The Blockchain and Why it Solves Everything

(Yes I have turned into that person...)

SPOILER: it doesn't solve everything, that was clickbait.

I've wanted to write about blockchain technology for a while, but I've spent so much of the last two years writing code that I've almost forgotten how to write 'normally'. Having recently completed this transformation into a full-blown coder, I've naturally fallen head first into the stereotypes and have become obsessed with the blockchain. The desire to share this newfound passion has become so overwhelming that I'm willing to brush concerns about my rusty writing skills to one side and fully embrace being a cliché. So, for the benefit of my friends, family and some internet stragglers, I'm going to arm myself with a slew of emojis and GIFs, risk being labelled a cryptster (yeah, it's a step beyond hipster and I just made it up, deal with it) and take you through why I think blockchain is so important…

As with any technology, blockchain really is what you make of it. If knowledge and power stay in the hands of a small cross-section of society we won't realise its full potential. I know so many awesome people doing really important work building a better future for us all, but I've been surprised by the lack of understanding around this issue. Perhaps it's because people are sometimes afraid of what they don't know, or maybe they're just sceptical of the hype. Or maybe, when it comes to new stuff, people feel like they have to either ignore it or understand it fully, until the fact that it's a known unknown becomes so normalised you either grew up with it or can't ignore it (hello, internet, old friend… how do you work really though??? (Most coders don't even know)). So, here I am, as your philosophy-trained sociologically-minded newly-anointed technocrat friend to explain it.

There are a few times recently when I've been either reading or watching something and this line crops up:

"The Great Recession of 2008 was the greatest economic crisis since the Great Depression of the 1930s".

It shocks me every time, because I still can't believe we lived through it. We're still reeling from the consequences, still waiting for change. Our generation came of age in a pretty broken world, we graduated to a jobless market, or maybe we didn't even graduate because uni was so expensive 😒 There were a lot of things that went wrong (ultimately with capitalism) to get us to this point, but to understand one of the main problems at the heart of the 2008 crash, we have to take a little trip back through the history of accounting. It sounds boring, but honestly I've come to find it really fascinating 🌈✨

Just for fun, let's boil something incredibly complicated down into some sound-bite points:

If you want to engage in trade 💸 and not necessarily pay the debt back immediately => I give you a cow 🐄 now, you give me some rice 🌾 later => you need two things:

1. A ledger 📜 - a record of who owes what

2. 💞Trust 💞

   2.1) that the ledger is accurate

   2.2) that your trading partner will actually respect the ledger.

Waaay back in the day, before global capitalism was a thing, people within a small society could hold the ledger in their heads and form social bonds which facilitated enough trust to engage in intra-societal trade (I imagine they did anyway, seems to make a lot of sense and really explains why social norms became such a big thing). Later on, as trade volumes grew these ledgers got a bit more complicated. People probably started messing them up, so they came up with a really really really radical idea => why not write them down?! This is why the oldest examples of writing anywhere in the world are tallies. They date back more than 40,000 years - way before any other examples of written language ~~~ FaScINaTiNg!!

That kind of ledger probably worked fine for relatively simple transactions within smaller societies, but for two different societies to engage in trade people had to find more comprehensive ways to establish trust in a system where personal social bonds were lacking. They needed a ledger that all parties could trust, even though they did not necessarily know one another personally and were separated by vast amounts of physical space (which also made moving physical money very difficult, further necessitating the need for a trustworthy ledger)… enter: double-entry accounting.

Double-entry accounting basically involves entering information into two accounts (duh - double-entry). So if you gave me £5 I wouldn't just write down +£5 in my account, you would also write down -£5 in yours too. With a doubly-entered ledger we can then do much more complicated economic manoeuvres, and at the end of the day if our figures match, we're all good. There's a lot more to it than that, obviously, but the basic fact is that double-entry accounting had a profound effect on world history, and most scholars agree that it was a major factor in facilitating the renaissance and the emergence of modern capitalism.

We've had such faith in this system of accounting for so long that we barely even notice it or question it these days. Or at least the majority of people in the "West" didn't, until about 2008 (I see you, Islamic Banking 😉). In 2008 we found out that the ledgers the banks had been keeping were, to put it mildly, complete bullshit. Bankers and financiers were thinking up new deranged financial products that were near impossible to accurately value (e.g. the infamous credit default swap). They used these products to fiddle the books, pay themselves insane wages, and when it all came crashing down it was us, the public taxpayer, who footed the bill. They're still at it, the bankers, lawyers, accountants and financiers - making up weird financial products to trade and pay themselves lavishly. Their latest weapon of choice is the "reverse merger" in which it is estimated that $14,000,000,000 of public money has been lost to fraud. There are lots of other things wrong with banks: they invest in really fucked up things (that we don't get to decide), they charge ridiculous rates, they avoid paying tax, they facilitate money laundering and fraud, and they offer credit in ways that more often than not make the rich richer and the poor poorer.

Enter: Blockchain

Blockchain is a new technology in accounting in which this all important ledger is decentralised. This means that any "node" in the system (i.e. a computer) can independently verify the authenticity of any transaction that has taken place on the blockchain. Blockchain technology is literally just that => a ledger that is not held by a central authority, yet it can be trusted with certainty. Read it again, it's probably simpler than you think. It provides a way to store and move value securely. "Value" here can mean a few different things => it might mean traditional fiat currencies such as the £ or $, or it might be a crypto-currency, perhaps a token, or any other digital asset. Blockchain allows people (or even automated contracts) to move that value around in ways that everyone can trust and verify, without needing a centralised mechanism. This means that nobody has to rely on a central power or "trusted third party" - such as a bank or government - to make, receive or verify a transaction. The blockchain is the ledger, and once a payment is written to it, the data is immutable. That means that information is open by default and distributed across the network, and that power is more decentralised and democratic than in traditional banking systems. We can trust the data on the blockchain because it is mathematically near impossible to falsify. Science literally proves the blockchain is uncrackable, well almost... Fun fact:

"Consider that Bitcoin is now the most powerful computing network in the world [i.e. all the computers connected to the network that power it], one whose combined "hashing" rate as of August 2017 enable all its computers to collectively pore through 7 million trillion different number guesses per second. Well, it would still take that network around 4,500 trillion trillion trillion years to work through all the possible numbers that could be generated by the SHA-256 hashing algorithm that protects Bitcoin's data. Let the record show that period of time is 36,264 trillion trillion times longer than the current best-estimate age of the universe. Bitcoin's cryptography is pretty secure."

🤔

Okay, so I'm skipping over bits here and I don't want to get too technical, but TLDR: blockchain gives us the opportunity to engage in commerce without needing banks or government. Every transaction that is made is recorded publicly (and potentially anonymously) on the blockchain. Even more radically, it allows us to do all this without us ever needing to have/prove/be an "individual" - a wallet on the blockchain may be associated with a single person, a collective of people, a company or cooperative, and a single individual may have multiple wallets.

I think that is pretty damn special! Moving around a store of value in a distributed and cryptographically secure system is rad, but it's really only the tip of the iceberg… Blockchain is the underlying technology, and Bitcoin is just one implementation of this. Another great example is Ethereum. Interestingly the Ethereum blockchain doesn't just store value on a decentralised ledger, it also stores code in the form of "smart contracts". Again, without getting too technical, this is a really mad point. Code can be written to execute in predefined ways and according to predetermined rules, and then put on the blockchain for everyone to see. It is, by definition, open source and transparent. Anyone can write a smart contract and put it on the Ethereum network and if people like the idea, they can engage with the contract. When people talk about "decentralised applications" this is what they mean - building application complexity in smart contracts that are stored on the blockchain that anyone can interact with. It's all very new, and potential applications are only just starting to be explored, the infrastructure is in its nascence. At the minute the things we can build are mostly constrained by the imaginations of developers, so.... PLZ SEND HELP!!!11!!1

Blockchain technology lets you record and exchange any digital asset - it doesn't have to just be money. There are many other things that we find valuable in society, and that we'd like to find safer, more secure ways to handle, without needing to pay expensive middle-men - things like contracts, medical records, personal data, registries, digital assets, art and even kittens https://www.cryptokitties.co/. Blockchain provides a way for us to assert control and ownership over the data that we generate - it can potentially (if we build it right) tip the balance back in favour of the people and away from giant tech conglomerates like Facebook, Google and Amazon.

Of course it's not all kittens, smart contracts and rainbows. Blockchain technology still has some serious issues. For a start, it uses a colossal amount of energy, with Bitcoin guzzling "about as much electricity annually as all of Nigeria", which just shows that we shouldn't tackle the problems we face in isolation. Blockchain is not a panacea, it is a weapon.

Blockchain technology also processes payments incredibly slowly, at around 9 transactions a second. Compare that to Visa's 1,667 a second and you realise there are some scalability issues before this replaces global banking. This is something that is being addressed, and lots of smart people are working on ways to solve these issues...

But...

One of the most fundamental problems with blockchain is about who these "smart" people are. Personally, I find this the most troubling aspect by far - that the infrastructure of the future is being built mostly by men, who, in the UK and US at least, are largely white. That means that the vast amount of wealth that is being unlocked is being handed directly to a section of the population who are doing pretty well already. That's not always true, and I'd personally take geeks over bankers any day of the week, but diversity in tech is completely whack - in the US recent reports show that men account for 76% of the work force, and even worse 95% of people in technical jobs are white. In the UK it's about 83% men, depending on who you ask.

Speaking of the rich getting richer... over a decade ago I heard a statistic which literally blew my little mind and changed my life: that the richest 50 people in the world had more wealth than the bottom 50% of the entire world's population combined. If you've never heard that statistic before or have never really given it much thought I encourage you to take a moment and really think about that. Since then, that figure has closed to just 8 people. You could fit them round your dinner table, and if you did have them over for tea, you'd be dining with people with a combined wealth of more than the poorest 3.7 billion people on the planet. Eight people. Not only is wealth inequality completely batshit insane, it's getting worse... Every time I think about that I can't believe we're not all rioting in the streets right now! It is completely completely insane and we have to do something. Don't get me wrong, I love Corbyz, but what I've learned in the last ten years of activism is that we need to have many strategies operating in parallel (something I like to call activist concurrency (s/o to all my activist geeks!)) - and that we can't hope that electing an individual into power, or even a party, will solve all our problems (though it might solve some). Even if they were to get elected, international corporations wield such power that governments have relatively limited ability to act (even when they are united!). It also seems naive to think that fundamental changes in world economics/politics could be driven by any individual nation-state.

Despite all of these harrowing statistics I'm still hugely optimistic about our ability to change the world, and I believe blockchain technology is able to provide radical solutions to some pressing issues - chief amongst them is wealth inequality. It gives us the opportunity to experiment with and engage in radical alternative economics right now. We can literally rewrite the system to play by a different set of rules, as in we can programmatically rewrite it. Here's an example of something I'm working on => A redistributive blockchain solution which redistributes wealth at a set time every week from the top 1% of wallets to the bottom 10%. Of course there are loads of problems with this that we'd need to iron out through experimentation - but after a decade of simply theorising about redistributive economics, I've realised that we have the tools to actually create new economic systems right now, test them, and then iterate, and we don't need to wait around for centralised authorities in order to do it.

Side-note: when I've mentioned this idea to people before even some of my most well-intentioned activist friends respond with the same question: "what would stop people from leaving that system if they got rich?" - I find it striking how similar some of these arguments are to the criticism I often hear about increasing taxation, or providing a universal basic income - "Wouldn't people just get lazy?" - "Wouldn't companies take their business elsewhere?" "No one would ever do that, you'll never get it through!" ===========> I think we need to start building the systems we want and need, and then ironing out the details later, without letting the fear of how rich people might act or our stereotypes about how poor people will behave dampen our resolve to innovate, experiment and imagine.

And wealth inequality is only going to get worse… wealth begets wealth and the robots are stealing our shit jobs... oh. no… not our shit jobs! I'm only half joking… being able to pay your bills is a matter of life and death for some. Without systems in place that redistribute wealth in radical new ways, I think we are heading for a very bleak future. One interesting and ironic point about blockchain though, particularly with solutions like Ethereum, is that these technologies actually have the power to replace the need for accountants, lawyers, bankers and other financial jobs. The blockchain revolution is really only just beginning, but when it comes, it'll be coming for white-collar workers too. (Life advice: learn to code... I know I know, it's lame to have to make yourself useful to capitalism, but it turns out coding is really fun and, as I hope I've convinced you in this article, has the ability to flip some stuff on its head).

As with any new technology, capitalism is going to try its hardest to co-opt its radical potential, hollow it out from the inside and then sell a shitter version of it back to us => literal yawn. All the major banks are currently investing billions and billions and billions of dollars into blockchain research. I sort of think that's how you know it will be the future - because people all across the political spectrum see the potential of it - and exactly what potential you see depends on where you are standing.

I'm trying to keep this short and sweet, so I'll just say this: Yes crypto assets are currently overvalued, yes there was (is?) a bubble, yes there are flaws, yes some crypto enthusiasts are bizarre, yes I might be turning into one, yes social movements absolutely need to be a driving factor, no they are not replaceable, yes new technology can be useful, no we shouldn't be so scared of experts and things we don't fully understand yet, no it won't solve everything, not by a long shot. But it does solve a number of very big, expensive and important problems, and for this reason it won't be going away. Right now I feel like how people that understood the internet in the 90s must have felt. They didn't know exactly what form it would take and how it would affect the world, they just knew that it would. Blockchain is a weapon, let's take up arms.