Why Build A Blockchain
Do we need another blockchain?
After looking at many alternatives, we concluded that building what we wanted to build on an existing blockchain would require us to make greater sacrifices than we were willing to make.
Distributed ledger technology was never meant to favour the few – it was meant to be for the masses. The entire objective was that we shouldn't have to rely on third parties. There are, of course, great teams out there building unique and useful products; however, we have yet to find a project that has successfully solved the “blockchain trilemma” to a satisfying degree, due to lack of true decentralisation and democracy within standard consensus mechanisms.
It eventually became clear to us that it was necessary to create our own blockchain; either from scratch, in partnership, or as a modification of an existing network. To give some background to this decision, let us go back a couple of decades to the very inception of blockchain technology. The history involved is a critical part of our reasoning.
A brief history of blockchain technology
Stuart Haber and W. Scott Stornetta envisioned the concept of a blockchain in 1991. They started by working on a blockchain secured by cryptography. The core of the idea is that the content of each block (text, numbers, date and time etc.) would be impossible to alter, after the block has been mined.
Something called "Hash trees" was incorporated into the system in 1992. A "Hash" is a map of information written as a unique string of characters with a set length. This identifier helped make the system more efficient by removing confusion, manipulation, and duplication, resulting in more documents per block. The original concept of a hash tree is named after Ralph Merkle, who patented it in 1979. Today, we use the terms "Hash trees" and "Merkle trees" interchangeably.
The concept of proof of work emerges
1993 marked the introduction of a concept called Proof of Work (PoW), invented by Moni Naor and Cynthia Dwork as a way to deter denial-of-service attacks and other forms of abusive behavior such as spam transactions by requiring some amount of processing power by a computer.
PoW is a form of cryptographic proof in which one party (the prover) proves to others (the verifiers) that a certain amount of computational work has been carried out. Verifiers can subsequently confirm that this is true, with minimal effort on their part.
Hashcash
In the '90s, Jonathan MacDonald, founder of SELF, and inventor of the Proof-of-AI consensus mechanism, started following the work of Tim May, Eric Hughes, and John Gilmore.
“I felt that there was a rebellious streak to what was being discussed - it felt revolutionary. Our online chat rooms with a dozen folk became hundreds, then thousands. A lot of smart people got involved, and new concepts began to appear”.
In those environments, a concept called "Hashcash" was proposed in 1997 by Adam Back (again, a PoW system used to limit email spam and denial-of-service attacks). Shortly after, PoW was published formally in a 1999 paper by Markus Jakobsson and Ari Juels.
These concepts were then adapted to digital tokens by Hal Finney in 2004 through the idea of "RPoW" (Reusable Proofs Of Work). RPoW became the core element of Bitcoin, which was introduced in 2009, specifically to eliminate digital double-spending.
Transition of Bitcoin as a tool for freedom and sovereignty to an asset class
During the years following the bitcoin whitepaper publication in January 2009, most people either didn't know of, or didn't care about any of the preceding history. Bitcoin was seen as trivial at best or criminal at worst. Those of us who spoke about the direction of innovation were laughed at, and we struggled to understand what was so funny about trying to make things fairer, safer, and less abusable. In the early years, nobody saw Bitcoin as an asset class. That wasn't the point.
Nonetheless, in February 2011, bitcoin's price matched the U.S. dollar for the first time. This brought new investors into the market, and over the next four months, bitcoin's price continued to rise – peaking at over $30. This was when things started to change.
Not only were investors becoming a part of the community, but mining began to be viewed as lucrative. At the time, the shifting "Overton Window" wasn't obvious, as most people still thought what we were doing was nonsense.
Slowly but surely, bitcoin and blockchain shifted from an opportunity to solve fundamental issues to a mechanism of wealth creation. Large corporations waded in, massive mining farms monopolised the market, and then, in 2024, bitcoin ETFs were approved by the SEC, followed by the Ethereum ETF approval in May 2024.
The erosion of the meaning of the term decentralisation
Another development that took place was that the term decentralisation became relative, as if decentralisation is a sliding scale (which it isn’t). This is in stark contrast to nature, where an organism is either centralised or not. A structure is only as decentralised as its most centralised component, and that component is the primary attack vector. If a few large mining farms are mining a network, they are in control and also susceptible to attacks and manipulation.
Proof of Stake
The same reality is apparent with Proof of Stake (PoS), an alternative consensus mechanism to PoW, now popularised by Ethereum. PoS was meant to incentivise honest behavior by rewarding those who put their crypto up as collateral in order to earn a yield. Again, the more money you have, the bigger influence you get. What this meant, however, was that the control of the network rapidly shifted into the hands of the few.
Ultimately, governance of any network is about power, and power is all about incentives. Today, there is a conflict of interest between the miners/validators and network users in PoW and PoS blockchains. Users would benefit from faster and cheaper transactions, but in general, this will decrease the profitability of miners and validators, reducing their profits.
New Consensus Mechanism: Proof-of-AI
With all of this in mind, it’s easy to understand how the two most popular consensus mechanisms of the current era - Proof of Work and Proof of Stake - don’t fully match the original ethos of blockchain nor hold the answer to how future systems could operate more democratically.
With the goal of addressing the issues inherent within current consensus standards, Jonathan MacDonald has developed a technical framework for a more efficient and democratic consensus mechanism that had been brewing since the early 2000s. The result is called Proof-of-AI.
The patent-pending PoAI consensus mechanism set to power SELF Chain is fair and equitable, in comparison to PoW which is about computing power and PoS which is about financial wealth.
One key factor of PoAI is that the algorithms constantly are in the process of learning and improving, directed to find the most efficient and cost-effective way of packing blocks. This is detailed further in the technical section of this document..
PoAI can sense and respond to attack vectors and attempts at manipulation and adjust accordingly to mitigate threats. This includes attempts to force gas fees to increase and slow down the network by spamming transactions.
The mechanism can also be manually updated and improved by the core team, with transparently recorded audit trails of what is a) planned in terms of improvements and optimisation, b) why that plan is in place, c) the timeframe of making the adjustments and d) the intended outcome of the adjustments.