Oh how I recall that fateful day when the cattle drive swept me into watching the unsettling pilot episode of the Netflix Series — Black Mirror.
Indeed, I was scarred. Never had I thought that such a vile act would make it’s way into relatively mainstream television. Worse yet, was the fact that it had been incorporated in such a natural and explainable fashion that it had almost felt like I was watching some grim news story.
Just picture it:
All of the nation’s electronics have been hacked and locked to the view of one traumatic live stream starring the Prime Minister. The plotline consists of the maybe beloved leader having to choose between an unspeakable act and the life of a young girl held hostage by said hackers. The pressure mounts.
Sounds like it can happen on any given day right?
However, as extreme as the scene played out, somehow the plausibility of the grander situation converted all of the disgust to some quest for deeper meaning.
What could the writers possibly be trying to say? — whatever it was, they were going to great lengths to say it.
As the episodes rolled on, the pattern emerged that revealed the true astuteness behind the concept of the show — that the technology of the future will cause us to reflect upon the societal flaws of the present.
In similar fashion, blockchain technology raises it’s own questions about the world in which we live. Firstly, we will look at how the promise of blockchain technology causes us to reflect on the true cost of trust. Secondly, we address the fear of technology as a recurring theme in Black Mirror. Likewise, we will see how the fear of blockchain is affecting it’s implementation, and whether those fears are legitimate. Lastly, we will conclude on the show’s most powerful thought, that technology alone is not enough to fix the world’s problems. Particularly, that blockchain and technology may not be the issue at all, but rather the people using them.
The Dirty Reflection
“Blockchain is a digital database containing information (such as records of financial transactions) that can be simultaneously used and shared within a large decentralized, publicly accessible network” — Merriam-Webster
Effectively, blockchain is trust management technology — hinging from the fact that it presents a system of transparent, tamper-proof, record keeping where the true value is guarded by the consensus algorithms involved. This says a whole lot when we consider that it is supposed to have all sorts of revolutionary repercussions to the way we do business.
In particular, the fact that blockchain is expected to be so disruptive reveals one thing about our societal construct, that is:
The cost of trust is staggering.
Fundamentally, in order to faithfully carry out transactions, we require systems that provide accurate proof of what a person owns, what they owe and what is owed to them. Just think about the fact that part of the job of an accountant is to reconcile their company’s records against the companies with which they do business. Compound this with the fact that we then have internal auditors and external auditors to further verify the healthiness of a company’s ledgers — not to mention the legislature that goes into determining what it even means to be healthy.
We have systems of checks and balances that iterate on themselves continuously and they are dreadfully expensive.
The Middle Man
To enable trust where there is none, often we look to intermediary entities to facilitate transactions. These entities, sometimes called “middle men”, are expected to:
- Ensure that the owner has a the right to sell a good
- Keep a clean record of transaction history
- Certify that the buyer has the ability to actually buy the good
The clearest example of such an entity is the bank.
We use banks to facilitate practically every form of a transfer of payments. From the payment of bills to sending money to Aunt Helga overseas, it all goes through the bank.
Generally speaking though, for each one of these transfers, there is one or more types of bank fee attached to the transaction. Consider the fact that wire transfer fees can be anywhere between 0 to $45 per transaction in the US.
In 2016, global remittance worldwide stood at about 574 Billion USD at a commission rate of 7.14% on average. That’s a ball park figure of about 40 Billion USD in commission fees from remittance alone.
These are all costs of trust since we aren’t able to faithfully carry out these transfers on our own. Blockchain technology is putting the spotlight squarely on the cost of trust by promising to offer more efficient trust management that is direct and less prone to human errors, while at the same time being of significantly lower costs.
Additionally, we use banks to safely store our money amongst other valuables. Banks further incentivize us to do so by rewarding us with interest, while at the same time lending out our deposits at much higher interest rates.
In this regard banks have the ability to create money out of thin air.
When you take $50 to the bank they may be required by law to keep about $5 in reserve while they are free to use the other $45. Viola the bank just created $45 that didn’t exist before. What we mean is that the $45 is now essentially in two places at once. We know that it’s in your account, because if you were to try to withdraw it, you’d have it. But in reality, it was probably used for some other purpose.
This is a precarious situation which banks balance through risk management.
The unfortunate part of this arrangement however is that we really don’t have much of a say in what the banks do after we deposit our money with them. Even worse, is the fact that their actions have such a massive ripple effect on the health of the economy and by extension our daily lives.
About 12 years ago, the Lehman Brothers reported record revenues which were endorsed by their auditors of the time. Less than a year later, the value of those same assets plummeted and the company filed for bankruptcy triggering the global financial crisis of 2008.
This may be the extreme case, but again, this is a clear example of the tumultuous cost of trust.
Black Mirror plays on the audience’s innate belief that man is his own greatest threat. This concept is translated rather snidely through the fact that every episode introduces some fascinating technology, and almost every episode ends in death. Again, even though we find the expressions to be extreme, shocking and disquieting, we find it hard to devise counter arguments of plausibility. New things are fascinating, progressive and absolutely necessary— but new things can also be damaging and they really can kill people sometimes.
That is why a fear of the unknown can sometimes be healthy. It’s really why we have a fear of the unknown in the first place.
Fear forms part of the difficulty undermining the speed of integration of cryptocurrency into regular monetary usage. Indeed, we are comfortable with the bank and fiat currencies. We know that we are charged unreasonable bank fees and that profit is maximized on every turn, but in the end we get service that is satisfactory enough to forget about it and move on with the other 99 problems we are facing.
It is therefore not by coincidence that bitcoin somewhat popularized around 2009. It was the perfect timing riding on the fact that for once the distrust of the banking system had overcome the comfort of going with the flow. Unfortunately, it’s hard to argue about alternative banking systems because we just don’t have time to think about how different life would be with these changes.
On the other hand however, blockchain technologies do come with their own fair share of worries.
For one, decentralization can be expensive. At present it takes large amounts of computing power to properly operate the complex algorithms that make blockchain secure. This means large amounts of electricity is required which is still largely produced by fossil fuels. According to a Futurism article in 2017, a single bitcoin transaction costs enough energy to power the average household for an entire month.
Further, at present blockchain technologies are rather slow in comparison to the transaction systems presently operating. For instance, the ethereum blockchain can only support about 15 transactions per second as opposed to the 45,000 that can be supported by Visa. However the creator of ethereum is confident that the world will eventually be able to handle up to at least 1 million transactions per second.
Undoubtedly, The greatest fear would be whether or not blockchain technologies can live up to the security features that are so strongly touted. So far though, most security issues that have come up with bitcoin have been to do with people being scammed out of their bitcoin — which is really through no fault of the technology.
Technology Alone is Not Enough
The most powerful statement made by Black Mirror is that better technology with the same societal precepts will lead to the same outcomes. More specifically, as with any technology, the main issue tends to come from the people using them.
For instance, banks form a significant portion of the Forbes Blockchain 50 (a list of companies leading the way in developing distributed ledger technologies and patents). This alludes to the fact that the same companies that currently profit the most from the cost of trust are leading the way in developing the technologies that some are expecting to replace them. What’s more likely to happen is that these companies will successfully integrate blockchain to improve the transparency and efficiency of their own operations and hopefully this success will trickle down to the wider society.
Another part of the great hope is that blockchain will serve as a tool to fight the forces of corruption. Indeed, if there is one thing that is more expensive than trust, it would be corruption. In fact according to the IMF an estimated $1.5 to $2 trillion dollars is spent yearly in bribes alone (about 2% of global GDP).
Venezuela is a prime example of the connection between corrupt government policies and the devastating effects of an economic collapse on every day life. The policies that were adopted by the Chavez regime up to 2013 and then continued by the Maduro government have lead to inflation rates of up to 80,000% per year and rising. So dire is the effect of the economic situation that people are resorting to eating food from trash cans.
Cryptocurrency may provide relief in such an instance by offering an immediate alternative to the failing local currency, if meaningfully instituted.
The trouble then is that a truly corrupt government can sometimes get cunningly creative. The good thing is that the decentralized, immutable ledger will certainly make it more difficult. As we have seen however, the very determined Chinese government is still quite successfully stifling the slippery influence of social media.
All in all, while it is up in the air whether blockchain may come to overturn the world, its prospect alone is causing us to ask some serious questions about the staggering cost of trust, the trade off between comfort and new technology, and whether or not seeking greater technology will ever come to fix the base issues that plague the societies in which we live.