It seems like most people who really understand blockchains are adamant about them. If you’re dystopian, you can reasonably be anti-AI or anti-VR or anti-biotech, but there really is no basis for being ‘anti-blockchain’. The decentralization that is possible with blockchain technologies puts humanity on the exact opposite historical trajectory as 1984. Once the inherent fallibility of centralized systems is truly comprehended, continuing to believe that centralized structures will dominate society becomes impossible.
Decentralization began with the mysterious release of Bitcoin in 2008, and the bestowal to humanity of the underlying blockchain idea. This idea describes a new type of inter-computer connection that enables new types of human interaction that were previously inconceivable. It mathematically creates real trust between anonymous strangers with no intermediary. It doesn’t connect servers to clients, but all computers to all others. It doesn’t need (and can’t have) a leader. It doesn’t require our core services like email, social networking, and search to be run by profit-machines like Facebook or Google, and it doesn’t give services the ability to own or control your private information.
In every experienceable metric, decentralized systems transcend centralized ones. They are simpler, stronger, safer, and more scalable. They enable a new era of human organization to begin, and in this era we will dismantle and re-build the systems we exist within. All man-made “agreement structures” will be re-created in ways that allow for assured mutual collaboration without the possibility of betrayal. Agreement structures like money, laws, contracts, voting, and investing are already being re-designed by the emerging decentralized workforce.
These concepts can be inherently difficult to understand because they are so purely abstract. It’s a revolution not in computer chips or molecules, but in how data is passed between computers. Those who first understood the impact of blockchains were mainly those who understood the code they were composed of, and many of those early adopters gained incredible amounts of financial wealth because of their prescient understanding.
Bitcoin was the first currency to exist only as data, which is a tricky idea. For decades, currency had been tracked digitally in computer databases around the world, but that data had always been only a reference to physical currency. The numbers in the databases were not the currency itself, but a symbol of it. The $1,200 listed on your bank account webpage referred to $1,200 in paper money that you could instantly obtain by walking to your local branch or ATM. Bitcoin was revolutionary in that now the digital numbers were the currency. Each bitcoin was soon seen as a genuine scarce resource, even if it wasn’t issued by a government, did not refer to anything physical, and allowed transactions to occur practically for free. Today, one bitcoin — a random array of bits on a hard-drive somewhere — is worth more than a cheap used car.
But the most important thing Bitcoin did was eliminate the need for any amount of trust between two individuals. “Trust” is one of those words that is easy to use, but requires some unpacking to fully appreciate. Trust doesn’t just exist between you and your loved ones, but exists as the basis of nearly every relationship in your life. You trust your mechanic to fix your car so it doesn’t break down, you trust your bank to not lose your money, you trust the police to keep you safe, your doctor to keep you well, and your dog to not bite you. In return, you receive trust back — your dog trusts that you will feed it and your doctor trusts that they will be paid.
The problem with trust amongst complete strangers is that it often requires some sort of middleman. Since there is no immediate social cost to breaking a stranger’s trust, there often needs to be someone whose job it is to verify that each stranger is doing what they said they would do. Things like escrow agents, lawyers, contracts, and legal consequences must exist in order for each party to feel comfortable interacting. The problem with escrow agents, banks, and lawyers is that they are expensive, and they don’t actually eliminate the need for trust — they move your trust onto them.
Bitcoin eliminated the need for these types of middlemen in financial transactions of any scale. Transferring $1,000,000 worth of Bitcoin requires no more effort or fees than transferring $0.25 worth. And why should it? They’re all just numbers anyway, and financial transactions are the source of most action in our world. Allowing financial cooperation to occur instantly, without the possibility of fraud, the cost of a middleman, or the revelation of identity is beginning to have a massive impact on the way humans interact with each other.
Most of this innovation was centered around monetary systems until 2013, when a 20-year-old named Vitalik Buterin gave us the ability to write and run any program on a blockchain. His creation, Ethereum, enables the development of decentralized apps (or dapps) that use a new type of digital agreement called a “smart contract” to leverage the enhanced capacities for trust we now have access to. In many ways, Ethereum is far more important to the future than Bitcoin.
Unfortunately, the impact Vitalik is having on humanity is not as obvious as someone like Elon Musk; innovations in data structures aren’t as photogenic as electric cars or spaceships. But Ethereum seems to be emerging as the basis of the new internet era. It is backed by a never-ending list of technology visionaries and has increased in value over 1000% in the last several months, with no signs of slowing down.
This all matters because the structures we exist within define what we are capable of doing. Global society is a giant structure made of individuals and organizations, and organizations are just agreements among individuals. If the agreements that weave us together exist with the same certainty as2+2=4, then the possibility of what we can mutually create is truly infinite.Society can finally trust itself.