Introduction to Blockchain
Blockchain, a cryptographic digital and decentralized ledger system that underlies Bitcoin, is a relatively new technological development. Much of the research to date on it has been in areas such as business, law, economics and computer science. There are avenues to study the development from a sociological lens, but so far little has been published academically from an academic social science perspective. Blockchain can be simultaneously understood and analyzed as a currency, an asset, a tool, a supercomputer, a social movement, an activist group, and a political cause. These conceptions of blockchain are varied, but not exhaustive, and the blockchain development space is continually changing through new projects and ideologies becoming involved. Because of this, I discuss blockchain as a technological embodiment of prefigurative politics, and used my research to examine the social effects and implications of blockchain technology to potentially reconfigure our social, political, institutional, and economic realities.
The main research questions that I intended to study through my research and thesis were varied, but were intended to give an exploratory and descriptive picture of some of the development and possibilities within the space, using a multi-methodological approach to data collection, and an engagement with the area and individuals continuing to push the development of the technology. The research questions that emerged from engagement with the space were as follows: how does a technology that keeps track of things on a distributed through peer to peer networking stand to change the way that we think about topics like privacy, anonymity, governance, security and trust? What about the blockchain allows it to be so broadly applicable, and what are the factors that may facilitate or impede acceptance of uses in the public and other interested groups? What characteristics of blockchain do those involved with it find valuable or integral to the technology, and does this perceived value align with that of other groups that could be affected by implementation? These research questions require serious engagement from the social sciences with individuals working within the blockchain space to best describe the potential changes and social implications of the technology.
I used a combination of methodologies to examine these questions, combining ethnography, digital ethnography, semi-structured interviews, and content analysis to best triangulate the data and give an initial descriptive look at some of the attitudes, ideologies and group characteristics of those working within the blockchain space. Moving from the data, I was able to create an initial description of the two major groups in the area: the institutions and business, contrasted with crypto enthusiasts and blockchain startups. I discuss the importance of different groups involved within the space, and how each project addition with its ideology and engagement with aspects both internal and external to the blockchain space has an influence on the possible futures of the space through the concept of prefigurative politics. I also propose a list of potential human and non-human actants that create social interactions and influence possible outcomes of the space using actor-network theory as social theory.
I intended this thesis to be a first look at the blockchain space from a social science perspective, one that has been noticeable absent in the literature around blockchain. Given the possibilities for serious reconfiguration of societal practices in a variety of ways, as well as the potential for a simple co-opting of the technology to support the continuation of the status quo, the technology deserves serious academic inquiry from the social sciences to explore the implications and possibilities prior to widespread adoption and or co-opting of the technology.
Describing Blockchain
The Government of Canada owns a CryptoKitty. This statement would probably have been regarded as nonsense five years ago. However by exploring the Ethereum blockchain, it can be shown to be a simple statement of fact¹. By navigating to the wallet address associated with the Government of Canada’s blockchain publishing prototype, a project to track research funding from the National Research Council (NRC), anyone can see the tokens held by that address, which is mostly empty aside from a bit of Ether and a single CK token. Anyone can do this, because the contract address for the Government’s project is public: 0xfF77e51f2c6473f72392865e0A0000de19af774a. Typing that address into the search bar at etherscan.io allows anyone to see all the transactions that have interacted with this smart contract, and yes, it shows the CryptoKitty that is associated with the contract address. The CryptoKitty is token number 42112, and has been transferred 4 different times, finally ending at the government’s smart contract address.
CryptoKitties are based on the ERC721 token standard, which means each token is unique and indivisible, or non-fungible. It is simply a digital token that exists on the Ethereum blockchain and functions in many of the same ways other tokens like Bitcoin or Ether can be transferred between parties. However, each CryptoKitty needs to be moved as a single token, whereas Bitcoin or Ether are highly fungible and can be transferred in amounts much lower than 1 full token. The visual representation of the token is a combination of traits called “cattributes” that are assigned to CryptoKitties at their “birth” (or creation) using a series of functions within a smart contract. The exact contents of that contract are considered proprietary and are not public. But you can see this specific cryptokitty, along with its cattributes and family tree simply by browsing to https://www.cryptokitties.co/kitty/42112.
What does it mean to have a digital object with this kind of simple, public traceability? What does it mean for a nation-state to own a digital asset represented by a cat? Is this important? It certainly seems whimsical. In less than 10 years, we have gone from a world in which Bitcoin, the first publicly known example of a blockchain, was hardly considered more than an obscure piece of code, to the present world, in 2018, in which a full Bitcoin hit an all-time high valuation of around $25,000 Canadian Dollars, and has also endured a price correction with lows of $8,000 Canadian dollars, and in which there are thousands of different tokens, projects and networks all utilizing aspects of the original Bitcoin blockchain technology. The Canadian government through the NRC is tracking research funding with the smart contract platform Ethereum, and yet there has been very little published within the social sciences on any of the social or political characteristics or potential impacts of the technology.
Blockchain, the technology that underlies Bitcoin, can be simultaneously understood and analyzed as a currency, an asset, a tool, a supercomputer, a social movement, an activist group, and a political cause. Through the research conducted for this thesis, I suggest several different social functions of blockchain. From a technological-utopian perspective, Blockchain is a potentially world-shaking revolution. It promises a functional political big tent, with the ability to integrate diverse viewpoints coordinated into a single system of action. It functions as a prefigurative political space, and enacts the theoretical functions of social and political multiplicity in both the digital and real-world spaces by the co-existence and operation of many radically different chains, created for radically different purposes. It is the possibility of an engaged populous making decisions democratically about things that interest and affect them, potentially in real time. It is a decentralized publicly available store of computing power that can be utilized to solve complex problems. It is a new tool with potential to be co-opted into the capitalist system, or to envision and create a post-capitalist society. It appears to be a potential vehicle for the implementation of a universal basic income to alleviate what is likely to be widespread unemployment resulting from automation. The biggest gift blockchain seems to give society is the ability to start actively looking at ways to improve our systems by using creativity and existing tools in new ways, giving us back the concept that creativity and utopian views can and should have a place in society and politics, and providing new tools to literally invent our future, whatever we want that to look like. It is the technological embodiment of a quasi-liberal (or libertarian) ideology focused on individual freedom and meritocracy that is most closely associated with hacker culture.
Bitcoin was first conceived and described in a white paper published under the pseudonym, Satoshi Nakamoto², which outlined the peer to peer system to allow for users to transfer value across the internet without the need for a trusted third party (for example, a private bank or nation-state treasury) to mediate and prevent double-spending (Nakamoto 2008). The technology that underlies this system is called the blockchain. A blockchain is essentially a ledger that can keep track of many different things, both digital and physical. It is both verified and secured through the computing power of users through the peer-to-peer (p2p) network. To break the concept down a little further, a ledger is simply a final list of transactions that have been settled, and an overall list of balances assigned to each wallet address. In most blockchain systems, this is done using hashing and cryptography to both obscure and secure individual’s claims to whatever is being tracked on the ledger. This ledger is copied and stored by every user running a computer on the network, also known as a node, so the entire chain of transactions is continually updated, verified and appended to by each user participating in the network, and each new block is broadcast, timestamped, and confirmed by each of the nodes throughout the network. All of this is coordinated by an underlying hashing algorithm that creates consensus in the network, and determines who gets the privilege of adding the next block in the chain in the mining and minting process. This is why blockchain technology is often described as a distributed ledger, as well as peer-to-peer as a result of the required interactions between users to maintain the network.
Blockchain as an underlying technology is seeing more diverse applications beyond simply cryptocurrencies now for two main reasons: firstly, because increasing numbers of people have realized the value of this distributed and verified ledger system for a variety of uses; and, secondly, because the blockchain is an open-source technology and can be used and adapted by others without any need for financial outlay (Yli-Huumo et al. 2016). However, as the adaptation, application and adoption of blockchain technology is a relatively recent development, little research on the implications of blockchain exist. There are several books that were released in 2016, including Beyond Bitcoin and Blockchain Revolution, but these are only the start of what could become an important and necessary body of literature on blockchain and cryptocurrencies (Halaburda and Sarvary 2016; D. Tapscott and A. Tapscott 2016).
Many publications are referring to the rush to blockchain as a “new gold rush”, or as a part of a “fourth industrial revolution” (Beaumont 2018; Wetherill 2018; Schwab 2016). This movement toward identifying technology as a resource is not new at all, as Big Data has also been referred to in similar natural resource terms as a “new oil” or “black gold” in Wired and other publications (Singh n.d.; Hern 2016). Is this simply capitalism recognizing the value in new technology and reframing it in terms that enable its effective exploitation? All new technology tends to be referred to in translation as a kind of analogy: “this new thing is like this other familiar thing that you know”. But in translation, some meaning is inevitably lost. Will it be so with the lofty goals of Big Data or the open-source, decentralization promised by blockchain?
It seems that the concept of Big Data is here to stay in some form or another, and with the movement toward blockchain being framed in similar ways, particularly with the recent intensification of corporate interest in the area, it is likely to see some form of more widespread adoption. The question then becomes, how do we best anticipate its uses and harness the new machine in a way that benefits someone or something? However, it is rapidly being decided for us that the machine will benefit the status quo. Part of this has to do with capitalism being the hegemonic economic system and that the innovations created under the capitalist logic are used for the purposes of extracting more labour for less capital, as well as the oft referred to resilience and adaptability of capitalism as an economic system (Novara Media 2017). At the same time, blockchain technology could also be an economic system disruptor, or an inflection point, given its novel development outside of the mainstream of capitalism, as well as the ideological qualities of the members of communities and projects within the space.
¹ While individual terms will be explained here as is contextually necessary, a fuller guide to terms can be found in the Technical Glossary.
² “Satoshi Nakatomo” has been identified as many different individuals and groups and their actual identity is no clearer now than it was in 2008.
References from this section:
Beaumont, Mark. 2018. “How I fell for the blockchain gold rush.” The Guardian, January 7. Retrieved August 20, 2018. (https://www.theguardian.com/technology/2018/jan/07/bitcoin-crypto-currencies-mcafee)
Halaburda, Hanna, and Miklos Sarvary. 2016. Beyond Bitcoin: The Economics of Digital Currencies. New York, NY: Palgrave Macmillan.
Nakamoto, Satoshi. 2008. “Bitcoin: A Peer-to-Peer Electronic Cash System”. Retrieved Nov. 29, 2016 (https://bitcoin.org/bitcoin.pdf)
Novara Media. 2017. “Technology and Postcapitalism.” Youtube Website. Retrieved July 5th 2018. (https://www.youtube.com/watch?v=g18JoOZsoEM).
Schwab, Klaus. 2016. “Welcome to The Fourth Industrial Revolution.” Rotman Management, September (Fall), pp. 19.
Singh, Arvind. N.d. “Is Big Data The New Black Gold?” Wired. No date. Retrieved August 20 2018 (https://www.wired.com/insights/2013/02/is-big-data-the-new-black-gold).
Tapscott Don and Alex Tapscott. 2016. Blockchain Revolution. New York, NY: Portfolio/Penguin.
Wetherill, Justin. 2018. “Cryptocurrency Gold Rush and the Unforeseen Effect on PC Gamers.” Forbes, March 21. Retrieved August 21 2018 (https://www.forbes.com/sites/forbestechcouncil/2018/03/21/cryptocurrency-gold-rush-and-the-unforeseen-effect-on-pc-gamers/#41fe86fe6286).
Yli-Huumo J, Ko D, Choi S, Park S, Smolander K. 2016. “Where Is Current Research on Blockchain Technology? — A Systematic Review”. PLoS ONE 11(10): e0163477. doi:10.1371/journal.pone.0163477
