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Technological Jailbreak: Bitcoin to Namecoin

author: kiba
published: 2011-05-28 22:07:15 UTC

Throughout the history of technology, technologies often jailbreak from their little niches. People often found new uses for technologies intended for other niches. For example, the internet was originally intended to be a military network. Even public key cryptography broke out of its niche, which is simple encryption, but is also used to authenticate identities.

The technology of bitcoin is also breaking out of its niche. It is now being adapted to further decentralize the domain name system. This new technological adapation is called Namecoin.

The need for decentralization of the global domain name system, or more specifically, the registration part of it, became especially clear when ICE engaged in the seizure of domain names, at first for piracy, and then against illegal gambling. Whatever the justification may be, the authorities represent an uncertainty and risk to businesses and fear to ordinary users. Technological initiatives are necessary to wrestle away the power of governments over their ability to control who get to own what domains.

The first project to come out of this was, of course, the dot-P2P project. However, they could not figure out the proper technological solution to domain name registrations. Instead, the founder decided to put off the technological challenge until later. That mean registration would be centralized, but it is the registration process that is the reason why it is possible for governments to seize domains. The refusal to face the primary problem became moot as the project lost momentum. Eventually, the project was dead in matter of months, with no code in sight and the wiki with no activities other than spam fighting activities.

But why was decentralizing domain name registration is such a big problem that the dot-P2P project refused to confront it, even though the success of their system hinge on them solving it?

The answer is Zooko's triangle. The diagram simply states that there are certain tradeoff for giving names in a network protocol. The three possible characteristics are: human-meaningful, secure, and decentralized. Human-meaningful simply means that names are not gibberish to humans. Secure means that it is not possible to fake. Decentralized means lack of central authorities. In other words, it is supposedly impossible to achieve all three of these characteristics. Rather, you could only settle on most, two characteristics. Domain names, for example, in the current dominant system, are secure and human-meaningful.

(For excruciating details on how namecoin work, please refer to this guide.)

Meanwhile, user Appamato propose what would become the origin of Namecoin, BitDNS. It spawned 20 pages of discussion in which there are much controversy and few consensus. Some of the ideas that achieved a rough consensus are cross-mining and blockchain specialization.

Cross-mining, first proposed by Satoshi Nakamoto, is meant to secure both blockchains of BitDNS and bitcoin. Instead of just mining for bitcoins, miners would be able to mine for domaincoins. This allows the BitDNS blockchain to be just as secure as bitcoin or at least more easily secured. This feature is not yet implemented by Namecoin, but it is on the development TODO list.

The need for blockchain specialization is because it is better to minimize the size of the bitcoin blockchain in favor of people who are only using it as a medium of exchange. If other data come in, such as domain names, it would greatly bloat the blockchain. For the privillege of using the blockchains and consequently bloating it, the domain name owner would pay a higher fee. That mean people who need the bitcoin block chain for specialized purpose will compete with people who are using it merely to settle trades. By creating a separate blockchain, there will be less competition between users and there would be less bloat for nodes to download.

Of course, how does Namecoin solves Zooko's triangle?

With each Namecoin's public addresses, are private keys. These private keys alone control literally who gets to control domain name records within the blockchain. If you don't have the right key, de-facto, you don't own it. It doesn't matter what the courts say. In essence, domain name ownership is the result of mathematics rather than the result of humans' adherence to the law of societies. Furthermore, the meaningfulness of the name is also enforced by the cost of registration, the coin supply scarcity, network fees and the transaction fees miners set. This prevent people from registering domain names in a great rush.

Together with proof of work, one can be reasonably sure that the blockchain is the authentic record of the namecoin domain name system. DNS servers will then parse the blockchain database to use as information to serve domain names. Since namecoin is like bitcoin in pretty much many other aspect, it is also decentralized and secure.

In term of technological mutation, namecoin isn't far from bitcoin. It uses an IRC channel for bootstrapping, have the same supply limit of 21 million coins. It is just as fungible, divisible, durable, and rare as bitcoin. It's a little bit more bloated in blockchain size simply because of the records that namecoin have to store. There are a few additional commands for registering and changing details of domain names. We can expect namecoin and bitcoin to share patches for quite a long time. Someday namecoin may diverges so much that patches from the bitcoin codebase become useless, but it is hard to predict the future development path taken by bitcoin and namecoin developers.

The market for namecoins isn't quite robust yet, but it seems to be the case that people mostly exchange only bitcoin for namecoin. This make sense because the bitcoin community drives the adoption of namecoin and the face that namecoin germinates inside the bitcoin community. It is also much safer to exchange namecoin and bitcoin rather than exchange paypal dollars for namecoin. Eventually, a dedicated marketplace, much like mtgox, will pops up to support the exchange of namecoin and bitcoin. Web interfaces, much like mybitcoin.com, will be developed to ease the process of registering domain names. It is also not easy for normal users to visit .bit domains. The best case scenario for adoption is for nameservers all over the world to recognize and make use of the namecoin database. The development of the namecoin market and new tools will be crucial in achieving global domination.

Whatever the historical evolution will be in the future, Namecoin is, in historical term, an unforeseen innovation that happened within a short span of time of Bitcoin's invention. It is one of the first technological jailbreak for Bitcoin technology, and it is unlikely to be the last.

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