Bitcoin, the Blockchain and the Decentralized Path Forward

This week, social entrepreneurs, business people, academics and activists gather to discuss new currency technology at a free, three-day conference put on by the Cryptocurrency Research Group in Mountain View, Calif., and at a parallel conference Tuesday called “Bitcoin and the Blockchain." It might be easy to dismiss this as the typical Silicon Valley crowd, postulating a version of "uber for pencils" that will save the world’s children from the next epidemic. In reality, though, the discussion is rapidly attracting interest from people everywhere who are seeking a fresh, more decentralized approach to coexistence.

Bitcoin was the first example of the technology that is now a thriving alternative to centralized currency. People are currently applying the blockchain, a vital innovation behind Bitcoin, to more than just money and beyond what many have envisioned. For social change advocates it is a new infrastructure where their causes can be realized. It can facilitate an honest and balanced society. Imagine that.

The efforts of currency reformists are abundant, yet they continue to confront the same limitations, unable to gain significant momentum. A centralized system concentrates power and resources in the hands of a few, blocking avenues to change. Armed with the blockchain, though, this movement could reach a tipping point, setting legitimate standards for business, politics, and social institutions.

How It Works

The blockchain creates a network of participants who have no need for a single authority to sanction financial transactions or communicate information. It does this through an intrinsically fair protocol, i.e. the way http serves for the Web. It allows people to share knowledge, resources and power transparently because everything is recorded in a public ledger, where information that's intended to be visible or anonymous remains that way.

A peer-to-peer architecture, the blockchain is similar to a more secure Napster, but with more capabilities. People can "rent" out resources, such as their extra computing power, wifi and storage space, creating a collaboratively provided mesh. Generally unhackable voting and rating systems can dictate future directions of companies or political bodies. Smart contracts, self-enforcing pieces of software, can automate lots of processes that are subject to manipulation today, such as rights distribution within the music industry.

People can also pay artists and other content creators directly using micro-payments, which is currently not feasible with credit cards. They can create largely spam-free communities around topics, artists and campaigns. As people use the blockchain, a verifiable reputation forms around them, contributing to a larger web of trust. Access to data and privacy in general is determined as users decide how they want to share information, and if they want to benefit financially from it. Reputation can become a monetary base for anything from selling sleep data to advertisers to negotiating contracts for a freelance writing gig.

For an overly simplistic representation of the blockchain ecosystem known as Ethereum, imagine a decentralized version of an itunes store that contains your digital persona attached to a reputation. That marketplace is collectively owned by the people who use it, and every transaction between any and all parties is visible, if you know where to look. Now apply that model to just about every business, charity and institution that exists. That’s the magnitude of what is being launched.

The fundamental principle of the blockchain, "decentralization," is already recognizable in the laws of nature. The lack of an overarching authority increases the resiliency of the whole, and creates a crowd-sourced intelligence that is greater than the sum of each individual part. Within ant colonies, synchronistic lightning bugs, brain chemistry,“neighborhood formation, pointillism, and Germany’s renewable energy program, decentralization has emerged countless times as an advantageous evolutionary position.

Technically, the blockchain is a general public ledger of every transaction that has ever occurred. It creates value through a process called mining. On an average of every 10 minutes, a new math proof or problem is broadcast to all of the nodes (i.e. computers running a Bitcoin blockchain). All of these nodes compete to prove they have the resources to solve an algorithmic problem in exchange for a financial reward, which currently stands at over $5,000. The node that completes the problem first publishes its answer, and the rest of the nodes verify it. All of the transactions (between people, businesses, etc) that occurred within that time frame are considered valid. They form a "block" that builds on top of the chain of previous blocks, which collectively becomes the historical record (i.e. a chain of blocks). To dive deeper into the process, check out this video.

Socially, a blockchain is an architecture for a global, distributed village that shares a database of information. It can be accessed and modified, upon appropriate consensus from the group, at anytime. Resource and information flows, such as the transfer and storage of certified value, can be recorded. Now imagine that many social institutions, corporations and tech platforms place some aspect of their business – or all of it – on that database. This will become possible with the project known as Ethereum, which launches in just a few months.

Liquid Democracy

Ethereum started with an idea from a 19-year-old visionary named Vitalik Buterin who realized society needed a new platform and programming language to accommodate the amount of activity required to power societies' needs. An eclectic group came together after the release of Buterin's white paper in 2013. Eight months later, they had raised $18.4 million to develop the platform – the second largest crowdsale in history. Ethereum is a Swiss not-for-profit that will govern the development and release of the protocol.

At its core, the technology improves the ability of a group to come to a consensus transparently. Current democratic decision making obscures the actual process in a myriad of black boxes, impenetrable to the common person. People's civic agency is thus thwarted, which facilitates a passive, apathetic and consumerism-addicted culture.

The decentralized ecosystem introduces balance into the relationship between people and the businesses that serve them. Corporations and governments will exist to augment individuals, not to dictate to them. The blockchain opens up previously exploited and untapped economic potential, and cuts out many of the extraneous middlemen who are not adding value to the system.

Here, people are incentivized to become active participants in an accessible, mutually rewarding process forming a "liquid democracy"that unites differing opinions in a revisable, transparent arena. This, as opposed to leaving everything in the hands of a few people who are often corruptible. The blockchain process has huge implications for a global civil body that must make decisions regarding climate change, the global economic standstill and international refugee practices, among other issues.

This emerging movement can build systems that incentivize carbon reductions, produce renewable energy, increase microfinance, decrease costs in remittances and education, and lower barriers to entries across industries. The driving members will be an entrepreneurial multitude with an ethos of liberating human capital and dissolving easily-exploitable restrictions on the exchange of resources and ideas. The main obstacles to the blockchain's initial success are the lack of public awareness and understanding about how it works.

To humanize the technology, the first step is education. Search for related online discussions, watch videos, and read the articles that interest you. Connect to your local blockchain meetup, or attend a conference like the one happening Tuesday in Mountain View. Network with people and find out what they are building. Start to envision how your particular blend of skills and expertise could be useful in this new paradigm.

While social reform needs this technology, the blockchain also needs people who can adapt it, interpret it and shape it into a new cultural reality. It's not the answer to all of our problems, but it may be the most compelling path forward that has emerged yet.