A reading from the book of rooster:
Greetings prospective Phononite!
However you wound up here, I’m glad you are.
To me (Reddest Rooster), the Phonon Protocol represents the financial equivalent of nuclear weaponry. It changes the game completely as soon as it’s on the board. Understanding both the implementation and advantages of this technology is crucial, hence this essay:
i.
Consider how you would describe a SCUBA dive to someone with no concept of the ocean?
There are many layers of understanding between “I live in the mountains, my parents lived in the mountains, I’ve no conception of ‘the sea’” to “yesterday I was navigating submerged cave structures off the Yucatan”.
There are several ways for a complete virgin to begin to get seasoned. Going in raw and falling for a scam on your first try isn’t wrong per se, but most would aim to do better. (Bitcoin OG Chris DeRose used to say you haven’t joined the crypto community until you’ve been scammed at least once -pg)
It is not strictly necessary to understand the historical or philosophical roots of the trillion dollar crypto-industry, but if you’re going to take my class you’re going to at least try to grok the motives of the people who gave us this technology.
A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution. Digital signatures provide part of the solution, but the main benefits are lost if a trusted third party is still required to prevent double-spending.
-Satoshi Nakamoto, Bitcoin: A Peer to Peer Electronic Cash System
The genius innovation of bitcoin is in decentralized double-spend protection. At the same time, someone who understands the irony hidden in the first two sentences of the Bitcoin Whitepaper will understand why Phonon is the missing link in realizing Satoshi’s dream of a trustless, censorship-proof means of digital transaction.
ii.
First we will focus on the “digital signatures”…the private key/public address architecture that forms the backbone of all crypto-security.
Phonon’s innovation is in how users store and interact with private keys. If you’ve ever been asked to store 12 to 24 random words by a wallet app, you’ve created a private key. If you’ve ever approved a transaction on a blockchain you’ve used a private key. If you have no idea what I’m talking about, let’s get started.
You use the private key to “sign” transactions associated with a public blockchain address that corresponds to the key. The blockchain itself holds a public key which corresponds to your private key, and is used to check that any transaction associated with an account has been signed with the correct private key, without the key holder having to reveal it.
Any attempt to make a tx without the appropriate private key will be immediately rejected by the network.
Anyone who has the private key can sign for any associated accounts. This is why you must protect your private key. There is no support system if you lose it or someone hacks it.
Those 12 to 24 word phrases are a common way to derive the entropy (randomness) that makes a private key unique. Anyone who has that phrase can derive the private key and use it to sign transactions. Since you don’t want someone to move your funds without your permission, you don’t want anyone else to ever see your private key. Hardware wallets have been developed that will store private keys and sign transactions all within a single hardened architecture as a way to protect these all-important keys.
iii.
So we’ve got these keys signing transactions…who is checking the signature? That would be the consensus mechanism.
The network timestamps transactions by hashing them into an ongoing chain of hash-based proof-of-work, forming a record that cannot be changed without redoing the proof-of-work. The longest chain not only serves as proof of the sequence of events witnessed, but proof that it came from the largest pool of CPU power. As long as a majority of CPU power is controlled by nodes that are not cooperating to attack the network, they'll generate the longest chain and outpace attackers.
- Satoshi Nakamoto, Bitcoin: A Peer to Peer Electronic Cash System
We don’t need to get too deep into how these consensus mechanisms work. Just understand that the input end of a public blockchain like bitcoin or ethereum is a pool of pending transactions. The pool feeds into the consensus mechanism, which checks that each transaction’s balance and signature are correct. The output is a canonical chain of approved transactions that can be traced straight back to the beginning of each coin on the network.
For the past thirteen years Bitcoin has produced a true, open state of accounts every 10 minutes, using open source code, digital signatures, the internet, and well-designed coordination games. In that time no one has managed to include a fake bitcoin transaction in that canonical history. Bitcoin is mathematical trust.
iv.
We value the bitcoin network because of the truth it produces. The price of this truth is in transaction fees, in leaked information, and in spent electricity.
Phonon avoids all of these costs by storing a private key as a file structure that can only be interpreted or interacted with by a trusted device. The creator of a Phonon funds it on-chain with any value they want, and then is free to pass the key to that value directly to any other compatible device—no fees, no centralized consensus to reveal yourself to, just peer to peer transfer of any asset that can be represented by a private key.
The network (if you can call it that) scales linearly with the number of compatible devices. For Phonon to reach 1 million transactions per second, there just needs to be 2 million Phonon cards in the world. Phonon users transact without going through the consensus bottleneck and exposing their info to the world. Instead they use a hardware enforced consensus that is less gameable, more efficient, and perfectly private.
You don’t need to be a card-carrying crypto-anarchist to see the value of no fees and infinite privacy, you just need to see a bit of the bigger picture.
Hopefully this gets you there. Nothing compares to Phonon, and it would be a shame for you to read this far and still miss the boat…