Was Bitcoin a Fair Launch?

When Satoshi Nakamoto published the Bitcoin whitepaper in 2008, the promise was clear. It was positioned as a peer-to-peer electronic cash system that would serve as a better global means of payment. More than fifteen years later, that vision has not materialized. Instead of becoming a widely used medium of exchange, Bitcoin has transitioned to an investment asset, a kind of digital gold promising outsized capital gains.

Bitcoin is often held up as the original Fair Launch with no VC round involved, no foundation treasury or presale. But peel back the mythology and cracks start to appear. For its first year, Satoshi controlled the vast majority of the network, some estimates put it at 70%. Early mining was effectively a premine, and the small number of participants could accumulate an enormous supply before the concept of “crypto market” even existed.

Why then do we still treat Bitcoin as Fair Launch? Because Satoshi never moved his coins and no insider cash-out distorted the distribution. For all its imperfections, Bitcoin’s economics aligned with its product. Each block was a unit of incorruptible record, and participants were rewarded equally for producing them. But scarcity turned it into digital gold, undermining its supposed role as peer-to-peer cash. Fixed supply guaranteed that latecomers could never stand on equal footing with early miners. The model essentially planted wealth asymmetry into the network’s DNA. The halving mechanism reinforced this divide, presenting a dual reality: on one hand, a long-term promise that network fees would sustain security once block rewards diminish; on the other, a structural rule that miners receive half the reward every cycle, meaning the system itself never treated participants equally over time.

The DeFi summer mirage

Fast forward a decade, and Fair Launch had become fashionable again. In the 2020 “DeFi Summer,” projects like Yearn Finance proudly declared their tokens fairly distributed. Anyone could farm liquidity and earn governance rights. Yet, providing liquidity was not a universal activity, but more of a financialized business product.

Worse, these “Fair Launches” were vulnerable to vampire attacks. SushiSwap forked Uniswap; PancakeSwap cloned Sushi. Each “fair” fork pumped liquidity by promising higher yields. Early insiders of each iteration were rewarded again and again, and again. Fair Launch, as defined in DeFi, was neither fair nor defensible. It created a race of forks and food coins, where fairness meant little more than “we didn’t do an ICO.”

The Presale Standard

By now, the industry has shifted the definition again. Ethereum’s ICO in 2015 raised over $18 million by selling 72 million ETH, more than half of the current supply in circulation, before a block was ever mined. Solana, Aptos, and Sui repeated the pattern, raising hundreds of millions and allocating vast percentages to insiders. After TGE, these allocations are not counted as part of inflation, even though they essentially represent delayed inflation, because these allocations become part of the circulating supply only after cliff unlocks.

Users are not buying into a network, they are buying out early backers. “Fair Launch” in this world has been reduced to a threshold, 5% insider allocation is now considered fair enough. But whether 5% or 35%, the principle is compromised.

The real meaning of Fair Launch

Fair Launch was never about percentages on a cap table. It is about alignment of values, and about whether the smallest unit of contribution to a network is rewarded equally, whether you joined on day one or in ten years. Bitcoin’s smallest unit is truth in a block. In identity networks, it might be a verified human. In other systems, it could be compute or bandwidth. The test is simple: does the network treat all contributors as equals in perpetuity?

Other questions helping to determine whether the project qualifies are: Is the smallest unit of contribution clearly defined and open to any human, not just capital providers? Are equal contributions rewarded equally across time? Are insider/team/investor allocations zero at the network layer (not just “<5%”)? Is on-chain inflation inclusive and auditable, with no off-chain overhang (vests/unlocks) needed to sustain development?

This is another reason why Bitcoin’s launch was not fair enough. Companies with capital compete with indie miners, making it very costly to try to join this side of the market. When it comes to values, Bitcoin has a built-in mechanism that makes it more centralized over time.

By that standard, almost every project today fails. Presales and foundation treasuries create deferred inflation that users must buy out and “liquidity mining” fair launches restrict participation to capital-bearing specialists. Unlock schedules hard-code exit liquidity into the future. They launch not to serve a community, but to serve the balance sheets of insiders.

For true Fair Launch, the core protocol has to stand on its own and deliver genuine utility, independent of token price movements. When it comes to accruing value, founders and developers should be able to earn profits from adjacent ecosystems, whether it’s services or businesses layered on top of the network. The upside should come from building things people genuinely want as opposed to relying on the continued appreciation of the token. When a protocol’s survival depends on token demand, fairness is already compromised.

Why it matters

In the end, Fair Launch is the only foundation on which durable crypto networks can be built. A network that privileges insiders will always fracture, because someone can always fork the code and promise a slightly better deal. But when fairness is absolute and product value is the driver, there is nothing left to fork against. Communities stay because they are treated as equals, not because of speculative incentives. Fair Launch, then, is the social contract of crypto, a commitment that no matter when you arrive, you stand on equal ground with every other participant.

This article proposes a privacy solution for when proof of personhood starts to proliferate across the internet, using a mechanism called ‘Sessions.’

The internet has no reliable way to verify a unique human identity.

As AI makes human impersonation increasingly convincing, this flaw has evolved from a minor oversight into an existential threat to digital trust.

Consider the AI voice clone that convinced a company to wire $25 million to fraudsters, or synthetic media that portrays events that never occurred with participants who never existed. Platforms struggle against manipulation by entities controlling thousands of fake accounts.

We need ways to verify that one human gets one account – the"proof of personhood" challenge that many projects are racing to solve. But verification alone creates a new problem: if now everyone online is verified, what happens to privacy?

Establishing unique human identities with persistent digital identities creates the perfect surveillance tool — one identifier to track you everywhere, link all your actions and control your digital existence.

Here are six key privacy issues that any proof of personhood solution must address:

1. Verification Privacy

How do we verify someone is human without compromising privacy during the verification process?

Biometrics, government IDs, and social validation involve sensitive information that, if stored improperly, creates massive honeypots. KYC (know your customer) doesn't solve the problem because any human can have as many accounts as they want, and traditional KYC systems are overly centralized and aren't secure.

2. Master Key Vulnerability

Verified systems provide users with “master keys” to control their digital identities, but this method creates a dangerous single point of failure.

A government can force you to surrender the key. A sophisticated attack can steal it. You can simply lose it.

Vitalik Buterin has noted that governments can force travelers to surrender private keys as a condition for border crossing or receiving a visa. I've experienced something close to this: when crossing a prominent border, I was once asked to provide full access to my phone. This future isn't so far away.

3. Cross-Platform Identity Linking

Without unified design, unique digital identities make it easy to track individuals across different platforms. This destroys contextual integrity.

Most of us want to present different aspects of ourselves in different contexts. In the physical world, your behavior at a party isn't visible to your employer. Likewise, we create multiple social media accounts or crypto wallets to maintain similar separation, but these approaches have their own tracking vulnerabilities.

4. Transaction Linkability

Even when using separate identifiers (like zk-based app-specific IDs) for different platforms, transactions can often be traced back to your main identity through on-chain analysis.

If you claim an airdrop with one zk-ID but transfer it to your main wallet, you've created a trackable connection.

Worldcoin's app-specific IDs partially address cross-platform linking, but don't solve this transaction linkability problem.

5. Platform-Specific Tracking

Even with separate zk-IDs for different platforms, each platform can still build comprehensive profiles by tracking all the actions within their ecosystem.

If Google knows every Gmail account, YouTube channel, and Search history belongs to the same verified human — even if they don't know which specific human — they can still build detailed profiles. This is ultimately a platform-level decision, and while we can't force platforms to change their business models, we can design systems that make it easier to maintain separation and privacy.

6. Pseudonymity Limitations

Platforms adopting proof of personhood might deprioritize unverified accounts, effectively killing pseudonymity.

As Vitalik has noted, “finsta” and “rinsta” accounts serve real purposes. Without separate but legitimate online personas, verified systems risk eliminating crucial safety valves for creativity, exploration and whistleblowing.

A Comprehensive Solution

Most proof of personhood projects address just one or two of these challenges, but a complete solution must address all six. This requires going beyond zk-based app-specific IDs. (In this piece, I won't dive into solving #1 — verification privacy — as this topic deserves its own full examination, but let’s assume it’s solved.)

We need a system that:

• Verifies you're a unique human once, while preserving privacy

• Allows unlinkable but verifiable sub-identities

• Gives each sub-identity its own cryptographic credentials (including separate keys and wallets) that function independently while deriving from a single root identity

• Prevents any entity from connecting these identities without explicit consent

• Incentivizes users to keep their root identity private

• Motivates platforms to utilize action-based zk-based IDs to create privacy inside the platform.

• Supports private transfers between sub-ids to restrict public on-chain analysis

This would enable you to prove your humanness without revealing your identity, maintain separate profiles that can't be linked, and recover from compromise without losing your core identity.

Current approaches, including Worldcoin, fall short. Their app-specific IDs don't include separate transaction infrastructure or private transfers, leaving activities linkable. They don't adequately address the master key vulnerability, and their verification depends on specialized hardware that is difficult to decentralize.

Vitalik’s "explicit pluralistic identity” is promising, but assumes one-human-one-account systems destroy pseudonymity, overlooking key design possibilities. The effort needed to earn a reputation across multiple identities is massive, hampering adoption. It relies on platforms choosing to implement identity pluralism, a significant ask when their business models depend on comprehensive user profiles. In practice, platforms would likely default to recognizing only a user's most-connected identity, effectively collapsing multiple identities into one.

Sessions

One approach I've been exploring for the last few years is what I call "sessions" — cryptographically derived sub-identities from root identity that:

• Prove you're a unique human without revealing who you are

• Cannot be publicly linked to your root identity or other sessions

• Inherit cryptographic proofs and credentials of a root identity

• Include independent transaction capabilities

• Build context-specific reputation without context collapse

• Enable the creation of new own sub-sessions for completely separate actions, even further increasing privacy

• Support private transfers

• Can be revoked by a user

With sessions, if someone demands your master key, you can provide a session key instead, only granting access to that specific context, not your entire digital life.

If a session key is compromised, you can revoke it without losing your root identity, creating strong disincentives for identity theft. Sessions can support one-time-use session logic too.

Another way to implement sessions is by using TEE infrastructure instead of zero-knowledge. If there is an MPC-based TEE certified by the network that can verify that the request to create a session is signed by the root ID owner, then the TEE can place a validation proof on-chain while keeping the user’s request private.

A “provider” Y for an app Y can define a list of required and optional credentials for session generation, along with custom logic for those credentials — for example, checking how many sessions already exist for that provider if that provider supports not just unique accounts, which automatically adds pseudonymity to the platform.

The root identity is kept private for almost all digital interactions, with most transfers and authentications are handled through sessions. This is an important design choice for clients, as it prevents ‘leaking’ unexpected attributes linked to the root ID that could be exposed through on-chain analysis and ultimately de-anonymize the user.

Limitations and Challenges

Users may struggle with managing multiple derived identities, creating UX friction. There's also a trust issue with client implementations: incorrectly developed (or malicious) apps could accidentally reveal connections between sessions or expose root identities.

Sessions also cannot prevent platforms from enforcing a one-account-per-human policy (challenge #6) if they choose to — that remains a platform-level decision. However, by making it easier for platforms to support multiple verified personas per human, we can create an environment where privacy-respecting business models win.

Closing Thoughts

In a world where AI can clone your voice after hearing five seconds of audio, proving you're human — and uniquely yourself — is becoming essential. The path forward requires verification with comprehensive privacy — solving all six challenges together.

The technology is here, but questions remain:

• How do we make privacy the default rather than an option?

• How do we incentivize platforms to respect identity boundaries and data ownership?

• How do we balance the legitimate regulatory needs with individual privacy?

• What governance structures ensure these systems evolve to protect users rather than exploit them?

These are the questions I’m currently exploring... If you're working to solve any of these, my DMs are open.

Kirill Avery is intensively building privacy-preserving digital identity infrastructure, more news is coming soon.

My first citizenship came from the Soviet Union's successor state. Like millions of others, I was assigned a nationality at birth, only to learn that it fundamentally conflicts with who I am and what I believe. I left Russia to build technology that enhances human freedom and connection—values that have become increasingly incompatible with the Russian state. Now I can't safely return to the country where I was born.

Even after building multiple technology companies and employing dozens of people in the United States, I face constant mobility barriers. I cannot see my family because they can't get US visas. Every international trip risks triggering "administrative processing" that could strand me outside the country where I'm building my business. This has happened twice now, where I’ve been locked out of the US for months at a time. Despite creating significant value and opportunities, my freedom of movement remains severely constrained by paperwork and bureaucracy.

This isn't just my story. Thousands of talented founders and builders face similar barriers, their potential constrained by the accident of where they were born. We talk about talent being globally distributed, but opportunity remains locked behind arbitrary borders.

My response is strategic citizenship acquisition, which ensures that as the geopolitical landscape gets more chaotic, I will have options. But here's the critical insight: not all citizenships enhance freedom. Some, like US citizenship, can actually restrict mobility through citizenship-based taxation—a system where you remain a tax resident regardless of where you live. The only way to escape double taxation is by renouncing your US citizenship entirely. That’s why the goal isn't to collect passports indiscriminately, but to build a carefully curated portfolio that maximizes sovereign mobility while minimizing new forms of control.

This strategy has become even more critical recently. I had been considering pursuing EU citizenship until I watched France arrest Pavel Durov, founder of Telegram, despite his French citizenship. His crime? Building technology that preserves privacy and resists centralized control. It's a stark reminder that even traditionally strong citizenship models can become control points rather than protections as states, or entire coalitions of states, trend toward more authoritarian approaches.

Another stark example emerged recently, as thousands of Belarusians—including friends of mine—found themselves unable to renew their passports after fleeing the country's authoritarian regime. In response, opposition leader Sviatlana Tsikhanouskaya has proposed a 'white passport' initiative, asking the UN to grant international recognition to Belarusians in exile. This proposal represents more than just emergency aid. It's an early experiment in decoupling citizenship from state control.

Our current model made sense in an industrial age where physical location determined most opportunities. But it breaks down spectacularly in a world where value creation has gone digital and communities form around shared values rather than shared borders.

The talent visa process offers the clearest example of this absurdity. A founder could be deemed "extraordinarily talented" by US immigration through the O1 visa process, spending months and thousands of dollars to prove their credentials. Then they need to prove the exact same things to the UK through their Global Talent visa program, then again for Australia's Distinguished Talent visa, then again for Canada's Global Skills stream—or just for extending their original O1.

Each process demands identical evidence: proof of international recognition, outstanding achievements, commercial success. Each costs thousands of dollars of legal fees and months of effort. It's like having to retake your driver's test every time you cross a state line—except the stakes are your ability to work and create value. The most talented builders in the world spend countless hours proving, over and over again, that they can contribute what they've already proven they can contribute. All while new technologies and companies wait to be built. 

We're already seeing early signals of change. Digital nomad visas and remote-first companies hint at new possibilities. The UAE has become arguably the main hub for nomads by implementing a 0% income tax and offering a 1-week process for obtaining work permits. But the real transformation will come through digital infrastructure that enables "network states"—global communities organized around shared values and goals rather than shared territory.

This isn't entirely without precedent. The Sovereign Military Order of Malta has maintained international sovereignty for centuries without controlling territory, issuing valid passports and maintaining diplomatic relations with over 100 countries. It's organized around humanitarian mission rather than geographic boundaries. Now imagine that model upgraded with digital infrastructure that enables trusted coordination and resource allocation across borders.

There also have been some examples of new approaches to this like Praxis, Zuzalu, Cabin, Edge Esmeralda and others. Some DAOs are experimenting with on-chain governance structures like quadratic voting or futarchy. There’s still a lot to figure out for these models to work reliably at scale. ZK-based DID is something we’re working on at Human.

I don't yet know for sure how network states will evolve beyond traditional passports and citizenship models, let alone how they’ll fit into our everyday lives. But what's clear is our current system limits human potential, and the concept of citizenship is already becoming more fluid and multidimensional. Future generations won't be bound to one or two nation-states—they'll participate in multiple virtual communities with national status.

This transformation won't happen overnight. Nation-states will remain important for decades to come. That's why I'm methodically building my citizenship portfolio—it's a bridge that solves immediate problems while we build toward something better. The real work lies in creating infrastructure that makes citizenship what it always should have been: a reflection of our values and aspirations, rather than an accident of birth.

—

1. For anyone pursuing a US talent visa, my friend Sigil built an online database of people who have successfully navigated the process. I contributed my initial O1a case from 2020 in the hopes that it could help others.

2. CitizenX can help you obtain citizenship through investment programs (including qualifying private funds) in over 15 countries. This is how I got my Grenadian passport, and I highly recommended them for ambitious builders looking to maximize their sovereignty.

This coordination deficit isn't just about politics or institutions. It's about the digital infrastructure that ties our world together. The internet promised to revolutionize human coordination, connecting billions of minds and enabling unprecedented collaboration. Yet today's internet, built for simple information sharing rather than trusted coordination, has become a landscape of declining trust, rampant misinformation, and increasingly sophisticated deception—all of which are getting worse with the rise of generative AI.

At the root of this problem is a cascade of infrastructural limitations. It starts with how the internet handles identity. Every critical internet function—from email to social media to financial transactions—requires some way to verify who users are. Yet the internet was built without a native identity layer, leaving each service to implement its own imperfect solutions. The result is a fragmented landscape where users juggle dozens of accounts, identities are easily faked, and reputation doesn't persist across platforms. This foundational flaw undermines every attempt to build robust coordination systems on top of the internet.

To understand what could be possible with better infrastructure, consider ocean pollution. The Ocean Cleanup project has already extracted over 206 tons of plastic from our oceans with approximately $50 million in funding. Their estimates suggest that using their novel approach with floating barriers cleaning just 50% of the Great Pacific Garbage Patch would cost about $500 million to 1 billion over five years. Cleaning the world's oceans entirely? Perhaps $100 billion.

This figure reveals something important about coordination challenges. The resources exist: the U.S. alone spent $4.5 trillion on healthcare in 2022, while global environmental spending reaches into the trillions annually. Our existing systems can mobilize massive resources—but only within established institutional boundaries. The moment we need to coordinate resources and action across those boundaries, everything breaks down.

Current institutions fragment and bottleneck global coordination in predictable ways. Nation-states can mobilize resources effectively within their borders, but they're optimized for local interests and electoral cycles. Even if millions of Americans care deeply about ocean cleanup, their collective will gets diluted through political systems designed for different problems. Non-profits and NGOs attempt to bridge these gaps, but they're constrained by traditional organizational models that don't scale. They fragment into separate legal entities across jurisdictions, creating bureaucratic overhead and limiting resource mobility. 

What we need isn't just better organizations—we need new coordination infrastructure. How many people in the world do you think care deeply about environmental crises and ocean pollution? If it's even 5% of the global population—around 400 million people—we'd have a distributed community roughly equivalent to the entire U.S. population but spread across all borders. This globally distributed force could be vastly more powerful than any single nation or organization. If each member contributed just $250 annually1 (less than a premium Netflix subscription), we'd have $100 billion for ocean cleanup in just one year.

But this kind of coordination requires infrastructure we don't yet have. We need systems that can:

• Find and connect aligned people across borders while filtering out bad actors

• Enable millions of participants to build trust and pool resources

• Facilitate collective decision-making that remains responsive at scale

• Ensure transparent resource allocation across jurisdictions

• Maintain consistent coordination without requiring central control

Building this infrastructure starts with self-sovereign identity (SSI), providing a way for humans to prove they're real and unique without sacrificing privacy or ceding control to central authorities. This foundation enables cryptographically verifiable reputation systems, allowing trust to scale across borders and platforms. Zero-knowledge proofs let us verify claims without exposing personal data. Blockchain technology ensures transparent resource allocation and governance. AI can help find patterns of aligned interests and optimize coordination among millions of participants.

With this new infrastructure, tackling global challenges becomes possible in ways we can barely imagine today. A global ocean cleanup community could continuously evolve and scale, using secure voting and quadratic funding to direct resources based on collective intelligence rather than institutional limitations.

This isn't just about ocean cleanup. Every major challenge humanity faces—from climate change to poverty to disease—becomes more tractable when we can effectively coordinate interested parties across borders. By building this missing coordination layer, we can transform the internet from a source of growing distrust into the engine of human progress it was meant to be.

It's time to upgrade the Internet for coordination. 

—

At Human, we’re working to build this missing infrastructure layer and lay the groundwork for a more coordinated and trustworthy internet. If you want to chat about these ideas—human to human—you can always find me on X.

These are just my thoughts after building in the space for three years, coming from a consumer social background, so don’t take them too seriously:

1. Governments do not help:

   • Banks in the US refuse entirely to work with you if you have any association with crypto, which constraints you with on/off ramps, integration to the existing financial infra

   • Existing regulation is flawed. It neither simplifies life for citizens nor for builders. Regulation should disincentivize unethical builders, but it is hard to build anything in its current form.

2. Builders build infrastructure without considering the distribution

   • I’m yet to meet a founder of a protocol who can explain to me who and how will use their product

3. Projects with some distribution often prioritize short-term gains over long-term humanity upside, leading to a rapid rise and quick death

   • If it's not a meme coin, it rarely addresses a real-world problem that uniquely benefits from utilizing crypto tech.

4. Speculation dominates most products:

   • This is a well-known issue, and while I think the speculation is, in some capacity, a healthy feature, these products do not have long-term vision.

5. An abundance of L2s, L1s, and bridges does not simplify life for users

6. Most crypto investors focus on short-term gains

   • This just makes it hard to find capital without a standard GTM, as Vitalik puts it, “casino.”

7. The number of real users is small:

   • Only 6.5% of the world has some form of crypto; these are not day-to-day users. We don’t know how accurate this data is since people have multiple wallets and sybils can be up to 98%.

8. The only actual mass use cases include:

   1. Store of value

   2. Cross-border payments

   3. Payments in countries with poor economies

   4. Dark web activities

   5. Speculation

9. Decentralization is deprioritized:

   • The original philosophy is flawed, as users don’t care about it, and developers save time

In the end, projects that quickly gain hype and profit from speculators attract more VC money, leading to token pumping and project death. Infrastructure projects focus on developer grants without understanding user needs. Governments and banks are the gatekeepers, and developers fail to solve real-world problems.

A potential solution for devs:

• Create a set of philosophical principles and values for builders that can be used as a market standard, endorsed by reputable individuals. This system would be similar to the Michelin star rating, with various aspects of trust and quality, to guide those who are not deeply familiar with the industry. While this will not solve the distribution problem, it can help create narratives around what is good and bad for the rest of the market.

• Build the first consumer use case for your protocol yourself and try to find pmf. Farcaster is a good example, although it’s too early to tell.

• Think about solving real problems that utilize blockchains for something that cannot be solved without them. Tokenizing everything doesn't make sense.

Follow my Twitter for some other thoughts.

Intro

Identity lies at the heart of any network, with the Internet being the most expansive network we know. Each node connected online essentially represents an identity, whether an IP, MAC, email address or someone’s laptop. This underscores just how crucial the concept of identity is on the internet. However, there are problems we have yet to crack.

Have you ever wondered - why there is no online voting mechanism yet?

I've built more than 30 mobile social apps, and my YC-backed startup grappled with users registering new numbers, making purchases, and then asking for Stripe refunds - a strategy I learned is a typical money laundering method using stolen credit cards. As it turned out, resolving this wasn't straightforward without compromising UX.

This issue of fraud led me to delve into the question, "Why is this still happening?". The answer appears to be the same as for the voting issue – “internet identity is broken.”

This article is solely my own opinion, introducing a potential solution as a concept on how to fix identity and is condensing into three sections: Why? (The problem); What? (The solution); Now what? (Use cases).

Why?

Digital identity issues today: 1) No ownership of data and identity; 2) poor UX for reusing the data, authenticating, and registering; 3) fragmentation with hundreds of accounts and new KYC checks; 4) no privacy; 5) no trust; 6) Sybil attacks; and 7) AI concerns.

The first three are clear, but there are a few things about the others:

One more word about ownership. To rectify the identity concept, which should have been an integral part of the Internet protocol, it needs to be as neutral as possible and collectively owned — each identity owner retains ownership of their identity, and the entire system is held in trust by humanity. This is important because if the concept of identity becomes the property of a centralized body/ies, it's relatively equivalent to the Internet being owned by a centralized entity (which we're already seeing with google/facebook, but it will become much worse).

No privacy. Recently I needed to obtain a UAE ID. During the process, I was required to send my passport picture to a government agent via WhatsApp.

There’s no ability to validate my data without exposing it and proving I'm 18+ or born in the US. I can't selectively share my data (say, just my address without other personal details). I can't maintain anonymity when I desire and certainly have no visibility into where my data is used after I've shared it with a KYC provider.

In some countries, messenger conversations can be read since the services you use are subject to their jurisdiction. And the issue is not a lack of encryption.

No trust. How can one ascertain that @alice on Twitter and @alice on Instagram are the same person, especially if they lack a consistent, identifiable profile or photo?

How can one determine whether or not to trust a virtual contact, regardless of the context or reason for the interaction? And how can I know that you are who you claim to be and you’re real?

Lack of Sybil resistance. The concept of Sybil resistance, at first glance, is about cheaply creating fake identities to trick a reputation system. But there's more.

While Proof-of-Work (PoW) predates Bitcoin (PoW was first conceived in 1993), Bitcoin’s true innovation resides in its solution to the double spending problem. PoW is effectively addressing Sybil resistance by establishing an "identity" within an anonymous, decentralized ledger using "costly" computations.

However, PoW is just a proxy and not a scalable solution for decentralized identity. The ideal would be to mark an online entity as a unique, real human and the ability to check if they actually represent who they claim they are, additionally allowing any developer to utilize it with an identity persistent reputation.

When this topic arises, many people express fear of online surveillance – “I don’t want someone to spy on me if I have a unique non-changeable ID!”. But having a unique online form doesn't necessarily negate the possibility of maintaining anonymity or privacy if desired.

AI Concerns. Distinguishing between a human and an AI is an ever-growing issue of AI Safety, and the current only practice of “good AI” for finding “bad AI” is an addition, not a solution to the problem.

What?

There are commonly confused two separate concepts about new identity solutions. The first revolves around personal data ownership and the option for privacy, also known as self-sovereign identity (SSI). The second deals with the uniqueness of identity and confirming the existence of a real person behind it.

SSI, by default, means decentralization, so all following mentions of SSI would mean that the identity is being stored on the blockchain.

The purpose is to lay out a fundamental framework that enables translating anyone’s online persona and every aspect of their identity.

Here are a few things we should agree on:

1.  Let's accept that identity stems from an owner. This owner, an "entity," could be a human, another identity, or possibly an AI in the future. Can ownership be transferred? Depends on the use case, but in the context of humans, my initial inclination is no. Another question is the ability to prove ownership to others in a trustless way.

2. Entity can have a near-infinite number of identities. Identities can tie to other identities and have a near-infinite number of subidentities.

3. Identity can have a near-infinite number of attributes. Each identity is linked with certain associated elements, whether they're connections to other identities, data, or basic features like gender, URL, or eye color. This implies that each identity should also have some form of "storage" tied to it.

Shadow Identity

Let’s introduce two concepts for further explanations: "Identity Primary Proxy" (IPP) or “Shadow Identity” and "Identity Proxy" (IP).

An Identity Proxy (IP) is an identity that serves as a wrapper or a mediator between one identity or an entity (a human being) and any other one or multiple identities. The main feature of IP is retaining ownership of one or multiple identities, becoming a singular access point. Account abstraction on Ethereum could be counted as a specific implementation of IP.

On the other hand, a “Shadow Identity” or Identity Primary Proxy (IPP) is a specific implementation of an IP. Shadow Identity is a Sybil resistant and self-sovereign IP linked to a level-0 entity (a human being). It also addresses the issues of proof-of-personhood, proof-of-ownership, and proof-of-identity.

Ideally, every individual should possess only one privacy-preserving Shadow Identity that acts as the primary access point to ALL of their identities, including the centralized ones we currently use, like a Twitter profile.

This Shadow Identity concept is somewhat different from the one suggested by crypto enthusiasts who propose that any Attribute of identity could be represented as a soulbound token, and a proof-of-personhood token could potentially solve Sybil attacks. While both solutions may be feasible, I believe the soulbound approach could serve as an addition to Shadow Identity. This is because soulbounds alone can't tackle the challenges related to onboarding, UX interoperability, and bridging on-chain with existing internet.

This model doesn't hinder the creation of multiple identities; rather, it facilitates the establishment of a global ID system owned by individuals in a privacy-preserving manner and serves as a mediator (IP) to all of the existing right now and future identities.

1. Self-sovereignty (SSI)

It addresses questions of ownership, trust, and interoperability. The principle is that an individual has exclusive ownership over their identity and its associated data. I believe SSI must potentially be based on a trust model superior to a 1 of 1 (centralized system). The closest examples we currently have are wallet addresses on the blockchain. These wallets essentially act as an identity, taking responsibility for the data, not just the assets. While they're transferable and may not solve the problem of Sybil resistance, they offer a level of self-sovereignty that's far more robust than existing systems.

2. Privacy

Privacy is the current issue of existing blockchains. With SSI, you maintain control over the level of anonymity or public exposure you want since an individual fully keeps the ownership. All associated data and Attributes are private by default and can be selectively shared, verified, and proven through verifiable credentials. The catch, however, lies in the UX. If I choose to make my profile picture private, it's an all-or-nothing scenario - I can either make it private for everyone or public for all. Attempting to make it partially private could inadvertently lead to data centralization.

3. Sybil resistance

Sybil attacks remain an unresolved issue in a decentralized setting. As previously discussed, there are many interim solutions like the PoW system, which, while innovative, lacks scalability and practicality for regular use as an identity provider.

In the identity paradigm, we should divide Sybil resistance into three layers: Proof-of-Personhood (PoP), Proof-of-Ownership (PoO), and Proof-of-Identity (PoI).

Proof-of-Personhood (PoP) — an individual is a real, unique human being. It’s possible to divide it even more — Proof-of-Realness and Proof-of-Uniqueness. It's a neutral concept that doesn't require knowledge of someone’s personal data - it’s an attribute attached to the identity.

Proof-of-Ownership (PoO) — Does an individual truly own and use their identity or not.

Finally, Proof-of-Identity (PoI) resolves the question of "who you are". It is worth remembering that someone could hold multiple legal identities, which is why PoI can't single-handedly tackle Sybil attacks.

If properly implemented, these three layers enable to navigate Sybil resistance online. PoP and PoO are particularly crucial in anonymous networks like Bitcoin, but for daily use in real life and to address the fourth point of interoperability, PoI is necessary.

The mechanism has to have these characteristics:

1. The mechanism should be as inclusive and egalitarian as possible.

2. The data can be provably provided to crypto-economic systems (e.g., blockchains, smart contracts).

3. The cost of obtaining one identity should be as low as possible and as high as possible for multiple identities.

4. The cost of obtaining multiple identities in an automated system should be as high as possible.

5. Preventing identity theft by prohibiting adding people without their knowledge.

6. Temporary and permanent transfer of control over their identity from one user to another should be economically disadvantageous.

7. Users’ personal data should be transmitted, stored, and reviewed securely, ensuring privacy. Access to this data should require direct permission from the data owner.

8. There shouldn't be a single trusted authority (governments or companies) in charge of issuing identities, as they could manipulate the system.

4. UX interoperability

Decentralization comes with its own set of challenges. While privacy, Sybil resistance, and self-sovereignty combine to form the concept of Shadow Identity, there are still questions to answer:

1. How to handle private keys ensuring minimal security risks and reducing centralization while improving the UX compared to what crypto has now?

2. How to be user-friendly and easily understandable for my mom, minimizing technical complexity for super low friction onboarding and consequent usage? Or, how to onboard humanity into the Shadow Identity solution?

3. How can I connect my current centralized/decentralized identities without losing backward compatibility?

4. And finally, how should passwordless authentication function, or what should be a better solution than logins and passwords?

Concepts such as passkeys, account abstraction, homomorphic encryption, and social recovery are still not wholly refined but are promising. Although the Shadow Identity concept can smoothly integrate with the current digital landscape, the primary challenge lies in the onboarding and identity management processes.

Another crucial point to remember is the inclusiveness of all individuals, regardless of age, country, or race.

Questions

Now what?

While still having UX interoperability issues, Shadow Identity can solve problems like fragmentation, privacy, trust, and authentication. It could also unlock new use cases:

1. Democratic and other forms of digital voting — this cannot be built on centralized platforms like Twitter because of trust issues and must be Sybil resistant.

2. Wealth redistribution and taxation — public goods, quadratic funding, UBI

3. Network States & Governance — digital forms of communities with their own currencies, constitutionz, passports, etc.

4. Persistent reputation, reputation systems, credit scores — existing implementations for credit scores are far from ideal, but we can experiment and come up with something more practical than SSN.

5. Anonymous Polls, Petitions — no need to explain.

6. Incentivization programs, airdrops — games could give lots of perks knowing that the user is unique; any apps could come up with creative ways of distribution.

7. Bot protection and community moderation — having a bad reputation score or being able to be permanently kicked is the primary tool for moderation protection.

8. AI & Human — using proof of ownership, it can be possible to temporarily

9. Offline — everywhere where you’re asked for a physical ID, passport, or driver's license is a place with lots of friction, and Shadow Identity solves the trust issue.

10. More — some things are possible that we can’t even imagine. As smart contracts appeared as a new block with the whole industry of defi, we can expect lots of valuable things built for society.

Conclusion

Shadow ID system introduces a solution that could be a mediator to all existent identities but also be owned entirely by an individual and prove they are who they claim they are.

However, numerous challenges exist. Implementing this framework requires addressing inclusivity, ensuring low-cost and high security for individual identities, yet deterring multiple identity creation. A system must be resistant to manipulation by a single trusted authority. UX challenge lies in compatibility with existing systems for low friction onboarding.

I plan to write more about this topic and post it on Twitter.

For two and a half years, I've been deeply exploring meta-governments, network states, decentralization, blockchains, and online democratic governance (ODG). These tools could address global issues like social inequality, climate change, and disease eradication. Opportunities include online voting, optimized funding, and blockchain for public trust and privacy.

I founded a research company to delve into these concepts a year ago. My aim is to offer insights into the international scene, avoid politics, and appreciate thoughtful critique. This article discusses the issue, while the following piece will focus on potential solutions.

My mission is to "release humanity from the matrix", viewing AI and online democracy as key. This is crucial in addressing challenges posed by superior AI, fostering self-sovereign individuals, and amplifying talent and ambition.

Introduction:

Three weeks before this tweet, I wrote a blog post titled "Human: The Ultimate Solution for AGI Safety and Major Human Challenges"” Funnily enough, I argue on the same topic.

The problem with this tweet isn't about finding the best solution to the AGI control issue but addressing the potential consequences of allowing Twitter users to vote by paying $8. This specific method is arguably the most unfavorable outcome we could envision. Fundamentally, it fails to solve the underlying problem.

Let's consider a hypothetical yet highly plausible scenario where Elon Musk determines user verification status and subsequently open-sources the voting protocol to gain public trust. Although this may improve existing options, the entire voting process remains susceptible to manipulation. Confidence in the system is fragile, as it relies solely on one individual's approval of the voter list. Since an $8 fee grants voting rights, it would only take a few million dollars or less for any government to exert undue influence over the voting process, ultimately undermining its integrity. 

For instance, let's consider the 2016 presidential election and apply it to this platform. We must consider the popular vote difference and the potential for flipping Electoral College votes. With that in mind, we could estimate how many votes Twitter could theoretically influence to alter the election outcome. The three states with the smallest margins of victory for Trump that could have changed the work were:

• Michigan: 10,704 votes

• Wisconsin: 22,748 votes

• Pennsylvania: 44,292 votes

She would have won the electoral college if these states had gone to Clinton instead of Trump. So, adding up those vote margins, you'd need to "buy" approximately 77,744 votes.

At $8 per vote, that would theoretically cost about $621,952. That is just a theoretical simulation; obviously, there would be more competition from both sides in real life if such a mechanic existed.

With all due respect to Elon, he uses his public image to sway opinions and consolidate his power rather than focusing exclusively on projects that significantly benefit humanity.

The importance of online democratic governance

As we stand in 2023, we find ourselves at a critical juncture where traditional methods rapidly become obsolete, and we have yet to develop suitable replacements.

The ongoing information wars among nations and the challenges of implementing leadership changes through fair elections have contributed to crises like the war in Ukraine. The onset of the U.S. recession in 2023 can be attributed to sluggish policy adjustments by the Federal Reserve. This situation underscores the potential value of enabling public propositions and votes on policy changes, extending beyond the confines of appointed officials.

AGI control problem and crypto regulation are definitely the most visible in the present moment, and ODG is “the least bad solution”1

Online governance offers numerous advantages and potential applications:

• Global democratic inclusion: Enhancing political participation through online voting2, digital petitions, transparent decision-making, and real-time policy feedback and adjustments. It will help accept direct responsibility for each individual for the impact of their decisions.

• Improved public goods funding, much more efficient capital allocation: Facilitating efficient resource allocation and redistribution using data-driven, real-time feedback mechanisms.

• Streamlined taxation systems: Promoting transparency, efficiency, and goal-oriented tax collection and administration approaches.

• Diverse policy experimentation: Encouraging the exploration of various governance models and creating new virtual states.

• Cross-border collaboration: Fostering cooperation and idea-sharing among citizens from different countries.

• Governance-led network states: Establishing communities centered around shared values and interests rather than geographic location or place of birth. While the existing notion of "Network States" is tied to a particular definition coined by certain online personalities, I believe this term and description don't fully capture the essence of the concept. I plan to delve deeper into this subject in the future.

• Citizen-led initiatives and social innovation: Empowering individuals to develop and implement solutions to local and global challenges.

• Combating misinformation and corruption: Enhancing online trust and accountability by addressing misinformation and reducing opportunities for corruption.

• Universal basic income: Fair distribution of economic benefits between system “citizens.”

Although these ideas are promising, the potential of online governance is vast. As new technologies and methodologies arise, more applications will undoubtedly be uncovered.

Applicable example: Ocean Cleanup & Capital Allocation

Ocean pollution and the necessary cleanup efforts are significant global issue. As of 2023, the Ocean Cleanup project, a non-profit organization, has impressively extracted over 206 tons3 of plastic from the ocean with a supported ~$50 million known investment.

The Ocean Cleanup estimates that their technology could clean up ~50% of the Great Pacific Garbage Patch within a 10-year timeframe4 at an approximate cost of $500M. Let’s roughly say that in order to do the same within a 5-year timeframe, they’d need $1B. However, this figure merely scratches the surface of the total cost of a global ocean cleanup, which would undoubtedly be significantly higher. It's also crucial to note that this estimate only covers the cost of removing existing waste, not the cost of measures to prevent further pollution. What would the cost be to clean up 98%-100% of the global ocean? $50 billion? Perhaps even $100 billion?

The comparison between the U.S. government's healthcare spending, which is partly aimed at increasing average life expectancy, and the funding for the Ocean Cleanup project reveals a striking disparity. In 2022, the U.S. shelled out an estimated $4.3 trillion on healthcare. This funding is devoted to enhancing life expectancy through disease prevention, treatment, and research initiatives. This amount is a staggering 86,000 times greater than the funds allocated to the Ocean Cleanup project. While it's clear that healthcare encompasses far more than just improving life expectancy, the significant difference in financial investment is worth noting.

Over the past few decades, the average lifespan in the U.S. has been steadily increasing, roughly by ~2 years every decade. While this is undoubtedly important, it does raise questions about efficient capital allocation. Many of those in government are older, with voting rights, and may naturally prioritize their immediate concerns over the needs of future generations.

Imagine, for a moment, that approximately 5% of the global population—around 400 million people, roughly equivalent to the population of the United States—holds a deep concern for ocean pollution and environmental issues. The U.S., for context, amasses an annual tax revenue of about $3.5-4 trillion.

Now, envision a novel form of society or governance (ODG), one that is not bound by geographical borders but is instead formed around shared beliefs and values. In this society, taxes are leveraged as a powerful tool to address pressing global issues.

In this context, the goal of amassing $1 billion to tackle 50% of the Great Pacific Garbage Patch over a span of five years wouldn't seem like an unachievable feat. In fact, it would translate to a mere contribution of $2.5 per individual.

If we propose that $100 billion is required to cleanse the global ocean, this would also represent a relatively reasonable contribution from 400 million people, especially compared to the revenue of economies with similar population sizes. Moreover, capital allocation doesn’t require raising the whole $100B right away since it requires time to clean the global ocean within a few years timeframe. This thought experiment underscores the potential of collective action and resource allocation in tackling some of the world's most pressing environmental challenges.

Ideal solution. Core Principles.

An ideal online governance system should embody the following core principles:

• Human-centric design: The system should prioritize individuals’ needs, experiences, and well-being while respecting cultural and social differences.

• Decentralization: Trust is a critical component of effective governance. A decentralized system, based on consensus among multiple parties, can help establish a more robust and resilient trust model.

• Collaboration: While traditional capitalism emphasizes competition, fostering cooperation can lead to more efficient outcomes when appropriate economic incentives are in place. Online tools can enable new, collaborative models of governance and resource allocation.

• Pluralism: The system should allow for the peaceful coexistence of diverse perspectives rather than a majority imposing its will on a minority. This approach promotes inclusivity and can lead to more balanced decision-making.

• Public good orientation: The system should be designed and operated as a public good, like the internet, ensuring its benefits are accessible to all members of society.

• Equality of votes: The system should ensure that each participant's vote carries equal weight, regardless of their social or economic standing, like age, gender, or nationality, promoting fairness and representation.

• Credible Nuterality: The system doesn’t discriminate against any specific people or group of people and treats everyone fairly, to the extent that it’s possible to treat people fairly in a world where everyone’s capabilities and needs are so different.

• Privacy and anonymity: To protect individuals' rights and ensure their participation, the system should prioritize privacy and anonymity, safeguarding sensitive information and minimizing potential misuse or manipulation.

• Adjusting to the rapidly evolving global landscape: This applies to the swiftly transforming world and existing legal frameworks. It is vital to incorporate online democratic governance systems into the current international context. Collaborating with other well-established democracies is important, but care must be taken when dealing with autocratic governments. They could perceive the system as a menace rather than an instrument for progress.

By embracing these core values, an online governance system can effectively address the challenges of the digital age and create an inclusive, collaborative, and responsive environment that benefits all members of society.

Pluralism: In-Depth of a Principle

While all principles are essential, feedback suggests they may seem too abstract. Let's ground one in a real-world example.

In today's political climate, if 51% vote for Democrats, the other 49% of Republicans must live with the results for the next four years, and vice versa. Despite its flaws, the US stands out, though corruption remains an issue globally.

Here's a simple illustration: in a "democratic" group of three, a decision is final if 2 out of 3 vote for it. Hence, the majority could vote to divide the third member's wealth between them, which would still be deemed a "legitimate democratic process."

This scenario can be extrapolated to the entire US economy:

Take the topic of taxation and wealth redistribution, a mainstay in U.S. politics. Certain policies advocate for taxing the wealthy more to fund social programs, essentially redistributing wealth. Proponents argue this is democratic since elected officials propose these policies and most citizens back them.

Critics, however, might say this mirrors the situation where 2 out of 3 individuals vote to split the third's wealth. The wealthiest, a minority, may feel unfairly targeted even though the process is democratically sanctioned.

Keep in mind, this is a simplified representation of a complex issue, and individual perspectives can vary.

I'm not expressing a personal stance on this proposal, merely highlighting the minority's plight and their inability to opt out.

This brings us to pluralism: you decide whether or not to participate in a particular democracy, and only then do you face the majority's decisions. If you're dissatisfied in the future, you can opt out and seek a better alternative. Rather than enforcing uniformity, this principle allows multiple democratic systems to coexist without the minority suffering due to the majority's decisions. This would necessitate a novel approach to how these democracies interact, but that's a topic for another discussion.

We're falling behind.

In the race to develop effective online governance systems, adherence to core principles like decentralization, privacy, and human-centric design is paramount. However, there's a risk of falling behind if users continue to use centralized or privacy-abusing platforms, such as Twitter, out of unfamiliarity with decentralized technologies. A single company leading this initiative could lead to a dangerous concentration of power that surpasses any existing government or major tech corporation.

We need to proactively address these concerns, but the task is difficult, as solutions that simplify the process may compromise core principles. The design should aim for integration with democratic countries, excluding autocracies and ensuring compliance with legal frameworks and participant rights.

In our increasingly digital world, the priority should be on building robust, inclusive, and efficient online democratic governance systems. We can overcome the significant challenges ahead by embracing principles like collaboration, pluralism, credible neutrality, public good orientation, vote equality, and privacy.

The clock is ticking; Our collective responsibility is to ensure democracy's evolution benefits everyone. Let's innovate, avoid centralization threats, and empower global individuals and communities.

Subscribe to my blog, Twitter and wait for the next upcoming great news!

Acknowledgments to Libermans, Will Depue, and reState.global for reviewing the early drafts.

Subscribe now