Finding New Consensus and Trust in Global Economies
How new technology can create new economic freedom and mutual trust
Compare the world of 2008 with the present world we live in. The transformations in many facets of our lives and the world around us is almost unbelievable. From the proliferation of social media and its influence to the development of machine learning and big data to the development of new applications in technological fields across the board, our reality has changed dramatically.
While living in the moment, it’s easy to take for granted something like using a smartphone to get an Uber. Or to consider that a company solely dedicated to producing electric cars like Tesla is one of the mainstream automotive manufacturers in the US. Or even to think about the fact that the president of the United States communicates directly with the people through Twitter. We accept these as how the world works.
Yet 10 years ago, all of these would have likely been unimaginable for all but a few forward-thinking people. Now, think about what the world will look like in 2028. In light of the advances we’ve made over the past 10 years and with the knowledge of developments in nascent technological fields, is there any reason to believe that 2028 will look as alien to us today than 2018 looks like to someone from 2008?
If anything, it’s arguable that the future in 10 years will look even stranger and less comprehensible than the changes we’ve experienced over the past 10 years.
Most projections call for driverless automobiles to be on the road within 10 years, which will create massive disruption in labor markets, industry and the way our society operates. Development in other AI applications will similarly disrupt huge sectors of industry, and the reach and scope of those disruptions probably can’t be predicted at this time. Technologies like Virtual Reality and Augmented Reality are poised to change the way we work and play. [4, 5]
Blockchain is a technology a little bit less on the radar than AI, driverless cars or VR. If most people were asked what technology will be most transformative over the next 10 years, few would probably select it. Yet blockchain has the potential to be at least as disruptive as any currently-developing technology.
The concept of a decentralized network maintaining a secure and accurate record of transactions is a bit counterintuitive to grasp, and still more difficult to fully envision in terms of applications. Most can eventually understand how a cryptocurrency like Bitcoin works, even if they don’t appreciate the nuance of the underlying blockchain framework.
The truth is that the power of blockchain technology has barely been harnessed at this point in time. While Bitcoin may seem like a speculation vehicle or a hobbyist’s interest, in reality, it is the first of a series of blockchain solutions which will change our world in a number of ways.
It’s possible to dive deep into the technical aspects of the specific applications both current and in development. Here, we’ll focus more on the broader concepts and ideas behind how blockchain is poised to change the way we interact with each other.
Trust and Freedom
The current world of cryptocurrency is fascinating, though ultimately flawed in several important ways. [3] Again, there are technical and specific explanations that provide a granular look at why this is the case and how it can be fixed. But it’s possible to explore it in more philosophical terms as well.
Two massive concepts with regard to blockchain are trust and freedom. Let’s start with trust. Every financial system (and it can be argued that finance underpins every system) is predicated on trust. Or else built up to solve the problem of a lack of trust. In a given interaction, how does a party in a transaction trust the second party, and vice versa?
Historically, we’ve solved this problem through the use of middlemen or facilitators. A monarch can enforce contracts and transactions through the establishment of penalties or negative consequences for those who break terms. A more sophisticated form of this are codified laws that establish rules and repercussions for violating those rules. For much of our recorded history, we’ve put the burden of trust on our governments.
Another form of a facilitator is a banking or financial institution. Both parties agree to trust this established entity to make the transaction happen. Many businesses and corporations can be viewed as trust guarantors along these lines. Again, we outsource trust to a large, established entity.
This has been how all societies have functioned for millennia. And it’s easy to see why this is the case. There are two basic paths: Either trust each other without the need for a centralized authority, or trust in that centralized authority. It’s always been preferable to trust in the centralized authority to the chaos and lawlessness of an unregulated marketplace.
But time and again, we’ve been failed by our central authorities. Governments misuse their power. Businesses value profits over truly serving their customers. And even beyond bad actors, both governments and businesses fail.
And in addition, we’ve shackled ourselves to all the negative consequences of giving away our trust to these central authorities. So, we have a system where we receive all of the negative side effects while hoping to receive some of the benefits. It’s a bad system, and the only reason it endures is that there has been no alternative.
The alternative is here. Blockchain technology offers the ability to conduct a transaction without the need for either trust between the transacting parties or the intervention of a centralized authority. Instead, the blockchain algorithm allows the nodes within the network to come to an unimpeachable consensus of the truth. [1, 2]
The ramifications of this are tremendous. And this is especially true once you realize that ‘transaction’ is a flexible and fundamental interaction. In a certain sense, almost everything we do socially is a transaction. And very few of our social interactions are truly free because we rely on facilitators due to the protections we’ve built up to compensate for a lack of trust. [1]
There are many definitions of freedom. The simplest one is to say that to be free is to be unencumbered. It’s pretty easy to see how governments limit freedom. This has always been the case, and it’s by design. We give up freedom in exchange for security. Or, to frame it slightly differently, give up freedom in exchange for the ability to trust.
Blockchain technology promises is a framework by which people can have both freedom and trust. And the implications of what that framework can bring to how we live our lives won’t fully be realized for at least another few generations of blockchain-based solutions. [2]
Because unfortunately, the current blockchain solutions don’t quite deliver on this promise. There is a preponderance of fees. Little sub-domains exist where only certain tokens or coins are required to transact. Transactions are slower than is acceptable when compared with conventional methods. Security concerns persist, not with the technology itself but with how it’s applied within bigger platforms. [3]
All of these are a new set of encumbrances. In their own way, they limit freedom just like the traditional model involving governmental or corporate middlemen does. Maybe not in the same way, but it amounts to the same thing. As long as blockchain-based solutions are slow, lack interoperability and require extraordinary security measures from their users, to most people the difference between blockchain and traditional is only in the details.
But here’s the bottom line — All these problems are fixable. Because none of them are fundamental to the nature of blockchain technology. The current state of blockchain technology is this: We’ve solved an age-old problem of trust and freedom. But in the course of doing so, we’ve created a number of issues that prevent the solution from truly functioning as intended. [3]
The next step is to solve the issues holding back blockchain-based solutions while maintaining the original purpose and focus. And this is what a number of blockchain innovators are working on right now.
When those issues have been cleaned up or mitigated, we’ll see something we’ve never seen before. A financial (and social) system in which all members are able to trust each other without the need for a central authority. A world in which we’re able to see what people will do once they’re finally free.
[1] — Is Blockchain the Future of Freedom, Max Gulker https://www.aier.org/research/blockchain-future-freedom
[2] — Blockchain Could Be the Savior of Free Speech, Mitch Hagen http://fortune.com/2018/07/26/blockchain-technology-cryptocurrency-ethereum-censorship-free-speech/
[3] — Cryptocurrencies Have an Everything Problem — John Biggs — https://techcrunch.com/2017/12/20/cryptocurrencies-have-an-everything-problem/
[4] — Disruptive Technologies And New Economic Models, Saheed Elnaj https://www.forbes.com/sites/forbestechcouncil/2018/01/04/disruptive-technologies-and-new-economic-models/#75d76b76b923
[5] — 12 technologies that will disrupt business in 2018, Paul Heltzel https://www.cio.com/article/3254744/emerging-technology/technologies-that-will-disrupt-business.html
