborated with @glenweyl and @vitalikbuterin on what will hopefully become a novel field of research, inquiry, and co-creation across our technological stack.

— Puja Ohlhaver (@pujaohlhaver) May 11, 2022

Within a DeSoc context, SBTs are issued by and held within accounts known as “Souls”. Souls are contract addresses in a wallet that hold SBTs and are used to establish provenance and reputation. Souls can be associated with individuals, organizations, or other entities.

One of the use cases of SBTs is to deter DAOs Sybil attacks, wherein an individual or coordinated group of individuals accumulate a critical mass of governance tokens and manipulate proposal voting in their favour.

Pros of NFTs

NFTs are the foundation for the builders and permissionless creator economy. It exposes the creators and artists work to the global markets and their works cannot be censored or artificially manipulated.

Cost efficient to protect the ownership and store an idea or an invention negating the middleman.

NFTs are transparent, provide proof of ownership as it is secured and verifiable on the blockchain by anyone.

Cons of NFTs

NFTs can either be a ticket for an event or conference where storage permanence is irrelevant. On the other hand if its a digital work of art like pictures and videos who is responsible for the storage permanence. NFTs does’nt provide storage on the blockchain as it is just a link like an IPFS CID.

NFTs are not worth it if it does not have a reliable secure censorship resistant permanent storage.

Cost of minting a new NFTs is quite expensive on Layer 1 but as we migrate NFTs minting to Layer 2 like optimistic rollups and ZK rollups it will be less expensive eventually.

Another drawback is if we mint NFTs in a market place like Opensea we get locked with that market place. We won’t be able to migrate to rarible, which is another market place. The reason is we only own the NFT but not NFT minting contract. It is owned by opensea and you cannot update NFTs in case of storage issues.

More over opensea does not adhere to the concept of decentralisation, NFT collections can simply be delisted without any form of community voting. You may inexplicably lose access to your digital assets collection, in an instant.

Huge bullshit Opensea delisting Artists from Cuba! WHY?! I gave this man the funds to start his collection to help feed his family. WTF @opensea pic.twitter.com/dTWW8GA9jg

— ODDMANOUTinc (@SKULLSCROWNS)March 27, 2022

NFTs are not a liquidity generating asset but a non-fungible asset with high volatility. It is one-of-a-kind, unique, irreplaceable and non-interchangeable. Examples include original works of art. Each of these assets has unique qualities that cannot be authentically replicated.

Buyers can only own the NFTs but do not own the IP rights associated with the assets.

It only establishes the authenticity of the digital asset but doesn't deter or restrict downstream replication of that asset unless the asset is encrypted.

Fractional ownership of a physical asset has a lot of grey areas, as it violates the tenants of ownership which is possession is nine-tenths of law. Ownership can be enforced only if you possess something like saying not your keys is not your coins.

Fractional system is prone to debasement and void proven to be true from the times of Romans. It has high potential for scammers, fraudsters and speculators.

Future of NFTs and SBTs

Let me give some case scenarios to get across the potential of NFTs and SBTs with permanent storage.

• If every scroll in the Library of Alexandria and Nalanda was an NFT with permanent storage it would have survived across space and time.

• If the designs, equations and writings of Nicola Tesla were NFTs it would have been a great priori for new ideas and inventions for connon people but not for corporates like wireless charging and Scalar tech.

• NFTs have a better scope for copyrights, designs and ideas but can’t effectively enforce IP rights.

• NFTs have great potential for preserving information across space and time like Akashic Records., if NFTs can provide censorship resistant decentralised ownership and permanent storage.

• SBTs can deter collusion of machines, whales and DAOs Sybil attacks.

The Bitcoin network utilises PoW consensus which is used for pure monetary value and preservation of buying power as a primary objective by burning a physical resource. Have you ever come across any Defi exchanges using Bitcoin network in its existence for more than 13 years?

On the other hand Ethereum was designed from the beginning to migrate to PoS consensus. The reason is simple the purpose of Ethereum is a decentralized Turing complete virtual machine.

The primary objective is to create an immutable trust-less decentralized virtual machine, monetary value is the secondary objective to incentivise people to use the virtual machine.

Ethereum has proved it’s purpose in its existence of more than 7 years, crowd funding various projects, building De-centralised exchanges, creating Non fungible tokens etc. This blog is another example of Ethereum network utility.

The main issues that arise with PoS consensus networks

• Maximal Extractable Value

• Staking Centralisation

• Prone to Protocol level Censorship

• Machine Intelligence and Entities Collusion

Maximal Extractable Value

Searcher bots run complex algorithms on blockchain data to detect profitable MEV opportunities and bots automatically submit those profitable transactions to the miners or validators.

Frontrunners are bots that watch the mempool to detect profitable transactions. The frontrunner will copy the potentially profitable transaction's code, replace addresses with the frontrunner's address, the frontrunner will submit the modified transaction with the replaced address and a higher gas price, frontrunning the original transaction and getting the original searcher's MEV.

Flashbots is an evolution of frontrunning bots with a service that allows searcher bots to submit MEV transactions to miners without revealing them to the public mempool. Over $650M of MEV were extracted through flashbots, and that number is still growing.

Even though MEV was first absorbed in PoW networks the phenomenon got magnified when we moved from pure monetary value to virtual machine utility like DEXs. Few examples are the DEX arbitrages and liquidations of assets.

MEV Auction (MEVA) and MEV Centralisation

The idea behind MEVA is instead of trying to prevent front-running, auction off the rights to order transactions, and allow the winner known as sequencer to front-run.

Users can either pay the sequencer a fee for inclusion in an aggregated block or submit transactions directly to the miners. Either way, the sequencer chooses the order in which the transactions are executed.

One key argument put forth by MEVA proponents, and voiced by Vitalik here, is that MEV is bad since it leads to mining centralisation, and MEVA reduces this centralisation risk but rather it centralises MEV.

Randomisation of the Transaction Order

Randomisation of the transaction order is another way to mitigate MEV. Validators will first pick a batch of transactions that will be committed. Then, validators will receive a random permutation, based on the hash of the current and previous block, and the ordering of the batched transactions will be performed based on the permutation. Such a mechanism can reduce the MEV and also increase the cost of performing MEV.

Staking Centralisation

With more than 4 million Ether deposited through Lido, or 32% of the total amount of the token being staked, the concentration is raising red flags. One entity holding a huge amount of Ether could raise security risks for the network.

The issue with Lido is not staking per se but it is the staking derivatives, the real culprit. Any powerful entities with vested interests can manipulate the derivatives or buy a major stake and swing the pendulum towards centralisation and collusion.

“Liquid staking derivatives (LSD) such as Lido and similar protocols are a stratum for cartelization,” Ryan wrote. “LSD protocols should self-limit to avoid centralization and protocol risk that can ultimately destroy their product.”

Marco Di Maggio, a professor at Harvard Business School and former researcher at Terra Labs, detailed the risks of liquid staking derivative’s tendency towards centralization.

Another solution put forward is by separating the functionality of validators as two different collectives as proposers and builders but the downside is we are shifting the validators centralisation to builders.

Prone to Protocol level Censorship

Tornado Cash is the perfect example of protocol level censorship on the privately managed crypto mixing platform. After the U.S. Treasury Office of Foreign Assets Control sanctioned and blocked Tornado Cash.

This can be mitigated by enabling protocol censorship resistant mechanism built in the protocol that means slashing system embedded in Ethereum’s PoS consensus mechanism.

As Ethereum co-founder Vitalik Buterin explained in a 2018 tweet: “if a 51% coalition starts censoring blocks, other validators and clients can detect that this is happening, and use the 99% fault tolerant consensus to agree that this is happening, and coordinate a minority fork.”

Machine Intelligence and Entities Collusion

Machine Intelligence collusion is entirely a research topic in itself, one classic example is MEV extraction. When we spice it with collective entities like corrupted validators and other powerful entities with vested interests it will ultimately lead to the Tragedy of the Commons. The public goods and utilities will be debased by vested entities leading to total dictatorship, surveillance and complete control of this planet.

All the organised religions, ideologies like right, left etc. throughout history are classic examples of vested entities collusion across space and time. Blending machine intelligences in the equation will ultimately annihilate the basic rights of common people, destroying Sanatana Dharma of this planet.

Eternal Natural Law should not be sacrificed at the alter of progress and scientific advancement. It will lead to a state of scientific dystopia like the witch hunting dark ages of Europe.

Building collusion resistant networks at a base protocol level is an open ended question. If we as an altruistic collective can’t find a solution how to prevent and defend against this case scenario we will become slaves to machine intelligence and the entities who manipulate them forever losing our freedom and free will.

The question we have to ask ourselves is PoS consensus networks like Ethereum or PoW consensus networks like Bitcoin will in reality enable common people to be a sovereign and be part of a collective who practise Sanatana Dharma.

Like the People who practised Eternal Natural Law across time like the Essenes of the Middle East, Greek philosophers, Chinese philosophers, Rishis and Sidhars of the ancient India, or will they be used as a tool to alien with Star war Seth’s agenda to enslave this planet and people by collusion across space and time.

References

1. Staking Centralisation

2. Proposer Builder Separation

3. Liquid Staking

4. Collusion

5. MEV