Blockchain — Seizing the Means of Transaction
[This article first appeared on Adobe’s CMO.com — May 2015]
There are so many new digital services, devices, platforms and technologies that it can sometimes be difficult to notice an important development.
It’s very easy to be blinded by the newest shiny toy or buzzword, or to be drawn into a debate about the pricing and reach of a new digital display format. Adverts on Snapchat! Adverts on Vine! Declining Facebook reach! Google’s got a buy button! Smart Underwear? Hell yes!
Imagine you’re at an exhibition in the early 1990’s and among all the exotic stands and vendor pitches there’s a small table manned by someone who looks like they’re from the IT dept. Let’s call him Tim. He’s a very amiable chap and he explains something called Hypertext Transfer Protocol to you. He says you can call it HTTP for short.
It’s a very technical explanation and he can’t really show you a sexy promotional video. It all sounds a bit complicated and you can’t really picture a use for it. There are no decent goody-bags in evidence. Your attention drifts over to the team demonstrating the radio-controlled fragrance balloons at a nearby stand and you don’t think about HTTP again.
HTTP became the foundation of data communication for the world wide web. I don’t think any of us could have anticipated how fundamental it would become to our way of life in such a comparatively short time, let alone the diversity of services it would enable.
A Few Players Dominate
Despite that flourishing of diversity, the network is increasingly dominated by a small number of commercial operators. We use their products and services because, well, they can be hard to avoid. Google, Amazon, Facebook, Apple and a handful of others own the means of digital production, to misquote Karl Marx. Users are reduced to a kind of digital proletariat, watching the big players harvesting their valuable personal data and profiting from it.
Enter the blockchain. We’re back at that imaginary exhibition but now it’s almost 20 years later — 2009. There are lots of stands demonstrating apps that you can download from a raft of recently created “app stores”. Everybody is very excited about something called Twitter.
There’s another small table near the fire exit and it’s being manned by someone who looks like they’re from the IT department. Let’s call him Tim. He’s a very amiable chap and he explains something called the blockchain to you.
It’s a very technical explanation and he can’t really show you a sexy promotional video. It all sounds a bit complicated and you can’t really picture a use for it. There are no decent goody-bags in evidence. Your attention drifts over to the team demonstrating a music streaming service called Spotify and you don’t think about the blockchain again.
A Decentralising Force
The blockchain could be a technological development as important as the web. As the ability to control the network is increasingly consolidated in the hands of fewer and fewer parties, blockchains decentralise power. Like Tim at the exhibition, I struggle to provide a simple, non-technical explanation of the blockchain but here I go.
A blockchain is a single ledger or registry of transactions, copied multiple times and distributed widely across the network. It’s effectively a decentralised database with no single organisation, state or person in control, no middlemen. Consensus on the contents of the database is reached by continual comparison between these database “nodes”; it’s a form of distributed co-operation. The distributed database contains authenticated records of the history of activity on a network.
The blockchain enables decentralised, programmatic authentication of a database transaction, requiring no intermediary.
So, back in 2015, what on earth does this mean?
What This Could Mean
It’s easiest to grasp if you think about current records that require authentication when they’re edited in order to validate them. Making a purchase using anything other than cash is an important one. In order to edit the official record and verify that money left your account and went to somebody else’s, we have an entire industry of intermediaries — the financial services industry. Blockchains, in theory, could make much of this existing infrastructure unnecessary. Cryptocurrencies like Bitcoin and others are built on top of the blockchain. Transactions are authenticated automatically without middlemen being involved.
Money is far from the only system that could be disrupted by the blockchain. Ownership and value of stocks and shares are recorded in databases that are centrally managed by dedicated organisations. Changes in the ownership details and value of stocks and shares might be handled by blockchains instead. Similarly, any certification of ownership or value. Loyalty points or air miles could be managed automatically by this type of system, requiring no central authority to manage. Proof that you own your house, your car, that it’s taxed appropriately or that your belongings are insured. All these things could theoretically be automated and decentralised by the blockchain, disintermediating whole industries just as the internet has been doing for the past couple of decades.
Because the blockchain is programmable we could see recruitment or human resourcing efforts handled automatically by blockchains. Our CV’s are small databases that contain data that could be verified automatically. Contracts of employment might update our personal historical record automatically, authenticating and verifying our professional achievements, helping algorithms to place us in our next role. Intellectual Property Rights could similarly be verified and updated automatically via blockchains (see ascribe.io for an early example).
Marx claimed that for the proletariat to be liberated they would need to seize the means of production from the ruling class. Blockchain might permit people to seize the means of transaction from the organisations that currently hold that power, decentralising it and distributing the authority they previously held. They’ll use that power for their own reasons, to achieve their own desired results. Just as with other technological developments in internet history, the unintended consequences could be huge.
Originally published at subsector.net on May 28, 2015.