Is Blockchain Ready For Its World Domination Closeup?

The Confluence of Bitcoin, Ether and Nationalism Has the Potential to Shake Up Society As We Know It. Really.

Co-Written by Mick Emmett

“A nickel ain’t worth a dime anymore.” — Yogi Berra

The fact that you’re reading this sentence probably means you know something about blockchain. You may even own some surging bitcoin and/or ether digital currency. Hell — you might even know the difference between them.

I’m also going to assume that you follow the news, which means you’ve been unable to avoid the reality of anti-establishment, nationalistic political environments in once-stalwart liberal democracies like the United States, France, the United Kingdom, and other nations.

OK, that’s a lot to ask for an article that you’re reading on the Internet. But since we’re talking about the future of the society as we know it, I think it’s a small price to pay. And speaking of price…

If You Invested in Ether A Few Months Ago You’d be Reading This from Necker Island

At the time of this writing, the value of ether, the crypto token that powers Ethereum’s blockchain (which is a different blockchain from the one that bitcoin runs on), is up approximately 2,000% since the beginning of the year. That’s not a typo. It also makes bitcoin seem like a slacker digital currency given its rise of a measly 125% over the same timeframe. Behind these large returns is a story with the potential to transform money, business, government…basically society as we know it.

Allow me to explain.

The Future Ain’t What It Used To Be

The possibility that blockchain, in particular digital currencies like bitcoin and ether, could shake our nation-state world to its very core makes this a juicy topic for techies, social scientists, economists, politicians, journalists, and just about anyone else with an opinion about the future. All of this is certainly more intriguing than trying figure out why we still can’t post photos to our Instagram accounts from a laptop. Well, most of the time, that is.

This topic has also got me thinking a lot lately about Yogi Berra, the Yankee legend famous for his off-kilter aphorisms like “It ain’t over ’til it’s over” and “The future ain’t what it used to be.” In particular I’ve been stuck on “A nickel ain’t worth a dime anymore.”

What if, someday soon, a nickel isn’t worth anything anymore because people have moved on to bitcoin and ether and other digital currencies? Hard to imagine, but it gets easier the deeper you down the blockchain wormhole you go. Trust me.

Actually, “trust” is the key word here. Back in Yogi’s heyday in the 1940s and 50s there was significantly more trust in institutions — governments, banks, religions, the media, even some large corporations (“As G.M. Goes, So Goes the Nation” was an actual thing back then) — than there is today. In a sense we’ve gone in the opposite direction by trusting strangers via wildly popular “sharing economy” platforms like Airbnb and Uber while trust in institutions has plummeted. Actually, “plummeted” might not be a strong enough term. The Edelman Trust Barometer has some of the gory details, beginning with its title: An Implosion of Trust.

Timing Is Everything

The timing couldn’t be better for bitcoin and ether to thrive. They make up what is sometimes called the “trust economy” since buyers and sellers are trusting each other via blockchain transactions — held electronically and controlled by no one — as opposed to legal tender issued by a sovereign nation. With a total market cap approaching $80B (more than quadruple what it was in March, and about 50% of it bitcoin), the cryptocurrency market is still small relative to most nation-states (sorry, Tuvalu). But this exponential growth and the wide range of applications to potentially billions of people — beyond just currency — combined with its increasing acceptance by the establishment that it is looking to replace (sound familiar?) are undeniable indicators of SOMETHING.

Bitcoin can currently be used in the US and other countries in place of cash and credit cards with companies like Microsoft, Dell and Overstock.com, but it’s availability is still limited and the transaction total is relatively small. Using ether is even more limited. Where things really get interesting is the developing world, where government, financial and other institutions are not nearly as dependable.

Hold on to that thought for a moment.

The Global Trust Machine

There’s no disputing the fact that alternative currencies are potentially game-changing. But what if you expanded the game beyond just currency? Enter Ethereum.

I’m not going to go too deep into Ethereum (sometimes called the “global trust machine”) here beyond ether, but it’s important to point out that it goes beyond currency to also include personal identity information via “smart contracts.” Specifically, things like credit card numbers, legal documents, real estate ownership, health data, and more. In other words, the stuff that many of us trust to third party providers like Amazon, Google, Apple and whatever The Cloud is. In developing countries it gets a lot trickier as the economics change and institutions and the rule of law become much less reliable and trustworthy.

As with blockchain in general, Ethereum gives the user total control of their information by replacing the existing third party server storage and access infrastructure with decentralized nodes spread out among millions of computers around the world. This structure also makes hacking (I’m looking at you, Yahoo!) negligible, which is nice.

When you expand the Ethereum concept worldwide the potential is staggering — on a scale of “billions and billions,” as Carl Sagan used to say. Think about it: billions of people have limited or no access to banking and credit services. This severely limits their access to just about everything they need to buy or sell to people nearby that they know and trust (that word again). When you expand that to personal information and related documents, agreements, contracts, etc., a lot of profiting middemen are cut out of the picture, including governments. And that’s where things get even more interesting than trying to figure out what’s next on Game of Thrones. It’s also where Nationalism joins the conversation.

(Dis)trust

The origin of today’s nationalistic political movements actually have something in common with the emergence of bitcoin and ether: distrust. Distrust of corrupt governments run by politicians who shirk accountability. Distrust of banks and financial institutions run by the top .001%. Distrust of media outlets who may or may not be dishing up fake news. Distrust of other countries offering cheaper labor. Distrust of people from other countries trying to live in ours. It’s a long list.

But here’s the thing: distrust is easy to scale. Trust is much harder to scale.

This Is Why We Can’t Have Nice Things

So what better time to be a decentralized currency not beholden to any of these corrupt, centralized, trust-repelling “establishment” institutions!

Actually…while there’s an anti-establishment spirit common to bitcoin, ether and Nationalism, the very establishment that bitcoin and ether seek to displace is getting in on the action. JP Morgan, IBM, Microsoft and the UK government are just a few of the global players doing more than just sniffing around with blockchain currencies. In some case they’re even building their own private blockchains to take advantage of the technology’s unique functionality.

While it’s ironic to see the ultimate libertarian, anti-establishment technology co-opted by…the establishment, I’m still bullish on bitcoin and ether’s potential to shake up society for the better. But not quite yet at scale, and not quite everywhere, and not to the extent that ubiquitous parts of life like fraud, corruption, censorship, opaqueness, taxes and nation-states become things of the past.

Power and the Money, Money and the Power. Minute after Minute, Hour After Hour

It’s still early days for bitcoin and ether. The blockchain platform they are built on is without a doubt a game-changer, though we’ll still need lawyers, guns and money for the foreseeable future in order to keep society moving. But, as Coolio told us, the “game” has always been rigged by those with the money and the power. Frankly, I don’t see that changing in my lifetime. The leaders and political parties and financial institutions and media outlets and all the other elements of the establishment will surely change, but the game will go on. What’s different is that bitcoin and ether will make the game a hell of a lot more interesting.