Can A New Ownership Transferring Mechanism Work?

In a private ownership society, individuals trade with each other to increase the value of their asset (social asset), maintain their purchasing power, and satisfy their daily need. As we may have already known, most of the trading activities in the private ownership society rely on our current centralized credit system which authorizes individuals the ability to gauge the risk and uphold the value to transfer to other parties through transactions.

We know we can build a trusty system/government to secure our interests and the value we transfer to each other. Unfortunately, we fall short of that. We can monitor the transaction activities through highly centralized credit authorizing center to prove daily business operation under an acceptable stability and with accountable credit record, however, in a long-term, we can barely supervise such highly centralized credit authorizing center when it conducts invisible actions that significantly violate the interests of its credits receiver such as consumers and citizens.

Block chain is actually an alternative solution for the problem. It addresses a new way of transaction, ownership transferring mechanism, which relies on tremendous computational nodes that reflects an objective fact of proof, that is, the computational power of our CPUs with consensus that eliminates the risk of centralization, human engagement, and may further probably reduce the potentials of catastrophic events like financial crisis which happened almost a decade ago.

The conception of distributing complex computational problems to thousands, even millions of computers is not a brand new idea. For example NASA’s project, Stardust@home, had encouraged volunteers to search images for tiny interstellar dust impacts. The project began providing data for analysis on August 1, 2006.

Originally, the block chain infrastructure that supports the transaction among crypto currency is certainly similar to the crowd sourcing projects that aims to eliminate the negative impact of the corruption of centralized credit authorizing center with much lower cost and higher effectiveness, plus, with kindness reward such as bitcoin or other crypto currency to its participants, which ultimately encourages and gives credits to participants to get rid of controls by financial magnates or dishonest governments/regulators.

All of this is about pursuing stronger personal freedom by reducing impact from dishonest and fragile regulators.

Pursuing stronger personal freedom is basic human nature we cannot ignore. Such nature has been discussed and discovered along the economic evolution. It eventually comes to the age of US dollar hegemony, which is under governed by Fed, the monetary policy creator. But, is it legally helping us pursue our personal freedom?

“In 1913 Congress vested all power to produce paper notes in the Federal Reserve. Despite its name, the Federal Reserve is actually a private institution set apart from the government. Congress passed the Federal Reserve Act in hopes of stabilizing the somewhat tumultuous bank industry. Over time, the value of Federal Reserve notes has declined. Initially Federal Reserve notes were tied to gold, but that relationship was tenuously severed during the Great Depression and completely severed in 1971. Money underwent another transformation as technology advanced. Many transactions today are done in the digital realm, with bytes of information being the only things that change. Since the Constitution does not specifically grant authority over paper money (let alone digital dollars), some people wonder if aspects of our monetary system are unconstitutional” (source: Bill of Right Insititute)

The issues of arguing Fed is unconstitutional is probably meaningless since the fact won’t immediately change through public argument, therefore we don’t invest time on discussing about it until the next financial crisis happens.

Nonetheless, if we look at the crediting system of our government and education institutions, we may inevitably face the corruption of the credit evaluators who politically take advantages on their power in such institutions to maximize their personal or group interests by taking away credit receivers’ interests. In other words, expecting credits evaluator to fairly give evaluation on the credit receiver without any external power to punish those dishonest credit evaluator, then it is irrational. Again we still cannot handle the problems come from punisher.

“Who is going to punish the dishonest punisher? ”

Furthermore, an illusion may even happen, credits receiver may condemn themselves the failures of their credits and giving away their freedom and basic human right to authority due to it. This is why a new ownership transferring mechanism relies on block chain makes itself appealing to folks.

If block chain can provide much better quality of credit validation among transaction by getting rid of human engagement, then the next question is, can it challenge the centralized credit authorization which could often corrupt along the human history?

The key points are the types of value that is transferred through block chain and its reward mechanism. Obviously, the current rewarding system that ties to crypto currency has been argued which obtains ZERO intrinsic value. However, if the rewarding system for validating blocks and the value transferred through block chain tie with real world commodity, then participants will be able to leverage it against government and pursue more personal freedom.

Against government?

This is really a deep question and could be traced back to a philosophical question, “Why do we need government?”

The question has been answered by Jams Madison already:

“The great security against a gradual concentration of the several powers in the same department, consists in giving to those who administer each department the necessary constitutional means and personal motives to resist encroachments of the others. The provision for defense must in this, as in all other cases, be made commensurate to the danger of attack. Ambition must be made to counteract ambition. The interest of the man must be connected with the constitutional rights of the place. It may be a reflection on human nature, that such devices should be necessary to control the abuses of government.

But what is government itself, but the greatest of all reflections on human nature? If men were angels, no government would be necessary. If angels were to govern men, neither external nor internal controls on government would be necessary. In framing a government which is to be administered by men over men, the great difficulty lies in this: you must first enable the government to control the governed; and in the next place oblige it to control itself. A dependence on the people is, no doubt, the primary control on the government; but experience has taught mankind the necessity of auxiliary precautions”

Only if we can tie block chain fairly with real world commodity and convert value of that commodity into the rewarding system, then we are mostly angels and a new ownership transferring mechanism may work. I would say transferring value such as social wealth is a good attempt for block chain application.