Summary: What would Alexander Hamilton think of blockchain technology? A recent gathering at the site of the 1944 Bretton Woods economic conference triggers thoughts about how new technologies can empower experimentation and change the world in a variety of positive ways, so long as they remain open and collaborative.
During several days of interesting juxtapositions at the Bretton Woods 2016 gathering last week, one of the oddest (and most oddly satisfying) was the following.
On Tuesday night, the 30 or so of us attending the event gathered for dinner. The conference, hosted by Consumers’ Research, brings together an eclectic mix of Bitcoin/blockchain enthusiasts for three days of intensive conversations and workshopping that, it is hoped, will help shape the future for these revolutionary technologies.
Michael Casey of the MIT Media Lab’s Digital Currency Initiative had just delivered an insightful talk contrasting the current groundswell of positive change in the world, represented by technologies that link us all in ever-more meaningful and powerful ways and also by correlative social forces, against an antipodal tide of despair, represented by both insular and repressive impulses that have led to results such as Brexit and the rise of political demagogues.
After he finished, Joe Colangelo, the head of Consumers’ Research, asked some of the children who were at the event with their families (including my daughters) to come forward and sing. He had heard that they knew the songs from the Broadway phenomenon Hamilton, and without (much) hesitation, they launched into the opening, eponymous number.
Pretty soon, the entire crowd was joining in, and it became a rousing good time. What was remarkable, though, was that here was a group consisting of Libertarians, legislators, technologists, futurists, regulators, developers, and yes, even a few attorneys, all participating in a song celebrating the (ten-dollar) founding father of the modern financial system, in the very hotel where arguably the most profound subsequent change to that financial system took place, back in 1944 when delegates from dozens of countries came together to mold post-WWII economic institutions.
Lesson Number One: There’s just something about a live performance. Music, and really all art, is at its best when it challenges and inspires us, but the immediacy with which artists are able to connect with their audience also is critical. Boiled down, the lesson is that finding ways to connect people to each other in meaningful ways matters.
The first portion of Hamilton deals with, of course, the American Revolution, an era when deep forces of change were at work in the world, leading to bloody conflicts between entrenched power and those who sought a different model. Reading Ron Chernow’s biography on which the musical is based, one gets the sense of how the leaders who crafted the Declaration of Independence and ultimately the Constitution collectively rose above their individual foibles and biases and identified and enshrined guiding principles that have, for the most part, kept us pointed in the right direction for over two centuries. Principles that have then been copied, followed, and even (arguably) improved upon in countless other nations.
After the Revolution, however, those very human men returned to their messy, sometimes principled but more often wholly self-interested, squabbles and schemes, or fell into scandal or debt or treachery. Hamilton himself personified these warring tides, almost single-handedly creating the treasury, the coast guard, and other institutions; but also ruining his personal reputation by having an affair with a woman whose husband then blackmailed him, and ultimately succumbing to the forces of pride and ego by engaging in his fatal duel with Aaron Burr.
Whatever your perspective on the global institutions such as the International Monetary Fund created by the 730 delegates at the 1944 Bretton Woods conference (and in particular due to the ministrations of John Maynard Keynes and Harry Dexter White), that conference has also been described as a moment when diverse, self-interested participants rose to an historic occasion and forged something greater than the obvious sum of its parts.
Lesson Number Two: There are moments in history where humans can unite to create lasting, positive change. But…
Unfortunately, not all historical moments are like this. There’s a song in Hamilton entitled “The Room Where it Happen,” which describes the dinner in 1790 where Hamilton, Madison and Jefferson worked out a compromise behind closed doors that resulted in the seat of government being located on the Potomac River, and the national assumption of states’ debts. The secret meeting may have solved several significant problems of the day, and remains partly shrouded in legend, but it stands as a symbol of for the many “smoke-filled rooms” of history where key decisions have been made by the political or financial elite. For instance, the “meeting” in which J. Pierpont Morgan locked the presidents of numerous banking institutions in his library to resolve the Panic of 1907, or the secret conclave in 1910 on Jekyll Island that laid the seeds for the Federal Reserve.
There was probably a “smoke-filled room” element to both the Constitutional Convention and the Bretton Woods Conference in 1944 as well, but there was also a key difference: The attendees were delegates rather than self-appointed decision makers, and the meetings were well-publicized in advance, ensuring press coverage. While the Constitutional Convention imposed a gag rule on its participants (a rule that met with significant criticism, by the way), it was still heavily covered by the press, and the Bretton Woods Conference had over 100 journalists in attendance. In the absence of such checks on those who wield power, in the words of the aforementioned song: “We want our leaders to save the day / But we don’t get a say in what they trade away.”
Lesson Number Three: Secret decision-making by non-elected parties who believe they “know best” what the rest of us need or want are subject to corruption and self-interested behavior.
The above three lessons can be reduced to just the following: Connection. Collaboration. Transparency.
These three goals were the focus of Bretton Woods 2016, from my perspective. While none of us were elected delegates and there was little or no press coverage, neither were the participants key government decision-makers or the financial elite. Rather, the conference examined the mechanisms by which new technologies can empower ordinary people to link together, across open networks, with other individuals across the globe, in order to change oppressive systems, create new opportunities, and simply take control of their own destinies.
For this reason, the issue of “identity” was a major topic of discussion throughout the three day event. How can blockchain-based databases, and related distributed systems, be used to provide those who struggle to build reputation and credit — the underpinnings of individual economic power — with a means of doing so? If you’re interested in this topic, a good place to start is here. But even for those of us in developed countries, how do we as individuals wrest control of our own personal data back from the institutions that often now control it?
Another major topic was, of course, regulation –a subject that tends to dominate many discussions around new technologies, especially those like Bitcoin that have been used for money laundering and other illicit purposes. Putting a particularly fine point on this discussion was the recent launch, runaway crowdfunding success, subsequent $60 million hack, and now potential hard fork of The DAO, the autonomous investment vehicle created on the Ethereum blockchain. (A general summary here if you’re not familiar with The DAO.) The general consensus — not a word used lightly in these circles — at the conference was that it will be a shame if regulators step in and react too harshly to The DAO, potentially squelching a new arena for development. But another lesson in transparency emerged: There were too many opaque aspects of what The DAO was intended to do and how it was governed, and this led to some of the key problems.
Experimentation itself, especially when it is transparent, is often a very good thing, whether it involves iterations of technology or even political structures: The success of the open source software model is a testament to that idea, and our current system of government is not called “the American Experiment” for nothing. In a sense, all systems of governance are experiments. Blockchain technology provides an interesting case study because blockchains require a consensus mechanism that essentially acts as a governance structure, and we have already seen multiple variations that diverge from the Bitcoin “proof of work” model. With distributed autonomous entities like The DAO, another layer of governance is added on top.
Thus, blockchain-based systems can act as test beds for all sorts of governance models in all sorts of contexts. Distributed entities can be created that, for instance, connect disparate individuals in global communities centered around shared interests or causes, and then those individuals can create whatever rules they want for their community. (Of course, this already occurs without blockchain technology, in many types of online shared-interest groups, but blockchain and related technologies stand to make those much more robust.) Different models of governance will be tried and discarded — “oceans rise, empires fall” — but perhaps we will discover new models that have lasting power.
There is no question that powerful forces are currently at work in the world, from a resurgence of nationalism, to serious cracks along racial fault lines, to deep distrust of financial, legislative and law enforcement institutions, just to name a few. Technology is never the sole answer to any problem, but technologies that allow us to connect, join forces and experiment, while providing a measure of transparency, have the potential to enable us to find new solutions to old problems.
At Bretton Woods 2016, it was not just the staunch Libertarians in the room who were considering ways in which blockchain technologies might help address these old problems — it was everyone present. Is it so much of stretch to think that technologies that remove intermediaries and thus allow people more immediacy might even empower political solutions to intransigent global issues? But in the first instance, the focus was on the direction of these nascent technologies themselves, to try to ensure that from a “first principles” perspective, the direction of development will be a positive one. One result will likely be a set of guiding principles for consumer protection in this space. Stay tuned for that.
Of course, even if new models emerge from experimentation, they typically coexist with old models for a long time, and the result of clashing philosophies can often be messy. The American form of democracy itself still coexists with monarchies, military dictatorships and juntas, and many other forms of governance. The Bitcoin proof of work consensus mechanism coexists with other variations and will battle for dominance in the market. Distributed autonomous entities will try — and fail — many different structures, and presumably the worst will fail but the best will continue.
And to bring all of this back to my favorite but narrower topic, we’re going to see many different approaches to how art and other content will be registered, managed and distributed. Some solutions will succeed, many will not. This is a time of experimentation, and it’s going to be fascinating.
I’d like to think that Alexander Hamilton (at least the Lin-Manuel Miranda version) would agree.