Bitcoin has turned the human race into a Hive Mind Super Computer

In the early days of bitcoin, it became clear that extending the blockchain to do general purpose processing would enable developers to decentralize just about anything. We wouldn’t only take power back from state institutions but entire corporations would be replaced by smart contracts. An early example of this in action is Storj, an Ethereum powered app which promises to completely decentralize and distribute the technology behind Dropbox. The motive to decentralize all the things has unified developers across multiple political ideologies to put aside their theoretical differences. What matters isn’t who we devolve power from, it’s that we devolve power to the edges. In the process, we seem to be opening up a Pandora’s Box of social re-organization that might leave the human race resembling something akin to a synchronized ant colony rather than a troop of monkeys with computers.

The Unifying Theory of Decentralization

Most ideologies concerned with human welfare divide the population into 2 groups: the rich minority ruling class and the excluded masses. For Marxists the ruling elite consists almost entirely of capitalists whereas the masses are comprised of workers. For Libertarians, the ruling elite are a mixture of politicians and the businesses who support them whereas the masses are the individuals excluded from this relationship. A great deal of friction between the broad church of the Left and the umbrella of Libertarians factions has been over who in society belongs to the elite and who belongs to the exploited.

One unifying ideal shared by both, however, is a desire to take power from the elite and distribute it to the broader population (I’ve covered this in more detail previously). Stated another way, most people across the ideological spectrum want a decentralization of power from the powerful centers of society to the powerless masses.

One Type of Developer

Enter the blockchain. No center of power is safe from its decentralizing powers. Whether its the concentrations of data in large corporations like Facebook and Google or functions of the state such as ID issuing, public good provision and welfare safety nets, blockchain startups are threatening to unwind all power structures in society. Both the nation state and the corporation are on extinction notice. Developers in this space have come together to work on bringing the unifying human value of decentralization to life while shifting the traditional ideological battle lines out to the “broad discussion” slack channel periphery.

What the Blockchain can’t do (yet)

Witnessing the death of ideological division taking place before my eyes, I couldn’t help but be excited by the endless possibilities and so over the past few months I’ve been learning Solidity, the high level language of smart contract creation in Ethereum. One thing I’ve noticed is the limitations on what a Turing-Complete blockchain can do. The act of decentralizing storage and execution means that many tradeoffs have to be made to keep the entire system manageable. I’ve provided a non-exhaustive list of what I’ve found so far. (Note that a smart contract is a first class citizen of Solidity. Contract is to Solidity what class is to Java):

1. Smart Contracts have a compiled size limit. You can’t write a contract of arbitrary size. This means that complex use cases have to be broken into multiple contracts which comes with certain non-trivial overheads.
2. The processing speed and power available to a contract is similar to a cellphone from the 90s.
3. Functions have a local variable and parameter limit. So you can’t carefully filter user needs with a long list of parameters. This leaves functions feeling rather general in purpose.
4. Gas limit: every operation has a gas cost associated with it. This is just a numerical measurement of how computationally expensive an operation is. For instance, a multiply costs more gas than an addition. The Ethereum miners set a gas limit per block mined. This is to prevent contracts from running forever. If your code can’t get the job done without exceeding the gas limit, it is killed in execution (or prevented from executing at all).
5. Smart contracts cannot self execute. They’re essentially switches that have to be turned on by either other contracts or humans.

At first I found these limitations quite upsetting. If all the heavy processing still has to be done on traditional servers then how can we expect true decentralization? What’s more, the fact that smart contracts can’t self execute felt like the fatal flaw in the “decentralize all the things” dream. What I didn’t realize is that I needed an entire mindset shift to appreciate how truly decentralizing blockchains are. The blockchain isn’t a decentralized computer, it’s an incentive engine. To understand what I mean by incentive engine, I’ll use an example of how I tried to overcome limitation (5) above:

“If you can be working on incentives, don’t work on anything else.” — Charlie Munger

Autonomous Human Calls

In one of my early attempts at a smart contract, I wanted to create a kind of simple pension fund. The idea was that you’d initialize a contract that accepts funds from a particular user. At some distant future date, the contract would automatically pay the user the accumulation of funds since the first deposit. I immediately ran into the fact that you can’t schedule a contract to perform a future dated operation. After engaging in some rabid stackoverflowing I came across the Ethereum Alarm Clock. This cleverly designed contract uses incentives to allow developers to schedule a future operation. I’ll use a fictional pension contract to illustrate:

1. EthPension is a smart contract that has a function called Payout() that needs to be called on the 31st June, 2057.
2. We place a bounty in the Alarm Clock Smart contract that says “the first person to call EthPension.Payout() on the 31st of June, 2057 will receive 1 ether reward.” This instruction is encoded in solidity of course. I’m just using plain English for explanation
3. 31st of June rolls by, 1 ether is worth $10 million by then and a massive queue of users are clamoring to be the “winner” of this schedule lottery.

Upon reflection, the seeming weakness of relying on a user to provoke a contract into life has been turned into a strength. Provided sufficient reward has been set aside, an incentive based activation may be more reliable that a fleet of redundant server farms carefully monitoring internal clocks. We’ve successfully scheduled our call using a farm of human computers!

This is why I refer to the blockchain as an Incentive Engine. Using a bit of smart contract code and the economics of human action, we can mobilize armies of anonymous humans to do our bidding. Designed with sufficient care, a web of smart contracts can provoke some very complex group behaviour.

One of the first rules of economics is that humans respond to incentives. Up until now, very few people have had the power to craft society wide incentives without resorting to coercive force or setting up influential companies. Bitcoin ushered in an era of programmable incentives that everyone has access to.

Tokens are the glucose of the Human Hive Mind

Bitcoin requires quite a lot of human labour and electricity to keep it going. Miners invest great resources and in many cases take great risks in digitally securing the network. In return they’re rewarded with the bitcoin token. This scarce token has been enough to make the bitcoin blockchain the most powerful supercomputer in the world in terms of raw processing power. The power of the blockchain is only made possible by the humans who operate it and in order to mobilize those humans, tokens coordinate the incentives through the price mechanism. Without tokens the entire ecosystem would die which is why statements by large corporate leaders that blockchains are more interesting than bitcoin is like saying that brains are more interesting than glucose. Sure, brains are where all the cool stuff happens in the human mind but without glucose, a brain is a dead lump of jelly. Similarly tokens are what keep the blockchain alive and humming.

The truth about decentralized applications is that they’re really a host of humans acting together to achieve a group goal. Instead of good will or trust, the coordinating mechanism is the glue of blockchain secured tokens. To see this in action, return to the example of Storj. Here, people who have surplus storage space are spontaneously volunteering portions of their hard drives for other people who need storage space to make use of. The users aren’t brought together by trust or kindness. They don’t meet on a centralized server which pays those with surplus and charges those with deficit. Instead, the the storj token binds them across the internet in much the same way that bitcoin binds miners, nodes and wallets together. In the example of storj, the blockchain isn’t doing much more than recording ownership. The real work is being performed by users and their computers freeing up space, running encryption software, subscribing to fast internet, paying electricity and so on. Yet the economics of token ownership and exchange means that the storj network is even more reliable than the Dropbox servers. This network of humans and their computers is documented to be more efficient and faster than both Dropbox and Google Drive and it’s cheaper to use! Who knew that armies of users could produce better computing outcomes than server farms, provided the incentives were right?

I guess Satoshi Nakamoto knew. In the example of bitcoin, the proof of work algorithm doesn’t take place on the blockchain. It happens off chain on mining hardware and only a proof of all the labour and coordination is recorded on-chain. Bitcoin and Ethereum miners have to provision their own hardware, calculate the profitability of electricity usage, install special purpose software, account for accelerated hardware depreciation and actually mine — all in service of tokens. Like little ants scurrying around to do the bidding of their token queen, human users assemble and distribute every blockchain without fail. Each successful token economy will create its own army of diligent ants. For now the majority of tokens are simply to secure blockchains but as storj has demonstrated, the ants can be made to run Dropbox-like services. Perhaps soon the ants will create social safety nets, organize efficient allocation of funding capital and create trustworthy news sources.

The important insight to take away in this article is that blockchains won’t become the great processors at the center of humanity. Instead they will act as the connective tissue between humans and machines, mediated by incentives. If humans are neurons in the great human hive mind, blockchain technology acts as the connective tissue and neurotransmitters.

The Mind of Earth

The evolution from nation states and corporations to decentralized networks of smart contracts will transform the human race into a collective hive mind as we internalize the mechanisms of social coordination that once used to be the duty of the Crown.

But it won’t be one where the individual is squashed. In this post-collectivist future, the individual won’t be either supreme or irrelevant. Instead, choices of individuals will be so strongly influenced by programmable incentives that distinctions between individual welfare and the greater good will lose meaning. Presently, groups of individuals can gather together and exploit other groups for differential gain. The net effect of such action always undermines the overall wealth of society. Once the Incentive Engine decentralizes everything, individual action that undermines the welfare of the broader human race will be rendered so expensive as to be impossible. Every time a group conspires against the majority, it will automatically create a profitable incentive to have itself disrupted by better technology. The giant brain that is humanity will begin to act in its own interest which will simultaneously be congruent with the welfare of the individual.

I hope you look forward to the coming hive mind as much as I do.

We are our own liberators. We are the blockchain.