The blockchain will thrive in the context of a crisis of confidence
The distributed trust model offered by the blockchain represents our likeliest and most desirable future
This article was originally written in french by Y.Caseau and S.Soudoplatoff under the name “La blockchain prospérera dans le terreau de la crise de confiance”.
W e are at the dawn of a veritable Renaissance. On the one hand, enormous progress is being made in science and technology. We are discovering exoplanets, exploring our own planet in increasingly fine detail and building quantum computers, just as during the Renaissance we invented the parachute, the dry dock and perspective in painting. We now know our place in the universe and are able to map it out with ever-greater precision, just as during the Renaissance we explored a world that suddenly had no limits. The internet is to our era what the printing press was to the Renaissance. We have the tools to understand our brains in more depth, enabling groundbreaking progress in neuroscience. We are sequencing the genome to such an accuracy that it may be divisible in units of 30 million, empowering improved diagnosis of illnesses, just as, during the Renaissance, André Vésale revolutionised medicine by challenging ancient Roman texts and dissecting the body with a modern methodology, reducing the personnel required from three people to one.
However, just like during the Renaissance, the establishment is battening down the hatches to protect its privileges, refusing to change and killing innovation by demonising it, all in the name of holding onto power at any price.
We are also currently going through a phase of economic regression which, fuelled by fear, is leading to a period of repression.
All of this has left a murky cloud hanging over the fundamental issue of trust. Transformation cannot take place without trust. Fear is a tool used by those in power who reject all change, and it is incompatible with trust. Who do we trust in 2016? Not Google, nor Facebook, whom we are entrusting with fewer and fewer of our secrets, nor Apple. We no longer trust brands, nor do we trust states. Even in France, one of the countries where levels of confidence in the State remain relatively high, this trust is ebbing away. Genuine trust exists today in only two domains: the family and the community. If war broke out tomorrow across the country, it is uncertain whether young French soldiers would stand up in defence of their nation, but they would undoubtedly defend their family and friends.
Trust is an unstable equilibrium
When two people trust each other, it only takes one of them to have doubts for the other to also start doubting. The result is that the parties descend into a state of mutual mistrust, a sentiment that is much less precariously balanced. It therefore takes energy to retain trust; yet it takes information to facilitate this energy. One of our era’s most violent breaks with established models concerns the source of this energy :
- France follows a model whereby energy is externalised: it is the nation’s judges, teachers, managers, parents, and so on, who are responsible for driving this energy.
- In the Anglo-Saxon model, the energy comes from both parties (or from the community, when there are several people involved).
When eBay was created, it was not the only online auction and shopping website, but it invented the concept of buyers and sellers rating each other, a scoring feature that can now be found on all community sites such as Airbnb, BlaBlaCar, and so.
What eBay understood is that trust could only be created by the community itself and not by the presence of third parties, which in its case would have meant expert auctioneers.
We could discuss the relative merits of the community-based trust model and the externalised trust model until the cows come home, but what we can say for sure is that the externalised trust model is proving inadequate in a world where the sheer volume of interactions is multiplying at such a rate, and it is starting to struggle. It is therefore very tempting for the regulator, the trusted third party, to demand ever greater resources in order to deal with this increase in the number of transactions. Unfortunately, this method clashes with the law of diminishing returns: past a certain threshold, the greater the means are, the more dysfunctional the system becomes. The community-based trust model is much more scalable and able to handle this increase in the number of interactions. Indeed, this is its main strength.
The blockchain model is even more powerful than the community-based trust model: it offers a model in which trust in transactions is reliable, can be audited by all and distributed thanks to its decentralised means of reaching a consensus.
The legacy of the Internet
Generally speaking, the construction of the internet was the product of a break with conventions. Whereas telephone operators were developing and maintaining a centralised network, the internet has shown the feasibility and, above all, the scalability of a totally decentralised network, without a centralised organisation and, therefore, without a single owner. Those same fundamental principles are there to be seen in its very construction: there has never been an “Internet project manager”, for the simple reason that the Internet has never existed as a project. The internet was built by “a loosely self-organized group of people who contribute to the engineering and evolution of Internet technologies” (IETF).
Whereas the old world thought only in terms of broadcasting, and above all mass broadcasting, the internet has shown that everyone can create and deliver content — and that it is an error to try to apply the television model to the internet. Whereas the old world was based on “supplier to customer” chains, the internet has shown the feasibility of large-scale peer-to-peer exchange models.
It was inevitable that, at some stage, these new principles would be applied to the transactional model: whereas the old world believed in the necessary presence of a trusted third party, and whereas Internet 2.0 still features organisms offering platforms for interaction, the blockchain model shows that we can do without either and create a pure “peer-to-peer” model (P2P). In this sense, the blockchain is the transactional version of peer-to-peer networks such as Bit Torrent, which reflected — it bears repeating — the fundamental principles of the internet as far back as 1968, well before the invention of the Web (1991). The approach of this purely P2P model differentiates it from the “content provider” model (Web 1.0) and the “interaction platform” model (Web 2.0).
The struggle against the blockchain is absurd
In the future, when the blockchain’s influence becomes truly disconcerting for the established institutions, there will be a great temptation for those currently in charge to suppress it, by outlawing it or limiting its effects. The Internet was born in 1969, but did not become widely available to the public until 1991. It is only 25 years later that the majority of politicians are now trying to suppress the innovation that the Internet brings with it.
But attempting to hold the Internet back is like trying to stop the rain. The decentralisation of the web, the fact that intelligence is found at its outer limits rather than inside the network, the longing of many citizens for another model where they are more engaged, and above all the growing complexity of the world, characterised by an increasing number of interactions, will encourage our progression towards distributed trust.
Any human intervention in a transaction slows it down, resulting in a lower overall processing capacity, and therefore a poorer quality of service. The blockchain’s great strength is that it speeds up transactions while preserving collective trust, all at a lower cost.
Thanks to the invention of the Internet technologies, the world of telecommunications has progressed from a centralised model with a prominent role for trusted third parties (the operators) that justified their role by the promise of “total quality”, to a decentralised model where everyone can effortlessly connect to the internet from anywhere, and benefit from a universal array of low cost services. Thanks to the invention of the blockchain, it is increasingly likely that the world of transactions, and not just the world of finance, will experience the same disruption; one that will not prove any less painful for the operators.
This article is excerpted from “The blockchain, or distributed trust”, a new publication for the french think tank Fondation pour l’innovation politique by Yves Caseau, member of the National Academy of Technologies and Serge Soudoplatoff, Internet expert and cofounder of Sooyoos and Scanderia. You can find the full text in english here.
