WWhen the cryptocurrency Bitcoin debuted in 2009, an interesting difference of opinion quickly emerged about it. Journalists tended to view it as some kind of incomprehensible money-laundering scam, while computer scientists, largely unaware about bitcoin’s prospects, nonetheless thought that the distributed ledger technology (the so-called blockchain) that underpins the currency was a big idea. It could have far-reaching consequences.
In this conviction, they were joined by legions of technical liberals who viewed technology as a way to enable economic life without the oppressive oversight of central banks and other regulatory institutions. Blockchain technology has the potential to change the way we buy and sell, interact with government and validate everything from title deeds to organic vegetables. It brought together, and to the amazement of that well-known revolutionary body Goldman Sachs, “the openness of the Internet with the security of cryptography to give everyone a faster and more secure way to verify essential information and establish trust.” Really, encryption will set us free.
In essence, the blockchain is just a ledger – a record of transactions that are time-stamped. These transactions can be any movement of money, goods or secure data – a purchase in a store, for example, ownership of a piece of property, an assignment of an NHS number or a vaccination status, you name it. In the offline world, transactions are verified by a central third party – a government agency, a bank or Visa, for example. But the blockchain is a file distributed (i.e. decentralized) where verification (and thus trustworthiness) does not come from a central authority but from the consensus of many blockchain users that a particular transaction is valid. Verified transactions are grouped into ‘blocks’, which are ‘linked’ together using cryptography so hard that, in principle, any attempt to alter transaction details appears retroactively. And repressive rent-seeking authorities like Visa and Mastercard (or, for that matter, Stripe) are nowhere in the chain.
Given all of that, it’s easy to see why the idea of a blockchain conjures utopian hopes: technology is finally sticking to the man. In this sense, the excitement around it reminds me of the early days of the Internet, when we truly believed that our contemporaries had invented a technology that was democratizing and liberalizing beyond existing power structures. Indeed, the network had—and still has—those coveted advantages. But we don’t use them to realize their great potential. Instead, we have YouTube and Netflix. What we underestimated, in our naivety, was the power of sovereign states, corporate ruthlessness and capacity, and consumer negativity, which ultimately led to corporate takeovers of the internet and centralization of digital power in the hands of a few giants and national governments. In other words, the same trap that occurred to advanced communication technologies – the telephone, radio and television broadcasting, and film – in the twentieth century, memorably recorded by Tim Wu in his book master key.
Will this happen to blockchain technology? I hope not, but the enthusiastic endorsement of it by groups like Goldman Sachs isn’t entirely reassuring. The problem with digital technology, for engineers, is that it is inherently fascinating and seductively challenging, which means that they gain a kind of tunnel vision: they are so focused on finding solutions to technical problems that they are blinded by the broader context. . Currently, for example, consensus creation processes to verify blockchain transactions require computation intensive, with a correspondingly heavy carbon footprint. Limiting this presents interesting technical challenges, but focusing on them means that the engineering community does not consider the governance issues raised by technology. There may not be any central authority in the blockchain, but as Vili Lehdonvirta pointed out years ago, there is be Rules for what constitutes consensus, and thus, a question about who exactly sets those rules. engineers? Owners of the largest supercomputer in the series? Goldman Sachs? These are, after all, political questions, not technical ones.
Blockchain engineers don’t seem to care much about the needs of humans who may eventually be users of the technology. This, however, is the conclusion reached by cryptologist Moxie Marlinspike in a fascinating examination of the technology. He writes: “When people talk about the blockchain, they are talking about distributed trust, leadership without consensus and all the mechanisms for how this works, but often they ignore the fact that customers can’t ultimately participate in those mechanisms. All network diagrams are for servers, and the trust model Between servers, it’s all about servers. Blockchains were designed to be a network of peers, but they weren’t designed so that it would really be possible for your mobile device or your browser to be one of those peers.”
We are not close to that point yet.
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