Like other things of sub-culture and community, people come to the world of blockchain for varying reasons. In 2017, it seems like everyone is here for quick money, and the allure has certainly made me allocate a greater share of my savings to cryptocurrencies. But back in late 2015, when Bitcoin was trading near $300 and the idea of big money was still far from my mind, it was the underlying technology that had me interested.

Nick Szabo, the doyen of cryptocurrency, describes blockchain technology as a fly trapped in amber. Once the amber is laid down on it, the fly is stuck there forever, unalterable for the rest of time. This is the nature of blockchain. Transactions, or transmissions of information, once set down on the blockchain, remain there unalterable for the remainder of that blockchain’s existence.

This, in fact, is what blockchain means- a long chain of blocks where each block contains information on transactions or other transmissions. This need not be remarkable in itself. But the second aspect of blockchain makes it the game-changing technology it is. Unlike previous forms of information management, blockchain is not a centralized technology. A typical blockchain network runs across several different machines spread across the globe.

Again in Nick Szabo’s words- “trusted third-parties are security holes.” This is so because a trusted third-party is a centralized store of information, and a centralized store provides a single-point target for would-be hackers and disrupters, including malfeasance from within. But a network spread across several machines is tougher to attack. Bringing one machine down does nothing to affect the network or the information within it. In effect, to bring down a blockchain network spread across the internet, one would have to bring down the internet itself.

This decentralised nature of blockchain technology gives to our species something it has never had- a means to large-scale co-operation that does not need centralised power structures to ensure fidelity.

If we look at the historical record of civilization, we see that the very first granaries immediately needed armies to protect them, treasuries to manage them, kings, to oversee it all, and priests to validate the entire affair. The farmers who broke their back under the daily sun and the people who consumed the grain were linked by a central, tax-taking and military-wielding authority.

This means that we have been a species that co-operates through trusted third-parties, and we need no conspiracy theories to acknowledge that this has facilitated much exploitation and opportunism throughout history. But this has not always been our way. Hunter-gatherer societies were egalitarian even though they possessed hierarchical structures.

Trust was decentralized throughout the tribe, and no intermediaries were needed for transactions between specific individuals. Blockchain has the potential to create civilization 2.0, a version of humanity where freedom, autonomy, and trust are spread evenly among individuals. This is, of course, a high claim to make, and I support it only by visions of the ideal state- a state where blockchain and its use are permeated positively throughout society. There is nothing in the current moment that guarantees this.

I frame the argument through three levels of a blockchain civilization (and a bonus fourth), where each level is necessary for the next, and successively they take us towards a version of true democracy and freedom- one that is so different from the present condition that it can be called civilization 2.0.

Level 1 of Blockchain World

The most apparent benefits of blockchain are in privacy and security. I can transact securely with you without ever needing to know you or trust you, and vice versa. Blockchain also allows us to anonymise our engagement, so that it is never traced back to us if we desire. This aspect of blockchain gives rise to concerns about criminality, but these concerns should be viewed with intellectual honesty.

Any means that a private individual has to secure himself or herself is naturally available to a criminal as well. So, this cannot be the case for rejection of a technology.

Just like the occurrence of criminal activities inside private homes does not preclude us from obtaining the most secure locks for ourselves, the ability of blockchain to help secure our digital domain is not a case against it. At level 1 of civilization 2.0, blockchain removes the need for intermediaries like Visa, PayTM and Amazon without compromising the security and validation they guarantee.

This does not come without a learning curve and the assumption of personal responsibility. When we remove trusted third-parties we also remove the customer support they provide. On the blockchain, we will be responsible for securing our own funds and ensuring our own privacy.

This again is not a case against it. True freedom also means complete responsibility. When thieves break into our house, we cannot sue the lock manufacturer (unless the break-in happens through a specific violation of the lock that the manufacturer guaranteed against in legal terms). Similarly, once we have secured our digital domain through our own means, we have no one to run to if the domain is violated.

In my view, level 1 of blockchain world will be hardest to attain. This is because the achievement of level 1 will mean major disruption of all big industries today, from banking to e-commerce. No current player will vacate the scene willingly, and when we live in a situation where banks such as HDFC are officially deemed ‘too big to fail,’ one can see how large the inertia to change will be.

Reaching level 1 also means largescale reorientation in how we think and operate as a species. We are conditioned to centralization and the relegation of responsibility. Our banks maintain our wealth for us, our retailers ensure the security of our purchases, our civic bodies take infrastructural decisions for our neighborhoods, and a group of people in our national capitals decide the fate of billions.

In all these layers, we are admittedly happy for not having to share the burden of collective responsibility. This is not our fault- we are all born into such a world and do not know any different.

That’s why accepting level 1 will take a different way of thinking, a decentralized mindset. And any technology that forces us to adopt a different way of thinking is bound to change our culture at a fundamental level. But we can be sure that the economic and cultural players of today will not bring about this change, for it means moving to a world where they are obsolete.

Why would Facebook promote a blockchain-based social interaction platform when it can continue to profit from our personal lives? Why would Amazon usher a blockchain-based marketplace that works on smart contracts when it profits from buyers and sellers on its own platform? Why would credit card companies and loan providers encourage the use of a blockchain platform that links buyers and sellers in a secure environment without the need of trusted third-parties? We already live in a world where the development of a solar-energy industry is hindered by concerns for the declining coal industry, so imagining the institutional resistance to blockchain adoption is easy.

Level 1 of blockchain, where secure peer-to-peer interactions of all kinds are possible, is essentially the end of the corporation. When citizens can interact and transact in decentralized secure environments, there is no limit to the nature of activities that can be conducted without trusted third-parties. Disclaiming once again that we are speculating on the ideal state of a blockchain world, imagine now if farmers could sell their produce directly, inventors could reach buyers directly, freelancers could offer their services directly, and pretty much anyone who wants to buy or sell something could do so directly- all without ever needing to know or trust the person at the other end. The way in this can permeate our lives can be examined through the simple example of a grocery purchase.

Currently, I buy my milk at the local grocery store, where it comes via shipping and logistics intermediaries from a large-scale diary corporation. This corporation, in turn, operates massive farms, where it produces milk from cows it owns and buys from independent farmers. Across the supply chain, from the individual owner of a cow to me, the buyer, there are several intermediaries eating up value. While I do not know or trust the cow owner and vice versa, we both transact through a system of trust based on the intermediaries. In effect, we allow them to eat up part of the value by leaving the trust management to them.

In a blockchain world, things can be very different. Independent farmers maintain a blockchain of their own, which is linked to a logistics blockchain that brings together shippers, loaders, customs and other players in the supply chain. These blockchains are in turn linked to the retail blockchain, where regular consumers place orders for groceries. The blockchains in all cases are maintained decentrally on the computers of the parties involved. So the farmers maintain their blockchain, the supply chain maintains its own, and the consumers theirs.

A breakdown in the machine or server of any single agent will not disrupt the overall interactions, and smart contracts provide trust without the value-eating intermediaries. This is a very rudimentary example, and the blockchain world can manifest in different ways. There can even be a single blockchain linking producers, suppliers, and consumers. But the idea is to imagine a world where all interactions are linked in this fashion- private, secure, decentralized, unalterable and devoid of trusted third-parties.

It is important to note that a blockchain world is not a world without all the necessary activities of today- verification, assurance, legal recourse, etc. A blockchain world is simply one where these activities are decentralized and spread among the very people they affect. This is why blockchain is a step towards true democracy, and why level 1 is important to prepare us for level 2.

Level 2 of Blockchain World

Image Credit: The Sleuth Journal

In level 2, having previously made the corporation obsolete, we move to a world where the modern government is obsolete. The modern government is one with a very central structure, and one where the only decision we can really take is a vote once every 4–5 years.

Everything else is decided by the modern government, from what forms of wealth are acceptable to what sexual activities can be conducted in the privacy of one’s bedroom. One does not need to be an anarchist to see that this is an inordinate amount of power in the hands of an institution that is technically nothing more than a servant. I do not need my servant to treat me like a child that does not know good from bad, or how to protect itself. I’m an adult that just needs the servant to make my life easy. Level 2 takes the government and all its operations onto the blockchain, and benefits from another advantage of such networks- transparency.

Blockchains need not be anonymous, they can also be public. A public blockchain is one where every transaction is visible to anyone, including the recipient and sender addresses

In an anonymous blockchain it is impossible to identify the recipient and sender, but in a public blockchain this could be the opposite. The only way to be assured of my servant’s integrity is to have all its operations conducted on a public blockchain, and in level 2 this is possible in many ways.

We could start with taxation. A common sentiment of the taxpaying individual is a helpless ignorance of where their tax goes, and how it is spent. The government is a vast bureaucracy, and we are surrendered to the idea that somehow, in some way, our tax is finally given back to us in the form of roads, electricity, and infrastructure. Whether this is true or not, and to what degree, is a question that can become moot through the blockchain world.

Taxation should be on the blockchain, end to end. Imagine if we could pay our taxes to a decentralized, nationally maintained tax ledger. From there, we could literally trace every Rupee of tax paid to its endpoint. Whether it goes into the next metro rail project, to increase the capacity of that hydro plant in Himachal Pradesh, or into the pocket of some bureaucrat will then be easy to identify. In one fell swoop, we not only give the public a way to know how their taxes are spent but also institute a system where it is impossible to steal without being caught.

Further, we could see the tax records of anyone else, including the people who currently store their wealth in Panama! This would be a profound change to modern governance.

Another aspect of uncertainty in government is the funding of political parties and campaigns. Here we are faced with the same problem- not only do we not know how our money is spent if we donate, we do not know who else has donated and whether the political party is compromised by the specific interests of a large donator.

But what if political parties were mandated to conduct their finances on a public blockchain. Now anyone could see who donates, how much they donate, and how the donation is used. If a large oil corporation, for example, donates to the political party, I am now in a position to know this and incorporate it into my own decisions. We can thus begin to see how level 2 of blockchain world fundamentally changes the way how democracy and government operate.

As is the case in level 1, we cannot expect our current political leaders to usher in a change that significantly negates the illicit benefits of their chosen vocation. This is a change only we can bring, and it again requires the assumption of personal responsibility. Now we will be responsible for ensuring financial fidelity ourselves. We would need to familiarise ourselves with the basics of economics, of expenditure and budget management. But the benefits far outweigh the apparent inconvenience of learning some economics. In level 2 of blockchain world, we have systemically eradicated many aspects of corruption in a way that they can never recur.

In level 2, blockchain can be embedded deep into the democratic process. A fully utopian vision is one where every decision can be voted upon through the blockchain, but since democracy of this kind can soon become mob rule, it gives us a good example of how not everything needs to be blockchained. What certainly can be blockchained is every action our governments take, and since most major forms of organized criminality can be traced back to a political collusion of some kind or the other, government-on-the-blockchain could mean the end of organized criminality itself.

Imagine adding to the eligibility criteria for any political office the rule that one’s financial conduct for the previous 5 years must be entirely on the blockchain- both income and expenses. And these would-be political leaders would have to link everything from their PAN card to their Aadhaar card to this blockchain. In this way, any transaction outside the blockchain could be identified. This is then a system where we know every single transaction the individual makes- a system of complete transparency.

I am of the opinion that complete public blockchaining of politics in this fashion is the end of corruption, government secrecy, and even maladministration. No longer can our leaders accept bribes, take decisions without our knowledge, and shirk their responsibilities as our elected servants. We would know every single property they own, every business they are invested in, and every unit of money siphoned off to secret accounts.

It is akin to taking the current modes of government control, amplifying them through blockchain, and turning them into government itself.

This situation assumes a complete embedding of blockchain into governance, a fully active level 2 that comes after the public has first been trained to operate at level 1. Remember also that we said level 1 will be harder to attain. This is so because the momentum will be irreversible once level 1 is completed. From then on, the public’s push for complete blockchaining will be hard to resist. And having learned the basics of personal responsibility in level 1, the learning curve now will be far less steep.

The paragraphs above give only a few ideas about government-on-the-blockchain, and no doubt there can be several other applications. But the larger vision is the same. Just like level 1 frees us from corporate exploitation, level 2 frees us from government exploitation. And this prepares us for the creation of civilization 2.0 through attaining level 3.

Level 3 of Blockchain World

Let us retrace our journey. In level 1, having taken every day human interactions onto the blockchain, we have removed the need for value-eating corporations. In level 2, by taking all government operations onto the blockchain, we have removed much of corruption, opaque governance, and organized criminality. In reaching level 2 we have already become a species used to the decentralized mindset, so level 3 is where we bring it all together to a point of complete convergence. Here, we eradicate borders of all forms and become a true global society.

Image Credit: Artist Frits Ahlefeldt

This begins with the increasing interaction of people on the blockchain, where national and bureaucratic borders are technologically rendered obsolete. Much of this is already in place because of the internet. Morals, values, ethics, laws and cultural practices are already being transported from one place to another, so the push for the decriminalisation of homosexuality in one nation, for example, makes the push in another nation one step easier.

Prior to attaining level 3, we would all live in a world where our leaders are completely committed to our desires and not compromised to the interests of larger players. This facilitates a greater control for us over the state of affairs- we would be able to pass the environmental legislation we want, succeed in decriminalization efforts for things that should be legal, and overall have our governments operate exactly as we want them to.

This thus means that the people of India, for example, would actually be able to disallow their government from trading with Saudi Arabia until the latter caught up with the rest of the world in terms of gender and sexuality laws. Note that for this we only need the Indian government to be blockchained. The act would work even if Saudi Arabia remained the monarchy it is. But remembering that we are anyway in speculative territory inclined for the ideal state, it is not hard to imagine that eventually, a blockchain world would mean even the democratization of Saudi Arabia, monarchy or not.

Level 3 of blockchain world is thus one where the human species can universalise its laws and ethics. It is the one world and one government of science fiction imaginations.

By rendering corporations obsolete we removed the ways in which our governments could be compromised and we ourselves could be exploited. By blockchaining the governments we took power into our hands and removed the corruption of all forms. By spreading this across the globe we then become one people in the truest sense. Our collective will drive our fate, and leaders that deny climate change, push religious divisions, subvert democratic freedoms, curtail gender and sexual liberties, or compromise public welfare to corporate interest will have no place in the system.

Again, it bears disclaiming that these are utopian speculations on blockchain, but this does not mean that they are impossible. All these levels of blockchain can indeed be realised, and successively they take us to civilisation 2.0- freer and more democratic than anything that has preceded it. And in the future eventuality that we become an interplanetary species, or encounter an alien one, we could upgrade to a level 4 blockchain world.

I’ve consciously avoided in all of the above any mention of cryptocurrencies and tokens, for the point can be made regarding blockchain alone. But if we understand the nature of decentralised systems, we must realise that there must be an incentive for these systems to be maintained.

I would dedicate the resources of my computer to maintaining, say, a consumer blockchain, only if that gives me something in return. This is where cryptocurrencies and tokens come in- for they are a mathematically valid method of incentivisation.

Think of the milk-on-the-blockchain scenario we created earlier. Individuals who maintain that ecosystem could get discount tokens for their milk, or milk sellers that link with the suppliers could get discount tokens on shipping. Either way, cryptographically validated methods to transfer value will be an essential part of blockchain. Therefore, while it is true that the real potential lies in blockchain technology itself, not cryptocurrencies, the two are inextricably linked and the spread of one automatically means the spread of another.

And this helps us imagine level 4 of blockchain world. In a scenario of alien encounter, it is absurd to imagine that the aliens would be interested in understanding our economic and financial models or find any value in the fiat currencies of today. The same is true for how we might look at their economics. But a cryptographically valid method is essentially a mathematical method, and since mathematics is a universal language it might be the only way for us to exchange value with an alien species. Even without aliens, an inter-planetary human society will find more value in cryptographically validated forms of value. Planetary colonies will give little importance to national fiat currencies and will hesitate from adopting metal-backed standards if the presence of these metals on different colonies will be highly variant.

This has brought us to the very far reaches of wild speculation on blockchain, so it is as good a time as any to wrap things up. In this article, we have engaged in an exercise of pure speculation, one that imagines how blockchain can be embedded into society in successive levels. Doing so, at its core, facilitates two things- 1) the interaction of individuals without the need for trusted third parties, and 2) complete and profound transparency in governance.

While this may sound simple, it requires immense momentum from the public itself and an assumption of personal responsibility in many affairs. Further, it will face intense resistance from all power structures existing today- from corporations and financial institutions to our own political leaders democratically elected or otherwise. But a small push can create a large wave, so attaining even level 1 can mean an unstoppable progression towards level 3- where blockchain carries the potential to create a global order, with universalized laws, ethics and governance conditions. And since all of this will be based on a way of co-operation we have never conducted before, decentralised, it would be the emergence of civilisation 2.0.

What the Sumerian farmers would have given for granaries-on-the-blockchain

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Posted by Manu Belmonte

Senior Editor at The Credible Hulk Magazine and writer at my personal blog learninghayek.wordpress.com

One Comment

  1. […] via Towards a Blockchain Future — BilanReport […]

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