Bitcoin for Self-Organization
The true meaning of the technology behind Bitcoin, the digital money for the internet age, is that it allows people to exchange information and verify its contents without said people having to trust each other, and doing so without a central authority. Bitcoin’s main application, the disruption of money and payments, is the first of many possible future applications. Think of decentralized identity, insurance, stock exchanges and even government.
The underlying technology, called the Bitcoin blockchain, is so revolutionary that we have to ask: can mankind, after having lived under the rule of central authority, possibly since the invention of agriculture, use such blockchain technology for more efficient organisation? Can man learn to peacefully govern himself without the need for a central government, central banks or even a supreme court telling him what to think, what to do, what to say and what to feel?
A long time ago in 1968 Douglas Engelbart gave a computer demonstration now known as The Mother of all Demos. In it Engelbart shows the audience how to work with a keyboard, a mouse, a ‘windowed’ operating system and something like a webcam for teleconferencing. Today we call this setup a personal computer, but at the time Engelbart called it something else. He called it a tool for intellectual workers to augment their minds. Similarly, Apple co-founder Steve Jobs would later call the Lisa computer a bicycle for the mind.
Fast forward to 2009. One or more anonymous cryptographers invented a decentralized database system that allows people to exchange and verify information without a need for trust or central authority. In an analogy to Engelbart’s statement, the Bitcoin blockchain is a technology for people to augment human organisation, by solving the problem of trust.
A Manifesto for a Decentralized World
Since I dove into the technology behind Bitcoin since early 2013, it has preoccupied much of my thinking about the world. A few weeks ago I spoke with several people at the Bitcoin Wednesday meetup in Amsterdam. The idea was born to write a manifesto for a decentralized world. This article only serves to get this idea for a manifesto out there. I hope there are people way smarter and more talented than I am to take the time to write such a (political) manifesto for a decentralized world. It is a world I would sincerely enjoy living in.
But I would not want to disappoint my readers. I want to present a concise, but by no means exhaustive list of applications for Bitcoin’s decentralized blockchain technology and all the various problems it can solve:
Digital Identity, Privacy and a Global Passport
Identity is a major problem with anonymous networks. Although we can work hard to establish a trustworthy Facebook profile corroborated by our friends and friends’ friends, why allow Facebook, a central authority, to control our personal information? While we can trust our friends, we cannot trust Facebook or other centralized ‘privacy silos’. The future world needs a way to establish someone’s identity and verify it in a decentralized manner.
Tim Pastoor, a technology evangelist, is one of the people working onIdenti.fi, a decentralized platform that combines people’s public online identities. Their website is currently a proof-of-concept, but if backed with enough support it could grow to become your driver’s license for the internet, or your passport for the digital age. The system is opt-in, nobody is forced to use it.
Peer to Peer Insurance and Healthcare
The central problem of collective insurance and healthcare is the validation of claims. We need commercial companies or governments to pay employees to verify or reject our insurance claims. Such centralized authorities may spend up to 10–20% of their policy holder’s monthly payments on personnel. Does it not sound strange to insure ourselves with commercial companies that pay employees to work full-time to find ways to reject our valid claims?
Insurance is clear case of the trust problem. Jip de Ridder, originator ofalternative for insurance is working on decentralized solutions to help people insure themselves, peer to peer, without a central (commercial) authority. At the very least we can cut out the middlemen and reduce the cost of our monthly insurance fees.
Public Accounting and Auditing
As the founder of eCash BV, a Bitcoin payment processor based in The Netherlands, I have been in meetings with (financial) corporations such as ABN AMRO Bank, ING Bank, KPMG, Baker & McKenzie, Accenture and Rabobank. From these meetings one particular application of interest came to light: to have a watertight, full proof method of accounting. For example, multinationals that need to move money around their local offices would store such information on a company blockchain.
A tax lawyer at Baker & McKenzie told me how his colleagues were shocked to hear that the Bitcoin blockchain technology might some day eliminate their jobs altogether. As a public ledger technology the Bitcoin blockchain holds a promise to automate, simplify and improve accounting and auditing worldwide.
Decentralized Autonomous Companies (DAC’s)
As a citizen of a country that is part of the European Union I find it frustrating that, despite talk of a Union, there is no way to establish a company in one country and have it recognized in others. A decentralized ‘chambers of commerce’ database can solve this problem, and it can be used by consumers and suppliers to rate businesses.
Efforts such as Ethereum are already under way to store smart contracts and smart property on block chains.
Stock Exchanges and Financial Custodians
In talks with consultants from KPMG the idea was coined to decentralize financial custodians, organisations that store the physical stock documents whereas banks only keep electronic copies. The Bitcoin blockchain can solve both problems: both eliminate the need for such physical documents by storing them on a decentralized blockchain and also cutting out the banks as middlemen.
It did not come as a surprise to me that Overstock.com’s Patrick Byrne is working on a decentralized stock exchange.
But why stop there? What we are looking at is the greatest revolution of our time. We will live to witness the democratization of financial wealth and power. The blockchain technology, or some more advanced improvement thereof, can ultimately empower the people to organize themselves without the need for central authority.