The Capital
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The Capital

Forget the money and hype: this is the reason why blockchains will define our future

How an industry for truth will conquer an archaic incumbent.

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Choi Wan Estate (彩雲村), Fung Chak House (豐澤樓) in Hong Kong.

If I served up two options for truth: one that is guaranteed by principles in mathematics and cryptography, and one that is guaranteed because I, as a reputed authority, told you it was true… which would you choose?

Perhaps an analogy might help. Suppose you were at a governmental office renewing your driver’s license. As you enter, 49 other people also walk-in at the same time. You are given two choices for the way you would be brought up to the counter: one, where all file towards a machine and be given a number. When your number is displayed on a giant flat-panel LCD, you will know it is your turn to go up. Or two, where I guarantee on my tenure as a career government employee that I can remember the exact order of every single person that walked in. Which system would you trust?

We are at the precipice of a major shift. Now, more than ever, we need to build stronger narratives around blockchain to drive mindful awareness and attention. But in the hyper-memetic world of cryptocurrencies and blockchain, memes like “Few” (shortened from ‘Few understand this’) are counterproductive to the mission of mainstream adoption. They drum up a sense of exclusion to the outsiders looking in. I mean, the memes are hilarious, but the community is not making widespread acceptance any quicker by leaning into this information asymmetry. This is nobody’s fault. Most projects are open source to the public for scrutiny and examination. But are we really expecting non-techies (moms, dads, neighbours, colleagues) to become polymath multi-disciplinarians well-versed in coding, cryptography, computer science, game theory, finance, mathematics, governance, and the likes?

My point is this: we have yet to crystallize the value proposition of blockchain down to a single, central idea. That is, until I heard Sergey Nazarov (co-founder of Chainlink) distill it to a core tenet that struck a chord with me: definitive truth.

Hence, my opening rhetorical.

One version, backed by math, creates definitive truth. The other version of truth carries weight in value because someone or some institution guarantees it with their “brand” (Sergey calls these “brand-based guarantees”). If you hadn’t guessed by now, blockchains create definitive truth. The other version of truth is about as good as astrological horoscopes telling you how your love life will be in the coming week. That is the magnitude of difference we are talking about here.

Definitive truth is irrefutable, unalterable, tamper-proof.

It is incredibly difficult to create definitive truth, especially when there are multiple, potentially adversarial (i.e., I don’t know you, you don’t know me) parties spread out over a large network. Yet in 2008, Satoshi Nakamoto unleashed a protocol that created definitive truths about whom owns what bitcoin without relying on a trusted intermediary. The fundamental ideas behind Bitcoin effectively birthed what we now know of as the “blockchain.” Without getting into the technical details here, because others have explained it far more elegantly than I can, the bitcoin blockchain guarantees transactional truth using cryptographic and mathematical proofs. It is why the Bitcoin network has emerged as the world’s most valuable cryptoasset network, and is possibly the most hard and sound money humanity has ever seen. Built on definitive truth.

Attestation of asset ownership, without trusting a third party, in a definitively true way. This is huge.

Many more projects have since gone on to expand on the concept of definitive truth created through blockchains. Ethereum attempts to create definitive truth through self-executing smart contracts that are guaranteed to execute exactly as written. The resulting changes to the states of accounts and contracts are then secured in amber on the blockchain. Filecoin attempts to create definitive truth about the storage of data, where one party provably shows to the network it is both: storing a unique copy of a client’s data, and that it existed in storage over time. This decentralizes cloud storage so failure or manipulation does not fall on a single point. Chainlink, although not a blockchain, nevertheless is a decentralized oracle network attempting to create definitive truths about the real world by serving up highly reliable and tamper-proof data into the blockchain.

An avalanche of research, design, and testing is underway for many more variations of arriving at definitive truths. Imagine definitive truth for the assertion and sharing of identity? Or definitive truth applied to the United States electoral process? Definitive truth will undoubtedly play a pivotal role in the future fight against misinformation. And when the next generation peer-to-peer ride-hailing application run on a decentralized system eventually subsumes Uber, definitive truth will prove you have paid for access to a cloud-connected smart car. That same car would feed definitively true data about the journey back onto the cloud, and onto the owner.

Proof-of-X’s, like Bitcoin’s proof-of-work or Ethereum’s proof-of-stake are consensus algorithms for arriving at definitive truths. Original tweet here.

On the other hand, you have brand-based guarantees. As Sergey puts it,

“we are increasingly living in a world of inflation and bad monetary policy.”

20% of all USD in existence (the de-facto world reserve currency) was printed in 2020. M0, M1, and M2 money supplies from around the world have seen exponential growth since April of the same year. Everyday, our trust in brand-based guarantors of truth like banks and central banks continue to erode away as the promise of our assets held in reserve increasingly come into question (as of March 2020, the US Fed Reserve abolished the minimum reserve requirement for all banks). This actually presents an extreme point of vulnerability and exposes our financial system’s fragility. Brand-based guarantees of truth are by nature opaque, insecure, and prone to manipulation. The Libor interest rate scandal involved the daily adjustments of an infinitesimally small value puppeteered by a spider network of bankers. The 2008 financial crisis was partially exacerbated by the refusal (or negligence) of credit rating agencies like Moody’s to accurately rate subprime mortgage loans. That is to say, brand-based guarantees of truth present a definitive truth as real as the 6'5 height I used to put on my Tinder profile.

That said, brand-based guarantees of truth have served us well for the most part. You can probably trust that the $10,000 your bank says is in your chequing account will be there tomorrow. Math-based guarantees of definitive truth can be computationally expensive, pragmatically complex, and slow. It all depends highly on the specific use case, and what is at stake.

But as pressure on corporate solvency and sovereign debt continues to build, and the spotlight is increasingly shone on these long-trusted intermediaries, it will be up to them to prove to us definitively that all their T’s are crossed and I’s are dotted. Blockchains, on the other hand, are schematically deployed from the ground up to present a rigorously verified, extremely reliable, extremely redundant, and mathematically and cryptographically secured definitive truth. It is no coincidence that some people call Bitcoin “the truth machine.” Blockchains are the arbiters of truth.

Which option of truth would you rely on again?

Video: Never forget: when (then Chair of Federal Reserve, now Treasury Secretary) Janet Yellen testified in front of Congress and this bloke infamously flashed the “Buy Bitcoin” sign.

What good would a crypto post be without some unabashed shilling? But it won’t be for some shitcoin. It will be for blockchain. As my one good friend Amer Ameen would say about his line of work in crypto:

“The cat is out of the bag. This is a hill I am willing to die on.”

Another good friend, a PhD researcher, suggests something far more uncertain, but far more ambitious:

“Blockchain as an innovation is on the level of the Gutenberg printing press.”

This conviction is not accidental. Claims like these would not be made for anything less than something as world-changing as definitive truth. It represents for us all an opportunity to rebuild the world to be more open, equitable, and accessible. Ofcourse, this won’t come easy. The community faces an uphill battle against a deeply entrenched incumbent system. We haven’t even found the simplest way to explain why blockchain is mission critical.

Until now.

’Tis the season when family members gather around the table to listen to your one cousin spout off about “fiat currencies,” “decentralization,” “mining,” “tokens,” etc., etc. Hopefully, you walk away from this post armed now with the most virulent way to explain, without the use of buzzy words, why blockchains will define the future:

Definitive truth.

Thank you first and foremost to Sergey Nazarov, who elucidated the concept of “definitive truth” perfectly, and inspired this post. Make sure to check out this Decrypt Daily podcast and his keynote talk on the topic.

Thank you to Amer Ameen and my researcher friend for their contributions on this post. Without their continued insistence on the value of this space, I would probably still be asleep at the wheel. I hope to have done them some justice.

This SmartContent article was also incredibly insightful, and helped shape a lot of the ideas above.

Make no mistake, this is opinion and for informational purposes only. Do not misconstrue this for investment or financial advice. There are far more socially proofed and credentialed experts that can give you brand-guaranteed advice.

Hey! If you actually made it this far into my story, then thank you from the bottom of my heart for your consideration, patience, and love for reading so much of my work. Words cannot express how much I appreciate it.

They say ‘writing = clear thinking’, so I am on my own journey to crystallize my thinking (and thus my writing). If you enjoyed this story, you can find more of my work on Medium here. I also occasionally make long form blog-style posts on Instagram here. You can also find me blabbering on Twitter here. Finally, be sure to visit my website.

What other ideas do you have where definitive truth could be practically applied? Please share! :-)

If you enjoy my content, please consider buying me a coffee!

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