This is the second article in a series about lessons that can inform bitcoin’s replacement of the U.S. dollar. Read the first article in the series, on leaving the gold standard, here[1].
The Open Systems Interconnection[2] (OSI) model gives seven layers of computation that allow a network effect to emerge. The network model used today is the TCP/IP model. When the two are compared, OSI is known for having stricter rules and providing delivery assurances as it transfers data. It is also known for being less reliable, as TCP/IP allows for greater levels of efficiency.
This is not a comparison of the two models. Rather, we will use OSI to stage a model for both fiat and bitcoin in order to understand the requirements needed to scale a network. We will use OSI because it allows us to explore each layer more in-depth and it most resembles the foundational building blocks of Bitcoin. It is within the construct of OSI that we will view the architecture of the current fiat system in order to understand how Bitcoin will achieve hyperbitcoinization.
An important note: these layers are not necessarily chronological, as previous layers may be used to expand on another.
Layer One: The Physical Layer
An overview of each layer can be found here[3], which is the source of the quotes in this article, unless otherwise noted.
“It defines the electrical and physical specifications of the data connection. It defines the relationship between a device and a physical transmission medium.”
The first layer of fiat architecture is the physical asset. Prior to the abandonment of sound money principles at the willful sacrifice of the gold standard, this could be understood as tangible gold. The base layer of any sound money is the
