Darkest Before the Ethereal Dawn
It goes without saying that the Global Financial Crisis of 2007–08 had a depressing impact on many companies, economies and individuals. For a few years leading up to that I became concerned about gross imbalances that I and many others had noticed had been building up for decades in the global economy. My friend Arie and I would meet regularly to discuss the madness that we noticed and consider various response or coping strategies from holding precious metals to buying South American farmland. My brother and I even trekked through Peru and Ecuador looking for land (and made an offer on one parcel).
While many markets were certainly highly manipulated, trading in various financial markets employing fundamental and traditional strategies was viable. Even if some of the data and the narrative was manufactured, things still mostly made sense. In 2007 when trading in most financial markets devolved into either risk-on or risk-off strategies, the only reasonable conclusion was that the global financial — and consequently, economic — infrastructure was broken. And this time, it looked dire.
In the aftermath of the catalyzing events of that period, global central banks have continuously deployed their fleets of quantitative easing helicopters and pledged to race one another down a continued, potentially decades long, spiral of currency devaluation.
This was necessary, many believed, since the previous decades of profligacy registered far more debt on a national, corporate and personal level than existed money with which to pay it off. In such situations there are two obvious outcomes: bankruptcies (probably cascading) to write off the debts, or massive printing of money to render the nominal value of the debt manageable via payment with inflated currencies.
So far central bankers have managed the latter strategy and have largely staved off what I expected: a black swan swooping non-linearly from nowhere and getting tangled in the helicopter blades, causing a domino-effect crisis and collapse. Instead global bankers have so far masterfully engineered a slow global cascading collapse, by employing the tried-and-true political and financial technique of kicking the can down the road, at each new inflection point. Instead of collapse, perhaps we should call it “transition” or “creative destruction.” The crux of the can kicking strategy is the hope that some new tech will emerge to drive massive novel economic growth, and the global economy will grow its way out of the deep trench of debt. What could this tech be? Nanotech machines? 3D printed manufacturing? Free energy? Teleportation devices?
In 2008 the situation looked dire and I felt like there was no end in sight. My assumption was that it would take 20+ years for the snake to digest this elephant of debt. And during that period, the snake was going nowhere … fast.
So, in a sense, I checked out.
Then something unexpected happened. On January 3, 2009, The Satoshi (whoever she/he/they are), unleashed the Bitcoin blockchain technology — in the form of the genesis block — as a salve intended to heal the damage caused by ill-managed debt-based fiat currencies, fractional reserve banking and widespread (and now confirmed) manipulation of nearly all significant global markets by entities that considered themselves too big to fail, or in many cases, too big to need to play by the rules. A string of text was embedded in that block: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.” The Satoshi had an agenda.
When I encountered this technology, I had that “Bitcoin moment” that so many of us have experienced: this has the potential to change everything. This technology can serve as the foundation for global and social systems that are provably fair and transparent, user-configurably private, and efficiently shared. This technology has the potential to shatter the silos of power and re-balance the information asymmetries that disadvantage so many.
I was excited that the people carrying the cardboard signs on sticks ,who occupied everything, could move on from walking the streets chanting to wake up the world and start working on some tangible and effective fixes. They had done their job of creating awareness. Now some of us could start building solutions rather than pointing out the problems. The tools were now available.
It took a few years of dreaming and designing and experimentation, and the work is ongoing. Many things went wrong in the early years as idealists drawn to this revolutionary way of doing things often constructed naive, insecure solutions. Amusingly, once many of these individuals had the epiphany of the revolutionary power of decentralized systems, what did they do? They ran out and registered a company with the state. “Security consultants” from around the world assisted these idealistic noobs, by pointing out where their centralized infrastructures were insecure — and extracted a sometimes excessive consulting fee for their labors. Eventually more mature solutions were built by sophisticated technologists. Nearly all of the excitement of this period was directed at the possibility of reformatting the financial plumbing of the world: payment systems, remittance, cryptocurrency exchanges, etc., .… Still, many of us anticipated a much larger vista would soon take shape.
In November 2013, Vitalik Buterin wrote the first version of the Ethereum White Paper. On January 1, 2014, I spoke with Vitalik about it and received a copy. It sketched a set of mechanisms that would enable the concrete development of that comprehensive vision that many of us glimpsed when we had that initial Bitcoin moment. That was my Ethereal moment.
I checked back in — all in.
Since that day in January, I — in conjunction with many gifted thinkers and technologists — have labored obsessively to help bring Ethereum, and elements of the decentralized economic and social ecosystem that we are building on it, into existence. And on Thursday July 30, 2015, Ethereum achieved genesis.
For the past several months, I and a different amazing group of thinkers and technologists from around the world have come together to form Consensus Systems LLC — ConsenSys. Over the next weeks, months and hopefully years, ConsenSys will release a wide variety of decentralized applications (dApps), demos and tools for the Ethereum ecosystem.
Stay tuned. This is going to change everything.
- Joseph Lubin
