Face the buzzword
Some years ago it was said that Big Data is like teenage sex: everyone talks about it, nobody really knows how to do it, everyone thinks everyone else is doing it, so everybody claims they are doing it. Now, we have to face another buzzword — blockchain. People claim that blockchain will change the world even more than internet did. Therefore, everyone wants to have their own blockchain, however, only few can understand how blockchain works and how it can really help.
The main purpose of this article is to introduce a different outlook on the blockchain technology. It aims at explaining why we are dealing with disruptive technology that revolutionizes the world. Even though the technology seems to be quite complex at the very first glance, we need to raise public awareness of its significance. Such an attitude may contribute to changing the perception of the blockchain technology so that the society could understand that not corporations but individuals and commons are those who may benefit most from the paradigm shift.
Change the world? Shut up and take my money!
We have heard a lot about the companies releasing announcements about blockchain implementation, or just adding blockchain to their name and their shares increased by hundreds of percent without any economic justification. Thus, it is claimed to be yet another iteration of the dotcom bubble, which can be also seen on the cryptocurrencies market. A vast majority of users is tempted by floating rates and an opportunity to earn a fortune in a short period of time, even though they do not have any idea how cryptocurrencies work. Nevertheless, investing money without doing any research and having any knowledge about your investment does not seem to be reasonable.
Furthermore, many people take advantage of the craziness about the new mechanism of fundraising — Initial Coin Offering, despite thinking more about just doing it instead of having a true purpose and need to do it. It does not take a rocket scientist to issue a token on Ethereum platform and it is more about the marketing. Specialists make a song and dance about the token causing Fear of Missing Out (FOMO) effect. People do not want to miss an opportunity and therefore they take part in ICO without any deeper consideration. And as a consequence, the main reason of creating ICO — enabling people to raise money for its projects in a very early stage thanks to a crowdsale with creating a community at the same time — seems to be blurred.
Not separately but collectively
So what, is blockchain just a new hype that started fast and will end equally fast? First of all, it is necessary to mention Amara’s law stating that people tend to overestimate the effect of the technology in the short run and underestimate the effect in the long run. Taking blockchain into such consideration we need to bear in mind that blockchain should not be evaluated separately, as it is much more valuable combined with other technologies. For instance, blockchain can be used as a data marketplace for those who need data for applying machine learning algorithms and for those who want to benefit from sharing data. Better access to data may lead to better-performing algorithms.
Besides, blockchain could be perceived as a control layer that coordinates the work of autonomous robotics and incentivized behaviors. As the potential of the Internet of Things grows and automatization of many processes can significantly increase the efficiency, blockchain may become the core of the Machine-to-Machine economy. Other technologies, such as augmented and virtual reality or 3D printing may increase their importance owing to being accelerated and more transparent when combined with blockchain.
As a matter of a fact, using distributed and shared database can also be beneficial in building trust among users, vitally important factor of commoditization. This process is a movement from monopolistic competition to perfect competition and it is caused by easy access to open-sourced technologies and marginal costs that are close to zero. It means that increasing the production of one unit does not cost anything. Hence, it is much more favorable for small players as the big ones can lose their advantages and blockchain can help them with the market creation, building a reputation and protecting its interest.
True sharing economy and peer-to-peer transactions
In order to understand the whole blockchain phenomenon and its similarity to the internet revolution, it is necessary to highlight that this technology is more beneficial for individuals and commons than for companies. Let me give you some example so as to prove that is not a sweeping generalization.
To begin with, we need to think about Metcalfe’s law and so-called network effect that is often used when describing the value of a social network. According to this law, the value of a network grows as the square of the number of users increases. For example, when the number of users increases tenfold then the value of the network grows hundredfold. We can apply this rule in terms of using utility token that can represent an access to a community. Owing to this, one may think about the tokenomy in a way that using network increases its value as the more data about users is generated, the better service is delivered and thus more users join the community. This may be a fulfillment of the sharing economy.
Imagine you want a lift and you want to use Uber, that is said to be a sharing economy platform, however, instead of paying you driver directly, Uber charges 25% of the driving fee. There is not a shadow of a doubt peer-to-peer to transactions are the part and parcel of the sharing economy and using token that represent certain activity may enable it. Ok, but how come can uber based on blockchain be created?
To clarify this issue we need to conjure up with a decentralized autonomous organization. It is a concept that states that all law and rules that organization has been written in a computer code, so-called smart-contract. It implies that all the administrative procedures, allocation of tasks and other issues that organizations are struggling with are embedded into a code and a majority of the processes are automated thus they are transparent and visible for all members. They are also rewarded with tokens for their contribution and in case of conflicts, a community decides to solve it. Therefore, we can avoid hierarchical structure and focus more on roles and not on positions and it can support the self-actualization needs what is crucial in nowadays world.
Returning to the Uber based on a blockchain, founders of the new organization are given tokens that have no value at the beginning but as the product works and the community grows token increases in value. They put their own skin in the game, thus they are well-motivated to succeed. Moreover, due to transparent rules people from different countries may easily cooperate with each other and they have nothing to fear from being deceived or fairly rewarded for their work.
Sustainable development and synergy
Apart from this, using blockchain and distributed ledger technology we can achieve sustainable development. It has been mentioned that the blockchain technology should be treated collectively with other technologies but it can also be applied not only in various sectors of economics but also in social and political matters. Thanks to applying technologies we can make our democracy more representative and it may help us shape the future in a more sustainable way.
It goes without saying that our environment is burdened with the consequences of previous industrial revolution and we need to care for our planet and prevent climate changes. Blockchain can help us create the collective intelligence that might be able to make right decisions.
We can also think about Gaia Theory states that living organisms are interacting with inorganic surroundings to create a synergy to maintain condition to live. For example, the hypothesis assumes that the concentration of oxygen in the atmosphere is regulated thanks to the incentives given to bacteria in order to balance the emission of methane and to keep the level sustainable. Blockchain can help people to achieve harmony and synergy and it may help solve a tragedy of common problem and coordinate interaction between people even if we are so far away from this.
Blockchain can also help us to interact with artificial intelligence in order to avoid scenarios presented in the Black Mirror series. How can blockchain help here? We need a little bit more transparency about the algorithms that are around us, especially for those which are applied in areas such as medicine. We are living in the world that is continuous. What does it mean? Rating and evaluation system are everywhere and there is a plenty of data in the network, based on those some decisions like which client is going to default or whether the treatment should be started are made by checking whether the score is above or under the threshold. And as the problem are more complex and require more decisions the number of decisions growths and it should be tracked.
In addition to that, we still have to deal with trolley problems and other dilemmas that are related to ethics and AI legal personality. We need to figure out who should be blamed for what. But those problems can not be solved by few people, a public discussion is essential and such topic needs to go to the mainstream as the wisdom of the crowd may help in shaping the future.
Blockchain4Everyone — create the future
Generally speaking, we need to raise public awareness of the importance of the new technologies. We need to start a public debate about the possible consequence of their implementation and we need a social impact that may force regulators to make essential changes in the law. It is also significant to inculcate in young people how the labor market will change. There are many popular jobs that are going to be replaced soon and meanwhile, there will be plenty of new occupation that will need specific skills that need to be developed.
As far as blockchain is concerned we have to remember that it is still an immature technology. Even if it exists a couple of years, there are still many technical challenges that ought to be overcome. The main issues that need to be solved: scalability, we need a faster blockchain; privacy, we need to be protected; accessibility, it needs to be user-friendly as everyone can benefit from.
Furthermore, people need to understand that cryptocurrencies are just a small scope of the blockchain technology. As it was said bitcoin is to blockchain as email was to the internet. However, people tend to use them only to speculate and we need to remember what Pope Francis says that money should serve, not rule. Besides lack of clear regulation concerning Anti-Money Laundering and Know-Your-Customer procedures lead to uncertainty and sandbox that help cryptocurrencies to develop needs to be created. Apart from this all the cryptocurrencies and tokens should be audited and validated in order to avoid scams.
Moreover, we need to solve consensus problem, cryptocurrencies are still prone to 51% attack. What does it mean? Imagine, that some miners can transfer its computation power from Bitcoin network to other cryptocurrencies and take control over it as there much less power needed for that. There are platforms where you can buy hashing platform and try to perform 51% attack. Undoubtedly, there is still a long journey before people to establish better and more resistant consensus protocols. Obviously, it not so easy as some trade-off between transparency and energy waste goes with the territory.
Last, but not least education is the key. Some people claim that only a few understand how internet works but everyone uses and same story will be blockchain. However, as it was mentioned blockchain is linked with other disrupting technologies and thus it will be having a huge impact on the society. We need different points of views and attitudes towards it in order to shape it more accurate. The only collective intelligence that consists of programmers, lawyers, data scientists, economists, and specialists will help us understand better the potential hidden in distributed ledger technologies. We do believe it will change the way we live and as it is claimed systems maintain longer than we think but eventually collapse faster than we imagine.
To sum up, I would like to emphasize that those who have more technical knowledge about technologies are responsible for sharing knowledge with others as it may help us to achieve sustainable development. Therefore, a group of young people and enthusiast of blockchain technologies has founded an initiative called Blockchain4Everyone that is aimed at raising public awareness of the importance of changes we have to face. It is the grassroots movement that idea Is to work similarly to the blockchain technologies, so everyone can be a node and help us to share knowledge.
We start by having workshops in high-schools but we will target our activities to all audiences. We think about creating crowdsourcing platform when people can help us make the technology understandable for everyone. If you want to join us in making the world easier to understand please let us know via our social media channels. We will appreciate any help as cause we do believe that individual is limited but together we are limitless.