By the end of this series, you’re going to understand blockchains well enough to recognize the impact they have on your life.
I relied on many sources for this blog series, but heavily on Naval Ravikant, Nick Szabo (@nickszabo4), and Yuval Noah Harari (author of Sapiens and Homo Deus).
Blockchain is a fundamental upgrade: an invention to solve trust, with broad implications for society. In the future, interactions that rely on trusting strangers will be mediated by some form of blockchain. These relationships underlie the most fundamental aspects of society, creating a world of opportunity. There are many kinds of blockchain products, and trust is the foundation for all of them.
Corporations, governments, and civilization-at-large are just beginning to incorporate blockchain. This series to help you understand blockchain intuitively — a map to navigate the terrain — while the Blockchain Wars are waged. In this post, I’ll detail three scenarios in which blockchain is clearly applicable. The problems with each involve a lack of trust. The social implications of adding a layer of trust to society makes blockchain an unstoppable force.
- DELETE — information is only as durable as the container in which it’s stored. When Haiti was hit by the 2010 earthquake, the municipal buildings containing paper records, such as land titles were destroyed. All ownership in Haiti disappeared. Moving this information to computers reduces the exposure considerably, however, these storage centers are consolidated, and still vulnerable to political turmoil and climate catastrophe. Moving this information to blockchain solves this problem entirely.
- ALTER —information isn’t easily verifiable. Consider when Trump decides to ‘improve’ public climate data. Scientists scrambled to download the climate data before his administration ‘fixed’ it. Consider shipping containers, which travel all over the globe. A robot loads a container onto a cargo ship in a matter of minutes. A piece of paper (the bill of lading) can stall a container for weeks — often, it goes missing because someone is fraudulently ‘improving’ it. The paper must also be stamped and exchanged dozens of times during its journey. The cost of moving this container includes the cost of tracking this paper. Blockchain can offer an indisputable electronic audit trail.
- CONTROL —we rely on others to distribute information. Consider publishing a book, writing a blogpost, tweet, Facebook post, comments, etc.. All of these go through entities that can deny, censor, or silence your content. Who are our modern gatekeepers? Twitter blocks tweets, Facebook hides your post, Google downgrades your content, your government monitors your internet — silently, with no recourse. Everything you’ve published or read was approved and promoted by something else. Blockchain allows anyone to control who can know about and access their information.
These three fundamental problems have never been completely solved.
Each of these problems relies on trust. Slowly, over millennia, humans have evolved better technologies of trust. Technologies like law, money, corporations, and government free us from the burden of trusting strangers. Increasing trust in these abstract ideas liberates us from the burden of knowing everyone. Even with their warts, these institutions empowered us to scale societies from tribes to nations of millions.
Institutions let us grow our civilization by administering the tasks that we don’t want to think about. This is the benefit of trust. We trust things to facilitate interactions neutrally. The Federal Reserve Bank (FED) takes care of keeping the USD stable. Ratings agencies monitor levels of risk across the world. Uber and AirBnB take care of matchmaking, reputation, and payments. All we have to do is have money and decide where to go.
The role of trust explains why finance is tightly coupled with politics. Political mishaps unleash financial misfortunes and vice versa. The 2008 financial crisis started with credit ratings industries that grade levels of trust. Predictably, they were corrupted by the money flowing from Wall Street and lobbyists to influence their ratings. The world footed the bill for their misplaced trust.
The problems that law, money, corporations, and government all share stem from centralization as a solution to trust. When two strangers interact — buying coffee, filing a lawsuit, downloading climate data, reading a blog post, transferring property — they trust in many other things to facilitate the relationship. Unhappily, these mediators aren’t neutral third parties. They can delete, alter, and control. Indeed, they often grow so large that they shape society — Facebook and Twitter revamped the nature of global elections; Uber altered global transportation; Wal-Mart remade middle America. And, we’re still paying for our corrupted ratings agencies that directed global investors into a high risk disaster.
Civilization advances by extending the number of important operations which we can perform without thinking about them. — Alfred North Whitehead
Increasing centralization via the internet has created an immense amount of pressure on society, reshaping our interactions around the things that save us time and thought. Once blockchain matures, it will morph society as much as the internet. History shows us that upgrading technologies for trusting strangers has shaped our world:
- Tribes — up to 150 people. The tribe members know one another intimately. The tribe enforces, punishes, and shames those who violate custom. Trust was between people with shared local customs, language, and gods — enforced by community.
- Pre-industrial, agricultural civilizations — thousands of people. These civilizations relied on increasing circles of trust — family, community, ruler. Still intimate, but larger and lightly mediated by trusted authority figures and religion.
- Industrial, nation-based civilizations — millions of people. Circles of trust has moved to trust in markets, institutions, and government. ‘Become individuals. Live and do whatever you wish.’ This is nationalism plus consumerism. Your level of freedom is determined by your citizenship. Better citizenship, better institutional access, more freedom.
- Post-industrial, globalist — billions of people. Anyone in the world can have a secure interaction with anyone else using blockchain, without relying on a trusted third party.
Improved technologies for trusting others allowed societies to scale up to their current capacity. Turns out, in order to solve the problems of delete, alter, and control, you have to design a technology whose main feature ensures that nobody controls it and everyone can use it. Blockchain will do just that, and open the door to truly global societies.