I don’t pay much serious attention to traditional capital markets these days, but when I do happen upon an article every now and again, it tends to be laden with doomsday rhetoric and predictions about the impending collapse of our financial system. From what I’ve been told (and I really don’t pretend to have a clue), we’re in the midst of some strange experiment with negative interest rates, where income inequality is the worst it’s been since pre-WWII, the gold standard is in vogue again, and oil prices are a signal of worse things to come. I’ve heard that the financial system is going through a “natural reset”, while others are birdwatching for black swans. Capital is in flight. Silicon Valley is a bubble. Student debt is a bubble. State pensions are vastly underfunded. China’s growth is slowing. The Big Short was better than the Revenant.

“The Big Short was awesome! Love Ryan Gosling, man.” — Everyone

Like most people, I like to think that I care about what’s going on in the world. But even when I’m feeling unseasonably studious, I’m not entirely sure how to go about validating any of these claims. Absent the patience and reach to sift through raw economic data, I’m left to my own humble devices. These mostly consist of casually reading Zero Hedge (and becoming kind of a Debbie Downer as a result of), getting clickbait-ed into terribly written Forbes articles, tweeting about Bloomberg’s sweet data visualizations, and trying to find seeders for a decent copy of a movie about events that I spent an unenthusiastic semester of undergrad studying. If I’m feeling ambitious this weekend, I might watch another documentary on how the fractional banking system is the devil incarnate and why I should blame all of my problems on the Fed.

Uncertainty and The Problem of Experts

This is admittedly a lazy form of due diligence, if one could call it that, but seems to me a natural and reasonable response to the immobilizing complexity of our global financial system. Surely, this is no way to go about my adult life, wallowing in ignorance and vilifying some ill-defined notion of Capitalism — but why should I behave in any other way?

I’m no expert, and I don’t pretend to be one. I don’t have tenure. I was not appointed to craft policy. I don’t run a macro fund and I have no agenda. I’ve had three semesters of economics at a state school. Despite living in Chicago, I’m not entirely sure if I belong to this school or the Austrian one. Apart from paying bills and taxes, I don’t have to pretend that I know anything about money or how it “works.” I more or less just have it (less), need it (more), or give it to other people in exchange for nice things. In short, I have the particular advantage of no one really caring about what I think about the economy — and that’s definitely a good thing!

Experts, on the other hand, are not so lucky. They have to either:

a) routinely make tough decisions based on complex, incomplete and opaque information, or

b) influence others who are making those decisions.

The Expert, seasoned and plucked out of industry or academia, is expected to have a bird’s eye view of everything that’s happening in our economy. Removed from their natural environments and sheltered from the thrashings of the free market, their expert instincts become diminished at best and stagnant at worst. Their opinions in turn influence fiscal policy, move global markets, and, perhaps most importantly, ease the general public into an odd type of post-coital fugue, nested in the warm belief that someone out there does actually know what’s going on. It’s this type of oxytocinergic comfort in the Expert that leads us to believe that we can pump and attenuate economic growth without repercussions by simply twisting the interest rate knob and flicking the tax rate switch. This is the same five-star, ivory tower comfort that has led to the hubristic fantasy of infinite housing price increases, too big to fail banks, and central banking wizards. In good times, The Experts are seen as omniscient gods and take all of the credit (no pun intended). In the not-so-good times, well, who could have seen that coming? Evidently some, but I still haven’t seen The Big Short.

The point is not to disparage those people who are genuinely trying to lead us through muddy financial terrain. The point is that complexity is a reality that humans can’t effectively face when we believe we exist outside of it. And while Hayek’s totalitarian nightmare has failed to fully manifest itself in our postmodern economies, Western society still seems to be holding on to the promise of central banking as if it’s somehow exempt from the critical analysis to which the rest of our social system is subject. Despite all the data that’s available in our information rich world, most of it is incomparable and unintelligible noise. Furthermore, economic models are becoming increasingly divorced from reality. To quote directly from a fairly updated analysis of Capitalism, Thomas Piketty:

To put it bluntly, the discipline of economics has yet to get over its childish passion for mathematics and for purely theoretical and often highly ideological speculation, at the expense of historical research and collaboration with the other social sciences. Economists are all too often preoccupied with petty mathematical problems of interest only to themselves. This obsession with mathematics is an easy way of acquiring the appearance of scientificity without having to answer the far more complex questions posed by the world we live in.

We don’t even know how much money is flowing through the financial system at any given moment — much of the world’s notional monetary value exists in over-the-counter contracts where annual estimates vary by hundreds of trillions of dollars. Knowing what’s at stake, with one expert is yelling ‘THE SKY IS FALLING’ and the next is whistling ‘Don’t Worry, Be Happy’, who should we listen to?

Fixing the existing financial system seems to me an intractable problem if it’s to be centrally planned; a problem that’s shared by all but is no one’s particular responsibility, and goes well beyond my pay grade and proverbial salt. If this was simply a technical issue, surely by now a civilization that’s put men on the moon and detected gravitational waves from the Big Bang would have engineered the kinks out. But we all know it’s not as easy as clicking Restart Later to upgrade the financial system’s OS. Besides, if we are going through some natural “rebooting” process, who’s to say that we can do anything about it?

A Contingency Plan

Let’s pretend for a moment that no one “out there” in the scary world has a clue about what’s going to happen tomorrow, let alone in six months or five years. It’s a radical (and possibly naive) idea, but let’s imagine, for argument’s sake, that Average Joe and the Expert are on equal footing as far as macroeconomic soothsaying is concerned. Janet Yellen says relax, Tyler Durden says buy gold, but neither of them has a crystal ball. And then, let’s say tomorrow the financial system explodes, or implodes, for no immediately apparent reason. Now what?

Frankly, I don’t need a Nobel to know that I will not be using this financial system again. Though I don’t like to admit it, I am as fickle and unforgiving as anyone in the 21st century — usually when an app on my smartphone crashes once, I uninstall it and move on to the next one. If tomorrow we wake up and see “Sorry, the dollar has crashed” on our glowing screens, suffice it to say that there won’t be a simple app re-launch. Assuming you’re a believer in classic liberalism like I am — that is, you believe in the individual’s inalienable right to choose for one’s self both economically and politically — then there’s a critical choice that each of us needs to make after our morning coffee:

a) Do we place our fate once again into the hands of experts and central planners to clean up the mess?

b) Do we place our faith in the sovereign domain of the individual to replace a failed system from the bottom up?

Option A, if nothing else, would be a good heuristic for deciding if you should bother having kids in the future. Option B would not have been regarded as a funny joke in 2008, let alone a serious plan of action. Without question, swift decisions had to be made under extreme pressure so that the West and much of The Rest did not wind up in an iron maiden at the turn of the decade. But would this necessarily be the case in the hypothetical meltdown of tomorrow? If we forgo bailouts and allow systemically important institutions to fail, does a contingency plan exist today that was not at our disposal in the wake of the most recent financial crisis?

All signs point to one amorphous organizational principle — decentralization — and all roads lead to one enigmatic technology — the blockchain.

I won’t waste anyone’s time in explaining the technological underpinnings of the blockchain protocol because after all — I’m no expert — and if you’ve landed on this page, you’ve probably heard it all before: immutable, auditable, no central point of failure, ad nauseum. But what I will attempt is to devise a disaster recovery plan of sorts, exploring the decentralized tools that are at my disposal on Ethereum should a financial apocalypse choose to rear its ugly head. Faced with crippling uncertainty, how would I, an Average Joe, navigate the ruins of a crumbling financial infrastructure?

Ground Zero

Let us assume the worst case scenario, that most of my personal wealth is wiped out and any assets tied to my name are worthless. As 1st century Roman philosopher Seneca the Younger and 90s alt-rock band Semisonic aptly put it: “Every new beginning comes from some other beginning’s end.” I will need a new identity.

“Every new beginning comes from some other beginning’s end.”

I pull out my Ubuntu phone (which happens to be running an Ethereum node), open up my mobile browser and point the address to uPort.me. I take a picture of myself and upload it to the blockchain; I fill out basic information about who I am, where I live and how to contact me. I link some of my surviving social media profiles to my uPort persona and finalize its creation. Boom. My self-sovereign identity is born.

Based on my personal details, uPort is able to perform an intelligent search of friends and family who are also using the identity service and automatically sends several requests for attestations on the integrity of my persona. A few of my friends receive the notification for attestation, which they respond to by selecting my phone number within the uPort app and sending me a text message for confirmation. I send a quick, ‘Yeah, it’s me!’ back to them and they digitally sign an attestation that’s recorded on the blockchain. People can now search for me on uPort and, with a high level of confidence, rest assured that they’ve found the right person.

Now that I’ve entered the portal into the decentralized web, I need to get ahold of some cryptocurrency to transact with. Luckily, there is a faucet offering a little amount of Ether, but that’s only enough to get me through tonight. I will need to find work. Unsurprisingly, no one is hiring right now, so I need to get creative. I logon to my Twitter account and turn on the GPS on my phone to pull in location-based content so I can see how everyone else is handling the crisis. Luckily for me, people are tweeting odd jobs and requests for information and placing bounties on their posts using Horde. I find several easy jobs that I can immediately receive payments for, making the prospect of tomorrow a little less dim.

Fast forward several weeks and I am managing to make ends meet with relative ease. I’ve become an active member on my local Noncense page, which functions like the front page of the decentralized web, where I’m able to claim bounties not only in close proximity but all over the world. It seems that many new users have, fortunately, managed to retain some of their wealth. However, now they want to convert all of it into cryptocurrency. It dawns on me that instead of bounty hunting, I could be making more money by starting a business that onboards others onto the Ethereum network. But how do I raise the capital I need to start a business?

I open up the DappStore on my Ubuntu phone and download a Dapp called WeiFund. This neat little Dapp lets me launch a crowdfunding campaign across the entire decentralized global network in as long as it takes me to write up a business plan. Thanks to my bounty hunting activity on Noncense and Horde, my uPort persona has been gathering a positive reputation that’s being collected in a RepSys smart contract and displayed on my WeiFund landing page. The combination of my high reputation and winning smile is bringing in many small investments and encouragement from people all over the world, but it’s still not enough to make this a success.

Being the savvy businessman that I am, I’ve managed to maintain contact with some of the old money that I helped onboard onto the network. A few of them are willing to make sizable investments in my start-up, conditional on some seats on the board for oversight. No problem . I fire up the Token Factory Dapp, which allows me to issue shares in my company, Average Joe & Co., in the form of digital tokens, which I send instantaneously to each owner. I link these tokens to BoardRoom, Ethereum’s decentralized governance tool, and grant each shareholder’s uPort persona access to the virtual boardroom dashboard. This platform makes it easy for us all to communicate, review performance, and initiate votes when decisions need to be made, despite being geographically dispersed. I list my company on Ethereum’s master for-profit company registry using Regis and we are open for business.

Just a year later , business is booming. I’ve helped onboard hundreds of clients onto Ethereum, managing to operate solo, due in part to how easy it is to invoice my clients and receive payments. With Balanc3, I have a simple method for billing my customers, setting up payment plans and auto-payments, and a clear audit trail for when I do my bookkeeping each fiscal period. When cashflow is tight near the end of the month, I can even factor Average Joe & Co.’s receivables, securitize them with the Token Factory, and sell them at a discount to regional banks on the decentralized exchange, EtherEx. To properly assess the associated risks, bankers can trace the receivables to each respective payer on the blockchain.

Over the years, my business evolves to include various new services : I’ve learned how to store and protect private keys for some of my most hands-off clients, mentored other entrepreneurs through several rounds of crowdfundraising, and helped architect decentralized, global organizations. The memory of what life was like pre-crisis is beginning to fade. The smart contract education trust that I’ve established for my child is due to pay out on its own in a few months; it serves as a sobering reminder that I’m getting old. I spend most of my down time streaming live music sets on UjoVR, sending micropayments to the DJ for every tune that gets my head nodding, and playing EtherPoker into the wee hours of the morning.

A Call to Action Without Posting Margin

This crypto-reverie paints a rosy, albeit simplistic, view of the future of finance, but I hope you’ll forgive my over-indulgence for the sake of envisioning direction in an increasingly uncertain landscape. We live in a restless world that’s growing ever more impatient, and becoming more of a moving target, each day. The needle-in-a-haystack idiom is hardly applicable for describing the search for causality in our emergent social systems. No one can say with absolute certainty how things are going to be five years from now, but we can, with a dose of humility, try to understand why things are the way they are in our financial system today and attempt to carve a path forward.

“…we must be careful not to allow economic freedom for all to devolve into technocratic planning by the few.”

From this thought experiment, we may glean a few things: First, the technology to rebuild and connect our shaky financial infrastructure exists today. If we can avoid a doomsday scenario by augmenting or replacing old transaction protocols, rather than just propping them up, we may come out on the other end with fewer bumps and bruises. Second, and perhaps of more interest to the Average Joe, is that ConsenSys is building the tools that will empower individuals to make their own choices and live with greater economic and political freedom. But with these newfound capabilities, built via blockchain technology, comes a serious caveat: we must be careful not to allow economic freedom for all to devolve into technocratic planning by the few.

Make no mistake — collaboration and participation are at the heart of the decentralization movement — but we must be mindful of old habits creeping into fresh starts. While consortiums continue to make alliances and plan what’s best for us, we’d be wise to begin thinking about what we can do today. The Average Joes of the world need to become Experts in the art of knowing what they don’t know, and act accordingly.

Even though I haven’t seen the Big Short, I’d venture a guess and say that whoever that movie is about was familiar with the Talebian notion of optionality. Whether they know it or not, I think everyone in the Etheruem Homestead is too.

by Gabe Tumlos, Business Development and Strategy