One of the hardest things to do in the world is to face the uncertainty of something new, find a groundbreaking answer that is way out of the norm and changes everything, and then try to explain it to people in a way that everyone says “Aha! But of course!”. This is even more so when it comes to projects that can change the whole landscape of decentralized finance, trading, and marketplaces. I mean, everybody knows about decentralized finance, consensus mechanisms, and governance models right?
“So, what is this thing that will change everything in decentralized finance, trading, and marketplaces?” you say. Our answer is "Humanode".
“But what’s different between Humanode and all of the other blockchain projects and cryptocurrencies?” you say. Our answer is simple. “Everything changes”.
You see, the whole philosophy behind Humanode was conceived from some simple, but fundamental questions that plague the whole world of crypto and decentralized finance, such as isn’t there a better way to run a consensus mechanism that does not rely on using an astronomical amount of electricity or that isn’t based on a system in where money is power? How do we build rock solid Sybil resistance? How do we protect privacy? How do we make a financial system that is global, truly decentralized and sustainable? How do we deal with high and fluctuating transaction fees? How do we build a system of governance that is transparent, sustainable, and truly equal… while fighting populism and voter apathy?
Today, we would like to share some simple Q & A's that will hopefully help all of our readers who are new to Humanode, or perhaps even crypto and/or decentralized projects.
Q. What do you mean when you say “consensus mechanism”?
Unlike most nationalized financial systems that use centralized banks, or government controlled centralized financial systems, decentralized financial systems that run on blockchain do not run on a centralized computer system that is under the control of one government or group of people. So, in order to ensure that the information in the ledgers are correct and that the computers agree upon what is written down, blockchain systems use a “consensus mechanism”.
Technically speaking, a consensus mechanism is a fault-tolerant mechanism used in a blockchain to reach an agreement on a single state of the network among distributed nodes. In other words, it is a system to make sure that at least 51% of the computers/nodes in the blockchain network agree that what is being written down in the ledger (as blocks) is correct, valid, and that there are no intentional (or unintentional) errors. This includes a mechanism that will penalize those who tried to tamper with the system, and a security mechanism that makes it very difficult to control 51% of the system.
The two most common mechanisms are Proof of Work (PoW) which Bitcoin operates on, and Proof of Stake (PoS) that Etherium is moving towards.
Q. What's wrong with PoW and PoS ?
Well, it depends on how you look at things, and at what scale. In Proof of Work networks, “miners” compete to create new blocks full of processed transactions. They use pools of high speed computers to calculate a cryptographic equation (or a “Math Puzzle too tough for most human brains”), and the first node that answers the question correctly becomes the winner. The winner shares the new block with the rest of the network and earns freshly minted crypto-currency. The fact that the node used electricity and computing power to answer the question, is the “proof” of “work”. Naturally, in order to gain 51% of control of the system, you would need to have full control over 51% of the computers that mine, which in most cases is not worth the investment required. The only problem here is that the bigger the network gets, the faster the computers get, and the higher the competition is for that freshly minted currency, the more electricity gets used. For Bitcoin, according to a study by MoneySuperMarket, it is said that the electricity consumed in one transaction is 1,173 Kilowatt Hours (kWh), which is roughly equivalent to US$175. So, depending on where you live, that is roughly the same amount of money an average family in America or Europe would spend on electricity in 1.5 to 3 months. And that is just for one transaction. There are over 105 billion Bitcoin transactions per year, meaning 123 Terawatt Hours (TWh), which means that Bitcoin alone uses more energy than 185 countries and is comparable to the annual energy consumption of Norway. And that is just to keep the network running AS IS. Considering that half of that electricity is generated in coal generated power plants, the environmental footprint is devastating.
Proof of Stake based networks on the other hand, do not fight over who solves the equation first, so they consume roughly 90 to 99% less energy. Instead, users “stake” their currency to earn the chance to create the block, and earn a commission. If you own 30% of the staked currency in a system, you have a 30% chance of earning the commission. If you own 0.0001%, the chance you get a reward is also 0.0001%. Your voting power in the system is also the same as the % of currency you own or represent. In other words, the more money you have, the more rewards you get, and the stronger your voice is… which means that most users have no choice but to follow the lead of the powerful rich people (or groups) who continue to get richer. On the flip side, you need to own and stake 51% of all the currency in the system to gain full control, which in most cases is unrealistic.
Q. What is Humanode based on?
Well, Humanode decided to tackle the issue of consensus, staking, and block creation from a different perspective. The Humanode network bases its infrastructure on human biometrics. Instead of PoW and PoS, Humanode utilizes the combination of Proof-of-Uniqueness and Proof-of-Existence. Combined with blockchain, it creates the first ever human-based digital verification layer. Human nodes are created through crypto-biometric authentication which is a combination of cryptographically secure matching and liveness detection mechanisms to verify uniqueness and existence of real human beings. One unique human who is alive can create one node, and each node has one vote in the system. The system does not care how much money you have or do not have, where you live, who you are, your race, beliefs, gender, class, social status, nationality, or how you look. All the system cares about is if you are a unique human being, if you are registered in the system or not, and if you are alive. The one vote you have, and the one vote I have, are equal power.
This also means, that in order to gain 51% of the votes in the system, you would have to hunt down (or track down) 51% of the people that participate in Humanode across the globe, and basically have them vote on something via gunpoint within the given time-frame, which is unrealistic. If you are a malicious actor, and try to scam the system, your biometrics get blacklisted, and you will be penalized depending on the severity of the offense. In the worst case scenario, you will lose all access to the network.
As for energy consumption of the network? Even if the network ran with 100,000 full time human nodes (current testnet runs on 3000 nodes as of Mar. 2022) doing non-stop transactions (as in hundreds of millions), we are talking about a drop in the bucket, only requiring an estimated 0.058 TWh per year, meaning 0.065% of what is needed to run Bitcoin.
Q. But how does the “mining” or “Validating” process work? How does one make money??
Well, there are a number of answers to these questions. One is the fact that one does not compete to gain the right to write the block and earn newly minted crypto or commission. The monetary algorithm is based on what we call Fath, a monetary policy and algorithm that targets real value growth and proportional emission. Fath basically controls the emission based on growth. In simple terms, the system basically makes a calculation based on a comparison of 2 years. If there is a 20% growth, from one year to the next, all token holders will be issued an additional 20% of tokens based on how much you own. If there is a minus growth, say a -10% growth, 10% of the currency will be deducted and burned from each user equally (not to worry, if you owned 1% of the tokens in the system, you will still own 1% of the tokens after the burn). This system makes sure that the number and value of the currency meets the market demand.
As for “commission”, all transaction fees in the network are shared equally across the validator nodes (assuming that your nodes were running at the same time), and all nodes in the network equally share the rewards from services provided.
Q. What do you mean by services provided?
The human-based digital verification layer that Humanode has developed, is a layer one technology (Meaning that this layer serves as the foundation and is the fundamental layer underneath the logical data structures of other higher level network functions. In other words, this is the base infrastructure that everything is based upon and can be built upon), is Ethereum compatible, and includes an EVM pallet that allows it to run Solidity smart contracts and use existing developer tools. This means the Humanode network will be able to bridge and provide private biometric processing and sybil-resistance to dApps and protocols based on other EVM-compatible chains, and we are already working closely with partners like AIKON to provide users the choice to use Humanode biometric authentication as a sign-on option alongside Google or Facebook accounts. There are countless use cases for services that can utilize or be built using Humanode cryptobiometric ID solutions, within the network, and through partnerships. Any profit earned from services provided, or built within the system, is shared amongst the human nodes.
Q. So, how safe is this “auditable pseudonymous cryptobiometric ID” solution? Is my privacy protected?
The challenge, from the get go, was how to ensure security, privacy, and maintain a strong Sybil resistance in order to allow human biometrics, which are the most private of private data, to be able to be used as the stakes in a public permissionless financial system, replacing the need for them to be capital based. Our answer was cryptobiometrics. Cryptobiometrics is based on a combination of various technologies, and exists at the intersection of the disciplines of mathematics, information security, cybersecurity, sybil resistance, biometric technology, liveness detection, zero knowledge proof (ZKP) technologies, encryption, and blockchain technology. In short, the system encrypts the data derived from the biometrics, only to be decrypted and used for matching in a Secure Enclave. This heavily encrypted data is only used to see if a user is registered or not, and If the user is registered, then grant them access to the various services the user is tied to. You basically become your own password, and unless someone can hijack your brain or consciousness, it will be very hard for a 3rd party to “become you”.
Q. What about governance? What about voting? How can I become a human node, and what if I want to develop a system using the technology? Is there a grant system??
Naturally, I am more than willing to answer all of those questions, in part II of the humanode 101 series. Thank you for reading, and see you in part II.