Gandhi-nomics and decentralisation : a strong foundation for cryptocurrency
the bitcoin use case
Mahatma Gandhi’s fundamental economic approach proposed in the 1940’s strongly embraced economic decentralisation (1). He favoured cottage industry over large scale industrialisation, as he felt the latter was responsible for human drudgery, monotony and other social evils (2). And so interestingly today, we observe how highly-evolved deep-data-driven technology at the most contemporary expression of modern day use, fuses with “village economics”. It’s delightful that such a concept traditionnel, one theme of Gandhi’s socio-economic philosophy, perpetuates vibrantly with full and proud disclosure in the current cryptocurrency ecosystem (3).
Gandhi’s stance was that each individual should have the means to feed and clothe him/herself adequately. Therefore it was necessary that :
“the means of production of elementary necessities of life remain in the control of the masses …. their monopolisation by any country, nation or groups of persons would be unjust.”
Gandhi further asserted that to neglect this principle of decentralisation would cause worldwide destitution. In this regard, one can look to the USA as being the lead example of “centralised” economic practices. Nobel Prize winning economist Joseph Stiglitz plainly reveals American anti-trust policies leading to the most effective market monopolisation practices in modern economies and their ensuing impact, resulting in mass failure albeit enrichment of the vested interests of a few (4).
2008 global financial crisis & bitcoin emergence
Fast forward almost 70 years and interestingly, paradoxically, as the world financial markets fell into massive crisis in September 2008 triggered by the collapse of Lehman Brothers bank (5), what arose like a phoenix from the ashes only 3 months later, in synchronistic timeliness, was a disruptive, bureaucratically permissionless, cryptocurrency response. Bitcoin!
The philosophical principle at the core of bitcoin? Decentralisation! So outlined by anonymous author Satoshi Nakamoto in a short 9-page whitepaper, entitled “Bitcoin: A Peer-to-Peer Electronic Cash System” (6). The paper, accompanied by the software protocol placed in open source repository Github in January 2009 (7), allowed anyone with average technical smarts and a computer to download the computer code and start mining a portion of the 21 million bitcoins (the total coin supply hard scripted into the bitcoin software).
bitcoin resolves what exactly?
Answer from bitcoin white paper : “inherent weaknesses of the trust based model” … in the existing mainstream financial system.
In an oversimplified nutshell, bitcoin addresses the “trust weakness” through offering a decentralised solution, rendering trust in a 3rd party like a clearing bank / the fed, obsolete. The very nature of bitcoin’s inherent technologies, completely removes the need to trust in any centralised institution to facilitate bitcoin transactions (speculative trading of bitcoin aside).
A view is that the fed, and greed motivation of banks, means they cannot be trusted to behave ethically in the interests of the communities they ostensibly serve. Also, as direct contributors to the 2008 global financial crisis, it’s conceivable that this non-trust perspective spurred on a bunch of fed-up, moralistic, intelligent techhead upstarts (we actually don’t know if Satoshi Nakamoto is one individual or a collective) who in tracking degeneration of the derivatives financial markets, saw fit to opportunistically turn this very sector on its’ head. To shake up the assumed monopolistic control of the existing money system, and to take back some control of — as Gandhi puts it — “the means of production” by the people. In this instance, the people being techies.
I urge readers to get that decentralised payments processing of any financial asset / currency / instrument is a highly disruptive, revolutionary set of technologies in the 21st century from a power and control redistribution standpoint. Also a deeply thorny irritation to regulators and the established financial system who realise that it’s possible fait accompli to create a well functioning system and to transact with units of financial value privately, daily without using any centralised banking services or fiat currency. And I refer not to the infamous Silk Road marketplace (8) either.
The provisions of International Covenant on Civil and Political Rights (ICCPR) and the International Covenant on Economic, Social and Cultural Rights (ICESCR) in their respective Article 1 state: “All peoples have the right to self-determination. By virtue of that right they freely determine their political status and freely pursue their economic, social and cultural development”(9).
Self-determination is vested in “peoples” and is applicable against a state. So one could logically argue the legitimacy of bitcoin, and the totality of it’s ecosystem, as a being a practical expression of people’s human rights to freely determine their own economic system, free of interference by the state.
the decentralised bitcoin ecosystem — simple tech explanation
Upon closer inspection, bitcoin is actually a collection of concepts and technologies that form the basis of a digital money ecosystem, including:
- A decentralised peer-to-peer network of computers called nodes of which there are 10,244 globally (10) (all running the Bitcoin protocol / software called Bitcoin core)
- Control of 50% or more of all nodes is not confined to one operator (dispersed control)
- A public transaction ledger that shows all transfers of bitcoin ownership — debit and credit inputs (the blockchain)
- A decentralised mathematical and deterministic currency issuance mechanism for the total bitcoin supply (distributed mining and the “Proof-of-Work” concept)
- A decentralised transaction verification system (transaction script) (11)
The Bitcoin system is based on decentralised trust, thus it relies heavily on cryptographic technologies to secure it, such as:
- Cryptographic hash functions (i.e. SHA-256 and RIPEMD-160)
- Public Key Cryptography (i.e. ECDSA — the Elliptic Curve Digital Signature Algorithm).
So even if you don’t understand the above concepts and technologies (this article isn’t a tutorial (see 12 for a simple “What is Bitcoin” video explanation)), I do suggest you make the mental effort to hold this entire construct as a complete system. All component parts matter! There cannot be the omission of any one of them. And so we have here, the first global, decentralised digital money system that the modern world has ever known.
decentralisation advocates — Elizabeth Ploshay McCauley and Andreas Antonopolous
Current board member of the Bitcoin Foundation, Elizabeth Ploshay McCauley(13) said in an interview in 2013 when newly elected, that one of her goals as a board member was “to ensure that bitcoin remains decentralised and free from being hijacked by centralised interests”. Elizabeth also expressed while working in US Congress as an assistant to the Whip, that bitcoin is a decentralised solution to centralised problems. Bitcoin offers “tonnes of opportunities for people around the world”. In her view “centralisation has harmed a lot of systems therefore the best option is alleviating any centralised poles of control and giving opportunity to individuals to participate in pro-active systems, and also assume all risks of failure likewise”.
Ardent bitcoin advocate and academic, Andreas Antonopolous, who I had the privilege of personally meeting at a Bitcoin Filter meet-up in Ubud, Bali (2017), speaks of “Decentralisation and the Architecture of Trust” in a talk in Canada (Nov 2017)(14). He asserts that hierarchal, pyramidical, common institutions or structures of today such as schools, businesses and governments (and so forth), conceived of during the industrial revolution, are dramatically failing to scale. We cannot trust banks unequivocally, unemployment is prolific, a sense of government betrayal of the people is rising due to fake democracy etc. They fail to deal with the globalisation of information. And so enter left stage, bitcoin, and all it’s concepts and technologies behind it. Delivered on a flat, peer-to-peer, non-hierarchical network. A decentralised use case in motion.
total market capitalisation of all cryptos vs equities
And not that this broad indicator, the total market cap (15), is priority in this conversation (that will keep for another article … the philosophy of speculative market economics), I mention it nonetheless as a means to providing an overview of sector size / scale that many readers are probably more familiar with. A sector literally built organically and for the most part free from centralised permission, wherein created to date are 1,591 further digital currencies in addition to bitcoin, all listed on 210 on-line exchanges. These exchanges are accessible globally to anyone with an internet connected computer / device, and who meets an exchange’s specific registration criteria (16).
So as at a single point in time on 17th May, the entire 24 hr / 7 days a week crypto sector activity (including bitcoin), reflected a total market cap of $385.9 billion USD (see coinmarketcap 17). And when compared with the US equities / stock market of $29 trillion USD in Feb 2018, post a massive 4.1 % drop in the S&P 500 Index, … AND … I hesistate to even include this stat because cryptos are NOT securities but this figure gives a broad financial comparison value … one can rightly see the cryptosector is a micro-drop in the money ocean (18). However the point to be made is, it exists. Cryptos are on the map!!!
In conclusion, I think if Gandhi were here today — meaning incarnate as the said physical embodiment — to witness this unfolding, he would approve wholeheartedly with the development of the digital currency sector. That it coherently leads in the direction of widespread and dispersed participation in the end-to-end product and services delivery and governance processes that you would expect from any viable financial system. Perfect the sector is not. Albeit perfection is in the fact that it was borne anyway. Perfection is that it continues in spite of technological, sector governance, centralised regulatory and competitive market obstructions almost 10 years after inception.
On a personal note. It’s a part of my self-proclaimed professional calling to seek out and bring to the awareness of all enthusiasts, investors, speculators, traders, even to critics, antagonists, the healthily disinterested and indifferent, a compassionate connection to the the underlying socio-economic philosophical context that underpins this emergent, bouyant, creative, highly disruptive, and for the present time price volatile digital currency ecosystem. My broad invitation is for all people in this sector to conduct themselves, their projects, their businesses and their profit motivation, from the most auspicious level of human care and consciousness that is personally and collectively possible.
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Disclaimer: No aspect of this article can nor should be relied upon as financial advice or encouragement to purchase or transact in bitcoin or any other cryptocurrency. Any decision to do so is your sole responsibility of course. Please do some quality due diligence & don’t break your “internal decision rules” or you’re likely to get screwed in scam crypto projects. I speak from personal experience. Take time to get informed in the mechanations of this ecosystem beyond price, meaning the tech, the teams, and all interrelated parts of a project. Question all assumed “monopoly-justified investment facts” about the mainstream financial system, and then act in full consciousness should you choose to onboard. Safe journeying off-grid. Namaste!
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(3) cryptocurrency ecosystem definition:
(11) “Mastering Bitcoin” by Andreas Antonopolous
(12) Youtube “What is Bitcoin video” https://www.youtube.com/watch?v=Gc2en3nHxA4
(13) The Bitcoin Foundation advocates on behalf of bitcoin and coordinates the efforts of the members of the Bitcoin community, helping to create awareness of the benefits of Bitcoin, how to use it and its related technology requirements, for technologists, regulators, the media and everyone else globally.
(14) https://www.youtube.com/watch?v=AcMTRGDWsu0 Andreas Antonopolous, Youtube “Decentralisation and the Architecture of Trust” speech.