What the world is learning from the Bitcoin experiment
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How do we scale bitcoin for mass market adoption? Will bitcoin replace or compliment fiat currencies? How will we deal with code obfuscation? Will bitcoin even exist in the future? These are just some of the many questions being asked and validated by this global experiment[1]. Nevertheless, whether you consider yourself an advocate, a skeptic or just a neutral observer, the underlying technology that powers bitcoin(the blockchain[2]) has prevailed[3]. We have learnt that the blockchain has proven to be more than a protocol for money, it has implications far beyond that.
A Glimpse Into the Future
40 years ago, ARPANET was started and the concept of an interconnected computer network was introduced to the world — this is how it all began. Things were asynchronous and fairly low bandwidth. In the early 80’s AOL joined in with its take on the walled garden model, offering games, chat rooms, etc. Having laid the foundations for the modern web, companies like Mosaic and Netscape launched and so began the World Wide Web. ‘Web 1.0’ and ‘Web 2.0’ were terms of art that were sort of hard to pin down. But to speak of the shift from 1.0 to 2.0 was basically to speak of going from a world of static content to a world where emphasis was on user generated content, social networking, and collaboration of one sort or another.
While the internet provides us with a great way to communicate and interact with individuals all over the world, it is not designed to enter into an agreements with them. Typically we had to trust these induviduals directly (in the case of e-commerce site, for example) or employ a third-party that would vouch on their behalf. Both are susceptible to the sorts of abuse that blockchain-based technology can mitigate or remove entirely.
Bitcoin has demonstrated, through the consensus mechanisms and voluntary respect of the social contract, that it is possible to use the internet as a world wide shared value-transfer system. In addition, it also demonstrated that this system was self governing and virtually free to use. Although this system was designed for money transfer, follow-up systems such as Namecoin adapted this technology into other applications, albeit rather simplistic ones.
A more generalized version of this technology, a blockchain 2.0 [4], has the potential to take us to an era of ‘Web 3.0’[5] which will change the delivery model of data on the internet. This implies that the delivery mechanism for static data (such as website styling, layout and static content) will be delivered via a peer-to-peer mechanism, while the time-sensitive data (such as context data and user content) will be incentivized based on user participation. Providing users with a greater level of anonymity, a more customized user experience, and a more efficient transfer of data. All while allowing the developers to create private, secure, and censorship resistant applications due to the lack of a central authority.
What will differentiate ‘Web 3.0’ from its predecessors is the ownership model that it will create for all the parties involved. In this world, various parties can enter into agreements regardless of geographic separation, interfacing difficulty, or perhaps incompetence , unwillingless, expense, uncertainty, inconvenience or corruption of existing legal systems.
The Blockchain as a Vehicle for Decentralization
Bitcoin brought a decentralized currency to the world which actually worked[6]. The logical follow-up questions to ask is what else can we decentralize?
At its crux, the word decentralization implies technological alternatives to human institutions — legal, social and financial. There are currently seven categories that show promise:
1 — Things that are purely digital in nature: these include things that exisit only in the digital world such as DNS mapping, digital storage, pay of proof applications, random number generators and lotteries to name a few.
2 — Things that can be represented digitally: such as real world currencies, stocks and other assets.
3 — Property ownership and trade: which are classified as smart property[7] and atomic exchanges.
4 — Complex contracts: these include things such as crowd funding and financial derivatives.
5 — Markets and auctions: which include things such as centralized markets (think used biked stores, Ebay, PayPal, Craigslist)
6 — Data feeds: which allow arbiters to assert real world facts into the blockchain. This will allow a host of very interesting applications that rely on price movements of real world entities and outcome of events. Hint: think de-centralized voting systems.
7 — Exchanges: that will allow transfer of value between various parties, when these parties are not even aware of the others existance.
A Safe Harbor for AI
It can be misunderstood that the blockchain helps us achieve trust minimization, mainly because of the heavy cryptographic connotation associated with this technology. However, building systems where we can operate without trusting anybody has never been the goal. Trust is a fundamental part of interacting with others and is not the right lenses to look from. Rather, this technology enables the administration of behaviour from the other parties to act in the manner that is intended[8]. This opens a whole world of possibilities especially when the other parties are autonomous artificial intelligence(AI).
Bots, smart-programs and AI technology are quickly becoming a big part of our everyday life and one can only speculate that this trend is going to increase (at an exponential rate) in the years to come. The popular belief is that as things around us get smarter[9], they will relay data to a central hub which will in turn collect additional data from other sources, process it and then act intelligently[10]. This ‘hub-spoke’ architecture not only has serious flaws from a scaling perspective, but more importantly from a privacy perspective[11].
The blockchain architecture with its ability to hold parties accountable to adhere to the behaviour specified, provides a safe harbor for AI to operate. Given a few technical hurdles that need to be overcome, blockchain 2.0, can provide an environment where the AI of tomorrow can grow and flourish, while ensuring that it does not turn into the “Skynet” that hollywood likes to believe.
In conclusion, bitcoin has given us a new model of thinking about ownership and the transfer of it. In the words of Arthur C. Clarke, predicting the future is a dangerous and hazardous occupation. If by some miracle, a prophet could describe the future exactly as it would take place, her predictions would sound so absurd that eveyone would laugh in scorn. The only thing we can be sure about is that the future will be absolutly fantastic. On that note, it will be exciting to see how the maturation of this technology will open doors never conceived before. Ultimately changing the way we interact with our technology, how it interacts with us and unequivocally how we interact with one another to prosper as a civilization.
NOTES & REFERENCES
[1] I used the word ‘experiment’ here to imply that the bitcoin system can be examined, and lessons from it can leveraged for the future. Obviously, bitcoin is legitimate and will continue to exist in the forseable future.
[2] “How does Bitcoin work?”. Bitcoin.org. Retrieved 20 October 2015.
[3] Davis, Joshua (10 October 2011). “The Crypto-Currency: Bitcoin and its mysterious inventor”. The New Yorker. Retrieved 31 October 2014.
[4] Blockchain 2.0, refer to the evolution of the blockchain to facilitate and accomodate the exchange of information beyond currency. This could be done by a variety of ways, which will not be discussed here.
[5] The term Web 3.0 was borrowed from Dr. Gavin Wood and is discussed in more detail in this article.
[6] Regardless of total market size of bitcoin, the concept proven that it can be used by a subset of people and the blockchain technology does not have any technical holes.
[7] The concept of smart property existed way before bitcoin and is explained in detial here
[8] Acting in the manner that is not intended does not necessarily imply malicious intent — For example, if the party got hacked.
[9] Objects are considered ‘smart’ when theyhave the ability to collect data, process it and then communicate over the internet.
[10] Act intelligently, by either beaming back instructions or trigger another set of commands to act based on the information that was provided.
[11] There is a lot of material available on how building AI that is not in line with human values can be one of the most detrimental thing humanity can build. Elon musk, Stephen Hawking and Bill Gates are just some of the many people who have voiced their opinion on the matter.
[12] Cover picture taken from the direct link provided by https://florica.wordpress.com.
Thanks to Terek Judi, Mohamad Atassi, Rebecca Panja, Joel Sardinha, Joshua Kho, Anand Nimkar and Ashish Malhotra for reading drafts of this.
